paul: good morning. i am paul allen in sydney. we are one hour away from the market open. shery: i am shery ahn. sophie: i am sophie kamaruddin in singapore. welcome to "daybreak asia." paul: our top stories this friday, trade talks resume in washington with president trump saying a deal is still possible. closed with a fourth straight loss. the negotiations come with yet

another potential hurdle as the u.s. banns china mobile. -- bans china mobile. the ipo values the company below its last private estimate. shery: let's get you started with a quick check up on how markets closed. the s&p 500 is now headed for its worst week this year. we sawtek and materials leading h andlients -- saw tec materials leading the declines. at one point, we have stocks really paring back the earlier losses as president trump came out with a more optimistic view of where the trade talks were headed. he said because potentially see a deal this week but that really was not enough. we have trade tensions, geopolitical tensions as well with iran. north korea firing missiles. investor sentiment pretty fragile at the moment. the yield curve in reverting at one point for the first time since march.

we of course are just five hours away from the higher tariffs kicking in on $200 billion of chinese goods. u.s. futures at the moment falling .25%. this friday, asian stocks are set for a fifth straight day of losses after a volatile week. missile losses from north korea. a less than auspicious -- for moon jae-in. the cost be likely to extend the kleins after plunging -- dec lines after plunging 3%. they recalled roughly two thirds of korea's chip exports. w loominge dollar lo ahead of the double whammy of the rba policy statement and higher tariffs. yen is hanging onto a gain. the offshore yuan is trading

6.84 handle.64 -- a potential move to 7.20. the kiwi dollar is slipping. the rbnz deputy governor said the economy needs to grow around 3% a year. paul. paul: thanks very much for that, sophie. just to get you breaking news on the bloomberg terminal, we have first-quarter income in singapore and that is a beat. first quarter income, $1.23 billion and the estimate was for $1.12 billion. net interest margin improving slightly on year to 1.76%. nonperforming loans ratio crept up a little to 1.5% versus 1.4% but overall, a beat. first quarter net income, $1.23

billion. let's get a check of the first word news with ed ludlow. uber has raised just over $8 billion in its ipo after pricing shares near the bottom of the range. if old 180 million shares at $45 a piece based on the amount of stock outstanding after the offer. the ipo gives uber a market value of $75.5 billion below it the market valuation of $76 billion and far shorter than the $100 billion that had been touted earlier. the u.s. air force tested a this month.ed cbm they deny the launch of have anything to do with renewed korea. firings by north the rocket flew 7000 kilometers to test theific accuracy of the system and authority --ith what authorities said it is a

robust nuclear deterrent. a chinese citizen has been indicted creating a massive computer hack in one of the biggest -- of consumer medical data in u.s. history. it accuses him of anding a hacking group 2015. the hack gained access to personal data are nearly 80 million people at anthem alone. the money is, -- 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 ed ludlow. this is bloomberg. paul. paul: thanks very much. u.s.-china trade talks resuming in washington just hours before to administration is due increased tariffs. president trump says a lot will be learned today. pres. trump: but our country is doing great. we are going to find out about china tonight, and i think in the end, you are going to be very impressed with the kind of things we are doing. paul: joining us now is joe

washington and our china correspondent, tom mackenzie, in beijing. what can we realistically expect? got underways just about two hours ago in washington. both sides have been pretty firm going into the talks with the president promising that he thinks he can get a deal and that china will agree to a deal. but he is not backing off at all on his threat to impose the additional tariffs. there is also the prospect of tariffs on additional chinese goods the u.s. has been hanging over this so they have got clearly a number of issues that need to be worked out, whether or not they can do that before midnight. that is when the higher tariffs will kick in. it is really unclear. there seem to be a number of issues that have been holding them back, and it will be tough to get that all done in a matter of hours. shery: we have heard that china

plans to retaliate on these tariffs. china haves does missed fight? -- have in this fight? tom: they have significant weapons in their arsenal. a number of them have the risk of significant backfire as well. they could impose 25% tariffs on all u.s. imports into china but a lot of those go into chinese exports. there will be the knock on effect and cost impacts there. the question is whether or not they depreciate or devalue the yuan. it is down 7.5% versus the west dollar. -- the u.s. dollar. the question is, if they'd devalue the yuan, well that lead to capital outflows? to capitalt lead outflows? the treasury holdings that china

has -- it is the largest holder of u.s. treasuries. if they start to sell down on those, that is an option for china. it is very unlikely instead of the financial ripple than impacts that would have. it would have a lot of blowback for china and its gdp. option seen as a nuclear , the treasury holdings. in terms of the most likely scenario, maybe they increase the tariff levels they have already imposed on u.s. goods. the other question is whether or not they start to push back on some of the pledged purchases of soybeans. a 25% duty on u.s. soybeans. they made pledges to purchase a certain number of millions of tons. 7 billion tons of soybeans. they can push those back. that would impact midwestern states in the u.s. they could diverge their attention to latin america and start to import more soybeans from there. points, we have

seen that, really, these trade tensions escalating could affect the u.s. as well. this gtv chart on the olympic showing there is an estimated 7 bloombergp -- on the showing there is an estimated 7 million. when we get the new tariffs, what impact will that have on the u.s.? tom: we have already seen that grain prices in the u.s. have plunged with the additional threats of tariffs. the economists and moody's analytics as the -- at moody's analytics estimate that if they continue, that could shave as growth in% off u.s. the fourth quarter of 2020. the big question is how long that goes on. andhe u.s. goes ahead imposes additional tariffs, that could be a major drag on the economy, just as president trump

is gearing up for his reelection. it would also have some impact on china's economy as well, so besides have the guns to their heads to get some sort of deal and avoid extending this trade war beyond much longer. explore one of the scenarios a little more. imagine tariffs due come into effect as threaten -- do come into threa effective threatened. effect as threatened. tom: they look for the thousand listed firms, exporters, major exporters. of the 1000, just 300 have profit margins of more than 10%, so a 10% level of tariffs, and with a weaker renminbi, down 7.5% over the last 12 months, they can just about whether that ther that.

out of the 1000 firms, just 60 have profit margins of 25% or above. so it makes it very difficult for chinese exporters. andquestion of the yuan whether that weakens further from here, we saw that drop 1.5% isce the tweets from trump going to be a key factor. about 20% of all china's exports go to the u.s. not all of them, of course. just 20%. many will be exporting to other countries and regions and may ramp-up that exposure. nonetheless, they will be reliant i think on more policy stimulus from china's policymakers and chinese officials. the question is whether or not these tax cuts we have seen implemented will be enough to weather the storm. bloomberg economics things that pretty unlikely. creditwe have seen growth in china slowing. thank you very much to tom mackenzie and joe sobczyk. and we have plenty more coming up. " willberg markets: asia

have special coverage as the increased tariffs come into force with all the reaction and live analysis. that is at 2:00 p.m. in sydney. u.s. subscribers can watch through tv on your two oral or on coming up on -- on bloomberg.com. we will look at the market impact and which sectors may fare better than others. paul: later in the show, softbank's big bet pays off. this is bloomberg. ♪

