tv Bloomberg Daybreak Asia Bloomberg May 23, 2022 7:00pm-9:00pm EDT
♪ haidi: a very good morning. i'm haidi stroud watts in sydney. shery: i am shery and a new york, welcome to daybreak asia. president biden plans to -- with growing calls to remove levees. the president is stoking tensions with beijing, pledging to defend taiwan with military force. the white house later walking back that remark. asian stocks set for a mixed start after traders digest an early selloff in u.s. equities futures we have a big interview coming up next hour on daybreak asia could we will speak live to
u.s. trade representative catherine who is in tokyo with president biden. that is at 8 a.m. hong kong time, 8 p.m. in new york. haidi: a muted start across trading in asia, sherry good australian futures are looking lackluster, looking like we needed that gain that we had in monday's session, up 3/10 of a percent. we are also seeing a little bit of a pullback when it comes to the sovereign bond space as well, although we did see treasury and what is historically supposed to be the best day of the year for the treasury's market. that was pretty poor. we saw yields across the spectrum really gaining amid gains for stocks and commodities, but we are starting to see a shift in sentiment when it comes to u.s. futures at the moment shery: yeah, taking a look at the downside that we are seeing right now. a 7/10 of 1%. this after the s&p 500 gained ground today. course we have comments from president biden on u.s. tariffs on china.
we heard from j.p. morgan, talking about a strong u.s. economy that has some bullish sentiment, but it is not holding up good roosting downside pressure which is also really weighing on at the fact that we are seeing skepticism on at the eu's ban on russian oil, especially as eu eaters move next week. we continue to watch the treasuries based could we saw the decline in the new york session with leading the declines. but of course we start with geopolitics, because that is the big story right now. what is affecting markets. president biden set to meet his counterpart to discuss the regional security in asia a day after the white house was forced to walk back comments after defending taiwan militarily. more we are joined by joby schneider in new york. and susan ingle in hong kong. jody, let me start with you, what would you expect from president biden in these meetings today? >> this was supposed to be the
centerpiece of president biden's trip to asia, along with those meetings with the individual leaders. and also, that trade framework. of course, things took a different turn with his comments about taiwan. jodi: this really is meant to be with the leaders from japan, india and australia, a chance to show their united front on a democratic values and ideals, as well as things like trade, like the economy and to show to china that they are united. the australian prime minister, who was just elected over the weekend, was jetting to tokyo to be a part of this environment. one of the big issues will be something that they will discuss there as well. and also, ways to try to help each other in things like covid vaccines. but again, it is also the banning together of democracies.
president biden we'll head back to the u.s. after making headlines. >> president biden's comments on taiwan, whether you see them as a gap or strategic clarity and perhaps intentional, what is the ramification? >> the cornerstone of u.s. policy on taiwan based on it taiwan relations act is strategic ambiguity. i do not want to say that he was intentional, but joe biden said something strategically ambiguous. to put that out there that the united states would come to the aid, but then walk it back, right? i do not want to parse his words. let's hear exactly what he said. the 11 second wrong and right to the point, here is joe biden. >> are you willing to get
involved militarily to defend taiwan? >> yes. that is the commitment we made. stephen: according to the taiwan relations act, the united states would be obliged to aid taiwan militarily, but not actually put troops in taiwan in the event of an attack. again, joe biden said our policy has not changed. but he did added this. he said the idea that if 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. it is a burden that is even stronger. so again, the strategic ambiguity, you put the prospect out there, then walk it back. i'm not saying that is intentional, because joe biden has made similar gaffes in the past, just in november, he referred to taiwan as being independent.
that of course is a redline from beijing, according to beijing. but he has walked that one back as well, saying no, this is an island that is democratically elected and has a right to make its own decisions. again, strategic ambiguity. beijing does not like ambiguity. they have a redline. they say the united states should refrain from sending the wrong message to avoid causing grave damage to bilateral relations. as you can see from the quote, there is no room for compromise, no room for concession. shery: some members of congress are talking about strategic clarity. let's talk to jodi, because we have seen congress being more vocal. what has been the response of our in taiwan? jodi: we have not heard from too many lawmakers per congress was not in session, but we heard from some, including senator tom cotton of arkansas, republican who did say those very words.
that this is strategic clarity. that we should be supporting taiwan and that he was glad to see the president -- a little bit of a dig at the president from the other party. basically saying he wants to see more substance, more clarity around the issue of what we can do to support taiwan. we also heard from experts on the region, including the head of the conflict -- council of foreign relations who spoke on bloomberg tv, saying that he does not think those comments were necessarily inconsistent. that the support of taiwan, we said we support taiwan in the past and the president was doing something that he thought was totally consistent with bilateral understanding of china. however, he is said of course, this is something china will criticize and look to make u.s. relations with china more difficult going forward. haidi: let's get you to vonnie
quinn with the first word headlines. vonnie: china is set to offer up more than 21 billion dollars of additional tax relief, mainly aimed at businesses as it seeks to offset the heavy impact of coronavirus lockdowns. according to state media, measures included tax rebates to companies and cuts of $9 billion on taxes. the tax cuts represent 0.1 of china's gdp last year. officials are worried they will not raise rates fast enough. they spelled out the banks timetable for exiting covid zero policy by the end of the third quarter. it rules out a half-point move, basis point hikes in july and in september. bloomberg understands that left hawkish officials uncomfortable. thailand's central bank is confident it will return to target last year and signals it is in no rush. in an interview, the governor says rising prices are mostly in
crude and energy and he is not seeing demand-side pressures in overheated economies. the bot is one of the few asian central banks that have stood tough on rates this year. >> incredible thing for us is not to see effects happening, not to see too much broadening of the things that are increasing. it's important as you mentioned it to make sure that the medium-term inflation remains anchored. vonnie: 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. shery: still ahead, china is offering more than $21 billion in additional tax relief for businesses to offset the impact of covid lockdowns. more details ahead. but first, asset management says historical levels of stimulus will be needed after china gets through its lockdown cycle. we discuss that next. this is bloomberg. ♪
with higher interest rates and that is inevitable. >> raising interest rates is not going to solve the problem of inflation. it is not going to create more tools. it is going to make it more difficult, because you're not going to be able to make it pretty you have supply-side interventions. haidi: key voices speaking to bloom erg around the world at the economic forum. market demand has been noticeable, most of that pain is about getting to more neutral policy settings. going forward, he said at around two half percent fed rate will help. joining us is george, the head of the fed at k2 asset management. he remained fully invested. when do you start feeling responsible with this market? until that point, do we continue to get the drifting and the lack of conviction in any selloff, in any rebound? george: all good questions of course.
