for a limited time, get $200 off - and free shipping too. just go to buyleesa.com today. you need this bed. >> a very good morning. we are in sydney and australia markets have just open. >> good evening from global headquarters in new york, i'm shery ahn. >> and i'm sophie in hong kong. "daybreak asia." top stories, asia futures mixed after a volatile session in new york. facebook and microsoft helping the tech lead recovery. sterling slumping as the first lady is returning. to europe for more

talks. and the family being blocked from company owned homes around the world. let's get you started with a quick check of how u.s. markets ended this first trading session of the week. we saw a very volatile session with the dow at one point falling 508 points before reversing its losses and gaining a 10th of 1%. the s&p 500 also saw the biggest loss since march of this year, before gaining 2/10 of 1%. all thanks to tech and communications stocks, which alleges the gains, but it was really about tech running the market as we saw facebook and microsoft rally. s&p futures unchanged at the moment, but we are seeing positive sentiment filter through, as we saw a huge reversal in u.s. equity markets, despite the fact we got a bit of an uptick in brexit risk, not to mention some more hawkish comments from fed officials, not

to mention more headlines coming cfo'sf the huawei's arrest in canada. now, sophie. sophie: no shortage of drama that could provide headwinds for asian markets, that we do see tech among the gainers so far in sydney. gaining ground after sinking 2.3% on monday. among the gainers, i want to highlight adderley bryson rising 3% this morning after being upgraded by credit suisse and morningstar, australia's biggest cement group. now the aussie dollar, study after rising off of a one-month low. and difficult in aussie bond yields, this ahead of the survey for november. the housing index will be due at the bottom of the hour. that is expected to deep into 2% for the third quarter. assets in focus, this us data election results are pending. in light of the shock resignation of the r.b.i.

governor. we take a look at the push back above the handle and the overnight losses, as we are expecting a first reaction and markets to what has been happening with r.b.i., as well as with the state elections. ubs sews that the rupee will pay the price. and among the selloff in indian markets, some are saying this is not a market you want to be out of and buying opportunities will emerge. di: now first word news with jessica summers. jessica: a former head of the reserve bank of india says the resignation of patel is of great concern. his predecessor says that patel has had enough of government interference. the r.b.i. board is going to meet on friday, and traditionally the governor's most senior deputy would become interim leader. the husband of the detained

huawei executive has told a court that he would post bail it cleveland to 11 million u.s. dollars to secure his wife's release. wanzhou meng's lawyer said that they would confirm the bail. the african the second day of a cfo whofor the allegedly breached sanctions on iran. protestsance, ending by offering tax cuts and bonuses. i just in after more rides over the weekend, the french president says that they are at a historic crossroads and acknowledged his share of responsibility for the anger on the streets. he admitted that france is facing a state of economic emergency. italynew survey suggests is a sliding toward a potential slump. barclays and bloomberg economics expect a contraction in the current quarter, which would take the country back into

recession. expansion next year is forecast to be less than 1%. and such an outcome would have grave implications for unemployment, credit ratings, the banking system and the desire to tackle their huge debt load. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jessica summers. this is bloomberg. you.ank back to the rebound in u.s. stocks, we saw a big rally in tech because of facebook and microsoft, reversing an ugly selloff. the dow managed to bounce back and end the day 34 points higher. really come another volatile session. >> it is say it was unbelievable that investors were jumping into buy tech on the dips, when earlier there was concern because of brexit that the trade situation would become much more worse, much more fragile.

let's go to the snapshot, because it does not reflect the gut wrenching volatility that was this manic monday. notice the dollar is higher, bond yields on the 10 year basically unchanged, but the two indexes, financials and energy, cut their intraday losses more than in half. at one point, the energy index was down over 4% to reflect the biggest plunge in oil in roughly two weeks. take a look at some of the big movers. and here you have tech to the rescue. broadcom, one of the biggest movers higher. and you have cooper software up on an acquisition. and take a look at banks, this is the bipolar aspect of the market. banks down in a big way, going to the next grade, but then again they cut their losses and half. a lot of this has to do with concern over the fed perhaps having to put a hex on hold going forward. -- hikes on hold going forward. >> and all this but asian on whether they will pause are not.

what are we seeing in terms of the latest speculation and how it changes the dynamic in the market? su: there are a lot of questions on the market, what is more important, what the fed does, what will happen in the market? but if we go in the bloomberg, we can see the speculative on fed cuts, at least going into 2020. again, they will have to ease. so what does the thinking right now mean? paul jones, a widely followed hedge fund manager, said on a recent broadcast he believes the fed is going to have to really pause going into 2019. downturn inthe commodities alone is weakening the economy, and so probably no fed hikes for 2019. a thick russian what will happen in december. go back into the bloomberg one more time, because most stocks and globally are in a bear market, over 50% of the world index down 20% or more. so again, that adds pressure to

the market. is whaty hard to trade, one veteran trader told me.he believes monday would be ugly and was shocked it ended higher. he said it is difficult to trade and frustrating. >> ok, we will take a look at the other source of a volatility. theresa may going to europe after vowing to her critics at home and postponing a crucial vote in parliament, she will be holding talks on tuesday with angela merkel in berlin after meeting with the dutch prime minister. our economics editor is watching all of this. peter, we were talking about the fact that this is kicking the can down the road, buying more time, but i am wondering for what. the vote is unlikely to change by january. peter: people are probably dug in. they may not have been that way when they came to their positions, but after a year or so of this, this is confirmation

lever, you were a will be more of a leaver now. this is why this is getting harder and harder, and the markets are seriously taking the possibility of a new deal brexit in march. >> i think at one point when the prime minister was urging her rivals in parliament to accept the compromise, she was greeted by laughter. >> unfortunately. >> so people hardening their positions. what about the eu, are we hearing they could compromise? peter: they are saying no, and donald tusk today was pretty blunt about that. he said, we are not going to meet with theresa may because we want to renegotiate the deal, we want to meet with her because we want to help her get the deal ratified. and he is clear about that. and i think it is partly because he does not have a lot of flexibility, he is representing 28 countries, so he has to go by

a rule based system. it is not just winging it with a one-on-one negotiation. >> where do we go from here? we had this flow chart of all the different options, no binary result, right? and it seems like those options are all back on the table with what would potentially happen in the next couple months. peter: people talk about may just representing the deal she are ready came up with, and hoping that as time passes people will realize that they are not going to get anything better. that is one possibility. her on party could try to choose a new prime minister, there could be a vote of no-confidence, general elections, a second referendum -- the second referendum could result in a different outcome this time, who knows? maybe the remains would win. >> and sterling taking a hit in the meantime. peter, they can for that. -- thank you for that.

still ahead, patel quits the reserve bank of india. we will discuss the governor's bombshell departure later in the show. >> coming up, market volatility continuing into a 12th. we will get the views of mainstay's ceo. that is coming up next. this is bloomberg.

