haidi: good morning. i am haidi stroud-watts in sydney where the markets have just come online. shery: i am shery ahn in new york. haslinda: i am sophie -- sophie: i am sophie kamaruddin. welcome to daybreak asia. haidi: our top stories, the , the emphaticiwan victory moves the island further from china's influence. iran admits to shooting down the ukrainian airliner, sparking protests at home and condemnation abroad as global

pressure mounts. shery: the volcano in the philippines shots schools and the stock exchange, warning of a violent explosion. australian markets have opened for trade. let's turn to sophie. sophie: stocks opened to the downside, off .2% after the best week of the asx 200 since february. we are seeing beach energy under pressure but australian oil companies should outperform in 2020, although looking for caution around oil prices in the back half of the year given expectations for additional supply which has taken the wind out of oils rally. -- the oil rally. oil had the worst week since july. let's flip the board to check in on cable. we are seeing cable under pressure. looking at how it is doing, moving towards the 130 scandal.

-- 130 scandal. here,g into the terminal want to give you the heads up the philippines stock exchange has been close to their rolling along with schools and the middle miller -- the manila airport in the week. here is where philippine stocks are. this is asia's worst performer to start the year. this as we are seeing -- $44 million. that is the biggest outflow in asia. the question is if the current evaluations will be enough to bring in bargain hunters given some of the economic outlook which is looking optimistic for one of asia's fastest growing economies. let's get more on the volcano. su: picking up on the headlines. the philippines stock exchange has suspended trading because of warnings the volcano south of

manila may explode at any time. could happensay it within hours or within days. they are recommending evacuation of up to 200,000 people. the volcano continues to vent ash and smoke and all flights have been suspended at manila airport. it is a tourist attraction and one of the most active volcanoes in the philippines. -- the prime but minister said the country must become more aware of the impact of climate change. this as bushfires continue to burn out of control in several states. he admitted global warning -- global warming is exhibiting factor but said australia can't do more to cut carbon emissions. 28 people are known to have died along with one billion animals. china is pledging more credit after reading up

$300 billion of nonperforming loans through the value of the shadow banking sector has fallen from the peak of $2.3 trillion in the last three years. the regulator is vowing to rein in high-risk businesses and prevent credit from flowing legally enter the property market. and the head of human rights watch said he has been given no official reason for being denied entry to hong kong sunday. he planned to or on -- to launch the anger world report in hong kong this week but was stopped at airport immigration and turned back to new york. this follows china's move to sanction organizations it said performed badly in relation to the protests in hong kong. >> the focus was to have the chinese government, really trying to deliberately undermine international human rights system. that is suppressing the right of people at home and undermining

the ability of anybody else to try to hold china to human rights standards. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. let's go to taiwan. candidate hasacy clinched a second term. this moves the island further from beijing's grasp and it is seen extending the recent market rally. i hope the beijing authorities understand democratic taiwan and our democratically elected government will not concede to into the nation. neutral respect is the best way to serve our people. the results of the election made this crystal clear. let's go to taipei. stephen engle joins us.

how big of a victory are we talking about and what does this mean for relations? stephen: a record number of votes for the incumbent, more than 8 million. she got 57% of the ballot compared to 38% for the other. and the third-party candidate was far in the distance. emphatic victory for her. it clearly shows the platform of closer integration with mainland china and the perception here in taiwan that there was interference from mainland china, those the strategies did not only not work, they really kind of backfired, also propelling the woman who was trailing in the polls a year ago, the rebound being attributed to everybody i have talked to over the weekend, the pro-democracy protests in hong kong. did not want, and she said it lately, one country,

two systems is not workable for taiwan and it will not happen while she is president. she is giving another mandate. if you look at the history of taiwan presidential elections going back to the first in 1996, 7 presidential elections, the dpp has got four out of seven. so big questions within the inner circles of the moment dong, how they can appeal to the younger voters. haidi: have we had any response from beijing? yes.en: they are not happy. we had comments from state media, the global times and the foreign ministry spokesperson yesterday who said taiwan remains part of china. that will not change. he also pleaded to the internet community -- international immunity.

within the charter of the ruling party there is a call for independence or independent-minded policies. she has not called for outright independence because really in her mind, taiwan already is sort of independent. she wants the status quo. that resonated with people. the news agency here, quite strident in their comments. let me read you one line. this is the use of dirty tricks like cheating, repression, intimidation to get both -- get votes. that was the first knee-jerk reaction from beijing. haidi: thank you for that. we will continue to watch that. we will have plenty of reactions to the vote later. policy -- we will also be speaking to the

fulbright research scholar. is a big week for markets. we are expecting the u.s. and china should sign the -- and china to sign the phase one trade deal. there is a continuing tension in the middle east. let's go through all of that now with our guest. thank you for standing by for us. let's start off with the situation between -- in the sawle east very we had see -- middle east. we had seesawing reactions. having me on.or we have seen quite a bit of volatility in the middle east situation and those tensions. we saw efforts to just lay over the week, but we see it as a significant concern and we think there will be further pressure on the supply of oil and we have

further outlook for energy, driven by a few things. the ongoing tensions, we see reasons to believe this will continue from both political sides. oil is inherently a political issue. we also see signs to suggest we have improving global macroeconomic outlook. this is seeing things like the global pmi survey which is showing signs of stabilization and gives us an indication of decisions manufacturers are making about hiring and spending. we have reason to believe this is stabilizing. more on the medium term, we are seeing this situation where we are having underinvestment in oil and think this should be a reason why we might see a supply shock and increase in the oil price over the medium term. for investors i look at, looking to get exposure to this energy

schematic through the australian energy company, santos and woodside petroleum. we saw a good trading window , and the localp players really liked. the window has closed as wti has retraced the gains but it is price arbitrage opportunities we are looking at. haidi: in terms of the macro picture we have the phase one deal this week. happyg is that given the animal spirits that come from it? >> there is a degree of that, and we saw that at the end of last year. now we are getting closer and the signing on wednesday, it is a fair question to ask. the key getting to this phase one agreement, that we weren't sure we would get here, it shows there is political will from both sides to disbelieve the

