>> welcome to "bloomberg daybreak: australia." i'm in hong kong. we are counting down to the asia major market open. haidi: these of the top stories in a sour. theresa may staying on after winning a conservative vote of confidence. she will now work to deliver brexit. sterling maintains much of its advance. may cannot be challenged for another year. the prime minister is being urged to seek concessions from

brussels. eu leaders are concerned there will be no new negotiations. shery: let's get a check of the markets close in the u.s.. coming out.of news the two bankia themes, what happened with brexit and the no-confidence vote for theresa may. we had more positive headlines when it came to trade. we saw the dow gained 6/10 of 1% and the s&p 500 saw the biggest gain in two weeks. this was the fourth consecutive session we saw a late rally selloff. the s&p 500 really giving up half or more than half of its gains in the afternoon. we got consumer stocks in tech -- and tech leading the gains. the nasdaq is also gaining about 1%. the key question was, what was going to happen to the no-confidence vote for theresa may.

she did survive. givenng got a bit up, but only 200 mps voted for her and 117 against her, sterling also took a little bit of a dive. there was more concern over whether she will be able to pass her brexit deal through parliament. let's see how things are shaping up for asia, sophie. sophie: quite a few developments. everybody is probably ready for the holidays. futures in asia hitting a mix. opening with politics and trade development. china continues to have tensions with the u.s.. japan are clinching its trade deal eliminating all tariffs between the two. we will see of japanese stocks continue gains after the rally from a two year low. more trouble for huawei.

this is seen as vulnerable to leaks and system shutdown. that could spell opportunity for samsung in the 5g market. when it comes to the eco-calendars, there will be a right decision from the philippines. haido? -- heidi? -- haidi? haidi: top of mine, theresa may remaining as prime minister after surviving a vote of no-confidence -- vote of confidence. >> here is our renewed mission. delivering the brexit people for, bringing the country back together, and building a country that truly works for everyone. the brexit chaos is far

from being resolved. covering all been of the moving parts of this development -- developing story. nothing is changing in terms of the challenges that theresa may faces. sebastian: absolutely not. she is in many ways where she was at the start of the day. she still has to get this deal through parliament. we have a clearer idea of how difficult it will be. against her leadership does not translate well in the number of votes that she will get for parliament. abouts speaking earlier the cyclical in the irish backstop, noting the issues many of her party have over it. ass will be her key point she seeks to get assurances from the eu. they will explore

, but they notece such assurance will not change or contradict the withdrawal agreement. not to double much -- too much of a shift. that is really not spelling good news for our tonsillar. -- good news. shery: does that to mean theresa may bashed as that mean theresa may has to go out and get those assurances? sebastian: that is exactly it. she was going to go to dublin and that had to be canceled. she is going to the eu tomorrow and her strategy has been speaking directly to leaders. she spoke with angela merkel yesterday. prefersral leadership her to deal with them directly, and we come to a point where she has got to get these people on board. she has to get something she can take back and show to all sides

of the party. as a hard brexiteers who pioneered the votes are people on the other side as well. the key we can't forget is the government. up her they need some sort of concession on the irish border before they can be confident they can back this deal. she needs those numbers. shery: sebastian, thank you so much for that. we turn to someone with intimate knowledge of the british economy and its politics. danny is a former member of the bank of england molitor policy -- monetary policy committee. always great to have you with us. going into the vote, there was some speculation that prime minister may could come out even stronger depending on the margin of the votes. now, it looks like she had 117 mps against her. does this confirm how difficult to the days ahead will be for

her? >> i think that is right. i would probably say she does not go back to where she started this morning. that she would have about 80 or so of her own party voting against her. 117, she is severely weakened. conversationto the from the bloomberg personal minutes ago talking about her attempt to go to the eu tomorrow , i think the chances of her pulling something out of a hat is exactly zero. we have had to end a half years. what makes you think something will come now? the answer is nothing. all this shows is that the brexit deal that she put on the to aboutunacceptable two thirds of the house of commons. where does it leave us? does it leave us with the brexit deal she has come up with? there is possible that we have no deal at all.