"daybreak asia." shery: let's return to the wild session on wall street as volatility continues into its 12th week. joining us is mainstay capital management ceo david could the. -- always great to have you. we are hearing more analysts from goldman sachs and jpmorgan recommended increasing cash

holdings. how do you had all this volatility? it seems we have lost david from mainstay capital management, he is the ceo there. we are talking about market volatility after a wild session on wall street when we saw a reversal coming from u.s. stocks, and we were headed toward an eight-month low, then we saw the reversal in buying the dip. investors and the dow reversing the decline and really gaining .1% at the end. as we get the connection established with david, we will take you to a check of the latest headlines. apple analysts shrugging off a report that it is being banned from selling some iphones in china following a lawsuit from qualcomm. shares fell initially, but recovered to trade higher. the qualcomm case accuses apple of infringing on two patents.

the court issued injections against the sale of seven iphones, including the 10. apple insists all its devices remain available in china. almostla trying to raise $840 million through bonds backed by auto leases in a second trip this year for asset-based -- back to securities. investors say they will look past volatility. tesla found a strong demand for its inaugural bond sale in february, and sources say it plans to be a regular issuer. the offeras confirmed price for its telco unit ipo, sticking to ¥1500 in an offer that could raise more than $23 billion. it is offering about one and three-quarter billion shares. it will begin trading in tokyo december 19. sellbet that they can

all the shares, but that is under question after networkwide outage. we have our guest back. david, thank you so much for hanging around as we sorted the technical issues. talk about the volatility we see in the markets, because we continue to hear from analysts, whether it is goldman sachs or jpmorgan, recommending increasing cash holdings. so how do we had all this volatility? -- headge all this volatility? david: it is important for investors to look at their goals long-term and what they want to do in their portfolio. and i think whether a growth investor or conservative investor, it makes sense through the volatility to have some hedges in place. some simple ways to do that is with sectors like rez, a residential etf that is non-correlated with stocks and

bonds, a good defensive position that has done well to the volatility with positive returns over the past three months. pui, which isf, a momentum etf and has done well. those are two good defensive sectors that can help hedge the growth oriented stocks. but we do not think you give up on your tech stocks or more growth oriented stocks. fasaw today the thing -- the ang lead the stock market back in the u.s. from some very low levels. that was led by the nasdaq. another one of those days, if you just saw the close you would think it was a boring day for the rest that market, but indeed there was considerable volatility. we came off of some very deep lows for the s&p 500 and dow to finish higher and the nasdaq to finish up three quarters of a

percent. shery: i think the last couple of sessions we said the closing numbers were super boring, but if you go inside the trading session, it was nailbiting throughout the process. so how much of that is because of year and liquidity playing a part? -- end liquidity playing a part? david: there is some is going on right now. right now, a lot of investors theyrying to determine, are taking a look at what is the new economic reality. we had just a couple months ago, we had a major wire house and economists that were forecasting four or even five rate hikes by the federal reserve next year. now, we are talking about only one or no rate hikes at all in 2019. forfed funds rate forecast march is now hovering around 50% or lower. so, you know, we have had such a change in the economic outlook in just a couple of months. and as we start to price of that

into the market, or figure out how to price that in, i think there is still that discovery going on, but the calls for recession are starting -- go ahead. shery: no, go ahead. david: these calls for a recession starting quite soon, we do not see that. we know we are closer to a yield curve inversion with the two year treasury and 10 year treasury spread as low as 11 basis points, now at 13.5, but we are not there yet. and then a peak in a recession, but we think we have further to go in this bull market and we will recover from these lows we are now experiencing. >> i was going to say, the markets and -- get it wrong all the time. in the span of a few months we have gone from three to four to know hikes next year. it is the idea that everything

is either perfect or horrible. are we kind of seeing investors getting ahead of themselves before we have a good idea of what we 19 really holds? what 2019 really holds? david: i think that is what has happened. jerome powell came out and gave guidance on a speech where we were so far away from the neutral level, then a couple weeks ago he said we are not that far away. we had a good rally that week. that was followed on by one day rally on what we thought was a trade truce between the u.s. and china, but that quickly fell apart. now we have more attention relative to trade -- more attention relative to trade. there is a lot going on, trade and the fed, those are the two big issues. that is for u.s. markets and asian markets. and as we look forward, as you say, these two extremes that we

are moving between, reality or where we will end up will be in between. and that is what the market is trying to figure out, that is what makes a market. and as we sort that out and move forward, we think we move forward in a constructive manner for stocks. it is not down from here, we think we still rebound from here , whether we do that between now and the end of the year or moving into the first quarter, we think the direction for stocks is rebounding from here, not moving lower. and hopefully, we move through the trade agreement and in a positive way over this 90 day and what is going on right now with some of the other friction that has been created, and we sort out what the fed more of where that goes. but then that means, if the fed is easier next year, we could become more positive on emerging markets, more positive on those astors that we do not or not

concerned about on higher rates. >> that is a breathing space em's will be looking for. always a pleasure, david kudla joining us. coming up, one economist calls it a tragic day for india. with accountable long-term damage. we are talking about the departure of urjit patel. we will get more on that, next. this is bloomberg. ♪

>> this is "daybreak asia." shery: the reserve bank of india has been plunged into turmoil with the resignation of governor urjit patel, whose departure comes after a long standoff between the government and r.b.i.. our global economics and policy editor kathleen hays is watching this. it is really all about central bank independence.

the head yes, because of the reserve bank of india, urjit patel, had been in a battle with the government over how he was running policy. recently come in particular when it comes to liquidity in the banking system. as he stepped down, even with the ongoing battle i do not think that people were expecting him to step down, because he had put up with it for some time. this was nine months before the end of his term. but there was a meeting on friday of the board, the broad board that oversees these questions of things, thanks, liquidity -- banks, liquidity, and in fact his team was expected to push against governor patel, saying put more liquidity in the system. patel was pushing back, saying the banks need to clean up their balance sheets, the reserves are not exactly as secure as you think they are, we do not want to do this.

this was a broader battle going on, because as patel tightened the rules on the state run banks, trying to get them to clean up their balance sheets, modi fought back against that because he has an election next year and you want to make sure that the economy is humming as much is possible. but this goes to the heart of the central bank independence. so in that way perhaps it is not surprising that urjit patel took this very dramatic step. as he leaves, the prime mr. inister thanks him for steering banks away from chaos. they they can for his services. and -- say the exit is a protest againsts the circumstances he has found himself in. ele seniormost deputy of pat will replace him as an interim head of the reserve bank of india. the whack-a-mole markets are wondering what is happening -- meanwhile, markets are wondering

what is happening next. shery: at a time when the rupee has been one of the worst performers in asia. what are the implications for india assets -- we spoke earlier about what could happen with emerging markets if the fed does hit pause next year. kathleen: maybe the pressure is on the r.b.i. to keep raising rates, when sometimes they want to cut them. look at this chart from our bloomberg library, but together shortly after the resignation. the forward contracts show the rupee weakening pretty dramatically, this is after the markets closed today. without currency expected to fall again. india saying that markets may bleed red as patel steps down. election results of the party expected to perhaps prevail, but they are in close elections and polls showing that maybe they will not win. this is one more source of uncertainty. one thing to remember is that

urjit patel does leave a good legacy, as mr. modi says, strong inflation coming down. we will see what happens next. >> coming up, the latest on the bail hearing for wanzhou meng in vancouver. ♪

