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sherry: good morning and welcome to "daybreak: asia," coming to you and kind onto asia's market opens. a verdict on the dpp's victory in taiwan's presidential vote, analyst saying it removes key uncertainties. the election of the u.s.-fender lai ching-te being seen as a setback for xi jinping strategy despite the best result in decades. plus, many managers going long on higher prices for brent crude as houthi rebels report new u.s.-lead strikes in yemen. annabelle: geopolitics is one of the key focus points for investors as we begin another trading week. here in asia. adding to that is a couple of different factors. expectations for the fed, whether money markets have it right, telling as that we will see around 170 basis points of cuts ahead. maybe that's a little bit too

aggressive by some estimates. earnings as well, that season kicking into gear. we have had bank earnings, airlines, luxury. and a bit more downbeat news to come out from that of company ceos. so you had china's loan data at the end of close of markets on friday telling us consumers,, corporate's really still not looking for cash. these are the factors will be watching closely. how that plays out over the to do dynamic in this week ahead. so far in the session, you can see the asx 200 holding steady. it is still a holiday period in aussie markets. so the liquidity has been pretty thin. but you can see here, fairly rangebound. let's switch and take a look at what is happening so far in the session today. it's a little bit mixed. a bit to the downside to a degree. kiwi stocks trading likewise.

the japanese yen continuing to hold close to the 145 mark. vonnie: and we are in a long weekend here in the u.s., it's a holiday on monday with the martin luther king jr. holiday. but we are seeing u.s. futures to the downside, 0.1%. this, after a slight gain on the s&p 500 last week, we had microsoft overtaking apple to become the world most valuable company. . and we had the u.s. earnings season being kicked off by banks, with some results missing estimates. the outlook on net interest income not looking great given what is predicted to be the fed trajectory. the treasury rally took another leg up, 2-year yields dropping for the 46 consecutive session to the last level since may. we had surprisingly weak ppi numbers. declining producer prices reinforcing bets on fred rate cuts. this, after higher than readings

we. know the path for the fed might be a bumpy one. the dollar reinforcing the weekly gain given to were under pressure. we are seeing the dollar index at the 102 level, we are following prices for oil closely as wti is under pressure early in the asian session after we saw prices gaining ground with the u.s. and allies launching airstrikes against houthi rebels in yemen. investors in asia will be very much watching the taiwanese market. they are set to give the verdict on the election of lai ching-te on the -- as taiwan's president. the dpp's victories also being seen as a blow to chinese president xi jinping data just for the island -- strategy for the island. >> we are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy.

vonnie: from type a is bloomberg markets coanchor yvonne man. what is the message taiwan's ruling party is trying to send to the international community? yvonne: good morning. for one thing, democracy, or won this weekend -- democracy won this weekend. despite china's threats saying that the selection is a matter of peace and war, taiwanese voters defied those concerns and reelected the dpp for a third straight term here, which we have never seen before in the history of taiwan, you mentioned what we are seeing here in terms of results from that yes, it was an historic win, by a wider than expected margin, but only receiving 40% of the vote for lai ching-te, which goes to show that how we have seen this coalition parted between the kmt and tpp, we would have been talking about a different result. and the dpp lost its

majority in the legislature, so no clear mandate from that that is certainly not left when it comes to the dpp on how they will move forward, because with a divided government now, he will have to negotiate with other parties on budgets, on legislation, to get anything from his agenda through. so that certainly is a dpp that is emerging out of this election a bit on the weaker side. but in again, this is also a sign of, you know, a bit of soul-searching for the kmt and the tpp. . you talk about how this is a missed opportunity for beijing, this is the taiwan that is becoming more taiwanese. more people here identify themselves as that, more so than china. shery: what has been the response from beijing so far? yvonne: i would say pretty low-key. we had already seen before heading into this election that lai ching-te was labeled an instigator of war and separatist

