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tv   Bloomberg Markets Asia  Bloomberg  May 15, 2022 10:00pm-12:00am EDT

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rishaad: s 10 a.m. in hong kong and singapore. i'm rishaad salamat it with haslinda on it. haslinda: we are expecting dire numbers. further deceleration in china's economy. of course, we've already seen the p.m. i normally manufacturing numbers in april, contractions. suggest the numbers today will not be pretty at all. take a look at what we are expecting in terms of reduced production crude 0.1%, assets up seven percent as retail felt, a contraction of 6.6% in estimates from economists. rishaad: the big shocker here, retail sales. and of course no supplies -- no surprise even though it was
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accounted for. covid lockdowns across china are the obvious excuse for this 11.1% fall that we have seen here on year retail sales looking at contraction. 6.6%. this is truly an awful number, does not reflect what is been going on on the ground in the real economy. production, we're looking at perhaps an increase of about a half of 1% pretty we've got a decline of 3%, 2.9% down. on top of that, we have a look at fist -- fixed assets and property investments, both lagging in estimates, all around, it does look as though these figures are way weaker than expected. haslinda: and we are already seeing a reaction from the market this year. market index advancing current now it is starting to decline. the one maintaining its strength. remember, we have seen it you want weakness on consecutive weeks and currently, the yuan at
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678.75. of course this begs the question what will the pboc and the government do? in fact saying that china will tap both in terms of fiscal as well as geopolitics. so far, responses have been muted. rishaad: on top of that, unemployment climbing to 6.1% higher than the percent anticipated. and they talked about the implement situation in china as "gray. let's give it over to jacqueline wong, chief economist. on the face, what are you reading? there's no way on earth that the chinese economy expanded in april. jacqueline: i think in april, the economy was in a recession because industrial production -2.9% at seven, so 6.1%. the headline gdp numbers should
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be massive in april. and retail sales suggest again consumption was hit of the hardest by covid-19 related restrictions. as well as lockdowns. and also, in april, in nominal terms, it grew by 3.9%. that highlights how dire the economic situation was in china. rishaad: or could be as well. let's send it over to just look at the yuan story. the offshore you want has escaped trading at 1/10 of 1% weaker. so this again begs the question can this five-and-a-half percent target set by the party be met? can it do that with covid
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restrictions? on top of that, can it also get to that level of growth if they can maintain a stable financial system, given the debt situation in various parts of the economy. not the least real estate. jacqueline: even before this round of the omicron wave, it is very unlikely for the government to fulfill the five-and-a-half percent annual growth target. now come up with this wave dealing a big blow to chinese economy, growth wasn't shown in april to be bigger. even quickly unlikely to have the five-and-a-half percent growth, actually in april, we base our annual forecast to four and a half percent. now we think that forecast actually face downward measures. so we think it is definitely
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time to see it weaken further because in the past, in q1, the currency got supported. now export is facing downward pressure. so we think the pboc keeps a hands-off approach to lead a market drive the currency to depreciate. haslinda: we are seeing the spillover effect from both dire numbers out of china and after the data, down for tense of 1%. the yuan front and center, weakness in particular down about 7% this quarter alone productive wondering how much more downside for the yuan, how much is already reflecting the weakness in the economy? jacqueline: actually, the target is seven, so that shows there is still some room for the currency to move higher. because basically we think all
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of the economic fundamentals points to weakening the currency because as we just said accounts and growth has been slowing. it is in capital accounts because of the wider differential between china and the u.s. and now because of this disruptions to china's a supply chain, i think gross would likely slow down as well because of the poor performance of china's equity markets. we have seen some decent outflow as well. so we think it is from either financial markets or economic fundamentals, it all points to further reflecting the currency. haslinda: jacqueline, perhaps no change to the m 11 ltr. something where liquid he is not an issue is the real economy that is needing some kind of support? jacqueline: yes.
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we do agree with that, because under virus lockdown, administration said more monetary easing is like pushing. it is not effective, so it is already reflected by a poor credit number in april. having said that, the pboc does not change the rate, which means the pboc has adopted a series of measures to lower funding costs to targeted entities. take a look at money market rates. either overnight or seven day rate has been trading below 2%. although yesterday, the pboc caution to the mortgage rate more. for the first time homebuyers, lpr -20 basis points. and that will hopefully reduce the interest rates burden on homebuyers. at the same time, the pboc have introduced a series in trying to
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lower the costs for policy ranging from micro and home business to carbon reduction and high tech. so the pboc is more likely resorting to targeted easing in a more restrained matter. -- manner. rishaad: thank you for joining us. jacqueline, chief economist in china. the data dewpoint to ultimately contractions in the chinese economic retail sales, shocking. the estimate, there you go 11.1% contraction for retail sales year on year. a 6%, investment as well. below estimates, but not by that much grief the jobless rate is higher than the industrial production figure. rather key and it was nearly 3%. haslinda: in question at
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five-and-a-half percent, gdp target, china has 42022. perhaps it is time to relook at that number. and you can go to bloomberg for more on this. t live go. for commentary analysis. for now, here is the first word news with vonnie quinn. vonnie: good morning. sweden is set to apply for memory shipping nato in a dramatic change for europe secured a landscape at russia's invasion of ukraine hasn't emboldened nations who have historically shunned nato. once the respective parliaments have signed off. >> this would be an historic moment. in nato, membership would increase our shared security. nato store is open and that aggression does not pay.
