morning.d i am paul allen in sydney. we are one hour away from the market shery: open in south korea. from the market open in south korea. in new york. welcome to "daybreak: asia." our top stories this friday, more trade or uncertainty shakes the markets, as chinese officials say they doubt a long-term trade deal with the u.s. is possible. there is big trouble back home

for president trump, as the house votes to back the impeachment inquiry. and almost five months of protests in hong kong throw it into recession, the worst slap to growth since the financial crisis. news in southg korea, consumer price inflation for the month of october coming in flat. there was no deflation or inflation whatsoever. this, of course, coming after the first inflation number of and this is also a beat. had expected another month of deceleration. that did not happen. year on year, it is flat. it was growth of 0.2% for the month, also beating expectations, a slight slowdown from the previous month when it comes to the month-to-month numbers. now, this is really surprising, because we had expected the

effect from the october 20 18 numbers, with that jump in food with the october 2018, jump in food prices, leading to more inflationary trends. we are not seeing that, inflation remaining flat for the month of october. we have seen the slack in the south korean economy. having said that, they have little policy room to implement further rate cuts after two rate cuts so far this year. we get south korea trade numbers later today, so do watch for that, as well. now, we turn to the australian markets that have come online. what are you seeing? reporter: under pressure, opening lower by 2/10 of 1%, extending declines for a third session with more warnings -- earnings expected. they delivered underwhelming results, which prompted several animists -- analysts to cut the

price target. it was the best month for asian stocks since june. they are expecting more to add to the risk off mood, including an anticipated pullback in a private survey of chinese pmi and week three and exports reported. yen thisking in on the 8, so a firmer yen, along with japanese stocks looking overbought. and this is staying around the the aussie7.04, and dollar, benchmark bonds, a deal falling two to five basis points after the rally in treasuries u.s.we saw with the manufacturing paul: data. paul? paul:all right -- u.s. manufacturing data.

on thek, let's check in first word news. reporter: entering recession, hong kong after newly five months of protests, shrinking from the previous quarter, contracting further than estimates, andst reordering the worst slump in the aftermath of the financial crisis. the finance secretary said a full year economic contraction is "very likely." britisht trump says prime minister boris johnson's brexit effort could hinder a trade deal. could havethey bigger numbers of johnson made a cleaner break with the eu. opportunities available for commerce after britain leave the eu single market. islamic state has confirmed to the death of abu bakr they have named

a replacement to become the new head. the group threatened to retaliate against the u.s. for killing al-baghdadi and refer to president trump as "a senile, old man." bywas the first targeted u.s. forces since osama bin laden was targeted in 2011. and an investigation is underway in pakistan after more than 70 people died when a fire broke out on a moving passenger train. the blaze was caused by a passenger's small gas stove that exploded. it then set off other cylinders used as extra fuel. the train stopped within three minutes after the first signs of fire, but passengers say it took the train nearly 20 minutes to come to a halt. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries.

i am jessica summers. this is bloomberg. ♪ shery: chinese officials are casting doubts on a long-term trade deal on the u.s., even as the two sides close in on a phase one agreement. our bloomberg chinese correspondent, tom mackenzie, joins us from beijing. to, what have we been hearing? tom: we have been hearing that officials in china are very concerned about the trajectory for the long term in terms of the trade talks, particularly phase two and phase three. phase i has been thrown to one after theome respect cancellation of the apec summit. there may be a chance to sign the deal in november. we heard that from president trump. they are not going to budge on the key issues like structural reform, in terms of state subsidies, for example, and industrial policy.

we have had a setback since day one basically, but that has been deemphasized by chinese officials. the other is the volatility, the impulsiveness, of president trump, that they may make concessions only for president trump to pullback at the last minute and leave them with a loss of faith. that is a concern, also. china also said they want a removal of all of the tariffs to be taken away, currently on on chinesebillion goods. the problem there is that the keepwanats 2 -- wants to the bulk of them there. there is a big question on tariffs. china says it is willing to negotiate passed phase one if we do, indeed, get phase one, but it does seem we have big questions as to how much progress could be made after what is meant to be the easiest part of the deal, segment one, which involves things like

agricultural purchases, intellectual property, and a currency pledge. again, we are still waiting to know when and which location is going to be chosen for a signing of a deal if it comes to that. win was itmuch of a for china that president trump agreed to break up this deal into different phases instead of aiming for a grand deal? extent, itto some was a win for beijing, because quite some time, earlier this year, president trump and his team said they will not take a comprehensive deal on a piecemeal deal, but, of course, the economic pressures have gone up in the u.s., which we are seeing in the numbers, the manufacturing sector, and to some extent, the consumer sector in the u.s., as well, so these are articulated and underscored very clearly in terms of the economics of the trade war and the drag it is having on china's economy, but on the u.s., as

well, and as we lead up to the 2 wants to makehe sure things look strong. he said the first stage of this deal is 60% of the way there and that he will continue negotiations, which will kickstart pretty quickly shortly after the phase one deal is done, trying to get ahead of that criticism in the u.s. that he is giving away too much to the chinese side and allowing them to drag their feet on this. by the way, we have a central committee meeting and a communiqué. we are still waiting for the full reading, which may come out in the next few days, but the communiqué says in terms of the chinese position, the focus what they describe as a market-based system but no lines in terms of fundamental structural changes coming, and they also say they want to improve the legal system in hong kong to safeguard national security.

from my guestd earlier in the show saying, look, ultimately, this is about the party of president xi reassuring their control with external risks. paul: tom, in terms of the isior leadership in china, there much discussion of trade, but very steady as she goes on all of those key items, such as hong kong, taiwan, and the policy wars with the u.s., as well? the headwinds facing china right now are almost unprecedented in terms of the external and domestic pressures on the economy. look. we think that the focus for the central committee in beijing meeting over four days was on the political apparatus, because of those risks and those challenges being so severe, that they dedicate a lot of time on the economy? we are not quite sure. we will get a briefing on what

was discussed, but it was more about the politics, and you cannot separate the politics from the economics, and, again, it was interesting that hong kong came up, and it was phrased in a way that was open to interpretation, a focus to assure the national security of hong kong. well, that does open up questions whether we will see more actions from beijing in terms of trying to stifle protests in the city of hong kong, where they are going to take a more assertive approach. paul: all right, china correspondent tom mackenzie in beijing, thank you. well, the house has president donald trump on the path of becoming only the third president in the u.s. to be impeached. it kicks off a public phase of the accelerating inquiry. let's go over to jodi schneider, our bloomberg theater -- senior correspondent. what does it imply? i: well, not only sets out a

roadmap for how the house will proceed in terms of the impeachment inquiry, which, of course, has already begun, but it really sends a strong signal that the house intends to vote on impeachment. the house, of course, acts as a prosecutor in the impeachment inquiry or trial, and the senate is than the jury, so this is a very strong signal that they are going to move forward with this very soon. the risk here is for president trump when he comes to his reelection bid in 2020? there is a real risk by going ahead with this. the president will have to spend a great deal of time fighting against this. he has already begun to do that. he calls it the biggest witchhunt in history and a tweet and also during game 7 of the world series. in the last game, he put up a very expensive, his campaign put up a very expensive at defending