>> they broker-deal. they cannot do that. so -- they broke the deal. they cannot do that. >> president trump appears to be crazily. i will call him rationally crazy. >> it is almost existential between the united states and

china. >> say to president trump, you're going to get a good deal. you have got to be patient, patient, patient, >> passive, persistent, stick with it. >>it makes a time, but we should do the proper trade deal. i would rather not do the deal then do a bad deal. shery: president trump and other key policy and market players weighing in on a trade battle between china and the u.s. one of them calling the president rationally crazy. that is an interesting one. the s&p 500 on pace for its worst week of the year. goldman sachs telling investors -- su keenan joining us with more on the u.s. close and after-hours action. what are we seeing? su: tactically, we are in good shape, but as one strategist said, things can get worse from here. if you look at the bigger picture, this has been a speed bump. that puts the pressure on friday, where we go from here. we close off the low of the

session, but if you look at this chart, first 50 day moving average breach of 2019, every major index. the dow, the s&p, the nasdaq, the russell 2000, and the dow transports rather than the dow below the 50 day moving average down the start suggests the s&p 500 could likely test the 200 day. let's going to the big mover is and what we see again. bondnapshot -- you saw the . the difference between the three-year and 10 year briefly invert. that tends to be a recession warning equalized by the end of the session. vix was on the move. let's go and to the big movers, and again, as i mentioned, earnings are a big story, but so were the stocks in the middle of the trade tariff bullseye caterpillar.

it closed off the low. gopro, a big mover ahead of its earnings. roku came in very strong. the video streaming service did very well. take a look at gopro after-hours. another strong stock doing very well. up as much as 10%. this is a company that a year had been struggling because of concerns it was a one-hit wonder. paul: su keenan, thanks very much for joining us. our next guest says it is time markets will go up to the reality that a trade war affects everyone, including economic growth, earnings, profits, and stock prices will rise. cio, david. and let me start by asking you this. do you think markets were too complacent ahead of the tweets we had earlier from president trump/.'markets are -- from president trump?

are they being team estimates that -- too pessimistic? david: we had a period of complacency. the market clearly was pricing in a deal and no controversy. that all changed. whether the market adjustment that we are seeing that you have just reported is over remain to be seen. i do not think so. a 200 day go to break moving average or not remains to be seeing, but we can do it. this is a serious confrontation between the world's two largest economies, two largest military culturally,they are linguistically, governmentally, entirely different. so we are confronting something very unique in modern financial market history.

paul: in some respects, onsident trump's approach trade has paid some dividends. i want to point out a chart in our gtv library. and it shows a large, thick red line getting bigger and bigger and bigger until we get to the final three bars, where it pulls back. the trade deficit narrowing rather sharply. president trump says he received chineseful letter from president xi jinping. who is holding the upper hand going into this negotiation in washington? david: i am also sure either side has such an upper hand. of course, we do not know the contents of a beautiful letter. i am very appreciative of the fact that the president is now reading. that is a good thing. whatuestion i would ask is is the outcome other than peace breaks out and we have a big lovefest and we all make up and

pretend we have not been through a year plus of trade war escalation. it would be a nice outcome. it would take a lot of healing time. this is not a quick blip of the light switch. to put it into perspective, if you take the maximum tariff threat on china now, and say what is a metaphor in the united states for such a change, it would be approximately one dollar a gallon gasoline increase permanently. how would the country react to that? so we have impacts here. this is real serious stuff. not just fuel prices. we are talking about everything on that list of goods of $200 billion of chinese imports. talking about toys, electronics, cell phones, laptops. how much of a conundrum will the

fed be in if inflation rises here? david: the fed now has a real problem. the problem is this is not due to monetary policy. this is due to this trade war modern equivalent of the great depression. so what is the fed going to do? monetary policy cannot create oil. it cannot build a toy. it cannot deal with an electronic exchange. my guess is the fed sits tight until there is some reaction, some catastrophe, some that shock, orebt something that causes a fed to have to move. they: when it comes to strength of the u.s. economy, that is what president trump is counting on, right? even if we look at the earnings season so far, it seems pretty positive. the gtv chart on the bloomberg

showing how many companies have beat estimates. can he really count on a solid u.s. economy to outlast the chinese economy if these trade tensions continue? david: i think there is an impact coming and there is a time delay. look at the news. capital also had had anuncement -- alpohha announcement. it had an appended clause that said it would not apply to anything currently in shipping or transit. there is or five weeks before you even start to see an impact. the impact now is in the expectation. what do businesses do? the fact is, if you are i were running a business impacted immediately, we would slow things down. we would reduce capital

expenditures. we would postpone investment. woulde kinds of things slow the economy, and this is going on worldwide, not just in the united states. shery: always great to have your views. thank you so much. david kotok. david: nice to be with you. shery: and of course, we have plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: we are seeing u.s. futures erasing all of its losses as we heard from fox news that president trump's meeting treasury secretary mnuchin and ambassador lighthizer and they are talking about the trade talk progress ahead of tariffs eating hike. right now, u.s. futures holding steady at 28.74 and erasing earlier losses. let's turn to uber raising a $.1 billion in its initial public offering. theate shares at

bottom of the range. let's dig in with many sing -- mandy singh. when ilook at >> -- >> look at uber and ridesharing in general, it has shifted on profitability. companies do not have a path to profitability. uber marketed itself as the amazon of transportation. when you compare them to amazon, they did not have such high sales and marketing expenses. amazon was not using subsidies. investors want to know how are these companies going to, you know, become ebitda positive, and whether they can never get off the subsidies they are using so far? bottom of >> at the the range which appears to be setting up for a pop. what can we expect? will this be the lyft experience? >> the fact that they are more

rational about pricing at the lower range, i think we have a thing for ridesharing. lyft is trading at about five times -- that is a comp. uber is pricing its ipo at 6.5 times it. they have a high-growth business in food delivery which is growing 100%. the core ridesharing business is five times bigger than lyft. the growth phrase decelerating, you can see that they have the scale and network effects and they are able to, you know, expand their sales much faster to subscribers who use both ridesharing and food delivery, so that is where you get the network effect. shery: thank you so much for that with the latest on uber pricing. mandeep singh of bloomberg intelligence. the u.s. is hanging up on china mobile.

