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Japan plans to ban government purchases of equipment from China’s Huawei Technologies and ZTE, a person with direct knowledge and a person briefed on the matter told Reuters on Friday.

The Yomiuri newspaper, which first reported the news, said the government was expected to revise its internal rules on procurement as early as Monday in a bid to prevent intelligence leaks and cyber attacks.

The report follows a decision by the United States this year to ban government purchases of Huawei gear.

U.S. intelligence agencies allege Huawei is linked to China’s government and that its equipment could contain “backdoors” for use by spies, although no evidence has been produced publicly and the firm has denied the claims.

In addition, Australia and New Zealand have blocked Huawei from building 5G networks, while Britain’s BT Group said on Wednesday it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

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Chess legend Garry Kasparov warns of a ‘cyber Cold War’

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Former world chess champion Garry Kasparov plays a game of chess with school children in South Africa.

Foto24 | Gallo Images | Getty Images

Ominous warnings about artificial intelligence spelling doom for mankind are pointless — it’s state actors like Russia and China we should be worrying about, according to former world chess champion Garry Kasparov.

“We should stop wasting our time talking of killer robots and terminators,” Kasparov told reporters in Paris last week. “No matter how sophisticated algorithms may be, it still needs a bad human actor.”

And as long as there are bad actors out there, he adds, “new technologies will give them new opportunities.” For context, Kasparov was asked by CNBC about the possibility of AI being used in a new wave of potentially crippling cyberattacks.

“Right now we are in some sort of cyber Cold War, and deterrence is the only response,” said Kasparov. “It seems like there’s no political will to make such a strong statement.”

He said Western countries like Britain, America and France should stop offering nations like Russia and China “futile compromises” when it comes to things like election interference and the theft of sensitive commercial data, because they will just continue to “break the rules.”

Kasparov, who famously took on IBM’s Deep Blue supercomputer at a game of chess in the late ’90s — winning the first match and losing the second — has since become an outspoken political activist, and is now a security ambassador for antivirus maker Avast. He’s widely considered to be the best chess player of all time.

A critic of Russian President Vladimir Putin and his regime, Kasparov has frequently warned of Moscow’s meddling in elections like the U.S. 2016 presidential vote. Such claims of interference became the subject of a widely publicized probe by U.S. Special Counsel Robert Mueller into President Donald Trump’s campaign.

His comments come amid particularly strained relations between the U.S. and China, which are both in the midst of an intense trade war. To make matters worse, Washington is pushing for the extradition of Huawei CFO Meng Wanzhou, on charges of violating U.S. sanctions against Iran.

U.S. officials allege the telecommunications giant’s equipment could be used for Chinese spying. President Trump recently added further fuel to the flames by declaring a national emergency over the threat of “foreign adversaries,” adding Huawei to a trade blacklist that blocks it from buying U.S. technology without special approval.

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Winning stocks, sectors in Australia Morrison election victory

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Australian shares rose to an 11-year high on Monday as Prime Minister Scott Morrison and the Liberal-led conservation government claimed victory at the national elections, after overturning opinion polls that had predicted a Labor victory.

Results on the Australian Electoral Commission’s website showed that Morrison’s coalition had won 77 seats out of 151 in parliament.

Bank, coal miners, property and healthcare stocks jumped, pushing the benchmark S&P/ASX 200 index to an 11-year high, after opening 1.7% higher and hitting its highest intraday level since 2007.

Those were among the sectors most affected by the campaign of the Labor Party, which had pledged to take strong action on climate change and property tax loopholes, for instance.

“A coalition win can be deemed a ‘surprise’ for investors and the upshot is that many tail risks that were potential consequences from what was a significant and wide reaching tax and policy reform agenda from the (Australian Labor Party) are now removed,” investment bank Morgan Stanley said in a note on Sunday.

Here are some sectors that jumped on Monday.

Coal miners

Coal stocks soared on news of Morrison’s victory.

Yancoal Australia surged 5.7%, New Hope jumped about 4%, and Whitehaven Coal rose about 2% on Monday morning.

The defeated opposition Labor party had ambitious targets for renewable energy, but Morrison rejected efforts to increase the use of renewables to generate electricity, arguing it would damage the economy which relies on coal-fired power and mining exports.

Climate change had been a divisive issue in the run-up to the election — and for years in the country. Battered by extended droughts, damaging floods, and more bushfires, Australian voters were expected to hand a mandate to the Labor party.

A coal pit of the Hazelwood coal-fired power plant stands in Hazelwood, Australia, on Thursday, March 30, 2017.

Carla Gottgens | Bloomberg | Getty Images

But the energy sector may yet see more uncertainty ahead, experts said.

“Given that several of the new centrist cross-bench members have promised strong action on climate change, we may see Morrison caught between his own party’s right-wing and the independents keeping the government in office,” said Sam Roggeveen, director of the Lowy Institute’s International Security Program.

The pressure on coal miners has probably eased, but a wait-and-see approach should be taken for energy policies, John Milroy, an investment advisor at Australian private wealth management group Ord Minnett, told CNBC Monday.