he does is raise the prospect of no brexit at all, and at the very least, a people that one person was talking about a while ago. , the pound has dipped and held steady today. it is steady as you go until the wind picks up tomorrow. shery: that's exactly it. we see more markets and economic pain. will that convince lawmakers that this needs to pass? danny: i don't know that it will. the question is, what does this actually achieve? it does not look like a deal attractive to people like me who thinks brexit looks like a disaster. it is unacceptable to the extreme right-wing brexiteers. she does not have anything approaching a group of people to pass what she has put on the

table. the irish backstop is crucial here. crucial to the eu. why would they give up anything now, despite what the dup says? having no border seems crucial to the eu. now we have an impasse. a three-way impasse. we are not going anywhere. uncertainty is the name of the game. -- she is notback going to come back tomorrow with some deal that she has not been able to do in 2.5 years. why would the you give it to her which would allow other countries like italy and others to try to come to the table and say give it to me? this is a big problem, and also a big problem for scotland. brexit is looking like a disaster. the whole question for the tori

party has been a disaster for years, and now it looks like a growing disaster for the british economy as the british economy slows because of this nonsense. shery: we heard from angela merkel on wednesday speaking to parliament saying there's no appetite for the 27 member states that straight from the negotiation reached already. you look at theresa may coming out of this worse. if you imagine most of the 117 people that voted against her will also vote against a brexit deal. between now and then, is she a lame-duck leader? is there a chance we could see her reconsider her own leadership ambitions and positions? she made this move the last 24 hours saying keep me going, vote for my deal, don't vote for this no-confidence deal. i will allow somebody else to come in in 22 for the next

election. the problem is, what all the are turn it in fear. -- alternatives here? unacceptable to the scottish national's, unacceptable to labor. in some sense, she is a lame-duck. the question is, what are the alternatives within the tori party? , letare probably legless alone lame. how could they generate some deal? it looks like we are in chaos. it was entirely predictable two and a half years ago. we should focus on the two and a half years were wasted -- that were wasted coming out with pie-in-the-sky deals that were never going to get through, or to realistic, and the promises made were unrealistic. it is basically surprise, surprise, you are in a whole.

this is not good for the policies and market. i don't know where it will go, but the prospect of maybe even a jeremy corbyn government around the possibility remain is coming. this is a step backwards. she is a dead woman walking. haidi: at least you guys don't have to do it again for at least another 12 months. danny, stay with us. much more to talk about. let's get you caught up to date with your first word news with jenna dagenhart. jenna: the new governor of the reserve bank of india described himself as a consensus builder.

he is their third leader in as in as many years. he was a key part of the prime minister's controversial cash ban two years ago. president trump's former lawyer and fixer is heading to jail, still pledging to give potentially damaging information to prosecutors. michael cohen was given three years after failing to win the leniency he thought from robert mueller -- sought from robert mueller. he said "it was my duty to cover up donald trump's dirty deed for the 2016 election." the white house declined to comment. the man suspected of killing three people in strasburg remains on the run. police say he has a long criminal record. the 29-year-old was first convicted at 13 years old and had a string of crimes across france and germany. he has 27 convictions and was

well known to police and --nce's is equivalent france's equivalent to the fbi. banned iran but is used by the president and foreign minister. the oil minister tweeted he was joining twitter for more dynamic and effective relationship with his domestic and foreign audience. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jenna dagenhart. this is bloomberg. coming up next, what does theresa may's survival mean for the bank of england? we take a look at the different scenarios confrong the central bank ahead. this is bloomberg. ♪

shery: we have breaking news across the bloomberg now. a u.s.m now persuading trade agency to consider banning imports of apple's iphone's that use intel chips. this is the latest step in the global fight against u.s. patents. , banninghas one that the sale of some of the iphone models in china. we now hear they persuaded the u.s. international trade commission on wednesday that it would take a closer look at judges recommendations about an america's hurting edge in the development of the next generation of mobile technology known as 5g. persuading a u.s. trade agency to consider banning imports of apple iphones that use intel chips. that's the latest on the global battle over royalties after qualcomm says it won the ruling banning against apple,

the sale of some iphone models in china. we will get you more on the story as we get them. haidi: let's get back to the top story. theresa may has comfortably survived a vote of no-confidence -- vote of confidence. take a look at how this affects bank of england. .athleen hays is here never mind a christmas miracle, the boe will need a brexit that iskathleen: certainly off the table for now. the big story for the last few weeks, popping it set up, is how severe a hard brexit would be for the u.k.. danny blanchflower raising the possibility that this won't be a question of brexit or no brexit -- or twill be in fact. danny, -- or it will be in fact.

