shery: welcome to "daybreak asia ." i am shery ahn in new york. haidi: i am haidi stroud-watts in sydney. down toounting you asia's major market opens. these are our top stories this hour. the white house will respond to china's new laws for hong kong later on friday. beijing is defined u.s. criticism while insisting it will ensure the city's fundamental freedom. asia faces an uncertain day after u.s. stocks erased gains and finished the session lower.

investors weighing a reaction that could further destabilize the global economy. president down to asia's major market opens. these are our top stories trumpe for social media after his tweets are fact checked he says twitter and others are trying to silence conservative voices. breaking news out of south korea. we are getting the industrial production numbers for the month of april and we are seeing a huge contraction month on month, a plunge of 6%. the expectation was for a decline of about half of that and this of course also is after gains in the previous month. year on year, it is a contraction of 4.5 percent. again, really a much bigger contraction than expected. hearing year, we are talking about the biggest contraction since the financial crisis. we have not seen such a big decline since 2009. in the month of april, and south korea, we have continued to see the restrictions over the coronavirus pandemic. already, we are seeing a second wave of infections in south korea and talking about new virus cases doubling in south

korea, the biggest spike in two months, and we are seeing industrial production numbers really take a hit in the month of april. plunging 6% month on month in april. and this would be the biggest fall since 2009 when it comes to the year on year numbers. haidi. that is really not likely to lend much of a lead when it comes to here in asia. a pretty mixed session. a great deal of uncertainty as we are awaiting the friday press conference from president trump. he says he will be announcing a policy response to that security law being passed by the npc with regards to hong kong. we had the president of course when itwhen -- turmoil comes to the signing of the executive order looking to potentially weaken or create more liability exposure for some of these tech companies and social media companies. in asia, it is pretty mixed. futures little changed in japan

after gains of more than 2% for the nikkei 225 yesterday. four days of gains when it comes to asia-pacific stocks as it is. futures are slipping .3% when it comes to trading in australia. edging a little bit higher when it comes to hong kong so we will continue to watch given we did see that late session in the u.s. could be a choppy session ahead in asia as well. president trump says he will be announcing these new policies with regards to the u.s. response to china on friday. this after beijing passed a national security law curbing freedoms in hong kong. his top economic advisor, larry kudlow, said china would be held accountable by the u.s. now fromnzie joins us beijing for more. do we have any idea as to what could be on the table in terms of what trump and the u.s. could announce? tom: the trump administration have been looking into their options and the options range from relatively targeted measures like visa restrictions or asset freezes to some top

officials in hong kong and here in the mainland. the option of removing that special trading status for hong kong altogether and treating it like mainland china, which is something kudlow alluded to. that is seen by many as a fairly extreme measure that possibly they will not resort to yet. we will have to wait to see. as kudlow was saying, his point was china has made a huge mistake in passing this national security law for hong kong. kudlow saying they have effectively, the mainland and beijing, rob hong kong of their freedom. we cannot let this go unnoticed. that was kudlow's line. he also talked about a phase i trade deal. that has been one area where the two sides have worked towards the implementation of that phase one trade deal. he says it continues but only for the moment. maybe they will be changes on that announced as well by president trump. back has promised to hit with countermeasures. state media have suggested that could involve this unreliable

entities list and names of u.s. companies that have been counted for that list include the likes of apple, qualcomm, even boeing. shery: the big question going into this npc was whether or not china would keep its growth target. they dropped that. what we -- what have we seen in terms of support measures for the economy? tom: premier li keqiang yesterday at his briefing really focused on the economy, the targeted approach, and said it was reasonable and rational that they dropped this numerical gdp target given the concerns about the global economy and the impacts of the pandemic. he really stressed the need to support jobs here in china. he said again that the action that china has taken would go a long way to supporting jobs and private businesses but said there was further action, further policies, essentially, they have in their back pocket,

if the situation deteriorates. he said there reserve policy space that they can quickly introduce new measures if needed. take a listen to what he had to say particularly on jobs. we believe development still holds the key and is the foundation for resolving all the problems in china today. putting protections in place in six key areas, especially in the areas of jobs, livelihoods, and businesses, will help us achieve positive growth of china's of china'ss economy this year and keep china's economic fundamentals stable. tom:tom: they have 500 billion dollars worth of infrastructure bonds lined up and that will focus on new infrastructure so things like 5g networks, for example, and data centers. he said boosting private demand is essentially a priority for the government, saying 70% of to funds they have set aside

support the economy will be used to increase incomes and fuel consumption so premier li keqiang saying they can see positive growth for 2020 if they stick to these target and goals they have set themselves in terms of boosting demand and securing jobs. shery: tom mackenzie, our bloomberg markets co. anchoring beijing. let's get to karina mitchell with the first word headlines. karina: global coronavirus infections are approaching 6 million now with deaths near three hundred 50,000, although the rate of both is continuing roles. state jobless declined for the first time in the pandemic, a sign that people are starting to return to work. latestmerica is the global focus now, accounting for 40% of daily deaths in covid-19. japan says that economy is worsening sharply amid the fallout from the coronavirus even as the abe government is the nationwide date of emergency . the cabinet office says activity will gradually resume but the severe downturn is expected to

continue for now. the labor market is weakening a business sentiment is falling. the government is revising down words it's outlook for exports. india continues to be a coronavirus hotspot in asia with fatalities now suppressing those of china -- surpassing those of china. it had the widest national lockdown in the world. the number of fatalities has quadrupled in less than a month with infection rates climbing at a similar rate. the government says the outbreak may not peak until next month or even july. the philippines is to easement ls virus lockdown starting monday, allowing business and mass transport to resume despite a record rising daily infection. metro manila will lift stay-at-home orders while the rest of the country moves to looser regulations. taiwan is cutting its full-year growth forecast as the pandemic threatens jobs at homes and weakens demand from abroad. 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 connection -- karina

mitchell. this is bloomberg. haidi. coming up next, we get the outlook for markets with a capital markets portfolio manager, who says that most of the opportunities are now here in asia. this is bloomberg. ♪

haidi: asian stocks have risen every day this week so far. the benchmark is looking to test its 100 day moving average with a gauge of the momentum back to highest since january. valuations on the asia extra pan index are close to a -- japan index are close as the highest . earnings outlook deteriorates simultaneously. more than a handful of markets in the region are trading. the stocks moved too far ahead of fundamentals. let's bring in an expert

