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tv   Bloomberg Daybreak Asia  Bloomberg  November 17, 2019 6:00pm-8:00pm EST

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paul: good morning. under one hour away from the market open in japan and south korea. shery: and good evening. sophie: i am sophie kamaruddin in hong kong. welcome to daybreak asia. paul: our top stories this monday, hong kong police say they are dispersing and arresting protesters after a dramatic standoff but deny they are staging a raid. u.s. and china hold more trade
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talks as the edge towards a deal. pboc warns of challenges ahead and warns of a slowing economy. arabiasouth -- saudi lowers its target for saudi aramco ipo, but it is still expected to be one of the biggest in history. australian markets have kicked off trading. let's turn to sophie for what to watch. sophie: aussie shares are slightly higher by about .1% after a two-day gain. 50 points shy of a record high we saw back in july. altogether we are setting up for a mix to start potentially an agent given that hong kong remains a point of concern as the city faces yet another week of potential disruption. nikkei futures in chicago swing to the downside this morning. iecking on currency moves, want to highlight the pound is gaining ground early. this, after conservatives pledged to back boris johnson's brexit deal if the election goes through, if he is elected.
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the highest level since november 3. aussie benchmark bonds holding study, continuing to climb after the best week for aussie 10 year bonds since april. spot gold is extending the dole -- let's check in on the first word news now with su keenan. su: we start in saudi arabia, which has agreed to lower its aramco and pervak the size of its initial public offering to ensure a successful debut on the stock exchange in a month. aramco will sell just 1.5% of itself, which is about half of what had been considered. it is seeking a valuation $1.7en $1.6 trillion and trillion. the federal reserve says long interest rates could push renderers into risky actions
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that would threaten the nation's financial stability. the ratet report says squeeze could erode lending standards. lowan jay powell says interest rates may now be a permanent part of the u.s. economic landscape. two australia, where bushfires continue to rage across most of the each and -- eastern part of the country and are expected to worsen. firefighters are already struggling more than with -- with more than 100 fires and local residents have been advised to move out. four people are known to have been killed and more than 300 homes had been destroyed. about 2.5 million acres of farmland burned out. , the closely now fought presidential election has ended in victory for the china-friendly former defense official. he won more than 52% of the vote which shows the country remains
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deeply divided along ethnic lines. he captured the southern promises, while his rival took the north of the island. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. paul: let's get back to our top story. hong kong police have launched an operation to end a standoff with students at polytechnic university after a weekend of violent clashes. let's get over to the city with our chief north asia correspondent stephen engle. so, the police said this was not a raid, it is a dispersal. can you explain the difference for us? stephen: yeah. we are still trying to decipher what the police is actually saying. we know there was a dispersal operation that was launched predawn within the last hour, 90
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minutes. now police are coming out and telling local media that they have not raided the university. we know that the police have atd tear gas in the pat here polytechnic university which is just across victoria harbour from where we are right now, at the entrance to the central harbor tunnel. there has been a tense standoff for many days at that university. the last week on friday, many daylong standoff between protesters and police at the chinese university further opt into the new territories, it actually ended fairly abruptly when the protesters stood down. this standoff, though, does not seem to be ending. the protesters are standing their ground. hardened battle lines on both signs. andeard early this morning a facebook live statement from
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police that the police will use force more aggressively, including the possibility of using live ammunition, live rounds, if there dispersal operation at polytechnic university is met with increased violence. so it is definitely a standoff right now. fires have been set as we have this live footage from polytechnic university. right now we do not know how this will transpire over this dispersal operation. shery: of course you are in the central district right now. heard of further disruptions around hong kong. what will he commute look like? stephen: well, schools have been closed again, so that keeps the kids off the streets, not at the buses. people will be coming to work this morning. there will be disruptions at the mpr and the mtr has announced
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some disclosures along rail lines. so there will be disruptions as a city has been accustomed to as of late. there are no protests happening right here, but obviously the central crossing tunnel will be affected yet again. it has been closed for a number of days. but again, the overarching story here is that there is no political solution to this. there is no security solutions. both sides from the protesters and police and the government, they are digging in their heels. the number two man, the chief secretary, the number two to carrie lam, last week said more decisive measures will be taken to end the violence. shery: stephen engle, thank you for joining us from the ground in hong kong. our chief north asia correspondent. with us now in new york for a deeper look at the hong kong tensions is robert hormats, vice chairman of kissinger associates. always great having you with us.