blocking the company from american markets. let's assess the impact, when we come back. this is bloomberg. ♪

>> i am ed ludlow with the first word headlines. the u.s. and china have begun their latest trade talks with just hours to go until president trump's imposes higher tariffs on imports. the chinese vice premier and his team are at the trade representative's office in washington for two days of talks with president trump surprising them by saying a deal is possible this week. he warned beijing to stop reneging on causes already agreed. the u.s. is expected to track more countries for currency manipulation after lowering the bar for foreign governments to come under scrutiny. .ietnam may be named outright

hanoi has been asked to disclose more information. treasuryh's biannual reports on foreign currencies is expected to raise the number of countries examined from 12 to 20. the philippines has joined the is a easing cycle, cutting its benchmark rates and saying it will lift growth from a four-year low. the central bank reduced the overnight borrowing rates from 25 basis points to 4.5%, making its first cut since 2016. the philippines joins malaysia and new zealand in easing this week amid low inflation and growing global threats. and the private sector space race is heating up with the world's richest man saying it is time to go back to the move. told a presentation in washington that it has been too long since an astronaut

walks on our nearest neighbor. blue moon is powered by liquid >> hydrogen. my general -- is powered by liquid hydrogen and nitrogen. >> we are going to build a road to space. and then, amazing things will happen. then you will have entrepreneurs start a company in their dorm room. back in happen today. ed: 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 ed ludlow. this is bloomberg. paul. paul: thanks very much for that. let's get a check of markets now with sophie in singapore. checking in on nikkei futures in chicago, we do have them paring earlier losses now, just off by about less than .1% this morning. briefly swinging into the green with s&p futures and switching

the board to check in on s&p futures. we did see a brief r espite for contracts. as you can see, if we can pull up the board, we can see that that respite has been briefed. we are seeing s&p futures back into negative territory. checking in on the aussie yen, we weighed on policy statements for the boj and our bam the pressure will continue to be on when higher tariffs are expected to take effect. flipping the board, i want to check in on the lira, which is gaining ground early in the asian session, extending its climb after the rate hike, helping push the lira below 6.16 against the dollar. it is undervalued and there may be potential support from are tightening, shery.

shery: sophie kamaruddin in singapore. thank you so much for that. plenty more to come on "daybreak asia." this is bloomberg. ♪

paul: we are counting down to asia's first major market opens this morning. we have got futures for japan slightly weaker at the moment by .3% after u.s. equity markets ended down for a fourth day in a row. this is "daybreak asia." i am paul allen in sydney. shery: i am shery and in new york -- shery ahn in new york. engle is in beijing, looking into this. steve of course, given the current atmosphere in china and the u.s., not that surprising, but what exactly was the reasoning behind this? stephen: yeah. goingade dispute is

further into the telecoms space. of course, there is the big lift with huawei -- rift with huawei that is not resolved with the cfo awaiting extradition to the united states. this is the case of the fcc and the united states, which has now -- in the united states, which has now barred china mobile in the u.s. market. that was in 2011, so eight years ago. and the fcc finally ruling on that and it is also open to reviewing the earlier authorization that they did grant the two other telecommunications companies from china, china telecom and china unicom. in the crosshairs is china mobile. the board voting unanimously, 5-0, to deny china mobile's request to enter the u.s. market after being urged to do so by the trump administration. the fcc determined china mobile

is controlled by the government. this is what the fcc chairman, pai, said.git sensitive targets depend on the network. unacceptabley an risk. it ramped up the tension between china and the united states just as the chinese delegation arrives thursday night in the united states for the very pivotal trade negotiations with trump. metaphors forhe tension at the moment, while way -- huawei. stephen: that is a debatable target. -- topic.

if you look at the efforts to get allies in other countries do not accept huawei equipment in 5gir buildout of 4g and networks, only japan and australia have agreed to follow the u.s. lead on that. none of the european nations have done so with a blanket ban. which is ae u.k., staunch ally. mike pompeo has been in london and he said, "now is the exact opposite time to go wobbly." that is not being determined to block wally. -- huawei. this comes at a time when canada is determining whether to extradite the huawei cfo to the united states on those charges by the united states on facilitating trade to iran as well as some of the long-standing complaints from the united states that huawei equipment can allow backdoor access and spying.

paul: chief north asia correspondent stephen engle, thanks for joining us. and bloomberg markets: asia will have special coverage as the increased tariffs come into force. we will have analysis and all the market and political reaction as well. at midday,l show hong kong and beijing time, 2:00 p.m. in sydney. u.s. subscribers can watch it via tv were on bloomberg.com. on tech areets starting to pay off with operating income within tripling in the last quarter. they saw a earnings surge at least on paper thanks to a new valuation of its take in uber. -- stake in uber. i want to start with your birdseye view of those results. what were your key takeaways there? >> thanks for having me. softbank results were pretty good.

there was little to complain. there are two parts of the overall business. one is their operating businesses, which includes softbank, etc. on the upside side, you have softbank's fund. the first part was flattish. the second part have fantastic in simple terms from last year's part paper, part real profits. ais year, it has been significant increase. it goes on to show that most of the investments are reading wars -- reaping rewards. given the big picture view, it is essentially when you look at softbank investment, you have to accept part of that may not come to fruition. 20%, 30% may not work. that is the style. the rest of it is generating healthier terms though.

paul: let's talk about one of those big investment. uber is going to float to tomorrow in the u.s.. that is a significant investment. it helps softbank's bottom line. that could really go either way, couldn't it? yes.en: -- >> it is not necessary that the it is a necessary positive. if you look at alibaba, the stock got listed. at --nk's stock was once a got listed come investors had an opportunity to directly invest in alibaba if they wanted to. the attraction for investing in softbank or alibaba to softbank was no longer there, and subsequently, the stock actually declined and went back to those levels only after for years, so it took them a while to get back to those levels so it is not necessary.

it is a big positive after that. it is not just uber. there are multiple companies that even before the listing, implies there is meaningful upside. in the kiss of uber, softbank has taken a statement that a in the case of the bank, softbank has taken a statement. they have paper profits up about 50%. shery: is there a risk that masayoshi son seems to have a concentrated bet in the ridehailing sector, including that of uber? there are some people that say that sector in itself still is money-losing and it will take time for them to reach profitability. that is true. a whole lot of a company's are out there that are not yet profitable. what we are seeing increasingly

is that these are monopolies. not as segmented as it began. they do have investments in uber and china. they do have these investments. these investments are sizable. there is no competition effectively. .or uber, there was competition for most of the companies and businesses, there's little competition. transport and ridehailing is one part of the investment portfolio. there is a lot more. sizable investments from that fund. shery: how much of an issue is these sluggish performance? they have parts of the overall business and portfolio. the contribution is less than

