>> good morning. i am haidi stroud-watts in sydney where markets have just open. sophie: i am sophie kamaruddin in hong kong. welcome to "bloomberg daybreak: our top stories this friday, iran is accused of shooting down the ukrainian 737 the u.s. and others say there is evidence of two missiles fired shortly after takeoff. beijing confirms a trade deal signing next year.

the u.s. and china are dusting off corporate deals in anticipation. austria braces for a hotter weekend as fires continue to burn out of control. thousands are urged to seek shelter. this justin, the u.s. house is voting on the or powers resolution. , as is mostly symbolic resolution that would seek to limit the president trump's options for military action against iran. house speaker nancy pallone says democrats were not satisfied by the administration's justification for last week's airstrikes that kill a top iranian official. nancy pelosi saying this is more than a symbolic gesture. we have more analysis, but it seems like a long shot for this to pass the republican held senate. that news just coming in that the resolution has been passed in the house. when it comes to the trading

session, it is fading out. tensions between u.s. and iran. a report suggests that the ukrainian flight was taken down by iranian missiles. that did not deter optimism. all three markets in the u.s. hitting record highs. just a little bit out of cash trading, futures pointing to a moderate gain. new zealand seeing an upside of about .5%. expecting retail sales to come up for austria. asian stocks on track for the largest winning streak in two years. a little optimism for the nikkei, taking a look at futures. that has been 2.3%, the highest level since 1991. sophie: let's get more details regarding the war powers resolution that has been voted

on by the house in the u.s.. joe is joining us from washington. give us more color regarding this resolution. it is nonbinding. joe: it is structured so that if it were to pass the house, if the senate were to adopt it, it would not need president trump's signature. becausestly symbolic, presidency of both parties in successive administrations have said that the act is unconstitutional, and if congress wanted to press the case, it would end up in the court. there have been some rulings that the president's authority in this area is broader than what congress is trying to restrict it to. it is symbolic, in the sense that it is likely not to have a

whole lot of effect on what president trump does in the future. constitutionr the has authority to declare war, but the president has rod power as commander-in-chief to command u.s. forces to defend the nation or in response to a threat. it kind ofppose underlines the amount of print -- the amount of criticism the president has had from democrats and republicans about the decision to authorize the killing of the iranian general. we are seeing different justifications now coming from the president. initially, it was talk about an imminent threat coming from the individual who was killed. joe: right. it is a combination of things that upset democrats. some are accusing the administration of not having proper justification. others -- in this is the issue with the senate republicans, who

really ripped into the administration, that they haven't fully explained what they are doing and they are disrespecting congress and their authority as a coequal branch of government by not consulting with lawmakers before doing this. especially if there is some question about how imminent the threat is. that has been one of the big issues, whether or not there was something that was about to happen, how serious it was, or whether this is an action taken in retribution for some long-term gain in the battle against terrorism. there are a lot of different arguments here that have been swirling about. it is not always fall directly along party lines, but clearly democrats are upset and want to show they are trying to rein in

president trump on this. haidi: have heard from canada in the u.k., leaders of both countries saying their intelligence shows more clarity into what happened to that ukrainian 737. joe: have cited their own and other intelligence agencies. a person familiar with the matter told bloomberg that u.s. spy satellites detected the launch of two surface-to-air missiles near the airport at the time the plane was taking off. thereis suggestion that was not the usual sort of data that you would see if there was a mechanical issue, such as an engine on fire. the plane suddenly cut off communications. there was no mayday. it went down, killing all those aboard, many of whom were canadians and the majority of them had ties to iran. family, they were of iranian

descent, and this is a common way that people from other countries, particular canada, would go to visit family in iran. canada have. and said publicly that they believe this is a missile strike, perhaps accidental. the iranians have not clarified anything or disputed that it was that. it seems fairly clear from the evidence that this was not a case of a mechanical issue with the plane or for any other reason. haidi: thank you so much for that update. our editor there. stocks broke fresh records as the u.s. and iran seem to be stepping back from the brink of war. the question remains, does the calm continue after a volatile start to the new year. word on that from sylvia. it has been quite an eventful start to the new year.

level ofkind of volatility expected and were you surprised by how easy it has been for investors to break -- back away from the risk on trade? >> i certainly didn't expect this coming into the new year, if we look at how we closed out december. 2019 was one of the best months for stocks, and i think a lot of investors expected the momentum to continue into 2020. tensions with iran was kind of the wildcard and geopolitics always is. we had fear of a trade war with china and quickly shifted into fears of an actual war with iran. looking at what happened, the de-escalation is interesting. a lot of investors came back into the market. the sidelining was very short-lived. evidenced by all-time highs today. is that particularly

worrying, given that we haven't seen the shift into value investing and valuations are looking stretched? >> i don't think it is looking worrying yet. regardless of iran, the market looks healthy. numbers came out to continue to support the idea that wages are good, workers are employed and they have higher amounts of liquidity. consumer is 70% of the economy. jobs, gdp, more money to spend could prop the market up. on the other cited as tech. today, we had five analysts upgrading the most highly valued names out there, the big names. apple, google. side, it looks like we are getting a lot of good reasons to get back into the market. a lot of sectors that looked to be healthy and overall, the

story is positive. we made a deal with china, jobs are good, gdp is decent. growth is slowing, but it is still positive. i am not too surprised. sophie: we do have data showing that u.s. activity is contracting. do have signs that that is spreading to job creation and could that possibly spread to easing? overall it is a mark that has to be monitored. if we look globally, we had positive numbers out of germany. i think in the u.s. we have an issue in terms of growth and manufacturing. in the long-term, we do have to solve that and that probably get solved with technology and investments in infrastructure. gdp-term, it will slow down , but near term, the next six months, i think there are a lot of equity opportunities in the market.

and theerm, expansion bull market will depend on additional investment in manufacturing and it was structure. sophie: we'll get more later, but do you see any risks with the job market given that it is the tightest? sylvia: it is at the tightest in 50 years. i think the risk is geopolitical. , ife have another iran deal we don't reach phase ii or phase three or something falls apart in phase one, i think a lot of companies start pulling back on hiring. a lot of production comes from china, so i think some of these geopolitical factors are the biggest risk in the short-term. do you with us. lots more to talk about. let's get you to first word news with jessica summers. >> the federal reserve says

policy is appropriate amid solid u.s. growth but admits there is a risk that inflation will fall short of the 2% target. the vice chairman told the council on foreign relations that monetary policy is in a good place and should support sustained expansion. the fed left rates unchanged in 2019. want to distinguish between the baseline and the risks around that. is private sector forecast core measures of inflation to begin to move up but i would be honest in suggesting that if there is a risk in that outlook, it skews to the downside. taiwan: the economy in may play a larger role in this weekend's election, with growth under the current president offset by frustration at progress in boosting the income of ordinary citizens.