it aftere that a rough mark carney, head of the bank of , showed a huge recession in the u.k.. then, a week later, his predecessor as head of the boe, says it would g -- be a just -- be just a little hiccup. who is right here? about fiscal wrong austerity saying it would have no effect on output. mark carney is fundamentally right, but he really did make a mistake and everybody picked up on it. if you have a brexit which takes place on the first of april 2019 and you have no deals in place, the airline stop, the border stop, the food and medicine does not getting, and the government will

stockpile porta potty's going into derby because of the huge line of traffic. the problem he came out with the generated this hysteria was to say that you have a big increase in unemployment rate, and it looks like the great recession. how the mpc response is to raise rates from this two basis points -- from 50 basis points to 550 basis points. i put my hand up and said i would not be voting for that. the answer would be that if you do not do that, the pound collapses even further. --ond dollar-pound heresy parity. disaster,ng over a but that puts carney in the crosshairs of the brexiteers who said he was compromised. i think he's right.

brexit looks around is if you don't have a deal, but mpc members won't votes to raise rates and make matters worse. shery: you mention sterling. this bloomberg function is showing how volatile it has been. i don't want to overwhelm you with this, but what this shows is the demand for sterling puts exceeding demand at the rim area .f this curb -- curve is there any source of certainty et al. as we don't know where we are headed with this process? >> the uncertainty is a big deal. in some sense, the benefit of the deal may's offering, it may be a bad deal, but at least you know what the deal is.

you said its rights, it is hard to see what the upside risks to the economy are. i was looking this morning. what was the exchange rate dollar pound when i went to the npc. june 2009, it in was 208. we should look at how far this has come. we are talking about dollar-pound parity from a point 10 years ago where it was over too. the economy is probably headed .o recession whatever form brexit takes, if we look at it without this cliff edge, the economy is probably going to be in recession by the end of 19. this is really bad. investors are thinking the pound has been strong and maybe we should short it. that is the worry that investors will think this is on a downward

track with certainty. that is what the problem for the u.k. government is. it does not look like the government is putting a stamp of approval on may's negotiation. sophie: you are looking at the worst -- haidi: you are looking at the worst-case scenario. , if you are the boe and a policy looking at the impact on growth, how do you model with that's given uncertainties? danny: i think that's right. what we saw was the bank of release shows how hard it was for them. saw a big rise in inflation, it turns up because of a supply shop inwards. that raise prices that the models say we should model that. and we certainly spotted to that -- we should respond to that.

looking back to why this is so relevant, everybody missed the turning point down in 2008 and missed the turning point up in 2009. the modeling is difficult and the problem is that you don't want authorities to make the wrong move. the problem here is that the central banks cannot do everything. its ability to do things is limited. the bank of england has interest rates of .75%. them, but the scenario of what to they can do on the downside, it has not gotten that far. then we are back in the realm of qe. the worry is that the bank did not really talk about what the heck the central bank can do. how the model what they do --hout a credible government how do they model what they do without a credible government? would you see them raising cutting -- raising spending and

cutting taxes? kathleen: let's look at the scenario. wage growth is good. you think we are going into recession, but it is over 3% year over year. despite this, there are strong parts in the economy. let's say the labour party gets it together and calls for a no-confidence in the government. that leads to a second referendum vote. what happens to the u.k. economy? -- a: that is a tough whole collection of scenarios. we economy has recovered, see implements growing, but that started to slow. we have to put this into context. real wages today in the u.k. are over 5% lower than they were in 2008. the people are still hurting and i think what will happen as the

economy starts to slow, people become upset. look at paris. why are we seeing the demonstration and riots? living standards are being impacted. the people that voted for brexit wanted something better. the question is, do the authorities have anything within their power to make is better? the answer is, it is hard to see what they do. perhaps what they have to do is slow brexit. they say we will extend article 50 and withdraw the application. this is too disastrous. that looks like the best thing to do. it's the best of all the bad's on the table. we spent two and a half years losing time. sophie: danny, do stay with us. thank you to kathleen hays joining in on the conversation.