bay beijing. we are not quite hearing that language here in the statement from the foreign affairs office yesterday. lai's name was not mentioned. he reiterated their stance on reunification with taiwan and, they said the 40% mandate received by lai, "could not represent the mainstream opinion of the island." it is softer language than what we saw four years ago. when the president won that second term by a landslide, chinese media was laboring her -- labeling her selfish, greedy, evil. . on the military side, the defense ministry here said they have seen 4 chinese naval vessels and one weather balloon around taiwan yesterday. no planes seen in the air defense zone here in taiwan, so we are not seeing the scores of jets or that military force being displayed. nothing like what we saw when

nancy pelosi visited taiwan last year. so you are seeing, at least some compromise from all three sides, even the u.s.. we heard from lai during his victory speech still reiterating that taiwan will seek cooperation with the u.s.. i don't think we can go as far as saying that they were there to have dialogue, because the sticking point is still that 1992 consensus which says that taiwan is part of china. the dpp still reject that. that is a redline for beijing. we also heard from president biden right after the election results, saying the u.s. does not support taiwanese independence. so they are still some olive branches, if you can call it that, being seen here, some reassuring words after this election/when it comes to the table economy, its chip industrys is so important.

stephen engle asked about the security of the industry to lai ching-te and during his postelection press conference permitted take a listen. stephen: how do you now mitigate the risk that increasing tensions with china essentially could weaken the strategic advantage, the strategic importance of the chip industry that it provides to taiwan? >> as long as there is a quality and compatibility between this two sides of the straits, taiwan is willing to exchange with china for exchanges and cooperation. you will vigorously assist the semiconductor industry in material, and equipment, r&d, packaging to testing to form a more complete industrial chain. shery: analysts have talked about how the election outcome doesn't necessarily change the global trend of dv skin, that we will still see more movement away from china and away from

taipei as well, how has taiwan's industry been doing, given that, of course, we have talked about the ongoing slump in the semiconductor industry as well? yvonne: right, and you take the look at the u.s. export controls on china as well, that has no doubt impacted taiwanese chipmakers and the tech supply chain here in the island. so you have to wonder with a dpp win, does that mean lucy morse scrutiny from u.s. companies on chipmakers like tsmc and how they are procuring their chips and where? if it is from china? i think what another are telling us, is that may be is status quo. that there will not be a big change in terms of sentiment, but how these chinese companies will navigate the changing state is key. a dpp windbag does in some ways

secure taiwan's location as an independent location to fabricate chinese servers and the like. and maybe that means with the dpp having a better relationship with the u.s., that they will have better access to chipmaking equipment with the west as well, that could be something beneficial. but as you said, this global trend of derisking is not going to change with this election result from the u.s. being it with the like 50 -- you are seeing it with the likes of tsmc expanding in japan and arizona in the u.s. as well. decoupling is still something that might stay i think the pace of which that happens might go down if it is a dpp win. who is to say? at least for now, markets wise, people are taking it in stride. shery:. shery: with you for the market opens in taiwan. bloomberg markets coanchor yvonne man, joining us live from

taipei. other geopolitical headlines we are tracking -- with the rebels say the u.s. and uk's fighter jets have hit targets in the red sea province in fresh stripes on sunday evening. if tv channel operated by it the evening impact group reported the attacks. u.s. allies have been bracing for a response after dozens of airstrikes on houthi targets in yemen since friday. ukrainian president president zelenskyy is said to be planning to meet with the jp morgan ceo jamie dimon at the world economic forum in davos. he is seeking to replenish the coffers after the war in russia, with calls for a piece eclipsed weather is not how much conflict. j.p. morgan has been advising president zelenskyy on attracting capital for rebuilding projects. coming up, are muizzu interview with the misonix energy -- our exclusive interview with the panasonic energy chief

technology officer. but first, a deep dive into china's economy with oxford economics. hear why they think upcoming data could show stimulus driven-growth continuing to pick up. this is bloomberg. ♪

