tv Bloomberg Daybreak Asia Bloomberg January 18, 2022 6:00pm-8:00pm EST
>> a good morning. i am haidi stroud-watts in sydney and i am counting down to asia's major market open. >> welcome to daybreak asia. the top stories this hour. asian stocks set to extend losses following a surge in treasury yields and the prospect of a tighter fed. china's central bank uses more policy to assist or the economy and ease credit stress. >> goldman sachs misses
estimates with record spencers. a sign of the ballooning costs of the talent war. >> let's get you straight to the start of trading here in sydney. we are watching some of these energy producers after we heard better than inspected numbers -- expected numbers. that rally continues to push higher. we should be helping out some of the energy producers here. this is a 10th of 1% lower. we will have a second straight session of losses at this point in time. kiwi stocks are looking a little bit weaker as well. the nikkei futures looks like we could show a cautious start. we are also seeing some mixed weakness when it comes to the fx side of things as well.
>> we are in full swing of earnings season here in the u.s.. goldman sachs shares tumbled after the bank posted a drop in trading revenue and compensation costs soared on the earnings call. the cfo spoke about the battle to retain staff. >> our philosophy remains to pay for performance and we are committed to awarding top talent in a competitive labor environment. >> all of these concerns really overshadowing the fact that for the year, this is the best ever for goldman sachs in terms of revenue or earnings. >> that is exactly right. this is the best year on record but investors did not seem to care about that that much.
this shows signs of slowing down. they were worried about costs, talk about inflation there. thank you pay and benefits is the single biggest driver at goldman. it jumps 33% to 17.7 billion for the year. that is an indication of the big reward for employees after a record year. as we know, the dealmakers delivered an amazing year. goldman had to pay up for that talent. that is what you see in terms of the cost jumping. the need to continue to keep paying for talent -- we know they were talking about bonus rises as much as 50% and multimillion dollar payoffs as well. >> the story of the compensation
cost, is that something we expect to see as a theme question mark >> absolutely right. we saw that jp morgan talked about this. jamie dimon saying they have to pay what is required to retain the talent but if they are delivering the results as well. if what you are seeing is pay going up but also earnings and revenue going up. we have bank of america and morgan stanley. we know that morgan stanley has been fighting in particular with goldman sachs very hard for the top spot in m&a rankings. they have had to pay up as well. you have the junior bankers to many more money. you have talent retention and also you're trying to poach good keybank bankers from other banks as well.
quays activision and blizzard has been purchased for $69 billion. this is part of microsoft's push into the metaverse. it is an interesting choice of company. it has had its high-profile issues. >> you are absolutely right. it is a little bit tainted. getting content is not that easy. this puts microsoft right in the middle of what is known as the metaverse. microsoft has a very strong portfolio of hardware products.
now they can expand on the content using this particular deal. >> we also saw global gaming stocks broadly. could we expect more m&a's in the sector? >> that was the senior analyst with the latest microsoft deal. let's turn to china, the central bank is pledging to do more for the economy and ease credit stress. kathleen hays joins us with the governor.
quincy knew what he was going to say and why they were going to say. they want to prevent a credit meltdown as they see contagion, contagion starting in the property market. they want to crack down on the property developers. they are making housing unequal for chinese people but it morphed into something else these kinds of things can do. he said the goal of the pboc is financial stability. they must move with force. they maintain overall money supply and avoid the collapse. they told us they are worried about just that. these words came one day after country guard holdings which is china's largest property
developer. they are in pretty good financial shape. but with more worry about who is going to default, their stock hit a low. let's hear more things the deputy governor said. they need to roll out policies to stabilize economic growth. do it quickly. make preemptive moves. don't wait for this to get worse. have to address these market concerns in a timely way. a lot of people are saying the pboc needs to get or funding into this industry to start this tide of default and financial contagion. on thursday, the pboc is expected to cut the loan primary by 10 basis points, dashing the cut in the immediate term lending facility that they did on monday. the next will be on thursday. the turquoise line is the mlf. the greenline is a three-year loan primary.
that is also expected to come down a bit more and in fact, deputy governor little was saying how they are already seeing that the mlf rate cut is helping money market rates, bond yields start to ease. they stated very clearly they have started to move, they will keep moving, bloomberg economics looks for more cuts on the rrr rate. that has not been signaled yet but to me this is a pretty dramatic statement. clearly the people's bank of china has decided to send out this message, they are getting ready to act and act more. >> that was kathleen hays there. let's get you to vonnie quinn who has our first word headlines. >> china's capital is seeing signs of further coronavirus spread with coronavirus infections found less than three before the winter olympic.
while a person in a different part of the capital tested positive for delta. officials have stepped up testing and contact tracing across this of the and halted olympic ticket sales to the general public. the greater tokyo region and other parts of japan are said to come under an emergency through friday. the measures are inspected to be in place for three weeks as the government tries to rein in a surge of covid cases. the prime ministers as a final decision will be made wednesday. local media reports that tokyo also plans to raise the virus warning level with more than 5000 cases reported tuesday. boris johnson will face angry lawmakers in parliament on wednesday. more as his own party members are calling for resignation for lying about attending parties at a residence that broke lockdown rules. johnson said he was not warned that the party was against the
law. >> i can't believe we have gone ahead with event that people were saying was against the rules or against what we were asking people to do. nobody warned me it was against the rules. i would run member that. -- remember that. >> reuters reports the investigation is focusing on how this tech giant stores plan to date including personal information and ip. the company is facing regulatory issues in china where it continues to face rooney from beijing -- scrutiny from beijing. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. up next, why they think neither
>> u.s. stock futures are fractionally higher after they surged on expectations of fed tightening. looking further afield into 2022. the next guest does not expect the variant to derail the equity rally. great to have you with us. you seem to think this market -- the sentiment is more resilient than we are giving a credit for. -- it credit for. >> the market is very volatile and we expect the volatility
will continue at the fed tightens policy in response to higher inflation. we think they will resolve themselves this year. we hope that all of the stronger economic growth and the robust economic fundamentals -- we are still looking at consumer spending. that will probably lead some of the way back to the equity markets and hopefully it will not derail the current market that we have. >> oil has been a continuing
winner, up about 10% this year. up about 51% last year and a lot of that just driven by demand and also a lot of investors are seeing oil in the wider commodity markets to hedge against inflation. and whether it is short-term or long-term, oil is probably still going to be a good sector to invest in at this point, energy in general. as well as financials. what i was saying last year is we have to start rotating into the value sector, not just energy but also financials, health care, other parts of the market that are not growth at this point. >> what about chinese adrs? that gets tricky. we do have perhaps cheaper valuations but at the same time, the regulatory crackdown and scrutiny seems to be intensifying.