him, basically saying the house was going on a witchhunt, and iskre is a real with -- r with his election campaign, spending a great deal of time defending against this, but also, not being able to get much done in the next year before the election, because the year-end change, another couple of days in the year, and not being able to do much but focus on this. there is very little chance a republican-led senate will vote to impeach him, which will act as that jury, but, still, he will have to spend all of that time in almost all of his political capital defending against it. shery: there was a reason house democrats did not want to go on the record and put their positions on impeachment on the public record. why is this, and what would the threat before them? really had very much this.ned against

house speaker nancy pelosi did not want to go ahead with this until recently, until the ukrainian phone call in july between president trump and ukrainian leader, in which he asked him to investigate his rival, joe biden. that really changed things for the house, and they decided to go ahead with first the inquiry and then this vote to move forward with a very deliberate way. first of all, this is all the democrats are able to do. they are not going to be able to get through any legislation in the next year, that they are really going to spend their time on this, but secondly, there is a risk that this is viewed as them being as going after the president, being political, rather than looking after what is best for the country, going ahead with this inquiry, strictly along party lines, no sitting republicans voting for it, so it gives the president, sayourse, a bully pulpit to

democrats in the house are just trying to go after him, they are not interested in moving ahead with what is best for the country, so there is that, but there is also a risk that this fires up president trump's base. he is very good with things like this in using things like " witchhunt" to use the base to take on the democrats, and the democrats who are running in close races in districts president trump had won as president are going to have some trouble, so it does have risks on both sides, but at this point, it is also a risk for the president as he tries to go ahead with an election campaign in the midst of an impeachment inquiry. snyder, thank you. still ahead, the hong kong schneider, thank you. still ahead, the hong kong economy shrunk amid protests going on for months. aul: the s&p 500 falls from

record high as chinese signals concern on a deal. in emerging out markets? we will talk to a portfolio manager. this is bloomberg. ♪

this is "daybreak: asia." i am paul allen and in sydney. in newand i am shery ahn york. the s&p 500 fell from the record, and fresh economic data suggesting u.s. spending has cooled and a new round of weak earnings reports added to bearish sentiment. bloomberg's su keenan is here with the latest. give us the take away. su: even if many met their forecast, there was a selloff. theof the weakest areas was industrial machinery.

that was a combination of the trade concerns, as well as concerns about weak manufacturing data. let's go into some of the big movers. note the size of the moves. apple and facebook had rallies. another with strong earnings. u.s. steel down on the trade war and wayfarer with and weinting numbers, talked about sales for truly a, the outlook falling. they were down 11% in the and on session -- friday, nonfarm payrolls expected to be under 90,000, and what is also likely to be part of that number is the impact of the 46 thousand striking gm workers, the longest nationwide walk out for gm since 1970. thiscould be a big part of

report. paul? paul: all right, su keenan. thanks. declines ind for the region after china reportedly cast some doubts on the likelihood of a long-term trade deal, and our next guest is an investment manager with an equity team with over 25 years experience. he joins us now in sydney. rob, thanks for coming in today. so some developments on the trade front, china expressing reservations about the phase one deal. enthusiasmt your firmly checked at the door, as well? rob: yes, i think enthusiasm is checked. president trump talked quite forcibly about a phase one deal. the chinese was just "we may progress," so i do not think we should be surprised about turning down the expectation for phase one.

paul: trade? rob: we have seen since the last month as the tensions have eased, we have seen a very positive response. i think the real concern has been the china growth and the effect of these tensions have had on that trend. if you think about the u.s. number below 50, the yield curve inversion, the level of rates, really, anticipating a really difficult period ahead. is working out is a truce, and i think that is very positive in terms of the rate of change and the effect of trade tension on that growth, and as a result, what we are seeing is quite a positive market response, because the market was sort of discounting some things. we have seen a rebound in those stocks as the fear of technical recession recedes. value,when it comes to how positioned are you in the chinese market? market for us all

year, we have been more positioned for value, because china has got premium growth and more conventional firepower to sustain that growth, so we have been waiting the value segments, for example, insurance property, on the back of ongoing policy easing, not just with monetary policy but particularly this year on fiscal. we maintain our position because this year has been focused very much on fiscal and tax cuts. the data still remains weak. we actually think next year as the fiscal issues receive, we are expecting even more monetary stimulus ahead. i think the commentary around the fed cut perhaps takes away the chance for benchmark rate cutting in china. more cuts.t we do expect the new lower prime rate to also see a cut probably before year-end, and the trade tensions, if they remain difficult, perhaps the benchmark

rate cut comes back on the table. shery: we have seen a huge selloff in the chinese sovereign bond markets, right? so we know that you have added some highly indebted companies to your portfolio when it comes to china. will this have an impact on corporate bonds? sovereigns china have backed a little bit, but not unusual. quite often, head of any sort of rate cut, you see a countermeasure coming from china. as i say, we do expect more rate cuts ahead, and, actually, because of the very cheap valuations of those stocks, our exposure in that area is actually performing quite well, so we maintain, if anything, looking for more value exposure. the quality part of the market is performing extremely well.

they put out positive structural themes, but the rotation i think is still too value. paul: in terms of some of your funds, some are up over 20% year-to-date. is that still the case, it is the strategy here just to go along? rob: as our china exposure explains, we have got structural longs, and this is premium growth, with attractive valuations. personally, we have kind of rotated with the bond proxy area, and as it moves into more sustainable, we hope these will start to perform. i think the opportunity remains in value, but you still have very attractive segments of the market which have got long-term structural growth stories driven by the whole emerging-market. shery: rob, thank you for your time. rd, a portfolio manager of emerging markets.

bloomberg subscribers, you can go on your terminals, also available on mobile with the bloomberg anywhere app. settingsustomize your so you get the news for the stories you care about. this is bloomberg. ♪

check of's get a quick the latest business headlines. mgm taking his stake in a chinese-american drug dealer, where beijing will commercialize cancer drugs to be sold in china. they will also work with beijing on developing 20 new drugs from its pipeline, a cash deal with a 26% premium to wednesday's close, the agreement expected to close in early 2020. there is more detail on the alibaba share sale, the tech giant weighing a deal in november or waiting until next year. the window for 20 is closing

fast. proceed following its singles day shopping. if that does not happen, the sale may be postponed until 2020. still are, we get a gauge of the labor market in japan with the jobless rate at the bottom of the hour. this is bloomberg. ♪

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>> let's get straight to japan. we have breaking news with the jobless rate coming in at 2.4%. now this is slightly higher than expected. also it's bigger number than the previous month of august. we had seen the previous two months of august and july, the unemployment rate holding at 2.2%.

but right now that unemployment rate has gone up to 2.4% for the month of september. the job to applicant ratio not ooking as great as expected. we had some negative aspects to the labor market in japan that could have denlted demand for temporary workers. >> as you pointed out, tight labor market in japan. no surprise there. the yen barely budging after that data. near a three-week high amid negative economic news from the u.s. and china. so sticking close to 108 against the dollar. this could see the dollar-yen test the average around 107.55. as we enter the final months of 2019, the yen up 1%, despite a drop in 10-year treasury.

the yen set for a record low trading range this year. checking in on nikkei futures coming on line in singapore, extending the overnight loss we saw of 1.1%. this is probably taking maybe a foot with japanese stocks in overboth territory and facing that stronger yen. so japanese banking shares will be put to the test today. a topic index tracking the sector has stayed above the moving average since october 23. that's the longest stretch since february, 2018. a bullish signal, then, as financials rally. in sydney we are seeing financially among the biggest drags on the asx 200. that off nearly 1% this morning. so the benchmark set for a third day of losses. dividends come under pressure and westpac expected to cut its payout when reporting on monday. >> thanks so much for. that let's get the news with jessica.

