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tv   Bloomberg Daybreak Asia  Bloomberg  April 21, 2022 7:00pm-9:00pm EDT

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>> good morning i am haidi in sydney we are counting down to asia's major market opens. welcome to "bloomberg's daybreak: asia." our top story, japan's inflation can top 1% for the first time since 2018. elon musk says he has lined up new the $47 billion to pay for twitter and signals he could be prepared to pay more.
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many in limbo as officials -- for pursuing the ipo is 2 billion. >> a lot of volatility in the u.s. session, a gain -- the nasdaq 100 losing about 2%. the futures at the moment under a little bit of pressure we see the 10 year yield rising at the 2.9% level. we are seeing crude fall from the three are high, there are some supply concerns from asia. it was really to do with those treasury yields spiking again. take a look at the charts on bloomberg, it was led again by the front and, that is the policy sensitive and, the past year or so we have seen about 11 times when the two year yield moves higher more than 10 basis
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points now being the highest since 2018, not surprising, haidi, given that we had heard from jay powell about a potential 50 basis points hike at the next meeting. >> they are now pricing in for to basis points at the each of the next three meetings and will be interesting we look at the currency of the asian sessions today. at looks like both equities and bonds will be following the u.s. cap are slower today. we see the decline of 0.9% when it comes to sydney futures. equities here in australia still close to the erasing of all the losses for the year after a string of steadily strong sessions. we see both the kiwi as well as the australian bond yields following the u.s., the dollar yen still in focus, not doing much of the moment.
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we do see the potential for yen intervention, well off that potential to get 130 we were at earlier at the start of the week. we could finally potentially see the tumble in the yen creating an advantage of -- for japanese exporters to shield local stockmarkets. perhaps we will see that rotational buying into tech stocks, the traditional correlation between the weaker yen and strengthen -- strengthening in japanese exporter. taking a look at the yield as we get the bond buying program, really, they have not budged. what else is there to say? the boj on their fourth day of bond buying and is testing the limits of the big japan stimulus impact that it -- bank of japan stimulus impact as it aims to try to keep those rates close to zero as we continue to see this
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widening policy divergence with the fed. >> the hawks were out in full force, fed chair josh jay powell endorsing 50 basis point hikes in the next month. i will start off with you, he has been awfully explicit. >> he certainly is, can only assume he has no qualms about telling us the fed is going to hike the key rate by 50 basis points at the may meeting a couple of weeks now. he was at the imf world bank meeting. let's listen to exactly what he said in this one key paragraph. >> it is appropriate, in my view, to move more quickly. i also there is something in the idf front and loading -- in the idea of front and loading. we make these decisions meeting
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by meeting, but i think 50 basis points will be on the table for the may meeting. >> it is short and concise, first of all, remember the st. louis fed at the beating of the year saying that they could have to go aggressive at 50 basis points at the first we are for meetings. chris waller, the fed governor following up about, other officials have gotten on board. they do not know if they are going to do it, but they are open to 50 basis points. the higher inflation gets in the higher the labor market gets, key indicators that they are making the same kind of statements. powell saying the market is too hot, the fed will cool it down, how do you do that? aggressive rate hikes. saying repeatedly on bloomberg television if you wait too long will have to move faster. now if you get too aggressive you may cause a recession.
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a bloomberg opinion columnist making the same point. let's also assume that this has to the fed not wanting to surprised the market. if is anyone there will be surprised by 50 basis point hike, the only thing that would surprise them now is the 75 basis point hike right away. they have had -- 50 basis points come you have the bet on it. >> to add to the hawkish nest, and the hawkish nest -- hawkishness from the boe. rising is only way up now. >> the only way is probably up for at least, they be the next little while. i actually think we are getting to a very interesting point. we have the end of the month coming up next week. that might see some thing of a pullback. that often happens. it might be a liberal hard to notice, but something of a loss of -- it might be a little hard
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to notice something of a loss of momentum. the treasury yield only went up eight basis points, not 10 or 15 and they are still eight basis points under the peak so far for the year. this question as to whether they can go through 3% and how far they go through 3%. at the moment a the focus on the short end is on the rate hike pledges, effectively from the fed. they will have to go 50 basis points unless they want to lose all credibility and may and probably in the future once. that level of aggression and that level of aggression getting priced in raises the potential the priebus -- the 3% turns into a peak for long-term yields. people are going to start to expect growth will slow and inflation will slow further out. >> when it comes to the boj
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looking ahead to the inflation numbers out today. at the end of this bond buying operation could we see more this week? they stopped it from moving higher come what is not effective in driving yields lower. >> it is both a nominal and a relative gain. corona has said that 20.25% is the limit for the jgb yield. he is prepared to make it very wide indeed, while everyone else is saying, even the ecb has caved in and said we will probably have to raise rates. even though there is a war in ukraine that would damage the economy, inflation will do more damage and we needed get on top of that. the boj is saying, even if we get 1% inflation that is only
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halfway to our target. they have scheduled bond buying operations for the 10 years for today, monday, tuesday. i think it is quite possible they will do it every day until the boj meets at the end of next week. until they have a meeting and change their policy, i do not think he is the sort of governor that will preempt the bank of japan meeting. >> we do have a big conversation coming up with potential indicate -- indications for the yen, janet yellen speaking to bloomberg at 11:45 a.m. friday at new york. we do have an alert on bloomberg right now, we may see hong kong easing some of the restrictions on incoming flights into the city. hong kong is set to relax the
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threshold or suspending -- four suspending the incoming flights from 6 -- they will make an announcement very soon according to the sources speaking to the south china morning post. the flight richard -- restrictions ahead crippled the industry, after the like a ban on nine countries was lifted at the start of april. >> president vladimir putin says russian forces have seized mariupol even while defense ministers say that 2000 ukrainian fighters remain hold up in his -- any facility. volodymyr zelenskyy deputy chief of staff told bloomberg that the declaration was premature. >> the ukrainian armed forces are still in town. they are locked in these, as
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well as many civilians are at the steel plant and their relatives. the president has suggested having an exchange of those civilians and soldiers that are wounded and the russian wounded soldiers that are in ukraine's possession. >> united states is sending ukraine another $1.2 billion in arms and economic aid, $100 billion will go to weapons. -- $800 million will go to weapons. >> today, i am announcing another 800 million dollars to further augment ukraine's ability to fight in the east and the donbas region including heavy artillery weapons, dozens of howitzers, and 144,000 rounds of ammunition to go with them.
