haidi: a very good morning. stroud-watts in sydney. we are one hour away from the australian market open. shery: good evening. i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this wednesday, u.s. stocks rise despite divergent clues on the state of the economy. the nasdaq closing within 1/10 of a hide. -- high. both sides say they are keen on a deal.

-- and apple are friends again. bringing their licensing battle to an end. haslinda: i am haslinda amin in jakarta, as indonesians head to the polls. i will be joined by big guests. shery: let's get you started with a quick check of markets closing. we saw the down game .3% -- dow gain .3%. we have financials leading the gains. blackrock's results upsetting coming out of the bank of america. we had health care and real estate weighing on the index. 500 barely changed. we have the nasdaq at the highest level since october. we had qualcomm surging after it

agreed to a deal with apple and entered a licensing agreement. let's see how we are shaping up for the asian markets. sophie: we are going to be watching reaction to those tech stories from overnight and reaction to results from johnson & johnson and netflix. plenty of dry sentiment. indonesian markets are closed today as polls open. we may see a lower open for in focus.h miners futures pointing higher for tokyo. trade talks could resume next week. we are facing a mixed start to the session where we have a key focus on china's first quarter gdp report and monthly activity data. signs of stabilization may support for the gain -- further gain. setew zealand, kiwi stocks for gains. we are seeing the kiwi dollar, depression this morning.

,e have the kiwi dollar sliding falling to a three-month low. you can see that drop. we have it approaching the 67 handle against the dollar. sliding eights basis points after inflation data missed estimates, which may see traders price and. we are seeing the aussie dollar declines, resuming sparked by dovish rba minutes. haidi. investors inght, the trade talks between the u.s. and japan. the japanese economy minister told reporters just about one hour ago that a good start has been made for negotiations. both sides keen to strike an early agreement. the u.s. trade representative saying they discussed trade

involving goods as well as agriculture and lighthizer and the other representative have agreed to meet again. joe sobczyk joins us. there was quite a bit of confusion. mixed signals. it does sound like incremental progress is being made on this trade front as well. the they are going to defer currency issue to the other ministers for separate talks, but right now, the big issues are autos and agriculture. one thing the japanese minister god is they are reluctant to beyond the existing agreements on agriculture. this has been a big stumbling block for the u.s. they want greater access to u.s. -- i'm sorry, japanese markets for u.s. goods. in turn, that would alleviate the threat of some quotas or possible tariffs on japanese

automobiles, which is something that japanese officials are trying to avoid. but they are making progress, and they are both sides saying they want to conclude this quickly. it will not be quite as contentious as the dealings with china, but there are still a couple of fairly substantial hurdles to getting a fuller agreement between the u.s. and japan. shery: give us the latest on the u.s. and china trade negotiations. because the latest we have heard seems to be secretary mnuchin continuing to say we are close to a final round. joe: everyday, we move a little closer. the issue now is on the tariffs and in terms of enforcement mechanisms. one of the things the u.s. wants is to be able to impose sanctions or additional tariffs, so whatever penalties against china if they are not compliant with the agreement. that of course would also give

china the ability to impose a similar penalties on the u.s. if they feel they have been aggrieved in the agreement. this, does two things. one it cuts out the -- this does two things. the trade. and they would be deciding whether the u.s. is fulfilling their end of the agreement. from the u.s. standpoint, what they want is to be able to act unilaterally without a third-party arbiter coming in so that is wto, going to be a subject of some negotiations, as are the issue of continuing tariffs, which the trump administration wants to do, and what the chinese will do with the retaliatory tariffs they have imposed, and there is some talk -- was some talk yesterday that they might shift them from agricultural goods to

other products from the u.s., but those are still in the middle of talks. shery: thank you so much for that, joe sobczyk in washington. let's get the first word news with jessica summers. thanks. the initial investigation into the fire that destroyed notre dame is focusing on renovation work that was being carried out on the roof. executors have all but ruled out arson, saying there is no evidence of anything other than an accident. drone footage shows the majesty of the cathedral. it was the tallest structure in paris until the eiffel tower was built. we are a nation of great builders. we have so much to rebuild, so yes, we built rebuild the notre dame cathedral even more beautiful, and i want that to be completed from now to five years. here again, we will mobilize. giving: nancy pelosi is

you can lawmakers some stern advice over the long drawn out and seemingly deadlocked -- u.k. lawmakers some stern advice over the long drawn out and deadlocked people. if the deal is compromised by brexit there will be no chance of a future deal with the u.s. of theny weakening friday accord. there would be no chance whatsoever. u.s.-u.k. trade agreement. have alreadypolls opened in indonesia for the world's largest single day democratic election. almost 200 million people are eligible to vote. it will be a rerun of the 2014 race, pitting the former president against a general. he vowed to create 100 million jobs. his opponent promised tax cuts and a revival of manufacturing. 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 jessica summers. this is bloomberg. shery: thank you. qualcomm shares surged more than withn news of a settlement apple over licensing fees. their battle has threatened to jeopardize the most profitable line of his -- of business. edward joins us from san diego. why did they wait until the trial started in order to settle? it is a very interesting situation. you were in court, listening to opening statements from qualcomm's lawyer when news started trickling in that they had settled the case. they can settle any time during is interesting that they waited until the jury yesterday to

settle this. he can only wonder what the exact reasons are, but it would think that it was, that besides, or maybe apple in particular, that it might have had a tough time convincing these jurors. they seem to be pretty highly educated people. to convince them that qualcomm was really running an illegal operation to its business model. and so, the impression we got is that this was a game of chicken and that qualcomm refused to play and apple decided it was to reach aheir risk huge jury verdict against them. haidi: that seems to suggest that on the analysis, qualcomm had more leverage and apple would have faced the biggest uphill battle? edvard: well, yes.

i think the fact is apple decided to sue qualcomm in san and onlyeir hometown, a few weeks ago, in a much smaller case, qualcomm won a jury verdict. there may have been more substantial home-court advantage for qualcomm than apple might have thought. welcome had a more -- qualcomm had a more straightforward story to tell. they had agreements with manufacturers. the manufacturers refused to pay them for the last two years. that is a much simpler story than what apple was trying to convey, was that qualcomm, through these various agreements throughck years, failing to live up to its pageant commitment to organization -- patent commitment to organization, ran what truly was an illegal

business model. there was a certain burn of doubt -- burden of doubt they had to meet to get the damages apple was seeking. haidi: all right, edvard in san francisco, our bloomberg news legal reporter, with the latest on that settlement. surprising the markets. we will take a look ahead to the global slowdown in trade. what it means for the logistics sector. we are joined with an exclusive interview with frank apple. omega'sind out why global investor made the wrong call by agreeing to cause. this is bloomberg. -- to pause. this is bloomberg. ♪

haidi: we're counting down to

asia's first major market opens this morning. japan's futures shaping up like this. u.s. stocks just extending into a gain. tech driving gains but financials pacing the rally after a mixed bag of reports. we are awaiting data out from china today. we have domestic activity indicators like retail sales, industrial production, as well to showumbers, expected a slowdown, but really looking for signs of stabilization and transmission of monetary policy stimulus. higherfutures, about .1% opensget into the market in australia, japan, and korea. this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. stocks rising on wall street despite a mixed bag of earnings. the apple-qualcomm settlement sending qualcomm soaring.