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vonnie: oh is set to offer solutions to avoid breaching sanctions at buying russian gas while clarifying vladimir putin's demands to pay in rubles. sources say the european commission will tell companies to make a clear statement that their obligations are fulfilled wants a player in euros or dollars. companies will be allowed to open accounts in russia's gas banks pretty chinese president has warned of an improper accumulation of wealth. previously unpublished remarks by common's party journal, he said china needs to expand the real economy and avoid mass joblessness. he warned of financial and property market list. india's ban on wheat exports comes amid a record heat wave and supply constraints amid were in ukraine. of decisions made to protect the country, it will allow exports
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to some countries based on request. 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. rishaad: still to come on the program, oil in the spotlight as germany announces its plan to ban russian crew by -- if the european union refuses to agree on coordinated action trigger haslinda: plus, we speak excessively to domain president and ceo about their plan and applications. which was shall blocked due to market volatility. we'll be back with us in just a moment pretty keep it here with us. this is bloomberg. ♪
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haslinda: welcome back. let's recap the ugly, ugly numbers out of china this morning. we have retail sales in particular slumping more than 11%, almost double what is expected by economists. industrial production, 100% increase, but a contraction of 2.9 instead. the rate currently staying steady at about 6%. it is not a pretty picture out of china. that is on the back of what the pboc fell today, which was to cut mlf and npr rates. analysts, investors have been looking forward to that. rishaad: that has certainly going down. let's have a look at the end of life, mark cranfield reaction to this pretty mark, what is the markets take?
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how much of this is priced in? if we look at the industrial retail sales now, they were weaker than any of the estimates out there. when you look the -2.9 at rate of industrial production, that was the worst month report on that data set since may of 2002. mark: the reaction is quite interesting. we got s&p 500 futures falling more than the on short chinese markets. china's csi 500 is only modestly down, but the s&p 500 has fallen harder since the data came out. it suggests that the rest of the world is having trouble getting used to the idea that the china slowdown has very big consequences for global progress group there are no traders in china that already knew that. they had gotten used to the idea and there have been lockdowns for some time in shanghai and other places. they do the data was on the way. they may not have expected the
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size of the mess that we had today, but they knew that this quarter was going to be particularly bad for china anyway. and that possibly is why i'm not seeing such an extreme reaction in chinese assets as you are in other places. also, the fact that the pboc left the mlf rate unchanged is not such a big deal when you consider that the unexpectedly lowered mortgage rates. that was a surprise and it was -- it again it shows they are focusing on very specific needs within the economy. they know the property sector needs help, so they are pursuing that direction. that is probably what they are going to continue to do looking at parts of the market which need help. the pboc is doing the right things, but of course, the main frustration in some areas is that they did not -- the rrr, they can still do reserve ratio if they need to. there is more policy to be forced and that yuan is weak which will help as well. in the short-term, you cannot
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take away that this was a foregone conclusion. haslinda: we have a reversal. economy down 2/10 of 1%. at the same time, bringing along some of those asian currencies like the aussie, further downside for asian currencies from here. mark: as long as the yuan stays on the weak side it will affect every currency within its orbit. the aussie is one of those, the korean you want, singapore dollar, those are key currencies that trade closely to china. there might not be too much more downside for the yuan in the short-term. what we saw in the fixing came close into what the estimates were. possibly one of the important factors is that the csx index has fallen quite a bit. yuan is adjusted by 6% since the end of march, which the pboc will want to be relatively pleased to see that happen. so from here, we will see less volatility in dollar yuan.
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it does not mean that it is going to come down quickly. it will probably hover around the 6.8. that will be a bit of a pivot area for it. as long as dollar yuan does not quickly rise toward seven, the pboc will be fairly relaxed and the volatility in the currency market is going to down a touch greater of course, a strong u.s. dollar will not go away in a hurry. in terms of what it means for the rest of asia, we will probably get consolidation for asian currencies from here. all of them slowly on the weaker side, but there is no particular reason to have a big deterioration from here. rishaad: mark, i got to correct myself. actually, the industrial production number was the worst since 1990. worst monthly record ever in that data, back to the terminal in 1990. it is the second time production has contracted in china. the last time was 2020, of course, when we were in the midst of the pandemic or the start of the pandemic, i should
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say there. talk about market reaction, how has the pboc been looking at these numbers? i'm sure it's already i suppose chiefly aware of the condition on the ground. mark: yeah, they would have been watching the effects of these lockdowns and supply disruptions. for some time, this is not something that they would not have already factored into their policy. the pboc also gets the impression that they are panicking. they want to do everything in a manner, just because one set of data has come out, they are not going to immediately react. the last thing they would want to do is to be seen as a central bank that has a knee-jerk reaction every time a new set of data comes out. that is not their style at all, they are much more methodical, long-term process central bank. and so, they would again be factoring this in, but they may have already decided that this quarter was going to be the worst this year for china already. and they may be looking ahead and seeing that as we headed to the third quarter and fourth
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quarter, there will be some improvement in the chinese economy. and they can calibrate their response depending on how those quarters play out. for now, of course, they will be concerned. we will probably see more easing of some type in the near future. haslinda: yuan at 6.8 trademark cranfield, we thank you for your insights pretty plenty more ahead. keep it here with us. this is bloomberg. ♪
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haslinda: welcome back and here are the latest business flashes. chinese developer sunac is such to amid a local bond payment after it announced that the
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company said initial planned payment to investors is the first principle payment on an 18 month extension. paulson has agreed to sell indian operations to a group for billions of dollars. 385 rupees per share for the companies 62% stake. they will inherit a stake in hcc, which has been pivoting away from its traditional cementing. they posted their highest profits since the record stockmarket listing pretty this boost from oil prices. this is in the wake of russia's invasion of ukraine pretty that income rose to $40 billion in the second quarter, up 82% from a year earlier. a record share price cost apple to be the world's most viable company.
