paul: good morning, i am paul allen in sydney. shery: good morning. welcome to "daybreak: asia." ♪ our top stories this monday, china re-commits to the further opening of the economy planning media regulations and lower financing for private companies. more flashes in hong kong as a police officer draws his gun after protesters try to vandalize the chinese flag.

shery: the bushfires rage on in australia with at least nine people known to have died. the prime minister says there is no direct link to climate change. paul: let's get straight to the market action with sophie in hong kong. we have the holidays upon us in tokyo. we are seeing stocks date after a three-day drop in the topix in nikkei. flipping the board, checking in on bonds. i want to highlight tenured jgb's. , treasuries just opening on change right here with the 10 year yield. bonds arechmark offering 5th street sessions.

aussie shares are sliding for a third straight session led lower by resource players. this morning. we are seeing gains for the korean benchmark. yuan holding steady against the greenback. shery: let's discuss those numbers out of south korea because we saw experts in the first 20 days of september falling only 2%. exports with china rose 5.3% year on year. we had a little bit of weakness with chip exports falling 16.7%. also, imports falling only half a percent year on year, this is after double-digit declines in the previous two months. we are starting to see some signs of stabilization in the south korean trade numbers. let's bring in our asia economics reporter. a pretty strong numbers of for south korea.

still contracting, but clear signs of stabilization given the south korea is a bellwether for the rest of asia, what is this telling us about the trade environment there? bellwether in misleading gauge is certainly a key one to watch with pressure data. this is a potent mix of good news and bad news. on the good side, you do see higher numbers to exports to china, which is heartening considering there is still quite a significant slowdown there and a lot of uncertainty around the trade war. south korea's on trade tensions with japan right now. the key here is the electronics rebound, whether or not we have it when we have been counting on chip industryeat numbers and the inventory has been waning, giving an indication that we might see higher sales. these numbers don't necessarily

reflect that rebound is imminent. i guess we will have to wait another month. there is a . -- weporters still seeing are really looking at some upbeat numbers in the electronics, which should help push south korea higher in the months to come. shery: we have been waiting for that bottoming out in the chip sector for quite a while. let me look at the import numbers because they only contracted .5% the first 20 days of december. that really reflecting the domestic demand and south korea. after two months of double-digit declines in imports, how much confidence can we get that there is a slight turnaround and that economy? months oftwo double-digit declines may point to that this could be a little bit of payback for the those really bad numbers in the earlier months. we will have to see.

it is key to remember that the bank of korea recently downgraded their growth forecast for this year and next to the slowest in a decade. next. this year, 2.3% for that would be the worst since 2009. still expecting a pretty significant slowdown relative to recent years. the bar is low. the import number is heartening, but we will have to see a repeat itself in the months to come to really have some confidence in the rebound. paul: asia economics reporter michelle jamrisko. let's check in on first word news. sue: we are starting in hong kong, which is back to business scuffles.a police officer drew his gun and pointed it out protesters. this escalated quickly and a rally in the city center. demonstrators gathered to show minority.r china's

police moved in after a chinese flag was ripped from a pole near city hall. in india, the government is defending its controversial citizenship laws as protests continue there throughout the country. the prime minister asked supporters to think lawmakers for pushing the bill through. violence has been on the increase for at least 17 people killed in -- to australia now, where bushfires are burning out of control. at least nine people are known to have been killed on hundreds of homes and buildings burned down. the government has been criticized for downplaying the effects of climate change.

malaysia's attorney general says he is ready to ratchet up a criminal case against goldman sachs for its role in the imdb affair. thomas spoke inclusively to bloomberg. >> it doesn't matter really if they settle with the u.s. it doesn't help them one bit. it doesn't affect our prosecution of the case. sue: global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. paul: still to come, credit suisse is getting ready to release results of its inquiry of a scandal. shery: up next, the investment world is just days away from its best asset returns in a decade. we will discuss this with alice

capital's george boubouras. this is bloomberg. ♪

"daybreak: asia. " majorunless we see a reversal before christmas, investors are about to look once in a decade returns. our next guest says we better moderate our expectations for 2020. george boubouras is atlas capital's cio and joins us from melbourne. thanks for joining us today. i just want to start off with a chart we have put together. was,ows how good 2019 pretty much the only way you could miss out on a returned was to be in cash. it is the same strategy of just being and pretty much anything. i have to work -- are they going to work in 2020? has been amazing,

2019. returns across all asset classes except for cash. 2020.on't continue in it is very rare to get any large numbers when you look at across the atlas classes where you are supposed to have low correlations between income and equities. it is very unreasonable for a calendar year to get a 9: 5-10:% on return income. temper your expectations and 2020. have moderate overweight to risk because of the monetary policy globally. temper those expectations across the asset classes. paul: yes. i wonder if we mess around with timing a little and relook look at this other chart we have. it is backdated to september 2018, which is just before we saw that big correction at the end of last year. to what extent did that skew

returns? i guess you could throw out some pretty dovish policy from central banks into the mix as well. george: exactly. 2018 has skewed the numbers. if you go out to the end of september until now, they are pretty much total returns between 10% and 14%, very much lower than where they are year to date. remember, that key selloff is all about global growth downgrades. calendar 19 and 20 was around 6.3% at the time. the imf downgraded to 3%. we have the lowest price of economic development since the financial crisis. what we have seen in the last six months is that stimulus and central-bank intervention has really underpinned returns across the outlet -- asset classes. you can selectively look at the data base effect, but to

reinforce in 2020, temper expectations between 7% and 9%. be cognizant that while earning revaluations, it comes as your bond total return will be much lower than that 9% and 10%. somewhere between that -- lower expected returns calendar 2020. is a very reasonable way to be looking at it going forward. shery: we are now seeing inflation expectations rising. the 10 year breakevens now with the highest level since july or so. what does this tell us about where monetary policy could go next year if central banks are but let the risk on 2019. could the reverse happen in 2020 and actually be more of a risk as the central banks could be turning the other way around? george: that is a risk. remember, the yield is positively slumped as well.

