♪ it is 9:00 a.m. in hong kong, 11:00 a.m. in sydney. i am haidi lun. this is "bloomberg markets: asia." ♪ haidi: korea leading the asia-pacific higher, earnings underscoring resilience. chinese stocks expecting to pboc cut the the reserve requirement ratio to improve funding at ranks.

also, president trump says the u.s. is already speaking at a high level to north korea. a second day of robust gains when it comes to u.s. stocks, the s&p pushing through that 100-day moving average. can it be sustained? it seems the skyhigh expectations for what is anticipated to be a blowout earnings season is creating quite a bit of support when it comes to sentiment. 30 minutes away from the open. singapore, taiwan, and malaysia coming online. sophie. bounce across asian markets led higher by japan and south korea. 1.1%, the 225 adding kospi up 1.25%. japanese investors with the latest trade figures to digest. surplusnce swung to a

and export and import growth less than forecast. this could be a negative for japanese stocks and shinzo abe has that dropped in import shows domestic demand is slowing, something for trump to consider during this summit. sayinghave larry kudlow steel and aluminum tariff exemptions would be on the table, but yet to hear of any concessions on that. i want to highlight the u.s. treasury market. 2.40% forar yield is the first time since september 2008 against this backdrop of risk on. taipei. in on stocks in tsmc ahead of earnings thursday, first-quarter net income expected to rise on cryptocurrency mining demand. it is also on the radar after la

m slumped after forecasting a decline in second half shipments, which may indicate chip spending is moderating. nanya sees supply constraints into the third quarter, boosting profits 3.5%. onci: we are seeing that play out when it comes to demand for treasuries, the 10 year yield making a move overnight. this line crossing the bloomberg, two year yield 2.4%, the first time at that level since to september 2008. let's get to first word news. expanded forxports a 16th month despite trade tensions. the trade balance remained in surplus in march and the increase was less than expected with the sales in the u.s. and eu flat. imports fell .6% against the

, $7.4 billionrise compared with estimates of $7.7 billion. the imf expects the global economy to continue expanding for two more years, but the seeds of the next demise has been sound. it projects global growth will fade as central banks tighten policy, u.s. fiscal stimulus subsides, and china's gradual slowdown continues. there cut low is downplaying the chances of the u.s. reentering the tpp, saying the idea is more of a thought the mena policy. "dlow says washington is in free preliminary disk ages of discussion." if the united states wanted to follow through on their interests, that would reach ricker a renegotiation as if

others were interested in joining the agreement as well. we will continue with the processes and see what comes of the signals, but it is not a matter of putting your hand up. president trump says the u.s. has begun direct talks with north korea and officials have had discussions at high levels. locations are under consideration for the talks. he has given south korea the go-ahead to negotiate a peace deal with the north and suggests he is responsible for the success of the recent winter olympics. ,> north korea is coming along and south korea plans to meet with north korea to see if they can into the war, and they have my blessing on that. >> global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. haidi: thank you.

of china hasbank sprung a surprise by cutting reserve ratios for commercial and foreign banks, effective from april 25, reducing the amount of cash banks need to hold as reserves. let's look at why they are doing this with tom mackenzie. suggest concern over liquidity in the system is behind this? >> to some degree. it was a surprise for most market watchers, but what it probably does not signal is a fromficant shift in policy the pboc. i reserve requirement ratio kicking in on april 25, currently stands at 17%. the idea is it will channel liquidity to businesses and individuals. will replaces the

banks borrowing. it is an adjustment of the liquidity scenario. we saw a similar cut in september last year. it kicked in in january. that was aimed at motivating and lend toing ranks to small and medium-sized businesses, a key focus for the government as they tried to short of some of these smes and ensure liquidity pumped to the major corporations and as so easy is balanced out. it is in line with that. we saw this in 2017 with this usesustment, the talk pboc to nudge operates without pushing up the benchmark rate. expect aomists don't benchmark rate rise in 2018.

but this is a question of liquidity, but probably not a change of stance significantly for the pboc. resilientsaw a fairly , mixed picture in the domestic activity and gdp numbers yesterday. we have chinese property data out today. what are we expecting? >> we are expecting fairly weaker property prices for march. we have seen indicators that have suggested that prices will continue to cool for the month and will probably continue into the gear as well. cicc pointing out that sales , pricesapril by 15% down about 2.5% in march. we will get that data at around 9:30 local time. what we have in place in china are these curbs, particularly in the first and the second tier

cities trying to avoid speculation in the property market, a key priority and outline president xi jinping. what it means for developers is that it becomes a trickier environment, particularly that debt load, $17.5 billion of onshore bonds held by china that mature by the end of this year. it could prove difficult for some of them given the tighter liquidity environment more generally. developers in focus, and the property market is a big part of the growth picture here, many economists suggest any slowdown in the real estate sector that is prolonged in 2018 could prove a drag on the economy come a but we got that 6.8% print for the first quarter yesterday. we will leave it for now, but get back to in about half an hour with the china new home

data coming out at the bottom of this hour. china has loosened restrictions across the auto sector, scrapping a 50% ownership cap. kevin buckland has been tracking the story. likely to seee foreign carmakers changing their strategy in china after this? >> yeah, that is a good question. changesd not see immediately. that is what the companies have said. , and thee a timeline certain aspects of the industry will be affected sooner than others. regular passenger vehicles, not until 2022 that the rules change. for new energy vehicles like electric and battery-electric vehicles, it takes effect this year. , tesla could be one of the first to benefit. to build a trying

factory in shanghai for about a year and has been stonewalled, so it could be a big and if it for them and a drag for the chinese electric car players like byd who would face bigger competition. basically what sums up the feeling among the global automakers is things are going well in china. the relationship with joint venture partners is good and business expanding and there is no reason to make any changes at the present time. is a question of how things develop after that. it could be a decade before people really start to think about how their businesses might benge, but it is likely to an evolution rather than a big change. hasi: the thing is that it been a tough time for chinese automakers despite the support