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rishaad: better get to the data we had a short while ago, big news in industrial production. contraction not seen since 1990. got a contraction of 2.9%, looking at findings in retail sales. way below even the lowest estimates. let's get to stephen engle, our chief north asian correspondent pretty what we described this as a shocker? stephen: bring up those numbers so we can riff off them, because retail sales, we do they're going to be bad. and when you take x million people out of the shopping chain and this and that, even during quiet times and shanghai, you could not have delivery, so online shopping was decimated. the industrial production number is astounding. i have been covering china for more than 30 years and it is always in the double digits usually. always. rishaad: this is double-digit the wrong way. stephen: so two point 7% is significant, because you go back
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to 1990, i'm dating myself here, but i lived in china in 1990. it is in the northeast, that was the whole d emphasis on industrialization in the northeast. that was a heavy, heavy industry. millions of people were thrown out of work in 1990 and this is the first time -- or actually the second time since 1990 that we have had a contraction on a year-over-year basis, on a monthly report. so that is significant. a very different economy now, of course, then 32 years ago. much, much larger, which makes it even more astounding. rishaad: not to look on employment figures that much, but it's interesting that we have them talk about the situation on the ground being great. people are looking at the data as if it has veracity, aren't they? stephen: veracity is a loaded strong word. you have to realize that the official data employment in data -- in china is a small sample
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size. there is a large, large part of the chinese economy that is called an informal economy. so if the officially surveyed economy is down 6.1%, the informal economy that is not reported could potentially be much, much larger. so when they say it is a great situation, he needs it. haslinda: well the numbers today pretty grave, stephen drew you got to wonder how much impact that will have. on the government and how xi jinping use this policy. without be greater pressure for them to get away from it now? stephen: that is what you've seen in the last couple of weeks. a different set of tone from xi jinping, who is head of the party. and the president. he is talking more in the ideological tone. and of course, pushing, pushing covid zero is a hallmark of his policy. whereas lisa chung has been talking about the grave impact on the economy. so at some point, and it is
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happening right now in the data, these two theories collide. support the economy versus support -- versus covid zero. haslinda: chinese assets under a lot of pressures here. extending mark to -- you want down to tens of 1% credit stephen engle, thank you so much for that could were going to leave it there. continue watching at live go. you will also find diary entries coming up today and later this week, as well as some of the events you may have missed earlier. still to come, big moves in oil markets after germany announces plans to an russian crewed by 2023. keep it here with us. this is bloomberg. ♪
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rishaad: 11:39 a.m.
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markets going on the lunch break. the nikkei, 2/10 of 1% to the upside, could be with at the doorstep with what is happening in china, retail sales down 11.1%. perhaps a fallback of about nearly half that, industrial production, the worst status that we have seen on that ever, you can argue, since 1990 at least, a decline of 2.9%. it's about what going on with japan as we go to lunch break, we still have the tech sector moving to the upside, concerns are pervasive about the federal reserve. haslinda: that's right. in china, the assets are under pressure, reversing earlier gains at least the csx index down for tenths of 1%, the
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markets are saying you know what, the pressure and decline is not as bad as what was expected, but the pboc did cut the mortgage rate, announced a phase 3 opening of shops in shanghai. those moves supporting assets at this point in time. take a look at where we are in terms of commodity, brent down by 1.5%. gains for iron ore and copper. copper up to tenths of 1%. we are tracking wheat on the back of what india did, putting a ban on exports, up by 5%. 1241 is what we're looking at. we will keep track of those numbers. here is vonnie quinn with the first word news. vonnie: goldman sachs senior chairman lloyd blankfein has urged companies and consumers to prepare for a recession. he said it's not a certainty but
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there is a narrow path to avoiding it. he said the fed has powerful tools to bring down inflation and has been responding well. >> do you think we are heading towards recession? >> we are certainly heading -- it's a high risk factor. there is a path, a narrow path, but i think the fed has powerful tools, it's hard to finally tune them and see the effects quickly enough to alter it, but i think they are responding well. it is a risk. if i was running a big company, i would be prepared for it, if i was a consumer i would be prepared for it. vonnie: the pboc cut the interest rates for new mortgages. the central bank announced on sunday first time buyers will be able to borrow at a rate as low as 4.4%. china's housing market is a
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crucial source of growth for the economy but has been in a slump for almost a year. three like as new prime minister held talks with the asian development bank in an effort to replenish food, fertilizer and medicine supplies. he says the government faces an immediate challenge in securing fuel. he was appointed by the president last week following violent protests. scott morrison has made an impassioned pitch for his government to be reelected for a fourth term less than one week -- week from a national election. the coalition held the campaign launch in a state crucial for his party to win the election. polls point to an opposition victory. >> it's been one of the most challenging times we have ever known. but i'm here to tell you today that despite what we have faced,
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we have remained true to the promise of australia and australia has prevailed. 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. rishaad: thanks. of course, data driving the markets, the commodities complex, copper, just as soon as those numbers appeared went south. fasted crude. brent is trading at 1.3% lower, 1.4% down at one stage. looking at brent that $110 a barrel. let's find out the implications of this as we bring in our asian energy reporter. take it away. reporter: these numbers came out and people are already nervous about what lockdowns are doing.