the center is expected to remain on hold for calendar 2020. if they were to look at increasing interest rates, that would temper growth asset outlooks in north america. remember, earning momentum is increasing at a decreasing rate. we passed earnings. the federal reserve are right. be cognizant as well that the ecb and bank of japan are very much, and the pboc will very much remain shery: shery: stimulatory banks globally. talking about the pboc, this chart showing how china remains asia-pacific's largest market, also one of the big gainers in 2019. what are we expecting for 2020 if you expect the pboc to remain stimulatory going into the new year? balanced.think i am

any advancement on the trade negotiations, which has already started on the positive, would get underpinned on those returns for mainland china. importantly, there are some ield debts anticipated, which is a good thing for mainland china. you are saying the sentiment turnaround with same up-to-date hong kong is the best ugly market for the month because it was one of the worst performers for the calendar year. people are starting to look for value in their. that turnaround story in mainland china and hong kong stimulation, the key point here. george, here in austria, the asx has put in a few consecutive days of declines to in the year. are you expecting to manage expectations around earnings? george: yeah. earnings momentum, market cap

adjusted look great because of the major mining exporters. good.e are looking quite taking a step back, the aussie equity market doesn't look like the same value as local development markets. nevertheless, in austria, higher payout ratios. for a good portion of the self manage superfund, which is in pension phase, gets a tax benefit from that. basically, global equities are doing better than ozzie equities, but nevertheless, total returns in the devon still remains compelling for the local equity market. shery: great talking to you. thank you. atlas capital cio, george boubouras joining us from melbourne. . is warningrica ceo of the threat of overleveraged loan stress on the global

economy. they are watching the market closely for signs of strain. in an exclusive interview, he said the best way to manage the risk is by focusing on debt underwriting. tendher leverage companies to have problems when the world slows down. that is economics 101 or credit underwriting 101. we have to underwrite. mazda is switching production back to japan because of the currency's continued strength. it has the capacity to make one hundred 30,000 cars in thailand. generated record sales and profits this year after a festive shopping period went

very well. the ceo told local media that they are growing significantly faster in the fourth quarter than it did in the third. analysts say the companies may generate revenue equivalent for $26 billion this year. coming up next, the death toll is growing from india's protest. the prime minister is doubling down. we will find out why, next. this is bloomberg. ♪

shery: hong kong is back to business as usual this week after another tense weekend. no shots were fired. stephen engle has been on this story from the very start. where does this thing stand now? stephen: you just set it. monday morning after another tense weekend.

this was not really violent. there was not a lot of tear gas, but there were clashes between the police and protesters, which started off yesterday is a fairly peaceful protest in support of the uighurs up in china. that turned tense when the protesters brought down from a flagpole a chinese flag. the riot police came in. the protesters saying they stormed the rally. isice say the one officer pulling a sidearm pointing out the protesting crowd when one protester tried to grab at the gun, according to police. hurled objects at the police officers. a number of people were arrested. another tense weekend here in hong kong. angst.in sight to the paul: what is in store for the coming week? stephen another:. still don't know how -- another

demonstration is planned for today. this is going to be another demonstration in support of those who have money frozen at their bank accounts late last basicallyauthorities clamps down on an organization called bark alliance. it has raised a lot of money to help support the demonstrations. a lot of this money is used for legal costs. more than 6000 protesters have been arrested, their legal costs and bail costs have mounted. one of these groups, another n withand associatio spark alliance says it can cost upwards of 230,000 dollars to defend a single protester over a 60 day period. more than 6000 protesters have been arrested. the demonstration today is a call and process of the authorities seizing some 70 million hong kong dollars. $9 million u.s. as well as cash and insurance that helped fund spark alliance.

seen: of course, we have all of those protests having an effect on the hong kong economy already in a recession. i need chance the stingless measures from the government have helped at all? stephen: not necessarily because the mainland chinese tourists have been staying away in droves. we have had four different stimulus packages so far. obviously, the spaces are calling for more needed help. also, property developers looking for some relief. right now, there is no end in sight to the confidence factor as we head into the holiday shortened week this week for christmas and boxing day and the new year holiday coming up next week. paul: stephen engle, thanks very much for joining us. the indian prime minister is defending the new religion based citizenship law that sparked deadly protests across the

nation. dan kincaid joins us from hong kong as well. what has been happening in india over the weekend? dan: more protests, more deaths. the death toll is now up to more than 20. most of them aren't india's most populous state, where we have seen a lot of sectarian riots. that is the big concern. modi, yesterday really try to lower tensions at the same time as he defended the law, saying that muslims don't need to worry about going in detention camps as the opposition has been saying, trying to ease those fears and ease fears over the national citizenship registry, which might be coming up next. shery: prime minister modi was really doubling down on this law, actually blaming his political opponents, the opposition, indian national

