haidi: very good warning. australian markets have just opened for trade. sophie: i'm sophie kamaruddin in hong kong. welcome to daybreak asia. ♪ haidi: the top stories this tuesday. futures pointing to a lower asia, with auto stocks particularly in focus. the dollar holding steady but the yen slipping. investors looking at global central banks. preparing for its semiannual testimony. the view from the bay. china gives more details on its

ambitious plans to challenge silicon valley. sophie: seeing how asian markets are setting up this tuesday. we are looking at a muted start for the session. opening flat, while kiwi shares under water at half percent. not seeing much gains for u.s. futures. there is some optimism around the u.s.-china trade talks being held this week. let's get to some movers in sydney. shares jumping 16%, to the highest level in 19 years. this is a company exceeding consensus forecast once again. blackmore, stock off 30% this morning, as the company does not see second half earnings matching first half -- the first half on chinese sales. weakness there. let's get the first word news. >> thanks. singapore is opening its wallet ahead of elections that could come this year. the government is predicting a

budget deficit of .7% of gdp in the year through march 2020. that is compared with a surplus of .4% in the current period. the budget boosts spending on health care for an aging population, offering a tax rebate, and tightening foreign workers. the reserve bank of india is ending positive profit to the government which is desperate for cash to fund populist programs. an interim dividend of $4 billion. the second straight year the bank has made an advanced payment to the modi administration. the cash will help fund his $10 billion program. brazil is fanning a specific type of dam after two collapsed, causing death and instruction. upstream dams must be decommissioned and removed by august 2021. owners have until -- the

dam burst last month, killing at least 169 people. the eu's chief brexit negotiator says it is open to a permanent union with a u.k. and the relationship should be as broad and ambitious as possible. the eu accepted the u.k.'s decision to leave and any differences in the negotiations are due to pragmatic issues, not dogma. barnier concerned the eu will not reopen talks on the terms of the brexit deal. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: carmakers around the world bracing for potential auto tariffs from president trump after the commerce department delivered its report on whether the u.s. should classify auto

imports as a threat to national security. derek, what do we know about the details of the report? derek: good to see you. let me tell you, we don't know all too much about the details of this report sadly. the commerce department actually told us in about a three line statement that the report was in and did not say anything about what was in the report or what was recommended to it. still, you saw the effects of this report hit the auto sector broadly yesterday. european carmakers and supplier shares were down significantly yesterday. you're seeing this land into a little bit of a softer market anyway, right? january was the seventh straight month of declining passenger car sales in china. down 17.7% year-over-year in january. there is already a little bit of a softer market. you can see carmakers are

feeling a little bit of a squeeze in the market ahead of the just simple concern about what president trump might do in response to this report up in a couple of months. sophie: more battering for the global auto industry. any preemptive response from the international community? derek: it is interesting. the european union has promised a "swift and adequate reaction." what that means in practice is that the european union is readying about 20 billion euros worth of countert ariffs. ahead withey will go that if the white house reacts. so far, european leaders are still working on negotiating with their ally in the united states. angela merkel has said the sorts of things are a little bit ridiculous. my words, not hers.

the europeans are quick to point out that a lot of production by the european carmakers that might be labeled is actually going on in the u.s. bmw has a factory in south carolina. mercedes has a factory in alabama. nissan in the u.s. south as well. you have seen a lot of foreign automakers put factories in the southern united states. those are on its face less friendly to domestic u.s. unions, but if you are donald trump, those are plants in states that you want in the last -- won in the last presidential election and you want to carry again. there is a large domestic, red state presents for these carmakers and they are trying to play that up right now. haidi: president trump spoke earlier at the venezuelan-american community event in miami. a pretty strong message for venezuela and nicolas maduro.

derek: yeah, it really was. the location is significant. i grew up in miami, florida. i know the area very well. donald trump went to the very beating heart of the venezuelan ex-pat community and delivered a stark message to the venezuelan military. he said let you monetary and aid i -- humanitarian aid in. you can back one guide up -- juan guaido, or you can stick with maduro. if you back guaido, we are interested in amnesty. you can live in peace with your family. if you back maduro, you have no place to hide and that line went over to screams of the light by the local crowd -- delight by the local crowd. also interesting is the message president trump is delivering without being quite so explicit. setting the stage for the 2020

presidential campaign, and continued a blast on the concept of democratic socialism -- bernie sanders, alexandria ocasio-cortez's. miami, florida, the state of florida is a swing state. it is one president trump will need to carry if he wants to win the white house again. sophie: derek wallbank in singapore. still ahead, london's financial sector ties in asia as it weighs business at home. we will hear from the lord mayor of the city of london. haidi: coming up next, japanese equities is one of its top trades. this is bloomberg. ♪

sophie: asia's first major market open this morning. japanese futures nudging

lower. nikkei 225 set to resume after losses on monday. stocks in asia are looking to drift. little direction from the u.s., the market on holiday. this is daybreak asia. i'm sophie kamaruddin. haidi: i'm haidi stroud-watts. let's get you a quick check of the latest business headlines. one dollar mill for shoppers at woolworth's. it is upping the price to support local dairy farmers and passing the extra profit to suppliers. australia's biggest supermarket chain has been under fire by government and dairy executives for driving down milk prices, hurting farmers. itsie: honda is the close factory in the u.k. and the biggest blow to the british auto industry, already reeling from cuts in the run-up to brexit. the u.k.'s fourth-largest car factory, employing 3.5 million

people. switchedn is now being back to japan. goes to awegian air seven-year low after offering heavily discounted shares. it is offering stock at 33 kroner apiece, far below the price on friday at 97 kroner. hares at the lowest since june 2012. british airways owner walked away last month. oil stock rally continues in china. both rising strongly at the start of the week. the mainland exchanges reaching a ten-month high. let's talk about the outlook, whether this is sustainable with john bell. he joins us now from new york. great to have you. finally catching a break, these chinese the mecce domestic equis after a few years of this interest.

i want to talk about this chart because so far equity strategists, the targets remain largely unchanged. there does not seem to be much of a conviction. if you take a look at the spread, that is at a one year low. is this a sense we are still waiting to see what the outcome of the trade negotiations is and whether china can whether a slowdown? john: yes, the markets have shown some relief over the last week or so. thinking a deal with the china and the u.s. will happen. some people really want to see proof. especially in japan, probably in china, they are so weary of this situation that they really not believe it until they see it. there is probably some upside left in chinese and asian equities if there really is a deal. but, it's mostly discounted on a primary basis. if you look down a couple of

quarters and the secondary effect of the deal, i think you will see earnings expectations rise for analysts and that will give a second boost to the market. haidi: what are they good, idiosyncratic domestic stories? where do we go when it comes to trade -- it could be potential years of kicking the can down the road in these negotiations. are there some good growth stories in china that would be resilient to that? john: there are. we long invested in the medical care system. the insurance industry. we have very positive intermediate and long-term outlooks for those industries. they rise and fall with valuations at times, but the long-term growth is quite sustainable. sophie: john, we have seen several warnings from chinese corporates. a 60% drop in profit for 2018.