taiwan has seen faster growth, and boy it financial investments. she faces a strong challenge from the more china friendly -- as well as the people first party. bracing forralia is the return of record hot weather this weekend as bushfires continue to burn out of control. thousands of people across the country are being urged to seek safety and emergency warnings remain in place as temperatures look set to rise. last year was australia's hottest and driest on record and the fires were seen by many as the consequence of global warming. costg is estimated to face of $5 billion as pilots are ordered to have similar training before the 737 max returns to service. bloomberg intelligence says that would effectively double the five point $6 billion that the plane maker has set aside to cover costs in the grounding.

boeing will be expected to reimburse airlines for expenses related to the training process. global news 24 hours a day on air and powered by 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. sophie: thanks so much. let's check in on reminders from sydney. bhb group set to snap a gain after seeing temporary but has not seen any impact to imports. performance under pressure after being cut, which freed cash flow and dividends seem to be as good as it gets. otherant to highlight gold stocks we are seeing under pressure, given the latest update. ofd output at the low end guidance after production fell in the second quarter.

fromg up, we are days away the u.s. and china signing their treaty. haidi: that's right. ofusting off a bevy corporate sales. the lead up to that plus the latest on the bushfires. new warnings across australia. we will have the latest as the heatwave returns. this is bloomberg. ♪ rg. ♪ haidi: we are getting one mover

in the u.s., grubhub falling 8% after the company says it is not running. we had a report from the new york host and others overnight that other u.s. were considering a purchase. grubhub saying the company is not for sale, pushing back against reports, saying there is

no process to sell the company and no plans to do so. saying they are confident in their growth strategy. it has been an issue of speculation that was competitive and discounted basis last year with sales numbers coming in dismal. that stock has been nose diving since the forecast over 31% from one year ago. markets stilll with us. she says if you are seeking value in 2020, look no further than health care. so what is driving you to call this -- saying you are favoring this sector? >> i think the sector makes up a variety of positions. you can look at medical devices, pharmaceutical, tech, health rifeand the story is across that. we have 72 million baby boomers right now that will be consumers

of health care. a lot of the pricing rhetoric has gone away. lowerctor is at a multiple evaluation compared to other sectors. it is a fairly reasonable by. a lot of the health care names, especially big health care companies have been paying dividends. i think the demographics will push the sector forward. if you look at health care 500, we are outperforming the first couple days. if you look at the beta fund, it is three times that. in the short-term, we have seen that play out in biotech and health care. demographics are very favorable. sophie: let's turn to attack. we saw apple among the leaders on wall street. is the rally looking overheated to you? sylvia: i have to preface this by saying i am an optimist with

tech. tech continues to crush it. if you look at the big tech names, they helped us last year, they led the markets and it looks like it is playing out the same this year. iu have this 5g surge and think that has not been priced in. there is a lot of momentum that can come from that but for example, everybody thought apple was overvalued and now we are finding out they have excelled. ,hey have 100 million users sales are up. upgrade, and some of the semiconductor names. it looks like tech and semiconductors are poised to continue. it is tough to buy at such high valuations, but i think you can pick your spots there and there are definitely companies that have room to run. haidi: what do you like in asia in particular.

when you look at that gauge, it is actually at an all-time high, which is interesting, given that all throughout the trade war there was talk about chinese tech, asian take as the collateral damage. despite the phase i trade deal, it is not resolved. sylvia: you have seen this jump in 18% of sales. which is huge. a looks like the thought of phase i deal coming to fruition and continued deals coming forward is moving in both places. china, theyterms of are an etf lens. , kike one for the long-term webb, and for the short-term, they track china internet companies. you have a favorable demographic

. for tech, it is the highest, fastest growing middle-class. you have a lot of young potential consumers and they are looking for tech related internet of things. company thatnline has to do with consumption, retail and technology is going to do well in china. i also think that is opening the market for investment. that is phase one to three if we see it. thank you so much. plenty moreto have ahead. this is bloomberg. ♪ [applause] [laughter]

haidi: you are watching "bloomberg daybreak: asia." much of a show you is bracing for more record hot weather as bushfires continue to burn out of control. ever managing editor from

australia has been tracking these. butre bracing for revival some parts of the fire burning again. that extremek into danger territory again. australia is looking bad. we have got a huge area from victoria state, and area the size of belgium, pushing up into the victoria, across the border into the coast of new south wales, all of which was hit hard last weekend. it is looking like it will be smacked again today as wind picks up and temperatures start pushing to about 43 degrees celsius. firefighting authorities have warned people in those areas to get out if they can or an act bushfires survival plans. we will be monitoring that news closely as conditions worsen throughout the day. we are hoping that it will not be as bad as last weekend, which

saw the death toll pick up to 26 nationally since the disaster began in september. we are now looking at about 11 million hectares of land burned across the country. that is twice the size of switzerland. quite extraordinary. one billion native animals killed is the latest estimate from the university of sydney. insurance claims pushing past 700 million dollars. 2000 properties destroyed. it has been an incredible disaster. a quarter of the 240,000 australians have been urged to evacuate their homes. what is the feeling among people in these communities, are they going to fight to save their homes? >> i am struggling to hear you a little. i think you're asking if people will be fighting to defend their homes. people weings from have spoken to on the ground.

people are very stoic and australia. they are used to battling fires. it is part and parcel of the s trillion summer, but this season has been extraordinary. many people we have spoken to have taken the decision that they are moving to safer areas. a picturesqueo town and deciding to leave their homes. they are moving to sports fields , which are being protected by the fire service. simply saying that it is not worth the risk. thank you so much to our managing editor for australia in sydney. let's check the latest is this flash headlines. the world's largest -- the world's oldest bank sees a sit -- a hit after the value of deferred tax assets. assets reduced to account for charges in italy and that will

be in the bank results for september. haidi: coming up next, days timing, the trade pact a bevy of corporate deals. we will have those details ahead. this is bloomberg. ♪ rg. ♪

>> political risk is not something new in the market. >> short-term noise in a long-term situation. >> the market is going to follow the fundamentals. >> weakness may represent a buying opportunity. >> liquidity has clearly been there. >> this is a market that is looking through the fundamental data. underlyingas the growth picture remains strong. >> looking through corporate guidance and data points. pointsoction of data makes the risk to a maximum. >> this market wants to go up in the short-term. >> there is low risk across

markets. >> that makes it profound the dangerous. sophie: some guests commenting on the focus on fundamentals and investors looking to take it steady with u.s. futures. a little changed to the upside. here in asia, markets set to end a choppy week on a high note, and head of u.s. payroll data. we look at industrial output from malaysia ahead of the shares building on thursdays gains at a record high above 6900 points. the biggest boost while gold is sliding. holding steady except for july 2018. no reaction to the latest data from japan, indicating that household spending in november fell 2% on a yearly basis. let's get to jessica summers for the first word headlines. intelligence

increasingly believes the ukrainian jet that crashed outside tehran was shot down by a missile. rockets wereus two detected from an iranian battery just after the 737 took off, followed by an explosion near the plane. 176jet crashed, killing all people on board. iran originally blamed technical issues, then said an engine had caught fire. china's new hong kong liaison officer made a courtesy call on chief executive carrie lam, saying they are confident the city will recover from unrest. he takes over with hong kong in recession and facing store closures as anti-china protests continue. the financial secretary has told bloomberg the government will spend boldly to bolster the economy. aboutogether, it comes to 25 billion.