>> we have got cost-push pressures -- cost-push pressures coming in. see inflation get stuck at 3%. then the fed will have to make a difficult decision to either tolerate it for longer, or try to reduce it to 2% to quickly and with growing the economy. shery: bloomberg opinion columnist and university of, cambridge queens college president mohamed el-erian there. let's look at the week ahead. in a couple of hours, the pboc will announce his decision on the medium-term lending facility rate. the central bank signaled ismay deployed monetary policy antiquity tools to boost economic growth. later this week we may be getting a snapshot of china's economic performance in 2023, with fourth-quarter gdp did i do as well as other key indicators for december. on wednesday, bank in the nation without avail their latest rate decision, bloomberg economics expects the bank to stand pat as its hikes this cycle have been

aimed at ruby a stability instead of cooling price pressures. inflation data in japan may show consumer prices gained slowly. we expect cpi from the eurozone and the u.k.. other data to note our gdp figures from germany, ppi numbers from japan, australia job data, and tsmc earnings. bloomberg will also be in davos for this year's meeting of the world economic forum. top world leaders as well as central bank heads will gather in the resort to discuss the overarching theme of building trust, amid a backdrop of geopolitical tensions. that is your week ahead. our next guest says the incoming trainees data will likely show stimulus-driven growth continuing to pick up. louise loo is the lead economist at oxford economics and join the snow. great to have you with us. tell us about the sort of data

we are expecting out of china, because we will get the complete 2023 picture as well. we will get about 5% growth? louise: yes, absolutely. this is where things a -- things get a bit more interesting. the big question is, all the stimulus announcements we heard at the end of last year, has that filtered through to the economy? i think this week, the data will show, as you said, we have the complete set of data. not just gdp data, but more high-frequency data such as industrial production and retail sales. also data on household spending and consumption data as well. so all of that data will probably show that some of that stimulus has worked, but not as effectively. i think the 5% growth target last year will be well within reach from the, in fact, we think they will exceed that a little bit, coming in at 5.2%.

shery: despite the rebound that we are seeing in the chinese economy, when it comes to today's mls, the medium-term lending facility, the consensus is that we might see the pboc cutting again, why do that on the monetary side of things, when we have seen that perhaps it is not as effective as a fiscal push? louise: it think it's more of a signal, right? it will not be that much more effective especially if the expectation is for a 10 basis point decrease. i think at the start of the year, the host of data that we saw, especially pmi and cpi data that we saw last week, it does suggest that the economy started the year on pretty weak footing. and they will be quite sensitive to that. if they had decided to hold the policy again today, it would probably send a signal that might not be very confidence- boasting. so i think that 10 bp cut today

would serve to reinforce the policy easing bias the government has. but i think in general, the heavy lifting of stimulus will probably fall on the fiscal side, rather than the monetary side/tell us a bit more about the chinese consumer, because the rebound has not been so much for the chinese public. the economy is still in this longest deflationary track in 14 years. when can we expect demand to rebound? louise: i think the authorities would like to think that if you support the supply-side of the economy if you support production then eventually, demand will come. that, obviously, is not how the rest of the other major economies operate, and for that reason, i think authorities have been quite reluctant on some of the more obvious demand-side stimulus, for example, cash handouts for broad consumption

support. that is the reason why even though we have seen some temporary spikes in consumer spending last year, that has not really persisted. i think the reason behind that is really the fact that confidence is so low. it's not really an inability to spend households in china have about 3.6 trillion renminbi in excess things. so they do have the money to spend. it's just that confidence is so low because what is happening on the property side is coming out on the weekly basis on the economic front. so the question is, how do you raise confidence? if we are not willing to extend direct consumption support to consumers, then it's going to be quite a tall order this year to achieve meaningful consumer spending growth. shery: it's a bit of a quiet week, at least here in the u.s., we are on holiday. what will you be watching when it comes to the asia eco docket,

because we have some trade figures, a rate decision from bank indonesia as well, what will be important for you? louise: the trade data across singapore, malaysia and indonesia will give a glimpse to the fact that that demand outlook continues to be on a slow recovery trend. so that will be somewhat encouraging for some of the export-oriented economies in asia. bank indonesia will be want to watch, they meet every month, so the policy guidance there is well signaled. we think the focus on rupiah stability would suggest that they will pause. i think the japanese cpi data will be something we watch as well towards the end of the week . it shoots suggest that disinflation trend is coming better.

