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tv   Bloomberg Daybreak Australia  Bloomberg  May 23, 2022 6:00pm-7:00pm EDT

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>> a very good morning, welcome to "daybreak australia." we are counting down to asia's major market open. >> the top stories this hour. president biden, fuels arousing in the in the stocks and offshore q1, after looking at -- yuan after looking at the chinese tariffs and imports. >> also ahead china looks to limit the fallout of its covid lockdown with a $21 billion test relief package. >> a big interview coming up later in daybreak asia coming will speak to ever-present of in
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tokyo with president biden at adm, hong kong time 8 p.m. here in york. they were with -- it was talk by president biden that stent -- send stocks higher. the s&p futures down 0.8%, after we saw the nasdaq 100 gain almost 2%, there was some optimism about perhaps the tariffs on chinese imports being lifted, the 10 year yield being higher above that 285 double. treasury is drifting -- level, treasury is drifting lower. underperforming the fund, we barely saw any change when it came to oil prices, barely budging from last week. we are seeing a lot of skepticism about the eu being able to ban russian oil imports. we are seeing the downside .1%.
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we are watching jp morgan as well, take a look at the jump of 6%, the best today since 2020, it was investor day, they talked about the economy. that there was storm clouds on the u.s. economy, but they would dissipate. it helped the risk of sentiment, coming at a good time we continue to see these concerns about inflation, recession, the mention of stagflation in news article soaring in the past few months. >> all of this makes you wonder how resilient these rebounds are. let's look at how asian markets are shaping up, a day before the policy meeting, next -- expectations are for 25 basis points, possibly 50. the aussie dollar and the kiwi dollars or two with the currencies are doing quite well this week gaining 0.3%, just
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extending the fact that we finish the previous session barely into the green there. kiwi stocks are looking pretty tepid at this stage. >> all of this with what is happening with those chinese tariffs, president biden saying he will be speaking to secretary janet yellen when he returns from asia about lifting them. those tariffs were implemented by the last administration, you're talking about $300 billion and imports from china, the caveat, we have heard mentions of tariff reductions in the past and nothing is happened. now we have supply chain disruptions, factory shutdowns because of covid zero, unit the district -- the tariffs were lifted how much will they help? >> you're talking about the impact on this, given that china's had these practical restrictions in place him in the covid zero program. also looking at the details,
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this new economic and trade framework announced over the course of this trip. we have australia join the fray, the economic wave continue to try to create cohesion in part to counter beijing in the region. let's get more analysis on the meeting between president biden and his counterpart, our chief asia correspondent, in hong kong. setting up the expectations from these meetings today. >> this was supposed to be the centerpiece of the trip. the meetings. of course the strategic framework is getting a lot of the attention, as well as the comments on taiwan and the tariffs. with the leaders of japan, asia,
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and australia, a way to show the world and china that the countries are united on democratic ideals and values, and are working together is on so issues as climate change and economic issues as well and things like covid. and trading vaccines, that was to be the message, it got overshadowed by other things, they hope comes back to that discussion. the new primary -- australian prime minister, jetted to be there to show the united purpose. we will see what comes of this. that was to be the centerpiece of the trip. president biden will have some meetings with each of the leaders, then fly back to washington. >> to her point, and a lot of it being overshadowed by other things, one of the other things, taiwan. how may times does this administration have to clarify itself over its stance on the island? >> is not the first time he has
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made a gaffe, if you will, on taiwan. in november he referred to taiwan as independent, he walked those comments act, saying taiwan is a democratically ruled island and can make decisions for itself, it is not independent. i do not want to misinterpret his words, you want to see his tone when he was asked this question at the rest briefing, let's hear it. >> are you willing to get involved militarily to dim -- defend taiwan for comes that? >> yes. >> you are? >> that is a commitment we made. >> that commitment years talking about the taiwan relations act that essentially spells out justification for the united states to provide military support for taiwan in the event of an attack, presumably from china, not necessarily troops on the ground. he did clarify, he said the
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policy is not changed at all. he did go on to say, and i will quote him, the idea that it's, taiwan, can be taken by force is just not appropriate. it will dislocate the entire region and be another action similar to what happened in ukraine. he clarified, but he also said, it is a burden that is even stronger because of the situation happening in ukraine. not surprisingly, beijing is not pleased with these comments. regardless of the walk back by the white house. one of the administrative foreign affairs for that spokesperson's in aging says the u.s. -- in beijing says the u.s. it should refrain from making the wrong comments. on issues bearing on china's core interest including its sovereign terry -- sovereignty and territorial integrity there is no room for compromise or concession.