what do you anticipate when it comes to earnings trajectory and the impact on the wider region china in exposure to markets like japan and elsewhere? john: earnings expectations in asia are very low right now, very subdued. there has been bad news not only in asia, but around the world in the fourth quarter. the whole world seems to be suffering a bit of an economic soft patch, a weakening sense of confidence in investing. so far, it does look like that is going to be a soft patch and we will be able to pull out of that without too much trouble. at that stage, earnings expectation should rise what of it -- quite a bit. a lot of the profit warnings we have seen will be history and people will be looking forward, if they are not already. sophie: i want to turn to japan. one developed country that is

not fully priced in with a china' deal. what is the case here? john: this is a case of having lived in japan for a long time, they're particular in terms of, more than any other country, really wanting to see proof. they are not good guessers. they like to see the facts unfold. so, sometimes they are really quite slow in predicting things or accepting them in the market. i think japan, more than other markets, has more to gain if there is a deal that is done between the u.s. and china. valuations are extremely low there. dividend yields are very high. a lot of defensive protection with dividend yields. of course, the high exposure to the auto industry which is struggling around the world, but it is a leader in that industry. it is making the next generation of cars so it should be quite

well protected. sophie: the global auto industry getting hammered by a series of headwinds. we are waiting from that official report by the u.s. on tariffs. the eu has come out to say there will be repercussions. honda is shutting down its factory in the u.k. due in part to some of these global trends. give us more of an assessment of global automakers and how they perhaps navigate some of these challenges they are facing? john: it is a structural decline for internal combustion engine vehicles. one of the problems around the world, particularly in china, really a 17% decrease in sales. that is the wholesale number because inventory numbers are so high. the retail number in china was actually only down 4% in january. still negative, but not as bad as that headline number many people are talking about. it is true that car sales

around the world are struggling. in europe and in china, quite often due to environmental regulations. there are restrictions to have many cars can be sold in metropolitan beijing and other cities. in europe, they are not even letting old internal combustion cars enter the city. there is a great amount of uncertainty as to what kind of car can i buy and be able to use in cities in europe and in china . that is one issue that is also holding back car sales. haidi: john, i want to get your thoughts on the ever popular em trade. it started off at a pretty fast clip. i want to throw out for the benefits of our viewers taking a look at this back in favor em equity rally. an 8% gain after a pretty horrible 2018.

we have talked a lot about emerging markets in asia having already priced in a lot of the global macro issues that developed markets are grappling with. has the exuberance bit overdone now that we are looking at not as much dollar weakness and central-bank divergence as we were setting up for at the start of the year? john: i do think at least with the currencies, it is a little bit overdone. it is a very well owned trade right now by the investor community. it was quite shocking to me personally to see emerging-markets current sees not decline -- currency not decline very much after that big selloff in december. they have already come back quite a bit and they have stayed quite strong. as far as the equity side, it means excluding asia which has with atential for gain china-u.s. trade deal. other companies seem to be more

fully valued. butxpert on russia, countries like brazil have rallied tremendously. they have a good political transition going there. there are also quite a lot of scandals popping up in china with this new president -- in brazil with this new president and he might not be able to do as much reform as he would like. haidi: asia is really the reason why you are not more constructive on em fx. even though we have large of situations where central banks in this part of the world have done the hard work to prop up the fundamentals of their currencies. john: yes. certainly, asian investors still want to see some proof. whether that be in currencies or equities. to be honest, it is not just the u.s.-china trade deal and tariffs better the issue.

there are a whole range, as we all know, of domestic security rules that can be used to make trade difficult between china and the u.s.. there is always a chance of other sorts of political wrangling that can go on with 5g and whatnot. it is not really ever going to be over, but it certainly would be a big relief if there is a trade deal on tariffs. sophie: given the political wrangling in asia, indonesia holding elections in april. we have traders petitioning -- positioning ahead of that with indonesia. how are you positioning? john: i'm not a next word on any one of those countries of those countries. i do know in india, people are saying it will be a very challenging election. certainly, the central bank there have given him a boost by being more dovish than anybody had expected previously.

that should not be good for the currency, but it is held in pretty well. once again, indonesia, i am not an expert on that one, but the long-term outlook for indonesia does look good economically. sophie: thank you so much for your time this morning. nikko asset management chief global strategist john vail. you can get the stories need to know on today's edition of daybreak. bloomberg subscribers can go to their terminal and it is also available on mobile on the bloomberg anywhere app. you can customize your settings so you get news on the industries and assets you care about. this is bloomberg. ♪

haidi: this is daybreak asia. i'm haidi stroud-watts. sophie: i'm sophie kamaruddin. china has announced more details of its ambitious plans to challenge silicon valley.

wanting to tie hong kong and macau closer to the mainland as they tried to build a metropolis. tom mackenzie has the story in beijing. what more do we know about this? tom: we already knew this was a plan that beijing was working up along with their counterparts in hong kong. this blueprint that was released thely flsheeshed in details. integrating hong kong and macau with nine cities on the mainland. in terms of transport, infrastructure, but also trade, finance and technology. china is notat wavering from its technology ambitions to be a key innovator. this is part of the plan to avoid that dreaded middle income trap. it is a crucial project. it is seen as a crucial project by policymakers in beijing in terms of china's direction of

travel in terms of development. they also hope it will be a plan and strategy that will elevate the yuan. yuan clearing facilities. companies in the region will be able to issue yuan to bonds. this is a region that totals in terms of resident numbers, 67 million. a $1 trillion economy. if it was a single entity, it would be the fourth-largest exporter above japan. very ambitious plan indeed. does: what kind of role hong kong play given that shenzhen and macau have been earmarked for different roles in the greater area? john: policymakers want to leverage the transparency and the trust that is embedded in the hong kong legal and financial system. more transparency and trust then you would have in the chinese mainland system. they want to put that in play in the greater area because they want to encourage international investors to get involved. they have described this as a

litmus test for some of the opening up reforms and market access reforms they expect policymakers to be pushing through. hong kong will have a very important role as a financial hub. macau will be the international tourism hub, but also clearing facilities for brazil, portuguese speaking countries. guangzhou will be an administrative center. haidi: big ambitions. tom mackenzie there reporting in beijing. coming up next, bhp may enjoy a boost after the dam disaster pushed up iron ore prices. we will take a look at what else could help the bottom line and whether this is one miner that can shore up the production gap left. this is bloomberg. ♪ this isn't just any moving day.

