tv Bloomberg Daybreak Asia Bloomberg May 29, 2022 7:00pm-9:00pm EDT
haidi: good morning. we are counting down to asia's major market open. shery: welcome to "daybreak: asia." stocks set to open on an upswing after wall street's best week since november 2020, but i turning point looms when the fed could start shrinking its balance sheet. shanghai moves to repair its lockdown battered economy well beijing declares is covid outbreak under control. plus, will japan be opening to tourists? we will hear about the boost from the weekend.
>> seen asian markets, online, this is have nikkei futures traded in chicago, this is one of the less liquid contracts. a lot a focus on the yen, the worst performing currency in the g10 space this year. some investors betting the weakness we are seeing could benefit the importers. that is another focus. sydney futures above that key 7200 resistance level. we did see the asx 200 closed at a three week high on friday and gains in new zealand looking more muted but we did have the jp morgan downgrading their gdp forecast, not predicting growth at 2.3%. it was 3.3% for the year. this does depend on what happens in china. some positive signs over the weekend. beijing relaxing some movement curves.
we had shanghai unveiling fresh policies to support their economy. shery: perhaps that is one reason we are seeing upside in u.s. futures, markets closed on monday for memorial weekend. we are seeing some upside with the nasdaq 100 getting 0.2% after the s&p 500 wiped out all of its losses for the month of may. despite this positive sentiment, we see concerns over growth. we were concerned about inflation, now we are concerned about growth. those fears have been found in the treasury space. we are headed for the first monthly gain for treasuries since november, the tender yield falling towards that to 70 level. we see upside for oil and asian session. after five weeks of gains, we are seeing tight supplies of fuel. in the u.s., it is summer
driving season. with more positivity, a lot of people asking for this capitulation we are starting to see. haidi: the sustainability of this. let's get more from our trust asset asia reporter -- cross asset asia reporter. how durable is this rebound? is there a sense that we are somewhere close to the bottom? >> that is right, and not surprising. you have seen markets fall a lot. you had a 30% drop in the s&p 500, the worst start since the 1970's. valuations have become cheap, especially in the tech sector. we have seen investors come in and buy those steps. we saw institutions back in last week. the discretion about is this sustainable, it does feel to
some extent like a bear market rally and we are likely to see this stocks fall for a while. there were few positive things last week. perhaps a less hawkish fed. relatively solid earnings. and still a resilient consumer in the u.s. underpinning growth. but of course we do have questions about growth, how sustainable is it as monetary policy, as interest rates become tighter. this is a question, we are seeing this rally with that backdrop of questions about growth, about a recession, about inflation, and geopolitical uncertainties around china and ukraine. shery: when it comes to fears about growth, very much focus on china. last week, we saw $20 billion of
relief measures announced by the government. we are hearing it from shanghai, local measures. will this help? andreea: investors have been underwhelmed by the measures that have come out. we saw this measures last week, the market did not take that and run away with it. it is positive, but up to this point, traders are focused on beijing and china's adherence of this covid zero policy. any signs that the economy is reopening, that economic activity is picking up, there's still a lot of uncertainty around how policymakers are going to follow through on some
of these promises, on these measures that have come out. definitely a positive, but to what extent? is this going to fire up that market in china? it does remain to be seen. shery: let's get more analysis on shanghai's economic support measures with our managing editor for global business. we are talking about these new policies for shanghai and a time when it seems the outbreak seems to be easing. >> i think you have seen cases coming down. also in beijing, six declining days of cases and reporting over the weekend, no cases in the community. that is still far off where they would probably like to be, but it does indicate that they are
potentially out of the woods in beijing and if responded accordingly, opening up some districts to allow people to work from offices, they no longer need to work from home, easing some restrictions around access to public places, and putting some more public transport back online. green shoots out of china, but it remains to be seen whether that is maintained until the next outbreak when people expect covid zero style restrictions again. you are seeing cases flaring along the border with north korea, which only emerged from a lengthy lockdown last month. >> previous guests said this effort for china to save itself from itself has been in ruins and that is what we are seeing with some support measures. emma: they are trying to counterbalance that.
they are trying to balance the fact that they want to pursue covid zero and they feel the need to be imposing these stringent, almost accordion measures to wipe out covid rather than their alongside it. these measures to the economy are like a band-aid, but they will not stop the root cause, which is that china is inflicting this on itself in terms of the economic damage from trying to continue to eliminate ever more contagious versions of the virus. haidi: emma o'brien here. let's look at treasury futures. we have brought our u.s. markets closed for memorial day weekend. we are seeing the bond market bracing for a reckoning when it comes to bigger forces driving inflation. at the same time, we usually see a good performance when it comes to treasuries during these long
weekends and the patriotic holidays, if previous performance will tell us. bonds at this point getting the upper hand in the treasury market, the first monthly gain since november. we are seeing a stable future when it comes to asian sovereigns so far. let's get you to paul allen. paul: the u.n. human rights official is trying criticism for her visit to china. it ended with a press conference that did little to address concerns about a china's alleged human rights abuses. the u.s. state department said restrictions imposed on the visit was not able to undertake a complete and independent assessment. eu nations failed to agree on a revised package of sanctions over moscow's invasion of ukraine ahead of a summit in brussels. anne-marie refusing to back a compromise ensuring all
suppliers. a proposal to ban russian real estate purchases in the eu was removed from the draft and eu officials say a deal is still possible. the longest presidential election is heading for a runoff with petro security 40% of first round votes. the leftist leader is an x rebel who wants to tax the rich, halt oil exploration, and restore ties with venezuela. an nds talisman outsider, adolfo hernandez, came in second. pakistan's finance minister says the country must secure an imf bailout quickly as it is unable to raise funds from the bond market and commercial banks. countries including saudi arabia are willing to help once an agreement with the imf is reached. pakistan needs 37 billion dollars in financing for the fiscal year starting june. 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: still ahead, we speak to ama holdings president and ceo about japan's tourism outlook. later this hour. next, an investment specialist joins us to discuss the market outlook and whether dollar strength has peaked. this is bloomberg. ♪
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>> take a look at the week ahead, eu leaders start a meeting with the war in ukraine driving the agenda. on tuesday, we got a check on the health of the chinese economy. we will also be getting australian gdp and asia pmi readings on wednesday. this week marking a turning point in monetary policy, quantitative tightening begins as the fed begins shrieking the balance -- shrinking the balance sheet. let's get more analysis with the head of investment specialist at citi australia. we just spoke about earlier the beginning of qt bringing a key investor risk.