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a.m. here in0 sydney, trading for 30 minutes. we have modest gains in the early part of the session, 6/10 of 1% higher. tech playing follow the leader as we have seen facebook and microsoft leading a rebound in a volatility driven session overnight. >> 6:30 p.m. in new york, s&p futures under pressure, down a 10th of 1%. this is a very volatile session on wall street, when we saw the dow at one point losing more than 500 points, to gain a 10th of 1%. and all the benchmark industries

in the green. i'm shery ahn. >> more stomach turning sessions before the holidays it seems. you are watching "daybreak asia ." now first word news. jessica: theresa may is going to europe on tuesday after bowing to her critics and postponing a crucial vote in parliament. she will talk with angela merkel in berlin after meeting the dutch prime minister, faced with almost certain defeat of her deal, she says she will seek assurances from the eu leaders. but she gave no indication of what that means. >> notwithstanding that fact, for as long as we failed to agree, the risk of an accidental no deal increases, so the worknment will step up its in preparation for that potential outcome. and the cabinet will hold further discussions this week. >> this deal is the best and

only deal possible. we will not renegotiate. our position has not changed. and we are concerned for the united kingdom leaving the european union on the 29th of march, 2019. jessica: oil sliding to its worst loss in two weeks on doubts whether opec and allies can deliver supply curbs. they fell 3% in new york, erasing gains from the past week between saudi arabia and russia to reduce supplies. the of the group has agreed to take 1% of global production off the market, but it is unclear how the curbs will be implemented. and president emmanuel macron is attempting to end violent protests across france by offering tax cuts and bonuses. addressing the nation after more riots over the weekend, he said that france is at historic crossroads, and acknowledged his share of responsibilities for the anger on the streets.

he admitted that france is facing a state of social and economic emergency. nissan said to be trying to block access to properties used by carlos -- around the world. the committee provided him and his families with homes in lebanon and other locations. we are told that locks have been changed at several addresses, and his wife is prevented from entering their home in beirut. shinzo abe says relations between france and japan will survive. >> talking about the impact on japan-france ties, i have held many meetings with president emmanuel macron an we haved expanded our close cooperation in diplomacy, economy, culture into security. i'm certain that are ties will not be shaken by this matter. jessica: global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jessica summers. this is bloomberg.

let's not get a check of the markets and how they are trading, after that afternoon rally on wall street. now, sophie. sophie: treating warming up in sydney, but it is hard to get excited given the headwinds that are mounting. up just .5% after losing 2.2% on monday, that brought the index to a near to your love. gains moves higher by health care and tech, but weakness coming through from energy stocks. the aussie dollar holding steady after rising from a one-month low, bond yields picking up a touch ahead of business conditions for november and a check on housing prices for the third quarter due in one hour. this month expected to have gone to 2%. stock movers, you have a lithium producer snapping a five-day decline. resmed climbing after being outperformed. and -- is gaining ground after

being upgraded by morgan stanley, recovering from a 30% cost in feed cost that was not fully passed on to customers. morgan stanley boosting the price target to the street high of 4.40 aussie dollar's. and -- insurace under pressure. this is the company said it has fully placed its reinsurance program and announced a three-year operational efficiency program to cut costs. and they have said they have completed their supplication of their portfolio, telling operations in puerto rico -- selling operations import rico and the philippines. onlet's get to the latest huawei. lawyers for the jailed cfo said that her husband would post 11 million u.s. dollars to gain her release. in court, they of heard arguments for and against bail. she is fighting her extra

addition to the u.s. unsettled markets thrusting huawei into the heart of the trade war. says the arrest will make all chinese businesspeople nervous about traveling to the u.s. >> yothe u.s. and canada have nt disclosed the reason behind the arrest, so we cannot speculate why this happened. from a company's perspective, you cannot interfere with a person's legitimate rights, or even safety, without grounds for doing so. the u.s. is the one that always claims to protect human rights, but now they have not given any reason. whoever travels to the u.s. now, they must be very scared. now mackenzie joining us from beijing, where he is following this story. what do we know so far on the bail hearing? we have heard arguments for and against, including having to do

with her husband, sharing that he fulfills his role as jailer, as the crown has been arguing. >> that is right. there is an omen of skepticism in the comments from the judge in vancouver, saying that he was not convinced necessarily in that her husband could act as a for his- as a jailer own wife, particularly given his visa into canada. the judge saying he did not have the ability to ensure that they could not leave the country. the lawyers for wanzhou meng have argued they could put up real estate and cash assets equivalent to $11 million, but the husband would act to guarantee that she remains and met conditions of bail. they also heard from an expert in security, who wanzhou meng said they would be paying for,

to ensure she does not skip bail. the expert saying they could put in place assets around her house to ensure she does not run off. the judge saying there was no guarantee that there was no flight risk. the prosecution, the crown saying this is an extraordinary case, given the wealth of wanzhou meng and her family, particularly her father who was the founder of huawei and is estimated to be worth well over $2 billion. so the case continues. they are on a break in vancouver, they will come back to this. and investors and business people in china, as we heard from our paying close attention to this. but it will be a long drawnout affair. >> what are the implications for that fragile traded truce between the u.s. and china? mentionedurse, as you over the weekend, we had commentators or members of the government in washington coming out and trying to separate these

two cases, saying that the traded truce is separate to the judicial process underway involving huawei's cfo. and the problem, of course, is the chinese here and policymakers are under pressure from those within the party, and the public, to take a tough line on canada and the u.s. the biggest tech company in china, including -- or providing all the infrastructure for telecom equipment, policymakers under that pressure. we have seen the u.s. ambassador givenna being pulled in, a talking to buy the foreign ministry here in china. this is a case, it is reverberating, we heard that from the ceo of haia, talking about the concerns around chinese's travel to the u.s. we heard about a delegation from canada that were going to go to

china, that was canceled because of fears they could be caught up in these moves from china. there have been threats of retaliation, but depending on how the case unfolds. so applications around the detention of wanzhou meng in vancouver. >> tom mackenzie, thank you. now, japan's nikkei u says the tokyo stock exchange is: putting nissan on the security's risk, the latest in the drama surrounding the ousted chairman. he and a fellow board member, and nissan itself, have been formally indicted. our correspondent stephen engle has been following this from the beginning. what happens now? reporter: i was looking at the securities alert, no more news on that other than i can say that the stock is down 6% in tokyo since the arrest. down about 40%, the shares are 4%, the shares

are now. we will get more on what that means for nissan by the securities rig leaders in japan. now, what happened yesterday with the indictment of not only carlos ghosn, but greg kelly and nissan itself, that allows prosecutors to lay out those formal charges. once in indictment happens, generally speaking in japan a trial could come within 40 or 50 days after that. this is a unique case, so it is not a foregone conclusion, but basically it also allows carlos ghosn to apply for bail, but the people we have spoken to say that is unlikely since also yesterday prosecutors rearrested carlos ghosn on similar charges, but a different timeframe. basically, the charges have been, the original charges have been for understating salary of

