paul: i am paul allen in sydney, we are under an hour away from the market open. shery: from bloomberg global headquarters, i am shery ahn. sophie: i am sophie kamaruddin. welcome to daybreak asia. ♪ paul: top stories, talking thee, beijing concerns, team will be in washington next week amid reports the u.s. is considering restricting fund flows to china.

global threats keeping haven bulls happy and the yen expected to outperform the g10 years. -- peers. petrol bombs, tear gas and rubber bullets fly as china's national day approaches. we want to get you to breaking news on the terminal now. industrial production from south korea for the month of august, something of a miss, 1.4% contraction for the month. the survey expected a 1% contraction for the year on year figure. 2.9% contraction of the market had been expected, a contraction of .2%. decline in expected industrial production for south korea in the month of august. get you started with a quick check of where markets are trading your u.s. futures gaining .1%, paring back

earlier gains but in the green. we are coming off the s&p 500 losing half a percent friday. we had it at one point falling below its 50 day moving average. it managed to bounce back, but still finished in the red. we have trade tensions, concerns across the past week which last -- which led the s&p 500 to lose more than 1%. we had trade sensitive sectors taking a big hit, the nasdaq losing more than 1% friday. crude futures gaining .4%, this after a weekly loss, the biggest since july. we had seen saudi arabia restoring production faster than expected after the drone attacks. crude trading around $56 a barrel. let's see how things are in asia. sophie: we are heading for a

cautious start to the last trading day of a choppy quarter that had hong kong shares among the worst performers in the world. -- budweiser asia pricing at a realistic valuation and it will list in hong kong after a 17th street weakened the protests ahead of the national break. and today we will get chinese pmi reports, tyson and other numbers which will signal contraction as the country grapples with slowing growth. looking at the agenda for today we have china pmi numbers as well as factory output from japan likely to see weakness. we will get a check on retail sales for the month of august ahead of tuesday's sales tax hike. i had of the rba policy decision we will get a read on inflation from australia and of note, goldman is to see its pretrial hearing for 1mdb.

taiwanese markets are closed because of a typhoon. paul: let's check in on first word news. start withet's su: the latest on that typhoon, financial markets, schools and offices in taipei will be closed monday as the typhoon approaches the northeast coast of taiwan. the weather bureau says the strong is bringing wind of over 100 kilometers an hour which is a warning of torrential rain as well. shows itberg terminal will reach taipei around midday. the eurozone taken another hit with confidence in the industrial sector falling to its lowest in six years amid rising trade uncertainty and brexit. the latest european commission survey shows managers are worried about customer-consumer and customer demand and are less keen of the overall gap. the weakest since early 2015.

and for the latest on brexit, the u.k. government is planning to present new proposals to break the deadlock. this in the coming days after the conservative party conference. the plan would set out a solution for the post brexit border in ireland, an issue that has loomed over since the referendum in 2015. the u.k. prime minister intends to send the proposal ahead of the e.u. summit on october 17. >> there is a good chance. you we are working hard, and we will work hard in the course of the next few days, right up until october 13. to see if we can get this over the line. ore exporter,on australia, is cutting its --

because of trade tensions and slowing growth. the quarterly report says threats are rising and bringing a downside to the sector. top steelmakers are painting a bleak forecast as the trade war continues to drag on growth and have increase in iron or prices. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. ♪ an official at the u.s. treasury said there are no plans to stop a chinese company from listing on american exchanges, a day after bloomberg reported the trump administration was discussing ways to limit u.s. investor access to china. let's bring in derek wallbank and our china correspondent tom mackenzie. point do we know at this what mechanisms could be used to actually achieve this?

: there is a couple of different things that could be done. one of the ones you mentioned was the treasury denial where they said they were not looking at doing it this time. you could be looking at sort of maybe capping chinese companies as part of certain indexes. you could look at limiting investors' exposer through certain limits related to pension funds. there is a range of things the u.s. government is exploring. key decisionsn no made. that is an important note. looking at this white house and at them exploring something, particularly the trump administration, it is a critical thing to know what level it is. the presidentevel has blessed the talks. they are happening at a senior level we understand, and there

has not been a firm decision made. -- it is, and this is not a trade issue. it is not packaged with the like stuff, although everything with the relationship it all sort of gets tied up. we are waiting on some sort of response to this from beijing. what have we heard? tom: we have not had beijing respond directly to the statements out of the u.s. but we have had a comment or statement from the financial stability committee which is a powerful financial committee overseeing the reform and opening of the sector headed by the vice premier who is in the driving seat when it comes to trade negotiations with the u.s. they put out a statement saying china would promote two-way

financial opening. they will encourage foreign financial institutions to be in china and get access to the chinese markets. they did not detail additional steps they would be taking but the view from beijing is this opening up of the financial sector will continue. we have seen a number of measures pushed through by china to do that, whether the stock and bond connect, allowing investment banks by jp morgan to start the process to full ownership of chinese businesses or most recently removing the cap on quotas for institutional investors to buy chinese equities. those have happened even as some and said at a snails pace it will continue. this makes things more complicated and china has reasons to want to retract fti because it wants to shore up its account and push greater internalizing asian -- we expect reforms to continue but this is

a number for them to mull over. paul: if nothing else it once again lays bare the divisions among the trump administration how to approach china. derek: it does. one thing to look at in these talks, we reported not everybody is on board with this sort of extremely hawkish idea. you have got a divide in the trump administration between the real hawks like peter navarro and the folks who want to take a more measured approach. what is important in terms of the timing is even though these talks came up separately than the trade stuff, it is important to note trade talks are coming up in a few weeks. ifwould be really something the trump administration were to move forward before trade talks

are supposed to happen. i think it would be such a move as to be fairly unlikely. we don't have an indication they are coming at any really hyper rapid pace for those talks happen. -- before those talks happen. thank you for joining us -- paul: thank you for joining us. hong kong police used water cannons on sunday as they clashed with demonstrators in one of the most violent days since the four months of continued unrest. stephen engle is in the city center for us now. can you tell us what happened this weekend? this was a special weekend because it is generally weekend.y it is a national holiday in china october 1 which is this

