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tv   Bloomberg Daybreak Asia  Bloomberg  December 23, 2021 6:00pm-8:00pm EST

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haidi: good morning. we are counting down to asia's major market open. >> our top stories this hour. optimism the recovery can whether flareups. the fda gives the covid pill the
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go-ahead. president biden signs a bill -- the move will add to tensions in beijing. haidi: we are on track for four state days -- straight days of gains. we are hearing rapid developments for how the virus is being handled here. we heard in the last hour that shortening of the timeframe. health minister saying you can get your third booster shot -- the third of vaccine just a month after your last shot. strong gains when it comes to materials and energy following the gains overnight in new zealand. one quarter of 1% higher. chicago nikkei futures paving
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the way as we look for risk sentiment getting into christmas eve. liquidity conditions the last half day of trading for the holiday. it looks like we are on track for the santa claus rally. >> u.s. futures are looking positive but after hitting records in the final days before the holidays, you would imagine that would be the case. a lot can happen between now and the next session on monday. right now you have the s&p 500 futures pointing to an open of half a percent up. the same for the rest of the futures. the crude oil is up. we have had all sorts of volatility in oil and natural gas prices.
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u.s. cargoes are on the way to europe and that gave traders in europe a lot of hope for the new year sessions. i want to point to new york city's new year because we will see what happens around the globe. plans are changing by the day when it comes to the times square ball drop. 15,000 is the limit that bill de blasio is putting on the times square grouping and it will be socially distanced. that changed in the last 24 hours as we saw omicron cases flareups. everyone will need to be vaccinated, but they will not need to prove they've had a booster shot. haidi: when it comes to times
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square, it's not one of my favorite places in new york city. being there in person even pre-pandemic fills me with a bit of dread. in australia, we are the first to ring in the new year. there are going to be social distancing measures in place when it comes to capacity limits. we continue to hear about the impact when it comes to these major events. ces is still pushing ahead saying they will continue with these plans to hold it in person in early january despite high-profile dropouts including amazon, twitter, t-mobile, and others. latest to say that they are suspending their on-site activity. out of the total number of participants, it is less than 7%
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of the exhibit floor that has been affected by cancellations. we will wait and see if this big event will continue to forge ahead in person in january. let's get the latest when it comes to the virus situation in australia. three states running back masked mandates. we have new rules kind of quick turnaround given that these restrictions were only just send days ago. we are also hearing changes when it comes to the booster. parks good morning. a lot of australians are waking up with a sense of deja vu. the masked mandates were reintroduced at midnight. streets are very quiet outside. it is christmas eve. a lot of people are working from home or not working at all. some of us have to and those of us must now wear a mask inside the office as well as inside all
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venues. that is in response to a surge in numbers which wrapped up yesterday. thankfully, those numbers are more stable today. >> are states or the federal government likely to impose any restrictions or under lockdown? >> i doubt it very much. not over the holiday. that's the last and they want. the government just announced in the last half-hour that it is going to be bringing down the weight for a booster from five months to four months. the government here is very much trying to ramp up its booster program. fully vaccinated australians now represent about 91% of the population. that just happened in the last half-hour.
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of course, we are approaching the holidays and nobody wants to see the hospitals get overrun. >> that was our melbourne bureau chief. the omicron variant is pushing cases to fresh highs across europe. daily infections surging to a new high for a second day in the u.k.. in france, a record 88,000 cases reported over 24 hours. authorities warning that number could jump higher in the last -- next few days. in italy, they are tightening restrictions after a record 44000 and actions. the u.s. says russia needs to take steps to de-escalate tensions on the you train -- crane order. -- ukraine border.
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president vladimir putin signaled a potential for future talks is positive. >> it is not us threatening them. we didn't come to the border of the united states or the u.k.. they came to our house. our border. now they are saying we want ukraine to be part of us as well. you want your and tees from us. -- guarantees from us. >> donald trump has asked supreme court to block the release of his white house papers. a congressional committee investigating the january 6 attack. joe biden waived executive privilege over the documents. the disputed records include visitor and call logs, meals,
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draft speeches, and handwritten notes. alibaba has reported it was slow to report a bug in software. it comes after tech regulators suspended cooperation over the security breach. alibaba says the employer -- employee who discovered the bug abided by procedures. >> president biden has signed a bill banning goods from chin jang region. let's get the rest from our reporter. this was a unanimous vote, everybody on both sides of the aisle agreeing to this. how do companies prove that this is something they can abide by or is it effectively sanction on
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companies who do business there? >> the way it works is a presumption that all goods coming from that region are made with forced labor. anything coming out of that region, any company that is importing something from that region would effectively have their business or their imports and if they are trying to bring them into the u.s.. what they can do is to try to approve by submitting paperwork and evidence to the customs and border protection agency saying, proving that where the goods are coming from. if they can prove that they're not being made with forced labor, they will be allowed to bring the shipments and. there is a mechanism in place to clampdown on forced labor that the goods they are bringing in are not made with forced labor,
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but this takes it a step further by issuing a blanket sanction or a blanket proclamation that all goods coming from that region are made with forced labor. it puts the burden of proof on the companies in a different way than status quo before the bill was signed into law. >> intel is an interesting case study because they have walked back trying to make it clear that what they are doing is only to ensure regulatory compliance. it is not an ethical or moral stance. it doesn't look good to either side when there is the perceived backtracking. >> that's a great point. just to reiterate quickly that -- the intel situation. they made a statement that they were going to start pulling back from the region because of the forced labor issue. they got criticism from the chinese government that.