congress. can he afford to keep going this way and why does he think it is fit to double down? dan: he has got a majority in parliament. he has got the numbers. this all stems from a big election when inmate. he has been putting a lot of measures that his party has been asking for for years. hindus basically to have their way over the muslims, so to speak. there is a lot of historical grievances there. a lot of things they feel are not right that they want to correct, which is what this is all about. is no say there discussion on the national citizenship registry. one of the big fears of the new law. it allows religious migrants from all over the region to come in except for muslims. when coupled with this citizenship registry, that means

anybody who is not an indian, based on this new registry that could take effect, would essentially be -- have to come back into the country. this would allow everyone except for muslims to come in. that is what is fueling the violence now, these concerns. the fact that modi said we are not going to go ahead with this anytime soon as one attempt to stamp that down. they have also removed postings on social media from party leaders saying that this was coming next. he has a two-pronged strategy to clamp down on the demonstrations right now, including through cutting mobile phones, trying to arrest or detain certain political leaders. while also trying to ease up on the accelerator on some of those things they are trying to do to appeal to this hard-line hindu base. dan, at the same time, the

prime minister has been emphasizing the work that is government does for poor muslim citizens. is that message having any residents? it really depends on the overall -- india is such a hard place to go. most of the protests have been peaceful so far. whether this will still kickoff remains to be seen. on a broader level, it is very difficult to answer that question. we do know that this has inflamed a lot of the muslim community in india, which is worried about not just this, but a series of steps, including removing the autonomy from , removing hindus from a religious side as well. means. not over by any muslims are generally quite squared. -- scared. shery: thank you. coming up next, ubs global

wealth management dominic schnider joins us for his 2020 outlook on fx and rates. stay tuned. this is bloomberg. ♪

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>> we are awaiting on the private sector credit numbers for the australian month of november. than the survey expectations of 2.4%. a little bit of decline on october's numbers. the month on month figure is a tent of 1% higher. i'm not saying a great deal of change in the aussie dollar. $.69s touched that mark. let's get over to sophie in hong kong. sophie: aussie shares are

struggling with a third day of losses. tokyo shares snapping a three-day drop. the nikkei 225 adding 2/10 of 1%. futures are sticking above zero. you have u.s. benchmark deals with little change. agent --appointed as asia gets control. this could weigh sentiments and highlight the singaporean inflation. they are trading at mid 135 levels. we do have the korean won on the back of it. looking with little change. they have very little data here. exports hinting that we could see that drop not looking in the double digits. we also have shipments from korea to china.

we have this real estate operator rising after the offer byacked a joint its employees and a lone star group. the company could still see a more hostile takeover bid. i want to mention this japanese toymaker. they jumped to a high. they rose by 10%. >> let's turn to su keenan with the first word headlines. su: we will start in china. i have confirmed they will continue opening its economy, easing regulations and lowering finance costs for private companies. the government will offer more tax breaks and broad incentives ranging from energy to telecom and transport. china has at least 20 79 private companies. this accounts for 60% of the economy.

north korea is reportedly expanding and raising concerns that it may use weapons that could threaten the u.s.. satellite imagery shows the structure on the sites that may be used for accommodating launchpad of long-range missiles. north korea has threatened a christmas present for america if it does not win nuclear concessions by the end of the year. boeing has brought its stalinist best caps off back to earth after a failed mission to the international space station. the capsule touched down in mexico in the first ever touched down on them. the mission was supposed to be six days. it only took two days. stalin amid 33 orbits during the aborted today mission. ittook off on friday because shortly became disoriented there after.

they are designed to carry up to six astronauts to the space station. speaking of boeing, they have been reviewed for the late this -- the grounding of the 737 max happened. they try to pressure the agency into letting the troubled max involved into fatal crashes by again. the faa reportedly said that -- global news, 24 hours a day, on air and on quick take by bloomberg, powered by 2700 other journalists and analysts. i am su keenan, this is bloomberg. >> our next guest is expecting stronger currencies against the dollar and 2020. yield rates go more negative and fun turns to asia. let's bring in the cio office,

head of commodities. great to have you with us. no wonder we are announcing investors cutting on their loan dollar position. on theziri charts bloomberg. investors have cut their positions to the lowest level, the second lowest level since june of 2018. for 2020, are you expecting the greenback to be knocked up at the wrong? >> we are looking for a steady decline of the dollar. more positioning unwinding. the dollar is richly valued. still, coming into 2020 with twin deficits. should bethe u.s. accelerated. there is room for some states to cut. on the other side in asia, we think that growth has bottomed. that kind of divergence gives a lot of confidence that asian

currencies can do pretty well in 2020. >> what would be your favorite carriage rates? for next year? next year?aits for domonic: you may not see a lot of appreciation but you go for additional carries. there could be returns in the single and high double-digit's i think it has rallied again. there is room for strength. the korean won is chiefly valued. that is one way to go. more toward europe, this is something to think about.

the russian really is likely to be supported. then we have the recovery on the british pound. plenty of opportunity to move away from the dollar. --we just saw the does it aussie dollar very briefly. it went down below that level again. it has been struggling to get above 69 cents the end of july. of july.the end what is going to break the aussie out of this range? thisic: the fact is that is a more ranged story. this is roughly where it is today.

we still think it will cut at some stage in the second quarter. i think you still have the domestic challenges. that gives you an indication that the aussie is not going to rally anywhere. 2020, there is going to be some volatility. once we see them point back, i think that is an opportunity to buy. >> in terms of risk, the aussie and is always a popular risk barometer. yennic: with regards to the , the dollar more brother weakens, there is an element of easing rates.