10% for each. the risk is not allowed to much. there will be risk that softbank is called upon. what if they say no and they do not invest? .here would be job losses in the downside of that for the u.s. could be bigger so it is one. on the other hand, they passed on all that investment to softbank, the subsidiary. it was listed recently. into that pocket, now. they collected cash on the back of that transaction. what would you like to see in the softbank investment topline going forward -- pipeline going forward? atul: a couple of things. one is better disclosure in terms of how they are managing, what kind of management, etc. it

is out there. also in terms of clarity for investors in terms of sourcing. there have been some issues in the past 12 months in terms of sourcing which made a lot of long-term investors nervous about softbank. from my standpoint, the reason long theftbank and be stock, if i believe in the to capital,ccess entrepreneurs, and opportunities. on the other hand, i am not that big a believer in shrinking. 50%.oks like that may stay, shrink, or that would be my reason to buy. that is my reason to be bullish on the stock. shery: he has never been too happy with the valuation gap. about half that.

will investors come around eventually? what will it take? last year -- i have been writing and are doing on the calls for buybacks. if you really believe that his is the best and cheapest stock out there, then he should put his money where his mouth is, and he started doing that in the last quarter. this quarter, they have announced a stock split while maintaining the dividend. that implies doubling of dividends. isse indicate the money flowing back to shareholders. that is the important thing. that is a pretty good thing that is happening for softbank shareholders. shery: thank you so much for that. senioryal, jeffries equities analyst here to you. more ahead on "daybreak asia." this is bloomberg. ♪

shery: welcome back. tencent and xiaomi are among the companies to win licenses to create virtual lenders in hong kong, bringing major players enter the race to shakeup traditional banking. joining us now from hong kong is a payments leader. great to have you with us. who has the stronger position here coming into this race? >> great to be back. thank you. good question. it me preface it by saying, mean, in terms of digital banking, hong kong is going from a standing start to what may emerge as the ultimate regional battleground for new players. is also ahat, it proving ground. we have eight new fully licensed retail banks coming to market most likely by the end of the year. it is almost unheard of in any developed market and we will see quite a lot of competition between these new players but

also with established players. who has the best position? -- proposition? that remains to be seen. shery: does scale matter? the bigger the company, the better the offerings can give in virtual banking? >> that is a great question. if we look at comparative markets, we have seen a lot of andlenger banks and others in the u.k. and they are competing for similar customer subsets. the difference in hong kong is the backers, the shareholders of many of these new virtual banks are extremely well capitalized, extremely large. in some cases, technology companies and established banks. they have scale when it comes to capital. they have scale when it comes to investment potential. the question is, can they scale from a customer acquisition perspective? this will be a battleground.

paul: why would a customer go to a virtual bank? surely, the traditional banks will just move to compete in the same space? james: you have to assume traditional banks are nimble. for those of us who have lived in the hong kong market for many years, we will find that from a customer experience perspective digitizationgital perspective, hong kong has not exactly been at the cutting edge, forefront. but you are right of course. large part of this story will be a response from incumbent banks, from established retail banks, and the question of why customers would change, i mean, that is the big challenge. can these new players offer a truly differentiated experience on price, on product set? this is a highly profitable banking market, but certainly it will not be easy. broadly, what does

this mean for hong kong as it tries to compete as a global financial services hub? james: like i said, i think this is fantastic news in one regard. hong kong has not in the last number of years been known for its financial services adoption. or simtech the banking regulator has taken it upon itself with a range of new initiatives to really drive innovation in the market. we have got a new immediate payments platform that was launched last year. we have open banking initiatives underway, and with these virtual banks coming to market, quite honestly, we will see considerable disruptions. what does that mean for the region? we are seeing other markets look to hong kong for inspiration or perhaps lessons learned in relation to how you license and apply new players. they are talking virtual banks coming to market in the same

way. this is great for hong kong standing as a regional hub. ey partners.loyd, asia-pacific simtech and payments leader. thank you for joining us this morning. that's get a check of the business flash headlines. finalizedsays it has an agreement to be bought by occidental and has paid a fee to chevron as compensation. tradeoth fell in u.s. with occidental dropping to a 10 year low on investor concern over the deal. chevron rose the most in three months, saying it will use the breakup fees to increase buybacks by 25%. shery: reports from the u.k. say land rover jaguar could be imminent. the press association says the so-called post sale integration document is in circulation with all sides looking at potential cost savings. they say they are in no hurry to make an acquisition.

the jail our owner -- jlr owner says he has no intention of selling the carmaker. paul: blackstone has so much demand for its latest fund that it has decided to cap total investment to $25 billion. that would set an industry you as investors continue to extra confidence. private equity firms raised more than $400 billion last year after delivering a record hall in 2017. shery: netflix is buying the rights to another show, stepping up its drive to get chinese speaking viewers around the world. it is adding the romantic comedy i hear you and will stream. netflix has been investing in chinese language content for distribution abroad. paul: china mobile is being

blocked from the u.s. wireless market on national security grounds and other chinese companies are under scrutiny. the news comes as trade talks resume and may be another point of tension between washington and beijing. the fcc voted unanimously to blocked china mobile the request of the trump administration. it is looking at earlier licenses granted to china telecom and unicom. .et's preview the market open and japan, south korea, and australia. let's get it over to sophie in singapore. sophie: we have nikkei and s&p futures this morning. a volatile ride for stocks likely to continue in a week that has pushed prices on the nikkei 225 to a four-month high. we are seeing the yen holding onto a five day gain, sticking below the handle against the greenback. flipping the board over in sydney, futures are hinting at an increase potentially at the start of cash trade. some green shoots to consider as well, from are you a -- rea

group. sticking below the 70 handle against the dollar. in seoul, we could see more pain ahead for the kospi after the worst plunge for the benchmark since october on thursday and that also saw the korean won stick to january 2017 lows. another missile tests from pyongyang is not helping matters. the stock in south korea and japan -- the missile tests do make for a grim milestone for moon jae-in, who marks his second year in office and this morning, the bok governor is to hold a meeting on the missile tests from north korea. so plenty ahead when it comes to what to watch for stocks in south korea and japan. shery: we will be watching all of those coming up on the next hour of "daybreak asia."