together with the measures we enacted, which was in the order of about 45 billion, these two byether can help our economy about 2%. johnson's brexit bill has cleared its final hurdle in the years of parliamentary gridlock in the u.k.. favor of the withdrawal agreement bill, which now goes to the house of lords. johnson once the bill passed into law this month so the u.k. can leave the european union on the 31st. he campaigned on the promise to get brexit done. and president trump's border wall plan has been given a boost after judges lifted in order that blocked his use of military construction funds. the decision by the court of appeals in portland allows him to divert cash from other military projects.

the white house welcomes the ruling and says the wall will be built. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. haidi: thank you. china has confirmed its top trade negotiator will be in washington next week for a phase one signing. both countries are lining up deals along with trade agreements. we are joined now from los angeles. we just heard they will be attending the ceremony. what kind of activity are we expecting that will ride the momentum? u.s. side,from the they are eager to show that this deal is about more than increased agricultural

purchases. that is important for trumps farming base and for his reelection bid. i think they really want to show that there is some meat on the bones of this deal, and getting u.s. and chinese companies working together and more entrenched in each other's economy will be a key part of that. this is ahead of a potential phase two, which president trump said he wants to start negotiations on right away. given that this is an election year, it seems they will keep track of negotiations. >> absolutely. it trump said that phase ii deal can come after the next election , expected for november 2020. that seems reasonable of a timeline, given the fact that those are when the hard issues need to be discussed. things that china will not give up easily like subsidies or tougher standards for ip, so that it is a sure that china is not stealing intellectual

property, which the u.s. accuses it of. question, will there be a political reason for trump to seek a phase ii deal after all that pain with china if he does win reelection. haidi: that is what i am wondering as well. symbolic,al kind of is it much of a purchase oriented deal rather than the structural issues that have been raised from day one. is that even going to be enough to get it through in this election year? >> absolutely. i think some of the criticism floating about is that this does not take the u.s. tax where it was before the trade deal. criticism from businesses in the u.s. that they are playing -- paying tariffs from china, which hurts them. ofre is little questioning why all this pain from the tariffs when really, it is crumbs perhaps.

again, we have not seen the text, so we do need to wait until we see the document. we really know has been agreed to, then as it rules out, to see what kind of difference it makes. sophie: thanks to our economic policy editor. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

haidi: you are looking at taiwan, just waking up going into an election weekend. for more stay with us coverage on bloomberg television. guests out of taipei including the hoover institution and a lawmaker joining us. south korea says it is watching the situation in the middle east and tensions appear to be easing between the u.s.

and i one -- iran. they say the conflict has not had a direct impact on south korea's economy. ofning us is senior director the korea economic institute. what is the likelihood that south korea may send troops into the hormuz strait, given what is happening in the region, although we have had reports that iran could cut ties if south korea does so? >> this is a sensitive issue for south korea. they have a division that does piracy missions off the horn of africa and they are considering re-tasking that mission. there is also a difference in terms of the challenges the united states faces. while the u.s. is pressuring south korea, japan and others to take ships into the middle east, protect shipping lanes, south korea is taking a more cautious approach. if they have to move beyond this one division in the middle east,

they would have to have approval by the national assembly. it is questionable whether they could get that. it is a delicate issue and they are looking at maintaining ties with iran as well. sophie: delicate indeed. i want to bring our viewers a breaking line that canada has accepted an invitation to iran for a crash site probe after the jamming of the ukrainian jet. as you said, this is a delicate issue. they are turning against south korea here. what are the risks in the long-term to petroleum supplies, the south korean -- saying it is not see a direct impact as of yet. >> at the moment, it has not impacted south korea. south korea does have a petroleum reserve that would last three months. they also have reserves jointly run with the uae, which they could draw on if they needed excess reserves. situationk at this where it could escalate, you

could have disruptions in the middle east. economyrea, 40% of its runs on petroleum and they get 70% of that from the middle east. it would have a significant impact on the south korean economy if supplies were disrupted for an extended time. haidi: there is myriad geopolitical conflicts and tensions that could arrive and a lot more we don't know. as to whether this is the end of the tensions right now, what options would be available to south korea? if they have to look at other suppliers, in terms of compatibility, norway and australia have similar sulfur content, so they might be options to increase exports. you might be able to take and use the u.s. crude instead of the middle eastern they had imported. there are options in terms of

other suppliers but if they had to look gone certain countries, they might have to look beyond economies. the good news is that if you look at the situation right now, most opec companies -- countries have been rolling back on production, so there should be excess capacity if there were to be disruptions. is still awables longer-term aspiration for this administration? troy: the current administration has put more effort into renewables, specifically hydrogen. they are trying to develop a new industry, so they are crating special sandboxes for experimentation on trying to develop new distribution centers, so they can take vehicles. hyundai is trying to push forward on fuel cell vehicles. you also have a push into fuel cell development for buses. this is a major area for the south korean government but if

you look at development, it is probably going to be a decade or two down the road. there is an exploratory committee on one of the world's largest wind farms but that would not start until 2022. even some of the things they have in the pipeline would not come on stream quickly. there really is a need to try to find a way to manage the petroleum supply, at least for the for searchable future. meantime, the u.s. could become korea's third-largest oil supplier and back in november, they said they would seek to boost more imports of u.s. oil. korease do you see south adjusting, given that we have sanctions placed on iranian given back inre may and how do you see south korea encouraging diversifying of its oil resources?