keenan is here with more. , still 500 maintaining staying above 2900, but barely. su: it was minor but we did see green at the end of the day. it was in question. let's go right to the market snapshot, and you will notice the financials were one of the stronger sectors. active futures, slightly lower going into thursday's session, but notice that the bonds were active as well. let's go into the big movers because earnings are really in full swing this week. deal really-apple giving a boost to the nasdaq. the chipmaker shares jumped better than 23%, the biggest rise since 1990 nine on that supply agreement and legal settlement with apple. 1999 on that supply

agreement and legal settlement with apple. as united really sunk health care did little to allay concerns that universal health care will be a negative for all these companies. the ceo had some dire remarks in that regard. international paper also lower on analyst downgrades. after hours, we see some action. netflix issued a forecast that rattled investors. you have got disney coming in with streaming video, a lot of competitors, so even though they came in with some strong wasers, their outlook really what concerned investors that they would add 300,000 users this quarter. notice united airlines not only rising better than 3.5% but boosting the entire airline sector as it announced its cost traction.y had it is getting more pricing

power. that is a positive. lubricant gtv is where you can -- bloomberg and gtv is where you can find our library of charts. a lot of analysts noted the s&p a record.roaching we talked about coming within a striking distance of the six month high just yesterday, and as it works its way back to that remark, you will notice today is a perfect example. it had very narrow gains, and that may be indicative of a pattern. keenan, thank you so much. joining us now is omega global investors portfolio manager, amanda. really seen an incredible rally since december. global markets adding $12 trillion in value since then. fed'sto do with the dovish turn and expectations they will stay dovish. how risky is this? onnda: thanks for having me

the show. i think i would like to talk about the general fixed income market. three points. first, i think that globally, growth is slowing down. second, credit spreads are tight at the moment. for u.s. investors. globally, the growth is slowing down. the global growth started to go a lot lower than expected. the future is at 2.2% and has had central banks introduce market puts. we still have to come and focus on the growth numbers. there is still a lot of uncertainty in the background. for example, there are trade talks between the two largest economies. in britain, there's brexit. there's political uncertainties in europe and slowing growth. 2019 is going to be a year that has slow growth.

however, i don't believe this growth will be in a straight line. and there is also the credit spreads. shery: the gtv chart on the bloomberg showing the credit situation in china. we have seen the credit conditions and monetary conditions remain loose in china. we have seen the impact of monetary easing being pretty evident as you mentioned,. will this keep the stock markets in china supported? amanda: it is actually very see that at the moment that both of the monetary and fiscal stimulus coming out from beijing -- at the same time, china is addressing some of the key structural issues for longer term reform. for example, high leveraging soe and the shadow banking as well. it is important to note that growth is important for china and there are other elements that are equally important to

china. the one belt, one road initiative is with the view of 20 trillion u.s. dollars. at the moment, taking a small psuse. that is to do with the trade tensions and backlash with southeast asia. we are seeing this emerging. and i think that china is going to have quite strong growth onwards. chinese growth will upset the price of global growth as well. haidi: amanda, you talk about the structural measures being taken. i am wondering, at the same time, you are seeing this resurgence in issuance of local government debt and financing vehicles. isn't that the old playbook? isn't it fair to say that beijing has abandoned its deleveraging efforts? amanda: it is a very interesting

point to note for the current market. it is one of the things i noticed that because of the trade tension, that could lead china to irrationally stimulate the economy. and that is creating more bad debts. the market was in the corrective mood since before this year. and the shadow banking was tightening. they want to improve credit. does irrationally stimulate the economy due to the trade tensions, then potentially, that will endanger the whole economy once again. shery'sgoing back to question, you have the pboc and the chinese government putting in place more stimulus and spending measures. paausve the fed on e. do you think the fed made a mistake in his dovish -- its dovish pause? amanda: i think that that will

one for thest market. it has made the wrong call to pause and switch to a more dovish turn. if the economic data does come back and surprises to the upside, with the full curve, that means the curve is delayed. that will leave the fed falling behind the curve with a record high u.s. credit as well as the high deficit level. so that will be the potential biggest reach of the markets. haidi: thank you so much for coming on for us, amanda lin, portfolio manager joining us. you can get 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 the be go on your terminals. a big settlement story of the day. -- dayb on your terminals.

a big settlement story of the day. you can customize your settings so you just get the news on industries and assets you care about. this is bloomberg. ♪ ♪

shery: this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. rio tinto anded cutting its iron ore target after damage from a tropical cyclone last month. it expects full-year total production to be in the range of 270 milliontons to tons, down from last year. bhp says its facilities did not sustain major damage. sprintt-mobile and tumbled after reports their propose merger is meeting resistance in washington. the wall street journal says

staff at the justice department says the deal is unlikely to be approved in its current form. took to twitter to deny the story, saying it is just not true. however, he said there would be no further comment. haidi: jet airways long struggle to keep flying seems to be coming to an end. if lenders are refusing to bail it out. it was once india's number two airline to ground more planes. be nos tell us there will cash injection for the time being. executives are ready to halt operations completely. -- have not been paid for months. shery: expedia group is looking to simplify its ownership model and boost its value. they agreed to acquire liberty expedia holdings in a $2.6 billion all stock deal. their structure has been divided between two billionaires.

he will become the largest shareholder 29%. coming up next, we will be live in jakarta as indonesia is crucial election begins. this is bloomberg. -- indonesia's crucial election begins. this is bloomberg. ♪

jessica: this is "daybreak asia ." i am jessica summers with the first word headlines. the u.s. and japan have wound up their first round of trade talks. it was described as a good start to negotiations. the economy minister told reporters they discussed currencies, digital trade, agricultural goods, and the autos sector, and that the two sides will meet again next week. toadded that japan is keen strike an early agreement but there is no deal yet. as apple and qualcomm are friends again, they have agreed battlea two-year legal over licensing fees. apple will make a one-off payment of qualcomm and then will also begin a multiyear supply and licensing agreement

in which it will pay the chipmaker royalties. news.mm jumped on the it says the agreement will add two dollars per share to earnings when it begins shipments to apple. islets appointed by the faa have reviewed boeing 737 max's software fix and concluded they will not need extra simulator training, but the panel is calling for additional training on the anti-stall system that has been linked to two fatal crashes. it stopped short of requiring the expensive simulator time. boeing'sinal set -- final software fix has yet to be sent to the faa. declined. that adds to signs of headwinds for manufacturing and growth at home as well as abroad. overall production was unchanged from february, while otto blank slipped -- auto output slipped. there is continued uncertainty