and encouragement from beijing to support homemade brands. is this going to make it just that much more competitive? thatll, yes, the fact is these rules were in place. another rule that would change this year is a significant reduction in the import tariffs on foreign-made cars, so again, that would increase the pressure on these chinese brands, but basically since the beginning china has basically said once the industry is developed a certain degree that it would start to pull back the safety really aet the brands sickly just battle for survival and let the strongest win. that is important that they don't let their own industry piggyback for too long on the foreign automakers, so china obviously feels now is the time when they can start to compete,

and we will see who the winners and losers are as the story develops. kevin, how much of this is a carrot to appease donald trump's concerns about market access? >> the timing is suggestive. china wants to make the most of this in terms of political capital. the announcements followed very soon after a strong tweet by trump against china closing its markets, so in that sense the timing is suggestive, but at the same time, this has been in the works for a long time. these measures were not supposed to be permanent. since 2016, we have been hearing they were considering when to start to pull back the foreign ownership limits, so this has been planned for a long time, and just the ultimate timing ,oincided well with the trade

threats of a trade were building leading up to it. optics,ll of that kevin, thank you very much. have more on china's policy changes next. whetherspeak to ubs on he sees these moves is stopping the slide in chinese stocks. north korea a hot topic as president trump and shinzo how they hold talks in mar-a-lago. this is bloomberg. ♪ his is bloomberg. ♪

haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. higher,uities pushing an earnings season underscores resilient growth. pointing to as higher open after the pboc cut the reserve requirement for banks. let's get over to singapore and

ubs. of resilience in that second day of gains and wall street with the s&p pushing through that 100 day moving average. what is the resilience of the market to you feel? i think the s&p 500 is likely to do well. if you look at earnings growth, , you'ree tax reforms looking at close to 15% for the whole year. if there is any weakness or sharp selloff, investors will likely pick up stocks and reinforce their positions, but some positions are largely because of short covering. there were a lot of short positions in the second week of march. any rebound in the first weeks of april was largely because of short coverage. season a strong earnings to make sure the recovery is sustainable. look at this to

chart. counterintuitive. we have the weakest reading when it comes to sentiment in two years as we get into what is expected to be a blowout earnings season across the board. do you look at this chart and say fundamentals are being or this is actually suggested that it is a good time to get in after lofty valuations? >> i think you have to put things into perspective. if you strip out the tech stocks on the s&p 500, the index has held up well. the five big tech stocks are 10% of the market cap. selloff this year, that has pulled the index down and affected sentiment everywhere else. if you look at consumption and the general market indices, leading indicators, pmi's, we

see note signs of weakness, dataas the economic macro is concerned, so fundamentals are still ok with regard to the u.s. economy and should help sure things up, but we need a strong earnings season to make sure earnings is on track to reach the 15% we are looking at this year. haidi: have you made a fundamental shift from buying everything growth the last few years to looking at more value? >> absolutely. at this stage of the cycle where you are moving mid to late cycle them you need to reorient your portfolio to some extent. neutralput u.s. tech at and are looking at value stocks, stocks not growing at 30% or 40%, but there is reasonable growth.

the cash flow is strong and the company is in good shape. therefore the rise in interest costswill not had to its dramatically over the next 12-18 months, so that is the profile we are looking at. haidi: there is a lot of noise affecting equities and uncertain developments when it comes to geopolitics, oil assets. trade tensions are expected to go for several more rounds. clients wondering what are worried about and how you make your way through the noise. are you more cautious this year than you were last year? >> certainly. forink we have been spoiled the 18 months from 2016 to the first month of this year. was about nine, historical lows.

toatility has rebounded back 19-20, pretty much in the range. it's not that were going through a remarkably volatile year. the selloff in february was volatile, but on the whole the average this year and is pretty much the average of the last 20 years, so we have to the of fact that we are entering normal volatility and should not be going back to where we were last year. and investorsts are having a difficult time adjusting to the new reality. you have u.s. treasury yields going at, two-year yields moving up to 2.4%, a level not seen since september 2008 and will bear on sentiment and some parts of the market. you can expect a strong market like last year.

that would be very unrealistic in that sense. you for that. maybe it's time we start looking at 3% for the 10 year yield as well. always great to have those views. allows you to interact .ith the charts on gtv this is bloomberg. ♪

haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. the latest business flash headlines. calling managers are timeout on the route in bank shares. they are raising holdings in real estate following the selloff fueled by rising inflation and the prospect of higher interest rates. the key property index has slumped 12% this year.

one analyst says it is a golden opportunity to buy on weakness. reports shipments of 83 million tons, just shy investments, and it maintained its full-year guidance. outputuarter aluminum fell short of the estimate of 890,000 tons. executives at bp evaluating software options as a u.s. technology ban threatens to cut off the operating system. due to adroid government order denied the company access to the technology for seven years. zte have been meeting google officials about the issue. we are counting down to the open of markets, watching for a

reaction on this move on the rrr. sophie: a positive start to the session. that cut was less than expected. it favors larger banks. we are keeping an eye on developers given the new home price data for march is due shortly. sales have been slipping. chinese carmakers being put on notice as policymakers remove a restriction on foreign ownership of local ventures, which signals china has confidence and home-grown contenders. the limits are to be listed as soon as this year, which would be a boon for tesla, yet to secure a deal to open an assembly plant in china and local players will face tougher competition from tesla. byd on the chart being

cut to underperform by credit suisse. haidi: thank you for that. more on the property sector next. this is bloomberg. ♪

haidi: we are counting down to the open of trading in hong kong. looking across the water. buoyant gains for asian stocks, .8% higher the msci asia-pacific. some trade tensions receiving or , geopoliticaleat tensions waning as we get greater anticipation, trump saying high-level talks have been held between the u.s. and north korea. we are looking at what is promised to be a block luster earnings season what we have had

so far has been impressive. asian stocks following the leader with asian stocks outperforming, pushing through that 100 day moving average, seeing some of these gains at a level we have not seen in months. let's look at shanghai and hong kong as we get into that open. when looking at the impact on the bond market, some pretty strong moves with 10 year bond yields falling the most in 10 months as the markets digest the impact in the signaling behind this rrr move. bond space and equity markets. one wonders if this could be the turnaround for shares on the innland after dropping 13% january. the shanghai composite gaining 1%, the hang seng up 1.3%. you have tech shares leading the

climb along with energy, but financials in focus with icbc and agricultural bank gaining ground following the cut. this will favor large players over mid-cap lenders. oft could spur a fresh wave on sales for chinese corporate spirit we are keeping and i on real estate stocks. sue gaining 3% this morning. a jump in 10 year yields. check out this chart to see that line in blue, 3.6% of the 10 year yield. we have this tumble in one year rate swaps being noted, falling the most since january 2017 to 3.2%. you have traders seeing their forecast turn more bullish on chinese bonds. haidi: let's get the breaking news.