>> thanks. chinese officials say they doubt a long-term trade deal with the u.s. is possible. we've been told beijing has warned it will not budge on the thornyist issues and remains concerned about president trump's impulsive nature, as well as the risk he may back out of even a limited deal that both sides say they want to sign in the coming weeks. the house of representatives has voted to proceed with a presidential impeachment inquiry. the vote played out along mostly partisan lines. it sets in motion a process that will begin with open hearings to investigate what democrats say is an abuse of power by president trump relating to pressure on the ukrainian government to undertake an investigation for his own personal political benefit. and anti-government protests are continuing in lebanon, even after the country's prime minister resigned. security forces struggled to open roads as protesters continued a civil disobedience

campaign. lebanese president pledged that new government ministers should be chosen based on merit and expertise, and not political allegiance or to please sectarian leaders. >> lebanon is at a dange cross cross -- dangerous crossroads, especially the economic situation. it's in dire need for a harmonic government that's capable of productivity and that is not blocked by political obstacles and disputes. >> and hong kong's typically exuberant halloween celebrations were muted thursday night amid standoffs between police and anti-government protesters. police fired tear gas to disperse large crouds and closed the most popular nightlife district. meanwhile, hong kong granted the government its second injunction in -- injunction in a week, limiting online speech nd banning internet posts. and california's biggest utilities say they'll restore power to everyone by the end of day friday.

winds fanned wildfire flames have begun to ease. the state governor said about 130,000 homes and businesses remained without power. several large fires are still burning across the state, but extreme safety warnings are due to be lifted. global news 24 hours a day on air and attic tock on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> thanks. a u.s.-china trade deal continues to move forward. but investors are still dissecting every piece of economic data to gauge the tariff wars' damage to the world economy. global economic policy -- bloomberg's economic and policy eporter is here. that's a rare uptick in the jobless rates in japan. what are the implications here? >> first of all, let's remember what a long, long line i'm

going to show you, in fact, jump into the bloomberg library with me. because, yes, it's unusual. as you look at the unemployment rate and look how long it's been coming down. look at that. it peaked back in 2009. been a long trend downward. jobs to applicant ratio, every month they've improved. nevertheless, if i'm the head of the bank of japan and i just decided to not do anything except change my language instead of adding more stimulus, for now i'd say japan can say, unemployment's still at its lowest since 1993. labor market still looks tight but it bears watching. i think this puts more focus on the jim boone, nikkei jim boone p.m.i. number coming out later this hour. it's at 48.5. that's a manufacturing gauge. so it's below 50. that's the kind of thing is that thank shows trade war damage. i think it puts more focus there. let's look ahead because korea's got important numbers too. first of all, exports. they are expected to be down for the 11th tonight in a row. this is consumer prices so

don't look at this yet. let this sink in. 11 months in a row. a decline this month is supposed to be 13.6% year over year. that's even worse than 11% year over year. now consumer prices, this is another pretty ominous number. the consumer price index fell into deplation last month and this is a concern that's going to stay there. it's expected to be down 0.4. now, in the grand scheme of things, it's been in a range for the past four years, up around, say, you know, 3%, down to pretty much flat. but this is a big concern for bank of korea. particularly ch -- particularly when its exports are so weak and the trade war is taking such a bite. we're also going to get korea's p.m.i. coming out later in the hour. it's supposed to come in somewhere around 48 which was it's the previous reading, again, -- which was the previous reading. both countries showing signs potential tensionly that the trade war is still taking a bite. >> a data-heavy week. we also have china numbers out this morning. and of course rounding out the week, though, will be the u.s.

nonpharm pay rolls. >> interesting. because the g.m. strike. six weeks, 46,000 workers were out. but how about the contractors, the suppliers, what about those workers that were laid off temporarily? we know that g.m. workers lost about $1 billion in wages. and this is supposed to take out, again, 46,000 workers, so let's move on to our bloomberg library now. i want to show you a chart. the last month was at 135,000. but 35,000 was census workers so the number really for private workers is only about 100,000. the bloomberg survey consensus, a gain of 85,000, yes, lots of g.m. workers. bloomberg economics sees it at 70,000. average hourly earnings is supposed to tick up to 3%. that's not go going to movet needle for anybody. what's important is we've had this bond rally that started after jay powell announced the fed's policy pause. we've seen the rally take the 10-year note yield down to

about, as you can see there, 1.68%. it was up much closer to, you know, 1.8%, 1.85%. and if we get an even weaker than forecasted october jobs report, maybe it fuels the next leg of the rally. maybe it gets people talking again about fed cuts in 2020. let's listen to this. >> if the uncertainty shock remains here, i think hiring slows down, then the consumer's next and that's why i think the fed can't release a frontrunner, they have to wait for the data. i think by the end of the year, it's going to become very clear that hiring is slowing. which is why the fed will have to re-engage. we think they'll have to cut three more times next year. >> priam is not alone in this thinking. i'm sure there are some folks still thinking this way. there are a lot of people who say, no, employment is holding up, wages are holding up, spending is holding up. a stronger than expected jobs report may mistake some of those bulls pull in their hurricane florence just a little bit. >> thanks so much. let's turn to hong kong because

the economy there in recession after the city was hit by a double whammy on violent street protests on the u.s.-china trade war. data for the third quarter shows much sharper hand expected contraction. chief asia economics correspondent joins us now. this is pretty much expected. perhaps not the size of the contraction, but we knew that hong kong was headed to recession, right? so what are the factors that we'll be looking at in order to gauge how long this will last? >> it definitely was expected. though it was also deeper than anticipated as well. as you mentioned, you have to look at private consumption and investment as real drags on the economy here. consumption off around 3.5%. those are big drags. i think that there are a couple of issues or a couple of factors dominating where the economy's heading. on the one hand, of course, you have the protests that have gutted out retail and tourism

side of things. that's playing out in terms of demand on the streets. you also have china's own slowing economy. that's been a factor in tourism spending too. then on the other hand, you have to look at the impact of the china-u.s. trade war which is squeezing hong kong's role as a key logistics and port hub. there are a number of factors at play here, all of which are squeezing hong kong's economy and i think a lot of economists watching this will tell you that they're not expecting much of an uptick in the next quarter either. >> we have the hong kong monetary authority cutting its rate to 2% last night. just following the u.s. fed. of course they're importing monetary policy, given the u.s. dollar peg. does that help at all? >> it -- normally it doesn't help because the buying don't pass it on. but yesterday the two biggest banks here cooked their own rate for the real economy by several basis points. they argue that will flow through to those companies and

small businesses who are holding loans, for example, and will encourage them to spend more. now, of course, you know, a lot of economists will tell you that the physical steps taken by the government so far, the measures they've taken to help especially small and medium sized enterprises along with what banks are doing on the monetary side won't be sufficient or won't be enough. they'll have to unveil pretty major hefty targeted at the pocket type stimulus overcoming months -- [indiscernible] -- floor to where the economy's going. i think the policy response so far clearly has been inadequate , kind of shock that the economy is experiencing. paul: and we could have another measure of that shock today. hong kong retail sales due. what are we expecting? >> we've already seen a record drop on retail sales in recent months. there is no sense of return there -- turn-around there. on the one hand you have the social unrest and protests on the ground. clearly impacting sentiment. impacting spending patterns.