trade tensions between china and the u.s.. we expect that to be a positive and to continue that positive asia and emerging rickets schematic. we are happy to be there and to invest there. the markets have underperformed recently and we have seen this as a stimulus. up thechina ramping credit support. this chart shows how the have cut the rrr. the requirement ratio, how much support will chinese equity markets get and what you say willing to play a cyclical rebound story? we have seen the shanghai index reached a nearly two-year high. we are seeing support. we believe there is further to go. the pboc is providing the ongoing support with a cut to requirements,tio

and we have yet to see whether it is obvious stimulus or just more accommodative and certainly increasing the amount of lending for the banking sector. we expect that to continue. we think that a good way to play this is asian tech. we are looking at index funds like beta shares, asia a technology fund where we will see that play on. we are happy to be exposed. we know that bush fires burning in australia for months, what does it mean for the asx 200 companies and what will you be looking at when you are best in the market? -- you invest in the market? >> the extent of the bushfires is tragic and vast. the economic cost is one component we have heard that from your previous guests. there is also the human and wildlife which is hard to measure.

only look at how it plays through to the companies, it varies from company to company. it is important investors focus on the fundamentals. one company we follow and has been impacted by the fires is big achieve. the share price was off 9% at the start of last week as the market analyzed the impact from the bushfires, the big valley --ion on the south coast dairy farms had been impacted by the fires. suggests it will not be a material impact and we haven't downgraded our earnings forecast for the company and so we are still positive on the stock and it has rallied. it is important to continue to look. it will vary from company to company. we will look at those fundamentals when investors are making decisions. fori: thank you so much

joining us. still ahead, and impact of the volcano in the philippines. we are hearing that the stock exchange is closed. this is bloomberg. ♪ ♪

asia. this is daybreak i am haidi stroud-watts. shery: i am shery ahn. iran is racing for more internal and external protests after admitting the army shot down the ukrainian airline, reversal that has triggered widespread condemnation. the military said human error was to blame and the culprits will be punished. we made a mistake and a number of our compatriots were martyred because of our mistake but it was unintentional. we apologize, but we will make up for it. we will not allow any one of our people to get hurt.

we are standing steadfast like a pillar. we get shot but we don't sit down. iswhat iran has admitted to very serious. shooting down a civilian aircraft is terrific. iran must take full responsibility. editor,re washington ros krasny. -- regime has spent diet spent days denying this. this is a dramatic about-face. ros: they were faced with overwhelming evidence that the plane had not crossed of its own accord, there is no mechanical problem. after a certainly sometimes the investigation showed there was theyher explanation but had shot down the plane, believing it to be a cruise missile. not unprecedented in the history of aviation but still a shopping and terrible mistake. the protests you are seeing

across iran yesterday and today, people want to see somebody take the rap for this. they want to see responsibility taken. revolutionary guard said he was wishing he was on the plane. he feels terrible. whether his rule, we don't know. wante are very angry and to see something happen. the trump administration is looking to exploit this anger. president trump tweeted in farsi, giving support to the protesters and warning the iranian government, do not shoot your protesters and allow for free reporting of the protests, putting his home on the scale. b on the scale. haidi: we have heard responses

from president trump as to why he targeted the general. have we heard more justification? the big newsbreak came friday night when president trump spoke to fox news when he believed four u.s. embassies were under, under imminent attack from iran. interesting comments which had not come up in congressional briefings about the attack on soleimani. one comment came from adam schiff, democratic congressman. he is a member of the gang of eight. he said there was no discussion in the briefings he had of these four embassies being targeted. we have seen the rationale for him killing -- mike pompeo, president trump and the defense chief. you might see more in the next few days. they don't quite have their story straight.

ros krasny with the latest. you can get more on the crash in today's edition of daybreak. bloomberg subscribers, dayb on your terminals. it is also in the bloomberg anywhere app. the house prepares to send the impeachment case to the senate. we will speak to nancy pelosi and a planning majority leader for mitch mcconnell. this is bloomberg. ♪

you are watching daybreak asia. the world's biggest ipo is even bigger than initially thought. sale hasmco's share totaled under $30 billion as goldman sachs off exercise an option to place on shares initially separated to avoid price swings. it avoid -- relies on a few high net worth investors with saudi

government institutions investing $2 billion. haidi: abu dhabi's investment company is helping with an energy waste plant in australia. it is investing in similar projects throughout southeast asia. the construction of the plant has already begun in the protest will that product will generate 30 megawatts of power. >> would like to announce our entry in australia, western andralia, with our partners advisory. we are developing the second inte to energy plant australia. in the rest of australia 300,000 tons of municipal and industrial waste. it is a major problem globally. siemens will honor a

contract to close -- to supply signaling systems to an australian coal mine despite protests from people in germany. the ceo said while he has empathy for environmental matters, he has to balance what he calls the different interest of different stakeholders. haidi: democrats are preparing to send the articles of impeachment to the senate. there is a standoff over the terms of the trial. slammedy, nancy pelosi mcconnell over his involvement. >> he signed on thursday to a resolution to dismiss the case. that is a cover-up. dismissing is a cover-up. the senators who are thinking now that voting for witnesses or not, they will have to be accountable for not having a

fair trial. let's bring in our senior international editor jodi schneider. what is the latest? >> there haven't been any concessions. nancy pelosi had not been wanting to send over the articles of impeachment to the senate until she had that, some kind of agreement on things like allowing witnesses, testimony. mitch mcconnell has said he is inclined not to do that, and the senate of force is controlled by republicans. he is the majority leader and it is expected that they will not vote. but atll vote to acquit, the same time the democrats are trying to get it to be more of a trial. she hasn't gotten anything from mitch mcconnell and therefore

that is why they have been pushing this way. now they will send over the articles. mitch mcconnell had been the 13th cosponsor of legislation last week which would have allowed the senate to dismiss if articles of impeachment nancy pelosi didn't send them over in a timely manner. shery: who do the democrats want to hear from? >> they are asking for a number of witnesses. you may recall in the house they didn't have administration witnesses. the administration, donald trump and other officials had been pretty successful at blocking officials from testifying in the house probe. now the impeachment is at trial, they are asking for those people to show up in the senate. people like mick mulvaney who is the chief of staff.