about trade and falling demand of global growth slows. -- as global growth slows. 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 jessica summers. this is bloomberg. shery: thank you. let's get straight to sophie for what to watch in markets this morning. sophie: it is a busy morning for australian corporates, aside from bhp. we had santos -- we had precious metals and a sayingminer, evolution, it is on track. sara eisen -- this company sees production. challenger in view after in theng a 4% increase third quarter and reaffirming its guidance. we are watching japanese drugmaker's after johnson & johnson posted better than forecast results, which citigroup says is positive for

ppon's company -- a company. the japanese company has agreed group with ania's offer that is at a 28% premium to the last close. the deal is expected to be completed in august. haidi: sophie kamaruddin. breaking news on intel. to exit itsis said business and instead focus on the five g network infrastructure development instead. intel saying it will not be launching 5g products that were planned for 2020 release. they will continue to meet commitments when it comes to the fourth quarter motor line, confirming they will focus on investment in the 5g network infrastructure. a number of analysts saying it

was a buying opportunity for that stock as they break even when it comes to modem sales. this in the wake of the qualcomm-apple settlement. it is exiting the business altogether. let's get to what our top political storiesare. polls are open in indonesia -- political stories are. polls are open in indonesia. like 2014 14 all over again. the same contenders vying to run southeast asia's largest economy. the incumbent president versus the man he beat five years ago, a retired general. big challenges include recent indonesia's economic power and serving the needs of a growing middle class. anis banking on infrastructure program as well

as plans to create 100 million jobs and make indonesia a manufacturing powerhouse. an expansive on fiscal policy to sustain growth after bank indonesia hikes interest rates -- hiked business rates. his opponent is promising to reduce public debt. toy are trying to a pill almost 200 million voters. about 40% of them belonging to the so-called millennial generation. social media savvy citizens could decide the outcome. shery: our chief southeast asia correspondent, haslinda amin, is in jakarta. round two. [laughter] >> it is a rematch of 2014. deja vu, if you wish. it will come down to the wire. in 2014, it was six percentage points. this time around, it could be

even closer. selections were economics were the main target, this time around, the focus is on religion. religion has divided the country right down the middle. we have in the conservatives as well as the moderates, and the have capitalized on this to gain support. he is a of joko widodo, well-established cleric who is the head of the organization with 40 million supporters. he is banking on supporters to give him that vote. , he is a venture capitalists turned politician. he is seen as perhaps the face of the future. he resonates with a younger population and he is seen as a very staunch muslim.

the two sides using religion as a way to gain support. now, going forward, whoever wins this election, it is important that he garners the support of the whole nation. they have to unite the people to be as one. this is a massive exercise. we're talking 193 million eligible voters. who will turn up? how many will turn up? over the course of several years, the nonvoters have risen. we are looking at 30%. and that could mean perhaps less him. for about turnout could benefit prabowo. a good turnout could benefit widodo. a bad turnout could benefit prabowo. haidi: what are we expecting in terms of numbers and percentages? haslinda: it is really hard to

say because when you take a look at what it was like perhaps decades ago when the election was first implemented, we saw nonvoters coming up to 6%. it is 30%.round, that is the reason why the government has been encouraging to come vote. this is not compulsory. voting is not compulsory in indonesia. they are encouraged to. businesses are offering free drinks, free food. and others offering discounts to voters, so the incentive to turn up and vote. what could sway the vote would be the most any else. they are 40% of the eligible voters. and they use multimedia. following him on

social media. social media has played a huge role in this election. shery: there has also been anti-china rhetoric across southeast asia. is this playing out in this election? haslinda: it is playing out. in fact, during the campaign period that we talked about, perhaps a turnaround in policies. i mean, indonesia is a country in need of infrastructure funding. and very few countries have the deep pockets that china has. are seeing joint ventures with chinese companies, especially on the belt and road initiative, and that has had some sort of backlash. the question is whether that will translate to a rebuff in policies or rivers in the relationship between china and -- reverse in the relationship between china and indonesia. the investment chief of indonesia says it is about

finding the right balance, and indonesia will find that balance in the years to come. he likened it to japan in the 1980's and 1990's. there was concern back then that japan would exert a lot of influence, but the years that came, that was tapered. balance.und debt perhaps that will happen with china as well. haidi: very interesting stuff. haslinda amin in jakarta, covering the indonesian elections. indonesia hase, been the best-performing major share market in the past decade. so how is the market positioning for today's vote? >> historically, indonesian stocks have rallied before elections. we have seen it up more than 12% in six months, finding support from a stronger rupiah, which has recovered after hitting the levels.

prospects for a rate cut have boosted sentiments. one of the factors that led credit suisse to raise indonesian stocks to market rate and has aberdeen standard favoring indonesia. broadly speaking, investors have been largely unnerved going into election, although foreign buying of indonesia and equities lost some momentum after the longest stretch of inflows since january. haveso, overseas funds returned to the indonesian share market in a big way, by $1 million worth of stocks this year, the most in southeast asia. on a sectoral basis, many see giventy as big boomers the massive need for infrastructure investment in the country. a gauge has rallied nearly 8%, up from a two-year slump. shery: thank you so much for that. we will be focusing on indonesia's election throughout the day with some big guests, including the country's former trade minister, and about one

hour. we will look at what the global slowdown in trade means for them just six sector when we are -- the logistics sector. this is bloomberg. ♪

shery: we are counting down to asia's first major market opens this morning. japan futures slightly higher this morning. course, we are getting trade figures out of japan and about less than 10 minutes now. we are expecting japan's trade surplus to be back in deficit. this is "daybreak asia." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. the world trade organization recently slashed its projection. forecast marking the second consecutive year at the wto has pared back expectations. you can see it in that chart.

it reflects some other readings and sentiments from the world bank and the imf last week. paul -- georgia post -- deutsche post. he joins us from singapore. going by your own internal statistics, you are starting to see a breakdown when it comes to momentum in chinese-driven trade. in particular, you're getting more data including the crucial gdp number. have they impacted your business? yes, so overall, the year started relatively slow, but we did see an improvement in the quarter somehow, and we expect a decent growth rate for the war year. i think people are too much excited about it.