take a look at how we saw that rebound in the u.s. before we went into the long weekend when it comes to the first up week we have seen in u.s. stocks, the longest losing streak for u.s. stocks since 2001 coming to an end. how much of a rescue is qt and how do you break that durability -- how much of a risk is qt? >> i think it is a little too early to say. i think we are in the middle of a bear market rally. not quite out of the woods. i think the market is going to be range bound, trying to figure out how soon is that recession coming or how quickly as inflation going down? there is a strong likelihood that even in october, we are going to see a repeat of what is happening now. that is the point of inflection
where the markets will take on the fed again. haidi: while we see uncertainty when it comes to equities, you are in the camp that bonds are back and they are a valuable part of a balanced portfolio. mahjabeen: indeed. we have been saying that for the last couple weeks. our conversations have been around inflation and interest rates. our base case stands at treasury yields peek into 2022, perhaps could be behind us now. receiving income without a duration somewhat makes sense. with that, we like bonds. we are in a period where we saw in the last six months most bonds and stocks decline more than 10%. in periods like these, you see over 10% recovery. shery: we have seen a lot of cash hoarding. how do bonds compare? mahjabeen: we have the fed
hiking at the fastest rate ever but when we look forward, we see rate cuts are also pricing in 2024 and beyond. cash rates are going to remain negative. we don't think inflation will remain so high but we also think interest rates will not remain as high. this is a great time to block in these high yields. if you look at the ig michael -- mike it, it is over 10% today. shery: what does this mean for the dollar in terms of the strength we have seen? we are headed downwards in recent days. mahjabeen: the dollar index, we have seen a reduction especially from leveraged names. in the short-term, further downside can be tested may be around the 100 mark and that is because we have seen nominal realties,, breakevens around 2.6 now.
over the long-term, we are still of the view that we will see dollar strength continue. that is on the back of the ongoing volatility that we face in the uncertain macroenvironment. haidi:. to have you with us -- good to have you with us. you can get a roundup of today stories in today's edition of daybreak. you can customize your settings so you only get unders on the industries and assets that you care about. this is bloomberg. ♪
goldman sachs saying the price of three key battery metals will drop over the next two years. the search in investor capital into long-term tv demand has generated an outside supply response ahead of the demand trend. retailers rushed to build up inventories last year on soaring consumer demand and transportation bottlenecks. inventories rose to $45 billion, up 26% from last year. u.s. retailers including walmart and target are paying more for storage and cutting prices on key goods. >> asian countries causing a ripple effect, the soaring price of palm oil and chicken are forcing investors to rethink positions as supply disruptions reshape earnings outlooks. haidi: look at the jump in food prices that we monitor. profit estimates are on the
rise. krispy kreme could take a hit from biting wheat prices. bloomberg users can read more about those. boris johnson said he wants oil and gas from the north sea to keep flowing and energy companies to boost investments. he was speaking to bloomberg about climate policy, inflation, and steps to combat recession. >> to tackle inflation in the medium-term, you have got to deal with supply-side issues. we need energy companies to be putting more into hydrocarbons but we also need the whole country to be investing in low carbon energy. >> yesterday's announcement is an incentive to buy cason oil to produce gas and oil decade --
gas and oil? >> we are going to need some. i don't think we can turn our backs entirely on hydrocarbons. the u.k. has a flourishing sector in scotland, it is important. we have to keep that going. one of the lessons of the current spike is we cannot afford to be totally dependent on putin's hydrocarbons, but we have to accelerate our drive for the carbon energy. if you look at the british security strategy, 50 gigawatts of wind by 2030, 25 gigawatts of nuclear by 2050. these are big increases in low carbon energy. what they offer is a big platform for investment from overseas. what i found in the last few weeks is a real appetite from international investors to put money in long-term infrastructure projects,
specifically the green energy sector. >> can i ask you about spending? do you risk getting the public are to high spending? what happens if the war in ukraine continues and this time next year, there are still high energy prices? >> i think the package we have set out in the last couple days, it is fake potatoes. -- big potatoes. it is a commitment to do what we did in the pandemic, get people through the surge in energy prices. we think it will last until prices update. i am confident they will. i think supply will improve. humanity is always fertile inexpedient -- in expedient solutions. we will find solutions in this
country. in the meantime, we are going to have a difficult period. we have to be clear, it is going to be difficult. that government cannot solve every problem. we cannot cover everybody's extra costs. but what we can do is make sure that we deal with the underlying causes of inflation but also keep our economy strong and open to investments. >> boris johnson they're speaking exclusively with bloomberg. a quick check of the headlines. a big shakeup at agl, the ceo and chairman announcing they will step down, it follows the decision to scrap plans to deem urge -- to demerge its coal business. a billionaire who holds an 11% stake had publicly campaigned for the demerger -- demerger to
be dumped. a former disney ceo has invested in unsealing company, he has agreed to act as advisor to the firm. neither party would comment on the size of his stake. evaluation hit $40 billion in september, it is one of the most valuable private software companies. a video stream or says it is resisting the temptation to outspend rivals to stay profitable. the company lost $7 billion or 70% of its market value since is 2018 debut. the ceo spoke exclusively with bloomberg about the shift in strategy. >> seeking market growth should not be our strategic priority. this industry has developed into a relatively but sure one at a slower growth stage. haidi: the u.s. corruption and
market many galatian -- and market manipulation cases has lighted on two former executives . authorities have not brought charges against the managers and is seeking cases against the firm and have identified two alleged perpetrators. they include a former head of copper. we have more to come. this is bloomberg. ♪ another crazy day?