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today marks the beginning of the quad summit between india, japan, australia, it denies states, it will be -- the united states, it will be in the back of the minds of all. >> not back of the mind when it comes to congress that has been vocal on taiwan, even asking biden to include taiwan on the economic framework. >> congress is not in session today, but we did hear from some including senator tom cotton of arkansas. he said at least he is not providing strategic clarity and he would like to see the u.s. double down and be more specific about what they are willing to do for taiwan. we heard from experts as well including richard, who spoke to us earlier today and he basically said, while some will see this as a gaffe, or maybe a
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mistake. that the white house is trying to walk back, he thinks that this could be good for the biden administration to make it clear that they wilt support taiwan in terms of selling weapons, that kind of thing, that he thinks that may not hurt the white house, but may actually help in terms of this conversation about taiwan. of course, top -- china will not want to and that makes it difficult for the relationship with china. >> the new australian leader wasting no time on that playing with his new foreign minister, what are his expectations? he has put climate at the center of these talks. >> he took a phone call with british prime minister boris johnson, while on the plane, the subject up climate came up. reaffirming his parties commitment between the u.s. and u.k., building nuclear some
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marines is a decade long agreement, he spoke to president biden over the weekend making similar a surgeons -- assertions. something probably -- previous labor government had been warm about come on the topic of climates, both the ministrations policies are much more closely align their. he is expected to seek u.s. support for australia, hosting a summit with the committee climate policy, because the government so many seats over the election. labor edging closer to that 76 seats and needs for the majority, currently sitting on 74, anthony saying a full cabinet will be sworn in the next week. >> stephen engle and jodi schneider with the top stories today, let's get over to vonnie quinn with the first word headlines. >> china is said to offer more than $21 billion in additional
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tax relief, namely aimed at businesses to offset the heavy impact of the lockdowns. according to state media the measures include additional tax rebates to custom eat -- companies. the additional tax cuts, represented 0.1% of china's gdp last year. from the ecb officials are worried that the president will not raise taxes and rates fast enough, a blog post spelled out the bank's time at tail -- table for exiting the monetary policy by the end of the quarter. bloomberg, -- thailand central bank's complement -- competent central -- inflation will return to target next year, it signaled it was in no rush to raise rates. he is not seeing the overheating
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coat -- economy. >> the critical thing for us is not to see a second round affect happening, to see too much broadening of things that are increasing, prices are very important to mention. to make sure that the median current inflation excitations remain anchored. >> the key position of finance has been vacant for nearly two weeks. prime minister, made double up as the minister for economic advisor. 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 had we have big voices from davos, richard tells us what he thinks about the new australian government climate
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push. next we get the market view and why he does not see any safe havens. this is bloomberg. ♪
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>> we feel that 2022 was --
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would be at lower levels of last year. >> the responsibility for inflation is at central banks, to the exception that they're able to exercise that response billy there will be high -- there will be higher interest rates. >> raising interest rates will not solve the problem of inflation, it will not create more food, it will make it more difficult. what you do is you have supply-side interventions. >> speaking to bloomberg on the sidelines of the world economic forum in davos. our next guest says there is no safe havens in the markets. you need unique ideas that are of the beaten pathf. ava, good to have you with us, especially when you cannot count on those safe havens when you saw what happened with target and walmart last week and those disaster days after earnings. it is all about margins and
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rising costs? >> that is exactly right, we saw target, walmart, costco, they were the safe companies to be at and they are not performing well. companies are struggling to absorb transportation costs, material costs, we see those struggles, regardless of the size of the company. let's go off the beaten path and look at individual companies and their fundamentals specifically look at those steady margins, ideally growing or at least staying steady, unfortunately there is no safe category. >> that has to include some chinese exposure, given that we are hearing more from the administration that they may be lifting some of those chinese tariffs. do you expect to increase or
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decrease your china exposure in the next 12 months? >> given the stimulus, now that you say the fact, that covid at some point will go away, we are expecting to increase our exposure in china. the valuations and become much better. the outlook now with the stimulus looks better than before. of course we are not going to have another wave, we are planning to increase our exposure to china. >> what about europe? you are not particularly about the -- optimistic about the outlook there, if you had to split your exposure between u.s. stocks and european equities given the recession risk in both, how do you do that? >> our base case is that the u.s. will likely not head into recession at least not in 2022, for europe, unfortunately what we see is increasing odds due to
