>> it is just making sure we

understand that we are working with the public service in particular to make sure our public services are delivering outcomes and results. a lot of it is getting our economics rights of people are encouraged to take on opportunity and go and take a risk and start a business and to grow a business because they have certainty from the government about what will be in place. there are a number of things we have to work on. the economic space is really about improving productivity. and it is social investment to help those less fortunate so they can lift up and participate. >> the geopolitical risk, is that a big one for next year? >> it has certainly become a more volatile and ambiguous space. a lot more contested and competitive in the pacific region. it is in australia and new zealand's interest to make sure we have peace, stability and prosperity. >> prime minister, thank you so

much, and welcome again to australia. that is new zealand's prime minister there right here in the bloomberg office in sydney. paul: the critical error. you never confuse new zealand with australia, that is a cardinal sin. we've just opened for trade in australia. we currently have the asx looking a little flat. no surprise that we have a staggered open so we'll have a closer look at what is going on when we get moving. not a great bit of movement in the yields. quite a bit of dollar weakness at the moment against all the g10 basket of currencies over the exception of the yen. speaking of japan, let's look at how we are setting up for the open there at the top of the next hour. futures currently in positive territory. seeing the yen weakened right now.

did not get a lot of guidance from the pdo say -- pboc yesterday. the market being left to make up its own mind. shery: which is why we have continued to see the japanese yen plunge. and we have seen the dollar fall but the yen was the only one of the g10 that were falling together with the greenback. take a look at how u.s. futures are opening because we are seeing downside pressure after we saw u.s. stocks gaining ground. the dow saw another record high. s&p 500 approaching its all-time high. every sector was in the green. we are really watching that fed commentary pushing back against early rate cut expectations. but it was really about the treasury space. investors are trying to figure out where the fed is going from here. pretty mixed. the two-year yield fell towards that 4.4% level. not a lot of movement. where we saw clear movement was in the oil space. we continued to see that upside

in oil -- in asian trading. more companies avoiding the red sea on that violence and the spike of attacks we have seen from houthi rebels. we will continue to watch that space. but really, it is all to do with the fed. and that pushback we continue to hear after the dovish turn that we heard from the fomc statement last week. paul: that's right. those dots indicating we might get up to three cuts in 2024, at least that is what some of the federal reserve members are thinking. raphael bostic among the fed speakers offering some clarity. he's saying there is no urgency to get lower rates. he sees a couple of cuts but not until the second half. he emphasizes that there is no active discussion on this, still a ton of uncertainty. let's have a listen to what he had to say. >> i think inflation will come down relatively slowly the next

six months, which means they will not be urgency for us to pull off of our restrictive stance. shery: really not surprised why we heard that bloomberg opinion columnist mohamed el-erian talk about the fed having a communication problem. you heard that pushback coming from bostick. at the same time we had markets supported by commentary about how we are indicating a rate cut if inflation continues to fall. so that was a little bit of a more dovish commentary again coming from the richmond fed president. paul: for a little more on this let's get to our next guest, elfreda jonker, client portfolio manager at alphinity investment management. i want to start with this sort of disconnect we are seeing between what the fed is saying, what the market thinks is going to happen. do think the market is getting ahead of itself in terms of rate cuts, and what is your expectation about the path? elfreda: i do think the market is definitely preferring to look through any's shorter -- any

shorter-term pressures we are potentially facing. i think we are looking into next year and given the fact equity markets have now rallied quite a bit and multiples have expanded, it is going to be very important year to ensure you look at companies where you have not seen too much into those multiples as well as support from earnings growth as well. paul: raphael bostic talking about all the uncertainty, risks to inflation. we have seen rising oil prices. in your view what are the risks to inflation, or has the fed pulled off a soft landing in the plan is taxiing to the gate? elfreda: the narrative of soft landing has changed to soft landed. if you look at the inflation outlook, it definitely seems to be disinflation across all the major economies. but one of the biggest risks for next year is a risk of a policy area. at this point in time, oil

prices have started to spike again. and we have not really seen wages under control yet. so definitely some concerns that the market is sinking ahead and looking through a lot of the risks we need to keep in mind if we look into 2024. paul: if we can talk about how you are positioning at the moment, you say you are becoming a little less defensive. where are you looking to add at the moment? elfreda: over the last six months we have continuously invested in high-quality growth companies at reasonable valuations and we are slowly but surely increasing -- reducing our defensive exposure for preference and some of the cyclical names. i think over the last year, we all know the max has accounted for the majority of returns. interesting to see that has reduced from 70% at the end of the member to closer to 60% 20 days later. so we think this is an

environment with a broadening of the market, things are starting to look up for next year. it is a time to act at cyclical exposure, so there are a few interesting names popping up across a number of different sectors that we think really add to a portfolio into next year besides just big tech. paul: are you able to share some of those names with us? elfreda: two of the high conviction names we have recently added to our portfolios, one is -- the second largest chipmaker began samsung -- beyond samsung. that is a key beneficiary of the ai train. ai is accelerating the demand for ai service by 50%. that means the demand for memory chips increases 80% to 90%. so that really is at the start of a multiyear megatrend for companies like sk hynix. another one we like a lot is a

more cyclical name in the industrial space. it is global industrial of aerospace systems. particularly with the increase of flight volumes they are seeing a lot of demand for products and they have a very strong ballasts sheet with a lot of optionality for additional m&a to come through. so those are two names we think can add a lot to a diversified portfolio which we think is really necessary into 2024. paul: one area you can find excellent value at the moment is china. i am wondering, are you looking to increase or decrease your china exposure over the next 12 months? elfreda: we currently don't have any direct exposure to china. if you look at what has happened this year it has been a very big disappointment. we all hope for much better growth out of china that we have seen. we are taking a look at some of the underlying companies but at this point in time, we are concerned we are getting a little bit too late as far as

support from the government. but the art clearly committed to increase the growth rate. for us, our preference is still to find global conglomerates with exposure to china rather than investing directly into the chinese equity market. paul: elfreda jonker, client portfolio manager at alphinity investment, thank you for joining us. shery: still ahead, we will speak with a number of japan's opposition is a flush fund scandal sends prime minister fumio because she to's ratings to new lows -- fumio kishida's ratings to new lows. this is bloomberg. ♪

(adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

hey, brent! if you had to choose, would you watch paint dry or compare benefits plans? compare benefits. gusto makes it easier to find the right plan for my team. i think i'm going to need new glasses. no problem. you're covered. choose benefits without the mess.