we get breaking lines crossing the bloomberg. chinese manufacturer of personal hygiene products. they are considering taking legal action against a research report into the company. they say the company's shares are worth closed -- worth quote "close to zero." the company says the stock will resume trading from 9:00 a.m. thursday hong kong time. we want to watch in the hang seng session. shery: at a time where we see markets rallying in, a little bit of brown as wall street recoups some of those losses. this comes when we had to bring themes in the markets as well as brexit. -- two themes in markets as well as brexit.

feeling market open is up half a percent. the qe dollar is not doing much, but we have more positive sentiment for currencies on positive trade news and we will keep you updated when bloomberg comes back. ♪

sophie: 9:30 a.m. in sydney, markets opening in 30 minutes. futures looking tepid. we are seeing a gain as sydney futures get trading. we do have another roundabout session in the u.s., a fourth day with the trend of an early rally of as much as 2% for the s&p, then investors fading and selling. a complete reversal of what we have seen in the past few weeks. investor sentiments the biggest news. theresa may in the u.k. surviving the vote of no-confidence, but still a great deal of uncertainty for her

political future as well as the future of brexit. i am haidi stroud-watts in sydney. shery: and i am shery ahn in new york. you are watching daybreak australia. let's get you the first word news. theresa may remains u.k. prime minister after surviving a confidence vote among conservative mps. the final result showed her winning by 200-117 and she cannot be challenged for another year. the vote still leaves may with a daunting task of trying to force her much criticized brexit bill through parliament. leaders meet thursday and have already said they won't reopen negotiations. canada has confirmed a former diplomat is under detention in china, but says his whereabouts are unknown. he was picked up during a visit to beijing on monday while on leave from a brussels research group. they say he has no diplomatic immunity. beijing says he is being held

for a national security investigation, but declined to offer more details. china's plan to dominate high-end tech maybe a victim of the trade war. beijing may postpone some of the made in china 2025 program by a decade, although a final decision has not been made. the plan aims for global advances in robotics, aerospace, and renewable energy and has been one of president trump's main targets. it is not clear how much of the potential delay has been communicated to washington. amazon has come under attack from new york city council over claims to offer $3 billion of public money to create a satellite headquarters. critics say the subway system is crumbling, there is record homelessness, and many people have no health insurance, but the world's richest company is still being offered a hefty incentive. the council has few legal powers to block the deal. powered by over 2700 journalists in 120 countries all over the world, this is bloomberg news.

i am jenna dagenhart. this is bloomberg. shery: thank you. we have the latest headlines crossing the bloomberg. canadian foreign minister speaking to reporters, saying canada is aware of a second canadian minister being questioned by the chinese government. this coming after the detention of a former diplomat, michael kovrig, who works at international crisis group in hong kong. the foreign minister saying canada is no longer in contact with this second individual and it has raised the case with chinese government. not exactly -- we don't know who exactly the second citizen is, but this comes after that attention of the first canadian citizen, so all eyes on the trade discussions as huawei's ceo remains in vancouver, canada. let's see how this will affect

the markets in asia. sophie kamaruddin getting the latest on that. we have seen more positive sentiment on wall street from some headlines on trade. sophie: some of that may come through in asian stocks, although we are seeing a mixed session potentially when we kick off trade. in tokyo, could be a gain of 1.4% according to nikkei futures in chicago. perhaps seeing japanese stocks extending the advanced that's all that rally from an 18 month low on wednesday. weakness anticipated for all the shares. -- aussie the shares shares. regulators raise concerns about the proposed merger with vodafone. augustres soared back in by a spike on this chart. that is when the planned merger was announced, but the stock has since lost about 70%, pretty

much retracing the gain on that day. the outlook for aussie shares. let's jump to the terminal. we have seen the benchmark lose as much as 8.5%, as you can see by the dip on the blueline towards the end. we are set for the worst annual performance for the asx 200 since 2011. even so, stocks have rewarded investors with an annual 11.4% return since 2008 as the economy has avoided a recession. for outpaces the 4.6 return bonds as tracked by the white line. investments sticking to its bet that aussie stocks will offer bonds in the coming years as returns are expected to improve, boosted by dividends. on the other side, jpmorgan asset less convinced as the fund is betting that this difference between bonds and equity returns will shrink. thank you.