china has released its property price data. tom mackenzie in beijing. lines dropping, shenzhen march new home prices falling 0.1%. shin jen was one of the cities to see riproaring prices in 2015 and 2016 and does have curves in place to take the steam out of the market as we have seen curbs in shanghai and beijing and second tier cities as well, so a moderate reduction, 0.1% on the month. we are waiting for additional lines. first quarter property sector gdp, 4.9% year on year. we saw developers doing fairly well in 2017, and consolidation with smaller developers easing to squeeze as interbank rates were pushed up as banks become more tight, the big developers profiting on the back of that.

we saw shares performing strongly in 2017. chinese developers listed in hong kong. we are waiting for additional lines. early indicators did suggest we will get a calling across the board. one real estate industry body saying prices in top tier cities fell 2.5% in march. you have the investment bank saying sales fell 15%. china march home prices zero -- 0.4 2% versus an increase of 0.25% in the previous month, a moderate pickup month on month for home prices across china. ,hat is the number, 0.42% surprising given early indicators suggesting we might see a softening. remain indo still place and there were few signs from policy makers they will be

removing those curves. we talked about the fact that mortgage funding is becoming more expensive. we talked about the fact of developers do have a significant amount of debt they will need to be paying down this year, another issue we have to factor in for those looking at china's developers. 0.4 2% increase month on month for china home prices. we will get a break city by city later in the day. hopefully that breaks down between first, second, and third sensex cities. -- tier cities. do you expect any policy implications for now. data that ise interesting. we just sent somebody on the ground to look at different cities.

we found all these prices are being made very orderly from the price cap's the government applies, they would actually if a developer bought land a couple of years ago and there will be no .ncrease if they bought it at a high , 20% gross margins and so on but there is not just a price cap. if there is going to be a high price project that will get .egistered on the system all we are trying to say is all this price data you are seeing are actually being a managed and very orderly. how do you explain the pickup

in property investment we saw out of the data in yesterday, more than 10%. what is driving that, behind that? >> it is a derivative of land sales. land sales picked up since the second half last year because it has been too low for almost 36 months. funding is quite high for developers. , closeey buy more land to a 10% increase in second tier cities, and 30% in third tear cities. they would commence the building work quickly. it is reflecting a pickup from a low base, restocking and simply more land supply to build on. do you expect to see further pressure in terms of mortgage

lending, a feature we should factor in for the second half of the year? quiteh mortgage rates are likely. even with all this increase in mortgage rates, it is actually very modest. 2014, we werein well above 7%, right now people are paying 5%. usually problems come in the down payment. they can't get a down payment easily if they are buying a second home. of registration any apartment that has not been registered cannot get a bank loan, so developers are getting stuck there. tofar as not being able register transactions, then they are not getting funding from the bank, and that is key. haidi: we are getting more of a breakdown.

beijing new home prices falling .6% on year, existing home prices falling almost 7%, shanghai new home prices down .3%, existing prices lower by 1.1%. did you see further diversions when it comes to first, second, and the third tier cities going forward? >> i think second and third tier cities price correction will be muchor won't actually see depreciation or correction at all because a lot of second sensex cities are -- second tier are pushing forward with reform. one just opened up to anybody who is a university graduate, so anyone can qualify. , they actually theunted for 20% to 30% of

property market transaction numbers, so the second tier cities will be well supported, especially as they are not coming from a high base. and likewise with third tier because prices are not that high, so a lot of room for correction like beijing and shanghai. , again,his price index we want to mention it has been well managed. when we looked at launches very often the rates on day one would 80%, so it is reflecting the amount is the strong. expect anyou developers in particular to gain any benefit from the pboc's move rrr?t the we will see lower cost funding and better liquidity, even though the verdict is out there as to whether this signal some kind of using. >> the bigger ones will benefit more because in terms of

typicallyhey are lower than small developers and don't usually borrow from trust that is the funding shrinking very quickly. significantrather divergence between the biggest 30-40 developers who will have less competitors in the land market, and the rest to feel >> i'm bit of pressure just wondering -- pressure. >> i'm just wondering whether you think the will be further consolidation in china's property market. >> that is almost a certainty. key iss of developers getting the land. if the government is tightening

in terms of funding supply to the mortgage market, a lot of this small developers who rely on the proceeds and trust lending are not getting the cash inflow to support them to compete for land in the market. also of a lot of land for sale these days with requirements to andd rental housing commercial properties where the return is low and it takes a long development cycle. those projects are just not bearable by small developers. the biggest 30-40 developers gaining market share, and that is almost a certainty. haidi: we have to leave it there, but always appreciate you coming on. also, tom mackenzie there in

beijing. through,lines coming march house prices for china falling year on year in 10 out of 70 cities, rising in 60 out of 70 cities. month, 10 out of 70 falling compared to 16 in february, 50 five out of 70 rising in prices month on month compared to 44 in february. we are seeing gains when it comes to the property markets, but probably not a great deal of policy implications for beijing. let's get to first word news now. >> thank you. china is adopting a carrot and stick approach to trade tensions with the u.s. it is promising to open up the world's biggest auto market. repeatedly made clear that it did not want a trade war, but has promised to buy

president trump trade policy and defend it's an interest. china underlying its growing status in asia by overtaking america as the main export market for be a noun. the u.s. was a top buyer for 15 hanoias annoyed rid -- relied on washington. dropped 33% compared with a 20% rise to the u.s.. the imf continues to expect the global economy to expand for the next two years. it warns the seed of its demise of a ready been sown. growth forecast and change, but says it will slow as banks tighten policy, u.s. fiscal stimulus subsides, and china's gradual slowdown continues. says the trump administration is considering new sanctions on russia but nikki haley was ahead of the curve discussing them in public.