shery: breaking news. we are hearing from the colorado supreme court that it has trump disqualified from its 2024 ballot. the court has now paulist a ruling until january 4 for the -- paused a ruling -- trump is disqualified from the 2024 ballot. the court is saying the insert rate -- insurrection clause a trump candidacy, at least when it comes to colorado. a group of voters in the state had blocked -- had sued to block him. the colorado supreme court has disqualified the former president from the 2024 ballot. it has paused its ruling until january 4 to allow for appeal. paul: the u.s. and its allies

have said to be considering military strikes against houthi rebels to deter attacks in the red sea. we're also told the u.s. still wants diplomacy to work and is not decided to go ahead with strikes. a wave of houthi attacks has prompted major shipping companies to reroute vessels around the southern tip of africa. shery: su keenan is here with me in the new york studio. of course we have been watching these detours from ships in the red sea because of all these concerns about that is really adding a ton of costs. su: at least $1 million to route around the tip of africa, a delay of seven to 10 days, and more and more companies are doing this. they are reporting that multiple attacks are now coming on almost a daily basis in the red sea. the u.s. is putting together a task force to protect vessels

but it is not clear how that will work out. meanwhile, a german container carrier has decided it is too unsafe to put their ships and staff through. they said they tried to push through as long as they could and had to make their first assessment the middle of that -- last week. they decided to continue but one of their ships was attacked friday. they decided to pause and they are now rerouting ships as of yesterday, hoping the current crisis is short-lived. let's listen. >> at the moment i would still like to think that this is not going to last for very long and that may still mean there will be a spike in freight rates. but hopefully for not a long time. su: he says he does see shipping rates spiking and since the attacks began, their own company has seen the number of requests for bookings increase

dramatically because of uncertainty. people are starting to rapidly book shipments so there is a potential for major backlogs and bottlenecks going forward. although he remains hopeful that he says this crisis is short-lived. the impact on shipping rates is already starting to impact the price of oil. paul: yeah. new york trade and oil futures rising the highest in two weeks. where do we had from here? su: we are seeing oil trading extend those gains in asia trading and there is a huge differential now between west texas intermediate and brent crude which has also been on a tear. this after what we saw was seven straight weeks of declines, last week being the first small gain and now we are off to the races once again. thcalation in attacks has bolster this rebound. prices had fallen to a five-month low on concerns about oversupply.

that continues to be the overarching concern. we have a lot of technical gauges that traders look at, signaling oversupply. traders do not see this bump in price as lasting, although it is important to point out it is the most tangible disruption of energy flows since the israel hamas war began. 8% of the world's crude flows through the suez canal and some analysts are looking at the situation saying it is really complicated, so it is not that easy to say oh, this will just be a temporary blip in price. meanwhile, the pentagon has not yet detailed what his plans are. they are planning to put together a special task force to somehow protect commercial container ships in that area. and there are many shippers that say if they return through the suez canal, they would like to do that as a convoy. very much an evolving situation. paul: su keenan there.

other geopolitical stories we are tracking, israeli president issac herzog says a fresh pause in fighting in gaza is possible, in return for more hostages held by hamas. they still hold about 129 people that it abducted from israel during its attack october 7. i must said in a state -- hamas said it is categorically rejecting the exchange while the attack is ongoing. ukrainian president volodymyr zelenskyy says his troops will hold off russia's advance, as their military faces looming ammunition shortages. speaking at a year end press conference, zelenskyy expressed conference that the promise of u.s. tied up in congress will be delivered. he also acknowledged a return of donald trump to the white house could harm the war effort. a top u.s. defense official says china has stopped dangerous military actions in the air and sea in recent weeks.

it suggests relations between the two are improving after president biden met with xi jinping in november. tensions still remain over beijing's approach to the south china sea. taiwan's ruling parties president shall candidate has seen his polling lead narrow at of next month's vote. the ddp pick had support of 35% respondents, the second-place was 31%. in august he had a lead of more than 25 percentage point. they will vote january 13. you can get more on a special report featuring bloomberg's exclusive interviews with all three president of candidates. you can catch it on bloomberg tv every thursday in asia, wednesday in the u.s., and also on youtube. plenty more to come on daybreak asia. this is bloomberg. ♪

shery: we are getting the lid this lines from the chicago fed president speaking on domestic media saying the markets perhaps got a little ahead of itself on cuts. he is also saying that the markets got a little ahead of the cuts and that the fed should not be bullied by what the markets want. echoing a bloomberg opinion columnist saying the fed has a communication problem and is being bullied. he said he was surprised by the outsized market reaction to quarterly projections last debate. he is now elaborating the fed should not be bullied by what the markets want and at the markets got a little ahead of itself on cuts.

when it comes to the fed's performance on the economy were reheard -- we heard from the bank of america ceo that fed officials will be able to engineer a soft landing. take a listen. >> we have the number one research team in the business that do a great job. they basically shifted yesterday literally and moved to more rate cuts in 2024. the real key is what they see in the economy and they have basically moved from a .5% growth rate up above 1%. they have softened their soft landing. and by doing that they have said when the fed is seeing inflation slow as fast as it is they think we get too low two -- they are 200 basis point rate cuts, 100 next year and 125, which still leaves you 3.5%.

the last time we were at that rate structure was 18 years ago. we have had a long stretch of very low rates except for what happened very recently. that fueled a lot of activity and now it is more structurally sound. we have to normalize this because we are seeing the economy and inflation come in. we're doing everything we can see that consumer spending is consistent with a 2% inflation economy. that level of spending growth is where it was when the fed raised rates. >> are you concerned that the market is perhaps overreacting? >> he has this challenge that the fed was late to cutting off inflation and now it has to be careful to not be late. the market will ebb and flow. people have to be careful. this is trading talk. this is the 10 year moving between 390, 450, 470. it is not the real economy. the real economy is still very restrictive and coming through

the system. against that, we still have a lot of stimulus coming through the system. that's the tug-of-war he is up against. overall, we believe he has engineered a soft landing. paul: bank of america chairman and ceo there speaking with bloomberg's david westin. wall street is planning another tepid bonus season, capping a dramatic deal of bank failures and job cuts. adam haigh has the details. what does this tell us about a year that has been not great for dealmaking? adam: separating in some sense the winners and the losers. because we are seeing quite a difference across wall street. it is not universal here. let's look at j.p. morgan and citigroup. we expect that their bonuses will be largely flat on 2022 levels. no big changes there. but at goldman and bank of

america we are expecting a slight sweetening of payouts and of course traders and high-performing traders getting the bulk of that increase in their compensation. so yes, overall still a very tough environment. remember the context of how we came into the pandemic with a huge increase over the next 12 months of activity and deal flow, but also of that wall for talent. that has still softened into last year but also the earlier part of this year. now you're starting to see a little bit of a change. you are seeing expectations going into next year with the u.s. economy in relatively good shape. no one forecasting any really serious hard landing. there may be a situation where banks are in a place where they need to retain their top people. they cannot afford at this point in the cycle to be losing some of the top traders. in that case he might need to go a little further with compensation at this point to

get in front of it six, 12 months from now. shery: does the outlook into next year look materially different for these banks? are cost cuts going to be front and center again? adam: of course to a large extent it depends on what happens to benchmark interest rates. banks are in a decent position having gone through some fairly sizable cost-cutting measures across the board. as i was saying to paul, it is that last point about balancing the need to retain your top talent going into a pretty tough looking environment, against wanting to spend too much and lift your overall headcount cost. that is a tricky balancing act and what we are seeing at goldman and bank of america is they are leaning into, let's up that compensation a little to make sure we get the best people we possibly can going into next year. shery: adam haigh there with the latest on the banking sector.

