>> good morning. i am paul allen in sydney. >> i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." shery: our top stories this hour, the u.s. and china are in daily contact on trade. down to thecks tariffs deadline. sterling falls as the latest opinion poll shows force johnson's campaign lead may be sliding.

itsco prepares to make trading debut in riyadh. reports say it is considering a secondary listing in asia. i want to get you to some breaking news out of new zealand. we have a fiscal update for you. they are cutting the budget surplus forecast. it now sees a budget deficit in 2019 and 2020. and smaller updates after that, specifically $943 million deficit. this is a previously forecast billion dollars. returning to forecast the following years, but only just. forecast was for $2.1 billion. growth of 2.1% seeing a sharp wasward revision from what

previously forecast as well. 2020 is an election year from new zealand, too. just some headlines there. that's get straight to the market action with sophie kamaruddin in hong kong. sophie: let's kick off with tokyo. topix withand divergence. the end is holding steady. a bunch of event risk including the u.k. election and the upcoming fed decision in hong kong with that tariffs deadline on sunday. a 10 year yield hovering around zero. let's switch out the board to check in on the seoul trade session with the kospi holding ground here, little changed at the start of cash trade, while the korean won is edging firmer, just slightly here, with some silver linings coming through in the latest trade data. export growth was positive for the first time in 12 months, but on the downside, when it comes

to economic data, the jobless rate climbed to 3.6% in november. moon jae-in, a challenge when it comes to boosting hiring as the economy faces headwinds. aussie shares gain .2%, led higher by banks and consumer stocks, while kiwi equities are off by .3%. let's check in on how the kiwi dollar is faring after the first have fiscal update, climbing .2% as the spending was lifted while the government saw its b surplus being cut. the aussie dollar holding steady after the consumer confidence data we got this morning, showing a drop in december as concerns rose about jobs. the offshore yuan holding steady, holding onto the overnight game that pushed it back below 70 c. 03, falling against all g10 peers, falling against the u.s. dollar.

the latest poll shows the tories lead mirroring ahead of the election. shery: let's get the first word news with ritika gupta. success of rewritten nafta is being welcomed by house democrats and will be voted on next week. the revised a deal is better for american workers. the usmca is seen as a political win for the president as he heads into an election year. the final approval from the senate is not expected soon. >> let me start by telling you what will not happen. usmca inot be doing the senate. between now and the end of next week. that will come up in all likelihood right after the trial is finished in the senate. says theresident trump articles of impeachment delivered against him are very weak.

house democrats are calling for his removal for abuse of power and preventing congress from exercising its ability as a check on the executive. also injuring national security for personal benefits. the impeachment vote is expected to pass in the house but stands little chance in the senate. the world's most profitable company makes its trading debut later wednesday, but with only a fraction of its stock available to investors, saudi aramco sold 1.5% in its ipo, which raised a record 25 point $6 billion. it will list on the exchange in isadh amid reports it considering a second relisting possibly in asia. probable death toll from a volcanic eruption in new zealand has written to 14 after a victim died overnight. four people are still missing on white island and are presumed dead while 30 are being treated for severe burns in hospitals. the volcano is still dangerous

and police are waiting for an improvement in conditions before they can reach the island. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ripped to google data -- ritika gupta. this is bloomberg. paul: china expects looming tariffs to be delayed as the two sides say they are closing in on an interim trade deal. that would give most sides -- both sides time for an interim deal. our strategist, garfield reynolds. we have seen low volumes and sideways drifting. is trade the key catalyst everyone is waiting on now garfield: the key catalyst, not the only one. we have brexit, the fed, we have areecb, so, yes, there

other catalogs out there, but trade would seem to be the primary one. the chinese seem to be hoping we are edging towards pretty much what is priced in by markets, which is a delay to the tariffs, which also means we could actually be disappointed if we think moves on the trade deal will actually revive asset moves because it might be that what we get is what is already priced in. about thefield, what fed decision tomorrow? are markets at all concerned about what could happen there? it seems given it would be a hold. garfield: it's a given, shery, rates.ey will hold if they did not, that would be a real shock. this is the last fed meeting for the year. they will not meet until late january, i believe. say about the outlook,

firmerlly we have had than expected third-quarter gdp numbers and much firmer than expected jobs numbers, so there might be a risk especially for bondholders that yields could get some upward bias if the fed is sounding confident about the u.s. outlook going into next year. metricse perhaps the they need to take such a stance, especially if there is not a blurb on trade, then with all of that, you would have the potential for bonds to continue to pay her gains as they have -- pare gains as they have over the last month or so. comments fromome jeffrey gundlach saying the odds of recession have fallen and there seems to be an outbreak of optimism going on, doesn't it? garfield: at the very least, a

waiting in pessimism. there is cautious optimism growing. somewhat disbelieving perhaps at just how resilient the u.s. consumer is being in the face of some other objects that are not that great. you look at what is going on with manufacturing. u.s. manufacturers are expecting to cut investment next year for the first time since 2009. even the services pmi's have not been great, so there have been some worrying signs, but there is definitely a feeling that recession panic that we had two months to three months ago was overblown. we are not going to get a recession. then the risk is how do you manage as it were if a move away from a fed that is using to a safeguard for the expansion of a fed that presumably would be on the lookout for a move back to a hawkish bias if the economy recovers faster than expected. that creates a fresh slew of

uncertainties, and good luck -- he was talking about the potential for yields to rise and for the potential that rising treasury yields will cause some pain for the bond market, especially the lower ranked areas of the bond market, some of which looked rather frothy. shery: garfield, we are seeing more debate on year end funding conditions, especially with the repo market instability we saw in september, and now, we have corporate tax payments due next week. is this across all asian markets? intoeld: i think it adds the concern. they year-end is often a dangerous time. swaps can gyrate around. we have also got potentially worrying set up with volatility. which has been very low, and now is ticking up into these event risks. it was at these levels before.