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>> some banks are supporting elon musk's run to buy twitter, 25 and have billion dollars come in the form of debt. all according to a reglet tory filing. morgan stanley is set to provide the biggest chunk. 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 am vonnie quinn, this is bloomberg. >> still ahead, rising inflation and geopolitics are adding to rising inequality around the world of women and young people being hardest hit. bloomberg equality looks into with the imf. next thornburg investment management inc is cutting alibaba. this is bloomberg. ♪
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>> i would say that 50 basis points would be on the table for the main meeting. the big english -- issue we are focused on is inflation and getting back to the 2% goal. >> our inflation is fueled by supply shock which calls for a particular kind of response that
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brings together fiscal policy and monetary policy. it is supply driven and it needs to be addressed in a sequential flexible, gradual way. >> it is too hot, unsustainably hot. it is a very good labor market for workers. >> fed treasury powell and christina amid that hawkish central bank. financials one of his top sector x, ben kirby, is good to have you with us. any favorite banks with us, now that you also see rising cost is tough to maintain talent? >> thank you for having meant to show there is a lot of tailwinds for banks right now, the rate curve looks a lot better today than it looked in the past two months or year.
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the credit policy remains relatively nine. we like -- benign. we like jp morgan and citigroup. >> let me show you this chart for our viewers coming to see first time that both global stocks and global bonds are falling at the same time. by this magnitude in at least 30 years. when you're trying to re-diversify your portfolio, how do you position? >> it is clearly a different investing regime then you have been in for the last 40 years. it is the worst quarter for bonds and a 40 year time. . and a quarter where stocks go down, bonds go down even more. it is hard to find a place to hide. what is interesting, in an environment where a lot of stocks are down, there is a chance to hydrate your portfolio and improve your risk-adjusted
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outlook. companies with evidence look really interesting today and in an inflationary environment having the income cushion is helpful. >> what about china? there has been significant adjustment, like reducing holdings in alibaba, tencent remains a big investment there. what is it when it comes to some of the supply chain snafus? tesla having about 600 vehicles produced in their shanghai factory, and production is rising. are you optimistic and comes the outlook in that region? >> it is next. -- mixed. we want to be long-term investors and have some visibility in the earnings trajectory for the company. you mentioned reducing holdings for alibaba, the happen to a few of our portfolios. their earnings trajectory is lower today than it was a few months ago.
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as opposed to the semiconductor company we think their outlook is robust. we think demand for their chips is very strong. they are at the leading edge of technology. even though there are supply constraints, they are investing heavily and will be able to meet demands of the next few years. >> how much do macro factors, fx moves and the likes and -- impact your long-term decisions? with the weakness in the yen, the rotational benefit for tech exporters in particular. is that a compelling enough reason? >> that is not enough of a reason, we are bottom up investors. we are looking at the companies from a mosaic that include the macro but not exclusively the macro. one comment i would make about the weakening yen, to raise some questions about what that makes
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-- means for the competitiveness of the chinese economy. china and japan to be a lot of export markets and win the yen weakens a lot, the yen versus the rmb is very weak. we think that poses a possibility for weakness. >> always great to have you. then from thornburg investment management inc. >> banks showing up in force to back elon musk's twitter takeover. this is bloomberg. ♪
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>> if anyone had any doubts about the seriousness of elon musk's plan to buy twitter billion tear -- the billionaires latest reglet tory filing may change that. he has lined up -- reglet tory
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financing may change that, lining up billions of financing and putting money on the line. this only got real. >> if anyone is asking show me the money, he answered that with the latest reglet tory filing. the names and numbers that he has secured 46.5 lien to buy twitter by some -- billion to buy twitter from some very big banks. he tweeted back in 2018 funding secured when he tried to take tesla private and turned out he did not have equity any and up and a lot of hot water the sec. morgan stanley, pledges the biggest chunk, five and have billion -- 5.5 billion. almost half of the funding coming from musk himself.
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over the weekend he had a trio of holding companies. investors have been trying to get in on one of the biggest take privates of all time and are ready to bet on musk. in terms of what he has left in terms of options, he said several tweets he indicated a tender offer or hostile bid where he appeals directly to shareholders. he is reaching out to equity partners, potentially, this filing sends a strong message that he is it serious, lined up the money, and is ready to negotiate. no would likely be the next step. >> whether we hearing about -- >> the filing shows us that there is more than of money raised that the offer price could be higher if the situation arises. you can see that twitter shares
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have been on a wild ride sent musk made his first, and final offer. he calls it a final after. it was a share pricing that was similar to the marijuana bill which made some question if it was serious or not. it is now serious,54. 20 a share to take over. one blockchain ceo just told bloomberg, pound for pound, on a level of pure entertainment value, musk has already delivered. everyone on wall street and main street paying attention. on thursday he said he would eliminate spambots from twitter if his bid was successful. that is another looking forward tweet we see from musk. where this goes next, everyone
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is paying attention. back to you. >> thank you, with the latest on elon musk's bid for twitter. >> gucci sales missed estimates for growth this quarter. lockdowns weighing on performance. they generated over have of their revenue for the period. the figure follows stronger falls from -- the world's biggest maker of ev batteries has posted a four year profit that beat estimates and plans to spend to billion dollars on a new factory in china. doubled almost $2.5 billion, the dividends and raw materials costs. disney is set to lose some of its -- in florida, stripping the
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company of its itself governance. governor ron desantis is expected to sign the legislation that would and a arrangement that would allow them their own visible functions for over 50 years, they are one of florida's biggest employers with over 70,000 local workers. we are counting down to the start of trading in tokyo and these are some of the stories we are watching and south korea, the outgoing south korean president and kim jong exchanged letters and it is an expression of leaders trust. we have a few financial earnings out today over and south korea. over in japan we are watching margin cpi figures on goldman, the main inflation gauge may lose its role as a callous monetary policy change -- catalyst for monetary policy change. advisors plan to seep -- seek
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bids. risk aversion hits record levels in japan's credit market as we see climbing yields and the plunging yen. >> we are getting breaking news from softbank that they plan to maintain a controlling
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>> breaking news out of japan we are getting the cpi numbers, core cpi in japan rising .8% year on year which was in line with expectations. with the recent acceleration of inflation for a seventh consecutive month. the headline number coming in the growth of 1.2% in line with expectations. we were expecting these numbers to top 1% given the rising energy prices and how that is being filtered through into the japanese economy. finally seeing some inflationary
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pressures, core -- energy is a contraction. is one of the reasons why the boj is planning to stick to its current framework. we are talking about the growth of a .8% year on year for the month of march. >> we do have some breaking news, when it comes to softbank's plan, they are planning to maintain a controlling stake following the ipo. they will be selling a smaller portion then originally expected. according to people familiar with the matter. back in 2016 after the plan to sell the business to nvidia collapsed earlier in the year and they decided to sell a smaller portion of arm now given the smaller portion of chip stocks. according to one the people to asked not to be identified the plan is not yet public.
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the secures of shares of arm allow softbank to hold onto a bigger portion of the company and allow them that flex ability with market conditions. we are expecting it to happen in the first quarter of next year. that size and timing of the offering could change and give a lot more perspective at how these changing market conditions and the market volatility is making these deals and ip -- ipo plans be reassessed. >> talk about volatility, japanese yen on decline i we saw earlier i that 128 level we saw against the u.s. dollar. we are hearing at the moment from the japanese finance minister, speaking in washington saying that the recent moves in the yen are very sudden, but he cannot comment on the possibility of intervention. he is only saying the market is
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showing sudden moves and it sudden moves in markets are undesirable. the reason has to respond to questions about intervention is with the incredible weakness in the japanese, right now a little bit of strength against the u.s. dollar. let's put at unchanged at the moment. still holding your that 20 year low, that 130 level, as we watch the japanese 10 year yields very close. it is a very elevator level where we can see the boj come and again to cap yields. suzuki saying they will respond to fx markets they sense of urgency -- with a sense of urgency. >> to give a more perspective at the yen at a seventh weekly decline, the dollar looks underpinned, what are we expecting? >> no one is willing to draw a line on sand at how low the yen will go. it is the biggest macro trader
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in town, sell the yen versus everything else. if there is intervention by the central bank, and officials directly into the market, people are saying 130 is a certainty. endless predicting that the yen could go to as low as 150 against the dollar. traders are saying, basically, just keep selling the yen for near 130 could be a new normal for dollar and those days of 105 and 110 are an average for the history books. >> if you look at the chart some bloomberg, really to your point, investors being on the same side of yen week as we see bearish yen buying to chart the volatility with the risk reversal skew positive for the first time since 2015. what do we have to be watching out for next? if not intervention from the
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finance ministry, perhaps with the boj could do? what could they really do to stem this weakness? >> absolute, intervention is the big work -- word being tossed around right now, what kind of intervention to bring down the yen volatility and strengthen it from these unprecedented levels is key here. to give you perspective, commonwealth bank of australia says intervention is likely to fail without the full support from the u.s.. any intervention of any sort is likely to happen this month by the japanese authorities. they are saying that the little intervention we have seen is very likely to give a temporary reprieve for the yen. all eyes are on the space until there is some certainty. we will likely to see elevated volatility. >> talk to me about the effectiveness of the boj's buying operation.
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it can halt the rise in yields? how much does that matter when the gap between the fed and other central banks continues to widen? >> that i think is key. the boj operation work to halt th in yields, but is not effectively pushing yields lower in many aspects. you're seeing a rise in a sense that the policy diversion story continues to be playing out in earnest. the fed will still be raising rates aggressively according to market pricing and boj is clinging to this ultra dovish policy. until one breaks of the other gives, in this case most people are expecting the boj to release yield control at a certain point in time. we will continue to see the yen selling off and people testing, really testing the boj comes to yield control. >> april 20, our viewers will
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have to watch the boj's meeting at that time. >> let's not get to vonnie quinn with the first word headlines. >> thank you. fed chair jay powell says a hike up 50 basis points is in play at the fomc meeting in may, he signals more aggressive tightening. arguing that he sees merit in front and loading. the fed about to enter its traditional blackout. before next month meeting. >> it is appropriate my view to move more quickly. i also think there is something in the idea of front end loading whatever accommodation one thinks is appropriate. it point to the direction of 50 basis points thing on the table. we make these decisions meeting by meeting. kobe on the table for the may meeting. >> u.k. says rebuilding ukraine will cost around $600 billion and they are calling on members
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of the to donate 10% of their proceeds to support it. any war is crucial to the -- >> ukraine is part of the global production chain, the world needs that production. looking beyond that, there needs to be a clarity in the world about the values, direction, the orientation of economies, but also the necessity of peace. there is a huge world interest in having the world -- war stop. >> they are asking not to back far right leader very le pen. they described her as a candidate that openly sides with those attack freedom and democracy. >> russia has armed -- barred
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entry to mark zuckerberg and 20 other americans in retaliation for u.s. sanctions. they say the list also includes the u.s. vice president and other state apart and officials. russia banned facebook and instagram last month calling them extremist organizations. 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 am vonnie quinn, this is bloomberg. >> malaysia southern wealth fund -- health care investments to help cushion it from inflation and long term returns. they told us exclusively that the rise in prices remains the biggest risk and how central banks deal with it. >> we are usually asked posed in the malaysian market. first of all, we have to see how
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we can create value, amongst these companies. to see whether they can have sustainable growth. a can only be achieved in the current environment with more productivity, more shifting to improving the cost structure as well as the service quality of what we have. it is the investments that we have in our performance that we are trying to improve. >> as it stands right now, china is still investable. >> as a long-term investor, we are exposed to china, we believe it will become a, it is already a major economy. when we look at it, we are delivering long-term sustainable value for our stakeholders. things come in cycles. as an investor --
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>> when looking at rebalancing up avolio, how would it look like -- your portfolio how would it look like in terms of asset classes? give us a breakdown of what you are looking at. >> i will not give you the percentage, i think the general, what we would like to have, we remain significantly in malaysia, of course. we are looking at the domestic market and developing markets. right now we are under when it comes to developing markets. in emerging markets we are looking at southeast asia, china as well, develop markets like u.s. and europe and japan. asset classes, we have been in [indiscernible]
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as well as private and public. >> do you find cryptocurrencies extracted, is it something you are looking at? >> we do have an appetite and priority, but it is unlikely we are investing in cryptocurrencies. one thing i would say, it is actually an interesting space when you look at dfi. there is a lot of innovation surrounding it. we also see companies experimenting with their own digital currencies. china is looking at a pilot program for southeast asia, this is an area we are keeping watch. we are monitoring, particularly the innovation happening. >> markets preoccupied with elevated inflation, what assumptions are you making about inflation? has it peaked?
