>> a very good morning. australian markets have just open for trade. shery: good evening from new york. sophie: welcome to daybreak asia. haidi: our top stories, more signs of stability and monday. factory output rebounding last month. its biggest jump in seven years. warned abouteen negative rates.

theresa may's conservatives prepare for a potential snap election. jean-claude juncker versus the eu's patience will not last forever. we are getting a tidbit and it comes to the state of the aussie home market. they have been falling steeply. house month on month number for march coming in at a decline of 7/10 of 1%. from the nineng tens of one percent slide from february. continuing to trend lower but the rate of decline has seen an easing trend. it is becoming more geographically spread out. values down from six out of eight major cities. hobart one of the worst decliners. lower when it comes to those monthly home prices. shery: we will discuss what that means later but for now let's

get a check of how markets closed the friday session. we saw u.s. stocks and treasury yields gaining rally. s&p 500 saw its best quarter since 2009. health care also. industrials leading the gains on friday. we also saw lyft surging on its ipo. the first big tech ipo of the year in the u.s. .4%.utures also up higher, investors focusing on brexit. also what is happening on the trade front between china and the u.s. key questions investors will be asking this week. sophie: we have a very busy start to the second quarter. today we have the survey from the boj. south korean export figures and focus after chinese pmi data rebounded strikingly -- strongly on sunday.

s --ve the a climbing as we await data down under along with home prices we just got. this morninge ahead of tuesday's rba decision. we are seeing stocks in wellington under pressure, snapping a rise. dollar is maintaining gains at a five day high, up about .2%. aussie dollar easing somewhat after we have got that home price data. offshore yuan extending. strengthening despite weakness in the turkish lira. istanbuligest the election results. australia,heck in on gaining 3.7% this morning.

this is against the go-ahead to buy a producer for 25 million aussie in cash and 25 million aussie in shares. those are the movers so far. haidi: one to watch. let's get you the first word news. su: we start with italy. it is being warned there is no money for popular spending. growth grinding to a halt. the finance minister said the economy has expanded a percentage point less than its eu peers for two years. even germany faces a slowdown. the eu said italy's enormous public debt threatens other countries in the region. the ruling where party appears to be ahead in local elections in a vote that is testing the popularity of president erdogan. and the opposition are both claiming victory in s-10

both, while the opposition is certain to win the capital. taken overiance has 50% of the national vote with the main opposition camp coming in at 38%. the king of thailand has made a rare foray into politics. making it more likely a paramilitary party will take power following disputed elections. he has lived abroad in self-imposed exile after being convicted of corruption. the party linked to him claims to have won the election a week ago, while a pro-army party claimed to have won. president trump repeated his threats to close the border with mexico, saying the u.s. can accept no more illegal migrants. he says mexico must do more, to which the homeland security

secretary says is causing a meltdown on the border. the president also tweeted immigration laws can be fixed easily and claims democrats do not care about crime. authorities in bangladesh have arrested two of the owners of a commercial tower which caught fire last week, killing 26 and injuring at least 70. the 22 story complex had no fire protective staircases and some upper floors had been illegally constructed. the owners have been charged with negligence and violations of a building code and could face culpable homicide charges. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. china's first official gauge for march signaling stabilization, the world's second largest economy using one of the biggest concerns from a global outlook. tom mackenzie joins us from

beijing with more. is the manufacturing sector starting to were back? -- roar back? tom: certainly it seems to be green. 15.5 for the month of march, which was well above except tatian's, above -- above expectations and what we got in february. the biggest increase since 2012 in terms of the manufacturing gauge. nonmanufacturing also ticked up. when you peel back the top layer, you look at some indices that make up this picture and you see that new orders and new export orders were up strongly as well. new export orders rising to their highest level in six months. we have a terminal chart showing on. orders since early 2016. you get a clearer picture of the rate of growth. new export orders are still in contraction. but you did see a large tick up.

somesaid this is a sign policy measures are starting to be effective. they say they may dial back expectations of another rrr cup. our analysts say they think policy measures, easing policy measures will still continue because they describe this as a mixed set of data overall from what we have seen in the last few months out of china. industrial production or industrial profits dropping sharply in february. bloomberg economics are more cautious. but certainly there appears to be science that thing -- be signs things are starting to stabilize. shery: beijing extending an extension -- a suspension on auto tariffs. are we near a trade deal now? tom: you could certainly surmise this is a goodwill gesture given the time. and roberten mnuchin

lighthizer in beijing until friday evening negotiating with high-level officials in beijing. then of course over the weekend to get this announcement from the ministry of finance that these retaliatory tariffs will continue to be suspended. they were suspended in january, the first of this year. that has now been extended. imposedal 25% tariffs on u.s. autos on top of the 15% already in place. that suspension will be welcome by u.s. auto manufacturers and european auto manufacturers that manufacture in the u.s. like bmw. to, it is probably a nod u.s. counterparts. we expect the chinese vice premier to travel to washington this week to continue these conversations. both sides said they were constructive. mnuchin said he had constructive conversations with his chinese counterpart. shery: tom mackenzie in beijing, thank you so much.

isdays to go until britain scheduled to exit the european union and still no deal is in place. now theresa may's conservatives are taking steps to prepare for a potential snap general election. joining us now for all the details is reporter catherine. we could see more votes in the u.k. parliament potentially anchoring --inching closer to a general election. it will be another interesting week on brexit. guest: absolutely. markets will look to see if lawmakers can find any common ground on these exit options after parliament rejected all eight on the table last week. in addition i think it will be important to watch how things develop with the european union. eu president juncker said this patientshe bloc's with the u.k. will not last forever. i think investors will be keeping an eye on if those relations for a further as we

get closer to this date. todi: our be getting closer this idea that we might see a hard brexit? is that which traders are worried about? katherine: i don't think that is anyone's base case at this point but with 12 days ago it is definitely becoming more of a risk. i think it is pretty appropriate to say it is the worst nightmare for pound traders. the government's own analysis shows a no deal brexit would lead to significant depreciation of the pound. talking to people in the market over the past weeks and months, they had probably agreed with that assessment. shery: are they hedging? how are investors preparing for april 12? katherine: you are either getting out or you are buying volatility. week volatility on pound dollar options surged to the highest level since the aftermath of the 2016 referendum. so no matter what happens in the weeks to come, i think it is

fair to say it will be a rocky road there. shery: plenty to look forward to this week. katie, think you so much for that. still ahead, aragon claims victory in istanbul as the opposition looks to take the capital. we will have the latest on the turkish election. haidi: and looking ahead to this week's big data points. this is bloomberg. ♪

shery: this is daybreak asia. china's official factory output unexpectedly grew in march after three months of decline. 50.5.as 1.3 points to that was the biggest increase

since 2012. another sign of stabilization as stimulus entities to play out, let's take a look at all of that less the other major data points we are expecting. scotia bank's head of economic joins us now. great to have you. we should be past the early part of the year with distortion through the new -- lunar new year. does this give you a sense of hope we are starting to see politics -- and we are over the bottom when it comes to china slowdown? think we will definitely see a pick up in the private sector pmi this week given that the government has been stimulating the economy and there has also been monetary stimulus. also have to -- we tivoli --conomy at activity improve in the near future.

