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tv   Bloomberg Daybreak Asia  Bloomberg  September 29, 2021 7:00pm-9:00pm EDT

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haidi: hello and welcome to "daybreak asia." sophie: we are counting down to asia's major market opens. shery: our top stories this hour -- asian traders way a week and to the u.s. trade session. the dollar hitting a 12-month high as investors look for havens. china evergrande may have missed
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another bond payment, but marathon assets tells us it is still buying debt. plus, he won over the party. now japan's next prime minister must convince the electorate. the previous month, numbers were revised slightly down to a gain of 7.7%. when it comes to the month on month number, it is a contraction of .7%, so perhaps we are seeing a little bit of easing and fading of those gains in factory output when it comes to those monthly trends. the expectation was still for a gain, and the previous month was revised downwards. we are seeing positive sentiment on industrial production.
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not to mention, domestic demand has also been strong, but we do have those delta-related disruptions in trading partners that could have caused some of that missed. overall, a year in your missed -- year on year miss. >> this x foreign minister, exit banker securing this job of premier potentially as we go into that vote. even though he's likely to have that recovery momentum it behind him, he has to convince japanese voters that he is the right man for the job. even though his public appeal has improved somewhat during the course of the campaign. shery: he will be the face of
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the general election this year, not to mention the upper house next year. the key question has also been -- what will the new prime minister due to the economy, especially when it comes to monetary policy? will he have a firmer hand? of course, we have not seen that much of a change when it comes to monetary policy. he was speaking at a virtual panel when he talked about what is happening in china as well, saying they are not detecting sort of speculative and in -- that they have seen before. he also played down the risk of a crisis from evergrande. >> we remain on evergrande repayment watch, i guess.
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pretty much all we know as a result them saying it does look like the situation is worsening, and of course, we continue to watch these private placement debt obligations as well. shery: $260 million, a big number, and the risks are huge. sophie: chinese policymakers attempt to contain evergrande. over the holiday we can come of offshore you one could reach 650 -- over the holiday weekend, offshore yuan.
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flipping the board for a look at how we are shaping up, tokyo began trade with low reaction. you have markets looking not very enthusiastic about the fact that we have david co. likely in the japanese administration. the economic picture looking to recover, but we could see downward pressure on the dollar given global pressures on the global central bank. shery: 4 of the world's leading central bankers remain optimistic that severe supply constraints -- how does this
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square with actual inflation numbers? kathleen: inflation is high and staying there. the longer it stays there, the harder it is to say it is temporary. let's start with what jay powell said, head of the federal reserve. he noted that it is not really a failure of our economic models on this. we just did not see these big supply-side constraints coming. it is frustrating, but inflation is going to ease. let's look at the turquoise line. if you move on to christine lagarde, that would be the white line. she, along with andrew bailey, their inflation rates have gone from around the target of 2%, they are both at 3% or a little
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bit above. lagarde saying those bottlenecks are accelerating in some areas, and we are monitoring how fast it is going to fade. andrew bailey i think a little more circumspect, saying they are watching inflation expectations. they are watching at the bank of england the second round inflation effect of these shortages. they are going to see how that feeds through. however, japan with that yellow-line inflation still negative, he said demand is surging so fast, supply cannot follow, but is probably hosting it will actually help boost inflation. one more thing we have to throw in what he said when talking about china's potential bubble or the bubble in real estate, very different, the speculative buying by real estate investors and homeowners, drove up japan prices. he does not see this as
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widespread in china. he does not think it will have the same kind of severe impact on the chinese economy that it did on japan back then. shery: this as investors continue to strive -- to struggle for analogies of historic examples. manufacturing activity has been hampered by widespread power shortages that intensified over the last week. let's get a preview from our chief asia correspondent. we heard from chair powell saying these supply-side snags were unanticipated, but china, how bad could it potentially get? what are we expecting? >> i think the electricity crunch does look like a game changer. economists are talking about official pmi slipping into contractionary territory. these power outages are affecting geographically, the
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most impacted, currently about 25% of gdp. the other thing to bear in mind is that online lockdowns have really hit the consumer side of the story. these car outages will be hitting the production side of china's economy, and that has been a big pillar of support since the pandemic began. all indications are now that these power shortages will have a material hit to growth. i think it is looking like something of a game changer for the profile for china's recovery. shery: we are seeing new signs that offshore holders of evergrande, the bonds are not getting their interest payments on time. several bondholders say they have not and paid.
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in the range of priorities, where do offshore holders fit in? stephen: i think it is becoming pretty clear pretty low on the totem pole. just by the recent track record on the coupons that were due last week, 83.5 million u.s. dollars, and by all accounts, those coupons were not paid. then yesterday, wednesday, here in asia, there was another $45 million coupon do. at least for bondholders that bloomberg news has spoken to on condition of anonymity say as of last night, they have not been paid. we are getting a lot of different signals on the contagion and what are the priorities for evergrande -- evergrande. the boj governor saying he thinks that situation is likely contained and is not a replication of japan in the late 1980's and early 1990's.
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we are also getting bruce richards saying he is buying more -- or for the first time, i should say, this week evergrande debt. he did admit that home buyers, suppliers, and onshore bondholders will be paid before offshore investors. we do know that the housing authority in china has stepped up supervision of their bank accounts to ensure that homes are completed first. the priorities are the investors, not necessarily the creditors. haidi: we have learned that government authorities are stepping in to buy evergrande's stake in banks. this is pretty much indirect or even you could say direct government intervention to try to help.
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>> it is indicating that the government is taking, you know, some sort of intervention. not outright intervention to save this company, but taking steps to basically achieve the goal that it wants to achieve, and that is social stability, making sure that those investors are paid off. yes, foreign bondholders argue might be a lower priority, but this stake that evergrande is selling in a bank in the northeast -- the stake has been bought by the government, i assume at the order of the central government, netting about one point 55 billion u.s. dollars. that could be used pay off those coupons, but the bank is demanding that all proceeds go to self -- settle debt with the lenders. that is a long answer to your question. essentially no, it will not be used to pay off those bond coupons.