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>> this is daybreak asia. president trump has called on the venezuelan military to make a choice between nicolas maduro and opposition leader one cueto. america and 30 other countries recognized assembly leader guaido as venezuela's interim president. he says the days of socialism are coming to an end in latin america and out the left will never cake control of the usa. president trump: they are turning the page on socialism, turning the page on dictatorship, and there will be no going back. [applause] new survey says the global

slowdown has left growth at its weakest since the financial crisis. the ubs suggests expansions slowed to 2.1% at the end of last year, which would be the worst since 2008. an early reading for the current quarter suggests a slight improvement, whether what we need to be a dramatic change to reach the 3.2% pace ubs initially forecast for the march period. eu banks, money managers and other financial trade in the single market have won formal approval to use u.k. based clearinghouses in the event of a no deal brexit. it will recognize clearinghouses run by the london stock exchange, london metro exchange, and the intercontinentalexchange if the u.k. leaves the eu without a deal. australia says weak production this financial year will probably total 73 million metric tons.

that's up from the official december forecast of 17 million tons. the bump in the west upset a shortfall in eastern states where growers are battling drought. sliipping almost 8% this year. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts. this is bloomberg. sophie: thank you. let's check in on the market action in australia. pulling up the board to see how aussie shares are faring. asx 200 rising for a third day, led by tech. while health care and consumer staples are weighing. the aussie dollar trading ahead. of the minutes do this morning. some big movers in sydney. blackmores diving the most on record as chinese sales hit its profit.

sliding after cutting full-year guidance. the company will not be paying an interim dividend. aussie shares jumping to the highest level in 19 years as it exceeded the forecast once again. some other movers. fiscal 2019 forecast amid market share loss in the u.s.. coles under pressure as it plans a strategic refresh to address headwinds in the wider market. the company will not be paying an interim dividend. emeco falling the most since 2017. it is anticipating a strong market in the second half. the company says it is committed to invest in significant core asset. one optimistic picture. ioof climbing the most in more than 10 years, with first cap underlying profit rising 6% on the yearly basis. the wealth manager says it will encourage combined cost of $20 million immediately. haidi?

haidi: we will stay with earnings and the world's biggest mining report. the backdrop of rebound in commodity prices. paul is here with a look at what to expect. you are watching bhp. paul: bhp will report after the closing australia so we are impacting -- expecting impact of $4 billion . one of the questions we will be watching out for is what bhp is going to do with the extra cash. will it get returned to shareholders, more picks? we have seen the iron ore prices rise pretty steeply on the bad news from brazil. specific to bhp, they have had production issues with the train the realm it -- train derailment. full-year net income is a miss. $341.2 million. costs for oil search up behind

the earthquake. the focus will be getting cost down to nine dollars, $10 a barrel of oil. they also say they have significant funds for the png lng expansion. oil search is signaling some brighter days ahead. sophie: let's turn to blackmores having a rough start to the session, falling to an august 2015 low. falling by as much as 35%. this on its warning from china. what is the picture? paul: if you take a look at the today chart, a picture tells a thousand words. the share price stepping off of a cliff. blackmores relies pretty heavily on china for its business model. we are long way away from the days of 2015, 2016 where chinese tourists would fill up their suitcases with blackmores

products and haul them back to china. we are long way from that now. blackmores also announcing a cost-cutting program which should take place over the next three years to trim $60 million in cost. you mentioned ioos. a fairly rough year but it looks like the worst is behind them. share price movement is to be any guide. million,e, $135 compliance cost of $20 million to $30 million. executives over a lack of credentialed discipline which came to light during the commission and misconduct in the banking industry. haidi: paul allen with a look at the earnings, what is on the earnings beat. we will be also be joined by the oil search managing director david button to get his views on those results that dropped earlier. it will be his first interview post-results. don't miss out on that.

oriental saysin despite the slowdown in china, the market for high-end hospitality remains robust. james riley gave us the latest on expansion plans. james: we are a modest sized hotel group. 31 hotels. some you would speak to have 4000, 5000 hotels. in that context, the important thing for us is to have a limited number of quality property in locations. in the middle east, i would hope to see we have six or seven properties over the next five or six years. >> can we circle back to home? we are trying to find new answers in terms of the strategy of hong kong. how strong after this asian holiday we have had, what have you seen? demand forn, the

luxury hospitality remains robust. i think we are going to continue to see that because a volume of people wanting to travel and wanting to have luxury hospitality experiences is growing. particularly out of china and india, we are seeing a transition in the luxury market from people wanting to buy products to wanting to buy experiences. that is a very important development from the hospitality sector. yousef: we had a series of data points that underscore how real the chinese economic slowdown is and what kind of ripple effects it has across industries and asset classes. what is your read on the slowdown and what are you doing to offset some of the impact? james: from my point of view, it is a slowdown, but it is a slowdown of continuing growth. i think that is very important to remember. from a small business like ours, there is so much capacity for more business. the direct impact is not that

obvious. let's say in hong kong, last year, we had an extremely strong year. the three properties we have on the mainland, trading is pretty positive. from our perspective, the impact is modest. more broadly for the group, mandarin oriental, there has been a greater impact. again, a positive you about the outlook for the china market in the long-term and see the slowdown is something as a short-term issue. manus: you have 31 properties globally. what are you seeing in the u.k.? a major refurbished in london. what can you tell us about the impact, if at all? are you seeing a step up because of sterling falling? james: we unfortunately have not gotten immediate -- having completed the refurb, we had a fire so the actual hotel does not open until april. the hospitality element in terms

of food and beverage, and reopened at the end of december. we were seeing quite a strong market at the end of the year. i think the beginning of this year has started slowly and a certain amount of uncertainty about the outlook for the u.k. at the moment with the uncertainty around brexit. yousef: investors are holding their breath around the trade tensions between the u.s. and china. signals over the weekend were positive. but as you look back at what has been a standup that has lasted a year, is it beginning to show in terms of what tourists do or how they behave when it comes to your hotels? james: it is not really having a significant impact. being on the luxury end of the segment, there is not a dramatic impact. james rileywas speaking earlier to bloomberg daybreak: europe you. coming up, we will be getting the inside track on financial implications of brexit. joining in the studio by the

lord mayor of the city of london. this is bloomberg. ♪

haidi: we are counting down to asia's first major market open this morning. a tepid start after the regionwide rally yesterday. wall street trading overnight, u.s. markets are closed on account of president's day. a mix in the previous session. u.k. futures looking lower, .3%. big earnings particularly in australia. news ascending the stocks a little lower as well. i'm haidi stroud-watts in sydney. sophie: i'm sophie kamaruddin in hong kong. one major brexit headache has been solved. will nottives traders face disruption on trillions of dollars of trade regardless of the outcome of the split. it is a significant boost for the city and will be welcomed by

