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tv   Bloomberg Daybreak Asia  Bloomberg  September 25, 2022 7:00pm-9:00pm EDT

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>> you are watching "bloomberg daybreak: asia."
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coming to you live from sydney, asia, and hong kong. >> the top stories this hour. asian stocks see another week under pressure while the pound continues to slide under the dollar after hitting multiyear lows. giorgia meloni looks untracked to lead the most right-wing government in italy since the end of the second world war and the filipino president looks to russia for gas supplies. >> maybe we need to look to russia to provide us with some fuel. >> u.s. futures under pressure in the asia monday morning session. after the s&p 500 so the worst week since june. we go 3600 from 4300, given the fed rate path, and that leading
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to more hiking expectations. we have the 10 year yield retreating slightly. the two year yield continues to rally for cross consecutive sessions, the highest since 2007. we have expectations of an economic slowdown weighing on the markets now. >> recession fears and fears of faster inflation. they are sending stocks down in asia because we have got futures for australia and asia trading like this. we are also watching the currency space, so we could see more yen intervention from japanese authorities. otherwise, we are watching for other currency crises from the likes of india and chile. taking you now to other index
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spaces, we are watching what is happening in the offshore yuan this morning. the onshore currency is falling to the lowest end of the pboc band since 2015. certainly a lot of pressure building on policymakers in china ahead of the key party congress in mid-october. in terms of other currencies, the euro is also fluctuating a bit this morning as we await the core election results of the election in italy. exit polls indicating that giorgia meloni's alliance could be untracked to win them the majority. they are also watching what is happening in the pound this morning, extending those losses in the early morning trading. ing saying that markets could be underpricing the risk of hitting parity with the dollar. there is a 25% chance of that happening in the next six
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months. shery: we get more on the pound and other market moves with our bloomberg reporter. what should we expect given the u.k. government's fiscal plan? >> the problem by the finance minister's plan is a large, unfunded tax break. 10% was already large for the u.k. even before the announcement last week, and now the requirement for the government is going to be much bigger as well. it will be one of the largest on record for the u.k., so for foreign investors, who look at the situation, they consider this. at the u.k. economy might start to rebound in the long-term, but in the short-term, it is a huge financial drag on the u.k. it means interest rates will have to go up much higher and the bank of england might even
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have to do an early rate hike to try and stabilize the currency because there is downward pressure on the pound. some people talk about the bank of england doing 100 basis points of they take for the next meeting. that is how serious it is and regardless of whether they move quickly or not, the path of interest rates now will be much higher because of the need to fund the government borrowing. there will be more issuing of bonds in the u.k. to finance the debt. in the near term, there are major headwinds for u.k. assets. not just the pound, but reflected in bonds and equities as well. that is what investors are concerned about. the situation has to get a loss -- a lot worse before it gets better. haidi: hong kong's long-awaited removal of hotel quarantines for arrivals is seeing calls for the city to scrap its remaining
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covid restrictions. stephen engle joins us from hunger hong kong -- from the hong kong international airport. this is a step in the right direction, but there are calls on the government to do more. stephen: absolutely. there are calls for this government to do much more because we are cut in a halfway point. let's concentrate on the positive and then we can focus on the negative. there are far more media here than passengers arriving. we are expecting a number of passengers from boston to be coming through immigration shortly, but one thing we have heard from some passengers is that one thing in particular came in from taipei. someone was ecstatic and he booked his flight immediately once that realization came out on friday to get back into the city. this arrival point here, the last time i came into hong kong, this was a staging area to get
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onto the hotel quarantines bus. after you get here, you have been pretty exhausted getting through immigration, waiting for your pcr tests, then you have to get here and go to the quarantine hotel for as long as 21 days. that was reduced to seven, down to three, and now down to zero. but the problem is you have to have at least 12 covid tests upon arrival. you have four pcr tests as well as eight anti-rapid -- eight rapid antigen tests. you have to sit with masks everywhere you go in public. as in hong kong, masks are common, get used to it. there are lots of concerns that when people are leaving, people will not necessarily come to hong kong as her wrists if they
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have to -- tourists if they cannot go to bars for the first three days. a lawmaker told me that if they do not stress those two days of monitoring on the app, it is pointless. shery: what does it mean for airports when it comes to building capacity? stephen: they have already said they cannot ramp up that quickly and they have lost thousands of employees the past two years. they simply cannot train enough pilots quick enough. they had to hire more employees, including 700 pilots over the next year, but it will be a slow ramp-up. they have said they cannot get back to pre-pandemic capacity levels for passenger flights. only to about a third of pre-pandemic levels at the end
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of this year. for now, the hong kong airport handling just 3.4% of the pandemic passengers capacity. 3.4% and only 30% of flights paid also a number of international airlines scrapped flights to hong kong completely. ba has announced that they will resume flights but not until december, so it will be a slow process. but very welcome news for a city that has been with severe covid restrictions for 2.5 years. shery: stephen engle joining us from hong kong. giorgia meloni looks to become italy's first female and far right prime minister since it became a republic. let's bring in maria tadeo who is at the forza italia election headquarters in rome. what are we seeing from the election so far? maria: it is 1:00 a.m. in the
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morning and still early by italian standards. we are in for hours before everything stabilizes, so when you look at the projections, it is giorgia meloni. she takes us home and she is the big winner of the night. that puts the far right untracked to form the next government. she is not sugarcoating the concerns around her views, but if you look at the overall picture, it is clear that italians have decided this is the end of the mario draghi era and the return for the right. haidi: you take a look at bond markets, investors seem unprepared to fight that premium over german bunds, showing there is not much reaction at all. do we expect this to change once we get a firm result? maria: that could potentially