it led to an explosion higher in volatility and a retreat in stocks in particular but also other risk assets. there's a chart to show you, which highlights exactly that situation. paul: mliv asia editor garfield reynolds, thanks so much for joining us, and the bloomberg mliv 2020 assets survey is now open. we are hoping to see where you think nine different asset classes end up around this time next year. forecasts in. sterling under pressure as a key election holder shows boris johnson's campaign lead is weakening. shery: after a blockbuster year, where does asia high-yield go from here? our guest shares her views on credit. this is bloomberg. ♪ ♪

paul: this is "daybreak asia." i am paul allen in sydney. shery: i am shery ahn in new york. our next guest sees volatility ahead with idiosyncratic risks. joining us now from hong kong, the capital founder and cio, monica. rate to have you with us. how exposed is this asset class to trade woes as we continue to negotiations on china-u.s. trade? monica: actually, our markets have not been moving so much with the trade talks and the headlines. as well as equities in our asset class. recently, we have been rocked idiosyncratic risks. in particular, in china, in the last few weeks, we had big moves

in certain bonds that have dragged down sentiment that relates to how we price and reassess risks associated with reliance on government support. shery:shery: where in asia are you seeing the opportunities? monica: in china, we continue to see that chinese property high-yield bonds are especially cheap. we have highlighted previously bonds.single b, overall, i would say property bonds today are fairly consensus trade. we really need to dig in and look at name by name, particularly in property sector. the funding conditions have tightened, and you know, this is on purpose from the government that using was not targeting the property sector this round. in indonesia, for example, we actually see that the indonesia

property sector, compared to chinese property bonds don't really offer a lot of value right now and the sovereign space. i think they have, and in such a way, much tighter now due to the easing of doi, which has done 100 dips of cuts and the fiscal side is fairly reflected in the spread. for indonesia, we have the coal sector. in that space, you know, we are facing some uncertainties for the renegotiations of coal contracts for the government, and you know, for us, we don't see a lot of upside in the turnaround for the call sector next year. , it's generally neutral in investment grade. high yields were generally underweight. getting back to

your thoughts on the property sector in the high-yield, there is always a risk of a downturn. how do you mitigate against that? monica: yes, i mean, for sure. the funding conditions, as i mentioned, are tighter. however, we are seeing that, fundamentally, the companies are managing very well. the liquidity conditions, i think what you have to do is really still do name picking, and we are avoiding some of those names that have high refinancing risks that don't have as much access to alternative funding channels. some of the names this year have been particularly good at tapping into private debt. for example. we are going to continue to see difficulty to access some of the trust loanke financing. we see that next year, i don't

think the government's intention is to overdo the tightening measures in property. we are already seeing that they are allowing certain cities to control in their own localities how to targeted easing. i think part of it is really in name how theyg name by manage the capital expenditure. year we have seen a record on bond defaults in china. is that a trend you expect to see continuing to 2020? monica: you know we do. as i mentioned, we have particular? that have been -- question marks that have been raised what we have seen is that for example, it was highlighted by a company wholly owned by -- they recently this past week

offer,ed their exchange and that really paves the way for us to see potentially a lot more restructuring in the soe side. we also recently have seen university bonds. tech conglomerate's had state support. those bonds fell dramatically. you know,lso lent, tone that spilled over even to other corporate's that have potential soe's. shery: monica, thank you. monica hsiao, cio. let's turn to south korea because we earlier reported their trade data for the first 10 days of december, and we saw exports rising nearly 8% on the year while chip exports plunged. we have unemployment figures earlier. our markets live reporter joins us now. also what caught my eye was the

import numbers. imports rising. could we say that we are starting to see a turnaround for the south korean economy? , the preliminary trade data is positive and encouraging. has ag under the hood, it positive tilt. , basically, you know read by the key exports. the slump has moderated because the export in volume continues to increase. although prices remain in a slump. i think that this is an ongoing trend. if samsung electronics is in focus, prices will turnaround

next year. we have seen growth in the next year. another positive thing in exports. a turnaround. the pmi turnaround in china continues to be positive for korean exports. i think the economy rebounding next year, and then the chipmakers and other manufacturers prepare for the rebound. the reports should increase together. shery: what about the unemployment rate came in higher than expected at 3.6%? why are we seeing the jobless rate go up? kyoungwha: korea has stubbornly high -- last year, we saw a big drop because of the stimulus. they create a lot of jobs in the public sector. this is not sustainable. are creeping higher. i think it will continue to

a lothigher when we have of students coming out to get a job. shery: you know -- kyoungwha: you know, in south korea, we will have an election. in between, the government tries jobs about to create this is not sustainable. it helps to contain the rates. right. all right. markets live reporter kyoungwha kim, thank you very much for joining us. still to come, the white house says it will push hard on a usmca bill before the end of the year despite the senate objections. we will have all the details, just ahead. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york. paul: i am paul allen in sydney. naftawritten successor to will be voted on next week. nancy pelosi a lot of the changes her party has been able to negotiate to the usmca, saying the revised deal is better for american workers. jodi schneider has been tracking this. what were the key concessions the democrats managed to win to get this over the line? this deal has been languishing for over a year. it is a priority of president trump. democrats really wanted labor rights protections in that bill. they wanted some key things that they had not been getting. those appeared. , heady labor union chief of the afl-cio, signed off on it.

a rare moment of the democrats and donald trump being on the came out, but they with 30 other democrats saying they like the deal and they will push it forward. it will go for a vote. it appears next week in the u.s. house. shery: at the moment, we have president trump now speaking at a rally in pennsylvania. he is addressing the crowds on that make america great again rally, and we have heard president trump earlier today talking about the usmca, saying that is a silver lining to the impeachment that house democrats have been trying to carry out. as you said, why have the democrats been willing to sign onto this nafta 2.0 deal? >> for the reasons i just mentioned on labor rights. also, it's about impeachment as well. this came -- the agreement that

they are going to move forward next week. a vote came just hours after they made clear what they were going to move forward on on the articles of impeachment against president trump. nancy pelosi said the timing is not coincidental. the democrats in the house want to prove they can do more than just work to impeach the president. they want to show that they can also do something to govern all the democrats who are running for reelection are up next year, so they have campaigns. they don't want to just be running on the impeachment issue. in the senate, it's a little bit different. in the senate, they will not move forward as quickly on this trade legislation. paul: jodi schneider in hong kong. thank you so much for joining us. coming up next, boris johnson says a brexit will not happen without a tory win. we will assess how the pound is reacting to the latest election lines and of course the yougov

poll which seems to indicate the tories will have a majority but perhaps not quite the size boris johnson would like. more in a moment. this is bloomberg. ♪