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how is that act during an -- factoring in how you view attentional investments? >> we do see, real terms in investments lowering. this is expectations going forward. what i think we want to do is, really to see how low it would take for the countries inflation to be arrested. we are making sure we are stay resilient. monta the investments that we have. -- monitor the investments we have. making sure that we always fix real assets. >> speaking exclusively with embarq. -- bloomberg. coming up we talk with the a.m.
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-- imf with how political unrest is widening the political inequality app in the region. this is bloomberg. ♪
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>> rising cost and food
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security concerns are causing unrest in countries including pakistan, the price of gas already exacerbated by the pandemic, we discuss more about the economic disparities, we bring in davide furceri. also joining in our global economic and policy as their kathleen hays. great to have you with us, we see on the back of the pandemic, that is continuing in many economies around the world at the inequality has deepened with these new price pressures coming from the war in ukraine and supply chain issues public. what impact do you see? >> keep in mind, most of the inequality you observe across countries is linked to -- we do see recessionary shocks,.
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why this is the case, one is quite simple. firms layoff worker, so employment goes down. people tend t more sensitive to the change in labor market conditions. more often with lower skilled, lower salary. this is what you see in terms of widening income gap. the shocks that we observe, as well as the warren ukraine -- war in ukraine. why this the pandemic, has been a element that makes it even worse. the fact that we had locked down in some countries, social distancing measures, and this also prevent the worker, to work
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remotely and sometimes lose their job. a worker that is unemployed in context-sensitive areas such as tourism, have lost their income, and lose their jobs. another element that is affecting family. the family many countries and has been school closures. the parents, often, have to work with their kids. in countries such as asia, you have seen there has been a huge increase in global participation, the gender gap widened because of this. this is likely to last long, the laws that we are seeing and it comes to income because of school closures. many kids around the world and
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not get the right educations. this is in poor countries. there is an internet -- interconnectivity problem. where there is no computer, etc. etc.. >> obviously fiscal signals could impact -- blunt the impact in the short-term, what structural reforms could help? >> there are several structural reforms. there are eight, price pressures, structural reforms that can increase opportunities -- often what is worrisome is not just the income, it is inequality. investing in people, the human capital infrastructures. to expand the community of the entire population and tend to benefit on average those are typically more vulnerable.
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>> i see a problem here, which is, we can look at what needs to be done, particular when it comes to fiscal stimulus. what i see now is a world where there are so many countries that need all kinds of stimulus post-pandemic. kids whose educations have been so messed up. ukraine is spending billions of dollars to rebuild. there are humanitarian crises all over the world. where is the money can come from? even if the will and desire to help his they are, who has the money? who is going to spend? >> we put it this way, spending related to the pandemic we often say if you do not -- if you spend now you do not need to spend as much later. at the beginning of the pandemic the position is better today and [inaudible]
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you're right, it is increasing much more than what is been observed in the past year because of the pandemic because it is systemic. countries really need to find the balance between, on the one and conservative budget spending and on the other and protecting the vulnerable. this is a crisis of the vulnerable. it is not just the pandemic, increases in prices, you see inflation going up. it is reducing purchasing power for all, but mostly for poor people. >> previous pandemics in previous academics that we have seen have seen inequality rise. what sort of lessons can we take away that could really help now? >> we noticed two things that countries that spend more at the beginning of the pandemic are those countries that suffered less.
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this is on the positive side. on the negative side we should expect, in terms of inequality it will be long-lasting. it is not that the pandemic is over and we are going back to -- it is likely this will add significant inequality going forward. the impact of school closure, the impact of human capital for poor kids will be quite significant in many countries in asia. we have to think about not only the problem today, but also be prepared to address the highest level inequalities going forward. >> it was good having you on, imf asia pacific department deputy, we are now hearing shanghai is reporting 17,009 or 29 more cases and 11 more covid debts. -- deaths.
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they will remain under lockdown, they say the covid situation is improving, but the lockdown continues. this is bloomberg. ♪
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>> take a look at the, rough time when it comes to chinese equity investing, along with the
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golden dragon index as well, chinese stocks are nearly back to levels in beijing to levels of mid-march. the monthly outflow since 2020, it is not been a good week. they say is ok if foreign investors leave as they will return to china. foreign investors are looking like -- that shows a positive on the chinese stock market. let's take a look at the market opens across the rest of asia as we of course have a correlation of rising yields, aggressive selloff in the bond market and other selloffs in equities as well. this is the picture as we get to the start of trading in asia at with the australia futures falling the most since the start of march. coming up the next hour, it central banks are likely to
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raise rates to facilitate the recovery post-pandemic. tcs has a new index that evaluates the sustainability efforts undertaken by companies and governments in asia will be speak to them as well. coming up next, the market opens.
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>> welcome to "bloomberg's daybreak: asia." from bloomberg world headquarters. >> asia's major markets have just open for trade, the stories this hour, asian markets affecting headwinds with fed powell expecting inflation -- rising at a faster pace than two years. president biden announces they $.3 billion of 80 ukraine.