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one of the rare steps we have seen recently has been china's people's liberation army coming out over their barracks and helping in the cleanup effort. last week there was some commentary in the state media global times, which sounded pretty ominous. they were saying the rioter's rampage is a short drive from the shenzhen armed police force and a short walk for the people's liberation army in hong kong. is this something we could envision beijing coming into hong kong to take over? robert: i have been in china as you know for the last several days. china throughfrom japan last night. and the tone i found in beijing, i did not have any --
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consensus thatal i at least was able to pick up, that they want to continue to use restraint. shery: what about restraint in the u.s.? the senate is now fast tracking the human rights democracy act for hong kong. if that passes the senate, it has already passed the house, will the president sign it? robert: i don't know the answer to that. i think the president has, on numerous occasions, made the point that this is an issue that has to be dealt with in the area. question whether the u.s. should or could appropriately play. it is a very complicated situation. not being on the ground in hong kong, it is difficult for me to make a judgment. i suspect that american officials in hong kong and
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beijing are giving them a constant feed of information, and at the state department, and perhaps members of congress as well, giving them a sense of what the pros and cons of any degree of american involvement would be. it is sensitive. we do not know all that much the details about it, what is going on below the surface. for the u.s. to get involved i think that involves a lot of compilations that at this point i am not in a position to make. paul: there are a lot of risks involved for the u.s. if it doesn't pass the human rights and democracy bill especially considering that china considers the u.s. to be the black hand behind all of this. robert: well, i think that congress has to think about that and think whether this and -- passing that bill is a plus or a minus. they have to weigh a lot of calculations. it is a very sensitive issue in beijing, as you correctly have
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indicated. so, for the u.s. to get involved by passing a bill, could lead to a lot of repercussions that perhaps america does not, or needs to at least take into account before it takes its actions. and when we get involved in situations like that, you need very good judgment before acting. because sometimes you can take actions and not realize the full implications of them. paul: all right. robert hormats is staying with us because we have plenty more to discuss. still to come, aside from hong kong, trade and other issues, hp rebuffs a bid to take over from xerox, saying it significantly undervalues the company. shery: and a perennial topic, trade. constructive talks over the weekend. are we close to locking down a deal? this is bloomberg. ♪ is bloomberg. ♪
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paul: this is daybreak: asia. shery: u.s. and chinese trade negotiators held what are described as constructive discussions in a phone call on saturday as a look to address each side's core concerns. tom mackenzie joins us from beijing. tom, how different is this time than the last few times we thought there were constructive developments? we do not have a detailed readout of what happened in terms of this phone call on saturday. we have a brief statement from the chinese side saying this was initiated by the u.s., but certainly it seems like they are moving the balls forward. the momentum is there. and this phone call that place between chinese -- it followed the comments that we got from larry kudlow on
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thursday, where he said they were closing in on the final stages of phase one of this deal. have beene two sides wrangling over the details of things like china's pledge to find more agricultural purchases from the u.s. side in terms of quantity, timeframe, and industrial or intellectual property. currencyurse their commitments as well along the yuan. all of those details discussed by lower ranking officials. then you had this phone call on saturday which seemed to move things forward. but when you are on the final stages of these trade negotiations, they are the dicey us in terms of the possibility of the talks breaking down. you have to cast your eye back to may of this year when we thought we were close to a deal and it collapsed. of course the big question is whether trump will put his name to the deal being fleshed out. ultimately i think it comes down to that. paul: indeed.
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there is a sense we have been here before. how close do you think the two sides already putting ink on p aper? tom: again, we are still waiting for a date and a location as to where this phase one deal will be signed, if they do indeed get to that point. sides seems like the too dovetailed in terms of commentary on this. the chinese side and u.s. side suggesting there is continued momentum around these issues, agricultural purchases. china's concern is they will be tariff relief, that is what they are pushing for, at least a partial rollback of the tariffs the u.s. is implemented. that is where china's energy and focus has been. if the two sides can square those demands, that is the key question. again, as many analysts will say , it is the easier part of the broader trade negotiations is
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phase two and three where you tackle the structural issues, things like industrial policy, the issues that are far more contentious than whether or not china will buy more soybeans from the u.s. nonetheless we are talking about phase one, and it seems that the momentum -- at the moment the momentum is there. the question is if this will be palatable ultimately to president trump. paul: tom mackenzie in beijing, thank you for that update. as tom said, they trade talks do remain complicated. says that hormats could be a major problem. dealsom was saying these in the final stages are often at the dicey is the moment. you see these deals often fall over in terms of differences on the implementation and verification. can we say at this stage how sure a footing the deal so far is on? robert: we really cannot. i would like to be optimistic
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about these negotiations, the two negotiators are world-class negotiators. hardhave been working very and are both experts in this area. and i am sure they are making progress. the problem is, and i have been a trade negotiator, is as you get down to the final strokes, sometimes brought agreements have to be put into precise words, and that can be a challenge. and i think tom laid out exactly the issues that are at stake here. one, the chinese do want a rollback in tariffs, particularly the tariffs imposed by the u.s. on september 1. the united states is pressing for more agricultural sales, which the president wants to be able to talk about when he campaigns in the midwest. issues relating to offshore property and currency. so, a deal is certainly possible. working out the final elements
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has obviously proved to be very challenging. i would also like to make the point that we have been through periods where we have positive talks that were close, we are on the verge, things are going constructively, only to find a few days later that they are not. and so we have been through this. and the other part of this is the market jumps at what it thinks is good news and comes from the mouth's of people who should know, and then the market goes up and when nothing happens, there is a sense of disappointment. so i would hope that as they get closer, there is less public conversation, and the focus is really on making the final deal. i think the danger is if they do not make a final deal little boy soon, then we get to the -- deal relatively soon, then we get to the president's threats of additional tariffs on december 15. if that happens then the