in asian equities. billion income.2 fund. right to have you with us. of us your take about where valuations are across asia given that we are seeing this rally but at the same time, going into this pandemic with the u.s. rally, we have talked about how asia might look cheap. thank you for having me. we are obviously in uncharted waters with lockdown directives being lifted in certain places in the globe and others being reinstated. with these reopening's happening, i would like to emphasize i do believe we are only in the very early stages of discovery of how the global economy is going to function in a post covid world. i do think second-quarter earnings are going to be bad. we could perhaps have some bright spots. domestically oriented companies,

those producing goods and services for domestic e-commerce, gaming, software, obviously better positions than export oriented and commodity companies. the results are going to be poor. i am cautious on my medium and long-term outlook for the markets. veryceive there to be a large disconnect between stock market valuations across the globe and underlying company fundamentals. i think headlights -- headlines such as green shoots are emerging as lockdowns ease. -- the markets that i look at. when it comes to south korea geographically, why do you like the markets there, and are there any concerns over potential pressure are now coming with how much they have to support the economy and what that could mean for debt and perhaps the risks for the financial sector in south korea?

>> sure. we do like korea. we like the real value. we like some of the corporate governance improvements that you have seen there. it is important to highlight that for anybody who missed the head of one of the main cables, j by the recently announced he would be the last of his family members to lead the south korean conglomerate. he will instead rely on professional management teams and increasingly independent board members. an announcement like this was unimaginable a few short years ago. we do have allocations to korea across different sectors. electronics, batteries, auto components, internet, snack food, and even advertising. waiting in korea. in terms of the risks and where i am seeing them, i am definitely worrying about debt and the emerging markets. in particular, one area of debt that has me worried is the chinese residential property sector. the explosion of data of the

listed residential property sectors is concerning, as is the cross currency risk that some of these players have taken on. they are issuing u.s. dollar--when all of their business is entirely rmb denominated and that is not even to mention the dependency of both local governments and local governments in china and the national government for a bank sales. residential property sector presents a challenge for the chinese authorities dependent on revenue for land bank sales. on the flipside, speaking about debt -- [crosstalk] flipside, something ist i do find comfort with the increasing depth and breadth of emerging-market local currency bond markets. almost all emerging-market countries learned a very hard lesson in the 1997 financial

crisis. most of these markets today are self funding primarily in their own local currencies so while countries like brazil are in the unenviable economic straits with their budget deficits and pension liabilities, the recent move in the brazilian real does not mean a dramatic increase in local currencies, value of their sovereign or corporate debt. they just do not have much of it. the emerging market -- many have made great progress. i think indonesia, india, mexico, and certainly china, i would put korea in there, deserve mention as having deepened and broadened their capital markets. as you rightfully points hasin your notes, covid severely dislocated the idea of globalization and global supply chains, so if you are bullish on asia, how do you hedge those risks, how do you take a

localized play when so many of the ones that you favor, the likes of south korea, their fast recovering economies like taiwan, are very export and supply chain exposed? kate: as you stated quite clearly, covid has derailed globalization and we are conscious of that. we are invested in the long-term and we do deep dive research into companies with the intention to hold them for long periods of time. we continue to focus on companies that generate most of their revenues and cash flows from goods and services that are produced and consumed domestically or regionally rather than companies that are dependent on trade and export primarily with the u.s. and/or europe, so we are seeing opportunities in the media sector, cloud, food and beverages, health care services, insurance, and pharmaceutical sectors. we are not seeing so many opportunities in materials, energy, or telecoms.

be helpful, i could mention one name, a stock we have in our portfolio to give you an idea of the kinds of opportunities that we see investing in the emerging markets. haidi: sure, kate. go for it. kate: sorry about the delay here. one of our portfolio holdings i will mention as an example of the type of companies in which we invest is a chinese media company. is a publishing and media company located in western china. it is a retail bookstore. they print textbooks and they are increasingly moving their offerings online. we like it because it has a large amount of cash and securities on their balance sheet. topline growth. stable margins. a very nice yield. 6% dividend yield.

that will continue as they just paid their dividend this week and it has a very compelling valuation with the h-shares we own trading at a pretty significant discount with the h-share counterparty so that gives you an idea of our portfolio strategy and trying to stay invested in companies that are not as dependent on global trade. really great to have you. really interesting investing ideas. kate jaquet, portfolio manager with us. coming up next, president trump hits out at twitter after the company starts fact checking his tweets. we will have the details on his social media executive order, next. this is bloomberg. ♪

shery: president trump has signed an executive order he says would admit liability protections afforded to social media companies after twitter began fact checking his posts. let's assess the implications of this with our attack and politics reporter, eric newcomer. tell us a little bit about the implications of this executive order and whether or not this is practically feasible. given the president acknowledges that this will probably be challenged in court. eric: president trump is certainly angry that twitter decided to fact check him earlier this week, so soon thereafter, we saw this executive order, which attempts to sort of make it difficult for technology companies to, you know, keep speech off their platforms for political reasons. expertslegal have all sorts of questions about how this would actually be enforceable, and i think there is no question that this is going to be scrutinized and

challenged. right, so if everyone has come out and is saying this is potentially unconstitutional, there is no way that you can, you know, push it forward, do these companies need to be worried at this point? do we need to think about the implications of how this would work if it was put through? eric: they have all become very reliant on this provision. the issue even coming up for debate probably is not ideal because they do not want other legislation changing it and this is certainly -- you don't want the president of the united states passing executive orders that challenge how you moderate huge, valuable technology platforms. it certainly spread to the companies, but at the end of the day, you know, this action is a law passed by congress so i think there will be serious questions about whether a

presidential executive order has enough weight to change that law. shery: democrats have cheered this effort to find check the president, but of course, we have seen criticism from the publican's that there is a bias against conservative opinions. what are we going to see in washington? eric: right, there's certainly a strong concern that these fact checking efforts end up focusing on republicans. i think in the case of twitter, i think they fact-check chinese government officials soon after they fact-check trump, but certainly, the president is a big target for fact checkers and conservatives. they feel extremely targeted and it becomes a political issue. facebook does not want it to get into the business of fact checking politicians both because it is logistically

difficult and if you are a company that needs things from the government, it is not easy to be criticizing politicians speech, so we have seen facebook really trying to stay out of this and twitter has taken a pretty mild fact checking approach, but it's already sort of drawn an extreme response from president trump. the mildness of that, you know, i guess, dipping its toes into the water with the first couple of tweets, has also drawn criticism, too. has it opened the floodgates for twitter where they are now being pressured or criticized by saying why don't you fact-check x, y, and z? do they now need to do more? eric: twitter fact-check to the president over his concerns about voter fraud and mail-in voting and twitter basically said there was not evidence for that, but it is coming the same week that the president is