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change in the next few days, but i would say for the time being, going into an italian election, you are correct. you would expect volatility to manifest in the bond markets. you see the european central bank which is still active in this market, but also this is a fundamentally big difference to 2018, the fact there has been little debate in the campaign about italy intentionally crashing out of the euro. there has been little debate around the euro as people around giorgia meloni have said they do not want a full out crash for the time being. this could change the country's heading into a tough winter economically, but a lot of this has played a factor in the btp and the lack of moves we have seen. the basic thing to walk out -- watch out for is the finance minister. that will tell you so much about the direction this country wants to take. haidi: that is maria tadeo, with
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a long night of counting. let's get to vonnie quinn with the first word headlines. vonnie: thank you. there are growing fears that the kremlin may ban some men from leaving russia after the conscription plans in russia spark a mass exodus. the russian government has tried to assure its citizens, saying that some students will be exempt. small protests also broke out across the country. china's communist party has completed the election of delegates for its key party meeting next month. more than 2200 officials were announced for the national party congress. they will talk finance, politics, and more. president xi jinping is expected to secure a third term in office. the philippines is talking about
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buying key commodities from russia. the nation is -- the president tells us the southeast asian country is closed amid fears of commodity concerns. they might have to turn to russia despite the invasion of ukraine. >> now, maybe we need to approach russia. maybe they can produce enough and provide us with some fuel. the political side of it has been tricky, but nonetheless, the national interest comes first. so we have to find those new sources of fuel. vonnie: bond markets will remain closed on monday in the philippines as super typhoon noru is set to hit luzon. rains are expected in the early
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monday morning and the typhoon will sustain massive winds of 195 kilometers per hour. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, japanese social networking platform what tillie says that the government will take steps to boost liquidity in the market. we get exclusive with their ceo later this hour. haidi: we expect to see manufacturing slowdowns across the region. this is bloomberg. ♪
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>> inflation is something we have to deal with. we see general costs to everyday requirements to support our people. we cannot allow it to reach to an extent where people simply cannot pay their food, electricity, water, all of these basic things. haidi: the philippine president there. china's industrial profits hairline and show struggling recovery. bloomberg sees thailand hiking rates by 25 basis points, delivering yet another rate hike. >> how much of an inflationary
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impact is this having across the world and is this the most vulnerable in this part of the world? sian: we see the king dollar that we have been seeing in currencies across asia. this is impacting those that are net importers of oil. that is impacting thailand, the philippines, and india in particular. what that is driving is that ons adding inflationary pressures and seeing more central banks hikinghistorically. haidi: you're expecting to see more slowdowns in the manufacturing sector. where do you see the biggest weakness there and wonder we start seeing an uptick in activity? sian: it is definitely going to be a challenging time for
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manufacturers. we have a couple of headwinds priced in. one is that there is a general rotation from goods to services. we are seeing this tightening in global financial conditions as high prices for energy impacting the euro zone, so we are expecting the u.s. and the eurozone get a recession in the coming months, which will be a drag on manufacturing and imports. and there are ongoing covid restrictions in china, which means that the mystic goods consumption is likely to remain week. -- domestic goods consumption is likely to remain week. shery: we see some rate hikes and what are you expecting from india and thailand this week? sian: we expect the central banks to hike interest rates. for the are b.i., we are looking for 25 basis points.
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the rbi, we are looking for 25 basis points. for the bank of thailand, we are looking for them to follow up 25 basis points for the next meeting. shery: what does that mean for the asian currencies that are not following the fed? we have the central bank hiking but also others that are holding steady like the pboc and the boj. and their currencies are under pressure. sian: we look at the interest rate differential that is putting pressure on the currency, particularly on the yen, which we saw intervention for last week. for the rest of the asian currencies, we are expecting the u.s. dollar to remain strong.
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this means that the currencies will remain quite week. inflation will remain elevated from target and we do look for further interest rate hikes. we would like to reiterate that we do not see the moving mike -- mark, which means they see some recovery even if inflation is the primary market concern. haidi: do you have any expectations of an improvement or catalyst for improvement after the party congress in china? is this a viable narrative to now see that china is the counter slick google -- countercyclical in terms of recovery? sian: unlike in previous global downturns where china will boost the global economy, we are not seeing that at the stampede we have been seeing some improvement in china for economic activity, but we do not
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actually see them removing this year. there might be further lockdowns, which will affect the pmi in the next pmi numbers coming out this week. we possibly could see some indication of that after the next cabinet meetings. it is going to be a bumpy road and even with growth, we do not see it dragging out the global economic issues. shery: thank you. that is sian fenner, we'd asia economic status oxford economics. you can customize your settings on the bloomberg app so you can only get the news that you care about. this is bloomberg. ♪
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shery: we are counting down to the start of trading. these are the stories we are watching. in south korea, they will attend a parliament session to take questions from neighbors. we are also seeing shares move after north korea launched a ballistic missile. u.s. says they are taking part in the exercises. haidi: let's get a check of the business flash headlines. the bpea is looking at a merger that could value the transport of $8 billion. they are taking a minority stake for the valuation of the merged
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business. x punk -- xpeng saw their shares move on the u.s. market after they plunged this year. they had an average price of $13 per share on friday. the near traders shares slumped 30% this year. starting on monday, investors will be able to stores and contracts for the metals exchanges. the offer futures trading and there may be hurdles for the trades to be established. china's construction bank is setting up a plan to buy property from developers as authorities step up efforts to contain a real estate crisis. they will renovate these into
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rental housing. ccb is looking for a potential extension. shery: and we continue to watch the british pound number which continues to slide against the u.s. dollar. this is after the follow-up to the u.k. fiscal plan announced last week and we saw u.k. assets were in dissent. that might be boosting calls for boe action. the euro is also unchanged at the moment, marginally higher, but this will be the first rebound we are seeing after sessions of declines. you are also watching the japanese yen at that 143 level after authorities intervened for the first time since 1998. japan is coming back from a long weekend, so we are seeing assets there. the aussie dollar is not doing much amid the king dollar story.