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positive environment that seems to be emerging from what we have heard can be jilted by a new set of american tariffs with perhaps new chinese retaliation, and that sets us on to what i have always felt will be if we escalate this further, mutually assured disruption. because then the markets will be disrupted, and then there may be other things that get thrown into the equation that are even more disrupted. so this has to be done relatively soon, or else the danger of things getting worse in mid-december increases. paul: in terms of disruption, what is your assessment of the manner in which these talks have been conducted? has there been enough regular contact, or is it all ad hoc? robert: well, it comes and goes. ayere have been periods in m when we thought we had a deal and then there was no deal, and there was a time when there was not much in the way of
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conversations. these are people, they know how to negotiate. i think that the best thing would be to have a regular series of conversations that they have, and there are detail people who work below them, they have to get them going. i think now there is a seriousness of purpose. when i was in china just recently, chinese officials i think did demonstrate that they were committed to working out an arrangement, and i think bob lighthizer is as well. but the chinese will not just buy off on any deal. they will die off on a deal that they find -- they will buy off on a deal they find they are interested in. tariffs are only one big part of it. that is something president xi jinping wants. i think president trump, if you get something good on agriculture that he can use at home, and then there is a period of calm that enables, one, the
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markets become more calm and less volatile based on every news story that comes out, and it sets the stage for the next round, or three rounds. they are the difficult parts of the equation. you need the confidence building agreement on this to get things going and tee them up. it could be five more rounds. this is a long-term process because this is a difficult issue. but at least cool things down, the notion of action and reaction that is disruptive to economies and makes things much more problematic and jolts the stock markets, that is very counterproductive on both sides. elso the chinese economy, th president to raise the chinese economy as weakening because of this. the chinese economy is certainly not growing as rapidly, but i do
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not think it is mainly because of the trade war. i think there are a lot of other factors. and i think it is also hurting a lot of american businesses. we don't talk so much about that. first of all, businesses that use chinese components, intermediate goods, they are being adversely affected. if there is another terrorist increase on the -- another tariff increase on december 15, that is primarily consumer goods. i think the president wants something from the farmers and he does not want to do something to adversely affect consumers. the president and his team have a strong incentive to make a deal. has thembassador, what trump administration achieved in the past 18 months? because the way that i see it, the chinese demands have not changed. they still want tariffs to be rolled back, they do not want to go into i.p. transfer. what the trump demonstration seems to --
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robert: i think the trump administration has come to recognize, certainly after may, that this big deal that they talked about is very complicated. the chinese are not going to change their fundamental system because the u.s. pushes them to do this. there are areas where i think there can be common interests, like intellectual property. i do think some language or understandings are useful there. there are areas where agreement is possible and there is some mutuality. some chinese also want to move ahead on some of these issues too, but the chinese have demonstrated they will not give into the u.s. if they find it is negative to their fundamental way of running their economy, or their fundamental interests, as the u.s. has come to understand that. and the u.s. cannot get everything at once from the chinese, because they may not be
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a jeffersonian democracy but they have public opinion and they have strong opinions within the communist party about what kind of deal should be and is appropriate. it is not as if president xi jinping does not have pressures on him. he has to represent the interests of the chinese people and the party. it is a different system, but he still has to be reflective of their interests, just as we do on our side, only the system is somewhat different in the way it is done. shery: let's see when we can get that phase one trade deal. hopefully soon. ambassador, thank you so much. plenty more to come. this is bloomberg. ♪
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shery: we are counted down to asia's first major market open. nikkei futures down .1% despite the fact we have seen a really weak japanese yen against the u.s. dollar.
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watch closely in the japan open. areave heard that they planning to announce a merger plan to be signed in december. plenty more to come. this is bloomberg. ♪ s is bloomberg. ♪ here, it all starts with a simple...
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this is daybreak: asia. i am su keenan with the headlines. we start in hong kong. another weekend of violent clashes. authorities warned that officers may fire live rounds if the situation continues. schools remain closed across hong kong. force theay cancellation of next week's local election. , the people's bank of china says it is ready to take any measures necessary to support the economy as slows and growth
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factory output remains sluggish. inflationncerns about . the bank says the external environment is complex and there is limited scope for action. who has the most money? is gaining ground as the world's richest person. close jeff bezos at the on friday thanks in part to a contract with the pentagon. climbed, taking wealth toonal with -- $100 billion. a mere 108 billion dollars in personal wealth. u.s.-china negotiations, both negotiators have held what are being described as productive
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discussions on trade over the weekend. the vice premier spoke with steve mnuchin in a call that came at washington's request. are moving into their final stages. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in 120 countries. i am su keenan. this is bloomberg. shery: we have breaking news. we have heard that a line of the will be -- that deal done through a share swap. they will become a joint company . sharend is the holdings z holdings shares have been
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suspended. they had been looking to merge. we are finally hearing about the merger plan, which could be signed in december. we have heard from local media z holdings will be the parent of yahoo! and line and will be held by the current z holdings ceo. we are getting the merger plan, which will be done through a share swap. in the meantime, let's get a check on markets that have been trading for about half an hour. what are you seeing? >> the aussie dollar just yields on while aussie are continuing to dip for the fifth straight session. i want to highlight shares that after a boost to
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earnings guidance. on the other side of the break morgansing ground after stanley cited more caution needed. smart group slumping after removing the ceo. the- after naming new ceo. he joined the company in 2009. >> saudi arabia sent aramco's $2 trillionow the goal. they said it was to ensure a successful offering. james, this is not going to be the blockbuster perhaps we were all expecting, but were we expecting too much? >> that's right. the valuation of 1.6-1 .7
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trillion is more realistic. with only 5% of the stock being offered, it's really and i -- a reflection -- it's really a reflection of the expectations. are not even going to market to australia and canada. traction insome china, that will be a bonus. ity are trying to make sweeter to local investors. they are asking banks to give them more leverage. you can expect it will be pretty well supported. look for evaluation in early december. pay 75co is promising to billion dollars in dividends. how does that compare to other oil companies? >> pretty similar.