for that it is important to see what happens with trade talks between china and the u.s. so you are thinking the outcome of the trade war will have a meaningful impact on the u.s. economy? to suggest the chinese slowdown is almost an entirely domestic story. it is definitely a domestic story partially, given that the government has been trying to deleverage the economy, improved financial imbalances in the economy. so there is definitely a domestic side to the story, but there is also a definite impact coming from the trade conflict the u.s. shery: we are seeing this gtv chart on the bloomberg showing how the pmi data has affected corporations differently. we have seen china's small and medium-sized indexes strengthen while bigger companies have been

hit a little bit. how are the stimulus measures from beijing policy measures being filtered through the economy and what sectors are gaining ground and what other sectors are losing? well, it seems that the monetary stimulus measures are mediumt the smaller and and micro enterprises. i think we should see that area to rebound in the near future. and it also seems that any technology-related industry and higherturing, value-added industries will see further stimulus in the near term. shery: what about china's deleveraging efforts? how much pressure will that put on the chinese economy going forward? tuuli: it will continue to be a drag on growth, definitely. but i think there will be less focus on deleveraging in the

near future, given that it has been putting so much downward pressure on the economy. so the impact that we are feeling right now are really the deleveraging efforts from last year. haidi: so does that mean some of the structural issues that china has been battling with over the fast -- past five to 15 years is a problem for future policymakers? is there a sense that they can grow their way out of this conundrum? tuuli: it is definitely a big challenge for the economy and policymakers. promisingere has been progress on reform in the economy and last week we heard from the government that the economy would be liberalize further. there would be further equal treatment of foreign firms. i think these are promising steps that policymakers remain committed to solve the structural issues. haidi: we are also looking ahead

to japanese numbers, but i'm curious, we are seeing this call saying there is a 50% chance, it is a coin toss as to whether they delay or cancel the planned sales tax hike later this year. would that be a good idea given that the first time they raised the tax it was disastrous in terms of the impact on the economy? tuuli: it definitely was a big challenge for the economy last time around. it is a very interesting point. there is a chance they will delay that, that is for sure, given that it would likely cause a contraction in output in the fourth quarter of this year, given the tax rate hike will be implement it in october. but the government has also been planning some offsetting measures this time around which would not be significant. that said, if the central bank

does not have much policy room to stimulate the economy if needed, any stimulus would be more and more the responsibility of the fiscal side, and that is the challenge. do getand we central-bank decisions out of india this week. the expectation from bloomberg is they will potentially cut rates. how accommodative can central-bank policy makers go in asia, as they also have to grapple with inflation expectations? tuuli: i think asian central banks will be in a wait and see mode in the foreseeable future. u.s. sayse what the and how global uncertainty plays out. but i do think if they see softening in domestic demand in the region, then they will be ready to act. the reserve bank of india will likely be the next one to cut rates. haidi: certainly the fed giving asian central banks a bit more

breathing space. tuuli, always great to have you. you can get a roundup of the stories you need to know to get your day going in the monday morning edition of daybreak. bloomberg subscribers go to your terminal or your mobile in the bloomberg app. you could tweak those settings so you just get news on the industries and assets you care about. this is bloomberg. ♪ ♪

haidi: this is daybreak asia. shery: investors are walking the incoming results from turkeys elections which are seen as a key test of president erdogan's popularity. bloomberg has been tracking all the develop month from istanbul. erdogan's alliance is set to lose the capital ankara there is a lot of controversy in istanbul. where do things stand? >> it was a nailbiting race for

istanbul and it is completely up in the air. party candidates claimed a victory as well as the main opposition party. right now it is not clear where things stand and this race may continue for the next weeks to come. as you said, the ruling party may have lost victory in the capital on correct, -- capital ankara, but overall in turkey it has managed to stand its ground overall. of course this is a race which was a complete test of erdogan's popularity. his name was not on the ballot box but this is the first vote since turkey switched to a parliamentary -- from a parliamentary to -- haidi: given it is seen as a referendum on his popularity this not mean whatever the result we will see and more populous economic policy.

what are the major challenges for the economy? simin: there are huge challenges right now. turkey is currently in a recession. the first time in a decade. itlation is at 20% and prior was the highest in 15 years. and unemployment is at a nine-year high. there are also dangers of u.s. becauseh the washington is extremely upset with turkey for the possibility of purchasing a defense system from russia. president erdogan said this purchase will go ahead and it could happen as early as july. if this happens, sanctions could follow, and of course this could play into the turkish financial markets which has already seen huge selloff last week. of course turkey last week fromnted foreign investors shortselling the lira.

but we saw selloffs in other turkish assets instead. gains forst of its 2019. the yields at 18%. of course royer this year they have fallen below 14%. there are huge economic challenges ahead. this could play into the markets. haidi: perhaps more volatility ahead as we continue to get that split results from the emissions -- the elections. let's get you a quick check of the latest business flash headlines. shipments from iron ore operations this year are likely lower than expected because of disruption caused by cyclone veronica. problems theyo were already facing after a fire in january. they are expecting a fallen production of about 14 million tons this year. shery: tesla is preparing to

tell investors how many cars it built and sold in the first quarter and there could be a surprise in store. an experimental tool built by bloomberg to track the rollout of the model three suggests totals could approach 80,000 cars through march, far higher than analysts'estimates. the gap represents more than $800 million worth of cars. haidi: boeing is sending a software team to europe to brief aviation regulators after european safety officials declined to attend the playmaker's 737 max upgrade meeting last week. the e.u. is expected to play a main role. china and canada say they will be conducting their own safety assessments. one leading pilot union has good-sized -- criticize the plan as being insufficient. next, a bond bonanza. we will discuss the inclusion of chinese government and policy

fors and what this means ambitions for financial sectors opening up. this is bloomberg. ♪

su: we start with australian property prices, which continued their slide last month. lending standards minute hard to get financing and some buyers delayed purchases until after the upcoming election. housing values fell .7% in march, bringing the fall in the last year to more than 8%. sydney is leading the slump with prices 14% lower than their peak two years ago. two the u.k. now partya may's conservative is preparing for a potential snap election with 12 days to go into the u.k. potentially crashes out of the european union. the house of commons will take