totally unfounded conspiracy theories about shofar burrows -- about a death. twitter has tried to limit the scope of their fact checking to these sort of election related issues and things related to the coronavirus, but then, you know, there are all sorts of potentially egregious statements that politicians make that now, twitter will be asked, why aren't you doing something about that? is an easier approach to articulate when you say we do not fact-check at all. once you get in terms of the business of flagging extreme cases, there are lots of questions about why something else does not deserve scrutiny. with: great to have you us. you can get more on trump's executive order targeting social media companies in today's edition of daybreak. that is dayb on your terminals. let's now get the business flash

headlines. say they will not accept the closure of car plants in spain indonesian -- and indonesia. thean slid into the red for first time in 11 years as the coronavirus pandemic stalls demand for new vehicles. itsswagen is expanding operations in china and the u.s. despite the coronavirus hitting sales and tensions rising between the world's two biggest economies. bmw has become the biggest shareholder after buying a quarter of the company while also expanding cooperation with ford on the electric vehicles and self driving cars. breaking news out of brazil. we are seeing reports of 26,400 been tea new coronavirus cases 26,417 new coronavirus cases. chilling new models saying that

could quadruple in the coming months. a political crisis brewing in brazil as we continue to see these record numbers of cases and deaths. we will have more, coming up next. this is bloomberg. ♪

haidi: we are getting breaking data when it comes to japan. crossing the bloomberg now, we are getting the labor market numbers coming through. the job to applicant ratio for the month of april coming in at 1.32, as expected, just lower from the previous month of march. the jobless rate actually falling to 2.6% from that 2.7% that was expected but still a slight rise above the 2.5% from the month of march. we are also getting some inflation gauges when it comes to tokyo. tokyo cpi excluding fresh food. that headline number year on year for the month of may coming in, actually a gain.

.2%, better than expectations of a decline of .2% , and a rise above the previous month as well. excluding fresh food as well as the volatile energy prices, we see a gain of inflation of .5% so much better than what was expected. tokyo cpi year on year, the top-level number we are seeing , bettern growing at .4% than expectations of just .1%. also, that jobless rate creeping up a little bit higher but not as bad as expected. we will be going through all of those numbers as well and japan's retail. we are getting industrial production numbers out a little bit later on this hour as well. the chief policy economist will be with us and also talking through the monumental amount of stimulus we are getting from the abe government. let's get you to karina mitchell with the first word headlines. karina: time is a lawmaking body

has approved a sweeping security laws for hong kong, defying u.s. could a they ensure fundamental freedoms for the city. the national people's congress voted overwhelmingly for the measure. to the hong kong administration now, which has already said it is needed. president trump is taking on another major target attacking social media that he says is restraining conservative comments. he signed an executive order to limit the liability protections that twitter and others enjoy after his tweets were subjected to fact checking. current leaders safeguarded against liability for third-party posts. the president signed the order after reporters were ushered out of the oval office. haidi: the egregious -- pres. trump: the egregious example is when they try to selectively apply a fact-check. checkhey choose to fact

and what they choose to ignore or even promote is nothing more than a political activism group for political activism. it is inappropriate. the european union says the u.k. may have given up on a brexit trade deal, admitting progress in negotiations is proving to be tough. phil hogan says there is little optimism and the u.k. may have decided there's not going to be a conclusion. failure to reach a deal by the end of the year would see the u.k. leave europe with no deal, adding extra pressures on business already revealing from the coronavirus -- reeling from the coronavirus. in pakistan, investigators uncovered the flight recorder of the plane that came down in karachi last week. it crashed into a residential neighborhood with reports saying air traffic controllers were concerned the plane was not making a proper dissent. the jet grazed the runway before circling and making another attempt to land.

iran launched new and upgraded naval vessels, warning the u.s. is not afraid of a challenge. the guard struck a defiant tone in the gulf despite years of american sanctions and the devastating effects of the coronavirus. president trump has ordered the u.s. navy to destroy any iranian vessels that harass american ships in international waters. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. shery. shery: global virus hotspots are shifting with the pace of new infections accelerating in developing countries. ill-equipped to contain the spread. sophie kamaruddin has more. that in america representing 40% of daily deaths globally and just now, we got brazil again, a record number of new cases. sophie: not great with the outlook. cases in latin america are growing. the largest countries in the

records inping daily the past week and the concern is many big cities are hitting their peaks as governments health risks against economic devastation. gdp could shrink 5.2% this year. that would be the deepest recession in 50 years. brazil has the most cases in the world, barring -- it is likely week.ipped -- within a the country reported another daily increase. a daily record. 26,400 17 new cases with over 6300 registered in sao paulo. despite the rise in case counts, sao paulo is to start resuming some and to be by june 1 after two months of patchy quarantine enforcement.

india's lockdown set to end on may 31. no signs of slowing cases. sophie: experts think the outbreak on not peak until june or july and in the meantime, india reached a grim milestone. the death toll quadrupling in less than a month to top 4700 on thursday. the country losing more lives than china and now having the highest number of fatalities in asia. infections have been surging, double what china has recorded. the ninth have highest number of cases in the world. a bleak situation for the government, which has tried to ramp up testing as well as pushing economic fallout. they are set for the first annual contraction in 40 years. shery: we are hearing that in southeast asia, the philippines is joining singapore and using lockdowns next week. what is the latest?

sophie: there is a similar theme playing out for the philippines president duterte, restrictions will be eased around the world despite the record rise in daily cases, so limited train and bosch operation -- bus operations. packageclear if the aid -- singapore, officials have said that phase two could begin earlier than scheduled. they will be keeping a low rate of local transmission. lockdownd to lift measures after allowing nearly all economic -- but country reported 10 new cases on thursday. sophie kamaruddin in hong kong. coming up next, nissan has posted its biggest loss in 20

years but insists it does have a turnaround plan. highlights from our interview next. this is bloomberg. ♪

haidi: nissan has reported a net loss for the latest fiscal year, its biggest into decades and revealed a plan to turn itself around by cutting cost capacity.

