haidi: a very good morning. i am haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: welcome to "daybreak asia ." to slidekets look set amid fresh u.s.-china tensions and worries about the virus. futures going to declines in tokyo and sydney although hong kong contracts go higher. day traders pile in. it was a rare losing day grace dock that surged more than 15%

in the last 10 days. the u.s. and china trade new barbs. washington rejects china's claim to the south china sea. top u.s. senators are facing mainland sanctions. haidi: u.s.-china sentiments dominating again with the grim overlay of rolling back restrictions around the world. this is how we are shaping up when it comes to u.s. futures contracts, up by .2% after what was a truly volatile session. we had the s&p 500 touching levels pre-pandemic and we also have the nasdaq hitting a fresh record before finishing in the red and we spoke about tesla being a huge part of that tech eventual close lower. nikkei futures up by .2 percent. sydney futures escalating in the red, point 8% lower, looking like a set up of .5% lower, this

as we are expecting an announcement today that the fed of new south wales will ease back those restrictions when it comes to indoor gatherings at pubs after cases coming from the pubs. it is now over 20. new zealand trading modestly higher, about .25%. some significant trade data out of china but really, there is a greater focus on the geopolitical side of things in today's session. shery: let's turn to those escalating tensions between the u.s. and china. the u.s. rejecting china's expansive claims in the south china sea, reversing its earlier policy of not taking sides. ake pompeo accused beijing of campaign of bullying and said its territorial claims are not lawful. tom mackenzie joins us from beijing with the details, and tom, do another example of the trump administration doing away

with traditional long-standing u.s. foreign policy. is absolutely right. as you say, the u.s. has not taken a position on the south china sea after that 26 in united nations tribunal ruling which ruled against china and in favor of the philippines when it came to those claims. now of course, that has changed the policy. that is significant. at the maritime rather than the landmasses that china has been building up, but nonetheless, it is seen and u.s. officials have been saying they want to give cover to other smaller nations. you can look at vietnam and malaysia, to pursue their claims in terms of territorial rights in the south china sea and it is a pushback by the u.s. as well against what is seen as an increasingly assertive chinese president -- chinese presence in a very gas and oil rich region -- region and significant as well. the concern is you will see more

naval operations by the chinese and the u.s. and we are seeing that already and of course, there is always a risk of an accident or clash that could flare up into something else. it is significant. the u.s. saying they are trying to give cover to smaller nations in the region to pursue their claims. haidi: when it comes to hong kong, this can be seen as a de-escalation. the u.s. taking one pretty nuclear option off the table. as: it was going to be seen a huge option, significant option, which is the hong kong dollar peg. state department officials discussed this or aides had as a potential option in how the u.s. response to the implementation of this security law by hong kong. and they were looking potentially at the options restricting u.s. dollars to some of those hong kong banks that would have potentially lead to that collapse in the hong kong dollar peg or the break of that peg. the option seems to be off the

table. the treasury department aides in that department pushing back, very concerned there will be a blowback on the u.s. and it would ultimately hurt u.s. companies and the u.s. economy as well, so that option is taken off the table. other areas of conflict we have seen between the u.s. and china, we have seen the u.s. put sanctions in place on some top senior chinese officials including a member of the the unitedver what nations says are human rights abuses in shenzhen, internment of at least one million muslims. china has responded by putting sanctions on marco rubio and senator ted cruz as well. the ample or implications of this are less significant because neither of these senators are likely to travel to china anytime soon but it points to the increasing rhetoric between the two sides. there were again, across a broad range of issues with technology, the pandemic, the covid-19 pandemic, the south china sea, changing, and hong kong --

shenzhen and hong kong. shery: after months and months of speculating over whether or not the u.k. would ban huawei from their 5g networks, we might be getting closer to an answer. absolutely. an announcement is expected later today in the commons in london and what we are hearing is that, and this is no big surprise, given what we have heard over the last few months, that the u.k. will indeed pursue or put in place a ban on huawei technology in two phases. they will ban new equipment from huawei being put into the telecoms networks by the end of 2020 and then by 2027, they want to see all huawei equipment ripped out of either the u.k. -- ripped out of the u.k. telecoms networks. they tried to come to some middle way and compromise when it comes to huawei, but they say and officials in london say the decision by the u.s. to add additional sanctions on huawei

has changed the calculation. they can no longer be trusted in terms of the chips and other devices. the hardware huawei would need onbuy are announced as trusted by london. we expect that announcement later today in the u.k.. haidi: tom mackenzie in beijing with the latest. still ahead, how the latest u.s.-china tensions are playing out when it comes to markets. a senior strategist is with us, next. plus, most u.s. businesses operating in hong kong are worried about the new national security law. a guest will be along with us a little later. this is bloomberg. ♪

karina: you are watching "daybreak asia." i am karina mitchell. the u.s. continues to be the

focus of the coronavirus pandemic with california closing indoor dining in its bars and two leading school districts going to remote dictation only despite president trump's call for classrooms to reopen. new york city is to educate people on the importance of wearing masks and maintaining social distancing. the u.s. posted its worst ever budget deficit and federal spending more than tripled in june from a year earlier in a bid to mitigate the fallout from the virus. the gap widens hundred 64 billion dollars, reflecting the record trillion dollar -- tied to the small business administration. the deficit in the first nine months of the current fiscal year totals $2.7 trillion. spiking virus numbers are forcing hong kong to reimpose strict health measures including the closure of bars and gyms for signs for week and anyone refusing to wear a social mask. amusement parks will shut their doors for seven days. hong kong recorded 41 new coronavirus cases on monday as

well as eight deaths. chinese markets are approaching a general valuation of $10 trillion, a level last seen before the stop crash of 2015. recent rallies have given equities a value of just 500 billion short of the magic number with markets already at a record. state media is reflecting official concern that the potential bubble, talking of the importance of stock markets. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. haidi. markets,aying on the putting aside the worrying rise in covid-19 cases, the positive narrative for investors in emerging markets remains evenly intact. the next guest continues to say asian equities and the relative safe havens of china, south korea, taiwan, and the philippines. the senior market strategist

joins us from london. we really appreciate you staying so late to equifax. let me throw up this chart in our gtv library to set the tone of the conversation which takes a look at these opportunities we continue to see in emerging markets, particularly here in asia. but these are also the places where we are seeing turning to hotspots for virus infections. how do you balance against these conflicting stories in terms of valuations, still providing more opportunity compared to developed markets? they are still seeing i guess a less controlled public health issue there. >> sure. good morning, haidi, and thank you very much for having me. overall, when you look at emerging markets, we think that the risks have diminished slightly as several major countries are actually starting to ease their lockdowns. the u.s. dollar is -- it has a weakening virus as stressors

have been using and the oil price war between russia and saudi arabia has diminished so as you pointed out, among all emerging markets, we think that are relative safe havens and that it is because, in the past, they have had far of impactfulce diseases such as sars, therefore we think they have robust networks and robust contingency plans to deal with them. tract and trade systems. so that is why in a pandemic environment, we think asian markets are a relative safe haven. haidi: i want to get your views on the philippines because i know that is one of your topics in terms of opportunities in asia. i want to throw up this chart taking a look at where the central bank is that.