after rate differentials narrow, i don't think they will do much. that narrowing gives us an .ndication that the dollar-yen we are looking to look for growth in 2020. you may want to have that kind of position. e-cig it would do pretty well. -- i think it would do pretty well. have analysts upgrading their forecasts. of thisfourth quarter year and the first quarter of 2020, forecasts have been revised upwards. still, the rally seems to have run its course. a hard brexit does not seem to be totally off the table.

what can we expect for sterling? about ising to think there will be a lot of discussion. i think there will be some tough negotiation. once we have clarity, once we i thinkt the deal is, that i'm kind -- that kind of certainty gives a point for the pound in the u.s.. there is still some structural upside. have a model looking at 1.56, the pound is extremely cheap. that is what investors will look like -- look at, clarity. i think those three factors really give you an opportunity

to either sell the downside -- it is low everywhere. positioning toward a stronger pound, that would be my guess. >> before we let you go, your strategy on oil. about six to one dollars per barrel, we came crashing down again. where are we headed next year is i think weominic: will pull back by roughly 10% in 2020. we will still have a surplus market in mind. the big news is the economy looks to be on stronger footing. demand growth has increased to one million. that number might come in a little higher.

we were looking at 0.6 million barrels per day. if that environment sticks together, you still have an environment where they can largely hold off. maybe they will hold back. it could be a less stable environment. would i go along oil on these levels? no. i would look for that 10% move. rishaad: that was dominic schnider. thank you so much for joining us. still to come, credit suisse. we will talk about the spying scandal. we will tell you what to watch out for, next. this is bloomberg. ♪

rishaad: you are watching daybreak asia. report onsse will monday about spy gate. the surveillance was carried out by the office of the pharmacy of without consent from the board or the ceo. what events are we expecting to see unfold today? >> we are expecting the bank to release the results of the second investigation. according to people familiar with the matter, it is a rogue operative that operated without the consent of the board or the chief executive officer. these latest incident and spying come after early incidents of scandal that about it earlier this year.

that financial circles from europe and beyond. they also said it found no evidence that they had observations of other employees. this was an unwelcome turn of events for credit suisse. >> what could be some of the wider ramifications of the bank for all of this? >> it comes at a very uncomfortable time for the chairman and ceo. they said the former international had a wealth management -- these other incidents seem to suggest that it was counter to that narrative. this shifts the narrative back on the credit suisse performance earlier this month. they unveiled a sweeping

investigation. the bank cut its profitability goal for 2020. this latest scandal is not something that investors want to say. just want to focus on performance and going into 2020. >> thank you to asia's investing editor. why the most off-line conversions may be the way of the future. this is bloomberg. ♪

>> on the positive side, we will see a bounce back in cloud spending. most of the major cloud operators that was investments in 2019 can resume in 2020. to cloud spending, --will seek a greater the operators ramp up their coverage. this will benefit supply chain companies that assembled the 5g equipment. >> china's investments could reach 14 billion u.s. dollars in

2020. that is double that of the level in 2016. investments in internet health care will be crucial for china. this is because of the growing health care costs. >> shipments seem to be showing signs of recovery. we are also seeing a teaser. while i is expecting to launch the second-generation. the company continues to explore new user cases. we are hearing they're trying to get that flip phone. >> the bloomberg intelligence expectationstheir

here. the ask you to pinpoint biggest trend for asian tech next year, what would you? >> one of the big trends would be off-line integration. the economy is growing. a lot of things happen. ofwill be the integration the brick and mortar businesses. the economy is great but they would need the scale to grow bigger. they would need the physical outlet. that is where the economy is going. everywhere on the story is the same.

what they are realizing is they need the integration with the physical. it could be a big thing. for m&adoes this mean forward as weing see these e-commerce giants trying to gain more market share in asia? >> there will be some rationalization of the business models. the e-commerce is growing. been a big has factor for the growth we have seen in the last couple of years. in 2019, we saw a bit more rationalization. we are realizing that we need to understand what segments are more profitable. let's focus on profitability. it is coming.

we are thinking about the new business models and customer segments. if you look at vietnam and indonesia, e-commerce is growing at 50%. companies, they have to take accountability. this is coming out to be a very big opportunity. this is something they need to address the challenge of if they want to grow more. you -- ajay, you identify this trend of moving toward e-commerce. how that affect the e-commerce players? -- how will that affect the e-commerce players? changing todel is

the commerce model. it will not be brick-and-mortar. many of the brick-and-mortar traditional players are realizing that e-commerce is here to stay. it might be interesting. we are seeing many of the models launching separate e-commerce divisions. i think that trend is going to continue. it may not be a black and white brick-and-mortar. i think what we saw in southeast asia is going to be a converse model. i just want to get your -- ajay: going to be

going toward a commerce model. rishaad: i-20 your thoughts on this. will with 5g coming, that -- rishaad: i just want to get your thoughts on this. there has 5g coming, been a tendency to connect first 10. security has been an afterthought. thankfully that is changing. more and more, there are devices coming into this. security is going to be a security first mindset. happening if you look at the spending, that is already happening.

about -- if you talk about the device level, it is something that is lacking in impact. rishaad: that he so much for joining us, ajay. let's get a preview of what to watch and markets. -- sophie: let's look at the agenda for the rest of this monday. we will get factory output that comes out after we saw exports in november follow more than forecasted. the hong kong dollar has lost some steam after its recent rally. we did see the currency fall back. flipping past the 7.8 midpoint. that currency is the most overbought territory in more than a year. that does not mean we could see a drop to the bottom. locals interbank rates have stayed elevated.

