paul: good morning. i am paul allen in sydney. we are under one hour with the australian market open. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." paul: our top stories this friday. issue markets look set for a muted start -- asian markets look set for a muted start. oil slides again and heads for a weekly decline.

worries about growth and demand are outweighing the lift from opec's cuts. samsung reports earnings that seem sluggish domestic data and export curbs from japan. shery: happy fourth of july. u.s. equity and bond markets closed on this independence day holiday. let's see how things are shaping up for asian markets. sophie: while our american friends are enjoying their july 4, futures are heading higher ahead of the jobs report due friday, with s&p futures topping 3000 early. ian stocks set for him -- a mixed end. in australia, we will be gauging reaction to the government devoting income tax relief to the slowing economy. shery: thanks very -- paul: thanks very much. selina wang. ina: boris johnson told the

conservative party campaign meeting that the split from brussels is key to keeping the u.k. together. he said he would prioritize u.k. warnedver the e.u., but that failure to deliver brexit could split the nation apart. tory members would choose brexit even if it meant breaking up the united kingdom. release its budget later with the government saying it expects economic growth to rebound from a five-year low. the finance ministry projected real gdp to hit 7% with upside and downside risk evenly balanced. the ministry's economic survey says india's political stability should drive growth without undermining deficit goals. british marines have seized an carryingr suspected of crude to syria in violation of sanctions. it was halted off gibraltar at washington's request.

they summoned the british ambassador to explain. european powers struggle to save the 2013 nuclear deal that has been unraveling since president trump walked away from it last year. one of the producers of the wolf of wall street has been arrested on corruption charges, making him in the movie to the malaysian 1mdb scandal. a 60 million dollars settlement with the u.s. justice department last year over claims that it finance the film with 1mdb money. they returned the front to malaysia. this is the stepson of the faces prime minister who charges over 1mdb. it is the end of an error for one of the most disrespectful publications out there. mad magazine is coming off the stands after a 67 year run. they will stop releasing new material and concentrate on selling vintage content. poked fun at people in power

and poked the boundaries of conventional humor. 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 selena wayne, and this is bloomberg. paul: samsung reports earnings later today at the end of a week that saw japan impose export curbs and more sluggish korean export data. let's discuss samsung's unlikely performance with sophie kamaruddin in hong kong. let's start with samsung's second quarter. what can we expect? sophie: with the ongoing decline of memory chip prices, the anticipation that samsung is likely showing similar to what we saw at the start of the year. as we can see from the graphic, the estimate is for quarterly revenue to come in at -- in the second quarter. similar to what we saw in the first quarter. when it comes to operating profit, bloomberg intelligence has a 60% year on year drop.

when you look at the bigger picture, samsung may outperform smaller chip rivals that were more heavily exposed to the huawei story. samsung grabbing market share after the curbs were placed on huawei in may. when you take a look at the potential impact on export curbs from japan, we will hear more. bloomberg intelligence indicating that probably will not hurt profit too much for samsung. shery: thank you so much. for more on samsung and what else to watch in markets today, let's cross to our asian equities team leader in singapore. sophie just mentioned japan's export ban taking effect on thursday. how will that play out for samsung and other south korean tech stocks today? >> the one thing that i would point out in samsung gets a lot of it supply from japan, so it is going to make an impact on

samsung in terms of what it can comes intothis ban place. the one place that this could actually be good is for the smaller suppliers to samsung that are based in korea itself. so far, those stocks have jumped quite a bit and's the export ban news reports -- quite a bit since the export ban news reports. there's a bunch of other stocks in south korea that could actually do well because they get to give more to samsung in terms of supplies. news lots of other big happening around asia today. it is the indian budget a little later on. we are watching for maybe a wider deficit. and asset sales. what is the impact on the stock market going to be? for this looks like, week stock investors have really been expecting a good budget to come out. the stock market has gained for the last four days in a row. people are really expecting

something strong to come out from the finance ministry. is if spendingen has been boosted, a lot of consumer stocks and consumer companies will likely gain from this report. on top of that, there will also be infrastructure companies in india that could stand to gain as well. if there is an increase in spending, you will see all these stocks climb again and in turn, the sensex could rise for a fifth day, which is great for indian stock split on top of that, the fact that -- stocks. on top of that, that could lead to the index climbing even more. sin --we are seeing trading trading -- thin trading. will we see fireworks on the rates side of things? divya: yes, so it will be interesting to see what comes out of the report. everybody will be watching the 160,000 number.