year having added significance because it is the 70th anniversary of the founding of the people's republic. some schools are off today. there is more time for people to come out and protest as they did over the weekend. saturday it was a rally to commemorate the fifth anniversary of the umbrella movement five years ago that paralyzed central parts of hong kong for 79 days. the unrest in 2019 has sparked to pass that already. there is also a planned rally tomorrow. it was banned by police like yesterday's rally was. many of the protesters including the hard court element tried to get their way towards legislative council to the left of me here at the main government offices. they were met with resistance by the police which as you said fired tear gas, use water again and with blue dye to identify the hard court -- hard-core

elements withdrawing. it seems as though we are in the 17th and 18th weekend in a row of unrest, both sides, the police are getting more stiff in their resistance and also the hard court elements of this protest movement, many of them are prepared to die. even though carrie lam met for the first time in a public dialogue forum, townhall, saying much of the blame for the unrest lies on her government, her answers didn't appease many people still taking to the streets wanting the four remaining of the five demands. took responsibility for the entire unrest so what does it mean? does the government move towards giving in on the other demand? doesn't seem like

they are. thelked to michael team, hong kong deputy for the national people's conference in china. also carrie lam -- he has recommended that carrie lam's government at least acquiesce on another demand, setting up an independent commission of inquiry. they haven't given way on that. one development late last week, the government said it will take forward constitutional development. is main overarching demand universal suffrage. they don't want to see hong kong in this situation where they can't directly elect their chief executive or get one like carrie lam. instead of saying step down which she will not do, they want a vote saying who the next chief executive will be. opposition lawmakers have dismissed that person from the government. they say it is more of the same propaganda.

rubbish rhetoric. that is where we stand now. chief stephen engle, our north asia correspondent. congress expects to hear from the whistleblower whose complaint prompted the impeachment inquiry into president trump. we will have the latest from washington. paul: it is a cautious start for asian stocks after that the u.s. may consider limiting investment in china. a portfolio manager gives us her outlook. this is bloomberg. ♪

paul: welcome back to daybreak asia. another round of trade talks after the people's republic celebrates its 70th anniversary. the fragile state of those talks could be threatened by reports

that the u.s. white house is considering new curbs on investment in china. let's bring in june pay. .- junpei the u.s. treasury will not restrict people listing in chinese exchanges which looked quite serious but it could restrict access to u.s. finance. citigroup is calling this extreme. is it a good choice of words? >> i would have thought so. there are conspiracy theories talking to the ultimate decoupling of the two major economies. that will be probably the worst case scenario on the horizon. of thely the discussion prevention of investment across the economy is going to be a to anyful deterrence sort of reconciliation in terms

of trade outlook. equity market has absorbed a lot in the last 12 to 18 months. but it isn't great for confidence. the timing is interesting. it is on the cusp of the 70th anniversary, a week before the treasurer goes to washington. how will chinese equities react? jun bei: we think the chinese equity will be reacting, negative to that comment. especially for the golden week as you talk to the timing of it, it is an important week of demonstration of the chinese xiue and all of these values jinping has talked to. anything that goes wrong ahead of it could create a fair bit of volatility. we have got protest in hong kong escalating ahead of this long week. it represents risk going in to it. shery: given the hong kong

protest we see the hang seng going for the worst order in years. is there some value to be had? jun bei: there is a lot of value in those markets, china, hong kong and the like. right now it is about the risk and how far could?? in terms of hong kong markets we see the actual economic impact already for that economy. you will see a real earnings downgrade. there is a lot of risk involved with it and if the protests continue to escalate, what is china going to do? the response will be pretty critical as to investors' confidence. shery: we have seen in the u.s. the small caps not living up to as we seecaps underperformance. is that the case in asia and can you find value there? jun bei: we believe the small

caps represent higher value on the risk and reward adjusted basis. small-cap normally outperforms in the environment whether investors confidence return and if they seek higher return. at this point, we see october, a fair bit of volatility. potentially you can see some value support for a lot of businesses. we need to see certainty in equity market but small-cap names to really outperform. paul: the reserve bank of australia tomorrow will be a big meeting. we have weakening jobs, prices for houses recovery, gentle turning points. what do you think we will see? jun bei: they will put cuts on the table. central banks are really, don't really have that many choice at this point. economy is tough.

they have got twice. we are seeing signs of improvement but looking at it globally because today the economies are interrelated. this fed will continue to cut and the ecb will boost, same as japan. with all of the currencies looking to weaken against the aussie dollar, for our fragile economy we can't have a strong currency. in my view, the central banks, reserve banks are forced to really cut. you forl right, thank joining us. we have plenty more to come on daybreak asia. this is bloomberg. ♪ ♪

paul: this is daybreak asia. i am paul allen in sydney. president trump wants to meet his accuser. in a tweet posted moments ago he

blamed a whistleblower for representing a perfect conversation in a totally inaccurate and fraudulent way. bloomberg news deputy managing editor ros krasny joins us from washington. hadollows a tweet storm we this morning. what is he saying? ros: very interesting tweet that he wants to meet his accuser and that is not how this works. anonymous.blower is his or her identity is being protected and it is not for the president to try to find that out. he may in due time. we know from adam schiff, the panel will get a chance to talk to the whistleblower soon. we don't know if that is weeks away. there is security clearance and other matters to be taken up but it is another twist in what is

becoming a dramatic situation in washington. you will hear more talk in the next few days about the trump war room and how will the white house push back against the that seems inquiry to have him rattled. paul: in terms of the next few days, what happens now? ros: congress is on recess but some of the key committees are still, will continue to work on the impeachment inquiry. thenow for example that person who was the u.s. envoy to ukraine, he is supposed to make a deposition on thursday i believe. the intelligence community inspector general is also supposed to appear. adam schiff and the other committee chairs are building their case to try to talk to the individuals including a

number of people mentioned in the whistleblower's documents and that was released last week. there is several names they know of and other people who are supposedly they could talk to. they are pushing and pushing on that the next few days. ros krasny in washington. let's get a look at the business flash headlines. very to step down. the ceo took the reins of bp after the 2010 deepwater horizon disaster and is focused on restoring the company to the status it had before the crisis. the explosion in the gulf of mexico killed 11 people, spilled millions. they are facing ms. moon aliens in legal costs and damages. shery: meeting to decide the in the bond scandal.