impacting the opening times of the stores and the public transport system, all of which plays a factor in the net aggregate demand. we saw private consumption demand fall 3% in the third quarter. we have the slowdown of the china to contend with. china tourism is a huge thing here in hong kong and that tourist arrival has been on a slowdown. when you consider those two factors together, nobody's looking for much of an uptick in retail spending, i think, in the near -- any time soon. paul: all right. chief asia economics correspondent. thanks for joining us. we're going to have more on the outlook for hong kong coming up. citigroup global markets chief joins us at the top of the next hour. but up next, sales of nintendo's switch hardware jumped 50% in the last quarter. so why is the company keeping with the conservative forecast? we're going to wrap up those earnings results in a moment.

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>> this is day break asia. i'm in new york. paul: and i'm paul in sydney. let's get over to sophie in hong kong. for what to watch in markets. >> this friday we have earnings due from japan, including k.d.d.i. sharp and mat zafment the car maker this morning saying results largely in line ith estimates. apple manufacturer did post a 37% drop in second quarter net profit but it did raise its outlook, citing stock reduction. annual profit outlook for a second time as acquisition net cost savings earlier than expected. so the drug maker forecasting a narrower operating loss of

about $1 billion. and tokyo electron also boosted its outlook as it sees stronger sales for chip equipment, which bloomberg intelligence says puts the company's profit target within reach, despite a possible sales decline in the third quarter due to seasonality. check out nintendo surging the most since april after beating estimates thanks to the launch of the switch light. which helped drive a 50% yearly increase in switch sales. so fiscal second quarter profit, that doubled. but the company did leave its full-year profit andriev knew outlooks unchanged. those are far below analysts' estimates, despite a strong lineup of games for later this year. expectations for stronger hardware growth. shery: thank you so much for that. joining us now for more on the ntendo and also other stocks is jeffries research equity manager. always great talking to you. you have maintained a buy in nintendo. but you are no longer a high

longer a high conviction in this stock. why? >> just a bit of context. we've had high conviction buy on nintendo and sony since 2013. nintendo in 2014 on so eny. both of these are up 3 1/2, four times since then in the last five to six years. that's not a bad return. coming to nintendo, we still maintain the target price and buy. they have fabulous results. amongst most of the other tech companies, when they are seeing earnings decline, i notice 80% to 90% of the companies seeing earnings decline. nintendo is an exception where we're confident they'll continue to grow earnings for the next three to four years at a compounded rate of more than 20%. it looks very solid. but, but the management execution and decision making leave a lot to be desired in terms of speed. they're fairly slow. at this stage, we want to see them a bit more active, trying

to seize opportunities that lie ahead of them. and in a way it's a message to the management. they need to do a bit more. still a very heavy buy. this is one of the top buys we have. 60% upside to our target price. but just not the high conviction that it has been. when we believed it was a multibagger for a long time. shery: are there more opportunities that they could find with their megahits smartphone game mario car tour? >> yeah. so it's not just mario cart tour. of course on mario cart tour alone, currently it's only single player mode. you are playing with a computer so the bots. it's not an able multiplayer. you can't play with your -- with your family, friends, etc. when that happens, the game starts to monetize even more. but it's not just mario cart. nintendo has the biggest i.p. library in the world. that could apply to mobile. now, in the last, what, 12 years, since this mobile game platform has started, they've had four games. just four games. pokey monday was not there, but

this is their i.p. so there's massive opportunity for them. whether they go with 10 cent or other they keep exploring. they haven't done a lot on that front or seized those opportunities. the opportunity -- mario kart, whatever game it was, top 10, top 20 rank consistently, even though it's not multiplayer much so the opportunity's very large. but they're not just teasing it. paul: i'm detecting a note of frustration there from you. why do you think nintendo is so slow with its decision making and execution? >> it could be cultural. they've always been like that. they think in decades. also, you know, generally speaking in japanese companies, you don't have the management incentives aligned with the stock price upside. so what the companies try to do is protect their down side. they take less risks. nintendo takes risks in its own way. it comes out with products that nobody has. so they do that. but when it comes to big

strategic changes, they are very, very slow. now, going on mobile, putting this game, making it multiplayer, is not exactly strategic. they just have to do it. it's been a month. my belief is windows of opportunity don't stay open forever. paul: let's talk a little about sony as well. pretty good result there. but cutting the revenue guards for the next two months, what's your outlook for sony? >> very positive. again, just like nintendo, which had earnings growth, sony doesn't have that much growth, but very high quality management team. probably one of the best in japan. andriev knew cuts, i won't look at too much on that front. because a lot of these japanese companies, what they do is they enter into new businesses. they enter into one after the other, new businesses. and they never exit. so in the last five, six years, since disk -- this management team has come onboard, they have restructured not by fighting a few people, they

have chosen which product businesses to stay and where to exit. as they exit, and especially in businesses where the markets are fragmented like a tv camera, the company's not trying to grow. what they're trying to do is increase accountability, control costs, and deliver profit growth. and we are quite excited with the profit growth that lies ahead, even for sony. we believe with the playstation 5, they have another big opportunity starting next year. very good management on the senters which go into all these iphones and -- sensors which go into all these iphones and phone cameras. very good positioning. but they're slowing down in places and consciously slowing down and lowering revenue targetings, in businesses where markets are fragmented, they don't want to fight on price competition and we like that. again, we have a buy on this one as well. and we very much like what the management is doing. we very much like the management here. it's a bit of a contrast with nintendo. the growth is very high ahead of us. and the management is, you know, it leaves room to

improve. whereas in so eny, the management is exceptionally good. the growth rate has slowed down over the next two to three years. shery: always great having your thoughts. thank you so much for that. jeffries equity research managing director. trick or treat. you're looking at live pictures of new york city's annual village halloween parade. look at that. the year's theme right now is the spirit being a wild thing. that's sixth avenue right there. you're seeing hundreds of thousands of people dressed up in their halloween costumes. happy halloween, everyone. this is bloomberg. ♪

paul: this is day break asia. i'm paul allen in sydney. shery: i'm in new york. let's get a quick check of the latest business splash headlines.