are far away from types of recessions, so we are still remaining optimistic. what we haveraged seen the last couple of months that this year will be another good year overall. haidi: where are you seeing new growth or the strongest with? with -- growth? we talk about not having much of a role when it comes to the domestic u.s. market which is dominated by the likes of ups and fedex. internationally, where using the strongest areas? frank: we have seen the development all over the world. i would not say that we are deeply concerned about a certain region. i think the uncertainty is the biggest issue always. you know, consumers are looking and reading newspapers and headlines, and they worry about something despite that global trade is continuing,

protectionism is not on the rise. we have not seen that. we are measuring that with our connectedness index. 2017 was the best year ever. that is the most recent data week analyzed. we have never seen the world more connected. the euro and japan signed this year a free-trade agreement. we believe that despite all the noise and despite the conflict between china and the u.s. on trade and brexit, the world will continue to globalize more and more, and that is good for the world anyway. we have seen that in our numbers as well. shery: a lot of noise coming from brexit as well. are we going to see a no-deal brexit? how does a company like yourself prepare when we do not know where we are headed here? know, you cannot prepare very well for uncertainty except on focusing on what you are doing well.

we are doing well to help our customers grow through complex situations. we are doing that when natural disasters are happening, when trade issues are happening. we are preparing ourselves for hiring people for customs clearance, by talking to our customers. this is the best you can do. i always tell our organization, focus on what you are good at, have a clear strategy going forward, and execute accordingly. and even a hard brexit will not be as bad as some people consider. that does not mean brexit is good. but we cannot delay brexit forever because that creates too much uncertainty for too many businesses. the brexit idea is not a good idea in the first place and has never been a good idea. people believe that they are better off on their own, which is completely wrong. there is not a single proof that any country was ever better off at protectionism. i don't know any country. all the countries who have

closed their borders or protected themselves were worse off in the long run. i'm in singapore. this is a role model for being and seeing where singapore stands on the world lists. in the past 50 years, we have risen from nowhere to the top of the list, and that is a role model for how you should behave as a country, being open, being competitive in the marketplace. shery: talking about being on your own, we're seeing a lot of m&a activity. so what are your plans in this regard? frank: yes, so we are believing that our footprint is large enough. largesttill by far the player in the industry. we want to continue to grow organically. we have a very clear plan to execute that. so we have no plans to do any major m&a activities in the future. frank, going back to brexit, you have 50,000 staff in

the u k. what are your plans for them -- the u.k. what are your plans for them? frank: we believe that we can keep all of them despite that a brexit will happen. even if a hard brexit will happen, we won't model through muddle through somehow. i have seen three times that the world will collapse pretty soon, but brexit will not be that bad. that does not mean it is a good idea. but we feel well-prepared if we serve our customers in the best way. we can keep all of our employees for sure. haidi: in terms of the asian business, you have the tie up with the biggest courier company in china. do you expect more tieups and m&a action on that front? is that your business model going forward for the asian international part of the business? that was agh -- no, particular situation for china.

this is an exception from the rule. we will continue to develop our business organically. it is only our logistics business. our other businesses, we continue in the same way. grow faster in china. it is better to line up with a very strong premium player in that.and sf is we have no other plans. we believe we are well-positioned everywhere. we do not need a partner. china is different for the domestic chinese market. the international trade, we will continue to do our business in china with our partner. we have no other plans to do that. we found this is a very good idea for the contract logistics business in the domestic chinese market. shery: thank you so much for joining us today. frank apple, joining us from -- appel, joining us from singapore.

numbers from japan, falling 2.4%. they are falling but they sell much less than expected. was 2.6%.ation it is a bigger fall than february. imports growing 1.1% in the month of march. 2.8% when it comes to the survey as well. when it comes to the trade surplus, we are seeing that they a muchto deficit, smaller deficit than expected. ¥177 billion. let's get some analysis with enda curran. we are seeing japan exports to china falling more than 9%. 9.4% year on year. still, overall, the numbers beating expectations. enda: the numbers are clearly a little bit better than expected, but i think the picture remains one of downward pressure from the external side at least on japan's economy. hasnow the chinese demand

tailed off. we have seen the figures this morning. we know the global growth story and global demand for japanese made goods is not what it was a year ago. it is about the cooling in a semiconductors cycle as well. it is a little bit better than expected. downward pressure remains. on the in port said, will -- in side,aid, oil -- import there is a better look. it is not as bad as expected. a real turnaround in the japanese exports story. haidi: hard to see how this will change the picture when it comes to what the boj will do going forward. enda: exactly right. they know well that all these external pressures were a big focus in the conversation of the imf talks a few days ago. even looking the armed the typical global growth story, japan and the u.s. have just begun critical trade negotiations.

and of course, how those tariffs play out and as talks play out will be critical for japan's economy going forward. thei: enda curran with latest japan trade numbers on the bloomberg. let's get more ahead when it comes to "daybreak asia." this is bloomberg. ♪

haidi: this is "daybreak asia." i am haidi stroud-watts in sydney. shery: i'm shery ahn in new york. let's go to sophie for a preview of what to watch in the markets. sophie. sophie: futures are hinting at gains in tokyo as japan trade talks wrap up and they resume next week with autos and agriculture in focus. the yen is looking little changed. exports falling less than expected in march. in seoul, the kospi could be set to extend its rally after a 13 day advance. that would be the best run

since 1984. i want to highlight rising doubts among bond traders at a rate cut may be in the off. we have seen outflows pickup and that is seeing three year yields on trillion bonds climbing about one basis points from -- korea and bonds climbing about nine basis points. the company may announce a non-memory chip investment after moon jae-in emphasized the importance of business during a cabinet meeting last month. the size of the plant is small compared to the memory chip factory but investment is more than 10 trillion won due to high-tech equipment. haidi: all right. in the next hour, we are focusing on indonesia's election. it is election day throughout the day with big guests joining

us including the former trade minister speaking with us in just about one hour's time. lots to come here on "daybreak asia," including the market opens almost upon us. this is bloomberg. ♪

haidi: good morning. asia markets have just open for trade. shery: good evening. i'm shery ahn. sophie: i'm sophie kamaruddin. welcome to daybreak asia. ♪ haidi: our top stories is wednesday -- a'sia stocks looking for a mixed start. investors are waiting major data from china. bhp is cutting its forecast for iron ore production

because of disruption from a powerful cyclone. and, indonesia kicks off the world's biggest exercise in one day democracy. forre live in jakarta round two. haidi: let's get straight to the market action with sophie in hong kong. what are we seeing? sophie: we are seeing some green shoots in tokyo with the nikkei 225 looking to extend gains. the topix up 2/10 of 1% after dropping on tuesday. the yen looking little changed, hovering around 112 as we digest the latest trade figures in japan where march exports fell less than forecast the, down for the month. checking in on the mood in seoul. looking to come under pressure after a 13 day rally. off by 1/10 of 1%. keeping our eyes on the airline, the stock under pressure.