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shery: let's get to vonnie quinn with first word headlines. vonnie: the former japanese foreign minister will be formally elected as the country's prime minister on monday. he took the most votes on wednesday. after winning over his party, he must now ace voters in a general election. he is promising to introduce major stimulus by year end and is receiving support for raising public sector wages. the u.s. house has passed standalone legislation to defend the federal debt limit. the measure passed on a mostly partyline vote. meanwhile, house speaker nancy pelosi must decide if she will hold a vote on the infrastructure bill. the u.s. fda may authorize
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half-dose boosters of moderna's vaccine. this would -- the timing of the announcement is unclear, but it would come as the u.s. recovery from the latest coronavirus wave is taking hold. cases are dropping or poised to start dropping in the vast majority of states. new zealand will offer a one-off residency to as many -- resident visa to as many as 165,000 migrants. officials say the majority of requests will be granted within a year of the category reopening in december. i'm vonnie quinn. this is bloomberg. shery: still ahead, international finance corporation invest in a bond for the first time.
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up next, variances not worried about stagflation. chief economist christopher -- chief economist christopher smart joins shortly. this is bloomberg. ♪
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>> this inflationary spike will not lead to a new regime of ongoing higher inflation. the current spike is really a consequence of supply constraints meeting very strong demand. >> we certainly have no reason to believe that this -- these price increases we are seeing now will not be largely transitory. >> the underlying inflation is not so weak as the headlining figures. >> we understand the effective
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rates in the transmission mechanism. shery: top central bankers downplaying the inflation threat. our next guest also agreed that high prices will be transitory. let's bring in christopher smart, chief global strategist at airings. >> who am i to disagree with for central bank governors? i think the message we actually see in the numbers, at least in the u.s. but also in europe is that the year run your numbers continually -- continue to be high, but the month by month numbers continue accelerating. the diagnosis is some bottlenecks, some areas that do
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not match up, but that's why we don't think the inflationary numbers we are seeing now are going to persist into next year. haidi: --shery: the other side of the equation's concerns about growth, which is why we continue to hear this concerns about start ration. where will the next level of growth come from? >> i think the growth has clearly hit an air pocket here with concerns about covid, with the drama going on in washington right now, the chinese property sector that has sent tremors through the global markets over the past couple of weeks. having said that, though, the general trajectory of the global economy remains very much what it was earlier this year, which is one of recovery, very strong demand from households, corporations that have strong balance sheets and are ready to invest in new capital expenditure, and the two of those combined with a continuing
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rollout of vaccines we think leads to a next leg up over the next 12 to 18 months. haidi: is a global worsening energy crisis a game changer, though? >> if you are talking about what we see in china, i think that is something to watch closely. the government in china has all the resources it needs to handle we think financial disruption from the property sector volatility that we have seen and the evergrande woes, but it's hard in the short term at least to intervene to make the power come back in sufficient quantities. i think is your report earlier in the program highlighted, it is particularly hitting the industrial sector. i'm not sure it leads us to completely revise our views on china, which is that the economy is slowing down but at a moderate pace, and if you can
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pick your companies correctly, and i think in china in particular, you need a sharp pencil and a green eye shade to look at those more closely, but i think generally, the chinese outlook remains good, but as you said, the energy sector remains something we are watching as best we can. haidi: as we are also watching the property sector, of course, and as you point out, the lion share of those a debt are within the sector. we may not see a systemic widening of the crisis, but does that also mean there's not much you can say about the deleveraging and the structural reform agenda of beijing if they were to have to take out the toolbox to contain this? >> i think the five-year plan, the government's plans to invest
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in the economy remains very much intact. it's efforts to rebound from industrial investments more toward consumer activity and domestic demand remain very much intact. i think the government is -- you know, as every government does when there is a financial crisis, it is to some extent improvising. it is proceeding carefully, and as you pointed out, there is a political dimension to this. it needs to make sure that the domestic savers who have invested, put down payments down on apartments get paid first or make sure their apartments are built, that suppliers get paid their bills, and more likely than not, it will be the domestic owners of the debt who get priority over the foreigners. we will have to see, and that is something that remains to be seen as this plays out. this is the first big restructuring i think we have really seen in the property sector, so i think it will be very informative for foreign investors as they look to what kind of reforms they're all when all is said and done.
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>> though i sense a tone of cautious optimism when it comes to not only how china's evergrande situation will unfold but also concerns about stagflation? are you as bullish when it comes to the market outlook then? >> markets have had a great run except for the last week or so. but the evaluations are something you have to keep closely in mind. having said that, the macroeconomic backdrop that we have seen over the last year's not going to be repeated next year, but i think the tailwinds are still much greater than any potential headwinds. we are watching these risks. if it's china, as i said, washington, or some of the other potential new headlines we will get related to covid and other variant outbreaks, but i think the general direction over the next year, year and a half, has to be one of government support, fiscal spending, central-bank support, even if it is tapering a little bit, accommodative
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liquidity, and strong balance sheets. that's what gives me generally an optimistic tone, even though we are watching closely for these risks. haidi: always great to have you and lovely to end on an optimistic tone. you can get a roundup of the stories you need to know to get your day going with today's edition of daybreak. you can always tweak settings so you can just get news on the industries and asset that matter to you. ♪his is bloomberg.
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haidi: nintendo has surprised many people and perplexed game developers with its latest game console with 4k access.
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a feature already provided by many of its rivals. the release plan for the later second half of 2022 or potentially even later. citigroup is trying to persuade a court that disgruntled creditors should return 500 million dollars the bank accidentally sent them last year. a trio of judges in manhattan had heard from both sides on reversing the decision but a previous court said the lenders could keep the money. the decision shouldn't -- the decision sent shockwaves through the market. sources say kkr is speaking with probe's owners, including project private equity. an agreement could be announced in the next few weeks, but negotiations could still all a part.
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coming up next, japan's prime minister must convince voters that he can revive an embattled economy.
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>> this is "bloomberg daybreak: asia." central bank chiefs, acknowledging concerns about the pains and challenges for recovery. christine lagarde and jerome powell both repeated that inflation spikes are temporary. they said growth would pick up to 4% next year, with the central banks unlikely changed under any per minister. china's national development and reform commission promised to keep gas prices stable.