does it go above that? does it stay in line? these will have a huge impact on what the fed decides to do this month. will there be a rate cut? maintain? will the rate cut be smaller than what is expected or larger? all of these different variations could then have an impact on markets across the world, really. so that will be something everybody is going to be watching. even in asia, later tonight, when the results come out. shery: divya balji, thank you so much. our bloomberg equities team leader. you can check out gtv for most charts we showed you throughout the programming. still ahead, we will be joined analyst, ben stanton to go through second quarter preliminary earnings when they break later this hour. paul: up next, jonathan garrett joins us from sydney with his outlook on commodities. oil, gold, and more besides.

this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. commodities had a mixed half to 2019 as the traits that rumbled on. economic data pointed to a widespread slowdown. here is sophie kamaruddin in hong kong. let's start with iron ore, which was the clear commodities champion so far this year with benchmark prices rocketing to a 2014 high, climbing more than 60% on tighter supplies, plus chinese demand. seeingan supplies recovery. morgan stanley seeing a drop in the fourth quarter for iron ore. gold, prices ended the first half near a six-year high, supported by lower rates for a

longer scenario as well as growth concerns along with geopolitics. this combo is seen driving further gains for gold. goldman among the optimists, raising its forecast. copper on the other hand has taken a hit, billy putting in monthsor the first six after slumping from the nine-month high it reached in april, youth is expected to talk output by -- april. use is expected to top output. now, to oil, which has gone through a wild ride, with brent hitting a high of $75 in late april and ending june in the upper $60s. opec agreeing to extend its cuts into early 2020. that could lift prices. ron factor -- that you ron factor will become -- the iran

factor will become important. paul. paul: yes, and oil slipping again. let's talk about that iran factor. tensions in the middle east ramping up a notch. that is in violation of sanctions. it sparked a furious reaction in tehran. let's take a look at the output for oil and other commodities as well. we have jonathan barrett with us. thanks for joining us. let's start with that incident in gibraltar, the u.k. ceasing that iranian tanker -- seizing that iranian tanker. jonathan: i think that is the answer really. when you look at it, the price of oil did not move on a risk like that when you would have expected it to. that suggests the markets still are more supplying it. the market cannot react to those geopolitical concerns. do you think the demand is

the driving seat as well with all these concerns swirling about global growth? jonathan: the weakness in demand is a player. pickup.d see demand if we do not see a pickup, oil prices continue to tumble. shery: let me return to that geopolitical risk. how much of that has an price in and how much more could we see that premium rise given that president trump is also really strengthening his position against iran? jonathan: it is interesting, but when you look at opec, opec plus, when you look at the geopolitical is, the geopolitical is really, until we see something really solid happen, have not really been moving. we did see some strong words. we saw a slight reaction. but i think the market is more focused on the demands i am not the disruption side, and if the demand side is weak, we are not

going to see that demand. i think if we get troops on the ground saying iran or something outwards, then you will see oil prices go up. but up until then, it is talk. it is about persuasion, trying to see who will play the biggest love. shery: has that amount outlook -- the demand outlook changed g20? the we continue to see central banks trying to turn more dovish in order to support their economies. how is that going to factor into prices? jonathan: i think that is a major factor. if you have ability for demand -- we have seen a lot of -- if you have not thought -- that ability for -- if you have not got that ability for demand, it will follow through. turnaround sort of a . but when you look at some of the demand, some of the reports coming out in terms of stocks and all those stockpiles, you get a sense that the market still feels that the world is awash with oil.