we actually have the bk ask index gaining ground today to the highest level in about a week. take a look at the currency markets because we have the dollar falling in the new york session against every g10 peer except the japanese yen. not surprising, that slumping, after the boj seemed to be in no hurry to remove that negative interest rate policy. the offshore yuan also holding steady. . this is bloomberg. ♪

paul: just getting an alert on the bloomberg terminal out of australia. the leading index, showing a very modest expansion, .7%, a bit of a reversal on the modest

contraction we saw on the month of october. forecasting slightly better growth for australia. the recent midyear fiscal update and the reserve bank of australia statement of monetary policy did see somewhat sluggish growth in australia. but the westpac index coming of little higher with an overall reading of 97.2. new zealand's prime minister is set to discuss the august security pact when he meets with his australian counterpart in sydney later. he spoke exclusively with arco anchor haidi stroud-watts about his administration's plans for security and the economy just moments ago. >> we will obviously have those conversations and continue to understand where that is going and what the opportunities may be for new zealand and obviously we will look at that. haidi: the you think the changing landscape makes more sense now? >> we have always been open to

exploring under the previous government and my government as well. it is a question of making sure it is about new technologies and how it gets shaped up and if there is an opportunity for new zealand. haidi: the previous labor government try to somewhat mollify the relationship with china. will you take a tougher position? >> our position is pretty clear at which is we acknowledge we have a large trading relationship with china, but we also have a long-standing relationship that has been in place for more than 50 years. what we do is consistently raise concerns and differences we may have with china in terms of different values we may have. we do that consistently and well, i think, under successive governments. it is also a relationship we have had for a long time and we are going to continue to make sure that continues. haidi: how do you balance that key trading and diplomatic relationship, and is there more

leverage now that we see that serious economic slowdown in china? >> new zealand is a country of 5 million people. we are a trading country. for us to do well in the world we need to do business with everyone around the world. we think there is a world of tremendous opportunities. yes, we have an important relationship but we see a huge opportunity for new zealand, be it in southeast asia, india, or u.k. the message is very clear. new zealand is under new management, we are open for business, and we are out in the world hustling because we to build relationships with everyone. we understand are trading and security components. haidi: the rbnz has been at the forefront of rate hikes. there is the potential risk that more needs to be done. some of that comes from immigration. we have seen immigration reform measures announced here. is that something you are considering? >> we're are in a place where we have had 129,000 net migration

to new zealand in the last year. i daresay it is not sustainable ultimately. we want to make sure our immigration levels are consistent with their economic agenda but also we have the infrastructure to support it. new zealand also had a government that increased government spending by 80%, that hired 15,000 were bureaucrats and delivered -- collected $100 million a day more in tax and you delivered more -- it has driven domestic inflation, which raised interest rates, slowed our economy, and rose unemployment. my government is going to be incredibly focused on dealing with the number one job, to tackle inflation and get it below 3% again. so we have a single-minded focus on doing that. if we can lower inflation, we lower the interest rates, keep people employed. that is been -- making sure we rebuild the economy, lower the cost of living. shery: new zealand's prime minister there speaking to haidi

stroud-watts in sydney. here in the u.s., colorado's supreme court has disqualified former president trump from the 2024 ballot under the constitution's insurrection clause. colorado is the first state to disqualify the former president trump the 2024 election. for more, jodi schneider joins us from washington. the colorado court now saying president trump engaged in insurrection. this provision of the 14th amendment though is still relatively untested, right? so what is the significance of this ruling? jodi: it will be the first time that a court has ruled, and this is the colorado supreme court, that a presidential candidate would be disqualified from the ballot using this particular clause. it's section three of the 14th amendment to the u.s. constitution that has never been used before in this way. it basically says someone who

has either incited an insurrection or aided and abetted others who were trying to incite an insurrection is disqualified, cannot run for president. this is the first time it has been used. this is the colorado supreme court. it is almost certain that this case will now go to the highest court, the u.s. supreme court. president trump's lawyers even before the ruling came down said that if any state was to do this they would appeal right away to the supreme court, and we will be sure they will do so. the question then is how the court would rule. the concern for the former president and his advisers is that if this was allowed to stand, may be other states would also do this. we are just about to enter the primary season, the iowa caucus is less than a month away, and one week later is the new hampshire primary. these are states in which the

former president is expected to do very well with republican voters. he is well ahead in the polls. but the concern would be if there are states down the road where he would be disqualified, could that effect balloting as well. shery: jodi schneider there with the breaking news out of the u.s. as we continue to see the political drama unfold. we are seeing another political news unfolding in japan where tokyo prosecutors investigating is slush fund scandal have raided the headquarters of two factions of the ruling liberal democratic government. approval ratings have tumbled to the lowest for any administration since 1947. can fragmented opposition turn this into political gains? joining us is harumi yoshida, a lower house member for the constitutional democratic party. thank you very much for your time. let me start by asking you how

you would really characterize this ongoing political scandal the prime minister is facing. a lot of people have compared it to the recruit insider scandal of the late 1980's that led to that prime minister to resign. how bad is it for prime minister kishida right now? harumi: i think the public feels this is even a bigger scandal than the one that happened 35 years ago. surely, yesterday i stand in my town, my constituency, and everything i hear is they are angry, knowing that the cost of living is going up. however, the politicians are abusing the system, making their own money. so the public are surely very angry about this situation. shery: some will say though that

perhaps prime minister kishida could use it as a way to emerge from the shadows of the former prime minister shinzo abe. what does this mean in terms of kishida's policies going forward? harumi: i think he can't just escape because of this abe f action. but now he has to face -- in order to put this policy forward, you need to gain public confidence to increase the burden of the taxes, which is being discussed. it is a very difficult and turbulent time for him. he needs to gain public confidence, but i doubt whether he can get through this crisis. shery: in fact, some public polls have shown that some people feel that factions within the ldp should be abolished altogether. what is your view? harumi: yes, i do think so. this faction has been continued

for over 50 years. the purpose of this faction, they say there are three things. one is to help each other from the money wise. second is to put the candidate forward at the time of general election or the natural election. and thirdly is the favor for the personnel position. but all of these things are hidden from the public. and it is really unclear for us to know what is going on. adding to that, there is this big money scandal which i feel now is the time that we have to move on to the new political era in japan. shery: will your party, the cpd, be able to capitalize on these problems in the administration? harumi: i am confident we can