our next guest. peter estlin is lord mayor of london and is in hong kong on a four-city tour around asia. here.now, you are six ways to go before the march 29 deadline. how are you reading this news about derivatives trading? is that progress when it comes to curbing financial fallout from brexit? mr. estlin: the regulators on both sides of the channel have really worked to put in measures to ensure stability. something the city has argued for, but it has been highly responsive on both sides. a very good outcome. sophie: we also have officials from the ecb tsonga majority of the brexit procedures for banks have been completed. they want bank like investment firms but under the ecb's supervision. what is your take? mr. estlin: again, both sides, ecb has ensured we

have continuity of business. there is some fine-tuning required, but either way, whether it is a no deal or a deal, either outcome, we will get financial stability. haidi: i have to tackle when you talk about continuity of investments -- how difficult is it in your role trying to sell investment in the city of london to strengthen these investment and trade ties when there is no certainty when it comes to policy? you look at the various outcomes, it is not very binary as to what we are expecting. mr. estlin: you are right. in terms of the uncertainty of brexit, it has been very frustrating. in many ways, it is huge levels of innovation that is taking place in the city and across the u.k. last year, another 18% growth in venture capital going to fin tech. we have innovation in cyber. in many ways, i'm pretty

confident that as we look beyond brexit, we are going to enjoy a period of growth that is associated with the industrial revolution. that is where the u.k. strengths are. haidi: in your current role, you have taken a sabbatical of your role at barclays at a senior advisor. i wonder if you can put your hat on and tell me your views on how brexit will play out and how potentially disastrous it will be for levels of investment for the city of london. mr. estlin: most of the major banks and barclays specifically have prepared for any outcome. in barclays, they have moved about 200 of the 45,000 british people over to dublin. what they are seeing is actually increased growth. now, that is coming largely from the innovation sector rather than some of the key, more

historic areas. we are also seeing growth in infrastructure. a large amount of that in the east. we are seeing quite a lot of infrastructure growth in the u.k. as well. we are getting in with investment from sovereign wealth funds, venture capitalists. in many ways, we are in a position of two halves. short-term frustration with brexit creating uncertainty, which is annoying. but we have the longer-term outlook which is quite exciting. sophie: as you pointed out, you are here to discuss potential collaboration opportunities with cities across asia, hong kong, tokyo, seoul, and singapore. one of those areas is financing and offshore trading, also on your agenda. what type of strategies are you seeking to ensure these ties will be strengthened? mr. estlin: we enjoyed today,

the u.k. and hong kong, very strong trading relationship. that has been boosted by the greater bay announcement. that is a large market opportunity. so, the u.k. looks at itself as the western end of the belt and road. we have a lot of capability around financing and professional services. but it is something to do collaboratively. hong kong's position as a gateway to china is really important. for us, it is how we collaborate to finance these major projects. so, with hong kong's relationship, that is an important piece of it, but we also have key relationships with international investors in london. it is bringing those two together. sophie: collaboration on one hand, but competition on the other. innovation and the building of a talent pool in the u.k. in an area such as fin tech -- are you seeing more drivers to ensure you are well-positioned? mr. estlin: there is

competition, but with the younger generation, a much more collaborative engagement. we have seen that and hubs, tech cities, where you have young people sitting side-by-side, sharing technology. that has created the growth. we have 75,000 fin tech people now. 40% of those are from international locations. quite a vibrant ecosystem that is encouraging. yes, there is some competition, but it is more around how you play together in a win-win culture. haidi: before we let you go, quite frankly, would it make your job easier in the long run if there was a second referendum? mr. estlin: frankly, i don't think so. the british people have made a decision. arguably, what they want is to make that decision happen. for parliament, we have been advocating we want the

certainty. make the decision and let's get on with this. you have a deal on the table. that is the start of an ongoing relationship. it is to help us with drawl, not the long-term future and that is really what people want to focus on. actually moving on with the 21st century and the opportunities that has created. sophie: thank you for sharing your thoughts as we count down to the march 29 deadline. prospects of strengthening ties between the u.k. at asia. peter estlin, lord mayor of london. don't forget our interactive tv function, tv . you can watch past interviews as well as dive into any of the securities we have been talking about. you can send us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪

sophie: this is daybreak asia.

i'm sophie kamaruddin. haidi: i'm haidi stroud-watts. a quick check of the latest business flash headlines. struggling maybe once the closer to rescue with delta and easyjet ready to pump in more than $450 million. a group of investors are evaluating the financial needs of a revamp after what would be its second bankruptcy in a decade. the plan to be discussed by delta and easyjet could see an injection of $1 billion total. sophie: jet airways is selling a majority stake for one rupee, about one u.s. cent. a consortium of banks will become controlling shareholders after the deal is voted through on thursday. it is india's biggest full-service airline and now 24% owned. it has 14% of india's domestic air travel market. haidi: norwegian air travel dive to a seven-year low after

offering heavily discounted shares to shore up the balance sheet. it is offering stock at 33 krone at these, far below friday's closing price of 97 krone. it is down as much is 15%, the lowest since june of 2012. giving the carrier some breathing space after the british airways owner walked away last month. ministernd's prime says things are still rosy with china. she is facing increasing pressure from opposition lawmakers who claim the ties may deteriorate after the government says it has major security concerns about allowing huawei to enter new zealand's 5g network. matthew brockett joins us now.are there signs china is retaliating new zealand over huawei and do we know where we are at with the decision? matthew: well, there are some signs. i think it is fueling the fears. they started earlier this month

when a new zealand playing down for shanghai had to turn around midflight, apparently because it did not have the right paperwork to land. that seems relatively innocuous, but within days of that, there were signs that perhaps china was sending new zealand a bit of a message. the launch of the year of tourism was postponed because chinese officials could not make it. an exporter started to complain about shipments being held up on the chinese border. there were reports on the chinese newspaper of tourists canceling plans to new zealand. the prime minister's long planned visit to beijing is still in limbo. while each of these look relatively trivial by itself, when you add them all up, it does not paint a rosy picture and the opposition has been quick to jump on this and essentially accuse the government of mishandling this

very important relationship. sophie: given the less than rosy picture, just how important is chinese economic relationship to new zealand? matthew: well, it is crucial. china has become new zealand's largest trading partner. roughly a quarter of all of our goods export and buys a lot of milk powder, for example. chinese tourists have become crucial to our tourism industry which has grown in recent years. any culling of the friendship between the two countries could have significant economic consequences for new zealand. haidi: what is the government saying about its diplomatic ties with china? matthew: ardern has hit back quite forcefully at these claims. she says the relationship with china is complex, but still very solid. she has accused the opposition of fear mongering and peddling

false information. she is essentially saying there is nothing to see here. i think it is fair to say there will be lots of scrutiny of this relationship for some time to come. sophie: that was matthew brockett, our london bureau chief. coming up in the next hour, we will check the outlook for oil. look at how take a we are setting up for the rest of the market open. australia is online and trading. heavy news when it comes to earnings at the moment. the aussie dollar pretty steady. not much of a lead for wall street with u.s. stocks closed until president's day. we're looking at a lower open when it comes to tokyo and seoul market about to come online. it is wait and see at the moment as we have holiday in session, but looking for a plethora of fed and other central bank speakers this week.