correct the regulatory issues and also a lot of the political issues, if you are in china, staying there, we have to give a longer time horizon. we feel that some of the chinese adrs are bottoming. this is really part of the diversified portfolio. >> what happens to the broader complex? >> investors are pouring in so much money. and the expectation that the chinese government would ease policies. china is such a big part of the end.
we are going to hopefully see the -- see this. this is what we saw with the u.s.. the volatilities. it needs to happen for the economy. this is the right thing to do. the second half, we will start seeing a growth out of the emerging markets out of china. hopefully china will lead the way with that. that will take some time as the policies stabilizes. -- policies stabilize. >> as we go toward that party congress. it was good catching up with you. howard marks says inflation has reached an excessive level.
>> everyone wants a little inflation. every country in the world has been trying to get 2% inflation and they have not been able to do so. a little inflation is good. it keeps everything moving but excessive inflation is not desirable. for the most part, higher inflation, the entire interest rate is higher. that is what is going on right now. >> higher interest rates could also throttle the economy. do you feel that the post-pandemic economy is now in question are at risk? >> i probably asserted that i am not an economist.
i think we will continue to have recovery. but with higher interest rates, all else being equal -- though interest rates are an incredible stimulant. >> when we spoke a few months ago, he described assets as being in and everything bubble. you let interest rates normalize. do you want, does oaktree want jay powell to use this opportunity with inflation staring us in the face to prickly everything bubble? >> i don't think the fed should try to manage that.
i also believe that other than the extremes of overstimulation and hyperinflation or recession, i think the fed should be relatively passive. interest rates have been artificially low. they got us out of the pandemic. a lockdown of the economy. the economy has been very strong. the demand related to that strength is contributing to the inflation they have. i think interest rates have to rise. the economy has to be less stimulated. we are seeing that. more interest rate increases
sooner than previously people have been legibly. -- led to believe. >> that was harold mark speaking to bloomberg. we are watching scott morrison here speaking on the omicron and coronavirus prices. we are now actually watching the treasurer speaking there. we heard earlier from the prime minister. he says the death rate has been among the lowest in the world. there has been an implosion of cases. this is largely in new south wales and there was also south australia and queens land. we heard scott morrison say these are disruptions and vocations of supply chains.
he really try to talk about the fact that the federal government has done everything. there has been a lot of criticism pertaining to the holiday season. that resulted in this big surge in cases, the pressure on the hospital system. this has not been a great start severe in terms of some of the negative headlines. this attracted a lot of criticism when it comes to these controversies with novak djokovic as well. the question is why he was given that in the first place. we believe that they are but we are just going to modify those remarks.
>> here is a quick check of the latest business flash headlines. at&t and verizon are temporarily delaying switching on to cell towers. most companies say they are voluntarily limiting their 5g service around the facility. this after last-minute talks with government officials. president joe biden praised the ruling. the group is positioning themselves for a return to
large-scale m&a. our sources tell us that the world's biggest miner has expanded and is interested in pursuing a transition. the company is in the process -- citigroup is set to be in advanced talks with taiwan's financial programming. they have emerged as the likely buyer after outbidding while that -- rivals. coming up next, took your is under a state of emergency. this is bloomberg. ♪
♪ shery: we are getting the latest with respect to consumer confidence numbers for the month of january. 102 .2, falling from the previous 104.3 which was also a decline. that number is a contraction of 2% following a contraction the previous month of 1%. this is unsurprising given that we've had this time where omicron and covid-19 cases have really just exploded and hit so many parts of the economy
including supply chain issues, logistics problems. the services sector, tourism, hospitality really impacted as well as retail. consumer confidence taking yet another dive. we are hearing from scott martian as well as the treasury, talking up the resilience of economic fundamentals in australia despite concerns that we won't see that strong bounce back from the opening up from the last lockdown because of how badly the omicron cases have hit. not just the hospital system but really have rocked the economy as well. this is what we are seeing when it comes to trading in australia. it has been a lackluster session so far. we are watching some of the nug names after the push higher in energy prices. downside extended by seven tents of 1%. we are also close to session
lows when it comes to trading in new zealand as well. singapore and nikkei futures seeing downside pressure as well. shery: as we head towards the open in tokyo, we are watching these stories. the prime ministers saying that a final decision will be made later wednesday on whether the japanese capital and other parts of the country will go under a state of emergency for three weeks, starting friday. that reigns and the surgeon covid-19 there. toyota saying that it expects to miss its target of marking -- making 9 million cars this year. this given the persistent ship shortages in the industry. japan airlines has now confirmed plans to cancel some u.s. routes due to concerns about interference with the rollout of five t-mobile phone services. let's now get the latest on the handling of the covid situation in japan. the prime minister is calling for unified approach.