troy: in the specific case of iran, after the nuclear deal was put in place, imports shot up to 10% or so of south korea's petroleum imports. south korea was importing from iran materials used in per billion production. refinedhan taking petroleum, because they have had difficulty finding new supplies, they looked to imports directly from country and -- countries like russia and other places. there has been a move to diversify suppliers, to move the production side outside. but, not just on petroleum, there is a push on more lng from the united states. one goal of the administration as they try to transition away from nuclear power is to increase the use of lng and power plants as well. that is another option, to speed

up that transition. young -- pyongyang has been largely silent. thiswondering what effort has on denuclearizing north korea. do they looked at this and say if we don't continue to near claes this is what we will get from the united states or do they look and think we need to bolster because of the possibility of u.s. military aggression? troy: north korea is in a different spot and iran. minimum that they can take and load a warhead onto a medium range missile in hit our bases in japan or guam. has a degree of deterrence that iran does not have against the united states. in terms of how this impacts the korea,on with north

you're going to see the u.s. administration tried to continue , butgue with north korea i'm not sure that this would deter north korea. if kim jong-un has made a strategic decision to test and icbm, the history he has with the united states suggest that while he could face increased sanctions, he is likely to face a response. in the long run, this probably does not change things much unless the situation in the middle east significantly escalates. haidi: fascinating conversation. thank you for joining us. more to ♪ come on "bloomberg daybreak: asia." this is bloomberg. ♪ is bloomberg. ♪

sophie: a check on the latest business flash headlines, the

days of expansion at office sharing wewrok seem to be over. dashedm nosedived in 2016 levels. in new york, they were the lowest in five years. arei: j.p. morgan chase taking extra office space in china's tallest skyscraper as the increase mainland headcount. jp morgan introduced its shanghai tower. 20,000 square meters. we are watching fast retailing when japan opens in a few minutes. the operator reported its worst quarterly revenue drop in a decade. the company had counted on overseas expansion and growth in the face of a week mastic market. that strategy has been hit in hong kong as well as the u.s. china trade war and the spat between japan and korea. today, webloomberg

have the health care sector in focus. selina wang joins us. you spoke to the ceo of united family health care, one of the country's largest private health care companies. selina: we had a wide-ranging discussion. she is a prominent figure in the health care space. she came to china for decades ago to start by selling medical equipment, then moved on to start united family health care in 1984. it was the first foreign invested health care hospital operating in china and now it is the largest foreign investment private health care in china and has become one of the largest health care companies to operate in china. tosked her what it was like tackle a complex regulatory system not only as a foreigner but also as a woman. >> a goes back earlier than that.

1979 and in china in when i first came to china, we were importing medical equipment for a chinese public hospital and when i would go to the states, i would be asked what it is like to be a woman in business in china and the best answer i could come up with is that i don't think i was seen as a woman. i don't think that gender was the first thing that popped out. being a foreigner in china at the time was like think from mars. it was wonderful being a martian, because people did not have expectations. i could do what i thought i wanted and needed to do without people thinking you can't do that because you are a woman. selina: do you feel like that offered you an advantage in a way? >> absolutely. there was not a rulebook. there was not a roadmap with barriers to where woman could go and couldn't go because that was not the persona i was seen as. selina: at the time, there were

challenges for women to start their in business. roberta: for sure. for chinese women, it was a very difficult time and things have certainly gotten better, but when i first came to china, for example, job ads would always specify gender and it would almost always be male. it wouldwas women, talk about the physical attributes of the woman that was required. selina: what kind of physical attributes? weight, goodtall, looking. legally, that is not allowed anymore, but that having been said, even if you look at university admissions, the bar is higher for women in many cases. notoriously shy away from hiring young women, especially if they have not

become mothers. often, employers will ask women, do you have any children or how many children do you have, because maternity leave in china is quite generous and many employers are concerned that it will be expensive to employ women who are about to go into childbearing years and they will move the continuity, professional development and shy away from hiring young women. selina: do you think that is industry specific? roberta: i think it goes across all industries. one shining sector in china is many successful chinese female entrepreneurs, but for big corporations, i think it goes across sectors that women have a much harder time, especially young women just entering their career. selina: how can companies solve that problem with maternity leave, it is required by the government. you're saying that because it is

generous, it is actually hampering those employers from wondering to hire women. what is the solution to that? over 70% of our employees are women and 80% of our c-suite and senior management. we approach this very differently. amazing that it is an resource. we really place a big -- we really appreciate diversity and think that is one of the secret sauces of our success that we have gender diversity as well as cultural diversity, educational diversity, bringing new ideas to health care. we do have young women going off to have babies, but in years where there are a lot of women in our company having babies, women can bring children to work and have an easy time for breast-feeding near the work flexible have

where any employee .8 or.5,e to work especially our physicians can choose if they want to be full-time or work four or five way, weeek and that have wider access to the talent pool. selina: we also spoke about how the private system in china has become more important in health care and the public system has become more overcrowded and people have more money in their pockets and want to get high-end services. we now have hospitals across china. most clients are wealthy, urban people including celebrities but they also have a foundation that goes to the rural parts to provide health care services. roberta told me that in many places, women say they never had

it before and they will line up multiple hours to get there first gynecological exam. sophie: thank you so much to selina wang in beijing. let's get a quick check on markets in sydney. we are seeing aussie shares pressure higher this morning. gold sliding after the overnight retreat. the first drop, higher for a third session after the benchmark rose to a fresh high with tech leading gains. this is what we are seeing when it comes to the next hour of "bloomberg daybreak: asia". our chief economist joins us to assess the economy in hong kong after months of protests and we are also joined on the taiwan elections in taipei. he has been asked to monitor the election. ♪ sophie: monday, we are live in

shanghai for an inclusive interview with the head of investment banking, david chin. we will also be speaking to harvard kennedy professor -- that is in hong kong on "bloomberg daybreak: asia." this is bloomberg. ♪ is bloomberg. ♪

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>> a very good morning. asia's major markets have just opened for trade. i am haidi stroud-watts in sydney. shery: i am sophie kamaruddin in hong kong. welcome to "daybreak asia." haidi: our top stories this friday, iran is accused of shooting down the ukrainian 737. the u.s. and others say there's evidence of two missiles that were fired shortly after takeoff. the hong kong government about to spend boldly as months of protests undermine the economy.

shery: it is the economy. taiwan goes to the polls. we are in taipei this hour. we have the open in tokyo upon us. let's check in on the mood in tokyo right now. we have the nikkei 225 adding .3%, adding to the advance we are seeing in retail markets. the longest streak in two years. the yen little changed. set for the biggest weekly drop since july. in november.p consumption is looking to recover following the sales tax hike. let's check in on the open in south korea. we are seeing upside moves come up .2%. modest gains as government officials continue to assess the impact of the iran developments on the economy. we have the korean won slightly

lower by .1%. aussie shares extending gains at a record high. getting downgraded. other gold stocks this morning. the aussie looking vulnerable. a move towards a 68 if the data less than that. haidi: taking a look at how the start of the festive spending season as well as the ongoing brush fires factored into consumer confidence and retail spending. not much of a move when it comes to the u.s. 10 year yield. risk-off play has faded somewhat. trickling through to the asian session as well. not much of a move. we are watching on oil markets. oil is set for its first weekly loss since november. wti seeing a decline. geopolitical tensions between the u.s. and iran seem to diminish.

gold holding at 15.50 at the moment. bringing mark cranfield. u.s.e records in the spirit aussie stocks trading at a record. tokyo looking like the high since 1991. are we looking beyond iran? we are starting to talk more about trade. there's more optimism going into this phase i deal. we are starting to look back at the fundamentals which people were worried about or looking forward to at the beginning of the year. they got interrupted by what happened with iran. we are rebooting 2020 again. now, we are back to this fairly optimistic outlook we have for world growth. 20/20 is shaping up to be an improvement on 2019. that is being reflected in the start.