there is a surprise to the upside when it comes to bigger than expected cuts, monetary policy. we know the central bank governor has said that they are going to take a pause because monetary policy transmission operates at a lag and he wants to see how the transmission happens. does that feed into your enthusiasm for stocks in the philippines? they are the worst performer in asia. why do you have expectations that they will improve? laie: i think there is still room for cuts for the philippines, but more importantly, from a policy space perspective, they have fiscal policy space to fight the virus and damage to the economy. not only the philippines, but there are many countries that could spend more, such as korea and taiwan, that we think will likely have less severe recessions with favorable debt to gdp ratios that open the door for these countries to fiscally spend as well. shery: how important is it that

emerging markets do not overdo it? they could soon run out of confidence from the markets. they are not at the same category as developing markets. laie: absolutely. i mean, especially for emerging markets, qe becoming part of their toolkit. i think this question is very important. as you know, emerging markets do not have the limitless credibility of developed markets. likely exitof qe, to -- timely exits to qe policies will be essential. there is a risk that some emerging markets will compromise the independence of monetary policy. we might see a monetization of fiscal using. which again raises the questions of which countries have actually sound institutions and policy

credibility. when you take a look at selecting, you know, investment opportunities. shery: chinese policymakers have held back when it comes to more policy efforts as opposed to past crises. this gtv chart on the bloomberg showing how big of a rally the markets and china have seen -- in china has seen, outpacing global counterparts when it comes to gains in the last few months. reaching 9.3 trillion, the highest since 2015. how important is the chinese market in setting the tone for the broader emerging markets fear? -- market sphere? laie: it is very important for china and other asian markets, our views are positive. for the rest of the year. i think china in particular is the head in managing the course of the disease and it looks like it is less threatened by a second wave.

the beijing cases seem to be brought under control. policy easing potentially in china is very supportive for equities as well. so long as there is not a second china might well be ahead of the game there as well, and that is obviously very important for another emerging-market equities because it will lead to heightened risk appetite for other emerging markets as well. , thank you akoner very much, senior market strategist. joining us from london. coming up next, robin hood users cannot get enough of tesla. why the stock is attracting as many as 10,000 day traders an hour. this is bloomberg. ♪

haidi: tesla's stock went on a reaching after fresh intraday record and a gain of 15%. just onehow that in four hour span, almost 40,000 day traders piled into the stock. su keenan joins us now by phone. this takes tesla mania to a whole new level when you're talking about this level of retail engagement. su: what is truly mind-boggling, again, it is the volume of buyers. there is a website that tracks robin hood, a trading platform that is loved by the millennials and day traders alike and that 40,000 figure about robin hood account users comes out to 10,000 users in our buying up up stop -- an hour buying the stock. it was already moving higher but

double digits in the monday session before dropping and that is a rare losing day for tesla. in fact, if we jump into the bloomberg, you can see the electric carmaker stock, which is the white line, has really been on a tear, up 56% in the last 10 days alone and analysts cannot even keep up with it. the blue line is the target price and that just trails below where the stock actually is. usually, it is the other way around. analysts are struggling to make sense of the skyhigh valuation. there are certainly a number of reasons why the stock was moving higher on monday. there is the anticipated unveiling of a new technology, there is a lot of covering interest, there's a lot of speculation over the stock being added to the s&p 500 index, and possibly, tesla reporting it had profit in the second quarter, and while that is good for tesla, that is significant because it will be their fourth straight quarter of profit,

which gives them entry to the s&p. many think that what we are seeing now is just contrary and indicator. -- an indicator. shery: apple forced to close stores due to the resurgence of virus across the u.s. su: we did see the stock go negative toward the close because of that news, but apple is closing in on the top market valuation in the world, a position held by saudi arabia's state-owned oil company. it was up as much as 4% at the peak of monday's trading. 1.7 put its valuation at trillion, just a hair behind saudi aramco. apple has rallied on broad optimism about its business even though the recent resurgence of coronavirus cases has caused apple to reclose many of the stores that just opened, and the most recent news coming out of apple has been announced that its staff will be back in full by the end of 2020.

in fact, in a memo that bloomberg has access to, staff has been told that apple does not see a full return to u.s. offices until the end of 2021. back to you. shery: su keenan with the latest on apple as well as tesla. pepsi is cashing in on customers is staying at home and snacking. the food and beverage giant reported stronger-than-expected earnings and its forecast for the third quarter is even more bullish. the pepsico cfo spoke earlier about changing consumer habits amid the pandemic. in terms of stickiness of habits, i think there are a couple notable trends with consumers. number one, there has been a reversion to big trusted brands. people were moving toward smaller brands free the pandemic -- pre the pandemic but they have a lot of trust in big brands and that is likely to sustain. they really like what they found. eatingtwo, the notion of at home, breakfast at home, i

think it's going to be a habit that will stick for a period of time. that benefits our quaker business quite a bit. number three, snacking tends to do well regardless of the environment. habits,ust adjust their stay-at-home consumption versus out of home consumption. the snack business tends to power through these types of issues. overall, we feel like we had a pretty good quarter. >> you talked about the volume and you touched on market share, the consumers going towards the reliable, big, well-known brands. can you talk about where you are more constructive in the year to come on that front as well? hugh: we have been investing in market share not by taking prices down because we want to build sustainable work but we are rather focused on innovation as a mechanism to drive market share. we are focused on moving into new adjacent spaces like our acquisition of rockstar energy, and now, upcoming our launch of

tito's mac & cheese. we are pulling the innovation levers, the execution levers, we are ensuring we support the brands properly, and we have seen pretty good market share gains. in the snack business, really, all over the globe. in the beverage business, the market share has been improving. >> be away from home channel looks absolutely dreadful right now. we are looking across the restaurant is in its worldwide and struggling to see how we normalize anytime soon. from your perspective, when you look around and think, things are not returning to normal anytime soon. that's pervak the costs and pay her back the investment -- let's pare back the costs and investment. hugh: that is down significantly. even convenience stores, which a couple of months ago were negative, have now turned into positive territory. one of the better moves we have made in the recent past was actually filled out an e-commerce business relatively early.