she said sanctions were coming and stephen mnuchin would announce them on monday. cut buzz says there might have been some confusion about the issue, but sanctions are being discussed. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. for thep, light shining boj's extraordinary stimulus program. we will discuss why inflation could find it be taking brewed in japan. this is bloomberg. ♪

haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. president trump says the u.s. and north korea are talking directly ahead of his meeting with kim jong aun. our chief north asia

correspondent is watching all of this play out. is an all alliance looking frayed these days. they need to talk about north korea and what the strategy is. >> pretty much dominated by north korea. we have a washington post story out in the last hour that bloomberg is looking to cooperate that cia director and secretary of state nominee mike topeo reportedly went pyongyang easter weekend and had direct talks to set the stage for this potential summit between kim jong-un and donald trump. that would be the highest level contact since madeleine albright went to pyongyang in 2000. it would be quite a development waiting forill

where this potential summit could be. donald trump with shinzo abe sitting next to him at mar-a-lago talked extensively about north korea potentially having height level talks ahead of this meeting with kim jong-un , but donald trump also saying he has not spoken with kim jong un. five locations being considered for the summit, not in the u.s., not on the korean peninsula. could be southeast asia or europe. , that tooktions second fiddle, but shinzo abe wanting to play a role in the summit leading up to that meeting in june or late may potentially come and donald trump saying the two nations are locked and unified on north korea. when it comes to trade, japan was noticeably absent from

that list of countries exempt from this recent round of tariffs. is that likely to happen, and what about tpp as well? >> some officials including larry kudlow have poured cold water on the notion the united states is seriously considering reentering or discussing reentering the tpp. larry coker low basically saying it is more of a thought than a policy. it is speculated that shinzo they wants to his to donald trump about the possibility of reentering tpp and starting a second high level bilateral discussion about that possibility, and also come again, getting that exemption potentially on the steel tariffs , which donald trump slapped on one of its closest allies, japan. carlos gutierrez yesterday if shinzo abe does not get that exemption on steel

he will be more unpopular than he is right now fighting a number of scandals. rishaad: a lot at stake for both leaders. thank you for that. shinzo abe could be looking at a hard earned victory as popularity polls close to record lows, but inflation showing signs of taking route. consumer demand is picking up and the economy continues to grow, potentially opening the door when it comes to an exit strategy. what does the inflation outlook mean for the boj policy? we are seeing promising signs in terms of domestic demand, which is different from the past

years when external factors did most of the work. it can gives is more confidence that policy is making progress and they may start tweaking policy this year or next year. haidi: what are the major risks. it has taken so long to get here , the deflationary lack of animal spirit is strong. what are the risks this will slow down and get in the way? you have the higher yen and as wele oil prices, and know the trade tensions can cause some problem and send the yen higher in terms of haven demand for the currency. all of that has a major influence and can get in the way

of the boj pretty easily. haidi: thank you so much for that. xiybe getting closer to an e strategy from the boj. our interactive tv function can be found at tv where you can catch up on interviews and dive into securities or functions we talk about and become part of the conversation, send us instant messages for our shows -- during our shows. this is for bloomberg subscribers only. tv this is bloomberg. ♪

haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. tradelling in late after revenue flat. sales came in at $19.1 billion, beating the average estimate, a

5% gain. without that help, revenue growth was unchanged. ginni rometty is trying to pull the company back from five years of declining revenue. apple planning to integrate its acquired magazine app texture into apple news and debut its own premium subscription offerings. it let's users subscribe to more than 200 magazines for $10 a month. an upgraded apple news app should launch within the year -- next year. the company is seeking to generate more revenue from content and services. starbucks is closing more than half of its domestic outlets next month and so that staff can undergo racial bias training come a direct response to the arrest of two black men in the store in philadelphia. starbucks will shut a thousand stores after public outcry at the treatment of the two men.

hour, we over the next will talk about the simmering trade tensions across the globe with one of china's top trade lawyers. he joins us in sydney. taking a looke at a connected story. looking at the implications when it comes to shipping numbers and orders. a will be joined by guessing the overreaction by companies may be overstated at the moment. in the meantime, asian stocks playing follow the leader after gains on wall street. rowling .6%. asian stocks up 1% across the region as trade fears take a backseat. blowout earnings season in the u.s. underway.

the question is whether we will see volatility returning. the s&p pushing through that key milestone 100-day moving average , offering a little support. plenty more to come. this is bloomberg. ♪ this is bloomberg. ♪

>> 10:00 p.m. if you are watching in new york. i'm haidi this is "bloomberg markets: asia." haidi: asia pacific equities are trading higher, encouraging u.s. earnings on resilient growth. weeding -- weakening. suspended in hong kong, shenzhen may lose access to the android operating system losing -- driving its phone. the fastest in the three months

after its two-year campaign to corner the market. it is a positive session across asia-pacific markets today. strongtracking two sessions of gains on wall street. it will be a blockbuster earning season, we are excited to see that. the question is, how long do we get the call that we see on the markets. the question is, howpicked up aa pacific, that weakness in the yen helping things when it comes to sentiment in tokyo. let's take a look at the first word news. reporter: thank you. japanese exports expanded for the 16th month despite continuing trade tensions. fore balance continued march. surplus was less than expected with the u.s. and eu nearly flat. imports fell against the forecast rise of more than 6%. billionlus of $7.4

compared to estimates of $4.7 billion. white house economic adviser larry kudlow is downplaying the chances of the u.s. reentering the tpp saying the idea is more of a thought than a policy. he says washington is in preliminary stages of discussions and officials are more interested in a separate deal with japan. new zealand says the u.s. would not be welcome back simply anyway. >> if the united states wanted to follow back, followthrough it asld trigger a renegotiation it would if others were interested in a joining the agreement. we will continue with the process as it were and continue to see what comes of a signals. it is not a matter of putting their hand up and swatting back into the agreement. president trump says the u.s. has begun direct talks with north korea ahead of a meeting with kim jong-un. officials have had discussions at high levels in five locations are under discussion.