hong kong's hotel rooms are an average 25% cheaper than a year ago. as ongoing protests crush demand. data provider says the average daily rate for a room was about $137 u.s. in september. the highest in hilton hotels are among those that have seen revenue for available rooms plunge in recent months. paul: j.p. morgan asset management says southeast asian markets still have selective investment opportunities. the firm's -- fund's manager likes the tourism stocks, particularly in thailand, including medical tourism companies like bdms. jpmorgan's firm has beaten 87% of peers over the past five years. that's despite foreigners pulling more than $25 billion out of the region since 2013. shery: discriminate by former c.e.o.'s ex-chief of staff. a complaint was filed with the equal employment opportunity commission alleging pregnancy

and gender discrimination at the company. wework said they had zero tolerance of discrimination of any kind and would vigorously defend itself. meanwhile, the company's new executive chairman said it won't boost diversity on its all-male board of directors. paul: let's take a look at how our asian markets are trading right now. over in new zealand, off .3%. here in australia, we've been trading for just under an hour now. the asx weaker by a quarter of -- by .25% as well. kospi futures pointing to the down side and we'll have very interesting data coming out of south korea. we've also got the nikkei opening at the top of the hour. futures unchanged there. we just had the unemployment numbers coming in a little higher than expected at 2.4%. all right. coming up on the next hour of day break asia, as i mentioned we will have those south korean

trade numbers at the top of the hour. citigroup global markets chief asia-pacific economist will join us for reaction to those numbers as well. so stay with us. market open in korea and japan next. this is bloomberg. ♪ the game doesn't end after that insane buzzer beater.

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♪ paul: good morning, i'm paul allen in sydney, where major markets have opened for trade. shery: good evening from bloomberg headquarters in new york. i'm shery ahn. kamaruddin inphie hong kong. welcome to "daybreak asia." ♪ our top stories this friday, asian markets set to fall as the trade war negatively saps sentiment. chinese officials say they doubt a long-term trade deal with the

u.s. is possible. months of protest take a toll on hong kong as it slides into recession, its worst month in growth since the financial crisis. all of that is weighing on alibaba's latest plans. we are told it will scale back its hong kong ipo or even delayed until next year. shery: breaking news out of south korea, export numbers for the month of october, year on year falling 14.7%. we are talking about 11 months of decline for south korean exports. it is a bigger decline than what was expected and an acceleration of declines from the previous month of september. when it comes to import numbers, also not looking great, down 14.6%, bigger decline than except back -- than expected any huge deceleration from the previous month. in the previous month, we only saw a contraction of 5.6%, which shows what demand within south korea is looking like.

we knew we were going to see about 11 months of contraction in export numbers, because for the first 20 days of october, semiconductor exports plunged 29%, exports to china down 20%. the trade balance coming in at the moment that a surplus of 5.39 billion dollars, slightly above estimates but still, export numbers falling for an 11th consecutive month. south korea is back online and japan's as well. let's check with sophie. sophie: weakness of trade aspects -- assets, the kospi off, washington lawmakers watching for a plunge in that space. ,hecking on the korean yuan 1170 once again after clocking a second monthly game but on the downside start of november. jobless numbers

from japan, tokyo stocks off about 9/10 of a percent for the nikkei 225. the yen holding steady, near a three-week i, back below one away. we will see if it touches the moving davit -- moving average of about one of 755. yield back10 year toward -15 basis points this morning. australian shares, heading lower for a third session with banks and miners weighing on the 10 year yield, filing -- falling as much as five basis points. tracking overnight on treasuries, checking in on how cash writing for treasuries this morning, little change their at 169 basis points for the 10 year, offshore yuan also looking steady after fluctuations overnight, paul, and the wake of weak data from china and the u.s., as well as concerns over a long-term trade deal between the u.s. and china. sophie.anks,

let's get more reaction to south korean trade numbers. let's bring in johanna chua chief asia economist at citigroup. declines always seem to be bigger than expected. where does this end? johanna: the key factor as global demand, china is an important factor and we predict slow down next year. the other important factor is driving the tech cycle, semiconductors the bellwether of the tech cycle that we watch command what extent do we see signs that the memory chip, for example, prices are bottoming. we think prices are going to bottom around two q of next year for some ships. that should help some of the year on your numbers for next year, but having said that, trade data that came out should have been a huge surprise,

because the first 20 days of data came out earlier, and already showed semiconductors did relapse and weaken in october. i think what has happened is we had a bit of a rebound in the third quarter this year, but i think part of that is a rush of frontloading of orders ahead of the tariffs that were going to kick in starting in september and december for the u.s. on china goods. so there was a rush order ahead of that related supply chain going into the tariff. i think now we are seeing a little payback of that. having said that, the clear issue is going into next year. clearly demand from u.s. consumers is still holding up well, but headwinds for global growth, including china, continues to be a challenge. that could put pressure on korea as well. shery: i'm not that shocked about export numbers, given what is happening on the external environment. but the import number is a contraction of 14.6% year on

year. we haven't seen double-digit losses in a few months. this would also be the biggest decline, i believe, in three years or so. what does this say about the state of the south korean economy? johanna: if you look at recent data, retail sales, a barometer for domestic consumption, weakened in september vis-a-vis august. that is surprising, given it is kind of a holiday. it does you domestic demand challenges in korea remain substantial. we have had relatively weak labor market conditions for some time. i think that continues to filter into domestic demand pretty -- demand. this shows even though the government is planning a sizable stimulus going into next year, it is unclear how big an impact that stimulus will be. we should expect central-bank and monetary policy easing is not finished. even though we had a rate cut last month, we expect another cut and the market should price

in another cut. we are at the margin on receiving rates in korea, especially at the front end. so we see a little selloff on rates on what has happened -- on the back of what has happened with global rates as an opportunity to receive. shery: we have seen the interest rate at a record low of one and a quarter percent. wouldn't you be worried about financial stability? there is aually trade-off on monetary policy for fueling domestic demand versus financial stability. in the case of korea, given to mastech demand is much weaker, domestic demand angle will weigh more heavily than the domestic -- especially since korea has to temper thero risk on financial stability. i think they will lean on rate easing. we still have room away from the fact lower bound. top of fiscalt on

policy will be both synchronized, complement three policy pushed to boost demand. is stayingnna chua with us, we are going to talk hong kong. let's get first word news with jessica summers per jessica: the house of representatives has voted to proceed with the presidential impeachment inquiry. the vote played out along mostly partisan lines. begin withrocess to open hearings of what investigators say is an abuse of power by president trump on the ukrainian government to undertake an investigation for his personal, political benefit. ♪ jessica: hong kong is in a recession after five months of protests. third-quarter gdp shrinks 3.2%, contracting further than economists' worst estimates and

the worst slump since 2009, and the aftermath of the financial crisis. the finance secretary said a full-your economic contraction is very likely. ♪ the islamic state confirmed the death of its leader and named a new leader to succeed him. become theder will head as the group threatened to retaliate against the u.s. for killing its leader, and referred to president trump as a, quote, senile old man. this was the highest ranking terrorist leader targeted by u.s. forces since al qaeda leader osama bin laden was killed in 2011. ♪ and california's biggest utilities say they will restore power to everyone by the end of the day friday, as wins fanning wildfire flames have begun to ease. the governor set about 130,000 homes and businesses remain without power. several large fires are still