up to $43 million for five years. the new arrest is for allegations or suspicions of understating that salary until march of 2018. so similar charges, a different timeframe, new arrests. that allows prosecutors to keep him in detention for now. >> does this complicate things at this point? reporter: absolutely, the potential of conviction an of the 10 year jail sentenced definitely throws things up in the air for renault, which back to buy the big shareholder, the french government, will likely consider carlos ghosn innocent until proven guilty. however, if he is taken out of the scene, they will have to rearrange their arrangement with a new ceo, and maybe have to make difficult decisions. we are hearing of fractures

within the board, as well as a hard-line union. the union calling for deeper change on the board, arguing that carlos ghosn's reputation has been tainted. keep in mind, emmanuel macron has been shoulder deep with the yellow vest protests, so will the government come to carlos this crisis.in >> coming up, oil and implications of the opec supply deal. we are going to hear from -- capital. this is bloomberg.

>> welcome back. oil fell to its worst loss in two weeks on monday as doubts grew about whether opec and allies can deliver enough cuts to head off a glut. we will discuss that with matt soli.

thank you for joining us. we are looking at a lot of volatility in the i oil markets. the one thing that change in gain weere, after the saw it plunge. so what does it signal long-term that we are getting some sort of cooperation between the saudis and russians? >> today, there was a little bit of a head scratching on the price action. obviously on friday, opec, plus reallyled consortium, delivered on what the market was looking for. so we see that as exactly what the market needs to be balanced for 2019, and help to make back some of the recent price action that oil has given up. so we see a positive outlook. until the market starts to see

some of these cuts come through, we may see volatility, especially given -- i think oil was down today with the broader equity markets early on, at least. shery: even with oil prices were gaining ground, we saw energy stocks really underperform, so what does this signal for the energy sector? matt: i think it speaks to the fact that valuations are cheap in the energy sector and it remains out of favor, which we view as an opportunity, we think that is the time to start looking at energy stocks, when they are not viewed as an attractive investment. because if you look at what is going on in the fundamentals behind these companies, we are at record demand levels for oil and natural gas. production domestically is at record levels. and for the first time last week, the u.s. was a net

exporter of crude oil an refinedd petroleum products, so that is something we have not done in 75 years. so significant things going on, specifically in the domestic u.s. energy sector, that is clearly not appreciated by investors. --the that as a long-term eight we see that as a long-term opportunity. building -- he is worr is building in terms of what is going on with brexity, whether the trade war will continue, as well as the structural slowdown in china and also here in australia, so does the supply side of things -- that is one thing, but does the demand side change as we see a slowdown economically next year? matt: our base case is for a slowdown, but not a recession. if we got into that environment, that would hinder demand growth. w with still expecte -- we would

still expect growth, just based on the trends in growing economies, but i would say there is risk to the 1.3 million barrel per day demand growth number that we are currently baking into our estimates. at current price levels, i would say that we are pricing in lower -- the market is pricing in lower demand growth than the baseline of 1.2, 1.3. >> we take a look at the deal struck by opec, how viable is it really if you consider that the swing producer ultimately is u.s. shale still? ant: i would say it creates environment where u.s. shale can continue to grow, but frankly it will need to grow to offset natural declines in many other countries. the only source of new production right now are the opec countries and u.s. shale, so those will be needed to meet the structural demand growth i

just spoke about, you know, call in to the tune of maybe 1.5 million barrels a day in the u.s. infrastructure constraints are creating a bit of a challenge in 2019, that gets alleviated in 2020. but then you have to look at production in venezuela, we do not know will happen when the iran sanctions expire, what will play out there. and libya demonstrated it is still a fragile environment in that it lost 400,000 barrels per day of production looking forward. and canada come also -- and canada is also curtailing production in 2019. so you will need opec to be steady and really the u.s. to come through and provide incremental barrel for demand growth. >> we appreciate your time, matt

sailee joining us. the market open in japan and south korea. we go to hong kong. >> we are setting up for slight gains at the start of trade in tokyo and seoul. the yen holding on to the bulk of overnight losses. looking at a lackluster session as you as futures are pointing to declines. and the latest report to digest, as the government is considering is the most package including shopping incentives and infrastructure spending to offset the planned tax hikes for 2019. and when becomes the stocks, we are keeping an eye on japanese autos, as u.s. carmakers urge the white house to open up the japanese market. nissan remains in the spotlight, given the report that the tse is considering putting them on the securities alert list. and keeping an eye on japanese telco's, this after news that -- will ban telecom equipment by

huawei did avoid using chinese 5g technology. softbank will be in focus after setting the price for its telecom unit after the original target of ¥1500 a share. and caps on biologics, trading resumes this tuesday as regulators decided not to do list shares. the stock has been suspended since november 15, after regulators concluded the company violated rules. an we are keeping an eye on apple suppliersd, which may move as qualcomm says it won a ban on the sale of some iphones in china. that apple says the remain available on the mainland and has filed a repeal. quite a bit to watch this morning. shery: coming up, we will have more on that apple story. sales in the biggest market could take a hit as qualcomm claims a legal win against the iphone maker in china. details next.

this is bloomberg. ♪

>> this is "daybreak asia." i'm shery ahn in new york. apple rose, shrugging off a ban on the sale of some iphones in china, part of the company's global patent fine with qualcomm. we go to los angeles. mark, what patents are we talking about? mark: the fight is not about the royalty they were fighting over over the past two years, these are adjacent patterns -- patents related to the touchscreen. this is an adjacent situation that qualcomm is using to try to an inhe b in placean -- b place. shery: doing a how it could impact apple, because these are

not all the models being banned? mark: i do not think it will be a dramatic impact. the -- is slim. motorola had an injunction in germany on ifo models there over cellular technology, 3g to be specific and the ban lasted about one hour. so to date, this news is only 24 old, years -- hours apple has not even had to pull any phones from shelves. this has only to do with some models. the 10 and 6s lines are no longer on sale, so this comes down to other models. they are hot sellers, particularly the 7 and 8s models, but they have not been pulled off shelves. s, thele has the 10r and

latest versions of their products still on sale there. e contesting of the disputes, does this get the parties closer to the table for settlement? mark: that is one line of thinking, that this will spur them to get some sort of deal done. apple might think, what are they going to get done here, will they be able to get them banned in certain regions. qualcomm will see this fall flat, the iphone will not be pulled off of sales, according to analysts and investors at this point. the president is -- shery: and we have the latest

headlines coming out of canada, the judge in the huawei bail hearing saying that they will not rule today, the hearing will resume on tuesday. although, they do want house arrest for wanzhou meng. plenty more coming up on "daybreak asia." ♪

haidi: a very good morning. i am haidi stroud-watts in sydney. from: good evening bloomberg's global headquarters in new york. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories on tuesday, asia-pacific markets facing a mixed start. investors are finding it hard to get excited. sterling slumps as theresa may rows to her critics. -- bows to her critics. shery: rupee weakness and r.b.i.