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they apologized and they are in a unique situation in that they're trying to expand in the u.s. and europe. there also trying to expand in china. you saw the statement where they apologized or took back some of their rhetoric. that largely in the business world landed with some impact in u.s. politics. before we started talking, i saw a statement from republican congressman in the house saying you have to make a choice. you can choose to expand your operations in the u.s. or in china. there is going to be a little bit more of that as we head into the new year, as there are new initiatives on the table in congress to boost domestic semi conductor production domestically in the u.s..
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obviously, the olympics are bringing this more to the forefront where you're going to see more politicians coming out and saying companies will have to choose. whether that is bipartisan or just republicans or democrats, we don't know. there has been an increase in bipartisan interests in taking on china with these issues recently which this bill illustrates. >> are congressional reporter there with the latest. we're talking about an amp deal of $428 million. shares are trading at close to 7% of the moment. this is part of a strategy to
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simplify its business ahead of a potential spinoff going into next year. we see this company trying to restore its reputation and reorganize and restructure into a simpler outfit. it continues to lose clients after what has been a few years of scandals, improper fees, as well as attempts to mislead regulators have been some of the accusations and cultural issues. it has had problems when it comes to selling off private markets business earlier this year. we are seeing the sale of the platform to aries management. still ahead our guest joins us to talk about the modern slavery issues and corporations honesty
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when it comes to compliance here in australia. this is bloomberg. ♪
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>> omicron is in the rearview mirror. >> it is much more transmissible. >> will can't go to work if they have the virus. >> it has been discounted into the market. >> i would be cautious. >> or red flags than most of my ex-boyfriend. >> some of these vaccines are good against this version. >> is going to have an economic impact whether or not is deadly.
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>> there's going to be a roller coaster ride. this is a big change in just a month. come on, it looked like the u.s. is something that should be overweight and now you have switch that over net -- international. >> u.s. equities still be ok next year. we have a target of 50-50 but i think you could get double that overseas. a lot of this is valuation. we had them underperform 25%. the valuations are attractive, but we see the growth cycle having bottomed in many of these markets. there are international equities
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that are value right now even though equities are set to do well. markets were we have been more cautious like u.k., parts of europe are looking attractive. also the emerging markets, china has been very beaten up this year. we are seeing valuations that are attractive there right now. some of it could be fading next year. consumer spending is looking in good shape. some of international valuations are attractive now. vonnie: can you give us an idea of where you are thinking of? we have a policy diversions in many countries. international is pick and mix. >> everybody is focused on the fed. many of the emerging markets they started hiking much earlier. think this is an attractive point to look at the and even in
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china after the central economic working conference, they sent a message they want to focus on growth. we think that growth bottomed in the third quarter of the year in china. you will see better quarterly performance coming up. we do like some of these plays in china as well. china and brazil stand out, but also brazil as well. returns could be high single digits, but you are looking at double-digit returns in international markets right now. part of that is there are divergent cycles. haidi: i want to go to a chart that looks at severe underperformers when it comes to china and hong kong particularly when you take a look at how chinese equities have struggled to catch a break with crackdown after crackdown.
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the geopolitics piece is not helping when you look at the orange and green lines. what do you like in terms of relative safety and opportunity in the chinese markets because we have had a lot of optimism, a lot saying they are seeing 40% upside when it comes to chinese equities next year. >> consumer discretionary stands out to meet. some of the renewables, the new industrial sectors. we are underweight on gaming. if you are not going to see some of the shift away on regulatory tightening. consumer discretionary should be better. signs of credit easing that will be forthcoming. we are underweight in health care. we think that in many of the markets focused on the
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commodities, they will perform better on the energy side. not just in china, but across the board. oil prices staying around $80 or even higher than that. >> has property bottomed? >> i think the property has priced in a lot. look at the default rate it is being priced in for china properties. it is 35% to 40%. the default rate is going to be half of that. i think you have bottoms in certain areas in the property sector. that still is one of the biggest risks. given the size and overall economy. much of that got priced in. i do think the government is taking some selective targeting credit measures on the credit easing side. i have sent a message that for the consumer discretionary, that's where we see more opportunities. >> great to have you with us.
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i'm sure we will speak to you next year. you can get around up of the stories you need to know to get your day going on daybreak. you can customize the settings. ♪
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>> we are tracking the fallout of the global supply chain crunch. it's the day before christmas, but a logistics giant is already looking at the next major holiday. the upcoming lunar new year is likely to create a cargo spike. in the chip sector, local foundries is boosting its -- to amd.
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another semi conductor giant intel is expanding its facilities across europe to boost production. another kind of chip crunch, another restaurant is flagging a shortage of french fries. it posted on instagram that it is halting sale of cottage fries. shake shack assured customers it will not see a fry shortage. flooding in vancouver is the cause. >> maybe stop piling potatoes is the new toilet paper. >> aluminum climbed to the highest since october. heading for one of its best ever years.