-- local interbank rates have stayed elevated. >> we will get outlook and strategy coming up. our market coverage continues as we look ahead to the start of trading. bloomberg. ♪

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beijing, andin singapore. i am selina wang. yvonne: i am yvonne man. here are the top stories. china recommenced to further opening up of the economy. it is planning easier regulations and lower cost for private companies. a police officer draws his gun. tempers flared after protesters tried to vandalize the chinese flag. malaysia plans to charge goldman sachs executives over the scandal. we hear from the attorney -- from they common

attorney general. president trump and president xi jumped on a call. we don't have a location or a time yet. the translation may be one of the holdups here. what are you seeing? yvonne: not many sticking points when it comes to the senate. we did learn that xi jinping may not be headed to davos in january. that eliminates one more possible face-to-face meeting with president trump. we are in holiday mode. we are mixed across the board for the region after we saw a decent pickup. singapore opening up. slow volume down over here today.

we are still watching the nifty here. we should mention u.s. records that was on friday. regulations, their help in some of these private companies when it comes to the -- they are easing regulations. they are helping some of these private companies. the offshore is still hovering around at seven and a. we are still seeing some weakness. we were in contraction but only 2%. the declines are using now. dollar, that rally will be visiting -- fizzling out.

let's look at commodities in particular. that at 191. the one thing that we saw on friday that was interesting was tenure breakevens. we are back up to those july highs. could that be a big risk for this bond rally? we are watching crude. we are seeing a pretty decent slowdown. we will see a drop in oil on friday. copper actually saw a decent couple of months. this is the fifth weekly rise for copper. let's get the first word news. we have su keenan. : monthly exports and south korea could decline by less than double digits in december. this could be the first time since may. outbound shipments fell 2% from a year ago. liveries in china rose more than

5%. -- deliveries in china rose more than 5%. officer drew his gun and pointed it at protesters in hong kong. no shots were fired in the incident. demonstrators gathered to show wiccat to china's minority. a chinese flag was ripped from a pole at city hall. protests continue in india. accusednister modi opponents of spreading lies. violence is increasing with 70 people killed. -- 17 people killed.

global news, 24 hours per day. than 20,000ore journalists in over 120 countries. yvonne: i want to cross to the terminal where we are getting some breaking headlines. china cut some import tariffs. import --oing to increase imports. china will lower import tariffs on 850 items from 2020. this is as we are awaiting the signage of that phase one trade deal. i want to bring in our china executive editor jean-luc. u. jon le we are getting headlines from china about cutting import tariffs. where are we?

>> we are looking at assigning in early january. they will sign that phase one deal. need this deal. it makes a lot of sense for china to buy agricultural goods. it makes a lot of sense for president trump to show that he the u.s. ahead of the election. there is no reason for this to not happen. yvonne: when it comes to the headlines on these import cuts, on 850 items, is this part of reaching the import targets? not sure that it is specifically week but it is all part of the same story. china is trying to show that the economy is open. china was to be the good guy in this trade war. -- wants to be the good guy in this trade war. the economy is headed for the slowest growth in decades.

are all of these headlines playing in china? how are they being received so far? it seems that china has been a little more conservative and how they are reporting the latest trade headlines. is there a signal that they don't want to seem to week akming out of this -- too we in the signing? >> beijing can't look like it is being forced by trump's tariffs. everything has to come across as something that beijing wanted to do. it is good for china, china's place in the world. some ofcan help appease the issues the u.s. has, great. yvonne: that was jean-luc. let's bring in a guest.

thank you so much for joining us. just give us the latest take of these headlines that china will cut some import tariffs january 1. the phase one deal looks to be close to assigning right now. is there anything you're looking for in the fine print? >> that is a good question. so far, so good. the market will we -- we will be looking at is enforcement. that will be a key focus, as well as the details around purchases. about additional purchases over the next two years. the information will be important to flesh out. yvonne: how important is this trade deal it comes to risk assets? against china doing with some of

the domestic issues? is it the rebalancing of the domestic economy? what about the fluctuations? where are you on that debate? >> we are clearly seen a slowdown in china growth. the key is that these things go hand-in-hand. the amount of fiscal stimulus will go hand-in-hand with this phase one trade deal. to be more china measured and how they do that. they don't want to over stability economy. -- over stimulate the economy. >> you were mentioning that delicate balance between intending that stimulus but not writing up the debt risk. is china doing enough when it comes to the fiscal and monetary side to support valuations?

>> we believe so because structural reforms are better. the china policy is to slow down. i put a question to how much it slowed down. they have been successful so far. >> when it comes to this phase one trade deal, the worst case scenario has been avoided. for risk that mean appetite and equity going into 2020? >> there have been many reasons why markets have done well in the last two months. fight the fed was true in the second half of the year. people are not in positions for good news. we have had record outflows this year.

now, flows are starting to stabilize. willhase one trade deal affect markets. >> we will have 20 more coming. more coming. still ahead, the malaysian attorney general said he is ready to prosecute goldman sachs in connection with the scandal. our exclusive interviews coming up. next, the central bank jumped back into the fray. what is in store for 2020? this is bloomberg. ♪

>> you're watching bloomberg markets china open. we are just a few minutes away from the open of trade in mainland hong kong. now, the coming year is looking like a great one for monetary policy after a wave of rate cuts in 2019. most of the major central banks including the federal reserve and pboc are expected to hold fire. says low andnomics negative rates have weakened the power of central banks to tackle downturn. >> a lot of questions on where pricing.d markets are look at this terminal. we base of a the u.s. 10 year yield. there are headwinds for it to break above 2%. biggesthrough the two overhangs for the market. we are still holding below 2% at