turmoil. he walks away. his predecessor says it is a protest against government meddling. we are looking ahead to that open i. in the meantime, the markets that are open across asia seem to be gaining ground. sophie kamaruddin with the latest on the markets. what are you seeing? sophie: we are seeing gains for stocks in tokyo and seoul as the cash trade kicks off. a lackluster session after regional stocks slid for two straight days. in sydney, tech shares are hoping to lead the advance. we saw a wild ride for wall street. real estate stocks gaining ground ahead of third quarter home prices. i want to highlight what is going on with the nikkei 225, up .2%, after sliding over 2% this morning. investors will have some of the

latest news lines out of japan. government ise's considering a ¥2 trillion budget to provide for shopping incentives and infrastructure spending to offset the impact of the upcoming sales tax hike due for october 2019. assets will be very much in focus today. state election results are pending. likely trigger an over reaction in indiana assets according to strategists. they said the imaging rupee will pay the price. and you're holding losses after pushing above the 72 handle. amid the anticipated selloff, some strategists are saying this is not a market you want to bat out of just yet as the selloff in the indian market could provide some buying opportunities. haidi. kamaruddin in hong kong. let's get you the first word news with jessica summers. thanks. a judge in vancouver has

signaled opposition to a bill -- bailby huawei's cfo request by huawei's cfo. her lawyer said her husband posted bail of 11 million u.s. dollars to gain her release from jail. s suggest a potential slump. they expect a contraction in the current quarter which would tip the company back into recession. expansion is forecast to be less than 1% and such an outcome would have grave implications for unemployment, credit ratings, the banking system, and italy's desire to tackle its huge debt load. president emmanuel macron is attempting to end weeks of violent protest across france by offering tax cuts and bonuses. addressing the nation after more riots over the weekend, he said france is that an historic

crossroads. he acknowledged his share of responsibility for the anger on the streets. he says france is facing emergency. is said to be trying to block access to property used by carlos ghosn around the world. the company provided him and his family with homes in france, lebanon, and other locations. 's wife is prevented from entering their home in beirut. shinzo abe says relations between japan and france are long-standing and will survive. >> talking about the impact on ties, i had many meeting with president macron, and we succeeded in expecting close cooperation in diplomacy, economy, culture, and security. i am certain that our ties will not be shaken by this matter. jessica: global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.

i am jessica summers. this is bloomberg. haidi: theresa may is paying for time by calling on tuesdays brexit vote in the face of the almost certain defeat of her much criticized deal. instead, she is heading to the hague in berlin, seeking unspecified assurances from e.u. leaders. she gave no indication of what that means. asme minister may: as long we failed to get a deal, the risk of an accidental no deal increases. so the government will step up for thatin preparation potential outcome, and the cabinet will hold further discussions on it this week. haidi: our bloomberg senior international editor, jodi schneider, joins us now with the latest. she is going to seek assurances. isre is not much chance she going to better the deal because they'd recently said this is all

you are going to get. jodi: that's right. the e.u. said at the time that the deal was negotiated with theresa may, and they said that again in recent days, but this is the deal on the table. they are not going to renegotiate. it is unclear what those reassurances could he or frankly how reassuring the could be, but perhaps they have said that they will try to help her think of how to, you know, get it through parliament. i am not sure what that means. i think at this point, what she is doing is, you know, trying to buy some time, clearly, by delaying the vote and going back to the e.u. again, probably coming out of a pretty empty-handed. shery: could that work in her favor given how the markets have a new brexit vote this week? could that -- no brexit vote this week? could that work for her when she comes back to parliament in january? jodi: that is a good question,

and that may be the only thing that will help her get this through. parliamentary map is not going to change. that would only change with the general election. if she comes back in january with the same deal, it is hard to see what changed. the only thing that may have changed is the market is tanking. questions, including from businesses, about what a no brexit deal would mean if the u.k. leaves march 29 without any kind of deal. we saw this in the u.s. during the financial crisis. there was a vote in congress about infrastructure funding. you can watch on one screen as the vote went on and the other screen as the markets tanked. a couple days later, they got it through. this is a different situation, but perhaps that is the kind of thing that theresa may is open, banking on, that it will be this or no deal, and you know, that this market pressure that could potentially work in her favor.

shery: jodi schneider, our senior international editor in hong kong, thank you so much. we are seeing once talk on a kospi move really surge after regulators decided not to delist their shares. sophie, what are you seeing? biologicsat is samson rising the most on record, 25.6%. as much as 26 -- it was resumed today at trading in the stock. this as regulators consider the breaching of accounting rules. investors are looking quite positively to the resumption of trade, expecting to have a positive impact on the entire sector. accountingthose issues, there is no major problem in the company's fundamentals. this is the nation's seventh biggest stock and that could see the biotech sector gained some ground this morning. shery: thank you. the resignation of the reserve bank of india's chief hit the

rupee hard and expected to rock domestic markets in mumbai. kathleen hays is watching this. his departurely, coming after a long battle with the modi government. kathleen: it has raised not just for him yet, but for the world, this question of central bank independence, and i think everyone surmising that that is one of the things he is standing up for as he announced his resignation, which was not expected. has been pushing the reserve bank of india to provide more liquidity to the banking system. there is a cash crunch. they want the bank to be able to lend -- -- a little bit of a political tilt here. at the same time, there is a meeting on friday coming up with the broad membership of the board of r.b.i. where there are members of the government included and it was expected

that, once again, after people thinking that maybe there was a truth that they would let this calm down about the cash crunch, it would be pushed on modi again. criticizedady been or had some pressure put on him about trying to clean up the banks. he tightened rules on state-run banks. all we know for sure is the statement we got from urjit patel. he is stepping down for personal reasons. modi thanked him, saying he was a great legacy. former head of the reserve bank of india, who also got kind of a push out the door by mr. modi at the end of his three-year term, said this is a protest. againstl is protesting his current circumstances. certainly alluding to the fact that he has had all this political pressure. it remains to be seen. he is this year most -- the seniormost deputy director has replaced him as an interim choice.

more uncertainty at a time when the markets and mr. modi could use more. haidi: also the rupee is one of the worst performers in the region this year. this is not good for them in the short-term. markets are closed. the forward contracts on dollar rupee showed quite a move. let's jump back into those charts. sophie just have this one up. you can see after the markets closed, here is the big move when the announcement came out. it took a lot more rupees to buy some dollars. today, stocks, bonds, and currencies expected to fall again. more uncertainty on top of the election uncertainty. there are three states in particular with a result of the elections in question, and it looks like mr. modi's party could come out on the short end. haidi: kathleen hays for us. still ahead, we will go through the challenges faced in india amid the fallout from urjit

patel's departure. shery: the chances of a santa claus rally. this is bloomberg. ♪ oomberg. ♪

haidi: "daybreak asia this is "daybreak asia." i am haidi stroud-watts -- this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i am shery ahn. tuesday trading looking pretty mixed at the moment. is there any chance of the hope for year-end rally? let's bring in sean taylor, dws. officer for -- at is this just a one-off? we see so many different headlines across markets. is this the new normal where we see more volatility ahead in the next year? i think over the next couple of months, we will

probably see more volatility. momentum is against the markets. two thet through first and second quarter, we will see a more positive environment, particularly for riskier assets. >> yet in your notes you say that you are not yet constructive on emerging markets. why is that? sean: because of the volatility and also we think there are a number of catalysts that will come to fruition in the second quarter of the year. know, one being the weakening of the dollar. potential weakening of the dollar. at some stage, the fed will signal the rate hikes are over. and hopefully, we will get more clarity on the trade situation in china. yes.: the key in that is if the fed pushes pause on rate hikes, it's quite extraordinary. we have gone from three to four total one to maybe none.