you just got to be comfortable being uncomfortable. the things we try to make creditable, we know that it's gone from the s&p lester 22 times, to the 10 year average crude -- last year 22 times. in monetary policy, there are tightening's for obvious reasons because of the inflation scare. i've got good economic momentum before the slowdown pit of i've got aggregate household savings high in north america and many developed economies. having said that, other central banks like bank of japan will be behind the curve. anka japan will never tighten. ecb misses the boat. it will be verified later this year and the u.k. the basic monetary policy and china stands on its own because they are very innovative of -- to repair
what's going on in the economy. on the back of the head, the u.s. and north america has commodity it heavy a qualities like australia and they will have a soft landing. we believe that the rate hikes are priced in at the moment for a hard landing, but the fed funds towards three a month ago and towards to 75 in australia. now they are about 25 basis points lower, so they are getting come to but with the scenario. 2 1/2 men fed funds rate, that will crack more stability owing forward. -- going forward. it is required forced ability in the future. haidi: the rba said neutral for austria is between two to three, so you see that's moves around a little bit. does the change in government have applications for the rba if we see more people spinning around the margins, maybe a
higher wage narrative and that renewed focus on climate investment? george: yeah, at the margins it is a higher cost imperative on health care. the advantage of the incoming government is that they are a majority in the lower house. that is the biggest hurdle that they have to overcome. they've got to get more clarity to deliver what they need. the concerns were what today do and they are going to reaffirm the commitment to a nuclear submarines etc. and that has been important. they are have taken at step back and they are going to spend more on health care. they had will raise in wages across the economy. this is in part coming, but they've got a situation at the best g20 economy performance for the private areas. the debt is excessive, but it is quite good so there are a lot of positives. that is a starting point could
shery: a lot of positives coming from china news, especially on a review of the tariffs by the u.s., not to mention all of the specific measures in the economy in beijing. do you expect to increase or decrease exposure to china and the next 12 months? george: yeah, very quickly, we've got major fund that has been around for 20 years. in the last year, it did not hold top 10 holdings for the first time and complicated what i was doing. predictive in future earnings in mainland china. going forward, there is extreme value there. it is a hard landing for the economy. and we will look at assuring an accumulation of chinese exposure -- not to the same levels that we had in 2012 to 2021. haidi: what are your top calls at this point? especially if you have a rebound in china perhaps, than there are
so many different economies across asia that are dependent on that. george: yeah, so, rising interest rates. you've got to remember it is rising but not across the globe. commodities are strong. and there is going to be cyclicality involved in that. what is good for australia is good for canada and parts of south africa, even indonesia and some parts of the economy. rising interest rates -- even though it is a little flatter is good for diversified financials. we like them. they are global play. and in fact, we step back. some sort of industrial exposure. food inflation is going to put a lot of pressure on the developed world, on generally good food supply and that is something to be cautious of crude regular and in some parts of the world.
we see evaluations are compelling for the soft landing calls of north america and the commodity economy. the dividends are a good cushion, but across the value play, they have never played into the growth of any technology pete alw -- always good having you with us. shery: we have a big interview coming up next hour on daybreak asia. we will speak live to u.s. trade representative catherine who is in tokyo with president biden. that is at 8 a.m. hong kong time, 8 p.m. in new york. this is bloomberg. ♪
the escalation of supply chain woes, up 28% from 20222020 one according to data compiled for bloomberg. exxon reported a wider than expected supply chain snarl in surging material costs. the chinese ev makers net loss more than doubled to $260 million in a three-month through march. russian oil weigh on moscow, controlling stake in a chinese lithium mine has garnered over 3004 hundred bids underscoring a scramble to secure the battery metal that is key to clear energy transition. shery: taking a look at the lithium price index. seen surging in today's march trip number terminal users conveyed more about those stories in our newsletter, supply lines. that is on and i trade nl. speaking of supply chain issues, intel ceo pat gelsinger says so i conductor supply demand adjusting is delayed until 2024
bit earlier he spoke with haslinda ahmed. >> we definitely think that the supply demand balance is 2024. and a year ago, i said 2023. since then, we've seen a number of equipments of high chains move out. so our equipment coming in to has moved out, so 2024 until we start to see a reasonable balancing of semi conductor supply chains. haslinda: if you look at the ports in china, there is ships waiting to unload. of course, that is causing a lot of had expert >> the supply chain issues that we have seen in china, comes on the back of other supply chain issues that we are already beating down and we have to work through it. and maybe the softening of the economy, the consumer softness gives us a little bit of breath. but we are still off to 2024. and obviously, shanghai ports have created a bit more turbulence that we are managing through near term.