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this is the against company in the world by profit. you would have to think it is a decent investment over the long run. thequestion is how long fossil fuels industry can sustain these profits in a world where we are more concerned about climate change? theyou only have to look at drone attack in december to see the huge impact they have on the oil markets. a risk to global institutional investors. but as you say, i'm sure it's going to get support. is their response to the prospect of peace demands? time, they have acknowledged it's a reality. giving any signs of being too stressed about it. beyond, there and
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is going to still be strong demand for oil. the risk is that peak demand comes earlier than expected. for these huge fossil fuel giants is that the transition comes quicker than expected and demand tapers off quicker than expected. the report around the aramco ipo suggested 2030 as peak demand, but it could come sooner than that. shery: thank you. our asia energy reporter. here in the u.s., hp has rejected an unsolicited bid from xerox saying it "significantly undervalues the company although it remains open to further talks." hp issued a statement on the rejection just an hour ago, saying it was unanimous.
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rather friendly unanimous rejection of the $35.5 billion dollar offer. hp is interested in other options that might include -- taking a look quickly at how hewlett-packard's stock prices have performed, there has been some uptick in price. was interested, they have now confirmed through their rejection a $22 a share deal. they said that did not correctly valued the company but they are open to further talks. fundamental questions needing to be addressed is what they say they want to explore and one of those is xerox's revenue decline there was a
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significant dip in the trajectory of future business and profits. they are interested in taking a look at xerox's books if they can do so and they will engage to better understand the business and what might be a .aluable combination >> karl aiken has been pushing for a union between these -- carl icahn has been pushing for a union between these two companies. >> he owns pieces of both. carl icahn of course is a billionaire activist who often boards.olved in in this case, he had a known stake in xerox, about a 10.6% stake, he also had increased his , and in hewlett-packard that was revealed in the filings
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last week. again, he has been pushing for this combination. the deal would unite companies that were once giants of american industry but both fortunes have waned in the digital age, although xerox postures have doubled in the last year while hewlett-packard has been down. estimates are that both , couldes, if combined produce revenues of $70 billion a year. that would make for a behemoth, so that makes this a likely hot story to be followed in monday trading on wall street. thank you for that. we have a hot story developing in japan. z holdings are pushing for a merger in 2020.
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the two companies are now takingg -- proposing line private although the final price is still being discussed. holdings andboth z line search to double digits last week. searched 17% and 15% respectively. they are now suspended as we have seen this merger announcement. plenty more to come. this is bloomberg. ♪
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asia, iis is daybreak am paul allen in sydney. shery: and i am shery ahn in new york. let's get a check on the
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markets. increasing uncertainty in hong kong affecting markets. they hung saying having the biggest drop in six -- hang seng having the biggest drop in six months. appealt fundamental to 27 85 -- the risky's are reflecting a neutral sentiment. areand dividend payouts among the short-term drivers of risk. 2020 forecasts insofar have the hong kong dollar trading up for most of next year. paul: markets are also awaiting more clarity after constructive trade talks over the weekend.
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let's bring in a strategist. thanks for joining us. you weretime we spoke, talking about the u.s. dollar being extremely overvalued. has eased back 1% since october. you think it has a bit more to run? nice to be back. yes, we do think the dollar has a further downside to go. think the dollar will go lower from its market your high. of our forecasts into 2020 are lower. , theple of reasons u.s.-china talks -- tensions seem to be de-escalating.
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banks are expanding their balance sheets. more importantly, global growth and the recovery of stabilization. lower dollarg at a . shery: as we continue to see these trade headlines, it's really interesting to see the negative correlation we are seeing with the yuan and treasury yields. the chart on the bloomberg showing negative correlation, while the top panel is showing you the dollar, dna, and 10 year yield. trade take a look at the risks, can we really expect the 10 year yield to reach that to reach that 2% handle without the offshore yuan appreciating to around 6.9 percent according to be, capital markets? where do you put the offshore
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yuan now? >> we think offshore and onshore depend on how the trade talks turnout. and china to u.s. reach the end of part one of the deal by the end of 2019. if that materializes, we are until the go lower next catalyst emerges. but if there is sudden escalation again, we will go revisit 719 715 and to try to reach 720 again.
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paul: you potentially see the yuan back with a six handle again. if you were going to put some odds on that, what would they be? we do not think china wants against the dollar. we think that will affect policy. more transparency is needed in forecast models. is on the agenda. onshore andith .ffshore investor conviction dollar, 70%er
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chance. shery: how comfortable are you going long on the japanese yen? it weakened this past week against the u.s. dollar. weaknessieve the yen's is because of the safe haven demand disappearing because of the current risk environment. bullish for yen since last year at the same time we were bullish with global derision. in our current portfolio, we are short dollar-yen.
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shery: always great having you with us. coming up, the world's largest shipping companies seeing the impact of the trade wars. this is bloomberg. ♪
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shery: this is daybreak asia. i am shery ahn in new york. paul: and i am paul allen in sydney. the world's top shipping companies are feeling the impact of the ongoing trade war, especially in the asia-pacific. ceo who admitted he is becoming less optimistic about growth. lot. has come down a we believe they will come in,
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when everything is said and done, at about 1.5% growth. everything is affected by the trade tensions, the impact that has on business sentiment and confidence. kind of impact? can you quantify the impact trade tensions are having on your company? >> we have been able to more demand byate low taking cost out, but obviously for the global economy, it's not good news that we are not growing any faster than we are. we will continue to be very and keep costs low. earningsntinue to grow
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. where are the trade tensions showing up the most? >> in the pacific between the u.s. and asia, where we might end up for the first time in with markets that decline. all year they have been down, but they have been outweighed by offsets from vietnam and southeast asia. but coming into the fourth quarter, we see decline combined with latin america where there is weakness because of the economy. to offsete managed weak demand in previous quarters through lower fuel costs. how much can the self-help measures really help you?