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u.s. futures at the moment are slightly under pressure after we saw the s&p 500 seeing two weeks of declines, the worst since june. this as richard -- research is saying that the u.s. dollar is a wrecking ball for profits. u.s. futures also under pressure. this is bloomberg. ♪
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>> i think the u.k. is behaving a bit like an emerging market turning itself into a
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submergant market. i would not be surprised if the current policy path is maintained. >> the former u.s. treasury secretary, larry summers, with a warning on the pound. a selloff in the u.k. currency extending into early trading in asia. where do we see a bottoming here? it's not just talk of parity but beyond. >> that's right. when you take a look at our options pricing model, a one in four chance of that happening within six months and that doesn't seem relatively low given all this noise in the market. 14% chance of that happening on thursday. others including what you heard from mary sommer, saying it could go lower than that. goldman sachs saying we could see further weakness from here because you have that spending on the fiscal side of this on
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matched by what we see in terms of what we are hearing from monetary policy to offset that inflationary impulse that comes from such a large amount of spending but investors really questioning how the government plans to pay for this biggest set of tax cuts here since the early 1970's. we could actually see parity in terms of the dollar and the euro moving forward. it really does put these losses into greater perspective here if we just change on for a look at the longer-term moves here. it's not just a short-term issue . it is something that has been brewing for years here because the fundamentals of the pound, they are also not looking strong. j.p. morgan chase lowering their target down to 1.05. shery: are we likely to see any reaction from the bank of england? annabelle: there's a lot of pressure building on them in terms of the quiddity emergency
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action. some strategists including j.p. morgan saying that that is unlikely but certainly, if the pressure on the currency does extend into this week, it does put a lot of pressure on policymakers to have some sort of rapid policy response. the former boe official, adam, already on twitter, saying that midweek of this week, if we do see the pound down, then rates will need to go up. deutsche bank saying that the central bank does need to act in the coming days to restore their credibility here but it does certainly also take a look at what is happening in terms of assets as well. there's also pressure building here that basically, that correlation is shifting back above zero here. basically stopped and the pound moving in the same direction here. a lot of pressure on the political side as well. the telegraph saying liz truss could face a rebellion from party backed ventures if this
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does happen. we do see that pound reaching parity there. haidi. haidi: we have been asking some of our guests on how they view the energy crisis, how all that could play into the transition for green tech and more broadly, green investments. take a listen to what they said. >> i think energy has had its run. >> there is a big flow into private infrastructure investing. it increased by 2 trillion over the next five years and a lot of that is focused on finding a solution. >> the biggest issue we face is time not just on the supply chain perspective but parading perspective -- permitting perspective. >> that requires an almost -- en ormous investments.
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>> we had invested more in energy efficient the and invested more in renewable energy then we would be in a better position than we are now. shery: one of the biggest questions has been whether this will actually accelerate green technology and green investment. some have said yes. others have said no, that some of the short-term measures to mitigate the energy crisis turned into long-term solutions, but at least when it comes to the survey that mliv has done, it seems green tech investments will actually increase. how do you expect the global energy crisis to impact investment? 61% think it will actually encourage sustainable tax. haidi: i have to say i was positively surprised when it comes to the results of the survey because we have spoken to so many people who cautioned against this and say that as a
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result of the short-term energy supply crunch that we are going to see that impact in terms of prolonging the usage and reliance on fossil fuels and perhaps even encouraging further investment in fossil fuel's but take a look at that result. it's pretty clear over 60% believe the current energy crisis will encourage sustainable attack, drive -- tech, drive more of that investment. question about -- will the nasdaq -- or 14,000? you can see those results there in terms of -- that is interesting between professional investors and retail investors. also, lots of interesting findings when it comes to how the metaverse will change the way they interact with businesses and the increasing or decreasing of exposure overstocks. that last one is pretty split over those who will increase and those who will decrease and a slim majority say that they will keep their holdings study. let's get over to vonnie quinn
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who has our first word headlines. vonnie: thank you. hong kong businesses are calling on the city to remove its restrictions. they say it will not be enough to attract tourists or boost the economy and they are calling on the government to provide a full roadmap. three years of covert restrictions have devastated hong kong's economy and forced many businesses to leave the city. north korea fired a short range ballistic missile. kamala harris is due to arrive in the region. the south korean military says the missile launched sunday reached and altitude of 60 kilometers. it came as an aircraft carrier prepared for its exercises. that is later this week. the pound is continuing to weaken in early asian trade, dropping to a 37 year low against the dollar and heaping pressure on liz truss's
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administration. a damaging assessment from investors sent u.k. assets tumbling. >> i think the u.k. is behaving a bit like an emerging market turning itself into a submerging market. it would not surprise me if the pound eventually gets below one dollar if the current policy path is maintained. >> global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: the philippines is holding talks to buy fuel and other key commodities from russia despite international sanctions over the invasion of ukraine. i spoke to president ferdinand
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in new york and says the national interest overrides potential concerns over the war. >> the fuel prices strangely enough, i think it impacts us in the same way that it impacts all the other countries. such a basic commodity that everything follows fuel. to the point that even our agricultural commodities have increased. transport costs have gone up and we have been asking our friends in the shipping industry, and they said there are no longer any charters for fuel shipments coming out of russia. that again is going -- what we are hoping to do is to go back and diversify. we see if you get complacent and depend on a single source, now, we will look to what we describe
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as nontraditional suppliers of fuel so we have certainly depended on the dubai oil prices. may be we need to approach russia and say maybe they can loosen up and provide us with some fuel. >> are you having those conversations? >> we are. we are having conversations with as many possible potential suppliers. >> when could we see it? >> pretty soon. we are coming close to some agreements. certainly, it will not be only in one place. again, there is a diversification of supply lines in terms of not only fuel -- >> the sanctions against russia given the invasion of ukraine worry you? >> we can see the effects.
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in our terms, we -- the political side of it has been a little tricky. nonetheless, the national interest comes first so we have to find those new sources of fuel. that applies not only to fuel. that applies to things like feed and fertilizer, like all these other inputs that are critical to us. >> the nuclear plant -- does that factor in? >> in terms of our energy supply , vis-a-vis the demand, we are a long way off. without any of these crises, we already have had to be very judicious in our planning. as you well know, the large power plants take eight years if you're lucky to get especially
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nuclear plants. even the new technology that is being spoken about, the small-scale modular -- >> do you know how difficult it is to start them? >> the power plant, i don't know. it's very much in the gray zone. it's right at the cusp here. is it still worth it? the fuel has been sold. we are paying for it still. it has never been -- we are looking and -- what are the most attractive sources of power generation? we need everything. we need all that we can, that we can get? the nuclear power plants, we have been talking. they have not been ruled out yet on a commercial basis.