the investigation shows the coo involved in authorizing surveillance of former executive over fears he would approach former colleagues after deciding to rival ubs. this is bloomberg. ♪

su: this is daybreak asia. i am su keenan. we start with the trade talks. beijing has confirmed a top negotiator will travel to washington next week for the trade negotiations to begin a new. the ministry of commerce says this chinese team will go to the u.s. after golden week and the 70th anniversary of the people's republic. treasury officials in the usa there is no plans to stop chinese companies from listing in the u.s., this after a report the trump administration is discussing ways to limit investor flows into china.

hong kong protesters clashed with police on sunday in one of the most violent days in the four months of ongoing unrest. they used water cannons, rubber bullets and tear gas on demonstrators who got to 8 -- set a subway station entrance on fire and tried to march on government offices. tens of thousands gathered to mark the fifth anniversary of the pro-democracy occupy movement. israel the prime minister is making a last ditch effort to form a government. after elections this month produced a parliamentary stalemate. partnership talks sunday morning with the rival blue and white party broke up without success. his own party said he may return his presidential mandate to form a government if negotiations fail. announceds elon musk a new rocket designed to carrying human crew and cargo to

mars, the moon or elsewhere. the starship venture is going to make its first launched in the next few weeks and will climb to 20,000 meters before landing. the presentation came on the 11th anniversary of a space ox -- spacex rocket reaching orbit for the first time. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: let's go to sophie in hong kong for what to watch. asia will lister in hong kong after shelving ipo plans earlier in the summer when investors raised eyebrows at the price tag. the second go around is more enticing and even after pricing at the low end of the range of the offering is the second biggest in the world after huber. selling the high-margin, more focus on china which according to bernstein made up 17% of 2018

earnings for the slimmed down unit. the ipo price at $27 hong kong ,nd is 17 times the 2020 ev which makes it the second most expensive listed stock kind china resources beer which is reflecting growth and the strength of the foreign brand product lineup. francine: thank you. let's get more on what we should be watching as training gets underway. adam haigh is with us. bonds in australia making a comeback. we have the rba. could there be life in the rally? adam: a lot of this is risk premium having come out of the bond market. think back to six months ago, there is a lot of worry we will be in a labor government, change of government, put pressure on the economy and housing market. a lot of that hasn't happened because liberals have stayed in

power. you had the easing of the restrictions on credit growth, and you have had two rate cuts from the rba and the markets are pricing strong chances. you could get a third rate cut. all of this in the mortgage asset spaces leading to a decent around 9% inets up the fixed income space. this of beneficiaries of risk premium. further can this go in people think about perhaps even as low as half a percent on the rba cash trade by the middle of next year, when does that start to be a drag and people don't find they want to take additional risk? looks like that is in place but when we reach infection point, it is hard to say. shery: in china the markets have one day before a weeklong

holiday to reacted to news the u.s. could be considering restricting portfolio inflows into china. what are we expecting? onm: it puts the emphasis today that much more because without any trading over the next week, it doesn't get much of a window. him is also the last opportunity we are to get going between the u.s. and china talk next week. we had the selloff in u.s. equities which moderated somewhat but this chart shows some of the real impact on the listed,companies chinese etf. they got hit reasonably hard. over the weekend we had a slight playing down of the emphasis of the original report. in a sense, the setup really for the asian equity market is a toole bit muted, not really

negative. that we only have one trading day in shanghai puts a lot of -- it increases risk of volatility. reason,ese yuan trading you see a huge knock on impact of that. it was priced in from friday. it is reasonably cautious start across asia. the global markets editor joining us from sydney and the fallout will be revealed in a series of economic reports this week starting with asia in the coming hours and winding up with the u.s. jobs report friday. policy editor kathleen hays is here with a preview. kathleen: i am watching these numbers. how much has the trade were affected each one of these economies? we will look at china because

china, the second-biggest economy and we know damage is being done. comes towhen it manufacturing. you will see a yellow line, and the red line is 50 because it divides the indexes between below 50, meaning contraction, above 50, and you can see this number, 49 .5, a little below 50 but it has been below 50 and it will go to 49.7, still in contraction territory. export orders below 50. the component of this survey around 47. what is holding up well is services. the larger part of a chinese economy -- a lot of small and media enterprises will -- we will hear their view when we get that manufacturing pmi. that is why. it is very important to see what happens with manufacturing and looking at exports, let's talk

about the bank of japan and why experts are important. japanese exports have been down nine months year-over-year and people are wondering about industrial production. lots of -- the industrial production number, the economics 0.4,says we will be down negative. at the bank of japan's tankan survey, the interview manufacturers, services companies, large and small and this rate will show falling confidence and big manufacturers, and other negative. anotheracturers, negative. let's move on to korea. korean inflation will be out this week. it will be closely watched because the last reading was zero, 0% year-over-year and now it is expected to go to -.3%. this is a negative, something the bank of korea will be

watching. something else, the bank of australia, they cut the rate two times in a row, down to 1.0, a record low. traders are pointing in 80% chance they will cut again. analysts are divided. the rba governor might not be ready. we will want to see how the trade war of course plays out. he said at jackson hole, it is trade war uncertainty causing problems in his economy and others. he can't change that with rate cuts but different picture for the reserve bank of india. they are seeing a key rate again. the governor of that bank said they would look at this in october. inflation below target, they want to move higher and boosted gdp. they would like to see gdp 7% year-over-year. it seems like a done deal. paul: let's bring it back to the

u.s., a big one at the end of the week, september payrolls report, seeing a lot of defense at the fed. are these numbers going to unite policymakers? asymmetric. is some of them did not want to cut, some did like jay powell, the head of the reserve, but jobs report is a big one. let's look at what we will be focusing on. it is always payroll, the number of jobs being created. in august there were 130 new jobs created. at the beginning, 300,000. and in august, take out 30,000 temporary hires, it is only 100,000. if it comes in low again, average hourly earnings number, which is basically wages, is it 3% or weakens, it could get the fed to say, i can see it. we need another rate cut.

