limited time, get $150 off - and free shipping too. just go to buyleesa.com today. you need this bed. ♪ david: good morning. it's friday. i'm david ingles in hong kong. kathleen: i'm kathleen hays in new york, welcoming you and everyone to daybreak asia. let's look at the top stories. asia stocks face a mixed start in many markets after the biggest turnaround since 2010. david: traders trying to figure out if the u.s. reversal signals a bottom for the soft market or the market itself, or is it a case of year end rebalancing? kathleen: china embracing for

year end demands on trade. beijing is unsure what president trump really wants. as kathleen, so mentioned, that's exactly what we are getting across major markets. australia up and running for 60 minutes, japan coming online, korea getting warmed up. have a look at our gmm here. equity columns on your left. mixed picture, .4%. earlier,of japan jobless rate ticking up a little bit, industrial numbers coming in slightly better than expectations. the story today is in the bond market. look at the fourth column with yields continuing to push lower. 2016 lows roughly for the australian 10-year, 2.34% right now. you know what? i'm calling it in the audacity of both. if markets rally 14% in the next

48 hours, 2018 will be a winning year. that's an epic rally. in the meantime, ed ludlow is with us for an update on the first word news. ed: the trump administration granted its first exclusions from tariffs imposed in china for intellectual property violations. they approved almost 1000 requests for exclusions, covering $34 billion of chinese goods. this comes as beijing confirms it hosts fresh trade talks next month. chinese officials go into those meetings unsure of what more they can do to meet u.s. demand. the partial u.s. government shutdown will continue into this the report says small and medium-sized enterprises continue to borrow elevated levels in the rejection rates

remain close to an all-time low. the company appears to be using money to pay bills and sustained cash flow rather than investing. saudi arabia has kept key supporters of the minister in cabinet jobs in the first major shakeup since the murder of jamal khashoggi. the ministers of finance, energy, and trade maintained their position. the king supported -- promoted several young royals, many of them working with the heir to the throne. elon musk has asked a judge to throw out the defamation lawsuit by the british cave diver that he called a pedophile. musk's lawyer says the twitter attack was simply part of a schoolyard spat on social media that wouldn't be taken seriously by any reasonable person. they argued such speculative insults were opinion protected by the first amendment. global news, 24 hours a day on air and at tictoc on twitter,

powered by more than 2,700 journalists and analysts in more than 120 countries. i'm ed ludlow. this is bloomberg. david: let's look ahead to these trade talks. beijing confirmed they will reserve -- resume next month. president xi stepped up to diffuse tensions. officials are bracing for more demand. they are saying the u.s. side doesn't know what they want. our china government editor has been tracking the story in sydney for us. karen, what is this meeting taking place? karen: the meeting is supposed to take place the weekend of january 7 and we know the two sides have been in touch. chinese officials are trying hard to get to the bottom of what the u.s. wants them to bring to the table in order to move these negotiations forward, but there seems to be -- on both sides.

on what thelear u.s. wants and they have said they think the u.s. doesn't know what they want. we are 10 days out and are waiting to see what happens and if a more clarity emerges. david: china does seem determined to strike a truce. that was apparent as we approached the g20 a month back. should this come, though, as a surprise, that china does want to somehow strike a truce? karen: it's been a hard year for china. they sing economic slowdown, they seen rapid growth that have brought them on the world stage in a major way. now growth is stagnant. the gdp growth forecast next year is not great. trillions of dollars off the stock market. trade war has been a big influencer in a lot of that. it's in their best interest to wrap this up and get back to china shoring up its economy. kathleen: there's all these

convocations of course. we've been following this story, one of the latest chapters is reuters reporting a possible executive order that would ban huawei and zte products in the note states. is it the primary pressure, they better do something? or do they say hey, what are they doing? is it going to make it tougher to do a deal with the chinese? t's definitely something that will add uncertainty for something already that's been opaque as a process. there was a lot of hope after xi and trump met at the g20 a month ago, and then right away u.s. ally canada arrested a top huawei executive, and that really played into one of the biggest gulfs between the two countries, which is the u.s. concern about ip and technology theft by the chinese. it gets at the heart of that dispute. until now, we've really seen them attempt to keep those

issues separate, but we're not sure how that's going to play into the next round of trade talks. kathleen: karen, we thank you editor,h, our china keeping track of the twists and turns in this story. let's get more now with mark matthews. where are we now in this trade war saga? of 2019irst quarter going to be the time when the chinese and the u.s. side finally gets enough of each other and can sit down and sign a deal? mark: i don't know if they're going to sign a deal but i think the chinese will demonstrate enough goodwill on the trade front and between now and march 31. they can will be kicked down the road. in other words, the tariffs will be deferred again for another three months. i feel optimistic on the trade fronts. i feel like they've actually

done quite a bit to demonstrate their goodwill. where is different is the whole other aspect of the relationship, which is the geopolitics, of course huawei being a case in point. there's no sign of progress there. kathleen: why not? it's tough does if somebody has broken laws that are applied in the united states, than the united states has to go after them. you have to prosecute, it seems. but if you're chinese and maybe don't have the same kind of laws, or want to protect that person, you're not going to cooperate. that's what the impasse is, and that could get in the way if this trade dispute getting ended. mark: i have a feeling they will be treated separately, but you could be right. even if they do sign a trade deal, even if huawei does go away, even if their friends in

the south china sea, frankly, those are highly unlikely episodes. but even if that happens, i don't see the chinese market suddenly doing a u-turn and going up. because the real reason it's going down is their economy is slowing down and there's just no sign of that ending. david: speaking of that, you know, mark, david here by the way, in hong kong. some of the policy that has been put in place hasn't shown up in the numbers. is that more a case of time lag, or is that a case that the prescription wasn't strong enough for the patient? mark: well david, you know they started the many stimulus and -- mini-stimulus and put the deleveraging back in june. we should have started to see the fruits of their labors by now. i think the mechanism, there's

some problem in the mechanism, probably that the technocrats and the lending officers and banks are not really willing to sign their names on pieces of paper to fund projects that they could be, somebody could come back in the future and say you shouldn't have signed that. i suspect that's the blockage, but i also suspect the government doesn't really want to do a major stimulus program, 2009, because there's already far too much debt. there's a lot more debt than there was back then. so i suspect one of the things they will have to have recourse to will be letting the currency go. and as much as that would help the chinese economy, it would have pretty nasty effect on other parts of the world. david: how would that help the

economy? i guess, just compared to 10-15 years ago. because it's not an export economy, is it, china? directly ifit isn't you look at the numbers. but indirectly, exports are still very important. yes aample, a factory, factory employs a certain amount of people, but there are insular really industries around it, from barbers to restaurants to i don't know what. so i think it would be helpful for them, just as it is when any current country let's their currency go. you saw that in europe, for example, the tremendous boon the germans have enjoyed through the weakness of the euro the last few years. calls is one of your on emerging markets, and you were really linking it to the s&p 500, u.s. stocks.