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>> would that include a potential joint exploration of oil with china for longer-term solution to this? >> yes. >> those conversations were halted, right? >> they were halted for the simple reason that we could not come to an agreement as to what local law would apply. that was the derivative that derives from the fact that there is disagreement on the actual territorial or the areas of the sea where we can consider to be philippines and within the economic zones. local law is filipino law. they have a different view and they claim that this is their territory and therefore, their local law should apply.
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it became a constitutional question. it would violate our constitution if we were to agree to the chinese assertion that their local law should apply. >> are there any points for compromise? >> i agree there must be. we certainly have said that on this basis, we cannot continue. we continue to explore. perhaps that can be other ways that we can do it. >> the philippine president. coming up next, a japanese social network platform says the government can take more progressive steps to help boost the country's labor market. we will be hearing from the ceo, next. this is bloomberg. ♪
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>> we are watching japan's credit market. the yen's plunge versus the dollar. it shows corporate bonds have lost 1% so far this year. we are watching toyota's using vehicle production permanently at its car plant in russia in see no indication to a weak start in the future. japan's financial watchdog may
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tell them to hot some operations as part of a penalty because of alleged stockmarket minute elation. japanese markets come back online at the top of next hour. take a look at the japanese yen, not falling for a second consecutive session against the dollar. authorities intervened in the market last week. nikkei futures pointing to the downside and we are watching the 10 year yield, whether it gets closer to that upper limit of tolerance for the boj. a japanese social networking platform focused on recruitment. this year told bloomberg that the japanese labor market gained liquidity but needs more support from the country's leadership including progressive measures to boost the labor market. >> labor liquidity has increased . when i started out -- it was the
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norm. changing jobs was considered something -- not really a good thing but now, people are more openly discussing about changing jobs and building their careers but -- they are being freelancers. it has become more diverse. >> covid hit many businesses including yours. i saw your operating profit hit a record last quarter. how have you been able to do that, to rebound? what did you do? >> there are two reasons. our main users are skewed towards the tech industry. we are focused on digital transformation. very scarce in japan and that is
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one reason. another is our business my subscription model. six months to 12 months ahead of time when they start posting jobs so that allowed us to stabilize our revenue sources. >> what kind of jobs are in most demand at the moment and what are in least man? >> really strong right now. because of the supplies at university i think. very small compared to china and the u.s. and i see this -- existing employees to enable them to utilize new technology like ai. >> japan still has the lowest average strategies among the g7
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countries. what do you see as the biggest problem we need to tackle? >> labor liquidity is the problem. in order to raise salary, we have to, you know, also raise liquidity. current japanese regulations kind of keep companies to keep your employment as long as the company is going. the only time companies -- is when they are going bankrupt. if that is the case, it's going to be a hard decision to make. the company needs to keep those people. >> goes back to lifelong employment again, right? what can we do to change that in japan? >> lifetime employment is one factor. you see a lot of homeless people
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as a result of having the really -- between rich and poor. that is resulting from unstable jobs. lots of employment -- have a safety net. that is the upside. having said that, i think strong leadership is required for japan. that will face some backlash. >> what do you think japan needs most? >> again, i think strong leadership is required. compared to other nations, japan is lagging behind and slowing down in terms of society economically.
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when you look at singapore -- changing laws. regulation is more progressive. in order to do that, leadership is required. japan has a larger population compared to small countries. so many diverse stakeholders like elderly people and they focus on issues within japan as to what will happen in their life. in adapting progressive policy, it might be -- face backlash is. when he thing about the future of japan in the long-term, politicians and leaders need to, you know, face those backlashes and convince people to adapt more progressive policies further. >> we do have plenty more to come. this is bloomberg. ♪
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>> asian markets are risking a reprise of stress levels seen during the global financial crisis. the mliv market strategist joins us now. we are seeing the reverberation of king dollar playing out for asia. >> absolutely.
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we are very concerned that the japanese authorities allow that to break and i don't think that they well this week. if they do, that could set off asian currency selling and dollar renminbi, very important. if they allow it to be weaker against the dollar and that will bring 720 in dollar yuan quickly. >> how resilient are asian economies compared to the global financial crisis? >> much more than they were for the per capita gdp which is much higher. a much stronger position, higher reserves. currencies going into the situation. we saw back then it's very unlikely to be repeated. >> simon flynn with what to expect in the currency market.
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korean defense-related shares could be moving following north korea's first of a significant launch since june and ahead of kamala harris's visit to asia. japan may boost defense spending to ¥40 trillion within five years. we are watching some of these stocks. coming up in the next hour, the trading week ahead in asia with mike matthews. hong kong stocks are currently too cheap. market opens in sydney, seoul, and tokyo are next. this is bloomberg. ♪
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>> this is daybreak asia.
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we are counting down to asia's major market opens. traders bracing for downsides after the mallet -- massive selloff in u.s. and u.k. assets. the governor announced the fiscal plan. eco-data this week. >> that is not likely to provide much respite. we have seen an effect in previous global recessionary conditions. that sets you straight to the market open. >> we are a few seconds away from the opens of japan, australia, and korea and treasury markets as well. they gathered pace last week. watching how the twos and the 10th come online. 30 basis points higher on the week. japanese markets meanwhile just coming back from a long weekend. -- weekend holiday.