also the 11th hour trade negotiations in washington. we are going to be speaking to the u.s.-china business council representative and we will check the outlook for asian property. the market open is next. this is bloomberg. ♪

paul: good morning. asia's major markets have just opened for trade. shery: good evening from new york. sophie: welcome to daybreak asia. ♪ paul: our top stories this friday, markets play defense as trade talks resume in d.c.. president trump says a deal is still possible as a clock ticks towards tariffs. negotiations face another

potential hurdle. the u.s. is dropping china mobile on the grounds of u.s. security. shery: uber raises a billion dollars after pricing your the bottom of the range. the ipo valued the company's below its last private estimate. sophie: we are hearing from the bank of korea saying tension is rising. we have seen the koran and japanese stock markets being hurt bad because of these trade tensions. yesterday we heard from the boj governor saying that they will potentially have to ease and really implement additional easing if these trade tensions between the u.s. and china affect price momentum in japan. let's get straight to the market action. what you seeing? sophie: in tokyo, japanese stocks are gaining ground. it's been a very volatile week. terror threats and to missile launches.

on the yen, we are seeing it lose some momentum after five days of gains. it could be set for the longest winning streak this year. the cossey is opening hire as well. tests, and auspicious milestone for the south korean president who is marking his two-year anniversary and office. losses given the concerns around tech as well as missile tests. this after plunging 3% on tuesday, the biggest drop since october. two thirds of chip exports go to china. let's check in on the mood in sydney. we have stocks, little change their own aussie dollar. ist crash low for the a ud moving ahead of the double whammy of the policy statement and the tariffs.

checking in on wellington. little change but to the downside this morning. the kiwi dollar is just flipping below that 55th handle. said that governor the economy needs to go at 3% a year to be inflation and employment goals. you very much. let's check in on the first word news. let's get it over to add. over $8 has raised billion in its ipo after pricing shares near the bottom of the range. it sold 180 million shares at $45 apiece. based on the amount of stock outstanding after the offer, it gives a broad market value of $75.5 billion below its last private market value of 76 we dollars. the u.s. is expected to track more countries for currency manipulation after lowering the

bar for foreign governments to come under scrutiny. vietnam may be named outright for artificially holding down the value of the dong and hanoi has been asked to disclose more information. the treasury reports on foreign currency is expected to raise the number of countries examined from 12 to 20. has tested aforce second unarmed icbm this month. they deny the launches have anything to do with renewed missile firing by north korea. the rocket flew almost 7000 kilometers over the pacific to the marshall islands to test the accuracy of the system and demonstrate what authorities said is a nuclear determine. chinese citizen has been indicted for aiding a massive computer hack at a health insurer in one of the biggest thefts of consumer medical data in u.s. history. the indictment accuses a 32-year-old of helping a hacking

group in china infiltrate computer systems at anthem and three other u.s. businesses in 2015. it gained access to personal data on nearly 80 million people in anthem alone. ,lobal news 20 for hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thanks very much. inde talks resumed washington hours before the administration is due to raise tariffs. president trump says a lot will be learned. >> our country is doing great. we will find out about china tonight. i think in the end, you will be impressed with the kind of things we are doing. paul: let's bring in our senior international editor jodie snyder. what can we realistically expect? >> we are certainly hearing different things from president trump. he's saying that a deal is still possible this week.

with that threat of tariffs out there, it really means that stances are hardening. it's hard to see them coming to a deal in the next few days. it is really a matter of what -- whether president trump makes -- wants to make good on that threat. we will see whether he intends that. obviously, if that happens, china has said it will go ahead and invoke retaliatory tariffs. that raises the stakes a good deal. president trump seemed to signal yesterday that he wants to blame china for the lack of progress in the talks lately. he said at a rally yesterday that china broke the deal. lots of tough words on both sides. his recent comments were somewhat softer in tone, saying they could still come to a deal this week. we have been seeing lots of conflicting signals. when we talk about 10% to 25%

tariffs on $200 billion of goods, what are we talking about? >> that's a significant increase. economists are telling us that really would raise the stakes significantly. so far, the 10% tariffs that have taken effect have hurt a little bit. the farm states, for instance. not that much. affect, thattook would have a big effect. he president has said that wants to look into putting in where we haveff not yet seen those goods affected. that would affect consumers. there's a lot of concern that that would affect u.s. consumers as well in terms of prices on computers and smartphones. economists are saying the full effect,na tariffs take

it could take as much as half a percent off of global gdp. paul: what is china's stance on the talks and president trump's assertions that beijing has reneged on its commitments? saying thatreally the mischaracterization. that they have not backpedaled on any of their commitments. they are saying that they honor their commitments and they want to continue to talk. they are also hardening their stance and saying if the u.s. goes ahead and invokes more tariffs, double those tariffs and goes ahead with any other kinds of actions to further impose tariffs, it will retaliate. hardening of of stances we have seen in recent days. the chinese said they are willing to talk, they did come this week even after that tariff threat from president trump. there tothey that are

communicate clearly. shery: bloomberg senior international editor. as we await more clarity on where the negotiations are headed, we are seeing u.s. futures are racing all of the losses and gaining. we have heard reports that the president was talking to his top trade negotiators, talking about making progress towards a trade deal. we are now seeing u.s. futures up. still no clarity on what will happen in the next few hours. tariffs are expected to go up to 25%. let's look at how this is affecting companies in china. our chief north asia correspondent is in beijing. how worried are these corporations that will be impacted by the tariffs? >> absolutely. it's been on the minds of just about every participant this week. everybody wants to know what's going to be the lasting impact

if indeed the trade talks fall apart. we will head into a protracted trade war beyond what has already been expected. that was an amicable solution. however, the rhetoric has been amped up. the immediate focus goes to those exporters. this is a fairly export dependent economy. yes, there is more domestic consumption and services taking up a bigger part of the economy. exports, still a strong pillar. jodie was talking about what kind of retaliatory steps -- three main ones. reduced import of u.s. soybeans and other products is one. they could reduce the treasury but that is maybe counterproductive as well. it could reduce the value of their remaining holdings if they do reduce some of their $1.1 trillion.

that would send yields higher. it would reduce the remaining value of holdings. the other one would be, you want devaluation. do they want to do that? painful lessons in 2015 with all of those outflows. that might not be something they want to do. that would help a lot of the exporters. data,e dug into bloomberg taking in a sample side -- size of 1000 export firms. we are learning that 300 of those thousand firms have profit margins of more than 10%. given the substantial depreciation, there is flexibility there. they could be resilient to those 10% tariffs. if you take those up to 25%, less than 60 of that sample size of 1000 chinese exporters had profit margins above 25%. there's going to be extreme pain in the export space. how is the chinese government

going to retaliate against the u.s.? swing --hey going to as wage the fears of a large swath of the chinese economy exporters? apply another layer of difficulty to all this, how about the band by the fcc of the china mobile in the u.s.? how is that playing into the tension? >> absolutely. timing is perhaps not a coincidence. china mobile had put in this application to the fcc i believe back as far back as 2011. the fcc has now ruled they are barring china mobile from entering into the u.s. market to operate primarily voice traffic. it is a highly symbolic move as well. saying they are going to review the previously

approved petitions from the other big carriers, china telecom and unicom. this is what the fcc chairman had to say. the chinese government could use chinese mobile to exploit our increase network to intelligence collections against the u.s. government agencies. that is a flatly unacceptable risk. the fcc still also considering whether to allow while way to operate in the united states and is awaiting a recommendation from the white house. already we have seen congressional action against them. we have seen the arrest in canada of the cfo. she is awaiting extradition to the united states. right now, it is a very sensitive and tricky time between china and the united states. this is a bit of a poster child for that tension. shery: we have seen the trump administration really trying to push back on the company, trying to really restrain it from global networks.