thank you. let's take a closer look at how u.s. markets closed. joining us is bloomberg cross asset reporter sarah ponczek. in late afternoon trading. what was rising -- what was driving the market? sarah: we did see a faint midway through the day, as we have seen the past few weeks. what seemed to be driving the positive sentiment in the morning were the positive steps that it seems to be getting on trade, and investors happen to be believing it. overnight in new york, we heard president trump said he would be willing to intervene with the huawei cfo, just in case that would help him get a trade deal with china. , the white time house saying china is going to buy a tremendous amount of soybeans. you can see amazon, facebook, google, microsoft rallying today, leading the pack higher.

at the bottom, more defensive areas, market utilities, real estate staples. it was reminiscent of the beginning of the year. have been talking about this rollover in the afternoon. is there anything driving that or is this just what we do now? sarah: we did ask many traders was there anything to point to. some mentioned headlines coming out regarding opec. some people pointing to the vote of no-confidence for theresa may. at the same time, it comes down to the fact we are in the middle of an equity market correction and this is just what we are dealing with now. there isn't that much conviction in the markets. there have already been six days this quarter where we have seen a 1% move in the s&p 500 or more be completely erased. that is the most since 2011 for any quarter. that shows you how uncertain investors are right now. ponczek,ank you, sarah

bloomberg cross asset reporter with a look at this trend. donald trump's commerce secretary has dialed back the president's assertion he may intervene in the extradition of the huawei cfo if it helps in trade talks. wilbur ross says that decision has not been made yet. >> i think you are drawing a lot of conclusions from a decision he has yet to make. let's see what he actually decides, see where we go from there. askedst time president xi him to do it as a personal favor, he made that very clear. let's bring in our bloomberg congress editor. this is an intriguing angle. the political stakes for the president are huge. joe: it is not for the first time that one of his top aides has had to clarify his remarks. as he said tuesday in an

interview, he might consider intervening in this case for national security or trade grounds. but his comments were rather soft. they did not say one way or the other. it is clear wilbur ross is not sure which way the president is going to go. if he does, that would create an interesting new dynamic in trade talks, as we saw with the two canadians in china appearing to be detained. whether or not that is part of a bargaining chip. it also has some implications for other americans who might be traveling to china, executives, as well as for the legal system in the u.s. it would be fairly unusual for the president to step into what the administration had been calling a separate track of enforcement. ross said china viewed it as well as a separate issue from the trade talks.

now the statements by the president are kind of mingling that together. hearing the former personal lawyer of president trump, michael cohen, is headed to prison for three years. i thought he would win some leniency for cooperating. what happened? joe: prosecutors in new york and wasjudge said that cohen rather selective in what he disclosed to the government in their investigation. his lawyers said he will continue to cooperate with special counsel robert mueller and his investigation of trump's campaign and russian interference in the u.s. election. there is some indication he will also be willing to appear before congressional committees, which will certainly begin a new round of investigations of the trump campaign, trump family businesses once democrats take over the house in january. he put most of the blame --

while he expressed regret, he put a lot of blame on the president, saying his failing was what he called blind loyalty to trump that caused him to go through with some of these actions that he now is facing jail time for. >> thank you so much, joining us from d.c. danny blanchflower, professor of economics at dartmouth, is still with us. we are talking about all these different headlines, whether it is the u.s. or globally on trade, protectionism. where do we get started? on a time where there is consensus the global economy could slow next year. what will be the biggest challenges into 2019? guest: i would go back one step. i was looking at the gdp data. in europe, we see that germany and italy have both had the most recent gdp numbers negative, and

we have seen weakening already in the u.k. that we are seeing global changes and global moves. i would argue probably driven by the fed mistakenly raising rates. because i think it is thought the stimulus that came from trump was going to have bigger effects then it has actually had. we have this uncertainty already that slowing may be in train. and we have trade deals and a potential trade war that is raising the level of uncertainty. we have used that word a few times. i was just looking at a letter that i signed that was equivalent to a letter signed in 1930 by 1000 economists, arguing you should not pass smoot-hawley. it starts out, we are convinced that increased protective duties would be a mistake. they would increase the prices