bloomberg spoke to nissan's coo about the turnaround strategy. nobody has a crystal ball to say what will happen to the automotive business. we are running our company based on weekly and biweekly business plans. we are seeing the total automotive market coming back. for example, in china, we saw but this year, we should -- overall, we anticipate that the total automotive market will be only 71 million, which is 20 million down. that is why we have not given any financial quotas today. fy 21, said today is, in we are targeting more than 2% of profit. what is very important for our company is to bring the cash flow positive and we do believe that in fy 21, second half, we

will be cash flow positive. this is what we are aiming for. >> i want to ask you about -- it is a huge topic right now. many of these were planned. they are viable going forward. some controversy over renault closing plants in spain. what happens? ashwani: at first, we are not closing plants because of covid. we are an automotive manufacturer. when we got to the market, we go with a long-term vision. a case where we over invested, anticipating higher market share and higher growth in the market. it did not happen. that is why we have to close. same as the case in barcelona. our plant is running at 15%. being studied.y today, what we announced is our intention to close.

in the current transformation plan, which we announced today, we have been aligned by 4 million capacity, which is good enough for us. 6% market share. it means we will have -- which is the best efficiency. it has been a difficult year for nissan. of chairman carlos ghosn and more difficulties beyond. geopolitical issues in china and hong kong, you are trying to take the lead in this three party alliance as well. tool to alliance is a improve the performance of each company and it is not objective and this has not changed and will not change as we announced yesterday. for nissan, when we looked at our transformation plan, it is

based on focus and they are the biggest automotive markets. we have the biggest market share . we are going to focus on that. china is recovering fast. we have a strong product lineup. we are going to invest more and more in china. we do believe a recovery which we are seeing in china, especially in terms of market share and the automotive market -- china remains one of the most important profitable growth markets. forou are leading efforts the alliance in china, north america, and japan. how concerned are you about the renewed tension between north america and china? ashwani: basically, i think nissan being a global company, we always align with a geopolitical context. enough to go for

globalization. the markets are requesting globalization it on the other side, if markets are coming back to enough regionalization, we ae coming back to regionalization. having said that, what is more important today is that the chinese customer is becoming more and more demanding in terms of technology. developwhere we need to some specific products in china for chinese customers. us anpproach is giving opportunity to relook into the ways we develop products. maybe three different cars for three main regions. joining us now from tokyo is the deputy head of japan research, christopher. see as the way ahead in terms of meaningful recovery and a fresh page after so much turmoil and controversy for this company? christopher: thank you for having me on.

i think the main -- i think nissan and mr. group to hit a lot of the right buttons as far as closing unnecessary plans, as far as trying to resume cash flow in terms of having a focused product line, focusing on core markets. these are all the right buttons to be pushing. i think what complicates this is the pandemic. a big restructuring plan like this could not come at a worse time. nissan is very optimistic about global demand coming back quickly, citing the good numbers we had last month in china, but you know, we still wonder if it is a long road ahead with a lot potentialyment, the for additional waves of the disease and so on. certainly, they have their work cut out for them. ultimately, having a plan is great but it is the execution that is going to matter.

haidi: it is really the cash burn, the cost-cutting side of things that will be matter. -- that will matter. it really depends whether they can survive this period until such times as we see demand pickup. >> right -- christopher: right. the cash burn for nissan will probably be a big issue this fiscal year. to nissan's credit, they do have a lot of resources lined up and a lot of liquidity. nonetheless, when we look at nissan as an investment, there's going to be a lot of cash burn and that cash burn means a reduced value at the company. nonetheless, when wealso, and at going forward. we are going to be watching -- we will probably be watching cash a lot more carefully than we will be watching accounting earnings this fiscal year. haidi: how positive is it that they are actually cooperating with renault? once carlos ghosn left, there was a lot of questions as to

whether or not the alliance would survive. christopher: yes, you are right. there was a tremendous amount of acrimony immediately after mr. ghosn's departure. a lot of that is starting to heal. and you know, i think they have made some important steps forward. nothing focuses the mind like the threat of death, so i think, you know, taken a fresh look at the alliance and seeing there's a lot of value here and we should be taking advantage of the rather than trying to tear it down. shery: let's turn to the technology and to the cars themselves out of nissan. how important is it that they get some new models out? christopher: ultimately, you can cut costs until the cows come home, but then your business gets smaller and smaller and smaller. ultimately, the way to grow the business, the way to make it

more profitable, is to have fresh product. new product in the automotive industry. it's like sushi. it sells for a good price when it is fresh. when it is a day old, it's cat food. really, really have a new product in the market is really important for nissan, and this is a really tough time to be launching new product right now. next year, hopefully, it will be a lot better. christopher, i want to ends with your guesses as to what the post pandemic kind of world for autos and mobility looks like. uber, ridesharing, and lyft, will they be around? will people be buying more cars because of social distancing? christopher: i think it is going to be a really hard ride for the ridehailing companies. people are not going -- unless they can figure some way to make people feel comfortable that they are not at risk of contracting the disease by

climbing into the backseat of a rideshare vehicle, it's going to be hard. people probably will want to climb more into their personal cars. in a way, you know, that will be good for the car companies. it will be bad for quality-of-life, road congestion, if road congestion was a stock, i would buy it. it has impact on carbon emissions and so on. for the might be good auto industry in the short-term, it might be not so good for society in the longer term. shery: that was christopher richter. thank you very much for joining us, deputy head of japan research. breaking news out of china right now. we are seeing china reporting no new coronavirus cases and also no deaths from may 28. they are reporting five new asymptomatic coronavirus cases. no new cases, no new deaths, but

still, five more asymptomatic cases. we continue toas see global cases rising, topping 5.9 million, and deaths over 358,000 around the world. this as we continue to see more deaths across latin america. as well about 40% of the deaths are averaging out of latin america. 9.1%nth of april, plunging month on month. now, that would be a much bigger decline than the estimated 5.7 percent decline of industrial production. also, when it comes to the yard your numbers, a plunge of 14.4%, a much bigger decline than was expected and also a huge contraction from the previous month. we are talking about the month of april. this is when the state of emergencies across japan were

still in place. of course, we have seen is taking a toll on external demand, also hitting outputs, so many different factors really affecting those april industrial production numbers out of japan. we are seeing the japanese yen holding at that 107 level. coming up next, we will break down those numbers for you with martin schulz. this is bloomberg. ♪

shery: continuing on those breaking numbers out of japan, retail sales month on month, a plunge of nine per 6%. year on year, 13.7%. month on month, this would be the biggest drop on record. for more analysis, the chief policy economist, martin schulz. worse numbers than expected growth in retail sales and industrial production. your reaction? martin: the impact has been huge. that is well known. there was a partial lockdown in tokyo. foreign tourists not coming, and department stores had to shut down. we have also seen that with the consumer prices going up 0.5%, the demand is certainly there. the labor market is stable, and companies are adjusting. the big question now is will the huge package with -- the

government package to support the economy at 40% gdp -- will it help? martin, at the same time, earlier in the hour, we had labor market data. it was not great but better than expectations. we actually have some semblance of inflation and those tokyo cpi numbers. exactly. this is a market where companies have to adjust, having a hard time to adjust. the strength in japan is the resilience of how businesses are continuing, how stable the labor market is, and demand will hold up. the big question is -- the smaller companies -- the dynamics in the market. that needs to get to the next level. tokyo is opening up. the economy is opening up this week. we should see more activity now. are they flexible enough to jump from here?