regardless of whether it is geopolitical concerns, demand concerns, the price still looks quite heavy. paul: let's talk stockpiles of a different variety, iron ore stockpiles at chinese ports continuing to decline. i have a chart that illustrates that. you can see the white line jogging upward. -- jagging upward. 120 per ton. jonathan: i think if you think about it, even eight months ago, no analysts were saying this is where it should go. if you look at the demand, it is all about china. it is all about the supply-side, what they are trying to do, what they are trying to achieve. we have seen the drop off in supply. as traces move higher, we will see more -- prices move higher, we will see more. 100.id that at we said that at 90. can it continue? it is up to demand. look at australia. they continue to go to record levels.

while we have seen that demand from china, i think prices, even if they do correct them, it will be a shallow correction before they continue to rise. paul: australia weirdly benefiting from stimulus coming from china and from the slowdown in terms of the price of gold. i believe gold now has overtaken coal. jonathan: it has been terrific, no doubt about it. it points back to the currency. why is the currency so weak, given our exports are so strong? that represents an opportunity because the aussie dollar is so cheap because of this. shery: let me turn to this a veteranfrom investor. he thinks gold should be in your portfolio. take a listen. >> i think the place to be would be in stocks. and by the way, gold. just think about it. if you are not getting anything lowhe bank with these

rates, it makes sense to have a little cold in your portfolio. shery: does it still makes sense when we see the price of gold much?so this gtv chart on the bloomberg showing you at least for now that the 14 day rsi has come down a little bit, but still in that 70 overbought territory. jonathan: when you look at the fundamentals for gold, when you look at the technicals for gold, the technicals do point to a very bullish picture for the metal, no doubt about it. the fundamentals are slowly starting to support it was a weaker dollar. a weaker dollar makes sense for the u.s. economy because that stimulates their exports. having gold in your portfolio is a great thing and i think most people understand that the only right time to buy gold is when you can afford it. paul: gold rising. silver not so. silver ratio starting to look odd. a moment in the sun coming? jonathan: it has had a 30 year

extreme, that ratio. once again, have a look at that chart. you can see that it does look extremely bullish. i mean, we're looking at prices over breakthrough for that level and you can get up to $20 per ounce very quickly. shery: how will the strength of the u.s. dollar factor into these prices? jonathan: generally, it is always retarded a little bit, the movements in the markets for the metals, but i am sort of feeling that the u.s. dollar should be weaker rather than stronger given where we are in the cycle in terms of interest rates and what all of our central banks are actually doing. i think the u.s. dollar will remain that are offered, which will support trades in these precious metals. shery: when it comes to base metals, and we were talking about stimulus earlier, given the shape and form of chinese support, it has been very

different from the past, how much of a transmission effect will it have to metals when the investments do not seem to be going to those places that in the past would have meant higher metal prices? it has been quite interesting, you know, in terms of what copper has been doing. you know, i tend to have a bullish outlook for it. but copper does have that problem where, you know, the global economy is not doing what we think it is and not growing, then people tend to go by the wayside. when you look at your primary imports, base metals, they should be moving. iron ore is going to the group. both of these are imports to the economy. we see one outperforming the other, which gives me the sense that there's a different style of investors in the base metal markets and there are in the iron ore markets, so it copper will have its day. at the end of the day, that stimulus or that one belt, one road policy in china is

something that will be with us for quite some time so that a lot ofways underpin these primary import markets. so when i look at that, i think copper will have its thing in the sun again. came outhave news that of the g20 that maybe not overshadowed. president trump having a quiet word with a prime minister on the sidelines, expressing concern about the level of australian aluminum exports. has he got a point there? look, at think he has a point. there is a lot we can do. but when you look at, you know, what trump is trying to do, when you look at the makeup of the alumina market, i think there is a lot we can do as well. paul: all right. jonathan barratt, thanks very much for joining us today. 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 dayb on their terminals and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on industries and assets you care about. this is bloomberg. ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. standard chartered makes the bulk of its revenue from china. the ceo spoke to bloomberg and spoke about his dealings with his concerns about trade in the long term. >> the period of unbridled globalization, which we could argue was part of what characterized the early part of the last decade, was very good for global growth. it was very good for a global bank like standard chartered, it was good for a subset of the population, and it obviously left another subset of the population behind, in particular middle-class in developed countries. that political will to go back to unbridled globalization seems to have passed. that is a natural extension of