we started investing in that in 2015 and out of the $3 billion for us in retail sales. we would not have been able to do that if we had not invested in the past. we will continue to build out all the channels. >> let's talk about how you operate at full capacity with social distancing constraints. for me, trying to operate this program, the guests are not around a table with me anymore, the reporters are not next to me anymore. things have changed. i wonder from your perspective, as you look through your business, have you been able to operate anywhere near full capacity with these new constraints? hugh: our first priority obviously is to protect our employees. something we spent a considerable amount of money on was personal protective equipment and sanitation and things like that. the reality is, social distancing does not present as big a problem for us. our plants tend to be reasonably spread out in terms of the employee density. we have lots of salesman in the marketplace and they tend to be spread out. what we are doing is everything we can to make sure that our

employees stay safe while they are doing their jobs. we spent about $400 million in covid related costs. some of that will diminish over time as we get more efficient with that but it is something that is a clear priority for us and we figured out how to do it reasonably well. one other move we have made is we have reduced the complexity of our portfolio. andave taken it down by 15% we have learned from that. i expect we will probably stay down about 5% to 10% on a permanent basis. pepsicowas the cfo, hugh johnston. imposing virus control measures. we have the latest,. this is bloomberg. ♪

hike! simon pagenaud takes the lead at the indy 500! coming to the green flag, racing at daytona. they're off... in the kentucky derby. rory mcllroy is a two time champion at east lake. touchdown! only mahomes. the big events are back and xfinity is your home for the return of live sports.

shery: this is "daybreak asia." let's get a quick check of the latest business flash headlines. the trump administration rejected beijing's claims to the south china sea, reversing washington's previous policy of not taking sides in territorial disputes in the area. the u.s. has generally called merely for freedom of navigation in the waterway while stopping short of taking specific sessions. mike pompeo now says china's claims are lawful. china is sitting back as rising sanctioning four u.s. officials including marco rubio and ted cruz, for the condemnation of beijing's

actions against uyghur muslim's inching john -- in shenzhen. chinesened three officials from entering the u.s. and fresenius it's they may have had in america. top advisors to president trump are ruling out undermining the hong kong dollar to punish china for tightening its grip on the city. white house aide 10 the state department weighed limiting bank access to u.s. dollars to strike back at beijing but dropped the idea after it failed to gather support. sources say it would be hard to implement and could hurt the u.s. fromi is facing a band next-generation mobile networks in the u.k. as government rolls out a two-step plan to protect systems from potential security threats. we are told phone companies will not be allowed to add new huawei components to their 5g network through the end of the year. after that, all existing huawei gear will have to be removed by

2027. johnson is expected to brief parliament later today. a resurgence of coronavirus cases in hong kong has prompted the city's government to impose stricter containment measures. let's get the full picture with yvonne man. step back. how did we get to this point? yvonne: people were getting too complacent. of the mostme drastic measures the city has imposed. you mentioned some of them. take out only in restaurants from 6:00 p.m. to 5:00 a.m.. when you dine in, only four people per table. the limit had been raised to 50 in mid-june. a week.bars closed for hong kong disneyland -- gyms and bars closed for a week.

hong kong disneyland will remain open. anyone not wearing a mask on public transport will now be fined. lam -- --rom terry carrie lam saying the city will allow civil servants flexibility on working hours. they urged companies to let staff work from home so all of this will take effect this wednesday. this third wave seems more serious from the first and second. ong kong reported 41 cases monday, another record daily high. about half of those are previous clusters but the other half is the most concerning. these are coming from unknown origins so that suggests there are hidden chains of transmission that have been circulating in hong kong for some time as people return to work and social activities. compared to the numbers and the rest of the world, it does not seem a lot, but the total tally now is about 1500 cases in the city of more than 7 billion people.

the city reported its eighth death. the department of health saying the containment strategy alone may not be enough to slow down the spread of the infection at this stage and senior government officials are very concerned about the situation now. shery: and the prospects might have brightened a little bit for those casino stops in macau with mccarroll removing 14 day quarantine requirements for visitors from china. aonne: this is the start of much needed recovery after we saw gaming revenue in macau plunged by more than 90% for three straight months now. the two things we learned, macau lifted restrictions with anyone with a recent travel history to beijing in hubei province so that means, as you said, all chinese citizens coming from the mainland are now free from restriction but they will need to test negative for covid-19 before they can enter p or on the other side, we heard from macau's neighbor, and that province has lifted the 14 day

quarantine requirement for travelers returning home from macau, so just to show you the significance, take a look at this terminal chart. visitors from the province actually dwarfs the numbers from any other chinese province. beijing, shanghai, nothing compared to traffic that they get. guangdong makes up half of total chinese visitors to macau so this is quite a big deal. we saw macau casino stocks jump on the news. what those names at the hong kong open. they are the lifeblood for the casino industry. this point,ying, at people outside of guangdong will be visiting macau but the overall trend, they say, is moving in the right direction so they expect pent-up demand to pick up fairly rapidly. shery: yvonne man reporting from hong kong. in the u.s., states are also sharply curbing there be openings with california closing

indoor dining, bars, and some school district despite calls by the trump administration for classrooms to fully reopen even as hospitalizations hit new highs. earlier, we spoke with maryland governor larry hogan about how he is managing the virus outbreak in his state and the possibility of school reopening scum september. gov. hogan: everybody wants to get kids back to school, but we had to do it in a safe way. we are working carefully with our state superintendent of schools and our local school boards and getting lots of input from our public health doctors and our scientists, along with our teachers and parents, and just, we are going to come up with a plan that will probably be some kind of hybrid to make sure that we get our kids educated and back-to-school but in a very safe way. >> how do you make sure the private schools do not have an advantage versus the public schools and all of the different types of towns and communities that might have different coronavirus rates?

how do you mixer it is fair for every student? -- how do you make sure it is fair for every student? gov. hogan: regardless of which community they are in, we are giving some flexibility to the local jurisdictions who may be in different positions from one jurisdiction to another. overall, our state, knock on wood, so far is doing much better than most other places around the country. we have declining rates, declining positivity rates, declining hospitalization, declining debts, declining icu beds. we are keeping a close eye on it and we are by no means out of the woods on this thing but we will be very careful to make sure we do it right. i know parents are anxious to get the kids back in school and they are really concerned about their health. gov. hogan: what about teachers? -- >> what about teachers? gov. hogan: teachers have a right to be concerned. we are working together with our local school boards. we have to keep them safe and make sure we go about this in a very careful way. >> what do you need from the federal government?

in washington, d.c., we are staring down another battle of another round of economic stimulus. what do you need to see coming from washington? gov. hogan: as the chairman of the national governors association, we have been fighting and pushing since march to try and get assistance from the federal government. we fought to try and get help from the state and local governments in the third stimulus package. next week, when congress comes back from their fourth of july recess, we are hoping -- we have been pushing very hard to make sure the state and local governments are included in that stimulus package because it is critically important. we already lost 1.5 million state and local government workers in the past 60 days. it is anticipated be could lose as many as 4 million more so we are talking about frontline health care workers and teachers and police and firefighters, people that we are out there providing more services under very difficult circumstances, and we are as impacted as the state and local government level as our business. our revenues are down dramatically.