Banks

The financial subindex jumped more than 5% on Monday.

Shares of Australia’s biggest lender Commonwealth Bank of Australia jumped about 6% and National Australia Bank surged 6.63%. Australia and New Zealand Banking Group also rose 6.46%, while Westpac soared 7.16%.

The financial sector had been under tremendous pressure following an investigation into its practices, which exposed shocking revelations of wrongdoing in the sector. The Royal Commission — a government-appointed committee which led the investigations — later recommended a clean-up of the sector.

But analysts had suggested the Labor Party might have taken a harder stance on the banking sector, than Morrison’s coalition party.

“It’s all about the regulations, what markets are expecting might come from a harder line taken (from) the recommendations by the Royal Commission. That seems to have come off the banks today, with the likely success of the coalition government,” Milroy said.

Real estate

Labor had campaigned on a promise of closing tax loopholes for owners of investment properties, and that could have battered housing prices — already in decline — even more.

Following the election surprise, property-related stocks bounced.

Property classified ads company REA Group was up 7% and shares of its rival, Domain Holdings Australia, rose 3% in early trade. Construction firm Lendlease Group bounced about 1%, while property developer Stockland jumped over 4.5%.

Health care

Shares of the country’s biggest private health insurer Medibank Private were up 10%, while smaller NIB Holdings was up 9% in morning trading after the preliminary election results.

The Labor Party had pledged to limit the price increase of private health insurance premiums at 2% for two years, a move that would have weighed on the insurers’ earnings.

— Reuters contributed to this report.

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Google stops some business with Huawei, may hit smartphones business

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Richard Yu, chief executive officer of Huawei Technologies Co., speaks as he presents the P30 series smartphone during a Huawei Technologies Co. launch event in Paris, France, on Tuesday, March 26, 2019.

Marlene Awaad | Bloomberg | Getty Images

Google’s move to stop licensing its Android mobile operating system to Huawei could deal a huge blow to the Chinese tech giant’s ambitions to become the top player in smartphones globally.

The U.S. tech conglomerate has suspended business activity with Huawei that involves the transfer of hardware, software and key technical services. Google made the move in order to comply with Washington’s decision to put Huawei on the so-called “Entity List,” meaning American firms need to get a license to sell products to the Chinese firm.

It means Huawei can no longer license Google’s proprietary Android operating system and other services that it offers. Instead, Huawei is now only able to use a public version of Google’s operating system through the Android Open Source Project. It means future Huawei phones will not have the Google services that users have come to expect on Android devices.

“We are complying with the order and reviewing the implications,” a Google spokesperson said on Monday. “For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.”

Huawei declined to comment when contacted by CNBC.

It’s a huge blow to the Chinese firm, which relies heavily on Android for the smartphones it sells outside of China. Within China, the company uses a modified version of Android that doesn’t have Google apps pre-installed because the search giant’s services are blocked there. But in markets outside of China, Huawei’s smartphones run Android complete with Google apps.

Just over 49%, of Huawei’s smartphone shipments in the first quarter of 2019 were to international markets outside of mainland China, according to Canalys. Huawei was the second-largest smartphone maker by global market share in the first quarter. The company has previously laid out its ambitions to become the top player in smartphones by 2020. But the latest move by Google could put a dent in that.

“It will be like an instant kill switch for Huawei’s ambition to overtake Samsung in the global market,” Nicole Peng, vice president of mobility at Canalys, told CNBC by phone on Monday.

Huawei relies on key components from several other American suppliers for everything from smartphones to its networking equipment. It counts over 30 American firms among its “core suppliers.” Some of those suppliers, including Qualcomm and Intel, have told employees they will not sell to Huawei until further notice, according to a Bloomberg report on Monday.

Is Huawei prepared?

Huawei, for its part, says it has been preparing for the sort of situation it now faces. In March, the company said that it had developed its own operating system for its consumer products if there came a time it was not able to use Google’s or Microsoft’s.

And just last week, the Nikkei Asian Review reported that Huawei told some suppliers six months ago that it wanted to build up a year’s worth of crucial components to prepare for any issues related to the U.S.-China trade war. Huawei has been developing its own chip technology, as well.

While Huawei has been able to reduce its reliance on American suppliers for some components, experts said that might not be enough because it still needs other parts from U.S. firms. And analysts have also cast doubt on the viability of Huawei’s own operating system.

Neil Shah, a research director at Counterpoint Research, said Huawei will have to rely on third-party Android app stores outside of China because Google Play will not be installed by default. That could be a problem.

“This makes a clear disadvantage for Huawei’s own (operating system) vs the Android (operating system) shipped on Samsung or other phones firstly in terms of lack of all the apps available on the Google Play store, quality of apps (some might be dated), potentially less secure as they will not be screened by Google or follows Google’s monthly secure patches and overall user-experience of the store,” Shah said.

“So all the apps from US players will not be available out of the box and users will have to sideload it or Huawei will have to make it available via third party or own branded Android compatible app store which is going to be a humongous task for Huawei,” he added.

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