>> might be very doubtful. >> we put new tariffs on. it declines 10% in a matter of days. would not be surprised to see a bit of a giveback. >> a pullback. >> that will end up being the buy in opportunity. >> we have seen that before. >> we get good news about trade. >> that would not surprise me. the markets rallied on hopes for something else in the future. >> a lot of risks. >> the conditions do not seem to have changed. >> what is optimism but too much complicity? earlier guests

awaiting signs of trade progress so we are very much in wait and see mode. not much going on early in asia sessions. treasuries ahead of the fed decision. 30 year sale. asian stop little changed. some muted gains coming through in sydney. the events being wiped out on the kospi pretty much right there. the kiwi dollar pretty much erasing its earlier advance of .2% that was sparked by the new zealand government announcing plans to boost infrastructure cut rates. the parliament heads late tuesday. a smaller than planned 2020 budget. showing an improvement in export growth thanks to wireless equipment and passenger cars. chip shipments continue to slump. we have the korean won holding steady this morning on the back of that. highlight what is going on in

the pound, pulling out the board to show how they are getting nervous with cables slipping from a nine-month high that we saw overnight at 132. jordan rochester and nomura points out the park it will not welcome a win by the tories. coming through under 131 here as the pound slides against all g10 peers, shery. shery: let's crossover to ritika gupta for the first word headlines. ritika: police say six people have been killed in a shooting in jersey city, including a police officer, to potential suspects, -- two potential suspects, and three bystanders. it is not clear who was behind the attack, but police say it is not thought to be an act of terrorism. the hong kong appeals court rejected the government's request to temporarily extended controversial ban. ruling represents another

setback for chief executive carrie lam with the latest local opinions poll showing public confidence in her leadership falling to 10%. passenger car sales fell in india for a record, extending 13 straight months in november, falling almost 11% from one year ago. demand for new vehicles slumped as the economy grows at its weakest pace in more than six years. there was one bright spot. new suv models spurred some interest among buyers. faces a newcoon -- threat with 12 state on damien petitioning to be declared bankrupt. the group has gone to court in london, chasing $1.5 billion in unpaid debt. he is accused of willfully defaulting on debt accumulated by his kingfisher airlines. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i am ritika gupta. this is bloomberg. paul. paul: sterling traders are nervous after the latest key yougov paul failed to provide clarity. boris johnson's potential majority dropping to 28 seats from 68 in the previous -- in the posters previous survey. david joins us now from seoul. sterling looks to remain under 132 against the dollar. this yougov poll really not the ideal result for markets, was it? david: definitely not. you remember historically, markets have been burdened by recent polling in the u.k. in this polling, rather than confirming a definite majority, they have a hung parliament. two weeks ago, this polling was the most accurate in 2017.

markets are heavily focused on it. senate majority, 68. the majority is down to 28. the range is huge. there is a chance of an 84 seat majority of conservatives. there is chance of a hung parliament and that is why the markets are really worried going into this. there's only a couple days to go. seats very closely fought. a big difference into the actual decision. to caps like it is going it. put have been reluctant to on a position knowing there is uncertainty going into this election result. aery: how sure are we of rally if conservatives win and how much does not depend on the margin of the victory here? david: very good question.

there is quite a lot on the margin of victory. i think if conservatives do get majority, then you see sterling initially pop. at the moment, it goes to 132. additional resistance against the u.s. dollar, 134. very quickly, the markets go. there is a swath of u.k. data next week for retail sales, employment, provisional pmi data, so all this information shows the state of the u.k. economy. even the bank of england rate decision next week. even though they are expected not to do anything, the markets will very quickly be focused on is force that's a majority, how does the bank of england interpret that? markets are pricing a 50% chance of a rate cut sometime next year. more than likely the latter half of next year. it sounds more hawkish or dovish. the adjustments will be made and that will affect sterling as well. some event risk next week in

terms of data. sterling rally may be capped quite quickly at 134. paul: david, how about the options market? have we seen a reaction to the pole developments? -- poll developments? david: volatility is elevated but not as elevated as it has been recently. you look at this, you see that risk reversals. based on the premium you are paying, downside protection. was about two vol, and now it is four vol based on a one-week basis. the markets are very worried that if there is a hung parliament or a very small majority, sterling may selloff, and because they have been burned before, there are hedges to the downside just in case.

the market is certainly not convinced going into this that sterling will be rallying extensively. at least, they are definitely hedging their bets. shery: you mentioned the boe earlier. we have seen three straight months of growth in the u.k. economy who had gdp numbers earlier today. that was for the first time since 2009 or so. are we seeing anymore suggestions coming from the boe that they may be shifting their stance? look at theinly last boe meeting, there was calls for a rate cut, so dovish stance is certainly materializing. next week, there is so much data out next week, employment, pmi data, retail sales, u.k. cpi, they will have a lot of things to make their decision on. the markets will look past the elections to see how that data is an boe interpret it. even as a majority for boris johnson, that still does not take a deal off the

table. you still have the free trade agreement. it has to be agreed between the u.k. and that you and that has to be done by the end of -- the e.u. and that has to be done. in athe market only priced 40% to 50% chance of a rate cut, -- it sounds a lot more dovish. there's a lot of room either way for this to be swung, hence the data. is key data we are heavily focused on. paul: david trinity -- david finnerty, thanks so much for joining us. we will have special coverage as the results roll in. join us from london. that is 9:00 a.m. if you are watching in sydney. still to come, the world's largest ipo. the world's most profitable company set to take off. look at what is so big about an offering in which very little

stock will trade. this is bloomberg. ♪ is bloomberg. ♪

shery: we have breaking news. peter navarro speaking to foxbusiness news, saying that he has no indication that the december tariffs on china won't be put on. of course, we are talking about those december 15 tariffs on imports from china. navarro saying china is trying to shape the narrative and also affect the futures market while his comments now affecting u.s. futures that are diving .2%. the offshore yuan is also taking a little bit of a hit and we are seeing some safe haven means for the japanese yen. peter navarro also saying it is up to the chinese as to whether we get a deal. that is china trying to shape the narrative as chinese officials telling sources they expect president trump to delay those tariffs.