control of brexit later monday, seeking a plan that can command a majority of parliament. may's cabinet is divided with some threatening to resign. china's first official economic gauge for march shows signs of a stabilization and then some. manufacturing pmi rose the most in seven years, exceeding all estimates. both new orders and new export orders rose to the highest levels in six months. all of this is seen as good news for global investors. this, as china's weakening demand had weighed on sisters like auto producers and commodity exporters worldwide. china says it will continue its policy of no tariffs on american autos and carports -- car parts of the hope of bringing u.s. china trade disputes to an end. they removed retaliatory tariffs on the first of the year. the finance ministry said it may date later but

welcomes new talks. the latest round moves from beijing to washington this week. president trump has repeated his threat to close the border between the u.s. and mexico, saying detention centers are full and the u.s. can no longer accept illegal migrants. he said mexico must do more to stop people heading north, which the homeland security secretary says is causing a meltdown on the border. the president also tweeted that the u.s. immigration laws could be fixed easily, and claims democrats do not care about crime. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: let's get straight to the market action and get a check on the aussie markets. sophie: aussie shares are adding about .75%.

gains from tech companies. ore and copper miners gaining ground. a decent start to the second quarter at the best -- after the best in nearly a decade. bond yields edging higher across the curve sending yields closer to the 180 zone. let's look at the aussie dollar, which is gaining about .2%. it rose to a five day high overnight but easing earlier as a latest home prices showed a continued slide. prices stalling in most areas and six of eight capital cities in march. let's check on woolworths after they issued an update. the group has completed the sale of its patrol unit and is planning a share buyback of 1.7 billion aussie dollars expects to complete and may.

to shut 30 stores over the next three years and two distribution centers. look at our take a other major market story. chinese markets could see massive inflow of firms as bond market gets included in a key global index today. chris, this is something of a win for reformists in beijing but in terms of the money we are expecting to see, what are we expecting in terms of actual inflows? vary athe estimates little bit. it starts from what economists or statisticians would call a fairly low base. in january, foreign investors had about 260 million dollars

worth of chinese domestic bonds in their holdings. trillionares with $6.4 that international investors have in u.s. treasuries. it starts from a low base, but estimates range from between $80 billion in in0 flows. a steady increase from this low base which we expect will happen for several years to come. shery: what will be the implication of this new stream into chinese markets? chris: there are three key implications to consider here. that of all, this inflow we anticipate will provide some support for the yuan's exchange rate. china has had a diminishing current account surplus over the years. some economists even anticipate that china will have a current account deficit in coming years.

so, this inflow of capital into the chinese bond market will be a source of support for the yuan going forward. a second implication haidi was alluded to earlier is it supports the efforts by the reformers in china, especially at the central bank, at the banking regulator, who would like to see the kind of pressure that foreign investors would bring for transparency, for pressing, for global standards. a significant presence of foreign investors will help that initiative. a third potential impact is as foreign investors get more and more invested in china, what happens in china's bond market will have increasing global implications. so when portfolio managers see

what is going on with their portfolios in china, it may have ripple effects on what they think about bonds in other countries. so, a variety of different effects that we will start to see as soon later this year. shery: thank you so much for that, chris. the head of jp morgan china is expecting the $13 trillion chinese bond markets to surge on its inclusion in the bloomberg barklay global aggregate index. he spoke exclusively to bloomberg. take a listen. >> when you look at the bond market, we still see global -- growth potential. the stock is not the size of the bond market. versus gdp in china it is only 90%. when we look at the economy, the size is anywhere from 200% to 250%. that tells you the foreign market is underdeveloped. that is the excitement. even when this market becomes

bigger, to properly represent gdp it has to be done through securitization of the debt. on the balance sheet there is a lot of regional banks. that needs to be more securitized, more market-driven and depressing. that is the whole point. development i think is undergoing a very temperate but careful, meticulous evolution right now and opening up. of chineseinclusion bonds on indexes, the impact will be what? >> it is huge. we are excited to hear the bloomberg barclays index has included the chinese government and policy bank markets to the index. know that of that, we -- if you look at the impact for

passive and active combined, it $300 billionup to in inflow. in, drivevestors come market peripherals. enhances thely risk offset ability for banks to free up capital and liquidity concern. so this development is somewhere that global investors can play a key role on top of that $300 billion of a start of cash coming through. how would look at properly pressing -- pricing risk. higher-yielding, or let's call it credit names. that's where i think global

market practices would help this market develop quicker. tom: since i last spoke to you earlier this week -- this year, what have you heard from clients in terms of their appetite and enthusiasm? has increased or are they more cautious now? mark: i think they are actively engaged in dialogue. separate dedicated sessions talking about it. it is unprecedented. the level of anticipation. 2018, the size of the bond fromt has generally grown around 1.6% to 2.3%. a big move on the low base. gdp, that market may grow in foreign anticipation. the number of anticipate's has

100.n from800 to 1 that's just 2018. that is before discussions that morgan, -- well, jp bloomberg,, actively exploring. when you look at all the signals from how it is, it is all trending in the right direction. bloomberg'surse parent company owns the bloomberg barklay is brand. we will be speaking to more guests about the significance. next, we are counting down to the bank of japan's business survey, bringing you those numbers as they cross the bloomberg. this is bloomberg.

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haidi: we are counting down to the major market open. has been a whipsaw session when it comes to treating in the u.s. we have at a settling somewhat when it comes to the treasury markets which is adding more positivity to equities. we are looking at broadly a positive session after a very busy week of data in asia. this is daybreak asia. shery: speculation of additional boj easing has resurfaced as the economy weakens and central bankers around the world sound increasingly dovish. the new head of japan's new decking lobby is warning against

deepening interest rates. ofexpect the latest survey business sentiment. ed rogers is ceo of rogers investment. ed, great to have you with us. we continue to seep all of these external risks for the japanese economy, whether it is the slowdown in china or trade tensions between china and the u.s. so, how vulnerable is the chinese economy and how has it affected business conditions so far? ed: good morning. thank you very much for having me back. look, the triangle of business and economics between the u.s., china and japan has never been more important to understand. seems there is positive outlook for the u.s. china trade talks, not a great benefit for japan in no uncertain terms. you have external

risks the domestic environment will still be more resilient in the japanese economy. does this translate to health in the consumer sector? ed: we think one of the most important numbers to come out recently was unemployment. it is now down to 2.3%. 163 jobare seeing openings for every 100 applicants. the shortage of labor in japan is now becoming very acute. will feed that is and into further growth in wages, and that will be very helpful in regards to consumer spending. just keep in mind that in october we have another 2% hike in the value added backs, and that is providing a bit of a break on consumer sentiment for the next six to eight months, we believe, in japan. haidi: we have also seen the likes of morgan stanley saying when it comes to that planned

sales tax later in the year, they are saying 50-50, so it could be delayed or called off. do you think that would be a favorable development given that the last tax hike was pretty damaging to the broader economy? ed: yeah. i am in the camp of let's take our medicine now, and it will be mostly preventative medicine. let's to --put the 2% on. the last hike was from 5% to 8%. a much greater increase from 8% to 10%. i think it will be less impactful than many believe. i also think prime minister abe is committed to getting this done now. we do not believe it will be postponed again. in terms of the structural changes, are we starting to get to the point where monetary policy has reached a pinnacle in terms of what it can possibly achieve?