shery: good to have you with us, that preview of equal data coming out of asia, and lead economist at oxford economics. we will bring you the latest when it comes to china's mls great decision today as well. you can get a roundup of all the stories you need to know to get your day going on this edition of "daybreak." terminal subscribers, go to dayb . it is also available on mobile, in the bloomberg anywhere app. you can also customize the settings so you only get the news on the industries and assets that matter to you. this is bloomberg. ♪

shery: you're watching "daybreak: asia." economic, financial and business leaders are gathering in switzerland for this week's world economic forum. the theme is "rebuilding trust." here is a look at the main issues set to dominate discussions. ♪ francine: white alpine mountains, billionaires and the

global elite. it can only be davos. a tiny ski result in switzerland, home to the world economic forum. you are three key topics high on the agenda. number one a dovish pivot. despite all the talk of higher-for-longer, sticky inflation and robust labor markets, investors are now pricing in aggressive rate cuts coming up after the break central bank this year following the cost of living crisis and the unprecedented cycle of global monetary tightening. reduced borrowing costs can't come soon enough for dad's truck companies and governments. the next crucial question is whether policymakers can make the paper to avoid a hard economic lending. two, rising geopolitical pressure. leaders already grappling with the russian invasion of ukraine launched by putting forth his two years ago. the much-anticipated counteroffensive by kyiv has not quite gone to plan, and foreign support and military aid is not flowing freely.

there is also now a second conflict on the global stage between israel and hamas. the humanitarian cost has been immense, and the war has the potential to spark wider tensions across the middle east with ramifications for global trade. 3, 2 letters. ai. investors are obsessed with its potential to disrupt chunks of the economy, and it drove some of the biggest stock market gains last year. pressure is mounting on tech companies to deliver on some of the earnings hope. and in the hundreds of power, security and ethical concerns remain. the e.u.'s struck a landmark agreement to regular artificial intelligence, and it could set the tone for similar rules for governments across the globe. of course, davos draws critiques. but politicians continue to grow in droves, and as long as they do, there was be the potential for global change. shery: take a look at how equity markets -- currency markets are

trading at the moment. take a look at the bloomberg muni index. not much after falling in the last session, pressured by yields. the japanese yen is seeing weakness in the u.s. dollar, 145 is the level after two weeks of losses. we heard from sources that bank of japan officials are likely to discuss slashing the foccaccia economic growth last week. the aussie is steady after two sessions of losses. we will be watching for all the jobs data this week. we will be talking oil. this is bloomberg. ♪ c'mon, we're right there. c'mon baby. it's the only we need. go, go, go, go! ah! touchdown baby! -touchdown! are your neighbors watching the same game? yeah, my 5g home internet delays the game a bit. but you get used to it. try these. they're noise cancelling earmuffs. i stole them from an airport. it's always something with you, man. great! solid! -greek salad?

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shery: take a look at how u.s. futures are trading today. a bit of downside pressure.

of course, it's a long weekend with markets closed on monday for the martin luther king holiday. we had seen gains when it came to the s&p 500 on a weekly basis, although the s&p 500 was pressured on friday. we have seen those big tech moves, microsoft overtaking apple to become the world's most valuable company. also the u.s. earnings season kicking off, we had some banks results, a few hits and misses. what we are following closely is the treasury space because the 2-year yield dropped to the lowest level since may. it was the broad expectation that the fed will need to cut rates sooner rather than later. this, coming after we got the economic data, the surprise decline in u.s. producer prices, reinforcing bets on the rate cuts despite the fact that we got hotter than estimated cpi readings. bloomberg opinion economist mohamed el-erian expects u.s. inflation to stay at 2% due to fresh cost-push pressures. he also tells us why he sees

growth risks ahead for the u.s. and other major economies. >> my major concern is that, if you look at the three systemically important regions in the world economically, the eurozone, the u.s., and china, all three are having issues growing in a robust monarch. the u.s. is the exception, but even the u.s. is facing lower household savings, higher debt. china needs to fundamentally change its economic models. and we know that without a healthy germany, europe is going to struggle. so if you actually look at who is the locomotive of growth, it's very hard to point to one locomotive. it's hard to believe that the u.s. will be able to maintain what it -- what were very impressive growth rates. on top of that, the geopolitical concerns. that is why when people extrapolate what was a

surprisingly good year last year, it is something we have to guard against. >> you are questioning the resilient growth story. are you also questioning the disinflationary transnet has started to develop in the last 12 months? >> i smiled when i heard the conversation before i came on that it is disinflation ahead. it's not. we are going to see and we already are seeing cost-push pressures in the pipeline. two in particular. what has happened to navigation in the red sea is directly and indirectly increasing inflationary pressures. directly by hiking import prices, indirectly by causing shortages that influence other prices. then we have the labor market issue. we have high labor costs coming through the pipeline. so you have cost-push pressures coming in. i suspect we will see inflation at the cpi level get stuck at 3%.

then the fed is going to have to make a difficult decision, either tolerate it for longer. . and i was encouraged by john williams' use of the word of "in longer-term inflation target is 2%." or, try to reduce it to 2% too quickly and risk ruining the economy. but this notion that immaculate disinflation is meant to continue is nothing i find very hard to reconcile with actual data. >> let's finish unsaid policy. expectations in march, what your gauge of what the threshold is to begin to reduce interest rates, and helpless do you think we are to it? >> there is no reason they should go in march. the market is overoptimistic both in terms of tightening, and in terms of the amount of cuts will get. . i think the market should listen to the fed when it does, signals around 3 25-basis point cuts and starting in march. i think it will be in the summer

with a start/bloomberg opinion columnist and university of cambridge, ensco last president mohamed el-erian peeking to bloomberg's jonathan ferro. another central bank we are watching today, people's bank of china. we are acting that one year mls f to be cut. annabelle: may be the said is not likely to reduce in march as we were hearing from mohamed el-erian, but the pboc he could be first. they have a decision you on one-year policy laws. you can see it is it to for -- one-year policy loans. you can see it is at 2.5% right now. we could see 8-10's introduction to 2.4%. there is a lot of pressure when he gets to the economic weakness in china. but also the seasonality factor, perhaps the timing that played into it as well because many people have spoken to are saying that pboc is likely to frontload any sort of reductions, given we

are approaching the national people's congress, the annual legislative meeting in march. that is when the growth targets are announced as well. that said, why we are seeing that pboc dating its interest rates lower, but also the academic reason for this to happen. one of the latest things that has played into this is a credit data. we saw a new yuan loans. both missing estimates. but issuance, it is at the weakest we have been -- new loan issuance is that the lucas we have seen on record. what we used to previously see with single-digit, versus double-digit previously. let's change to something as we are watching within the credit data, which is what is, or from corporate and household lending. you can see the household in yellow, corporate in pink.