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>> many people calling it on investable. >> there's a wide margin of safety. >> september talk over there will start one of the big fiscal responses in history. >> there is a possibility that they reopen and they stimulate the economy. >> you will see economic activity resume more quickly. >> attractive long-term growth. we will be cautious and prudent in this environment. we are optimistic about china as the country. >> we are expected to increase our exposure in china. i >> see a deepening of relationships into china. shery: some of our guests talking about chinese markets.
annabelle is looking at the outlook for chinese equities given all the stimulus measures we have announced. could we see some positive momentum? >> we>> have seen the csi 300 pickup over the last few sessions. seeing gains. we did have a better-than-expected tech result at the end of last week. it is down to local governments. responding to this government pledged to prop up their local economy. shanghai is the latest. they have the tax rebates. they will be allowing manufacturers to resume all of their operations. it does follow shenzhen. they announced measures on thursday. any upside for the thirst -- for the csi 300 could be limited by the low margin regrowth we are seeing. the outlook for china's economy is not looking rosy. bloomberg economic are one of the most bearish on the outlook saying to percent growth this
year. it is quite a bit lower than the consensus forecast for four point 5% growth. pmi data, that will be one of the most economic indicators. it is not looking like it will be that flash hot. expecting a further contraction in services and manufacturing sector. still a lot of headwinds facing this economy from china's continued support of covid zero policies. shery: let's get to paul allen. he is in sydney with the full headlines. >> shanghai is facing bring you back in economy with battered lockdowns. allowing manufacturers to resume operations from june. the immiscible government is easing testing requirements for entering public places. hong kong is a relaxing some covid-19 testing requirements
for inbound travel. passengers will still need a pcr tests before their scheduled flight no longer need to give proof of the lab accreditation. also dropping testing requirements for transit passengers. the leader of sri lanka's main opposition party says the government needs -- the country needs a new government. the leader says the country needs policy coherence. it is calling for a fresh mandate to ensure stability. sri lanka's negotiating a bailout program with the imf. ukraine's president volodymyr zelenskyy visited troops in the kharkiv region over the weekend. it was his first publicly known trip outside of the kyiv area. he handed out state awards to soldiers. green officials say more than 30% of residential buildings in
kharkiv have been damaged by russian attacks. president biden has laid flowers outside a texas elementary school where an 18-year-old with an 18-year-old within assault rifle last week killed 19 children and two teachers. with gun control back on the agenda in washington, u.s. lawmakers are setting a timetable to negotiate new laws. the u.s. department of justice says it will create a critical incident review to the police response -- of the police response to the shooting. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. haidi: the un's top human rights official is drawing criticism for her trip to china after she took part in the six-day visit which ended with little mention of human rights abuses against weaker muslims -- against the uighur muslims. this ambiguous statement and
outcomes. >> she pretty much avoided all controversy in her press conference. at the conclusion. i have noticed a trend and that is when you have visiting dignitaries who are perhaps pressed criticize china while they are still on chinese soil, they tend to refrain from doing so. the coming days after she leaves china could be more pressing and what she also reports back to the united nations and her offices will tell more. in this press conference, she stood clear of controversy and that alone drew the ire of many human rights groups as well as the united states. her strongest comments worship a encourage the chinese government to undertake a review of all counterterrorism and do you radicalization policies -- were
talking about should junction to ensure they comply with international rights standards. human rights groups are saying the fact she did not necessarily see or outline any potential or alleged abuses of the uighurs was a missed opportunity to bring global attention to the issue of these vocational and education centers that the chinese say is for do you radicalization and reeducation and are not necessarily prison camps. this is what antony blinken said, the u.s. agree terry of state. he said we are concerned the condition aging authorities imposed did not and able a complete and independent assessment of the human rights environment in china. the visit was already being criticized for failing to secure
guarantees for unfettered access to chin jong. she said at the briefing she was able to speak unsupervised with chinese people. she visited a prison, a former vocational and training center. her most detailed and most critical answer came from a chinese state television question about u.s. gun violence and u.s. racism. that again will bring more criticism from rights groups and perhaps democracies like the united states. shery: one of those critics of the trip has been the human rights watch china. the director, will be speaking to her and of the next hour. we will hear from the ana holding ceo about japan's tourism outlook. this is bloomberg. ♪
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with 74 new devices. does anybody have any questions? and just as many questions. shut down a storm of ddos attacks. protect headquarters and the cloud. with all your data on the nation's largest ip network. whoa, that is big. ok. coffee time. double shot. deal with a potential breach. deal with your calendar. deal with your fantasy lineup. and then... that's it? we feeling good? looks like we're feeling good. bring on today with comcast business. powering possibilities™. haidi: japanese markets will open at the top of the next hour. we are looking to get the upswing in asia after we had the recovery rally in the u.s.
this is held dollar-yen is sitting. just higher when it comes to the greenback to tenths of 1% should this is part of the three week period of weakening we had seen for the japanese yen. singapore futures looking pretty positive. up by just about 1.5%. steady as she covers when comes to jgb. the jobless numbers are expected to show a tightening market on tuesday. industrial production will be coming out. that is expected to show the shrinking of industrial production in japan. shery: we are watching the openings in japan. the country is ramping up its reopening after more than two years of pandemic restrictions. the ama holding ceo says the weaker yen will help boost sales for japan's largest airline. to discuss the tourism outlook
-- he discussed the tourism outlook with our transportation reporter. >> we have seen a robust recovery recently. demand for domestic flights recovered 65% and 30% for international flights earlier this month. reservations for the next three months are expected and looking quite promising. i'm sensing a powerful return of flight demand. >> japan is set to relax border controls from june. are there any further support or moves from the government? >> i am very grateful to the government for easing restrictions, however from a global perspective, i do believe there is room for easing requirements, pcr tests before departure when foreign nationals come to japan. i would like to see the government he the level of travel advice. for japanese people who wish to travel to certain countries.