>>[speaking japanese] >> the administration's top priority is covid-19 measures. we cannot handle it on our own. i would like everyone to help each other and overcome the situation. we ask for your continued cooperation. shery: so what would a because i emergency look like in japan? >> as we see globally, it's going higher as well. in order to contain the infection of the virus in japan, japan is going to put tokyo under quarantine or a state of emergency for three weeks. what allows that is that the local government will be allowed to request, to limit, making
social gatherings smaller. restaurants and bars will have shortened hours. large events will be asked to require testing before gathering people. and then the government is also thinking about getting a requirement for three weeks. haidi: in terms of the infection numbers, what is that alarming data point? the record high cases. at the same time, we've seen death rates remaining pretty low. >> that's right. japan is seeing a record number of cases with over 30,000. tokyo is seeing 5000 which is
also a record number, up from 30 about a month ago. as you say, severe cases remain fairly low. yeah. we are seeing that the cases are still very mild. shery: we are tracking the fallout of the global supply chain crisis as a result of these pandemic effects. these are the top stories today. nickel is drawing attention from metal exchange. buyers are forced to pay massive premiums for immediately available metal. they are increasing monitoring. toyota says it's unlikely to reach its goal of manufacturing 9 million cars this fiscal year through march due to persistent ship shortages.
the world's biggest automaker is paring back production to 700,000 units in february, 150,000 you are -- units than its original go. europe's car sales slid during december. passenger coverage dropped 22% in december, capping the worst year for european manufacturers since the early 90's. shery: there's a big winner in the supply chain crisis. the crunch has been impossible. shipping rates have surged fivefold. it's looking like elevated prices are going to stay for years. long-term rates are locking in higher prices well into 2023. terminal users can read more about the stories in our newsletter. let's get more now on toyota supply chain challenges and the
impact on production with river davis. what prompted the revision on its guidelines for output when it comes to their cars? river: yes. toyota has been targeting high protection of cars. it was quite ambitious given the current supply chain issues. toyota has been producing record numbers of cars each month actually. that being said, yesterday's message was basically look, we are producing record numbers of cars right now. the trip shortage and other supply issues we are facing right now aren't really getting any better. so we are not able to meet these superhigh targets that we said in the past. of course, the message wasn't as simple as the revision yesterday . they didn't produce a new figure or target of cars to produce this fiscal year. the messaging was more, we have
this really high target of 9 million cars and we are going to try to keep that but it's looking quite difficult at this point in time. shery: why did they set such a high target? river: the backdrop of that is really strong demand for cars. toyota is facing all of the supply chain issues and has been entirely unable to produce the level of demand that it is seeing right now. this is a new thing for toyota. it's an automaker that has had a really strong hold over it supply chain. tracking the activities of its most obscure parts makers. the company was really thrown for a loop earlier this summer when delta began to hit in southeast asia which is a really big production hub for toyota. so around the summer and fall months, toyota had to cut back production significantly.
that being said, in recent months, supply conditions have started to get better for the company and it started producing those record numbers of cars which is why it kept that in bish 9 million car target for the current fiscal year. haidi: river davis there. coming up next on daybreak asia, we speak with henry chong about his plans for asia's first fully regulated digital securities exchange. this is bloomberg. ♪
♪ >> this is daybreak: asia. the pboc has pledged to use more tools of ease credit stress as signs of a property slump worsen. the central bank will roll out additional policies to stabilize growth and make preemptive moves. the poc expected to allow lumbers -- lenders to cut the rate on thursday. inflation has reached an excessive level. the cofounder says that the result of central-bank stimulus used to prop up economies during the pandemic. he says the fed should have been preparing to raise rates months ago.
he shared his strategies with bloomberg, adding that timing is not a winning trade for most investors. >> if you think you're going to be living and inflationary times, you should have things which will do great under that scenario. number one, you might want to have more floating-rate debt than fixed-rate debt because fixed-rate debt goes down when rates go up. you may want to have more properties that you can rent out where you have the ability to increase rent over time. vonnie: south african researchers say the omicron variant appears to cause less severe illness and provide protection against the delta variant. samples from 23 people show that those who previously caught the delta variant could contract omicron but those infected by the omicron strain didn't catch delta. particularly if they had been vaccinated. the study has yet to be peer-reviewed. macau casino law contains on the
specter provisions including clauses limiting arrangements that were used to attract the oak -- vip bettors. operators will need to notify the government before making big financial decisions. the city's chief executive canceled licenses on security grounds. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. haidi: let's take a look at how we are trading when it comes to oil. we are continuing to see it push higher. this as we take a look at wti, trading up by 1.7% as we really continue to see demand remaining extremely strong despite concerns over the china slowdown. oil extending that rally from that 2014 high.
we are getting geopolitical elements in there as well. a key gas line hit by an explosion. that took out supply when it came to it tight market. the global market tightening as a result of these outages and producers including asian buyers paying more premiums for cargo as well. take a look at iron ore. this are what we -- is what we are watching when it comes to the report that came out higher-than-expected. it was positive when it comes to iron ore. certainly when it comes to iron ore exports, supply chain strength despite the disruptions. shery: take a look at crypto assets. we are seeing more stabilization when it comes to bitcoin and either prices after we saw bitcoin really falling below that 40,000 level for the first time since september last year. many analysts thinking that that
40,000 was already a bottom and the only way from here is upwards. we saw the galaxy crypto index also higher for a second consecutive session. an exchange that uses blockchain technology to tokenizer real-world assets like shares, bonds, and funds. is planning to launch an ipo on its own exchange by the end of the quarter. joining us now is henry chong. henry, it's great to have you with us. you are raising capital going through digital assets instead of using the conventional market, the private equity market like other crypto exchanges have done. why? henry: good morning. excited to be here and break this news on bloomberg. asia's first fully licensed and regulated digital financial ecosystem for securities. a unique combination of licenses, technology, and services allows us to provide a platform to issue lists and
trade securities, cryptocurrencies, etc. that's why we are doing an ipo for ourselves today. we wanted to be able to merge the best of the traditional ipo process, the regulatory approval that we need to go through to become a publicly listed company , and all of the investor protections that that brings. lending that with the best of blockchain technology by issuing a token that represents shares, not company. shery: how much clarity do we have in terms of regulation when it comes to what makes a security token? what do you think needs to be done on this front? henry: i think there's a great deal of clarity in the approach that we have taken is to not look at the technology but the underlying asset layer to say, what exactly does this token represent? if it represents a share, my belief is that you should have all the usual security rules that go into that.