191 for your u.s. tenure. -- 10 year. join in on this debate. is the catalyst for higher yields behind us? we see 10 year yields repricing. the markets repriced from the lower levels of the summer. we see it more range bound. >> we were talking about the u.s. tenure yield curve. how much steeper doesn't need to get the for the session starts to hurt your outlook on equities? >> the key question is why is it steepening?

you saw korea exports as well. the decline is coming down, the rate of decline. that is better growth. if the yields have been because of that, we have better corporate profits. atthe yen fix is coming in this number. this is hovering around that seven level. 2019, we saw the yen impacted by the whiplash and of the u.s. china trade war. do you see the bigger driver being continued discussion around phase two? will it be more about s in the chinese economy? >> as we move from phase want to phase two, that affects the chinese cottage eight --

currency. pickup.have a moderate that will help the currency in terms of stability in the second half. yvonne: you are estimating that economic growth will be moderate in 2020. that there will not be a risk of recession. change your view when it comes to risk assessment for 2020? prashant: if the phase one deal falls apart at the last hurdle and we have additional tariffs, that could be the cause. that will not cause the recession but it will feel like it. you would see policy support pick up again. it is a balancing act. that would be one thing. the other risk that no one is facing -- focusing on is debt.

picks up in the second half of the year and in cutcentral banks cannot rates, that could cause a problem as well. strategy,ok at your it seems like you made a lot of good cause. offering u.s. equities. going positive on global equities toward the end of october. how will your strategy change for the end of 2020? prashant: we are maintaining our strategy of global equity. the rallying we see in the fourth quarter, there will be more high single-digit returns. we think that will maintain given the base case that this cycle is not over. every year that this goes on, everyone wants to predict that the cycle is ending. that underpins the equity view.

sophie: i just want to follow-up yuan. u.n. -- you on -- it was hovering around seven. what number do you think it could get to? the volatility is actually quite low. we see the chinese currency more range bound. i see a range that is realistic. the central bank are still using. you can see the chinese currency strengthening below seven. later in the year, we will see how many rate cuts come through from the fed. our forecast is up to two. you can see the currency also narrowing.

>> thank you very much. we have fund more to come. this is bloomberg. ♪

>> you're watching bloomberg markets china open. a quick check of the latest business flash headlines. releaseuisse is set to a report about the surveillance that was carried out by the office of the pharmacy of without consent from the board or the coo. -- ceo. bank form mirror the

a claim of a spying incident by former management. this was struggling an isolated event. full accountability has been taken by the individuals concerned. the carlyle group is planning a 109 pound takeover of the what management group. the report says that it will be announced to the london stock exchange monday at a price that is not expected to represent a big premium to the cause. there has been no official comment from either party so far. >> hong kong is back to business this morning after another tense weekend that included a police officer drawing his sidearm on protesters. no shots were fired but here is the latest from stephen engle. where do we stand? >> i don't think this was an escalation, it was more a relation of the will and the bad blood that has developed over six months between the police

and protesters. what started out as a fairly peaceful protest in edinburgh place in support. it was a rally in support here. this turned fairly confrontational. protesters threw objects and bottles at the ripe police -- riot police that came in. protesters tore down a chinese national flag from a flagpole. one officer drew his firearm. police put out a statement saying that the protesters try to grab the gun from the officers. standoff, ill will. the morning commute went off without a hitch. still, we are in this no man's land. no resolution in sight. sophie: you are saying this was

not necessarily an escalation. what is in store later this week? stephen: more protests have been called. we don't know if large numbers will heed the call but today's demonstration is the plan. there has been seizing and freezing assets of spark aligned. they helped raise the money that is in support of the demonstrators. more than 6000 people have been arrested. legal costs and bail costs can get quite high. this organization uses those funds to help authorities. they also seized assets totaling more than 70 billion hong kong dollars. 9 million u.s. dollars on allegations that it was being used for money laundering. another example of just how far apart the two sides are right now. again, a number of the protesters --

they are afraid that the situation was happening with detention camps. they could happen in hong kong. not to that level but they say it is that level they are fighting against. sophie: we are just a few minutes away from the open of trade in hong kong. let's look at how things are setting up for the hang seng. we are up at least 153 points. futures are flat right now. we have taken off some of the gains we saw earlier. volatility is coming down in the hong kong market. it seems that we are shrugging off what happened over the weekend. we are back to the lows when it comes to volatility since the start of this year. we are watching securities come through here.

they are focusing a little more on the aviation side. it is for when macau -- new ratings for macau. plenty more to come, this is bloomberg. ♪

>> you are watching bloomberg china open. headlines coming through this morning about china lowering tariffs on more than 850 items including pork and oj. perhaps a more goodwill measures. -- also easeff some of the skepticism that china will be able to reach some of those import targets

especially regarding those agricultural purchases. from donaldtiment trump saying they are arranging the final signing of the phase one trade deal. and china is also hosting meetings among three sides. taking a look at mainland markets, not a lot of movement. we are seeing some of the gains. the shanghai composite and shenzhen composite have opened 1% higher although we did see china down continuing some of the losses. looking at the 10 year yield. according to a government statement, china is trying to ease market regulations to make it easier for private companies to get financing. we have seen those companies get squeezed. when we look at the yield, government bonds did rally last

week as we solve the government inject 150 billion yen into the financial system. rated see the prime loan however around the 3.21 level. the fixed coming in for the second consecutive day slightly stronger than what was expected. 7.0117.t said heious guest thought that currency would be range bound. yvonne: let us look at the hong kong open. we are seeing another violent episode with protests on sunday. we are seeing the hang seng up moderately. a-shares -- age shares also up. h sharesy though -- also up.