navarro now saying he has no indication that those december tariffs won't be put on. sort of echoing what the white house economic advisor, larry kudlow, said earlier on, that the tariffs increases remain in play. paul. paul: thanks. today is the day. the world's most possible company will make its trading debut. but only with a fraction of the stock available to investors. saudi aramco 1.5%. the ipo raising record $25.6 billion. joining us now from hong kong is the sanford c bernstein senior analyst, neil beveridge. we will have trading getting underway. what are your expectations for the stock price? valuation is a lot lower than where the stock is initially going to price at $1.7 trillion. we estimate fair value of closer trillion dollars.

there is lots of pressure certainly for the stock to go up. the saudi oil minister is talking around a $2 trillion valuation so i think you could on the stock move up today buying from local investors, and of course, we will have passive money flowing into aramco given it is waiting on the msci e.m. when it gets included. paul: in terms of that expectation you mentioned from the saudi energy minister of a valuation, that is making some pretty hero look assumptions about where the oil price is heading, isn't it? a 1.7 trillion dollars valuation, aramco is yielding around 4.4% relative to the average global major around six points in. -- 6%. you are pushing the yield down below 4% to really justify that

in the current market, you would need an oil price of around $85 per barrel, which is clearly well ahead of where we are at the moment with brent somewhere close to $64 a barrel and the market indicating a $60 barrel longer-term price. you need higher oil prices to justify that valuation. shery: does that mean investors should not be worried about this -- that could be negative for other global oil majors? neil: the big worry for investors is given the market cap size of aramco that you could see rotation from other particularly -- oil majors into aramco, but again, if you look at the dividend yields you're 6%,ing on companies, around it is well in excess of where aramco is going for yields. that risk of rotation is going to be significantly lower given the valuations we are seeing. shery: who will be the buyers from here on out when it comes

to the aramco shares? neil: initially, it will be of course retail investors from saudi arabia that will take up a third of the free flow. the rest of the investment will come from institutional investors primarily in saudi arabia and the gulf region. bethink aramco is going to awaiting for .5% on the msci e.m. index. we will see that for some of the passives on buying in. it should come around the middle of december. promises oful: dividends are very well and good but only 1.5% of the companies are going to be in public hands. does that raise some concerns about decision-making at aramco, and who has benefited -- whose benefit it ultimately seeks? neil: the concern that most into

solution all investors -- institutional investors have, as we are seeing with national oil companies, when the government owns so much of the company, you tend to see a misallocation of capital. you do tend to see a degree of national service from the companies, and what that leads to over time is lower returns. capital is not employed as efficiently as it would be if the company was held purely by institutional investors. corporate governance is a big worry here. paul: we have also had news that consideringentially and asia ipo. how will that have to be structured to attack international investors? neil: i think there will be a listing at some point. i think aramco indicated that is what they want to do.

asia could be a logical place for that listing. most of the incremental oil demand growth is coming from asia. in terms of appetite for something like aramco, i think it would see more interest, certainly, in asia relative to other markets. the key question again comes down to valuation. i think really, to get investors interest in asia, you know, we will have to see oil prices moving significantly higher than they are today. so that valuations catch up with oil price. paul: to your point on oil prices, of course, we did see some surprise. afterprise reduction cuts the opec plus meeting. the oil price went up for a minute. they don't seem to have much effect. what is going to change the law of diminishing returns around this approach to reduction cuts in order to prop up the oil price?

neil: it was a surprise. i think the magnitude of the cuts, if they are implemented, and that is one of the key questions investors have, the compliance with the additional .5 million barrel per day cuts, and the 400,000 barrel a day additional cuts that saudi has promised, i think the key question will come down to compliance. but if you look at just the set up for 2020, you know, with the cuts, we will have a largely balanced market in the first half of 2020. then, you will start to see the impact of the cuts relief flowing in to tightening the supply and demand, lowering inventories for the second half of next year. i think that will push off prices, so i think these cuts will have an effect. i think it will be backend loaded in 2020. i think compliance -- the market wants to see evidence of compliance. saudi wants oil prices to be higher. they need $80 per barrel to

balance the budget. to make it a success for investors, they need to see oil prices higher this time next year relative to where we are today. shery: thank you. neil beveridge, senior analyst p.m. as meal was telling -- senior analyst. the objective is to diversify away from oil. the kingdom is counting brent averaging $65 per barrel. the saudi economy minister spoke exclusively to bloomberg in riyadh. >> there are few aspects. one is the new sectors with developed -- introduced to the market. hospitality. this is definitely a great multiplier for the gdp. it is a great theater globally. privateback from the sector, this is tourists applying for visas. very encouraging. we will continue investing in

that sector. there are two arms and the saudi economy. we support the treasury. one is that international development fun. both are equipped with money, with tools to introduce other sectors, talk about mining, talk about industries, export driven. it supports the treasury. >> opec plus has cut deeper. oil prices look a little bit shaky. growth target for 2.3% in 2020 still realistic or is it time to adjust that? mohammed: as we always said, rerun this budget on a scenario basis. we are very comfortable with the current position. saudi arabia has always been a global leader. we continue to believe that

oil will stabilize the market. isever, our whole objective diversification, so we are working very closely with so many entities to ensure that our payments, our spending, is targeted towards oil activities. yousef: saudi aramco is going to start trading shortly on the local stock exchange. how do you expect investors to react in the first minute of trade? and more longer-term, where do you see the trajectory of the company? mohammed: we have done this ipo to the best global standards. we have done everything by the book. we are very pleased with the feedback we are getting from investors. we will both watch how the market -- i am optimistic. the company value is very significant and we will let the market discover that value. paul: that is the saudi economy

minister speaking through yousef gamal el-din in riyadh. stay with us. this is bloomberg. ♪

shery: this is "daybreak asia." i am shery ahn in new york.