for our own ipo, we follow a traditional ipo process. grateful that our regulators have approved that. the only difference is instead of having a piece of paper, we now have a digital token. to me, this needs to be the future of how we merge traditional capital markets and crypto currency markets. you mentioned the fact that a lot of crypto exchanges, listing untraditional -- on traditional stock exchanges, i think it's strange. they are saying digital tokens are the future. on the other hand, listing on a traditional exchange, it's just a bit strange. to me, we need to be able to prove out this process, to show the market that you don't need to complain about regulation, and you can issue a fully regulated asset. these tokens can represent shares in a company.
haidi: is this because we are seeing traditional securities struggling to be able to keep up with? new technology and innovation? ? henry: the crypto markets are very excited. you have new innovations coming every day. the truth about crypto is that it is volatile. these assets, as interesting as they are as a medium of exchange, they don't have the same underlying value as traditional security shares. there exists regulatory frameworks today of how to list . we can use new technology with the blockchain to represent those securities. as i said, being able to merge the best of her traditional ipo process, listing on a fully licensed and -- stock exchange, but also trying to bring in the best of blockchain technology. that's why we've chosen to do
this first ipo for ourselves. prove out the model and also forge the path forward. shery: you've talked about security tokens being issued by cryptocurrency firms. are they akin to more complex securities rather than straightforward shares? if that's the case, there are equally complex securities across traditional asset classes but they are not embraced by retail investors the way that crypto has been. how do you reconcile that? henry: exactly. as exciting as the crypto technology is and it's important to look through to the underlying assets -- as investors, people need to step up and take responsibility and ask, what exactly am i investing in? does it give me any legal or contractual rights? what exactly am i getting as an investment, never mind the technology layer? you are 100% right. a lot of security tokens are
either a digital token matched to a piece of paper somewhere else or they are a token that represents some kind of complex derivative. as interesting as those are, there's a lot to be said for shares, bonds, funds. straightforward securities, we know how those work. we believe we know regulators. that is simplest in terms of investors knowing exactly what they are getting. if investors look at buying into institutional, regulated assets on a regulated platform, this will really open the floodgates for mass adoption. there's a recent study that showed that by 2030, 25% of all publicly listed companies can and will be tokenized, issued as blockchain based tokens. that's a $4 trillion issuance. very excited to be able to kick off that trend with our own knife -- own ipo.
most in more than 18 months after the lender posted a supplies drop in stock trading while compensation costs soared. revenue sank 11%. the trading boom may be starting to fade. benefit costs also surge 33% to $17.7 billion last year as banks wrapped up efforts to retain talent. fort expect to record a gain of $8.2 billion in the fourth quarter on its investment after the electric truck makers blockbuster ipo last year. fort has a 12% stake that was valued at more than $10 billion in early december. microsoft is buying videogame publisher activision blizzard for $69 billion. it will be the largest cash trade since the start of the pandemic at $95 a share. the move is part of microsoft's push into building out for the metaverse. activism have -- has been
engulfed in scandals. the ceo is tied to those reports. shery: look at the stocks that might move. sony is a gaming rival. we've seen adrs fall more than 7%. we are watching game publishers in japan. square enix, speculation driving publishers higher. game publishers and south korea as well. we do have the toyota news. they said they are unlikely to reach their goal of manufacturing 9 million cars this fiscal year through march. given the issues that they are seeing with trip shortages, we will be watching toyota and other carmakers. perhaps chipmakers as well. problems around semiconductor suppliers as well. the world spoke -- biggest automakers have pared back
production in february. take a look at the broader markets. futures trading at the moment. we may see some downside at the open with the asx 200 down 8/10 of 1%. this of course as we have already seen u.s. stocks falling across the board here in the u.s. with some banks tumbling the most in years. disappointing results from goldman. nikkei futures looking to the downside. we've seen the japanese yen falling to a one link low. it's holding at that 114 level. kospi futures under pressure. they are seeing their longest losing streak since november. they are becoming asia's worst-performing national benchmark this year. we will be watching them very closely. haidi: we continue to track the wild wide on commodities. the world gold council
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credit stress. hong kong's travel curbs. the american chamber of commerce joins us this hour. shery: we are seeing broad downside with the open in japan and south korea with materials and industrials leading the decline. we are seeing energy gaining ground given the wti continues to rise in the asian session as well. we are seeing the japanese yen holding at around 01 link -- one week low. we had seen a fall given u.s. yields rising, expectations of fed rate increases. jgb's have been broadly trading in narrow ranges after the boj rate decision not to change much in terms of policy. take a look at the kospi. it continues to lose ground. we are talking about the longest losing streak since november. one reason could be that we are about to see the largest ever ipo offering and south korea with lg energy and that's taking