he has given south korea the go-ahead to negotiate peace with the north and suggests he was responsible for the success of the recent winter olympics. >> north korea is coming along, south korea has plans to meet with north korea to see if they can end the war and they have my blessing on that. yvonne: u.s. airlines face possible disruption as a negotiated right to fly over russia is expiring and there is no indication that negotiations are imminent. carriers andes of unions are looking for help from the state department after moscow pulled out of talks this week. flying over eastern russia today, the quickest and cheapest route to asia. global news 24 hours a day powered by over 2700 journalists and analysts in 120 countries. i am yvonne man. this is bloomberg. heidi. haidi: thank you for that.

we are seeing nice gains being picked up across asia following a positive session on wall street, s&p hitting the highest be seen in a month and pushing through the 100 day moving average that it has struggled at. , a big partarnings of the story. some of these trade feuds taking a backseat. politics starting to wane. taking a look, nice gains in singapore almost 1%, the nikkei 225 supported by the yen, heading towards 108 handle. the hang seng, about .8%. shanghai as usual marching to the tune of its own drum, we are seeing price action when it comes to the bond market. not so much when it comes to chinese equities. that ratio cuts with banks from analystshas prompted

to turn more bullish on a bonds, 1% reduction is expected to unleash 400 billion when it takes effect next week. let's pull up this chart, the yield of a 10 year has dropped to the lowest since july. let's bring in our life strategist for more. what is review on where market is headed in china and how to square with the deleveraging campaign? reporter: i think this is great news for the bond market. the bond market has been doing well even before this move, it was one of the best-performing markets this year and this will provide a further boost. this unleashes more liquidity and therefore means they can redeem some of funding and the lower yields and support the bond market, but also we might see more rrr cuts later this year. the rrr ratio is still high it is interesting to note there are only four times of china has seen a full percentage point cut

in three during a crisis. this might be a policy shift in china, a positive signal as well as an immediate boost. as for the deleveraging, this will help relieve some pressure but given there are 5 billion, sorry 5 trillion yuan outstanding, this really about 900 billion yuan, there are still -- there is still pressure in that market. haidi: taking a look at the broader market in general, it is an up day. how do you feel about the resilience of the market? market is trading well, there is positive boost from earnings which has been strong in the u.s. this week. that is dominating sentiment. the latest incremental step we got in trade tensions seemed to be positive but that is still a story that will play for the next month. there might be negative headlines to come but at the

moment the trade's story is looking less worrying than it was a couple weeks ago and now we have got strong u.s. earnings. it is interesting that even though some industry beatweights like ibm earnings, they all traded poorly after earnings. the index did not rise because of those industry heavyweights, it rose because of the tech sector and netflix follow-through. it is interesting to note that despite the fact that we are seeing big beats in u.s. earnings stocks that are beating earnings are not trading that well. haidi: think you so much for , you can feelng an underlying sense of unease as for how long will this trade -- this call last. to this risk of a trade war between the u.s. and china. a markets and investors are not worried about it today. beijing is promising concessions across autos, slashing

antidumping duties on imports of u.s. sorghum. the risk of a full-scale trade war is not over just yet. the managing partner, one of china's top trade lawyers, also joining us is our bloomberg -- bloomberg gadfly columnist. great to have you with us. you point out the confusion about the u.s. saying we have gained great concessions with china, beijing says we have not negotiated and will not. china has a different definition of negotiation so they do not talk about it in detail terms. i'm sure among the top leadership there is dialogue between china and the u.s.. sentiment between the u.s. and china. haidi: what are you hearing in beijing?

you are well-connected and much like trump is playing to his audience, xi has eight nationalistic audience to play two. how quickly can we get to an actual trade conflict? communication by the u.s., trump, and the chinese government are for the domestic audience only. difficult to foresee whether china and the u.s. can reach an overall settlement isause it seems like china ready to compromise on some substantial aspects of such a demand from the u.s.. on the other hand, the u.s. seems to ask for 100% satisfaction, otherwise no deal. it is difficult to foresee where we go for this trade war. this kind of carrot and

stick to happen over and over, what do you make of that? thing that strikes me and it would be interesting to get your view on this, as we speech, itinping's is mostly a continuation of existing policy. it was first discussed about five years ago. the opening up of further sectors on the negative list has been ongoing for more than 20 years. one thing that strikes me when i look at what the u.s. trade negotiators are saying, i'm interested to get your views on this, the core of their objections have to do with the role of the state in the economy in the role of state planning and the development of the economy which seems to be much more fundamental issues in china than washington appreciates. what are your thoughts on that? guest: it is true that people will ohpromise by china

the promise made by china in the past. they are pushing demand from trump, maybe china is going to implement another commitment. in the old days, some of chinese officials say the u.s. government would change their president, therefore, why rush? wants to push things through. will need to hurry up as well so that we can the breakout of real trade war. haidi: i think your point is that they cannot hurry. if washington's fundamental objective is the growth model, not cannot -- that is something you can change with one or two summits. reporter: that is the thing i

really wonder about. -- as you putre been saying, there is an process that china wants to dance and i would think trump with that as well, underlying that, there is a growing objection in washington to the chinese economic model. that seems a much more radical thing. if these cosmetic concessions are not sufficient, the prospect of trade war goes up significantly. it is a fear of china taking the power vacuum, too, isn't it? is this an ideological fight? guest: i do not think the chinese government once in ideological fight. , thethe u.s. side maybe policy will slowdown. tos will be a push to china

keep it store open so that we can force some kind of reform in china. the u.s. establishment certainly have this in the agenda. curtailhe attempt to the china 2025 ambitions is part of it, is it not? the u.s. wants to curb china's ambitions to be a leader in areas where the u.s. is currently a leader. guest: indeed. what happened yesterday showed that china really has a heavy reliance on imports of american ships from u.s., japan, other countries. , they are eager to develop high-tech and reduce all the necessary chips. 2025 is in ambitious plan to catch up with the u.s. from a technology front.