burning across the state, but extreme safety warnings are due to be lifted. ♪ and chinese officials say they doubt a long-term trade deal with the u.s. is possible. we have been told asian warrants it will not budge on the thorniest issues at remains concerned about president trump's impulsive nature, as well as the risky may back out of even a limited deal both sides say they want to sign in coming weeks. ♪ global news, 24 hours a day on air, on tictoc and twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jessica summers. this is bloomberg. ♪ thanks, jessica. asian markets are following in the footsteps of the u.s. as investors get into a risk off mood. asian editor joins us in sydney. garfield, asian stocks are starting to retreat, reacting to

disappointment on the trade front. garfield: there is a fair bit of that paulson's that has been an underpainting -- an underpinning for sentiments past couple of months. investors want to be careful about overplaying what has gone on the last couple of days in the stock market. because some of what happened looks an awful lot like rebalancing. think about it. at the s&p 500. if you bought that around the time it became clear there was going to be a love fest in the between trump and uav, and sold it overnight, that's a nice profit to lock in. but there were plenty of reasons to get out, but there are plenty of reasons going forward now to stay out for the moment. we have got concerns about the trade war. we also have a resumption of the soggy data concerns. i thought it was interesting what johanna was saying about

how korea had frontloading with tariffs in september and now that is coming off in october. that might play out globally, because also when it comes to china, when china had those holidays at the beginning of october. so there were a lot of thing -- a lot of reasons to frontload things going in and out of china. now we are seeing a pullback. possibly even we might get them selling on disappointment, if there is a phase-one trade deal that doesn't offer a clear path forward to whatever might be phase two. shery: is that what we are seeing the bond rally continue, despite the fact the fed signaled it is done with easing? garfield: i think that is also part of it. ofds have rallied for most this year as economic data has gotten weaker and weaker. perhaps lessds are likely to take such an immediate

lead from sentiment the way stocks are. suggest because the two sides are talking doesn't mean damage from the trade war stops, and something that was perhaps a thingscured with every else was going on, u.s. gdp beat estimates but was still quite weak. and while the consumer held it up, the underlying business investment story there is very concerning. we had a bigger than expected nonresidential business investment, and that is two straight quarters of substantial decline. now, if we get a third great quarter, which is possible amid trade uncertainty, that usually means we get a recession to follow. reynolds, thank you. coming up, singapore is urged to keep an open mind to nuclear power as neighbors develop plans.

we are joined exclusively later in the show. ♪ economyus, hong kong's slides into recession. more on that. this is bloomberg. ♪

>> following the latest interest rate decision, tom keene and i have an exclusive interview on bloomberg television. ♪ ♪ shery: this is "daybreak asia." i'm shery ahn in new york. paul: i'm paul allen in sydney. the hong kong economy contracted sharply in the third quarter. data exceeded economists' worst estimates from the damage of nearly five months of protests, plus the trade war.

percent, the 3.2 worst slump since 2009, which was the aftermath of the global financial crisis. still with us is johanna chua, economist pacific at citigroup. terrible numbers. we were expecting hong kong to slip into recession, but the road to recovery seems long and uncertain as long as protests continue. right? johanna: absolutely. the 3.2% was a shocker. you look at when the data what was surprising was how deep and sharp the contraction was on fixed capital investments. clearly the investment environment is very weak. therefore the amount of policy support the government can provide would certainly help at the margin. you are absolutely right, i think recovery will take a

while. but it is important to point out three q was the trough, the worst of the contraction. the issue is, how much recovery and how fast the recovery will be? the key thing here is the ability to maintain law and order, rule of law, stability so can amaq -- stability so economic activity can resume. we are seeing that happened gradually. paul: how much worse could it get? we have the hong kong monetary authority seeing -- saying it is not seeing capital outflows. is there a risk they could increase? johanna: i don't think so. you are right, during the very worst month you should have seen significant pressure on liquidity. but we didn't see that. yes, some outflows, but not of meaningful size to be a big issue. undertaking was

never really tested. last time it was tested was in march. since the protests started, we never tested the top side of the band. while there were outflows, it is important to take stock and see the bigger picture and the amount of outflow was not as bad as some people feared, and liquidity conditions seem relatively normal. shery: with the protests we have seen a huge hit to tourism. the dtv chart on the bloomberg showing chinese visitors to hong kong, the line in purple, have plunged, while japan, south korea, singapore, the other lines there, those have remained constant. can there be recovery in hong kong without tourists coming back? johanna: this is certainly why it is very, very important for the government to ensure there is security and safety. the most disruptive transport links that happened in august does not happen, and obviously confidence. it takes a while to rebuild that. but we have seen in a number of

cases when we have these shocks, at some point stability can be restored. i think it is a matter of time. we just got a headline from china that they will try to maintain stability. then, hopefully things will gradually improve. but again, the question is an timing, that is something we still need to weigh. the one thing that may recover more is the domestic side, because domestic demand took a huge hit. when there were huge disruptions, even domestic residents maybe didn't allowed as much or eat at restaurants or preferred to eat at home, so the issue is, usually domestics are more attuned to how domestic conditions are improving at the margin in hong kong. maybe that type of economic activity can stabilize. end of course the tourist side is going to be more exposed to the media and what is on the news and are nationally -- on the news internationally, so they may be more sensitive if they see protests in the headlines. this is something we need to

watch on an ongoing basis, but i think we are around the bottom of the trough already, of the worst pessimism we have seen. but it is unclear how fast a recovery will be. kong: at we have the hong monetary authority saying local banks do have their own funding considerations, but we saw that after the monetary authority at the right to follow the fed yesterday. a couple of vendors took action. what are you sing on that front? could that help support the economy? prime ratesn though have gone down in the number of banks -- na number of banks have brought down their rates as well, the net interest margin of the banks are under some pressure. on the flipside, the government is trying to ease lending conditions by relaxing regulation on countercyclical capital buffer, for example. but a lot of what is driving

demand, banks have to worry about the appetite for asset quality risks they need to monitor. it is going to take a while. a lot of it is going to be driven by confidence. but it has been very tough, and i think some proactive measures could maybe have improvement going into next year. at least that is incorporate into our forecasts. that it is going to take a bit of time. shery: johanna chua, thank you for your insights, joining us from citigroup. coming up next, the u.s. house votes on mostly party lines to begin open hearings into impeaching the president. we discuss the next steps. this is bloomberg. ♪