the view that my small population and my country is more important to me than a larger population in another country. >> what does it mean for banks, where you see growth, supply chains? they have moved. do they come back? have a changed? >> it is fascinating to that of the soundbites of china becoming a force for good in , but that appears to be the case. will china be a globalize or on a global scale or on a super regional scale? the way we look at it, the china andystem extend from ghana nigeria through taiwan and japan and maybe some pacific islands and in south to australia. the china globalization ecosystem is very, very big. it is a big portion of the world growth.and world

many of our ecosystem. that is where we are operating in that china's fear. the world for -- china's phere. as supply chains -- sphere. , weupply chains reconfigure want to make sure we are facilitating the flow. there will be a lot of trade between the china sphere and the rest of the world. india would be well advised to maintain a middle position. rather than to side with one side or the other. european bankly a given our london domicile. we want to focus on how we can promote trade within that did china sphere it also how we can promote trade across that sphere, which is what we do today. >> what is your biggest challenge? what do we misunderstand about china? bill: i think we all struggle to really understand the politics. every country is a political

beast. the politics are very different. who is on the ascendant? pressure?er in terms of different types of ongoing change and reform. i think it is difficult to understand. i think there are some simple misconceptions about china. there's too much debt. that's highly simplistic. there is a lot of debt in china and china uses fiscal stimulus actively. they have a tremendous remaining tool in terms of monetary stimulus and an enormously large asset base. they have an ability to effectively extract taxes from the population that a western democracy does not have. so get china has -- yet china has challenges and tremendous resources. if you look at how the u.s. or the u.k. developed, we had big booms or big busts.you had political swings from left to right that d havoc.nt -- wreake china is able to navigate and a

narrow corridor because of the political system. paul: that was the winters speaking to francine lacqua, on the upcoming episode of "leaders with the quad -- francine lacqua." stay with us. this is bloomberg. ♪

shery: -- >> this is "daybreak asia." the firsta wang with word headlines. parts of southeastern california and nevada were hit by a earthquake at 6.4. authorities say there are no reports of damage. eliot said flights have not been affected. it struck at 10:30 a.m. in the mojave desert, 240 kilometers northeast of l.a., the strongest it in 20 years. to the polls on sunday with the prime minister struggling to defend four years

of austerity and economic and social upheaval. is theocracy leader -- overwhelming favorite with voters like in his message that austerity has failed and the country needs a new pro-business culture. 180% of gdp. the bundesbank president ruled himself out of the race to run the imf, narrowing the field. he says he is happy with his role, and is not looking to move elsewhere. he was seen as a front runner to succeed christine lagarde at the fund. he worked at the imf in the 1990's. indonesian president -- has been named in a lawsuit over air quality in jakarta. he and the ministries of environment and health, and the city governor are all included in the suit. that says they are responsible for the growing crisis. illusion does not just come from jakarta's gridlocked streets but also from inefficient power

plants around the city. pakistani prime minister khan has been revealed to have assets that dwarf many other politicians. a book or media is reporting information disclosed by the election commission showing he has assets. the politician supports cost-cutting and has moved out of his official residence and sold government assets including luxury cars. 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 selina wang. and this is bloomberg. shery: thank you so much. and we have now seen the latest numbers out of japan, showing that the main household spending number rose 4%, which is a huge beat considering the survey of analysts. it is a jump from the 1.3% we saw back in april, so for the month of may, household spending in japan you're on your growing