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they will work to avoid abrupt power cuts while letting prices reasonably reflect market changes. vision was considering a hike in energy costs for factories undergoing supply crunches. china's power crunch may hurt agricultural production and processing and intern and trigger a renewed surge in world food prices. harvest is underway just as energy shortages hit provinces where china's corn and soybeans are grown. china will have a tough time handling those crops along with peanuts and coffee. the top u.s. claimant implement, john kerry, called for china to move more aggressively to slash greenhouse gas emissions by 2030. they hope they can find more common ground moving the progress forward. president xi jinping will move further on emissions reductions
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during the course of the next 10 years. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ sherry: the x foreign minister of japan assent to become the country's x-ray minister after winning the backing of the ruling party -- next prime minister after winning the backing of the ruling party. he admitted to being the boring choice. he will face an economy hit hard by the pandemic. >> we must start working on economic stimulus measures as biggest tens of trillions of yen by the end of this year. we need to realize a free and open and the pacific and we have to solve many serious issues in the country, including declining population. i'm determined to start my work today. sherry: let's talk to our politics reporter in tokyo.
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he finished one election, then you are looking ahead to the next one. we have the general election this year, the upper house election this year, will kishida be able to convince the public he's the right candidate to lead the country? >> that's the question that remains to be seen. this leadership selection has come at a very key moment for the ldp. they literally only have weeks to prepare for the first general election, which we are expecting probably in november. i think there are some signs that he could see hope in the future. for example, tomorrow, we are going to see the end of the state of emergency in japan. measures have fallen drastically. we are seeing we are ahead of
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the u.s. in terms of percentage of the population. things are going better than they were a few months ago, certainly. in general terms, he gets a boost in the opinion polls. on the other hand, looking over the past few months, voters have been very critical of what the government has done. they've said the measures to control the virus have not been effective. they were critical of the holding of the olympics last summer. so everything remains in the balance at the moment. >> we expect a change of course when it comes to how this government will work with the bank of japan? >> when it comes to the bank of japan, i don't think we are going to see a big change. there wasn't really a sign that the foreign minister wanted a
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kickback against this kind of policy. but in terms of spending, he -- as we saw in the club just now, he wants a package size in the tens of trillions of yen before the end of the year, which will likely be announced in some detail or other before the election. that could be another incentive for people to want to vote for him. >> isabel reynolds in tokyo. let's talk about the impact kishida we'll have on markets. joining us is the bloomberg tokyo sucks reported. we've seen the world beating rally. can it continue? what does this new leadership need to do for that next catalyst hire? reporter: the market is closely watching for any details on what the stimulus package could be. it will likely be in the tens of trillions of yen. whether it can beat market
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expectations has yet to be seen. the nikkei 225 and dead more than 2% lower -- ended more than 2% lower. there wasn't much excitement about kishida's victory. >> it is likely to generate the weakest equity market move. what are investors looking ahead to now? >> right. apart from the stimulus, which is a focus, people are also watching for the cabinet members. for example, the current finance minister will he be replaced or not? further down the road, another key thing to watch is whether the current bank of japan quarter will be replaced, when the term ends in 2023. other interesting details about his policies are further key things to watch for market
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investors. >> o bloomberg tokyo sucks reporter -- our bloomberg tokyo stocks reporter there. we will discuss what is on the party's agenda and the challenges ahead. we are less than half an hour before the open and japan. sophie, what are you seen? >> going into the tokyo open, pulling up the board to see how we are shaping up for the markets, the ldp race with kishida. having won that election. we are watching the nikkei futures in singapore, halting a three day drug. -- three day drop. we see the next target at one 1225 with dovish fed and ongoing china risks underpinning dollar strength. the aussie dollar, with a one month low.
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citi, expecting the bonsall level continue as more clients race for sticky inflation which could put more upside pressure on the banks. it should pull the dollar higher. pulling up the chart on that, we have the other spot index at a 10 month high. we are up for most currencies in the coming year. haidi: coming up next, the first investment globally in a sustainability link to bond. we will be joined exclusively. this is bloomberg. ♪
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sherry: we are seeing a pause when it comes to the commodity space after the rally we saw that took commodities to multiyear highs. nickel, at the lowest level in more than two months. we continue to see broad-based metals falling. this come on china's electricity shortages and that really being led by the shortage of thermal coal, we saw prices skyrocket that 40% higher this month with
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consolidation right there. natgas, at a seven-year high. we are -- suffice it to say, china, looking for more energy fuel. we continue to see -- see lng prices skyrocket. only a few cents away from new record highs. aluminum come also under pressure with broader base metals. this of course after rallying to that 13 year high. haidi: as you say, let's continue to assess the spike in energy prices. how this might impact climate goals and economic growth. our next guest says this is not mutually exclusive. he says decarbonization goals and energy security can all work together. alfonso garcia mora, ifc regional vp. happy to have you with us. some would say energy security
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is one of the reasons a lot of people are a little bit concerned about the energy transition. can this work in a smooth and potentially profitable way for investors? >> yes, indeed. the reason events have shown we need to take transition very seriously. the issue that we need to work on reducing emissions and reach targets, which is absolutely critical. that should not preclude us to make sure we provide the services [indiscernible] also energy transition is a key topic. it needs to be thought out here carefully. shery: talk to us about the ifc. there's private sector -- it is a private sector arm of
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the world bank. the partnership with industries and how you hope sustainability bonds play a part in the story. >> ifc is investing in the first time in our history. this is a clear step in the right direction. we know this climate change impact is going to take more than 100 million people. it will decline in gdp by 10-16 percent, with respect to the baseline. the impact of climate change are of he is, clear, quantified. -- climate change is clear and quantified. according to estimations, we need close to $100 trillion to mobilize the next 15 years to pay the costs of the climate carbonization.
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how can we do that? with the financial sector? we have important instruments in the market. new bonds. but we need more instruments further the issuers. that also provides particularities to the investments. [indiscernible] to reach specific targets. in this case of production. by 25% of emissions in 2035. commitments are important. commitments are needed. an instrument that can match the commitment with appetites. >> what is the size of the market in asia? >> today, it is still very small.