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fresh supply worries for consumers faced where shortages and 2021. aluminum has surged second only to 10. the increases would be the biggest since 2009. the third-largest sense the current form of the contract was launched in 1987. for more on the stories look to our newsletter supply chains. a check of your bloomberg business flash headlines. morgan stanley has issued new covert guidance to its employees. it told employees who have to be in the office in january to wear face coverings when not at their desks. it says the guidance applies to all locations even where everyone is fully vaccinated. hsbc has agreed to buy a unit of
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-- financial holdings. the deal will boost the wealth management business in asia as it 10 use to increase its presence in the region. plenty m
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haidi: we are getting japan inflation numbers. a slight increase when it comes to the consumer price inflation that includes fresh food. better than expectations. picking up the pace from a 10th of 1% in the previous month. the headline number coming in at 6/10 of 1%. stripping out fresh food and
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volatile energy costs, we are seeing a deflationary rate of contraction. that is in line with expectations and a slight improvement from the contraction that we saw in the previous month. we are seeing prices in necessities like energy and food being key drivers. positive for that reflation study. weighing on consumer sentiment which was similar to what we see when it comes to the muted consumer spending numbers in the u.s.. bloomberg economics expecting core inflation and japan to pull back to three tens of 1% come december. then get to zero level in the first quarter. >> another record annual budget
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from the prime minister ahead of the election next summer credit let's get more from our economics reporter. japan's debt gdp ratio is already the greatest in the world. is the prime minister throwing caution to the wind? is this necessary? >> 10 chili. according to documents we obtained, ¥106.7 trillion. that's not great news for japan given that it's ratio is about 250%. with an aging population, the social security costs are going to keep rising from here. for the question of how japan is going to pay back that debt, it
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is something country will eventually have to face. >> what is the country trying to show with the country and this budget? >> next year's initial budget is 1.9% larger than next year -- last year. you could argue that he is trying to project the image that he is thinking about long-term fiscal health. the initial budget was relatively restrained. it doesn't mean that japan will remain that way for the end of the year. >> will the japanese have to pay for this? they got hit with the sales tax. is the prime minister taking care of himself before the
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election and not really worried about the economy and the consumer? >> on how he's going to pay for all of this or how japan is going to pay for it, he has talked about capital gains tax raising that. he is saying he will not be raising a consumption tax and all members agree on that front. it is something that we could still look at once japan comes to a realization that we are the world's most -- and this debt has to be paid. >> our economics reporter. let's take a look at how we are setting up going into the trading in tokyo and seoul, korea. we have australia seeing solid
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gains. looking like we will end out with a firm santa claus rally. we do have the push from the record high close in u.s. stocks. this despite concerns over the omicron variant. good news when it comes to further treatment options being available with the merck pill being authorized for emergency use. nikkei futures are looking pretty robust. looking at u.s. futures as well, looks like we are set up for a risk on end before we get to the christmas holiday break. vonnie: and inflation trader who nailed the call warns that cpi
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could jump as much as 7%. >> market expectations for next year in terms of asset pricing is very positive because they are feeling that growth will be -- enough savings to support consumer savings. looking at the news we got some previous support measures expired next year. we are expecting contribution to be negative next year. also central banks are changing the reaction functions and prioritizing off-site inflation risks which might come from --
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what we got was hawkish. they told us they're looking to deliver three rate hikes next year and they are discussing tightening. they're looking to deliver after one or two rate hikes that can also happen in 2022 so that will be a lot of -- a lot for the markets to diverge -- digest. >> in terms of where you expect inflation to go next year, market pricing looks really relaxed. do you believe market pricing at the moment? parks even the fed dropped the
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word transitory. the markets and central banks say that it is much more world based. energy prices are reopening. it's very likely the u.s. inflation will move in the first quarter. the market was already tight and when we saw a number of nuclear reactors taken off the grid and russian supply was lower than expected, we saw fresh spikes. looking out into more medium-term, we are expecting some supply related pressures to
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ease. delivery times are already shortening. energy-based effects mean the contribution on the headline would be slightly lower. in 2020, there was a short time where the prices were negative. looking where they are now, that base effect this year was superstrong. looking into next year, we're going to be comparing 2022 prices with 2021 prices. the starting point will be much higher and the base effect will be not tort headline inflation. we do not expect back to pre-pandemic low inflation levels either. there is mostly pent up demand
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for services especially travel. at that is going to continue and wages are picking up. haidi: coming up next, a look at modern slavery issues across supply chains. a new report suggesting that major australian companies are failing at slavery disclosures. ♪
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merck's covid-19 pill has been cleared by regulators. it received emergency authorization on the heels of pfizer's competing pill. the pills combined are expected to help relieve pressure on hospitals. new south wales victoria and western australia will require face coverings in all indoor public settings. new south wales will also reinstate passively limits. infections have hit new highs in victoria and new south wales
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putting pressures to reopen on hold. president biden has signed a bill putting restrictions on imports from china. the province is a major source for cotton used in clothing and is a key location for a component of solar panels. intel has apologized to chinese customers after its opposition sparks a backlash. it says it was merely complying with u.s. laws and not taking the political position when it sent a letter asking suppliers not to use any labor or products from a chinese province. those are your latest first word headlines.
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>> australia's largest listed companies indicate they don't understand the risks and their supply chains. this was headline of a new report after australia legislated to root out the problem. our next guest has spent over two decades of investigating the issue of slavery. we appreciate you having the time to join us on christmas eve. when you say that this indicates they don't understand their disclosure requirements and the nature of their supply chains, is that a reasonable excuse? is there a lack of effort being made by these companies that failed? >> it is probably not a universal answer to the question. this is a new thing for many companies. while they are used to looking at things like gender or
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environment, what we are talking about here is an illegal and hidden crime which is more difficult to trace and more difficult to assess. we often find that the first reaction of businesses when you say we think there might be modern slavery in your supply chain is we are a good company, it couldn't possibly be us. our experience in the chocolate industry is that that was the response for about 13 years. >> you take a look at the outperformer's, i understand that they have a personal interest in the abolishment of slavery, but are the companies successful in this ranking, what are they doing right? parks they are actually looking for. we use the phrase it's not if you find modern slavery it's when you find modern slavery in
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your supply chain. if you want to find it, you have to go looking for it. if you go looking for it with the eyes of we are looking to find this crime in our supply chain, chances are you will find. >> it is particularly acute in this part of the world the risks because according to the national labor organization, two thirds of the 25 million people estimated to be in forced labor are in the asia-pacific. when you look at the breakdown, i'm curious where you see that split across gender, industries, what types of supply chains and businesses are most affected? >> what we have seen over the last decade or more is that countries like australia, the u.s., the u.k., europe have offshore their manufacturing.