4%. asian stocks set for a fifth weekly gain. here is sophie with the setup this friday. sophie: asian stocks are looking to end this week mixed. check out all the shares looking potentially this friday after closing at a november 2007 high. rally potentially because after a bumpy fiscal 2019, earnings are smoother going into 2020. focus on bonds now, given the rally this week, which has increased negative yielding debt. we have seen benchmark bund yields push below the ecb deposit rate for the first time. analysts are anticipating further declines with draghi's likely successor, christine lagarde, seeing -- germany joining japan and a few others in having benchmark yields below key rates. when you sack appeals against jgb, japan notes are looking cheaper with the spread widening between the two expected by this

chart on the terminal. paul. paul: thanks very much, sophie. investors watching the indian budget, the first budget since the modi government's decisive reelection. movement, seen as winners or losers in the spending plan. our southeast asia economics reporter, michelle, is watching this. what has prompted the government now?ost spending and what are the risks the fed deficit gets wider? michelle: not comfortable election victory you mentioned must seem so far away for the modi government now. they are trying to tackle big challenges right now. the growth is looking pretty anemic. of course, the darkening global growth outlook and a lot of need to boost tax revenue that has been fairly anemic and to generate some more consumption. they do kind of me to catch up to where the the -- the dependent need to catch up to --

they do kind of need to catch up. that might mean an increase in the deficit gap 3.5% in our survey from 3.4% projected earlier in february, so there is that willt lead to a meddling in the bond market. things they will want to avoid as they delicately approached this new stimulus package. shery: what else are you looking for that might make it into this budget? few things our team is looking at. on the tax side, perhaps the personal income tax threshold increase, trying to kind of boost that consumption side while also juggling the gst intake that has been kind of ,ndershooting for quite a while so the tax side is a little bit delicate. they are looking to sell some government assets, one trillion rupees worth of government assets that could we just invested the film -- dis to fill those coffers.

looking at increasing the dividends from the r.b.i.. that has been a political issue between the central bank and the government, and they do receive some dividends this year. there is a panel exploring the capital position of the central bank to see where there might be more room to folk coffers -- more room to fill the coffers. as to whereints that might be going to it on the infrastructure side, we had the intoovernment that came reelection, promising $1.4 trillion worth of infrastructure spending over the next five years, so we will see if we get any more details on that. there should be some hints to what they are going to do with roads and rail how they are going to generate those products -- at how they are going to generate those projects. shery: we are awaiting those preliminary second-quarter results from samsung. let's bring in our next guest to

see how the company is faring. we are joined by ben stanton. our bloomberg intelligence analysts saying we could see second-quarter operating profit plunge in as much as the present year on year. what are you expecting? certainly, that is in line with our expectations as well. drop ofting profit between 50% to 60%. many of them would have been a bit more positive about samsung. if you look at critical factors in the last three months, such as for example the price of chips on the open market, it really is moving against samsung in many ways, and that is critical for samsung because the semiconductor division accounts for typically two thirds of its operating profit in any particular quarter, so when the market moves against samsung, it is difficult for them to turn that business around even if they are stronger in other areas. shery: some analysts expected dram to bottom out.

what happened and what is the outlook? that is true. yes, so many analysts expected that to happen in q2, and it did not. the first thing i think people overlooked is a lot of samsung's big-ticket customers. this goes for the other big dram suppliers, sk hynix and macron as well. -- micron as well. there is no demand to buy new dram chips from big cloud providers. the other big factor which was not anticipated in the last quarter was the escalation of this u.s. versus china trade war, and specifically around the and the u.s.wei administration, this is a massive challenge now for component suppliers. huawei is one of the leading survey manufacturers in the world, one of the leading smartphone manufacturers in the world. it was set to ship over 200

million phones this year. a massive, massive player. if huawei is not in that market or is restricted significantly, that means there are far fewer players for samsung and its peers to sell dram chips. we do expect the dram price to bottom out at some point. the reason for that is because it has three major players and it has invested interest in all of them to bump that price back up. at this stage, we are looking at outlook. to --d not the place expect the price to bottom out until 2020 at the earliest. the rebound would have to follow that. paul: something else the market did not anticipate was this growing tension between japan and south korea. we have japan restricting some access to some of the materials needed for semiconductors. to what extent is that going to affect samsung and sk hynix? yes, it will have a major

impact on those two companies, but also, lg, as well with lg display. the components japan is talking ,bout, imposing restrictions also applies to displays as well. samsung is in a strange position where it has both of those components as a key part of its business where sk hynix and lg may be exposed to one of them. , evenas not expected though japan and south korea did not necessarily have the most productive g20 summit together last week. unanticipated shocks for investors. it may will impact the outlook for samsung. shery: just as we are speaking, we are getting breaking news out of samsung. "operating profit beating estimates, coming in at 6.5 trillion won. the estimate was for 6.0 8 trillion won.