>> has russia's invasion of the ukraine impacted anas business so far? >> all flights from japan to europe have been flying over russia but now they all need to go around russia extending the travel time by 25%. the biggest direct impact of the situation is the cost increase. >> ana has been hit by soaring oil prices like many other businesses. how will it impact the procurement of sustainable aviation fuel? >> i can say there is no direct impact from the current soaring oil prices on our plans for sustainable aviation fuel. in the process of achieving our goal of carbon neutrality by 2050, we aim to replace 10% of fuel with sustainable aviation flow by 2030 procuring both internationally and domestically. we have been hedging against rising oil prices so there will not be a huge impact on our
earnings in the short term should >> do think weaker yen will help japanese airline businesses and if so, how? >> we need to think from post the -- from both the cost and revenue side. on the cost side we have been hedging so the impact is quite limited. when it comes to revenue, a weaker yen will bring more foreign tourist to japan and that will push up domestic demand as well. i have positive expectations about the weak yen. foreign travelers used to comprise 10% of travelers in japan pit with the cope situation, i don't expect a huge jump in numbers or visitors but i still expect three to 5% of foreign travelers to come back >> after largely halting hiring for three years, does ana have in its numbers of flight attendants and pilots? how is ana going to address the situation? >> we have enough pilots and
flight attendants. we never stopped hiring pilots. it takes time to educate them so we have a constant flow of pilots coming in. some flight attendants have been assigned to overwork during covid but we can ask them to return to work as the demand increases. >> what is the biggest challenge japan is facing right now? >> this is strictly my personal view. i think we need to set our minds on the global standard. so many excellent technologies and discoveries remain varied within japan. governments and industry should all take initiatives in making brilliant japanese powers apparent in the global arena. japanese airline industry is in the same situation. we have been part of starlight since 1999. since then, we have learned so much from global mentors -- global members. we have built our own knowledge
and information over the past 23 years and it is time for us to bring that forward. >> ana holding ceo speaking with our asia transportation reporter. you can get more from this interview on tv available to all bloomberg terminal subscribers. that is monday's at 8:40 a.m. tokyo time here on bloomberg television. ♪
haidi: chinese video stream or says it is open to prioritize profitability over market share. the company has lost 17% since its 28 teen debut. the ceo and founder spoke exclusively with bloomberg about the change in strategy. >> shaky market growth should not be a strategic priority anymore because this industry has developed into a relatively mature one that has had a slower growth strange -- growth stage. >> much room do you see to raise prices again additionally?
>> price hike potential still exist whether we will raise the price this year, we will see how markets react. we don't have a clear plan yet. >> where do you see advertising revenue going the rest of the year and where do you see the economy going? >> for the second quarter, almost entire shanghai is under lockdown. for those who understand brand advertisement industry, they know half of china's print advertisement marketing is based in shanghai so we will see bigger negative impact on brand advertisement in the second quarter. in my opinion, q2 is the bottom. the end of q2, we will see a gradual recovery. the third and fourth quarter, we will see growth. >> you expect the impact from the regulatory environment to moderate to become less noticeable going forward. >> last year, there was
regulatory scrutiny. we are not afraid of regulation but the transition is painful. let's say the regulation was different last year and this year it changed. it is that transition that is relatively painful. >> in 20, -- 2020, the reports alibaba and tencent were interested in buying stakes. is that still something that is possible? >> this is a rumor. there have never been any conversations with tencent and alibaba about investment. some people ora media did ask my opinion. my response is it is not possible. >> at the end of march, the sec placed you on the list of companies that could be delisted because of the auditing dispute between u.s. and china. at the time, you said you are working on solutions to protect stakeholders. how is that process going and
how likely do you think a delisting could be? >> i hope the dialogue between china and the u.s. will make some progress to resolve the issue. at the same time we are looking at other opportunities to reduce the risk. we are working on technical issues for hong kong listing. there is no specific timetable yet. >> what does consumption look like in china? >> the service we are providing is very special. it is a low spending online entertainment industry. our business is not highly correlated with the economy. shery: speaking exclusively with bloomberg. here's a quick check of the latest headlines. money gram is getting set to partner with crypto firms to allow customers to send stablecoins and convert them to hard currency.
the ceo of the money transfer firm says the partnership bridges the two worlds. the recent collapse -- stablecoin has raised fresh scrutiny. andy has oil and natural gas is rose 32% of the first quarter but missed estimates. an increase antigovernment levees amtech again after russia's invasion of ukraine. net income increased to $1.1 billion in the three months ending march from $867 million a year earlier. top gun maverick topped the memorial day weekend box office taking in an estimated $124 million in friday through sunday ticket sales in the u.s. and canada. the movie gave theaters one of the biggest box office debuts since the start of the pandemic. a rare move for a non-superhero film.
the movie is unlikely to be released in china, diminishing its global return to haidi: we do have covid numbers out of shanghai. one covid case outside of quarantine to 67 local covid-19 cases within quarantine. underscores how difficult it is for them to be able to stick to know community transmission. there was one in yesterday's count as well. we had shanghai planning to loosen covid test requirements for people entering public places. this slew of reported measures for the economy. aimed at reigniting the economy that has just been crippled by these past weeks of lockdowns including tax rebates and incentives to property firms, supply for residential developments, ev subsidies and the like among those measures announced. a peel energy withdrawing its
merger proposal as the board starts to re-strategize about the company's direction. let's bring up the reaction. obviously elated. tweeting immediate after it was announced. the chairman and ceo stepping down. let's take a look at what he had to say. is this is a big win for shareholder activism? it is a big day for australia. we are embracing opportunities of decarbonization with tenacity and creativity. >> were only two weeks away from the vote. normally at this point to the lead up to a big vote like this, they would be issuing proxy reports so the proxy firms which steer all the passing shareholders in the company and it indicates at least one of those firms was going to tell shareholders they were not in support of the demerger plan.
both sides were quite desperately pulling their own shareholders on the retail side. from what i heard from sources, both sides were saying it was nearly 2-1 on the retail side. they could have taken it all the way. these indications were so strong that there were no point to win this as it stood. >> this is quite the story. climactic wisdom have such an impact on the corporation. have we seen anything like this in australia before? >> we have not seen anything close to those in australia and globally. for quite some time we often see corporate activists and shareholder activists demolish corporate strategy in the name of profit but this is the first time it has been done extensively in the name of global climate change. if it is not the first, it is one of the more high-profile
cases. there was last year in june, an activist firm got three board seats on exxon mobil. that was the first taste of this. for years we have been seeing students show up and pop executives at shareholder meetings. this is the first time they had a tangible impact on such and enormous company. haidi: we expect to see the courtship for the takeover to continue. coming up, human rights watch joining us to discuss the controversial six-day visit by the top u.n. official. supply chain disruptions weighing on investor sentiment. the market opens up next. we are expecting to get the upswing from the reversal in fortunes in the u.s. session. this is bloomberg.