s&p's off to the record highs again, so the mood obviously is pretty good and the fact that we should be able to put iran behind us for a while is helping out in that respect. there's a lot of data points coming up with the u.s. earnings season will be extremely important. big u.s. banks start to report next weekend by the end of the month, you will start to see some of the key corporate's in online as well, so with the u.s. markets at such lofty levels, it really needs a justification of a decent earnings season to back that up. people will be watching those numbers very closely. derailave anything to this good move in u.s. equities, it could come during the earnings season. it will be a volatile period ahead and people will be watching closely to see who beats and two misses the estimates put out by major companies. >> we will be watching very

closely. he is on his way to the event. is this preston? -- priced in? mark: the phase i deal has been priced in. an interesting development overnight is that donald trump says they will start talking about a phase two deal straightaway. we know from how long it took to get the phase i deal that it is not plain sailing by any means. there's a lot of ups and downs getting to the phase i deal. the fact that they are willing to start on a phase two is important for markets. that's an important sign because just the fact that they are going to be on a path to discussion reduces the risk that the united states would backtrack on anything that happened in phase one or consider adding new tariffs on china in the meantime. markets will take that as a good sign even if they know it will

not be a bit of a bumpy journey. the fact that they want to take that journey towards a phase two deal is a positive thing for u.s. markets and global markets indeed. we are getting some of these reactions from the white house. after the house of representatives voted to curb president trump's power when it comes to initiating military strikes against iran without congressional approval, the white house saying that congress's war powers action and the vote on that is completely misguided. this is seen as mostly a symbolic vote given it is not likely to be taken up by the republican-controlled senate. u.s. jobs. the initial jobless claims came in earlier. payrolls were looking like that. there are estimates on the bloomberg survey. that's another decent number for

payrolls. iseresting, but risk slightly higher. it is above 170. that suggests traders are looking for a beach, looking for an upward beat on the payrolls member. we have seen quite a few of those. the number came in better than expected, so that tells you that if u.s. stocks are going to get positive momentum, it will not come from the jobs number. it would have to be a huge number, probably well over 200,000 to move the dial as far as sentiment is concerned. if u.s. stocks are going to get more momentum, it's going to be from somewhere else, probably from this discussion or looking ahead to earnings. the payrolls would need to be a very good level on the upside. it probably means there's much more risk for a miss on the downside. they could do a lot more damage to markets than a really good member on the upside. so much to mark cranfield, our mliv strategists.

you can follow more on our markets live blog on the bloomberg at mliv . let's check in on some movers in tokyo, pulling up the board to check in on some names i want to highlight this morning. fast retailing under pressure, falling as much as 2.1% after the uniqlo owner lowered its profit. asia's largest retailer cut its operating target. japan display moving to the upside. inventorye overstated which may have inflated the company's operating results. also reiterating it wants to reach definitive agreement after ending bailout talks. lastly, gaining ground after beating third quarter estimates, posting record high operating income for the period, helped by profitability and the domestics and overseas convenience store operations. first word news with jessica summers.

the federal reserve says policy is appropriate amid solid u.s. growth but admits there is a risk that inflation will all start at the 2% target. return claret i told the council on foreign relations that monetary policy is "in a good place and should support sustained expansion." the fed left rates unchanged and signaled a pause through this year. >> we want to distinguish between the baseline interview and the risks around that view. the private sector forecasters baseline view is for core measures of inflation to begin to move up towards 2%, but i would be honest in confessing that if there is a risk to that outlook, it is skewed to the downside. jessica: much of australia is bracing for the return of record hot weather this weekend as brush fires continue to burn out of control. thousands of people across the country are being urged to seek

safety. state emergency warnings remain in place as temperatures looks set to rise. last year was australia's hottest and driest on record and the fires were seen by many as the consequence of global warming. boris johnson's brexit bill has cleared its final hurdle in the house of commons, ending years of parliament terry gridlock in the u.k. mp's voted in favor of the withdrawal agreement bill which now goes to the house of lords for ratification. johnson wants the bill passed into law this month so the u.k. can leave the european union on the 31st. he campaigned on the promise to get brexit done. and boeing is estimated to face costs of $5 billion. that is if pilots are ordered to have simulator training before the 737 max returns to service. bloomberg intelligence says that would effectively double the $5.6 billion that the plane

maker has already set aside to cover costs from the grounding. boeing would be expected to reimburse airlines for expenses related to the training process. 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. haidi: thank you. breaking news when it comes to the ntsb, the national transport safety board receiving an iranian invitation to investigate that plane probe. sophie. our next story, questions over taiwan's future relationship gloom larger than ever in the presidential election on saturday. from thechallenge mainland friendly -- stephen engle is in taipei. you know, this area in

front of the presidential office thousands of -- the nationalist party here, supporters in their big, nice rally before tomorrow's election. local television was saying it was the largest rally goes journalists had ever seen. not surprising because the north of taiwan, particularly taipei, is a stronghold. it is the rival to the incumbent president. he has been running on a platform of more economic .ntegration with mainland china but again, keep in mind we have had for years under dpp rule which has a pro-independence stance. he prefers -- she prefers to say she wants the status quo. she rejected the one china 1992

consensus that there is only one china. rejected the one country, to systems model employed in hong kong as a workable model for taiwan. that is what is interesting. the battle of narrative has been fierce here in taiwan leading up to this presidential election tomorrow. because hong kong and the pursuit of democracy there by the protesters has struck a cord which many people here, who may refer to themselves as taiwanese rather than chinese. yesterday from the foreign minister, joseph, who warned china about interfering in the narrative here being discussed in taiwan ahead of the election. the democratic election is for the taiwanese people, and therefore, if china reads too much into taiwan's election, or they want to play a role in the

taiwanese election, we might end up with a situation that china will feel they are defeated and therefore, trying to come up with part of these that are conducive to peace and stability. i would say that if china wants democracies and other countries so much, they can try with their own elections. it's going to be a fiercely contested battle tomorrow from legislative rates as well. right now is really about accusations across the board from both sides of interference and intimidation. in the next hours, as we give you up-to-date coverage here from taipei, i will get more into those details and the accusations and the denials coming from the two camps. stephen engle in taipei.

