paul: good morning. we are under one hour away from the market open in japan and south korea. shery: welcome to daybreak asia. hour,p stories this talking trade. steve mnuchin says the interim deal with china is in final review and will be signed and made public in the new year. optimism too over the new nafta. the agreement passes the house and is set to add .5% to gdp growth.

and the next bank of england governor is to be named later. say fda head and you bailey is in pole position. paul: let's check on how we are doing in the markets. australia just opened. we have a staggered open, so very much early days. ever so slightly higher. new zealand continuing to build on record highs that it reached thursday, up .5% right now. nikkei futures looking kind of flat. we are of course waiting on numbers, cpi numbers for november, expecting to see a slight uptick mainly inspired by the sales tax. we also have futures just coming online, looking flat as well. let's check in on the first word news and get over to jessica summers. central banks made headlines with policymakers in swedenying on hold but

swimming against the tide and ending half a decade of negative rates. bank indonesia kept its key rate unchanged for a second straight month, saying the economy and exports will rebound in 2020. the boj also held as expected, with the governor echoing the more optimistic tone of his colleagues at the fed and ecb. government'se economic policy and stimulus package is appropriate, and the synergy effects of the fiscal package and the bank of japan yield curve control are quite significant. i see this as a positive policy mix. jessica: the new governor of the bank of england is expected to be named later friday, with eft saying the current head of the financial conduct authority, andrew bailey, is the current favorite. the process defined a successor to mark carney was delayed by the political turmoil around brexit and the snap general election. chinese president xi jinping will make a speech in macau

later to mark the 20th anniversary of the enclave's return to mainland rule. his visit highlights the differences between the beijing-friendly gaming hub and the unrest in hong kong across the estuary. thehe start of his visit president praised macau for implementing measures such as patriotic education schools and colleges. and new south wales has declared a state of emergency, as bushfires burn out of control amid record summer temperatures. the last such declaration ran for one week in mid-november and it was the first implemented in the state since 2013. six people have died in the fires, and more than 800 properties destroyed. sydney is also taking an economic hit, with tourist groups being redirected to other parts of australia. 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'm jessica summers. this is bloomberg. you. thank trade tensions appear to be clearing up for the u.s. with the phase i china deal to be signed month. now the usmca is passing through the house. this could boost market sentiment in asia this friday. let's ask toby lawson. thank you for joining us. we had some comments today from steven mnuchin talking about the usmca. gdphinks it will add .5% in growth to the u.s. is that reasonable? toby: i take his assessment at word. you had phase one of the deal and you are adding more potential. what we get down to is the question whether that is enough to forestall a cyclical slowdown, potential recession in the middle of next year in the u.s., which is our forecast. so we are watching data closely

but if they can add gdp for a chance of avoiding a recession. paul: the recession forecast is somewhat contrarian. what is your reason for that? toby: it is cyclical, to be fair pete we have been expecting it for some time. when you saw third quarter economic data come through it was aggressively negative. the consumer was holding out. --t recently retail sales this is not unusual for us to see if that continues, even if we see a flattening of the activity, consumer retail sales and potentially employment filling up a little bit, that -- shery: what would that mean for equity markets already at record highs? toby: that is a good question. short-term it is hard to see selling equities, even though they are at record highs. over the course of the middle of next year your forecasting potentially 10% to 50% drawdown. given that we see the -- 15%

drawdown. we think equity markets will finish where they are. the outreach target people are talking about, it is the potential target short-term as we get exuberance out of the new year terms and trade talks. our forecast is potential 10% to 15%. shery: midyear next year. so would that be a good opportunity to add to your position, especially given that usually election years have been pretty good for u.s. markets? toby: that is a good point. they are historically good. this one could be interesting as we have seen the most interesting time in u.s. politics over the last four years. hard to see historical parallels , but it is a good point. even if we get a drawdown based on economic activity we expect

it to be short-lived and equity markets to continue to be supported overall. paul: we have been having quite a few discussions about the reappearance of inflation and inflation risks. seems like a strange thing to be saying. stille phillips curve relevant or broken? toby: it is still broken but there have been signs. it is premature to say we will see inflation breakout. but if you are an investor looking -- investments are quite attractive in terms of price. so if you are looking for some inflation, it is not a bad time to buy on the basis that you will get a cheap. paul: how do you like the look of emerging markets right now? this environment of a weakening u.s. dollar. the: yes, certainly on faces of the growth grant -- gap and potential u.s. dollar

overall being weaker and allocation for the u.s. dollar and other currencies would probably be a little bit more broader than has been in 2019. one of the great drivers in our region of course is china. if china can receive it 6% target and maintain indices in the economy as needed it should be a good outlook for e.m. shery: we have seen chinese markets rally this year. cadet continue next year, especially when most people expect stimulus but not broad-based stimulus like in the past? toby: i think they will continue to stimulate the economy as needed. that will clearly move parameters towards targeting growth. it has been well achieved. equity markets and china have done well. they have outperformed basis on a catch-up. it is all about transmission mechanisms for chinese authorities to try to get stimulus in without necessarily creating broad stimulus across economy. where credit markets need to have support, the chinese

authorities will try to drive that in to maintain economic growth towards the target of 6%. historically they have been able to achieve that at the level of the growth. stimulus,king about let's talk about the fiscal measures we saw in japan, and potentially we could expect something out of europe as well. yourould that factor into calculations of market levels at this point? seen,so as we have central banks have been very much accommodating to monetary policy in this full growth period. in europe and japan they have run out of steam in terms of monetary policy. starting to pivot towards fiscal stimulus, and that will sustain growth. that will probably strengthen of course potentially inflation on the one hand, in those particular economies, and also in regards -- the fed will be more likely to

be accommodating, potentially slowing -- supporting a slowing u.s. economy. the euro and yen could outperform relatively speaking. some parameters we are looking at into the new year. paul: how do you like the look of aussie equities in 2020? there are a few domestic factors at play. toby: the australian market, the growth andsub-trend earnings have been ok. we can expect aussie equities will struggle a little bit. we have seen the overall economic outlook will be benign in australia. there will be stimulus coming through from the government, but they are committed to getting a surplus. until we get the midyear budget around may, we are unlikely to see very aggressive stimulus from the government will help the markets. right now the parameter suggests ok aussie equities but nothing too much. lawson, thank you so much for joining us. still to come, house approval

for the new nafta. we are going to take a new look next at the usmca. shery: and in the shadow of impeachment, we are live from los angeles for a preview of this week's democratic party debate. this is bloomberg. ♪ s bloomberg. ♪

paul: this is daybreak asia. is onepresident trump step closer to his new nafta agreement, one day after voting to impeach him, the house has passed the u.s.-mexico canada free trade agreement. let's go to washington and bring in joe. given we are not expecting a senate vote on the usmca this year, what is next for this deal? joe: it will be going on to the senate in january when lawmakers return from the christmas holidays. it is really in no danger. it passed the house by an overwhelming majority with