that domestic consumers pay. a higher level of protection would impact the cost of living and injure the majority of consumers. so the worry is this trade war repeats what happened under smoot-hawley. it is a global trade war. we are seeing the first signs around the world. obviously there are pockets. the thing i would go back to, which investors should have in , in september 2008, central banks and policymakers around the world really had no clue that the u.s. economy had been in recession for nine months, and every other economy, perhaps apart from australia was actually in recession. so the policymakers missed these turns. the worry is they have missed the return again. this recovery won't go on forever and suddenly we start to be shocked by that data. i think bad data is the thing we have to worry about down the road.

from germany and italy, to see negative growth in this current quarter i think was a shock for many people. we need to be mindful of the data and understand that turning points are very hard to predict and we probably don't know we are in one until a year later. i think that is where we are, with brexit uncertainty, trade issues around the world, particularly between china and the u.s.. potential retaliation. and the big thing is that we are 10 years into a u.s. recovery, which can't go on forever. i think the fed has killed that recovery off. doomfraid i sound like dr. , but i think that is where we are. the people are hurting. this week inriots paris, belgium, and amsterdam. i think the signs are not good around the world. maybe asia is different, australia is different, but what we have seen our global events.

i think we will see more global events looking much the same. >> do you predict this time next year when we have this conversation, we will be talking about the impacts of a disorderly brexit, many economies in recession, and central-bank season? -- central banks using? guest: i think we will see economies slowing as talking about the potential for central banks using. but i think our concern will be, what do you do? what does the ecb or bank of japan do when they start to talk about using -- easing? the last decade has been a decade of the central bank. if slowing comes, we have to think about what the fiscal authorities are going to do. it is on them because the central banks have very little firepower left. i am not sure exactly the extent to which we will see a recession. i think we will see slowing. the big deal around the world is

was -- is this is looking bad for the 2020 presidential election. it looks likely to me that 2020 looks to be a slowing year, maybe a recession. i think by the end of 2019, we will see more global slowing. i think it is driven by the fed mistakenly raising rates. >> it does not help a fiscal stimulus is fading in the u.s. thank you so much, professor of economics at dartmouth college joining us from naples, florida. thank you for your time. coming up, china's biggest streaming service makes its highly anticipated u.s. trading debut. we take a deeper dive into tencent music. is bloomberg. ♪

>> tencent music has risen on its trading debut in the u.s. it happened only after a series of negative headlines, including a lawsuit and a two-month delay that threatened to dampen the

mood of investors. ramy inocencio has been following the moves of china's biggest streaming music service. they had less than ideal ipo pricing, but how did the debut go? : the pricing was in the range of 13 to 14 and we learned it would be in the lower range of $13. when it started trading on the stock exchange, it actually opened and popped to $14.10 right at the open. it did meander lower, but it closed smack on $14 a share. what does that mean? that is a price job of -- a price jump of about 7.7%. that still comes under the range of $13 to $15, so in all likelihood investors are saying, it is good we did something a little lower because it still came in lower than the $15 mark. let's look at the details of

this. about $1.1t raised billion versus an expected $1.2 billion. that still values the company at just about $22.9 billion. we also sold about 82 million american depository receipts. how does this stack up against all the other chinese companies that have listed in the united states? it is coming in at number four over the past year after these three. this did fall short of early it is ambition, but still one of the top chinese ipos in the past few years after alibaba in 2014 for one of the biggest of all time. when you take a look at what is happening between the chinese tech ipos in the u.s. and all u.s. ipos, chinese tech ipos listing in the u.s. have not done that well. down by 12% in the past year.