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it has gone offshore because wages are cheaper. sometimes associated with those cheap wages are bad working conditions. yes, you are correct the majority is in the area from india to china. that probably accounts for two thirds of it. around three quarters are women and remember when i am quoting these statistics, you will hear someone quote different statistics because we are talking about a crime so people don't put the sort of information onto their tax return or reveal what they are actually doing. about three quarters are women. half are children and young people. the key industry of things that are imported into australia, the top industries would be fashion and cotton. linked with that is particularly
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state enforced forced labor in countries like the changing region of china and is pakistan and turkmenistan. it is in electronics. the making of them in certain countries, but also the products such as cobalt the come from the democratic republic of congo. there is a high propensity of these to be mined by children. we would have seafood coming into australia. we import 72% of our seafood. the issues in the seafood across southeast asia are large. some companies are doing some fabulous work in that area. the next would be rice. then the final is coco. west africa is the source of 85% of the world's chocolate.
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ingredients. then there is around 1.5 to 1.8 children and child labor. >> how has the pandemic and the dislocations when it comes to supply chains and orders being closed exacerbated the issues of modern slavery? >> it's a good question. just this last week, the australian federal police put out a release saying they anticipate there's likely to be an increase in human trafficking and modern slavery as the borders open up. closed borders means that it's more difficult to traffic people across borders. there has probably been an increase in intercountry trafficking. what we also know is that with the pandemic has done is it has
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made people even more vulnerable. have lost their income and so have headed back home. when large groups of people are traveling and moving, then they are easier targets. plus, people are desperate. people are more likely to take a job that might have some risks associated with it or risk migrating in an unofficial manner. which makes them all more vulnerable. we all know the things that have happened to our supply chains, we have become aware that we can't get some things because of the places in which they are made. probably we weren't aware of that before. unicef estimates that there will be an increase of 18% of the number of children in child labor and that is going up from
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165 million. >> it seems to be the power of the individual to stamp this out. our thanks to you. be sure to tune into bloomberg radio to hear more from the big newsmakers and get in-depth analysis. broadcasting live from our studio and hong kong. stay with us. ♪
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vonnie: a booming popularity of entertainment like squid game is also driving desire for products like games. >> also we have korean dumpling makers. they are making a frozen dumpling and their product became popular after two members said they were fighting over them. they are driving their total sales. we also have some instant noodle maker and their products appear in squid game or the movie
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parasite. the point of their popularity is the global audiences were bored during the pandemic, staying at home watching korean drama and they found korean food. they said maybe we need to try so their products went viral on social media like youtube. they said it's because food is the easiest way for you to experience a different culture. vonnie: it's so funny because normally, you associate merchandise with movies so you might anticipate bts or parasite urgent ice. we are about things like food or kitchen products. anything else we should look for that is affected by the korean boom? >> we have a company making water purifiers. they hired bts for their advertisement since march.
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in malaysia, there's a huge number of bts fans. they also made good sales in the united states. >> bts and black pink. we have to include them both. [laughter] so good talking about squid game in particular. shery ahn is not the biggest fan. let's talk about the stocks we are watching opening today. we are looking at -- more of a big move after alzheimer treatment was granted fda fast-track designation. also watching crypto stocks. bitcoin above $50,000 for the
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first time in almost two weeks. market opens in tokyo and seoul, korea are next. this is bloomberg. ♪
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♪ >> welcome to daybreak asia. >> asia's major markets have just opened. top stories, asian stocks had for a fourth day of gains after another fresh hike on the s&p 500. optimism the economy can weather the coronavirus. >> regulators approve the next covid bill as daily infections
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double in new york state and hit records around much of europe. we speak to the ceo of finance australia. >> let's look at where we stand as we see the open of trade in japan and south korea. we've got a wealth of economic data out of japan today. markets are taking it well after an up session which saw the s&p 500, dow and nasdaq all hit records. >> when it comes to trading, we are seeing some positive sentiment as we head into the second part of this christmas eve session. thin liquidity, given most traders are already on holiday. those who are still around will probably be just doing a half day today. other stocks trading at the highest since mid-november. the aussie dollar, a little down
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action but we did have the dollar decline continue to support risk currencies like the aussie and the kiwi which is trading at 68 $.15. kiwi stocks still up by .25%. omicron looms large. hi case numbers out of new south wales. a change to guidance as to when you can get your booster in australia, now four months. the return of masked mandates as well happening across three major australian states. vonnie: troubling over the next few days. let's bring in gareth nicholson, cio at new moreh international wealth management. i want to talk to you about treasuries and fixed incomes broadly. given we had the fed pitted, i know you are not coming out until january with you our forecast but may be give us a sneak peek. what happens to the yield curve?