support from both parties. democrats in the senate and republicans as well have said they are ready to take it on. the problem will be that they will be occupied with the impeachment trial of president trump. once they begin that they cannot consider any other issues or legislation, so they will be focused on that. so it probably will not be until late january, possibly even february before it actually gets past. however, there is really no danger of any backsliding. this has full support of the white house and both parties. so, it is a deal that will go through and it has been pretty much widely hailed, certainly among business groups, and as well has support of labor groups which were key to bringing democratic votes on board. paul: in terms of that impeachment trial, joe, nancy pelosi holding off on sending those two articles of

impeachment to the senate as she awaits from rule changes for the trial. what exactly does she want? joe: she has not specified exactly what she wants to see. ons is a bit of gamesmanship both the part of her and senate majority leader mitch mcconnell. he just spoke on the senate floor a few minutes ago saying he does not see what leverage democrats have by offering to hold up something they don't want to deal with in the first place. leadersenate minority chuck schumer, the democrat from new york, has been pressing to get some witnesses set up before the senate trial starts. mcconnell says he wants to proceed with the same rules that were used any clinton impeachment trial in which they settled the initial issues on procedures, timing and such, and then went on later mid-trial to

decide if there would be any witnesses. pelosi right now is just holding back. she did not want to send it over immediately anyway because, as i trigger would say -- the senate trial into place and forestall a few things. do a fewe today had to bills. this will probably play out over the holidays as they go back and forth. chuck schumer and mitch mcconnell both had a meeting andy to discuss the issues, they essentially said they would defer it until they return in january. not clear where this goes or what even pelosi wants ultimately to get out of it, but it is a negotiating point for both sides that they will be using, and you must remember that the political campaign for the 2020 election will be getting in full swing at the start of the year, so this may

well play into that as well. shery: joe, thank you. staying with u.s. politics, the sixth democratic debate takes place a little longer -- later in los angeles and in the shadow of the historic impeachment vote. kevin, only 24 hours after the historic impeachment vote. how long will this shadow of impeachment be at this debate? kevin: it will definitely be casting a shadow, particularly for several of those candidates on that stage tonight where they are going to have to be participants in the senate trial. people like senators elizabeth warren, bernie sanders, amy klobuchar, and others. on the issue of impeachment virtually every democrat on the stage is in agreement. they agree that they feel the resident should be impeached.

rilli -- but the nuance on their policies, the issue whether to utilize tariffs as a negotiation tactic with china, mexico and canada and europe, that is where the crux of differences have emerged in this field. this is an opportunity for former vice president joe biden to solidify his front runner status. he is emboldened by a new poll released in the last 24 hours my nbc news and the wall street journal which has him at 28%, in the top 5 -- top spot. the next highest is senator bernie sanders, who has been consistent in his pole numbers at 21%. elizabeth warren and pete buttigieg, they have to continue to jockey each other to some extent to make the case that they will be able to continue on and pick up a win in iowa and new hampshire, the early primary states. paul: who are we expecting to be

the breakout candidate tonight? that there, i think are several reports that indicate senator amy klobuchar is poised to have a significant night. she has been steadily trying to drum up grassroots support in the early caucus states like iowa. someone like andrew yang is another individual who has been consistent in terms of his appeal. we are in california which is a democratic stronghold. andrew yang support among people here is incredibly, incredibly strong. and his supporters are going to try to embolden and make their case from yang's perspective that he can be a top-tier candidate and not just someone from a social needed -- media dynamic, online campaign. paul: kevin, keep an eye on the democratic debate for us. still to come, back live in macau ahead of the major speech from president xi jinping.

this is bloomberg. ♪ s bloomberg. ♪

shery: this is daybreak: asia. president xi jinping is set to get a major speech in macau later on friday. 20 year anniversary of his return to chinese rule. rosalind chin is in macau for us. what are we expecting to hear from the president? xi jinping is likely to talk about the further developments of macau and how to further diversify. there have been reports about the establishment of a financial market. during a trip last night he had been giving macau high praise saying they have earnestly been

implementing the 122 system, and also implementing measures in the interest of the city and nation. he is probably referring to the implementation of something called patriotic education in schools and universities, and also the passing of a security law. he also referred to the fact that macau has resisted external interference. this is a slightly veiled, perhaps not so veiled reference to hong kong, for which beijing has recently been saying foreign forces have been influencing hong kong unrest. he did not directly or for to hong kong but he has alluded to it. tojinping also expected announce macau's third chief executive. shery: macau has suffered little from the unrest that has gripped hong kong. why are we seeing this sharp difference from hong kong and

macau both politically and economically? it is quite a different legacy. they both had colonial masters for a time but one the riddance left hong kong the left a pretty international financial center. it had judicial structure. when portuguese left macau, essentially it was still a gaming enclave. it was dominated by one person, one country. it did open up the game industry in 2002 and their economy really took off. but politically macau has been much more stable than hong kong. it is going to have its third chief executive today. it is fairly stable in comparison to hong kong which has seen a succession of chief executives, some of whom were very unpopular with the public. also a slightly different structure in that its political part has been different. a much stronger pro-beijing force in macau.

demographically there has been a huge influx of people from mainland china to work and live here compared to hong kong, where the influx of people coming in from china has been much smaller in comparison. economically, they rely on macau for gaming. already dependent on huge part for china because the mac a nice government gets 80% of its revenue from gaming. that means it has been keen to embrace plans for the greater bay area, a plan beijing has been moving forward. politically and economically macau and hong kong are quite different. bear in mind in macau, in basic law there is no reference to direct elections. a key element is missing. in beijing eyes, macau is essentially the very model of how one country, two systems should work compared to hong kong. shery: rosalind chin in macau,

thank you. let's not get a quick check of headlines. nike investors are a tough crowd to impress. despite posting quarterly results that passed wall street estimates, shares dipped in late trading, suggesting investors were looking for an even bigger upside surprise. it is nothing new for nike. the company has been estimates in every quarter but one going the stockd-2012, but has declined about a third of the time. paul: goldman sachs is said to be negotiating a settlement for its role in the 1mdb missing scandal that would include omission -- we are told the deal would include a fine nearing $2 billion. they are separately in talks with malaysia for a payment of $7.5 billion. start an asset management business in china with one of the country's biggest banks.

the investing giant has entered a nonbinding agreement to take a majority stake in the new unit, according to someone close to the move. mhe arrangement would see the develop for local chinese investors. paul: an australian cricketer has been the most expensive acquisition in the league. he paid $3.1 million at a player option. month cricket tournament between international teams representing different cities in india and attracts the most fans of any cricket league in the world. ahead, japan's consumer prices may have picked up in november. we will break the data down for you next and check the markets and have an update on the latest news as well. this is bloomberg. ♪ g. ♪

shery: breaking news out of japan. we have japan bpi numbers year on year. we are seeing a growth of .5%, in line with estimates for the month of november. accelerating numbers from the previous month. when it comes to the core cpi excluding fresh food year on year prices grew .5%, which is an acceleration from the previous month, again in line with estimates. core cpi, take out fresh foods energy, year on year growth of 0.8%. it is meeting expectations. growing 0.8% instead of only 0.7%. although we do have to mention that of course we do have higher

sales tax that was applied to back in october. that was applied to tilly's mobile phone chargers, so that could have reviewed it -- provided a boost. overall broadly speaking the picture is still low and slowing inflation. bloomberg economics still in -- expects core inflation to slow down towards the end of the year. at the moment core percent -- core cpi, .8%. let's cross to jessica summers for the first word headlines. jessica: washington has confirmed the interim trade deal with china will be signed and made public early in the new year. treasury secretary steven mnuchin told cnbc the accord is undergoing a technical and legal review, but will be ready for signing in about two or three weeks. when you should also said the new north american trade agreement, the usmca, will add .5% to u.s. gdp growth. trump want president to know if speaker nancy

pelosi's decision to delay sending the impeachment articles to the senate means that he has not technically been impeached yet. the white house view is that if a president has been impeached, the senate should already have jurisdiction over the process. president trump says it is unconstitutional for pelosi to not send the articles to the senate. boris johnson is promising a new golden age for the united kingdom. that is a begins as what is being described as a fast-track process for ratifying the split from the european union at the end of next month. he also wants to move his agenda on from brexit. he announced the legislative program that includes tougher prison sentences, a crackdown on foreign spies, and more funds to the national health service. nafta'-- nasa's plan to resume flying faces a major test friday as boeing prepares to test its star liner rocket.

it will make its first ever trip to the international space station from cape canaveral on a mission that could see a manned flight in the coming year. nasa has relied on russian rockets to reach the iss spins -- since the space shuttle retired in 2011. 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'm jessica summers. this is bloomberg. shery: again, those breaking numbers out of japan. the headline inflation number growth of .5% for the month of november year on year. core cpi excluding fresh food and energy growing 0.8%. it is now at the highest level since april of 2016. joining us from singapore is jessie lu. figures of these price were affected by that sales type

-- sales tax hike we saw in japan? i think the impact of the sales tax hike inflation has been quite modest so far. at the previous tax hike in 2014, it resulted in significant volatility in inflation. headline inflation almost doubled in the month tax was increased. but looking at it this time although the sales takes -- tax hike would likely put pressure on inflation, but it has been offsetting the upward process. have seen lower mobile phone charges have resulted in dropping price pressures. so that is contributing to the muted price inflation impact. shery: still nowhere close to the boj to percent inflation target. we have seen the boj hold steady. how much will the new fiscal

measures, more than $120 billion worth, will help support the economy? jessie: it is true. i think the inflation is still far away from the 2% target set by the boj. and i think one of the reasons for the low inflation is the deflationary mindset japan has been pretty hard to get rid of. so that has been one of the structural forces weighing on inflation. and the recent fiscal measures by the japanese government has indeed provided the boj. fiscal measures came at a time where monetary policy hit is limits. this provides much-needed support for the economy, so we expect the boj to maintain his commitment to current easing policy unless there is further deterioration of economic conditions. paul: there are other structural

headwinds for inflation in japan as well, not the least of which is demographics. everybody but the boj seems to accept that this 2% goal was really unachievable. is it time to adopt a range? true,: well, i think it's the demographic issue is also one of the structural headwinds that has been weighing on japan's inflation figure. stillthink japan should becauser the 2% target, a lower or higher inflation target probably will not give them better results. provide thet would results? what we really light a fire under inflation in japan? because nothing seems to really be having any effect at all. think when the monetary policy hit its limits, it is possible, or more

important to get the fiscal policy to provide support for the economy and to address some of the structural forces that have been weighing on japan's inflation figure. shery: let's talk a little bit about those fiscal measures and what that will due to the government debt load already. this gtv chart on the bloomberg shown japan's debt to gdp ratio is around 236%. so why are people there not more concerned about this? jessie: well, yeah, i think it is true, japan does have a huge government debt burden, but we believe it is also still kosher for them to introduce fiscal measures to help smooth out some short-term volatility due to the sales tax hike. to fiscal measures will help address some of the impacts from the sales tax hike in the recent

natural disasters. in the long run it will help strengthen the supply-side in our view and perhaps boost productive capacity of the economy. shery: and of course we have now seen the fiscal measures, we have seen the extent of monetary easing as far as the boj can do at the moment. there was another part of the three arrows of economics, structural reform. how has that gone so far? jessie: looking at the structural reform, i think it does show some results. the labor market in japan has been tightening. the unemployment rate has dropped to a multiyear low. and so, it shows that the labor market is producing some results, but the wage growth has been quite disappointing. so i think the labor market reform has to continue, and to drive a more sustained again in wages.

lu, thank you. later friday we may be told who will replace mark carney as bank of england governor to help guide the u.k. through brexit. the financial times says the favourite is the current financial conduct authority chief andrew bailey. joining us now is bloomberg opinion columnist john authers. tell us a little bit about bailey. he spent three decades at the boe? john: yes. he is thoroughly an insider and obviously thoroughly qualified. he knows what he is doing. recently also more been the head of the fca, the financial conduct authority, which has some -- it used to be part of the bank of england's over -- financial oversight. it was formed by tony blair 20 years ago. the thing that is surprising about this is that the last year

that has been quite a number of embarrassments for the fca. once a very famous star fund manager in the u.k., his fund group crashed spectacularly this year. very scandalous circumstances. there have been a couple other nots where people were entirely on top. which is why he has gone down the list of runners and riders when people were working out who would get the job. shery: do we have any idea at this point how he would deal with monetary policy, given we see the u.k. economy stagnating? some people say the boe did not move this week but they could cut next year. john: i think the critical point, it will not surprise you to learn that any appointment being made by politicians in britain is guided by brexit more than anything else. one of his main competitors for the job apparently was ruled out

because he had been quite critical of brexit in public in the past. i have been looking carefully through the records for the last hour or so. i cannot find anything negative that he said about brexit, but i think the critical point that people were looking for is that if the bank of england needs to ease the process if things get difficult in the forthcoming negotiations over brexit, they need someone they can rely on to do that, but is not someone who will really rock the vote it comes to negotiations over the relationship between the city of london, the all-important financial services sector of the u.k., and the eu. in terms of monetary policy, as far as i can see we have no particular reason to see that he would differ in any way from the policy we have a nice to under mark carney. if you want to someone who would have been a departure, that was the other main candidate, the former fed governor kevin walsh, who has at one point, he was a

rival to get the job here at the fed. he has a representative -- reputation as a hawk which is not something i think would be terribly wise for the u.k. to try until brexit is well over and done with. kevine critical point for is he was with john osborne, david cameron, and who is not friendly with boris johnson. so i suspect this is more about politics than monetary policy that he got this job. paul: there was an opportunity here to strike a blow for gender diversity, but the chancellor appears to be letting that pass in by. john: as far as i am aware, andrew bailey is still male and he will be when he takes over the job. yes, at one point it looked like the leading candidate was a longtime advisor, and the briefing that my former -- full

disclosure, i worked there for many years. the briefing my former colleagues had been given a she was told she had been too anti-brexit and her public pronouncements which is why they decided against it. so i am sure boris johnson, like many other people, would prefer if they were equally qualified men and women, to take the woman. might trumpfor him, even gender equality when it comes to making appointments. that is my best guess as for why she waspened, and why the most likely candidate. but brexit trumps everything else. paul: all right. john authers, thank you for joining us. let's get a quick check on how we are standing in terms of market. we have been trading in australia a little over 40 minutes.

currently we are looking a little flat right now. most sectors are performing reasonably well. industrials leading the way higher by almost .5%. new zealand continues to build on gains, posted a fresh record on thursday, now higher by almost .1%. nikkei futures improving a little, now also higher. s&p still looking kind of flat. still to come, nike's gross margin squeeze spooks investors. we put the sportswear giant's earnings through their paces, next. this is bloomberg. ♪ this is bloomberg. ♪

paul: this is daybreak: asia. failed to impress investors when it posted earnings after the bell. it be earnings and revenue but missed on gross margins, citing tariffs as part of the problem. su has more on the story.

but the stocks hit a record in the regular session. su: it has been on a tear, which may be why investors expect that even better news, because the news they gave was already strong. after hours and rebounded a bit from its initial drop of almost 3%. look at the headline, profit rising 32%. beat on sales and profit, and manage for the most part. you today it is up 36%. for the most part it had very strong news. the tariffs did trim the gross margin. that appears to be an area of disappointment. but they boosted sales on 10%. so clearly all the trade when headlines and the headwinds were not as big a problem for nike as for other companies. a couple negatives that could have really impacted investors. those profit margins, as i mentioned, they expanded to 44% which was short of estimates.

they have certainly grown as the company also focused more on selling direct to its customers. also it seemed to have high inventories. nike also had some bumps and scandals throughout the year. it named a new chief executive. as you may recall, it drew criticism from vice president pence for not getting involved or speaking out against the hong kong protests. su, your points on the trade war, china played a big role in the jump on sales. su: very big. greater china is its greatest growth region. in north america sales have been strong but lower than a year before. sales were about 5%. take a look at the last 90 days of the stock. sales momentum is really what has pushed this stock to a record, which again, shery mentioned we sought the close of

the regular session. analysts do see that sales growth continuing. and part of the reason you saw in the stock after hours come off its lows was because the conference call went into some of the strengths. north american sales 5%appointed slightly, but up from the previous period a year ago. but sales in china were double digits, up some 20% year-over-year, and that is a sign of real growth. guided forward sales will be strong going into the third fiscal quarter for nike, and a lot of analysts had already put out notes ahead of the earnings pushing the stock higher. they see the sales momentum continuing. paul: su keenan thank you. tiffany & co. also sees sales growth in china continuing despite the weakening economy. this, as consumers curb overseas

luxury purchases and spend more money at home. the ceo spoke with us and explained his plans to expand the business in china. i see not really increasing the number of stores but increasing the size and the experience that we provide our customers in those stores. and i think this is really the ultimate example. experience that is truly compatible with our new york flagship in terms of public assortment that goes all the way to a permanent collection. >> will you be adding any stores next year? >> very few. that is not the focus of the growth in china. what is very important this year has been the launch of china, a commerce-enabled.

this is very important for the three cities where we do not have a store. not to compromise on the experience. >> sales have been very strong in china. what is your outlook for next year? can you sustain that strength as the economy overall starts to slow? >> as you know, the weaker renminbi and all the efforts the chinese effort has done to increase consumption, to anrease -- of course it's incentive for chinese customers to buy locally instead of flying to japan or europe for those purchases. digitat least double growth for you in 2020? >> yes. tom: do you look to reduce your exposure to hong kong at this stage, given that mainland

tourists have effectively dried up and the spending power there has plummeted? in myave seen hong kong last 25 years in the industry going through amazing moments and difficult moments and then bouncing back. so, i am really confident about fact of the the future role in the luxury world. tom: as you look ahead to the holiday season, is this going to be a strong holiday season globally? productse several new like the men's line, like a new er line of watches for men and women, and plenty of owner units that have been launched in october. i expect them to fuel the holiday season. i have to say the initial results of these new products hope thataging, so i

the support of customers will continue. tom: you obviously will be part of the lvmh family. that deal is likely to close next year. how do you think that will change the strategy? >> it will be of great satisfaction for existing shareholders of tiffany, but also thinking for the future of the brand in terms of growth, in a line that has always been the tiffany line, the leading luxury jeweler in the world. tom: where are the obvious synergies you see? >> in this industry the real value comes from the increase in sales and expansion of the browned. and i think this is really the as it has been, for all successful luxury band -- brand. the takeovere once happens and is completed, do you

stay on as ceo? >> this will be in the choice of the founder. shery: the tiffany cl speaking exclusively to tom mackenzie. don't forget a few are away from your screen you can always find in-depth analysis and big newsmakers on bloomberg radio, now broadcasting live from our studio in hong kong. listen on the bloomberg app or bloombergradio.com. this is bloomberg. ♪ ♪

this is daybreak: asia. i am shery ahn in new york. paul: i am paul allen in sydney. let's get a quick check of the latest business headlines. more bumps on the road for uber in europe as it lost another ruling in germany after a court and it from processing orders for the company through its app. the business model is anti-competitive and lacks enough control over some of the

practices of german companies that users. customers can still order regular taxis via the uber app. shery: there is less time for luxury watch buying in china. they fell after switch watch export figures showed an unexpected slump in mainland sales and week trends in hong kong. despite a year of economic uncertainty, luxury demands have shown resilience, but analysts are more worried this time. it has prompted a first round of sector earning downgrades in more than three years. and --ech companies tivo equity athe combined combined value of $2.4 billion. it values people shares at a 21% premium. tivo shareholders would own 54% of the company which would be run by john kershner. tivo surged. still to come in the next hour

of daybreak asia, richard yetsegna join us to discuss the outlook for asian potential banks in 2020. we have the market open in japan and south korea next. this is bloomberg. ♪ his is bloomberg. ♪

haidi: good morning. i am paul allen in sydney. it is as major markets have dressed up for trade. -- just open for trade. shery: welcome to "daybreak asia ." our top stories this hour, xi jinping prepares to mark 20 years since macau returned to china. brings unrest to hong kong. black rock and another company are in talks for a management business in china alongside one

of the nation's biggest banks. indian bands protest groups and cuts communications and the internet. on across the country. paul: alright. we have the market open in japan and south korea. if we take a look at the nikkei, it is higher by about a fifth of 1%. encouraging cpi numbers. .8%. that is the highest since april 2016. if we take a look at the topix, that is higher by .1%. the yen holding fairly steady in the japanese 10 year yield above zero. shery: take a look at the kospi and australia and new zealand. the cost becoming online higher, .3 percent. of course, this is adding to gains we have seen in the past session. it closed at the highest level since may. we are seeing the korean won also gaining ground at the moment against the u.s. dollar.

this coming on the back of foreign inflows we have seen recently going into the year-end. the korean government has cut their growth forecast for this year and next year but they have signaled that economic slowdown is bottoming out. the asx 200 at the moment down .2%, losing ground for a third consecutive session. we have seen the aussie dollar after seeing its best gain in a week. we have the unemployment rate dropping and jobs growth beating the highest estimates, and now, the kiwi stops at the moment unchanged but this of course after closing at a record high. let's bring in our mliv strategist, mark cranfield, in singapore, to dissect the market. wall street giving asia a positive start to the day, of course, ending again on record highs. is it going to stay strong into year-end? investors are now

thinking ahead to the first quarter of 2020 and where they want to put their money in relation to how they are finishing off the year. there must be a reasonable amount of optimism around the trade war. it is largely getting behind us. we have had more comments overnight from stephen mnuchin emphasizing that this trade deal is pretty close to being finalized. there is not too much more to worry about on that front. we have also got the u.k. elections out-of-the-way so in terms of major risk events, there's not so many ahead of us, and people can get back to thinking about where they want to allocate equities versus bonds and other asset classes. equities at the moment are in a pretty good decision. we have had lots of voices in the last few days saying they feel fairly countable with the risk environment and that will be good to start the year faculties. we will probably see a quiet-ish finish to the years. people start your range their portfolios to try and maximize the areas where they see gains next year.

for example, we have seen recent reports that the rams are coming back to life. good for asia in general. you will start to see some adjustments going on where some of the laggard markets start to do better and certain sectors, which were falling behind, will see new interest or generally speaking, people will start looking ahead to 2020, thinking it will be a good first quarter. and that generally favors equities and that is not an unusual way for a year to start. much more optimistic than we were 12 months ago and we had such a terrible end to the last year. we are looking ahead to people putting money to work and that should be good for 2020. paul: china's prime loan rate is going to be in focus again today. the expectation seems to be for another gentle trimming, right? mark: indeed, we saw the 14 day repo shaved by five basis points this week. he has been a general trend from

the pboc that they are gradually cutting away all the different monetary levers they have. it's part of a process going on to get people used to this different tearing effect. it comes towards the high-end of the range to get people used to the fact that rates don't need to go any higher than that and if they can trim it a bit more, it lacks encouragement. this is partly because they want to avoid any crunch at year-end. it is where they are streamlining monetary policy for the period ahead. they have not yet got around to an official rate cut. it is a possibility for the first quarter of next year, but they are trimming away with rrr. we expect another reserve ratio cut early in the new year. it could come in the middle of january, possibly before chinese new year even. there's a number of things on the cards. lowering interest rates through

all the levers it has, to keep liquidity going. do as much as it can to sustain some kind of recovery in the chinese economy. the government stimulus has been very slow to act on the chinese economy so there's a bit more emphasis on monetary policy during the job and the prime loan rate will be another factor in helping to get people used to the idea that the pboc is doing all that it can to help stimulate the chinese economy. cranfield in singapore, thank you so much for joining us. i want to get you over to macau, seeing at now, we are flag raising ceremony, marking the 20th anniversary of the return of macau to china from portuguese rule back in 1999. president xi jinping is of course in macau as well. he is not expected to attend the ceremony, but rosalind chin is right there in macau for us. what are we expecting to hear from the president when he speaks later today?

jinping will be making what is considered to be a big speak later today. he is likely to be talking about the development of macau, especially efforts to push it beyond gaming. there have been reports of course of establishing a financial center here. financial markets based on the yen denominated one. that could be in the works as well as other things. and how it will evolve as part of that bigger beijing plan. well, xi jinping has been praising macau, saying it has been earnestly implementing the one country to systems plan. two systems plan. macau, in the last year, has been introducing patriotic indication in universities and schools. it uses books from the mainland. it passed a security law which was rejected by hong kong a few

years ago. in the eyes of beijing, macau is fulfilling its role and the very model of one country, two systems, that you want to see, compared to its neighbor, hong kong, has been causing quite a few headaches for china. directly toefer hong kong but he said macau has external interference. beijing has regularly said that hong kong has had foreign forces fomenting unrest and this is a failed reference to hong kong even though he did not mention hong kong at all so far. shery: right now, viewers watching the flag raising ceremony in macau, happening at the moment. but tell us, macau has been rather politically stable, right? we have not seen protests since 2014 or so. so why the big difference with hong kong? even then, the

protests were fairly small. with14, this year as well, the six months we have been seeing which has been ongoing. financial and economic futures as well. withifference largely lies the legacy left behind by the colonial masters when the british left hong kong and there was an international financial center at work here in hong kong. in macau, it was a gaming enclave. not only was that dominated by one person, the chinese authorities did open up the gaming industry to outside players. have seen other gaming players other than sammy houck, who dominated it. that helps macau's economy kick off in the last 20 years or so. however, of course, this has helped them economically. on china,ery reliant

even more dependent because of its reliance on gaming and that is partly one of the reasons it has embraced the greater bay area plan. politically, it is much more stable. you will see the chief executive being inaugurated and that is because the last few sat for 10 year terms, unlike in hong kong. been veryem have unpopular with the public. demographically as well, at least half of the population here in macau comes from or was born on the mainland as well. again, pointing to a much more pro-beijing stance in all of that. back to you. rosalind chin in macau. thank you for joining us. let's check in on the first word news with jessica summers. jessica. the newgo -- jessica: governor of the bank of england onexpected to be named friday. andrew bigley is the current

favorite. the process to find a successor to mark carney was delayed by the political turmoil around brexit and the snap general election. central banks in asia stayed on hold but sweden's riksbank swimming against the tide and ending half a decade of negative rates. bank indonesia kept its key rate unchanged for a second straight month, saying the economy and exports will rebound in 2020. the boj also held as expected with governor haruhiko kuroda echoing the more optimistic tone of his colleagues at the fed and the ecb. >> i think the government's economic policy and stimulus and theis appropriate synergy effects of the fiscal package and the bank of japan are significant. i see this as a positive policy mix.

jessica: the indian government has banned public protest and shut down communications and the internet in some areas as anger at the religion-based citizenship a lot of rages on. curfews have been imposed in the capital, new delhi, as well as the entire state. a mobile carrier confirms it has cut internet, voice, and sms services in delhi and elsewhere. panther" ise "black back in the news with the u.s. department of agriculture nda as awhawaka free-trade partner. the two nations apparently traded, including ducks, donkeys, and dairy cattle. questions were raised in the media that prompted the joke that they are in a trade war. 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 jessica summers. this is bloomberg. ahead, why global

investors are underestimating japan's contracting bond sales, which are set to fall for a seventh straight year. we will be live in tokyo. paul: up next, richard singer joins us as we ask whether a flurry of central-bank easing means we have reached peak dovishness. this is bloomberg. ♪

shery: breaking news at the moment, we are seeing nuclear technology now diving more than 8%. a hostile takeover bid for that toshiba unit. ceo rejectediba's now fallingo -- about 9% at one point. priced is a highly nuclear equipment provider and he is basically not selling and

price is not the issue. life or death situation for nuflare technology, suggesting the subsidiary would not be able to survive. toshiba gaining ground. paul. paul: thank you very much. 2019's flood of monetary easing has slowed to a trickle in asia this week. central banks in japan, indonesia, taiwan, and thailand, all met. our next guest says we are seeing the most concentrated period of monetary easing since the financial crisis. richard joins us now in sydney. richard, all those rate decisions, is the global easing cycle done? all those concerns about global growth, we can forget about them now? richard: we might get a couple more but in broad terms, it is done. 2019 was an incredible period.

certainly the largest since the financial crisis in terms of easing and i think central banks increasingly now are less target focused and more momentum focused because a lot of them are away from their targets. as soon as things start to get better and they have limited ammunition, they tend to pull back and hold and i think that is what we have started to see. shery: one of the thing -- paul: one of the things the central banks in developed markets are looking for -- we had a slightly positive read in japan today. are we really seeing inflation? are we just confined to unique factors around food prices, for example? richard: largely confined to unique factors around food samples. can have an enormous impact across the region and that is what we are seeing and we are seeing it in australia and new zealand in food prices and in india that will raise headline inflation a bit. i do not think that is much of a dynamic that is causing central banks to be a bit less

uncomfortable maybe. shery: what are you expecting from central banks in asia next year? are you forecasting any cuts across asian central banks? richard: only in china next year. we think the rest of the region is on hold. the trade volume cycle stabilizing globally. volumes are stabilizing. the tech cycle is turning up a bit. most countries have been quite aggressive in easing. the tech piece and piece influences china a bit less than some of the other countries in the region. china is being much more modest and cautious. region,ountries in the china is one where growth next year will still be weaker than this year. shery: we have seen november pmi's, some of the latest data out of china being pretty positive, so you do not see that as an inflection point? richard: it is an infection point but it is always --

inflection point, but it is a small one. the chinese working age population is shrinking. china is going through what is low-key relative to countries like india, but they are important and a sustained adjustment in the financial sector. issues atmuch bigger play around technology and geopolitical leadership. constraints onl the chinese growth story. paul: in terms of the general picture of banks reaching peak dovishness, we have not seen a great deal of credit growth, have we? richard: this is one of the ofues, one of the worries secular stagnation is that it is not just slower growth but less effective monetary policy and if you look at asia, even in countries which in recent years have had pretty strong credit growth, like the philippines, the impact of easing seems very limited so far. thises seem like there is

general trend where borrowers are starting to say either i am not comfortable enough about the future or i do not particularly want to borrow more. it is not so much about the price. paul: richard will be staying with us. we will be assessing options for the reserve bank of australia in particular. we have markets pricing and odds in february. we will discuss that in a moment. this is bloomberg. ♪

paul: you are watching "daybreak asia." thursday's employment figures in australia did seem to support the rba's view of a gentle turning point in the economy. a plunge in expectations for a rate cut from the rba in february. let's bring back our guest, richard yetsenga. those job numbers, always

volatile in australia, but when you look at those and start peeling it back, a lot of the growth was in part-time jobs. was there enough for the rba to get excited about? richard: i think where the market is is the rba said february is an important consideration point, which makes sense. we have the employment number this time and one more employment number in early january. suggests the rba might not go. think, stage, we probably they go in february. as per market pricing, it looks most likely after the fall in the unemployment rate. paul: phil lowe described a pretty high threshold for qe. do you see the rba reaching that threshold? richard: not next year, not in 2020. the global backdrop seems to have been part of this more somber domestic outlook in australia. the global picture of the king a bit better. the rba has done a material amount of easing this year.

go.rate cuts to takesnk that probably 2020 off the table for qe, may be a 2021 question. shery: we also have seen a very sharp turnaround for the housing market. will that affect policy at all for the rba? richard: it certainly complicates policy. it is where we are left with the supply and demand of credit, less sensitive to interest rates. we left with house prices in the exchange rate. a weaker exchange rate would be good. the problem with higher house prices is they can cause other issues for household stability and deck. it complicates the policy process rather than not necessarily making it less likely the rba boat need to ease. rba will need to ease. out: rba continues to put

these optimistic growth forecasts which get walked back later down the track. what are your expectations? richard: growth and recession risk are two different things. growth is somber. structurally, it is somber. potential growth has come down materially. uses aicial forecast framework which takes a long time to reflect that. that will take some time to come through. recessions are caused by inflation because they force the central bank to keep hiking after growth has started to slow. this time, in a sense, we have the opposite, deflation risk. it would be odd to have a recession under these conditions. the prospect of recession certainly next year with a year after is less than 20%. paul: australia has a track record when it comes to getting out of jail. is that going to be the ticket to escape another recession? richard: my commodity piece of the economy is doing very well. it is a key part of the reason

company profits are quite high and the budget is back in surplus or close to being back in surplus. unfortunately, those two things don't directly for through much of the private sector in much of the economy. a lot of the company profits are earned in dollars. shery: always great having you with us. anz chief economist, richard yetsenga. let's get a quick check of the latest business flash headlines. morgan stanley raised $5.5 billion for a third infrastructure fund, surging past its plan to target after a flood of investor demand. the global fund will invest about half its capital in the americas, 40% in europe, and 10% in asia. retirementate common fund and taiwan life insurance are among the funds, according to bloomberg data. paul: blackrock and another company in talks to start an asset management business in china with one of the company's biggest banks. they want to take a majority

stake in the new unit according to someone close to the move. the arrangement would see the firm's development distribute products to chinese investors. has becomeralia's -- the most offensive overseas acquisition. they paid $3.1 million for the -- annual two month tournament between international teams representing different cities in india and attract the most fans of any cricket league in the world. shutting down is mobile networks as protests spread. we will have the latest on the arrest, just ahead. this is bloomberg. ♪

>> this is "daybreak asia." i am jessica summers with the first word headlines. washington confirmed the interim trade deal with china will be signed early in the new year. told cnbc that the accord is undergoing a technical and legal review but will be ready for signing in about two weeks or three weeks. mnuchin said the new north american trade agreement, the usmca, will add .5% to u.s. gdp growth. lawyers for president trump want to know if speaker nancy pelosi's decision to delay sending the impeachment articles to the senate means he has not

technically been impeached yet. the white house view is that if the president has been impeached, the senate should already have jurisdiction over the process. president trump says it is unconstitutional for pelosi to not send articles to the senate. jinpingprices and xi will make a speech -- president xi jinping will make a speech in macau, to mark the return to mainland rule. and the unrest in hong kong across the pearl estuary. the president prays to for implementing measures such as patriotic education in schools and colleges. new south wales has declared a state of emergency. bushfires are burning out of control amid record summer temperatures. the last such declaration ran for a week in mid-november and was the first implemented in the state since 2013. six people have died in the

fires and more than 800 properties and destroyed. sydney is also taking an economic hit with tourist groups being redirected to other parts of australia. 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 jessica summers. this is bloomberg. a quick checket up on how markets are trading in the asia-pacific region. we are seeing a bit of a mixed picture with the nikkei falling .2%. for a third consecutive session. we are seeing communication and industrial stocks leading the declines. a little bit of profit taking according to investors ahead of the year-end holiday season not to mention the japanese yen is trading at the strongest level in more than a weaker against the u.s. dollar. the cost be pretty flat. this is the highest level since may. we have seen a little bit of foreign inflows into the korean won ahead of the year-end as well. the korean government carting their growth forecast for this year and next.

down .2 percent. consumer stocks leading the declines, and kiwi stocks holding around those record highs. we have seen consumer confidence for december rising to 123 this morning. paul. paul: thanks, shery. the indian government has banned public protests and shut down communications and the internet in some areas. citizenshipr as the log rages on. thousands are defying their ban. let's bring in dan. what is the latest? a big dayrday was where we saw protests all over india. most of them were peaceful. there were instances of violence that broke out, reports of one or two deaths from gunshot wounds. pretty much, chaotic. bringing a sense of, you know,

what is next in this whole movement. it erupted due to the citizenship law. there are things on the agenda that could further inflame religious tensions in india in the month ahead including the construction of a hindu temple razedsite that was decades ago where a mosque once stood. shery: we continue to see indian stocks touching record highs. why aren't we seeing this impact on market sentiment there? an: so far, it is just question of how far this thing will go. modi, on the one hand, has been going around courting foreign investments, taking measures to boost the economy, which has been slow of late, and help boost the stock market. the worry was more longer-term. the social tensions that are bubbling up now only get worse over time. anda is a very delicate mix a long history of

religious violence. a more sectarian nature in which hindus and muslims are constantly fighting, there's been maoist insurgents, insurgents in cashmere, terrorist attacks like the one kashmir, terrorist attack's in mumbai, so the fear is things could spin out of control. there might be more of an impact on markets and economy. it is still in the early days. the supreme court is going to examine this law. could that be a potential circuit breaker? dan: yes, that is one of the off ramps here. modi has a big majority in parliament. he just won an election in a landslide which is why we have seen measures come out in the past few months. these are all things he basically resisted during his first term in office. yes, the supreme court looks to be the main check on this right now. that decision could go a long way to seeing whether this

unrest and that we have seen lately continues. shery: thank you, our asia government managing editor. coming up next, china's president, xi jinping, is preparing to address macau. we will look at how the gambling hub is being framed as a well behaved for hong kong. this is bloomberg. ♪

shery: you are looking at a live picture of macau at the moment. we just earlier in the hour had a flag raising ceremony as the city marks the 20th anniversary of its return to china from portugal in 1999. president xi jinping, set to give a major speech in macau later on friday. joining us now from hong kong is the associate professor in the department of government and

public administration at university of macau. professor, great to have you with us. so we have seen a relatively different picture when it comes to political stability. macau has not had protests since 2014 or so while the protests in hong kong have been racing for seven months. a starke have such difference between these two cities? macau has been, very close to mainland china, incidents after the pro-beijing compete against -- and become dominant in the chinese community. the forces have become representing the chinese community and managing the chinese society together with

the authorities. been -- ition has continues after the handover, so forces can manage the society and maintain stability. this served the purpose of the one country, to systems. systems.- two that is very important. have government officials close connections with mainland china. some of them were born in mainland china and even some of born in macau and they received education in mainland china. the macau government tries to be very cooperative with the central government. so this can serve the purpose. kong, we have seen the people motivated by these ideals of democracy and freedom. what are we seeing and macau with a population of -- in

macau, especially in their youth? that thel, i think relevant status between hong kong and macau is different. of course, macau is an emerging economy right after the handover, and so, the society now is, you know, prioritized economically rather than political developments, and so, although the government has a lot of problems about we got tocy issues, maintain stability. very important for macau's economic development, so they rather would like to sacrifice part of their political right of participation in order to maintain their economic development. paul: what is the wealth gap in macau? how does that compare to hong kong?

one of the grievances of the purchasers in hong kong, among other things, the right-of-way property market. prospects for a better life for the youth in macau. eilo: yes, this actually -- hong kong and macau youth face similar problems of housing. would likeovernment to have more public housing right now. ford like to have more land housing to the people. of course, the demand is very huge. at the same time, we find that most of the housing now is being held by the local people. so at this moment, the local theunity can still tolerate housing price at this moment, so the macau government still has some time to deal with this issue. in hong kong, i believe that it is very difficult of a

situation. paul: there is a new leader in macau. he doing to improve prospects for use in macau? eilo: he actually tried to deal with the housing issue by similar tosomething the housing scheme suggested by the hong kong government decades ago and was hoping that, you know, they cannot enforce private housing. at the same time, they are not qualified for public housing. the government can do a special scheme. and hoping that this can solve public grievances on the housing issue. shery: how vulnerable is the macau economy right now given that they are so focused and centered on gambling? and you continue to see this slowdown in china? we know those vip gamblers are the ones who are really boosting

the macau economy. absolutely, the economy is going down. be a 2.5% drop of gdp in 2019. and -- but you have to accept that macau still has a very good -- at the same time, the macau government actually, you know, spends where we need to in terms of the weapon deal. we always spend two thirds of our revenue, so we still have some room that can sustain the government's expenditure in the coming years if the economy will not drop that much. shery: macau is now establishing a yuan denominated financial market. how much will this help? eilo: it is hard to say. we do not have much, you know, people working on the financial

sector, especially for the banking companies. actually, we do not have much in macau. now, we are talking about how to for the financial market in macau as well as international life. the macau market. there will be a long way to go. we don't have people working in the sector. foron't have relevant -- financial products. at the same time, we do not have space for this sector, so actually, rather than just having that at the moment. paul: all right. university of macau associate professor, eilo yu, thank you so much for joining us. still to come, blackrock joint venture in china. who else might be involved. 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 of the latest business flash headlines. shares of chip equipment maker new flare plunged in tokyo after toshiba reiterated its refusal to sell. earlier this week, they made a rare unsolicited takeover bid worth more than $1.3 billion.