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can still do a lot to manage our business better. on the cost agenda, and i think we have our own fate in our hands. technology driven productivity gains are something i know help in your industry. where will you be using self-help to tackle a slowdown? >> there are a couple of areas where we are using technology. website that attracts more than $20 billion in revenue per year. quotes andg price there is an efficiency gain for us. let's get a quick check of the latest business flash
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headlines. from germany, ready to invest $4.5 billion in a new .actory build says tesla may receive eu million toorth $330 bring a factory online. bankrupt california utility pg&e is threatening to cut power to almost 200,000 homes in the north of the state this week due to a forecast of dry, windy weather. foothills of nevada may face orchestrated blackouts over concerns of powerlines sparking new wildfires. some californians could be in the dark for days. up for there gearing market opens in tokyo and seoul at the top of the hour.
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what are you watching? >> nikkei futures are hinting at losses. shares on the retreat with the s&p lower. situation in hong kong among the points of concern . softbank wants to combine its business, z holdings, with line. aim is for the merger to be done in october, 2020. the offer is still under discussion with the final deal being signed in december. keep in mind today shares are atpended and will resume 5:00 p.m. local time. paul: coming up, more unrest in
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hong kong. we speak to the head of hong kong police intelligence. and we have the market open in japan and south korea up next. stay with us. this is bloomberg. ♪
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paul: good morning, i am paul allen in sydney. asia's major markets have just opened for trade. shery: in new york, i'm shery ahn. in hong kong. welcome to daybreak asia. ♪ paul: our top stories this monday, hong kong police say dispersing and arresting protesters after -- say they dispersed and arrested
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protesters after a university standoff but neither was a raid. shery: saudi arabia lowers its target for aramco's valuation. even so, it is expected to be one of the biggest ipo's in history. japan and south korea coming online. let's get straight to the market action. sophie: stocks in tokyo under pressure. the nikkei to the downside. the yen just nudging higher. concerns about the unrest in hong kong continue. in on the mood in seoul. the cost be slightly to the downside -- kospi moving slightly to the downside. continue between the u.s. and south korea. the third round takes place tomorrow. aussie shares off about .4%
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advance.wo day telcos the biggest drag. the aussie dollar is just holding on. kiwi stocks under pressure, off by .25%. let's check in on the first word news with su keenan. : in hong kong, police clear students from polytechnic university after another week of violent lashes. authorities warned officers may fire live rounds if the situation continues. streets are closed throughout hong kong. the protest may force cancellation of next weekend's local election. city continues to fall into recession. u.s. and chinese negotiators beenhile had what has described as constructive conversations on trade over the weekend.
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with thepremier spoke u.s. treasury secretary and trade -- a trade representative. they all agreed to stay in close contact as negotiations move into the final stage. in saudi arabia, they have lowered the valuation of energy giant aramco and pared back the size of the ipo to ensure successful debut on the riyadh stock exchange next month. aramco will sell just 1.5% of its stock in the ipo. that's about half of what it had considered. it is seeking a valuation of between 1.6-1 $.7 trillion. who has the most money? bill gates has apparently regained his crown as the world's richest person. he moved ahead of jeff bezos, who had been number one of the close of trading on friday. this helped in part by a cloud computing contract at the
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pentagon. microsoft shares climbed 4% after beating amazon for the bringing bill gates wealth to 110 billion dollars. amazon stock has fallen, bringing bezos down to a mirror 100 -- bringing bezos wealth down to a mere $108 billion. little news 24 hours a day and on tictoc on twitter powered by more than 120 -- powered by more than 2700 journalists in over 120 countries. i'm su keenan. this is bloomberg. bond traders in particular are having their best annual performance since 2011. we bring in garfield reynolds. yields are recovering somewhat. can they sustain that run to the end of the year? >> well, they have a pretty good .hot at it
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trade seems to be getting slower and the comments about getting closer to a deal are perhaps marginal utility when it comes to sentiment boost. we have seen data breakdown. had the juncture of trade talk optimism and the recovery of the economic pulse. that's a powerful driver on sentiment. people had been starting to fret that yields were so low and bonds were looking a bit dangerous in that context. now it seems like stocks are starting to look a little dangerous unless we get a better case scenario trade deal. friday,ecord highs on
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in the u.s., but that does not necessarily translate to gains in asia, does it? >> asia is more affected by the global trade tensions. china and india are both experiencing slowdowns that are not just about trade. there are different factors, shadow banking scares, the .eleveraging campaign konghe other thing is hong . that's asia's third-biggest stock market. that's obviously the sort of thing that's on everybody's mind and is going to push people toward the risk off spectrum rather than the risk on side. even as what's going on in hong kong obviously has an impact on
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sentiment in europe and the u.s., the impact there is going to be a lot less than it is here. shery: we also have china announcing benchmark prime lending rates. they cut earlier this month. is this something that usually has an impact on the market? >> it's a little hard to tell because they really only rot in these loan rates -- brought in these loan rates fairly recently . there's been a lot of expectation it will do something significant to turn the economy around. taking a gradual approach. there's an ever broadening sentiment involved. very much what it's trying to do is avoid either a sudden letdown or create fresh bubbles they will have to stamp on. so, anyone looking for a
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substantial boost from this is likely to be disappointed. that was garfield reynolds. you can get more on this story and all the days trading on the bloomberg at mliv. get the market run down in one click. there is also expert analysis. kong, police and protesters hardening their battle lines over the weekend with violent clashes culminating in a standoff at a local university and a warning that officers may fire live ammunition. steve vickers, ceo of vickers and associates and the former head of the royal hong kong police criminal intelligence bureau joins us. great to have you with us. we continue to see more even fatalities in
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hong kong. where is all this violence headed? >> it has been an extraordinary weekend. i think it has stabilized. it has been an extranet we weekend -- extraordinary weekend. appears tol solution be inside. there is a danger of people assuming hong kong is not open for business. this is being largely contained to the universities over the weekend, and extraordinarily, nobody has been killed in the last 48 hours. i think we are very lucky, very fortunate. what are the risks for businesses and when could things start to return to normal?