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the size is less than $60 million. it is a market that, if we look at the evolution of the market, which is no more than -- now more than a trillion, this market will be the next one. we need to -- we need to keep working. i think this is a case that will be followed by many others. to really set the tone and try to incentivize other companies took on the same direction. because we believe this is one of the markets that will be more active in the next months. shery: we are a month out of 26. what do you expect to see? >> we hope to see clear commitments, tangible commitments from country, we'll have to much time. this is a big problem that will
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affect all the economies and all the industries. what we expect is to have good, clear commitments and quantified commitments. and as a result of that, to put the public and private sector to work to achieve those objectives. >> that is the bread and butter, these public/private partnerships. when you have situations where the government is perhaps not so strongly prioritizing climate change goals, can the private sector really take the lead here? >> that is a good question. i think our objective precisely is to provide those analytics and diagnostics to countries, to the authorities, for them to realize the impact. it could be mitigation measures,
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for anticipation or adaptation measures. -- or anticipation or adaptation measures. you will be impacted by climate change, so you need to prepare for what is coming. governments need to think carefully how climate change will impact their own countries. and then to create the right incentives for the private sector. we need to mobilize with trillions of dollars, and for that, we need the private sector. there are ways in which you c an bring the private sector into the equation. shery: thank you very much. do watch us live and see our past interviews as well on our
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interactive tv function tv to dive into any of the securities or bloomberg functions that we talk about. also become part of the conversation by sending us instant messages during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
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>> here's a quick check of the latest business flash headlines would some holders of the china ever grand dollar bonds say they have not been paid yet. two of the investors told bloomberg they have not received payment as a 5:00 p.m. in hong kong and another two as of 9:30 p.m. ever grand owes $45 billion of interest in the bond to 22 any for with a 30 degrees period. payment failure would bring them one step closer to restructuring. preventing opportunities for specialist. marathon asset management ceo bruce richard said his firm bought ever grand debt for the first time this weekend will continue to do so at current low prices. >> the big picture in ever grand is it is a problem for china and a problem for the banks. and the whole segment that it relies on this a lot of jobs
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related to this end a lot of commerce related to this. shery: we are seeing breaking news out of japan. we are getting the factory output numbers. when it comes to the year on year number, it is not .3% growth, which is a slow -- 9.3% growth, which is a slow down from the previous month, also from the survey. the month-to-month number is actually a contraction bigger than was expected. 3.2%, and set of a half percent contraction that was expected by economists. the ministry of trade, saying they do see september output rising .2% month-to-month. there october output will rise much more at 6.8% month-to-month. japan, as many other countries across asia, are suffering from those supply chain disruptions and securing parts. likely limiting production. external demand remains strong. the year on year number is still a growth of more than 9%.
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missing expectations on the month-to-month number. haidi: and we know the prolonged state of emergency and the restrictions and the slow down and china come all playing into -- and china are all playing into the disappointing numbers. retail sales for the month of august, coming in a contraction of over 4%, worse than the 1.7% that we were expecting and claiming from the gain of 1.1% that we saw in july. year on year, the number is a contraction of 3.2%. also much worse than the 1% we were expecting. department store and supermarket sales, also seeing a follow 4.7%. much worse then the 1.4% fall that we were expecting. things could look up from here as we get later on today. the expiring of that state of emergency, the first him since april of 47 prefectures within
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japan are going to have the restriction lifted. -- the first time since april that all 47 prefectures within japan are going to have the restrictions lifted. >> let's turn to the new york stock exchange sang the ipo pipeline is looking strong. >> across the board, 2020 was a blockbuster year. we had more ipos and more capital rates than in history. we saw 2020 when eclipsing those numbers. what's unique about this time and different from what we talk about when we look back at era is the breath of types of companies. we are seeing internet tech, consumer tech, health care, so many different industries going public right now. as the markets have become choppy, we are seeing investors become more discerning about
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which companies your supporting -- companies they are supporting. some companies are choosing to wait a few quarters before they go public, but there's still a lot lineup -- a lot lined up in the short-term. they are also thinking about how they go public, not just one. -- not just when. >> let's talk a little bit about the direct listing. you say the markets are getting top year. does the direct listing become more attractive in choppy markets? >> that's a great point. we are already seeing more companies considering a direct listing. when you're not selling shares into the market, you're a little less concerned about what the market conditions might be. you are allowing investors to price the company. there are not new shares being sold. it is attractive, when markets might be more volatile. we are seeing more companies,
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because of their priorities, the cost of capital is significantly better in a direct listing, because you're allowing the overall market to participate. and that is democratization of access to that initial listing. it is an important driver for many companies, who want all investors to have a level playing field, as they hit the public market. >> hear your point about direct listings. your somewhat immune from volatility within the markets to some capacity. if yields are rising and assets repricing for that, do you think that materially impacts the space? >> i think not so much for direct listings. there are drivers for why there are so many companies looking to go public. if you rewind back to the spring of 2020, nobody would've expected that we would be in such a busy ipo calendar. it was very expensive during that time, to raise money in the private market.
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the public markets were providing access to capital to companies who needed it urgently, desperately, and really efficiently. the public markets were really on display. now we have seen a lot of companies recognizing the value of the public markets. interest rates are playing a role in that as well. companies are looking to be public because they are not quite sure. we are coming off a 10-11 year bull run market. conditions might not be within their control over a period of time and they are looking to tap into that capital to expand and grow their businesses despite conditions. >> stacy cunningham, nyse president speaking earlier with bloomberg. china's pmi is due for the month of september. we will be speaking to morgan stanley's robert s. about the pressures on china's economy. coming up next, discussing the outlook for japan, as
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it brings in a new prime minister. this is bloomberg.. -- this is bloomberg. ♪
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>> hello and welcome to "bloomberg daybreak: asia." >> looking at the major markets opening, in asia our top stories this hour -- the u.s. rally fizzled off. the dolly extends a rally as investors see cave-ins. >> china evergrande missed
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another bond payment, but it is still buying. >> and china is scrambling for solutions and could push up global food prices. >> let's get you straight to the market actions. >> plenty today just indeed, including politics in the wake of the ldp race. we are seeing some news for the chinese stocks. tokyo electron is under pressure. we are digesting the latest eco-data from japan. industrial output and sales, missing estimates for august. we had traders watching for the bond buying plan, which may give us clues as to what the stimulus package may be under the new premier. as folks wonder what the implication may be on fiscal spending and policy under
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kishida's term. we have exxon under pressure. this, as we focus on asian videogame stocks. changing the rules around content on the mainland. we have the lospi under pressure -- kospi under pressure and the korean won trading close to 11.89 against the greenback. it is the worst performer this month. we do have korean bond futures ticking lower here ahead of the bok and finance minister chief meeting, potentially to talk about policy for the nation. checking on the open in sydney, a staggered open after a two-day drop. seeing a bounce this morning. we are keeping an eye on energy names. seeing oil prices come under pressure following the rebound we saw in u.s. stockpiles. cash treasuries coming online with a 10 year yield, now moving
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toward the 150 level. the selloff will likely continue as investors brace for sticky inflation. the offshore u.n., ing says it could see 50 going into the holiday. pressures remain. haidi: our next guest says a rally does have legs with everything moving in the right direction for japan right now. how much of an extra boost our markets and the new leader going to get given the expiry of the state of emergency measures today? >> you are right that august was a bit of a -- was a bit slow
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here. the other issue is the production bottlenecks. it does look like that will be the bottom. things are improving from here. the end of the state of emergency will make a big difference for japan, especially tokyo, representing a large part of the national spending. things look good from here. we will have some lessening of the bottlenecks, the economy will open. corporate profits are already zooming partially due to their global exposure. the yen is also weakening. especially overnight, as we saw. all these things that up to a very good situation, especially for the fourth quarter, which could see a very major beat of consensus right now. >> how much of a tailwind is that weaker yen? we are assessing the impact
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of the strengthening ust. -- usd. >> it is helpful for japan not only because it helps exporter'' profits, but the mentality is very much determined by how strong the yen is. if the yen is very strong, then they think their economy is -- an export oriented nation -- will struggle. it helps consumer sentiment also. shery: let me throw you a bigger picture question. the idea of this new type of japanese capitalism, favoring redistribution of wealth and also wage increases. of course we have in china that drive toward, and prosperity. we have south korea also clamping down on big tech. is this renewed focus in northeast asia towards more income equality? something the markets should be paying more attention to? >> yes.