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-- of 80 ukraine. didi is in limbo wild they suggest that the penalties deposit -- punish them is too lenient. >> we have the cpi numbers a heidi mentioned, .8% during year for the core numbers. we are still away from that 2% inflation target. for a company -- country that has barely seen any inflation we are seeing those pressures. what we are watching now is the japanese yen, you did at the almond, a 20 year low against the u.s. dollar and perhaps a bit more weakness in the session. 14 out of 15 sessions of loss against the u.s. dollar. given that we are expected to see what the boj does and see yields again and i could add further pressure. take a look at this chart on the bloomberg's showing viewed the 10 year yield. we are at the desk close to the
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upper limit. given that we are having a roderick global bond rout -- broader global bond rout happening right now. the one also -- the yuan weakening against the u.s. dollar. this is we continue to see the korean equity market weaken. we watch the three year yield in south korea that is also the -- near the deck at high -- decade high. >> we see the tandem drop across bonds and equities that has not happened at this magnitude and 30 years. you see this happening in australia and new zealand as well. just about every sector is sitting in the red at the moment, the biggest losers the materials and energy with oil
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heading toward this weekly loss with the falling energy demand out of china weighing in as well take a look at the australian 10 year yield rising in tandem as we get the global bond selloff accelerating as aggressively as we saw before with treasuries overnight as well. kiwi stocks up tens of -- of a percent. probably the kiwi a little more than the aussie given that we had a mess on the inflation rating. taking a look at what treasury futures are showing us at the moment. after what was a really big selloff in the overnight session. particular on that short price-sensitive and of the curve there. -- end of the curve there. treasuries of the five year yield rising, particularly at the end of the yield curve.
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pricing 50 basis points at the end of each meeting, after fed chair powell was really confident suggesting have a point hike was on the table for may at least. crude seeing a little bit high, as i mentioned oil seeing a weekly loss. bonds under pressure, fed chair -- powell and amid that hawkish central bank environment, our next guest says equities a still stronger than fixed income. j.p. morgan asset management, always great to have you with us. take a look at this chart that looks at the fullest -- fully priced in nature from what traders are expecting from the next three meetings, that the basis points for each of those meetings. at the same time we see they tandem follow it comes to
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equities and bonds. where you find opportunity at the moment? is there no better trade than selected equities? >> i think so if you look at the historic environment, this time around as chair powell mentioned yesterday, you will be having expressed a service when it comes to raising interest rates at the next few meetings. i still think the equity performance will continue. first of all, comes back to the point the fed will be raising rates and a time of growth and strong labor market. even though u.s. consumers are facing higher food prices and fuel costs they should be able to accommodate it reasonably well. the other point is that, the duration rests and fixed income continues to be a challenge. if you look at corporate credit
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spreads investment rates at high yield are relatively rich in terms of valuations. the room for capital gain in fixed income is somewhat limited. on the other hand, inequities you can either opt or the value -- for the value rotation and a rising environment or the high dividend play that could also benefit as well. i think there are more tricks in the equities world to deliver return at least for the time being. >> the slump against the dollar should historically benefit exporters, is that good enough reason to look into japan as we see some of that rotational buying into japanese tech? >> i think so, japanese equities have always been somewhat under invested -- estimated by investors around the world. we have yet to see the corresponding pickup in japanese equities in response to the
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weaker yen, even as the local currency value in terms of earnings growth, japanese companies are still expanding their earnings quite decently. valuations are no means quite expensive and japan. i think -- however i think the concerns of the potential up flow further weaken the yen because of the spread between the u.s. treasuries as well as the potential duration of the council in japan because of high energy costs could potentially turn investors, at least for the near term. i do think japanese equities will look a lot more interesting once you have the stability and the yen as well as combining that with the valuation when it comes to japanese equities. >> similar question similar to heidi's, with the chinese equity markets, we are not doing well,
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back to levels before beijing intervened march. you have a week chinese yuan as well, to the have any application for chinese equities? >> in the near term the investors will take a more cautious term when it comes to china. i think the cover of potential capital is chipping away, towards the end of april or may, once the pandemic becomes under better control there is the expectation you will see a stronger rebound in the economy late in the second half. at the same time i think the government could unleash more stimulus into the economy all of which could potentially lead to a more positive reaction on either market. i think it be a tougher time in the near term. over the next three months or so, i do expect them to have a comeback on the back of economies finding a bottom. there are some uncertainties with regulations against the
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adr, we have seen chinese regulators working with u.s. regulators and trying to resolve some of the risks. at the same time, whether the u.s. regulators will be satisfied with the concessions made by the chinese authorities, i think it will be an important point to watch. from the regulations we are setting up the framework in terms of last year and into this year in terms of enforcement. for specific companies they could still face headwinds and it comes to it being applied to them. at the same time we are seeing companies cutting costs and protecting earnings. >> how important will be the role of income and allocations across asia especially with central banks raising rates faster? >> i think the asian central banks, you have seen taiwan, south korea, new zealand raising rates. i think there will be raising rates and a gradual rate
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compared to the fed. it will be pretty low, and i think that will be a field for income events spent -- investment. it does provide some degree of value when it comes to income generation. we have seen more investors looking to high dividend equities such as real estate in order to generate that income. either through retirement or provide more stability when it comes to return. with more volatility. >> always good having you with us, chief market strategist at j.p. morgan asset management. really not surprising given that we also have news of didi being sold and softbank has put more than 12 billion start --
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troubling dollars internet company and that stock creator -- cratering. asian tech executive peter joins us now, let's start with what is happening with arm and the application for the broader softbank group. >> softbank had been looking to sell arm originally cutting a deal with nvidia to sell the company. it could not get regulatory approval over that deal. arm also objected to it. they are onto plan b or plan c. they had been planning a initial public offering for arm, sources are telling us that because of the challenging markets out there they're planning to scale back the size of the ipo. they want to retain a majority of the equity in arm as it goes public. they are still playing to proceed with the ipo.