taking a look at the whole universe of ipos in the u.s., that is up by 6.5%. dichotomy between the chinese as well as all u.s. shery: thank you so much for that. mark mahaneyw is in sydney, where he comes to asia once a year. great to have you here. it has been a busy year for chinese tech companies going public in the u.s., but a challenging year. was the take-up for tencent music pointer broader market malaise for chinese tech and the many headwinds? guest: i will not comment specifically on tencent music. we don't cover it. we cover spotify, we used to cover pandora. i think there is a broad read for attack as a whole. we have growth for where investors want to put dollars. we have seen a material correction in the fang stocks,

off 20% on average. nasdaq off 15%. this was a tough market to pull off a deal like this. that is a pretty accurate statement. whether that continues next year depends on the overall macro environment, regulation. anyway, it is a tough market for tech. i think that creates interesting opportunities because in the middle of the year we had an aggressive tech market. we are probably going through a correction. haidi: it is hard to talk about value when it comes to this sector, particularly the rotation from growth into value. do you think the correction has created pockets of opportunity for a rebound next year, like we have seen and facebook and microsoft this year? guest: absolutely. we are going to look at which companies have consistent fundamentals. google has 20 straight quarters of advertising revenue growth, unprecedented in financial history. you want to sell that off, that

creates a great opening point for the stock. we are looking for companies with consistent fundamentals that have been brought down with market turmoil and maybe have a product catalyst ahead. google fits that because the product coming up is autonomous vehicles. >> this gtv chart on the bloomberg showing the underperformance relative to the s&p 500 starting the third quarter. in the last few weeks, we have seen them outperform. you mentioned google. lawmakers have been warning of more regulations to come. how big of a risk will this be? guest: i think it is going to be standard operating procedure risk for the next five or 10 years. this wasn't the case three years ago. you never would have asked this question three years ago. now the tech platforms, whether alibaba, tencent, come over to the u.s. you look at facebook, google, and amazon. they are in the regulatory spotlight. these are massive platforms with

a lot of inference -- influence. how severely they could be regulated is an open question. stocks can still work under a severe regulatory environment. that is microsoft, that did work. but you need to have a product cycle or shift in the business or continuation of fundamental growth. regulation is here to stay. it should be investment risk factor number one in the large tech sector ipos. >> we would not have asked this question a few years ago because the understanding was companies could self regulate. now sentiment has changed on capitol hill. shaido you think pin performed on his first congressional hearing? guest: sentiment has dramatically changed on these names. i think it has become excessively negative in terms of the impact of these businesses on society. i think we have overstepped boundaries in terms of the public criticism these companies

face. we had major global regulation imposed against these internet giants earlier this year, gdpr in europe. i don't think we will see another round of that. i know we have potential legislation in australia, but i don't think we will see that in the u.s. unless these companies shoot themselves in the other foot. , we thought he did a solid job representing the company. he always has a very calm disposition and he wants to show there is an adult at google. he is one of them. >> data collection and ai in china, regardless ethical concerns over that issue, it is massive power. how do you develop a strategy to be part of that? guest: i think one of the most important trends in technology is the use of big data, the application of artificial intelligence. there are three or four companies around the world that

are spearheading ai investment and rolling out a series of new applications. that group includes alibaba, tencent, google, and amazon. there are others, too, but those four are probably doing close to $100 billion in investment and spend around ai. ai is expensive. the number of data centers and servers that are required to boost computational capacity to implement ai procedures, improve the personalization -- ai is expensive. investors got sticker shock when they shop -- when they saw how much additional capex is required. but companies will continue to invest because it is good for their business and customers long-term. >> regulation is the number one risk. is trade the second? guest: three broad risks. regulation, maturity, and competition. you are seeing platforms increasingly knock into each

other. amazon is becoming an advertising platform, google entering the cloud space. alibaba and amazon are bumping heads. uc platforms converge, that is competition. >> the trade war element -- guest: it has not affected the stoxx. google has a minimal presence in china, facebook has no presence. amazon has a small presence. it has impacted more negatively the chinese stocks. >> pleasure to have you, thank you so much. joining us in sydney. trading in new zealand is getting underway. we are expecting a muted start to the session as we fade -- as we saw the fade in the afternoon to the u.s. rallies. kiwi dollar one of the laggards overnight as well as sydney. about .1% higher.

watching the aussie dollar as well as looking to the end of the week, which is filled. lots more to come from "daybreak: asia."

>> a very good morning. i am haidi stroud-watts in sydney, where australian markets have just opened. shery: i am shery on. sophie: and i am sophie kamaruddin in hong kong. welcome to "daybreak: asia." haidi: theresa may clings onto power after winning a conservative vote for confidence, but her brexit headache will not be going away. china may delay its global tech ambitions as t.