across the country, we are expecting a decrease in revenues of state governments up to 30%. >> 1.5 million jobs already lost and then you just said 4 million jobs potentially could be lost, and that is for government workers. gov. hogan: state and local government workers. we are working very hard. we have been pushing the administration, working with leaders in congress on both sides of the aisle in the house in the senate, and we are hopeful that sometime by the end of july, we are going to have some success and get some help because states are making very difficult budget decisions, and putting together their budgets, and looking at dramatic, you know, reductions in staff. >> in many ways, a government job is seen as a safe job. when you're talking to president trump when you're talking to your pelosi, what do you specifically want them to know? gov. hogan: i want them to know that not only as we are trying to have this economic recovery, the worst thing we could possibly do is to put more people on the unemployment line and for those folks that are actually trying to help the

other people that are in need, so we need more money, not less money, for local governments, and the federal government, this is one thing the states cannot do without the federal government. republican governor of maryland, larry hogan. breaking news. beijing reacting for the first time to the trump administration rejecting china's claims on the south china sea. now, the chinese embassy in the united states saying that they firmly oppose the u.s. statement on the south china sea and urging the u.s. not to disturb regional stability and accusing washington of provoking tensions and making unreasonable accusations. this as we see the chinese embassy in the u.s. urging washington not to disturb regional stability, reacting to the trump administration, rejecting china's claims in the south china sea as unlawful.

look at howe will tensions between beijing and washington will affect u.s. businesses operating in hong kong with the amp chan -- with our guest. this is bloomberg. ♪

shery: let's get a quick check on how markets are trading at the moment.

u.s. futures extending gains, up .3%. this after we had that reversal in the afternoon session here in new york. we are now seeing u.s. futures higher while asian futures are pointing to the downside. tk futures down .3%. this is by the fact that we have a slightly weaker japanese yen past that 100 seven level. we are also seeing wti crude at the moment losing ground and below that what he dollars a barrel ahead of that opec-plus meeting this week. the expectation is that they will announce plans to start tapering those historic production cuts. all of this coming at a time when we continue to see escalating tensions between china and the u.s. we just had beijing's first reaction to the u.s. statement that china's expansive claims to the south china sea is unlawful. we heard beijing asking the u.s. not to disturb regional stability.

this coming on the back of sanctions against u.s. officials by beijing, including senators marco rubio and ted cruz. all of this with amcham hong kong president tara joseph. really too many things to talk about when it comes to these escalating tensions between china and the u.s. on so many different fronts. how are businesses in hong kong preparing for this new era where we are really not expecting any de-escalation from here? tara: it is interesting because one of the best things about hong kong, one of the things that made it fantastic to do business is that it is in the middle of everything. it is a great city for connectivity. now that type of being in the middle of everything, i.e. being in the middle of a trade war and rising tensions, is not such an easy feeling anymore, especially since the national security law was passed in beijing. ofhave just done a survey our membership on the national

security law, and the level of concern between concern and at 75%ly concerned is of our membership so that is a lot. shery: of course, we could potentially see sanctions coming from the u.s. on the hong kong autonomy act, right? because of that new security law. what sort of preparations are businesses making at the moment? and can they make preparations, especially when it comes to this particular law, given how vague and brought it is? -- broad it is? tara: one of the biggest concerns about the law was the ambiguity of it makes it very difficult to predict what the implementation will be and also makes it very difficult to prepare because it is hard to predict. so that makes people nervous and on the other hand, hong kong has been going through a rough time now for a year.

the protests, which really rocked the streets of hong kong, have been underway since last summer. so people are getting used to building risk scenarios in hong quiet aboutng very how they perceive things. one thing that we did notice as well in terms of our latest survey, people are more comfortable speaking anonymously. they do not want to speak out. we have seen some very difficult experiences from some companies who have spoken out. issue wellthe cathay before the national security law and other things. the anonymous comments show that people are concerned, maybe worried about their own safety, but they are not just picking up and pulling out of hong kong yet. hong kong has too many benefits for business, and many people have been there for a long time. haidi: there is that level of self-censorship that we are starting to see come through

almost immediately after the implementation of the new bill. i am wondering, it is that great uncertainty you hit on. how difficult is it for the longer-term, even if businesses are saying they are staying put now, maybe because they don't want to be seen as the first global bank or financial services company to relocate the asian headquarters away from hong kong. it is not a good book to look like you are abandoning the city. but that uncertainty as to how this problem can be implemented against your staff, against your business, does that ultimately mean that hong kong does not remain a feasible or attractive ways to do business? tara: i go back to the survey because of its anonymous nature. it may give the comments around what you are asking. people are saying, in the long term, -- in the people may be leaving in larger numbers. what we did notice from our previous survey, which was done months ago, that the number of

people who say they would consider leaving has risen somewhat. it is a difficult time. we do need to remember that hong kong serves a great purpose and there are very few if any substitutes for hong kong in terms of providing a major international capital market smack in asia. singapore cannot take that over with the snap of a finger. the flow of money that comes through hong kong is absolutely huge. the connectivity between east and west of hong kong is still huge so that cannot disappear overnight. we would expect that if there is a deep change over the coming years, it may take some time unless we see some event that makes it seem more urgent. also, the u.s. reaction to the national security law could have an impact as well. conversely, have you heard anyone say that they are

happy with this national security law in that it gives a bit more certainty in terms of at least getting the protesters off the streets? tara: there is a sizable minority who felt the national security law was necessary and it has at least cleared up the streets and stops the violent protests. people were very upset about that. they see this as good. it also shows what a divided place hong kong actually is as well. haidi: tara joseph joining us with really interesting findings of that latest survey. still ahead, the commercial hedscape in singapore -- joins us in the next hour as we get singapore gdp as well as his view in the aftermath of the election results. plus, we will be assessing the outlook for the philippines and malaysia in two exclusive interviews.

our guests will be with us later. plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: let's get a quick check of the latest business flash headlines. tesla seemingly relentless surge in this year falters despite enthusiasm for upcoming announcements. shares gained as much as 16% monday before pulling back with a rally that has taken the

company passed toyota in value. tesla is eclectic to release details of new battery technology along with entry to a potentially lucrative new market and possible additions to the s&p 500. staff toasking retail work remotely again as covid-19 cases spike in the u.s. and other parts of the world. to pre-virusrn normality will not happen this year. apple stock continues its drive to become the largest company in the world market cap. early gains in new york. althoughsaudi aramco they pulled back later in the day. shares in casino companies rallied as prospects brightened for the world's largest gaming hub. the southern chinese province agreed to lift quarantine for travelers arriving back from macau, opening the way for resumption of gambling activities. macau's borders were closed in march, effectively cutting off chinese customers.