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>> this is daybreak: asia. we are counting down to asia's major market opens. we are watching for reactions to the latest measures by china for economic support. this time coming from the shanghai municipal government announcing rebates, not to mention ordering manufacturing to resume operations. >> investors would welcome any semblance of support measures to give some momentum to this economy. let's get you over to annabelle with the market open. annabelle: of course, what helps the chinese economy also helps the rest of the region, so we are looking to a more positive
start to trading here in asia along with the strong rally we saw into the u.s. close on right a. the nikkei just coming online. we are seeing some upside at the start of trade. of course, broadly, the topic has been outperforming the main regional benchmarks over the past few months. the yen trading pretty much in line with the average band we are seeing for this quarter and japanese bond futures pretty much flat, though we have seen three straight weekly gains here, but it does not -- it does really look like the bond vigilantes have given up at this stage to sort of selloff. flipping the stage to korea, interesting to note that the korean government did approve more than what the finance minister had initially allotted. the korean won this morning is looking pretty flat against the
greenback. we did see it jumped the most in a month on friday, and it still of course is under pressure, given elevated oil prices and the chinese economy, despite stimulus measures still not in the best shape. moving to australia, we do have the a sx 200 coming online about that key resistance level, 7200. not all strategists saying we will continue seeing gains. one group predicting a capitulation the size of which we have not seen since the 1970's. a big mover as well, agl coming online this morning after it scrapped a proposed split efforts larger shareholder opposed the move. >> let's delve into the markets with our next guest who says he does not think investors are primed for a recession. let's bring in the head of equity research for asia.
good to have you with us. we are expecting -- good to have you with us. despite the fact that you are expecting recession, you are still favoring the markets. >> first of all, we are not expecting recession in those markets. if you look at consensus expectations around recession over the next 12 months, it is only 30%. we are not expecting recession, that is not our base case. we also think the markets are not pricing that in that work to be the case. there is also hope that we can avoid recession and that the safe can navigate a soft landing , but of course, it is a very fine line. >> how to the markets in the u.s. and europe compared to perhaps china, and the economic stimulus measures we continue to see every week? >> i think we would put it in
the context of we think there's two big battles going on in the market. one is inflation versus interest rates, so focused on the u.s., and the other is zero covid strategy versus science. of course, the impact of that in china is impacting supply chains and inflation, so those two are very closely tied. for us, you know, we are basically equal weight view on global equities and we have a preference for the u.s. at the moment, and we would be underweight china and other em markets. we think there is obviously an opportunity in the second half for stimulus in china and we are seeing the start of that now, to try to reverse course, but of course, if you look at april indicators, china is very likely to have a gdp decline in this current quarter. they've got lots of errors they could pull out in terms of stimulus, so the big question is
-- what are they waiting for? what about the risk of recession in europe? that is one of your preferred markets. are you thinking that translation area risk is very high? >> the problem with europe is generally growth, and a lot of it has to do with the structure politically of europe and economically. what is going on in eastern europe has -- is a real risk going forward if that spreads, so, really, for us, we think that is the biggest risk. investment in the economy in the face of aggression in eastern europe, and i think that is probably the immediate risk against a backdrop of already a low growth economy in europe in general. haidi: you are still constructive on europe as a
market when it comes to equities? >> yeah, we think, you know, everything's got a price. this current year, we think earnings are likely to be ok for europe. again, against a sort of neutral backdrop for global equities, we prefer the u.s., but we also do not mind europe, contrasted against currently and underweight view on china and em in general. >> we appreciate your time. let's get to paul allen with the first word headlines. paul: eu nations failed to agree on the revised faction of sanctions over moscow's invasion of ukraine. hungary is refusing to back a compromise, despite proposals that would ensure oil supplies. in eu official says a deal is
still possible in the coming days. colombia's presidential election is headed for a runoff with the frontrunner securing 40% of first round votes. the 62-year-old leftist leader is an chlorella and former mayor who wants to tax the rich, halt oil exploration and restore ties with venezuela's socialist government -- the 62-year-old leftist leader is an ex-guerrilla. hong kong is halting some testing requirements to inbound travelers. passengers will still need a pcr tests before their scheduled flight. the city is also dropping testing requirements for transit passengers. measures have been eased slightly for airlines. the united nations' top human rights official is drawing criticism for her visit to china. her six-day trip ended with a press conference that does little to address concerns about
china's alleged human rights abuses. on saturday, the u.s. state department said restrictions imposed on the visit meant she was not able to undertake a complete assessment. i'm paul allen. this is bloomberg. shery: still ahead, we actually do have more on that china trip by the united nations human rights commissioner. here why human rights watch says it is appalled and alarmed. sophie richardson joins us later. up next, shanghai is offering new tax rebates and allowing factories to resume operations. we discussed more about the -- what the city is doing to revitalize the economy hammered by lockdowns. this is bloomberg. ♪
very wide margin of safety. >> they will start one of the biggest fiscal impulses in human history. >> there's also positive commodities if they reopen and stimulate the economy. >> probably we will see the world regular cash the world regulatory economic activity resume work ugly. >> we are optimistic about china as a country. haidi: those with the responses to our mliv post surveythe majoy
the economic risks to the world's number two economy are underappreciated by global investors. let's get more on what the city is trying to do to revitalize an economy that has been crippled by covid lockdowns. this is part of different measures across eight different categories to try to undo some of the economic harm we have seen over the past couple of months. john: that's right. the case count has come down significantly. shanghai today reported 67 cases . that's after the case count was up in the 10,000 range. i think that is affording the government the opportunity to focus more on the economy and that's why you see these new measures being rolled out in addition to what nationally was announced earlier, so you have rebates for rental, for businesses. you have the reduction of the requirement for resuming production in factories. you have the government asking stores and e-commerce companies
to offer coupons to spur spending. i think we will see more measures coming in the next few days. shery: put this for us into context. last week, we saw $20 billion of tax relief from the national government already. investors and markets have not really reacted that well, and we keep hearing that aging needs to do more. will this be enough or what more can we expect? john: the problem is there is quite an overhang. there is always the danger that covid comes back and you have the city or some part of the city going back into some type of lockdown. the other thing is getting restarted is not that easy. for example, they are allowing factories to resume production, but getting workers to the factories, getting them restarted, getting those factories resupplied, that is not just going to happen overnight, so this will be a long-term issue and probably
spreading into the third quarter. i'm not sure the economy will react quickly. haidi: a lot of investors are expect and were stimulus in the second half and a lot of them are asking why wait until the second half, why not more measures now? what is the balance when it comes to policymakers' decision-making at the moment? john: china had this experience in 2008 where it pumped the system for liquidity and a couple years later, that liquidity ended up being more trouble than good that it did during the financial crisis, so i think there is a lot of trepidation that doing too much, pumping too much money into the system could cause problems later, so you see this conservative approach from china, trying to do things through taxes, through the school side of the ledger and not resorting to much to monetary spending. i think that is why the actions have been relatively held back.
shery: bloomberg's senior china executive -- editor with the latest out of china. we did have u.s. stocks tapping that seventh week of losing streaks and reversing fortunes. take a look at interest. the euro stoxx 50 futures for the firm the moment. we did see in the friday session that european stocks actually posted their best weekly advance since about the middle of march. investors really returning to buy that did, returning to risk assets -- investors really returning to buy that dip. we did see the strength in the consumer with consumer discretionary and tech sectors outperforming as well. we did, however, see some weakness when it comes to utilities and energy on the back of these windfall tax plans from the u.k. government. watching the euro as well as the
dollar continue to trade sideways. u.k. prime minister boris johnson says he wants to keep gas from the north sea flowing. he spoke about climate policy, inflation, and steps to combat inflation. >> to tackle inflation in the medium-term, to try to deal with it in the medium-term, you got to deal with supply-side issues, so we need energy companies to be putting more into hydrocarbons, but we also need the whole country to be investing in more low carbon energy. >> is the solution to offer an incentive to buy gas and oil? >> i think we are going to need some. i don't think we can turn our backs entirely on hydrocarbons. the u.k. actually has a flourishing sector in the
northeast of scotland. it is very important. we got to keep that going. i think one of the lessons of the current spike is we cannot afford to be totally dependent on putin's hydrocarbons, but at the same time, we got to accelerate our drive for the carbon energy. you look at the british energy security strategy, 50 gigawatts of wind by 2030, 25 gigawatts of nuclear by 2050. these are big, big increases in low carbon energy, and what they offer is a big platform for investment from overseas, and what i have found in the last few weeks is a real appetite from international investors for long-term infrastructure projects in the u.k., specifically in the energy sector. >> do you risk getting the public addicted to high spending? what happens if the war in ukraine continues and this time
next year, there's still high energy prices? >> i think the package we have set out in the last couple of days, it is a very considerable commitment to help the british people, to do what we did in the pandemic, put our arms around them, get them through the surge in energy prices. we think that it will last until prices start to update, and i'm confident that they will. i think supply will start to improve. humanity is always for tile in experience and resourceful in coming up with solutions. we will find new ways of getting energy, not least in this country, but in the meantime, we are going to have a difficult period and we got to be absolutely clear with people. it is going to be difficult.
the government cannot solve every problem. we cannot cover everybody's extra costs, but what we can do is make sure we deal with the underlying causes of inflation but also keep our economy strong and open to investment. shery: the u.k. prime minister speaking inclusively with bloomberg's katie donaldson. asia seeing its best date -- day in about a week. what stocks are you watching? what unfortunately not the case -- >> unfortunately nothing case for agl. essentially, they scratched a proposed move which would have split off most of the company's legacy coal power plants. interestingly, opposition to the move came from agl's biggest shareholder, aussie billionaire mike cannon brookes. he said it would slow the company's overall exit from coal
power in the long-term. we have seen that a partner of agl's ceo and chair, and that is clearly not being liked by investors today. korea gas is one of the world's top importers of lng, and they will be speeding up their transition to hydrogen. that is what they are saying is the future, and they are planning to go carbon neutral by 2050, which is in line with the korean government's plans as well. we are seeing moves in some of the japan defense-related stocks. this is a report from the nikkei saying the government could end up relaxing regulations related to the export of defense equipment by as soon as march. this means companies could be allowed to export missiles to countries that already have existing security agreements with japan, so clearly supportive for these companies. shery: we are seeing more government moves in reaction to geopolitical tensions. you can get information on all
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deal with a potential breach. deal with your calendar. deal with your fantasy lineup. and then... that's it? we feeling good? looks like we're feeling good. bring on today with comcast business. powering possibilities™. >> i think the fed's flexibility is a much better place for it to be then all this emphasis on forward guidance that we were having for a long time. i think devalue is the right posture with respect to monetary policy. i thought the fed's posture at last was broadly appropriate, and now the question is going to
involve carrying through, but i do continue to believe that a soft landing is an unlikely outcome. haidi: former u.s. treasury secretary larry summers there. quantitative tightening officially begins as the head starts shrinking its $8.9 trillion balance sheet starting june 1. that is bigger than all the economies of the world except, of course, the u.s. and china. we will see how all this will go through markets and economies. bloomberg opinion columnist mohamed el-erian says the fed faces a decision after failing to contain u.s. price pressures. he also told us china has a key role in how the global inflation story will play out. >> what happens in china impacts both global aggregate demand and
global aggregate supply. we forget that china is a major consumer of products also made elsewhere. we saw with the retail numbers look like. they were pretty horrible. we also are reminded how important china still is in the supply chain, so i look at this very carefully. the concern we have, and i know that you are very intuitive, is that three major areas of the global economy are slowing at the same time, and there is no compensating locomotive anywhere in the global economy right now, so we've got to be careful that we don't get this tale-feeding process, and this is important because the marketplace has embraced the possibility of a cause in september -- a pause in september. be careful because the only reason the fed would pause is because demand has come down very fast. tom: what is the reasonable set
right now for the american central bank? >> i think feasible is what chair powell calls assad-ish -- calls a soft-ish landing, and i think the "-ish" is important. the fed should have moved nine months ago and did not, so instead of tightening into a growing and dynamic economy, it is tightening into a slowing economy, so it is very difficult to get a soft landing, so the best you can hope for right now is a soft-ish landing. the probability of that happening is not as high as i would like it to be. you risk having inflation well
into 2023. shery: mohamed el-erian there with his thoughts on china, the fed, and global policy, all, of course, issues affecting how markets are trading. the memorial day weekend is here in the u.s., so we don't have markets opening monday, but take a look at u.s. futures, higher on the week. we are seeing positive sentiment continue after the best week since november of 2020 for the s&p 500. we will continue to watch the markets as we set up to the open after the holidays, but coming next, human rights watch says the chinese government is committing human rights violations on scope and scale unimaginable since the united nations' last visit in 2005. don't miss that next on bloomberg. ♪ what's it like having xfinity internet?