after a crazy week like this, and granted it's a holiday week. nevertheless, this week seems like it's going to leave its mark on the early part of 2019. what is the signal for emerging markets? mark: well, you know, if you look at the most crowded trades going into every year, they usually don't end up being the right ones. so all i will tell you is that, from what i can see, the most crowded trade going into 2019 is long emerging-market equity. and this position has been building for the last few months. it makes sense on the surface. they had a terrible year last year. the currency got walloped. how much worse can it get in turkey and argentina? so i can certainly see the merit in certain aspects of emerging markets. primarily, they're fixed income.

but i think it's dangerous to assume that they are going to turn the corner, number one, if the chinese let their currency go. number two, i still think for all its faults, the dollar is the default currency in the world. i could be wrong and you could be very bearish on the dollar. number three, we've had a huge selloff in the u.s. if the numbers are right, the u.s. is trading 15 times next year's earnings. actually, not an expensive market anymore. so all of those things make me think that this big emerging-market trade is going to turn out -- i'm not saying it's going to be a disaster, but probably less good than anticipated. 2018's been a low bar. mark matthews, a lot more to talk about with you. things have picked up a little bit. set for japan, basically at

session highs. use futures also pointing slight -- u.s. futures also pointing slightly higher. we'll have much more with mark matthews, talking about heads of the fed. mr. powell faces a barrage of tweets. how does this all proceed in 2019? kathleen: later, the top tech trends in 2019 from e-commerce to the new digital economy, all coming up on daybreak asia. this is bloomberg. ♪

david: welcome back. you're watching daybreak asia. i'm david ingles and hong kong. kathleen: and i'm kathleen hays in new york. jay powell's job may be safe for the moment but that doesn't mean president trump will start tweeting about rate hikes. what does this mean for markets?

joining us is mark matthews. mark, you been watching central banks for a long time, certainly the federal reserve. donald trump opened this whole new venue that i don't think anybody has seen. what's going to happen next? do you think this is it? importantly, how big a factor, if any, does this have on the market? two people ignore this as a lot of noise? or is this something that's been weighing on you? mark: this fight between president trump and chairman powell, it really burned off the republican establishment. if there are envision procedures coming next year in the house of representatives, and he needs to maintain his super majority to not get voted for impeachment in the senate, then this is where i think all of it can of played.

going forward, i think the fed has toned down what they were saying previously. now they are only looking for to rate hikes next year. i suspect that it will become less of an issue going forward simply because we don't see them raising rates until june next year. kathleen: it's interesting you do see them raising rates, nonetheless. i want to let everybody know, maybe call up a chart from the bloomberg library, the market, futures have priced out rate hikes. it seems the main reason for this, the fed says you seen a strong economy, but you've had a big stock market route, a lot of uncertainty. is the market going to be wrong or does the fed risk make stocks go down in 2019, even if you wait? mark: well, luckily this is six months away. we don't see them raising in the first half. but i would say yes, i think

they should raise rates more because the u.s. economy is still very strong. growth,oking at 2.8% just a little under the 2.9% growth we expected this year. if you look at pmi, the jobs number, all of the numbers in the u.s. basically suggests the economy is strong and therefore, i think it can handle a couple of more rate hikes. then i think we'll probably get a recession in 2020, a mild one in the middle of 2020. that would be totally normal as we haven't had one, as you know, for about 10 years now. just: mark, i'm guessing short-term 2019, the other thing that really cost -- caused a disaster across emerging markets is that the u.s. economy did much better than everybody else. does a strong dollar need to go away next year for the em rally you think might happen?

and is there a chance a strong dollar doesn't go away next year because of that? withouts, i think that at least the dollar being flat, emerging markets typically have a hard time. i feel it's a little unfair, but at least that's the way history has been for the last 25 years. i guess people don't want to invest in countries where they think they can lose money in the currency. and some of these countries, be it brazil or indonesia, you can lose a lot of money in the currency when the dollar is going up. so, i think it's one of the major stumbling blocks of becoming very optimistic on the emerging markets, as exactly as you say, with two more rate hikes we think, next year, really can't expect the dollar to be week next year. david: very quickly, the most underappreciated risk in 2019?

boy, you put me on the spot, david, but i think it's probably the chinese economy. we had not anticipated china would slow this long. without the stimulus would work around now. so i don't think the chinese economy is going to stop decelerating until probably sometime in the second quarter. and that could put pressure on, if we let the currency go, that could cause a chain reaction around the world. david: mark, going to leave it there. thank you and happy new year. head of asia research. coming up next, we will be acting -- asking why opec's oil cuts didn't extend to oil prices. we get to that story in a couple of minutes. this is bloomberg. ♪

david: welcome back. you're watching daybreak asia. i'm david english in hong kong. kathleen: i'm kathleen hays in new york. the output was supposed to prop up sinking prices. instead, we've seen the worst price decline in a decade. let's bring in stephen such as ski in singapore. wow, steve. we talk about volatile stocks, but oil. what does this say about oil managing the market? guest: i think there is an expectation now that perhaps opec needs to show more than they can tell. as we said in the past few years, when opec said they would cut reduction, price of oil would increase. that was almost a constant in the oil market. we've seen price of oil decline to cut production by 1.2 million barrels a day in russia. i think there's a number of things happening here.

the enormous selloff in u.s. equities has taken the wind out of oil, and you seen oil track with the equities market in the notice states. at the same time, market was expecting a supply crunch when the u.s. sanctions on iranian exports were to kick in in november. but the trump administration surprised the market and said they would provide exemptions. that adds to this idea when he 19 could be oversupply. maybe opec and russia's decision to cut 1.2 million barrels isn't quite enough, and the market is waiting for them to do more. and the russian energy minister said we are going to meet again and talk and if something needs to be done, we'll do something before april. kathleen: another big picture item here, indication that crude inventories are on the rise. what is going on there? guest: well y eah, like you said, the american petroleum institute was said to say

overnight, last night crude stockpiles rose by 6.9 million barrels. that's much more than what the analysts surveyed by bloomberg said. they said it would drop by about 3 million barrels. numbers will come out later today on friday and we will see where they stack up. basically, if they are rising, that shows shale output is stronger than what was expected. at the same time, maybe it's importing more oil than expected. this adds to the overall bearish nature in the market. obviously takes the wind out of dds more of oil and a downward pressure going forward. david: just to pick it to sinopec, shares took it on the chin. it might have to do with the tory, we understand, officials at oil trading companies were suspended because of the under price of oil.