we keep hearing this reiteration of whatever it takes until we get to 2%. we are near -- nowhere near 2% inflation still. ed: so you are asking the question we ask ourselves once a week at a minimum. it is a great question. we do not think we will see more negative interest rates. if you will, we have bottomed on the top tranche. i think they are still quite willing to live in general with 0% interest rate policy for a long time. commitment to that 2% target seems at this stage not even up for debate, frankly. there are voices of concern around it but in general the way japan works culturally, once we have set a target like this, we will go forward until we reach that target. that is a cultural norm. people need to understand japan will run itself the way it wants. i believe that policy will not change anytime soon. shery: so what is happening with

the japanese stock markets? this chart on the bloomberg showing japanese stock valuations against asian stocks are near the lowest in more than a decade. why are they lagging global stocks so much? ed: the bottom line is we still need to get japanese consumers and japanese domestic investors to come back into the market in size. if you will, they need to back their own country more. that is the simplest answer. days, weeksd hours, and months giving the more complex answer as to why japanese equities continue to lag, even though by many metrics, class of quantitative measurements, japan should be doing much better than it is. shery: so do you like japan? ed: we continue to make money there. in our japan fund we have only been down twice in the last 15 years. i think we 2011, could get a break for that. it is a tough place to make

money. i would say the data is asked -- the beta is expensive and the outfit is cheap, if you are familiar -- the alpha is cheap. you can increase your risk returns quite well with a significant investment. haidi: what do you see -- i am going to jump and get you the latest tankan survey numbers. than an expected slow down to 13 from 19 in the previous quarter. the outlook at eight, much worse than the 12. this is doing more buoyantly. 21 is what we are getting, a little lower than the 22 expected. outlook holding steady at 20 unchanged from the quarter before. that is for the large manufacturing sector outlook. more manufacturing index coming in at six against expectations

of 10. looking pretty dire. we were expecting a slow down when it comes to expectations of business conditions and the outlook going forward. how much of this do you see as the chineseion from slowdown as well as the u.s. china trade talks and the way that has really impacted sentiment? do you expect this is really just part of the seasonal effect we see, where japanese corporate tend to be bearish at the start of the year and gradually things pick up from here on? ed: two immediate bullet points i would keep in mind. one is still positive, the numbers are still positive. while weaker than expected it is still a positive outlook. two, these numbers are still all going to be dependent on how things go in the u.s./china talks and the macro environment which we continue to see improving, while at the same time the microenvironment in

japan, the most important numbers again, unemployment at 2.3%, and there is enormous business input into the political dialogue right now saying we need more workers, we cannot keep factories and stores open. much of this is starting now to reach the press. that will drive things going forward. there is enormous capital on the sidelines in japan. interest rates will stay low because the government wants to force his capital the work. right?but they are not, we have not seen much progress with wage gains, and we are also not expecting much in the way of how much investment will take place. a very conservative approach, there. ed: we would view that through a cultural lens of how japan operates. i would also say, it is becoming very public now, this debate of -- they will not college immigration, but do we need more

workers in the hundreds of thousands or potentially millions. the answer is clearly yes. you are running out of people to work in the stores and factories where they are needed. japan can continue to produce better, but it needs more workers to do so. and i believe solving that part of the equation is going to be very important for the overall inflation numbers going forward and what creates a more positive environment for japanese to be willing to support equities again. shery: a stronger japanese yen does not bode well for a positive environment when it comes to japan think. right now we are seeing the yen 87 thisround 108, plus year. are they roughly right? where do you put the japanese yen? ed: as you very rightly point out, japan continues to be a bit of a flight to quality market as far as dollar-yen is concerned. the yen in particular. we think everyone would be more

comfortable in a 110 to 117 range. macro forces being what they are, 108 to 112 is perhaps a better range. with the like to see it back at 120? of course. will that happen anytime soon? i don't think so. i also don't see it going to 105 either. i think we are in a fairly tight range and that will suit all parties. anywhere from 108 to 118. haidi: we have been in a tight range for a while with japanese yen. thank you very much. plenty more to come. this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: training gets underway

and karen and south korea. let's see how we are setting up. sophie. sophie: nikkei futures are hinting at gains of 1.5%, so we will be gauging reaction to the survey. it showed a deterioration in business conditions. as for growth expected to have dropped 7%. you are keeping an eye on rakuten. the company said it would have a valuation gain in the first quarter. watching reaction with the ceo, talking about its mobile plan for users. japan to play -- display is on the radar. they want a bailout deal. all right. coming up on the next hour of "daybreak asia," standard chartered's head of strategy joins us in hong kong. the bond market inclusion and the meaningful implications when it comes to financial opening

up. the market open in japan and south korea is next. we are getting a bit of a reaction to that disappointing read on the japanese survey. this is bloomberg. ♪ want more from your entertainment experience?

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haidi: a very good morning. i am haidi stroud-watts in sydney. asia's major markets have opened for trade. shery: good evening. i am shery on. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this monday, more signs of stability in china. the biggest jump in seven years. the move meanwhile darkening in japan. the survey was even worse than forecast in the first quarter.