take over the administration. although one of the things being said is that even though this is an awful time of the scandal, the supporting rate of ldp is going down, but it will not be gaining in support. one of the reasons i feel that the public feels that opposition is fragmented -- they want to feel how an opposition party can get together to tackle the problem and also show the view of the future japan. shery: will the future of japan, especially in politics, include more women? we saw the number of female lawmakers has actually gone down and there is talk that if we do see a new party leader then it

could potentially be a woman. but this seems very challenging. what do you think? harumi: it is damaging but i hope the time is sooner than we expect. as you have correctly pointed out at the time of election in 2021, there were only 46 lower house members out of 465. and it is a custom here, to be a prime minister you have to be a member of the lower house. so this is really a challenge. but i feel if this female prime minister will come to the public, maybe the change of the government will happen at the same time. because when people claim for drastic change, just a change

happens. i hope the time will come. shery: we will be watching the 2025 general elections. harumi yoshida, thank you very much for your time. paul: thank you. let's get back to the breaking political story. we are showing you live pictures of waterloo in iowa, where we are expecting former president donald speaking. and of course we have just heard that trump has been disqualified from the 2024 presidential ballot in colorado. this case centers on a post-civil war era of the u.s. constitution that dan's insurrectionists from holding public office -- bans insurrectionists from holding public office. but they are pausing in an anticipation of an appeal to the u.s. supreme court. the trump campaign said they will appeal to the u.s. supreme court. former president trump confident the supreme court will overrule

the decision, calls the decision to keep him off the ballot in colorado, quote, flawed. and donald trump will be addressing that crowd in waterloo in a few minutes. we have plenty more to come. this is bloomberg. ♪

>> we believe he has engineered a soft landing. >> there is a soft landing base case we are all hoping for. >> it is very restrictive and still coming through the system. against that we still have a lot of stimulus coming through the system. >> a tug-of-war between their guidance and market pricing. >> i think we have a real problem with fed communication. >> is the markets think mission accomplished in rate cuts, six cards are coming in next year, that will ease conditions, making it less likely inflation comes down. it is a tricky point right now for the fed. >> the market is correct in trying to do two things. it is strong to bully the fed, because this fed seems willing to be billy. and secondly, to get carried away with this notion the fed put is back. shery: bloomberg guests

commenting on fed policy and the challenges facing chair powell. higher interest rates this year have waned on global fundraising for real estate. our next guest says the asia-pacific is the only region where institutional investors are planning to increase their real estate allocation with the u.s. flat and europe down. joining us is aldredo lobo. great to have you with us. how much of an increase are we expecting in asia, what is driving that, and who are the investors? are we talking about people based in the region or outside? aldredo: a pleasure to join you this morning. we are seeing a pretty volatile environment over the last 12 months. but asian growth seems to be coming back into the picture. and institutional investors in this region are not as -- sorry, assets in the region are not as over levered as we find in the

u.s. we have a fairly healthy office market here as well. we see institutional investors from outside the region but we also see a fair amount of domestic liquidity as well. there has been less cross-border flows from asia to europe and the u.s., and that is being directed back into our markets here in the region. shery: asia is such a diverse and huge region. what specific markets are investors finding attractive at the moment? aldredo: over the last two or three years there has been a pronounced pivot to developed markets in the region. japan, korea, singapore, and australia really have been getting the lion's share of capital flows. investors have realized they don't need to be on a relative return basis, moving into underdeveloped or developing markets to generate the types of returns.

gravitating towards markets that are large, liquid and transparent. paul: i know you have seen investment transaction volumes plummeting. can you get a sense of the scale of those declines and whether or not you expect that trend to change? aldredo: yeah. we have come through probably one of the roughest or slowest fundraising environments of the last 12 years. total capital raised for private equity real estate. taking it to the up of the third quarter. expected to be about $120 billion by the end of the year, a 46% decline from the years before. in addition to that, transaction volumes have fallen about 50%. there are certainly reasons for optimism.

institutions have maintained their allocations to real estate. and counterintuitively, institutions are also viewing this as a fairly attractive buying opportunity. as institutions look to take advantage of dislocation they are seeing in the markets. paul: how are investors approaching opportunities in china? aldredo: china is definitely certainly very muted. we have seen market slowdown in capital flows to the extent capital flows have gone into china. very targeted and very concentrated in areas like the gestic's and lifesciences. but geopolitics and the domestic environment in china has limited the amount of inflows we have seen. shery: does it make a difference, even within china and perhaps in hong kong as well, what sort of assets you are looking at? we are thinking perhaps commercial real estate is seeing

a slump, as we have heard from hong kong. perhaps logistics could be doing any better? aldredo: i think within china, logistics has certainly been an area that has been targeted. we are seeing niche sectors also come to the fore. like lifesciences in the region have proven fairly popular. but unless it is for rent housing in china, generally investors have been fairly shy to venture back into the market. shery: aldredo lobo, thank you so much for the picture of the asian real estate. we have breaking news for you. we are getting the trade numbers out of japan and we are seeing exports for the month of november have contracted .2%. the expectation was for an expansion of 1.4%. but we are surprising to the downside and contracting for the first time in three months.

imports also a bigger decline, 11.9%. that was expected for the month of november. given the huge imports decline, that leaves a trade deficit of around 776.9 billion yen. adjusted, 408.9 billion yen. we're seeing the trade deficit coming in a little bit smaller than the expectation. but because of the balancer between exports and imports in the huge plunge in the inboard shipments of almost 12% while exports also contracted and expectedly. we will have more to come on daybreak asia. this is bloomberg. ♪

paul: you are watching daybreak asia. some corporate headlines, mattel and hasbro are offering big discounts to shoppers this holiday season to boost sales amid squeeze consumer budgets. adobe analytics expects price cuts to peak at up to 35%, as manufacturers offload excess inventory. average toy prices in the u.s. have fallen nearly 5% since march to their lowest on record.

japanese beverage company asahi will hike prices. they said the price of some liquor will jump as much as 62%. last month their rival announced they will double the price for some of their most popular models. shery: of course we are watching for the start of trade in japan and take a look at the stocks we are watching. sony in the spotlight as hawkers claim -- hackers claim to have leaked more than one million files from is video gaming division. the nikkei reporting that a toyota unit plans to expand production over -- they have cut net income guidance for a full year after a 123 billion yen charge for abandoning a fire project. and its operating income for the

second quarter beat the average analyst estimate. coming up in the next hour, why global sentiment will continue to be supported by signs of an economic soft landing. plus we discussed how far the rba is from easing rates with west bank -- westpac. this is bloomberg. ♪ hey, doc, if you had to choose, would you give yourself a root canal or run payroll? oh, run payroll. paying my team with gusto takes just a few clicks. they automatically file my taxes for me too. can i run payroll too? choose payroll without the pain.

i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with the xfinity 10g network.