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we did see them starting to focus on defensive postures and the shedding stocks and debt wherever they can hear so in terms of the opening japanese docs this morning with the nikkei my trading lower, 1.4%. traders bracing for any possible further intervention from authorities. we will be watching those for the open as well as terrorism stocks because we did have the nation announcing they will be abolishing plenty of covid border control starting on october 11 so individual visitors not allowed to enter and the caps on daily arrivals will be ended. you can see it there on your board. taking a look at defense-related shares as they could be moving as well because we did have north korea firing a short range ballistic missile on sunday ahead of the u.s. vice president's visit to the region and watching for the outcomes of the bank of korea meeting with the finance minister and they will also be attending a parliament session at 10:00 a.m. local time to be taking
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questions from lawmakers. that's switch over to the open we have for australian stocks as well this morning. down .5% at the open, keeping an eye on what is happening. the aussie dollar is one of the few gainers this morning and we continue to monitor what we see in terms of the pound and you can see the slump extending into the new week, watching for it to hit parity with the dollar and we do see options pricing indicating a one in four chance of that happening within six months and that is the u.k. futures contract and you can see stocks pointing to a slightly high start and they have been very much battered with that correlation between the pound and u.k. stocks also rising. >> let's bring in our next guest. with us is the head of asia research. great to have you with us. more broadly, if we are headed for a seventh straight week of losses for asia, this only
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happened the fourth time in a century that we have seen that losing streak. where do use the opportunities for bargain-hunting now? -- you see the opportunities for bargain-hunting now? >> singapore is not as expensive market. ocbc at 1.2 times with good exposure across southeast asia and nice dividend yield. you have yields on your risk appetite of anywhere from 3% to 10% and a strong currency. >> tell me about your call on hong kong? we are still hearing calls for more loosening of restrictions. do we get in now because it is inevitable that they will fully open up and do you see any kind of opportunity for a bet against what is going on in the rest of the world with china hoping that
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they might have the cyclical economic trend after the party congress? >> i view hong kong a little bit as a warrant on that. in other words, if somehow things get better in china, hong kong would go up. i am not holding my breath. i like hong kong because of its cheapness, first and foremost. the hang seng index a series you can take back to the 1960's. even then, it was never this cheap. where it is observed to be 1.2, i doubt it. maybe one, i think that is fair or. what i like in hong kong is not so much the chinese stocks. i like hong kong stocks or companies that have a lot of business around the world like i said in hsbc or samsonite. if you couple that with the hong kong companies which are things like reits or utilities that
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have yields of 5% or 6%, the hong kong dollar as you well know is pegged to the u.s. dollar so it is not going to be exposed to the currency weakness of emerging markets. i think it is a sound idea for that income in the hard currency. >> if you take a look at this chart on the bloomberg showing how the hang seng index is falling to the 18,000 level, not a level seen since 2011. more than 11 years or so. i wonder if you are seeing such opportunities and good value in chinese stocks and the mainland as well? >> if memory serves me right, there's 7000 shares. there must be a lot of value there. it is not a well researched market. the big stocks are expensive. i think it is safe to say they are still expensive. in china, i would be less interested in value and more interested in growth and the one area of growth that i do see is
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electric vehicles and renewable energy. it is clear they are the leader in the world and i believe t co. in china, i would be focusing more on that side. >> we continue to see the strength of the dollar, on relentless. -- unrelentless. where are you seeing it across asia? mark: it seems to be everywhere, doesn't it? countries that are exporters and yet are very reliant on energy imports. korea, for example. 94% of the energy that they consume is imported in the export a lot of electronics which are soft right now because central banks are raising interest rates and the world economy is slowing down. those are the places which are weak and probably will continue to be until we get moved from the bank of japan.
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the bank of japan is the linchpin in the whole situation in asia. when the bank of japan makes a material change in the policy, you think the other currencies are also at the rebound. it will not be until april of next year. >> we are at month seven of the war in ukraine. lots of developments, not least of which is how frequently the nuclear threat is coming up for vladimir putin as well as the annexations and mobilization and all these reports of closing borders as well. how do you characterize your political risk if there is no end in sight for this conflict? >> i don't know how to answer the question because in my career, which is 30 years, i never had to deal with it before and i must admit, i was not trained in school to analyze it. so this thing caught us by surprise and i still struggled to understand how to view it in
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markets. it sounds quite morbid and sinister to say but i will say it anyway -- the wars don't have a history of disrupting markets. world war ii, vietnam, korea, afghanistan, iraq. if you are talking about something perhaps even bigger r -- not bigger than world war ii broke perhaps the other ones i mentioned. i don't know. i better stop rambling. >> you are not the other one who is struggling to get a view when it comes to geopolitical tensions. thank you so much for your time here at head of asia research julius baer. let's get to vonnie quinn with the first word headlines. vonnie: thank you. we will continue on that theme. the kremlin may ban some men from leaving russia after it spikes a mass exodus of citizens. people waited for hours in long
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lines at land crossings into finland, kazakhstan, and georgia over the weekend. the russian government tried to reassure its citizens, saying some will be exempt. small protests also broke out across the country. north korea has fired a short range ballistic missile, stoking pensions as kamala harris was due to arrive in the region. the south korean military says the missile launched sunday and reached an altitude of about 60 kilometers and flew about 600 kilometers. a carrier group prepares for its first naval exercises with south korea later this week. china's communist party reportedly completed the election of delegates for its leadership summit next month. a news agency says more than 2200 officials were elected for the 20th party congress. some sectors -- the twice a decade gathering starts with xi jinping expected to secure a third term in
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office. hong kong business groups are calling on the city to remove its remaining travel restrictions. they say last week's move to relax covid measures will not be enough to attract tourists or boost the economy and they are calling on the government to provide a clear roadmap. restrictions pushed many residents and businesses to leave hong kong. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: -- haidi: let's get more on the reopening in asia. we are expecting to see certain centers move in japan. >> that is right. we do of course have japan returning here from a long weekend break. we did also have the government here announcing that it's going to be abolishing a range of covid border control starting october 11 so basically individual visitors are now
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going to be allowed to enter here as they are reinstating the visa waiver program and in addition to that, the caps on daily arrivals has been inflated and will be abolished. in terms of the reaction we are seeing from the likes of retailers, transport stocks, hotel groups, so far looking muted off of that. let's take a look at another sector we are watching and this is defense stocks in japan and also in korea at the start of trading because we did have north korea firing a short range ballistic missile. vonnie was going through the details. ahead of the u.s. vice president's visit to the region, the first since shooting off its single day record of eight at the start of june. in terms of the reaction, a little bit mixed from some of the biggest defense names. haidi. haidi: still ahead, we get the outlook for business travel in hong kong. the government putting an end to mandatory hotel quarantine but some restrictions still remain. the airport lounge operator joins us later this hour. first, -- looks set to become
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italy's first female and far right prime minister since it became a republic. we will get the latest, next. this is bloomberg. ♪
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>> challenging geopolitical landscape -- relations with china while maintaining its defense ties with the u.s. i spoke about his recent conversation with joe biden.