this is within the range of expectations. we are seeing seconds order sales coming in at 56 trillion abovehich is also estimates. the estimate was for 54.54 trillion won. both in terms of operating profits and sales, samsung beating expectations in the second quarter. ben, we got second-quarter operating profit, sales, so what do you make of the numbers? ben: really interesting. a lot of the fact is we have just spoken about impact samsung in different ways depending on the division you're looking at, so the cheap price of dram, semiconductor negatively. if you look at samsung galaxy s10, it makes it cheaper.

actually, that may well be down to strengthen the smartphone side of the market, so the huawei saga, as we said before, really impacting negatively on semiconductors. it has opened the door for samsung to start to grow back in certain key smartphone markets against huawei. there's a lot of consumer mistrust if you look at markets like the middle east, europe, latin america. samsung is in many cases an incumbent. it has been able to fight back and a lot of key sectors. coupled with that the latest 10, isp, the galaxy s performing really well. they are 20% further on than the s9 was last year. if you look at the cheaper ones, actually, the s10 family of la jolla is 80% further on than s9 was last year. 80% further on than

was last year. it beat expectations. paul: we continue to get headlines from the samsung result. the second-quarter earnings reflect a one-off game related to display, so that suggests that maybe this beats encouraging as it is potentially not sustainable. how does the second half look for samsung? set the second half, as we up the beginning, is extremely contingent on the price of dram and how quickly that bottoms out. actually, in many ways, it depends ironically on huawei. certainly, last week, there seemed to be some kind of hint of a reprieve from donald trump which was clarified by the trump administration would suggest huawei will stay on the entity list and may have improved

trading, chain restrictions improved going forward. if the shackles are taken off huawei significantly, the price much,m will come about much faster, and that will bring sam's and's operating profit that to a level they would like it to be in the second half of the year. in many ways, it is contingent on that. difficult as the operating profit moving back towards the levels we saw this time last year anytime before the 2020. -- mid 2020. paul: you were talking about optimism around the galaxy 9. i want to talk about a more troubled model, the fold, which has been redesigned. this is the folding smart phone that had the well-publicized difficult these. how hard is it going to be for samsung to win back trust in that product? ben: extremely difficult. , isung, for the galaxy fold

under intense scrutiny. it was deeply embarrassing for thecompany to almost get to stage of release and then have the tested devices in the market, which were held by bloggers and youtubers, failing one after the other. there will be intense scrutiny on that device. it is not at this stage particularly important to the wider company or even the smartphone business as a whole in terms of revenue or profit it might generate. we understand that the lifetime production capacity for the galaxy fold is around about one million units, and samsung, depending on what you are -- year you're looking at, typically ships 3 million. ands a very tiny part appeals to a very small demographic of people, but it is an amazing opportunity for samsung to try and shift the paradigm of the industry to a theera with itself at center. going forward into the next two amazing three years, an

opportunity. the galaxy fold in particular, the number of devices they are able to produce is very low at this stage. we do not expect it to make a big difference from an earnings perspective. shery: thank you so much for that. and stanton, with his -- been stanton, with his latest -- ben stanton. plenty more to come on "daybreak asia." this is bloomberg. ♪

paul: china's onshore bond market saw some respite, but mounting risks to the economy mean it may not last much longer. tom mackenzie has the story in beijing. is this the calm before the storm for chinese bondholders? tom: quite possibly. in the first two quarters of the year come on shorty ports actually slid. we had a record year of defaults in 2018. particularly in the early starts