how successful have they been so far? to be honest, they haven't been that successful. they have lobbied hard. only japan and australia have followed suit from the white house recommendations on that ban of their equipment. none of the european countries of done this. , they have not done it. the secretary of state mike pompeo has been in london. said, now is the exact opposite time to go wobbly. all right. bloomberg's chief north asia correspondent in beijing. still to come, china's e-commerce boom means opportunity for global real estate investors. they tell us where they are moving money. shery: prepare for a stock correction. whether we see a trade deal or

not. we will discuss that warning, next. this is bloomberg. ♪

paul: this is daybreak asia. shery: major markets across asia in the green at the moment. sophie: mitsubishi motors sliding the most since april 2016. after it missed estimates in its latest report. the stock was downgraded to hold at georgia. sharp sliding as well this morning. that might be too optimistic of you for analysts as it seemed to also mystic for its profit margin. takeda is gaining

ground. paul: thanks very much for that. is primed for a correction whether there is a trade deal or not. this global strategist joins us now from hong kong. thanks for joining us today. if we look at the trade deal, there are three possible scenarios. deal, no deal, or the can gets kicked down the road. innocenteing a tick up be futures right now. are you detecting similar optimism or is this just a short-term boost? >> i would be surprised if this deal actually agreed in the next 48 hours. tariffs will go up. are they going to keep talking? tariffs themselves are only

levied when goods arrive in the u.s.. weeks, to putw together a deal. are they going to keep talking? what are the indications about the willingness to keep talking and get a deal within a few weeks time? that's not such a bad outcome. paul: you think we are do a correction in the markets. what is going to bring an end to this long run? >> this latest run is not so long. since the end of last year when markets were in panic mode, we've had a constructive you. there were a lot of catalysts that would lead the markets to recover. probably recovered a bit more than we thought. catalystsorward, the that we were looking for have all come to pass.

if we get the trade deal, i guess there is still a chance that we may hit new highs in the u.s.. thing that we pay a lot of attention to is the momentum of the world economy, and specifically of global industrial and production growth. our forecast is it is bouncing this quarter which is a surprise to some people. it will go from zero to about 3.5% per annum growth rate. sideways,ort of go maybe even get weaker in q3. we often think the markets anticipate where global growth is going, it is particularly to lookt for earnings at the trend of global industrial production. that is one thing that is probably not going to get better. valuations are not as

compelling, from -- fundamental reasons for buying at these levels in the u.s. are less compelling. if there's a trade deal, that's better for non-us markets. it's better for non-us growth around the world. view, some of of the positive surprises that we were looking for at the beginning of the year, chinese fiscal stimulus, some kind of recovery in global production growth, some progress towards a trade deal. all of those are behind us now. once the trade deal is in place, i think what we really need to see is whether or not it's going clear-cut andore sustainable acceleration in growth. that is not going to come until the end of this year going into 2020 in a trade deal scenario. shery: in the meantime, we could get those higher tariffs.

you say you are not optimistic they will get a trade deal in the next few hours. if we do actually get those tariffs in place, what will happen to earnings? our chart showing that recently the earnings revisions have been less negative. will all this picture change? >> actually, i think that is a really important point. you can say that what has happened to both global growth and earnings revisions is that momentum has actually accelerated. that is to say, it has gotten less negative. that is very important. if you have the tariffs imposed, and they last longer than a few and there's no prospect of some resolution, i think there are two effects which are pretty

negative. in theon confidence world economy, the implications for chinese companies and so on. net positive. it is often difficult to be precise about the impact on u.s. company earnings. the second effect is, if you are where the chinese have to start paying these tariffs which is a few weeks away, it doesn't happen the minute they go up, i think that the chinese are likely to be retaliating in some form. it may not just be confined to raising a few tariffs on u.s. imports. it may be broader than that. shery: at this point, we are facing this choice. deal or no deal. time hason for a long been, what happens if you actually do get a deal? there seems to be more consensus with these issues with china

mobile that the tensions will summer in the background. what does that mean for the markets? >> actually, i think the whole technology standards, technology story,national security that is a medium-term reality about the relationship between china and the u.s.. that isconvinced incompatible with markets doing ok. at least into the next presidential election. we do have some presidents. a long time ago when there was competition between germany and the u.k., all of that competition was around technological standards. it was about the standards for ships wayyou some back in the 19 sensory. -- 19th century. that sort of rivalry between the

up-and-coming power, germany and the established power, the u.k., it went on. todidn't actually lead recession or major -- it is possible that growth can continue even in those circumstances. shery: that is the hope. thank you so much for that. plenty more to come on daybreak asia. this is bloomberg.

shery: let's get a quick check of the latest business flash headlines. pickup in trading and insurance businesses. the only weak spot was in bad debt with allowances for loans and other assets swelling from a year earlier. dots has finalized an agreement to be bought by occidental and has paid a $1 billion breakup fee as

compensation. occidental both stall in u.s. trades on concerns over the deal. coming up next, the u.s. china business council is with us to discuss those last-ditch trade talks in washington. this is bloomberg. ♪

paul: this is daybreak asia. u.s. and china have begun their latest trade talks with hours to go until president trump imposes higher tariffs on imports. the chinese vice premier and his team are in washington for two days of talks with president trump. he said the deal is a possible this week. he also warned beijing to stop reneging on clauses already agreed. >> i did get a very beautiful letter from the chinese president, let's work together. let's see if we can get something done. they renegotiated the deal. they took intellectual property

theft, they took many parts of that deal and renegotiated it. you can't do that. joinedphilippines has the asia easing cycle, cutting-edge benchmark rate and saying it will consider lowering the ratio next week to lift growth from a four-year low. raised it to 4.5%, the first cut since 2015. the philippines joins malaysia and new zealand in easing this week amid low inflation and growing global threat. namedrk liberty has been the worst airport in the u.s. by air health, a body that deals with travelers rights over delays and cancellations. airports are rated on three practice. on-time performance, quality of service, food and shopping options. atlanta was first place in the global survey. came in at 116. the top-ranked airport was from qatar.