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its proximity to ukraine, due to the fact that it is energy dependent, and the slower growth they already had coming into 2022. it is already gotten worse and inflation and the rising cost. europe is in a tough spot. we are underweight europe, u.s. is more of a safe haven, of course you cannot say safe haven, you see a happens the u.s.. it is more safe. there is no category or geography that is really safe in this environment. geopolitical issues and environmental issues are only adding fuel to the severity of what is going on. >> how do you trade around these soft commodities, inflation stories, especially when it comes to food come up by extension energy if you see as a continuation? >> when it comes to the three drivers that affect inflation,
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between energy cost, wage cost, food prices. we are mostly concerned about food prices going forward. the reason is, when it comes to energy costs, and a lot of the rush in -- russian oil output has been sold to india, that has refined it and is selling at europe, has not that is it too much degree. they have bolstered production, when it comes to food prices,, on the other hand you have droughts that we see in india, other markets, brazil, even the u.s. suffering droughts. you see the ukrainian breadbasket going away, the existing grain storage in ukraine is also being blocked by russia. the energy cost, we think at some point will stabilize or drop. food costs, we are mostly concerned that the bills will continue to rise. when it comes to wages we think there will be some easing there
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too because we are seeing more and more layoffs. >> eva always great to have you with us, coo and chief investment strategist, we have a big interview coming up later on daybreak asia, who is in tokyo with president biden, happening at 10 a.m. if you're happening in sydney, you can get a wrap up of the stories you need to know in today's edition of daybreak, you can customize the settings, getting news on the nds -- industries and assets you care about. this is bloomberg. ♪
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>> billionaire and australia's richest person and your forest is urging the government to go far beyond the campaign pledges
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to address the climate crisis he spoke with bloomberg about it. >> the climate policy has been frankly, embarrassing, we are relied on by our children for leadership, we are relied on by our children for understanding. for about a decade we haven't, i think the new government will move australia towards a global china -- climate champion. >> you are optimistic anthony albanese will be more ambitious about his clinicals and what he brought into the election. >> now that you're actually in government, i think there will be much more ambitious, and they should be, compared to the rest of the world, australia has been lagging. i am a successful all -- australian, i know. >> i within the -- what you mean by more ambitious? >> i would like to see 50% or 6%
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by -- 60% by 2030. by a company we plan to be down one how to percent by 2030 -- 100% by 2030. we are in the whole industrial sector. >> when you look at the country, it is so dependent on iron ore and coal as well, would you put it on all of those industries today to make it a difference? >> australia is a country, it is up to the government, but if you take the sector, all of us -- we need to be moving faster. they have sown -- shown great enthusiasm. first you go green, all those
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companies say we can to. >> executive chairman andrew forrest speaking to bloomberg and davos. here is a quick check of the list -- latest business flash headlines. >> and plans to file the required paperwork on or after june 2, the shareholder votes clears the way for the company, chinese regulators demanding an overhaul of its data systems. >> the ceo says banks are not likely to ever return to work full-time in the office, he says it is counterproductive to push it too hard to come back. there are growing calls across europe supporting flexible work policies. after posting a beat after its
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second-quarter profit forecast, the software venue expect revenue to be as high of 1.2 billion dollars in the reporting period, profits, will be up to $.92 per share, a sign that zoom is finding way to sustain growth beyond the pandemic boom. we have putting more to come on daybreak is truly a. --on "daybreak australia." stay with us. this is bloomberg. ♪ xfinity mobile runs on america's most reliable
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>> you're watching bloomberg "daybreak australia." the white house has been forced to walk back president biden's comments on taiwan after he said that they would defend the island on any attack from china, appearing to break with a long-standing policy of strategic ambiguity, they had to clarify that they would only provide aid for taiwan to help defend itself in the event of conflict. >> some officials are worried that the president will not raise rates fast enough, exiting the monetary policy by the end of the third quarter, effectively rolling out a half-point move. bloomberg understands that left hawkish officials uncomfortable. pakistan central bank raised
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rates more than analysts was expecting as it tries to win a bailout from the international mill -- monetary fund. breezing into 13.57% battling inflation in asia, -- raising its 213.57%. -- the employee's on the nyc subway is a senseless tragedy, they are searching for the an identified man who shot and killed a goldman sachs employee on the subway. 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. sherry. >> china is rolling out another $21 billion in tax relief for businesses as the centerpiece of the latest package to boost its lockdown stricken economy.