tell us about that. stephen: exactly. univac, the trading arm of sinopec, they made, according to our sources, made some wrong way that's on the price of oil -- wrong way bets on the price of oil. they are not the only ones to do that. there are a lot of traders around the world who weren't expecting oil to do what it did. just in september, analysts were expecting brent oil to the $100 a barrel. we're at $50. you can buy basically to barrels for $100 at this point. no one is expecting this drop and sinopec was caught up in it. they suspended two of their top party officials because of that. i think it illustrates the market volatility has caught folks by surprise. i don't think china is going to stop buying oil. their demand is enormous. but it will definitely show that folks are hurting right now. david: right.

we'll leave it there. coming up next, we talk about japanese factory output slowing. what that means for that market and the economy. this is bloomberg. ♪

david: it is 8:30 a.m. in hong kong, one hour away from the open of the cash market. and the last trading day really of 2018, a bad year, a year to forget. and we have a short trading session on monday. and given the event risk on the table and people not at their desks, maybe half asleep in bed, it is going to be a muted session today. right, i am david ingles. kathleen: i'm kathleen hays. you are watching "daybreak: asia." we are going to go to the first word news now with ed. ed: u.s. consumer confidence slumped in december to the lowest since july, the latest

sign americans are growing less optimistic. people expecting more jobs in the next six months, had its biggest fall since 1977. the report from the new york-based conference board says the declines reflect increasing concern that economic growth will slow down in the first part of next year. the partial u.s. government shutdown will continue at least until the weekend, after has republicans said they did not schedule votes for friday. no sign of any progress toward a plan to fund nine government departments that closed after fundy rainout on december 31. and president trump tweeted most people are -- most federal employees losing pay our democrats. and raising a budget bill through parliament by the year in deadline. the customers of tax increase for charities is the latest hurdle to be cleared. a news conference will be held later, head of the later -- lower hospital on saturday.

if they miss the deadline in italy, they will revert back to this year's budget. and india tightening rules for foreign e-commerce firms to protect local companies. online retailers including amazon will be barred from forcing sailors -- sellers to -- on their platforms. they should curb foreign influence on prices. amazon and flip car will jointly contest the regulations. 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 ed ludlow. this is bloomberg. david: market check, 30 minutes into the session. in tokyo and south korea, it is looking better. it is not unbridled optimism, let's get that out there, but we have some more life as we go into the open of southeast asia and china, 60 minutes from now.

s&p futures down a third of 1% after what was an epic, epic 10 around midsession -- epic 10 around midsession in the u.s.. and a little bit of weakness, a little over half of the constituents in the nikkei 225 on their way up. 2000 on the index. and 18% down for the year. 150 stocks on the index on their way up. and half of 1% better. we will flesh out some of the data for you, but before that we want to take a look at the currency markets. the dollar-yen, the aussie, the south korea juan, where we have had production numbers, quite bad in fact over in south korea. they were out this morning. flip the boards, have a look at the sovereign bond markets. prices up, yields down. 10 year across really -- take your pick, japanese 10 year yields -- oh, look at that,

when basis point. and you have your tenure yields -- 10 year yields in australia and new zealand, switching back and forth. take this back to 2016, that is where the levels are at the moment, 2.77 right now on the u.s. 10 year. high-yield in the u.s. treasuries, relatively speaking. and a quick rap of the commodity markets. gold and silver, oil very much in play. crude to the upside following the bounce yesterday. that is based on the --. we are waiting for crude to get underway. gold pulling back a little bit after pushing limits in recent weeks. kathleen: thank you. now i know where we are going. and we are going to japan. factory output dropping in november, the sixth contraction in eight months. brexit and slowing growth overseas proving to be tough headwinds to beat for the economy. joining us to dig in is our

deputy tokyo bureau chief. take us through the numbers. the job numbers look pretty good,, not much movement as expected. and it seems like there is quite a story behind the headline numbers. >> absolutely. we have a lot of data coming out. a lot to dig through. industrial production, as you say, can be volatile. i think what we are seeing now is last month we had a rebound from the previous month related to several -- that japan had in september, that really affected production. i think what we saw today that was interesting was even though the data had rebounded previously in october, we are seeing it is retracing the path that was on previously. as you say, that is moving downward for the past much eight months. and we might see it be positive in the fourth quarter, but it is touch and go right now. the indication from the data is

-- wore that down in december, the forecast set to rise 2.4%, but that data turned out to be a little more positive. and the jobs market, as you say, it continues to be extremely tight. slackening slightly over the past couple months, the economists' take has been positive factors, more people entering the workforce, people quitting jobs to pursue better opportunities. kathleen: i want to ask you about inflation. the tokyo inflation numbers came out and explain to the viewers, first of all -- what part of total national inflation is the tokyo number? and what did the movement there tell us? >> obviously, it is a the core partrt, of tokyo is the national economy. and i think with the data tells you, it was broadly in line with what we saw, which is inflation is going up.

up in the core cpi index. and that is what you would consider core cpi in the u.s. but obviously that is well-off what the boj's target is of 2%. and it has continued to meander around the sort of under 1% for a long time. tokyo data does move quite closely with the national numbers, but i think what we should expect is he will not see much change in the national numbers, that is before we get into the topic of oil, which is included in that data. releasede boj also their summary of opinions. help us understand what was the opinion. >> so many opinions. it is released about a week after the most recent decision. it is hard to read too much into it because it is presented in a format where each individual

member's opinion is gathered together and you cannot tell which opinion is which, but there were interesting things we saw in that forum of opinions today, one of which was comments referring to uncertainties over overseas economies, uncertainties on the price outlook for 2019. obviously, oil prices were referred to several times as a risk, the first time we have seen that in recent months. and also one of the most interest in comments i thought was, one number indicated it was going to be hard to grasp the trends in 2019, to grasp the underlying trends in inflation because of so many uncertain factors, including overseas economies in china, oil prices, mobile phones, a topic here in japan, changing the billing plans -- the government seeking to enact that, and the increase in sales tax, as of right now

still expected to happen in october. boj'sas an impact on the policy and how they conduct policy. one thing to remember about the opinions though is that one member did indicate that, you know, they should have flexibility in how they conduct policy. remember that these were gathered before the boj yesterday released its buying plans for january, basically indicating to keep things exactly as they are right now. david: it is difficult to be a central banker. that is probably why they are paid relatively high, right? thank you so much, our deputy tokyo bureau chief. very close to zero on the 10 year. if we fall below that -- let's take a look at shares, down in the tokyo session. 2019, yeah, shaping up to be another tough one for employees there. and a europe, job losses likely.

