After 2016s foreign takeover spree. We have the world covered on daybreak asia. We go to watch the developments out of beijing as chinese mostators watch the prolific overseas dealmakers. And we are watching the e. U. Summit in brussels throughout the morning through this is daybreak asia, coming to you sive from bloomberg asian headquarters. I am yvonne man. Betty is that the wharton global conference. A very busy friday and a happy one as well. Yvonne we are marking the oneyear anniversary of brexit. We have the stress test, keeping an eye out on china as well. First it was anbang, but regulators could be targeting other companies. A lot of big guests on our show with betty. Starting this hour, Geoffrey Garrett in 40 minutes time. On Bloomberg Markets, betty will be speaking to the incoming chief executive of hong kong. Her as have to talk to we start next week, marking the anniversary of the handover. You do not want to miss bettys chat with tom friedman at 10 40 a. M. Hongyou do not want to konn sydney. Look at markets trading in the asiapacific. It could be a slow start to this friday. We are flat on the index as well as the kiwi at 7267, taking a breather from the 6 climb we have seen in the last month for the currency. Australia, we saw some stabilization. 282 for wti. Futures heading higher for the asx 200. We did see a bump to end the day,. 7 higher on that recovery in the oil price. Japan, the yen could keep surprising us. The market starts to doubt how much the fed can tighten. Taking a look at japan futures, it could be pretty slow here as well. It is looking to be relatively mixed. They are heading higher, pointing towards a 40 point gain for the nikkei 225. Dollaryen going nowhere. 111. 29. Let us take a look at how things are going in the u. S. Session. Pretty much sideways. Stocks really paring gains. Su keenan . It looks like the selloff has been pretty much brought to if you look at the close. We have positive news on the economic front. We had home sales which were up. Let us take a look at the close. Su that would offset the initial jobless plans. There you go. The nasdaq up a flight tick. If we go into the big movers, oracle, mcleod move clearly gaining momentum. The stock up almost 9 . Carmax, which is in a very tortured space, the car dealers decline,used price analysts saying that is doing well. Deals and give on the horizon and it was up some 9 . Market snapshot shows oil spending a second day below the 43 mark. It showed a slight increase. The selloff appears to have halted for the moment. Gain. Ls pain is golds a lot more attractiveness to the attractive metal given the slide in oil. If we go into the bloomberg, ed g btv 297, to bring into the 297, there isbtv the loss of momentum we have seen as brent has joined the intermediate in a bear market. The death cross the longterm average moving. You have got the red circle. Again, that shows more the clients likely ahead. Card onthe feds report the banks, the stress test, all 34 of the largest lenders past. Give us some of the highlights. Su everyone waiting for the tests as expected. Two. The concern is step it is the one investors watch because it shows whether these banks will be having enough money to raise dividends and other buybacks. What we hear is the largest banks passing the test put in place after the financial crisis shows firms are getting the hang of these once dreaded reviews. Every bank exceeded the minimum threshold, except for Morgan Stanley. Administration, interestingly enough, would like to make this easier, and we did have the Banking Committee they are all for transparency Going Forward. Take a look at how wall street like that. I would give the fed credit that they listened to the industrys complaints, and a lot of the prior stress tests were maybe even a bit too stringent, and in some ways, were not how banks would react to a crisis, and the fed has shown a little bit of modification. And i understand from jay powell that the fed is going to be more transparent. Which is a very good move. Hill, did testify on the talk about now being a good time to reassess if needed. Goal is to be more efficient with these stress tests and to be more transparent. President trump has indicated he viceoon nominate a fed chair for banking supervision who will oversee the test. That to you. Aonne that one should be little more interesting and important for investors as well. Su keenan, thank you. First word news with Courtney Collins in new york. President trump has ended weeks of speculation triggered by himself by saying james comey at the white house. He did not make any such recordings when the two talked in the oval office. The president raised the issue went in after firing comey, he tweeted he better hope there are no tapes before he starts leaking to the press. Senate republicans issued a new Health Care Bill which was immediately attacked by senior Party Figures. The draft includes sharp cuts to medicaid, modest reductions of other obamacare subsidies, and tax cuts for the wealthy. Hospital staff led a rise in Health Care Shares. It is the biggest intraday gain for drug stocks since november. U. K. Prime minister theresa may has pledged that e. U. Citizens currently in britain can stay there after brexit. She laid out her position at a summit to e. U. Leaders in brussels, saying she does not want to deport a break up families. The e. U. Is likely to reject to her insistence that Citizen Rights be that must be numeral of the European Court of justice. North korea said to have carried out another engine test for a potential intercontinental ballistic missile. Wherepened in the city previous tests have taken place. John yang said it was pyon gyang that it was not far from the technology. The American Military has been practicing shooting down muscles in midair. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am Courtney Collins and this is bloomberg. Yvonne courtney, thank you. We finally got betty back online at the global conference. Betty, you will be thought about geopolitics with the dean of wharton, Geoffrey Garrett, in just a couple of minutes. Everyone is looking forward to carrie lam as well. Betty thats right. Willn, Geoffrey Garrett start kicking off this whole session, this twoday session at the hotel for the whartons 50th global forum. A lot of attention will be paid this morning to the keynote by carrie lam, the chief executive elect. Of peoplee gathering close to the school. Many of them are Global Investors, ceos, and on top of their mind, when they are listening to carrie lam, is going to be, what is the role of hong kong . We made it through 20 years after the handover, but what is hong kongs role going to be in the next 20 years . Will they be a premier Financial Hub . Is this greater banish it is this Greater Bay Initiative going to pump the economy even further . Know, very as you sharply is dealing with some of the issues that many of the leaders around the world are dealing with, which is this widening wage gap, and how that electeded unrest and officials into office that no one had expected, including of course, President Trump. Yvonne a position that is going to be very tough. Inis just before she comes as chief executive. We will continue to watch that one and get you in a bit. Let us take a look at china here. Some of the most inquisitive for inls makers dealmakers the spotlight. We are told the companies such are on theanbang list. Let us get to our china correspondent, Tom Mackenzie, joining us live from beijing. Tom, what do we know . Tom yvonne, we are talking about some of the Biggest Private Companies in china, sprawling ballmer it sprawling conglomerates. We have heard from the regulators at the banks that have been lending to them to help with overseas acquisitions been told to give the regulators details about that lending. It Isd Bernstein possible they are seeing red flags appeared on the back of this news, we saw some of the stocks of these companies, or linked to these companies, falling very heavily yesterday. Its also greatly. Another company as well. This is part and parcel of this crackdown ons financials by the Chinese Government that is now clearly a central priority, and it follows just one week after we had the chairman of anbang, who was detained by officials looking into potential Economic Crimes at that business. It comes of course after the msci included those ashares as part of 2018, that is. The riskshts again not just for companies that are part of these deals abroad, these international companies, but also investors looking to do to play in the Chinese Markets, because there are risks involved. And this regulatory move highlights some of that. It also is going to have a Chilling Effect on the m a picture. We have seen the buying, the spree of buying we saw last year. That is down by nearly 60 this year because of capital controls , and now, we have this Regulatory Risk as well. You will likely see more of these deals suspended or a xed completely, but it is an evolving story. Betty where does this leave the bigticket deals . Tom so, in 2016, we had a outboundar for m a, deals from china. We had companies that the hna group that spent 30 billion u. S. Dollars from 2016 on. Skyecial groups like Bridge Capital chairs at deutsche bank. You had another company spend 10 billion on legendary entertainment, the production house in hollywood. They had a deal where they wanted to buy Dick Clark Productions. That fell through because of capital controls. It seems the other deals they have in the pipeline will be in question. Whether that is hnas plans to buy cwt, a Logistics Company based in singapore, for 1 billion. Another Company Plans to buy a plot of real estate in london. You have another group who had agreed to buy a 10 stake in a russian gold producer. All of these deals, one would expect, would likely be looked at again. There are a number of questions we are hoping to get answers from, which involves the probe and the extent of this probe. Is it a firing of a warning shot to the companies, or an example of the regulators pulling out a piece of string and seeing what unravel . The other question of course, is when it comes to bank lending, many of these banks are stateowned. Where were the regulators in the first place . We are hoping to get the answer to some of the questions, Going Forward. Of questions indeed, tom. Thank you so much, Tom Mackenzie in beijing. By a ahead, takata fell record as investors see bankruptcy ahead. We will have all the applications of a takata bankruptcy. Yvonne up next, theresa may reaches out to the 3 million e. U. Citizens in the u k. The latest from the brexit summit. Coming up. This is bloomberg. Betty we are counting you down to asias first major market opens this morning. A beautiful friday morning in tokyo. Take a live look outside the imperial palace. Japan futures heading slightly higher, up 50 points at this moment. This is daybreak asia, live from hong kong. I am yvonne man. Here and i am betty liu at the Wharton Global Forum. Conranh one here at the hotel. Theresa may has outlined proposal to guarantee the residency rights of e. U. Citizens living in the u k as an e. U. Summit kicks off in brussels Kathleen Hays here with more on the e. U. Summit. Important, and what was the response so far, kathleen . Kathleen this is going to affect the lives of at least 