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our global economics and policy editor kathleen hays is here with the latest, what is in the package and what are authorities trying to do here? >> as they said they are trying to lead downward pressure on the economy, the centerpiece is the $21 billion of tax relief to businesses. the hallmark of the tax cuts, the fiscal steps that china has taken so far. here is what we have, $21 billion in tax rebates to companies, 60 billion in yuan in passenger car purchase taxes. that equals about 0.1% of china's gdp, it is along with 1.5 trillion dollars in tax because they passed so far this year. they will also double the quota on small and medium size business loans. more people can get those, they
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will also expand social insurance payments, social security payments, that companies have to pay to the government,. all of those to provide relief, they are trying to do targeted forceful steps. again, most of this is going to businesses, not households, some people saying they be we should be sending checks to consumers. while some countries have done that, so far that is not in the works. they did tax cuts in march, at the time they likened it to, fertilizer applied directly to the roots of the economy, a very supply-side approach, like all supply-side approaches, if you reduce the cost of businesses, give them more money, they will invest it, they will do something of that. that will boost the economy, some say that you might just end
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up increasing the debt, they have not said anything about how they're going to find the tax relief, making their debt and deficit bigger. maybe it comes later, it is interesting to see, you have a supply side or in china, as a premier, this is what is holding its way for now. >> president biden opening the door to remove u.s. tariffs in china, how wide is the opening? >> certainly they have been, the biden team has been considering, particularly since inflation picked up some much in the u.s., considering looking at, reviewing tariffs, etc. when asked about tariffs, listen to what joe biden said when he was on his trip to asia today. >> i am talking with the secretary we get home, i have considered it, we did not oppose and -- we did not impose any of
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those tariffs, they were imposed by the last administration and are under consideration. >> he will be talking to secretary janet yellen, about what to do next. the thing about rolling back tariffs, it would be great for china, potentially the yuan had quite a jump when the news came out overnight in the u.s., late in the day yesterday in asia. as long as you have supply chains are disrupted, as long as you are locking down factories and other fracturing facilities, any benefits china might accrue from this is seen as very limited. however the hotter inflation gets, the more biden and his team is getting pressured, looking for more more ways to reduce inflation. if you remove tariffs, you will reduce the cost of goods of the united states buying goods from china. on the outside of the article coin, november midterm elections
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-- the political coin, november midterm elections are coming, he does not want to be seen as soft on china when the margin between republicans and democrats going into the midterms is so slim. >> global economics and policy editor kathleen hays with the latest, we do have a big interview coming up later on daybreak asia, speaking live for the u.s. trade representative in tokyo with president biden, 8:00 p.m. if you're watching in new york. let's get you to another great conversation from davos, the international monetary fund chief telling bloomberg she does not see a global recession, that the imf will need to come to the aid of some developing countries. take a listen. >> if you want to retain, increasing standards of living, we have to work together for it. >> what does that mean for the next 12 to 18 months? if you look at inflation leading to famine, could be extreme
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e-card for poor -- extremely hard for poor countries and then you have recession. >> we are projecting a lot of growth that we anticipated last year, 3.6% versus 4.9%. let's room ever that 3.6% is the average growth in the previous decade, we are still projecting to be in positive territory. however, since we put out our projection, where we downgraded 143 countries, what are in commensal changes? one, tightening financial conditions. two, appreciation of the dollar. three, slowdown in china. all of this is making further downgrades not out of the question. for some countries, there is now an increased risk of recession.