that is who they want to see. shery: senior international editor. we will discuss the finding -- the signing of the phase one trade deal. this is bloomberg. ♪ omberg. ♪

hired 21 million people. however not listing wages to bring people into the labor force? >> my bottom line is this doesn't change any expectations about economic prospects or affect policy. inflation see pressure building towards the back half of the year. before that i don't think the fed will be in play. >> the diminishment of external risks, the economy that looks like it is not generating a lot of domestic price pressures. the fed can sit by and let this play out. >> the fed is on hold

indefinitely until either the markets or the data shake them one way or the other. guests reacting to the latest policy. in the wake of that data we saw treasuries gaining ground as the jobs numbers for any inflation, you can see the interview of the staycation. we will get a check on u.s. gpi with consensus for 2.1%, the fastest pace in more than a year. we have the 10 year yield trading around 1.82%, the midpoint of 20 basis points. flipping the board, we will get treasury cash trading with japanese futures off-line. treasury futures -- we saw treasuries friday and the yen, softer by a touch. the worst week of the currency since october while gold is losing ground areas the stock price is off a quarter of 1% after a volatile week for fully

and. some analysts are saying it could be time to buy the dip. haidi: one of president trump's top economic advisers is striking an optimistic tone for the strength of the u.s. economy. he said the jobs data is still very strong despite missing estimates. said expectations, measuring against this and that market forecast. but 145,000 jobs is a great number. thether point is unemployment rate is 3.5% and remains at a 51 year low. that is a remarkable number with no inflation. when you look at unemployment, you got to look at the household survey which very few people do. gain in the7,000 household survey which skews to the smaller, younger businesses

to show the vitality of the economy. i think it is a strong report. one last point, you were talking about the stock market and mohamed el-erian is a bright fellow, talking about the resiliency and dynamism of the american economy. generic point, the huge increase in the stock believe, is a to signal of improving confidence among consumers and businesses. i think it is pointing towards faster growth in the next year. selina: -- is hope theere document gets assigned. there is some confusion the last month about whether this has been translated or not. secretary mnuchin said it is already on paper and translated. said at thevarro end of the month all caps we did on is for the chinese the loose

to translate the english version into the chinese version. can you make sure we have got this in chinese and english? >> i spoke to ambassador lighthizer last night, to reconfirm all of this. the translation has been authenticated. the chinese are coming, as you probably know. the vice premier will be here next week for two days. the signing ceremony will be on january 15. president trump will sign. there will be a celebratory dinner and lunches surrounding those signatures. everything is completely in place. i have seen some of these rumors. everything is completely in place. the translation worked, the signing ceremony work. historic, remarkable deal. the president was talking about it yesterday when he unveiled his environmental deregulation.

maybe we will get to that. phase really got a lot in one, a lot. what the percentage is, i don't know. it could be 40% or 50%. people are saying we left the tough stuff for phase two. i want to call ambassador lighthizer from our conversation last night, such a wonderful fellow. -- nobody everin thought we would get phase one. no one has ever done it before. there is nothing like this in trade history, so that the importance and significance is enormous. shery: let's cross to su keenan.

su: protests across iran after the military mistakenly shot down a passenger plane. it was down shortly after takeover -- take off because of human error. all 176 people on board were killed. this is a dramatic reversal of the initial comments. authorities first blamed technical problems and then said an engine caught fire. and amade a mistake number of our compatriots were murdered, but we apologize. we are sorry. we will make up for it. we will not allow any one of our people to get hurt. we are standing said firm and fast. su: hezbollah said the missile strikes on u.s. bases in iraq are almost -- only the start of the response for the american killing of general soleimani. the hezbollah leader told supporters the attacks were the

first step down a long path that will force the u.s. to leave the region. he said iran hasn't used what he calls its sophisticated weaponry. in thailand, protests reappeared over the weekend less than a year after a formal -- former general claimed victory. thousands gathered at a park in bangkok to deliver -- ask for political freedom. people question the fairness of votes held under a military backed constitution and the traditional hold on power. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. shery: the philippines is bracing for what authorities call hazardous interruption of a volcano -- a hazardous erruption

of a volcano. the volcano continues to vent ash and smoke, causing schools airports,s to shut, and the stock exchange. secretary, great to have you with us very thank you for joining us today. we know january is a popular month for travelers to the philippines. how big will this impact be on philippine tourism? >> we have been diverting , butts from manila basically [indiscernible] so basically [indiscernible]

everybody, -- [indiscernible] the philippines is one of the most disaster prone countries. you have dozens of events annually. how does this natural disaster compared to others and the impact going forward through the rest of the year? we have a lot of -- and normally as i said, we have a lot of airports in the country. this is [indiscernible] been disrupting operations for manila airport. but [indiscernible]

haidi: are you optimistic the tourism industry can withstand it, given this is the peak tourism season? yes, right now we are seeing the general welfare of -- our talkhas been nonstop things through stranded travelers in the airport. we have talked with our stakeholders. our main concern is that the stakeholders are out of harms way. [indiscernible] international airport, which is in manila.

open at 8:00 a.m., but we are still waiting. this comes just weeks after the typhoon. tell us about the level of crisis preparedness. disastere the national management council. last christmas we had the [indiscernible] but we have a counter that is the national government and local governments. whenever we have -- for example , [indiscernible] and manila last night and this morning, flights were canceled or diverted to another airport. it is an check. thank you for joining us.

we will have to leave it there. the philippines continue to navigate that. the philippine tourism secretary joining us with the latest on the volcano. china state news agency accuses the taiwan president of cheating to win her election. following policy research institute. this is bloomberg. ♪ this is bloomberg. ♪

shery: this is daybreak asia. i'm shery ahn in new york. haidi: taiwan's president winning a landslide reelection victory, a move which would shift the country from china's influence. let's get to stephen engle. this is a pretty resounding

message to beijing? stephen: there is a resounding victory, winning with 57% of the vote compared to her opponent about 38%. for the first time 8 million votes were cast for the winning candidate. it was a resounding victory. they have to go back to the drive or to see how they can win in the four years. out of the seven presidential elections we have had since four ofe dpp has won those seven. she is the -- now a political science professor. how did you see this victory? is this a resounding referendum against china?