up demand from the rest of the market. south korea is the worst-performing benchmark this year across asia. we are seeing the korean won losing ground against the u.s. dollar. not a lot of movement in terms of bonds that have been steady after the selloff that we saw last week. shery: we are's -- haidi: we are seeing an interesting picture when it comes to trading in australia. energy and utility names hanging onto green here. we are seeing widespread losses across the rest of the market. we did get negative consumer sentiment numbers in january. household sentiment dropping in response to a surgeon coronavirus cases, exacerbating already existing supply chain problems. clearly turning australian shoppers more cautious as well. we are also watching the impact of the treasury futures extending. we saw the australian 10 year yield hitting above 2% for the first time since late october
when we had that meltdown. when it comes to currencies, a bit of a reaction against the move in the bloomberg dollar index overnight. shery: we've seen the biggest rally since the year start. let's get marcus -- market analysis. it's great to have you with us. you are expecting this to continue for a while? julia: sure. we expect the dollar to stay stronger this year. our range for the broad dollar is between 95 and 98. it is slowly creeping up towards the top end of our range. we think dollar strength is broadly supported by the prospect of more fed normalization. a stronger u.s. economy, especially compared with a few other dm's. most emerging markets, when you
have volatile markets and less positive risk outlets, the taller -- outlooks, the dollar gets higher. we think it will be probably stronger. over the last couple of days, it has been pretty rapid. a lot of hikes at this point. we would not be surprised if the market finds some stabilization, just because of how it moved already. shery: what does that mean for emerging markets? stronger dollar has also meant downside for a lot of these developing nations. we have some asian central banks standing pat, not going along with the fed. what will that mean in terms of their markets? julia: that's a very good question. generally speaking, when the fed is starting to normalize policy rates, economies that are reliant on capital flows, lower
dollar financing rates. that means a lot of emerging markets broadly speaking. so we do think that this puts some pressure on some emerging markets. it means that there central banks may need to bring forward their rate hikes as well. that could happen to a lot of emerging markets this year. that said, it depends on how much an economy has already reopened. it covered how much more room they have to go, if they are helped by the commodity uplift. are they helped by the global export story? are they just relying on domestic services which will probably remain vulnerable to how the covid pandemic pans out? within emerging markets, there are likely going to be quite a bit of differentiation based on the other factors as well. it's not really broad-based
case. there's room to be selectively positive on some emerging markets, particularly in asia, with regards to the big semiconductor names and the names related to industrial operating. haidi: yeah. tell me about those things that you had the opportunity to think about. particularly divergence opportunities between the fed's or pboc and other central banks. julia: sure. within asia, like the exporters. not all of the exporters. we haven't been mindful of higher inflation and the prospect of slower growth in the near term in china. some normalization in the u.s.. the economies that really stand out are the ones that did pretty well last year. taiwan, south korea doing better
this year. we like japan. these are industrial capex stories. that remains something we are positive on globally. we are looking for opportunities within asia in terms of potential domestic reopening stories. so far, it seems to be progressing better than during the delta waves. markets are tightened. if we see more reopening domestically or externally, the market is placed to come back. the market we are cautious about is china offshore. we think the regular trade implications for growth possibility and valuations is still unclear at this point. relatively speaking, within the china assets based, we may offer more of the protection,
especially given that it's mostly invested by domestic investors. they tend to have more sectors rather than technologies that are centered on regulatory changes. haidi: i know that you like japan going into the end of the year. we heard from the boj yesterday. government kuroda comfortable with the weakness in the yen. does that continue to drive positive catalyst for japanese equities? julia: share. we do see the yen weakening versus the dollar this year, potentially to as much as 120. that's a very clear reflection of the diversions and monetary policy between the fed and the boj. that should help to support japanese exporters. we think that japan is a good story in terms of its investment
observations. it seems to be catching up globally. it has good exposure to a lot of the secular growth that we like as well. that said, i think that it's not completely immune from the market volatility we see an underdeveloped markets. especially the u.s.. broadly speaking, as we progress through the year, we think fundamentals for recovery, especially in developed markets, is still pretty solid. policy is still pretty loose. once we get through these volatility spots, we think the and market is still priced to do well. we could see capital coming back to markets like japan which is still quite attractive on earnings and valuations. shery: it was great catching up. take a look at toyota right now. we are seeing broad downside and we are talking about the worst
date in -- for the carmaker after they announced they are unlikely to reach their goals of manufacturing 9 million cars this fiscal year. we continue to see this ship shortage affecting the industry. take a look at sony, falling more than 8%. we were expecting some downside pressure for the stock given that its rival microsoft in the gaming space is planning to buy activision blizzard for $59 billion. we have seen gaming stocks rally but this could pose a new challenge for sony which at the moment is losing ground. a little bit of a mixed picture for other gaming stocks in the region. haidi: let's get to vonnie quinn with the first word headlines. vonnie: the u.s. is said to be reviewing alibaba's cloud business to see if it poses a risk to national security. the investigation is focusing on how the tech giant plants data.