sidesra weakens as both claimed victory. president erdogan's party looks certain to lose control of ankara. shery: breaking news out of south korea. we are getting the latest trade numbers. exports falling 8.2% in the month of march, which is a bigger fall than what is expected of around 7%. it is still a deceleration when it comes to the declines from the previous month in february, when we saw a double-digit decline of 11%. it is still a contraction for a fourth consecutive month for south korea's exports in the month of march. more than 8% contraction. imports falling 6.7%. it is a smaller fall than the previous month, but still a much bigger fall than what was expected. the trade surplus coming in at $5.2 billion. higher than much the previous month, also beating

expectations, but we have to mention that when it comes to exports year on year, it was a much bigger fall. more than 8% fall year on year. we have seen negative had ran -- negative headwinds come out of china. samsung's profit warning when it comes to shipments to china and other parts of the world, really that sector not recovering. we are seeing exports year on year fell more than expected in south korea, more than 8% year on year in the month of march. much get straight to the market action with sophie kamaruddin. sophie. sophie: we are seeing green shoots for tokyo stocks. the yen is reflecting some of this return of risk appetite, holding above 1.11 handle. holding steady. we have the boj survey to digest manufacturer index. koreae trade data from

exports, sliding for a fourth straight month and the korean won holding on to its recent gains. the march 26 level. staying firm. korean stalled gaining ground about .8%. the asx 200.n on set to extend gains for a sixth straight day. we saw a beast come through for all the assets from the strong rebound in chinese factory pmi, but we do have stocks and wellington losing ground this morning, off .3%, snapping a four-day advance. kiwi dollar trending higher along with aussie on the back of the data from china. haidi: let's get you the first word news with su keenan in new york. su: we start with theresa may. is conservative party preparing for a snap election with 12 days to go before the u.k. potentially crashes out of the european union.

the house of commons will take control of brexit monday, seeking a plan that could command a majority of the parliament. may's cabinet divided with some people calling for a hard split with no deal and others threatening to resign is that occurs. italy -- if that occurs. italy saying there is no money for populist spending lands. the finance minister said the economy has expended a percentage point less than its no. peers and will show growth in 2019 as germany faces a slowdown. best month, the e.u. said italy's debt threatened other countries in the region. to turkey now. the ruling party appears to be .head in local elections in a testing the popularity of theident erdogan, opposition claiming victory in istanbul. the capital. his allianceays

has taken over 50% of the national vote while the main opposition camp is at 38%. to thailand now. the king made a rare foray into politics, provoking honors. making it more likely a promilitary party will take power following disputed elections. lived an exile after being convicted of corruption. a pro-army party claims to have earned the most votes as the counting continues. 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. i am su keenan. this is bloomberg. shery: thank you. china's first official gauge for march indicates the economy stabilized further come offering some relief for investors worried about the global outlook. let's run through the numbers. , can we take this

for stabilization in the chinese economy or is it still the lingering effects of the holidays? : if you look at new export orders and new orders, both of the are six months -- future activity is rebounding. as you mentioned, the overall index itself had the biggest rebound in seven years, so there is no doubt it point to stabilization. the stock market is doing better in china this year. business sentiment is stabilizing. those indicate manufacturers are turning a corner when heading in the right direction. is the stabilization key. how much better is another story, shery ahn. haidi: are there any reasons --

i suspect you are about to tell us we should be a bit cautious when it comes to being too positive about this reading. enda: new orders -- orders are in contractionary territory. of course, there is the lunar new year effect. always, the story remains the trade negotiations. they are making progress. we know that for my suite. they still have not signed off on a deal. much depends on the durability and how sustainable it will be. there are indications the many aacturing sector is turning corner. the plan stimulus is hoping things. there is a little bit to go yet before they are completely out of the woods. haidi: it seems like we are finally starting to see transmission. does it change anything when it comes to monetary or fiscal policy? enda: you would have to say, and indeed, looking at some of the commentary from the economist, it takes pressure off them to cash.ut extra they have already planned $300 billion u.s. in tax cuts and

they have taken steps to get the banks lending, especially the small and medium-sized enterprises, so if you're taking the view point we have a trade deal coming down the tracks, and the manufacturing sector is turning around, let's hold off on the stimulus side of things and see how we go. will have a bit of wiggle room. if we see the turnaround continuing, they will be happy. if that is not planning out, then china will have more work to do. stimulus on the table. shery: thank you. haidi: and occur in, who we all want to thank for joining us -- and the current -- enda curren, who we all want to thank for joining us. the outlook is stable. they have rated that as a plus. this is a saudi arabia and oil company, or saudi aramco.

or saudin oil company, aramco. we know this is -- that they plan to buy $60 billion of a stake in petrochemicals. we are hearing the rating has published saudi aramco's a plus first time r.b.i. rating and the outlook for the company is stable. still ahead, we will dig into the numbers in the boj's latest business survey and ask what they mean for the japanese economy. haidi: up next, we are talking to an investment manager about the global slowdown and the chances we will see a recession in this is bloomberg. 2019. ♪ 9. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney.

shery: i am shery on the new york. our next guest has a neutral outlook on asian markets, but cautious on china. joining us is the aia regional head of equities research. great to have you with us. it seems you are not the only one who is a little bit cautious about the chinese economy. we have analysts downgrading chinese stocks at the fastest rate in eight years. why aren't you concerned? >> the stocks have run up quite a bit in the first quarter. they are not as compelling as before. , arexport orders, pmi still in a contractionary mode. having said that, we're seeing pockets of improvement. overnight, we saw improving manufacturing pmi for china. that is very encouraging. we are probably going to see improving industrial numbers going forward. targetedovernment

stimulus measures are going to lend some support to stabilizing the economy. we are going to see improvement from tech cuts in the consumer sector and also in the infrastructure and spending space. shery: whether it is in china or the rest of the asian markets, how much have these growth concerns than already priced in -- been already priced in given we have seen a recent selloff? yes, they have> been somewhat priced in. we have seen 16 months of earnings downgrades by brokers. so expectations are fairly low now. selective in quite terms of our investment strategy. for instance, we would be more comfortable with the structural growth stories. defensive domestics, which are more reliant on domestic demand. may in mind that china

potentially run into a current account deficit this year. the first time in 26 years. he had to be careful. the government needs to accelerate this market reform. open up the financial markets to more capital inflows to help support that. haidi: i want to draw your attention to a chart, a broad-based chart, taking a look charts.l the best performance in 2010 last quarter. are we getting a sense that 2019 is going to be a repeat of the good times we had in 2018 for global equities in that central banks more broadly have turned dovish or perhaps even expecting more easing from the fed? certainly, they are on hold and patient now. china starting to rebound. fiscal and monetary policies of what growth. is there a sense that the goldilocks scenario is being price to buy markets -- priced in my markets? -- by markets? we are stabilizing

currencies. it helps to take a of the uncertainty for businesses and they could potentially resume their decisions, especially if demand starts to come through. we still have to be a bit more cautious because it is the outcome of the china-u.s. trade negotiations. that yous, and i know were saying do not bank on them kissing and making up. it is taking perhaps longer than anticipated. is that a good thing or a bad thing? it would suggest they are trying to work towards a sustainable and longer-term, more meaningful agreement. but at what point to investors and markets kind of, you know, lose their patience with how long it is taking and what we are likely to get in the end? down the road, it is

expected. too many sticking points. for china to increase imports of soybeans, ports, and even energy from the u.s., and potentially cut some tariffs, but then again, there is a limit to how much the u.s. candidate export to china before production up significant need to close that trade deficit gap, and more importantly, the two relationships are evolving in a very big way going forward. isrementally, the u.s. seeing china more as a strategic threat, a competitor, and potentially, if you look at technology transfers, it investments, restrictions, , these ownership are very challenging points to address, and also, how do you get an effective enforcement mechanism in place to monitor the complaint by the two countries?