casino gaming revenue plunged by 90%. we will be watching softbank when trading kicks off in japan. sources told bloomberg the company is exploring options for selling part or all of its stake in arm holdings. the are joined by the tech reporter in tokyo. portrayed as the linchpin of the ai centering vision of the future. how does this change that strategy? indeed, the entire stake would be something of a shocker. it is an ipo, it could happen as soon as next year, although there is some outstanding issues . for one, they lost about $400 million the last fiscal year. they have had a bit of a problem with china where there is a tug-of-war about who controls

the subsidiary. at the end of the day, this company, which softbank acquired in 2016 for $32 billion, is without a doubt a key part of global semiconductor infrastructure and while exactly $32 billion, there is clear indications that the markets for semiconductors is heating up. harm could probably get a good bump in valuation. -- 2023. these rumors are already coming out. it suggests an acceleration of plans. shery: how does this really play into masayoshi son's strategy of ¥4.5 trillion in asset sales that he has already planned? pavel: it will definitely be in addition to that. it is $42 billion.

planning to sell $21 billion from the domestic corporation plan to should -- they do this year. clearly, someone is raising a war chest to continue investing which unfortunately has not delivered the results expected. like he is getting ready to go it alone. haidi: what about softbank's stock? they have already soared to the highest into decades. is there still room to go up? pavel: i think a lot of people see a lot more upside to the stocks. softbank has already burned through ¥500 billion buybacks which were announced back to back. trillion.as ¥1

there was room upwards. it does not hurt that there is renewed optimism around tech companies and potential ipo's. we sawready made -- ready-made do really well. fundamentalspany's might not have changed fundamentally from earlier this year, things turned really negative for the company. it is clear that there is a lot of positives pushing upwards. reporter withh the latest in softbank in tokyo, pavel alpeyev. shareholders have approved a plan to avoid a collapse of the airlines, but will it be enough? what happens next, we will be discussing. singapore's gdp is due out in a

few minutes time. breaking it down, a record planned for this singapore business federation ceo. the market open is also next. this is bloomberg. ♪

w?w?uhió'ñó

haidi: very good morning. i'm haidi stroud-watts in cigna -- sydney. shery: i'm shery ahn in new york. welcome to "bloomberg daybreak: asia." our top stories. asian stock its look set to slide amid fresh geopolitical tensions and worries about covid-19. futures decline in tokyo and sydney. hong kong's new virus restrictions might weigh on stocks. singapore's economy contracted sharply in the second quarter,

although activity may be steadily recovering from april's lows. the u.s. and china trade new punches. washington rejects beijing's claims to the south china sea, and top u.s. senators are facing mainland sanctions. haidi: that's right. we have the singapore gdp for the second quarter just crossing the bloomberg. it is bad. worse than expected, but perhaps not as bad as some estimates. singaporean economic activity contracted by 12.6% on a year on year basis in the second quarter of 2020. remember, we had the circuit breaker we implemented from the first week of april 2 essentially the start of june in response to escalating cases of covid-19. that meant nonessential parts of the economy came to a complete standstill. we see on a quarter on quarter seasonally adjusted annualized basis, the singapore economy 30%.k more than

there were estimates as bad as 50%. i suppose in that context, not as bad as we could have gotten. a slowdown in the manufacturing sector. growth at 2.5%. highlight, we saw there was a surge in biomedical manufacturing. sees astruction sector decline of 55% year on year basis. contraction when it comes to construction and services producing industries as we saw the impact of the circuit breaker. going forward, bloomberg economics is not expecting a return to positive growth in the third quarter or even the fourth quarter. opening recovery in the second pretty likely, seen as dim without a possible vaccine going forward. let's get a reaction with sophie in hong kong.

sophie: gdp numbers were expected to be rough and light on the circuit breakers. at 1.3905. 1.39,o slightly above after it managed to go below that on monday. easing off of that strength this after the gdp numbers coming in. tourism related sectors weighing heavily in singapore. the singaporean economy in recession. let's check in on the open in other markets across asia. the nikkei 225 off six times of 6/10 of 1%essure -- under pressure. tenths of 1%ff to with parts of sydney being declared virus hotspots. copper futures in shanghai pulling back after jumping the

most since 2016. minis, one on cpe third of 1% up. there might be a pause in hong kong with politics focusing along with heightened virus curbs. ahead with the june trade data, the offshore yuan holding around seven. 50 futures closed lower after mainland stocks resumed monday. quickly jumping into the terminal, there could be momentum to see china's total stock value hit $10 trillion as soon as this week. bocom says the rally may not stop there. checking in quickly on a stock softbankeen watching, off more than 1% on news the conglomerate is selling part or all of its stake in chip designer arm holdings either through a private deal or public

listing. no decision has been made yet but such a move would accelerate a timeline that masayoshi son outlined in 2018. onry: let's get insights singapore's economy after the gdp data and also following friday's election. singapore the business federation, ho meng kit , representing more than 26,000 companies in the lion city, glad to have you with us.the singaporean economy contracted more than 40% in the second quarter from the first. the country in recession. do the economic numbers do justice to what you are seeing on the ground among numbers -- members? >> i think the numbers are not great, but not unexpected. because of thes circuit breaker where most companies cannot function. in aprillly stopped

and may. i would say that the second quarter will be likely to be the worst quarter for this year because of the circuit breaker. i think the next two quarters for the rest of the year, the second half of this year, will still negative. since early june, the economy has opened up. economic sectors like retail have opened, but they are not at the previous levels. there is still no tourism in singapore. right now it's almost at zero. sectors like transportation and manufacturing have services were singapore is .ery strong

we will see a pickup from the low base, but i think it will be a recovery for the second half of 2020. shery: who will be leading this recovery? although gradual, some sectors must be doing better than others? >> the external sectors will lead it. of the biggeste .ases is china china's economy is still resilient. tourists are beginning to travel, albeit domestically. we hope by 2021, there will be some effect on that in singapore. the rest of the sectors, the rest of the markets like the

economiesurope, these have to get around covid-19 decisively. in singapore, there will be emphasis on digitalization. technology is going to be a big sector because of huge demand for cybersecurity and solutions, work from home, etc. that sector will be that continue to be resilient. haidi: in the longer term, can singapore benefit from companies and businesses that decide to leave hong kong because of the political environment? it is not great that what is happening in hong kong, we want some stability. singapore,ink

because it offers a stable and safe environment and trusted environment, will be a good doingfor many companies operations in the region. is in covid-19, to continue to statuscause a lot of our is determined on the ability of business depot being able to travel into the region. so far we are not able to travel, then a lot of the services from singapore will be curtailed. term, after the recent election, i think the country is stable, the policies will be consistent. think it will be better for businesses. mandatetable, but the