and the chief executive of the biggest investment bank in japan says they need to cut staff while spurring revenue. in europe, struggling to generate profits. lehman brothers back 10 years ago. and the ceo says that that firm's 3000 strong workforce in the region maybe closed -- quot e, "a little large." kathleen: bloomberg has been doing some crystal ball gazing as the year draws to a close. today, taking on the biggest names that could face -- themes that could face the asian sector in 2019. think there could be more limited -- transmission to several key markets, including china, japan and australia. >> we think the chinese interests are improving on the sales front. we think that they will continue

to grow, mainly thanks to the expansion and margin. the reason of that is the product -- is shifting toward more protection type policies, which is good for medical insurance. rebalancing with rebalancing -- we two somewhat -- and increasing higher now. >> in china, we think that investment is still challenging. and the method bodies will be a challenge for some of them, right? but at the same time, their allocation is still focused more on long-duration assets. that ampanies have done theytime ago, and also

have been reducing their equities exposure. that is a good thing. when the equity environments remain challenging. ♪ david: speaking of 2019, coming top teche talking t trends of next year. this is bloomberg. ♪

kathleen: welcome back this is , "daybreak: asia." i'm kathleen hays. david: i'm david ingles. while way with a difficult year. let's let the numbers do the talking. the larger tech company in china, 21% jump in annual revenue. that is a sharp acceleration in topline growth. joining us to talk about this is our age of tech editor. the chairman striking a confident note. a bit of a paradox, irony if you will, given the year they have

have -- have had. >> fundamentally, it has a very sound business. it has done very well with networking, extremely well with smartphones. this year saw a pivotal move for the company when it overtook apple behind samsung. it shows how much of they have tapped into consumer demand, not to mention all the wireless companies around the world trying to build new networks and they might be locked out of the u.s., but they are in parts of europe, and definitely in other parts of asia, with a home in china. and they have loyal customers. david: if you are the frontier you have toy here, understand the new technology that they are trying to introduce. >> they are focused on fifth-generation wireless networks, and this is where you get to download a high-definition movie in seconds. and we are talking about in of capacity and technology for

autonomous driving, for all the things connecting all the things in your household to one, things like that. that requires advanced technology and they have done so well in that. and they have done so well in 5g, investing 10% of their revenue, so more than $100 billion in revenue. they are spending one is a billion dollars in our in the. and whatever happens with 5g around the world, they will have a say in it. kathleen: i want to ask, the awei, theor hu government is concerned about their technology and how it works. a year or so ago, up and coming. now the view has shifted a bit. >> that will be the big challenge for them. china will be huge, they obviously have a lot of national champions status in their home country, but in places like the united states and also their

allies, like canada, u.k., australia and new zealand, they will push back on them. that is a challenge. but when it comes to the emerging markets, they are happy to have huawei. they promise superior service and they are the cheapest. so if you are in sub-saharan africa and you want to get 5g, try to kickstart the economy, they will be part of that conversation and a competitive bidder. they will keep doing well. it is just the western markets it will struggle with a bit. david: the revenues 21% up in 2018. rob, thank you so much for wrapping that up for us. rob in our studios. let's broaden the conversation, tech trends for 2019. we have the vp for asia-pacific information and context, communications technology. very nice to see you. 2019 will be very interesting. help us understand what are the

major tech trends for next year? consumer, start theere. re. >> i think one of the broad trends will be the rise of e-commerce. we saw it getting more active in india. and from a consumer standpoint, we are moving at a rapid pace. we have done well on the growth margin. bought on platforms and we expect this to continue. and another emerging trend because of e-commerce, what is happening is traditional retailers struggling are also realizing they need to use e-commerce more effectively. and with them on and pop retailers getting into see thece, we traditional retailers figuring out what new e-commerce means for them. will be a e-commerce

consumer trend. and i think that we had the likes of airbnb, uber starting off, but that is spilling over into we see more platforms now being used. that is leading to another trend, integrated payment platforms. so we see the kind of payment companies, many getting aggressive. and that is going to be a boost when we look at 2019. david: based on everything you mentioned, does it seem like that this is simply a big playground, or should i expect incoming companies in any of these major trends to make headway next year, or is it the same names? >> again, i think consolidation will be big. e-commerce, there is a challenge and profitability. e-commerce is turning out be the

way that the current business models have started turning. the higher the volumes, the bigger the profitability. and that is one of the trends you expect. as the smaller companies might consolidate with the bigger names in the region, we are expecting that trend. but profitability is becoming important, that is where the e-commerce companies are taking a look at the model, what kind of model works for us? there is no point in burning money just to stay relevant. what kind of new things should we target. luxury commerce for example, that is relatively much more profitable than traditional e-commerce. you see that with a lot of the big names consolidating, absorbing the smaller players. and smaller players struggling in the e-commerce business. kathleen: kathleen in new york.

aggressive payment strategies, that is what you are looking for. and people know names like alipay, but you talk about grab pay, it seems like every place there are all kinds of startups that have become bigger companies. aggressive, ok. aggressive, but competitive with so much of this going on? >> yeah. i think that there are two models. one of the traditional models has been a transaction fee model. you take a cut from the transactional volume rate. but when you look at the new boss this test new business models -- when you take a look at the new business models, they are looking at payment incentive. and again, this can be a complement to that. when i know how the transactions are flowing, i can actually analyze and i can actually try building up that in terms of in analytics platform. use that to track and monetize

more revenue streams. the is not based on just traditional model, but looking at analytics behind payments is turning out to be a different way of thinking for some of these pay more -- these payment platform players. it is not just commissions cut, but it is how to use the insight from that payment data in a lot more different ways, even though there are many. it is not just about payments, it is offering other different services. those insights will be useful. i can monetize those insights, either on my own platform or with third-party platforms. kathleen: you have your retail stuff you want to buy, use that payment system and another part of the picture is enterprise. and cybersecurity, cloud, data security -- these are big deals all over the world, so what is going on in asia, what do you see in 2019?

>> i think that the full look at it, cybersecurity is definitely getting bigger. cloud, we have seen clad for a number of years, but 2019 we are expecting this to get more aggressive. and automation and analytics, these are two trends we are expecting. companies are realizing that automation is not just about replacing workforce, but it is augmenting the existing workforce with the help of technology. companies are open to experiment with automation, whether it is technologies like rpa, using the automation, these companies are getting interested and more aggressive. and we are expecting a lot more enterprises. they are having board level discussions, where it is no longer just an add-on service, it is depending upon how good the security is, the kind of failures that an organization --

david: we have to leave it there. we are out of time. lots more coming up, stay with us. this is bloomberg. ♪

kathleen: this is "daybreak: asia." i'm kathleen hays. david: i'm david ingles.