tokyo's was second. the private sector space race is heating up. the world richest man saying it's time to go back to the moon. jeff bezos has displayed a displayed a potential lunar lander and told a presentation in washington that it has been too long since we walked on our nearest neighbor. blue moon is powered by liquid hydrogen and oxygen. it is scheduled for 2024. >> this generation's job is to build the infrastructure so that you will be able to. we are going to build a road to space. amazing things will happen. you will have space entrepreneurs coming out of there are. -- their dorm room. " powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

shery: thank you. we are less than four hours away until those tariffs on chinese imports go up. let's see how the markets are waiting. what you seeing? sophie: asian stocks are mostly climbing. new zealand stocks under pressure. u.s. futures rising as well as the deadline looms. the cops he leading gains in the region. i want to check on movers in tokyo. carbon falling as much as 64% earlier this afternoon. mitsui e and s is set for a ninth day of losses. kieran is on the retreat after reporting a first quarter net loss due to an impairment charge. number eyes operating beat estimates for the beverage maker.

bloomberg intelligence sees weakness in 2019 with earnings pinched by higher costs. i want to highlight rocky 10 which is gaining ground ahead of results today. the stock has been under pressure's. nc soft is under pressure after first-quarter operating profits missed the lowest estimate. flat sales growth weighing for the last of the mobile game market in the first quarter for the company. paul: thanks very much for that. our next guest represents about 200 u.s. firms doing business with china. members were caught off guard by the sudden escalation in trade tensions. trey parker is the vice president at the u.s. and china business council. we are counting down to this tariff deadline. about 3.5 hours to go. we are looking at three scenarios, really. deal, no deal or some sort of delay.

what do you expect to see happen? i think at this point we have to look at what the holding points are on both sides. on the chinese side, we've heard that they are very concerned about the tariff drawdown rate. and at what pace those will be taken away. on the u.s. side, we've heard that there is concern about how china implements its commitments on the trade agreement through legal actions are regulatory actions. at least the u.s. side was under the impression previously that these changes will be implemented in law under a national people's congress process. that seems to have changed over the weekend. that is what led to president trump's tweets. there is a pathway for the two sides to come to an agreement that would delay the increase in tariffs. there's is a lot riding on these next few hours. paul: we do have a piece of breaking news right now. writers that says the first day of u.s. china trade talks ended.

that is quite an interesting development. what we put this down to. bad news or jet lag? understand, they finished their dinner and they have gone to speak with the president. it doesn't surprise me -- the fact that the vice premier wen to the united states indicates to me that there was likely something he was bringing, some kind of message. the presidents speaking on the phone, a very nice letter. there is likely something the chinese believe they can do to delay this effort. those messages have been delivered. it will be in the top administration's court to see whether these tariffs are going to rise. three hours and 24 minutes away from those tariffs being hike. how prepared are your members? >> our members were caught off

guard by the announcement on sunday of the tariff increase. in december, before the g20 meeting, many companies have created contingency plans, looking at the impact of the potential increase of tariffs. .any of them are ready there will not be immediate impact for much of our companies. over the next few months, there will be an increase in cost that will affect company margins. we will see an increase in the cost of suppliers and eventually this is going to hit the consumer wallet as well. there's a 10% tariff increase with largely offset by chinese r&b depreciation. much of the cost was passed on to suppliers and a hit on our companies margins. consumers didn't feel much of the 10% tariff impact. that is going to change significantly when they ratchet up to 25%. cost are going to be passed on to the consumer. president trump will be taxing

the american consumer. we have seen news here in the u.s. that the s&p has blocked china mobile from entering the u.s. market. we continue to see the tensions over holiday. if we do get a trade deal between china and the u.s., simmering trade tensions between china and the u.s., they suspect your members operating in china. is this part of doing business in china? >> from the business council's perspective, we like to view the national security and economic issues as two separate tracks. companies, we make the same point to the u.s. government. these issues around national security need to be kept separate. whenever the trajectory of the u.s.-china relationship is on the decline, that has a chilling impact on u.s. companies working in the market. there doesn't have to be a central government directive. they can sense the trajectory of the relationship.

that has a negative impact on business here on the ground in china. paul: we have also heard from china saying that if these tariffs get put on, there will be retaliation. the tweet from president trump earlier this week caught you off guard. is potential retaliation going to catch you off guard as well or do you have a sense of what that might be? >> we have a full expectation that tariffs will increase immediately in a reciprocal way. it will match the united states. what we are most concerned about and that is very difficult to prepare for is the qualitative actions that china might take to retaliate against u.s. industry. what we signs of tempers that there was an increase in custom inspections. we saw increased local regulatory enforcement, advertising law violations, these are the sorts of actions that are very difficult to find

a causative link between trade and implementation. they are concerns companies are going to have to face every day on the ground. shery: we are hearing that the issues at the heart of these discussions are ip transfer, ip protection, technology transfer. industrial reform in china. the latest we've heard from sources is that china didn't really want to change their laws when it comes to some of the agreements on this deal. are there any areas in the chinese economy that policymakers could be more open to change? what are some of the red lines for chinese policymakers? >> when we talked to chinese policymakers, we understand that the areas for collaboration match the china's economic reform goals. the areas where there's a

potential opportunity for collaboration or subsidies, the reduction of those in the notification of those. one of the areas the chinese government indicated is more of , one anecdote i've heard from a government official is that if the u.s. negotiators are trying to reform key areas that are important to u.s. companies and government that align with china's economic development goals, they will be the able to move forward. if the fundamental goal is to reform and change china's fundamental economic system, that is not going to be a successful prospect. finding that balance between the two sides will be the critical way forward. there was speculation here that given president trump's hard-line stance, the potentially vice premier could've taken ahead. he's seen of one of the more progressive ones in the communist party. do you get a sense that perhaps the hardliners could beginning ground in china? view the vice premier

as an economic reformer and he is gathering people around him as well. there were certainly concerned domestically now, not only in china's inner agency but also from the chinese public. if china gives too much in the negotiation, it will be viewed as capitulation. it will weaken some within china's economic system. that is always a concern with china's economic reforms. one of the key drivers of china's economic were firm over the years has been outside pressure. what the u.s. has done here with a tariff action has certainly move things forward more quickly than they likely would've gone on their own. there is a key balance between moving things forward and pushing too hard. i think we are right on the line at the moment between those two different scenarios. paul: yes. to that point, china hawks and the trump administration have the upper hand right now. as we head into the 2020 presidential election campaign, has being tough on china now

been a policy central for any candidate? saw many of the candidates talking about china, that it is not a threat. some have said it is. some said is it -- it is existential to the united states. china will remain what it is. the united states needs to have commonsense policies that deal with the real challenges which u.s. businesses face in the china market. it's going to be a persistent challenge going forward for both political parties. shery: thank you so much for that. vice president at the u.s. china business council. we will have special coverage of the increased tariffs coming to force with live analysis and all the market and political reaction. 2:00 in sydney. u.s. subscribers can watch if you have tv on bloomberg or on bloomberg.com. up next, china's e-commerce boom offers a coup for one real

estate firms next big investment. the ceo will tell us all about it. this is bloomberg.