was not as strong as i think the prime minister would have liked. you worked for the prime minister. you came from the origins of singapore being the little dog, no natural resource. in this current challenge, what does singaporean challenge need to do to overcome the downturn? >> the pmi, it does not have a strong mandate, but as far as the business community is concerned, there was a clear mandate for the government. i think a clear mandate, we expect the government to be in a position to remain with decisive policies and plans to overcome a critical challenge of putting the singapore economy through covid-19. this is important. the government has laid down

fiscal measures. we need to lay down implementation of these measures, particularly safe reopening of businesses and to manage the rising unemployment situation. that requires not just businesses, but support from government as well. a lot of challenges to deal with. i think we are happy we have a clear mandate. i think policies will remain. we are also happy that there becausebetter diversity social issues will become more andrtant going forward social issues ought to be addressed and should be addressed. shery: great to have your insights, thank you. ceo of this singapore business federation. coming up, more on the singapore gdp reaction in the markets and

look ahead to china's trade data later today. shares of cathay pacific completely missed the hang seng rally. we discussed the outlook for the carrier later. this is bloomberg. ♪

karina: i'm karina mitchell with first word headlines. the trump administration has rejected beijing's claims in the south china sea, reversing the policy of not taking positions. however, secretary of state mike pompeo now says china's claims are unlawful. china is hitting back at rising u.s. pressures, sanctioning officials including senators marco rubio and ted their condemnation of beijing's actions against uighur muslims. details have yet to be released -- it comes after

spiking virus numbers are forcing hong kong to reimpose strict health measures including the re-closure of bars and gyms for at least a week and fines for anyone refusing to wear a mask. social gatherings are to be limited to just four people and amusement parks including disneyland, this time closing their doors for seven days. hong kong recorded 41 new coronavirus cases monday as well as eight deaths. chinese markets are approaching ofebt -- general valuation $10 trillion, lasting before the stock crash of 2015. the recent rally has given equities a value of 500 billion to short of the magic number. state media is reflecting official concerned the potential bubble, talking about the importance of healthy stock markets. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and

analysts in over 120 countries. i'm karina mitchell. this is bloomberg. shery: staying on stocks, asian equities opening lower following jo -- u.s. markets. a strategist joins us on the line from singapore. what would be the reaction from numbers? they were supposed to be bad, but they were worse than expected. >> yes, the headlines are certainly shocking. but i don't think anyone who follows singapore too closely numbers, therise numbers telegraphed by the government, were to say they would be as bad as quarter -- a quarter as singapore has ever seen. that's what we have here. willcountries in the world pretty. horrible second-quarter singapore may be worse than some, but there will be others that are worse.

it is not a great shock to people who. . closely follow singapore. what it means is not a great deal. the currency is being managed tightly and in a very narrow range. there is an official zero appreciation policy and it is steady against other currencies. the bigger issue for singapore is to make sure the inflation stays down. so much in singapore has to be imported. it is important to keep the singapore dollar fairly firm to make sure imported inflation stays down. that is important for the outlook for the country. we are not going to see too much weakness. you would expect the third quarter to improve quite substantially since the government has an enormous amount of fiscal stimulus into the economy. by ratio, it is one of the largest in the world. certainly there will be a big improvement in the next few months. if we look at the asian context,

asian currencies are starting to appreciate anyway. the yuan has gotten stronger. -- flowinge fluence into the markets. not much risk in the singapore dollars. whether agencies can recapture the strength is another matter. singapore stocks are actually relatively undervalued compared to many parts of the region. of course, some foreign investors are little concern to see the opposition got a bigger share of the vote at the last election. they will soon probably realize monetary policy and fiscal policy will not change very much in the near term. --y should rear serve people reassure people that stocks are placed to benefit from any asian rally. we've got quite a trade on tap today. when it comes to the currency, where is the yuan headed as we see beijing in a new push for internationalization? reporter: they are pretty happy to see it stay on the firm side

and they have been fixing it below seven. some noise between the u.s. and china, but for now, nobody is really taking the kind of measure that would hurt markets. there's a lot of talk but no serious action. the u.s. dollar gradually losing a bit of steam. .e have seen the euro pickup it's a signal the u.s. dollar is getting weaker. china's clearly further ahead than many countries in the economy coming back into shape. bloomberg economics was talking about higher frequency data for july. it looks optimistic for china. they are not still firing on also lenders, but they are a lot better than other countries --

they are still not firing on all cylinders, but they are a lot better than other countries. haidi: catch up with all the day's trading on the bloomberg. plus, more markets analysis ahead. goldman sachs and their chief asia-pacific equity strategist. coming up next, incoming rank, sayingt to an agreement with the european recovery fund is needed. our exclusive conversation is just ahead. this is bloomberg. ♪

shery: outgoing euro group president mario centeno says an agreement on the european leaders with a rep -- proposed recovery fund will help boost investor confidence after the pandemic. financeer portuguese

minister and incoming central bank governor spoke to us from a distance. >> it's a much-needed deal. leaders can close into a deal as soon as this week or at the latest at the end of the month. in april,roup, back set a fast response. of thesehe first steps responses into the crisis and we need to close this deal to strengthen the confidence of investors and citizens in the recovery phase. it is important. >> will the deal come with eddie strings to get them on board with this? think we have enough bargaining room and this gives margin for maneuver at the

negotiation table to find an agreement that fits everyone in europe. process.he typical when we negotiate in europe, we have different views over the final agreement, but this time there will be enough to bargain and build the seat, not only -- reporter: we have seen a polish election this weekend. does the reelection make it slightly more difficult to make this happen? some would argue that poland has flouted some of the rules that are at the core of the european union and the prospect of further erosion of media freedoms as well. >> this agreement is important for poland as well.

a deep part of the agreement and i think everyone understands that. isall times in europe, this one of the characteristics of our democratic nature. 27 mature democracies. i don't think that one should be put in front of the other. have thethat you democratic election in poland within our nature and he needs to work with all governments. i think certainly the polish understands how important it is for poland on the subject. reporter: i feel like going into the meeting, there will be a lot of grandstanding in terms of countries threatening vetoes.

how can investors understand the difference between the noise and negotiating tactics versus countries taking a harder stance? thatthink it is important we understand the relevance of closing a deal. morenk some countries use of a hard way to negotiate, but honestly, i think what is europe, we must provide clarity for economic agents to get out of this pandemic crisis. we have already enough uncertainty. uncertainty -- we must

look at other examples of the regions and countries that are facing difficulties in terms of on how to fight the pandemic and respond economically. that was mario centeno, the former euro group president and the incoming portuguese fed president. i had, we will assess the outlook for the philippines and malaysia and exclusives and the usb governor. let's take you to san diego where you are seeing live pictures of the ongoing fire aboard the amphibious assault ship currently docked in san diego. they are having real trouble getting the fire under control. it could be days before the fire is contained.