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>> good question. good morning. i think the yield curve is going to -- we have already seen that. the -- markets over the last session and a little more. large amounts of equity comes from banks. if the economy is going to be able to withstand omicron and strong enough for the patients to have their medicine taken away, we are going to get -- and we are likely to get banks to do better. [indiscernible] like most things, it is going to be somewhere between the worst cases. zombie environments where you have rates rushing, high yield junk, liquidity stocks struggling. the other side is the fairytale central banks squashing volatility. we think it is going to be somewhere in between but
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probably more bearish if you will. we are optimistic, but there is still a lot of caution given the unknowns. >> bearish bowl. doesn't sound too bad. will it be an orderly move? you've pretty much got the fed pivot. the only thing uncertain is the omicron situation and perhaps what might emanate from congress. what is on the horizon? >> i agree. if those are the only things to worry about, the fed will be able to maintain and we get orderly fashion. the other one is inflation, particularly driven by energy. you look at europe, the crisis there is still a big unknown. if inflation driven by energy still remains geopolitical, or demand driven, given the lack of investments or the transition area we are going through with
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energy, that could be a factor which could affect energy, food costs. inflation seems to be out of control. then orderly is out the window and we will see aggressive policy. you see inflation come up in november probably higher. december will also be higher, but potentially moderating next year. if that is the case, stable rates, bearish bulls are online. >> an increasing chorus of people are sounding more optimistic. look at this chart showing the underperformers both onshore and offshore. how much does this change? we are hearing an upside of 40% is the call from some places. is that optimistic given policy risk is still there? >> our half call is 20% on japan. a large amount would be china
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reducing -- definitely an upside after the gain from china. we do think from an economic perspective, the worst is still to come. q1 is going to be a struggle. the lockdown is going to be more of a -- beijing policy is going to stop efforts, or slow down. there are a number of curbs around property in other regions which are going to slow down the academy. first quarter economy is going to struggle and there is going to be headwinds from there. as an investor [indiscernible]-- [indiscernible]
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>> tell us about some of these sector selections in china where there is relative safety but you still have compelling valuations. >> china tech, china consumer, tech not focusing on e-commerce. more semiconductor machinery, 5g clouds. the tech which is really becoming important to the government. they are going to continue to push because tech is the future. there is still valuation opportunity there. the chinese consumer has struggled but we think there is opportunity to selectively pave space as well. the longer structural term plays, we need to be a little selective when it comes to some of the mega cap names that have done well in the past. strong companies but argued lee are not going to get the same support from governments unless
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they align themselves better, and given delisting and extra noise around that, we've got to be selective in this space. it is not just a -- selection going. >> great to have you with us. we appreciate your time. international wealth management cio. this hour, the omicron variant pushing cases to fresh highs. in the u.k., daily infections surged to a new record for a second day with just under 120,000 thursday. in france, 80 8000 reported over 24 hours. authorities warning numbers could jump higher in the next few days. italy harsh earning -- tightening restrictions after 44,000 infections. australia to bring back mask mandates. new south wales, victoria and western australia will work --
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require face coverings. new south wales will also reinstate capacity limits. infections have hit new high in victoria and new south wales, putting pressure on the push to reopen after lockdown. president biden has passed a new law banning imports from xinjiang unless companies can prove they are not made with forced labor. the law could force significant -- from any products used. xinjiang is a major port for cotton clothing and is a key import for polysilicon. intel has apologized for chinese customers after its proposition spark backlash. intel says it was merely complying with u.s. laws and not taking a political position when asking suppliers not to use products from xinjiang. chinese social media seized on
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the issue to criticize intel. one celebrity cutting ties with the company. those are your first world headlines. >> still ahead, the ceo of finance australia about the transparency into the world of crypto. tensions again between washington and beijing as president biden plans a bipartisan bill punishing china for its treatment of the uygur minority.
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♪ >> president biden signed a bill banning goods from china's xinjiang region unless companies can prove they are not made with forced labor. this won't be a welcome development to china.
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will there be retaliation from chinese authorities who have already said there is no such thing as forced labor in that it region? >> officials and beijing have strongly rejected this allegation of actions, prejudice, policies against the minority uygur population in xinjiang. i think it is possible there might be a retaliatory measure taken. we should be getting more information later today, they will very likely address the passage of this bill in washington. it is possible there might be actions taken against american companies, or companies that decide not to use xinjiang products. beyond that, on chinese social media, there is a price for western companies when they
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adhere to american sanctions that they have to pay in china with consumers online and social media sort of -- there is backlash against actions. >> there is no perfect playbook for companies like intel caught in the middle. at the same token, the walk back saying they essentially took this move for compliance reasons and not ethical or a moral position, does not look great either. >> the strategy for most companies is to keep their heads low and try to avoid the limelight. try not to be singled out. try not to make whatever they are doing a political expression, but try to throw to that they have no choice. they have to follow laws. be it in china or the united states. >> you can get a roundup of the
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stories you need to know to get your day going in today's edition of daybreak. it is available on the mobile, bloomberg anywhere app. you can customize settings to get news from the industry. this is bloomberg. ♪
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♪ >> breaking news, -- based in hong kong is selling aircraft to carlisle managed firm for $4.28 million. it is also selling more aircraft to other entities including canada's pension fund. haidi: japan is set to unveil another record annual budget as
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the prime minister adds to the world's heaviest debt load with more spending ahead of an election next summer. let's get more from our reporter. how big was japan's budget? what does this mean in terms of adding to that huge debt load, the most indebted among advanced economies? >> according to documents -- the official budget next year will be ¥107.6 trillion -- [indiscernible] that is not great news for japan given -- is already above -- [indiscernible] with an aging population, social kit -- social security costs will keep rising. how to pay for that debt has been -- with covid but something the country will have to -- >> what does the prime minister trying to show with this budget?
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>> [indiscernible] >> how effective is this impacting the longer term issues that face the japanese economy, demographic issues and how does it fit into this idea of new capitalism? >> that is something we have yet to see. [indiscernible]
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>> the next budget will be -- stimulus package. [indiscernible] economists are divided on whether this new idea of capitalism -- forward will do enough for longer-term growth. redistributing wealth. they say maybe it is not looking enough at longer-term growth. >> looking for to seen details of this budget package. we will be watching. israel says its position to offer a fourth vaccine dose was prompted by new data which showed that without the extra shot, people will be left with less protection against omicron. we spoke to johns hopkins professor -- about the move. >> we have seen that vaccine-induced immunity wanes over time.