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they are aiming for early next year with this ipo. in this way they are figuring they can get a better valuation. sources are saying they are aiming for a valuation of $60 billion that is quite rich given the initial performance. they would be able to maintain a majority if they can sell less equity and prop up the valuation. >> does the outlook suggest that chip demand industry earnings will change anyway that will attract more investors to this stock? >> chip demand has been very strong. the industry has been plagued by shortages that have driven up the prices of many different kinds of chips from memory to logic chips. arm sits in a place where it's designs are used widely within the tech industry, but also beyond that and into other industries. there is certainly very strong demand for its products. historically it does not been --
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has not been run to maximize profits because it provides such a wide variety of designs different segments. the questions will be how they will boost revenues and how it will affect demand from their customers. if they can keep the positive relationships they have historically had with a wide range of customers. >> asia tech executive editor peter, take a look at how that stock is trading in the first 10 or 15 minutes so of the session. we are seeing softbank a little bit lower. we are also watching some of the other tech names. they are considering the cell -- sale of hitachi, five-and-a-half percent higher after a company said they had hired outside advisors for proposals for privatization or other strategic
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alternatives there. we are at session highs with six to half percent higher in tokyo as well. earlier they had talked about setting up this special committee for privatization offers a what is best for stakeholders. much more ahead. this is bloomberg. ♪
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>> this is "bloomberg's daybreak: asia." >> russian forces have seized mariupol even as the defense minister says more than 2000 korean fighters holed up in the city -- ukrainian fighters remain holed up the city. ukrainian present volodymyr zelenskyy says the declaration is pretty that's premature -- is premature. >> there are locked in the steel
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plant. as well as many civilians, which are in the same steel plant. many of them relatives. they suggest to have an exchange of those civilians and those soldiers that are wounded to the russian we did soldiers -- wounded soldiers. >> the u.s. is giving ukraine another $1.3 billion in arms and economic aid, $800 million is going to weapons. that is on top of the other eight authorized for the fiscal year. ukraine says rebuilding the country following russian invasion of the cost $600 billion, they have been appealing to policymakers this week for more eight. the prime minister -- aid. they are calling on the imf to donate 10% of their assets. >> up this time we need up to 7
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billion u.s. dollars each month to make up for the economic losses. we will need hundreds of billions of dollars to rebuild later. >> they have barred -- russia has barred entry to mark zuckerberg and other americans. it includes u.s. vice president as well as state apartment officials. moscow band facebook and instagram calling them extremist organizations. 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 am vonnie quinn, this is bloomberg. >> the world bank president said getting aid to ukraine and ending the war is crucial for the global supply chain. he spoke with our global economic policy editor kathleen hays. >> these are huge challenges for
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the world to have a sustained effort of support. i do not know into the future. i know the world bank will be there, we will have a sizable program in the rebuilding effort. i am sure europe will. we have a number of partners in this effort that are already contributing to the trust funds being used in ukraine itself. of course, president zelenskyy made the strong case that this is in the world's interest to support ukraine. >> do you agree that it is in the world's interest and in what way? what is the compelling argument for nations give up their own resource to help ukraine now? >> the direct effect is that ukraine is part of the global production change. the world needs that production. looking beyond that, there needs to be a clarity and the world about values, direction,
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orientation of economies and the necessity of peace. there is a huge interest in having the war stop and having the world not do this again. >> emerging markets have been hit hard, food crises, some of these things that is where people get hit the hardest. that is where a lot of investors put their money. from that standpoint, if there is a self-interested reason for people in advanced nations to pay more attention to what is going in some of these conflict ridden places, that has something to do with that. >> this is a huge point. there has to be a win-win solution for developing. where countries are weaker grow faster and create markets and output that is part of the world community. that is the goal. i have been working in this
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field for a long time. it is just very challenging. there have been many setbacks. the latin debt crisis of the 1980's. the asia crisis of the 1990's. on a hopeful sign we have seen china medical a lot of -- make a lot of progress. india making substantial progress, these are big appellations sectors going forward and create big market opportunities. right now the challenge of higher interest rates is often times not favorable for developing countries and this time included. i'm hoping the central banks freeze all of their tools. they can shrink their balance sheets can also shrink the duration of the balance sheet. those would both be stimulative for supply. that is a critical part of the solution. >> followed by -- take a look at
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how european futures are coming online. we are seeing a libido pressure, and mixed picture after -- seeing a little bit of pressure, a mixed picture after all. there was a little bit of anxiety in the market as we had a hawkish stance. talking about potentially a rate hike as soon as july. take a look at the bond market. you saw the reaction right there, the two-year german rising to the highest since 2014, the two-year -- rising to the highest since 2009, the 10 year surpassing the 2% level after we saw that hawkish stance coming from the boe. holding steady after losing ground in the previous section. you can get a roundup of the stories you need to know in today's edition of the daybreak, bloomberg subscribers go to your terminal you can customize your
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settings. this is bloomberg. ♪
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>> we are seeing a big downside on markets and asia taking a look at the nikkei that is losing ground almost 2%. every sectors in the red and we are talking about the first locked -- losses and four sessions as we continue to see a very weak japanese yen, suzuki speaking that he cannot comment on the possibility of intervention but they will respond to the moves with a sense of urgency. we are also seeing it lose ground by with a 1% if it closes at these levels it will be the worst in two weeks. the s&p a us next -- kiwi stocks are also losing 0.4% for the
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second consecutive session. >> it does look like a rough start, not just for broader asian equities, but specifically what comes the start of trading in hong kong and china the are seeing equity futures flagging another difficult session. take a look at the lead or really the lag the government overnight session, the golden dragon index sliding by 5.1% there. we are seeing the likes of alibaba and didi global trading lower. didi down 9% at the last close after their fate is in limbo after officials rejecting a proposed penalty with the measures not being a for beijing. we are seeing the stock echo does -- exodus from new york intensifying with that delisting possibility. trying to restore confidence we are hearing from the csrc, calling on institutional investors to take on more
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stocks. why isn't beijing pleased with the penalties? >> investors are watching is very closely, investors will be waiting for the delisting, the big corner stored -- stone investment -- we heard last week that didi had not applied to list on another exchange. that rules out hong kong on the short-term. they will be delisting more than likely the shareholders will vote for them to delist at beijing's insistence at the shareholder meeting on may 23. essentially we've been waiting to hear what kind of fine or penalty would be meted down to didi based on the cybersecurity review by the cyberspace administration of china. essentially they gave the recommendations, we do not know what they were, we are hearing that they were too lenient. back to square one now.