coordinated over this dovish tilt we have seen. the rba minutes dropping over the next hour. this is bloomberg. ♪

haidi: a very good morning where the asian markets just open for trade. sophie: and i'm in hong kong. welcome to daybreak: asia. ♪ haidi: our top stories this tuesday, asia-pacific stocks set to drift with no direction from new york after a session in europe. the dollar is steady and again is weaker. automakers in the spotlight as exporters embrace new tariffs. -- embrace -- as exporters brace for new tariffs. sophie: and that's a rising that

the pboc will cut rates. the economy and inflation suggests some kind of move. let's check in with how markets are faring. the aussie dollar is little changed ahead of the rba meeting. how equityck in on markets are faring. the aussie sharemarket getting anda third day, led by tech financials. we did see weakness in the nikkei 225 after jumping more than 2% on monday. and coming through for the cost be as well. -- kospi as well. we're looking at automakers around the potential u.s. auto tariffs. honda has closed its factory in the u.k.. what production will move to japan. -- more production will move to japan. haidi: big gains in chinese equities on monday.

that theysuggested are maintaining their target at this point. is there conviction behind the rally? guest: there is a lack of conviction behind any sellers. that is what it comes down to. there are a lot of reasons to like chinese autos in the short-term. -- chinese stocks in the short-term. there is plenty of stimulus in the pipeline. the price-to-book ratio for the shanghai composite got back down to record lows that it hit just before the 2014-2015 ramp-up. there are factors like that going on in this seems to be -- and there seems to be a lot of foreign appetite. that tends to be foreigners coming in. there is plenty of appetite there.

it might cause a little bit of retreat. but absent any bad news on trade, and the big party in march, itng up is hard to see a major pullback. i think the rally looks sustainable for the next few weeks. the em when it comes to space, the head of management coming out in favor of stocks. is there a reason to be optimistic about that sector? garfield: a lot of that comes back to china as well. was china's meltdown last year, an extraordinarily bad year for chinese stocks. you helped to keep the pressure on em stocks. help to keep the pressure on em stocks. there is pressure on china to buy their exports. if china is looking like it can

curve the equity side, that can be helpful for emerging markets. i think it will be much more fragile than the chinese rally because that economic news might be good news for chinese stocks because of the stimulus idea. it may not be good news for non-chinese stocks. they are getting the week demand side of things. weak demand side of things. haidi: they are confirming the auto tariffs will not be implemented as long as trade talks continue. but it is another headwind for broad sentiment. garfield: yes, and the medium-term trade remains in enormous problem. the market seems to be quite happy to trade. talks of can-kicking. but in business, you want certainty. in the next three months to six months, you may or may not have tariffs. there may or may not be

enforcement with mechanisms brought in. medium-term.e some of the central bank efforts to turn the global economic picture around. i think you need clarity with what is going on in trade. thank you so much, garfield reynolds in sydney. on more of the story on the bloomberg fm live go. there is commentary as well as analysis from bloomberg experts and editors. find out what is affecting your investments right now. let's get to first word news. chief brexit negotiator is open to a custom eu accepted the uk's .ecision to leave

any negotiation differences are pragmatic issues. the eu will not reopen talks on the terms of the brexit deal. managers and other financial traders facing single markets have one form of approval or another for the u.k.-based clearing houses in the event of a no deal brexit. the securities and market authority will recognize clearinghouses by the london stock exchange. u.k. leaves the eu without a withdrawal deal. the reserve bank of india is handing part of its topics to the government. cash to fund populist programs ahead of the election. he r.b.i. approved a dividend of about $4 billion. the second straight year the bank has made an advance payment to the administration. the cash will fund billion dollar programs to support rural communities. brazil is banning a suspect the

-- they must type be decommissioned and removed by august of 2021. owners can furnish plans for reinforcing and repairing current dams. a dam burst last month, killing 169 people. detailss announced more to link hong kong with macau and create a version of silicon valley. the program will turn the greater bay area into an innovation hub and send shipping trade to make hong kong a global leader in finance. there are 60 million residents and a trillion dollar economy. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 100nalists and in more than

-- and analysts in more than 120 countries. sophie: japan's economy minister confirmedhat abe has with trump that auto tariffs will not be applied to japan as trade talks continue between the two countries. in cio this, let's bring of fixed income. difference ofa use when it comes to the outcome for the trade talks between the u.s. and china. these auto tariffs that i can other later of complexity to the trade picture. -- these auto tariffs adding yer of complexity to the trade picture. it has been two years that we have been waiting for the trade war to have a catastrophic effect somewhere.

like the doge bit bed doesn't bark. -- the dog that doesn't bark. been a lot of noise. in terms of the actual impact on the ground, we haven't seen it. and that should not come as a big surprise. the tension is there. and i don't think we will see a rapid de-escalation of the tension. that i don't think it will be translated to permanent, meaningful increases in tariffs. sophie: and the fed could still be on a tightening path and 2019 given there won't be much of an impact on consumption. the risk will be contained. what is driving your view of the rate hikes from the fed? it is more that i am surprised that the market is as swift as it was pricing out rate hikes. the next move will be a rate cut.

i think that is probably incorrect. i think the market is getting ahead of itself. if you think about the change between december and january, the fed talked about several factors that influenced what it was doing. it pointed to financial conditions. wasif i looked at what underpinning the tightening of financial conditions, it was the equity markets. they are recovering. the underlying u.s. economy is pretty strong if i look at what is -- at everything that is happening with the. it.appening with haidi: our markets getting too comfortable at the moment? my view is that the market is getting a bit too comfortable with the idea that the fed will never hike again. wages, laborthe

markets, underlying gdp growth not just in the u.s. but around the world, there is moderation. but it is not moderation that is dramatic enough to prevent any more rate hikes. there are the rate hikes that we have talked about. on the other side is this idea of what they do with the balance sheet. one of the game changers is that that is also on the table. we start thinking about the balance sheet being on autopilot. how much divergence is there in the market among the big investment houses as to where that runoff will end? morgan stanley is seeing 3.8 trillion. jpmorgan at 3.2 trillion. do we need a bit more flexibility when it comes to thinking that the fed is actually going to tweak this side of things? know, i would take a

slightly different view here. in the sense that i think that we are focusing too much on the fed's balance sheet. so in a sense, if i look at where i see the fiscal deficit going in the u.s., that is expanding. that is the bottom line of that. again, the possibility that the fed runs off more rapidly. in the end, i think it is a bit of a wash. the precise dollar amount of the endpoint is probably somewhat misguided. focused, to be honest. i think it is less of an issue, perhaps, than people think. what is the trajectory for u.s. yields -- sophie: what is the trajectory for u.s. yields? sonal: i think we can go to 3.5, maybe higher.