there are concerns the ship may be damaged beyond repair. it is one of the few u.s. navy ships that can operate like a mini aircraft carrier. 57 people so far have been injured. this is bloomberg. ♪

haidi: let's take a look at how asian markets are faring this tuesday. a big down day with singapore gdp looking ahead to china trade. shery: certainly a busy day ahead. asian stocks ahead of the following well u.s. futures are edging higher and the dollar extending gains to stay with the aussie and kiwi leading g10 losses. ,he aussie 10 year yield chinese trade figures, australia with 20 bonds out tuesday. researching virus cases under

highlight risk around the fiscal outlook. switching up the board to take a look at the damage across the off 7/10 ofasx 200 1% and the kospi losing ground and the korean won on the emfx lossesead ahead of president moon's announcement of a new deal this afternoon. japanese stocks also to the downside. and we have the korean won losing ground as noted. the singaporean dollar losing ground after the economy slumped into a recession with a 41 point 2% quarterly drop put this was expected with a 200 day moving average. let's turn to the latest on the global pandemic.

mixed news from a sean virus cases. tokyo reporting 119 cases monday. its first reading below 200 and five days, easing concerns that outbreak is spreading beyond nightclubs and other hotspots. but it's a different story in hong kong where there has been an uptick. let's get the latest from our senior international editor jodi schneider. what is happening in these cities? basically we are seeing a mixed bag. tokyo, reporting many fewer cases than it has in the past five days, is still undergoing a wave of cases and new clusters. there are new cases around a childcare center. while it's better than it has been in the past few days, there is still a lot of concern that it's going from the tokyo area, which has been a hot spot, to

some surrounding prefectures. hong kong is a place where the virus has been pretty well contained, there has been an uptick in cases so much so that the government here is mandating a new list of restrictions, including public gatherings and other things to get it under control. what's interesting is in asia, you are seeing a third wave of cases including in hong kong, places that have fought this since january. course hong kong is near mainland china. they have been fighting this now for six months. haidi: even with these concerns about new clusters and waves of infections, asia is still by far handling the pandemic much better than for example the u.s. and other western countries. what sets asia part in the way they are able to do this?

reporter: that's right. in hong kong, even with the uptick, the total number of in a city of 7 million, which only seven deaths, which is minuscule compared to what we are seeing in the u.s. a lot of this is mask wearing. it is not politicized in a place like hong kong. lam,matter of fact, carrie the chief executive, one of her requirements is people wear a mask on public transportation. the reaction has been, doesn't everybody wear one anyway on public? transportation? mask wearing is universal, in tokyo as well. that has helped get it under control. the other thing is contact tracing. there's fairly widespread testing and rigorous contact tracing. once an outbreak occurs, governments are able, in places like hong kong and tokyo and

south korea, which has done very well, to figure out who came in contact with that person and get them tested right away to curtail outbreaks before they get out of control. jodi schneider, our senior international editor in hong kong. we will be assessing the rising .irus cases in hong kong the reproduction number is starting to edge higher. we also spoke with the johns hopkins school of public health vice dean about whether the ratio of death to infections has changed since the start of the pandemic. >> not at that point, and certainly not at this point. there are a couple reasons why. we are seeing deaths trend upwards. it could be a function of timing. there were younger people infected in the south, but they are starting to infect people with greater risk for death like

older adults. it could be that the treatment is getting better, which would be a good thing. we have a couple of drugs that may work well. even if it reduces mortality start -- some, it is still a lot of people dying. reporter: and importantlyreporter:, i think the audience wants to know, away from death, there's a lot of injury. learned about the substantial harm to the body one can get even if they don't die? >> i put that into categories. there's harms to the lungs, people who have serious pneumonia or have to be ventilated, or are in the intensive care unit, it can take them a while. we don't know yet if they can regain their full long capacity and be able to exercise the same they did before.

and then there are the complications outside the lungs. strokes, other kinds of clotting, disorders in different parts of the body. it is early to understand the full problem. we also have mental health complications of being sick and fearful for your life that will haunt a lot of people. reporter: we celebrate in new york zero deaths yesterday, i believe that was the first time in 100 plus days. does that mean we can let our guard down? does it mean we can get to the restaurants for lunch today? >> certainly it does not mean that. what it does say is we are not inevitably stuck with the tremendous spread of the virus. it is up to us. new yorkers hunkered down for quite a while. people had been very worried so they stayed vigilant in new york

and that has allowed the cases to come down. that path is available to every other part of the country if they take it. and once they take it, you need to stick with it until we get a vaccine. around the world have done that successfully. reporter: would you eat and a restaurant indoors right now? >> i would say probably not. i would consider outdoor seating. in fact, i did do that once. but i have not eat in -- eaten indoors. reporter: what i am fascinated by the moment, clearly the sun belt, hot at the moment, people are going inside for the ac. it seems to be a significant source of transmission. in the northeastern united states and europe, for the moment we can all go outside, andin october, november,

december, how can we make it happen? do you think it is impossible? >> i think it's important for employers who can keep people at home to keep people at home. we have to thin out the work lace as much as possible. hopefully we can build up more intense public health response. restaurantsk indoor are necessarily bad for anybody if you keep number flow and separate everybody. the risk is pretty low. but it also depends on how much is out there in the community. i think you have to take it one step at a time. but if we are vigilant and we do testing well, you can manage it. there are places around the world opening restaurants again because they have a strong response. shery: johns hopkins school of public health vice dean joshua

sharfstein. , cathay pacific shareholders approve a multibillion-dollar plan. the airline has been losing $260 million a month since february, as the virus takes its toll. with bo comes -- bocom international's luya you next. this is bloomberg. ♪

karina: you are watching "bloomberg daybreak: asia." i'm karina mitchell. singapore plunged into recession last quarter with gdp falling an annualized 41.2% from the previous three months. it was characterized by the country is locked down for two thirds of that time as it fought to control the coronavirus by shutting down essential business. the contraction is the largest on record for singapore and was worse than the median estimate of a 36% drop. the u.s. continues to be the focus of the coronavirus pandemic with california now closing indoor dining and bars and two leading school districts going to remote education only despite president trump's call for classrooms to reopen. new york city is to educate people on the importance of wearing masks and maintain social distancing. >> the virus remains public enemy number one, but the actions of many governments and people do not reflect this. the only aim of the virus is to

find people to infect. ared messages from leaders undermining the most critical ingredient of any response. bloomberg is being told top advisors for president trump are not ruling out undermining the hong kong dollar to punish china for tightening its grip on the city. white house aide's and the state department have weighed striking back at beijing but dropped the idea after it failed to gather support. sources say it could be hard to implement and could hurt the u.s. while way faces a band from next generation mobile carriers in the u.k. as they roll out a plan to protect systems from security threats. they are told companies will not be allowed to add new while way components -- huawei components through the end of the year and all existing components will have to be removed by 2027. global news 24 hours a day