shery: you saying in your notes that digitalization is key in japan. how feasible is this when we have seen complaints out of japan during the pandemic that they have to fax constrictions for telemedicine? prescriptions for telemedicine? martin: companies are really focusing on getting japan going, getting it digitalized so the economy can move on but they have no cash right now. this is where the government packages can help. let's see that companies are focusing on getting the business model into the new world. haidi:haidi: are we seeing a blurring of divisions between the boj and the finance ministry in this whatever it takes approach? istin: the bank of japan financing the government. that is important in the current situation.

the government packages are really outsized. the bank of japan was focusing on the market, pushing banks to provide credit and liquidity for smaller businesses. this is the main point, getting cash into the market. keeping companies alive. shery: policy economist marshals with us. coming up on the next hour of "daybreak asia," we will be taking a look at asian stocks. they are set to end may on pretty weak to mix footing. this is bloomberg. ♪

haidi: i am haidi stroud-watts in sydney. asia's major markets just open for trade. shery: good evening, i'm shery ahn. welcome to "daybreak: asia." our top stories. haidi: the white house will respond to china's new laws for hong kong late on friday. beijing is defying u.s. criticism insisting it will have ensured fundamental freedom. asia ends a bumpy month after wall street erased gains and finished assessment lower.

reaction could further destabilize the global economy. hauwei vows to continue campaign events on tech. the security chief says washington's actions will hurt american jobs. let's get you started with a quick check of how markets are opening across the panel. pressure on the nikkei and of the topix, which are losing ground. also falling from the highest level since february. we had four sessions of gains for japanese stocks. we have seen the japanese yen strengthen. pretty negative economic data out of japan when it came to industrial production and retail sales slumping more than expected. retail sales, the biggest year on your drop in 22 years. we have seen a semblance of inflation when it came to tokyo cpi numbers. take a look at what korea is doing. a fall of .6%.

this as we extend the losses on tensions between the u.s. and china. the korean won leading the declines yesterday. a little bit of strength today. this coming after we saw investor production in south korea plunging about 6% month on month, the biggest construction since 2009 -- the biggest contraction in's 2009. haidi: that model not creating positive sentiment when it comes to the trading as we head into the end of the month. this is what we see across australian and new zealand markets. down by about .10% when it comes to aussie markets. we could see this as a turning point for some investors really taking deposits up the table. zealand,omes to new some modest gains across the board. trimming those earlier gains to a quarter of 1% for a full week of gains when it comes to

trading new zealand. we got consumer confidence numbers that suggested it bounced off of the low in april as the country emerges from lockdown. j.p. morgan chase strategist is dialing back on equities. he says investors should start trimming equity holdings as tensions heat up between the u.s. and china. let's get more on the outlook with our guest. notable goal, he said people should stop buying back in march. he was saying there is real concern out there that we will see an erasure of these gains continue with the tensions between the u.s. and china. and outlook,ing political risk show signs of normalization. what is your take on that, given the political risks and a lack of normalization on that front has been a key theme over the past couple of years?

me.hanks for having equities ateing this point of time, particularly for the likes of getting a little bit expensive. in terms of the outlook, there's a lot of hostilities. one you just pointed out, as well. really in terms of how we are seeing the risks starting to build up, particularly on the u.s.-china trade front. a lot of what we have in the market at this point of time, we have seen the april numbers coming back maybe not so much better, but there is recognition there may be a bottom. that's why the market is trying to trade on this kind of trend at this point in time. i do think that sentiment may get hit on the side of the u.s. and china. exchanges at this point of time.

it is really not leading us on a very positive trajectory. above it, the change in behavior that we see the covid-19 situation has brought along. there are some expectations that we see a little bit of reopening optimism guiding us. how that will shape up is still a question. capacity in covid-19, i think that will bring the market to a bit of a cooling as they can begin treatment. that all-time high situation we had seen before march. reboundingaw gold from a two-week low. does that fit into your strategy of allocating more into havens? >> i definitely do think gold shines, looks to really continue at this point in time. gold prices themselves a little

bit from the testing. once it has to do with the reopening optimism, the negative correlations deepened a little bit. gold prices reacted to as much of the optimism itself. the markets recognize gold really comes alive, one that is really eager. gold prices much supportive above 100. the likes of u.s.-china trading some of the exchanges. i think there is likelihood that we may see on this front, even if the virus itself doesn't come back onto the table. i think the likelihood for

exchanges to get more heated, thereby giving the gold prices more room to rise, that looks to be the case for what we have on hand. >> what happens top dollar offshore yuan? we are seeing it approach the 720 level. we will see more bearish lows given between the u.s. and china? definitely being watched. week oil prices trying to test that around. the likes of what we are looking at. 9% at this point in time. the market is understanding the situation has bit into the rating. is not the virus something we are looking on the horizon, on the table at this point of time. itselfough the sentiment surrounding the matter, a lot of

the world says it could be negative. even with the growth outlook not getting materially affected at this point in time. it is a dangerous situation at this point. we are looking how to manage that. a lot of people do things that the depreciation, or allowing the yen to reconsider against the u.s. dollar. makes a lot of sense. i do think stability will be managed at this point, especially with china being ahead of the province. definitely look to how what the u.s. may say, like with the announcement over the weekend and how the yen may fluctuate. shery: where do you see dollar strength going?