we can definitely talk more about whether we think a recession is imminent. and here i don't think it is imminent. at some stage, will there be a recession. at someon't know -- stage, there will be a recession. but we don't know if it will be 18 months or two years. if you take away that immediate fear of recession, the ceo -- the yields go substantially higher. with at a doubt, we can see long end rates going to that level. that nominal growth trade in the u.s. is pretty substantial. it continues to be that way. haidi: still ahead, we will get and herm sonal desai

views on china. plus, china's tech giants are lobbying for more changes from hong kong when it comes to ipo's. this is bloomberg. ♪

haidi: this is daybreak asia. economychina's slowing and use of inflation is predicting the pboc will lower borrowing costs. analysts are split on which rate is most likely to be cut. our china markets reporter joins us now. what is the window of opportunity for the pboc that analyst are seeing? >> the most fundamental reason is that the economy is really week. -- really weak. to investment,

everything is sluggish. it is worse than expected. and the start of 2018 did not really help to support the economy. and as you mentioned earlier, inflation pressures are affecting it. that means if the pboc does ease, the monetary policy between china and the u.s. is not diverging. so it is raring to cut rates. >> targeting that benchmark is not something they have done in a long time. tian: the benchmark interest is really blunt and aggressive. it is a double-edged sword, actually. it does lower the costs for almost everybody in the real economy, but they will have much more incentive to lend to smaller companies and private companies. sidee same time, the bad

of the benchmark lending rate is that the u.n. will face a lot more pressures. it does make more sense for traders to back the currency and create asset bubbles in the stock market and emerging markets. that is what we saw in 2015 when there was the last round of cuts. thank you so much for joining us. let's bring sonal back into the conversation. suggesting that there are real .ees, deflation going back to the story talking about china's economic slowdown, what are your expectations for further compression of bond deals in china? sonal: i think we probably will see them. authorities in china definitely have enough tools at hand to buffer the economy. it is clear that is where the focus is right now.

overall, i don't think the enormous quantity of pessimism with respect to china -- we don't really share it as much. i think the chinese authorities are really focused on making sure that we don't to get a hard landing. and i don't think we are getting a hard landing. the tools as mentioned by tian, we have the low inflation pressures. that means the folks will continue to use those tools moving forward. all is think the aim at to regenerate massive quantities of renewed credit in the economy. i don't think that's were the focus of the authority is. the focus is on gently easing down to that growth rate level. and i think it will be able to change. haidi: the transition of lone

markets and credit starting to play through. let's take a look at the yield spread compared to u.s. treasuries between the chinese .0 year it is approaching a nine year low. that is a pretty big gap in terms of the comfortable range. the governor has expressed his levels of comfort by that. is there a concern that given we are seeing growing defaults across the chinese economy that we are seeing increasing distressed companies come to the fore? is their systemic concern that we will see further weakness in the yuan given the backdrop of not as much weakness in the u.s. dollar? sonal: let's focus on the defaults. there has been a lot of discussion about defaults, without a doubt, in china. i think yes. all the numbers are startling and dramatic. the 30% increase in the default

rate -- we don't need to balance that against the fact that the overall default rate in china is substantially lower than high-yield default rates. is a nascent corporate bond market that is still emerging and growing. is relatively healthy that we start seeing some of these defaults. run, it will create a little bit of panic in market. .- in markets as china matures and becomes increasingly more developed, we need to see markets more adequately priced. i am relatively encouraged that we are seeing some of these defaults happening. i don't think we are in a position where we will see a massive devaluation on the back of these interest rate differentials. see u.s. rates going up

again as we go further down. i am definitely not alarmed right now at what i am seeing. sophie: and you are anticipating expansion to avoid a hard landing. we did see credit growth hit a record in january. so what is the trajectory going forward? >> everything the president has said indicated his discomfort. i think, to some extent, the number of defaults we are seeing is a reflection of the desire to maintain this balance, if you will, between maintaining credit flowing and at the same time, slowly trying to address the issue. we are seeing an attempt to really make that balance.

so far, so good. i would not be surprised if we saw additional moves in an ongoing way. what our priorities that you see that will be outlined by the leadership? thel: i'm not sure what leadership will outline. i will say that from my perspective, what would be great to see is a renewed strong commitment to growing the private industry component. this thely financing are reform of the financial sector. the decades moving forward, china to have that strong, healthy, private sector. i hope to see a renewed commitment to reform pushing in that direction. sophie: thank you for visiting us this morning in the hong kong studio.

canmber, bloomberg users interact with the chart shown using g tv . andh up on key analysis save charts for future reference. this is bloomberg. ♪

this is- sophie: sophie daybreak asia. haidi: check of the latest business flash headlines. boosting a dividend payout after a 13% annual profit increase. higher oil and gas prices helpe thee company overcome closure of plants and pipelines. vitamin maker black maurice slumped the most on record in sydney after forecasting second-half revenues to be lower than the first half of the year. -- they blame consumer

habits in china. a2 milk. zealand's haidi: honda will close its factory in the u.k. in the biggest blow yet to the british auto industry that is already reeling from cuts and lost production in the run-up to brexit. car factoryargest employs three flight -- 3500 people to make the honda civic. 90% of the cars are being exported to the european union and production is moving back to japan. sophie: no more one dollar milk for aussie shoppers today. they are upping the price to support local dairy farmers and will pass on all extra profit to suppliers. supermarket chains have been under fire from the government. local farmers are already reeling from a record drought. haidi: coming up next, we will take a look at why investors

will have the r.b.i. deviating away from it start. the minutes from the latest meeting. we will get more insight from the reserve bank of australia. this is bloomberg. ♪ the latest innovation from xfinity