>> it turned on a number of factors including the personalities of the candidates and the trust factor people have for the leading candidates. but it is impossible to dismiss the china factor because while there are many issues in taiwan, on thear, the emphasis protest in hong kong and interactions between the prc and taiwan have really made that issue the focus of the election. stephen: i know she really latched on to that as well and it was a propellant for her victory. did that really resonate to the young people? >> yes. they have been paying attention. they see people like them, their age, station in life, students, high school students, young professionals out in the streets and hong kong.

they seem to have this visceral sense that that could be us. stephen: what are the next four years going to look like? will she get emboldened by this big mandate or will she say status quote is de facto independence? >> she will stick to the line she has been taking the last 3.5 years. she has been consistent from her acceptance speech to her inauguration, all of the speeches she has made during her presidency. i don't think she has a mandate for really strong change because while she got 8 million votes, there is another party election where you cast directly for a party at her party did much less well. lost seven district seats. i heard that from a lot of people.

young people say i will vote for her because i can't vote for the other guy. don't put me down as a dpp supporters because i am not partisan for her party. in this election i think she is the right presidential candidate. it begs the question what is the future? was it the wrong platform or the wrong candidate? they propose closer integration with mainland china. there was a rebuke of that. but there is strong support in rural areas of taiwan, in the north as well for the campy. -- the kmp. >> i think their way of talking about the prc and frustrated relations is worn out. they keep saying the same thing. they keep digesting the same policies. many people feel like we need new ideas because it is not working. at the same time, the real

obstacle was the candidate who was great. people were excited about him last year as a mayoral candidate, but he didn't stay in that job long enough to accumulate a record of performance and he is a very straight talking kind of slightly foulmouthed guy. people say that is ok for a mayor but not in the presidential office. and he got a dpp stronghold. >> he got 54% of the vote in the mayoral race as the candidate last year. 34% as a presidential candidate. clearly the people of the city said, what were you thinking? we elected you to do this job and you ran off for president three months later.

stephen: this has been a beneficiary, more manufacturing, the stock market near a record high. gdp could be close to 3%. is it sustainable? >> it could be as long as the global economy is ok. offshore back to taiwan or other parts of east asia, that was a trend that was already underway before the trade war the costnks to structure. it is getting expensive to do is this. the special treatment the taiwanese investors used to get to attract them to the mainland, it is not so prominent anymore. i think it will continue. stephen: do you believe to marginalize taiwan internationally will continue?

>> probably amplify. this is not what china was looking for but they can look at the weakness of the dpp party mpte and that even the k candidate got more votes that years ago. stephen: the rain is coming. we will leave it there. we'll get under the umbrellas. the sunny days of last week, a little bit over, returning to taipei winter weather. stephen: thank you so much -- shery: thank you so much. we will have more reactions followed by -- with our research fellow. they will join us later. saying heent trump is is restating his red lines on iran, saying the national security advisers suggested the sanctions and protest have iran

choked off and will force him to negotiate. he couldn't care less, but no nuclear weapons and he says don't kill your protesters. we know that protesters are gathering in iran for antigovernment demonstrations after the government admitted he downed a ukrainian passenger jet. president trump tweeting on iran. this is bloomberg. ♪

shery: we have an alert on the bloomberg, south korea releasing trade data for the first 10 days, showing exports rose 5.3%. chip exports jumping 11.5%. toerts -- exports from china drop, showing great stabilization when it comes to the trade numbers. imports also rising 5.7%.

these numbers coming out of taiwan, numbers out of south korea have declined. had been in the negative for months. ofwas 13 consecutive months declines, but now we are seeing for the first 10 days of january exports rose more than 5%. haidi: some grain shoots. let's look at the business flash headlines. lloyd's is warning people to expect -- after a series of heard earnings. the guardian said the major land -- oan protection insurance 2.5 billion dollars. that cut third-quarter profit 97% and it is expected to drag on for year results. shery: new hong kong banks willing customers with -- wooing customers with a 6% introductory

rate. digital only operations in the city, offering depositors over three percentage points more than traditional lenders. analysts doubt this is sustainable but the move is a sign of increasing competition in banking. haidi: china may come to the rescue of james bond's favorite carmaker. aston martin is in talks with a chinese company, receiving $260 million of investment from a canadian billionaire. technologytemporary is also a milling a stake. shery: japan is away on holiday, coming of age day, markets open in south korea. what are you watching? sophie: kospi futures were lower. korean stocks in the week ahead,

looking at trade figures, jobs data and the bok policy decision. we did see the export growth. we could see if there will be a list for sentiment. we have people pushing higher moving into the earnings season. the dollar index a little changed, holding to most of the declines we saw friday on the u.s. payrolls data, missing. we have cable off of session lows but losing ground after we got dovish comments from the boe member indicating support for a rate cut. and crude saw its worst week since july. we are seeing a supply risk premium staying high. haidi: coming up next, we are shanghai with the ubs china conference for an exclusive interview with the head of aipac investment banking. we will be speaking to the former secretary of defense

graham allison. and we have an exclusive interview with james lamb some the hong kong financial secretary for services. you can join us for that. this is bloomberg. ♪

haidi: i am haidi stroud-watts in sydney. south korea has opened for trade. shery: i am shery ahn. sophie: i am sophie kamaruddin in hong kong. welcome to "daybreak: asia." haidi: the volcano in the philippines shut schools, offices, manila airports, and the stock exchange with fears of a violent explosion. downing theadmits ukrainian airliner, sparking