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and of course we have the u.s. example, too, with the biden administration and the democratic house of representatives. it's a big -- it's a bit of a global theme. inequalities network even worse -- that were even worse during the pandemic. these are issues that have to be addressed. japan already is a very gala terrien society -- egalitarian society, perhaps most of the world. i think that kishida we'll definitely do things to try to alleviate that. a lot in his term will depend on what happens to the course of the virus. just like prime minister asuga, the popularity will be decided by how will he does with the virus. it is very important for him and for the region. >> in china, we've seen that
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tech crackdown, the property sector crackdown, all that are really affecting the markets. this chart, showing how it is really shaping up to be the worst quarter for china. since 2015. does this mean that perhaps there's a little bit of value to be found there? >> yes. there's always some sectors that provide value. there's a lot of stocks that perhaps if you are a long-term investor, there is value. on the growth side, there are still attractive companies there, as the country shifts to an even higher tech mode. companies are doing externally well. we are quite enthusiastic about them as well. shery: are you enthusiastic about some of those assets? >> i certainly believe china
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is a good long-term economic growth story. we do think they will be able to overcome this current slow down. there's still a lot of growth to be had. yes, there's a good story for china. especially in the long-term. shery: great to have your thoughts, john vail. chief global strategist of nikko asset management. >> the u.s. house standalone legislation to extend the federal debt limit to now travel to the senate. house speaker nancy pelosi must decide whether to hold a vote on the infrastructure bill. she promised moderates that would happen on thursday. the central bank chiefs have given reassuring messages while acknowledging concerns about the challenges for recovery. christine lagarde and jerome powell both repeated that
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inflation spikes are temporary. the bank of japan set japan's growth would pick up to 4% next year. central banks mandate, unlikely to change and to renew prime minister. promising to keep residential electricity and gas prices stable and gas prices stable in china. authorities say it they will work to avoid a -- avoid abrupt power cuts. bloomberg sources earlier said they were hoping to ease will supply crunches. no international spectators will be allowed at beijing 2022 winter games. tickets will be sold exclusively to spectators residing in china's mainland who meet virus requirements. the ioc also says athletes who are not fully vaccinated will have to quarantine for tony one days upon arrival in beijing -- 21 days upon arrival in beijing.
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global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ shery: still ahead, morgan stanley's chief china economist joins us to discuss the pmi numbers. marathon asset management investing on evergrande. more on why they are buying the developer's debt. this is bloomberg. ♪
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>> china's real estate program is somewhat different from the program we face. toward the 1980's or 1990's.
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an investment in the real estate market does not appear to be the case -- the chinese case. >> the governor, downgrading the risks of a property crisis in china. as her are seeing opportunities in this tumbling evergrande bond assets. the ceo, bruce richards, says he will continue to invest. >> the big picture is, it is a problem for china, for the market, for the banks and the whole segment that it relies on. there's a lot of jobs related to this and a lot of commerce related to this pivot a lot of industry related to evergrande.
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that is a problem. for all the folks thinking about evergrande and the logic of how 20 play out, number one, the first obligation when this gets restructured, when that day comes, there will be some coupons maybe to get paid an interim, but when it happens and we don't know when it happens, the first orders, they are going to make sure the homeowner that bought those homes take delivery and they are made whole. second is the trade. the folks that did the work and supplied the goods and services, and appliances, the bathtubs are going to get paid, because they are owed a lot of money. third, and this is very interesting, are there domestic -- the domestic creditors going to paid first? at the end of the order are going to be the offshore bondholders. . that trade in new york loss out of china -- law outside of
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china. a lot of that debt was domiciled debt and blood. we are buying evergrande debt and we will continue to buy it at these very low prices. the whole question is, is the price of acquisition relative to what you think recovery value is? we don't know what it is, but we are getting close to the point where we think it now makes sense for the first time. we've never about the credit until just this week. >> $.25, i'm hearing $.35. >> [laughter] >> ok, so you would be -- [overlapping voices] >> not $.30. >> i'm curious how -- the capital structure looks like it's completely reversed. it would be completely the other way around. >> yes. >> basically what you're saying is a dollar holders are going to be last in line and the recovery rates are going to be
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significantly lower than you would normally expect. >> completely unknown what happens in china, what happens in hong kong. this is hong kong-based. it is completely -- it is an unknown variable and what we have to watch first. >> are there other opportunities that evergrande is also creating? >> the monetized 1.5 5 billion dollars. there are going to be other assets sold -- sold, that includes assets be on the property. >> any other developers in china that you think are going to end up in the same position, that you are buying credit elsewhere? >> we think you would for the domino to actually fall and you see how bad it gets for others that are not quite the problem that evergrande is today. we wouldn't want to be early.