kbb reportedly said the sale would take at least six months. flipping the board to check in on the mood in sydney. the asx 200 is off by about 2/10 of 1% after a three-day advance. the company very much in view with plenty of production updates from the likes of bhp and more. we are seeing the aussie dollar take a hit, resuming yesterday's decline that was sparked by dovish rba minutes. further weakness for the currency should iron ore prices weaken on vale moving closer to restoring part of its production. let's check in on new zealand. we have ndx 50 rising for a fifth straight day, while the kiwi dollar is on the back foot. sliding as much as 1.4%, falling to a three-month low. kiwi two-year swats down about 10 basis points after we saw first-quarter inflation data missing estimates for new zealand, so traders need pricing

in more rate cuts ahead. haidi: let's get the first word news now. the initial investigation into the fire that destroyed notre dame is focused on the renovation work on the roof. prosecutors have all but ruled out arson, saying there is no evidence other than an accident. newly released drone footage shows the cathedral. it was the highest structure in paris until the eiffel tower was built in 1889. >> we are a nation of great builders. we have so much to rebuild, so yes, we will rebuild the notre dame cathedral. i want that to be completed from now until five years. we can do it and we will mobilize. house speaker nancy pelosi has given u.k. lawmakers some advice over the long drawn out and seemingly deadlocked brexit negotiations -- do not

mess with the good friday agreement. irishrned that if the peace accord is compromised, there would be no chance for a future u.k. trade deal with the u.s. >> if there were to be any weakening of the good friday chance there would be no whatsoever, a nonstarter for u.s.-u.k. trade agreement. apple and qualcomm agreed to end the two-year battle after billions of dollars of licensing fees. multi-yearin a supply and licensing agreement where it will pay the chipmaker royalties. it will add two dollars to share for earnings when it begins shipment to apple. shery: the big story that investors will be watching.

china's fourth-quarter gdp numbers. the economy is expected growth of 6.3% year on year. you take a look at china's official gdp numbers. bloomberg's own gdp tracker. you can see analysts are mostly converging around that 6.5% growth level. we are also getting data on retail sales. not cemented industrial production out of china. we are expecting a bit of a rebound when it comes to those numbers as we see some stabilization in the chinese economy. we have already seen real estate investment on data picking up since the fourth quarter of 2015. we will keep a close eye on those chinese numbers out in about two hours. haidi: absolutely. really key for investors today. let's get analysis. joining us is julia wang. let me start off with this chart

taking a look at the longer-term picture when it comes to the remarkable chinese growth story. chinese gdp growth has outpaced the global measure this century. are these expectations too high? we talked about the impact of the trade war, but this is the structural slowdown that has to happen. julia: we think the chinese economy is still in middle income economy. if you look at broader metrics like capital per worker, productivity growth, it is clear there is a lot of room for china to continue to grow and converge to develop market levels. we have been quite encouraged by some of the more positive structural upgrading stories, especially over the past couple of years, even when global trade was quite slow. moving up the value chain. you can see that in the export competition. you can also see the domestic story with consumers having been

a bigger driver of growth. i think that is the same for this year. domestic stabilization really holds the key. we are quite confident of the domestic consumption story will continue to firmly drive growth. there are still challenges mostly from the external side. you mentioned the trade war which continues to be a constraint in terms of how quickly business confidence can recover. we think to offset that, there has been a decent enough of policy easing particularly focused on the business sector. that's it offset the near-term headwind a little bit. haidi: i find it interesting that you still retain great confidence in the strength of the chinese consumer and domestic rebalancing towards domestic demand and away from the old manufacturing growth story because we have seen the export weakness -- import weakness on the china trade numbers last week. japanese exports to china also seeing a decline of almost 10% year on year.

there is some weakness in that consumer story, no? julia: there have been some pockets of weakness last are in food consumption. you look at car sales, smartphone sales. the big-ticket items have slowed. some of that weakness you are seeing were like -- reflecting in the trade cycle because china imports so much of what it also exports. a lot of trade is processing trade. at the same time, we are seeing stronger consumption growth in the service sector which is more domestically driven. you look at household spending and things like health care, entertainment, education, these are really growing at a faster pace. we have been saying for some time that domestic consumption story is no longer just about goods, tradable goods. a lot of it is shifting to services. that should be expected as the economy becomes more middle-class. it will spend more on services. that itself is the beginning of a more sustained organic growth

cycle. we know the services sector also employs a lot of people. as these employment markets get supported, the support for wage growth which supports household consumption. we are beginning to see a more society -- sell something -- self sustained growth. shery: there is concern given the data around china, the recovery in the economy. the pboc and policymakers could pull back in monetary and fiscal support. for how long do they need to maintain the support they are providing to the economy for it to become self-sustaining? julia: i think we have seen a little bit of a shift in terms of the interbank activity by the pboc. with a have done is reduced some of the excessive liquidity in the interbank market which they do not believe will go to the real economy. they have also perhaps eased some of the excessive

expectations given where data has been heading. i think that shift is prudent and the right thing for the medium-term. i think there is a difference still between not easing further and tightening. there is no real justification at this point to outright heightened monetary. i think it will be in a neutral range for some time to come. i think that is probably already quite supportive in terms of where rates are and bank lending. it is quite supportive for the real economy to recover. if you look at the market activity data in march, growth is taking back up. that means some of the lending that was happening earlier this year is going back to corporate activities, the banking system. from a credit perspective, the earliest sign that this may be a sustainable recovery and it does not rely on additional

aggressive monetary easing. shery: how challenging has it been for policymakers to veer credit away from property, soe's, and channel them to the private sector? julia: i think it has been a bit of an uphill battle. there has been a lot of new regulations introduced. there has been a lot of monitoring and the incentive mechanism is being shifted rapidly. there has been a lot of adjustment both the central banks part and the part of the market participants. but i think relative to what perhaps the market was looking at a couple of months ago, this beat has been quite quick. i think it looks to me it can be sustained over the next couple of quarters. on pboc keeps a vigilant eye how financial resources are being used. haidi: we have had some really interesting conversations about central bank independence, particularly in light of what the fed is doing.