on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm karina mitchell. this is bloomberg. cathay shareholders have approved a plan to raise $5 billion in a government-backed rescue, but includes shares. the bocomluya you, international transportation analyst. there was no other option for cathay, was there? the chairman says that there was the only option to stave off collapse. >> good morning. yes, for cathay right now, it has been pretty leery this is their last chance for survivability. we think it is a good thing that the government was able to step in at the last minute. but overall, we think for cathay pacific right now, they have enough money for the rest of the year and possibly the next year as well. haidi: so the problem, when you

take a look at all the airlines that are suffering the same fate at the moment, some of them were likely to recover better once border restrictions and international travel restrictions were to be eased, but cathay had issued profit warnings last year. do the fundamentals suggest we will see any recovery once the pandemic concerns have eased? last year, really the key issues impacting cathay pacific was social unrest in hong kong. it remains to be seen what the year will look like after the coronavirus and everything ends, but we think that is the base fundamental for the airlines, it is still pretty solid. it depends on the macroeconomic outbreak environment. so for cathay pacific, if things return to normal and we see

strong demand throughout the asia-pacific, we think they carry is able to recover pretty nicely. shery: this chart on the bloomberg showing how analysts are not actually quite convinced of a recovery. rating, theus market its least lish in three years, where do you put the share price and the rest of the year? you have put the stock as neutral. do think theree are considerable pressures on share price. one of it being dilution from the plan and the others obviously being the macroeconomic environment. looking forward, if we are looking potentially into next there arehink highlights for cathay pacific simply because we know that basically within asia pacific and the overall target market,

we do think there are benefits to be gained. but obviously right now, so many things are quoted by the fact that there is the coronavirus among many other things. ondo have a neutral hold cathay pacific right now as we await to see how things will unfold. shery: we are expecting second-quarter gdp numbers out of china with an economic recovery happening gradually. where do you put chinese airlines for the rest of the year? >> for the chinese airlines, the story is a little bit more clear because they have a solid domestic market. for the charlie's -- chinese market, essentially that was their bottom for the demand. and to second half of this year, things are looking better. we have a much clearer picture of how the recovery will look for chinese airlines. right now, we do think it is a good time to buy chinese airlines.

the story has been very clear. if you are looking to basically buy into the entire chinese aviation market, now is a good time. haidi: there's always lots of rumors around the stakes china takes in cathay. this that longer-term make sense? >> this is something we have been looking at for a long time, which is what is the role for the chinese airlines, air china, and potentially hong kong and cathay pacific? we think there is a lot more room for collaboration. when things are little more complicated, we don't see many moves in the short-term. we think when it comes to stay cold in, we think it will remain mostly stable for this year or next. youy: always great having with us. bocom international transportation analyst, luya you . plenty more analysis ahead.

chinese stocks are closing in on the $10 trillion milestone for that first time in more than a decade. we preview the market open, next. this is bloomberg. ♪

haidi: a quick check of the

latest business flash headlines. investors have bet heavily on softbank lately. . shares have more than doubled since the march low. we find masayoshi son shrugging off the twin disasters of the loss of the ipo and the fallout from the coronavirus. is asking retail staff to work remotely again as covid-19 cases spike in the ubs -- in the u.s. and other parts of the world. it is closing stores and saying the full return to normality will not happen this year. they become the largest company in the world by market cap, early gains close to saudi aramco although they pulled later in the day. tesla seemingly relentless surge faltering slightly, despite investor enthusiasm for up coming announcements. shares gained as much as 16% monday before pulling back with a rally that had taken the

company higher in value. they have renewed battery technology and entry to a potentially lucrative new market and an addition to the s&p 500. shares and casino companies rallied monday as prospects rally to the world's largest gaming hub. they agreed to list -- it opened the way for the resumption of gambling activity. march, were closed in effectively cutting off chinese customers and casino gaming plunged by 19%. shery:shery: let's get a quick check of the markets at the moment. the nikkei losing 6/10 of 1%. the losses are being led by consumer stocks despite the fact that we are seeing a japanese yen holding steady past the 107 level and a little weaker than what we saw last week. down for trance of 1%

after seeing gains in the previous section0. the korean won holding. we had seen a little more optimism when it came to south korea, given the declines in exports were slowing down. we are headed toward the be ok decision on thursday where they are expected to hold steady along with the bank of japan on wednesday. the asx 200 right now is led lower by technology shares. this after gaining ground in the previous session. the aussie dollar at the moment $.69 u.s.eady at level after three show in this decline against the u.s. dollar -- sessions of decline against the u.s. dollar. a large bounce in employment is likely given that restrictions across australia were lifted around may and june. those are the u.s. futures along with asian futures at the moment. of course, we are headed towards the open in china.

stocks are closing in on the $10 trillion mark. joining us to preview the open, where cross assets reporter gregor stuart hunter. we continue to see a rally in china, but at the same time we hear that the china stock leverage has arisen for an 11th day for 1.3 trillion yuan. we really have to wonder how risky this rally is. reporter: absolutely. it is a familiar picture. the increasing margin is reminiscent of 2015. in terms of the chinese market capitalization going to near the $10 trillion mark, this will probably revise questions of whether china's gdp will benefit from a wealth effect as people get rich off the stock market. -- it wasn'tne

really clear this happened partially because the gains as operated, but that is also one reason why authorities are keen to engineer steady markets at this time around. haidi: we often talk about with china a great bowling ball of money looking for a home. are we seeing just as hefty games when it comes to -- gains when it comes to other chinese asset classes? reporter: that's a great point. not really. bonds are in the middle of a selloff in place since april. better growth prospects for fixedbut partially in income assets. gains for stocks are helped along by the chinese yuan that has appreciated to around seven against the u.s. dollar.

that's another aspect of it. haidi: really appreciate your time as we continue to watch with some degree of caution where the chinese rally goes from here. a reminder, a big interview in a few minutes. . the philippine central bank governor joins us at the china open. you don't want to miss that. that is it for "bloomberg daybreak: asia." markets coverage continues as we look ahead to the start of trading in hong kong and shanghai and shenzhen. "bloomberg markets: the china open" is next. this is bloomberg. ♪

49... 50! i found you! good job. now i'm gonna stay here and you go hide. watch your favorites from anywhere in the house with the xfinity stream app. free with your xfinity service. now any room can be a tv room. stream live tv, on demand shows and movies even your dvr recordings. download the xfinity stream app today to stream the entertainment you love. xfinity. the future of awesome.

beijing and shanghai. welcome to "bloomberg markets: china open." i am tom mackenzie. david: i am david inglis. our top story today, the u.s. and china trading punches. washington rejecting beijing's claims while the top u.s. mainlandare facing defections. tom: