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tv   Bloomberg Daybreak Australia  Bloomberg  September 30, 2021 6:00pm-7:00pm EDT

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>> good morning and welcome to "daybreak australia." i'm paul allen. >> we are counting down to the major market open. shery: volatility continues to hunt wall street. u.s. stocks seeing their biggest monthly selloff since march 2020. >> china orders its top energy
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companies to secure supplies at all cost saying power blackouts will not be tolerated. shery: nancy pelosi may push ahead with a vote despite democrats threatening to defeat the bill. this is a picture across wall street. we are seeing u.s. futures marginally higher after the s&p 500 finished at the lowest level -- level since july. we saw volatility remaining height with the vix above 23. the 10 year yield retreating a little bit. we also had wti marginally higher. it cap the biggest monthly gain since june. that would be a gain of about 10% given the global energy shortages. we have the s&p 500 turning green slightly in the session as we saw the stopgap spending bill
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passing the senate, but that wasn't enough to keep the momentum going through the closed. let's look at the quarter, because it was a bit of a mixed picture. you can see the small caps are one of the biggest decliners. that is the bar in pink. soaring bond yields could be providing a turning point for small caps perhaps long-duration assets like technology. overall, we have been trading above the 200 day moving average for the s&p for over 300 days which is one of the longest ending streaks in history. we continue to watch what this means for potential future pullbacks. in the meantime, there seems to have been some pullback -- progress when it comes to congress. it just cleared the stopgap funding bill that would keep the government operating until at least december 3.
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now we have another vote on the infrastructure package as well coming up according to house speaker nancy pelosi. secretary yellen suggesting there may be a few more days of cash left after october 18 date she gave to the debt limit. paul: slow progress, but it is progress. china also trying to move things along in terms of the energy crisis. there is word coming from the vice premier telling the state owned energy enterprises to secure resources that blackouts will not be tolerated. it's one thing to say that, it's another thing to achieve it. a number of factors are trying to balance to get to the net goa by restricting coal. shery: we continue to watch evergrande. a huge story when it comes to
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the broader economy and china. it seems that the company has made one of three repayments for their wealth management products. those investors that really put their money in the wealth products have been paid the first 10% installment that was due september, but of course the saga continues as we have to hear more about the interest on the bond. not to mention they are facing claims on a separate $260 million bond that matures on saturday. paul: it might take investors 2.5 years to get there money back. china's government ordering the top estate owned energy companies to supply -- secure supplies for this winter at all costs. let's get to our energy
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reporter. it's one thing to say secure the energy supplies, but it's another thing to get the job done. house is going to be achieved? -- how is this going to be achieved? >> you are right, we are already seeing supplies of oil deficit after recovery from the pandemic. it has already put the market -- that there is some kind of shortage of all cans of oil. it will be interesting to see how they can secure additional supplies. we have not heard from opec. we are watching to see with their next moves will be. shery: while china is moving to secure those supplies, we are seeing record highs when it comes to energy prices around the world. especially for the lng imports of northeast asia.
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>> that's right. we are seeing record prices in lng. we are also seeing similar soaring prices in chinese coal prices. they are also surging. in china, a lot of the electricity supply is coal based. going back to the whole supply situation, there have been similar underinvestment in coal production. this has been going on in the background as we were going to the pandemic. it is long coming. the whole world wants to shift to greener fuel. that is why there has been underinvestment. now when we need it, it's going to be a tight situation. not just for oil, but for other energy products.
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shery: that was our energy reporter at the latest on the power crunch and china and around the world. the world is watching developments around evergrande. a developer saying it paid the first 10% for september. let's bring in our opinion columnist. how positive is this development? >> not terribly. it tends to confirm what we might have thought which is if there is any group that is going to be given priority, it is those people who have exposure through wealth management products who tend to be relatively normal ministry chinese people. it is through failure of wealth management products that the greatest risk of this turning
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into a serious destabilizing incident. what's interesting and what might be concerning for foreign investors is that they seem to have priority over foreign debt at the present which is what you might've expected, but which is not good news for foreign investors and it suggests something about chinese priorities. paul: something not entirely surprising about chinese priorities. what does this mean about contagion? how far this could spread? >> it's intriguing to me that the s&p here has had a bad day today, but it is no lower than it was at the worst moments on monday of last week which is the first day when the market responded to evergrande. there have been other bearish things coming along since then. the risk of the world isn't that bothered by the evergrande
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situation. -- the rest of the world isn't that bothered by the evergrande situation. the possibility that this does cause damage to the chinese economy and chinese growth and to chinese relation overseas, those are all less series than an outright lehman crisis, but they are not good. they are very much on the table. i tend to agree with you, that this has been underestimated outside of china. shery: that was john on his opinion with the evergrande such -- situation. the senate passed a bill and both chambers agreed to pass after democrats agreed to include a debt ceiling suspension.
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how much of a relief is it for markets when the issue of the debt ceiling hasn't been resolved yet? >> the fact of the matter is, it isn't that much of a concern compared to the debt ceiling matter. the markets have been much more focused on our line of credit than keeping government operations running. most people thought this would happen, it was just a matter of when. the senate passed the bill earlier today, it went immediately to the house and passed convincingly. nancy pelosi held a bit of a ceremony before sending it to the white house. we are waiting to find out if there's going to be a vote night on a bipartisan infrastructure bill it is already past the senate. it has been on the shelf in the weeks in the house as democrats demand that it be held until a reconciliation bill can be put together with the human infrastructure elements the
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president biden is looking for. i just spoke with one progressive democrat from michigan who says that he is not too happy with the news today. that we learned from joe manchin in the senate was one of the people holding this up. he said his top line is $1.5 trillion. progressives were looking for more than twice that. we could be in a situation where both bills are in the air for the next couple of weeks. with or not there is about tonight, it is likely to come in the wee hours. paul: you mentioned the debt ceiling is not resolved. there is any guide, presumably we will get there in the end. >> it's the fact that we're talking about it, you remember there was an s&p downgrade in 2011. we never got to defaulting, but the closer you get to the cliff, the more concern there is. janet yellen today suggesting
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that this will be a problem that we will run out of credit in and around the 18th of october. that could move by a couple of days. it's hard to put real figure on that democrats have made clear and this is important that they will not let the government default even if there is not a single republican vote. there are a couple of measures including reconciliation that democrats can use to take this on their own. they have been trying to force the republicans to vote no so it can be used in campaign ads. the democrats will handle this all on their own and the president has promised to sign the bill if it reaches his desk. paul: it looks like it could be a late night. let's get check of the market action in asian-pacific. >> we kick off the new quarter with a bunch of readings from across asia. we have seen delta outbreaks
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hamper factory operations. the energy crunch that is slowing activity and weighing on profit margins and energy prices push ever higher. we have seen the gauge of raw materials jump to a record high as search in coal and gas prices continues. oil tapped the biggest monthly gain since june which puts the pressure on opec to increase production. base metals are feeling the squeeze in the face of the slowing growth and rising rates outlook. the dollars assent is a hurdle. we have metals like copper looking stronger than for crude. city downgraded copper. we have an impact on supply chains and households for a jump
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and energy prices. shery: let's get over to vonnie quinn first word headlines. >> the incoming japanese prime minister will reportedly name -- a broadcaster says the former olympic minister is like a to replace him. he wants to appoint younger lawmakers to keep the party in cabinet positions. bloomberg shows that 55 countries are yet to hit the 10% covid and oculus and target. that number is seen as a crucial target the narrow the gap. it illustrates the challenges for covax to send shots to every corner of the planet. covax has cut the supply forecast with production delays, export bans and hoarding among the issues.
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india's current account balance spong on robust exports and a narrower trade deficit. the current accounts which is an assessment of overseas trade was up $6.5 billion. forecasts were for a $2 billion excess. strong sales of computer and is this services help to boost income. bloomberg forces site the head of the wto privately discussed resigning. she said -- she is seven months into 4.5 year term. now, we are told she has fully grasped the reality and may resign if no headway can be found on critical issues. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. paul: still to come, investors
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watching a responsible wrist -- list of funds. we will ask a representative why it is not naming any utilities in the asset mix. but first, we will speak with a est who sees em volatility ahead. this is bloomberg. ♪
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>> there are a lot of value traps populating traditional benchmarks today and the value traps, they are going to be significant downside surprises because of all the disruption and disintermediation we see taking place in the world today thanks to technologically enabled innovation. this is a combination of
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innovation but also a call on the corporate bond market. watch out. >> that was cathie wood speaking about what she sees as the biggest risk in the coming years. our next guest says she is moving to defensive stocks with volatility likely indicated. always great having you with us. you talk about defensive, but at the same time we have seen the likes of utilities, telecom services, real estate getting smoked given the rise in treasury yields. where did we go for safety? >> nice to be back. for us when we are net defensive places, we are looking at health care facilities. things like hospitals, providers of health care because all through last year, people were not going to hospitals, but that trend has changed. we are looking selectively at telecom as well. consumer staples -- i think that
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is set to change now. shery: with rising yield, we have seen small caps starting to outperform especially this chart showing how they are gaining ground against large tech -- large-cap tech companies. when you look at this trend, we have more to go for these small-cap stocks that could be more vulnerable to economic changes? >> i think so, yes. if you have a similar chart for emerging markets or china, that is even more extreme. in china, the large caps have been hit by very strong regulatory pressure. small caps and china have outperformed by almost 18%. because of less regulatory pressure than benefiting from -- yes i think that trend could
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continue. paul: china is dealing with a number of other issues. it had terrible pmi numbers yesterday. do you anticipate seeing some support coming from the pboc? >> yes, and we saw some news on evergrande last night. the chinese government is in a tough situation compared to where his been in the last 10 years where it is trying to balance economic growth, emissions, as well as social prosperity. i think you will see over the next few years and expansion of the state owned enterprises, because the government will come into support property, financials, and you are right that the pboc will intervene to support the real economy if not the market. paul: we have been seeing a lot of dollar strength, but no corresponding weakness in the offshore yuan. do you see any pressure coming from the r&d? >> that has made it difficult
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for china meaning their exports are less competitive than three months ago and a lot of economic growth in china when the last quarter was still driven by exports. the fact that the yuan is what it is [indiscernible] shery: the power crunch, will that lead to more from policymakers? >> i think between economic growth and emissions, the balance they're trying to find, you saw earlier today where they are announcing they want to increase power supply. yes, there will be more regulation i think. for china to reach its emission goals, certain industries will have to be shut down for a certain time. i do think there is more volatility in china going forward. paul: thank you for joining us
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from california. you can get around up of the stories you need to know to get your day going in today's edition of daybreak. it is also available on mobile. you can customize your settings so you're only getting news on the industries and assets you care about. this is bloomberg. ♪
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paul: taking a look at the day ahead for australia, homes are getting more expensive by the day and that is fueling cause for tighter lending rules. we will be watching for news on covid restrictions. a report showed australia has
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made little progress since the turn-of-the-century in gender pay gap issues. shery: china's evergrande has started returning a small portion of the money owed to investors. missed payments on some $6 billion of wealth products sparked protests last month. asset management shareholders will consider a proposal to issue almost $11 billion of bonds to raise cash. the debt sale with a term of no more than 10 years is subject to approval. the manager secured a rescue package from some of china's largest firms in august and revealed a record loss for 2020 after delaying an earnings
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report. the wall street journal says morgan stanley and interactive brokers are being scrutinized u.s. federal authorities over links to an alleged venezuelan fraud. it says they are among accounts for a man accused of helping an oil minister launder billions of dollars. elliot management says it has become a significant investor in toshiba as the japanese company's considers taking it private. it says it increased its stake after a private firm approached toshiba about a takeover. it is now said to be one of toshiba's top 10 shareholders. we will have plenty more to come on daybreak australia. we are awaiting the open as we saw the s&p 500 fall to the lowest since july. we are seeing u.s. futures
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slightly higher. this is bloomberg. ♪
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shery: it has been nine months since the first wave of inoculations against covid-19, but dozens of countries have yet to vaccinate 10% of their population. the who has pushed for september to be a key date for these vaccinations to happen to try to end the pandemic. yet there is still a long way to go. >> right. by our calculation, more than 50 countries are short of that goal.
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it shows the problems that covax is having trying to get the vaccine everywhere in the world. this is key issue because health advocates worry if your slowing vaccines around the world, it's going to prolong the pandemic and increase the risk of variants circulating. they are behind what we had hoped. paul: looking to the u.s., it has been three weeks since president biden ordered large employers to enforce vaccines or weekly testing. what has the impact been so far? >> we had a story out today saying that about 25% of companies surveyed have instituted a vaccine mandate. that is up from 16% from their survey last month. another 13% of companies are
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planning to put a mandate in place. that leaves a wide proportion of about 40% of companies have not responded or have not made a decision if they want to ultimately test their employees or enforce shots. but idea that forcing employees -- forcing shots could cause employees to leave at a time when there is a labor shortage -- there has been a greater move in that direction by these companies. shery: we do have breaking news. we are hearing that two companies have agreed to terminate the contract. the purchase has drawn scrutiny from the u.s. security agencies
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and it has slowed the review of the deal which was estimated to be $15 billion. we are now hearing that five9 and zoom have mutually agreed to end the pact. it did not get enough votes from five9 holders. >> nancy pelosi may press ahead with a vote on the bipartisan infrastructure built. that is despite progressive democrats saying they have the numbers to stall until a senate -- the senate agrees on another package. she has been meeting with lawmakers trying to find a solution. earlier, the house passed a nine week spending bill to avert a government shutdown. the spike in european energy prices is amplifying concerns about support for the most ambitious climate reform. we are heard ministers will debate the crisis early next week.
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the european parliament is tackling the issue in a plenary setting. a government is ordering -- china is ordering state owned energy suppliers to increase supplies at all costs. the government says blackouts will not be tolerated. a chinese driver has successfully sued tesla for fraud over his purchase of a secondhand vehicle. a beijing court found tesla had misrepresented the car's condition after major repairs following an earlier accident. tesla was ordered to refund the cost of the car and pay damages of three times the cost of the vehicle. global news 24 hours a day on
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air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. paul: nancy pelosi is pressing ahead with a vote on the bipartisan infrastructure built. -- bill. here in australia, an investment company has launched responsible infrastructure fund investing in companies that can contribute to or benefit from sustainable development. here to talk about this more is portfolio manager. you brought refund to australia parted you say it is a demand driven decision. what growth do you anticipate? >> we are seeing growth globally, more and more investors are wanting solutions that deliver risk on return while having a social
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characteristic. people are really realizing that infrastructure investment is what we need to hit net zero. otherwise, net zero is just a tight line. this is that the absolute center of what needs to change for net zero to be achievable. i think the idea of recovery from covid build back better has gone to the hearts and minds of the public. paul: do you have any australian assets in the fund? >> we have very few. one company has some exposure to austria, but very limited australian utilities. australia lacks public policy. it is not all doom and gloom.
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it is quite similar to the u.s.. the problem is the rest of the mix. we have very limited gas, no nuclear, and some of what we do have is carbon heavy. we don't have a public policy to think about decommissioning those coal plants and building more renewables. those are things to think about women look at australian utilities. many of our utilities are based in the united states. shery: how much does the new infrastructure built which contains billions of dollars toward shoring up infrastructure against climate change, mitigating the impact of global warming affect your calculations? >> i think it's going to lead to more infrastructure investment in the long-term. the bulk of the climate related investment is in the $3.5 trillion bill rather than the
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smaller bipartisan bill. the bill contains multiple provisions that can accelerate infrastructure investment [indiscernible] the u.s. historically -- incentivize the rollout. other cleaner forms are a win for the climate. what's important in the bill is solar and storage are clear winners. solar is the cheapest form of energy. enabling more of it is a win for customers and a win for the climate. also in the bill more standalone tax credit for storage. shery: when you talk about customers, how real is the appetite for these types of investments? >> it is very real.
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it is real from general public more corporate. we talk about lack of public policy in australia, but we are seeing more corporate -- corporate's moving ahead of public policy. it is really wanted by customers also because it is the cheapest form of energy. if you can lower the bill and have greener generation, it's a win-win for everyone. paul: thank you so much for joining us. we have seen a fair bit of m&a in australia this year including in the energy space. this got to the point where we have got m&a and australia closing in for the top spot in the asian pacific just behind china. we have $135 billion worth of bills -- deals in the last nine
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months. also the square tie up as well. the sydney airport tie up that is been closing in on a record year for m&a and australia. shery: not surprising, but it seems that the transactions and china are also starting to shrink. donna is a much bigger focus for investment banks when it comes to m&a, but we are seeing the deals in china being relatively small this year. there was the chinese recruitment firm, also a company agreeing to buy an asset management company. a few billion dollars, but not enough to take a bigger lead when it comes to these m&a's. we continue to see the uncertainty in china. we will talk to wall street -- we have ceos weighing in on the risk for investors. a guggenheim partners cio saying
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the sustainability of the global payment system was keeping him up at night. this is bloomberg. ♪
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>> time for morning calls ahead of the asian trading day.
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aluminum seen outperforming in a cyclical flow down. the ongoing property crackdown as well as the chip shortages. macy aluminum supply tighten further with smelters and west china may start cutting out in the fourth quarter to meet stricter emissions caps. goldman determines why macro policy is not yet forthcoming. one interpretation seems to be that the current stresses are temporary and they want to avoid over stimulus. others see -- we could see -- shery: the guggenheim investments chairman says
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sustainability of the global payment system is the top risk facing financial markets. in an exclusive interview, he told bloomberg a coordinated hack could bring the global financial system to its knees. scott: the thing that bothers me about something like the global payment system is i don't think anyone is focused on it. it really takes a high degree of international cooperation. it takes a macro look, meaning there needs to be somebody or some group of people who are looking at how everything interconnects. and where the potential vulnerabilities are. at this stage, this is in the world of the unthinkable. therefore, i have used this phrase before, there is a cognitive dissonance around it which is to talk about the idea the consequences are so dire that immediately, people move on to say that will never happen.
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i think there's a real vulnerability to the markets in general. even to the existence of capitalism if the payment system were to be suddenly disrupted. >> what likelihood do you see of some sort of damaging attack on the global payment system and the u.s. payment system in particular? scott: i would put the probability at very high. well over 50%. the reason i put it so high is number one, nobody seems focused on it. number two, for someone who is sitting out there thinking that they want to disrupt our economy, this is the most logical chokepoint in the economy. i got accused when talking about this once that i am alerting
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terrorists and other governments on how to attack us. i think the likelihood is they are already thinking about it. paul: that was guggenheim partners cio. you can watch us live and see our news on our interactive tv function. you can also dive into any the seat -- securities or functions we talk about and be part of the conversation by sending us instant messages during our shows. this is for terminal subscribers only. this is bloomberg. ♪
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shery: korean airlines is expecting approval to buy the rival carrier by year end. the chairman says business integration will take at least two years with only the most efficient airplanes retained. a380s are unlikely to remain in the fleet much longer. deutsche bank will close retail branches in italy and spain in favor of a smaller number of flashy locations. it is a shift away from covering the needs of all clients to
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focus on the more affluent group. it says it plans to serve customers and the rest of europe mainly through digital banking. lack rock has told employees they will start the return to office pilot program in november -- on november 1. more than half of staff will be expected to work in the office at least three days per week allowing up to two days of remote work. the world's biggest asset manager says it will assess over the next several months how well employees can collaborate under the future of work program. paul: australia's gender equality data shows a paradox. it tops the world in terms of women's educational attainment, but ranks among the worst in terms of female participation in the economy. a finance reporter crunched the data for this report. what did you find?
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>> this is about the australian paradox. australia has better parental leave policies and we are making progress, we are still a long way behind. what was startling was that we are the best in the world at educating our women. we are number one under the world economic forum data, but we are number 17 when it comes to women's economic participation. that is obviously a huge problem for the country. we called it the australian paradox. shery: what are australian executives telling you about what could be behind the paradox? >> there are a couple of factors. this is a complicated issue. there's not a lot of research and clear-cut data that compares apples to apples. what i found is that australia has been very ingrained
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attitudes, conservative social and cultural norms that are built around the nuclear family. also, this idea where men look after each other. this goes back to the roots of australia, this is an old concept. more women executives are finding that they are being excluded and that it ultimately ends up being an exclusionary concept for them. last year during the pandemic, out of the 23 ceos appointed to top destroying companies, only one was a woman and the excuse was given that in unprecedented times, it was felt safer to go with a man. women are still seen as a risky bet in corporate australia. paul: you spoke to a number of female executives. can you tell us some of the stories they told you? >> the stories are quite
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interesting. some of the stark ones were about how some women were told they didn't belong in board rooms. one of the stories that stuck out to me was about this australian club which is the oldest gentlemen's club in the southern hemisphere. it voted to keep women out as members. they voted overwhelmingly to not allow women to join the club. some of the reasons that were given for the some of the members worried that if they allowed women into the club, they might be seduced i the new members out of their marriages. or that they won't be allowed to behave in a boorish manner. if you have women there, they have to behave. simultaneously, women are so boring they can be fun, but on
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the other hand, they are seducing men out of their marriages. shery: you can't win. what is being done to overcome this? >> not enough is the short answer. this is why we are still having this conversation. what we're advocating for his targets. companies that have set targets to achieve gender parity generally tend to do better. the other issue is that you need to get more women into the higher-paying industries. one of the reasons australia has a high gender pay gap which is about 31% last year when you include full-time, part-time, and over time is that we have a segregated workforce. men working in mining and
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construction and women working in the caring industry. those jobs are paid last. -- paid less. there is also straight out sexism. and the factor about childcare. i was surprised to find that australia has childcare costs higher than the u.s., you k, -- u.k., and the oecd average. even though they have a paid parental leave policy, it is not made to benefit women. shery: in the next hour, we will speak to others on this issue. happy asia friday. also heavy start to the final quarter of the year because it has been a very tough quarter when it comes to asian equity markets. the chart on the bloomberg showing you how we saw the first
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loss for asian equities and six down 5% since the end of june. of course we have the bond market tantrum, yields rising in february. it didn't affect equity markets as much. complicating matters this time around is the ongoing saga with ever grand, the supply chain issues. jp morgan as it management -- asset management says we will see a choppy market. paul: the final quarter of the years went to be interesting particularly with all of these pressures you described and the energy crisis piled in on top. if you want to look at one bright side, chinese tech has already suffered a lot of selling this year. perhaps the downside might be limited. take sensitive to the rising yields we are seeing. another thing to consider is
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what if inflation isn't transitory? a huge amount of debate circulating around that at the moment. we could see the sentiment really start to take hold if inflation proves to be enduring. we could see the pressure start to accelerate in the final quarter. the last three months of the year, we are setting up for something interesting. shery: no wonder given the concerns over inflation. we continue to see the selloff in the tech sector. the valuations continue. the chart on the bloomberg showing how values continuing to overtake the tech story given that perhaps we might see these narratives continue into the final quarter. we will continue to watch what happens on this value versus growth story. paul: that is it for "daybreak australia." we have the market opening in
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just over one hour. nikkei futures looking weaker. we will have more for you and a moment. daybreak asia is up next. this is bloomberg. ♪
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poll hello and welcome to "daybreak: asia to: sophie: -- shery: i am shery ahn. our top stories this hour. asian stocks that to start october on the back foot after wall street kept its biggest monthly cell up since march 2020 with further losses. china orders


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