pressure from the white house. in terms of the pboc, they have done a pretty remarkable job of being restrained as the not putting out too much stimulus and waiting for the transmission to go through which is starting to feed into the money supply and credit numbers. i am wondering given the government spending on the fiscal side, we are seeing that leverage up when it comes to local government debt. how much pressure will there be on the pboc to turn on the lending caps and do more? julia: i think domestically, the fiscal framework has become a lot more restrained. also, i think a lot more sound over the past couple of years. you can see that really all they have been doing over the past of love years is putting more constrained over local governments in terms of what kind of debt they can issue, for how much, for what type of products. these kind of restraint are out there more than ever. even as there is a bigger amount of bond issuance, these are

municipal bond issuance. if you look at the shadow year type of financing, this has declined continuously over the past couple of years. from that respect, the fiscal framework has become a lot better regulated as well. i think the pboc's perspective, the liquidity is -- rates are quite low. they have done all they need to do from a broad macro economic perspective. risks run itthe really was still be on the external side. the pboc will be quite vigilant in terms of sensing external risks particularly with the trade war and financial market volatility. if there are chances that these things can break down, pboc can still respond. haidi: i'm curious as to whether the resolution to the trade war matters less now in the beginning of the year now that we have seen the data pointing

to more strength and stabilization. julia: i think that the two sides are now talking which is a good thing. the continuing conversation is already a much better environment for chinese businesses compared to a couple of month ago. i think that continues to be in improvement. the fact we don't have a formalization of the trade deal, i think at this point is still constrained. how quickly business sentiment and consumer sentiment can recover. i think we are already in much better positioned than where we were compared to last year. from that perspective, policymakers are in a lot more comfortable position compared to a couple of quarters ago. shery: julia, thank you so much for your time. let's get back to the markets with sophie for a check of the big moves we are seeing. sophie: we are seeing some big moves in reaction to nippon st ate agreeing to buy, and 20 per

it -- 20% premium. we are seeing a gain, trading around 9.80 a share. paint looking to buy the australian company. duluxgroup jumping by the most on record.the deal will be completed in august. the company will retain its name. another mover i want to highlight is group which is under pressure. up nearly 5%. after reports of a final bid are due by may 15. we had several shortlisted bidders named. among the names that could be among that list. net marble considering joining the bid. the valley was estimate about 10 trillion yuan given nexon's interests. shery: thank you for that.

still ahead, a victory for vale as the world's largest iron ore exporter moves a step closer to reopening an important mine in brazil. we will assess the implications for the market. haidi: up next, we will go back to jakarta as voters head to the polls in indonesia and what is the world's largest single day democratic election. this is bloomberg. ♪

shery: 190 million voters in just six hours to just cast their ballot. the polls are open is indonesia holds the world's largest single the election. once again the president is running against a former general for the top job. our chief south asia correspondent haslinda amin is in jakarta. how significant is this election? haslinda: it is significant

because the country unity is at stake. it is not about the economy. yes, we need more jobs. yes, we need growth to go beyond the 5%. yes, we need better stability in the economy, but the two sides do not differ very much in terms of economic policy. this election is the political identity, religious identity of the country. this is where the country has been split right down the middle between moderates and conservatives. moderate islam, conservative islam. you can see the choice of their respective vice president candidates. a muslim cleric. this is a man who leads a muslim organization of 40 million people. this is also the men mostly responsible for putting the deputy governor of jakarta behind bars for allegedly making comments about the quran.

that says a lot about the pairing of the two. capitalist turned politician. a man seen as educated, modern, but also at the same time, a staunch muslim. he appeals to the moderates, to the educated millennials. here in lies the division between the two. what is important is unity. whoever wins this election will need to bring the country together and that is a huge challenge. as far as this election is concerned, it is about political identity, religion playing a huge role. remember that this is home to the largest muslim population in the world. the religion card being played as a key campaign issue. d 193 million people eligible to vote. what are we expecting in terms of turnout numbers? the last if you go by

election in 2014, close to 60%. that is because the nonvoters, the number of nonvoters has been climbing and we're looking at about 30%. the government has gone all-out through ads on television, campaigns across the country to encourage people to vote. remember that voting is not compulsory in indonesia. it is a public policy -- holiday. who can sway the vote, the result? that will be the millennials. they account for 20% of the eligible voters. how they will look, it is difficult to say. some are of the opinion that they are looking ahead. they are looking for a candidate who perhaps can create more jobs, get better access of funding to start businesses. the millennials will sway the

vote going forward. haidi: our chief south asia correspondent haslinda amin in jakarta where polling has been open for about 20 minutes. plenty more still to come from the indonesian elections. later this hour, we will be joined by the country's former trade minister. she joins us with her views. this is bloomberg. ♪

haidi: rio tinto trimming annual guidance for its iron ore operations, forecasting output will fall after a tropical cyclone battered ports. our senior reporter david stringer now. how big was the impact in terms of the storm and what we saw on the numbers? david: that is right. as you recall last month, we saw

tropical cyclone veronica really deluge the huge export terminals used by bhp. they suffered flooding. revised down the guidance of the year through july. they will produce less iron ore in fact than a year earlier. what that means is i guess we will see more tightness in the market. the market already digesting the impact of supply shortages in brazil. we heard from rio yesterday also downgrading the guidance. it is all supportive news for iron ore prices. shery: good news for vale who looks set to reopen one of the biggest mines. david: that is right. it has been quite a confusing time for investors in the iron ore market. lots of conflicting news. what we have heard from a judge in brazil is that vale has now

been authorized to resume use of a couple of mines. in january, it was the failure of one of those dams that caused deaths and halted production. they now have the go-ahead to resume. they can bring back a major iron ore mine within 72 hours. it will mean the company said they will it the midpoint of the sales guidance. they are suggesting they will sell between 370 million in 2019. that is better than they expected. it is still less than expected before that disaster. they were then calling for 380 million but it will certainly bring more supply into the market. vale back on track in some degree. shery: thank you so much for that, david stringer there. let's get a quick check of the latest business flash headlines. intel is terminating a

multibillion-dollar, multi-decade effort to seize a viable stake of the mobile phone industry. after apple agreed to chips, intel said it would quit the 5g smartphone business to focus on meeting commitments for existing 4g products. even with apple as an exclusive customer, intel struggled to make money in mobile chips. haidi: netflix slumped after hours when it subscriber forecast missed estimates, prompting questions about growth in the competitive streaming sector. it managed to beat analysts expectations of new sign-ups, coming in shy of 10 million new price watchers. more subscriber turn in the u.s. netflix said it would trim its budget for future contact. shery: blackrock rebounded after customers jump into the fixed income products and showed interest in the liquid alternatives. the world's largest asset manager saw $65 billion in net

inflows the first quarter. that is the strongest total since 2017. it helped lift the company's assets under management above $6 trillion. this is bloomberg. ♪

haidi: you are watching daybreak asia. we are getting these numbers when it comes to singapore trade numbers. domestic numbers crossing the bloomberg. what a shocker of a miss. seasonally adjusted basis, declining a massive 14.3%. way worse under contraction of the 4.6% we were expecting. pretty much reversing the prior month 16% gain which was an unexpected increase after three straight months of year on year decline. a lot of analysts saying they will stay in recovery. a seasonally adjusted basis in singapore, a decline of over 14%. electronic exports continuing to see weakness as well.