haslinda: we talk about a slowdown. in fact a global slowdown, although we have seen a pushback that they were not looking at a global recession. but definitely a slowdown. what that means, demand disruption, what assumption is are you making? pat: we see a bit of softening on the consumer side. haslinda: how much softening? can you put a number to that? pat: in our earnings we saw there was a meaningful number of percentage points softening to we were expecting the pc industry to be of a couple of points this year, now it is flat, maybe down one point. so a meaningful swing, but on the business size, the enterprise and commercial side, no change. continuing to have real strength in those areas of the market. i think with inflation concerns, tightening of monetary policy, these continuing supply chain challenges, yeah, things are going to be choppy for a couple of quarters. haslinda: you also where reviewing where you produced your tips and saying you are
making europe as well as the u.s. a priority. and perhaps a message is resonating even more given what we are seeing in china. how is that coming along? pat: we are all in on the rebuilding of what we called the geographically balanced resilient supply chain. where this industry was 80% of u.s. and europe years ago, now it is 80% manufactured in asia. what happened? it was never by -- i was in washington last week and i joked with some of the congressional leaders that we never voted to get rid of this industry. those countries voted to get this industry. they put strong packages in-place to attract industry there. and now we see that we are way too dependent on too few places in the world. and what aspect of your life is not becoming more digital? everything is becoming digital. my consumer, my health care, my
trade, transportation, how i work, how i live. and everything digital runs on semi conductors. as i say, where the oil reserves are defined geopolitics for the last five decades. that is more important for the next several decades. we can build them where we want them and do it in a way where we have resilience to the supply chain. haslinda: it is great that you want to make the u.s. and europe a priority, but also scaling and scaling quickly. how soon can you get there? pat: we have been out to the ohio site, extensions in arizona and europe. expansions in germany, new research in france, expansions continuing in ireland. and what we are really now anxious to see is that the u.s. and the e.u. chips act to get completed. that allows us to make good economic investments, because part of the challenge is the fact that we are competing now with countries that have investments in asia.
these investments have to be competitive worldwide or i cannot compete for a worldwide market. so that is what we are looking for the eu leaders as well as the u.s. leaders to get these things done, so we can go faster. shery: pat gelsinger speaking with haslinda. take a look at some movers in the u.s. crude meta-and other companies that rely on digital advertising calling after they warned they would miss second quarter forecasts. not surprisingly how the nasdaq 100 futures falling more than 1% at this point. we heard that the social media giants shares brought more than 80% in -- dropped more than 80% after markets closed on monday. now the snap owners are 30% lower. pinterest fell more than 15%. we have plenty more to come on daybreak asia. this is bloomberg. ♪
shery: u.s. futures are accelerating losses after the s&p 500 rose. now we are going backwards. the fed's job is to set the system of balances leading inflation and hikes should remain around 2% by august. the fed is communicating on the policy path. we continue to see tech futures dropping. let's get to vonnie quinn. >> the white house has rolled
back biden's comments on taiwan after he said the u.s. military would defend the island from any attacks on finance. the biden administration clarified, saying that president was only promising aid to help taiwan defend themselves. pakistan has raised rates more than expected as they try to win a bailout from a military fund. the target rate was 13.75% as they battle some of the highest inflation in asia. they are seeking to find a deal with the imf. sulekha is said to be appointing a minister of finance and another for economic revival. in the position has been vacant for two weeks and is crucial for negotiations. the prime minister might double
up as minister for economic revival to guide economic policy. goldman sachs ceo says employee death on the new york city subway is a tragedy. and unidentified man shot and killed a goldman sachs employee on the train. the victim works for the company since 2013. 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. this is bloomberg. haidi: china is rolling out another $21 billion in tax relief for businesses, some of the latest package to boost the lockdown stricken economy. kathleen hays is here. what are they hoping the effect will be? >> that it will ease the pressure on the economy hit hard by many stressors.
they are looking at providing more tax relief. the package, $21 billion is the tax relief. tax rebates to companies. cuts on taxes paid when a customer purchases cars. that will help as well. tax cuts equal 0.1 percent of china's gdp but when added with the billions of fiscal steps taken in march, it is starting to add up. they are going to double the quota for low and -- for small and medium-size businesses and expand -- they put a delay on how much time companies have to pay with they oh the government for social insurance type -- what they oh the government for social insurance type payments.
this is going to businesses. if you help businesses, people will get jobs, they can spend more. one important thing, a lot of people pointed out that this initial statement from the channel -- china state council does not say how they will pay for this. we are looking at something that will add to the gdp and they are not saying how they will pay for it. but in the last 15 minutes or so, the china security journal put out a piece saying the government will put out special sovereign bonds. so it looks like they have a plan.
step-by-step, the government is letting us know there will be more stimulus, tax relief, and maybe a way to pay for it. like many, it is fix the economy first and worry about paying for it later. we have asked about biden's road trip to asia and he was asked about the tariffs at a press conference, he said he might be talking to janet yellen about it. president biden: i am talking with the secretary when we get home. we did not impose any of those tariffs. they were opposed by the last administration. >> people figure if the tariffs are removed, it may be china's x which will be cheaper to the
u.s. -- exports will be cheaper to the u.s.. it might be limited by the fact that there are still so many supply chain constraints and lockdowns. beijing is and lockdowns now. any positive will be blunted by that. as for joe biden, the team has been looking at this and looking at removing tariffs. but as inflation has gotten so high, there has been more pressure about reducing inflation. if import prices were not so high. but maybe we do not want to look soft on china before the midterm elections. it is still a little bit of a political hot potato in the u.s. and these races are very close. so maybe they will go slowly and softly, or maybe they will move ahead and explain to americans how it is not being soft on
china, it is doing something for americans by bringing down the prices of goods they import from china. haidi: kathleen hays. we have some breaking news. potential ipo amid securities. we are hearing from rasputin group preparing to lift the unit but it has not happened yet. they talk about improving competitiveness, mobility, and autonomy of the business and they believe by listing shares publicly they can have a more autonomous perspective and fund the various growth and financing strategies. no date set yet but we heard previously that the financial ecosystem would be a major driver given that potential ipo.