next hour, the market opened in hong kong and china into several markets across southeast asia. the state of play as we move into those opening bells, what do we have? asia, we are actually just a little bit below normal. for tens of 1% on the nikkei 225. in south korea, it has not been good. the cheapest market. have you seen train caboose on -- train to busan, imagine that is true nationwide, that is the valuation of that market. trading as if there is a zombie apocalypse that is about to engulf south korea. 8 times earnings, i think. have a look at the currency markets. majors a little bit higher, a little stronger. the u.s. dollar 1.1083. dollar korea, 1.120. and numbers following a little

bit. and what else do we have? i think we have a commodities board. and we are looking at futures in singapore. slight uptick, 25 points on those features. china opening over 30 minutes from now. kathleen: a lot more coming up. to kenny limlking joining us 10 a bucket and hong kong time. so much going on in the markets. it is an interview you must hear, coming up verily shortly -- virtually. a look ahead to the start of trade. stand by for china open. this is bloomberg. ♪

rishaad: it is 9:00 a.m. in hong kong and shanghai, this is "bloomberg markets: china open." yvonne: asia stocks face a downbeat day, japan unable to sustain thursday gains despite a turnaround on wall street. rishaad: trying to decide if the u.s. reversal signals a case of a year and rebalancing. yvonne: and china slowing for a seventh straight month, as a trade war troops fails to fire up the economy. ♪

yvonne: biggest reversal in u.s. stocks since 2010, not enough to lift up the asian markets. you have to wonder why it is not carrying through. we got some week data out of korea, japan and early indicators of china not looking good. rishaad: missing that 2% target, nowhere near being filled anytime soon in japan. it is more about what is happening in the u.s. a situation, but not really following through, the markets just opening up this friday morning. and unchanged here, little movement there. kl on its way down. a decent amount of trading so far for the nikkei 225. and half of 1%, erasing the rises we saw on thursday. let's take a look at what really happened here. it was quite something. we saw the s&p 500 moving with a

massive movement. a huge delta in the last two hours of trading. that is what happened on the s&p 500. an hour and a half, posting gains, 8/10 of 1%. and over two days, this is the situation. just up, as yvonne mentioned, 2010 is the last time we saw a move like this. this is all predicated on low volumes, which can exacerbate the volatility. manyve windowdressing with pension funds coming in with their cash. and money coming in, and perhaps of these gains are being overdone and that is the thing that the traders are grappling with -- have we found the bottom? what about the prospects of the trading day in this part of the world? china having a look at the futures -- down by a half of a percent. this was positive at the start of the session yesterday, ended up in negative terrain by three quarters of 1%.

and the ftse, chinese features up 2/10 of 1%. and looking at those, we will see if all back. there we go. anticipating the yuan fix coming up. 187. rmb we are going over to new york to have a look at this political stalemate on capitol hill. here is kathleen. >> yes, the partial u.s. government shutdown will continue at least into the weekend after house republicans said they did not plan to schedule any votes for friday. no sign of any progress toward a plan to fund nine government departments that closed after funding ran out on december 21. and most federal employees losing pay because of the closure, president trump says, where democrats. falling, butoutput rising over a year-to-year basis.

and limited strength in any rebound as investors navigate the china trade war, brexit and is slowing growth overseas in japan. over inflation, an indicator of price movement, showing that the unemployment rate rose fractionally. and to top officials at a powerful trading company suspended over oil prices. unitech's parent company confirmed the suspensions that said -- but said they were only related to work reasons. analyst say the market is closely watching for details on the scale of the lost. and shares tumbled about 7% on thursday. 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 kathleen hays. this is bloomberg. economy falling

for a seventh straight month, according to early indicators compiled by bloomberg. the trade war seen as a major headwind, but sources tell us that beijing is making an effort to settle the dispute. yvonne: joining us is our government editor in sydney, and we want to bring in our economics editor in tokyo for us. let's start with, where do we stand when it comes to the trade talks in beijing, we are only days away from these talks? >> we are seeing uncertainty on both sides. the chinese do not appear to be clear on what the u.s. wants, and they are not quite sure if the u.s. knows what it wants. so we are only 10 days out and that is the situation. rishaad: should we be surprised that china is so determined at the moment to make peace, to strike a truce? >> i do not think you should, it has been a hard year for them economically, they have seen a slowdown in growth and trillions come off of their stock market.

the trade war has been a factor in all of that, so it is in their best interest to wrap this up as quickly as possible. yvonne: we have been hearing multiple reports, reuters reported a possible white house executive order banning huawei products. how much does this play into the possible settlement in this trade dispute? karen: it plays into one of the u.s.'s chief concerns about china, which is over intellectual property and technology theft, and it comes on the heels of the arrest of a top huawei executive in canada and the subsequent arrest of two canadians in china, so it could complicate things. rishaad: let's move to james. tell me about this gauge of the economy in china perhaps showing a seventh straight month of slowing business activity, what are we looking at? what are the main drags? james: the big drags from the

previous months were the copper prices and also sort of the major stock industry. you saw the fall in copper prices, demand not there for that. but i mean, this has been happening for seven months now. and we are seeing that this is not getting better. purchasing managers, those numbers continue to fall. basically, none of the indicators we are looking at are good at the moment. we actually see a continuation of what we have seen for months now. yvonne: it is interesting what we saw with the china beige book, they have said despite all these concerns that banks were not lending or extending credit, borrowing by nonstate companies they say is actually up, but there is a problem. tell us about that. james: that was a very interesting report. it is harde story is

for private companies to get credit, and they say that is not the case. they have increased borrowing. but this is the same problem that they have been pointing to, that this credit is not getting through to the real economy. they talk about problems in the transmission mechanism, which means that there is monetary easing, that is leading to greater credit, but that is not leading to more investment or wage gains, and not leading to a sort of expansion of growth in the economy. governmentsee and came out with a report and talked about ways they will improve the transmission mechanism next year, which is if it does work, it should help get this borrowing that is happening through to generating growth. but they have talked about these problems for quite a while and they still exist and they are still happening, so whether that will have an effect remains to be seen. rishaad: that is karen and

james. yvonne: our next guest is the head of strategy at standard chartered private bank and joins us from singapore. thank you for joining us. given the weakness we have seen in the data recently, how behind the curve is china when it comes to implementing policy that actually works to stem this rapid decline? well, behind the curve may not be the right place to describe it, in our view they are trying to achieve to eject is -- they are try to achieve to objectives -- growth, which is offset by the campaign for things to stay in place. it is a tricky balance to achieve. it is about supporting growth, but not letting growth fall too far, but also making sure we do not end up in the situation of extended lending, because that creates problems down the line. we will notwe think

be looking for any sort of imminent big bang measures. but the negotiations still will be key. , weaad: it is a bit like are getting the full effect of the trade war to come, or do we already see some of that? >> you may see a little bit more impact come through. if you go back a few months, we had evidence of that committed before some of the newer tariffs began to bite. but at the end of the day, it depends on how the negotiations go. we have seen some efforts on noncontentious issues, but i think that this will be important, not only for the actual orders, but also sentiment, which at the moment is quite weak. and you can see that in the bond yields, in the equity market valuations as well. yvonne: so, how should i be