shery: we get these tensions between the two biggest economies in the world, and then analysts say, you what, who can benefit? an countries.ase will we see stock market upside for countries like malaysia, thailand, vietnam? absolutely. we will expect businesses to try to diversify the supply chains, and this will benefit countries like vietnam, philippines, malaysia, and even thailand and the longer-term term. and valuations of these countries are not a stretch in most cases. the main risks for some of these countries near-term would be election risk. if you have unexpected election outcomes in some of these markets, that could potentially spur some capital flight. shery: how much of that will also depend on currency

stability against the u.s. dollar? thatne: the good news is with a more dovish fed and more accommodative monetary policies a asia, we are likely to see more stable currency environment for the asian currencies compared to a year ago, so that should be beneficial for the asian markets. typically, the em equities tend to perform well in a period where the u.s. dollar is stable or on the weaker side. haidi: is there any sort of fundamental reason why we should continue to see a stronger u.s. dollar? the reaction in the dollar since the fed's pivot has been quite confounding i think for most analysts. corrine: of exports continue to asia, that of could be one reason for potential continued

strengthening in the u.s. dollar. haidi: all right, corrine png, aia investment management. today'sget a run-up in -- a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪ s bloomberg. ♪

haidi: we have developments out of the saudi aramco story. the very latest i am hearing. last week, we have saudi aramco planning to issue its first ever international bond as early as this week. this is the $10 billion number to help fund the acquisition of the petrochemical giant according to people with knowledge of the matter.

this is a highly anticipated deal because it requires the to open upil giant its accounts for investors for the first time since it was nationalized about 40 years ago. it would also have to make public details about oil reserves and operations. very interesting for that investor base. we had heard that saudi aramco a $10 billionng bond to fund that acquisition. we are that saudi aramco is hiring banks for a dollar-denominated bond roadshow, starting on april 1. shery. check let's get a quick of the latest business flash headlines. rio tinto said shipments from its iron ore operations this year are likely to be lower than expected due to disruption caused by cyclone veronica. repairinghe cost of damage is adding to problems it was already facing after a fire in january. they are expecting a fall in production of 14 million tons this year. haidi: boeing is sending a

software team to europe to grieve aviation regulators after european safety officials inclined to attend the playmakers 737 max upgrade meeting. the e.u. is expected to play a leading role. china and canada meanwhile say that they are conducting their own safety assessments. one has criticized the plan as insufficient. shery: tesla is preparing to tell investors how many cars it built and sold in the first quarter, and there could be a surprise in store. an experimental tool built by bloomberg to track the rollout of the model three suggest production totals could approach 80,000 cars through march, far higher than the average analyst estimate of 64,000. the gap represents more than $800 million worth of cars. haidi: turkey's ruling party appears to be nudging ahead and local elections in a post

testing the popularity of president erdogan. the opposition claiming victory in istanbul. how this is look at playing out in the markets with mliv managing editor mark cudmore. we have seen quite a volatile rights for the lira and other turkish assets as well. what does this mean going forward? we have this split result in terms of how the votes turned out in different parts of the country. it has been seen as a referendum on his popularity. think that the outlook for the lira looks relatively negative no matter how the election went this weekend. that was because, as funding rates correct that down from the extreme levels we saw last week, there is more of a chance for foreigners to get more of their money out of turkey. the pressure on the lira will remain. you can see that by the with the volatility -- implied volatility levels remain extraordinarily high. the funding rates, we will not know until turkish trading opens

on later on today. how does the election play into this? it does show akp did not win with a clear majority. it looks like they lost ankara and may lose istanbul as well. in the majoring cities. that might mean there is more pressure from more populist policies to come from erdogan in the weeks ahead. it again kind of says that the lira pain might be more drawn out but slower to come through. shery: we know about president erdogan's unusual economic stance when it comes to him revising those lines that inflation would lowest turkey lowers interest rates. what can we expect from him in the coming weeks? said, the most important thing this week is to watch whether funding rates come back down again. if funding rates come down quickly, i think we will see the lira depreciate significantly because we will see foreigners get their money out.

chance of uncertainty around the election, especially if we have to wait several days for istanbul to be decided. it looks like the margin of him will be close either way. we might see funding rates stay high as the central bank squeezes liquidity. when itbe more pain comes through farther down the line. i think it is not that we are expecting any new central bank policies to come from this election result. it is just a matter of timing when the pain will come through for the lira. haidi: and how are we seeing japanese investors playing into that story? of anit is a bit unfortunate situation. japanese retail investors tend to be very noticeable when they get blown out in these carry trades. retail investors in japan tends to like these traits that offer very high yields. suddenly, it all blows up in one day. they all seem vulnerable at the moment. we have seen investors returned

to turkey. high carry for the japanese investors. the hit ratio has not been great. has led to these on flash crashes. we may see a vulnerable chance of that again around the lira, where we have long positions for out of tokyo, where they are vulnerable to squeeze in low liquidity stopoff runs. shery: thank you so much for that. mliv managing editor mark cudmore in singapore. breaking news out of japan. she pseudo--- a company is forming a tie up with alibaba. up .1nnounced the tie up, percent, almost 1% right there. this is a joint business plan with both sides collaborating on brand marketing, e-commerce, and other areas. to have theseted products available on alibaba toups, exclusively on

imo. brand.s a particular we are seeing this business announcement by shiseido and alibaba leading the gains on the shiseido stock. this is bloomberg. ♪ this isn't just any moving day.