paul: i am paul allen in sydney. let's get a quick check now. chevron says it will write down as much as $11 billion on the natural gas assets after the price of the fuel slumped. have to the write-down is due to the reduced value of its holdings in the appalachian shale region. futures prices have slumped this year amid a supply glut, averaging levels not seen in 20 years. india'sreditors of grounded jet airways have agreed to extend the deadline for resolution of its $2 billion of --. a bidder is holding off from a binding offer until he has clarity from the government. to other allocated airlines after jet suspended operations in april. coffee top italian roaster has launched a sale of a minority stake to have expansion in the united states. it set up parliamentary details. it may offer a 20% stake to value the firm at more than $1

billion. in october, they confirmed they would hire goldman sachs to expand in the? kit. -- expand in the u.s. market. shery: sophie. sophie: with conflicting lines around the tariff deadline, here is a quick snapshot of the market reaction to peter navarro's comments earlier on fox p or the offshore yuan and .2%e minis weakening by while the yen briefly strengthened against the dollar. this afternoon are a said there is no indication that there will be a delay. it is up to china on whether a deal is secure. he also contended that china is trying to shape the narrative and affected the futures market. we are seeing a broader market, looking more risk off. is deepening in tokyo and seoul. the topic -- the topix off. mark cranfield expects the knee-jerk reaction could be reversed if the pboc has a

steady fixing today. shery: thank you. happening right now, president from speaking in pennsylvania at a make america great again rally. the president talked about the usmca being a silver lining to his impeachment challenges. we have seen the house democrats announcing two articles of impeachment. of course, that could be a big win for the president if he doesn't fact get the nafta 2.0 finalized. naftas in fact get the 2.0 finalized. we are seeing lines when it comes to the china-u.s. trade negotiations, with peter navarro echoing what -- plenty more to come on bloomberg. this is bloomberg. ♪

♪ 9:00 a.m. in beijing. welcome to "bloomberg markets: china open." down towe are counting the open up trade. china say u.s. and they are in daily contact as the clock ticks down to the trade deadline. fed's final policy decision of the year. the announcement may indicate how the trade war is affecting the u.s. economy. , pollserling falls showing borst johnson's lead may be sliding.

showing borst johnson's lead may be sliding. ♪ china bear par excellen officialsfter chinese expect the december 15 tariffs to be delayed. cranfield was pointing out, he is the consistent hawkish voice on china. it means anyone who thought it was 100% should see the doctor. yvonne: let's show the boards. stocks in particular. futures lower on the back of

that line from peter navarro. we will see how long the reaction stays within the session, but futures are positive. we did get that credit data, seeingat big rebound -- that big rebound. piercing some pressure on the back of the trade headlines. we will see if the pboc tries to stem these declines. when it comes to treasuries and fixed income, yields higher. here slightly by one basis point. jgb hit 0% yesterday, the highest since march when it comes to that yield, but it seems like buying came back into play. , analysts arelar split about where the currency will go when it comes to 2020. we are also watching the kiwi

dollar on the back of the boost in stimulus. sterling weakening against all major currencies this morning. .hat pole not really helping let's get to first word news with su keenan in new york. >> we start with the north american trade deal, the rewritten successor to nafta is being welcomed by house democrats. it will be voted on next week. speaker nancy pelosi lauded the changes her party was able to negotiate, saying the revised the deal is better for american workers. seen as a political win for the president. a final approval from the senate is not expected soon. >> let me start by telling you what won't happen between now and the end of next week. usmca inot be doing

the senate. up in allave to come likelihood right after the trial is finished in the senate. congress,ealings in president trump says the two articles of impeachment are "very weak." house are calling for his removal from office from abuse of power and preventing congress from exercising its duty as a check on the executive branch. the resolution accuses trump that ignoring national security for personal benefit. the impeachment bill is expected to pass in the house, but stands little chance in the senate. the u.s. court has permanently banned president trump from using billions of dollars in military construction funds to pay for the border wall with mexico. it follows an earlier ruling

that his declaration of a national emergency to use the funds was illegal. the judge said he is not the president from using funds earmarked for counter drug operations. global news 24 hours a day on air and at quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. thank you. progress onawaiting the trade talks ahead of the in the tariffs hike final fed policy decision of the year. let's bring in selina wang and kathleen hays. selena, what are we hearing in terms of these trade talks now with peter navarro waiting in with his own commentary? >> you're seeing navarro saying there is no sign we will not go forward with the december 15 tariffs. that is counter to what the

agricultural secretary and wilbur ross were saying. can opine all we want, but we never know. they areina side, expecting those tariffs to be delayed in for talks to continue. conversatione about the complete removal of existing tariffs, their discussing how to cut the existing rate. that could be cut by as much as half. the sticking points remain around the timeline and i cultural purchases. china is saying that purchases should be market-based. the u.s. says it needs an enforcement tactic. this is the easier part of the disagreement between the u.s. and china. the fact it is dragging on for so long and has been so contentious does not bode well for the negotiations that will touch on issues like state subsidies and industrial policy. usid: it is giving

insurance. what might the fed say in the absence of the deal up to this point? >> he will be asked questions about that in the press conference, but a lot of people are assuming he will repeat the economy is in a good place, underscored by a november jobs report with the biggest gain in payrolls since january. manufacturing has been weakening , but the fed has made it clear they are willing to pause and see what the impact is. i don't know what he will say about the fact there is no trade deal signed yet. he will be asked about it. i think the main focus will be on the dots. every three months they update their forecasts, which is what gives them their forecast for rates. dots were set in

september. the majority, there were seven suggesting who were that the rate would end up where it was cut to in october, 1.62% is the median, so they were anticipating a september cut and one more. the other 10 or not. ts will change. more importantly what with the signal be for 2020. will they keep it on and even 2019.with or with adults go the other direction? this is what the market will be sorting out as soon as we get that out of the fed meeting, and jay powell talking at the press conference. if anything moves bonds, stocks, and currencies, that has the potential to do it. david: 18 hours.