>> we are counting down to asia's major market open. some gains in the asian session

after we saw another background high for the dow and the nasdaq 100. we have seen those docs supported by dovish commentary from the richmond fed president but we have seen fixed messaging. mohamed el-erian saying the fed is being bullied by the markets. >> the markets have a different idea what the fed is saying from rafael bostic as well, giving pushback to the expectations around rate cuts. the other central bank we heard from was the bank of japan. not a lot of guidance about the future rate cycle. shery: they look like they are not in a hurry to remove the negative interest rate which is why we have seen the japanese yen slump in a previous session. we have been holding close to 144 against the u.s. dollar. this as we heard from the boj governor pushing back against rate hike expectations. we have export numbers in japan up today.

surprising to the downside. a contraction for november. 0.2% year on year for the first time in three months. we are seeing the japanese 10 year yield holding below 0.6 percent for the first time since august. really the idea japan will not move any faster when it comes to removing negative rates in order to really support the markets. we are seeing that pressure on jgb yields continue in today's session. look how the kospi is coming online. we are seeing upside and recouping losses we saw in the previous session. while the korean won is strengthening, we have of course the south korean currency leading most emerging asian currencies lower given the uncertainty over fed policy. not to mention boj policy as well. >> breaking lines out of new zealand. a new government in charge there

and the finance minister has released the anticipated many budget -- mini budget. the finance minister saying the government can deliver tax relief. we heard from prime minister chris lucks and saying inflation is the number one priority. we are anticipating spending cuts. that could help get inflation back to target. finance minister says she sees a challenge to achieve the surplus they are planing in 2027. the new zealand treasury does see a surplus in 2077 for the budget. the 2023-24 budget deficit expected to be 9.3 billion new zealand dollars. perhaps on path with a little work to get a surplus in 2027. those lines coming out of new

zealand's mini budget. australia, seeing strength from the aussie dollar against the greenback. 67.5 cents. the u.s. dollar weaker against most of the g10 basket of currencies with the exception of the yen. we have stocks in australia performing pretty well for another day. about 0.6%. energy stocks, we've seen the price of oil edging up again. 74.12 for west texas on the security concerns in the red sea. let's look how u.s. treasuries are doing as well. yields going a little bit sideways. 3.92 on the 10 year. we did discuss the disconnect between what the fed is saying about rate cuts and what the market is expecting and what a number of fed members are saying themselves. we hear from raphael bostic as well earlier outlining

expectations around rate cuts in 2024. do not hold your breath is the take away. >> despite that, and we are seeing pushback from the fed as paul mentioned, we have seen exuberance in the markets. pricing in the devilish pivot already. our next guest says investor sentiment improved further in december in all markets except china. let's bring in the head of apac applied research at -- first of all, will market exuberance last? >> you are in a situation where you have to give investors a reason not to be positive. the interest rate cycle has pete . they think the economic cycle will bottom out. earnings are bigger than expected. they are still strong. you have to give a reason not to be positive. shery: and yet market sentiment in china going the opposite

direction, the november market rally we saw, the boost in sentiment not being upheld, what's going on? >> we see investors throwing in the towel a little. they have been waiting for a big stimulus package. they've been waiting for something from the authorities. they have not heard what they wanted, the stimulus seen as adding liquidity or subprime loan rates, trying to prevent the credit default crisis from the high-heeled property side of things but not really boosting the economy. recently we have seen investors give up on that and sell. we expect they will stay out for the foreseeable future until they hear from the authorities the big guns are coming and we are going to have to come something for the economy and it's going to be all right. they fell for it in 2023 but they might not in 2024. shery: how biggest china for the

exuberance? it was good to see this year that everything except china seemed to be doing well. even emerging-market decoupling with that sentiment coming from china which is of course so influential for smaller economies. is that a trend that's going to continue in 2024? olivier: it's going to affect asia. but not much else. in emerging markets people have been loving -- that has outperformed the u.s. market. emerging markets are more diversified than developed markets in terms of the type of economies you have. investors have been playing with emerging europe, emerging america and it has been fine. but china, not enough information. not enough clarity. you also have the presidential election in the u.s. next year. china is bound to be another --

i think a lot of investors are going to wait this out. shery: how has sentiment been for japan? if you look at the market rally, double digits for this year, you would think it has been bullish. >> this has been one of the strange ones. japan has been one of the best-performing markets all year. it has been a yen weakness story. it has been deglobalization. supply chains have moved out of china. the concentration in japan was also quite tight. it was technology industrials and technology involved industrial parts and consumer discretionary again tech side of it. not much else has benefited from that. it has been a concentrated market, a yen story. and the yen story is starting to reverse. we have the fed aiming to cut rates next year. the boj is expected to raise rates about the same time around april. so we may see a yen

strengthening story which will hurt the market there. shery: how much does it hurt the japanese stock market though? we have seen decoupling from that. not like years past where you have a little bit of japanese yen strength and this huge impact on japanese exporters. how big will it be 2024? >> that all depends if there is an alternative. japan will continue to benefit from this deglobalization, the supply chain away from china. but other countries are also benefiting from that. it's not going to be fully on japan to pick up the slack. there are other options. the u.s. markets remember that both u.s. and europe the last 18 months, a lot of money left the equity market and went into fixed interest because of higher interest rates. that money is going to go back. usually it will go back about 70%. 70% of that money is going to stay in the u.s. and europe.

so where is the new inflow for japan going to come from especially if we see the strengthening yen story -- it is debatable. i do not see japan being the outperformer it was this year next year. shery: we have just a few days left when it comes to 2023. what will be driving the markets with so many people away on holidays? olivier: true. volatility is very low. it has been one of the things markets have missed. we were wrong on the economy, wrong on unemployment, we were wrong on volatility. volatility has been way below local trends and it is -- the vix is around 12. it has no business being there if we have this much uncertainty. it seems investors are getting confidence in their forecast, getting more secure about funds, and they are willing to go for it. i do not think there is any

danger the next few days even with volume because volatility is so low. shery: good to have you with us. thank you. paul? paul: still to come, ai. an explosive market catalyst this year. as the hype dies down we will look at what the industry investors have in store in 2024. plus new zealand's prime minister says his government has a single-minded focus on lowering inflation so rates can fall. our exclusive interview next. this is bloomberg. ♪

the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

>> the first consequence you will see, we are seeing it already today is freight rates will start to go up. the second consequence you will see a couple weeks from now is that supply chains will be distorted heavily.