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su: this is "daybreak asia." i am su keenan. we start with china's first official economic gauge for march. it shows signs of stabilization and then some. any fracturing pmi rose most in seven years and exceeded theanufacturing pmi rose most in seven years. this is seen as good news from global investors because china's weakening demand has weighed on sectors such as auto producers and commodity exporters worldwide. itsa says it will continue policy of no tariffs on american autos and car parts. this is the hope of bringing u.s. china trade disputes to an

end. china removed retaliatory tariffs on cars. the finance ministry may name and end date for this is pension of duties later but for now welcomes the resumption's of talks. the latest round of discussions moves from beijing to washington this week. and hisresident trump repeated threat to close the border with mexico. centersays the tension along the border are full and the u.s. cannot accept any more illegal migrants. he said -- the homeland security secretary says it is causing a meltdown on the border. the president sent out a big tweet that u.s. immigration laws could be "easily fixed." a claims the democrats do not care about crime. bangladesh in arrested two of the owners of a commercial tower that caught fire last week, killing 26 people, and injuring 70.

the 22 story complex had no fire protection staircases. some of the upper floors had been illegally constructed. withhave been charged negligence and violations of a building code and may face club homicide charges. homicide charges. they continued their site last month. for lending standards made it harder to obtain financing and some buyers delayed purchases until after the upcoming election. the housing values fell .7% in march and that brings the decline in the last year to more than 8%. sydney is leading the way down with prices now 14% lower than their peak two years ago. 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. i am su keenan. this is bloomberg. haidi: thank you. let's take a look at how asian

markets are shaping up this monday morning. sophie. sophie: a not too shabby start to the second quarter with asian stocks rising while bonds are falling and the yen is on the back foot, back around the 1.11 handle against the dollar while the aussie and kiwi dollars are trading near five-day highs on the pmi beat, which is helping investors in japan and korea this off some dismal data morning. korean export figures continuing to decline and sinking sentiment among japanese manufacturers. the rebound boding well for exporters, so that is helping 1.7% thisikkei 225 by morning. let's check in on sizable stock moves across the region. displayed jumping as much as 14% as it nears a bailout deal. it is set to raise as much as ¥110 billion. we have another company jumping over 10% to the highest level in a year, extending gains with the altra zeneca deal. to 3.5 billion

dollars by a share sale. avestors are being guided to higher share price. on the losing side, we have look rokuten off.k assessing thebe ceo's comments in a nikkei news report that its mobile unit may not bind users to a two-year contract when the service starts in autumn. in seoul, we are seeing them slumping after halting the ofistribution and sale products. it will tentatively it suspend patient recruitment in the u.s.. they have faced critical charges. they jumped 1.5% this morning, moving higher on the news that it is tying up with alibaba as

part of the push to bring tech into the beauty sector. shiseido has already teamed up with microsoft on an ar enabled app. we are seeing that stock gain ground although easing some of the the earlier ones so far. -- the earlier one so far. declared asurvey has week outlook. brett miller leads our economic coverage and joins us from tokyo. what are your key takeaways from these numbers? brett: when you look at the manufacturing index, it really the biggestng drop in six years. that is quite a concerning number. we have also got a trend that's been in place since the beginning of last year of always downward moving numbers. we still see optimists outnumber pessimists. but what was also quite striking was the outlook for the next three months.

when we look at that, the to about is halved eight. that is a worrying number. it is playing out in investment plans. we saw a sharp drop in what our company's plan to invest over the next 12 months. last year, we had a pretty strong number. this year, maybe only 1%. the upshot from that survey was weak investment over the next 12 months. haidi: what does this mean potentially for the government and policy? this castsing if into doubt whether that sales tax hike will happen? brett: it will mean a lot more to the debate on the sales tax. they would need a strong shock, something like the global financial crisis to prompt them into something again, but we will see a lot more. we will have to keep an eye out the first quarter gdp numbers. some economists are thinking that could even be a small decline.

point 2%.ero if we see a decline, the debate will strengthen and we will have to look at how the outlook is for exports. industrial production has been up and down. if we get any more weakness, the debate could get stronger, but for now, it looks like the government probably will go ahead with the sales tax hike. shery: we are getting more weakness out of south korea with exports falling much more than was expected. how that is the situation there? korea, it is very bad. korea is even more export dependent than japan. the economy has been seeing a steady decline in the growth rate and the has been a lot of trouble in the labor market. they are trying very hard to increase jobs. exports are falling. there is a lot more pressure i would think on korea, on the export front. the pmi numbers give a little encouragement, but more so in korea, the exports are a real worry.

shery: you can see the south korean won unchanged at the moment. brett miller leads our economics coverage in japan and south korea. becky liu next, than joins us about the inclusion into the index. this is bloomberg. ♪

shery: chinese markets may see a if a slice of its onshore bond market gets included in the global aggregate index. some analysts are expecting more than 100 billion dollars of those fund inflows for 2019. we are seeing the huge interest when it comes to sovereign bonds in china. foreign investors now really holding a record amount back in december. what makes chinese bonds so appealing to these investors? the stability and yields -- in yields.

the resilience in chinese yields. we are seeing the chinese benchmark yield at 3%. that would give us the whitest spread over u.s. treasuries since back in 2018 in september, so despite all the turbulence in rates markets globally, we have seen this resilience in the chinese markets, which is why investors are still optimistic about what this means for the future of the chinese bond to seeas we continue this financial opening in china. bigave been talking to guests to get their take on the inclusion of chinese bonds into the index. take a listen. >> the inclusion of government and policy bank bonds into the bloomberg barclays index. it will be a game changer. , theyors around the world are talking about capturing this opportunity. >> it will definitely be a game changer if that happens.

it will be difficult. liquidityrtainly add and it will be a great opportunity. >> we know that there are probably the top three indexes, the equity sides of those. if we look at the impact for passive and active combined, it could drive up to the hundred billion. haidi: some of our major guests -- 300 billion. haidi: some of our major guests -- bloomberg lp of course owns the bloomberg barclays branded bond indexes. joining us now from hong kong is of standard chartered's head strategy. this is something of a win for the reformists in beijing. transparency great presumably. how meaningful are the implications both in terms of what it means for reforms and

also what it means in terms of foreign fund inflows for china? with theinitely agree previous speakers comment that this will be a game changer. so far, the bulk of the foreign inflows into china has been available to public sector investors. allar, we have 80% of onshore chinese bonds being held by foreigners. foreign public sector investors. the index's inclusion would be one of the strongest catalysts for investors. so we are estimating more than 120 billion dollars of passive inflow on the back of the index between 2019 to 2020. from china's perspective, we believe this is a good catalyst for china to further open up its capital markets, especially under the backdrop of potential decline of china's current account surplus. to make up theve

gap. haidi: certainly helpful in the context of the reforms being discussed in the trade negotiations. i want to throw up this chart, taking a look at foreign holdings in chinese equities and bonds. both on the rise, albeit we should look at a pretty low base of a retail driven market. we can see that when it comes to bonds. they are rising a lot more than equities are, which have stagnated a little bit. we are starting to see a plateau in when it comes to chinese stocks. it is buying into these indexes. like transparency, things like settlements that come up time and time again as we have international inclusion of chinese financial asset. -- assets. becky: there are a number of