the trend we have been seeing year on year with the decline of almost 27%. so much worse than the previous months decline of 8%. not all domestic exports on a year on year basis contracting by 11.7%, much worse than expectations of a decline of 2.2%. part of that is the super bowl of the pharmaceuticals that impacts singapore. it looks like the february gain of 16% could have been trade divergent as companies and manufacturers try to navigate their way around the u.s.-china trade uncertainty. that number is 14.3% on a seasonally adjusted basis. coming down by a contraction of almost 1%. pretty bad miss when it comes to japan trade numbers. really setting up a great deal of importance to the china numbers that come out later today. let's get you the first word news.

the headlines with jessica summers. jessica: the house of representatives has passed a bill on -- setting up a possible white house veto. the resolution directs the president to rein in u.s. involvement in the saudi led conflict. it directs the removal of american armed forces from operations not authorized by congress to. the u.s. and japan have wrapped up the first round of trade talks in what is described as a good start to negotiations. the economy minister told reporters they discussed currencies, digital trade, agricultural goods, and the auto sector and that the two sides will meet again next week. he added japan is keen to strike an early agreement but there is no deal yet. reports from tokyo say japan wants the asian development bank to halt new loans to china on the grounds they are no laggard needed. the per capita income exceeds

the upper range that the adp sets for borrowers. the minister will stress that point at the adb board of governors meeting next month. china was the fourth largest recipient of adb financing in 2018. and u.s. factory production fell in march as car output decline, headwinds for manufacturing and growth at home and abroad. overall production was unchanged from february, while auto output slipped for the second month. manufacturers are having to deal with rising inventory, continued uncertainty about trade, and falling demand as global growth slows. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. convictiona ton of when it comes to asian market trading an early trade.

as we had towards the china eco-data out this morning, let's get straight to the market action with sophie. sophie: little conviction as we are seeing some stock gains being muted with weakness in the forex the nikkei 225 up one third of a percent. the yen is sleeping to the lowest levels in four months. could be looking to extend its rally for a 14 session. the nzx 50 is gaining ground for a fifth straight day. the kiwi dollar under pressure, earlier to his three-month low on the miss in fourth-quarter inflation data. the aussie dollar is under pressure ahead of china's gdp report. i want to highlight movers in sydney. checking in on iron ore players in australia. we will switch it out because it is declining by the most in a year. falling from an all-time high. the stock was downgraded, but it is with bjhp and rio.

this after vale moves closer to restoring parts of its halted production. continued weakness for the materials sub index on the asx 200. we are seeing moves, leading gains in sydney. surging to a record. nippon paint agreeing to buy the company in a $2.7 billion cash deal. rakuten is jumping nearly 5%. downgraded and upgraded the stock on an excited revenue boost for the launch of its mobile network. are awaitingors key numbers out of china. domestic activity indicated, as well as the gdp number. let's bring in our across markets editor out of singapore. what are we watching given that before we have the main event, we have had japanese exports lighting for a fourth month and the horrible series out of singapore.

>> right. basically with china, we are watching to see if that turnaround that everyone has been waiting for is really happening. the stock market has had such a strong start to the year in anticipation of that. investors will be watching to see if there is more evidence of it. if it will look like china is really stabilizing things because a lot of people said even at the end of last year when there was concern about the chinese economy, so much of the global picture is really on china these days. you always have trade issues as a factor. singapore and japan are likely showing. china looks like it is that eating out, then that will be a little better. there are number of pieces of data, including some retail data that will be somewhat interesting because the chinese consumer is becoming a bigger part of the economy. there are a lot of things to watch for here in both stock and

bond investors should be interested. shery: across asset volatility has been extremely low as you can see on the bloomberg. what are you watching and how will people invest based on this? joanna: the trick with this is that people have gotten used a low volatility even in a few months it has been low, as we have had some pretty specific directions, some easy direction from the central banks as to what their policy looks like. low,he volatility has been but it is the case where volatility could increase really quickly once it goes. it does not usually adjusted it kind of goes flat all at once. and youatching for that can do things like relative value trade to take advantage of it volatility goes up, there are things like technology sectors and energy and things like that

that volatility goes up more in some sectors than in others and if you just prepare in advance for it, you can also do hedges pretty cheaply now since volatility is pretty low. that might be the way to go. shery: thank you so much for that, joanna in singapore. the group plans to boost spending to capture opportunities at china embarks on the sweeping plan to create a financial and technology hub in the river delta. the ceo spoke exclusively to bloomberg's juliette saly. >> singapore will be the most important market for us because it is a tough economy. we do a lot of local business. singapore is our most important market. of the previous two years, greater china has emerged and become the second-largest market in terms of contribution. i think that position is able to

be maintained. for the greater bay area, it is a market where we have a lot of hopes for because the chinese leaders have announced this will be a region of which they will do quite a bit of facilitating policies to allow the flows to increase. once you allow the flows to increase, there will be a lot of things that the banks can be involved. helping out on the capital flow, helping the people flow. looklieve that -- if you at the time we first announced the greater bay area strategy in 2017, we do expect that we should be able to double our net profit before tax which is the earnings in that region. >> what businesses do you see that growth coming through? >> capturing the flow that will happen amongst the four major cities in that region. that is one. that includes the world flow and capital flow that we expect that

there will be some facilitating policies that will help us achieve that. the whole market with the capital flow into it, the domestic activity will increase. we want to be involved in that as well. >> the insurance business to not do well in the fourth quarter. is it picking up? >> insurance was affected by the market holdings. when the market recovers and then the market will also come up to a positive number. >> finally, how optimistic are you for the remainder of the year once we do look at all of these headwinds we are seeing globally? >> the first half of this year will be challenging, quite tough. investor sentiment is not so good and the investment from the businessman will be held back. it will be a tougher first half of this year. there will be some carryforward impacts that we saw last year which will carry into the first half of this year.

the second half of this year, if those things were to be removed, think the investments will continue and it will be in more conducive market for the banks to perform. ceo withat was the bloomberg's juliette saly. votersup, 190 million with six hours to get their vote. back in jakarta next as indonesia goes to the polls. ♪

haidi: this is daybreak asia. shery: voting is underway in indonesia in what would be a rerun of the 2014 race. paying the current president against the former general. the country's equities has been asia's biggest performing sharemarket in the past decade. how are investors positioning

for today's vote? sophie: historically, in asian stocks have rallied in the six-month before and after elections. as noted by the white line on this chart, jci is up by about 12.5% in the past six months. support from a stronger rupiah which has recovered after hitting the weakest level since 1998 back in october. prospects for a rate cut has boosted sentiment. one of the factors that led credit suisse to raise and then asian stocks to market weight. indonesia with banking and property stocks in benefiting from those rate cut expectations. broadly speaking, investors have been unnerved going into the elections. buying of indonesian equities has lost momentum over the past week after a long stretch of inflows seen january. overseas funds have returned to the indonesian sharemarket in a big way. $1 billion worth of stocks this year, the most in southeast asia. many observers see property and