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sophie: this is daybreak asia. the first word headlines. a new survey says the global slowdown has left growth at its weakest since the financial crisis. a ubs suggests expansion slowed to 2.1% at the end of last year, which would be the worst since 2008. an early reading for the current quarter suggests a slight improvement. they would need to be a dramatic change to reach the 3.2% ubs initially forecast for march. singapore is opening its squalid ahead of elections that could come this year. the predicted is predicting a budget deficit of .7% of gdp through march 2020. that is compared with a surplus

of 4.1%. the budget boosts spending on health care for the aging population. offering some people a tax rebate and tightening curbs on foreign workers. a populist web vote in italy has decided to maintain unity with its political leaders by backing immunity for the leader. supporters were asked whether salvini should face charges related to his refusal to let a migrant ship dock in italy last year. 52,000 people voted, with 59% in favor of keeping his immunity. australia says weak production this financial year will probably go to 17.3 million metric tons, with western a trillion delivering a bigger then expected -- western australia delivering a bigger than expected output. a shortfall in eastern states where growers battle drought. eastern australian wheat

futures have slipped nearly 8% this year. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts. this is bloomberg. rba minutesng the of the latest meeting crossing the bloomberg. they state on hold, citing trade tensions, domestic demand related to china. how future consumption decisions is a key risk for the outlook. consumption is at risk with house prices in australia, like in sydney and melbourne. australian bank and oughof is no need for adjustment and policy, but noting significant uncertainties around forecast and seeing si scenarios where a hike or cut would be appropriate. a key dovish point in the statement. a lot of analysts have pointed out the minutes and the policy

statement itself was a little misleading given that a day after that, we had that speech from the rba governor sounding materially much more dovish, slashing the growth forecast and suggesting the next move could be a cut as well as a hike. these minutes noting the sharp drop when it comes to trade between the u.s. and china when it comes to the trade war. they decided not to make a move either way because there is still reasonable expectation that inflation and unemployment will continue to hold up for the australian economy. we will get more analysis and a minute but let's take a look at the markets. pretty holiday thin session in the fact we did not get much of a catalyst from wall street overnight. sophie: jumping into the terminal for the global macro movers. focusing on the aussie dollar which did see a bit of a pop on the back of the rba meeting minutes.

the assessment is that with rates futures going onto price stronger odds for a rate cut, that may hold back the aussie dollar. the kiwi dollar gaining ground. the yuan on the back foot, while the yen is holding steady. a mixed picture for the nikkei 225 adding a 10th of a percent. utilities lead the benchmark higher. we are seeing weakness in auto and retail stocks. in seoul, losing one third of a percent. consumer stocks. we are seeing sydney shares up a third of a percent, rising for a third straight day. some big movers on the back of some results. thinking over concerns of its chinese sales. to the next story, china tech giants pushing for more changes from hong kong when it comes to ipo's. barely a year since the hong kong market amended its rules to attract more holdings.

lulu chen joins aus. what changes are they seeking? lulu: more freedom in hong kong i've the us. two issues. they are asking for changes in corporate weighted voting rights and also for double dipping to be lifted. you might be asking what does this all mean, what is at stake? what is at stake is alibaba, tencent and hundreds of portfolio companies might benefit from these changes in policies, but some investors and regulators are concerned that by changing these policies, investors might be at risk. so that is a conflict. haidi: what kind of pressure are we seeing on the hong kong stock exchange? lulu: hong kong is facing a lot of pressure to maintain its status as the leading financial center. what we have been told is a lot of tech companies have pressured the hong kong stock exchange in the past for changes in these

policies. business ticketing that is backed by tencent, they asked for a waiver for double dipping to allow tencent to find more shares in its ipo, but was rejected. alibaba and portfolio companies have asked for more voting rights to be considered. that is something the hong kong stock exchange is considering right now and discussions are still ongoing. sophie: how did adopting shares work out for hong kong? lulu: it has been great for hong kong in attracting new economy shares. looking at the trading volume and amount of funding, last year, funding raised 5% to $15 billion. if this trend keeps going, hong kong has a good chance of competing with its peers in the u.s. and elsewhere, but still a lot of tech companies wanting more freedom. haidi: lulu chen in hong kong.

let's get back to the breaking lines from the rba minutes. getting some analysis from malcolm scott. it is interesting because the statement itself was criticized as being misleading because it day after, there was that speech that rocked expectations for rba policy. did the statement give us more? malcolm: the minutes give us more context about what they are worried about. it's household consumption and house prices. that is what is worrying the rba. they have been very sanguine about this. the bubble kept inflating, the rba publicly was saying this is ok. household finances are fairly strong. now we have at least a year of accelerating price declines in some parts of the eastern seaboard. the rba is admitting it is getting a little bit worried, especially should those declines keep going. they said in the minutes today

-- pulling up what they said exactly -- they said if we continue to see reduced price declines, the result will be higher unemployment and lower inflation. no central bank will be raising interest rates. they do hedge their bets a little bit. they said they could go each way, scenarios could call for producing interest rates and still scenarios that could call for increasing interest rate. they are still trying to go a little bit each way. the market has gone towards bets on declines for decreases to interest rates. the rba is trying to hedge its bets. haidi: the reason why they did not move off that in terms of keeping that hold was expectations, reasonable expectations that the labor market would hold up. malcolm: we are in this rare situation in australia. the labor market is very strong, unemployment around 5%, especially along the eastern seaboard cities. yet, we have declining house

prices. usually the house prices decline when the economy starts to tank. this time it is happening in reverse. that makes it a little unsettling for the central bank. which way will consumption go. so far, consumption held up. we have the headwinds of the upcoming election. we have all this talk around the election that retirees' savings might get taxed and all doubt creeping into the electorate. so far, the labor market has been enough to hold up consumption. sophie: turning from the rba to the rbi, india central bank agreeing to early payout to the government. does the r.b.i. need this capital? malcolm: the rbi under patel would have said yes. although the r.b.i. also paid an interim dividend. this is not unprecedented. the rbi pays its dividends like any central bank pays its dividend so the

government. about $4 billion worth. the government certainly needs it. they have been rolling out this income support program for farmers. they don't have a lot of spare cash to do so. they are running a budget gap of 3% of gdp. they need to make the first installments of this farm program by the end of march. this $4 billion worth from the rbi will help to do that. we should separate this interim dividend out from the surplus capital argument which is what contributed to the confrontation between the former rbi governor patel, who left amid what he said was personal reasons, but what many thought were around this acrimonious debate about what should be done with the rbi's capital. haidi: ouur malcolm scott in sydney. coming up next, oil climbing to a three-month high but the rally

that started last year may have been capped. our next guest explains why. this is bloomberg. ♪

sophie: this is daybreak asia. i'm sophie kamaruddin. haidi: i'm haidi stroud-watts. oil is now trading near a three-month high as the u.s. and china prepare for more talks this week. our next guest says the deal will not solve the world's problems. joining us now from singapore -- great to have you. is this the demand side you are more worried about? because u.s.haidi, and china might reach a deal. increasingly, it looks like it. but the chinese economy was slowing even before the tariffs war began. they have other problems, recent crackdown on peer-to-peer lending, and so one.