still ahead, we take a look at what 2020 will hold for hong kong's economy with a guest joining us. this is bloomberg. ♪

haidi: you are watching "daybreak asia." the government of hong kong says it is ready to "spend boldly" to shore up the crumbling economy. the secretary-general spoke to yvonne man about the resilience in the financial market. the tourism board has been working closely with the tourism commission in terms of further positioning in hong kong in the .ierarchy of high-value tourism on the retail sector, yes, currently, a lot of the tenants are affected by higher rental, but if the situation shows that

this kind of high rental cannot be sustained, i think the market will adjust itself. yvonne: do you think hong kong can remain luxury hub? paul: in the past six months, because of the social unrest, people worry about their safety. people worry about whether it is still safe for them to come here. i think it is still very attractive, not just as a tourist destination, but also as a place to do business. yvonne: the financial sector, the property sector, has stayed robust amazed seven months of protests. do you expect it to stay that way where you see this dichotomy between retail and tourism, but the banking system still remains strong? cannot still hold up? -- can that still hold up? paul: when you look at the

inflow and outflow of funds, as well as the banking system, you might not have realized we are going through very difficult times in terms of this is society -- this society. going forward, we maintain that our financial system is very robust. financial stability is no problem. yvonne: will it stay intact? paul: of course. we have no intention to review it. yvonne: what would force you to abandon it? paul: no circumstances. no circumstances. wells been serving us very , functioning very well. we do not see any particular reason for this to be reviewed. paul: not even if the economy -- yvonne: not even if the economy weakens further. are people thinking about taking

their firms outside? paul: business people have thing contingent -- having contingency plans is natural. far, our engagement with them indicates that, yes, they have some concern. they have to think about whether they need a contingency plan, but we do not see any move their plan to business investment away from hong kong. at the end of the day, hong kong still is a very good business. the core competitiveness is still here. hong kong plays a very important role in china's economic development. take for example the greater bay area. paul chan speaking exclusively to bloomberg markets

anchor yvonne man. that's get some insights from our next guest, oxford economics head of asia economics. we have the secretary of hong kong striking a fairly optimistic tone. in financial markets, it is looking more upbeat. when you take a look at the trajectory, holding up this chart on the terminal right here, we are expecting further contraction for hong kong's economy in the fourth quarter. with pledges to shore up hong kong from the finance secretary, where do you see things going this year? >> we think hong kong is up for a tough time. we have been projecting a further decline in economic output compared to last year after a contraction in 2019. mr. chan did refer to the retail sector that is a weak spot in hong kong because of that reliance on terrorism. it's going to take an awful long

flows tothose tourist come back if at all. i am personally not sure that we will see a complete resumption of the flows as they had been before the terrorism but i think i also agree that if you look at other parts of the economy like the financial sector, that we are looking at a very solid, very strong economy that still has some key advantages. one thing that is interesting to note is that as you have that u.s.-china rivalry, there are which hong kong is benefiting from that as well in terms of chinese companies being interested in listing here as opposed to in the u.s.. i think that hong kong still complained that role as a gateway, a liaison between china and the rest of the world.

>> we are seeing a slight let up in external pressures on hong kong's economy. hong kong shipments to china seeing the pickup. do you see that providing some green shoots, offsetting what the domestic economy is going through given the downward pressure on retail? louis: absolutely. if we look at what has been the cause of the strong negative pressure on china last year, then it was not only the domestic issue. it was also the broader global weakness in the u.s.-china trade war. now we look a little more positively at that and we are more cautious but we are not as bearish anymore on that global picture and the u.s.-china tensions. that also will help hong kong because this economy is still tremendously, you know, exposed, tremendously affected by global forces. seen: we have deterioration of the macro environment when it comes to the pmi readings. it has not surprise you that the capital markets have been so resilient. if you think that will be sustainable? louis: that is a good question

and very interesting. if we look at something that a lot of people have been speculating about will there be an outflow of money? we know there have been people speculating against it. i agree with the financial secretary that if you look at fundamentals, they are solid. if you look at the amount of foreign reserves that is backing up the hong kong currency, i think this is incredibly difficult for markets to bet against successfully, so the currency and more generally, the financial system, which is very open, it plays that role between china and the rest of the world. i think that is a very solid arrangement. get more details about the trade deal being signed on the 15th, we are hearing that he will be attending the signing. the momentum waves of positivity. there are parts of the market

alking about pricing in phase for deal. this addresses none of the structural issues that were raised from day one of the trade war. louis: that's right. even overnight, we were reading comments from the chinese side that even the chinese side is explicitly, openly, you know, expressing caution or doubt about how quickly we can actually see some progress in this. as everybody knows, the more difficult aspect has been pushed into that phase two side. in the u.s., we are moving into a presidential election season, so you know, i think it is definitely a very good sign that there is that phase i deal because it does show that there are channels of communication, there is negotiation taking place, but i think we should not run ahead of ourselves as to how quickly there will be anything

like a phase two deal. > thank you for joining us in the studio. that was louis kuijs, head of asia economics. we will have other big guests on monday in hong kong. we will have exclusive interviews with the city secretary for financial services as well as commerce and developments. also joining us exclusively is the average minister, michael darcy. let's get a quick check of the latest business flash headlines. there are reports of trouble-free at another company backed by southbank. the delivery service is laying off more than 300 staff according to axios. they secured $1 billion of financing from the softbank group a year ago. it comes one day after another halfank investment slashed its workforce. haidi: the days of breakneck expansion at the office sharing startup wework seems to be over.

it nosedived to pre-brexit vote levels. they were at the lowest in more than five years. the news follows the abandoned in september.o sophie: grubhub insists it is not for sale, pushing back on media reports that sent shares surging. the company says there is unequivocally no prospects to sell. the wall street journal and new york post reported that grubhub was considering a sale. it gave the company a market value of $5 million. haidi: we are expecting retail sales data in australia over the next couple of minutes. we will get you those numbers after the break and the reaction in the aussie, already under pressure in this session. this is bloomberg. ♪ and they lived happily ever after. the end.

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read it again, papa? sure. i've got plenty of time. life line screening. the power of prevention. call now to learn more. haidi: we are getting a nice beat when it comes to retail sales, up for australia. the surveying at number, .9%. the previous month was flat. let's get some reaction with james mcintyre. we are of course keenly awaiting the next few data sets to show the impact of the bushfires, impact of how the festive spending season went. james: this is too early but what this is showing is if we did not have this bushfire crisis unfolding, it would be the thing we would be talking about, the impact of the increasing trend within australia toward black friday and cyber monday-type spending,

so we have a couple of elements that are probably contributing to this boost in retail sales today. firstly, the weaker than expected number last month, but for the month of november, this pull forward of christmas spending because of cyber monday -- sorry, black friday-type deals and specials, a lot of that potentially, retailers reporting pulling forward. it is sort of shaping up that december could be one of those key months where we see the beginnings of bushfire impacts as well as how well the statistical agency is dealing with the economy such as these new things like this pull forward into november of that christmas spend. haidi: in terms of what we are expecting to see with the bushfires, obviously, it's