a little bit like we saw with ever given and during the covid crisis. >> i would at the moment like to think this is not going to last for very long. that may mean there's going to be a bit of a spike in freight rates. hopefully not for a very long period of time. shery: shipping executives speaking to bloomberg about the impact of the crisis in the red sea. for how companies are avoiding the key maritime trading route, su keenan joins us with the latest. >> companies are telling us it is a seven to 10 day delay to go around the tip of africa. this can cost $1 million or more per ship. it is a major deal. multiple attacks. almost a daily basis is what the companies are witnessing. well the u.s. is putting together a task force to protect vessels, the details are still not clear.

meanwhile the german container carrier hapag lloyd has decided it is too unsafe to put their staff through. they tried to put ships through as long as they could but they had to make their first assessment in the middle of last week. they decided to continue until one of their own ships was hit friday. then they decided to pause things and they are now among the other companies rerouting ships as of yesterday. the ceo of the company says he does not -- he does see these rates continuing to rise. you are already starting to see a blip on the far end of the screen. since the attacks began his own shipping company has had a number of requests for bookings really take off. they have gone up dramatically because of uncertainty. people are starting to book shipments concerned they cannot get their oil out. there is potential for major backlogs and bottlenecks going forward. so what you have is a number of

global shipping companies if not the entire industry bracing for the prospect of what could be weeks of detours for the main shipping line and as we know, the ceo of hapag lloyd is hoping this is short-term, weeks and not months. >> not just container ships. red sea attacks stoking a rally in oil futures. >> it is a main source of transportation. you have to remember the beginning of the israel hamas war. there were a lot of analysts saying unless we see a disruption to some of the shipping lanes, the strait of hormuz or the red sea as it turns out, there will not be a bump to price. now you are seeing it. we saw wti above $74 in the u.s. session we are seeing those gains extend in asia trading. the spread between brent crude and west texas new media now widening.

brent also rises as mentioned to the highest in two weeks. that was after for five month low. the escalation of these attacks has bolstered the rebound. the overarching concern has been the oversupply of oil. a number of technical indicators, whether it be the time spreads which are closely watched by industry veterans, these continue to signal oversupply. many analysts are saying near term direction is still lower. they view this bump up in price as temporary. 8% of the world's crude flows through the suez canal and for that reason there are many analysts who are saying this is a rather complex issue and it is hard to say how long this can go on. paul: other political stories, the ukrainian president says his troops will hold off russia's

advance even as the military faces ammunition shortages and questions over foreign aid. speaking at a year end press conference, zelenskyy expressed confidence the u.s. aid tied up in congress will be delivered. he acknowledged the return of donald trump to the war effort. top u.s. defense official says china has stopped dangerous military actions in the air and see in recent weeks. the development suggests relations are improving after president biden met with his chinese counterpart xi jinping in november. tensions remain over beijing's approach to the south china sea. former u.s. president donald trump has been disqualified from the presidential primary ballot in colorado. the state supreme court says trump forfeited his right to run for reelection by inciting the january 6 attack on the u.s. capitol. his campaign says it is confident the u.s. supreme court will overrule that decision. the former u.s. president has until january 4 two appeal.

taiwan's ruling party presidential candidate has seen his polling lead narrow ahead of next month's vote. the survey released on tuesday showed he had the support of 35% . second place was 31%. in august he had a lead of 25 percentage points. voters in taiwan will choose the next president and lawmakers on january 30. you can hear more on the upcoming elections, taiwan decides, a special report featuring exclusive interviews with all three presidential candidates, on bloomberg tv. also available on youtube. plenty more to come on daybreak asia. this is bloomberg. ♪

paul: new zealand's prime

minister christopher luxon is set to discuss the august security pact when he meets his australian counterpart in sydney. before that he spoke about his administrations plans for security and the economy. >> we will have those conversations to understand where that is going ahead with the opportunities may be for new zealand. we will look at that through the course of next year. >> do you think the changing landscape strategically, it makes more sense now? >> we have always been open to exploring it under previous governments. it is just a question of making sure, it's about new technologies, how it has shaped up and if there's an opportunity for new zealand. >> the government had sought on various points to modify the relationship with china. you think you will be taking a tougher position? >> our position is clear.

we have a large trading question. we also have a long-standing relationship that has been in place for 50 years. what we do is consistently raise concerns and differences we may have with china in terms of different values we may have. we do that consistently and well i think. under successive governments. also it is a relationship we've had a long period of time. >> how do you characterize the balance of that diplomatic relationship? is there more leverage now that we see the serious economic and structural slowdown in china? >> new zealand is a country of 5 million people. for us to do well in the world we need to do business with everyone. we think there's a lot of opportunities. we have an important relationship with australia. we see a huge opportunity for new zealand weather in southeast asia with the recently signed

new free trade agreement. we are open for business. we are out in the world hustling because we want good relationships with everybody. we understand there are security components to those relationships as well. >> there is still this potential risk that more needs to be done. some of that comes from immigration. immigration reform measures were announced here. is that something you are considering? >> we have had 129,000 in new migration to the new zealand. that is not sustainable ultimately. we want to make sure our immigration levels are consistent with our economic agenda. so we have infrastructure to support it. new zealand is dealing with the situation where we had a government increase spending by 90%. it collected $100 million per year more in tax. the high level of government

domestic spending has driven domestic inflation which has raised our interest rates, slowed the economy down, and risked rising unemployment. my government has been focused on dealing with the number one job we have, which is to tackle inflation and get it below 3% again. have a single-minded focus on that. that has been a lot of what are 100 day plan is, lowering the cost of living. paul: new zealand's prime minister speaking to our daybreak coanchor, haidi stroud-watts in sydney. we are awaiting a joint media conference between the new zealand and australian prime minister's. that is due at any moment now. you are seeing a live shot from where it will happen. we will bring you that when it begins. shery: japanese stocks continue their rally after the boj held rates steady.

materials and industrials leading those gains with traders saying japanese stocks need to jump five large hurdles next year before topping the three decade high so we have reached in 2023. for more let's bring in asian equities reporter when he soon. we have seen japanese equities being pressured the last couple weeks because of a stronger japanese yen. what are the key risks in 2024? >> people are saying actually the rally we are seeing might be more fragile than it seems to be one of the key reasons being the weakness of the end, driving the rally. that overstretch might see some reversal next year if we assume the yen will appreciate next year with some expectations around the boj making monetary policy changes and beyond that, the narrower rally this year

compared to before. adding more volatility to the market, consumption, power, are probably weaker than how it has been for the past few months. we are also looking at potential global competition coming in if u.s. yields continue to come down and u.s. potentially achieving soft landing. last but not least, we have the ongoing political scandal dragging down kishida's approval rate. the instability around the economic and political environment is going to be something we want to watch for the next three to six months. paul: what has been the impact of the bank of japan decision on the markets? >> a very early christmas gift for all of us. it decided to stay the easing monetary policy and we see that in markets reacting accordingly.