patrick harker, president of the helly fed, was clear that was not in favor of the last rate cut and doesn't think it is capital costs that are holding back firms from borrowing and investing. he sees it going to trade war uncertainty and what can the central bank do? a lot of numbers, it will be a great walk for watchers like me. you. all right, thank still to come, the japanese economy risks being derailed by a sales-tax hike for a third time. we will ask about this economic whiplash we saw in 2014. this is bloomberg. ♪

sophie: you are watching daybreak asia. exports have not shown enthusiasm -- a three-year high. a little changed on the quarter. analysts expecting it to rally 105 per dollar. over the past decade the yen has an average of 3.6%, losing ground in seven of the last 10 years with 2016 particularly painful and this year seeing weakness aggravated by portfolio outflows for $226 billion with many of them becoming mature. low yield at home, they look overseas with a premium and treasuries over jgb's. people could miss out in the first half. the yen weakness could follow. jpmorgan penciling in 110 by the year-end but october is flat.

they potentially boj meeting and the sales tax hike which will take effect tuesday. shery: joining us from tokyo is a white parthenon partner. great white -- great to have you with us. how ready is japan for the consumption tax hike? right. on the positive side the government indicate the economy is healthy enough to withstand the impact from the consumption tax hike. negative the consumer confidence has been eroding the past two years. the appetite for consumption is not very high and on average consumer with extra dollar in hand would rather save then spent. will they spend before the consumption tax hike comes on tuesday?

are we going to see the impact on the september numbers? >> the government has been rolling out numbers to soften the impact so the rest purchase has been quite -- rushed purchase has been quite moderate since the last tax hike which was in 2014. the immediate impact is estimated to be around ¥2.2 trillion, about one quarter of last time. the rush purchase has been moderate which will be mirrored consumptione dip in after the tax hike that goes into effect tomorrow. the: let's talk about measures the government has brought in. a lower tax on newspapers, free childcare, lower tuition fees. looks like stimulus. is it going to be enough?

mitigating the net impact on the immediate consumption and it is supposed to mitigate the risks of the consumption tax impact. substantial by the government to offset that impact. paul: we talk about the type labor market, but do you see an opportunity of creating conditions for reform? what could you see? should -- super tight the market as low as 1.3% in august could create a trigger for japanese companies to carry out otherwise destructive reform. industry consolidation, portfolio reconstruction ring,

more automation, those are all potential levers to really reboot the productivity especially in the domestic market. how businessnder sentiment will be given the ongoing trade tensions not only between the u.s. and china but between japan and south korea. i spoke to south korea's foreign minister. she was not optimistic about the recent tensions. take a listen. we have big disagreements on the issues at hand. the trade restriction measures disagreement over our supreme court labor issue, they are there. we need to work through that. we are committed. what impact are we seeing? >> the direct impacts from the trade friction with south korea is limited.

south korea only represent 6% of the japan export. but the animosity between the two nations is worrisome. on a micro level, if you are in the retail consumer hospitality industry catering to inbound tourists, the number of korean visitors happen slashed to half compared to august last year. you will see an impact from that. we had a little bit of good news on another trade front, the u.s. and japan seeming to find agreement. how important was it the auto tariffs got put to one side? news.was good for the lack of major negative surprises i guess, reaching early harvest deal, so to speak in early september was a good news. a little bit of relief to the

japanese industry. shery: what about relief from the japanese yen? for how long will the boj be able to hold off? >> it would be the outcome of a complex formula with the consumption tax hike into -- impacting everything else. it is not easy to forecast but the boj and government are so far in lockstep to go any -- do anything they can to sustain the economy. latestwe are getting the breaking up is out of japan, industrial production falling, a for the month2% of august. the expectation was a wall of half a percent after a gain of .ore than 1% year on year, the numbers are .47% than expected, down area at retail sales year on

year, growing 2%. the consumption side of things is stronger here. growing 2% for the month of august, this is beating expectations. also coming from a contraction in the previous month. month on month as well, the number for retail sales growth is 4.8%. really we are seeing this divergence when it comes to the numbers. retail sales pretty strong or stronger than expected, industrial production much weaker, month on month falling 1.2%. given your reaction and what it is telling us about the economy. the industrial site has been impacted from the broader context of the trade war, not only impacting japan but the global economy as a whole. the export to the asia for instance from japan was down by

10%. that must be causing the companies to rethink or to spend on the capex activities. on domestic front the strong number is helped by the rush purchases before the tax hike. so far the unemployment rate has been slowed. the question is whether it can be translated into which growth. so for the 2% or so real wage growth annually has not been enough to reinflate japan. so is it a domestic economy recovery real? it will only be real if there is sustained wage growth. paul: you could say the same about the retail sales numbers. frontloading ahead of the sales tax rise. we will have to wait and see. does this change the picture for the boj?

it could but the boj i think as far as we understand will be cautious on doing anything drastic now. but the boj had to roll out its weapons the last time that happened and the impact was worse than predicted. so it is the jury is still out. paul: thank you for joining us. don't forget our interactive tv function, tv go. you can watch us live and catch up on past interviews and dive into securities or functions we talk about. you can become part of the conversation, sending us instant messages during our shows. this is for bloomberg subscribers only. check it out this is bloomberg. ♪ at tv .

paul: this is daybreak asia. shery: let's get a quick check of the latest business flash headlines. sumitomo chemical is spending $800 million u.s. to buy a south american asset of the australian agricultural company new farm. it is expected to complete the transaction in the first half of next year. it will use the money to reduce debt and help shift the focus with north america, europe and asia. paul: hsbc looking for the next ceo including banking had stephen birds and stephen hester. that is according to the uk's sunday times newspaper. they say the interim ceo is seen as another strong candidates. a key consideration is experience in asia where hsbc generated most of its profit

last year. slashedorgan stanley the valuation of waymo saying self driving technology is taking longer than expected to develop. waymo is now worth 5 -- $105 billion, below the $175 billion per month ago. he said autonomous driving faces a series of hurdles, adding morgan stanley underestimated how long human safe drivers will be needed behind the wheel. track --e temper is on september is on track to be a record for foreigners buying chinese a shares. they injected $9 billion into the market by friday to exchange links with hong kong. the shanghai composite index heading for its first monthly gain since june. shery: coming up, alliancebernstein's greater chief economist joins us with her outlook on economic growth

and the countdown to the new pmi figures. the market open is next. this is bloomberg. ♪ here, it all starts with a simple...