interesting. we have seen some of the economists coming out. perhaps the damage assessment is not as bad as we expect given how concentrated economic activity is in the major cities. do you expect a boost when we see the first of the $2 billion being rolled out for relief and recovery and the stimulus effect? james: with these disasters, they are not new to us in australia. there is a common way of thinking about them which is the initial impacts and the damage bill, which we still do not know as the fire situation is continuing to evolve, but then we have the reconstruction spending that goes on, and net-net, while we have an initial early hit to the economy, you do get some payback later on. there's a few things that are different about this fire season in the sense that while sydney, melbourne, and canberra, those three capitals, our home to 11 million people, and they represent .3% of australia's landmass, but almost half of australia's economy is in these

cities. it has not directly benefited by a fire, but the smoke pays and the effects it has had on the economy is the disruptions there. that is something that might be different about the impacts of the economy this fire season then we are used to from natural disasters. haidi: does it change anything for the rba? you don't want to see a disorderly transition when it comes to the energy policy, right? james: that's true. one of the things that might be a little bit more concerning, not so much on the energy front, is what is happening to consumers, and some of that high-frequency data we have seen, we have got the retail sales today, but earlier in the week, what we have seen is a continuation of a marked slump in consumer sentiments with the weekly figures showing that consumer sentiment has not only been declining but consumers expectations of how they think the economy will perform over the next year and over the next five years really hitting marked

deterioration. the consumer outlook will be one of the key things for the rba. more than 55% of the economy, it is being weak. we saw in the gdp before christmas that consumer spending in per capita terms has been declining. if we do not see that turn in the economy coming through for consumers, then that is the thing i think that will really, more so than energy, be effective for the rba. >> not story about. thank you so much for that. bloomberg -- james mcintyre here. sophie: we are seeing reaction to the aussie dollar to the latest retail sales data. the aussie rising .2%. the kiwi is on the back foot. sydney stocks gaining ground. gold miners are under pressure given the easing we are seeing in geopolitical tensions which has pulled back the advances seen in gold and oil. belowrean won trading

11.68 against the dollar. the nikkei 225 adding .7%. japanese stocks set for a weekly gain while the yen is headed for the worst week since july 2018 this morning. let's get to jessica summers for the first word headlines. jessica: u.s. intelligence increasingly believes the arainian -- was shot down by missile. sources tell us service air rockets were detected from an iranian battery just after the 737 took off followed by an explosion near the plane. the jet crashed in flames, killing all 176 people on board. iran originally blamed technical issues for the disaster and then said an engine had caught fire. china has confirmed the vice premier will lead a delegation to washington next week for the signing of the so-called phase one trade deal. he acted as president she's top negotiator throughout the tariffs saga.

for thebe in the u.s. signing ceremony and president trump said he will fly to beijing afterwards to begin talks on the next deal. kong liaisonong officer has paid a courtesy call on carrie lam with the two saying they are confident the city will recover from months of unrest. he takes over with hong kong in recession and facing store closures and job losses as the anti-china protests rumbled on. bloomberg thed government will spend boldly to bolster the economy. >> altogether, the amount comes to 25 billion. together with the measures, we are managing the budget, which was in the order of above $45 billion. lfese two together can ha our economy by 2%. jessica: president trump's border wall plan has been given

a boost. the court ofby appeals in new orleans allows him to divert cash from other military projects while the administration continues to appeal a separate federal ruling in texas that it is illegal to use that money. the white house welcome to the ruling and said the wall will be built. 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. haidi: thank you. we are getting some updated developments on the crash of the ukrainian airline 737 aircraft. we heard overnight that intelligence from canada and the u.k. suggests it was caught by iranian missile fire. we are hearing from the safety board in the u.s., a statement sayingairlines flight that they have designated an

accredited representative to the investigation and they are currently evaluating the level of participation in the evaluation. the ntsb saying they received an iranian invitation into this plane crash probe and that they have designated a representative. they are unclear as to the level of involvement. participation still in doubt. we heard from many analysts saying they would be unsurprised if there was no ntsb involvement given a level of hostilities between iran and the u.s. which would prevent a joint multilateral investigation from being able to take place properly. coming up next, taiwan voting this weekend. how the elections may decide the independent state's future relationship with china. this is bloomberg. ♪

>> you are watching "daybreak asia." taiwan's votes this weekend

could shape the future of its relationship with china. our chief north asia correspondent, stephen engle, takes a look at where the two major parties stand on the issue. consideredijing has it a thorn -- her a thorn in its side since she came to power, taiwan's first female leader who refuses to endorse the one china principle, raising tensions. that's also become her top-selling point as she campaigns for a second term. taiwan has been ruled separately from the chinese mainland since 1949, and today is democracy. beijing and taipei reached an understanding that they are part of one china while disagreeing on which government is legitimate. she vows taiwan will never be reunified with china as long as she is in power. that and her support for pro-democracy protest in hong

kong has helped boost her popularity ahead of this weekend's boat. a reversal of fortune after her party's municipal election defeat in 2018. whosethe opposite for -- perceived friendliness to china is perceived as a liability. the mayor struggled to articulate a clear china policy even as he warns against a push for independence. the future of taiwan's relations with the mainland has become a central issue in this year's election as beijing adopts a more assertive approach. despite closer ties with china, more and more people on the self world island are identifying as taiwanese. support for reunification also has fallen over the years. that is a headache for the communist party in beijing, which views we taking taiwan as an historic task that must be completed at whatever cost. even if that means by force. engle standing by

and taipei, covering these elections. what is the mood, i guess, as we get into the morning? what are some of the key issues at stake here? jubilant,he mood is obviously. 24 hours before the polls open, the weather is cooperating in the usually rainy taipei in the wintertime, and that bodes well for perhaps a fairly high turnout tomorrow, but right here, in front of the presidential office behind me, that is the ultimate prize, currently being held by the incumbent of the dpp. he is the challenger of the nationalist party. they had their big rally right here, and it was standing room only. thousands of people were here at the final rally before the election tomorrow. all the paraphernalia is being swapped around. of supportersands will be in the same location as

the president, who will come here and give her final address before she casts her ballot tomorrow morning, i presume, in her constituency. let's bring in our next guest to give some perspective on this election. it is lanhee chen. he is a fellow at the hoover institution in samford university. also, of course, former advisor to multiple u.s. presidential campaigns including chief advisor -- policy advisor to mitt romney. you are also here at the invitation of the ministry of foreign affairs as one of the u.s. scholarly experts, advisors, or observers, i should say. so how important is this election? going back over the number of different elections, we swapped back and forth. right now, we are coming into this phase one of a trade deal between china and the united states. you have the pro-democracy protests in hong kong. you have china being more assertive in allegedly interfering in this election. how important is this one? >> i think it is really