the company is also facing regulatory issues in china where it continues to face good news from beijing over data handling. china's capital is seeing signs of further coronavirus bread with delta and omicron infections. authorities say a person in a different part of the capital tested positive for delta. officials has set up mass testing across the city. the greater tokyo region is set to come under aim -- an emergency from friday. measures are expected to be in place for three weeks as the government tries to wait -- rain and covid cases. the prime minister says the final decision will be made wednesday. local media reports the tokyo plans to raise the virus warning level with more than 5000 cases
on tuesday. the u.k. prime minister boris johnson will face angry lawmakers in parliament during weekly q&a session on wednesday. his own party members are calling for his resignation. he broke lockdown rules. johnson says he was not warned that the parties were against the law. >> i can't believe that we would have gone ahead with an event that people were saying was against the rules or against what we were asking people to do. nobody warned me that it was against the rules. i would remember that. vonnie: global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. haidi: still ahead, we speak to the american chamber of commerce about the biggest challenges
♪ ♪ shery: take a look at some of those chain -- chinese apis. they were brought down by pressure on reports that washington is probing the potential national security risk of alibaba's cloud business that has weighed on sentiment. it doesn't help that we are seeing a tech selloff so investors are shifting away from growth stocks. we continue to see the index fall below the 8700 level. we have an interesting chart to show you. this will be the nominal spread between chinese and u.s. bonds,
now below 100 basis time -- points. that was after the pboc pledged to use more policy tools. it's another sign of the policy divergence between china central bank and the fed which continues to move towards tightening. the chinese 10 year yield is at the lowest since june 2020 while treasury yields are back to pre-pandemic highs. haidi: the pboc is pledging to do more to spur -- stir the economy. kathleen hays is here with what the pboc deputy governor told reporters in beijing. how strong was the messaging from the pboc and what sort of commitments are we gauging here? kathleen: it's a strong message. the deputy governor went out of his way to make certain statements at a press conference. you don't just walk into a press conference without having
thought very carefully about what kind of message you want to send. it comes at a time when the property market is facing financial contagion. those are serious words. funding starts drying up for one property developer. even the healthier ones are starting to see their bond yields -- bond prices plummet. this is the kind of thing they're worried about. what the deputy governor said was that the goal is financial stability. they must move with force. the phrase that really stood out in his opening remarks, they want to stake -- take set -- steps to open their toolbox wider, maintain money supply and avoid a collapsing credit. i think that's a pretty strong message. this comes just one day after country garden holdings had their worst one day ever.
there bonds now are down to 62 on the dollar. their stock price hit a five year low. this is what is concerning. that's the largest property developer in terms of sales and it was considered to be a pretty good financial shape. contagion washing over everybody driving the pboc. what else does the deputy governor think they will be doing? they should be rolling out policies to stabilize economic growth. make this a preemptive move, don't sit back, be aggressive, address market concerns in a timely way, stay ahead of the market curve. again, they are ready to act and they are ready to act forcefully. this is the kind of thing that people are waiting for now. the question is, what exactly are they going to do? can they stabilize something that represents about one third of their economy? shery: kathleen hays watching
♪ >> they defy gravity. the average person probably doesn't get affected by the goldman sachs bonuses. the average person is worried about more what it costs to buy food or a car or get gasoline. those prices are up and people have sticker shock when they go to get gasoline or the supermarket. shery: we have breaking news at
the moment. we are hearing from dentyne hong kong filing their winding up petition of the company, filing their provisional liquidation that they will imminently be unable to pay debt as they fall due. they remain suspended until further notice. this is the troubled cruise operator that has warned already that they may be seeking court assistance to safeguard their assets mistaking that their cash balances are expected to run out around the end of january. their application for provisional liquidation appointment is ongoing. this as we continue to see the pressure on this cruise operator , given the covid-19 crisis. broadening chinese outbreaks right now. standard chartered saying that its third-quarter expenses were up 5% due to a rising
performance from their ceo. he spoke to bloomberg about talent retention efforts. >> it's a big challenge. we know that the great resignation is touching every industry. i'm driving this. lifestyle changes on the back of the pandemic? the world is flush with cash and that cash is looking for greater talent? standard chartered, we are above the trough levels. 2021 was back to normal in terms of levels of attrition. we needed to pay up but also found ways to save money in other areas. then our expenses were less. we haven't reported earnings yet. i would hope that we could continue with that trend. >> how sticky are these forces right now? how sticky do they think they are?
there's a hope that this is a one-off story. how sticky do you think it is? >> they are as sticky as the profits are sticky. it's been an extraordinary year in some aspects of the market. we sought from u.s. banks that already reported. investment banks have been fantastic. is that going to carry on? the fixed income business is doing relatively well but not as well as it did during the pandemic. profits are up. that's the way it works on wall street. >> how do you lift revenue, the share price? you've had a nice rebound recently. you are nowhere near the pandemic level with an em exposure that you have, with the hong kong exposure that you have , what is the strategy to jumpstart growth? >> that's a good question. we are releasing earnings in about a month. part of that will be sharing our story with how we accomplished
exactly that. on the one hand, emerging markets is out of favor with investors. in particular with equity investors. that has an impact on our share price. on the other hand, these are the drivers of global economic growth. look at china. they are at 4% gdp growth in the fourth quarter. that's pretty tough relative to the 7% that we've become accustomed to. 4% is still pretty good in the global context. especially given the challenges that china faced in the early part of the year. that will extend across asia as we work through the pandemic effects. overall, the way that we list properties is can -- continue to grow as we have been. we have been growing consistently for seven years. the impact of low interest rates has a high impact on the banking industry. >> your website says, here for
good. great. there's no banker more qualified to tell us about the potential move from hong kong to singapore. can you predict western banks, the larger commercial banks will be forced to jettison hong kong for other geographies including singapore? >> i don't think so. hong kong has been the entry point to china. it's the place that capital goes into and out of china. it is a two-way street. it flows into bonds in china. less so into equity. that will balance out over time. there's been a substantial flow of chinese money out. that's going to accelerate. that's going through hong kong.
hong kong is solidified. it's in the strong's position it has ever been. haidi: that's bill winters speaking with bloomberg's tom keene and jonathan ferro. let's get you a look at business flash headlines this hour. goldman sachs shares slumping the most in more than 18 months. a surprise drop in stock trading while compensation costs soared. revenue sank 11% in a sign of the covid pandemic training -- trading boom. compensation also surged to 33%. $17.7 billion last year. at&t temporarily delaying switching on hundreds of 5g cell towers near u.s. airports. they say they are voluntarily limiting their 5g services after last-minute talks with governor fisher and presenting -- coming
up next, hong kong -- hong kong's rig -- travel restrictions are a top concern for american businesses. and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.