so this will potentially provide relief to the debt burden. the mobile unit remains lost. capex staying high. so the leasing of the security and banking business could provide some self reliance away from broader debt markets. the ceo of credit suisse says he does not expect a recession. he is concerned he has a clear mandate from the board to continue in his position. >> with the high inflation shocks we have seen, people are
somewhat insecure. but we do not think there will be a recession. there will be a slowdown. [indiscernible] if you look at certain markets, equity markets, they have clearly, under pressure. they are basically being pretty quiet. [inaudible] but our clients are not panicking. they look at how things develop. >> you are not seeing outflow? you are fully invested? >> we saw deleveraging from
competitors [inaudible] some deleveraging, especially in asia. obviously with what happened in russia and other parts have not come down. but no outflows. >> does it hurt your ability to collect in certain parts of the market? >> if you look at our three revenue streams, interest came under pressure because we had lower lending volume but now with interest rates going up, it should be positive element going forward. returning revenue has also come down because of lower a um. tax revenue started to stabilize now come up volatility is sometimes a good thing for tax revenue so it's starting to pick up but it has created a 2022
will be at lower levels than last year. shery: credit suisse ceo speaking to bloomberg and davos. and a u.s. official is speaking in tokyo to reporters ahead of the quad meeting. the quad agreement will allow tracking of dark fishing. we have heard report from the financial times that the quad will unveil a program aimed at tracking illegal phishing, with the u.s. saying china was mostly responsible for these activities. a reminder of our big interview coming up in the next hour on daybreak asia.
haidi: -- >> our climate policy has been embarrassing. we are relied on children for leadership and we have to give them that. for about a decade, we have an and i think the new government can make australia the global climate champion, which they should have years ago. reporter: do you think the new prime minister will be more aggressive in his climate goals? >> now that he is in government, i think something more ambitious compared to the rest of the world. australia has been lagging.
reporter: what would you like to see? >> at least 50%, 60% by 2030. when you have solar, wind, leadership, there is no reason why you cannot do it. company should be down by 100% by 2030. we are in trucking, shipping, transit. reporter: the country is still so dependent on iron ore and coal. would you put scope three on as a goal of industries today to make a difference? four australia? >> four australia as a country is up to the government. but if you look at the structure, we need to be moving fast.
[indiscernible] some have shown great enthusiasm. but all the companies are going to have to say, we will see. shery: andrew forrest speaking with bloomberg and davos. we see how leadership changes around the world are putting climate at the forefront of geopolitics. in australia, the new prime minister has vowed to turn australia into a renewable energy superpower. what will this -- what will his winning mean for the country? >> you will see more action. if you look at the election results, it was under
performance of green that allowed labor to form that government. they have the lowest margin of victory ever and they are going to have to rely on their party and a few independent. labor calls for 43% initial reduction, and improvement on what that target was before, 30%. haidi: in terms of expectations, the prime minister said climate will be a centerpiece of the talks with the quad nations today. do we expect climate to feature prominently? >> i hope it will. so far what we have seen during biden's trip has been more rehashing the prayer -- prior
commitments. the u.s. and japan have already joined the climate pledge. if it results in australia and india joining, that would be a tangible result. haidi: looking ahead at what to expect from the quad talks. shanghai covid cases, one new death in shanghai. no new cases outside of quarantine for the second day. 418 local cases being added. the city has been easing the lockdown. but issues when it comes to unwinding the restrictions. some grassroots volunteers have been police and the compounds
shery: we are counting down to the start of trading in tokyo. in japan, the prime minister is said to be discussing regional security and economic ties in the quad meeting. and toshiba is going to nominate executives from elliott management. and we expect pmi data for may. we will bring you numbers lives when we get them. haidi: let's get a quick check of the headlines. didi global has secured the blessing of shareholders for the new york stock exchange and they plan to file the paperwork on or after june 2. this will help with the overhaul of their data systems and help them prepare for a hong kong share flow.
and supply chains have snarled materials. the sales forecast for the current quarter is below estimate. bloomberg has learned [indiscernible] it will be mostly stock but also include a large cash element. shares rose 25%, giving the company a market cap of $50 billion. airbnb is shoving operations in china and focusing on outbound chinese tourism as the country continues trying to come -- trying to contain covid. china accounted for just 1% of
the company revenue in the past few years. shery: look at the stocks we will watch. qantas bought a 51% stake in online travel and plans to grow the company's revenue through a closed partnership. [indiscernible] it is reportedly set up a trust company to manage digital assets in the year. and we are watching hitachi construction maintaining operating guidance for the full year which misses the average analyst estimate. u.s. futures, we see losses held by s&p after the s&p 500 rose in the new york session. risk on sentiment returning with biden signaling he is reconsidering tariffs on china. jp morgan dimon says the u.s.
economy remains strong. mastec 100 futures done more than 1%. snap warning it would mess second quarter profits and revenue forecasts. this filtering through in the futures space right now as we continue to watch president biden's trip in asia and the focus on what happens to the economic framework and to the chinese tariffs. $300 billion of tariffs on chinese imports. haidi: and it is almost taking a back burner in terms of if the -- if beijing is fulfilling their side of the bargain but now we are talking about potentially removing tariffs. more on that in a few minutes.
looking at the session in asia, flat. sidney starts trading in six minutes. the bond market for sovereigns in terms of kiwi bond and australia, tracking has been a muted market for treasury. kiwi stocks are a little up. rbnz hurtling towards the neutral rate, potentially a 50 basis point hike. dollar-yen, we do not seem to be getting too much of a boost when it comes to risk of sentiment. shery: it doesn't help that we continue to see beijing reporting covid. 48 local cases. in the next hour, a big interview with katherine tai, who was in tokyo with biden.