u.k. elections. we have december 15 on sunday. thank you so much. is our joining is now guest. thank you for joining us. day,is headline bonanza this is a question we started off with on mliv. what scenarios are you plotting and what will move the most? pricing in this deal will be resolved, but what we justelling investors it resets the negotiations back to the may escalation. be aware of that. negotiationtinuing in the escalation of tensions

will be a relief for the market. truce, i don't think we will revive business sentiment just yet. it is not sufficient. corporate sentiment or corporate investment will find a bottom. they managed to trigger some sort of bond yields falling in the corporate credit threat remains high. it such as corporate, and need to stop pouring, they are not finding it to difficult to borrow, so that should be a good factor. david: what is worst-case? >> that things could continue or get postpone to the november for another year with the same backdrop.

for 2020,continue because we still have lots of risks and uncertainty going on. tom: i lot of the strategists remains ing the fed 2020. we will get more insight later today. are the markets underpricing the risk of the hike next year? perspective, at this moment, we are expecting more perspective from the fed meeting in the press conference, and also the q and a session. we are still expecting them to stay in change for 2020. meeting, it will be uneventful. right now people and investors continue to highlight that we see the growth momentum especially in the u.s. is steady

and robust. retail sales numbers coming out should be decent with the christmas season, then as mentioned, we see for example the nonfarm payrolls number exceeded consensus, and the unemployment rate declined to 3.5%, and the ism manufacturing sector was weak, but global pmi stabilized, so this should be something the fed which has been worried about global manufacturing momentum starting be ane, and so this should reassuring signal to the fed. tom: what does that mean for the u.s. 10 year? do yields remain below that level? consider near term, we in fed will not hike or cut 2020, or at least until the

election. asia orentral banks, emerging markets, they still have room to cut. the downside pressure on rates continues, so this suggests the hunt for yield and desire for yields will continue. yvonne: we will have more from you next. for 2020,y fit talking about china. doubling down on electric cars with the 2035 plan, targeting higher sales that requires more connected and intelligent vehicles. capitalspeak to cicc about how this drives the investment strategy in the sector. this is bloomberg. ♪

yvonne: david: the pboc just releasing its fixing. yvonne: have big meeting in beijing as well. economists saying china's top leadership was at the target for economic growth at 6%. the conference that began tuesday will wrap up tomorrow. they are laying down the policy parties for the coming year commencing the fiscal deficit in inflation as well. slowinge tough growth, rising pork prices, not to mention the trade war. tom: there is a lot on the agenda. we are hoping to get some detail on thursday. today can and look ahead to 2020

-- two did in and look ahead to 2020, our guest from j.p. morgan is to with us. the convinces us that we will get a little under 6% in 2020. our china's policymakers more comfortable with the scenario 6%? glo growth is belo >> yes, indeed. at 6% or slightly ballistics percent, they are comfortable. and even though growth stability recently from the growth data we have seen it is stabilizing. , not just official caixin, but also stabilizing, suggesting growth has bottom. they need more economic data,

the data coming in next monday would suggest the green shoots are for real this time. tom: there has been an interesting and relatively open debate in china amongst officials around the need or not to stimulate. former think tank official saying if we stimulate now, there is a risk we could push china's economy towards the cliff's edge in the future. who is winning out in this debate? >> at this moment they are still trying to stimulate the economy. sidexample on the fiscal from that they will continue infrastructure investment. on the monetary side, they will do it in a way that is more measured. there will be some sort of fiscal stimulus going on for the rest of this year into

2020. i believe it may be more stimulus than non-stimulus. youre: meantime, recommending clients to stay fit. this is my resolution for the new year. it's not just about trying to time the markets. you need to focus on the fundamentals. ,e need to utilize assets negative for low correlation to the risk assets. we are recommending government bonds. for income generation, it remains key. we remain focused on that fixed income. it remains a staple for 2020. also for example, the u.s. dollar stability will hopefully bring interest back into

emerging-market local debt. and themes.s for the themes, we have artificial intelligence, big computing, and fiveg, and relative infrastructure investment. these are all. all these numbers and alphabet. david: who ever is coming up these things that jp morgan should go to jail. yvonne: no. david: where do i find that in terms of income? will continue to be

a focus. within asia pacific, quite a lot of companies will offer a yield. even people they are always considering, looking into developed markets for the investment. asia-pacific is a good place to go. yvonne: in terms of the consensus when it comes to the earnings forecast, still 13% for 2020. is that still achievable? we've been talking about low teens. >> yes, consensus right now is high. 2019 is around 1% consensus. 2018 was 4%. whether we can achieve might begit, 13%, it too ambitious. we see some downward pressure on that. yvonne: thank you. clients, our mliv

surface is open for you. in.your forecast this is bloomberg. ♪

♪ tom: welcome back. you are watching "bloomberg markets: china open." hsbc has agreed to pay $200 million to resolve the decade-long u.s. tax investigation, and it admitted it helped american clients cheat the irs. 2000lates to conduct from to 2010, and follows years of battles against swiss banks and u.s. taxpayers over undeclared

overseas accounts. his owntting advertising agency with three independent directors in a dispute over how to address accounting problems at the company. as it cut its profit forecast after a review by pwc found irregularities were more extensive than previously thought. the company has vowed to rebuild the board and restore the agency's performance. finally recorded the years first official orders for the 737 max. it took inquiries for 30 jets in november, offering some relief for boeing as it struggles to win approval for the plane to fly again and regain the trust of customers and crew. after many cancellations and conversions, max orders are still in negative territory for the year. david: just a couple of minutes away as well.

company news and the headlines out of peter navarro, the latest on december 15. to him there is nothing that indicates there won't be tariffs. have a look at where we are on options. this is the chinese currency. you can see how traders are wary when you look at one-week implied volatility. have a look at this. relativeemain elevated to other measures. markets,of your equity not much happening with your global benchmarks. hsbc joins us in 40 minutes. there seeing the hang seng index and the msci china at those levels. we will talk to hsbc. .f you have questions, tv

yvonne: the market open is quite when it comes to volatility. we will see what will spark some movement today. this is bloomberg. ♪ is is bloomberg. ♪

beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond.