♪ shery: "daybreak asia." -- this is "daybreak asia." i'm shery ahn in new york. in sydney.aul allen

donald trump's presidency is treacherous ground up the u.s. house votes to go forward with its impeachment inquiry. kevin cirilli has details. kevin: the house of representatives took the first vote to formalize the impeachment inquiry into president trump. upon a largely partyline vote of 232-196, lawmakers voted to advance the impeachment inquiry. there were two democrats voted with republicans. the next step? likely public hearings ed morse call for testimony from officials in the trump white house and state department. kevin cirilli, bloomberg news. shery: let's get more from senior international editor jodi schneider. what does the impeachment resolution passed by the house set out? what are the implications? mac for sets up a road forng ahead -- a roadmap moving ahead with the public

phase of the inquiry, and also legitimizes it. there had been criticism from republicans and president trump that the inquiry was illegitimate, that was unauthorized because there had not been a vote. basically, white house officials were being told not to cooperate, either in terms of giving testimony or documents. so now there has been an official vote, it is authorized, and it is a very clear signal the house intends to move forward with an impeachment vote, which would end with a jury in the senate. but the senate is unlikely to impeach a sitting republican .resident it is setting this up to be now a vote in both chambers at some point, and this means this is occurring as president trump is waiting his reelection campaign. paul: in terms of that, what are the dangers for the president, either of actual impeachment or x to the daschle risks to the

campaign? : it is going to be difficult to concentrate on much else, paul, except as per this is going to consume the white house and president trump. he is going to try to both bolster support from republicans in terms of fighting off the impeachment, and certainly making sure the senate goes along and votes to retain him, not to remove him from office, but also he is going to have to do this as he tries to seek their support on the campaign trail. it is also going to be very hard to get much else done in terms of things like trying to move forward with the nafta agreement to get a vote in congress on that, as congress and the president are consumed with impeachment. he also has to show that he can govern, more important than ever that he shows he is asked -- he is up to the task of governing the country, even if impeachment occurs. he can continue to make the

case, we can presume, as he has the last 24 hours on twitter, that this is a witch hunt and he is being unfairly targeted for political purposes by house democrats. ♪ paul: bloomberg's senior international editor jodi schneider. more to come. this is bloomberg. ♪

♪ jessica: this is "daybreak asia." i'm jessica summers with first word headlines. u.k. primerump says minister boris johnson's brexit deal could hinder a trade deal between the u.s. and china. trump says he could do bigger numbers have emit a cleaner break with the eu. johnson wants a swift trade deal to show the opportunities for commerce after britain leaves the eu market. hong kong's typically exuberant halloween celebrations were mooted -- were muted thursday night amid standoffs between

police and antigovernment protesters. police fired tear grass to disperse crowds and closed the most popular nightlife district. -- bracing for an injunction that limits online propertyat sites damage. antigovernment protests continue and lebanon after the country's prime minister resigned. security forces struggled to open roads as row testers continued a civil disobedience campaign. the lebanese president pledged new government ministers should be chosen based on merit and expertise, not political allegiance or to please a secretary and leaders. >> lebanon is at a dangerous crossroads, especially the economic situation. there is a dire need for a hard number -- a harmonic government that is not blocked by political obstacles and disputes.

issica: an investigation underway in pakistan after more than 70 people died when a fire broke out on a moving passenger train. the blaze was caused by a passenger's small gas stove that exploded, then set fire to other gas cylinders used as fuel. the conductor says the train stopped within three minutes of the first signs of fire, but passengers said it took nearly 20 minutes to come to a halt. ♪ global news, 24 hours a day on air, on tictoc and twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm jessica summers. this is bloomberg. ♪ thanks very much, jessica. let's check in on what is happening in markets, get over to sophie in hong kong. start: paul, asian stocks november lower since the best month since june. bonds mostly higher, treasuries holding their midweek danes, yields falling across the curve,

the 10 year down nearly four basis points, moving toward negative and 19 basis -- i nine basis points this morning. the korean won is back down around 1117, but the kospi fluctuating, now moving higher 2/10 of a percent even though the data shows imports and exports sliding 50%, korean inflation surprising the upside. the australian dollar back up, the kiwi also on the upside, both currencies set for a weekly gain. the yen earlier reached one await against the greenback. the nikkei is off nearly a quarter of 1%. expected to snap a three-day gain. nintendo jumping the most since april after a second-quarter beat on switch, it did see revenue and sales outlook unchanged. the apple manufacturer raising its outlook for iphone demands seen boosting component sales,

and this stock jumping seven .2 -- jumping seven talk -- jumping investors shrugging off the mess we saw in the second quarter. the downside, this electric, following the most in 16 years after lng losses. mazda sliding ahead of earnings do later today, the carmakers as its results will be largely in line with a nikkei news estimate and the carmaker will reported 22% drop in annual profit. and rome company, it makes chip and allete -- rohm may suffer from we commanded automotive sector. paul: alibaba is facing a dilemma over a planned share sale in hong kong. reportedlyant is deciding between launching a sharply reduced $10 billion

share sale in december, or delay the deal altogether until 2020. havehaihig -- we phong -- haitong's bill leung. is a good chance alibaba will continue with the listing, but in terms of timing, there might be a better chance this ipo could be maybe early next year, which i think would be better timing. valuations, onof the start of the bloomberg terminal we see alibaba trading at a pretty decent discount to its msci world i to growth peers . is this a buying opportunity? billy: i definitely think so. thisve a buy rating on stock. it is a long-term story for alibaba.

one issue investors have been misunderstanding or underestimating is the retail market potential in china, which we estimate to be quite a large attentional. i think it is in its really early stages right now. our estimates in terms of the market could reach $16 trillion muchrms of d&b, which is larger than other players in the e-commerce sector in china. shery: they have outperformed some competitors. chart shows on the bloomberg that alibaba when it comes to growth is outperforming peers. so why is alibaba doing so well, despite the fact we continue to get the narrative that the chinese economy is slowing down? billy: good question. it is a fact of the economy is slowing down. retail growth is slowing down. but the china internet or e-commerce market is still a very large market. if you look at china internet

population, still much lower than other developed markets. if you look at disposable income, retail spending, it is still much lower. and in fact, if you look at online retail spending year to date, we are growing at 17% 18%, which is quite a stable, decent growth. so i think e-commerce is still a very big, long-term growth story for china and alibaba as well. lower-tiermentioned cities. what about competition? billy: we have addressed this point. we below -- we believe the lower tier city market is big enough for other players, not just alibaba, it could be sufficient for three or four players. the lower market sizes in that next 10 years could reach 16 million, much larger than the current dmv total of the top four players. worries about

competition might be premature. isl: a big day for alibaba november 11, typically selling a phenomenal amount of products. what are your expectations for singles' day? i am interested particularly in talk of attentional point out of u.s. goods? we are still looking at solid growth. last year singles' day growth was 27% year on year, this year we are looking at about 24%. there are concerns on trade wars are geopolitical tensions which might impact. but we are also seeing strong domestic demand for apparel, cosmetics, these are very strong categories which we are expecting to see strong growth in this year as well. paul: i want to switch back to suffering fromen regulatory issues. the nba is one of the products that has been carrying it. has the brand become tainted in

china to some degree? what bright spots you see for tencent? billy: we are positive on tencent. we currently do -- we do a buy rating on tencent, because of the strength of their games. they are the largest developer and publisher of online games in china, also strong in e-sports and online gamestreaming. they have a very strong market position in online training. -- online gaming. online games in china are still very under-penetrated market, still much lower than other countries such as korea and japan. we are seeing new revenue models being introduced in chinese online games as well. still very big growth potential for tencent in terms of online games. i think current concerns are more to do with the slowdown in advertising, impacted by

macro. it also increasing competition from one of its peers. shery: short video platforms ford give tencent a run its money. what are bright spots on that front? billy: for tencent they have to put bigger effort into improving their own content. one of the advantages they have is that in the past 10 years they have accumulated very strong content, both domestically, self developed and overseas as well. that is one advantage they have. shery: thank you so much for your time today, billy leung, haitong international director of equity research. plenty more to come on daybreak asia. this is bloomberg. ♪