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retail sales, industrial production are down, china's massive fleet of coal power plants produced 12% less than they did the year before, the biggest drop since december 2008 after the financial crisis. with lockdowns persisting in shanghai, hopefully not much longer and in beijing, i'm restricted to working from my hotel room. there is a lot of worry it's not going to get a lot better. there is a little bit of risk off in the markets as people are concerned may be china does not bounce back from this as quickly as the government is saying they are going to. haslinda: the thing is, we have the eu meeting to talk about a ban on russian oil. how is this likely to weigh on the oil market? dan: oil is trading at $111 a barrel, and that has come as
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demand has weakened in china. we can only imagine what prices would be like if their economy was going up. germany is planning on getting rid of russian oil by the end of this year which is going to further sow supply chain issues in the way energy is transported around the world. if china is able to rally gets economy in the next month or two, that's going to add fuel to this type oil market and could propel prices higher in the coming months as traders try to balance things out by shifting barrels here and there to keep the market balanced. haslinda: while we are mulling over what that may mean, iran says if it needs to, it will double its supply. mike that counter any sort of -- might that counter supply shortages? dan: it would be nice of that
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happened. iran's oil infrastructure has been underutilized for the last couple of years. whether it's been well maintained and is able to ramp up production, that is a question not a lot of analysts have a time of confidence in. the equipment it takes to process oil and export it is complicated and if it's not operating all the time, there are questions over whether they can ramp up fast enough to make up for supply deficits if china's economy is able to ramp back up to its pre-pandemic levels. rishaad: let's move to india and have a look at something else, we're talking wheat exports. restricting them, something the world was counting on to alleviate supply constraints
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sparked by the war in ukraine. let's get to james. look at this. 5.2% increase in wheat prices in the last two days. does mean further pressure is likely to keep on being piled on agriculture commodities? james: definitely. we have already seen global food costs at a record earlier this year, chances are they will keep going higher. what we will need is a series of good bumper crops globally to relief supplies, and that is not in prospect at the moment. we are seeing food protectionism. this move from india, this follows a few weeks after indonesia banned exports of palm oil, that has sent up prices. in general terms, the world is prone to erratic weather these
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days over the last two years, this has become more extreme. u.s. production of winter wheat falling to the lowest, the smallest crop since 1963. we have dry weather problems in europe, and above all, the war in ukraine has choked off exports from the european breadbasket. it's very hard to see where any relief is coming from. haslinda: talk to us about the impact this is having on the wider economy. james: it's breathing -- bleeding into the inflation narrative. energy costs are high and that is supporting agriculture prices. food is getting more expensive. you hear more and more anecdotal stories about people finding flour, especially in the north
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african and middle eastern countries that depend on imports of wheat. it's going to feed through to inflation, it makes the interest rate issue much more difficult to deal with for central banks, because they have to see how they can control inflation without a recession. rishaad: does this mean we're even more subject to weather conditions because of what happening out there, does that mean there is no way of knowing when we will see a respite from high prices? james: i can only agree with that. you have global warming, climate change, more volatile weather, erratic weather, that's causing havoc. there was an immense drought lester in canada, -- last year in canada.
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you have record temperatures, heat wave in india, one of the reasons production has fallen, they have to restrict exports. the world is getting more volatile in terms of whether and that is leading through two crop prices. haslinda: the asia agriculture editor. still to come, our guest shares a company's latest ipo plans. the exclusive is coming right up. this is bloomberg. ♪
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rishaad: looking at the reaction to what happened with the data we got from china, retail sales way weaker than anticipated, production figures showed a deep contraction. you have to go back to 1990 before you see any number that is similar to that. on the hang seng, down. we were up. the csi 300 extending losses, brent crude, 1.3% down, wheat to the downside, that number is way lower than what it was before,
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iron or, likewise, industrial production responsible for those two. also with what we saw with car sales and other manufacturing elements to the chinese economy really affecting oil prices. you can see straightaway, quite a few markets shut. singapore, malaysia, thailand and others not trading or various reasons. no reaction from them thus far. haslinda: that's right. a billionaire is preparing to list a unit on the hong kong stock exchange that was shelved in 2018 due to market volatility. we are joined by the president. good to have you with us. we have to draw a distinction. talk to us if you could about the revised ipo plan, some
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insight over whether that will go ahead. guest: v3 is putting the ipo in hong kong. the business is doing well, and the last two years of the pandemic, we have seen shares fly in the market. definitely they are going ahead. haslinda: the ipo plan will go ahead. how soon will that happen? taha: maybe this summer. they're looking for what is the best time and they will go ahead. haslinda: talk to us about the longer-term plans and how is that being impacted by commodity prices? taha: from day one we created a brand that appealed to a large market globally. when you have this kind of niche
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market, you are not affected by small points that can happen today, and that is why we are very happy to have this plan, we are listing $100 million to make sure our brand is evolving all over the globe. rishaad: how is business overall? taha: the business is not too bad. i was looking at this during the pandemic, and we had a great business in e-commerce because we focused on e-commerce, and we are more short today than yesterday, the two years of the pandemic made us make a great structure and we are today looking at increasing this kind of business. it's quite interesting to see the demand is more when you have
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a great brand. today, i feel the pandemic showed that when you have an equity brand, it can help you make sure people are ordering without coming to check, because they know the brand. rishaad: supply chain bottlenecks have been a huge issue. how to the effective? what have you done -- how do they affect you, and what are you doing to mitigate the effect of them? taha: to have the supply chain to be global everywhere which means i don't focus on one market to have my supply. today, i'm happy to have this kind of structure, when a country has an issue, i know i can have a second part to buy from. this was key to me, i remember my financial people told it you must have a contract, i said no, when the quality is bad i will buy from somewhere else.
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i can take from another place and this is how i manage it. i'm happy to have this policy from day one. haslinda: is that adding to your cost? we have supply chain disruptions, inflation, higher prices. how is that affecting your costs ends do you expect that to trickle down to the consumer? taha: from day one, i preferred to keep my price very tight, i don't want to increase. of course, we saw the shipping issues the last two years. this would affect pricing. but, i'm very careful not to make my consumers say, this brand is taking an opportunity
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to increase. i will look at pricing to make sure the consumer does not pay the high price. rishaad: give us a bit more on your ipo and why you are coming to market, whether you can raise money elsewhere by other means, and ultimately, what you hope to achieve? taha: today, we feel everything will make sense for the next three years because for v3 torme, we feel the market has huge potential, tea, coffee,
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everyone who wakes up in the morning, you choose between this beverage. this has a tremendous future and this is why we are extremely confident we must invest more, and make sure we have new markets even with the pandemic. for example, africa, we found it was not too much affected by the pandemic, or the middle east, and this will up -- this will help us to increase our presence globally, and today we are happy to make sure we are doing business in asia and everywhere else. haslinda: i want to touch on sri lanka. given with happening, is your brand getting impacted by a? taha: not really. we have 800 type of teas from all over the world. sri lanka is a minimal business
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for us, and of course, those tea leaves are for the mass market. they will not affect us at all in our business. haslinda: thanks for coming in. good to have you with us. plenty more ahead. keep it here with us. this is bloomberg. ♪
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rishaad: we are looking at what happened at the top of the hour. industrial production is way weaker than anticipated, going back to 1990 two see a contraction like this. there has only been one month before, 2002 we saw contraction, and 2020 in march as the pandemic started. looking at retail sales, 11% the fallback there, all of that affecting markets. the yuan weakened, offshore at 6.8, the csi 300 three quarters of 1% down. overall, the commodities side is taking some of the brunt, the aussie dollar, too. haslinda: that's right.