construction stocks as big winners matter who wins the vote, given the massive need for infrastructure investment in the country. as you can see, a gauge of the sector on the jci as rallied from a two-year slump in the best-performing over the past month. the segment up nearly 8% in that time. haidi: let's get more on the indonesian election. we will go to jakarta. haslinda amin is there for us. indonesian stocks may be having a rally, but when you take a look at the economy, it has been stagnating about 5%. when you take a look at exports, down for four consecutive months. let's get everything in perspective from the indonesian minister of trade. good to have you with us. how resilient is indonesia's economy given there is a slowdown right now? >> i think on the macro side, we

are very resilient. the fiscal policy is in shape and monetary policy is also stable with the interest rates. i will thing it will be kept the same. maybe not raising it any further just because the fed is being very dovish. there could be a cut. on the macro side, we probably maximized what we can do. the question is whether we can actually have a fiscal stimulus. i think in facing the external slowdown, what christine lagarde calls synchronized deceleration, it means external sources of growth will be limited. it has to be domestic sources and that would have to be a combination of stimulus or government spending which the current government spending has to be smarter in terms of being more effective, whether it is the subsidies or the current

spending to have a stimulus affect. then, you need to address the investment because the key is really generating private investment if you want to grow higher than 5%. haslinda: what is the outlook? we have been seeing a slowdown. the expectations will remain sluggish. >> i think this is the big challenge for whoever is going to win the election today. i think our challenge is really on the real sector. how do we have a structural changes that will get us out of the 5% growth? that is an investment question. i think a lot has to do with the direction of policy. we need to diversify. we know that. but, where should we be stressing on the manufacturing, also in services? a lot of opportunity there but it needs consistent direction. haslinda: let's pick up on services because you have always

said great potential in services, why is there not being look into? what policies would you like to see from the next government? mari: i think if you look at what we need to diversify, let's start with the manufacturing. think the biggest issue is manufacturing is still the labor policy. policy asry stringent well as minimum wage. on the services side, what we have seen is the growth in the services sector but merely in the traditional services, like trade and construction. we should be focusing on the modern services, whether it is business services or tourism, as well as the fact we have this toential to service -- export services in terms of animation services, software. what you call i.t.-based services. budding to happen is maybe a

couple of things. we need to reduce the restrictions in the services sector. many to encourage foreign investment. one of the big issues for indonesia is foreign talent. indonesia only has 1% foreign labor out of his total labor compared to other countries. we we should be trying to attract foreign talent to help us grow the services sector. haslinda: i want to touch on the u.s.-china trade war. indonesia has been somewhat protected. it has been buffered from the spillover effects. not that plug into the global supply train -- chain. the downside is the global supply chain to go further. where do you see it going then? mari: this is part of the story. how do we increase our competitiveness for our exports down the road? we know 62% over exports is commodity-based. we need to restructure to be

more competitive in exports. i think that is with the services story comes in. when you think about being part of the global landscape, it is increasingly not just about manufactured products, but the whole end to end. that includes the services. having traditional services, rnd services in your country will increase the value added and be part of the value chain. i think this is the big challenge for indonesia. reforming labor laws, improving investment climate, infrastructure. think the skill level. you cannot really be part of the global change if you cannot increase in skill level of your workers. you cannot want to be out skilled labor intensive component of the global value chain. haslinda: how important is china to indonesia's growth? there has been debate on whether indonesia should be as committed in its relationship with china as it is today. mari: china is very important.

china is our number one trading partner. the first quarter of this year, the slowdown in china as well as the world has affected commodity prices which is our expect -- affecting our exports. china plays a big role in our economy. but at the same time, we do need to balance the sources of growth and trading partners. for us, addressing all the bilateral elation ships as well as increasing regional integration. world we areading facing now is to enhance regional integration. increase trade and investment between each other in the region. haslinda: unlike six month ago, we have seen stability in the rupiah. one of the better performing currencies in asia. are you comfortable with where it is giving you were the former trade minister? is it conducive for exports? rupiahes, i think the

depreciated 12 -- 12% last year and it has rebounded almost of the same level. haslinda: up 8%. mari: it is a sign of confidence in indonesia. the macro is fundamentally sound. we have seen a capital inflow in the first three quarters but still mainly short-term. i think the challenge is how to attract the longer-term, foreign direct investment which will help restructure the economy and lead us out of the middle income trap and have more quality investment, including in the i.t.-based. i think the other thing we have not touched on is how the technology go revolution, disruption can be a new source of growth for indonesia. we just did an analysis in a project on digital economy and it shows indonesia can get about half a percent more growth if we can really deploy the

technological revolution across sectors. haslinda: something the government have to look into. the former trade minister of indonesia joining us this morning. shery, indonesia looking to be the fourth-largest economy by 20 50. a long way to go. shery: thank you for that. we will have plenty more to come on indonesia's election later today when we are joined by jakarta by the international institute of strategic studies fellow eric connolly. this is bloomberg. ♪

haidi: let's get to a quick check of the latest business flash headlines. commerzbank is said to be bonded out by png after lenders talks to deutsche grows increasing opposition. a magazine reported the story, citing unnamed sources. no one at the two banks or the german finance ministry was prepared to comment. shery: t-mobile and sprint tumbled in late trade after reports that proposed merger is meeting resistance in washington. the wall street journal says staff of the justice department say the deal is unlikely to be approved in its current form. t-mobile boss john ledger took to twitter to deny the story, saying it is not just true.

he says there will be no further comment. haidi: jet airways long struggle to keep flying seems to be coming to an end. its lenders is refusing to bailout the carrier, forcing what was once india's number two airline to ground more planes. the banks confirmed there will be injection for the time being and jet executives are now ready to halt operations completely. let's get straight to sophie fore-check of what to watch in the markets later this morning. sophie: after that latest exports number we got from singapore, the resilience of stocks in the city very much to the test after we saw a rally of 8.6% so far this year. electronics exports sliding nearly 27%. in taipei, watching technology after the first quarter results. the company had cut by 34% on week demand.

their earnings due on thursday. net income slumping 28%. looking at the board, we are watching bmw planning to recall 360,000 cars on faulty airbag inflator's on the mainland. china's view ahead of the earnings report due today as property stocks on the radar. some valuations are looking stretched. it has yet to see a sustained recovery in home sales and credit conditions that the market has been pricing in. haidi: we will handed over to bloomberg markets. that is it for daybreak asia. our markets coverage does continue with the start of trading in hong kong, shanghai and shenzhen. this is bloomberg. ♪ moving is hard.

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♪ 9:00 a yemen in shanghai, beijing, and singapore. welcome to "bloomberg markets: china open." we are counting down to the open of trade. david: your top stories. asian stocks trading sideways, flat after wall street struggled for traction overnight. bhp flies after cutting forecast because of disruption from a powerful cyclone. the indonesia kicks off biggest exercise and one-day democracy. we are live in