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it has been decided. there's many arrangements that we can make in terms of our joint military and defense and security responses. to all these shocks that we are seeing and having to go through. for the philippines and the united states, it's a singular situation. we have had 100 plus year relationship, formal relationship has been the 70th. that is what we hope to build on. >> that includes more usage. >> we cannot have basis.
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>> usage and other agreements. >> that allows forces to calm. not a permanent base. we have a treaty with the united states for the united states are our only treaty partners. that has to evolve and that is what we spoke about with president biden. what we started off with, maybe seven years ago, the situation is entirely different now and therefore, we have to evolve that. the relationship between the united states and philippines, will just continue to grow. that partnership will not diminish in any way whatsoever. i think in the future, it will go from strength to strength. >> the philippines and many other countries are in a trickier position given the rivalry between the u.s. and china.
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if there are more tensions around taiwan, what role will the philippines play? >> the role that the philippines -- for ourselves. it's clear to us that if there is outright conflict -- there is no way we are exempt from that whatever we do. the nearest part of china that the philippines is 600 kilometers. it is not something that we can possibly avoid. so of course the defense of the country is going to be the first priority. we cannot act independently in the sense that the philippines is not militarily sufficiently
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capable to fight the war by themselves. we are putting much of our efforts into the partnerships that we have. with our allies, with our partners. asean is going to have a very large part to play in this. i really believe that asean should be the main actor when it comes to the defense and security around the region. there are multilateral -- that is one of the best examples of a multilateral arrangement. bilateral arrangements with other countries also are available and that certainly applies to the united states where we have strong bilateral relations which we can use as a basis moving forward. you cannot look at the security
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situation and isolate it to defense and security. the economies around the west philippines and the asia-pacific region, they play to the strength of the economy in large part. i used the term economic security as a basis also for the security of our member nations and different allies. i always say that the main pillar of our foreign policies -- we talked about the economy and we all know that that is top of mind and that is critical right now. we have many plans and ideas we are starting to put into place. without peace, they will not come to fruition.
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>> ferdinand marcos, jr. there. -- looks to become italy's first female and far right politician since it became a republic. they are counting progressives. what are we seeing out of these results? >> it is past 2:00 a.m. local but what is clear is the big winner here is -- we are expecting that she will make her way into the headquarters. it will be a celebration. clearly, she has come to dominate the italian political landscape and the italian right and she will have the keys to the next government. this is someone who is pulling 4%, just -- who was polling 4% just a few years ago. it already feels like a celebration for her. >> the markets do not seem too
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perturbed at the moment. what are we seeing? maria: going into the markets, this is a very good point. every time there is action, they tend to come often. a government would last. there is a lot of volatility in question marks. we have not seen the volatility we are expecting. there's two factors that go into this the european central bank clearly continues to shield countries like italy from that market volatility but also there is the fact that this campaign really has seen a giorgia meloni that has seen a battle at home. there has been very little debate around italy and the european union. it was a different story in 2018. there was an active debate as to whether or not the euro -- friendly. this is coming off the back of the brexit vote. a lot of that has changed in the macro picture to shield the
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country going into this election. the real question, this is the real issue, how to deal with the energy crisis and the economic crisis that will follow. a name to keep an eye on is the next spanish minister. it will tell investors a lot as to the agenda. >> maria tadeo joining us from rome. we will continue to watch that spread between italian and german bunds. european futures looking like this as stocks fell into the bear market on friday. ultimate downside at the moment given the pressure broadly globally. we have seen u.k. assets and the pound continuing to take a beating given the latest on the u.k. government's fiscal plans as well. this is bloomberg. ♪
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>> here is a quick check of the latest business flash headlines. bearings is said to be considering combining two hong kong firms. sources say bpa is working with advisors on a merger that could value the company at up to $8 billion. we are told the buyout is to sell a minority stake to set a valuation for the is next. the founder of -- $30 million worth of the shares in the open markets. 2.2 million shares at an average price of -- the shares have
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slumped 73% this year. singapore exchange is set to launch its first lithium and cobalt contracts starting monday. investors will be waiting to trade in four contracts with both metals as it follows the london and chicago metals exchanges in operating futures trading. trading liquidity is far below that of established commodities. >> let's take a look when it comes to broader equities trading here in asia. of course after the week that was, we are hoping that was that up for quieter trading week after the bonanza of central bank decisions last week. far fewer this week. thailand among them. the rbi's is meeting as well. central bank in mexico as well. you are seeing that it is decidedly risk-off. if this makes a second week --
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second consecutive week of downside for asian losses, we have always had the seven-week losing streak three times so far this century so things are getting to the point where we are seeing pretty severe downside milestones. the thing when it comes to fx trading is really key here continuing -- considering we continue to have this. we are watching for parity potentially even beyond but we are seeing the pain relief being felt across asian currencies as well. dollar yen holding up pretty steady at this point and we are also seeing 10-year jgb futures sliding really hard on monday levels at a point which can bring on aggressive protestations from the bank of japan. they are feeling a further risk-off sentiment. so much focus when it comes to the key cable trading. >> exactly, given the u.k.'s
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fiscal plans. we continue to watch dollar as well. take a look at the dollar index topping 113. very near the highest since 2002 and that is having implications for everything in the equity markets and other asset classes as well. the dollar is a wrecking ball for u.s. corporate profits and you can see u.s. futures at the moment the downside after the s&p 500 saw the worst few weeks since june. we have plenty more to come. this is bloomberg. ♪ millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan,
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>> breaking out of japan. preliminary for the month of
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september. this will be an improvement for the 49.4 in the previous month. also going back into expansion territory. it has fallen for the first time in six months. really seesawing throughout. the services pmi numbers in expansion territory. 51.9. the manufacturing pmi at 51. all of the numbers are better than the previous month except for manufacturing which has eased slightly from 51.5. that is surprising given the manufacturing across the region has been slow. we have seen external demand softening a little bit when it comes to composite pmi numbers out of japan back in expansion territory. >> a bit of a positive for markets this morning. we are on watch for intervention into the yen. in terms of other currency markets, a lot to be monitoring.