the yen weakened and also the markets were up. exporters were up, led by the weakening of the yen. some market participants say we should be cautious about the rally, might not continue for a long time because people are still going to be a little cautious about what's going to come in the january meeting. shery: does that mean muted gains? higher or lower for japanese stocks in 2024? >> good point. overall people are still pretty optimistic about japanese equities. the momentum is likely to slow. some say the end of next year, it's probably going to be an upside of 5% to 15% driven by the strong fundamentals of japan. we have the tse copper governance and also the country potentially exiting from

deflation to inflation. but we will be watching what we are going to be getting from the negotiation next year for more evidence about that. paul: plenty more to come on daybreak asia. this is bloomberg. ♪

shery: look how asian stocks are trading. we are seeing the rally in japanese stocks continue after the best day in a week as the yen continues to slump, the 144 level after boj kept rate settings unchanged. the kospi is gaining ground for

the fifth consecutive session, the longest winning streak since the asx 200 -- since may. the asx 200 is being led higher by energy stocks. every sector in the green right now. new zealand under pressure. we just had the government coming out with its budget pledging to cut spending and achieve a surplus. we are awaiting the press conference between the new zealand and australian prime minister's. paul: let's look at australia and new zealand bonds at the moment. yields going sideways at the moment. the finance minister of new zealand saying they are going to be seeking about $7.5 billion of savings in new zealand but tackling inflation remains the priority and achieving that plan surplus in 2027, possible but challenging. take a look at australian yields also. not really a great deal of conviction.

lacking in catalysts at the moment on the 10 year, the yield just above 4%. inflation does remain sticky in australia. investors watching how far the reserve bank is from easing. joining us now we have lucy ellis, chief economist at westpac and previously assistant governor at the rba. thank you for joining us. >> thank you for having me. paul: just two and half months at westpac after the rba, you have a feeling of the room temperature at the reserve bank at the moment. how do you think the inflation pictures going to look like in australia? >> we are expecting inflation will keep coming down. as long as there are not big upside inflation surprises we think that will provide comfort to the rba. they did talk about some positive signs they were seeing in inflation in recent times. but they are watching services

inflation. they are nervous that will not come down fast enough. they have also learned over the last couple of years that you do need to look at the example of other countries. we are not going to be completely the same. each country has experienced the post-pandemic phase differently. but they need to be aware of the experience of other countries and we are starting to see services inflation coming down in other countries as well. they will be mindful of that but very sensitive to any signs inflation is not coming down fast enough. >> there are pressures outside of the control. we have been talking about the oil price pushing up over geopolitical concerns in the red sea. are there other things like that better on your radar that could cause upside for inflation? >> geopolitical concerns and energy costs are always a source of upside risk. that is just in the last few days and of course we saw the conflict between hamas and

israel also resulting in a spike in oil prices. we have to be aware there's a lot of spare capacity on the sidelines in the oil market. i think we will do adapt and you do not see spikes lasting weeks and months. but we are very mindful there are those sources of upside risk. another one is of course we have had the surge in population in australia. westpac economics expect that to unwind. it was largely a ketchup from the closed borders. that could pressure domestic pricing by more than anticipated. these are all things the rba is going to be hypersensitive to. paul: the last meeting, we had a call on whether to hold or increase rates. how much more do you feel the economy can take before we see effects on growth? there's already rental stress out there.

how much more tightening can there be without the risk of something breaking? >> we are seeing monetary policy affect the economy. taxation is taking more out of household income over the past year than the increase in interest payments has out of interest income. monetary policy is absolutely already influencing the pocketbooks of australian households. that is different from some other countries. the rba does need to be mindful of that. >> you mentioned immigration. pretty outsized impact on the bond market in australia. immigration seems to be pulling back a little. how is this adjusting your picture around the un up limit rate? -- unemployment rate? >> much of the surge in population growth was a catch-up. visa backlogs were cleared, students who been studying online came back to in person studies in something of a rush.

they were -- that's not going to be repeated in the coming year. that was in large part catch-up. we do expect population growth to revert to something more normal even without the policy changes that of been announced. that will take up the pressure in the housing market over time. that will take a while. in terms of the jobs market the thing that really strikes me is actually the incredible lift in participation and work we are seeing in australia. this is different from other countries. the participation rate in australia is at a 113 year high. you go back through the books to 1910, we have never seen participation as high as it has been this year. it is not just that people are responding to job opportunities on offer. they are trying to get more work because they are trying to make ends meet.

the economy slows and you will see more in underemployment or unwinding required hours. that will dampen the bloke in terms of -- the below in terms of managed employment but it will mean households getting squeezed more than counterparts in other countries. >> there is disconnect between what the market think the fed is going to do next and what the fed says they are going to do but easing as part of the conversation. where do you think easing is going to enter the conversation? >> our current view is that toward the end of next year, we penciled in the september meeting, the rba will have confidence inflation has calmed down enough they can start taking out restrictive starts of policy. that's all predicated on inflation coming down at the pace they are wanting to see. paul: well the rba keeps rates

high we are seeing appreciation of the aussie dollar. where do you see that heading? >> that is the narrative that informs our forecasting of the exchange rate. we have further appreciation in the exchange rate over 2024 in our forecast. we are expecting it to reach 76 by the end of the year. other people have different views but that is predicated on the interest rate differential story and at the same time commodity prices not falling particularly. paul: thanks so much for joining us. you can watch us live and see past interviews on the interactive tv function, tv . you can dive into any of the securities or functions we talk about. you can become part of the conversation by sending instant messages during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg.

paul: -- shery: look how asian markets are trading. on the early session still when it comes to the nikkei we are seeing another rally for japanese stocks after already the best day in a week.

we see the yen slumping after the boj kept its policies unchanged. we have november export numbers for japan contracting on year for the first time a contraction in three months. the kospi gaining ground and rallying, taking the longest winning streak since may of this year. we continue to see upside and the korean won strengthening a little bit after all the uncertainty over the fed policy, not to mention boj policy fading a little bit. every sector is in the green right now. consumer discretionary is leading gains. kiwi stocks under pressure. the government pledging to cut spending and achieve surplus. but of course we are watching for the press conference between the prime minister's of new zealand and australia as well really focused on regional security. paul: that's right. we are expecting that press conference to begin anytime now.