that will have implications for the asian emerging market currencies. >> i do think we have seen the u.s. dollar index weakening quite a bit over this week. a lot has to do with the euro. the momentum had gone thicker than earlier expected. think there are hurdles and they have to cool a little bit of the strength. a bit of a safe haven. the optimism perhaps surrounding the covid-19 situation. with regards to reopening, coming to cool a little bit into june. if we do not see the indicators catching up. you consider jobless claims. that is really at a bit of a demolition pace, in terms of the decrease. a bit of a precaution that could

put -- reflect back into the market with how the situation is evolving. for the u.s. dollar, likewise, at least a court coming to into june. shery: great to have you with us. one stock we are watching, nissan plunging at the moment about 7%. this would be the biggest fall since march 31 of this year. this coming after they posted the biggest loss in 20 years, 6.2 billion dollars of net loss for the latest fiscal year. they also unveiled a plan to turn around the company. we are seeing the losses mounting for nissan and the stock plunging more than 7% at the moment. the biggest drop since march. let's get to karina mitchell with the first word headlines. >> global coronavirus infections are approaching 6 million with deaths nearing 306,000. the rate of those is a slowing. u.s. outlooks for the mobile

declined for the first time for a sign people are returning to work. latin america is the latest global fork us -- focus counting deaths from covid-19. isan says the economy worsening sharply amid the fallout from the coronavirus. even as the government eases the nationwide state of emergency. the cabinet office says activity will gradually resume, but the severe downturn is expected to continue for now. thatatest data supports industrial output fell over 9% last month. retail sales were down almost 14%. the european union says the u.k. may have given up on a brexit trade deal, admitting progress and negotiations is perusing -- proving to be tough. there is little optimism the u.k. may have decided that there is not going to be a conclusion. failure to reach a deal by the end of the year would see the u.k. leave europe with no deal, adding extra pressure on

business already reeling from the coronavirus. president trump is taking on another major target, attacking social media that he says is restraining conservative comments. he signed an executive order to limit the liability protection twitter and others enjoy after his tweets were subjected to fact checking. currently, they are safeguarded against liability for third-party hosts. the president signed the order after reporters were ushered out of the oval office. >> one egregious example is when they tried to silence views they disagree with by selectively applying a fact-check. used to fact check and what they choose to ignore is nothing more than a political activism group or political activism. it is inappropriate. >> global news, 24 hours a day, on air and at critic by bloomberg, powered by more than 2700 journalists and analysts in

more than 120 countries. i'm karina mitchell, this is bloomberg. haidi: still ahead, we get a preview of the upcoming indian gdp data release. joined by a guest as the lockdown continues in india. covid now surpassing that of china. coming up next, we get the latest from the streets of hong kong. what comes after beijing has approved their new national security law. this is bloomberg. ♪

they are raping the hong kong system within the one computer systems obviously. >> one country comes the full two systems. never mind the two systems. >> the two systems will remain. they will not reduce anything. >> how is this going to work out is anyone's guess.

>> it's in everybody's interest that they publish their job legislation as soon as possible. >> is not possible for the economy and distance to the situation. >> throughout those years, we have seen uncertainty. this time is no different. we continue to believe in hong kong. >> we remain committed to being here. in recent years, we have made meaningful investments. >> we are certainly reaching a turning point. whether it will turn for the worse is still to be seen. stop donald trump to impose sanctions. states, orunited trump administration, whatever they would like to do, i don't think we will be in a worse situation. >> i don't support sanctions of hong kong, because in the words of some business people, that

means the game is over. our guests commenting on the new security laws for hong kong that have been improved by beijing. stephen to our engle. very little surprised that they passed laws. how will the u.s. respond? >> how will society respond? carrie lam putting out a statement asking people for their understanding and support of this highly controversial national security legislation. she's appealing for understanding. but the statement, if you read it, it has very little warmth. i think a lot of people in society here, even those resigned to the fact that the national security legislation will be imposed on them, i think they are looking for a little bit of warmth and understanding of their concerns from the chief executive. i don't want to editorialize on reading between the lines. again, a lot of people are

divided on this subject. because there is very little transparency and knowledge on what exactly is going to be in this legislation that was over only passed by them yesterday. one aotes for yes, gainst, six abstentions. now it's up to the standing committee to draft the official formalities and implement it, perhaps by the summer. the big question is how much political capital will donald trump and the white house exert on this issue to put more pressure on china? we know he's taking twitter and facebook to battle. will he also stand up for hong kong? that's a question. larry kudlow already seen beijing's move for a huge mistake. he's going to have a press conference friday in the united states outline his response,

which could include as a drastic step, revoking the favorable trading status the u.s. bestows on hong kong. shery: the u.k. also giving beijing a warning. what is this about possible citizenship for some hong kong citizens? >> about 300,000 hong kong citizens have a british national overseas passport that allows them to go to the u.k. for six months. dominic raab, the foreign secretary, has a warning to china, saying they could and may remove that time limit and allow a path to apply for citizenship for those who have the passport to do so if they so desire. he's basically saying we are troubled by the new security laws and urging beijing to pause for thought, step back, reconsider, and above all, live up to its international obligations. shery: our chief north asia

correspondent, stephen engle. huawei technologies has been caught in the middle of escalating tensions between the u.s. and china. it has been reeling from restrictions on buying u.s. technology and has suffered a legal setback in its quest to block the extradition of the cfo from canada. the chief security officer says battling huawei will cost american jobs and slow tax progress. initial system takes a long time. we have confidence in the judicial system in canada. if she's extradited to the u.s., we believe she will be treated fairly in the u.s. and exonerated. shery: if that is the case, why not come to the u.s. and face the charges and make her case here? decision, she is charged as an individual and has an individual defense attorney. i'm not going to second-guess the decision. shery: this coming at a time

when we are seeing fresh sanctions out of the u.s. against huawei. microchips made with the technology. how prepared is huawei to face this? how much industry buildup have you prepared? >> this is an escalation of u.s. efforts to crush jessica: -- to crush huawei. we had an impact of about $12 million. the companyalation is studying very closely to see what the impact is, there will be an impact, we are basically buttressing up for our survival. that is what this is about. in the meantime, there is a very significant impact on the semiconductor industry in the u.s. and a significant loss of jobs, which is really a shame. >> is in this and estes essential threat when it comes to other jurisdictions? huawei has struck these

sensitive, compromises like the u.k.. does it prevent huawei from doing business with these carriers? >> this is part of several factors that are standing in the way. at the u.s. government is inter-closing. they prevent the u.s. government from being willing to talk with us. the geopolitical situation in china, now the presidential election campaign, the absence of a strong industrial strategy in the u.s. all of those things are struggles china and the u.s. need to face before they talk to us about the kinds of activities we have done in the u.k. and are doing in other countries around the world to address sovereignty. we hope to hold those conversations with the u.s. government and at that there doesn't have to be such a great loss of u.s. jobs. is thethe expectation geopolitical strategic competitive concerns and tensions will continue, that's just a fact of the times we are