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shery: welcome to daybreak asia from bloomberg headquarters in new york. haidi: asia's major markets have just open for trade. we will speak with kathleen ty, who is in tokyo with joe biden. that interview is coming up. also, traders are digesting an early selloff in u.s. equity futures. and china is offering 21 billion dollars in extra tax relief.
we have a mixed picture of trading. the removal of sentiment we saw overnight. australia coming online flat. we see the risk aversion in the rbnz meeting tomorrow. we expect another potentially 50 basis point hike. nikkei 225 is muted. kospi down half a percent. no further details about the ipo so far. shery: biden saying that he will review the tariffs imposed on china. let's speak with u.s. trade representative kathleen ty who -- joins us from china.
>> i gave a speech last october describing the biden administrations bilaterally in the u.s.-china trade and economic relationship and since then we have been engaged in conversations with china on china's performance under the phase one commitments. we also articulated the need for the united states to champion the interest of american workers on the american economy and continued to push for and fight for a level playing field in the competition with china. so what you have now is a very deliberate approach by the biden administration in our economic engagement in asia. i am delighted to be in tokyo with the president. i came to tokyo from bangkok
where there were two days of trade meetings. the biden administration's commitment to this region is clear and is being demonstrated now by our physical presence here. shery: did the conversations with china include the prospect of lifting the tariffs on chinese imports? and would that be contingent on china reciprocating? catherine: the first step in engagement with china has been about china's commitment under phase one agreement, which includes purchase commitments they have taken. at the moment we are engaging with our partners in the region on enhancing u.s. engagement here economically. we watched the indo pacific
economic framework yesterday with 12 countries and this region. that is what we are doing today. with respect to our work with china, we continue working on our deliberate next steps in adjusting the competitive imbalances on the need to realign this relationship. haidi: and now -- president biden said back in march he would like to keep the tariffs and places a leverage. is it more strategic to keep them there until other issues are ironed out? >> with respect to the tariffs, our approach as with everything in this relationship is to be strategic. we have to keep our eye on the ball in terms of how to effectively realign the trade and economic relationships. i know there is a lot of talk about tariffs right now given international and global
economic dynamics which have been really punctuated by the impacts of russia invading ukraine. all options are on the table in terms of how we address short-term economic needs but are i must be on the ball in terms -- but our eyes must be on the ball in terms of long-term so that we can emerge from this stronger than when we came in. haidi: part of it is better economic engagement and economic opportunities. there has been criticism domestically going into this trip that this lacks ambition and specifics. how do you answer that? >> look at the world around us
right now. the world has experienced significant disruption from the global pandemic. the world economy is feeling the impacts of russia invasion on ukraine with respect to energy prices and questions around food security. we also have a world economy that is facing challenges from the need to make a green and clean transition. and economies around the world are going through a rapid digital transformation. in the face of all of these changes, what is clear to us in the biden administration is that we need new approaches to trade and we need innovation in the ways we engage our partners and allies. that is the program we are bringing in the framework. it is not a traditional trade
agreement. that is by design. what we are bringing to this region is a program for ensuring that we have durable and resilient economic engagement, and that we are able to work with our partners here into an economic recovery that is sustainable, resilient, and inclusive. shery: these countries will also have these environmental standards without the benefit of potentially lower tariffs and access to u.s. market. so what is the incentive? >> the incentive is certainty. right now if you look at issues arising in the global economy, you have supply chain disruptions that come from logistical challenges, but also
significant supply chain challenges that come from not knowing whether your supply chains are clean, whether or not they are working toward decreasing carbon, and whether or not they are free from forced labor. the engagements we are bringing is to establish norms and standards to provide our partners and firms, workers, and people with more certainty in the version of globalization we are working towards coming out of this pandemic on these turbulent years. shery: why isn't taiwan one of them? the chinese foreign ministry has said they want to be included. will you be open to that idea in the future? >> i just met with my
counterpart from taiwan in bangkok a few days ago when we were at the apac meetings in thailand and i have to tell you we had a very positive conversation and we are committed to deepening and enhancing the bilateral trade and economic relationship and we have instructed our teams to work over the next few weeks on that deepening and enhancement. haidi: ambassador ty, you talked about globalization. the resilience has been breaking down supply chains and sticks. -- and logistics. what measures are you going to put in place that improve that now? >> we have to talk to each other. we are all experiencing very similar challenges.
one of the basic tenets of this economic framework is to create a form for the united states and our partners and allies to come together and collaborate and cooperate on the challenges we face today, which are particularly acute. and they have been quite different from what we have experienced leading up to this. so i will start there and reinforce with -- reinforce the notion that this is where the real work happens on the rubber meets the road. this is where the really exciting explorations begin. haidi: so great having you with us. we appreciate your time. katherine tai joining us from tokyo where she is with president biden for the quad meetings. >> the white house has been forced to walk back biden's
comments on taiwan after he said the u.s. military would defend the island from any attacks from china. this breaks from the strategic ambiguity. the white house clarified saying that president was only promising aid for the to defend themselves. china is putting out 21 billion dollars tax relief for businesses. small tax cuts represented 1% of china's gdp last year. [indiscernible] a blog post has spelled out a timetable for exiting monetary policy by the end of the third quarter.
less hawkish officials [indiscernible] dr. george says he expects the central bank to raise interest rates by 2% by august. he added inflation is decelerating and will inform judgments about further tightening. the fed hikes by 50 basis points earlier this month. they will have meetings in june and july. the ceo of goldman sachs says an employee's death on a new york subway is a senseless tragedy. an identified man shot and killed the employee on a subway train. the victim, a 40 eight-year-old, had worked for the firm since 2014 -- 848-year-old, had worked for the firm since 2014.