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>> there with the latest on didi . more to come on "bloomberg's daybreak: asia." this is bloomberg. ♪
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haidi: we have japan pmi's crossing the board. the april composite pmi coming in at 50.9. services pmi 50.5. both above the level that demarcate growth from contraction. this comes as japan continues to struggle with the impact of the weakness in the yen, as well as cpi numbers coming through at the fastest pace in two years. we had the national cpi
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excluding fresh food, up by 0.8% , faster than expectations. now services as well as composite pmi's, improving from the previous month. and from the previous number in march, the services in particular, have now pulled out of contractionary territory. shery: you mentioned the weakness in the yen, well, take a look at what is happening right now. we continue to see the downside against the u.s. dollar, 15 consecutive session of losses in 16. . this would put the yen at the 20 low. -- this would put the yen yen on a 20 year low. the japanese finance minister said they would respond to the markets with a sense of urgency, but couldn't really comment on intervention. let's bring in our senior effects and rates reporter, ruth carson. the key question right now, will eventually have to intervene?
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ross: that is what markets are tilting at. when you look at the market action, the yen is now down more than 10% against the dollar in just four months. so it depends on what kind of intervention that markets will truly see. to put it into perspective, the commonwealth bank of australia, for example, says intervention is likely by japanese authorities this month. but without the full support of the u.s., it is likely to fail, or just provide some artificial support for the yen briefly. others say intervention is only likely to give it a bit of a pause in terms of the losses. so, yes, all eyes on this space, on just how and when intervention can take place. haidi: that boj's bond buying, we could see that continue or be revived next week. is it really having much of an impact on yields, given the
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growing gap that we see? ruth: that is the multimillion-dollar question right there, as to the effectiveness of the policy. they do essentially work to halt the rise in yields, but it will not be truly effective in pushing yields lower, one could argue. yields are pretty flat at the moment in japan on benchmark, it is about 0.245%, so yes, more intervention is likely. as for its ripple effects through 2 billion, as you can see, people continue to test the boj's resolve by selling it. haidi: our senior fx and rates reporter ruth carson in singapore. let's get to vonnie quinn with the first word headlines. vonnie: federal reserve chair powell says a hike of 50 basis points is in play at the next meeting in may. he also signaled support for more aggressive tightening to curb inflation, adding that he sees front end loading policy
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moves. he spoke at a panel on thursday, with the fed about to enter its traditional blackout period ahead of next month's meeting. >> at also think there is something in the idea of front-end loading, whatever accommodation when things is appropriate. so that point in the direction of 50 basis points being on the table. when we make these, decisions at the meeting and we will make them meeting by meeting i will say that 50 basis points will be on the table. vonnie: leaders from germany, spain, and article, have asked french voters not to back far-right candidate marine le pen. in a tweet, published on thursday, their leaders described le pen as a candidate who openly sides with those who attack freedom and democracy. australian opposition leader's election campaign has been interrupted, after he tested positive for covid-19.
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the labour party leader will be isolating at home for the next seven days, effectively putting him out of action less than two weeks before the campaign. he says he is feeling fine. the election is set for may 21. several wall street banks and some international ones, too, are supporting elon musk's run to buy twitter. the support will come in the form of debt from around a dozen banks around the world. morgan stanley, musk's advisor, has pledged the biggest chunk, about $5 billion. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. ♪ haidi: this seven about fund is betting on health care investments to help question it from inflation that is eating into longer-term returns. its managing director told us exclusively that rising prices remains the biggest risk, along with how central banks deal with it. >> we are hugely exposed, 60% or
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70%. first of all we have to see how we can actually create value, value-creation of mach 2 these companies, to see whether they can have sustainable growth going forward. you can only achieve that in this current environment, where you need more productivity, more shifting to improving the cost structures, as well as the service quality of what we have. so it is really the investments that we have been our portfolio that we will try to achieve. >> as it stands right now, china is still investable. it is a debate about whether china is or not. >> has a long-term investor, you cannot ignore china. we are exposed to china, and that is something that i truly believe will -- it is already a major economy, and it is in transition. like i said, when we actually look at it, we are delivering
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long-term, sustainable value for our stakeholders. thanks, in cycles. as an investor in china, yes. >> you are looking at rebalancing your portfolio. how might that look like, in terms of regents, asset classes? give us a sense of the breakdown that you are looking at. >> i will not give you the percentage, but i think in general, what we would like to have at the balance, yes, we remain significantly in the country, malaysia. but then we are looking at domestic parts of developed markets, emerging markets, and right now i think we are under, when it comes to developed markets. in emerging markets, we are looking at southeast asia, china as well. developed markets, u.s., europe, and japan.
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we also have exposure in india as well. asset classes, we haven't been in -- markets, but the bulk of our investment in international markets is really private markets. >> do you find cryptocurrency attractive? is it something that you may be looking at? >> we do have risk appetite. it is unlikely that we would be investing in crypto-currencies. but one thing i would say is, it is actually an interesting space when you look at defi. that's because it is actually more of innovation. we also see countries both are experimenting in their own digital currencies, the cbd central, bank crypto-currencies. china is looking at a program. this is an area we are keeping watch. i think we are monitoring, particularly the innovation that is happening now in digital
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assets. >> markets preoccupied with elevated inflation, has inflation peaked? how is that factoring in in terms of how you view potential investments? >> we do see real returns from investments lowering. and i think what we want to do is going forward, is, is to see how long it would take for the country's inflation to be arrested. right now we are making sure that we stay resilient, stay focused on the longer-term investment profiles that we have. we are into certain markets already, for example, health care, institutions. shery: that was the malaysia
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sovereign wealth fund managing director. coming up next we would hear from the apac president about their index. this is bloomberg. ♪
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shery: india giant tcs has developed a new digital sustainability index for the asia-pacific region. it evaluates how ready companies and governments are with achieving their green goals. the study highlights a vast majority of green digital, sustainability can deliver a competitive edge, but their efforts are not sufficiently recognized in the region. joining us now is girish ramachandran, asia-pacific president at tcs. good to have you with us. what is going on across asia why are these efforts not recognized? girish: good morning. first of all, it is a pleasure to be speaking on world earth day. as we see, there is significant push towards digitization globally. every company in the world is becoming a technology we realized that there so much pushed and digitization, nature also start measuring the impact
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on sustainability goals. and is there enough of a push towards sustainability goals? this is why we came up with what we call the digital sustainability index. we interviewed something like 200 companies across the asia-pacific, oppressed on. the idea was to find out where is the intersection between technology and digitization. haidi: so what do you propose as being the ways that we can accelerate the transition? girish: what we found is that there is a lot of positivity around digital sustainability. the biggest positivity which we saw from companies was that they saw their own competitive advantage going up, as well as their own reputation going up. but what we also figured out
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during our study was that there were three big challenges. the big challenges were on limited budgets towards assisted ability. the second one was a lack of expertise. and the third one was the return on investment. if you look at all three, i think those will be the major inhibitors of digital sustainability. and we need to keep pushing this particular agenda forward. haidi: we heard from a billionaire activist investor carl icahn, really calling out some of his peers in some corporations for what he calls "hypocrisy" when it comes to wall street efforts on esg. he said "it is the biggest hypocrisy of our time." and that the world's many managers, bankers, lawyers, the entire group seems to be engaged in a cover-up, and to promote
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esg's impact, and also criticizing them for selectively selecting which esg issues are important. i am really curious to get your thoughts on that, whether you think there is an element of that hypocrisy, and certainly the criticism of things like green washing, for example, the tech space is not immune from either. girish: what you say is true. there is a significant amount of green washing happening. but we should also recognize that there are enough companies in the world clearly calling out and moving the esg agenda forward. even in terms of the goals, we will be falling short of achieving sdg goals by 2030. and asia will be lagging behind in that journey.