4 Million People if you look at the numbers. Citizens from the u. K. , who are living somewhere in the e. U. , it is a very specific issue that has to be ironed out at the beginning of brexit negotiations, that is important for both sides. Both sides are kind of drawing some lines in the sand and importantly, theresa may put out a specific proposal. So far, it has got a pretty decent response, and it has got some ideas for how Citizens Rights will be maintained as they get ready to negotiate the rest of the very important issues. Here is how it works. If you have been in the u. K. At least five years, you have no problem. You have settled status. You will be treated like a u. K. Citizen. Less than five years residence before a cutoff date it cut off date between when the brexit negotiation period started in march, and when the u. K. Actually brexits that is contentious. If it is less than five years, you can apply. If it is less than that, you get a great period. The issue is, it is not resolved yet. Angela merkel said it is a good start, but there have been other responses as well. Anchor kathleen, stay with us. Other ofring in economics at the university of sydney. Professor, great to have you. We just heard from kathleen. We heard from david davis, giving and and not talking about trade talks before we get this divorce settled. Now, you are seeing theresa may giving a lighter touch when it comes to Citizens Rights. Why so nice . David firstly, thank you for having me. I guess this is just the very start of negotiations. There will be a lot of issues to discuss. I think the british Prime Minister wants to get the negotiations off on the right foot. The tone fort brexit negotiations. They have already conceded on trade talks. It looks like the cards have been dealt. Mark the interesting things issue the interesting with these brexit negotiations is that sitting here now, it is not at all clear how the negotiations will be brought to a successful conclusion or conclusion. On one side, you have the u. K. , which really does not have that many bargaining chips to play with. On the other side, you have the european union, which one would imagine would rather not see brexit go ahead, but have been forced in this position by the u. K. Referendum about a year ago. Brexit is just one of the many issues they are dealing with. Macron said we do not want to get talking hours and hours about negotiation. What is at the top of the list for you . One person says he thinks security is the number one issue. What is on your list . Well, the Citizens Rights is just the most obvious reason the most obvious issue that needed to be dealt with first, discussed first. Eventually, there is the question of what the u. K. Can do , what be trading relationship will be between the u. K. And the you Going Forward the e. U. Going forward. There are a lot of other big issues like the labor movement, the divorce bill, when the u. K. Leaves. The problem with all of these issues is that they are interconnected and it is not clear how you can deal with one without also dealing with the others simultaneously. That is the reality of the negotiations that we find ourselves in. Anchor and the question of theia and the question of u. S. Stance standing behind the as. Fully is not quite strong as it was. President trump in the white house. Is this a concern to european leaders, Something Else they want to talk about at this summit besides brexit . Mark for sure. Clear int is pretty fact that the press has reported this. Considered, i guess, brexit as a bit of a distraction from other issues which are at least as important. In fact, this is one of the largest costs perhaps of brexit. Not much attention is being paid to it. It is basically the opportunity cost of all the effort and time and resources that are going to be put into potentially the u. K. Leaving. We will not know that for a while yet, for at least two years. There are oral of these are all of these other issues to be dealt with at the same time. It is almost like a bit of a distraction and a moving of resources away from other issues. Quickly, people can talking about the norway option for brexit. What does that even mean . Is that feasible for the u. K. . Mark the no deal option . Im not really sure what this means. No deal, as i say, from the yous point of you, the e. U. s point of view, they have the potential to facilitate a successful exit. I think they will be making a series of take it or leave it offers to the u. K. The u. K. Walks away from those, and i guess we are left with the status quote, which is no exit. The status quo, which is no exit. A have a very weak start. Anchor were going to leave it there. Mark melatos. We want to thank Kathleen Hays. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak for bloomberg subscribers. Go to dayb on your terminals. It is available on your smart phone in the bloomberg anywhere app, where you can customize your settings to only get the news, industries, and assets that you care about. Dayb. This is bloomberg. Anchor a quick check of the latest business flash headlines. Qatar airways has made is applied did for a stake in American Airlines. It wants to buy 10 , which would put it on par with Berkshire Hathaway as a shareholder. It is a dramatic move. The rivals are accused of government subsidies. They comes weeks after President Trump accused bill hall of supporting terrorism. The Indian Government expected to discuss its flag carriers policy. They will decide if a stake in air india should be sold at other potential strategies for the latest airline. On wednesday, the toss of group said it may be interested the tato group said it may be intere