♪ shery: welcome back to "daybreak asia." on in new york. the singapore state owned utility firm, sp group, becomes the first state owned issuer of energy certificates and asia. the certificates are proof of energy generated by renewable sources. we are joined by sp group ceo wong kim yin. thank you for joining us. we know singapore produces most of its electricity by burning fossil fuel. tell us about efforts to diversify sources of your electricity? singapore is very short on

renewable resources. we are a small island and we have very limited rooftops. we do not have wind, we do not depending, so i think on natural gas at the moment, we tried to do as much solar as we could. but i think in the meantime, one of the possible ways of tapping on renewable resources is actually working with our neighbors. some physical regional interconnection will help singapore in that department. that is why we are thinking, why don't we have renewable energy certificates? so that even that even though we may not be physically burning natural gas, we could also tap on renewable resources by issuing renewable energy certificates. shery: singapore announced goals this week of having two

gigawatts of solar power capacity by 2030. is sp going to play a role here? wong: yes, of course. we are the national grid provider. our mission is to help singapore tap as much solar energy as we could tap. our role is to help anybody who can produce solar energy to connect to the grid and then have their energy sent to the consumers in a seamless manner. this to us is very important. time, for those who couldn't have access, we will try to build as much -- who couldn't have aske -- you couldn't have access, we will try to build as much access as possible. shery: what about nuclear power in singapore and the risk of neighboring company -- neighboring countries developing nuclear power plants?

nuclear has always been something that provides a very stable source. we see other countries tapping into nuclear power, but because of accidents there is a lot of concern. so for us, at the end of the day, it must be safe. we are a small island. our safety is our primary consideration. so yes, when it is deemed to be safe, when we are comfortable with it, we would work with our neighbors and make sure it is a sustainable source, a cheap source, it is something that will benefit not just ourselves, but also our regional counterparts. though small nuclear, small modular reactors, there is also the possibility of fusion, these are all some new technologies that are out there that we are watching closely. but having said that, i think it will be some years, probably a number of years, before we would be able to tap on that. playing a are also

role in ev technology, increasing your high-speed electric vehicle charging network. how many charging points are you expecting to install across singapore, and by what timeframe? it,: if you think about singapore is very uniquely suited for electric vehicles. we are trying to install as much as possible. we see charging points, charging evs as a natural extension to our business, so today we have inbe less than 500 evs singapore, so we are thinking of taking the lead in building more than 1000 charging points by the end of 2020. you haveknow yet, do the chargers first of the cars first? let's build the chargers first, and that will help promote the use of electric vehicles.

shery: that is an interesting point you mentioned. i was going to ask if this is going to have an impact on raising the number of people who actually drive ev's in singapore. what is the situation like there? today the cost at the end of the day is primarily in the consumer's mind. today compared to other countries in which there may be certain support or subsidies for electric vehicles, singapore, we leave it to the market to decide. so the cost at the end of the day of the ev's relative to ice vehicles, it is not practical for people to convert to ev's. but we think ev's will ultimately be very well-suited for singapore. today a single charge overnight would allow an ev to run for 250 kilometers.

and that is for every singapore family, that is one week's worth of driving. so it is a very suitable means of transport. in the long run, we think the cost of the ev's will come down, battery costs will come down, as we have observed, and maintenance costs of the ev's is also supposed to be much lower. we know that because we have converted part of our fleet of vehicles into electric vehicles. shery: would sp group ever consider an ipo of your assets? wong: [laughter] think an ipo, at the end of the day, it is a means. what is the en -- what is the end? it is to raise capital. into year we invest renewing our network and catering for growth. ofif the ipo is a means

tapping onto a market, tapping onto capital we otherwise do not is moreotherwise expensive, then obviously we would consider that as an option. order to do this we would have to get alignment, from regulators, from consumers, from shareholders. but at the moment we are able to bondshe capital, we issue , and that has been giving us a lot of traction in terms of the ability to fund operations moving forward. so in ipo -- cell an ipo is an option, we don't rule it out, but we have to consider the costs. , thank you kim yin so much for your insights today,

sp group ceo. if he missed any of that is yourtion, tv function, dive into any bloomberg functions we talk about and become part of the conversation and send instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪

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shery:shery: welcome back to "daybreak asia." i'm shery ahn in new york. china has made a big push to become a tech powerhouse, rolling out the world's big five g network, as we continue to see china and the u.s. locked in a trade war. our telecoms reporter shirley dow joins us. shirley, what has been reaction to the rollout? reaction has been pretty underwhelming, which is expected. because for consumers like you able to stream video or gaming faster isn't and a that attractive, lot of people on china's social media are saying prices are on the expensive side, between $18 and $85 u.s. a lot of chinese consumers say they are not going to be able to afford it.

yesterday in beijing's most commercial network, very few people are going through chinese telco branches to sign up for the deals. and even online, we are not seeing that much of a response. we have seen the u.s. move to pressure some chinese tech companies, including the blacklisting of huawei and other tech companies. has that impacted the 5g rollout? shirley: actually, that has made china be even more aggressive in rolling out 5g. because due to this trade war with the u.s., china is thinking rolling out 5g as soon as possible would give chinese telecom companies and technology companies a better start, earlier than many countries, to buy them more time to develop future technologies related to 5g, for example, self-driving,

automation, internet of things, these are important technologies that can help china lead the world in the future. but for chinese telecom operators, building out the 5g network has been really expensive. three majore chinese telecom operators have spent 43 billion dollars in capital expenditure, partly to stations thatbase will help transmit signals under 5g. and the initial consumer response is not very good. so i think initially for chinese telecom operators, it is not going to be very good. for example, china's biggest telecom operator has seen a 14% drop in profit in the first nine and they areear, setting up for their first annual profit drop since 2015. this will be a longer game than

immediate impact. shery: shirley, you mentioned this was an expensive rollout. we are seeing telcos and other countries under financial pressure. so what does china's 5g rollout think of them? is not going to recover the telecom operators' costs on building out the world's largest 5g network immediately. income, itlk of 5g is not going to come from daily consumers, but from industrial and other commercial use in 5g, for example the automation of thestrial manufacturing, internet of things, self-driving, these are the technologies that are going to mature in about four or five years. so for chinese telecom operators, they are going to wait a bit longer to have real profit and more income from 5g. thank yourley zhao,

for the latest on china's 5g rollout. asian markets, mixed picture, 1%,kospi higher at 2/10 of cpi data beat but missing estimates and declining more than expected. the nikkei down 6/10 of 1%, still in overbought territory, pressure from the asx and kiwi stocks. still to come we will be live from the hong kong stock 'schange to speak with esr chairman about the ipo. the china open is next. this is bloomberg. ♪ whether you're out here on lte.

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>> is 9:00 a.m. in beijing. looking to bloomberg markets open. >> we are counting down to the open of trade in hong kong. let's get to your top stories today. amid the city's worst growth slump since the global financial crisis. protest in trade war uncertainty of planes the trade -- the economy into recession. > we were told it will scale back the hong kong ipo or even delay until next year. gloom and doom.