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you get a tremendous reinvigoration of immune response with boosting. the israelis this week published their data on comparing people who had two doses of messenger rna, with people who had a third boosting dose. that showed a 90% reduction in mortality. that is significant. the astrazeneca data also is important because even though many countries are not using it, many used astrazeneca, the fact is now -- and the who has been working on this -- many countries are going to have later doses that are different either with the new protein subunit vaccine that is coming along, or with mrna. in south africa they started with astrazeneca. now they are using mrna. that mix and match strategy also
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looks good and looks like it is protective. that is important. >> that's it, the booster and the rollout of it. looking at how long immunity lasts, when we get a vaccine, is this unusual that the new -- that the immunity lasts as little time as it seems to. is it unusual? is there a chance the science moves quickly to produce something that does not rain so quickly? >> this is the biology of coronavirus. this is why with group a that caused the common cold, you have a cold, you don't get it again probably that season but you are vulnerable the next year. that is just how immunity to coronaviruses works. it isn't surprising, but what it means -- probably -- is that we are going to have to have more regular boosting to keep the immunity up as long as the virus is still circulating.
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it is true that a huge challenge we face is that so much of the world still hasn't seen their first dose. that we have to fix in 2022. it is looking likely we will have enough vaccine to immunize everybody. and then it is going to be a logistical operational challenge to immunize the rest of the world. >> thinking about the variant, how encouraged are you by what we have heard in these early studies, these studies all on the same day pointing to lower hospitalization rates from omicron. given its spread, is a relief but it still spreads fast. how -- are you buy that data? >> it is encouraging. we are always looking for things that are consistent. since you have data from three different populations suggesting the same lower risk of
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hospitalization or severe disease, that is encouraging. the data from south africa is the most compelling, that showed about a two thirds reduction. but that is a population that had a high rate of recovered from a very serious surge of delta. there was a lot of pre-existing immunity. we will have to see how that looks in other populations since both the variant and the populations have been circling. what we are worried about in the u.s. is that we have about a 25% of the population not immunized at all. many of those people have been relying on the idea of natural immunity, having recovered from covid. what we have seen with omicron is that is not working. part of the reason why it is so infectious is it is able to infect people who have already had corona. >> chris briar, professor at
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johns hopkins school of public health. the bloomberg school of public health is supported by michael bloomberg, founder of bloomberg lp and bloomberg philanthropies. let's get you a quick check of business headlines. morgan stanley issued new covid guidance to employees. in a memo, the bank told staff who have to be in the office in january to wear face coverings when not at their desks and to limit large in person meetings. morgan stanley says the guidance applies to all locations, even where everybody is fully vaccinated. -- could upload its theme park project in china. sources say the south korean hotel operator is in talks to gauge interest from potential investors and could end up deciding to keep the project. the theme park construction has been halted to that -- due to the pandemic. casino stocks rose in new york after the gaming authority
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released favorable results from public hearings on license renewals. according to findings, the -- remotely satisfied with the current number of casino licenses, which stands at six. that boosts the likelihood that major casino operators will get their licenses renewed by june 2022 without major changes to their term. -- as agreed to by india's -- the ceo says the deal will boost world management business in asia as it continues to increase its presence across the region. india is asia third largest profit center. four months after hsbc bought -- of singapore for $570 million. let's check the markets. >> the nikkei is higher by .1%. we've got economic data out of japan. the market is waiting for more details on the japan budget that is going to be unveiled in the
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next few hours. we will see how the reaction is there. broadly risk on across the asian continent after a risk on day in the united states. -- one of the movers there is up .5%. investing in its vietnam units. in australia, we see a gain of .6% for the asx 200. gains as well in new zealand. some of this is on the market getting a little wary of omicron. we will have to see how that plays out. haidi: that level of risk on appetite we are seeing when it comes to omicron, the potential limited impact on the economic trajectory is playing out when it comes to resent to been to in essex. we are ceiling -- seeing the dollar up again. we are watching whether we see the sustained fall of the dollar that happened overnight that did add to gains we saw across risk
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currencies. the aussie, pulling back a little bit alongside the kiwi dollar. up next, that coin capping off a big year even with major price swings. finance australia talks to hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas special. gotta go! take the savings challenge at or visit an xfinity store to learn how our switch squad makes switching fast and easy this holiday season.
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>> -- it has been quite the year for crypto. james gorman of morgan stanley saying it is no fad. we definitely had comments from jamie dimon and other bank ceos talking about this. today, bitcoin holding above its $50,000 mark. $51,000 a coin. we have seen bitcoin gain substantially since its low in november.
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it was at $68,000 on november 10. it dropped substantially. so far this year my -- bit digital mining company had a difficult year. 7% higher roughly today. after an 8% drop. results have been disappointing. bloomberg galaxy index, the crypto index year-to-date is up 240%. today, just up 3.3%. the sec continuing its harsh look at the crypto world. we had the agency rejecting a pair of spot etf filings. valkyrie and crypto coin -- crypt coin. that was a bit of a land grab, the first to get that past the sec will be happy for sure.