you look at europe. is germany on the brink of a recession? it will not solve all of the world problems. it will probably lift investor mood and oil prices a bit, but i think attention will remain on the rest of the global economy will perform for the rest of the year. haidi: i want to bring up this chart and talk about the supply side. in the meantime, it has been a strong start for 2019 in terms of opec committee and implementing these cuts. i'm looking at saudi arabia, planning to pump 9.8 billion barrels of crude -- million barrels of crude a day. is this in essence the whatever it takes moment for opec? the saudis in particular. we have seen declines, potential more sanctions on venezuela and iran as well. vandana: yeah, so the saudis, we have the opec and non-opec cuts

and moving from the market starting january. that has started at a fairly good compliance level overall. it is very interesting. the saudis going well beyond what they have pledged to cut. if you talk about the 9.8 million barrels a day, to put that in context, the saudi energy ministers said it would be the production for march. almost 1.3 million barrels a day below what they pumped in november. the saudis are all but tightening the market once again. they did that a bit in 2017, but i think they are doing it much more this time. we have a lot of other suppliers. venezuela is a major want. the oil market is keeping an eye on that. production had been on a very steep decline. the u.s. sanctions could go down much faster. of course, iran, nearly one million barrels a day has been removed as a result of u.s.

sanctions against that country as well. alberta, where they are mandated cuts ongoing. the recent outage in major saudi fields. libya has a major field that has been shut since december as well. all of these are starting to stack up and that is what the market has been paying attention to since last week. sophie: sophie in hong kong. tightening supplies from various producers. that is coupled with a not much an acceleration for demand growth. it looks like global oil markets will remain volatile this year. where do you anticipate prices will go? is the upside potentially limited? vandana: yeah, for the first half of this year, i am still sticking to $60 to $70. i know it is not a very exciting number, but it looks more safe, i think. i don't buy into price is going

much above $70, certainly not into the $80's. inhink opec and the saudis general will be more cautious about over tightening this year after what happened last year. the experience was on a good one for opec. they over tightened and put another $1 million back into the -- one million barrels back into the market. i think they will be modulating it much more this year. tweets onrump, his opec not to over tightened the market. the market not being as tight, as much tightness as last year. the second half of this year is probably going to be very different. it will be probably a year of two halves. the second half of the year is much change. limits on the fields that will take place next year. i think that is changing --

going to change a lot of the refinery economics, what kind of crude, enough of the right kind of crude available. we will see probably very huge swings in the traditional price relationships. and of course, as more pipelines are becoming available, it shou ld probably increase the growth for production. all bets are off in the second half of the year. sophie: turning to saudi arabia, we have mohammad bin salman in asia making visits the route the region. this as saudi aramco has been strengthening its footprints in asia, perhaps a resurgence in oil demand growth in the region. visito you think of his and the implication of saudi aramco's production? vandana: saudi aramco has been almost reinventing itself since the ipo was announced a few

years ago. it is becoming more global. it is not just in asia. it wants to develop a gas footprint as well. it is increasing its investment in the u.s. as well. it's probably more critical for saudi aramco because this is a natural, big and growing market for its crude. the company still remains majorly an upstream crude producing company. it seems like an act two of the saudi king salman. in 2017, he was on a tour of the region. pledged a lot of downstream investment. always downstream refinery investments in japan and korea for a long time, and china. they are growing now. they did so in indonesia, into malaysia. the refinery in india.

a furthereems to be growth footprint into south asia. it is a win-win for both sides. pakistan and india would like investment. aramco is a good partner to have, deep pockets. i think this is a trend you will continue to see to grow. sophie: thank you for joining us this morning. vandana hari. you can get a roundup of the stories you need to know to get your day going on today's edition of daybreak. bloomberg subscribers go to tv . it is also available on mobile on the bloomberg anywhere ap. you can customize your settings to you get news on only the industries and assets you care about. this is bloomberg. ♪

haidi: this is daybreak asia. i'm howdy stroud-watts. sophie: i'm sophie kamaruddin. business flash headlines. struggling maybe as that closer to a rescue i delta and easyjet coming in with $450 million. a group of investors are evaluating the financial needs of the revamped company of what would be the second bankruptcy in a decade. the plans will be discussed by delta and easyjet which could see a total injection of $1 billion. haidi: jet airways selling a majority stake of one u.s. cent

as part of a bailout plan by state owned lenders. the consortium of banks would be controlling shareholders. it is the biggest airline and 24% owned. it has 14% of india's domestic air travel market. sophie: norwegian air shuttle dives to a seven-year low after offering heavily discounted shares to discount the balance sheet. far below the friday's closing price of 97 kroner. it's an shares down as much as 60% to the lowest since -- 16% to the lowest since 2012. detailss announced more over its ambitious plans for the pearl river area and its challenge to silicon valley. policymakers want to tie hong kong and macau closer to the mainland as they build a high and metropolis -- high-end metropolis. david, what is china driving out

with this enormous plan? david: it has been a long time in the making. the document that came out last night -- interestingly, only in chinese which gives a sense on how china sees it being driven. the idea is to link 10 cities in the southern chinese mainland. the economic powerhouse of china. but also integrate hong kong and macau much more closely into it. hong kong is set to become this international financial sector which is going to be able to help drive economic growth, drive finance into southern china. macau these it's a becoming a tourism and leisure center, but also a center of a former portuguese colony. also a center for portuguese language yuan trading and other portuguese language trade. they are talking about reaching out to brazil. a huge, great big plan. the document being released is

light on some detail though. haidi: there is some anxiety for those that are resisting greater integration. david: that is one of the details i think we need to look at, because a lot of people in hong kong worry that closer economic ties with china is going to erode the one country, two systems, the autonomy that guarantees the independent policy and political system in hong kong. it is something that has been raised, the united states has raised it when it talks sometimes about the close economic integration of hong kong into china might start to erode the political freedoms that hong kong has. one of the interesting things that was not in the document is this whole discussion about which legal system is going to predominate. you think about the european union -- france and germany, all the other countries -- they have

different legal systems but they are not that different. above them, you have the european court of justice. there is no mechanism that has been lined so far in this plan to say it is the hong kong legal system or chinese legal system that will predominate. for hong kong, the independence of the judiciary is the absolutely cornerstone of the autonomy we have. sophie: thank you for that assessment. with that note, david tweed in hong kong. when it comes to stocks to watch, we will be keeping an eye on players like property that is looking well-positioned to benefit from development as it could expand its land. also keeping an eye on hsbc and hang seng. analysts are anticipating that may disappoint on the revenue line. haidi? haidi: the cfo will be joining

bloomberg at 12:45 p.m. hong kong time. before we hand it over to bloomberg markets: asia, let's take a look at how the markets oare setting up. the japan nikkei 225 seeing modest declines, 1/10 of 1%. steeper declines up 3/10 of 1%. automakers in light of waiting for donald trump to see what he decides about this report on auto tariffs. --are seeing clinton's of glimpses of shift from the aussie sector. our markets coverage continuing with bloomberg markets. the china open is almost upon us. this is bloomberg. ♪ i'm a veteran

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>> 9 a.m. in hong kong and shanghai. :his is bloomberg markets chennai open. >> no direction from new york, the focus is on china with momentum at a three-year high. >> exporters brace for a new tariffs, president trump must decide on national security grounds. china giving more details on its ambitious plan to challenge silicon valley.