is that a green light for emerging markets that have been under so much pressure in asia, particularly if we have something resembling a detente on the trade front as well? sean: there are three elements affecting markets in different ways. the first clearly on the rate dollar issue, that clearly will current account deficit market, so they have been under pressure, and also a weaker oil price helps them. which has been underperforming this year will look more stable. the second area, obviously, the overall trade affects the whole growth level of asia, so you know, most people have got a reasonable outlook for emerging market growth. round about the 5%. maybe that gets downgraded a bit. certainty for people to basically -- basically for the economy to deliver what has been promised. the third issue and may be the most important issue for the direction of markets is what is happening within china itself.

is what a policy response from the chinese government. we probably will not get such a severe response until the party conference in march or the npc in march. it is a little bit of wait-and-see until then. haidi: i want to get your views on these dramatic developments from the r.b.i. in india. the shock exit of urjit patel, which has been building up for many months now in terms of the struggle for independence. should this worry investors in indian em spaces in terms of not knowing whether policy is now being impacted by the government because there is a school of thought that says the next person to replace of it should -- urjit patel is likely to take bias? sean: it is an issue we have to look at for the next couple of years, policy. once we get over the big macro factors we were touching on,

policy will be important. india is a classic example. over the summer, we were worried about the relationship between the r.b.i. and the government, and you know, we thought it was all sorted out. now we have the news. in one way, there is the pressure that they r.b.i. does should up rates enough, be combating inflation, but that is the problem. we have a crucial week in india in terms of the election. the results are coming out of the states. the polls are not looking so good. there's going to be a bit of pressure. what does that mean? at the moment, one is cautious on india, but it will give a very good buying opportunity as long as the growth rates come in. one of the problems with india and the equity market is it is always traded at a premium, particularly since modi has come in. thatthe last few months, premium has slightly gone down a bit, but it is still at a premium. that would be our real concern. story, good growth,

good earnings. probably the best five your in asia. in this next three to six months, it will be very policy driven, and it will be more volatile. shery: what about the fact that india is a net oil importer and we are now seeing prospects for higher oil prices given the opec plus deal? kathleen: -- sean: if you look back into really what happened turkey,ary and march to argentina, to india, it was the rise in the oil price that caught people out. a lot of it is talked about because of interest rates in the u.s. going up and the dollar, but the oil price is so significant. any pressure, upward pressure, on the oil price -- and we have a 65 target to the end of 2019 -- will put pressure on india, definitely. and that is a question of whether they keep the growth in the economy by not putting rates up. or they put rates up to combat

inflation. sean, thank you so much. sean taylor. head of emerging-market equities joining us out of hong kong. lots more to come here on "daybreak asia." this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts. shery: i am shery ahn. trees --uver euro bureau chief was there. we did not get a ruling today. what were the arguments for and against a bail? i am standing outside the courthouse in vancouver where we had another six hours of seedings, and there has been

no decision. mengefense has argued that is a woman of character, of dignity, that she has deep roots in vancouver and the reason to flee the country if she is granted bail. one of the terms they offered in their proposal was to have her give something called a surety, a person who acts as a guarantor, somebody who puts financial efforts to ensure the person does not flee, and also ensures as a sort of community jailer, to see that they comply with their bail term. that was the problem that prolonged this hearing today and prolonged it to tomorrow. the judge has said that her husband is not a resident of canada and cannot he put forth put forth cannot be as this a surety, this guarantor.

they will reassemble tomorrow strongly thatted the defense come forward with somebody else to act as her surety. haidi: natalie, thank you so much for joining us, our bloomberg vancouver bureau chief. we will speak tomorrow when the hearing resumes. other members of corporate china are certainly concerned about these developments. the appliance maker says it makes chinese businesspeople more nervous about traveling to the u.s. the u.s. and canada have not disclosed the reason behind this arrest, so we cannot speculate why this happened. from a companies perspective, you cannot interfere with a person's legitimate rights or even safety without any grounds for doing so. the u.s. is the one who always claims to protect human rights. but now,ey have not --

they have not given any reason. whoever travels to the u.s. now, they must be very scared. haidi: our china correspondent, tom mackenzie, joins us now from beijing. this at yalta the fire. one of the views we heard from beijing is this is not a judicial case. it is another entanglement, another part of this ongoing trade and strategic war, if you will, between washington and beijing. is certainly the concern here in beijing and further afield and china. the u.s. have been pushing back against that view, saying it's totally set from the trade dispute and is part of the judicial process. the judicial process in china is very different and it is linked essentially to whatever the party dictates. getting their heads around that idea has been deep. it may be difficult for officials, but there are implications around this trade truce that was dealt with or

agreed to after the g20 meeting between the two presidents, the 90 day truths that leads up to march 1. we have seen him put into place some policies to address some of the issues brought up during there's -- those discussions. increasing soybean imports or discussions on putting tariffs on u.s. autos. -- cutting tariffs on u.s. autos. for president xi, there are two tensions. one is the desire to ensure that truth does hold so that the economic impacts of these terrorists starts to soften -- starttariffs to soften. the other side of the pressure on president xi's from the theonalist voices within party but also further afield in chinese society, who are calling for a tough response to the cfo.st of huawei's

wereare operating traveling to china were canadian executives as well. british columbia and trade delegation had plans to visit china. that has been canceled. you heard from executives thing chinese execs will be concerned about traveling to the u.s. that is more short to medium-term concerned. concern, thism case around huawei articulates this standoff between the u.s. and china when it comes to technology priorities, and that is something that will not go away. shery: it seems both sides do not want to see this case blow up. we heard from ambassador mai tais are that huawei is separate from the trade talks. just quickly, tom. tom: that's right. the u.s. have made that position clear that these are two individual cases. the judicial process on the other. chinese officials have said that they will match any actions around the huawei case and respond appropriately. they told that to the canadians

and americans, but they are trying to focus on resolving this trade dispute. beijing,m mackenzie in thank you. coming up, we will be talking about nissan and carlos ghosn's indictment. this is bloomberg. ♪

haidi: it is 8:30 a.m. in hong kong. we are an hour away from the opening of trading day in hong kong. across the board in shenzhen and shanghai, chinese stocks looking like a muted start tuesday's trading. pretty muted in terms of the markets that are open. we are seeing tokyo and seoul trading lower. australia keeping its head above water. it was a roller coaster ride of volatility-driven turnaround when it comes to the u.s. session overnight. not a great deal of conviction feeding through to the asian morning. i am haidi stroud-watts in sydney. shery: i'm shery ahn. let's get the first word news

with jessica summers. jessica: thanks. theresa may heads for europe on to her after bowing critics at home and postponing a crucial brexit vote in parliament. she will hold talks with angela merkel. faced with almost certain defeat of her much criticized deal, the prime minister says she will seek what she cause assurances from e.u. leaders, yet she gave no indication of what that means. >> the government will step up its work in preparation for that potential outcome and the cabinet will heard -- hold further discussions on it this week. >> this deal is the best and only deal possible. we will not renegotiate. our position has not changed. as far as we are concerned, the united kingdom is leaving the european union on the 29th of march, 2019.