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the jump we are seeing in yields leading to a lot more pressure for emerging-market currencies like the korean won. in terms of other markets, we are keeping an eye on what is happening in the year of this morning, paring some of the earlier gains, still on track for what we are seeing out of the italian election results. this want to be watching here with it looking like georgia maloney's alliance on track here will be the most far right government we have seen since world war ii. in terms of what else we are watching, the pound as well hiding whether it reaches parity and that is what we are seeing from a lot of analysts. economists and traders seeing that happening in the next few months and we are seeing extending losses into early trading this morning. a lot of pressure on the government to be justified in how it plans to fund these aggressive tax cuts, the biggest ones we have seen since the early 1970's. let's take a look at the picture
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for equities this morning in asia because we are seeing some serious losses really across the board here. japan coming back after a long weekend but will broad-based. we can see the losses also in korea and australia at the start of trade. new zealand is closed for a public holiday but u.s. futures looking like this as we did see the reopening could be one of the more positive factors going into market trading today and we also have what is happening in hong kong as well because we have seen these big changes coming through. if you bring up the terminal chart. basically, we will no longer need to go into hotel quarantine and in fact, the government pushed through a zero plus three system so you have assertions for the first three days of arrival so certainly, more positive than what had been expected going into the press conference on friday. zero plus seven could be the case. as you can see here, numbers well below the pre-pandemic norm, really does point to the challenges facing the city to revive the economy here.
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haidi: lots of water cooler conversation here in sydney. three days and what does that mean for business travelers doing these short trips? the dismantling of hotel quarantine is being met by these calls to lift all remaining restricted for travelers for the international financial log. let's get to hong kong airport where stephen engle is standing by. steve. stephen: that's right. the one downside, you have to wear a mask here and that is part of daily life here in hong kong but i have to say the airport here in hong kong has returned to some semblance of normalcy. that is the first time i can say that into .5 years. just until last week, this area here was the staging area for the quarantine buses going to your quarantine hotel after a lengthy process of going through tests.
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the various different checkpoints patience throughout the airport. that is being streamlined and removed now and you can come off the airplane and people are telling us anecdotally at least that in the early morning, the early arrivals, it took only about 20 minutes from deplaning through all the immigration and testing to hear, where you can get on the train that is running at a more went timetable as well as get into a taxi and go home. or to your hotel. lots of change starting today in hong kong. that is the positive spin. there is still downside. we will talk about that with our guest. you run lounges, right? several lounges here in hong kong. obviously, this is welcome news, this relaxation. >> thank you very much. we have several rounds of
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hospitality services and we do see that. we welcome the travel scheme coming in from hong kong. this will certainly help to outbound traffic. the next step which is the most important is going towards the zero plus zero theme. in order to push up all the inbound traffic coming into hong kong which is the most important , for instance, according to the hong kong tourism board, the average traveler takes about three days to stay in hong kong. this may deter business travelers coming into hong kong. we see that in the near horizon so there is still hope yet to come. >> what do you think the near horizon is going to be? critical to your business here is mainland tourists and that will be dependent on china's zero covert policies which does not seem to be relaxing at all. what is your best case scenario
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as far as going zero press zero for hong kong and how that will impact your business? jonathan: thank you very much. best outcome would be zero plus zero with a combination of opening up borders and lifting of travel restrictions and quarantine measures in all notation countries including mainland china. when that happens, that will be a significant boost and be able to go back to pre-covid traffic levels. to emphasize the importance of the chinese traveler, in 2019 come around 75% of inbound travel coming to hong kong was from the chinese mainland so you can see the importance of scale of why it is important to open up all the borders throughout the region. cracks from your experience in singapore's opening up and other areas in southeast asia and now japan will be opening up as well, october 11, what has singapore showed you as far as the amount of business uptick
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compared to pre-pandemic levels? >> certainly. we have several lounges as well as an airport hotel in singapore. the are poor announced over 55% of the traffic has recovered to pre-covid levels following the lifting of all of their quarantine measures and we have certainly seen the progression of hong kong going through that same out, should it go through the travel scheme as well. >> are you seeing a significant uptick? >> most definitely. right now, a lot of travelers who are coming back up after years of hibernation, what is the most important to them? they are willing to spend on those business class tickets, willing to spend on services to ensure their convenience, good value, love and care across all of their journey. >> how badly was your business
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here in hong kong affected through this time? the passenger traffic numbers going through here from that record in 2019 down to about 3.4% of pre-pandemic levels of passenger traffic, that is absolutely, you know, destroying any business that does business in the airport. how bad was it for you? >> we are in the travel and hospitality sector, on the onset of covid-19. they significantly impacted us because the traffic has dropped more than 90% across the board but what we were doing was to use this opportunity and we also diversified with different business plans as well. we were able to soften the impact. certainly, it is still a road ahead and a road forward and we are still watching very closely. >> a very good day for your
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business and hopefully, this optimism will spread throughout hong kong as well. thank you so much for your time on bloomberg television. all right. we are going to be here all morning at the hong kong international airport as we are marking the first day of what we can really say is a soft opening of hong kong after 2.5 years of the world's most strict covid and travel curbs. back to you. haidi: stephen engle joining us from hong kong. we take you to rome, italy where the leader of the party is now speaking. this is as he is now set -- clear majority in the italian vote. she is the leader of the right-wing block and she would be the country's first female terminus or. we are watching this very closely as investors are watching whether or not her government will challenge rules designed to keep deficits in check. for those who want to continue
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watching this conversation, go to live and you will find a diary entry coming up later this week. this is bloomberg. ♪
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>> this is "daybreak asia."