concerns remaining. the bulk of these concerned that this stage are technical issues. the accessibility to the forstic us at the market hedging purposes and the lack of up tobility is opening foreign investors. on the other hand, the concerns on the other angles, specifically in terms of the legal framework, the transparency issue, or mostly --are mostly expressed in the credit bonds. the bulk of the interest have been in the rates bond. shery: so we are going to see foreign investors become a more significant stakeholders in chinese for a. what will that mean for china? foreign-- becky: investors have become a market mover since 2018, and it has in loadingucial role

up the net issuance of chinese government bonds. so far, it's a very positive move to the chinese market because that means an increase fairng-term execution professional investors into china's domestic market for both bonds and equities, the bulk of the current investors on the equity side, as you know, is mainly retail driven. on the bond market side, you have a mixture of offshore commercial banks or the speculative on security fund. the entry by foreign investors, which tend to be long-term and real money investors would be a stabilizer of the market. it helped the pricing of the chinese government bonds as well. haidi: we have reforms in chinese financial markets. reforms whenct any it comes to interest-rate liberalization this year? becky: very material improvement in chinese interest-rate

liberalization. it started in 1996. there has been very little progress in the last few years after the introduction of a certificate of deposit. we have been hearing enough chatter from the government officials or from the state toia that they are planning move that forward. the first up is quite likely to be a gradual phaseout of the current policy rate. i.e., the benchmark lending rate , as a benchmark for the domestic loan pricing. at the same time, the government would need to introduce new benchmark rate for the pricing of domestic loans. purpose for this interest-rate liberalization is to gradually minimize the gap between this one, the pricing of the interbank market, and the pricing of the policy driven loan and deposit markets. shery: very exciting year for the markets. shiseido --becky liu.

the bloombergwns barclays branded bond indices. and of course, if you missed out on any of these reviews throughout our shows, it is the tv function, tv . you can watch past interviews, dive into any of the securities on bloomberg functions we talk about and also send us questions lower leftsts on the side. this is for bloomberg subscribers only. tv . this is bloomberg. ♪ g. ♪

haidi: the dallas fed president, dallas kaplan -- robert kaplan, says he sees gdp growing to 2% and is not forecasting any rate hikes this year. take a listen. i i did not, in my dot plot, have been saying this for sometime, i did not have any rate increases for 2019. it does not mean that i could not change my mind. i sat there in the march meeting, that was my base case for 2019. but it is always subject to change. and so, what my main goal is, for monetary policy right now, is that we are flexible and that we are patient. see how growth is going to unfold for the next several months in 2019.

based on what i see, and for me, i look not only at the economy corporate i look at earnings reports, a whole range of factors in the markets, particularly the fixed income markets and the treasury curve. as we get through later in the second quarter, i want to be flexible enough and have a stance and policy where we can move appropriately. i do not know where that will be yet. it could be no action at all. i think we are well-positioned to take the appropriate move raised on how the facts unfold. >> what would be a trigger for you to look at cutting rates or even pull that trigger? our base case at the dallas fed is the gdp growth for this year is going to the a little bit below 2%, in the neighborhood of 2%. and i have some confidence we were saying through 2018 that we thought growth was going to slow meaningfully.

it turned out to be a little slower than we thought. if there was evidence to suggest growth would undershoot that forecast -- there's a number of uncertainties. waning.timulus is we got all this trade uncertainty, issues with china. we have got a long list of uncertainties. if i saw growth -- if i start to believe growth aspects are below the base case forecast, then i would start thinking about what does that tell me about policy? i have been saying over the last couple of years is i do not think the fed should be restrictive and monetary policy in our stance, but i also felt we are getting to the point through 2018 and up to now, i am not sure we need to the accommodative either. shery: robert kaplan speaking to kathleen hays. let's turn to the business flash headlines. growing has entered the debate about social media

responsibility and the internet regulation 10 days after the livestreaming of shootings in new zealand. flanklink told -- nick l said we should agree on standards. it echoes calls made by the ceo made earlier this weekend. haidi: asia-pacific governments are stepping up the drive to fight hate speech and extremism on social media. australia is true introduce tough new laws to face the weaponization of online platforms such as glass months livestreaming of shootings in christchurch.singapore is drying up up newdrawing regulations to halt the spread of fake news. shery: let's get more on the breaking news we saw. shiseido reversing losses. the company will work together on strengthening product development and e-commerce. now from tokyo.

what do we know at this point about this partnership? and alibabado announced a business partnership to focus around development. it is what alibaba has done before with other consumer companies, where they are providing them with what shoppers are demanding on their website. this is a pretty good move for shiseido, because outside of biggesthina is its source of revenue, and the chinese market, there is a tremendous demand for japanese beauty products, skin care, and products made in japan. so it is a great move for shiseido. shery: how will this fit into the broader strategy? if the company is trying expand outside of japan, which is its main market, but it is focusing a lot on

china, where there is this tremendous growing demand for the japanese beauty segment. additionally, it is focused on prestige. slightly higher-end products ll verycell -- that se well in china. they want to understand consumer needs. it does fit well with what the company has been talking about the last year. >> maybe some synergies on the tech fronts. ar-enabled makeup. lisa du interfere with the latest on that alibaba-shiseido high up. let's get a preview of what's happening in markets later as we are on the cusp of the china open. sophie: quite a few things that play. washington, d.c., how investors will react to signs emerging that china wants to slow the years bull run. up nearly 24% at the start of

the year, but with that, i want to switch out the board to check in on this chart, which shows, according to data by bloomberg analysts, cuts. that is the highest number since 2011. this as authorities have warned on speculation and leverage. let's jump into the terminal. i want to show you last month chinese investors increase stock leverage by the most since 2015 with outstanding margin that up more than 40% last month. leveraged funds are in the market for quick profits, so margin growth is likely slowing growing ahead. haidi: before we handed over to "bloomberg markets: asia," let's get you a quick check on how markets are trading and there is a part of the monday session. 1.7% despite a shocking reading on the boj survey on the outlook for large manufacturers in particular. the cost be seeing gains of

1.25%. here in australia, slightly more modest, but still positively to the tune of .7%. keeping an eye on the iron ore miner's after a great quarter for commodities and for oil. but some concern over the iron ae price situation as you get revised lower output estimate rs,m a number of mine including rio tinto. shery: u.s. futures gaining ground. investors focused on all of the economic data out today, whether it is japan, south korea. the biggest drop in more than two years. this is bloomberg. ♪

>> it is not :00 a.m. in beijing, shanghai and singapore. down towe are counting the open of trade in hong kong and mainland markets. david: these are your top stories this monday morning. gauge factory output rebounded last month showing its biggest jump in seven years. yvonne: and another check on the health of the economy led to this hour -- later this hour. the survey of business sentiment was even worse than forecast in march.