deploying or playing china at the moment? some say that this trade stuff is noise, every thing has been priced in already with the equity market, so is it early to start talking about a rotation out of bonds and back into equities? >> actually, no. we think in the short-term there could be an opportunity. from an equity market perspective, we like on short chinese equities, particularly in the short term. for us, the markets are equally about the outlook, but also about how much pain is priced in. we think some of the sentiment is very weak, so no doubt the economic that is a soft and we might have more policies coming through, but when you look at measures of sentiment, they are looking very weak and technicals look very weak. and we think it is a lack of appetite, not just in asia, but globally, but most north asian equity markets look quite beaten-down. so if we see this risk

sentiments stabilize or we get less bad news, we think that is sufficient to get a short-term bounce. rishaad: surely, there is so much bad news already, which has already been locked into all this, what more are we likely to be factoring in here? >> well, when you start looking beyond the next few months, the big one is how this three-month u.s. china truce ins, because -- ends, because there are some areas that are not so contentious, property laws, where we have already seen some sort of moves by china, but what we do not know is will there be new demands with ongoing negotiations starting, and how will the big or more contentious issues be resolved. i think that that is really one big risk, which is to say we get through the end of the three months and where do things stand? it is a likely to get better or worse. and when we look beyond the three months, for us we think that the risk is that the trade

war will stay with us. we make it in improvement in sentiment, but we will deteriorate again, so that is why we think we may still end the year lower than where we are today, securely if the fed keeps tightening policy on the other side. yvonne: so, how much lower could it go? some say seven is the line in the sand, but if you are waiting for that's the most effect to come through will that be a net positive or negative for renminbi? >> in the short-term i think it could be a positive. seven is the level they tend to focus on, but trade measures are equally important. i think the relationships being ignored when you look at the nominal levels is the differentials. over the past year, the difference in interest rates between the u.s. and china have been a good indicator of where the dollar is likely to be. if you step back for a moment and say, there is more room for

chinese policymakers to ease, on the other side, especially after the pain we have seen in the u.s., if we see the markets moved back to two hikes by the fed in 2019, that could tilt the balance back in favor of the dollar against the renminbi. and that is as simple as it is. there is excessive focus on the seven level, but we think we will be below that by the end of the year. yvonne: hm. rishaad: stick around. still to come, looking at more on the wild ride on wall street, the s&p 500 pulling up its biggest reversal since 2010. and we will discuss what is driving the atmosphere out there. yvonne: 865 point swing on the dow yesterday. and you can join the conversation, send us instant messages during our shows on tv<

go>. this is bloomberg.

yvonne: ok, take a look at the live pictures out of hong kong. looking sunny, but the temperatures are dropping today. and the asia-pacific, we are lower here across the region. that is a reversal in u.s. stocks not carrying through here today. japan with a nearly 4% gain yesterday. rishaad: let's talk more on this. we have our guest, head of fic strategies, standard chartered bank. before i get to this, take a look at what is happening with the u.s. economy. we have consumption at the moment holding up -- just. we have pmi looking strong, manufacturing and nonmanufacturing, but on the other hand take a look at wti.

look at capital goods. financial health indicators all heading in the southerly direction. most of it is pointing to a fairly bad state of affairs. are they really behind the curve at the moment? s heerhaps donald trump -- a really agrees with them, would suggest? >> i would not put it as behind the curve. i think a lot of the data is slowing on the growth side, but this is where context is important. we are coming off a period where economic growth was unusually strong. we were above trend. in our view, what we are seeing is a shift back towards trend growth. and you see that in the economic data. they are holding up well. you see that in the data from the consumer side, it is slowing, but not to the point

pointing to a slowdown in the session, it is back toward long-term trends. we think that is part of the fact, one of the factors that is driving what we are seeing, but for us it is not pointing toward the end of the cycle, it is pointing toward trend growth and we see it on the earnings inside as well. that is why even though we think volatility is elevated, it usually does it when the fed keeps tightening, but we think that the endpoint, the returns should be all right. yvonne: what is driving these violent price swings we have seen in the u.s. the last couple days? we basically learned overnight that this surge in stocks was not kind of a one-time wonder. s it still -- is it still the technical factors, where do you look at some of the fundamental factors, as we mentioned, about the economics and earnings side? not pointing to one factor alone. technicals may have a lot to do

with it. what didn't help is we are getting a lot of these factors around the end of the year, where liquidity is usually lower than it normally tends to be. it is coming at a time when we have negative sentiment coming through, whether it is coming from donald trump, where we had information from steve mnuchin, and what got the markets wobbly was the brief in version, the 5-2 part of the curve. we think that is the 10-2 that really matters, which is not flashing red. we had a lot of negative comments. we had the fed tightening come to. and we have seen that we have larger than average rebounding efforts coming in at a liquid time of the year. a a lot of factors coming together in a very quiet year end period, but that is what is important for us, to draw ourselves out of this into focus on the big picture -- are things changing or not? we still think that this is

about growth and that is why we are focused on stabilization and more opportunities coming out of the weakness we have seen in december. your recommendations will also be based on what happens with the dollar. the dollar is strong at the moment, relatively speaking. how far does it stabilize now in your view? view, to some extent it is already beginning to happen. throughout all of the volatility, a lot of folks in the equity markets, we have not seen that flow through back into the dollar, we do think that there is room for a little bit of upside. and i think in the first quarter of the year, where it is coming from will be the differentials. and in december the markets have priced out any rate hikes by the fed in 2019. we think that is extreme. we think there is still room for a couple of rate hikes through the year. so that could offer a little bit of support early in the year,

but once that is through, we do think that we would be lacking for the catalyst, for the dollar strength. and that is why, especially on the bond side, we have already the dipping our tool into e.m. dollar bonds. and in some equity markets as well. yvonne: you mentioned the 2-5 diverting, i am guessing if the fed hikes two more times next year, pretty soon that 2-10 spread is going to narrow even further, if not invert. do you think that is a likely event next year that? -- then? >> look, it is possible next year. but, you know, we are still distance away from that. and what is interesting is despite a lot of the moves we have seen, we have not seen that inverted. this time we saw it move in the opposite direction as the long-term yields came down. at the end of the day, that is

one binary indicator. to send a signal, you have to actually invert, so until that happens we should focus on other factors. and if it does invert, it does not tell us whether to expect the u.s. recession in three months or three years and that is a big difference. it is about the curve for us, looking at corporate margins, whether we see them continue to hold, and whether we see lead economic indicators turned on more sharply. i think we need to see all of those come through before we get much more worried about growth. sitting here today, we are just not. rishaad: stick around. we have a stronger fix since december 6, 6.86, there we go. tvonne: feel free to go to g to catch up with key analysis and save charts for future reference. this is bloomberg. ♪

rishaad: counting down to the start of the open, minutes away in hong kong. hang seng pretty much flat. negative finish yesterday after being positive for much of the session. and h shares could be the drivers to the upside here. futures contracts for the chinese mainland. stocks on the way up as well. and offshore yuan, a tad weaker than on short, which is at 6.86. take a look at the movers we are likely to be seeing. down over 5% here. with officials been suspended amid trading losses. at the oillooking prices affecting that one. and this is unchanged. and hsinchu international group getting an upgrade on a

recommendation from citi. the pledge of late actually made it cheap. withe are getting above, the two companies buying ft life. there you have it. the open is next. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> 9:29 a.m. in hong kong. we are counting down to the china open. we are seeing strength coming to the chinese rmb. we are sitting around two week highs. watching in terms of equities. it seems like that rally we saw in the u.s. is not exactly getting through here. yesterday, china not exactly playing ball. concerns with cytotec and the trading unit erased most of the gains we saw yesterday. another turbulent day forsinote ch as well. >> looking at shanghai, the china stock market overall worst in the world. $2.3 trillion worth of losses.