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anabel: this is "daybreak asia." we're looking at how markets are coming online and we are seeing green across the screen, particularly in japan. the nikkei trading up in line with the general outperformance we have seen from japanese stocks against their asian peers. quite a few supportive sectors we are seeing for this first and foremost is morning is the policy support we are getting out of china, particularly in shanghai. the financial hub there announcing a pretty stiff economic package including tax rebates and allowing manufacturers to resume activities after a similar move we had from shenzhen last week in order to boost production. we did get the government approving at the weekend an
extra bite worth around 49 billion u.s. dollars. your analysts saying any sort of sustained improvement in korean stocks will need to come from the big, institutional investors which have left the market, and we are seeing trading for a lot of retail investors at the moment. finally, the a sx 200 about that key level, 7200, for the first time in about three weeks. shery: of course, we are following the latest on these chinese companies. some joint liquidators were served with a winding up petition. it seeks to appoint joint regulators who oppose the petition is rigorously. they will seek legal advice and
try to find protection for their rise. we will get more details as we get them. of course, let's get to paul allen with first word headlines. paul: thanks. shanghai is bringing in measures to support those currently battered by covid lockdowns. among dozens of policies over the weekend, it is citing tax rebates. the municipal government is also easing some testing requirements for entering public basis as case numbers fall. president biden has laid flowers out by the texas elementary school with -- where an 18-year-old with an assault rifle killed 19 children and two teachers. with gun control back on the agenda in washington, u.s. lawmakers are putting a timetable to negotiate new laws. the department of justice also said it will conduct a critical incident review of the police response to the mass shooting. pakistan's finance minister says the country must secure a bailout quickly as it is unable
to secure funds for banks. pakistan needs about the $7 billion in financing for the fiscal year starting in june. the leader of sri lanka's main opposition party says the country needs a new government to tackle the economic crisis. he says the country needs policy coherence to get us through the crisis and is calling for a fresh mandate to ensure stability. sri lanka was negotiating a bailout program with the imf and restructuring its debt after defaulting for the first time. global news 24 hours a day on air and on bloomberg wicktake 24 -- bloomberg quicktake 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries.
haidi: hunger next guest, human rights watch's china director, sophie richardson, joins us now. new images that the u.s. has called jarring, new reports of some of the activity and human rights abuses being alleged. what do you think this visit actually achieves given everything we have heard or have not heard? >> unfortunately, i think it has achieved exactly what the chinese government wanted, which was a near total lack of criticism of its human rights record, even as it continues to commit crimes against humanity and continues to do so during its visit. this included no discussion or comfort are steps for victims are survivors of human rights violations. on some level, the human rights commission are actually ratified some of the chinese government's
agenda. worst of all, the exodus the high commissioner proposed are exactly the ones that have been tried in the past and failed and allowed the chinese government to commit even more violations now. haidi: in a sense, does the trick do more harm than good? does it set up a troubling president -- president -- precedent for how trips like this will be conducted in the future? >> it is not clear what her office act -- asked. it is possible they presented a very robust agenda and the chinese government said no, in which case they probably should have said thanks but no thanks, which is what a lot of governments have done.
the way to salvage the situation at this point is to immediately release the report that her office has actually been preparing and that she promised to publish and to mount a credible investigation into crimes against humanity. that is what the office is meant to do. that is what the office has done in other situations, and if she makes an exception for the chinese government, she is setting up a very dangerous double standard. shery: the high commissioner's idea, as she described it, was she was not going to china for investigation, it was to open up regular conversations. has she achieved something on that front, at least? >> it is not clear why the
chinese diplomats in geneva don't count. that is perplexing. and given the very high political stakes and given the chinese government's efforts to manipulate and undermine the human rights system, her failure to expressly criticize the chinese government, given the abundance of evidence of some of the serious human rights crimes under international law was an enormous failure and leads to these kind of really toothless mechanisms rather than the pursuit of accountability, really damaging her and the office's credibility and enables the chinese government to continue thinking it can commit grave human rights crimes and get away with it. shery: for the fact we have not seen a united nations human rights commissioner go to china in decades is because of this
same issue, right? that they do not really have the access to pursue these accusations. in that sense, what could another high commissioner have done in her place? >> it is actually a very common problem. no government that is committing human rights violations welcomes these kinds of visits. typically what happens is the high commissioner moves in and gathers evidence outside the country with a view toward using that as a basis toward a more formal investigation and eventually even prosecution, and that is exactly what her office had started to do. they started gathering a lot of the secondary information and government documents that have been leaked with the aim of making recommendations about how to take the next steps that would lead to some kind of accountability proceedings, and that's the report she still has not released. shery: we will be looking forward to the release of that report. we will have more later when we
discussed the linking -- the leaking of police files set to outline china's human rights violations in the region. a representative from the communism memorial foundation joins us later for that. up next, we are seeing food production on the rise among the government's moves to boost supplies. we will show how that is impacting the economy next. this is bloomberg. ♪
shery: we are seeing -- well, we have oil as well, but we are seeing wti continue to gain ground, up .4% after five weeks of gains already. of course, we have concerns about growth, but at the same time, we have seen those very tight supplies, especially here in the u.s. as we head toward that summer driving season. we are seeing gold move a little bit of ground right now in the asian session after we saw those gains, after we got u.s. inflation numbers cooling a little bit. we had base metals rallying toward the end of the week. of course, those growth concerns wait on base metals in the beginning of the week. that has reversed. we continue to watch very closely. also on grains, take a look at that wheat price. it continues to rally.