a huge drop-off as well. it tells us consumers are very perhaps about the property sector. they are not wanting to get loans. corporate as well concern about the health of the property market, the drop off game demand. that plays into the demand dynamics for oil that we are continuing to track. shery: really interesting what we are seeing in the market, because despite the suspect the u.s. and the u.k. on houthi rebels in yemen, we are seeing oil right now losing ground and not sustaining the gains we saw last week. traders are still keeping a close eye on whether iran will be drawn into the conflict. but it is the demand picture that is not looking great as well either. let's ring in our next guest, whose the oil supply-demand outlook remains bearish. jennie garth is vandana hari, founder of insets provider vanda

insights. -- joining us is vandana hari. founder of vanda insights. vandana: the picture that is emerging looking out over 2024 is one of overwhelming downward pressure from plenty of supply and sluggish demand growth. if you have been talking about the u.s., china and the general economic outlook earlier in your program, and that is pretty much what is framing the views of the oil market as well. and within the broader context, of course, we have the geopolitical tensions, but they don't seem to be creating, causing much of a risk premium, simply because we have the view of plentiful supplies, plenty of

spare capacity within opec+ as well. anywhere above 5 million barrels a day easily. that is questioning any fear that the market feels. and at this point, i think this is the other major factor, the market is not assigning risk of a wider regional conflict destructive supplies in any sensible way from the middle east. shery: interesting when you talk about the geopolitical tensions in the middle east, what about geopolitical tensions within opec+? we saw those tensions come to the forefront last year, is that not also leading to confident that we might see sustained cuts from the group? vandana: indeed, that is adding another bearish pressure. hypothetically i could say that had opec+ last november returns to its convention of a target for the entire group and then parceled out, next all the members everybody joining the

cuts instead of it being piecemeal and military cuts, which let's face it, at market hasn't really understood what their strategy or ideology is. had opec+ done that, perhaps he would have seen price support a little bit higher. at this point the market has turned quite difficult. does open does have a game plan beyond q1? because they have enough cuts, nine voluntary cuts by nine members. what is going to happen beyond that? opec+ seems to be just in a disconnect with the market. they are not communicating. if they do have a different strategy, the market is not quite grasping it. indeed that is another headwind for oil prices. shery: how big of a role is u.s. shale oil playing? the longest time we did not even address the projection, -- production, from the u.s., how

significant is it now? vandana: a major one last year -- a major one. last year u.s. production surprise to the upside with 1.1 million barrels for day growth to a new high, 12.9 million barrels a day. growth is instructed to moderate this year, but yet expected to reach another new high of 13.2 million barrels a day. that is indeed laying on market sentiment because -- 1.1 major merrill spurred a substantial growth in the u.s. not just in the u.s., we have seen brazil and guyana reached all-time highs. canadian growth is growing. and if you look a bit eastward, kazakhstan is growing. norwegian output is growing. so again, the story is 90 of growth outside of opec+, whereas perhaps there is a bit of skepticism over opec+'s ability to continue cutting more, especially if they want to put a

floor under prices. now, through last year, we had the risk in the market that opec+ will try to put an $80 floor under brent. the market has certainly discarded that and it is becoming increasingly clear that through 2024, they will have to cut much deeper if that is the floor they are aiming for. at this point the market is really doubtful that opec+ is capable or willing todo that/ we. shery: were talking about the weakness in chinese demand, what about perhaps other economies like the u.s. where we are seeing a stronger-than-expected economic data here and there, potentially surprising to the upside permit how much demand could that add to the supply and demand picture in 2024? vandana: going forward, i think you will see a continuing disconnect as the war between sentiment in the broader financial markets, perhaps what you see reflected in the stock

market in the u.s. and even globally, a continuing tussle between what investors are betting on in terms of said rate cuts, and what the fed is saying. but for quite some time now, the oil complex has been decoupled from that and i expect that to continue. what the oil market is contemplating what it looks at the u.s. is not just u.s., but the eurozone, both these regions are seeing either a plateauing in the best case scenario plateauing of oil demand, or perhaps even weakening demand. look at 2019 for a comparison pre-covid, the and eurozone together -- o.e.c.d. europe rather together, are still 1.6 million barrels a day below what they were consuming in 2019. so it is pretty clear, the writing is on the wall that both of these regions and major consumers are well beyond their historical demand peak.

on top of that now, if you say that you agree that the economies in these regions will continue slowing, then you'll will probably see downward pressure further on oil demand. then you have china, of course, continue to grow, but nowhere near making up for the decline in the u.s. and o.e.c.d. europe combined. shery: vandana hari, great to get your insights, with your view on where the oil price is going. we continue to see downside pressure on wti at that level, 72.2. nine dollars we have more when it comes to the broader energy sector. we will speak is gruesomely with panasonic's chief technology officer about the company's ev battery upgrades. this is bloomberg. ♪

shery: it is time for "japan ahead,"" on "daybreak: asia." this stock rose 1.7% year on year in the prior month. machine tool orders for the month are due. in november, the numbers fell, it revised 14.6% from a year earlier. and we will be watching shares for these two companies including resonac, whose ceo

says they are considering ways to play an active role in jsr's future. take a look at how futures are trading at the moment. a downside of 0.1% alongside the broader market, as we are seeing u.s. futures also under pressure. japanese yen weakening pastor the 145 level against the u.s. dollar. we have been watching sources tell bloomberg last week that officials are likely to discuss cutting their forecasts for inflation and economic growth. this week in japan, we will be numbers, and watching government bond futures given the option of 30-year jd b's last week saw weaker than expected demand. we will also be watching geopolitics, or at least domestic politics in japan. the new survey found over 86% of respondents backing tougher political funds control laws in

the country. the japanese prime minister has vowed to fully cooperate with the investigation. our east asia government editor jon herskovitz joins us from tokyo. what does cooperation from the fumio kishida government look like at this point to address the scandal? jon: it looks like they will be available for questioning from prosecutors. some members from his ruling party has already gone to prosecutors to address questions. for kishida, what he is really trying to do is trying to head off this problem, change public opinion. the public has soured on his government and this has made things worse. last week he set up a panel to look at the innerworkings of the financing of the lep. but opinions show that the public is skeptical about this. also the idea about having the ruling party police itself.

it's a difficult sell to the general public that this will effect the type of change they are looking for. shery: we have already seen public support for kishida himself not to mention some cabinet members also leaving his government because of it. tell us how the government is addressing these issues, and how that has affected their performance. how they can actually do their jobs, taking the helm of the government. jon: well, right now the focus of the government is on the earthquake that hit the ishikawa region. getting aid to people there. for the parliament session, the budget is coming up, we will probably see that enacted at the end of march as is typical of the schedule. this is really drawing attention away from what the government wants to be its priorities. for kishida, it may speed up the time that he actually departs as

leader. he is on until september, there is a leadership election in the ldp. so march will be a key period for him when he has the budget. he will also be taking a state visit to washington ahead of the vote. after these two measures are done, we could see a shift in the inner workings of the kishida government. shery: bloomberg's east asia government editor jon herskovitz there. panasonic says it is willing to roll out its new version of ev battery cells as early as this year. we spoke with them on bloomberg about those upgrades as well as their plans to expand capacity. >> panasonic has long been a world leader in energy density. i believe that north america is very receptive to batteries with long-range, and that our technology and safety are highly regarded. we have been focusing on nevada

to see how many cutting edge batteries we can mass-produce their permit we have learned a great deal in nevada and would like to improve our operations there and further develop the new plant. >> you have set a goal of increasing output in nevada by 10% in fiscal year 2025. how will you get there? >> we have been increasing productivity since 2017 and have exceeded our own expectations. between now and 2025, we will further increase battery capacity and manufacturing efficiency by 5% which amounts to a 10% increase in overall production. we are promoting improvements in development and in prctivity. >> what is euro 2024 outlook on the supply chain for ev batteries? are you having any trouble sourcing locally for raw materials in north america? >> the major purpose of evs is

to eliminate carbon emissions. so it is ideal to develop resources and tell them locally. in reality, most of the products are exported from asia and manufactured in north america. but we are working in partnership with various companies to recycle in north america and use materials produced there for the future. this is the focus of our current efforts? >> with u.s.-china tensions, what is the impact on sourcing from china? have you been hurt by the export restrictions on this critical ev materials at all? jon: lithium-ion batteries were pioneered in japan and have grown in asia. so we have a lot of respect for the very supply chain manufacturers in this region. however, since our operations are centered in north america, we understand that local production for local consumption is inevitable.