i think it is a long way to go. on the other hand, china needed itamend the 2025 plan, so does not look like a direct subsidy of their high-tech outanies but try to figure how they can comply on the subsidy agreement. on that issue of technology transfer, that is a big irritant in this relationship and i think we saw them talking about maybe we do not need these anymore. china's r&d spending is more than many countries in europe, catching up with america. traditionally these agreements were in agreement -- were agreements between developed countries. did any disagreements anymore and is there a way to be given up? it is i do not think

ready to give up yet. reporter: why not? because, china thinks -- for the domestic audience they say, china is strong enough so we do not need foreign technology, but for the international reality, china has to rely on foreign technology. to give up 2025, i do not think china is ready to do that. haidi: in your everyday line of work, the companies that you're dealing with, how often does the issue of intellectual protection come up? guest: a lot. in the old days, china said we opened the chinese domestic market but you have to import

technology. you have to transfer your technology. this kind of requirement is no longer legal under chinese law, but the reality is that a lot of local government and local companies say no deal if you are not going to transfer technology. the legal requirement is one thing antibusiness reality is and the business reality is another, so we have it is not to me so have to be forced. you also have an issue about ip protection in china. down on those infringers of foreign technology , how we can get incentives to local government so that they can really help foreign the factory close

of ip infringers. needed tothing china from central government and local government, as well. reporter: do you think we'll be seeing progress? i-70 u.s. chamber of commerce put out a report on ip performance in the recent one, buta scores further down it's scores improving dramatically. this is something xi jinping is talking about. is there real improvement are just enough to keep negotiations of the back -- negotiators off their back? in the past, all these foreign countries like the u.s. copied england so why do you bother with me now that i try to copy other countries? timenk china had a similar

to do this infringement. now it is becoming serious so we ,an protect chinese technology 10 years ago i said for china to become strong on the protection side, you have to make sure that chinese companies look at their infringed which happens. you also have to make sure the local government put ip protection as one of the many areas of promotion. when you have this in place, local government officials will be eager to crack down any type of infringement. haidi: that is a very practical way of looking at things and exec we have things work in china. great to have you. that was the managing partner of gadfly and our bloomberg

columnist. still ahead, we're going to talk more about his et from rising star to freefalling. washington delivers that the stating blow. next, chinese financial stocks are taking a hit, insurers taking a hit as well with collateral damage. this is bloomberg. ♪

haidi: this is bloomberg. "bloomberg markets: asia," i am haidi living in sydney. perhaps that is changing, over the past three years shares with the most attractive measures have been based on the market index. crash, the boom and let's bring in china markets .eporter this is a fairly new

conversation to be having. guest: this is just another way of slicing the world's biggest equity market. earningsividends, revisions, value, all these factors that have been popular in wall street for years and if you did follow this strategy and held on, you outperform the benchmarks by quite a significant amount so this is quite surprising because if you isback to 2015, all the chat about how speculative the market was. notaw huge moves on necessarily how good these companies were or how cheap or expensive their shares were but that is a shift. these factorsh have been building more influence on the market. it is a sign of how the markets when moreaturing

institutional money gets involved, we have less retail participation, individual investors are not trusting asset managers withholdings. it is a way to show maybe this is not the casino it was three years ago. what changed since 2016 is what foreign investors want to know and more importantly what has not changed? what has changed is there have been changes on the regulatory and market structure side of things. to reduce speculation from the equity market, china does not want this to be a speculative market. that lou up in cheese face -- that blew up in xi's face. few speculative moves. we cannot change in market in three years. a saw back a few months ago

lot of stocks that were tied to a potential new casino area in the south of china, they rally to significantly then crashed a few days later when that did not materialize. stocks,the big news in the maximum a stock can move is 10%. there are quite a few limitations on who can own a mainline stock. that will change starting from june. it is still risky, there are still signs of state intervention in the market. when it falls to certain levels you have a national team buying, so it is a change that will take time but we are seeing some positive signs so far. argue that that makes it safer in the mid-time -- in the meantime. they do so much for that.

our china markets reporter there. insurer shares are trading at a discount in hong kong. this is a rare situation, it is being fueled by concern that china will further free up deposits. jeanette rodriguez joining us from mumbai. what is driving this? said, investors have been concerned that china would further free of deposit rates. any steps would hit banks and not insurance companies so the insurance sector is collateral damage on the mainland, where stocks are still driven by sentiment. in hong kong, where the market is more open, it is driven more by global sentiment. there is a gap opened up between the prices of shares in hong kong and shares on the mainland. this discrepancy comes into focus, and vectors -- investors

need to focus on the inclusion which is looming. it is closer to the date. seize ese popular -- these possible opportunities for investors. haidi: what are analysts and investors saying about this? how are they reading this situation? guest: analysts and even executives say that if you focus on fundamentals, ping an is cheap compared to peers like china life. if you look at several metrics, forecast earnings, and where the stock price is now. you see share price expectations for different analysts, valuations of ping an seem to be better. upsides expect a higher compared to china life and other insurers.

overall sentiment the depend on how global markets trade, how stock markets in particular trade amidst the trade war and global concerns we have right now. haidi: i per share your time. jeanette reggie does our finance editor in dubai. janet rodriguez, our finance editor in mumbai. haidi: markets gaining this week, picking up on the higher hand over from wall street. in encouraging start to the earnings season and is promising to be very robust indeed. u.s. seeking out these gains on the back of fiscal stimulus, tax reforms, japanese markets heading into that lunch break 1.3%.trength, up by the weaker yen a situation boosting sentiment. putting on 1%.

risk off sentiment has seen haven flows in recent days and weeks very much welcome. plenty more to come. this is bloomberg. ♪

>> 1029 in hong kong, 12:29 in sydney. a study says india's economy would be hit hard by accommodation of a global tariff war and the feds tightening cycle. targets tightens -- india because it says it is a u.s. ally, it could lead to inflation hurting indian purchasing power and investment. the international monetary fund expects the global economy to continue expanding for two more the seeds of its next demise have been sown.