♪ yvonne: you are watching "bloomberg markets: china open." that trade headline from peter navarro, saying no indication at this point the december 15 tariffs won't be put on. they say china is trying to shape the narrative on trade talks. had reports china was expecting some delay on the tariffs you'd more confusion. tom: more bluff and bluster.

the weather in beijing is crystal clear after days of heavy smog. clarity on the air front in beijing, but not trade talks. we have the credit data out of china. a pickup in yuan loans. was weak. for capex the csi 300 up 0.2%. they close marginally in the green yesterday. the shanghai composite also up. some weakness and shenzhen in the small caps. we can move it onto the currency range bound. we had weakness on the back of comments from peter navarro. some weakness there. marginallywas just weaker than expected. we are counting down to that

unofficial deadline. chinese officials think the tariffs will be removed. torces say they are gotten the point of discussing reducing tariffs. with the inject optimism into these markets? david: the little bit lower with the open. 31 down on the hang seng. 16 up or unchanged. let the round things up. the hang seng index, that level by the end of next year. h-shares at that level. that is theng, target of hsbc. substantial upside. very quickly that look under the hood. at the open, nothing worth noting. it is a quiet day with the macro flow. let's get some final

thoughts with our guests. -- guest. we ended the last discussion saying markets were pricing in a bottom when it comes to global growth. why isn't the chinese market moving? >> i guess the markets are waiting. now they are still waiting for the growth data to confirm whether the green shoots a real, and they are dubious about the data. yvonne: how long to wait until you get the all clear, months? >> for example, we got export data from china is mixed. are improving,ey some stabilization.

we say the magnitude is not great, but we are satisfied by the process. goingk we need to see back to positive territory. for example, the pmi data suggesting the sentiment has turned her stabilize. it's not like in the past interviews that it is just one or two months, then falls back to the bottom. david: it feels like we need to be here until april to determine that. before we know it we are in the chinese new year and the distortions of their. for the stock market, the a-share market, is the pboc or economy more important? >> right now the policy news and ongoing negotiations will be the key driving forces. some sortwe will see of sorting in the market. also the policy were conference,

to see whether they will provide some guidance for this year in 2020. xiaomi some of your picks -- tom: some of your picks are consumption, health care, and education. as you see the consumer squeezed by prices and debt levels, isn't that consumer story going to look fragile? think theinue to consumer story is a long-term theme. themes forioned long-term investors can generate a decent return in the next decade. not just within china, but also within asia pacific. but finding the right asset management company, then you can find a good one. kongshifting focus to hong

, eps consists next year is 5%. is that realistic? >> we continue to see some downward pressure on that as well. inr to date, month on month november, equity markets continue to underperform msci , andpacific ex japan year-to-date continues to underperform the whole region. the locals remain under pressure, even though uncertainty dives down a bit or stabilizes a bit, we still see some instability or uncertainty going forward. cautious dubious are for the equity market going into 2020. david: overall, we have almost done this if you're looking into the next year, and there does not seem as an air where equities have a substantial

downside, because either the economy improves or the will be policy support. twoou think those assumptions hold for 2020? >> i think for 2020 they will still hold. they will continue to support the market with economic policies. that might be some sort of twist and turns, and that might suggest a retreat and policy stimulus, but this will continue to be the thing for 2020 as well. david: happy new year. merry christmas. everything in between. do come back before valentine's day. >> ok. worde: let's get to first news with su keenan in new york. >> we start with the latest on the hong kong protests. there is more pressure on the hong kong government over demands for an independent inquiry.

a panel of foreign exports required to oversee the objectivity of the probe has resigned, this after complaints the independent counsel does not have enough power. earlier reports they cannot summon witnesses to provide evidence. court hasg appeals rejected the government's request to temporarily expand a controversial mask than, define criticism from china to declared unconstitutional. the ruling represents a setback for carrie lam with the latest local opinion polls showing public confidence in her leadership falling to 10%. the world's most profitable company makes its trading debut wednesday, but with only a fraction of stock available for investors. saudi aramco sold 1.5% of its ipo, raising $25.6 billion.

later on the exchange in riyadh, committed reports it's considering a secondary listing in asia. six people have been killed in a shooting in jersey city, including a police officer. two potential suspects in three potential bystanders. heavy gunfire rang out for at least an hour in the early afternoon. it is not clear who was behind the attack in the northeastern part of the country, but please say it is not thought to be an act of terrorism. , aung san in myanmar suu kyi is set to defend her country and a united nations cord against genocide later wednesday. the international court of justice in the hague began hearings tuesday for killings, violence, and the destruction of

thousands of homes in northwestern myanmar. global news 24 hours a day on air and at quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you. plenty more coming up. we discussed new energy investing in china's private equity space with cicc. stay with us. this is bloomberg. ♪