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let's take a look at commodities. copper took a hit, back of the numbers out of china, very dramatic picture, china saying consumption will rebound, advancing on gains we saw earlier this morning. rishaad: china saying the chinese economy is showing good growth momentum, not sure what they are saying, talking about shanghai that they see normalization in the city in june or various areas.
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we are seeing covid lockdowns essentially being lifted as well. looking at some carmakers being affected by data for retail sales, we were not able to get to the showroom. the least of their problems. getting food was the big deal there, you can see the fallback take place. also seeing the oil price heading south, immediately after that news. haslinda: that's right. plenty more in the next hour of bloomberg markets: asia. stay with us. this is bloomberg. ♪
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rishaad: it's almost 11:00 a.m. in shanghai. welcome, i'm haslinda almond. rishaad: china's april data dropped, rattling markets. oil down for the first time in four sessions. getting pummeled by disappointing news. india's move to restrict exports , further food inflation. haslinda: that's all about the dire data out of china, a deceleration in the economy, contraction putting pressure on asset classes. we have the yuan under pressure, currently flat, but it was in touch with 6.8 slightly earlier,
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that is dragging along the likes of the commodity space. brent crude reversed gains on the back of that data, currently down 1.3%. $110 is the level we are looking at. copper higher by 1%. 10 year yields are climbing 1.6%. rishaad: just quickly, the data, what to be have? retail sales, 11.1% contraction. that says it all. industrial production, to 1990. here is mark cranfield. mark: seeing a decent reaction, s&p 500 futures with a bit of a knee-jerk move lower.
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i suspect it will not stay down for too long. the rest of the world is starting to factor in that this will be a bad quarter for china. people in the trading world were recognizing that already. the data is a bit worse than forecast, but we have seen lockdowns are fairly unpredictable, it's hard to make decent predict -- projections about what this means for the economy. we have news saying shanghai expects to go back to normal life in june, that's not far away. some of the measures being taken appeared to have slowed down. it's quite possible the worst is behind china in terms of what covid measures meant for the economy. that will take a while to come out in data anyway. it's possible this will filter out and we may find the early
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weakness we are seeing wears off and by the time trading gets going, they will see this was probably a bad set of data but a bit backward looking in terms of what it means for china. haslinda: what does it mean for risk assets? mark: you have to factor that in with the other things going on in the rest of the world, the federal reserve is going to start raising by 50 basis points in several meetings, not just the one in may. a lot of that has been digested and that's partly why you saw stocks finish well last week. we will probably be in a bear market for some time. if you look at the way the world is trying to catch up, the fed has more work to do. stagflation already.
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but we are seeing in u.s. stocks is probably a bounce within a medium-term bear market, and these revisions could be quite substantial. you can see the market rise 10% even though it will go lower in the weeks ahead. we are probably in the early stages of a rebound in u.s. stocks as people digest the news. we are mostly responding to things that have happened. unless we get a big shock this week, we will probably have a reasonable week for equities around the world. rishaad: let's get to this data. it's all down to the lockdowns which affected whatsapp in, particular for retail sales. the industrial consumer sectors being brought down by >> going on in the streets of shanghai and other cities. what do you make of it all?
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it would be difficult to see the chinese economy having grown in april, seems a bit odd. could rope -- good growth momentum and the second quarter? guest: this quarter will be weaker than everyone expected. we are forecasting a sequential subtraction of 0.5%. on an annualized basis, 1.9%. this car is going to be the weakest quarter we have seen in many years in china. rishaad: the growth target of 5.5% for the year. it's like whack-a-mole. they want a stable financial system. chetan: we are forecasting gdp growth to before -- 4.2%, and we see downside risk of 3.5% duty be growth this year. haslinda: however you cut it,
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the data is dire. that will have implications for the rest of the world at a time where we have people saying price for a recession. how might this play out? how might asia get hit? chetan: the way you can think about it for the rest of the world, supply chains are very important. what we are seeing is our own proprietary supply chains went to a new high in april. you're going to see exasperation of supply chain challenges showing up in the data in the u.s. and europe. the good news is, as mark mentioned earlier, the world seems to be behind the supply chain in china -- worst seems to be behind the supply chain in china. traffic data has recovered from lows. it looks like you will see some sort of solution to the supply
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chain issues and china over the next few weeks. shanghai reopening is one important factor we are looking at. there will be a lot of challenges for the rest of the world, but it looks like the worst is behind us. one other thing we are watching is the demand for goods globally seems to be slowing, if you look at consumption expenditures in goods, it's been flat for a few months and the last month it has declined on a sequential basis. supply chain challenges are in the offing in the coming weeks. haslinda: the pboc said it will provide support needed, but so far, all of the moves have been lackluster, and today, no change for mlf and lpr. what can we expect the pboc to do? chetan: the framework we are operating within china is the
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policy easing has taken place already on the monetary front. we should see more fiscal action , which the government has already highlighted, but for all of the policy easing to be affected, you need solution to the near zero covid policy. it's not about just the economic policy easing itself, now we need to see the economy gets going, freeing up restrictions on mobility, and expecting that to happen in the next few weeks. we think the model will be taken up across the country and most cities where you do regular testing and that allows you to avoid a lockdown. we are expecting policies to be affected gradually in the coming weeks, but the full effectiveness will take time to transition to living with covid.