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. this is bloomberg. shery: in japan, some gaining ground as rocket tend to us for the ipo. they have not set a date yet. rakuten could be entering the music copyright section. and we will discuss what is next for a chinese ride-hailing giant. first, how china exposures will be readjusted over the next few months. do not miss it. this is bloomberg. ♪
aussie dollar. we have seen a bit of a boost in currencies like the aussie and kiwi but at the moment it seems like more focus is being given to china and potentially what further easing moves we will see and if it will give more alleviation to growth concerns. we speak with a portfolio manager at gamma asset management. i'm going to take you to our blog question. do you expect to increase or decrease exposure to china in the next 12 months? how bullish are you feeling now that it seems like policymakers are stepping it up? >> i agree. policy makers increasing stimulus has really changed the dynamic with respect to investing in china. in the last nine months they
were very slow fiscally and on the monetary side. very small steps. hopefully now with the communication we are getting out of the council and governor -- government and prime minister, they are stepping up actions. the fiscal boost measures are still small so we need to see more but i think we have turned the corner in terms of policy action that will be supportive for market. haidi: what do you like in china in terms of areas are names that are looking extra compelling right now? >> a large part of chinese stocks listed overseas are in hong kong and abroad have seen valuations come down to a really interesting level. the tech side that was battered by regulation initially and then by the downdraft of tech stop
globally seems to be reaching levels we are valuation are more interesting. so i think both on the domestic side and domestic support coming in and also on the international side, chinese stocks on both sides are interesting. shery: talking about the fiscal policies we have heard from beijing's policy makers, how much fiscal space do they have to do this? you say it will continue until growth starts to improve, but they pulled back years ago because of leverage and concerns about financial assistance. so in reality, do they have leeway at this point? >> i think they have the leeway. they can increase their level of deficit and total debt. we can see that from many other countries. but they are worried about it.
they are worried about the increase in total debt for the past 10 years. since then they have been more hesitant to implement a larger fiscal boost. and they have also been worried about different sectors being leveraged up because rates are too low. so constraint on the policy side but now they are facing a situation where growth is low and they have to take action. shery: we have seen markets overreact to the fact that perhaps the u.s. will be lifting tariffs on chinese imports. which asset would benefit the most if that actually happened? >> i think it would be positive for not only china, but also the rest of the region. supply chains are running through the asian region with product being sent to china and exported, it would give a lift. it also signals that things
aren't going to get worse on this side and that we have passed the home. so i think not only the immediate action but the direction of future policy is positively influenced by this announcement. shery: we saw other assets gaining ground on the potential of u.s. tariffs being lifted from chinese imports. european the stock gained ground in that previous session although now futures are pointing down, a little mixed. not surprising. u.s. futures losing ground. the stoxx 600 is trading at the lowest since the pandemic in 2020 so we continue to see this mentality play out any time we
if you look at inflation that could lead to famine, it will be extremely hard. and then there's the chance of a worldwide recession. >> we are projecting a lower growth than we anticipated last year. 3.6% -- 2.6%. but let's remember that is the average growth in the previous decade. so we are still projecting to be in positive territory. however, since we put out the projection, which we downgraded, what are the incremental changes? the financial conditions. appreciation of the dollar. slow down in china. all of these are making further downgrades not out of the question. and for some countries, there is
now an increased risk of recession but we do not anticipate a global recession. reporter: it has huge implications for some countries across the world. do you expect the imf will have to step in to countries more because of all of these? >> we are living in a time of a crisis upon a crisis. the countries most at risk are the ones who were weaker to begin with. so we already see increased demand for imf engagement in lebanon, egypt, tunisia, sri lanka. and we are looking into the -- this year is a difficult year for especially developing countries under a high level of debt. then you are in a tight fiscal position.
that is of course when the imf has to step up, and we will do it. haidi: imf managing director speaking with bloomberg. let's get a quick check of the headlines. she did global has secured the blessing of shareholders to delist from the new york stock exchange. they will file the paperwork around june 2. this clears the way for the chinese company to work with regulators in china. dd would be able to begin preparing for a hong kong share float. chinese electric vehicle maker is having a net loss of more than double with the firm sales forecast for the current quarter below estimate.
>> solid numbers from japan. we are talking about an improvement in the may preliminary numbers. services second month of expansion, 51.7, better than the previous month where it stayed around 50. the composite also in expansionary territory for a third consecutive month at 51.4. manufacturing has been resilient now coming in for a at 53.2. we continue to see an improvement in pmi numbers not only in japan but throughout the rest of asia given that some countries are lifting covid restrictions. let's take a look at how markets are trading. we are seeing some risk off sentiment with the nikkei and the kospi leading the declines.