♪ tom: welcome back. targetaised its sales for electric cars. vehicles sold new by 2025 to be factory powered. this comes as the government tries to spur a sector showing signs of slowing down with car sales declining, a second

straight annual drop for the world's biggest automobile market. let's bring in the executive director at cicc capital. thank you for joining us on set. is this target china setting achievable, and what will it do to the ecosystem? target was out, the home market was excited about this new market, and in my opinion, i as an investor am excited about this target. , china hassee experienced soaring growth for the past decade. ev has brought new air to the sector. it is quite an interesting sector. achievable target is with new technologies, like the , lightweightology

materials, ridesharing. there is a lot of great momentum in the sector. tom: i want to get your views broadly. the government steps back in terms of support and subsidies, can the market sustain itself without government backing? >> hi am fairly positive about this. ,hen the subsidy is decreasing the policy is also having other cars.ys to promote ev 's will have ev points. if they don't have enough sales, they will have to buy points. there are other mechanisms to promote sales. also, there will be growth market andr the

demand because of pollution. also the ridesharing market, a havingoem's are ridesharing platforms. tom: you talked about some of the subsectors. which are most appealing to you as an investor? where are you looking for opportunity? >> mainly two sectors will be really appealing, electric platform, battery, electric motors, electric controllers, second, artificial intelligence and deep learning, thirdly is lightweight materials, fourth is the ridesharing. veryour subcategories are good investment categories. pick up your to point on ridesharing. you mentioned the growth rate

you expect for next year is 25%. thate to ask you how growth rate remains realistic. you have seen a decline in the number of people who use ridesharing apps in china. total active users with down 6% with didi. can you put that together for us. >> we remain confident in ridesharing. platform isthe didi the biggest, a lot of others are trying to launch their platforms. good, leading player in the sector. example forry good the ridesharing services. oems are launching

services in this sector, so we remain confidence in this sector since we have a lot of more quality, better service offerings in this sector. yvonne: obviously you are confident about the growth picture so far, but private equity investment has been sluggish for some time now. do you see any of that reversing next year? question, youhe mean private equity in terms of financing? >> yes. >> ok. , definitely it is slow right now. best equitythe

houses, they have a solid brand and a great track record, third is the projects have great financial returns for investors. even though you see the entire market is slow right now with the best ridesharing company are still getting great capital flow or investment in. to see were expecting more exits this year or 2020 in terms of these investments, ipos and exits, are they expected to pick up? >> i think they do. there is an china revolutionary, a lot of great policies in the market right now really promotes the technology, the ipos for a great technology company, so we see exits with successful ipos

in the outlook for 2020. tom: there is always a risk in china you will get bubbles, particularly when they try to align with government policies, so how'd you pick the right kind of companies that were not go pop in the next couple of years? particularly as we see consolidation in the space and smaller players getting squeezed out. >> for example, the electric platform sector, even in battery sector, we see a great consolidation in this sector. we actually see a lot of opportunities for investors when you are embracing this great opportunity. it is important you identify the great companies with really high entry barrier, technology entry

of barrier, and also great product with first-tier customer boundaryso the entry for investment will be relatively high during the consolidation. tom: great analysis. thank you for coming on the set. lots of changes. thank you for your thoughts. coming up come the latest election polls suggest the prime minister boris johnson's conservative party may want a smaller majority. we take a look at how that is affecting the pound. this is bloomberg. ♪

yvonne: sterling traders are nervous ahead of that u.k. election, the latest poll failed

to provide clarity. results show a potential majority dropping to 28 seats. ing, to sayower the least. big deal we have a slight narrowing? not aiously it is positive for sterling. off on this news. it is smaller. the majority could be as big as 84, but also there is a chance of a hung parliament. this polling was the most accurate and 2017. it is a big survey, and that is why the market is focused on it.

the 68 seat majority is now down to 28 seats. he have to think they are 85 seats that are quite close in contention. those could swing one way or the other, so you could see the majority going back to hung parliament. it will be harder for boris johnson to get his brexit deal through. tom: let me, help me understand this. if you get a majority for the onies, and you're out january 31, that is bad for britain's economy according to the experts. if you get a hung parliament, then brexit gets pushed further down the line. for thehat is better economy and sterling longer-term? >> this is the catch.

you don't know how it will play out. most economists surveyed will say if are going to leave, it is not ideal, but better to leave with the deal the no deal. the worst case scenario is a no deal brexit. if we have to leave, they will say better to have a deal. ideally the markets would be happier if it were not in the eu at all. the catch is if you have a hung parliament and get anything ,greed on, second referendum article 50, there has been no agreement. that is definitely not good for sterling. number what is the magic we have to see on thursday to be satisfied here?

where does that gap have to be? >> anything over 40 the market will be happy. definitely over 50. will take itet given all the uncertainty heading into the election. below 30 to 40 would be negative. thank you. yvonne: we will have special coverage of the u.k. election. join us live from london 6:00 a.m. friday hong kong time, 9:00 a.m. in sydney. tom: for a quick check of the business flash headlines, barclays capital says uber and lyft are well positioned to make a profit. 2.5team analyzed t billion trips in new york city and said they could charge more to make an operating profit with only a modest impact on right

volumes. uber shares have failed to take off since listing, down nearly 39%. hasp italian coffee roaster plunged the sale of a minority shake support expansion in the united states. stake thatr a 20% would value the firm had more than $1 billion. wasctober, it confirmed it expanding his presence in the united states. ,hecking in on mainland markets the csi 300 down 0.1%. peter navarro pouring cold water on the report the u.s. decided to hold off on those december 15 tariffs. the other flat as indexes up about 2%. david: 30 minutes into the session, that is how things look. a cold, crisp winter morning.

shanghai, slightly better, although hazy. you hope it is fog. show.ore coming up on the this is bloomberg. ♪

rishaad: almost 10 a.m. in hong kong and singapore. inthe u.s. and china are daily contact on trade. new tariffs being delayed. the fed'skets await final policy of the. how the trade war is affecting the u.s. economy. rishaad: is india the home of the next wave of tech unicorns.

david: next four days will be key. we have the fed. in 16 hours, we have the u.k. election. trade headline remains the key focus. conflicting messages from kudlow and navarro. rishaad: i just say it is the new normal. this is what we go. misinterpretations. we had a muddled start to the trading day. earnings positive. hang seng to the downside. nikkei to the upside but at the moment it is moving to, slightly down. australian, constant there. data showing we had a deterioration with regards to that. it