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there, i would want proof of concept. this is case -- this case study to play out before we invest more. >> that is marathon asset management ceo bruce richards. this bring our china credit editor. despite all this uncertainty, we are seeing firms like marathon actually buying up evergrande's debt. where the risks here? -- what are the risks here? >> it is interesting to see interest from hedge funds looking at evergrande debt. ultimately the recovery will be higher than the 20 cent range we are seeing at the moment. the risk is sort of to full. firstly, there's going to be jostling between the on shore bondholders and the offshore bondholders.
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as marathon's ceo mentioned. potentially a restructuring could play to their favorite. on shore bondholders have proximity to the situation. that's a significant advantage in this case. the other risk here is the debts that might not be widely known. a $120 million bond. risks were not widely known the market. there's a potential for other deals of the sword that may not have been listed. may not be widely or publicly known. they do pop out of the woodwork. >> what is not even easily known as whether they have or have not missed coupon payments. we think they missed them yesterday. according to a couple of their holders who told us late last night they still hadn't received the interest payment. what does that potentially mean
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for the credit rating? >> the credit rating yesterday said it all. there was likely a missed payment and they were not able to confirm. that is the increasing assumption for many analysts. that we are seeing missed coupon payments. we don't have [indiscernible] that was due last week. bondholders that receive payment for the $45 million coupon payment that was due yesterday. i think it is pretty likely that we start to see perhaps moody's and s&p also move to lower the credit rating. to do that to the lowest rating possible. >> any sense of the authorities starting to move -- sign of the authorities starting to move? >> the pboc, urging banks to maintain a healthy property market. of course we've seen nine straight days of injections. liquidity from the pboc, to help ease things up.
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and residential mortgage backed securities issuance has also picked up during the evergrande saga. that will help some time for property firms and ease potential balance sheet worries in the short-term. we the pboc and authorities stepping into make sure that things are kind of easy. particularly going into this long break we are expecting. >> our china credit editor, with the latest on evergrande. you can get more on our stories in today's edition of "daybreak." this is available in the bloomberg and the anywhere app. you can get the news on the industries and news that matter to you. this is bloomberg. ♪
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shery: president biden is scrambling to break a deadlock among democrats on the size and scope of a tax and spending bill worth as much as $3.5 trillion. that comes with congress at an impasse over the debt ceiling. let's get more with our congressional government reporter, emily wilkins. it's a pivotal week in washington. what are we expecting? >> we are still expecting a vote on that bipartisan infrastructure bill that passed the senate back all the way in august. there's a big threat on whether there is actually going to -- they are going to be able to have the votes to pass it. the democrats are still saying they have several dozen members who are not going to be voting for the infrastructure plan because they haven't yet seen what's decided on the reconciliation bill about the large social spending package. all these things progressives really want.
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there's lots of questions in d.c. whether or not pelosi will delay that vote on the structure bill or whether they might allow the infrastructure bill to come to the floor and failed. which would be an embarrassment for the democrats. but wouldn't necessarily mean that work on the infrastructure and social spending package stops. haidi: there have been special measures in place for borrowing. what are we hearing is the latest modeling or production as to when that is going to run out? >> the treasury secretary, janet yellen, said the debt ceiling is going to be running out on october 18th. you saw the house tonight pass legislation that would extend the debt limit until 2022. however the bill doesn't stand a great chance in the senate. they democrats would need -- the democrats would need 10 republicans to go along with them and there don't seem to be 10 republicans willing to vote to raise a debt limit. democrats say they have a couple of other options as well,
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potentially president biden could raise the debt limit on his own. there's also been talk of missing a trillion dollar coin that could pay the debt. lots of discussion underway. democrats have at this point said they will not be using the reconciliation process to move the debt limit. that could take several weeks to do. they would really have to start something like that about now, if they want to get it done by the deadline. shery: what's the dynamic right now between progressive democrats and moderates? what's president biden doing to bring more to his side? >> president biden was actually staying in the white house continuing to negotiate with lawmakers. senators headed over to the white house to meet with white house officials. we saw the two top democrats, speaker nancy pelosi and majority leader chuck schumer, on talk with biden. -- go and talk with biden. there's still a ways to go on negotiations over this social spending bill. we don't have a topline number.
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there are still questions about how various programs will be funded. if infrastructure doesn't happen tomorrow, lawmakers still have time to work on this and figure out a way to come together. if it's not done tomorrow, it doesn't mean it is not done at all. tomorrow's vote is a precarious one for democrats. because if they don't pass the infrastructure bill, that is going to be pretty amyris and for them and for president biden -- pretty embarrassing for them and for president biden. >> emily wilkins, with the very latest. let's get you a quick check of the latest business flash headlines. citigroup is trying to persuade an appeals court that disgruntled creditors should return more than half $1 billion that the bank accidentally sent the last year.
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citigroup called the decision a misapplication of the law that sent shockwaves through the market. nintendo has responded to reports of its latest model of the switch consul will not include support for 4k. this is a common feature of apple products. nintendo says it is not working on a switch capable of supporting the high-resolution. however, we understand at least 11 companies have already been developing 4k games using a software kit provided by nintendo. we hear the kkr is an advanced talks to buy australian outsourcing company for group and a deal that could value it at $871 million. kkr is speaking with owners. an agreement could be announced in the next few weeks but negotiations could still fall apart. morgan stanley's robin xing
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joins us next. we will discuss the pmi outlook. this is bloomberg. ♪ baaam. internet that doesn't miss a beat. that's cute, but my internet streams to my ride. adorable, but does yours block malware? nope. -it crushes it. pshh, mine's so fast, no one can catch me. big whoop! mine gives me a 4k streaming box. -for free! that's because you all have the same internet. xfinity xfi. so powerful, it keeps one-upping itself. can your internet do that?