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but we recognize that even in companies across the asia-pacific, there is a significant push towards one of the goals. for example, in australia and singapore, we realized there is significant push towards the environment. whereas if you look at thailand and malaysia, there is a significant push toward social all the countries were looking at what are the economic benefits of sustainability. so unless we have some corporations merging all of this and looking at this together, i think this is something which will be a concern, and we need to keep pushing this particular agenda forward. shery: when it comes to digital sustainability, which countries in asia are doing better than others, and which countries in the world are reading? girish: i can only talk to you about what is happening in asia. what we found is that, thailand, for example, is significantly
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leading. there are countries like singapore, japan, and korea, who have a very positive impact on -- focusing significantly on reputation, as well as new zealand. whereas there are other countries which we found really interesting, there are countries who did not really focus significantly on -- they were focusing a lot on economic reasons, countries like australia. i think we need to significantly push this agenda forward in countries like that. haidi: great to have you with us, we appreciate your time. parish ramachandran, asia-pacific president at tcs let's get you a quick check of the latest headlines. bloomberg learned that china's state run energy companies are eyeing shall state in a major russian gas export project. cnooc and others are in touch with charlotte over its 28% holding in this company.
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shell is exiting its russian operations, including a joint venture with gazprom, following the invasion on ukraine. the road's biggest maker of ev batteries has posted a full-year profit that beat estimates, and announced plans to spend $2 billion on a new factory in china. the major teslas supplier/net income for 2021 more than doubled more than 2.5 billion dollars. still, they scrapped a dividend, and warned of surging raw material costs. sources say bank of america is moving some of its staff from singapore -- to singapore from hong kong. some senior m&a staff are also relocating. singapore is set to drop all virus restrictions. 75 is the new for basis points. shery: i know, we are getting the new call by nomura, saying
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that after 850 basis point hike in may, in june and july, we could also see hikes from the federal reserve by 75 basis points in both june and july. so really, more and more analysts are getting hawkish about the fed. and we have already seen swap contracts pricing in 50 basis point hikes in the next two minutes. -- next two meetings. but nomura says that we could get 75 basis points more. even today, fed chair powell last that half-point interest rate hike next month, and signaled support for further aggressive threatening to come. this as we continue to what fields surging around the world. we are watching the -- talking about the 10-year yield in treasuries, now about the 2.95 level. we have already seen the front end of the yield curve here in the new york session appreciate. talking about the policy sense that a two-year rate, at one
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point topping that 2.73 level, and finishing at the highest levels since 2018. this follows moves that happened in the government data selloff in the euro area, on heightened expectations of more rate hikes, whether from the ecb or the bod. plenty more to daybreak asia." this is bloomberg. ♪
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shery: the yuan has had a pretty tremendous week already. i will colleagues saying that friday's pboc you unfixed could be the best signal of just how ready china is to hold the drop of the yuan. this as we saw the reference rate in the previous session being fixed at a similar rate to what expectations were. and remember the wednesday fixing which was much weaker, more than 100-basis point different from what economists had expected. and people are starting to wonder, does china want a weaker yuan to help the economy? take a look at the massive plunge in the yuan against the u.s. dollar. we have seen them break those levels, the weakest level in a couple of years already. haidi: is.
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and they could be said for more pain today as broader sentiment falls. let's get more with our guest, catherine. even without the broader downside risk sentiment, the disappearing risk appetite we are seeing across the region, there is a glut of idiosyncratic pressures for chinese stocks. guest: good morning. absolutely. it has been such a wild ride in stocks the last month or so. just a month ago, all of these government bodies and officials came up to say, we will stabilize the markets, we will change and sentiment. you are now standing just a month later and back to where we started. and today we are just a whisker away from breaking those loads in mid-march because people are so afraid of what is going to happen. shery: what are some of the key
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points we have to be watching, especially for the chinese yuan and how it affects the equity space? catherine: last night, there was a statement released, a rare one, saying they had gone to incisional investors and banks and insurers, to encourage them to buy equities. sentiment in this market is so weak right now. so any of these signs for policymakers for government bodies to come out and support the market is quite welcomed. however, there is a mismatch. in the last month, we have seen what the policymakers are saying and what the policy actions have been, a mismatch. investors are carefully watching and trying to figure out what they're going to do. haidi: catherine ngai, leading our asian equities team there with a start ahead of china equities trading. take a look at the bond selloff
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here in asia. this aggressive selloff that took place with treasuries overnight, gripping now agents of rains. take a look at the 10-year yield in australia, the yield rising to the highest since november of 2014. lots more to come on our markets coverage next. ♪
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david: good friday morning from hong kong. it is 9:00 a.m. here, also in beijing and shanghai. welcome to the "bloomberg markets: china open." i am david ingles. fed chair powell toughens his inflation stands and says a 50-basis point hike in may is on the table now. china asking its big institutional investors to boost stock holdings as the rout


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