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rishaad: looking into the implications of that data. as we move to the first word news and join vonnie quinn. vonnie: finland and sweden are set to apply for membership of nato in a dramatic change for the security landscape. the invasion of ukraine has ended an era for the nations who shunned military alliances. they will deliver the formal applications to brussels later this week once their parliaments have signed off. >> this would be a historic moment. their membership would increase our shared security. it would demonstrate nato's doors open and aggression does not pay. vonnie: sources say the european
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commission will tell countries to make a clear statement their obligations are fulfilled. wheat futures in chicago surged. it comes amid a record-breaking heat wave and tight global supply due to the war in ukraine. the indian government says the move was made to protect food security but will still allow exports to some countries based on request. sri lanka's new prime minister has held talks in an effort to replenish food, fertilizer and medicine supplies. he says the government faces an immediate challenge in securing financing to pay for fuel in the coming weeks. he was appointed by the president last week following a violent protest. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more
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than 120 countries. i am vonnie quinn. this is bloomberg. haslinda: still ahead this hour, the world have been counting on indian wheat to alleviate supply constraints but they are suspending exports. we will have more on that. plus, one of india's largest funds as reported fourth-quarter net income that beat estimates. the cfo joins us to discuss the outlook. keep it here with us. this is bloomberg. ♪ et if your network power goes down, your business goes with it. recording: thanks for calling, we are unexpectedly closed today due to... cdw experts can keep you up and running with an apc smart-ups lithium-ion ups from schneider electric. it offers cloud-enabled remote monitoring and three times the battery life, so you can get the performance and certainty you need to stay open for business. for resiliency at the edge, trust schneider electric and it orchestration by cdw®.
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have the fed grappling with a slowdown in high inflation, is there a leg of the global economy that can shore up growth? chetan: it seems to be the region excluding china within asia is probably the part which can do well. this is a part of the region that did not see reopening in a full-fledged manner, and now we are seeing one after the other country taking up reopening. the region should now take off in the next few months, despite all of these challenges you are seeing in the global economy. you mentioned about the fed and china, but there is also geopolitical tensions and high commodity prices. these factors will drag growth lower, but this part of the region which is reopened now will probably be the offset. rishaad: i would not call it the stars aligned in, but a number
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of things are aligning which would .2 more and more of stagflation or a deeper recession. what is your take on this? chetan: we are staying there will be a deeper slowdown in the second half, but if you look at the fact that labor markets will still be in a state where job growth is positive and you are not seeing a contraction in jobs, it's hard to paul that stagflation. -- call that stagflation. it's basically moderate growth and high inflation. haslinda: we heard from the bok saying you cannot rule out bigger rate hikes to fight inflation. i would suspect this would be the approach many central bankers adopt in this part of the world. how would this weigh on growth
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and consumption in the coming months? chetan: there are three countries in the region which have this problem, australia, korea and india. when you look at the inflation trend in this region, you have a broad-based rise in inflation. we think the central banks have their work cut out and have to do a rate hike. we were not called -- we would not call this restrictive. everyone is operating with negative real interest rates, and you are going to see these go towards zero, but it will be far away when they get to restrictive territory which will weigh on consumption growth. this is more countercyclical, still normalization as far as our thinking and forecast as far as numbers are concerned. haslinda: how much will domestic demand help to counter a slowdown in growth?
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can asia rely on domestic demand to boost growth? chetan: we think they can. they have this advantage that they are transitioning to living with covid, and consumption growth is relatively strong. with consumption improving, that will feed into the line. -- cap x line. excluding china. china we think joins at the end of this year, sometime around october, november. the region excluding china will see that improvement in domestic demand and that will be an offset. we are expecting growth in the region to before .9% this year, next year china will have the base effect.