this would be reducing two sessions of gains for both equity markets. we continue to see the japanese yen holding at that 127 level. perhaps a bit more strength against the u.s. dollar. >> we know the leaders of the u.s.-japan-india-australia meet today in tokyo for strategic talks. president biden said the u.s. would defend taiwan in the event of an attack from china. let's bring in our chief north asia correspondent stephen engle. whether you perceive these comments to be a gaffe or a strategic bit of clarity is going to have big repercussions. >> sure, and it is not the first time biden has misspoken about taiwan. strategic ambiguity is the cornerstone of the u.s. taiwan policy. as in the after shoot of the
taiwan relations act, which allows the united states to provide military aid to taiwan in the event of an attack from china, but not necessarily directly involved with troops on the ground. before i try to parse biden's words, let's hear from the president exactly what he said to that question. >> are you willing to get involved militarily to defend taiwan if it comes to that? >> yes. >> you are? >> that is the commitment we made. >> to be clear, biden essentially said the policy towards taiwan has not changed at all, but he added he -- he went further down this road a little bit. he said the idea that 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. it is a burden that is even stronger. you can argue whether this was strategic ambiguity or a little
bit of strategic clarity and then the white house walks it back, at least the threat or that statement is out there and then they walk it back a little bit. nonetheless, beijing is not pleased obviously. this is the ministry of foreign affairs, one of their spokespeople. he says they urge the united states not to send the wrong message to avoid damage to bilateral relations. he says there is no room for compromise or concession on sovereignty or territorial integrity issues. >> we have the u.s. trade representative katherine tai, and it was a really interesting conversation because we could feel he really wanted to talk about the indo pacific economic framework but we cannot help ourselves but ask about the chinese tariffs. is the u.s. considering lifting it? the taiwan issue has also overshadowed this piece of the economic engagement.
>> she was not very committal of course in your questioning to her. from an economic point with inflation running at a four decade high, there could be an economic case for removing those tariffs. then on the strategic side, and that is what katherine tai essentially said, they have to be strategic with china. my take away from the interview is she is the u.s. trade representative. she is the person negotiating with the chinese across the table when they are across the table from each other. you do not want to remove the leverage -- those levers of leverage with the chinese. removing tariffs would do precisely that. you take away more tools from her. the trade pact was supposed to be the centerpiece of biden's trip. the ipf -- ipef. the criticism is it is not necessarily that specific and there is not necessarily much of
an incentive for indo pacific countries to join if there is not going to be tariff reduction involved in that. as katherine tai basically laid out the case that it is not your traditional trade pact, and that was by design. it was essentially -- you know, an offer for these 12 other signatories in addition to the united states to build a next generation of relationship on trade that involves digital rights management and of course protection of supply chain we have seen because of the supply disruptions from the pandemic and a number of other issues that are not necessarily tied to the traditional way of tariffs and non-tariffs. >> stephen engle with the latest on those trade talks of course and the visit by president biden across asia. we are looking at that economic framework and perhaps also the lifting of those tariffs on chinese imports that would help
the economy while beijing is doing its own thing in order to boost their economy. they will offer more than $21 million -- $21 billion in additional tax relief and that businesses as they seek to offset the heavy impact of coronavirus lockdowns. enda curran joins us for more on this. how potent with these measures be? >> it is an example of where the relief is going to. it continues to go to the business sector more than the consumer side of things. i mentioned tax rebates coming up to 21 billion u.s.. there will also be tax cuts for those buying new cars. taken together it brings the overall tax measures now this year to being worth more than the tax measures, the tax relief they ordered back in 2020 when the pandemic was just beginning. it must be said these measures still seem to be within the parameters of the fiscal settings that were agreed in march. it is not clear we are talking
about new money or new tax offsets, nor is it clear how this will be paid for. it is one item out of several announced. there are other measures and that includes more spending on infrastructure around water projects and even renovating old houses. more evidence the authorities are pushing toward more stimulus . >> the driver of demand-side growth, exports threat the pandemic, it looks like that is starting to soften. >> the trade export boom was a big dynamo for china and asia during the pandemic. of course it is complicated by the supply chain story and by inflation rising. now we are starting to hear from the industrial sectors that consumers on the ground in the u.s. and europe are starting to change their spending habits, moving away from buying goods. the merchandise they have stocked up on the last few
years, they seem to be well ahead on that front and they are spending money elsewhere. it is just signaling what we are getting from manufacturers in this parts of the world. they are seeing cooling. >> let's get you to vonnie quinn with our first word headlines. >> u.s. trade representative katherine tai says the u.s. is engaged in discussions with china over its progress of meeting the terms of the phase i trade deal after president biden pledged to review trump era tariffs. the biden administration is focused on protecting the interests of american workers and the economy and will continue to push for a level playing field. >> our approach as with everything in this relationship to the tariffs is to be strategic. we have to keep our eye on the
ball in terms of how to effectively realign the u.s.-china trade and economic relationship. >> pakistan's central bank raised rates more than analysts were expecting as it tries to win a bailout from the international monetary fund. the state bank of pakistan lifted the target rate by 150 basis points as it battles some of the highest inflation in asia. pakistan is seeking to sign a deal with the imf to access $3 billion. thailand's central bank is confident inflation will return to target next year and has signaled there. is no rush to hike rates. in an interview with bloomberg the governor said rising prices are mostly concentrated in food and energy that he is not seeing demand-side pressures found in overheating economies. it is one of few central asian banks that have not raise rates this year. >> the critical thing is not to see second-round round effects, not to see broadening of things that are increasing in prices and to make sure the medium-term
inflation expectations remain accurate. >> sri lanka is said to be appointing a minister for finance and another one for economic revival. the key portfolio -- it is crucial for negotiations with the imf and bondholders. the prime minister may double up as minister for economic revival to guide domestic policy. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. >> next, didi has secured the blessing of shareholders to delist from the new york stock exchange as a symbol of china's crackdown on the tech industry. we get the details and what comes next. this is bloomberg. ♪