we continue to see export curbs from the likes of india and kazakhstan. traders and analysts lining up their bets on which companies, commodities, and other assets will be winners and losers. let's discuss this with bloomberg's asia stocks correspondent. how are traders lining up those bets on who will come up better or worse? >> there has been a host of export limitations announced by india and malaysia over the last week, and we have basically the local producers getting hurt the most. global producers are not affected by these domestic measures. in australia, for example, you have rain costs, which is -- you have a commodities trader expected to benefit by the curbs
in india and pakistan. for sugar, china and thailand producers are expected to win, whereas in the meat space, chinese producers is one listed play that was outlined by equity analysts. haidi: those are the more out-of-the-box ideas like smart arming and -- smart farming and food distributors. what are we seeing? >> companies like nokia are qualcomm are coming up with technologies that help tractors or cows even where you attach 5g net straps -- and -- neck straps to the cows allowing farmers to more easily track their movement
and condition. even in terms of food service distributors, they tend to pass on this food inflation to the operators themselves, so the food distributors tend to see their profits balloon in such situations. equity analysts and traders are betting such companies will do well, and they have actually outperformed the s&p 500 so far this year. mosaic has seen losses recently, but adrian bell is one of the companies expecting fertilizer costs to retrace these losses. haidi: coming up next, property and auto stocks could be primed for a shanghai -- could be
split failed to win shareholder approval. an investor who holds an 11% stake has publicly campaign for the demerger to be dumped. former disney ceo bob iger has reportedly taken a stake in an australian graphic design company with over 75 million monthly users. he also wants to act as an advisor to the firm. neither party would comment. the company's valuation hit $40 billion in september, making it one of the world's most valuable private software companies. authorities have not brought any charges against top glencore managers but have identified two alleged perpetrators of corruption. they include a former global head of oil and armor head of
copper. india's oil and natural gas rose 32% in the fourth quarter but missed estimates. an increase in government levies aided the gains after russia's invasion of ukraine. net income increased to $1.1 billion in the three months ending in march from $367 million a year earlier. china's netflix-style video stream or says it has lost about 70% of its market value since its 2018 debut amid a broad selloff simmering from beijing's regulatory crackdown -- stemming from beijing's regulatory crackdown. >> market growth should not be a strategic priority anymore because the industry has
developed into a relatively mature one that is at a slower growth stage. >> in november 2020, they raise prices and raise prices again in december last year. how much room do you see to raise prices again additionally? >> price hike potential still exists. if we raise the price this year, we will see how markets react. we don't have a clear plan yet. >> where do you see advertising revenue building the rest of the year? >> for the second quarter, almost entire shanghai is under lockdown. for those who understand the brand advertisement industry, they know half of china's brand advertisement marketing is based in shanghai. in my opinion, q2 is the bottom. the end of q2, which is current
stage, we will see gradual recovery. in the third and fourth quarter, we will see growth. >> your expect the impact from the regulatory environment to moderate, to become less noticeable going forward? >> last year, there was regulatory scrutiny. we are not afraid of regulations. but the transition period is painful. let's say regulation was this way last year and then this year, it changed. 'tis that transition that is relatively painful. >> in 2020, there were reports of possible purchases. is that still possible? >> this is a rumor. they have never been conversations with tencent and alibaba about investment. some people ora media did ask my opinion. my response is it is not
possible. >> at the end of march, there were concerns it could be listed because of the audit between the u.s. and china. the company said it was making moves to protect stakeholders. how is that process going? what do you think the end will be? >> i hope the dialogue between china and the u.s. will make some process to resolve the issue, but at the same time, we are looking for other opportunities to reduce risk. there is no specific timetable yet. >> give us a better picture of what the economy is looking like at the moment. what does consumption look like? >> the service we provide is very special. it is a low spending online entertainment industry. our business is not highly correlated with the economy.
shery: chinese stocks could be set for a boost when trade opens in a few minutes after shanghai unveiled measures for the economy and said it would aid testing requirements. i feel like it is deja vu. we continue to see these measures that markets react really well, but that reaction does not really last that long. how durable can we expect this pop to be? >> this is kind of the implementation phase of the support measures announced -- that have been announced repeatedly, as we say, since march. we are getting a bit more of a sustained recovery. you did see jp morgan report friday saying that hedge funds have started to buy up hong kong stocks to cover their positions,
especially since that big pop in march, so the danger is you will get caught by market moving higher. what we are seeing is actually the news out of shanghai is that now that government officials are really pressing ahead for local governments to implement policies such as tax cuts and other support measures, that could move the needle. again, the news is that covid zero is a strategy that will remain, so even, as you say, if we get more policies, the question is -- will it work and can it be deployed when big cities like shanghai are still in semi-locked? haidi: a number of measures aimed at the property market trying to inject some revitalization there, is that going to help fantasia? >> fantasia was already a distressed company.
the key news is a quasi-state developer supported by the government is after an extension on the bond repayment due in june, that rattled the credit market because even these kind of credit companies are not safe from contagion. let's see how that plays out. there was a selloff last week, and the concern is it is not about the supply-side in terms of sustained risk. it is about demand. the concern among homebuyers has gotten so bad and so poor that there really needs to be a pickup in the economy, and that is a lot more difficult than policies that will help these companies sell bonds or help with their liquidity, so that is the big challenge going forward. haidi: some of the stocks we will be watching on markets in hong kong when the mainland
opens in about half an hour, shanghai relaxing covert rules, meaning shares linked to china's reopening could move. watching travel agencies, travel-related names, in addition to restaurants as well as casinos. they could hopefully benefit from some of this opening up. shery: we will be talking more about the chinese markets despite analysts cutting china's forecast growth. why ubs says it is keeping china as part of its regional strategy. plus, more on the controversial visit to china by the united nations human rights chief. that is it from "daybreak asia." our markets coverage continues as we look ahead to the start of trading. stan by four -- standby for
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