sentiment knocking helped in productions,ory cpi in tokyo was pretty much bang on. noise in the u.s. as well with that continuing. we have light at the end of the tunnel. a meeting taking place over trade next month with china. let's have a look at what's going on market wise. let's get to the open proper. this is the position right now. the hang seng extending gains we saw premarket. a-shares driving things up. shanghai composite flat. shenzhen and shanghai stocks up 0.3%. we are perhaps getting a few tailwinds coming through from that furious u.s. rebound last couple hours trading. a massive comeback with the

biggest two-day reversal since 2010. >> let's bring back the head of strategy at a bank. he talked about how he likes chinese entre equities. maybe a short-term rebound. we have been talking about how serious these reversals are. some say this is a turning point. we have reached the bottom when it comes to u.s. equities. why do you think that is not carrying through in asia? >> part of the reason we think other equitymany markets. let's not forget asian equities, em equities more broadly have been weakening for a large part of the second half of 2018. trade obviously being a large part of that. think where the has left us is valuations look interesting. we have been discussing how much more interesting valuations have become in the u.s.. a lot of that case holds for

notation markets. if you bring perspective back to, what is the outlook, we see quite a bit of negativity priced in. that is where we are looking for opportunities. >> things look like they are being priced in a few months ago. a long-term by was on the cards. the same scenario exists if you look at it from fundamentals point of view. >> agreed. evaluations on their own can never tell you whether markets are poised to rebound. i think the most interesting one is that if we see stabilization of developed market equities, u.s. equities, and we see someive sentiment, maybe less negative news, we think that may be enough to trigger a short-term rebound. to your point, there are

longer-term issues at play. the earnings numbers across parts of asia that may offer some room. ,or us, also china equities asian equities more broadly, we think the short is the one worth playing. whether that is something we say longer-term or not, we do not have the confidence. u.s., the relationship is strongest. that is where earnings are strongest. >> is it healthy, these moves? some say some of these bear market rallies tend to be quite nasty. does it show in terms of sentiment how people are actually placing their bets at the moment? what does it tell you about the character of the markets at the moment? >> the market character -- is characterized by such large moves. it makes trying to make

decisions white difficult. -- quite difficult. you have to protect yourself against torture volatility even if you are right on a slightly longer view -- short-term volatility even if you are right on a slightly longer view. december has been a lesson. equity market weakness, but we have seen bond, cash, and gold do their job as diversifiers. that enables investors to look through short-term volatility. that we think will be important in 2019. there is evidence that as you go later in the cycle, volatility does rise. we think that is what we are seeing. we can take the view that we do think u.s. equities will outperform. trying to ride out that volatility we think will be equally important. early in the year, most of 2019 we think. >> what about economic policies?

people say if we get a stimulus plan it is going to help. further down the line, hang on, we have just been going through deleveraging. we will have to go through it again once more. that may be a negative, ultimately. china, it comes to deleveraging efforts tend to be fairly long-lasting. that is a lesson from history. it is not something that there is no silver bullet that can solve the problems overnight. factork that may be a that is here to stay for some time. the reality is we have seen and continue to see many cycles from china foreign policy and economic perspective and we have to figure out how to make money off it. we still think there is enough capitalist to get a market trend outfit. beene bond side we have

hearing high-quality investment-grade -- that has been doing well, sure to outperform deleveraging efforts. something we still have to navigate, particularly the balance between pressure from trade and avoiding too much stimulus. unfortunately, that is the market we think is ahead of us in 2019. >> what are you seeing from the china credit perspective? we are watching all these pressures in the private sector when it comes to energy, to the housing market and private firms. how big is that default risk for next year? >> the default risk is there. relative to expectations. we have come from a long period where onshore in china, not really an issue. if we have to move to a more havel market, defaults to

rights. spacenk as long as that is contained and does not surprise markets, that is really the key, we don't see that being as disruptive. we don't really see defaults in the offshore dollar bond markets. those tend to be much more selective by the nature of the market. what we do think at this point in time, high-quality investment-grade bonds should continue to perform highly. they have already have for some time. we think from an investment standpoint, relative performances were it should play out. credit.e brought up let's bring up this chart from our library showing credit impulses going down, especially right here at the end of 2018.

we're going to quote autonomous research. clifflly has fallen off a and it is going to be reflected in the fourth quarter. could show disappointment to the downside. how bad are things getting in china overall? will those earnings be reflected? -- reflective of that? >> to some extent, yes. we have been seeing this number fall for a few months. for an investment perspective, two factors i put out there. we have seen some policy effort at offsetting that from a broader policy basis. second, it comes back to the conversation we had about how much of this do markets already know? we look at the numbers across north asian markets, they are very low. undoubtedly we will get downward. we believe that is likely. we still think that is not enough of a constraint to

prevent a short-term rebound. to howmately comes down much of the market sentiment already prices that in. >> stay with us. chartered private bank, he is sticking with us as we talk about oil markets. >> moving on, the first word headlines. the data showing what the economy has been doing. >> u.s. consumer confidence slumped in december to the lowest since july. the latest sign americans are growing less optimistic. at the same time, the sheriff people expecting more jobs in the next six months had its biggest fall since 1977. the report from the u.s.-based commerce board said it reflects increasing concern economic growth is going to slow in the first half of next year. saudi arabia has kept key supporters of crown prince mohammad bin salman in cabinet jobs in the first major

government shakeup since the murder of jamal khashoggi. the ministers of finance, energy, economy, and trade retained their positions. the king promoted several young royals, many of whom have worked with the heir to the throne. italy's populist government is racing to push its budget bill to parliament by the year-end deadline. a controversial tax increases the latest hurdle to be cleared. held ainister conte press conference ahead of a lower house vote on saturday. if it misses the deadline, it must is a special procedure to revert back to this year's budget. elon musk has asked a judge to throw out a defamation lawsuit by the british cave diver the tesla diver -- tesla ceo called a pedophile. onsaid it was part of a spat social media that would not be taken seriously by any reasonable person. they argued insults were opinion

protected by the first amendment. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. >> coming up, a bloomberg survey says the heads of the world biggest banks seeing a rebound of oil prices. we discuss that next. this is bloomberg. ♪