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>> the asian session -- we >> >> a mixed bag for asian stocks. fluctuations up a tent of our percent. we are seeing utilities. in -- a 10th of a percent. nikko, sing the near-term catalyst may be over for japanese stocks. we are seeing a bounce from the
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june low up more than 1% for the benchmark with zip shares climbing for percent on its agreement with microsoft. oil and gas players in australia are being led higher by beach energy. oil prices, stalled this week on the u.s. stockpile rebound we saw in resurgent dollar strength also putting pressure on oil prices and citi flagging concerns while offshore u.s. oil and gas production is returning. shery: sticking with energy, the chinese government, raising industrial power prices to help ease a historic supply shortage. bloomberg is earning rate hikes factories could be underway. >> beijing is considering this, meanwhile, china's national development and reform commission is -- has
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promised to keep gas prices stable for residence. a call shortage is causing a power crisis in china. china it is set to put asian liquefied natural gas to all-time highs. powered by lng. let's go to some of the price charts just to see the movements that we are seeing. we've got liquefied natural gas. within striking distance of a record. we are also looking at some of the coal and iron ore futures, those have been flying high. if we go specifically to liquefied natural gas, the consumption in china is forecast to rise 6% from this time last year. it's been void by the switch from covid. check out how this is impacting
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other commodities like silicon, which has quadrupled this year, mostly in the past few weeks. hint, it is used in solar panel manufacturing. we have been addressing this all week. shortages, pushing coal to never before seen prices. we've got beijing authorities considering letting power generators charge more, because they want to allow the generation to really pick up on their end. all of it, causing goldman sachs for instance to the clearly power crisis, yet another growth shock for china. >> investors of course trying to pick out the winners and losers and the stocks being impacted by the crisis. >> yet. there are likely more losers than winners here.
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but let's go through the panel of the big movers we are seeing. electricity users, all down at the moment. there's a big question as to what is going to happen with these electricity suppliers. analysts say again, what we are going to see here is at least 20 provinces and regions, which make up more than two thirds of china's gdp, that cutting for some form of power cuts, so that could be the reaction we are seeing. coal and gas exporters are more likely to gain the analysts. factories churning out everything from twist to vital components for apple and tesla have been caught in this follow. analysts say producers of gas for the region will be the clear beneficiaries of surging crisis while those importing, consuming, and distributing, the companies in india, they stand to lose. they use lng as feedstock.
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the risk is for a margin squeeze again as we come into winter. that is particularly for the gas distributors. >> su keenan, with the latest on the implications of the china power crunch. our next guest essays the factory gauge falling into contraction because of worsening energy shortages, let's bring in robin xing. managing director and chief china economist at morgan stanley. you seem to be a little bit more pessimistic than consensus. why? >> well, i think when we are meeting forecasts, either gdp or pmi and china, what we need to bear in mind is they have a major regulatory reset -- had a major regulatory reset late last year. we are seeing the housing downturn.
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it is part of this reset to tackle deleveraging, decarbonization, and rate distribution -- and redistribution. this power crunch, which means production cuts in order to comply with the energy-saving targets, causes slower housing activity. and pressure for some property developers. there will not be a significant drag on growth. but there will be some offsetting from the pboc and the ministry of finance. tennis pmi will fall to 40.5 in september and in third quarter it is tracking a 4.5% year-over-year, which is also weaker than most people expected. shery: you mentioned the pboc, this chart shows the pboc toolkit. what are you expecting them to use, in order to help the economy? >> i think we are at the
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inflection point of further policy easing. with the pboc, number one is liquidity injection. they will likely cut the ratio by 50 basis points. followed by more lending quota for both the manufacturing sector, complemented by the ministry of finance. all in all, that means september will likely mark the trough of china's finance growth. we will see more rebound in the growth from fourth quarter onwards. shery: speaking of what the pboc potentially can do to help with the situation, over at evergrande, we have been seeing global investors really weighing in on the argument, everybody is watching as to what the rest
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of the story will play out like. listen to what a chief investment china just had to say. >> over the next 2-3 months, growth is something you have to watch out for and china. the government is conscious about the impact. we have seen the pboc losing monetary policy. i would expect the next few months, we will see more support in that front. to make sure we sustain into 2022. haidi: we've had liquidity injections, and direct guidance from the government already in terms of how firms can support evergrande. do you expect this to accelerate into more direct intervention? >> well, i don't have a crystal ball to forecast what can happen for a civil firm on a specific date. but what we can observe from what china handled before and
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the current events in the last 18 months, it looks like the authorities have a playbook to manage and organize restructuring of issues in the huizinga sector -- the housing sector. it's part of the regulatory reset. what we are likely to see from the playbook is number one, they will try to maintain the operations of the property developer. the default likely happens at the holding company level. there are probably 500-600 projects for property developers. they will try to maintain operations for these projects coming to finish them. number two, all parties are incentivized to avoid a liquidation scenario. they will likely establish a committee. banks will looks and the payment
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deadlines. with the window guidance headed by the central bank. and a restructuring plan could be reviewed. but it could take quite a long time to complete the restructuring. because with the sheer size of the city, the property developer, it is more complex than the cases that we observed over the last 18 months. haidi: yetah. bloomberg also reported on the bond issue by jumbo enterprises. we now start to worry about the depth of the cross defaults. does that make it harder for authorities to be able to [indiscernible] the risk? >> i would say, what china's revelatory reset means for its economy is you see in your one of the reset -- year one of the reset a lot of the regulation
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rules were enforced in a very harsh way. with and even -- with uneven communication, not regulated. it happened in 2016 with a supply-side consolidation. then with the banking cling up. this is year one of this reset we talked about, the housing deleveraging, decarbonization. right now, we see some abrupt change in some of the regulation rules. that is causing impact to the market. overall, i would say, this is part of the far-reaching and wider regulatory tightening cycle in china. i would say there's liquidity pressure for housing sector players and a -- and production cuts for these energy sectors and we see
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downside risk for the enemy. what we observed in the past, we have seen this in movies may times on the revelatory reset in china, in year one, there's not much rulebook. so there's disruption to the market. but over the time span of 12-18 months, they will likely finalize the over arching framework, given the new rulebook. by that time, i think the impact to the market will be more predicable. shery: great to have your insights into what's happening in china. robin xing. managing director and chief china economist at morgan stanley. joining us with his forecast for the economy. we talked about the hour crunch and china hurting factory production. the power curves really having a broad impact across the economy. of course we cannot forget that it's also hurting food prices,