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paul: asia's major markets are about to open for trade. >> welcome to daybreak: asia. paul: our top stories monday. talking trade. beijing confirms the u.s. is considering restricting fund flows to china. a/v end of prepares to list its asian unit. the hong kong share sale is the biggest this year.

after rupert. hong kong reels from protests as china's national day approaches. how are we looking? sophie: we are going to be gauging reactions to that beat in retail sales in japan. industrial output shrank and we are seeing tokyo stocks, the topics off 0.8%. the benchmark is headed to the best since 2015. the yen is below 108 set for the biggest monthly loss since february. gtv traders will be reading the boj's buying. let's check in on seoul. the kospi is up, but on course for the first monthly rise in three. the korean won continuing above the 300 mark against the dollar.

it is down 3.8% for the quarter, making it the worst performer among asian currencies. more pressure on the be ok to cut rates. the latest output figures missing estimates. the governor warned of downside risks to the economy outweighing upside. aussie stocks up. it will change to the downside while bonds are tracking friday's drop in treasuries ahead of august inflation and data from australia, which comes before tuesday's rba decision. the central bank widely expected to cut again. the kiwi dollar is under pressure this morning, trading just below 63 after a brief risk bite on the rise we saw earlier this morning. let's check on the first word news with su keenan. the latest inth taipei's financial markets. schools and offices will be closed monday as a typhoon approaches the coast of taiwan.

torrential rain. it will reach taipei at around midday. another zone has taken hit with confidence in the falling.l this is a lot to do with rising trade uncertainty and the uncertainty of brexit related to the european commission survey shows the industry managers increasingly are worried about customer demands and they are theirleft certain about desire to hire new staff. sentiment is at its weakest since early 2015. the u.k. government is planning to present new proposals to break the brexit deadlock in the coming days after the conservative party conference. we are told the plan would set out a solution for the post-brexit border in ireland.

that is an issue that has loomed since the referendum in 2016. prime minister boris johnson intends to send the proposal to brussels ahead of an eu summit taking place on october 17. >> there is a good chance. we are working credibly hard. i will continue to work tomorrow and in the course of the next few days right up until october 30 -- october 13 to see if we can get this over the line. orehe world's top iron exporter is cutting the outlook for global steel demand because of trade tensions and slowing growth. the government's quarterly report says threats are rising and a range of downsides are emerging. steelmakers are forecasting weakness as the trade war grows on growth. they have at an increase in iron -- anocesses -- profits

increase in iron ore prices that could take out of profits. 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'm su keenan. this is bloomberg. paul: an official at the u.s. treasury says there are no current plans to stop chinese companies from listing on american exchanges. the day after bloomberg reported the trump administration's discussing ways to limit investor access to china. let's bring in our senior editor and are china correspondent. what has been discussed according to this bloomberg report? treasuries have seen enough? >> the bloomberg report by my colleagues in washington suggested that the trump administration is having a very high level conversation about ways to limit access, and some of the ways they are doing are

as you mentioned, but there are some other options. of could limit the ability tensions to buy into some of the stuff. you could limit chinese companies being in certain indexes, maybe capping them in some way. it's all a little bit vague. these conversations are at a senior staff level. we are given to understand that this is a push from some of the real china hawks in the administration. also, some folks outside. peter navarro is a name you know inside the ministry should. steve bannon is the name you should know from outside the administration. these are at a very discussion stage. there is no decision here. president trump is said to be aware of these discussions, but has not taken a decision either way. the other thing that is interesting, we understand the

treasury department was not entirely too wild about this stuff coming out in the first place, saying it was not ready for prime time. it is still in the discussion phase. in the past 18 months we have seen a pattern of china being more measured when it comes to news coming out of washington. what are we seeing this time around? has not been any official response to this report. we did have a statement over the weekend from china's very powerful financial specialist regulatory body that they are going to continue their opening process as well as continue to encourage investment into the china market. the financial sector in china has seen significant reforms over the past couple years. plans to remove ownership caps on securities, mutual funds, and life insurance. there have also been moves to open the door to local bank takeovers. ubs, jp morgan, nomura, have

received approvals. china has removed a quota system. despite the ongoing trade war, china is probably not going to change his long-term plans for financial sector opening. part of the reason why is because china really needs the inflow of funds right now. china's current-account surplus dramatically narrowed over the past decade. u.s.e like this from the would send a very negative signal to local investors at a time when china needs the funds the most. not to mention this what her china's attempts to internationalize the end. shery: you mentioned peter navarro, steve bannon. who has the ear of the president? >> we don't know yet. i found it really interesting. i guess i would be reading it a little bit here, but i read in the fact that we had this sort of port out there for a little

while until treasury issued their statement, and we listed a number of things that are going on in these discussions. the treasury's response was very specific. they said we are not looking at this one little part of it at this time. read into that how you will. it is very clear that the white house is still sort of gaming this out. it is also -- i think it would be a really big signal if the white house were looking at doing something and actually took action ahead of these trade talks. that would be a little bit off, right? as you have seen throughout the trade talks, even if the u.s. likes the idea of doing something, they want to not blow up the trade talks before they are supposed to happen. that is supposed to happen again in a couple weeks. i think next week. if they were actually to take a move like this, it would be a

really stiff signal. to have that happening before the trade talks would have the effect of lowering the launchpad. i'm not sure the u.s. wants to do that. blowing up on the launchpad. i'm not sure the u.s. wants to do that. it is very much news. you saw the market reaction. it is news even that it is on the table. the timing is interesting. how much of a shadow is this going to cast over this upcoming trade negotiation? premier headed to the u.s. for negotiating talks after the holiday in china. this certainly is going to overshadow the discussions around trade and complicated discussions even though this move has not been linked to the ongoing trade negotiations. this also risks potential reciprocity from china given

that china does have much more involvement in the u.s. portfolio market than vice versa. in addition to that, even though it's unclear how far these talks have progressed, the fact that high level talks around this were discussed at all shows just how tense relations between the u.s. and china are right now. a bloomberg economists said it this way. isen this latest threat, it hard to avoid the conclusion that the u.s. and china are not going toward decoupling given the fact you have sanctions on huawei, billions of dollars in trade tariffs on both sides, as well as the very high regulatory restrictions chinese companies face on acquisitions in the u.s.. thanks very much to both of you for joining us. let's check was moving in the markets, get over to sophie kamaruddin in hong kong. sophie: because i electric is up 4.2%.