jessica: a former head of the reserve bank of india says the resignation of urjit patel is a protest and of great concern. says patelssor ultimately had enough of government interference in the bank's independence. the r.b.i. board is to meet on friday and traditionally, the governor's most senior deputy would become interim leader. loss in to its worst two weeks on doubts over whether opec and its allies can deliver supply curves. futures fell 3% in new york, erasing all the games from last week's pact between saudi arabia, russia, and other producers to reduce supplies. the opec plus group has agreed to put 1% of global production off the market. it is unclear how the curbs will be implemented. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg.

haidi: jessica, thank you. let's take a look at how asian markets are shaping up. let's get it over to sophie in hong kong. sophie: haidi, it is looking like a lackluster session. gains. shares eking out a near two-year low on monday. the aussie dollar barely budging as we get the survey on business conditions. competence lighting for the month of november -- slighting for the month of november. still, a drop for the third quarter, down on a yearly basis compared to the drop expected of 2%. we do have the nikkei swinging losses with energy and materials being the biggest drag. we have the yen edging slightly higher but holding onto the ball of its overnight drop. ae offshore yuan holding decline as investors assessed

the likelihood of further easing from china. woncohesion one -- korean weakening further. trading is flat for the moment. let's check in on some of his members. i want to highlight samsung dialogic's, which is surging in seoul, but not doing much to move the kospi higher. the company of avoiding delisting and resuming trade today, which is looking to be positive for the biotech sector. that is not the case for sultry on -- for another company. softbank is gaining ground after setting the final price for it telecom units ipo at the original target. i want to highlight income groups, gaining 5% after the stock was upgraded at morgan stanley. the company is recovering from the increase in -- shery: thank you. japan's nikkei news says tokyo exchange is considering putting nissan on the securities alert list.

the latest in the drama surrounding ousted nissan chairman carlos ghosn. he and fellow board member, have, and nissan itself, been indicted. stephen engle has been following this from the very beginning. mr. ghosn still behind bars, so what is next? we have the indictment yesterday and the latest news according to citing people who have not been named without attribution. nissan shares, the stock could be put on the securities or have been put on, it is considering. they are considering putting nissan securities on the watchlist. unless nissan meets certain criteria and assures the tokyo stock exchange down the line, it could lead to a delisting, or like toshiba a couple of years ago, or in 2017, demoted from the main section of the took a stock exchange.

basically, the nikkei reporting that grave misreporting insecurities reports and management issues are among the criteria for the list companies are required to submit, report on internal control, and can be removed from the designation if the tse approves the measures, much like what happened with toshiba. that is the latest on the stock market. we got the formal indictments from tokyo prosecutors, not only against carlos ghosn, but also former representative director and fellow board member greg kelly, as well as nissan itself. the indictment allows prosecutors to lay out formal charges. it would also allow carlos ghosn's lawyers to formally apply for bail. that would be extremely a mike lee since yesterday on monday, the tokyo prosecutors rearrested similar charges for allegedly mr. presenting his pay. but over a different timeframe.

haidi: this further complicates matters for the no -- renault. natalie: it absolutely does -- >> it absolutely does. the japanese prosecutors have a 99% conviction rate. we could get a trial within 40 to 50 days post indictment, which was yesterday. that takes him out of the picture for potentially sometime . if he is jailed for a long breath of time, tokyo prosecutors have talked about it potentially having a 10 year prison sentence. there are fractions within the renault board starting to emerge, especially with a hard-line union calling for change. and saying carlos ghosn's reputation is tainted. emmanuel macron, the president, is under fire of course with his yellow vest protest. will the french government, which owns a 15% stake and very significant sway in the french automaker, will they come to even though's aid

they keep saying carlos ghosn should be innocent until proven guilty? him.lt has not removed they have an interim ceo, but changes could be a horizon. haidi: steve engle continuing to follow that story for us. investors will be watching apple suppliers today after qualcomm claims a partial win. some of the iphones could now be theyd in china, although say it is not as serious as it first sounds. let's go to tokyo where our managing editor, peter elstrom, joins us now. what do we know? the impact is likely to be limited, right, because it does not affect some of the latest iphone's? peter: the key thing is that qualcomm is saying the people's court in china made a decision that apple is violating some of qualcomm's patents, and this would cover some of the iphones

that are out there at this point. the 6, 7, 8, and x's. so qualcomm's interpretation of this decision is that apple is not going to be able to sell those phones in china. that could be a fairly big blow to apple. they are disputing that. they say the current front on sale and it is not a problem. they think there may be a way to continue selling the older phones depending on the legal interpretation of this decision. shery: so what patents exactly are we talking about here? there are a couple patents in dispute. some of them involved the sizing of photos. some of them involved using applications. there are a couple of precise points within the phones that apple uses. now, apple has had a

long-running ip dispute for qualcomm for years. they think qualcomm is using its patents as a weapon to try to monetize things that they should not be able to monetize. in particular, qualcomm charges a royalty based on the price of the phone as opposed to the price of the component. apple thinks that should be reversed. apple's argument here is that there is a dispute going on right now in a california court, and that should take primacy in the decision. this court is interesting. they have been involved in some very key intellectual property decisions between the china and u.s., so we need to pay attention to this. this is happening with a backdrop of the u.s.'s did dispute with huawei -- big dispute with huawei. there may be some opportunities for apple to suffer some consequences sort of in retaliation for what is going on with huawei.