♪ vonnie: this is daybreak asia. the pboc using more tools to spur the economy and ease credit stress. the central bank says a rollout of additional policy to save live growth and make preemptive moves. another rrr rate cut is narrowing. economists except the pboc to allow lenders to cut their rate on thursday. the full draft of macau casino law contains unexpected provisions. these include junket
arrangements that were used to attract vip bettors. operators will need to notify the government before making big financial decisions. the chief executive -- beijing is seeking to recast macau as a leisure and tourism hub. the biden ministrations program to send free covid test u.s. households has informally launch. unofficial launch on wednesday. initial requests are expected to be delivered in 12 days. global news -- global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg.. shery: hong kong has ordered the culling of thousands of small analysts -- animals. imported has -- hamsters may
have spread covid-19 to humans. yvonne man joins us from hong kong. what's the latest? yvonne: this is escalating. quite a twist to the whole covid story in hong kong. what we are hearing is that all pet shops that are selling hamsters have been shut for now. also, about 100 or so people who visited this one pet store have been sent to quarantine camps. 2000 small mammals, including chinchillas and rabbits, are going to be cold. imports of these animals have been suspended so far. this started after nearly a dozen hamsters imported from the netherlands was sold at this pet store and tested positive for the delta variant. this is a variant that we have not seen in hong kong locally for months now. now people tied to that pet
store have tested positive as well. a worker as well as a customer. this is quite a rare case. we've heard of cases where humans have passed covid to pets before but never the other way around. we did hear from the secretary of food and safety, saying this is why they have to be prudent, they are taking preventative measures right now and not ruling out any kind of transmission. once again, this hamster crackdown is just another chapter and how they try to stamp out covid and these already very strict curbs in the city. yesterday, you had hsbc warning its traders of some of the main risks of keeping business going here. his hong kong's strict quarantine policy. in a memo to staff, they said that the risk is not really about being infected by covid-19. more portly, being first, second
level close contacts and be taken to go over meant quarantine for 14 days. they are now splitting their trading floor among that global market decision into teams as a precaution. haidi: it's all about managing the risks there. the latest in hong kong. stringent travel restrictions are the biggest challenge for american businesses in the city. over taking hot button issues. let's bring in power joseph. it feels like a long time ago that we were talking about protests and the political uncertainty and tension relating to china as being the big issue for businesses. what did the survey in the most recent iteration tell us a -- about the biggest worries now? tara: the strict quarantine
rules and the inability for people to travel, and the fear of getting the government quarantine camp, rate is the top concerns. this is not new. you mentioned that you were talking before about protests. we've been talking for a very long time about the stringent quarantine measures. the fact that there seems to be no light at the end of the tunnel is adding to the stress and strain of doing business in hong kong. on the other cited things however, executives are telling us in the survey that there's a lot of business to be done in hong kong. it's a gal -- delicate dance between thinking it out in order to do the business that matters, especially in sectors like financial services, and really worrying about being disconnected with the rest of the world.
haidi: there's also been a lot of frustration being expressed in terms of just how far they've gotten when it comes to trying to consult with the government about these measures. tara: that's right. this is something relatively new in the surveys that we are seeing. a lot of the companies who responded to the survey said they felt that the government was unconcerned or not caring about hong kong as an international business center or really focused at all on international companies. this is strange because hong kong has always been seen as a huge international center. it really stood out as a place where companies and the government connected regularly because it is such a commercially driven city. that is something new. hopefully the government will respond to this. we spoke to them about it yesterday.
there's just a sense that the government doesn't care. shery: in this environment, what has been the biggest change that you've seen in business operations among your members? given the government's drive to keep covid zero going. tara: obviously, many more people are working from home. we are seeing people going away and then working remotely for long periods of time. we are seeing offices left off. we are seeing new messages for recruiting as well. one of the big fallout from the inability to travel is that the hiring outlook is becoming extremely difficult. bringing in talent to hong kong has become a major issue. so some of these executives that we normally come into hong kong, may hired and already being hired in other areas. in addition to that, we will see more executives from china start
to take over positions in hong kong. this is something that people expect will start to come sooner rather than later and probably change the complexion of the professional services class in hong kong in the years to come. haidi: before the pandemic, hong kong was dealing with pro-democracy protests and tensions. how do your members feel about the national security laws as well as the rule in the city? tara: yeah. not surprisingly, there is concern about the national security law. even though people have adjusted to it at this point. one of the big issues around that is the loss of talent. many hong kong managers leaving hong kong and people losing some of their best staff during that time. also, worries about data
security and press freedom and the transparency of data coming along with the national security law. more surprisingly, and i think it's one of the first times we've seen it, is a fear now of confidence issues over rule of law. as everyone knows, it's a hallmark of the stability of hong kong. people can't put a finger on it but they are starting to say, they lack confidence in the rule of law and they are worried about it going forward. this is something to really keep an eye on. of course, it's related to the national security law. some of the effects of putting in a different judge for national security, etc. hopefully we won't seal -- the real cases in business law that impinge on the rule of law as we know it in hong kong. clearly, it's a growing concern.