living in and the dynamic between these two superpowers. how does huawei try to assure its very survival? what is the strategy across markets you still have access to? >> we are doing more of what we had to do with the imposition of the restrictions on buying from american companies last year. dig even deeper. prioritizing the products most important to our customers, the requirements of the customer, breaking up our research and irrelevant, we are about 50 in the world with about a $20 billion investment this year in r&d. we are trying to move forward with products that may not require these components, trying to find alternatives, and research and development to come up with this on our own. we are not yet sure of the impact on huawei, but it will be a significant impact on american jobs. haidi: huawei keeps stating as a

defense from the u.s. arguments that it is independent from the chinese government, but why do you feel the chinese government feels the need to intervene on the side of huawei whether it is with action or rhetoric? >> the recent escalations from the u.s., i hope china doesn't --turn escalate and rock topples the ability to do business. the china government is doing to apple what the u.s. government is doing to huawei, don't you think president trump would be all over the place criticizing china and defending apple? absolutely. was --hat haidi: that was huawei's chief security officer speaking to us plenty more to come on "daybreak: asia." this is bloomberg. ♪

shery: let's get a quick check of the latest business flash headlines. nissan workers won't accept the closure of car plans in spain and indonesia, despite the company saying the move is essential to its latest recovery plan. the company reported a full-year loss of more than $6 billion, its first annual shortfall since 2009. geely has 600 million new shares are just over $10 hong kong a piece in an exercise that will raise the chinese carmaker around 850 million u.s. they say the proceeds of the sale will be used for product development and general working capital. coming up next, japan recorded its biggest year on year drop in retail sales in 22 years. we break down the data. this is bloomberg. ♪ staying connected your way is easier than ever.

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we've always believed in the power of working together. that's why, when every connection counts... you can count on us. shery: let's get a quick check of the markets trading at the moment. we are seeing downside pressure for japan, south korea, and australia. japan losing .2% coming down from the highest level since february. we have tech and financials leading the declines. financials also leading the declines on the asx 200. almost every sector in the red right now. kospi also down. dismal data out of japan and south korea. the qe stocks holding steady at the moment.

about the phone numbers out of japan. it was rising on employment, following on retail sales and weaker industrial production inflicting the damage coronavirus is causing. japan's economy, bloomberg economics policy editor kathleen is here with the latest. where do you want to start? kathleen: i think we have to start on the really bad numbers. yes we know there is coronavirus that caused the lockdown and have caused bad numbers as they have around the world. when you go into a deep pool, how deep is it and what will it take to get out of it? leaders in the two that department, industrial production and retail sales. they were weak in march, got weaker in april. retail fail in japan, down 13.7% year-over-year. the biggest drop in 22 years.

that is nothing to sneeze at. to put it in perspective, if you shut things down, make it harder for people to go out, ask them to stay home, you will see less sales. industrial production already weak. 5.2% in march was the decline. that was already pretty bad. now 14.4%. those are year on your numbers in japan in april. hikeonsumption sales tax last year is something that has already been weighing on manufacturers, hurting some demand. have less production, you will get less demand for the goods, like automobiles will be a problem. you can see from a chart we have on the bloomberg just how the numbers have gone from plus and not quite so plus, to definitely bad.

the question is what does it mean for the broader economy? was interesting is that the unemployment rate, which i think was the low unemployment in this cycle at 2.2%. one of the lowest in the world. at 2.6%, that is only up a little bit from 2.5%. it is still relatively tight labor market. maybe businesses in japan have been a little bit more resilient, as one of our guests just put it talking about the japanese economy. and also maybe trying to adjust, trying not to lay off any more workers than they have to. that is definitely a plus for them. ,n terms of where we go next japan did lift its state of emergency on monday. now the question is will things start loosening up? will the economy start recovering? it is so deep, it will take a while for the shift.

what do these numbers mean for how bad the damage for the pandemic has been and how quickly they can recover, even with this monumental amount of stimulus plan? >> it is hard to say. e,e of the big questions is ab the prime minister just came out with a big stimulus package. $1.1 trillion. really doubling down on what is done from the economy. that will be 40% of gdp in japan. there is a concern about deflation. how thely said deflationary mindset that settles in in japan how you change that. year-over-year following 2.2% as expected. time to show the chart, you can

see this little hike up. we can into the national pti, which is also turned slightly negative. i think a lot of people are looking at japan. goingcan keep its economy , meaning a positive lesson for the world. the world is probably thinking about the negative lessons of japan when it comes to inflation. >> our global economics and policy editor kathleen hays there with us. coming up next, india's gdp is expected to slump 25% in the current quarter. we hear from what is to come with nomura.

sweeping security laws for hong kong, defying u.s. criticism and saying they ensure fundamental freedom in the city. the national people's congress voted for the measure, which outlaws subversion, secession, terrorism, and foreign intervention. the law passes through the hong kong administration, which is already set it is needed. philippines has decided to

ease manila's lockdown despite a record rise in daily infections. metro manila will lift stay-at-home orders while the country moves. taiwan is cutting its full-year growth forecast as the pandemic threatens jobs at home and weakens demands from abroad. india continues to be a coronavirus hotspot in asia with the tallies surpassing those of china. the death toll past 4600 despite the widest national lockdown in the world. the tallies have quadrupled with infection rates climbing at a similar rate. the government says the covid-19 outbreak may not until next month or even july. 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. this is bloomberg. >> let us stay with india. gdp data later will likely show growth cooled to 1.6% from 4.7%

in the previous quarter. with key services sector at a standstill. our next guest says the economy will contract a record 5% in the current fiscal year. -- chief india economist joins us. tell us how the indian economy is faring right now. which are the sectors most affected? >> the shop comes at a bad time.