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in the sense that it's sending them higher, processing plants, from everything from corn to soybeans to peanuts. having to shut down, coming at a time during which food prices, we didn't need an extra boost to those prices, but we could get them. haidi: and this is coming at a critical time, going into the autumn harvest period. farmers and agricultural firms and livelihoods really depending on this. it is things that we usually do not think about, energy and electricity required to drive crops,. -- required to produce cups. -- required to produce crops. we are seeing this widespread impact. this is in-state back to media, of key importance. it's very clear we are seeing the leadership in beijing become
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very concerned about the widespread impact of this energy crisis. coming up next, jay powell and his counterparts renew their assurances when it comes to inflation, despite the energy upside risks. we will be telling you why they remain optimistic, next. this is bloomberg. ♪
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shery: the world's leading central bankers room and optimistic that severe supply constraints boosting inflation over the world will prove temporary. our global economics and policy editor, kathleen hays, is here with views you it anything that stood out -- with their views. anything that set out? >> that our supply constraints, pushing up prices, but to varying degrees, they are still saying it's probably going to be temporary. the longer it lasts, the harder it is to argue that. let's start by pointing out this is the european central bank's banking forum, with the top four major central banks people speaking there, jay powell, andrew bailey from the bank of england, see lagarde, the head of the ecb on stage -- christine lagarde, the head of the ecb on stage, and the governor from japan. jay powell said number one come our economic models
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didn't fail. we didn't expect these huge supply constraints coming out of the pandemic. it is frustrating they are there and boosting inflation. it's going to continue for longer than we thought, then it's going to ease. as for christine lagarde, she said bottlenecks are excel the rating in some areas -- accelerating in some areas, we are monitoring it, we are going to see how fast it fades. obviously still optimistic this will not be long-lasting. importantly, andrew bailey, the head of the bank of england, they left their door open to a november rate hike. may be slowing down versus the fact that their inflation has shot up, too. they said they are watching inflation expectations and looking for second round effects as shortages of petrol are pushing gasoline prices up. finally, the governor of japan, still try to get inflation up to 1%, let alone 2%. he did say though that demand is surging so much for what they are trying to produce, there are so many supply shortages, that
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is having upward pressure on those prices to continue not going away very soon. again, we see all these stories about shortening of supply, ships waiting to unload, they do wonder, at one point does the supply chain constraint keep going? and that becomes a problem. haidi: does that narrative square with the numbers? we don't know for sure. in a couple of months, maybe it does all start dying down quickly. > let's look at the bloomberg terminal chart. we can see what inflation is doing in these countries. the purple line is a u.s. since march, there's been a steady jump up and inflation. -- up in inflation. does it look like it's going to be temporary? we don't know. the red flags come also up -- the red flex, also up
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-- the red flags, also up. no sign of easing yet, but time will tell. the yellow line along the bottom, that is japan. the headline number has dropped back below zero. the key number which takes out fresh food prices was actually flat again. the governor is really not of this imposition as these other three. all you can say, haidi, is wait to see what happens. so far, it is a forecast, it is a bit. -- a bet. especially with the supply forces that determine what actually happens. haidi: kathleen hays there. let's get you to vonnie quinn with the first word headlines. >> japan's factory production dropped more than expected as the pandemic continues to disrupt global supply chains. electronic many factoring, down 2.3% from july.
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economists had forecast a 2.5% drop a wood retail sales also fell more than expected. down 4.1% from july. the u.s. sca may authorize posters of modernist covid-19 vaccine after pfizer's was approved earlier. the timing of the announcement was unclear but it will come as a u.s. recovery from the latest coronavirus wave is taking hold. cases are dropping and poised to start dropping in the vast majority of cases. new zealand will offer these us to as many as 106 to 5000 migrants. delays in processing residency applications during the covid endemic threatened an exit is of skilled foreigners. -- an exodus of skilled foreigners. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg.. -- this is bloomberg. haidi: concerns are mounting
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about vaccine efficacy against delta and if the mrna shot is growing looser. our senior medical reporter joins us now from hong kong. which markets and countries are we talking about here? >> we are seeing a decrease in orders for china's vaccines across the world, specifically in some parts of southeast asia and and latin america, where china had done a really great job of getting in their earlier -- there earlier to make the shots available for many countries who didn't have access to the more potent mrna shot that came from pfizer, magenta, and biontech. it is those areas that are now looking to get some of these western vaccines that seem to have higher efficacy rates. shery: does that mean those mrna vaccines are now more available to those countries? because there was a reason the chinese vaccines were used, even though they were not as effective, right? >> there were two things going
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on early in the pandemic. number one, any fracturing just wasn't fully -- manufacturing just wasn't fully ramped up yet. early on, the manufacturing just wasn't as great as it is now. there was also the other element of the entire world being unvaccinated. you had countries like the u.s. and the u.k. in many places in europe that were keeping all the vaccine that it was producing. we saw the same thing in india. while there was production happening, those charts were not able to get to some of these other places, specifically developing countries and places that couldn't pay as much or perhaps were relying on covax donations. they just didn't come in and the early days. china stepped up then. we should note the vaccines are very effective from china, reducing hospitalizations and deaths. we are talking about the continuing infection rate here.
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shery: michelle cortez, with her insights on the vaccinations, bloomberg senior medical reporter. you can keep track of the vaccination campaign around the world, check out the bloomberg vaccine tracker on the terminal on this is bloomberg. ♪
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>> here's a quick check of the latest business flash headlines. some holders of the china evergrande bond say they haven't been paid yet. two of the investors had not received payment as a 5:00 p.m. in hong kong and another two as of 9:30 p.m. evergrande owes $45 million in interest on the bond do 2024 with a 30 day grace period. holding off on further investments into the chinese tech industry, as they seek more clarity on the fallout from regulatory crackdowns. the singapore state fund says it feels comfortable holding its current position, with china accounting for 27% of the firm's $281 billion in assets. temasek will selectively invest in other sectors in china. >> the earnings will be fairer over the next be months as it becomes clearer. we want clarity around that before making investment. we are very comfortable with
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what we hold. we see them as long-term winners. haidi: let's take a look at what we are watching into the start of trading in china. sophie: pmi data due at the top of the hour. resilience is a focus here. we are sing relatively return to pre-heightened levels when we saw the evergrande rupture in the markets. the evergrande episode is likely a short-term hit, not adorable catalyst for you when weakness -- durable catalyst for you on weakness. instead of evergrande's contagion, we have mild weakness going into your end as the fed begins tapering. cnh, hitting 650 during the breakdown upon us. shery: our market coverage continues as we look ahead to the start of trading in hong kong, shanghai, and shenzhen. stay tuned for bloomberg markets
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china open -- bloomberg markets -- "bloomberg markets: china open." this is bloomberg. ♪
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>> this is my kitchen table and it is also my filing system. over much of the past three decades i have been in investment. the highest calling of mankind i often thought was private equity. then i started interviewing. i have learned from doing interviews how leaders make it to the top. >> i did not negotiate with him, i did no due diligence. >> you do not feel inadequate now


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