centerirman was at the of a payoff scandal. he took cash from a local town official from 2006 earlier than the utility had admitted. switching the board to check on since 1993 best game after the company announced it and it would be sold to sumitomo chemical. shery: protesters and police cash -- clashed again in hong kong ahead of china's national day. we bring you the latest. sent toxt, china release key factory data for september. it's going to be months before man your -- many factoring is back. this is bloomberg. ♪ ♪

shery: this is "daybreak asia." paul: it is the final day of the third quarter. let's see how mainland markets have fared. give us some of the highlights the past three months. >> the most exciting part of china's market is the yuan in the past three months. it was actually quite a historic month for the currency. it weakened past seven per dollar for the first time since china's financial crisis. it weakened to the lowest level in 11 years. since then -- that's because the currency has hemorrhaged due to the trade war. there was the fear the trade war furtherag the currency and the two currency might be used as a weapon. later, the currency rebounded because there is concern that the pboc may stabilize the currency ahead of national day celebrations.

have beentensions easing. in terms of bonds, china's bonds have been lacking. paul: what are market players saying about what we can see in pboc policy? behind the curve? what are they going to do next quarter? >> the pboc has been behind the curve in terms of easing monetary policy because the central bank cannot loosen it too much for fear of triggering a bubble in the financial markets. pboc tore expecting the cut the rrr in the fourth quarter to support the economy. the expectation that the central bank has to do more to bolster the economy. that is good news for the bonds our bloomberg survey,

investors are expecting the 10 year yield to end the year at 3%, but that is too far away from here and that is good news for the stock market. shery: thank you so much. later today we will have the final readings for the third quarter in china. both the official and the private manufacturing pmi's are likely to show further contraction and our next guest says no pickup before the rest of the year. ji mo joins us in hong kong. great to have you with us. would you say -- how much would judeay this contraction is -- is due to the pboc not doing enough fiasco -- not doing enough? >> also the uncertainty coming from u.s.-china trade tensions.

shery: what does it say about policymakers? do they need to act further to stop this slowdown? what can we expect? been callingways for easing required. pboc and fiscal policy will continue in has to be accelerated. do you expect that pboc stimulus to keep coming? ji: even though we have good outcomes from the trade talks, that does not mean that is not there. denominated to ease much. >> is this one of the reasons growthur outlook for gdp

is a bit more optimistic than many? there are predictions gdp growth in china might slump to five and a half percent. do you feel that is a cup half-empty? mo: i think there is truly a risk for the current forecast. how much further is it going to ease to stabilize the current economy? we are seeing for 2020, china will be the stabilizer not the d stabilizer. gtv chart i have on my terminal right now is showing bloomberg estimates of chinese averagethat it will around 6% below -- up below that 6% level. if we get a trade deal with the u.s. tomorrow, how much of the

damage that has already been done can be reversed this year? see for the you past one and a half year, china has already passed this test. the economy is stabilizing around the current level around 6% or even slightly higher. currentugh for the trade negotiation being positive, the impact, there is always a fact. furthereds to ease much at this time. shery: if we get stabilization in the chinese market and we are now seeing measures taken by policymakers, how much of an impact will it have on other economies that depend on china? this is a very good question.

even for europe, it is still very much correlated. with china, it is stimulus. when china is stabilizing, when the global economy is stabilizing, on the other hand, when we see china is having the hard lending, -- this is why china is a big global markets. when china carries out concrete measures, that is positive for risk assets. how about the role of the yuan? mo: the escalation in trade tensions, meaning trump is going .o add the current tariffs

paul: we ask a lot of our guests, what do you see is the biggest challenge for china in the coming days? -- the coming decade? mo: many challenges. number one, resources reform. that's the fundamental. for the structure reform, how to balance between demand-side and supply-side. how to balance between deleverage and re-leverage. economy withe the only the consumption of the economy and how to avoid stakes river.e are crossing the we are already in the middle of the river. that is very key for the next 10 decades. the next decade.

mo ji, thanks for joining us. you can get a roundup of the stories you need to know. bloomberg subscribers get daily go on your terminals. you can customize your settings so you are only getting news on the industries and assets you care about. this is bloomberg. ♪

paul: a quick check of the latest business flash headlines. credit suisse board set to decide on the fate of executives implicated in a spying scandal. it wasestigation shows involved in authorizing a former

executive overhears he would poach former colleagues after deciding to move to ubs. sayy: reports from london the bp chief is planning to stop down. he took the reins after the 2010 deepwater horizon disaster and has focused on restraint the company to the status it had before the crisis. the explosion in the gulf of mexico killed 11 people, spilled millions of barrels and oil, left bp facing millions of dollars in legal costs and damages. paul: morgan stanley has slashed its forecast saying self driving technology is taking longer than expected to develop. the company is now worth $105 billion, well below his 175 billion dollars valuation 12 months ago. he says autonomous driving faces a series of hurdles, adding that morgan stanley underestimated how long human safety drivers

would still be needed behind the wheel. breaking news. we are seeing softbank falling to the lowest level since february. this would be to pre-buyback levels. losses of more than 2% in the past two days. this taking the stock to a level we have not seen since earlier this year, when softbank announced they would be buying back more than 100 million shares over the next 11 months. this would be worth about $5 billion of stock buybacks. we are now back to those levels we have seen earlier this year. paul? paul: let's check on how we are trading right now. we've got the nikkei in japan off by nearly 0.4%. south korea weaker as well. australia, kind of flat, and a similar story across the tasman as we saw equities a

little bit weaker at the end of last week. plenty more to come on "daybreak asia." ♪

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>> this is "daybreak asia we start with the latest on the trade talks. a topg has confirmed negotiator will travel to washington next week for a new round of trade talks. the ministry of commerce says the chinese team will fly to the u.s. after golden week and the 70th anniversary. officials sayury there are no plans to stop chinese companies from listing in the u.s. after a report that the trump administration is inspecting ways to limit investor flows. hong kong protesters clashed with police sunday on one of the

most violent days in the four months of ongoing unrest since . protesters set the subway entrance on fire and through petrol bombs. tens of thousands gathered for a rally to mark the fifth anniversary of the pro-democracy occupy movement. benjamin netanyahu is making a last-ditch effort to form a government after elections this month. a parliamentary stalemate. talks with the rival blue-and-white party broke apart. netanyahu may return as presidential mandate to form a government if negotiations fail. elon musk has announced a new rocket designed to carry a human crew and cargo to the moon, mars, or elsewhere in the solar system.