we did hear from them new zealand prime minister chris luxon a short time ago. a couple of themes he was talking about, the economy obviously but to your point on security, some discussion perhaps that new zealand might be interested in joining the aukus tier two security arrangement. it would not be involved in tier one because new zealand has antinuclear policy. but the tier two option is something new zealand may be interested in. it is just a short three hour flight across the tasman sea to get to australia. this is his first visit since taking office. we can see them at the podium now, let's listen. >> prime minister luxon here in australia on your first official overseas visit as new zealand's prime minister. i congratulate once again chris on his election as prime

minister. australia and new zealand share history, geography, values, and common strategic outlook. our relationship has never been more important. on a personal level, christopher and i have never seen two leaders of nations who are more than anything else aviation nerds. i was australia's transport minister. we have known each other for a very long period of time. and that is a good thing. our relationship is not starting, it is continuing. that was shown by the nature of the discussions that we had today. this year has marked a number of milestones for the australia-new zealand relationship. full use of the closer economic

relations trade agreement, 50 years of the trans tasman travel arrangements. this year we also strengthened the bonds between us improving pathways to us trillion citizenship for new zealanders residing in australia. we also of course cohosted the fifa women's world cup. one of the most successful events ever held in our nations. i was pleased that last week, the extent of our cooperation with a joint statement we made with canadian prime minister trudeau condemning hamas's terror attacks on israel supporting urgent international effort toward a cease-fire and affirming our commitment to a just and enduring peace in the region. our countries are most effective

when we work together. in our talks today we recommitted ourselves to the trans tasman roadmap to 2035 which we will review and modify annually to help drive our ambitious agenda. we have invited prime minister luxon to attend and take up the opportunity early on to meet the asean leaders in melbourne next year. we discussed the way we can work together in the pacific as well. how common values we have as nations mean that there are great opportunities for us to work together on closer economic ties, close or social ties, and working together in the international community to meet our common objectives. australia and new zealand will

continue to support priorities working together to respond to our region's shared challenges. that includes very importantly action dealing with climate change. we will deepen our trade and economic engagement in the context of our unique single economic market agenda. i think you very much -- thank you very much for making australia your first visit. we talked today as well about hosting next year in new zealand. the annual meetings between our respective leaders. including in that as well our economic ministers and events and foreign affairs ministers as well. there is a real opportunity to renew our relationship. i look forward to informal discussions afterwards as well. i will host the prime minister

for lunch after we deal with this press conference. i asked prime minister luxon to make some comments and then we will take questions as have been designated from our australian and new zealand media. >> good afternoon everybody. thank you for the warm welcome. i am delighted to be back in sydney. it is good to renew our relationship and i thank you for your generosity in the way you have posted us. as some of you know i spent five years living and working in sydney. my daughter now lives and works here in australia. the health of the relationship between new zealand and australia is close to my heart. i am very pleased the trans tasman bond remains as strong as it has been. buy 80 years of diplomatic representation.

the prime minister said 40 years of our closer economic relationship. this is a relationship that deserves constant renewal. we want to deliver new energy, new enthusiasm, and new direction to ensure our bond can meet contemporary challenges we see. we stand up for h other in times of need. i want to thank you for the way you gave us support earlier in the year. we had a rather difficult devastating extreme weather event and i want you to know new zealanders are here to help in any way we can as well. the depth of our relationship is unique. it spans all areas including security, economic integration, and strong cultural links. if i can talk about defensive security, we know we are facing a more challenging world. our close security and defense relationships are foundational

for new zealand. new zealand is committed to doing our share of the heavy lifting. new zealand will continue alongside australia as we seek to advance our shared interests and common values. we want to work together to support a stable, resilient region. we want to advance the international rules-based order. that is why we agree are ministers of foreign affairs and defense will have their first joint meeting in the new year as quickly as possible after christmas to dive into some of those issues and ensure our plans and responses are aligned and coordinated. we discussed our work in the pacific. our neighborhood faces a growing array of challenges including the effects of climate change and increasingly contested strategic environment. we are determined to work together as bedrock partners in the region. the pacific island forum is a key mechanism for us to ensure

peace and stability. with respect to trade and economy, this is a relationship that has 32 plan dollars of annual trade. one third of australian businesses export to new zealand. more than half of the foreign investment comes from this side of the tasman. that underpins the jobs and livelihoods on both sides of the tasman. we want to work strongly about what we can do more to renew the ambition and inspiration we have together economically. with respect to people, the trans tasman relationship, many of us in the room have the same examples i have had, as intertwined. people that live and work together more closely than any other countries around the world. i think new zealand makes a fantastic contribution to australia, just putting it out there -- our people to people relationship is -- for us to

keep working it as well. i want to acknowledge the administration for the work and the interventions you have made to make it easier for new zealanders to have a pathway to citizenship here in australia. that is a good thing for the new zealanders here. it is a good thing for australia as well. i want to say thank you for making an effort on our behalf. that has been very helpful. finally, we started discussing the formal meetings between our respective governments next year. we will use the annual leaders meeting in the middle of the year -- shery: you have been listening to the prime minister luxon of new zealand as well as the prime minister of australia both emphasizing the close ties between the two countries and a willingness to enhance that relationship in geopolitics and trade. bloomberg subscribers can continue watching at live go.

you will find the big entries coming up today and later this week as well as events you may have missed earlier. this is bloomberg. ♪

shery: we are setting up for the market opens in china where sentiment has been depressed.

traders have been dodging chinese assets by shifting funds to em stocks beyond the mainland and hong kong. jp morgan says china is beginning to look like an em orphanage as investors look for better and growth prospects. charlotte, we have talked about this de coupling between china and ems. are we going to continue to see that trend? >> we are seeing some flows tracking etf's. we are seeing increasing flows into etf's and investing emerging markets but excluding china. to give you an example this etf called em xc, the value has jumped 15% the past few months to reach $1 billion. just two years ago the size was about -- so much smaller than etf tracking china. what we are hearing from investors and analysts is the

expect this flow to continue. investors are looking to invest in countries such as mexico and india. the geography offers a stronger growth prospect in china. paul: we are waiting on our loan prime rate decision due in 20 minutes time. what are we expecting there? >> bloomberg economics expecting chinese commercial banks to keep the one year loan prime rate setting. just following the steps of the pboc to keep the rates in december. they expect the five-year rate to keep steady. the rate cut for the property sector, we are expecting the fixing today. paul: charlotte yang. the loan prime rate decision do in 20 minutes time.

still to come, -- asset management tells us why they are bullish in 2024. plus despite conservative consensus on chinese equities next year, why he capital still sees surprise to the upside. that is it from daybreak asia. markets coverage does continue as we look ahead to the start of trading in shanghai, hong kong, and shenzhen. this is bloomberg. ♪

an ever-changing landscape comes with challenges. from our vantage point, we see opportunities. as a top-ten real estate manager, we harness the power of a 360° perspective,

delivering local insights and global expertise across public and private equity and debt. our experienced team and vast network uncover compelling opportunities giving our clients an exclusive advantage. principal asset management. actively invested. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner.

i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works.

>> 9:00 here in hong kong and shanghai. that the bloomberg