paul: this is daybreak asia. shery: amid all the market turmoil in the ongoing trade tensions, one real estate firm is still bullish on china's massive growth in consumer appetite. the ceo of asia-pacific firm management, great to have you with us. how much of your optimism has to do with the fact that china has been stimulating the economy. it seems to be pretty concentrated on boosting domestic consumption with tax cuts. >> absolutely. stimulation has been part of it. what we like better is the real growth in the market. there's no question the

government policy of consumption led growth is happening. if you look over the past 20 years, the percentage of gdp that comes from domestic consumption has a most doubled and is continuing to grow very strongly. it's a real growth story. shery: doesn't matter that it is coming on the back of growing debt? is that an issue long-term when you look at property investment in china? >> that is an issue. obviously we watch closely household debt. on a relative basis, china household debt is not an extreme levels compared to other markets. it is stealing some of the growth and we will look at it long-term. it is the beginning of nice sales. online sales, incredibly strong in china. in terms of real estate, where are you seeing the areas of undersupply? where are the opportunities? >> all the major markets in china, we have 12 top markets that we like to invest in.

no surprise, the greater shanghai market, the greater beijing market. now the bay area market with all the policy changes coming in there. the market fundamentally undersupplied. that is because the demand side has grown so much faster than the land ability side -- availability side. paul: you are not talking about the residential space. you are talking about commercial industrial space, correct? >> absolutely. we are talking about investing in logistics buildings in china. these are the typical one or two story buildings that have truck access, one-hour drive time to the major urban areas. they are really serving the e-commerce trade. that is why we like that domestic consumption story. we are talking about warehouse buildings. about the story

around the domestic consumer in china. does that mean you are not closed off to other potential opportunities as well? i'm thinking the growing belt and road initiative. i'm thinking the growing belt and road initiative. >> it is part of that story. all the infrastructure growth, all the connectivity between different transportation modes. all those things support that domestic consumption story, that ability of the 3po and jd.com's and alibaba's of the world. getting goods from point a to point b. we are still at the early days of that story relative to other markets. that is why we like the opportunity of investing in china logistics at the moment. we see that as a 20-30 year runway in terms of opportunity. shery: how will the timing industrial land quota affect the market in the long-term? >> it has some positive impacts in the short-term. obviously, that is a mechanism that constrained supply.

that is a mechanism that constrained supply. whenever you have constrained supply and growth, demand environment, you will see appreciation in rent. that is exactly what has happened in the china logistics center. rent has grown 5-6% over the past 10 years. that is very strong growth. long-term, it's going to be a problem. if there isn't enough land quota in the government, you might have a very speculative market. the chinese government is good at balancing that. it will be an impact in the short-term. in the long-term, it will work itself out. shery: how supportive have government policies been for the part -- the market? >> it depends what you are talking about. there has been recent support for the residential market. there will be continued support there. the residential market has such a good percentage of the domestic wealth. it is important for the chinese government to protect that. infrastructure support is really important for logistics.

i mentioned the strong growth. if you look at the uplift in gdp, 76% of it is coming from growth in the service sector. the serviceto see sector growing in china as consumers are getting better jobs, better pay, all that translates into better sales that translates into more demand for warehouses. area you areone looking at is also space conversion opportunities. where is the oversupply in the opportunities there? is inthe region, often it balanced. sydney, shanghai, beijing, tokyo, osaka. we continue to see rental growth occur. our global investors also know that we are late cycle in terms of investing. when you are late cycle, you have to be worried about markets that have had strong depreciation. most of the major urban cities

have had that over the last couple of years. when we look at office, we are looking at buildings that are still in the urban core. they need a little bit more money in terms of uplifting them and perhaps changing them into a creative space. the hot trend now following what we have done, other tenants want their space to look like creative space. if you find in the liberal and ken renovated to give that creative feel, you are getting a nice of lift on red -- uplift on rent. paul: the asia-pacific ceo for a real estate firm. don't forget, tv . you can watch us live and catch up on past interviews as well as dial-in to any of the securities on bloomberg functions that we talk about. you can become part of the conversation. send us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: this is daybreak asia. a quick check of the latest business flash headlines. china mobile is being blocked from the u.s. wireless market on national security grounds. other chinese companies are also under scrutiny. the news comes as trade talks resume and maybe another point of tension between washington and beijing.

boat at thearnel my request of the chinese -- trump administration. softbank boss says he is aiming to launch a second tech investment vehicle which will be about the same size as the original $100 billion vision fund. presentation declined to comment on a possible ipo for the current fund. they didn't specifically rule out ip. they say softbank will create the second fund to inspire other investors. >> the timing of the launch, size, and structure will still be started. -- sorted. it will be the same size as vision fund one. paul: arima big names entering hong kong's digital banking race. tencent has one a license to team up with icbc's low so -- hong kong exchanges and clearing.

the four firms plan to offer services within nine months. virtual banks are taking up to 30% from revenues of traditional lenders. shery: we are less than three hours away from those tariffs being hiked on chinese imports here by the u.s.. local stocks have lost $2 trillion this week. what should we be looking at this morning? we've had the first day of trade talks in d.c. wrapping up. it looks like we are still gearing up for higher tariffs do. few hours. into turmoil here, we are checking in on the offshore yuan. it is near its most volatile levels in five months. met, yuanement is not is fighting toward seven.

switching out the terminal for another chart, you can find it in the gtb library. foreign funds are bailing on equities. they are not waiting around to see how the stocks are playing out. this week alone, they sold $646 million a day with hong kong. its heaviest week of selling since late 2016. that selloff has inspired hot stock mount ida which has lost nearly 12% so far this week. thanks very much. quick reminder, bloomberg market asia will have special coverage as the increased tariffs come into force. stay tuned for that special show. this is bloomberg. ♪

♪ tom: welcome to "bloomberg markets: china open." i am tom mackenzie. yvonne: we are counting down to the open of trade. the top stories, the tariff clock is ticking as the first day of new talks winds up. trump says there is a chance of the deal, beijing says more tariffs are not the solution. tom: another hurdle, the u.s. blocking china mobile on grounds of national security. raises $8 billion in its ipo. it has proved a massive