that is unchanged at 3.9%. global growth will fade as central banks tighten policy, u.s. fiscal stimulus subsides and china's slowdown continues. china has cut 1% off the reserve requirement for some banks, freeing up $207 billion. most of the funds will be used by banks to repay medium-term financing adding a net $64 billion to the financial system. reductions will ease costs for businesses and individuals. china is under group -- underlying its status in asia by taking over america as the main export market for vietnam. the u.s. was a top buyer for 15 require -- relied on washington. china jumped nearly 33% in the first quarter compared with a 20% rise for the u.s..

global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am yvonne man, this is bloomberg. haidi: thank you. asian stocks seeing gains for the first time this month. the chinese bond market on the fire as we have news of a surprise gift by rrr. but go to the latest with sophie. reporter: rising for the first time this week, chinese stocks are fluctuating aztec and automakers fall. we'll get into that shortly. rise tech players on the after exports rose double digits in march. shipments accounted for nearly 60% of that total. the nikkei 225 closing 1.2% higher as trade tensions are easing between china and the u.s..

they may be showing up in the latest numbers as exports were week and march. steel shipments to u.s. falling in a value. the finance minister said they were not sure if that was due to metal tariffs. losing ground as yen slips for yield 24% foryear the first time since september 2008. checking in on chinese debt, 10 year yield falling nearly 15 basis points, the biggest drop since 2016, as traders turn bullish on chinese bonds falling -- following the pboc's rrr cuts. take it look at the breakdown by equity movers on the shanghai composite. saic motor'sll as dragging. carmakers'free lunch is numbered.

searching to check in on the leaderboards, i want to highlight icbc leading on chinese lenders, they stand to make higher profits from the policy tweaked as a funding costs are falling. stocks on the mainland are fluctuating, hong kong shares maintaining gase things to energy and banking. chinese automakers are slumping hong kong. -- passenger vehicle fallen passenger vehicle sector has been cut. they fell as much as 11% earlier, a partner with bmw in baic isd be a icy is -- falling and most. -- falling the most. haidi: a seven-year ban on using intellectual property is threatening china's rising tech start. our next guest has cut their price target by half. edison lee is head of china

telecom research and joining us is our bloomberg gadfly columnist out of taipei. great to have you. i will still offer you, edison. are you making the sunshine that the span will be seven years -- are you making the assumption that the ban will be a seven years? guest: they may be able to come up some settlement over the next five months but we cannot rule out the fact that his bank can last longer depending on it negotiations. regionalok at 2016 imposition of this ban, they reached a resolution over 10 months. how big an impact do you expect this year and the next year for the company? guest: if they are cut off from the supply chain the ink -- the impact will be big. the two major areas will be

equipment and handsets. they have been buying chips from hong kong and broadcom to make handsets and unequal beside have components.optical you have just done a piece saying on the u.s. side these companies overreacted but how much do you see the damage being done to zte and the broader chinese telecom ecosystem? one of the big issues we need to focus on is that this is zte specific. everyone brings quality -- h uawei, but the u.s. and europe are suspicious of that company.

back on anoing agreement they made one year ago to just that. let's focus on that. in the wider aspects, the risk to china is that everybody else is now going to be on the radar. they will be more on the radar for section funding. if zte is cutout. there willnt maybe be a negotiation but there is not a lot of incentive for the u.s. administration to let zte back in. over and messed up on this. there is no reason they should let them back in. the components that are critical to the chinese to monitor are kicked if they out of zte hands others in china will be able to pick up on that. theye long-term, even cannot get access to that, it will be very difficult.

most components can be made by chinese, taiwanese, japanese companies but if you critical companies -- there are a few critical components china cannot do. that could stop the development and advancement of technology until they can catch up. haidi: how long do you think that will take, if you want to call it china's effort to vertically integrate everything, how far away are they? illustrates the crucial nature of them doing that eventually. reporter: the answer is how long is a piece of string? it is impossible to say how long. it is very gradual. there are some components that the chinese could replace immediately with taiwanese, japanese, european chips but some components only broadcom or

qualcomm or others can provide. it is difficult. what they will be doing is trying to design around it so they have backup options to design products that do not rely on it u.s. made semiconductor technology. that will be the process that they have already probably started. over the next few years of product element cycles, every time there is a key component they will be saying do we really need this chip? what is our backup choice? that will be a process that will kick off and push even further in years to come. haidi: what you see the specific nature of the impact playing out for the device and handset business? all, zte'st of business is not huge. it accounts for about percent of its revenue into has been more successful outside of china been within. they have been buying chipsets

from qualcomm and intel and they have a collaboration with qualcomm and china mobile. aat is why this is not only direct supply relationship, they also have a lot of technological collaboration with qualcomm into 5g and i think 5g is a big plan and there is potential for dte on a global basis. zte on a global basis. this will set back the progress on the 5g ambition. there could be further applications for 5g progress on a global basis. the question that investors or the industry people need to think about is will china or the u.s. do anything more to ban shipment of chipsets from the u.s. to china on a more general basis? as tim said, this time around

zte has a problem that the u.s. government is dealing with. they raise it to a more general level, that is what the market or investors are thinking about right now and i think there will be much bigger indications for 5g progress in china and also the technological process china has been making, and on the global basis, whether there will be enough scale for 5g to be wrapped up to make it cost competitive or commercially attractive around the world to lunch. -- to launch. haidi: what are the chances with -- aight o-matic solution diplomatic solution? solution? guest: on the global basis and within china, zte is one of the

strategic companies in the mind of the chinese government, part of the overall tech portfolio and that is why i cannot imagine that zte would be allowed by the chinese government to suffer from whatever the u.s. imposes on them. i expect china's government will get involved at some point in time and i do think on a political basis, the u.s. and china have to talk and have a lot to talk about on the trade front including technology. that is why i did not expand this situation -- expects this situation to be the same as what has been announced over the next three to five months. haidi: what about huawei? do they look more attractive in the meantime? guest: i would argue that all things being equal if this continues they would benefit when it china's telecom companies are looking for alternatives. supply thenot

equipment given asked to supply on a global basis, zte is a smaller player so huawei will benefit from gaining market share in china. zte will not be able to deliver. this is a more short-term picture, the longer-term picture is whether they will be facing a semi-treatment by the u.s. in the longer term. that has to do with what trumps trade and technology policy will be. policy will be. this officially is not something that we can have a definite conclusion right now, but huawei is a bigger target been zte because they are the global leader in telecoms and their technology prowess is stronger and more threatening to u.s.