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>> everybody thought when it comes to crypt though -- lee travers, ceo of finance australia joins us now from perth. taking a look at the year that was when it comes to the crypto landscape, even by volatile standards it was quite a year. we had with -- index doubling, giving back all its gains by july. down 25% from november. what does the year ahead holds given it looks like we are ending with the rally? >> i am not going to predict less volatility because 2021 has been volatile. whether that is a macro concerns, some individual aspects happening within the crypto market. it has been an eventful year and i continue to expect there is going to be more interest, demand and volatility. one thing we have seen coming through is really positive
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countries towards regulating crypto and allowing their consumers to be able to access the innovations that blockchain and cryptocurrencies can bring. we are fortunate to have a positive environment. 2022 is shaping up to be a year where we will have regulations in the markets. there will be a genuine bar to entry, rather than just registration. we are going to see the year that mainstream payments are now available through cryptocurrencies. huge year for 2022 and i am excited for it. >> when it comes to the price action, this chart is interesting because we have historically had these peaks and troughs and crashes when it comes to bitcoin and other crypto assets. in previous years, bitcoin crashes took years to recover from. we have seen recent crashes only take months, sometimes weeks.
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what does that tell you? does that mean we are finding more of a fundamental confidence in this asset? >> definitely. it is certainly not just the domain of early adopters anymore. it is getting mainstream. genuine buyers out there. we certainly saw that this year with a flood of capital coming to join the buy side. we didn't necessarily see that in previous cycles. this one has been met with a lot of buying capital. that is positive. we are seeing now in australia a -- sense of the marketplace. i expect that is going to double over the next year. commonwealth bank will be able to do that for us. it is certainly not seeing those
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numbers anything out of the ordinary. globally, we are probably going to move from 5%, maybe even 10% or 15%. there is going to be a huge influx of new participants to this marketplace and that is going to mean dips are going to get bought up. it is still going to be volatile, we know, especially the fed class which should only be a small percentage of your protocol the. -- portfolio. i am confident the major dips we have seen in the past won't be as severe. >> give us what we are hearing about a search for a headquarters. apparently you guys are looking for a headquarters in the uae? >> for the finance global, they are looking at a range of opportunities. some countries have been more positive towards adopting crypto than others. in australia -- i am running
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over here. certainly we have a strong base for growth. a strong base in terms of having a positive regulatory environment and looking forward to getting a markets license, potential custody license regime and tweaks to the tax structure and potentially even what we are seeing is internet organizations establishing a framework for them. i expect a year of regulation is going to keep us very busy. >> obviously, australia's regulators you have to watch what you must have to keep a close eye on gary gensler in the united states. the sec is really clamping down on crypto companies. what do you see playing out over 2022 in terms of u.s. regulation? >> u.s. regulars that deborah barbara -- being focused on
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australia a. what i have seen at the highest level is a genuine environment to accept crypto as a means of payment. a genuine excitement around the innovation that blockchain brings. you're looking at some of the most high-profile, important companies in the u.s. that are public companies, that are crypto. you are not seeing that in other exchanges globally. i am seeing the u.s. continuing to be a leader. they will make sure consumer protections are in place. there is a lot of interest around the etf. in one to two years, spot etf will be approved. i think that is a better solution for customers. right now, you're certainly going to get a lot better deal as an investor buying bitcoin on an exchange rather than futures etf. the structure's set up.
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i expect to see positive development in the u.s.. >> talk to me about binance becoming the first --does that -- given the concerns around the -- when it comes the mining on the usage of cryptocurrency. >> definitely. that is one of the big misconceptions around crypto in terms of it being a force for good, particularly around carbon concerns. it absolutely uses far less carbon than the traditional financial institutions, or even going back to the gold standard and gold-mining. crypto coming through is absolutely a force for good and i expect the market to a knowledge that. we saw one of the big pullbacks
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in march through april caused by carbon concerns of the major blockchain's. we are seeing positive developments on those fronts in terms of some of those moving towards -- blockchain's which are 99% less carbon intensive. from binance australia, we want to pave the way in terms of bringing through transparency. we have seen that in the u.s. with the north american bitcoin mining counsel. they quantified the amount of renewables being used for secure the network and we want to quantify that carbon output that crypto firms are having globally. generally we have seen huge interest in wanting to move towards a -- from an environmental point of view as we will be offsetting all of our carbon emissions in australia as well as positively contribute in back to the environment. we have just announced plans to help plant 40 thousand trees for
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koalas in australia through the binance charity fund. how much an impact it has already made. >> lee travers from perth. great to have you with us. let's get a quick check on crypto stocks. on christmas eve. japan dashes seeing modest gains for the outperformer being -- in japan as well as watching gains in rubik's point. in south korea come out performers in that space include -- and of course when it comes to this rally a lot has yet to be seen given we will have one or trading day before we head off on holiday. technology just shy of 2%. this is bloomberg. is bloomberg.
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>> let's get to the first world headlines. the u.s. says russia needs to take steps to de-escalate tensions on the ukraine border. key have estimates moscow has 122,000 troops on the border and u.s. officials continue to see signs of a russian disinformation campaign to pin the tensions on ukraine.