the starship is expected to make its first launch in the next few weeks and climbed to 20,000 meters before landing back on earth. this presentation came on the 11th anniversary of the spacex rocket first reaching orbit. 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. this is bloomberg. let's check on the markets now with sophie in hong kong. sophie: asian stocks are set for a second day of losses on the final trading day of a choppy third-quarter, which in the currency space has been painful for the korean won and kiwi dollar. new zealand's business confidence fell to an 11 year low and industrial output contracted more than forecast. the offshore yuan is recovering from a three week low it hit on

friday. the aussie dollar looking little changed as we wait on chinese pmi data for september later this running. the nikkei two to five is headed for a second they of declines with softbank, the biggest drag as it slips to low pre-buyback level. shery: a week of economic reports underway with important industrial data from japan and south korea. our global economics and policy editor kathleen hays is here with the latest. really that global manufacturing slump deepening. >> it does seem that way and it is hard not to make the dots connect between what's happening in production manufacturing in the trade war. haveasian countries depended heavily on exports. we have the industrial production number for august in japan. it was supposed to already be 0.5%. it fell 1.2%. this is not a surprise for two

reasons. experts have fallen in japan year on year for nine months in a row. in addition, the japanese economy, japanese businesses, they are big in business investment. capex has held up well. it is not as strong as it was. there are two ways things get hit in japan. array of light perhaps in the japan retail sales numbers, however. they actually moved higher. they rose more than expected. after being down sharply before. you can see that. it could be, of course, the consumers, knowing there is a hike taste -- sales tax this week, october 21, maybe that did make people say, maybe i will buy something early i'm going to purchase anyway while i can avoid the sales tax. another number to talk about his

korean industrial production because it fell 1.4% in august, it was up 2.6% in july. production has held up better in south korea than japan. they, too, have their exports year-over-year down nine quarters in a row. they are expected to fall for a 10th month. the korean exports for the first 20 days of the month last month were down more than 20%. korea is really feeling the pain. it's no wonder it's showing up in industrial production. paul: a couple of pretty important central-bank meetings this week as well. particularly in australia. that was a very live meeting for the irb a tomorrow. -- the rba tomorrow. >> people can say the governor has the door open to rate cuts, but is he ready to move orbit -- move through it? does he want to see more on the data front?

we are going to be getting housing prices in australia before the rba makes its decision. they're supposed to rebound. that could reassure the rba their rate cutting so far, two rate cuts back to back. june, july, 20 five basis points each, a record low 1% on their key rate. does they want to wait to see if maybe some of the stimulus on the monetary side starts getting through? if we move on to the reserve bank of india, the r.b.i. is not expected to wait to see anything, because they have seen enough. inflation is well below target. gdp growth has slowed down to 5%. it was running around 7%. it has been as high as 8%. this is really something they want to address and address quickly. anre was an interview at event in mumbai. he said they would consider cutting the rate again at the october meeting this week. we could see more rate action by friday. shery: it is jobs report week in

the u.s.. how we are asked -- how are we expecting that to play? >> we had a weak number in august. this is a september meeting. there were things in the august report that made it weaker than it really was. look at this chart with me, go to the far right-hand hand side. the turquoise bar. the gain was only 130,000. you would hope to get at least 200,000 gradually trending lower. if it continues to trend lower and get weaker, this is something that could convince the fed officials in the middle who don't think the economy needs rate cuts. they think global trade uncertainty, other things, or maybe weighing down on it. should it rebound? that is going to harden the position of those who think it is really not going to be appropriate to cut at all anymore this year. whether you are set up for the october meeting for the end of the month, this is something

that could have a big difference. thank you for that. hong kong police used rubber bullets, tear gas, and water cannons on sunday as they clashed with demonstrators on one of the most violent days in four months of continued unrest. our chief north asia correspondent stephen engle for us now. this is coming at a crucial week for beijing. they are celebrating the 70th anniversary of the rule of the communist party. >> absolutely. that's coming tomorrow, and there is a plan rally for tomorrow, which has according to local media been banned by the police. that has not deterred protesters in the past from showing up, even though the police have not approved their petition or application for demonstrations, including yesterday, which turned quite violent. i don't mean to make light of what is obviously a very sensitive situation here in hong kong, but it really has become

rally, rinse, repeat. that's what's happening right now. the street sweepers are out cleaning up the city after another raucous evening. an entrance to a subway station was lit a fire. we had petrol bombs thrown at the police. the police responded with tear gas, rubber bullets, pepper spray. as well as those water cannons with blue dye. a couple minutes ago, we had street sweepers and trucks with water spray cleaning all that blue dye off the streets. all the other chunks. there is stuff strewn everywhere. this is emblematic of the weekend violence. protesters have been battered quite badly. this stuff is strewn everywhere and it has become a repeat scenario. every monday morning when i'm here to talk to you about it. it gets a bit violent friday night. i sought early this morning, 5:00, beer cans strewn

everywhere. the protesters are obviously having a little bit of alcohol and they are having a little bit of fun with the police, but it is not fun, because many of them are saying, of course, they are prepared to die for this movement. it is a very critical phase. tomorrow could be another day of mayhem if i may use that word, because the celebration in beijing is going to be very different than the celebration here in hong kong. on a we are closing in sensitive time politically. how is beijing likely to respond ? with all this disruption ongoing during a birthday party. >> it is a little late to do anything to prevent that happening tomorrow with a rally planned, even though it has been denied by the police here. so far, i have to say the beijing authorities, while they may have threatened certain ofngs, saying acts

protesters, which they have called riots, have smacked of terrorism, they have not encouraged the local government to invoke the emergency powers. they have not brought in extra troops. we have not seen soldiers on the street. they have used back channel pressures to get the government here to maintain order. the police obviously have been using much more force against the protesters, but protesters have also used must -- much more force against the police. backare not afraid to hit or throw petrol bombs. .e are at a critical time 17 weeks in a row of unrest. there is no solution on the table. stephen engle in hong kong, thank you for keeping an eye on that story for us. breaking news on the bloomberg terminal. the pharmaceutical company plunging on the nikkei the most on record. it was down 14% at one point. now we are off a little more

than 12%. its drug avp 786, a drug to treat agitation in all summers patients, missed its -- itseimer's patients missed endpoint. we are seeing shares of otsuka holdings plunging. stay with us. this is bloomberg. ♪

paul: this is "daybreak asia." made: no progress has been toward a deal on north korea's nuclear program despite meetings between president trump and kim jong-un. the south korean foreign minister has been leading the push. she spoke to me exclusively about whether talks will resume.