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is i don't know. i think these big scale university conflagrations, if that's the right word, will come to an end noon. associate with the people that support them. first, you want to make sure people can get to and from work safely. they have measures in place for working from home or other measures to help people out. unfortunately, people have been classified as either pro-government or pro-movement. you are either yellow or you are blue. corporations and businesses need to not be labeled either way and to get on with business as usual. there is concern about the use
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of social media by corporations. can it put your company in the blue or the yellow camp? reputational he, protect yourself and don't get in the firing line -- reputational he, how do you protect yourself and not get in the firing line? the: we saw a report over weekend the partners in law firms are being asked to state which side they stand on when pitching for chinese business. does that speak to a broader risk? >> the broader risk is an interesting point. cathay pacific had a large number of people who came under considerable pressure. when this is over -- and it will damage done will be to hong kong organizations
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who will come under pressure from the mainland side. historically, hong kong has been truly independent. there has been no interference in business. that has been one of hong kong's primary attractions. but banks, accounting firms and the rest have and will come under pressure. the real danger is not what you see blamed on the cameras, but the implications you see rising from this movement. paul: one of the extraordinary things we saw was members of the pla engaged in voluntary cleanup. should we be reading between the lines here? or was that what it was? >> i think it was subtly nuanced. the platoons came out of the almost adjacent to the
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baptist university where the students had a proactive weekend in terms of littering the street . they came out and cleaned it up, quickly efficient. the weapons they carried were .rooms i think it was a clever pr move. woreof the t-shirts they reflected the chinese government views. there's a big election coming up on the 20 hong kong people are very concerned they are not canceled -- on the 24th in hong kong. people are very concerned they are not canceled. creates oxygen for further demonstrations.
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there is hope that the government, despite the level of violence, will not cancel the elections. shery: on the cleanup efforts by the pla, what sort of report is beijing offering in trying to this violence. >> this is a political problem political a solution, but when people are firing petrol bombs and arrows and wounding people, you cannot let that go on. that's what happened this without widespread use of live ammunition. beijing can provide intelligence help, technical help. these movements operate primarily through telegram. china is well-equipped to deal with this. but the issues will be political leading up to the elections on
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sunday. it will be interesting to see what the public view of all this is and how much support the movement has. bute it does have support, the silent side of society hasn't really had a chance to talk about what they think -- to report what they think of it. what happens between now and the election is important and business should notice that and make arrangements to deal with situations as they occur. others say business as usual this morning. paul: steve vickers, thanks very much for joining us. ,till to come, combining forces softbank looks to merge line and yahoo! japan. shery: markets are on watch and
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wait mode for investment opportunities. this is bloomberg. ♪
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paul: this is daybreak: asia. i'm paul allen in sydney. shery: i'm shery ahn in new york. let's check in on stocks. >> reaction to news that softbank, z holdings and a neighborhood messaging service have agreed to a merger to be completed in 2020. shares are climbing as much as 3.2%. yahoo! japan adding as much as 5% this monday. we also see moves in internet related stocks. joe deaux falling 4.2%. xoxo falling 4.2%.
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paul: thanks, sophie. markets are also awaiting more trade clarity after constructive talks over the weekend. let's bring in j.p. morgan private banks head of market strategy for asia. strategy, butour in many respects, you think the best approach is to tune out the noise and stay the course. >> there's a certain amount of that. our view is that the u.s.-china trade tensions are part of a larger structural issue. the risk has come down on further escalation. we think tensions will probably persist. china, weerms of
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heard this plan from the pboc, it's going to increase adjustments to ward off some pressures. what are you expecting to see? course,ng the potentially. they have maintained easing bias, but we haven't seen real response from a growth perspective. we think there are a lot of valances -- balances that are well-known, housing prices and other asset bubble prices. shery: we have seen some measures in china. recently, there was the one-year lending facilities reduction. how much has that filtered into the real economy? , about five small basis points. they have been tinkering and
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trying to push down domestic money market rates within china to lower the cost of retainment of the existing debt burden. but in general, we haven't seen much response from a credit growth perspective. that generally is a leading indicator of overall economic tivoli -- activity. shery: in the meantime, we have in beijings surge while hong kong has barely stayed in the green. will this continue the rest of the year as we continue to see unrest there? >> i think it likely will. and you look at domestic china, there are still a lot of policy tools they can use to support domestic growth. also, one of the big impacts over the past year is trade tensions, but if we see an alleviation of further interest rates
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tied to u.s. interest rate policy, there are not as many hong kong can use in to stimulate growth. on top of that, tensions are pushing toward recession. shery: we continue to see liquidity being squeezed. >> yeah, you continue to see that. we largely expected that. so far, it hasn't been near the previous highs in terms of being widespread. you see some weakness on the hong kong dollar. you see points creeping up as well. there is some liquidity drain, but again, the symptom -- system is meant to handle that. normalk it is still a function of the system. great having you with us.