protest and condemnation. global pressure is mounting on the government. stephen: i am stephen engle in taipei with the landslide victory for president tsai. local reaction ad from abroad. shery: japan is away on holiday. let's turn to sophie for what to watch in markets. sophie: let's take a look at the sydney share market. about .5%, off snapping a two day gain and back below hundred points. the aussie dollar holding steady around 69 and aussie bonds tracking the rise we saw in treasuries on friday. ,et's check on the kospi opening little changed. trade figures from this morning to consider. we saw that pick export growth on a yearly basis with

double-digit growth for chip e-sports -- chip exports. the korean won gaining ground against the dollar advancing by .2%. that is a snapshot of what it looks like. haidi: let's look at what else we should be watching. mark joins us. how much impact are we going to see from the signing of the phase one deal between the u.s. and china, given expectations are it is priced in to sentiment? mark: i think that was the case. there is no surprise this deal is going to be signed. we have had lots of lead time to get used to the deal. a recent development is the talk about the phase two deal. donald trump saying he wants to get on with that straightaway. that will be an encouragement to people in asia as far as sentiment is concerned because they will be reading that as meaning the united states is

less inclined to put on new tariffs in china if it wants to work for new deals with china in the next few months. from the first set of negotiations it is a pretty bumpy ride. it took a long time to get to the phase one deal. markets did have reasons to have selloffs during that period. sometimes talks appeared to be stalling. we got there in the end, markets in a better condition than when talks began. as we move druids a phase two deal, a final outcome will be better for everybody. that doesn't mean to say it is going to be a one-way bet. it is already an encouraging picture for risk assets. as we enter 2020, the conditions are better than they were 12 months ago. that is helping people put money to work. last week was very volatile because of iran, yet markets still ended higher than they were at the beginning of the week.

optimism is good and people do want to invest. shery: your question of the day on the markets blog is how much is already priced into u.s. stocks ahead of the fourth quarter earnings season? what are your thoughts? mark: there are some analysts saying valuations are already rich on some measures. some people are looking back to the beginning of 2018, we had a big selloff in u.s. stocks around this time of year with a price to earnings ratio at similar levels for the s&p 500. we were looking at valuations where they are right now. big about 10%a selloff for american stocks. people will be concerned that if earnings don't meet the high expectations we have, we could see a quick turnaround in the u.s. markets. there is also some analysts saying we don't need to worry about current valuations because

the forward valuations are still modest compared to some levels over the past couple of decades. when you take into account tech stocks, which tend to be priced more expensively than the rest of the market, we are looking at a situation where on a long-term basis the tech stocks have not reached their full maturity. when you look at apple, their earnings will be closely watched later this month. there will certainly be some road bumps along the way and the earnings season is extremely important. it will give investors reasons to think about whether they really like u.s. stocks at these levels. shery: thank you for your views, mark cranfield. you can follow this story on our markets live blog on the bloomberg at mliv . you can get a market run down in one click and commentary and analysis from bloomberg expert editors so you can find out what is affecting your investments right now.

we are now heading live to shanghai and hong kong, covering the ubs china conference and the asf. let's go to tom mackenzie and david ingles. let's start with tom and shanghai with the ubs conference. tell us what we can expect. tom: we are talking geopolitics, u.s. china trade, financial markets, the opening and china. this rally we are seeing. we are going to kick it off with david chin, the head of investment banking in the aipac region for ups. we are going to be speaking to graham allison, a professor of government at the harvard kennedy school, author of the book "u.s. and china: can they avoid the thucydides trap?" can they send off the competition from the likes of

impossible and beyond meet? we will also talk with the chairman of frontier biotech. david ingles is in hong kong. what have you got for us today? david: good morning, everyone. it is the 13th edition of the asian financial forum. on top of the usual topics of growth challenges and risks to their broader industry, and a lot of people are traveling, maybe for the first time, to hong kong since the social unrest began months ago. that is a topic we will bring up with a lot of our guests. i was just walking around coming to our live studio here. a hefty chunk of the real estate in these big halls has been dedicated to technology. that is another topic of conversation. lau, the hong

kong secretary for financial services. also his partner who oversees commerce and the economy. and coming up later on is the country head for the world bank when it comes to china. back shortly in about 15 minutes with the first interview. haidi: lots of great guests coming up, tom mackenzie and shanghai, david ingles in hong kong. speaking of china, we will be discussing goldman planning to double its china headcount to 600 and the next five years. just getting that line crossing the bloomberg. we will get you more details as they come available. goldman sachs planning to expand in china, doubling their headcount to 600 in five years. let's get the first word nerd with su keenan. tsai'staiwan, president emphatic victory is expected to boost the markets.

analysts say the election will extend positive sentiment. likely beneficiaries include biotechnology and wind energy, which gained on the expectation government support will continue. tourism stocks may slide on concern the result will hurt ties with china. the philippines stock exchange has suspended trading monday amidst warnings the volcano south of manila may explode at any time. seismologists say that could happen within hours or days and are recommending an evacuation of up to 200,000 people. the volcano continues to vent ash and smoke and flights have been suspended. it is a tourist attraction and one of the most active volcanoes in the philippines. turning to australia, prime minister scott morrison says the country must become more aware of the impact of climate change, this as bushfires continue to

burn out of control in several states -- states. he admitted global warming is a contributing factor but said australia cannot do much more to cut carbon emissions. at least 28 people are known to have died in the fires along with a billion animals. the continuing troubles with boeing are seeing hitting the wider u.s. economy. treasury secretary steven mnuchin says issues that the playmaker could trim .5 point from gdp this year, although he still expects growth of 2.5%. that is more upbeat than many observers, who say stimulus from the 2017 tax cuts is starting to fade. economists forecast growth this year of 1.8%. global news 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. shery: still ahead, president

straitlls for cross cooperation after a landslide victory in taipei. manila forre live in the latest on the volcano and warnings of a violent explosion. this is bloomberg. ♪

haidi: you are watching daybreak: asia. keepingairs -- shares up the momentum from 2019. potential further upside from cooling trade tensions, a weaker u.s. dollar, central-bank easing. all of these a backdrop for the ubs greater china 2020 conference in shanghai. tom mackenzie is there. what is the mood? more buoyant, i imagine. tom: certainly more buoyant.