significant. openly contested on taiwan. i think the interesting situation is it comes at a very challenging time geopolitically. you have the u.s. and china that have been engaged in this trade dispute. taiwan has been a bit of finfish -- a beneficiary of that. china is trying to exert more regional hegemony. so the expression of democracy that we are going to see here on saturday here tomorrow on taiwan is actually quite important, quite significant, because it demonstrates to some degree the ability of democracy to flourish in a region where i think arguably, we have seen a diminishing of democracy with what is happening in hong kong, china, other societies. for taiwan to be able to express itself in this way, i was at that rally -- jubilant, energetic. we will see the same thing tonight, i presume. that is an important statement at a time when democracy is receding in a lot of parts of a

sham around the world. stephen: how much do you think the hong kong issue has played a factor? we are not allowed to broadcast polls, but we have seen a shift in sentiment. a year ago, they were perhaps on their way towards a victory. but things have changed over the last six months. thatare really seizing on sentiment that democracy is something worth fighting for. do you get that sense? lanhee: significant. hong kong has played a huge role. first of all, the framework that beijing wants for taiwan and china class state relations, this notion of one country, to systems, has proven to be unacceptable in taiwan. the hong kong situation has accentuated that. it sort of reminded people of the challenge that comes in dealing with china. that has bolstered her chances of being reelected as president. it has raised a broader set of questions about the economy in taiwan, how closely do they want the taiwanese economy to be tied to china, the amount of trade

between taiwan and china which is equivalent to the amount between the u.s. and japan. it is significant. stephen: biggest trading partner by far. lanhee: how closely tied to the chinese versus the united states, for example, is one issue. how much of taiwan's security can be pegged to the u.s.. stephen: what do you think a second term will look like? they are emboldened by the fact that the economy is doing well right now. lanhee: they are emboldened by the pursuit of democracy and not necessarily independence from china but the state escrow. does she push that independence charter or does she say the state escrow is good for us? i don't get -- state escrow is good for us -- status quo is good for us. it will largely be the policy of the administration going forward.

how does beijing respond? that is something i have asked. i don't think anybody really knows how china is going to flex its muscles if she gets reelected. will it be a military response? maybe a more calculated one. the u.s.-taiwan relationship has been largely stable. after that initial phone call that president trump made, which created a lot of controversy in the region, he's basically laid low with respect to taiwan and i think he is likely to continue that posture regardless of who gets elected president, knowing that taiwan has her huge constituency in the united states. a lot of people pulling the taiwan-u.s. relationship is important, and that will continue regardless. he does not want to poke beijing at a time when this phase one trade deal remains in the balance. will come to sign this agreement with the president.

i think the u.s.-china trade is done as an issue until the election. i think president trump has what he needs out of that negotiation with the chinese politically. by and large, i think this issue does not go away but it does not have the same kind of currency it has had for the last six months. what does the victory look like to you? lanhee: with respect to the u.s. relationship, i think it continues to be very similar. that does not change very much. it will be interesting to see if the china-taiwan relationship shifts or changes at all. conventional wisdom is that the taiwan-china relationship is cozier during times of kmt rule. the reality of state escrow continues. he has campaigned on a policy that is more integration, economic at least, with the mainland. look at the numbers.

top ofe going to be the the economies in 2019. nearly 3% growth for 2020. there is an up cycle in chips. they have been the beneficiary of the u.s.-china trade were indirectly because of the shoring. well, somy is doing does taiwan need more integration with them? lanhee: some of it is unavoidable because of the short distance from here, the close relationship that a lot of business people here in taiwan china.th folks in the tie administration is focused on their so-called southbound strategy, the notion of investing more in vietnam, thailand, malaysia, singapore, and i think that has benefited taiwan, but it will be very hard to completely replace or to completely move away from that relationship economically with china, so i think the question is how does taiwan continue to have stability in that

relationship given the geopolitical tension while continuing to invest in economies and countries where there is a future for taiwanese economic growth? do they need to diversify their economy away from overreliance on china and the intel monopoly? the pc supply chain? lanhee: taiwan has such intellectual currency developed around those industries had obviously, there's a lot of human capital around those industries. i do not see that happening necessarily. tourism is another area where taiwan ends at being relatively dependent on them as well. they closed the spigot. fors going to be tough taiwan to diversify too much. some diversity is recognition that western investment will be premised on the security of the supply chain. emphasizing those points will be for the chinese economy. thank you. showen: we can do a whole

just talking taiwan politics. going to send it back to you. the sunny streets of taipei. to stephenu so much engle. don't forget our tv function, tv go. you can catch up on past interviews as well as dive into any of the securities are bloomberg functions. become part of the conversation by sending us instant messages during our shows. check it out at tv . this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. shares are falling after it recorded its worst revenue drop in a decade. the company counted on overseas expansion to power growth in the face of a weak domestic market in japan. that strategy has been hit by the street protests in hong kong as well as u.s.-china trade war and a spat between japan and korea. sophie: j.p. morgan chase and space ase taking extra they increase their mainland headcount. we are told j.p. morgan is boosting its space by one third to 20,000 square meters while number is doubling the size of its lease to 5000. any overseas investment firms are expanding and shanghai as china liberalize its financial

regulation. updi: apple is dialing significant numbers. shipments grew 18% year on year in december to almost 3.2 million units, and acceleration from previous months which were already supported by the iphone 11th release in september. the data confirming the view that they are -- the 11 is selling more strongly than its predecessor. before we handed over, let's take a look at how the markets are trading in asia. in this final trading session of the week, it is record highs. we are seeing a buoyant session in asia. the nikkei 225, .4 percent higher, close to the highs we have not seen since 1991. the kospi seeing upside to close two point 5%. we have seen record highs for the aussie sector as well, .6% higher and a bit of a boost for the aussie dollar in the face of the beat on retail sales for the month of november. new zealand, we are seeing

modest upside trading in that market as well. sophie. sophie: as taiwan heads to the polls, the taiex is within striking distance of an all-time high aztec optimism pays off, drying and foreign investors, and taiwanese shares set for more gains in the months following the vote if history is any guide. it has been a volatile start to 2020 for hong kong stocks, but the hang seng looks set to reclaim levels. we'll show you what's been going on with the hang seng as it closed above 28,000 this week. a stronger yuan. chinese banks and property stocks listed in the city, but as you see, the bottom half of this panel, the msci hong kong index is mostly made up of local companies in the city. that is still 7% off the peak reached in july with the economy in recession and ongoing protests. that's take a look at the futures board once again,

checking in on smpte minis -- &p e minis. the offshore yuan just holding steady below 693 against the greenback as we count down to the open in shanghai and shenzhen. that is it for "daybreak asia." our markets coverage continues as we had to the start of trade. standby for bloomberg markets the china open. this is bloomberg. ♪

>> led them to bloomberg markets china open. yvonne: we are counting down the open. david ingles, let's get to the top stories. david: ivana accused of shooting down the 737. there is evidence of at least two missiles fired after takeoff. yvonne: the u.s. and china are dusting off a string of corporate deals in anticipation. braces for an even hotter weekend. we will ask about the potential