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the region will have numbers closer to 5% in the next two quarters. rishaad: what do you make of where india is going? we have we exports being banned -- wheat exports being banned, with record temperature, they will be lucky to have week. chetan: i think it goes back to the issue of domestic inflation, the extent to which inflation has been high. there is also demand-side pressure picking up because the economy is reopening. when you look at the number i was mentioning earlier, how broad-based pressure is, 60% of the items in cpi in india is the upper band of the policy target. there are some broad-based pressures picking up and india, and the central bank may sue try
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and normalize to ensure that even if you don't have big pressure today, you do not let it get out of hand in the coming months. remember, the starting point for central banks in the region is low levels of real interest rates. rishaad: always a pleasure, thank you so much. the morgan stanley chief asia economist. haslinda: still to come, markets rushing to reprice bitcoin after the collapse of a stable going. -- stable coin. details, just ahead. this is bloomberg. ♪
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haslinda: let's talk
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cryptocurrency. bitcoin has been falling. the china data did not help, it's down 2.5% but above the $30,000 level, just the latest twist in a volatile week. su keenan us with the latest. -- joins us with the latest. su: the $30,000 level is key. the ceo of binance tweeted this is newfound resilience after the dizzying collapse that roiled the market. you can see in bitcoins prior precious, -- crashes, it took several months if not years to see a bounceback, yet market observers are seeing we have seen a rapid bounceback in a matter of days for bitcoin, back
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above 30,000 -- $30,000. the big difference we are seeing is we now have a lot more institutional investors involved then a few years ago and say this is a buying opportunity. bit of red on the screen, but for the most part, the crypto recovery has left the total market value of digital currencies down by $350 billion. bitcoin down 60% from its november highs, but it seems to have digested the worst of the fallout, let's check out one more bloomberg here. it shows the stunning collapse of what was considered a key decentralized project, this collateralized algorithmic stable coin, terra. it had a reserve transferred to multiple accounts that many say
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is untraceable. a lot of questions that follow the collapse. rishaad: coinbase had a rough time of it, the ceo defending the company, saying they are nowhere near bankruptcy. cathie wood and others went in and have been big buyers. you look at the innovation etf fund, its down 76% since its peak in february of last year. su: many believe it's been a stunning plunge for arc, let's go into the bloomberg one more time, you're not only have inflows into the arc, the flagship etf that tends to mirror a lot of future-looking high-tech companies, and this is the fifth weekly inflow that comes during a week that had its third biggest drop, it was down
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10% midweek. during all of this, as coinbase was falling on the market, cathie wood was buying on the debt. several -- on the dip. there was criticism of her fund but it appears the investors are loyal for now. haslinda: thank you. metoo a quick check of -- let's do a quick check of the business headlines. sunac is said to have made a bond payment shortly after it announced a default. two bondholders told bloomberg -- it's the first principle payment under an 18th month extension. there is an offering for 385
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rupees per share for a 63% shake -- they will also inherit a controlling stake. they have been pivoting away from the traditional cement business. saudi aramco has posted its biggest profit since the record stockmarket listing. the company saw a boost from oil prices in the wake of russia's invasion of ukraine. net income rose to almost $40 billion, up 82% from a year earlier. they are set to become the world's most valuable company. rishaad: let's have a look at the commodities side of things, being roiled with the chinese data which came out at 10:00. we're talking about brent crude, 1.7% down, copper feeling it, industrial numbers showing the biggest contraction on record. looking at iron ore, wheat, this
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got a big boost because of india saying they will not be exporting wheat. here we go. futures down as well, disappointing numbers with u.s. equity futures, some european ones heading in a southerly direction. it underscores what were deep concerns. we are talking about finland and sweden set to deliver formal applications at nato's headquarters. we have the latest and rishaad: .
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traffic tells you a big story. no community cases, apparently. second day of no cases outside of quarantine as the city opens up, a gradual process. it was the data which spooked markets as we see all of the benchmarks heading in a southerly direction after disappointing news, industrial production contracting the most since 1990, retail sales taking a hammering. let's get over to david ingles. david: we are ending lower, worth noting we started higher on most benchmarks, so we will go through s&p futures near session most. i do need to tell you a show you when data came out, same thing when you look at things like the aussie dollar, copper, iron or.
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similar looking chart. growth related stocks, copper and iron or next. we are trading at the 9000 level, higher for the day. i don't need to tell you. last thing, rate hike expectations. had a little bit of a dip in terms of pricing stocks. 2.7%, 2.8% by the end of this year. the slowdown in china story, markets thinking it might affect what the fed is about to do, the answer is no. rishaad: let's get to the senior editor looking at all of this in more detail. not surprising about retail sales given lockdowns, not going
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to buy a car let alone make one? reporter: retail sales were some of the worst on record, industrial output probably the worst on record. another worrying sign is the increase in the jobless rate. that youth jobless rate is 18%. rishaad: this is done in a small sample size, so it could perhaps be even worse. richard: there is always some skepticism about china data. i think the concern is the degree of how bad the economy is doing, but what happens next? officials have tried to paint a frightening picture -- frightening picture, covid coming under control. talking about lifting the
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lockdown in shanghai. on a district level, lockdowns tends to continue an economic activity continues to be suppressed. until china works out how to exit covid zero, we will see this huge drag continuing. haslinda: we will leave it there. thank you so much for that. let's get the first word news with vonnie quinn in new york. vonnie: lloyd blankfein has urged companies and consumers to prepare for a recession. in an interview, he said it's not a certainty but there is only a narrow path to avoiding it. he added the fed has powerful tools to bring down inflation and has been responding well. >> do you think we are headed towards recession? >> we are certainly heading, it's a high risk factor. there is a path, a narrow path but i think the fed has powerful
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tools, it's hard to finally tune them and see the effects quickly enough to alter it, but i think they are responding well. it is definitely a risk. if i was running a big company i would be prepared, if i was a consumer i would be prepared. it is not baked in the cake. vonnie: the chinese president has warned of a so-called improper accumulation of wealth. in previously unpublished remarks, he said china needs to expand the real economy and avoid mass joblessness. he warned financial and property risks persist. the pboc effectively cut the interest rate for new mortgages in an attempt to prop up the housing market. the central bank announced first-time homebuyers will be able to borrow at an interest rate as low as 4.4%. that is down from 4.6%.