happenxpect that to within weeks. there are indications of readiness to come back to the discussion. they have been more and more concrete. the meeting between the presidents were a wonderful opportunity to touch base on where things are and to exchange ideas on how -- when the negotiations do resume, how to take the issue and produce some concrete results on all the areas that were agreed to in singapore, which is denuclearization, certainly, but the peninsulaing and improving relations between the united states and north korea. >> will the leaders meet again soon? perhaps in north korea?

>> that is the big hypothesis. we would want to see real movement on the nuclear issues. >> we have seen direct correspondence between washington and pyongyang. doesrall -- what role seoul have? >> we are the primary party to be affected by how the negotiations proceed. we are absolutely out one with the united states towards our goal of complete denuclearization. and getting that from north korea. we are confident about the u.s. approach to negotiations with north korea. you can call us the mediator, facilitator, whatever. at the end of the day, we are the primary stakeholder. >> are you concerned? how concerned is washington

about short-range ballistic missiles from north korea? >> we are all concerned. ofre have been a series short lunches. it does not help the dialogue momentum. we make that very clear. koreans, the militaries are in close consultations in identifying exactly the nature of short-range launches. we have also been measured in our response so as not to disrupt the dialogue momentum picking up again. we watch every move very closely and to read the implications, but again, based upon very solid combined defense posture and readiness on the part of our military. >> has your alliance with the

u.s. seen any impact from the south korea exiting the pact with japan? >> the u.s. has expressed its disappointment that our decision. the compellinged nature of our decision, which was triggered by japan's very unexpected trade measure. therefore, we respect the u.s. position on this, but our position, the position we have made, talking about the military intelligence sharing agreement, this requires a great deal of parties.ween trade decisions based upon the rationale of trust and security concerns, it does not make sense for us to maintain this agreement which requires a higher level of trust.

south korea's foreign affairs minister. if you missed any part of that, tv is your function. dive into any of the securities or bloomberg functions we talk about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers. check it out at tv . ♪

shery: after scrapping original plans, ab invev is ready to lift its -- list its asian unit later today. here's what we know. it is priced at 27 dollars per share, the bottom of the range. billion inraising $5 the listing with a valuation of 45 billion. this marks the biggest ipo globally. one of the biggest motors for the ipo is helping to reduce the debt pile that has topped $100 billion following its purchase

in 2016. this can lay the groundwork for possible future acquisitions. speaking at the bloomberg global business from last week, the ab invev ceo was optimistic despite the long road getting here. ipo hasdea of the always been to establish a local , othern that is equal things it could do in southeast asia, namely. that is done now, it is in the process. shares start trading next monday. very happy to be where we are. will take a closer look later on bloomberg markets. we will be joined by an analyst. for now, let's get a quick check of the latest business flash headlines. list for its next

ceo includes citigroup's goebel banking had. head.bal banking the bank's interim ceo was seen as another strong candidate. key consideration was experience in asia where hsbc generated most of its profit last year. shery: and agriculture company nufarm is surging after selling its crop protection asset sumitomo chemical. it is offloading units in result, argentina, colombia, and chile -- the deal is to be completed in the first half of next year. nufarm has said it will use the money to reduce debt and shift focus with operations in north america, europe, and asia. paul: september is on track to be a record for foreigners buying a-shares. overseas investors have injected more than $9 billion into the

market. the shanghai composite index is headed for its first monthly gain since june. >> india has found the export of all varieties of london -- a bunion. onion.eties of prices are a sensitive political issue. the government says they will continue and consider action against profiteering. london sayts from the bp chief is planning to step down. the ceo took the reins after the 2010 deepwater horizon disaster and is focused on restring the company to the status it had before the crisis. people,osion killed 11 spilled millions of barrels of oil, and left to bp facing billions of dollars in legal costs and damages.

here are the stocks we are watching. softbank falling to the lowest level since february. that would be a level we have not seen since before they announced those buybacks. 112 million shares over the next 11 months. this was a five and a half billion dollars stock buyback. levels before. also plunging the most on record. this is after the all cymer's trial missed the endpoint. they announced -- alzheimer's trial missed its endpoint. stocksseeing these plunging at the moment in tokyo. take a look at what markets are doing at the moment in asia. we are seeing the nikkei falling a 0.4%. this is the second consecutive session of losses coming out a time when we saw u.s. markets also lead the declines and at

one point, the s&p 500 falling to the lowest 50 day moving average -- two below its 50 day moving average. unchanged at the moment. we are gearing up for that rba as rates inn australia hold steady at that 1% record low. let us check in on our futures trading at the moment. by 0.25%.p higher futures, taiwan looking a little weaker. china is going to be an interesting one. currently weaker by 1%. bloomberg has been reporting that the u.s. may be looking to restrict chinese access to u.s. finance. this is a move citigroup called extreme. the u.s. treasury denying it

won't move to restrict chinese companies from listing on exchanges. this is going to be the only trading day of the week for chinese markets. they will close tomorrow for the 70th anniversary celebration of the establishment of the people's republic of china and be closed for the rest of the week. we are going to be watching chinese equities. futures weaker by 1%. still to come in the next hour, china pmi data expected at the top of the hour. we talked to the vanguard chief asia-pacific economist, joining us for reaction. that was it from daybreak asia. market coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. ♪

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>> it is 9:00. welcome to bloomberg markets china open. opene: we are down to the of trade on hong kong and mainland markets. this hour brings the latest snapshot of the chinese economy facing further contraction of the -- as the trade war rumbles on. the revived hong kong share sale is the biggest in the world this year after uber. braces for hong kong more unrest after a violent weekend. andol bombs, tear gas rubber bullets fly as china's national day approaches.