volumes will stay pretty low throughout the session. the hong kong dollar turning back to the weaker end of the ban. the rally was short-lived. this is the one day. we're watching for the likes of tectonic industries. julian auto gaining. some real estate companies -- protest related. we are seeing some downside today, down more than 1% for some of the property developers. is selena.now great to have you. let us talk about the latest headlines when it comes to trade. china the thing up imports. is that going to help risk assets or fundamentally is there room for earnings upside down? >> definitely.

the details are not known yet but we are seeing a turn in the relationship between china and the united states. previously, we were expecting the relationship to deteriorate and now, there will definitely be a turn. coupled with the fact that there soeasing from tariffs outlook for the earnings should look quite positive. yvonne: what sector are you concentrating on? >> staples. goods.r they will be be up now that the tariffs will be lower. big is likely going to be a year for hang seng upgrades. and therefore the companies will see some positive earnings movement going forward. yvonne: this seems to be the big

theme domestically speaking for china going forward -- five g. do you focus on the component makers? you look at other parts of the supply chain as well? >> everything including components. acoustic companies and the semiconductors. you mentioned the consumer sector as one that you are interested in. we hear that from us to the guests we have on the show. that that suggestion sector is being overbought of late? quite a bit ofg performance from the frometionary especially the garment industry.

expecting another like up for the staples companies. >> how much of a risk are the regulatory overhang for that sector? we are seeing the regulators increase some of the approval though it has still been quite slow. the massd expect now d of the entertainment business could see some support now that we have already felt pressure in the physical economy. gaming is one of the sectors that could benefit from this. yvonne: what are the specific companies in the gaming sector that are most attractive right now? are quite positive overall about the whole sector. and not specifically about any name. were onlast time you

the show, you were talking about the policy support and how that would impact the different sectors. we were talking about the likes of china easing regulations. are you expecting a meaningful tax break for these private companies? how does that translate into earnings? -- we have notre seen any public policy action yet on that front. expectations are quite high for that sector. we will likely see policy support for that also. will benefitpport from policy easing. we are already seeing some gestures. and autos is a another sector that will likely see some support. yvonne: there were also liquidity injections that we saw. what does that signal to you? is it a sign of a new easing cycle? easing is a policy

definitely happening. sayingy trade is already that we have seen the cuts in the interest rate. it is likely going to continue. but not very major. we will likely see easing policies in terms of fiscal and monetary in 2020. >> we just got the news statement from the government that they are going to try to ease government regulations. how much will this -- how much easier will this make it for the companies? >> it is definitely going to help. no matter how much. a gesture is going to help out some of the private companies. , we are seeingt oversupply in terms of the thestry and therefore when

system is tightening, consolidation is happening also which can be quite healthy going forward. yvonne: thank you for joining us. words get to the first news. latestrting with the with boeing which has brought its star liner space capsule back to earth after a failed mission to the international space station or i as as. the capsule touched down in new mexico in nasa's first ever touched down on land. it is the second day of what was supposed to be a six-day trip. it made 33 orbits. it took off on friday but became disoriented and was unable to reach the iss. the star liner is designed to carry up to seven astronauts to the space station. ceo has been personally abused by the regulator for the

way that he has handled the grounding of the max. the faa reportedly says boeing should concentrate on providing information about its software upgrades for the troubled max jets. north korea is reportedly expanding a missile plant raising concerns that it may resume testing rockets that could threaten the united states. satellite images show a new structure on the site that may be used as a launchpad for long-range missiles. north korea threatened a christmas present for america. and thousands of protesters massed in central beirut against the new prime minister saying he should reject the post because he is a member of the ruling elite. several highways were blocked

into the city as demonstrators denounced his-- nomination. he has been backed up by hezbollah but has failed to win the support of other muslim groups. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am su keenan and this is bloomberg. >> coming up, malaysia eight -- malaysia's top prosecutor will ratchet up the criminal case against goldman sachs. our exclusive interview with tommy thomas is up next. this is bloomberg. ♪

prosecutor istop ready to ratchet up a criminal case against goldman that for its role in the 1mdb scandal. but the sides are far apart

after settlement talks. us more about what he had to say and the gap ilsley between malaysia and goldman sachs. about the gap between malaysia and goldman sachs. >> despite the immense public pressure he is under to find a resolution around 1mdb. into his two-year term as attorney general. he says the case could drag on. he was not able to comment on the ongoing trial of the prime minister but he was putting in a strong case on how he hopes to prosecute goldman by the middle of 2020. this as a settlement is in the cards. >> i don't know anything more

than the press release. i am quite cynical about all of the press releases. i wonder if they are self-serving and self generating by goldman sachs. the last time my office is spoke to the ag in the u.s., they said they are far away from settlement. at the end of the day come each country decides what it must do respect its national interest. as far as malaysia is concerned, we are not terribly concerned about what happens in the u.s. or singapore or switzerland in relation to goldman sachs. a sovereign nation, we will do what is right in malaysia's interests. does the latest developments regarding the u.s. front affect malaysia? >> it does not matter really if they settle with the u.s. it does not help them one bit and it does not affect our prosecution of the case.