come on the early part of this year, defaults really fell. the month of may, you had one new defaulter. in june, things started to change. you saw a tick up in those. thisreally coincided with weaker manufacturing pmi data that we saw come through here in china, and you saw as well correspondingly in the month of june the spreads between aaa rated corporate bonds and aa rated corporate bonds really spike in june as well. the funding environment became much more difficult as the economy started to slow and it became clear to investors that some of the measures the government put in place to support the financial sector here were not having as much of an impact as some had hoped. you have the likes of bmp saying we should expect further tck ups in china -- tick ups in china. this is from a low base and we are not expecting any material

deterioration in terms of bonds going forward. not many big shocks in the pipeline even if bmp says we will see a tick up going forward. shery: we had that supplies bailout of the bank as well. -- surprise bailout of the bank as well. how did that affect sentiment? ben: that was key. that was a bailout of a small lender and may and a reminder -- tom: that was a bailout of a small lender in may. the government bailed its bank out and told creditors he will have to take losses and that sent shock waves through the financial system. you can see the bond issuance fall to a low. you saw a spike in these negotiable certificates. spiked up as well. the government did step in to try to alleviate the pressure, injecting more funds into the financial system and allowing

brokerages, for example, to increase their debt loads to pass on to some of the smaller banks but it does not seem to have had a big effect in terms of the smaller lender. the concerns remain and that is bleeding into the broader corporate bond space in china so that has been central to all of this. paul: china correspondent tom mackenzie in beijing. thanks for joining us. do not forget our interactive tv function, tv go. there, you can watch us live and dive into any of the securities or bloomberg functions we talk about. you can become part of the conversation. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

shery: uber is building a unique strategy for th japan were ridesharing is banned. the ceo was in japan this week. let's cross to tokyo and our

asian tech reporter. a unique strategy for a very unique country. when you have so many seniors in need of jobs. what did the cesa here -- ceo say here? >> his message is quite simple. he said japan remains an important market for uber and that they are committed to it. like aght seem kind of commonsense thing to say about the third-largest economy, but you have to keep in mind that uber's presence in asia have become very attenuated. of south to grab. they are up against an incumbent india which only leaves -- in india which only leaves japan. a lot of people are questioning, trying?en worth this message is absolutely. they are increasing their labor force here and looking to expand the partnership with taxi companies. they only have about 100 people in the country and the increase will be 30% or more, so that

still pales in comparison to the 22,000 globally, but the point is that uber is here to stay. paul: you talk about the challenges in other parts of asia. japan is particularly difficult because ridehailing is banned completely. how will they be saved by an army of grandmothers? pavel: you're right. has been limited to a sprinkling of uber black here in tokyo and eight other regional cities. they are basically a glorified software provider for their dispatch, but where they were really successful is in their south business -- their eat business. 15,000 delivery people, available in 10 cities. we do not know the exact numbers, but it is the kind of business that can provide healthy profit for a company looking to make --

and perhaps to get out of the house. much forank you so that. a very interesting story. our asian tech reporter. check of a quick the latest business flash headlines. has approved the $6 billion purchase of essar steel. the court rejected petitions and argued that the proceeds must be shared fairly. it can be challenged in india's top court but paved the way for them to become the nation's fourth biggest steel producer. is in theerra spotlight after shares fell to a record low on thursday. the cfo insists nothing extraordinary happened to trigger the plunge. the fundamentals of the business remains wrong. he admits fonterra's performance

has not been where it should be an management is working on a strategic review. fonterra has slumped more than 20% so far this year. shery: a unit of air new zealand has won another $17 million contract to service gas turbines in the u.s. navy in what is the fourth agreement of its kind. they would work on 10 engines which power ships in the u.s. navy's fleet of cruisers. the unit is an authorized provider. it has been working with the u.s. navy for 20 years. the market open in japan, south korea, and australia at the top of the hour. let's preview that. sophie: futures are pointing to gains. more choppiness for japanese stocks. are gaining ground. a positive start in sydney and seoul. samsung enough light on its preliminary second-quarter results. we will see a less than expected

drop. profits fell 56% to $5.6 billion compared to the forecast for in your 60% drop. shares gained 19% your today -- year to date. this is bloomberg. ♪

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