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i'm vonnie quinn. philippine currency stocks and bond markets will remain closed on monday -- into the island. the president has suspended work and schools at the capitol several other regions and two provinces are without power in more than 74,000 people are -- the philippines is holding talks to buy fuel and other key commodities from russia. the president told bloomberg that the southeast asian nation is close to deals with some fuel suppliers. he also added that the philippines national interest is diversifying its energy sources and that will override any potential concerns about dealing with russia despite russia's invasion of ukraine. quotes we need to approach russia and say that maybe they can loosen up and provide us with some fuel, and the
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political side of it has been tricky. nonetheless, the national interest comes first so we have to find those new sources of fuel. >> global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: the rally in the dollar continues with the dollar index past the 113 level at the highest since 2002 and on the others out of that trade, we are seeing g10 currency pairs under pressure with the japanese yen falling .3% come around the 143 level. the korean won way past that 1400 level while the aussie is also under pressure and the british pound at the moment, fresh decade lows. we are talking about the 37 year low against the dollar given the relief of the u.k. fiscal plan but it's all really to do with the dollar, isn't it?
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let's espouse the global fx picture with the macro strategist at -- great to have you with us. let me get started with our mliv question of the week because it seems to be all about dollar and on the flip side of it. the question right now is where is the next currency crisis? especially as we watch all these different pressures across asia and we have seen intervention by japanese authorities last week as well. patrick: that's right. donna has been superstrong and it has been driven by the heartlessness of the federal reserve. it's hard to put a pin in that. a lot of focus on the fact that the currency, 2% weaker to that level, close to it on friday. i think that will be a major focus this morning. >> which currency pairs are you
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watching in order to get the sense of direction in where global currencies are headed? patrick: we like selling the australian and new zealand dollars at the moment. pros sector, high -- we call them because when global growth grows, external demand slows and impacts australian and new zealand economies. that is going to slow and it will be a headwind to domestic activity. they are going to get the slower growth and the higher rate. slower external demand for china . the australian and new zealand dollars can we can from here -- weaken from here. there is real intervention from the bank of japan and the ministry of finance after last week. >> it's interesting because we have seen weakness going into trading for the australian
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dollar. the favorable terms of trade, external demand future for commodities really has not had much positive impact. >> that is absolutely right. we would have expected that the currency has traded very much in line with the terms of trade over a long period and there has been a sharp divergence between that but even now, it is weaker than the commodity prices, the correlation with commodity prices suggested should be and we believe that the market is pricing a stronger dollar, simply pressing a weaker global external demand environment so demand for industrial commodities is going to be softer. forget -- again, if we add in the weakness out of china, slower growth in the property sector, it is probably ripe for next year as well as. it will slightly underperform. >> we are now seeing yet more weakness for the pound. sterling sliding as much as 1.1
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.1%, hit the lowest since 1985. 107, weakening by over 1% at this point. we can get to parity sooner than we even expect. do we go beyond parity? the question is what is possible at this point, policy or intervention or otherwise to put a floor into the pound? patrick: it's an interesting one given this fiscal stimulus announced on friday is much bigger than was expected which means that the u.k., in terms of its deficit, relies on the kindness of strangers so you have to be able to sell those gilts that they will have to issue to fund this deficit and they will do that at a weaker level of the currency. very interesting to where we are now, similar to where we were in 1985. the plaza record is the last time when the dollar was very strong. doesn't seem to be any movement, you know, any motion at the
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moment to curb the dollar strength. 105.20, we think we can get through that. if we do that, we see higher inflation and for -- loose fiscal policy. we think it will contribute to further weakness from that point. that will see us below that pretty shortly. >> we are seeing giorgia meloni's right wing block set for the italian vote this weekend. we had the euro strengthening but we are further down now. what are the implications of the far right coming into power in italy the broader european market? -- for the broader european market? patrick: it has been difficult. his very unclear and uncertain what has been happening for a period of time but given the weakness in demand, in the whole
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eurozone construct, the pressure through the higher energy crisis heading into winter, just one more after which ways on the currency and we continue to see it from this point forward with that politics as well being another straw on top. >> patrick bennett, macro strategist that. coming up ahead of the communist party congress, investors betting on more government supported stimulus for the country's troubled property market. we get more on that next. this is bloomberg. ♪
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>> after a difficult year, china's stock investors are looking to capitalize on any potential policy shift of the comet as part of congress next month. our managing editor joins us now. how are investors positioned going into the party congress? >> a key strategy that many of them are talking about is to bet on more stimulus on the property market. that is because the market itself is so big and such a big contributor to the gdp. i would say i think it accounts for about a quarter of economic out but by some measure in china. so any kind of stimulus policy
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will have to include some kind of policies for the property sector. we are also looking at furniture and decoration and materials sectors that could see property impacts related to the positive policies on the properties sector. if you look into the history, typically leading into the party congress, a few sectors including finance shells, food and beverage, and communications typically have done well so these are the sectors investors are keeping an eye on. >> the yen and the offshore yuan have historic lows so what are the potential regional implications of this? lianting: these are two heavyweights in asia's currency market and investors are saying these are very big anchors. further weakness could risk destabilizing the whole currency
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universe so if you look at their influence, china is the largest canadian partner with southeast asian markets in 13 straight years and japan is a major exporter of credit and capital in the market. so any tumble in those two currencies could spark some kind of crisis if overseas funds are selling money out of asia. that would be to massive capital flight so that is the next thing we are watching out for and that could evoke and raise of the asian financial crisis in the 1997 and 1998 period. >> lianting tu there. some of the stocks we are watching ahead of markets opening in hong kong and china, developer shares will be in focus. a $30 billion fund to buy
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properties from developers. some of those developers -- could potentially move on that news and we are watching macau casinos after the government announced to groups in the mainland will resume as soon as november. shery: we continue to see that haven demand pushing the dollar higher with the dollar index now past the 113 level and at levels we have not seen since 2002. on the others out of the trade, the japanese yen continues to weaken, same for the aussie dollar which is at 65 u.s. cents after two weeks of losses against the dollar and we are watching the british pound because the declines continue after we saw the fiscal plan coming out of the u.k. and the pound now dropping to a fresh 37 year low against the u.s. dollar. the euro is pretty weak.
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accelerating losses. against the british pound, we are actually seeing it rise. haidi: we are just getting some breaking news, and alert on the wanted list. prosecutors in south korea commenting on the case via text message, saying they are being placed on the wanted list. he denied that he is on the run but has -- there has been ongoing speculation that he is at risk. 16 billion dollar cryptocurrency. educators are seeking to charge him with crimes for much more to come. this is bloomberg. ♪
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>> good monday mni


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