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alex will from jp morgan. from jpnue -- alex wolf morgan. we continue to see a city in turmoil. this is hong kong polytechnic university. we have seen the standoff there. police have come out and said they have not rated polytech they are onlyat conducting dispersal operations, but chaos continues in the city causing disruption for transportation. the east and west rail lines disrupted. a station closed. ofin service halted because --t one train operator says calls facility damage. we see live pictures out of hong kong. we will have more coming up. this is bloomberg. ♪
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paul: let's get a quick check of the latest business flash headlines. hp has rejected an offer from -- a takeover bid from xerox saying it significantly devalues the company. hp says it is willing to discuss saysential merger and declining revenue at xerox last year raises questions about its trajectory and future prospects. airbus is in talks with ge for a second engine to rival rolls-royce. we are told the new engine would currentlyn the design powering the boeing triple seven
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-- boeing 777. paul: boeing is working hard to return the 737 max to the skies. boeing is dedicated to integrity and safety and hopes to restore customer confidence. let's get you back live to hong university.ytech you can see some of the students trudging away after police have conducted a rather dramatic operation. it was described as a dispersal, but we saw quite a lot of teargas fired in order to remove some of those students after an .vernight standoff earlier, we saw some pictures of fires burning. you see a lot of debris on the road and some teargas smoldering as police move to break up that demonstration.
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it was a dramatic weekend. we also saw a cloud members of the pla on the streets. the former democratic party chair emily lau is coming up. this is bloomberg. ♪
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su: this is daybreak asia. i'm su keenan with the latest headline. we start with the federal reserve. risky actions might threaten the nation's financial stability. were -- reportly on potential threats. interestl says lower rates may be a permanent part of the u.s. landscape. investment growth slows and sluggish.tput remains
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third quarter monetary policy highlights rising challenges and renewed concern about inflation. the external environment is complex with limited scope for action. to the brush fires in australia. ofy are raging across much the country and set to worsen as dry, windy weather moves in. firefighters are already fighting more than 100 fires in new south wales and queensland. have been known to be killed and over 200 acres of farmland burned out. presidentialght victory.has ended in the winner won more than 52 of the country.
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-- day onnews 24 hours a bloomberg and on twitter. i'm su keenan, this is bloomberg. >> disruptions continue in hong kong as the operator says they have closed these stations, citing damage in the sub boy stations. service has been disrupted. we have seen the east and west rail lines disrupted. kong.ictures out of hong earlier today, we saw the police entering the hong kong campus of
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polytechnic university. we continue to see the protest .n hong kong disrupting we are waiting for the open in hong kong. the in stocksseeing moves and bonds as well. just a touch firmer while the is showing a two-day gain. let's check in on stock movers. by 10%.e starting up
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the rbc says it could be this updated guidance giving the up growth trajectory this year. dragon quest walk registered more than 10 million downloads according to square enix. >> saudi arabia says that aramco's valuation is well below. the kingdom looks to ensure a successful offering. let's bring in our bloomberg expert. what factors played into this valuation? oil in is a story about the future for oil prices. a decade ago, we were double that.
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sincebeen about 10 years the executive said they were targeting to trillion dollars but it has stayed at for$50 million -- $50 level the last two years. they are seeing it below the $2 trillion that they had set. sell at looking to about 1.5%. for vehicles and cars changing from combustion engines to electric vehicles. of risk at the future for aramco and a lot of folks have said maybe this valuation was too high.
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valuation, that is much higher than what the market expects. idea is that they would raise money to transfer that to the public investment fund. theing much less of expected billion dollars. >> this ipo, if it is successful and on the higher range could billion which$25 is below the $100 billion they were looking at. it is going to be a challenge going forward to raise more money for this saudi arabia plan, which is a whole plan in the economic plans for
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saudi arabia. technologies and renewable energies. softbank'sed in vision fund. if they have less money in their sovereign wealth fund that will make that investment so much harder. are they going to expand in other markets beyond the domestic markets? those will be the questions going forward to see how the crown prince can make this his vision and his goal a success going forward. >> thank you so much. combine then to yahoo! instant messaging service hopings business online
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it will create a viable global competitor in artificial .ntelligence why do these companies need each other? has leveledr base off. they are struggling to find ways to build out that platform. japan.e goes for yahoo! country'snce the largest website. they are struggling to compete in what is the most ruthlessly competitive business on the internet where there tends to be one big winner. you mentioned ai. it is difficult to hire the kind of data scientists and engineers that are needed to push forward core tofort which is both of these companies.
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, they can combine both of their resources in that .rea >> what are the key risks for this deal? >> this is a ruthlessly competitive industry. they are competing with giant platforms going up against google and facebook and social media. it's very difficult to keep pace with the user services being offered. these global platforms investing billions. they did mention commerce as one
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of the areas that they want to push forward in. ai scientists. they have said that they will keep the brand separate, but they will have to find areas of overlap to work together for the platform. there is an extremely competitive business where there tends to be in each category only one winner. very high-stakes and very big risks. >> still to come, china has warned of foreign intervention, but that hasn't stopped the former chair of the democratic party from lobbying for international help. this is bloomberg.