quarternow, the second is going to be the worst quarter . india is a service driven economy. the lockdown's have resulted in a decline in consumption on the services side. second quarter we think could lead to a contraction year-over-year. i think there are a lot of challenges on the demand-side and supply-side. --luding >> what is growing at the budget deficit for india with prime minister modi promising to spend 10% of gdp and stimulus packages as this gtv chart of the bloomberg shows. we have seen the r.b.i. really prevent it from monetizing the deficit, but will they eventually be forced to buy bonds to finance the widening deficit? break your question

into two parts. the headline 10% of gdp announcement, the fiscal and financial packages about tics .5% of that. ,he cash from the government 0.8% of that gdp. the headline numbers actually exaggerate the support coming from the government. that is not to say it is not important. loan guarantees, etc.. a substantial part is not because of the fiscal stimulus being announced. it is because the growth is dampening. on your second aspect in terms of how this -- whether the reserve bank will come in direct monetization, at this stage, the

bar is quite high. also to keep in mind credit -- areis growing where high. the banks will be more than .appy funding should not be an issue even though the r.b.i. will not direct monetization. >> i want to throw up this chart taking a look at how devastating the coronavirus has been in terms of this quadrupling we have seen in the death rate in the past month. india has surpassed china for the most number in terms of the number of fatalities. cases are still surging even though parts of the economy are getting back to work. to what extent is this carried through if we see a second or third wave in india. have theirpanies

back office operations in india. barclays has something like a quarter of their back office cap in india. will this deter international organizations and companies to invest further? >> this is definitely a challenge on the next six to 12 months. the life versus livelihood trade-off is quite stark for low income and countries like india. we do not know the counterfactual in terms of how this would have paid out in the long term. the fact is the infections have continued despite the lockdown. back.es are migrant workers have gone back to their villages. increase. is critical ifng

you are living in small quarters," or's. to keep certain districts where infections are high and allow business to come back, to try to balance the life versus livelihood debate. , companieschallenge even in india are going to face, if you are an auto company, you have districts, cities like mumbai under lockdown, the supply chain challenges companies are going to face. us.hank you for joining no more economist for india and asia. coming up next, fight or flight. ♪

>> citigroup is pursuing a slow reopening of offices globally. the ceo told bloomberg in an has been interview

critical to management of the pandemic. it is uneven in every sense. it did not start the same time, it has not spread at the same rate. varied economic and policy responses to it. therefore, not just in the u.s., but around the world, there is going to be a varied pace of recovery from this. are city's perspective, we going to take a very granular approach around the data. what that data tells us. again, stealing a line my wife often uses, while we are all in the same storm, we are certainly

not in the same boat. we have to be very mindful of that. hardest decisions a ceo has to make is when to bring people back to work. are they going back to their old desks? are they going to some new space in the suburbs? will employees be expected to travel? is zoom the next business class ticket? if a big client shows up at the front door with a fever, do you welcome him or turn him away? tell me how you are thinking about those kinds of issues. >> one is that our business model has given us some real advantages. that is that clearly, we have been in asia a long time. her colleagues gave us great insight. as we saw, we knew it was likely covid would be coming west, we had the ability to have the learnings on the ground, what was happening in asia, what was working, what was not.

if you go back and look at the record, pretty early movers in terms of selling decisions we made. since then has been the health and safety of our people, making done everything in our power to ensure that. what wet news is that have made in technology along the way, the efficacy of working at home has worked for us. it is nice to have that flexibility. if you look at the things we have done remotely, it is externally.

the things we have been able to do for our customers and clients, and things we have been able to do for the communities we serve in terms of giving back. me your best guess. i know it is data-driven. when will you start putting people back into your mobile headquarters in downtown manhattan. we keep all about, can safe? about a desk or an office. it is about coming through the turnstiles and down to the cafeteria. it is about the elevators, is about all the things you have to make sure our safe. the bigger challenge is actually, i do not think we are in phase one. you continue to bring more people back, how do you actually scale those particles to be able

to keep that -- those protocols to keep that safe? is putting traders on the trading floor a priority? has been a lot of talk in terms of company saying people never need to or will return to work. atm very comfortable saying citigroup that is not who we are. we are very happy to continue to imagine and reimagine as we go forward the ways we come to work , but at our core, we are a client-facing, client-driven business that in many ways is an apprenticeship business. down, andis passed the human interaction is critical. corbat speaking to bloomberg. lenovo is cutting costs in the wake of the coronavirus pandemic as they look to streamline operations amid the global recession.

the smartphone maker has seen sales drop and supply chains disrupted. lenovo owns the motorola brand and has several offices in the u.s.. it would not say what cuts will be or if they will be -- or if they will include job losses. prada sees a brighter future saying sales in china have risen this month. demand has climbed more than 10% so far in may, although it is far from complete recovery. says demand will rise when a virus treatment is developed. it is focusing on new products and digital technology. ♪ >> china's new national security law in hong kong and the subsequent u.s. response is feeding the flames of a capital flight from one of the world's largest financial hubs. our china markets editor joins us now. are we seeing much of this

already? how do we track outflows in hong kong? track howricky to capital is moving in and out of hong kong. the best way is to look at trends in the currency. we look at changes in aggregate balance into bank liquidity, that kind of stuff in the money market that shows whether people are pulling out. there was a report on local media saying locals were queuing to exchange hong kong dollars for u.s. dollars and the bank ran out of u.s. dollars so people were forced to change it into pounds and other currencies. there are anecdotal ways to track this. >> we continue to see rising tensions between china and the u.s.. what stocks are worth watching at this point in time? , in theber the won chinese stock market, was the

rare earth. these are metals that china produces. there was speculation it could war.ed in the trade these stocks have done well in may and they are a good barometer of how heated tensions are. it is probably the best way to track this in the equity markets. >> what does jun hold? what the china central bank has done in may is unleashed its liquidity prowess. in june the concern is that we have quite a lot of funding u.s.ing, about 380 billion dollars in the financial system. now all we need is the central bank to do more.

there is talk of a triple are cut as soonest today. cut as soon today. the liquidity is a concern. that is where it is showing in the repo market. in china, borrowing costs rising and government bonds having a pretty awful make. may.ful we would need the central bank to ease these liquidity concerns. >> what are we seeing in terms of liquidity concerns in hong kong. quiteuidity has been tight for a while. that is partially a result of what the defense show -- the defective central bank has done havespend currency -- we liquidity so tight, that is what has been supporting the currency. that is why it is on the strong and. -- the strong end.

, likely to ipo's list in june, that is going to increase the demand for cash and probably spike further bank rates in hibor. , if it does not need to replenish this liquidity, we could see a very volatile currency. >> thank you very much. that is it from daybreak: asia. more markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. ♪

a.m.it is 9:00 i am tom mackenzie with david english -- ingles. beijing is defying u.s. criticism while insisting it will ensure hong kong's fundamental freedom. asia looks like ending a bumping month with declines after wall street finished its session lower. investors weighed a u.s. reaction