this is the 20th anniversary for ubs greater china conference. they say there are more attendees than ever. to get a clear a gauge of what clients are saying as we head into 2020 and as the financial sector in china continues to open, let's put these questions to the head of investment banking at a pac, david chin. what are signs telling you at this point of the year? >> i think at this point as usual, they are very curious, cautiously optimistic that we are entering a phase of the world that is more stable than last year. interest rate, monetary easing, all these are relatively benign, so investors are looking to deploy. lastthe ms ci inclusion year, global institutional investors want to look at a-shares very carefully.

multinationals, investors are thinking to invest. thinking about limits being relaxed and trying to make china work better for them. there is good potential dialogue on the institutional side and copper side. on an institutional side but also individual level, investors are putting cash back. do you think that is going to pick up? >> i think so. ubs is the largest wealth manager in the world. they are all looking at how to make more money in a very long interest rate environment. expect it is bonds, we another terrific year for offshore bond issuance. they are also looking for ways to grow on short in china as it becomes easier to invest in the

domestic capital markets for institutional and individual investors. tom: ubs taking that into account, what do you expect to be the biggest driver of revenue across the banking business? >> i think traditionally for ubs , i think australia and china are our two biggest markets. we expect the picture to be broadly the same, but china is going to get a lot of attention this year. i think our key strategy is to be global and local. we need to serve global clients very well, but we also need to be here on the ground to offer them differentiated service, whether it is about research, copper access. we need to do things for them that no other local houses or foreign banks can do. tom: do you expect mna to pick up? >> i think so. it is both inbound and outbound.

we have a large u.s. insurance company last year increasing their stake in the existing china subsidiary last year. also help companies restructure their china operation because they want to grow bigger faster by pardoning -- partnering with a china major conglomerate. these are the themes for those who are already here or are thinking about entering china. tom: what about the ipo's? >> i think it is decent. it will surround the same sectors that have been attractive for investors through the new economy, like health care. i think those will be the key sectors. valuation wise, people have to be realistic because after the

wework issue, investors will be more cautious. they will not be buying any and everything. i think the good companies will definitely come to the market. tom: there was breaking news a couple minutes ago from one of your major competitors, goldman sachs, adding headcount in the mainland. what are your priorities for expanding the business in china? >> we have been in china for a long time. our domestic subsidiary, ubs security, we have been operating that for 12 years. we already have an essential presence, but over the medium-term term, three to five years, we think business will continue to grow. particularly for the banking side, i think we will be adding headcount as well. tom: what kind of numbers are we looking at? >> three to five years, i would

say doubling that is quite achievable. tom: doubling the headcount within three to five years. david chen thank you. apac head at ubs. a lot more guests coming up. mackenzie and shanghai at the ubs conference. tom will have more from the greater china conference 2020. the former u.s. assistant secretary of defense graham allison joins us later this hour. we will also speak to the biotechnology chairman. next, we are joined by the hong kong secretary for financial from thejames lau asian financial forum. this is bloomberg. ♪

haidi: you are watching "daybreak: asia." the asian financial forum kicks

off in hong kong today with its city status as an international financial hub at risk because of the protests. david ingles is at the conference with a man who oversees financial services and hong kong. dave, over to you. david: it is getting busy here. things kick off at 9:00, but we are up and away already. lau,ng me on set is james secretary for hong kong financial services. thank you for joining me. at the record, looking back 2019, it was a period of unrest and hong kong has seen better years. was theyour view biggest challenge for the financial services industry? >> financial services itself, we were doing pretty good, both banking and the securities and insurance sector. ipo, we were number one last year in the world. if you look at the economy in

general, we saw a contraction in the economy, so the whole year we are looking at a contraction of 1.3% roughly. arrival,t on tourist domestic consumption, and the general sentiment was kind of disruptive in the last half of the year. david: did you see any of the banks move staff outside hong kong because of what's happened? or temporarily not coming here because of what's been happening? >> banks in general have been pretty stable. there are cases due to family considerations and whatever. we did not see any large outflow. david: reputational damage. has there been one that's sustained or do you think things snap back when things improve? >> i think so far manageable. we still see inquiries like on the ipo for example, and also for the asset management industry and our cooperation

with the -- it is attracting a lot of inquiries and hong kong. david: ipo, you mentioned it last year, a big one. you had ab invev, alibaba coming to hong kong. any big names this year? can you tell us which ones? >> i am afraid that cannot be disclosed. david: mainland chinese companies? -- mainly, soaybe far. david: why are they looking to relist and hong kong? that is why we are seeing a lot of these big names come back. >> several considerations. the first is when they are listed in the u.s., the access by mainland investors is not as easy. for them, they are familiar with hong kong. shanghai,enzhen and so that provides a convenient access channel. fromapital outflow

mainland china to hong kong, they are well managed and contained. david: since you brought it up, people have been wondering what happened to primary connect and etf connect. >> for etf, that is something ongoing we are discussing with a authorities in mainland china. there should be rome to find -- should be room to find something mutually acceptable. was envisioned for those already listed enterprises. primary connect, there is something we need to work on. david: which do you think comes first? >> i would think etf. david: this year? >> i hope so, in one form or another. david: in terms of the macau stock exchange, and you mentioned -- as well.

is that something hong kong should lose sleep over? >> i would not lose sleep over it because macau is part of the greater bay area, so we are going to operate and complement each other. david: back to the economy as well. a lot of people watching right now -- i personally got my tax bill quite late, and i am sure a lot of people as well. is that going to affect the government cash flow? >> there will be some impact on cash flow. but the payments will still be collected in the first quarter of this year, so it will still be within financial year 2019-2020. by and large, we are ok. david: there is a lot of fintech bulletin. hong kong is trying to pitch itself as a center for that. what is hong kong's pitch to the

world? clusterse have the two on artificial intelligence and also one on biotech. we are opting our investment in cyber. there will be more funding. we hope to see more funding and co-funding. we have innovation technology , so we are looking at funding, also looking at collaboration with jen jen -- with shenzhen on innovation and technology. david: thank you for coming on the program. that was james lau, hong kong secretary for financial services. we will be back a little bit later on. haidi: lots more to come from the asian financial forum, including the finance minister speaking to the hong kong secretary for commerce and

economic development. next, back to shanghai for the ubs greater china conference 2020. a leading voice in geopolitics, graham allison, will be joining us next. this is bloomberg. ♪

su: this is daybreak asia. protests erupted across iran after the government admitted its military mistakenly shot down by ukrainian airlines passenger jet last week. the army said the boeing 737 was downed after takeoff the cause of human error. were killed.e this is a dramatic reversal from the initial comments where iran first blamed technical problems and then said the engine caught fire. >> we made a mistake and a number of our compatriots were murdered, but it was unintentional.

we apologize, we will make up for it. we won't allow anyone to get hurt. we are standing steadfast like a pillar. we get shots but we don't sit .own or neil -- or kneel su: hezbollah says missile strikes are only the start of the response to america's killing of general soleimani. the hezbollah leader told supporters the attacks were the first step down a long path which will force the u.s. to leave the region. he said iran hasn't used what he calls its sophisticated weaponry. reappeared protests less than akend, year after a general claimed victory in a disputed election. thousands gathered in a park to demand more political freedom. antigovernment critics question

the marches under a military backed constitution and announced the establishment's traditional hold on power. the head of human rights watch said he was given no official reason for being denied entry into hong kong. he had planned to launch the annual world report in hong kong, but was stopped at airport immigration and turned back to new york. this follows china's pledge to sanction organizations it believes have performed badly in relations to the protests. >> the focus was how the chinese government is, deliberately undermines the human rights system. that suppresses the rights of people at home and the ability of anyone else to try to hold china to human rights standards. su: global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i am su keenan. this is bloomberg. shery: markets in asia looking next. sophie: japan is off-line. moves.re tentative the kospi just gaining ground by .2% as we digest some of the latest trade figures. export growth is rising. we have the korean won on the advance against the dollar, rising as we have the dollar holding onto friday's losses. the yen is under pressure this morning. sterling and cable on the retreat. this as we get another boe policymaker showing support for a rate cut. the aussie dollar is steady. the asx 200 is retreating.

best week since february. we have energy names among the laggards in sydney. this is wti -- this as wti and brent with losses for a straight session. in on futures for the taiex, the head of the open. looking at potential gains for the taiex as history has shown us in the months following a vote, we have seen the index gained ground. we are looking perhaps for some of this outside momentum, given the election over the weekend. turn to thean bloomberg for more on that story. you can get analysis from our expert editors. mliv go. the u.s. and china are set to sign a phase one trade deal at

the white house. two toalls for phase begin. negotiation to start. the greater china conference. we are looking ahead. very pleased to say i am joined by a professor of government of the harvard kennedy school. a former u.s. surgery of defense and the author of a book about a trap destined for war about the u.s.-china relationship. we can ask and kick off with the trade deal. how much further forward do you think the signing of this deal takes us? is it likely to put a floor under the drop, the relationship between beijing and washington? >> first it is a good thing.

second, this is not a big deal. this is a phase in an agreement which could have been reached between president xi and president trump. will put't think it what is hostile relationships between the countries, because it is driven by a deep chinaural reality, namely is a rising power. the u.s. is a ruling power. is in full foron both of them. tom: there has been some suggestion that maybe and restarting of talks, semiannual talks between the u.s. and china, in beijing and in washington. will it move things forward? it is it likely to prove material? >> the would be a good thing. the whole idea of talks mixes

that in. and the way in which nations end up stumbling into war through rivalry typically involve misunderstandings and some third-party action that neither anticipated, provoking a set of reactions. one of the big mistakes from early on was limiting those talks. it would be a good thing to restart them. saw phase onele as the easy part. is phase two realistic? will they make any movement? >> i would say it is a 50-50 at twot there will be a phase before november. the reason why is trade involves so many different conflict issues and there are so many ways to compromise the site we want to compromise, you can have phase 23 and four. so the deal was when they could have done any time.

meeting a had had a month before, that they would be somewhere, they decided the 'sreement because from trump perspective, this is about appearances and is feeling the ways in which this has put a shadow on the market. the stock market is his political genie. i think he will be interested in the second phase agreement before the elections when president xi and the chinese government are interested in trying to give him a victory. theyecondly what terms will end up with. i suspect we will see negotiations on trade. there will be other items, and agreements reached from time to time because it is kind of

attractive or both parties. leaders can do something. that is why that. tom: one of the flash point is taiwan. how much more difficult does it make the relationship between beijing, washington and taipei? >> i would say it is externally dangerous because from beijing's perspective, taiwan is an integral part of the chinese station. no compromise, not one inch. from the american perspective taiwan looks like a very successful self-governing, perhaps province of china under one nation, two systems. the economy, society, the notion that these people that would be somehow violently taking into the fault, if it should ever come to that point,

seems unacceptable for an american point of view. many americans believe we should have a tight relationship with taiwan that we would propose to fight for taiwan. many others don't. reason -- there is a risk. if the president came to be too full of herself and decided to make a dramatic move towards greater independence for taiwan, which many people would support, i think beijing would react violently. i think the question of whether you see a rescue is uncertain but possible. if the u.s. did, it would be the fastest for the u.s. and china finding themselves falling into these. you would have a bloody war. we should remember what it was like in 1950 in korea.

the americans came to the rescue, pushing towards the chinese border without realizing what we were doing. war -- nd most of that americans killing chinese and chinese killing americans. tom: 50-50 chance of it happening before the elections. our coanchor there at the ubs greater china conference. we will have plenty more guests from the conference. they will join us later on bloomberg markets: asia. haidi: and goldman sachs plans to double its headcount in china for the next five years as china continues to open its $45 trillion financial market. let's cross to selina wang. what do we know? sources say goldman is planning to increase headcount

by 600 contingent on its -- if china continues on a path of reform. part of goldman's strategy is very important. sources say when david solomon took the job, one of the first things he asked for was a five-year plan to sketch out extension -- expansion plans in china. china needs to take full ownership before the end of the year. goldman plans to increase the stake from 33% to 50% and will take control of the unit by the year-end if they are permitted. so far the profits from the joint venture have been modest. in 2015 they made $10 million, but we heard from the asia executive in an interview that they are planning to not only drive growth in asset management but also other parts of the business.

clients seek to diversify away from cash and real estate. china has been trying to open its $45 trillion financial market not only to boost its economy but attract foreign competition so it can improve its domestic financial services market. how does this compare with what their competitors are doing? selina: no surprise, it is up against competition. it is an immense opportunity for global financial firms. up regrets is $9 billion -- up for grabs is $9 billion. in terms of what competition is doing, ubs is planning on doubling its investment in the next three or four years. jpmorgan will also expand its office space. we know that japan's number of his gratitude expand and. to 500 over the next few years. in addition to the investment

banking sector, china is opening its mutual funds, securities, life insurance, allowing different types of companies to have full ownership before the end of this year. haidi: selina wang with the latest on the expansion landing in china. spewingpine volcano is ash, shutting down schools, the markets and the airport. a worse abruption could be near. we will have more from manila next. this is bloomberg. ♪ ♪

shery: this is daybreak asia. haidi: a quick check of business flash headlines. the first of hong kong's digital taking customers in at a 6% introductory rate. this is one of eight firms

preparing digital only operations. it operates over three percentage points more than traditional lenders. analysts don't this is sustainable but say it is a sign of increasing competition in ranking. shery: nissan is stepping up planning for a possible split from renault amid the fallout from carlos ghosn's germanic escape to lebanon. culinary talks include a total split of engineering and manufacturing as well as changes to the nissan board of directors. the paper says the renault chairman had doubts about the alliance when he replaced carlos ghosn last year. china may come to the rescue of aston martin. they were listed as junk, in talks with a chinese company and receiving 200 60 million dollars of investment from the canadian billionaire lawrence stroll. china's contemporary technology is also mulling a stake after?

was under increasing pressure with a stock under fault. they: investors will have first chance to react -- to react to the landslide victory in taiwan when markets open at the top of the hour. let's cross to taipei. we are already seeing stock adex futures rising almost percent in taiwan. what do we know about this landslide victory and what it means for taiwan? stephen: a key point of the election was the china question, but also the losing party here in the presidential election at least argued that for taiwan's wouldy to get wings, he meet closer integration with mainland china, like the two-term president of the past.

twonow that he has won straight terms, the electorate is putting their face in the policies of her more isolationist if you will, rather than integration with mainland china. but investors so far in 2019 and into 2020 have cheered what has happened in taiwan because it has been a beneficiary of the u.s.-china trade war with more manufacturing coming back here to taiwan. gdp growth is expected for 2019, the full year 2.5%. could be upwards of 2.7% in 2020. there is an up cycle is a chip sector where taiwan is a key component as well as sending in 5g. there is optimism that this current uptick in the taiwanese economy, the best-performing of economies iser going to last.

that is the big question. the electorate says we are going to stick to this. what comes next in terms of this relationship with beijing and what each of the parties are likely to do going forward? stephen: one insider said it was generational warfare. we saw it in the election with many of the young people turning against the dpp. --t turning again to the dpp turning again to the dpp. they have now lost two presidential elections in a row, running on the same platform. isng forward, the amp licking its wounds. the beijing leadership perhaps as well. they have already put out several statements to state media.

this sums up the mood in beijing after the overwhelming landslide victory of a million votes cast in her favor. she said -- china said they used dirty tricks like cheating and intimidation to get votes, exposing their selfish and greedy nature. the weather has turned quite evil right now. it is dumping on us and there is a lightning storm. the gods are not angry with us -- pretty angry with us as well. engle there in taipei. if you are away from a screen, you can find in-depth analysis on the big newsmakers on bloomberg radio. we are broadcasting live from the radio. you can listen on bloombergradio.com. this is bloomberg. ♪

shery: the philippines are bracing for a violent explosion as a volcano 65 kilometers south -- it is venting clouds of ash and has triggered 150 earthquakes. there are warnings of a worse direction in the coming hours or days. joining now is a seismologist. great to have you with us. we have heard now from local radio stations saying the manila

airport could be resuming partial operations on monday, given what is happening as the air -- the locator, so safe with that the? [speaking simultaneously] , the activity0 has subsided. in the direction has changed a little bit, not towards manila international airport. before testing have to observe the activity and see where it is already going. they will decide if they will have planes take off or not. activity has subsided. shery: this is one of the most active volcanoes, now we ever opting with a massive plume --

now errupting with a massive plume of smoke and steam. you can see the smoke coming out that tell us a little bit about how this effect could change? because so far we have seen the rruptiontion -- the e aimed at the sky. how could this affect the land? >> if you look at the plume and compare with what happened yesterday, more energetic and have more cash. and we asked when this would fall on land, would affect if they inhale the fine ash. they can make the road slippery. and if will slow down the ash get bigger and on the it will get heavier

than the roofs and collapse and people have to clean the roots from time to time. the ash might affect aviation. they could enter the engine and be converted to bless. this can block the airflow of the engine. your response to the preparedness? was there enough warning? >> the level of the volcano is already at number one. this was march 20 19th record nation been done with the local government of the province. happenedficant changes at 11:00 have the escalation of this activity was so fast that the progressive alert level occurred within a matter of several hours, maybe in six

hours. it is because of the sudden increased escalation of the volcano's activity. the main concern with the people on the volcano island itself, occurring,ruption is were at the maximum over 10,000 people would stay there. but based on my coordination with [indiscernible] disaster official, all residents in the area were safely evacuated. thank you so much for joining us. we are going to have to leave it there. this is bloomberg. ♪ ♪

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

>> it's 9:00 a.m. in hong kong, singapore, and in taipei. welcome to bloomberg markets china open. i am david ingles. >> i am tom mackenzie in shanghai. we are looking at a reaction to the election in taiwan and counting down to the open in hong kong and the mainland. >> the election in taiwan is said to lift markets. victory moves the island further from china's influence. the volcano in the philippines shut schools, offices, manila airport, and the stock