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chile'sve an alert, president speaking at the moment saying he did consider another state of emergency. we have seen a month of protests for sweeping changes. the peso has plunged to record lows. is now saying that he sees social demands are legitimate and fair and he wants to reduce the cost of living. the next challenge is to improve pensions. they are determined to raise the minimum pension to more than 20% as those riots and protests continue in chile. we have more unrest in hong kong as well. tenset clashes and a
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standoff. stephen engle has the very latest. tense standoff across the harbor from here the center ofn polytechnic university. different reports on how it transpired but we did hear about 5:30 that there was a dispersal operation ordered by the police. there is a bit of a standoff now 300 of the00 to --dents who are holding let's bring in emily lau a former democratic chair. how do you see this -- not necessarily today's standoff but the six-month-long standoff
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resolving? >> we certainly think it should be resolved and knowing hong kong, it must be resolved. the hong kong government which is under the xi jinping presidency, they have to respond to the people's demands. elsewherek at turmoil in bolivia or chile, they responded. we are not asking for a revolution or independence, we just want an independent inquiry to investigate the saga. >> can the government ask about current approach by putting police force out there and using more reports, will they be able to -- more decisive measures? >> no is. >>? -- no.
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>> is that just going to and flame it? >> exactly. many people would agree me -- agree with me, the main thing is for the government to respond. some are suggesting giving them amnesty. the first thing is to tell the police to stop lying. they found out the police were going to arrest them so they were very angry. many people including my former colleagues in the legislative council, they are all trying to negotiate, to de-escalate. >> are the protesters losing the high ground by using bows and bs?ows, catapults, petrol bom police are there to maintain social order. >> i think the hong kong people have lost patience with the
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radical protesters, that's true, but there are others who are very sympathetic, who will take to the streets in black to continue to support them. hong kong and bloomberg, business is in a terrible state, the hotels are empty, the restaurants are empty. have been around for a long time. i have seen them go through trials and tribulations. the property crashes, the umbrella movement, is this the worst you have seen it? mo it is. people have been reminding me that in this protest, there are many dimensions, from the mainland, mainland people ordered by beijing to infiltrate from other places, some would
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say the americans were taiwan. we must send the message, the government has to respond to the demand. we burn with burn, us. -- is she only answering to xi jinping? .e has issues here he has issues internally. a some say we are in difficult position because we are caught in a power struggle. when they have a power struggle, no holds barred. they don't care if you die or perish. it is very sad. people who love hong kong should speak out. the rich and powerful people, the international community and
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many countries have many citizens and companies operating here. many foreigners will also be hurt. this is a time for the international community to speak .ut they don't support violence and neither do i. >> the hong kong human rights tradingcracy act, privileges to hong kong and hold officials here with sanctions. if that is breached that they will get sanctions. is that going to help the matter or does it only inflame it? >> i think so because it is better for the american legislature. they say if you do not have one country or two systems or a high degree of out on a me, you don't
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get -- autonomy, you don't get the best treatment. you don't want a sword hanging over your head. if you are undermining human rights, of course they should be bad. not just by america but by european countries and the u.k. the u.k. have the biggest responsibility. they should give the british citizens here british passports. >> they had that chance 30 years ago. >> that chance is coming up again. i hope that they will listen to us and will consider so if people wonder if it really goes wrong they have a place to go to. >> on saturday, it was a good measure. they are trying to clean up. is that just another step vote toward military? >> it is another step. many peoplesee that
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here and in the international community have responded. they know it is in breach of the law because they can only come out when invited by the hong kong government. they think they come out of their own initiative. they may think that some people applaud it. the next time they come out, they may be helping took well -- to quell the unrest. >> so you think the right to protest against the police -- >> not only the police. >> do you think that would calm things down? wishful thinking. >> she said get an independent police council. >> an independent advisory has
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already said that's not good enough. >> she is wasting time. >> should she resign? -- should xi resign? >> of course. the whole cabinet. >> this is the same kind of debate going on at dinner tables across hong kong. it is not over and it is simply going to continue to be debated. former democratic party chair inly lau and stephen engle hong kong. up next, this hong kong member on the program to discuss the ongoing unrest and the upcoming elections. elections.
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>> this is daybreak: asia. >> i am shery ahn in new york. investors ready to invest $4.5 billion in the newly announced berlin factory. their plant will turn out 150 cars per year. tesla may receive eu subsidies worth the equivalent of $330 million to bring the factory
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online. is threatening to cut power to these homes. businesses in the foothills of the sierra nevada may face organized blackouts designed to prevent power lines from sparking fires. >> sophie is in hong kong. what are you watching? recap of thequick exports data. . bigger than expected drop we did see it continuing to fall into negative territory.
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the hong kong jobless numbers could see a slight uptick from 2.9% where it has been since july. the current trend could put an end to their record low sales inent levels, as small to medium businesses continues to decline. sinces a level not seen november 2010. >> hong kong has returned to the city. we continue to see these protesters out on the streets. this is near polytechnic university where we saw a standoff with police. police have not been conducting dispersal operations. seen the operator coming out saying that this station has been reopened.
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the east end west rail lines have been suspended. unrestinue to see this unfold in the city. paul: it has been a dramatic weekend. police moved into disperse the protesters at polytechnic university with tear gas fired. the situation in hong kong is continuing to unfold. that is it for daybreak asia. market coverage continues. this is bloomberg.
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yvonne: here are the top stories. violent protests continues in hong kong after another weekend of chaos. police threatened to use live ammunition if the unrest continues. of challengesrns and says it will support the slowing economy. >> saudi arabia lowers its valuation target for aramco but even so


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