toshiba rebuffed that and has repeated its position. the ceo said he is not selling and indicated nuflare would not survive outside of the toshiba company. shery: tech companies have agreed to merge. the transaction gives the company and to tea and equity value of $2.4 billion and values -- shareholders would hold 54% of the company, which would be run by the ceo. reaction.a tol: goldman sachs is said be negotiating a settlement of its role in the 1mdb missing funds scandal that would include admission of guilt by a unit in asia and not the parent company itself. the deal would include a fine approaching $2 billion which is pending in new york. goldman is separately and

talks with malaysia which says it wants a payment of $7.5 billion. fall for and japan may a seventh year despite shinzo abe's stimulus package. that is according to a vast majority of primary dealers surveyed by bloomberg. let's bring in chris anstey in tokyo. do theyal investors -- have the right perception of japanese bond issuance? little is one of those noticed facts about japan by many observers around the world. japanese bond sales have actually been falling for several years now, and the expectation is that in the fiscal year plan that will be released later this morning here in tokyo, the ministry of finance will confirm that for the seventh straight year, the total sales of its bonds sold at auctions will be coming down for a seventh straight year, so what

is going on here is the ministry of finance, you know, has been very adept at closing loopholes on taxes and they have got sales tax hikes pushed through parliament twice under the abe administration, and they have managed to boost revenue such that the need for bond sales has been reduced. the most interesting tidbit we are expecting today is about a bump up in longer dated bond sales. observers expect that 40 year bond sales will be ramped up next year, and this is very important for institutional investors that have been pushed out of this market. the bank of japan governor, kuroda, was actually calling for more 40 year bond sales just a few weeks ago, and it looks like

his former colleagues at the ministry of finance heard the call and will respond. but we will get confirmation later this morning. ministryis, why is the of finance been able to cut the bond issuance amounts? know, this is partly because the economy is doing a little bit better. you know, under prime minister abba a, nominal gdp growth, that is gdp on adjusted for price changes, has been steadily expanding, and in the years prior top nymex, we have this pattern of nominal gdp which would go up, go down, and was not much changed over time over the space of even 10 years to 15 years nominal gdp was probably unchanged. that is important because that is the basis for revenues. corporate tax revenues, income tax revenues, those are all paid

in nominal terms. you do not inflation tax return. it is very important for government revenues that nominal gdp growth has been steadily rising under prime minister abe, so that is one reason why they are able to cut back on bond sales. they have got these other sources of revenue coming in. shery: so will a drop in debt sales mean that the boj will become more aggressive in tapering next year? chris: it gives them the opportunity to keep doing what they have been doing this year. they have been trimming back especially purchases at the longer end of the yield curve. wanted touroda has see a steepening in that curve to address some of the negative side effects in japan of superlow long-term yields that

have effectively pushed institutional investors. pension funds, life insurance companies, out of the bond market. even the regional banks that yields rely on positive in japanese government bonds, have been pushed into risky assets. that sparked concerns among regulators here, so from a boj standpoint, selling more longer dated bonds, selling fewer bonds all around, will allow the boj to get out of the business of dominating the bond market as much as it has been. alright. asia economy managing editor chris anstey in tokyo. thank you for joining us. blackrock, the world's largest asset manager, and singapore's estate investor are in talks to launch an asset management business in china. asia investing reporter david roundly joins us from singapore. why do these two want to join

forces? david: both of them have quite a bit of history in investing in china. about $60 billion of its portfolio was invested in the country as of march. yet at the same time, they have very little brand recognition when it comes to selling products. blackrock has been in there for quite some time but chinese consumers sometimes confuse it with blackstone. this could help them when they partner with a vocal dispute or. shery: tell -- local distributor. shery: tell us about the challenges. david: the main one is the one i just mentioned. when chinese consumers are looking for an option, they like high returns combined with periods, low holding which is not ideal for an asset manager, so these guys are going to have to get together and overcome that internal rental

barrier to taking on that kind of money. but also, we are not entirely sure how the chinese government will react to a massive downturn if and when that happens when it comes to foreign-owned financial service providers. it is still a relatively new concept in the country, so i will be very interested to see whether or not they start taking back assets in case of an emergency. shery: what other financial firms have we seen striking some joint ventures in china? is trying., everyone the swiss banks -- ubs and others -- are all looking to take a piece of it. it is one of the most exciting prospects for any international asset manager. china's growth is huge. the market is massive. and it is one of the few areas where you can get some real growth in terms of your asset pool. of course, the risk is that, again, as previously stated, this is a relatively new market for foreign ownership and majority control. paul: is there any indication

about what sorts of products blackrock and temasek might offer? david: not entirely as yet. blackrock has already been in the country offering some decently high yield and low c structure kinds of products for the local market. generally speaking, chinese consumers, they do not want to pay for nothing. they would rather pay for performance. that is a stereotype era to other people are willing to pay more. we will have to see, posted this memorandum of understanding what the actual products will look like. paul: asia investing reporter david ramli, thank you so much for joining us. before we head over to bloomberg markets the china, let's get a quick look at how we are trading right now. we have australia currently .3% right now. we have all sectors lower with the exception of industrials and utilities, so this is another down day where we are seeing on the asx, new zealand holding onto those record gains that

have posted on thursday. .he nikkei is off .25% we did see some semi-encouraging consumer price numbers out of japan earlier, but there was obviously an impact on the sales tax. we have the cost be looking kind of flat right now. -- kospi looking kind of flat right now. shery: wall street hit another record. we are seeing taiex futures higher. we have seen the offshore u.n. holding -- you want holding at that -- yuan holding at that level the entire week. we will see how they do at the open. that is it from "daybreak asia." our markets coverage continues. the china open is next. this is bloomberg. ♪ >> it is 9:00 in beijing.

welcome to bloomberg markets. i am tom mackenzie. >> we are coming down to the open of trade on hong kong and mainland markets. david: let's get to your top stories this friday. several banks across the region still on hold among signs of stability. the pboc might cut the rate that supports the economy. >> double-digit growth for tiffany in china next year. we hear exclusively from the ceo. 20 years since macau returned to china. the gambling hub