>> when might malaysia see a deal? >> as far as malaysia is concerned, it is public knowledge that there has been talks. there have been two or three rounds of negotiations but they have not gone anywhere. gulf is still a huge between malaysia and goldman sachs. us.they can come to see we are proceeding with preparing the case for prosecution. any trial lawyer will tell you that you can settle on the first day of the trial or in the middle of the trial. as far as malaysia is concerned, it is being conducted in parallel. we prepare for the trial. and the series -- and these various settlement talks. we can do that simultaneously. , how terms of a settlement

much can malaysia expect? againstwas borrowing the guarantees and goldman sachs was structuring it back. malaysia's primary position is that we did not need those bonds. it did not serve malaysia's interests in 2012 and 2013 to have those bonds. we are not saddled with repainting those bonds -- with repaying those bonds. -- withle of malaysia interest, we are talking about the principle of 6.5 and interest. , malaysia's primary

argument is you have to pay back the principal and the interest. settlement with goldman is one avenue. in the past, you said you have a strong case. what kind of leverage do you have in order to prosecute effectively? >> as far as we're concerned, we are preparing for trial. we hope to have that trial in the middle of next year. when i prepare a case for trial, i'm not too concerned about how my opponent is preparing. we are preparing. goldman prepare is not my concern. >> that was tommy thomas, the attorney general of malaysia from his chambers. we spoke almost a year to the day that malaysia charged goldman in its first ever criminal case. said there is little reason to push ahead. yvonne: they are ready to

prepare for this kind of case. thank you, sophie. coming up, another high profile setback for but weighing. the space capsule returns to earth after a failed mission to the international space station. this is bloomberg. ♪

selina: now, for a quick check of the headlines. the personal information of millions of facebook users have been exposed. thearch firm discovery says website was trying to charge for access. but it left personal information open to all. facebook says information was likely taken before its upgrade. agreement. an

the agreement will clear the way for a final deal that will allow project sunrise to proceed. the carrier is said to be confident that it will support a new airport after 18 months of negotiations. saudi aramco fell for a fourth day in riyadh extending losses and erasing half of the gains it made. the stock rose in the first few days. the vast majority of initial shareholders are local with international investors largely unimpressed. bank of america ceo brian moynihan is warning of the threat of the stress on the global economy. the bank is watching the market closely for signs of strain. in an exclusive interview with bloomberg, moynahan said the

best way to handle risk is to focus on debt. down -- he world slows boeing has suffered another blow to its reputation. newftware glitch forced its capsule to abort a mission to the international space station and that is on top of the 737 max remaining grounded. we are joinedis, by our reporter from singapore. boeing. a rough one for what are the biggest challenges for next year? >> the biggest challenge will be to regain the confidence that it lost. they have lost a lot of faith from customers. and the loss of revenue generated from the whole global

grounding we have seen since march. that will be the biggest challenge at boeing and for the ceo. we solve this whole mission when it came to the space -- the star liner i should say. it really was a dead. when it comes -- it really was a dud. is airbus taking advantage of the situation? >> since the grounding of the 737 max happened, orders for the longer version gained a lot of attraction from customers because it offers longer-range. economically, it makes sense for a lot of the airlines and that has been a very popular plane this year. they want to take that advantage going into next year. the cousin of boeing's

preoccupation with the 737 max, they have not unveiled anything that would match the range that the airbus plane has at this moment. they have the market that is not 321a competition with the a that is selling quite well for airbus. >> it looks like the board of directors are sticking with the ceo but there are talks that his role could be in jeopardy. focusingk the board is on getting over this crisis at the moment and that is why we have seen the chairman basically theng support to you ceo at this moment. for now, the board clearly has to steeridence in him them clear of this crisis at the moment. >> our transfer reporter from

singapore. thank you for joining us. for another look at the mainland and hong kong markets. muted gains. we are seeing the shanghai composite trade down more than 0.1%. headlines earlier -- china will -- this bodes well for the phase one agreement which donald trump says they are arranging the signing for. slightly stronger than expected. the offshore yen trading just around that seven handle. we have a lot more to look for a head of the holidays when it comes to details. on when and where the phase one deal will be signed. yvonne: it is interesting. we saw more numbers come through --m the report which is there is not a lot of movement.

a lot of the markets will be closed over the christmas holidays as well. we have not seen a lot of movement when it came to the chinese currency. we are still hovering around the seven handle. the rest of the region is pretty much flat. dollar-yen still hovering around the 109 range. not a lot of conviction when it comes to the cross assets. indonesia coming online next. otherwise, things have been mixed across the board. the india session -- records for a fourth time as they came to the benchmarks here. watching fx, the dollar is on the back foot though we did see the first weekly gain in december last week. still a lot of questions on where the greenback will go next

year. plenty more to come. this is bloomberg. ♪

rishaad: 10:00 in hong kong and singapore. this is the markets. yvonne: import tariffs and wider efforts to open up the economy. rishaad: a police officer draws his gun. tempers flare. yvonne: anger builds across india as modi offends his citizenship law. he says opponents are simply spreading lies. ♪

yvonne: it's pretty slow out there as we count down to the holidays, but we got the latest line saying they are ready to reduce tariffs and import more consumer goods. perhaps that's going to move the needle, but we haven't seen much of a reaction so far. it is that time of year. ever, they seem to be the same way at the moment, the nikkei up. these moves are small. and amid the volumes, they can lead to quite a lot of swings at their -- out there, as well. we had south korean export data out, 20 day export data, that show the decline. not quite nearly as deep as they had