shery: peter, thank you so much for your insights. peter elstrom. coming up next, one economist calls it a tragic day for india with incalculable long-term damage. we will have more on the impact of urjit patel's sudden r.b.i. exit. that is next. this is bloomberg. ♪

haidi: -- shery: this is "daybreak asia." i am shery and in new york. haidi: i am haidi stroud-watts in sydney. the bank of england deals investors another bout of policy uncertainty. they are grappling with an electoral test ahead for prime minister modi in key state elections. patel was my months from the end of his three-year term as governor and leaves citing personal reasons. the currency is one of the worst performer so far this year in asia. let's bring in a founder and a global strategies

company. he joins us now from los angeles. always a pleasure. great to see you. great to have you on with us. the fact that he resigned -- rajan called this an act of protest. is this actually a positive thing in terms of this governor wanting to maintain the independence of the central bank? >> we have had two governors who wanted to keep the independence of the central bank. rajan was first and patel has been the second. so the real risk now, haidi, is the fact that the government will name somebody who is more with their needs. they want to take some of the excess reserves away from the central bank so the government will be a look to spend it. they also want the reserve bank of india to go slow in dealing with the bad loan problem, which is an enormous issue for the economy. both these gentlemen, one after

the other, the two governors, have been very strict in terms of the monetary policy, their hawkish approach has helped bring inflation down. now, the risk is there is a reversal. if that happens, you spoke a few minutes ago about the rupee weakening. you can have actual -- the rupee really drop in the market on tuesday when it opens. and you are probably also going to see bond yields increase in the equity indexes sharply on tuesday in response to what happened -- indexes drop sharply on tuesday in response to what happened. haidi: do investors get spooked this? can they afford to not be an indian assets if we get a replacement at the head of the r.b.i. who is going to take a decidedly less hawkish tone than his predecessor? komal: if a new process and takes -- new person takes a less hawkish turn, it is possible that investors can look for returns.

keep in mind that emerging markets have so been very much in a correction mode for the last several months. the last a reprieve in few weeks because oil prices, which are very important to india because oil is the most important import in the balance oil priceshen the plummeted, the indian rupee appreciated in the last few weeks. some of it will get reversed because it will give patel change, and yes, investors are going to look elsewhere if india does not show promise in terms of the change. also, keep in mind that we have already had the growth rate start to come down, so you have slowing growth, the potential for an increase in the inflation rate, and you also have the situation with the change in the central bank governors. sri of course, governor patel was trying to get the

banking sector in order. this gtv chart on the bloomberg showing that china's debt burden is bigger than that of india, but when you take a look at the toios, nonperforming loans total loans, india is really much worse than china right here, so how much has governor patel accomplished during his tenure in trying to reign in the banking crisis? how bad is the situation right now? komal: it is a quite difficult one. if you start out with what andened, it darted with -- it continued with patel. with rajan and continued with patel. they have had a cozy relationship with the company's barring from them and the manynies which borrowed, took it to be a grant which did not have to be repaid. the bad loans were built up, and they were very rarely

recognized. leasing and financial services, which is a large it holdscture lender, a significant portion of its debt to the commercial banking system, so the commercial banks have made bad loans not only to companies, but also to so-called non-bank intermediaries, which are unable to pay them back, and unless this is corrected soon, it is very likely to put a dampener on future economic growth prospects. as you said, we are seeing that take place in china right now. india -- the situation in some ways is better, but if it is left unattended, it is likely to get worse during the years to come. haidi: so one of the issues here was that the government wanted to the.i. tara return

government. have sizable is that? could we see -- how sizable is that? could we see the repetition of the early 1990's? komal: two answers. the reserves amount to the equivalent of several billions of dollars. so especially if that were handed over to the government just a few months before national elections are going to be held, the government would them to be able to spend it and increase fiscal spending in a way that it does not show up as a deficit in the fiscal side. so that is one. and in terms of what might happen further with respect to a repeat of the 1991 crisis, that i do not believe is likely at all. 1991, the country was very close to bankruptcy. they wereas about

going to default on the debt. foreign-exchange holdings were close to nil. now that we are talking about several hundred billions of dollars of reserves on hand, and nine the equivalent of months to 12 months of imports of goods and services, so the holdings of the foreign-exchange are quite hampered. that is not the problem. the problem is that inflation and that we of hand would have a long-term problem with the loss of independence for the central bank, so 1991 2018, are different problems. still, significant nevertheless. haidi: if we assume that the fed is going to hit pause on its rate trajectory going into next year, does that potentially have a bit of a cooling in the war?-u.s. trade does that provide a reprieve for india and other em's? india, it helps

china, it helps emerging markets as a whole. the reprieve is likely to be a temporary one. 800use the two other major bond guerrillas sitting in the room, so to say, are slowing global economic growth, which is a negative. secondly, you have the issue as well with a continuing u.s. u.s. and china trade attention which affects not only that who countries, but it affects india and the rest of emerging markets. have three major difficulties they have to face. three major headwinds. and the fed pause results from the one of the three of them. the two others are very much present. haidi: what are your assumptions as to the extent of the global economic slowdown? that chorus of bearish choices is certainly getting louder. komal: i have been negative on global growth for several months, long before the court is began. i thought the u.s. growth was at a peak from the u.s. side that

you are not going to have a pickup and economic growth after the second and third quarters. the positive impact of the tax cuts was going to fade. european growth has slowed. there is no sign it's going to pick up again. and the two major contributors to growth from the emerging-market side have been china and india, and both of them are slowing as well. forecastk even the imf of 3.7% for next year might be , may be tooive side optimistic, and we may be looking at just about 3% for the --le world >> "daybreak asia."

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haidi: this is "daybreak asia." shery: let's get a quick check of the latest business flash headlines. the offeras confirmed price for its telco unit ipo, sticking to ¥1500 in an offer that could raise more than $23 billion. it is offering about 1.3 billion shares.

it will begin trading in tokyo on december 19. masayoshi son -- under question after japan's network outage last week. haidi: goodyear laid off more crumblingstaff as the economy forces more foreign companies to close down. workers arrived at the plant in valencia to find a letter posted on the gate saying the plant is no longer working. goodyear is offering severance packages including -- per worker, which is hugely valuable and country that is short of almost everything. who lost hiss tyke fight to avoid extradition to his home country. of moneyused laundering and conspiracy involving hundreds of millions of dollars. a london court said there is no indication the case against him is political. the judge added his companies are in desperate financial situations that has been concealed from creditors.

for more on what to watch and markets today, but skip to sophie in hong kong. watchingside from developments in one way, keeping an eye on chinese automakers, particularly -- this after car sales on the mainland plunged for a sixth straight month in november while inventory hit historical highs. this put the chinese auto market on course for the first annual drop in at least two decades as the popularitynd of ridesharing weighs on demand. with a few weeks left to 2018 ind with few catalysts sight, the downward trend is expected to continue. is seeing further losses of some 26% for the hang 2019 at 19,000 points with economic growth slowing in the u.s. and asia. peter so is among the most

bearish when it comes to the outlook for hong kong markets. haidi: sophie kamaruddin on the markets. speaking to bearishness, it is the mood here in asia despite that volatility-driven rebound we saw in u.s. markets. this is how we are trading at the moment here in asia. the nikkei 225 as well as korea's kospi both seeing downsides. lower for japanese shares. the aussie shares have also given up those earlier gains and trading close again to that two-year low. resignation of the r.b.i. head. lots of concerns for investors to contend with. shery: that is it from "daybreak asia." all of that coming up on "bloomberg markets: asi china o" ♪

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rishaad: 9:00 a.m. in hong kong. another nervous day in markets. david: his predecessor says it is a protest against government meddling. rishaad: theresa may bowing to her critics. her brexitpulling bill in parliament.