let's get more from bloomberg's asia tech executive editor peter elstrom. walk us through the process that allows didi to proceed with this delisting. >> so this vote on delisting is not really a huge surprise. but the very short life of didi as a public company has been a huge surprise. it went public 11 months ago in june. everybody thought this was a great hope for china's technology industry who was supposed to take its place alongside uber and other big ride-hailing companies in the world. it was supposed to have a bright future. china's regulators crackdown very hard. they said the company had not properly secured data and they pushed the company to delist because they were concerned about some of these security issues, particularly because it was listed in the united states. now they have gone through the painful delisting. shares have dropped 90% and they
are now going to try to relist their shares in hong kong a little bit closer to home after they get some of the data security issues under control. >> which is also not without its challenges given the requirements of hong kong. >> that is exactly right. they have been filing for this hong kong listing for a while and have not been able to secure the blessing of the regulators in beijing. in particular the cac has been concerned about data security because didi collect a lot of very sensitive data. it figures out when people are going different places. it could also include government officials or other perhaps sensitive people. the regulators want didi to do a better job of securing that data, making sure it is under control. also they need licenses in certain places to operate that they do not have yet. they need to collect that and they can proceed with the hong kong listing and only then can shareholders who have suffered a very painful 11 months begin to
recoup the losses they have suffered. >> peter elstrom there. we will get more analysis in the next hour when it comes to didi's exit from the u.s. market, what it means for the company, shareholders, china's tech outlook. is this likely to be the last of the chinese listed adrs to be making the exit from that market? benjamin harbored from msa capital will be joining us. the lowest level in nine years. the stock exchange ceo is expecting things together pace the rest of the year. he spoke with haslinda amin in davos. >> what i would like to look at usually is how companies are submitting their filings, their application. right now we have between 170 to 180 applications of people that have shown an interest to
file for ipo's. what has happened, i think it is not related to covid as much, but to the economic environment and the fact that valuations seem to be down. people are filing. we have almost record level of filing applications. they still have not pulled the trigger in a significant way. >> when do you expect the trigger to be pulled? it is impacting your earnings. you are looking at earnings at the lowest level in five years. when do you see a reversal of that? >> 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 the general sentiment has lowered the amount of trading that happens. at the same time, valuations are lower. what we see is eventually the markets will come back which it
always has. there are periods's when valuations are lower, then they pick up. i cannot predict whether that is two months, six months, seven months. what i know is if i take a longer-term approach and i look at 5, 10 years, opportunities around china and capital markets -- >> it has been challenging for you. you took over as the ceo of the hong kong exchange almost one year to the day, the 24th of may. you did a trip to china in april. what was the conversation like? what was the message you sent across to china? >> we have a lot of stakeholders in china, a lot of partnerships. we forged some new partnerships with the china climate exchange. there is a lot of positive interactions that we have. the key message i heard is around the importance of hong kong developing and continuing to develop as a key
international financial center, i mean a global international financial center. that is very important and that was very clear. we have a unique role as the most international city of china and the most chinese city outside the mainland. >> more projects expected? >> the opening up of china will continue. >> the hkex in davos. investors are jumping into an etf tracking tightening internet stocks in the latest sign of improving optimism for the sector. this is bloomberg. ♪
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in extended trading, after posting a beat on its forecast, the software vendor expects revenue to be a tie in the reporting period. profit excluding some items will be up $.92 per share in a signs uma is finding -- in a sign zoom is finding ways to grow beyond the pandemic room. air pmb stopping operations -- air bnb stopping operations in china as the country continues its crackdown on covid-19. it is ending rental despite a big push on mainland china that accounted for only 1% of the countries revenue -- the company's revenue over the past years. we have some breaking news.
the growth forecast continuing to be slashed for china as the country grapples with the negative consequences of its covid zero strategy and the slowdowns coming from those lockdowns. we are now getting from ubs cutting their china 22 growth forecast to 3% from 4.2%. this is really one of the most bearish outlooks on the -- if not the most bearish. we had citi downgrading, goldman sachs cutting to 4%. nomura one of the lower ones at 3.9% for their 20 growth forecast. now we are getting that cut to 3% for ubs. at the same time we are starting to see signs of potentially an improvement in momentum when it comes to chinese markets as investors are buying into internet stocks through an etf. president biden said they would be reviewing tariffs on imports. for more analysis let's bring in coal dobson.
for such a long time and has been catch a falling knife. chinese assets. is there a better perception now that we are close? >> the vibe i'm getting from markets right now, have a look at j.p. morgan's weekly cross market note which came out overnight. leading right off unfavorable yuan -- what they are saying is the risk reward balance is leaning in china's favor. there are a lot of risks out there. chinese equities are very cheap. we are starting to see increasing signs of policy support coming through. a lot of the bad news, you know, the ubs forecast, it is a catch up. growth is going to be slow and from here maybe there is potential for an upside given expectations are so dismal. that sentiment starting to feed into the equities market, and maybe not today, not tomorrow,
but soon, we are going to get the pickup investors are looking for and anxious to lock onto it have an opportunity to make the money this year when it has been so dismal everywhere. >> perhaps investors thinking there are opportunities in chinese tech? we are seeing this rough towards -- this rush towards etf's. >> we definitely feel positive flow data from the u.s. side as well which is interesting. sentiment is not just coming from domestic investors, but even those outside china also are keen to have a look again at this. there are still risks hanging out. we have the didi delisting news. we did not have a good day yesterday in the u.s. for the golden dragon index. if you are looking at measures of puts versus calls, everything is starting to twist in favor of those chinese markets, and including the tech companies.
>> bloomberg's executive editor for asian markets, paul dobson. the ceo of the state owned oil company, there has been a lot of turbulence given that the government is trying to press fuel prices. the ceo has been ceo only for about a month and we continue to see pressure from president bolsonaro as fuel prices continue to rise. that is really adding pressure to the government. the government has now headed for an election later this year. coming up we discussed dd's plan to delist from the u.s. stock exchange after receiving the green light from shareholders. market coverage continues as bloomberg brings you the start of trade in hong kong, shanghai, and shenzhen. this is bloomberg. ♪
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