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in moscow, vladimir putin signaled the potential for talks as positive, but also hitting nato. the omicron variant pushing cases to fresh highs across the u.s. and u.k.. daily infections surged to a new record for a second day with fewer than 120,000 cases. in france, a record 88,000 cases were reported over 24 hours authorities warning the number could jump higher than the next two days. italy tightening restrictions after a record 44,000 infections. haidi: u.s. officials must decide who gets new covid treatment pills from pfizer and mark now that they have been authorized. let's bring in michelle cortez. as we continue to see this huge surge in new cases, what do we know about who is going to be
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eligible and how this is going to be distributed? >> it is critical to make sure that people who need these pills get access to them. the pfizer pill looks to be significantly more effective than the merck medicine, but it is not anywhere near as available. the u.s. has ordered millions of doses of both, but the merck pill is on the shelves. you can actually get access to it, whereas pfizer is tricky. doctors are going to have to be tricky making sure they are giving the pfizer pill to those at highest risk. merck also works, both are effective in reducing the risk of serious illness and disease. again, merck is just not as good. the merck pill should not be used for people who have already gotten severely ill. it does not help you if you are already second pregnant women should avoid it. >> a new study is looking at the efficacy of astrazeneca boosters
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per what have we learned? >> bad news for people who received the -- shot, the most widely used vaccines around the world. what that found is that even three doses of sinovac's, the full vaccine plus a booster is not enough. it is a worrisome signal that perhaps people need to be getting stronger vaccines or might need another one on top of it. that study showed an mrna vaccine did increase the effectiveness of the sinovac early shot if you got an mrna booster. astrazeneca, different shot. it did sure the booster shot with astrazeneca improved protection, increased neutralizing antibody protections. that is good news. there is astrazeneca as well. if you are out there getting a booster, make sure you pay attention to the science before you decide what you get. >> we are learning more every day.
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michelle cortez, thank you. after a difficult 2021, chinese property expected -- property firms expecting their toughest yet. back wages owned to -- elude to migrant workers. how painful could this be for the embattled property sector and all of their affiliate industries? >> it is going to be painful. fourth quarter was tough on these developers like evergrande and others who defaulted on their bonds. at least six developers defaulted in the fourth quarter. the first quarter is going to see not only more coupons do for these developers, but also these deferred wages they have not paid to the migrant workers who all need to go back to their homes, if they are allowed to. anyway, usually the biggest migration on the planet happens during the lunar new year holiday.
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migrant workers who work for these contractors and affiliates and property companies need to be paid because beijing says it is not an option not to pay. estimates are that there could be upwards of 173 billion dollars worth of deferred wages that need to be paid by the end of the lunar new year holiday. that begins january 31. the official holiday is february 6, but the holiday period traditionally is 40 days. there may be a grace period, but that is a big bill. on top of the estimates of the bond bills coming due in the first quarter to the tune of 19.8 billion u.s. dollars. you add that upcoming it's a lot of responsibility and bills due for an industry that is hurting for cash. the strikes are lining up against the property sector at a time when the government also does not want social instability
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at the lunar new year holiday and especially ahead of the winter olympics that begin in february. >> a busy couple of months ahead. staying with china, the offshore yuan is trading at around $6.37. u.s. dollar holding steady. we are watching the chinese currency closely. the yuan has having -- is having a greater impact on its eu counterparts. shery ahn joins a set of new york. how do we determine the potential performance of currency going into next year? >> we have seen that already this year, the yuan's resilience has played a role limiting the fluctuations we have seen in emerging markets. it seems in the past 12 months -- now we are hearing from the news the state council meeting is saying that china will keep the yuan basically stable.
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this will have broader implications for emerging-market currencies. this chart on the bloomberg showing its correlation with the index of developing peers rising to a record in september. we are talking about .81. as low as .24 at the end of 2020. we have china -- being a factor but also because of you on's strong links to brazil, or -- [indiscernible] >> shery ahn in new york. tune into bloomberg radio here. take newsmakers and in-depth analysis from the daybreak team. listen via the app or 20 morehead.
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♪ >> alibaba -- updated a major bug in its software because it was unaware that severity. a comes a day after china's tech regulators suspended alibaba's cloud unit over a secure --
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cyber security breach. the statement talks about untimely reporting. can you break that down as to what that means? >> this is probably the most curious aspect of both of those statements. what we know initially is when the vulnerability was first disclosed, it was disclosed by a researcher at the cloud security program under alibaba. this researcher emailed the open source community that maintains the software called the apache software foundation. they received an email and once that happened it was like pandora's box burst open. the world literally raced to seal these flaws and seal any
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leaks that hackers may exploit. wednesday, when the chinese minister of information and internet technology suspended cooperation with ali-cloud, they said we understand, according to reports, that the suspension was because they did not report the flaw in a timely manner. we do not know when the ministry would have preferred to find out and whether they would have preferred to find out before or after ali-cloud informed. china has passed strict laws, especially on cybersecurity reporting where they expect researchers to report flaws to both the vendor and authorities. as a lot of questions we have that we are not getting answers to right now. >> relations between alibaba and chinese authorities are already tense. it seems to suggest things might
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get worse. >> at least on one level. on the cybersecurity tech front, we know for sure there's gonna be three to six months. this is against the backdrop of over eight years worth of sweeping reforms from beijing, pulling the plug on and group, the alibaba affiliate that was also cofounded by -- there was an antitrust probe of alibaba abusing market power. this has been going back and forth and for many businesses, probably the latest thing alibaba has encountered in this sweeping text crackdown by chinese authorities. >> thank you. we will keep an eye. our cybersecurity reporter. some stocks we are watching and the chinese and hong kong sessions, asset holdings after it closed a $4.3 billion deal to
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seller our craft -- aircraft to the carlyle group. in the wake of the unfavorable reports on the sinovac 16. mikal released favorable results from public hearings on the renewal of casino licenses there. wall street's reaction suggesting perhaps that won't have an impact too much at all. stocks tied to china's xinjiang region after president biden signed a bill banning goods coming in from that country unless they can prove they were not made with. slave labor. that is it for daybreak asia. our coverage continues as we look ahead to the start of trading in hong kong, shanghai and shenzhen.
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this is bloomberg. ♪
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>> 9:00 a.m. in beijing and shanghai, looking to bloomberg markets china open. i am yvonne man in hong kong. our top story this morning, asian stocks stand to rally in hopes the global just the global economy continue to expand next year despite the virus miss. president bided signing a law while banning imports. we are watch t


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