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we do not anticipate a global recession. >> you are right about the dollar rally, having huge implications for some of the countries across the world, do expect the imf to step in with countries a lot more because of the imbalances we could live through the next 18 months? >> we are living in a time of crisis. who is most at risk? the countries that were weaker to begin with. we are already seeing an increase of demand for imf engagement in lebanon, egypt, indonesia, sri lanka. we are looking into the 2022 as a difficult year, especially for developing countries under a high level of debt. when your cost of servicing a debt jumps up, and you are in a very tight fiscal position, of course this is a time when the imf has to step up.
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and we will do. >> imf managing director speaking with francine. it is time for morning calls ahead of the asian trading day, blackrock saying it is cutting its recommendations to neutral. flagging concerns over slowing growth, and fed tightening, not to mention china fears. u.s., japanese, chinese talk -- stocks look less appealing. saying it is too early to turn bullish on u.s. stocks. he says the s&p 500 dropping lower than current levels. growth areas like consumer spending emerging at a lower level, stocks better reflect earnings challenges. >> coming up next, j.p. morgan investor day that the u.s. economy remains strong,
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potential obstacles to growth are not set in stone. we will talk more about this next. this is bloomberg. ♪
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>> strong economy. storm clouds. i'm calling them strong because because they are storm calls, they made dissipate, if there
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was a hurricane because it was a tsunami like 07, 08, we can handle all that. >> that was j.p. morgan seo, at the banks investor day, that's bring -- coo at the banks investor day, he was optimistic about the headwinds we see at the moment may not be permanent or at least long-term. what does he have to backup the view? >> he has been a big champion of how the u.s. economy is doing, he struck that note again today, he says how robust it is with all the stimulus pumped into the economy. he also recognize the unusual cocktail of inflation and quantitative tightening by the fed. he thinks that the -- strong credit quality. perhaps those two things, combined maybe allayed some of
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his concerns among investors that any recession is imminent. >> jp morgan recently received backlash about spending, what have you heard on that front? >> that made this meeting today really quite a high-stakes one. the bank had earlier this year said spending would rise above 8.6%, have not given investors enough clarity or detail about what that spending is going towards. i think jamie dimon and the bank really set out today to give a much more conference of break down about that spending. they went through real trouble to emphasize discipline in their expenses. they gave a very clear write-down of the five areas where there -- breakdown of the five areas where there will be expenses, they reaffirmed the expenses in 2022, they did not increase the projection, they
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gave down the breakdown of the technology sector, hiring, wage inflation, that did seem to of wage -- that did seem to assuage investors some degree. so far this year, the bank has been a worst performer against its u.s. biggest rivals. >> recovering 6% its best a sense 2020, staying with banks, charter ceo says it is skeptical about any push to break up rival lender. we will discuss the outlook for inflation in the chances for recession with bloomberg's francine. >> i worry about recession and the cost of living, the two things are linked. i am encouraged by the overall level of economic activity remains it bust. i -- robust. i know that they have a lot of
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heavy lifting to do to get the inflation under control. the likely that it trends into a material economic slowdown is high. >> is there anything banks can do to alleviate that or is it up to governments? it is unclear whose responsible after two years. >> is a squarely with central banks, to the extent that they are able to exercise that responsibility, there will be higher interest rates and that will lead to lower economic growth. that is inevitable, is a transition mechanism, no way to get around it. there was a question, when push came to shove, will fed's come -- go all in? we will see. >> do you think it is a policy mistake in the making from the central bank? >> i think we could all speculate on if the central bank should move earlier, there's been a series of supply shocks as well that has taken place. the central bank could not a forecasted.