companies. haidi: more to come, perhaps. upper you coming on and giving us insights. head of china telecom research. bloomberg gadfly columnist in taipei. we are getting details of a story reported earlier that the cia director did travel to north korea a few weeks ago, in fact over the easter weekend. he met with kim jong-un to prepare for the possible anticipated some -- some it with president trump. this raises optimism that this meeting could produce a deal to denuclearize north korea. pompeo is awaiting confirmation as secretary of state. he made that visit to talk about other things, including possible venues for this talk. trump said this meeting could come early june or the for the.

he had teased reporters by saying that these talks have been happening at high levels already. this is coming after his meeting at mar-a-lago. north korea very much on top of the agenda. supportedes are being on reports of falling u.s. stockpiles. a hint that opec and its allies may extend supply. this is bloomberg. ♪

haidi: this is "bloomberg markets: asia," i am haidi london in sydney. reportsbove $71 after showing crude supplies fell at the nations biggest storage unit. opec is giving hints that supply curves may be extended beyond this year. let's go to tokyo where our oil editor joins us.

you are the pricing authority in the market and i'm wondering how much further there is to go. the market is reacting favorably to the data today. we had the api report which showed stockpiles in the u.s. fell by over one million barrels last week. this is a head of government data which analysts forecast stockpiles to actually increase by 650,000 barrels. also as you mentioned, stockpiles fell as well and that is reflected in government data that would be the first decline since march. investors are watching this closely. one of the things we have had analysts say to us is that investors are turning to the fundamentals in the market. which is different from what we saw over the past couple weeks, which was investors focusing a

lot on speculation, what was going on in the middle east, the syria strike, also the conflict between saudi arabia and yemen. they had been boosting speculation at we might see supply disruptions in the middle east. last week we saw prices rise to a three-year high. haidi: we saw that three-year high and also getting the warning that opec could end up hurting the market if prices rise further. i suppose this would be on account of how attractive it would be for u.s. shale to come back in. exactly. the $80 you mentioned is saudi $80 is theiry said goal for oil prices. prices arened, if near levels where it becomes more difficult for opec, they could end up hurting themselves. rise,sly when prices

shale production increases and we are seeing shale production at record levels at the moment. going back to the stockpile data, have been falling for the past year. and bottomed out in january reason seeing stockpiles increase. there is concern in a markets however time stockpiles decline whether this will boost prices into shale will ramp up. it is basically a catch-22 for opec. haidi: absolutely. and you so much for that, our oil editor in tokyo. they say they may need to out rise -- revise aluminum outlook. our asia metals and mining reporter joins us from melbourne. they mayre telling us need to mothball aluminum smelters because of the effect from a result actions.

lookinganother way of at geopolitical in trade tensions? guest: that is right. , a lot ofmplex web producers have connections but particularly in the aluminum industry there are a couple materials you need to make aluminum. a lot of companies make all of them and rely on each other. that is the case, they have come out publicly and released production data, they may need to adjust down the guidance for aluminium output as a result of fallout against rusal. 3.5 expect to reduce about million to 3.7 million tons this year. rio is the biggest -- the second-biggest producer outside china. we will see where that ends up but they are flagging to the

market that there could be impact. they are working with customers to investigate any impact of supply disruption and as you said, what we are told by a person familiar with the situation is that rio is assessing its options. as it looks at how to plug gaps in the supply chain, one possibility is to mothball some operations. we are at the start of understanding the fallout. haidi: i'm curious, you talk about the web of the supply chain but what is the extent of the linkage between rusal and rio? rusal is key in the supply chain. in terms of rio, rusal has a 20% stake in a joint venture. in aluminum refinery. supplies in that operation and is a buyer of some of those materials.

bauxite, the primary run material goes through a refinery in ireland and rio is the buyer of the material that comes out of that fertility -- that facility. they are pretty interconnected. what real is doing is -- what rio is doing is looking what needs to be adjusted. they have flagged that they are in the process of declaring force majeure on some contract. much. thank you so our asian metals and mining reporter in melbourne. we just got president trump tweeting, pouring cold water over expectations that perhaps the u.s. would be open to rejoining the transpacific partnership as he had hinted up. saying, as much as japan and south korea would like us to go back in, i do not like the deal for the united states. too many contingencies and no way to go out if it does not

work. moreeral deals are far efficient, profitable and better for our workers. look how bad wto is for the united states. ,hat is after his meeting setting up an interesting environment to talk about trade. potentially and -- and exclusion for japan. that is all we have. plenty more to come. ♪

haidi: this is bloomberg markets am haidi london in sydney. here in asia we're seeing gains. session highs when it comes to chinese markets. we are seeing a turn in negative territory. the shanghai, extending the flat level to see losses of about .6%. the nikkei 225, we sought nice gains backed up by weakness in the yen. going fast is korean assets across the board. optimism that this meeting between the u.s. and north korean leaders will happen. anticipationve that the u.s. will rejoin the tpp, that global trade has not been scrapped of the agenda, we got another treat. guest: what time is it now?

that has not stopped the u.s. president from tweeting. able to saygh to be it might be part of posturing ahead of negotiations. when we say a lot of these things are coming together, you have some lines coming, there related. when it comes to south korea and north korea, really supportive of that in korea. lots to talk about. timesheet a joins us. joins us.a this is bloomberg. ♪

mark: you are watching bloomberg technology. president trump says the u.s. and north korea are speaking directly in what he calls extremely high levels ahead of a potential meeting with kim jong-un. the president spoke during a meeting with japanese prime minister shinzo abe at the president's private club in friday --in florida. one passenger was killed and others injured after a southwest airlines jet blue and engine -- at 30,000 feet. the flight made an emergenc