>> let's take a look at your commodities. it certainly has been a volatile day or week when it comes to oil prices. we did see them follow that reversal higher on thursday. we are sitting around just under $46 for wti. brent crude, we are seeing

decent gains north of 2.5% today during the asian session that 53.54 a barrel. gold heading the other direction. more of a risk appetite today. byper futures also positive 0.6%. >> let's get to standard chartered private bank. short-term opportunity of a crime gold. gold.ortunity in it is only the latter part of 2018 when things have been going on across the u.s. we have seen an uplift in gold. it could be short-term. tell us about it. . >> i think gold has disappointed as a traditional risk hedge the past couple years. we do see some of that recently. the most important relationship is with bond yields and interest rates. we have seen that unlock a little bit of performance for gold. we think that is a short-term

story and that comes from to specific levels. as we discussed earlier, we think there is room for interested expectation in the u.s. to be priced higher. we think to rate hikes are justified. -- two rate hikes are justified. we have been in the 1100 range for a long period of time. we have not broken out of that. that is the magnitude we are looking at, at least for the time being. that is where we see a short-term opportunity. >> a short-term opportunity, as you mentioned, given the fact that the growth of the u.s. is solid. perhaps we see real breaks start to rise again. what does it mean when it comes to the yields? i know we have talked about treasuries. do you think the risks are tilted toward higher yields? how high could that be given we have seen them show quite a bit of momentum into that bond rally

recently? room forthink there is yields to move higher. really a reversal of that. when you look at 10 year, we 3.25%about 3% and up to is justified. really taking us back to where 10-year peaked a few months ago. we do not think that can happen overnight. what we are seeing him across the volatility in equity markets is we likely take a few days to a few weeks to stabilize. it is really going into the first part of 2019 where we see those yields begin to normalize. we think that will be complete by move its -- market moving back to price in one to two rate hikes by the fed. that will be the driver. for us, we think that is really above the extent 10-year reaches. not more than 3.25%. >> i want to go to oil.

what is your take on what is going on with the oil market? plus haseem as if opec said things such as they will do what it takes, but they do not seem to do what it takes. oil what we are seeing is reaction. we were having the opposite discussion on oil at $85. a volatile commodity, but we think less about supply. market concerns have been more about demand. whether we see worries about slower growth might spill over into the oil market. china for example, large part of asia is part of the oil demand growth. i think that has been the driver. we do agree supply is the most important factor. given where oil prices are, we

would like to see a reaction from opec if prices don't rebound before that. we are seeing anecdotal evidence there is pressure coming through in shale oil. there are a lot of doubts whether oil is sustainable at these levels. we think a rebound back to $70 on brent is where we will end up a few months from here. >> thank you so much. happy new year thanks for joining us this holiday week. manpreet gill at standard chartered private bank. 23the hang seng seeing stocks, 26 on the way down. we just got into negative terrain for the hong kong market. just up by 0.1%. some of these companies have been making way. a division of sinotech, officials are suspended. this is -- has spooked some

investors as they exit that stock. boc aviation going up. the bank of china, china construction bank getting a move up. we have the story coming through beijing has given to the biggest banks in the country to go ahead to set up wealth management units. a banking industry which has been struggling to sustain profitability. from the approvals china banking and insurance regulator. permission to set up wealth management units. >> turn to casinos now. the chips are down after a year of slowing revenue growth and concerns about the chinese economy. usorts chairman and ceo gave his thoughts on what to expect next year. >> next year will be moderate growth. we just opened a new property so we are carving better market share out of a market. the market is going to grow only

slowly. >> as ever we have an opposing view. another casino heavyweight taking a positive view. chairman. >> 2018 was a good year. in 2015 at years 2016, 2017 and 2018 have been good years. i think 2019 is going to be a decent year. >> i think high single digits potentially. a lot of it is dependent on geopolitics and macroeconomic factors. is the trade war really going to happen? happening, and the extent of the trade war -- >> is the trade war going to affect the licenses which are coming due again? iny need to reapply with mgm 2020.

yourself and others in 2022. could this be delayed? or could the characteristics of the licenses be changed, such as more non-gaming revenue as part of the requirements? >> the government -- what they have been saying has been very consistent for the last 15 years since the licenses were first granted. they want to diversification. more non-gaming. , we have listened to them since day one. we have been the market leader. we call it beyond gaming. we have rides that -- rides. we fully accept that. beyond gaming as part of our dna and we are happy. as part of leading up to this license process, they had to take stock of how six operators have been performing.

melco finished first in virtually every category. we are very happy with that. chairmanas the melco and ceo speaking to stephen engle this month. this is bloomberg. ♪

>> now for a look at the stories trending across the bloomberg universe. ,oom and gloom for markets hedge funds, and blackrock as we near the end of a 2018. more upbeat headlines trending. highflying chicken prices. is, whoc, the question are you going to call? the drone busters. efforts underway to prevent another airport meltdown.

check out those stories online or on the terminal. more to come. >> taking a look at india. tightening rules for foreign e-commerce companies to protect local ones. online retailers including amazon would be powered -- barred from forcing sellers to feature programs exclusively on their platforms. that news channel reported amazon will contest the regulations. instagram redesigned its platform and the plane almost went immediately sideways. the update allows users to swipe left and right through posts. that sparked complaints. the redesign was a small test that went wide by accident.

$130 million in mark to market losses monday. the stock surged. of rally in advance mind-body to be acquired. ,ind-body has a 30 day window which raises the possibility of another bit, sending the stock even higher. being caught on the wrong side of that trade >> coming up we have more to talk about. noah holdings group president joining us at top of the hour talk about -- to talk about china. a lot of consolidation happening. that is the key for the long-term prospect moving forward. >> what may be happening with regulators, possible stimulus coming through for the chinese economy. cuts?o they do before rrr below the radar. the medium-size enterprise.

also going higher is hang as well. >> always watching industrial profits, which was pretty weak. into negative territory for the first time in three years. this is bloomberg. ♪

yvonne: welcome to "bloomberg daybreak: asia." rishaad: the rebound failing to carry through in asia. stocks flat, the yen the gaining. yvonne: doesn't signal a bullish turnaround or year-end rebalancing? rishaad: china bracing for new u.s. demands on trade. beijing is unsure what president trump really, really wants. ♪ rishaad: volumes and volatility

high. concentrate on markets in this part of the world. hang seng negative. yvonne: the same story once again. rishaad: i know. it is déjà vu. yvonne: it seems a little weak. take a look at japan. whipsawing whipsawing the clear out performer yesterday. whipsawing already, we are shrugging off those gains, down .6% on the nikkei 225. we did see that 4% surge yesterday. i think every single stock in did in the green, so perhaps it was overextended. a mixed bag when it comes to equities. up. asx 200 looking decent when it comes to