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the confluence of events right now is to make the central bankers job very hard. >> if we do have a recession, you have lived through the global financial crisis, would it be different from that? we have talked about the 80's pattern, but all recessions are different. >> the big difference between recessions is that it does it trigger a financial crisis or doesn't not? thankfully this time i do not think there will be a financial crisis, the financial system is extraordinary strong. we got a love things right after the financial crisis, increasing -- a lot of things right after the financial crisis. that is very encouraging, the likelihood that the economic growth translates through the credit crisis and financial crisis is low. trip -- typically when you have -- it is not so severe. i would hope if we go into recession it feels like a
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dipping growth. >> shareholders are trying to break up the bank, how do you look up -- look at it on what it could mean? >> we are focused on running our business, we are having a good time right now, trade is increasing, you have a tail of higher interest rates. credit quality four is very good. we feel our strategy as we have it articulated and we have it very specific of the guidance we gave back in february is working. i am skeptical of the inorganic solutions we take something that is reasonably well functioning and split up into pieces. for charter bank the cost would be much greater than the benefit , thickly knowing the suggesting that in our case. >> that was the ceo bill winters, speaking to bloomberg and davos. excluding the effect of inflation falling by half a
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percent quarter on quarter, that is actually against an estimate of a gain of three tens of a there is not unexpected given that the new zealand economy -- is still rebalancing with the opening of international borders and the resumption of tourism is having an impact on the retail sector. bloomberg economics, most economist expecting a way five basis points move, -- 25 basis points move, some expect half a point, we did get the shadow of those banks calling for 50 basis, certainly they are racing towards neutral at they do that half point hike. lots more ahead on daybreak. this is bloomberg. ♪
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>> hong kong ipo market has been hit hard during the pandemic, shrinking to the lowest level in nine years, the stock exchange ceo is expecting things together paster the course of the rest of the year -- pace through the rest of the year. he spoke and davos. >> what i like to look at usually, are companies coming out and submitting filings and
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applications? we have between 170 and 180 applications of people to have shown interest in ipo's. it is not related to co-vista -- covid as much as the environment, economic environment, that investment seems down and soft, people are interesting and filing. we have almost a record level of filing applications, they have not pulled a trigger in a significant way. >> when do you expect the trigger to be pulled? right now it is impacting your earnings, you're looking at the lowest level of earnings in five years, when can you grow that again? >> last year we had record earnings. when we look at the numbers, the numbers are quite good if we look at the last five years. what we see is that the general sentiment has lowered the amount of trading that happens.
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at the same time, federations are lower. what we see, eventually the market will come back, it will all -- it always has. there are periods word is lower, and it picks up, i cannot predict if it is two months, six months, seven months, i know that if i take a longer term approach, five years, 10 years, opportunities in china with a capital market. >> you took over as ceo of hong kong exchange almost one year to the day, 24th of may, you did a trip to china in april, was a conversation like? what was the message across china? >> we have a lot of stakeholders in china, and a lot of partnerships. we forged some new partnerships with the china climate exchange. there is a lot of positive interactions that we had. the key message that i heard,
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around the importance of hong kong developing, and continuing to develop a key international financial center. a global international financial center with preeminence. that is very important and i was very very clear. we have unique goal, the most international city of china and the most chinese city outside the mainland. the opening up of china will continue. >> ceo, speaking to bloomberg in davos. >> didi has secured the blessing of investors to delist in the u.s., they have a deal that will wipe out billions of dollars in market value. walk us through the process that allows didi to delist in new york. >> i want to say this was a well watched calendar advanced, they
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had the shareholder meeting to vote on the plan. some 96% of stakeholders voted in favor of the move. didi from here will proceed with moving -- removing its shares from the new york stock exchange. it will file with the sec on or off june 2 and it officially happens there. i want to say this is something the market widely expected. they believe it was a move didi needed to take and work with chinese regulators to complete an ongoing cybersecurity review that required them to do some overhauls on their data systems. the market also expects, didi will eventually listed shares in hong kong. there is still lots of uncertainties about what kind of punishment beijing will have for this company. how long this right --regulatory
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review process will take. for that the uncertainty remains, the shares have been under tremendous pressure. >> how quickly do we see a listing in hong kong? what are the challenges? >> i would say that, one thing that happens to didi once the share stocks are delisted, they will likely be traded over-the-counter for a length of times, requiring a pink sheet, that is the home for a lot of penny stocks and risky assets. they will likely to be facing lots of volatility and less price transparency. >> let's get to, we will be heading into daybreak asia next, that is it for "daybreak australia." this is bloomberg. ♪
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