haidi: do we see that bifurcation in terms of the companies that are committed to staying in hong kong? there's a commitment in terms of their presence. is that different to seeing companies that are based in hong kong but are perhaps more broadly fake -- focused in asia because of that inability to really travel into business elsewhere? tara: yes. as we were just hearing from the ceo that you had on shortly before me, hong kong is very important. especially because of its proximity to mainland china and because of the development of the financial services market. there's no sense that companies really feel they want to walk away from a market that's huge and growing. it's not just in the financial services sector. its logistics, its retail, it's
real estate, it's insurance opportunities in the greater bay area where companies are already present. what we may see and are starting to see is companies that don't need to be there or independent research or tech companies that don't need to be there, looking at other ways to work or spreading their staff out into different areas. bifurcation would be a good way to put it. but for many companies, it's a delicate dance. hong kong has a lot to offer in terms of the mainland china market, in terms of what is still a great tax regime and infrastructure. it's hard to figure out how to stick their and deal with all of the risks that are growing. haidi: good catching up with you. shery: oil extending gains from
something around 4%. that is still double what we've had. a lot of people are nervous about it. people are beginning to increase prices and wonder whether their customers will go away or go along with these prices. >> if you think you are going to be living and inflationary times, you should have things which will do great well under that scenario. you might want to have more floating-rate debt than fixed-rate debt because fixed-rate debt goes down when rates go up. you may want to have more properties that you can rent out where you have the ability to increase rent over time. shery: big names weighing in on inflation and searching oil prices that will not help with those price pressures. we are seeing wti pushing towards $87 a barrel. an explosion and fire at a key pipeline is causing crude to
extend gains in asia trading. su keenan joins us with the latest. we already saw futures soared to a seven-year high in new york and london trading. what do we know about the extent of the price gains? su: we know that this kind of explosion we are seeing on a key pipeline in the mideast fuels concerns about increasing geopolitical tensions as well as concerns about supply disruptions. that is supportive of prices that we are now seeing at the highest in seven years. what we are hearing from the pipeline operators is that the fire in this turkey iraq pipeline is now under control because the blast remains unknown. it will be brought back online at some point. meanwhile, we are seeing prices continue to shoot higher. wax texas intermediate now at about the $87 mark and that's after a 2% gain in a robust new
york session. upward momentum. let's take a look at the chart. brent crude has been on fire at the highest level since 2014. opec is expecting the market to remain well supported by robust demand and they are getting validation of their view that ron would not dent demand. that has been on target so far. you can really see how oil has been running higher. opec-plus's monthly report remains bullish in his views that the market strength will persist. haidi: goldman's view that oil could hit $100 later this year. is that getting a lot of attention? su: they are saying it could hit $100 in the third quarter because of all the demand we are seeing for brent crude. robust fundamentals.
it's reversing the fact that we saw oil prices collapsed last year. you can see that point where oil went below zero dollars. all of that is really turned around. oils highest is flashing and overboard signal. there are investors who believe we could see oil prices pull back a little bit in new york trading. back to you. shery: su keenan there. coming up, sony is plunging. we continue to get the latest on that stock. microsoft was a blockbuster deal for activision blizzard. we tell you how it changes competition on the gaming landscape. this is bloomberg. ♪
is? how much uncertainty is there still over this purchase by microsoft? su: -- >> yes. it may very well be. in the immediate term, we are talking about a big portfolio of highly successful games. it strength has been built on exclusive items to the playstation platform. the company is selling every single playstation 5 console that it's able to build. looking long-term, what this says to us is that microsoft's spending spree to make its xbox games past service a success is bottomless. it has appetite that stretches into the tens of billions of dollars. that's what it signals with this acquisition. the company is going to maintain that aggressive posture and put more pressure.
sony will probably match that, maybe seek mergers and acquisitions of its own. shery: how do you see the microsoft deal unfolding, given that activision comes with a lot of baggage? >> it does indeed. one of the things, the baggage lowered activision's price and made it more affordable for somebody like microsoft to take it over. microsoft itself has had issues with its xbox game division, about being sexist. the company has worked through those issues. it has address them directly. it has shown that it can address those cultural issues that span across the games industry. we can take some solace from that, that the company can work through it. if anything, the regulatory aspect might be more interesting here. activision is already a huge game share.
they may want to take a closer look at this deal and what it means in terms of competition across the industry. shery: a look at microsoft and sony as well. here's a quick check of the latest business flash headlines. bhp group is positioning itself a return to large-scale m&a. the world's biggest miner has expanded its steelmaking team and is interested in pursuing a transformational acquisition. they are evaluating rivals including glencore. there's no indication that it's preparing any bids. the company is in the process of exiting oil and gas and has plans to collapse its london listing. citigroup is said to be in advanced talks with taiwan for sale of its consumer business in mainland china. sources say they have emerged as the likeliest buyer after a bidding rivalry and an agreement could be signed in the coming weeks. we are told citigroup's assets could be valued at about $1.5
billion. we are just over half an hour away from the open in hong kong and mainland china. tech once again and focus after voters report that washington is looking into alibaba's cloud business, sparking another selloff in chinese listed firms. let's cross to sophie a heart kind. are we expecting more downside? chinese stocks can't get a break. sophia: we've moved from winter by the dip two, this is something that whenever traders start to feel like the worst is over for china tech, there is news that really hammers the sector. the thing here is that the biden administration is looking at alibaba's cloud services business which is the world's largest for national security concerns. this is when the company is
already facing a number of regulatory pressures in china. really caught between the two countries. the shares did worse on a day where u.s. tech was sold off because of concerns that higher rates in the u.s. will trigger selling in the most valued or overvalued parts of the market. really not looking like a good time to buy the dip for the sector. haidi: we are tracking the market impact after the news that hong kong ordered the coaling of 100 hamsters. this is the latest action being taken in the fight against covid. what do we expect in terms of a reaction? sophia: there was a lot of joking around on social media yesterday. obviously, the government eradicating on hamsters when the
rest of the world is looking at how to live with the virus. it can be a funny story. i mean, it's no joke. the fact that the government is so serious about covid zero has a significant impact to the economic outlook for the city. economists forecasting growth will slow to 2.4% from a 3% forecast this year. this is a time when the hkma is essentially forced to follow the fed's tightening cycle. slower economic outlook in a tightening environment is something that is not a good environment for the city financial market. haidi: let's take a look at the stocks we are watching ahead of the open. we will keep a kenai -- kenai on
>> good morning from hong kong where it's not :00 a.m. and in shanghai. welcome to "bloomberg markets: china open." you are watching "bloomberg markets: china open." . let's get to our top stories. yvonne: our top story this morning, treasury yields climb on rising speculation that central banks will boost rates.