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china's housing market is crucial as a source of growth for the economy, but it's been in a slump for almost a year. scott morrison has made an impassioned pitch for a center-right government to be reelected for a fourth term. the coalition held its official campaign launch on sunday in a state crucial for his party to win the election. polls point to an opposition victory. >> it had been one of the most challenging times we have ever known. but i'm here to tell you today that despite what we have faced, we have remained true to the promise of australia, and australia has prevailed. 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. haslinda: nato has welcomed finland's decision to seek entry into the defense alliance, with germany saying the country and
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its neighbor sweden are defective members. that's bring in john -- let's bring in john. when are they expected to officially join nato, and in terms of obstacles, what might be in their way? reporter: we are expecting the parliaments to approve the measure as soon this weekends. -- the week ends. the nato secretary-general said turkey, which has some objections to sweden coming in, will put aside objections. all 30 members need to approve the membership. that process could take a year. we are looking at one of the greatest changes in the security alliance in europe since russia's invasion of ukraine. rishaad: what about that $40
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billion aid package for ukraine? the senate has to pass that. jon: it was held up last week, rand paul objected, he wanted language concerning some oversight measures. mitch mcconnell said he expects the vote to end the filibuster on monday and hopefully passes wednesday. it includes provisions for aid, new weapons. one of the things talked about was a new type of tank-lusting drone. which would make its way to ukraine and onto the battlefield. rishaad: you have ukraine, a
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resurgent and aggressive vladimir putin, moldova. how important is it for these two nordic countries to join nato, and could this perhaps up the ante with russia by the end of the day? jon: you are looking at one of the longest borders, 800 miles or so. finland is seeing russia to pleat in terms of its military which is being used to fight the war in ukraine, and unable to backup threats of some sort of countermeasure. we are seeing these two countries who have long had neutrality shifting alliances, seeing the threat from russia as
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being overwhelming, and russia because of the weight it's extending in the war, not able to backup any action it may have taken before on the border in terms of manpower and weaponry, because of what is devoted ukraine. rishaad: thank you so much. the ukrainian situation, u.s. and nato elements. we prices jumping, india restricting exports of the grain adding to tight global supply. more information on the way. this is bloomberg. ♪
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haslinda: live pictures of mumbai. nifty futures pointing to a higher open, 3/10 of 1%. india grappling with a heat wave. triple digit temperatures over the past six weeks. india has had the hottest april in 122 years. we know that it has killed 125 people.
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surging electricity demand and you have to wonder how economic activity will continue from here. rishaad: reports birds are falling out of the sky due to exhaustion and dehydration. at the same time, commodities in play because the heatwave could hamper industrial activity and maybe we will have to wait until the monsoon hits. pakistan for instance, the hottest place in asia, expecting a temperature 50 degrees celsius. power plants running out of coal, that is having an effect overall. it's an early monsoon which will be really pivotal to provide that relief. to state bank of india raising its benchmark lending rate for
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the second time in two months, that's because of inflation kicked off by what we are seeing with the heat. let's look at key equities. gauges are falling for a sixth straight session, the longest stretch of weekly losses in two years. nifty futures and of course we looked at commodities as well. haslinda: that's right. let's stay with india. it has restricted wheat exports the world was counting on. let's get more from ages bloomberg -- bloomberg's asia agriculture reporter. you have to wonder whether india can feed its people. reporter: record-breaking heat waves in march when we to planting takes place.
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[indiscernible] what we are hearing from farmers that it may fall farther. the government said food security is important, at risk, so we prices have been rising -- wheat prices. at the same time, as you said, the government says supplies are ok. [indiscernible]
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supplies have become stable and they -- rishaad: you touched on the fine line between feeding the country and within election looming, but it has an international dimension because india has deals with various countries to export week, egypt for one, does it renege on those promises? what is the deal? reporter: after the war in ukraine, india started talking about exports. they said exports may more than double. ? now, they are saying if a needy
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country comes to the indian government and says we need wheat, they will consider that. that is the situation. we are diverting the trade towards the needy people, and a sense, globally. we have to see whether country comes to india and asks for wheat and we will see what the permission is at that point in time. as of now, they will allow wheat exports on demand from needy countries. the contracts will be allowed to be shipped. [indiscernible] rishaad: thank you. quickly looking at the indian
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open, let's check in on what going on. mildly positive. we do have various moving parts, the heatwave, uncertainty about the cost of borrowing. haslinda: fourth-quarter net profit rose nearly 40% on year beating estimates. one of the top i.t. services company scored deal wins. to discuss, we are joined by the cfo. good to have you with us. 40%. is it sustainable? guest: [indiscernible]
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haslinda: what will drive growth? which regions, which areas? guest: we focus on communication verticals. that has done quite well. it's all across. it is broad-based. rishaad: looking ahead, give us a sense about 5g. how does it change the equation for you? guest: focusing on the communication vertical,
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particularly 5g, it's early days but we have seen growth go faster. 5g -- communications with service providers. [indiscernible] haslinda: talking about how you one $1 billion deals. with the outlook for the billion dollar deals? guest: [indiscernible]
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it could be less, but yeah. rishaad: i can't let you go without talking about the currency. how does it affect your business and forecast? guest: the currency depreciation [indiscernible] that is not going to help us. there are some impacts, but not so much --
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haslinda: thank you so much for your time. rishaad: thank you so much. [laughter] i had one more question. we have a tech talent shortage in india, a crunch. would you use that word? guest: yeah, there is a shortage particularly of experienced people. [indiscernible] they continue to be the -- we have managed it well.
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haslinda: thank you. plenty more ahead. keep it here with us. this is bloomberg. ♪
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rishaad: having a look at some
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business flash headlines. the state bank of india hiking its key lending rate coming after the reserve bank surprised everyone by tightening to fight inflation. the lender is raising points 10 basis points across the world, and unscheduled change, food places posing a growing threat to the economy. a deal worth $10 billion, 385 rupees per share, the swiss company making a 63% stake. i have been moving away from the traditional business. turning to saudi aramco posting its highest profit since the record stockmarket listing,
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seeing a boost from oil prices in the wake of the russian invasion of ukraine. rising to almost $40 billion, 82% increase from the year before, last week aramco became the most valuable company as it overtook apple. haslinda: markets getting hit by the china data dump, disappointing, dire numbers. industrial production down 2.9%, the worst and more than 30 years. retail sales slumping, 11%, fixed assets coming in disappointingly at 6.8%. enough to paint the disappointing picture. the question now is what will the likes of the pboc and government do? perhaps it's the real economy
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needing some kind of support. rishaad: let's have a look at overall markets, the csi went out to lunch with the decline of 8/10 of 1%, the kospi on the way down. asx, strong open there. the nikkei adding to gains after initial losses. the commodity side of things -- wti on the way down. one bit of hope, shanghai is aiming to restore normal order of life in june and will be resuming public transportation on the 22nd of may. daybreak middle east is next. ♪
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