therefore, it's not a simple binary. there are various important factors, in we want to select suppliers who can realize these factors. >> you are ramping up production of your newest cell, a 46 av type battery. . how does that compare to the older 2170, and why do you think carmakers will want to go to the 4680? >> since the size of the battery is 5x larger from the car manufacturers' point of view, the number of batteries is reduced to 1/5, in the number of connecting parts and welding processes can be reduced to 1/5. i understand this is a big advantage for them. >> how is the timeline looking for the production of the 4680, are you on track? >> we are preparing for production in japan. we have already completed the building and are now installing the production facilities. since we are basically on time with both development and

production operations, we think it is possible to start production in the first half of fiscal euro 2024. >> what is the one thing japan needs most to stay ahead in the world? >> i believe this is a great time to make a big change in the energy sector from the decarbonization point of view. at least when it comes to batteries. japan has been very proactive. it's important for japan to have confidence and to take on challenges. shery: the cto of panasonic energy, speaking exclusively with bloomberg's kurumi mori. you can catch "japan ahead and every week monday at 8:40 a.m. if you are watching in tokyo, seven 40 p.m. sunday here. in new york as subscribers can watch live on the terminal using the function of course. this is bloomberg. ♪

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i keep what works, and send back the rest. stitch fix. shery: bloomberg is live from the world economic forum in davos this week. we will be speaking to leaders from blackrock, bundesbank and others. the market opens in tokyo and seoul are next. this is bloomberg. ♪

annabelle: this is "daybreak: asia. ." ." we are down to asia's market opens. keeping of trading in which a market asia amended. a lot of geopolitical focus right now. digesting the result of the election of taiwan -- into taiwan over the weekend. what we will focus on in terms of what else in terms of geopolitical headlines this. shery: and look at oil prices. under pressure against this by the fact that middle east tensions went higher last week. be watching the market opens as we are also trying to digest what is happening in the treasury space after we saw another rally last week. annabelle: and treasury will be desecrating will be -- trading will be closed today for martin luther king day. it is holding about 4% across the curve. what we are also watching is the

focus on tiffany's equities. you have the nikkei trading up again for another session, just fractionally, but still, it has been a very let's start to the year for japanese -- very solid starts to the year for japanese stocks, perhaps looking to close at an all-time high that was reached before the economic bubble burst in the early 1990's some analysts. think there is a strong possibility that we extend above that. a lot of investors choosing the market for reasons like easier policy settings, and that geopolitical side weighing into this permit investors saying they prefer japan to other markets like taiwan even with that election results signaling some market calm. those are geopolitical tensions in focus. that is japan. take a look at korea. adding to all of this uncertainty is what is happening between north and south korea. we had north korea on sunday

firing its first ballistic missile of 2024. that was confirmed by south korea. essentially the missile, we understand, was fired from an area near the north korean capital. new keep an eye on defense stocks to see if they moved in turn. what is happening with the u.s. market closure on monday, thinner liquidity perhaps. futures, for instance, fractionally under pressure. the cost trading water -- treading water. we have the open of the asx 200 one hour into the session so far. interesting moves in the energy complex. we have seen energy companies moving higher even though and crude is a bit weaker. the focus more on the demand which are coming through, part of that is concerned around the weakness of china's economy. we have credit data for instance

out friday after the markets told us households and corporate's are still not picking up new loans. materials stocks as well in the red. haidi: so much for investors to contend with and we are just at the police into the new year. our next guest says a lot of the prevailing themes of 2023 will still be relevant, including rotating gradually out of megacap stocks to small caps with high growth potential. tardiness is the funder and ceo of sjmc capital. there is concern about the lack of breath in u.s. equity markets last year, but what comes to asia and doubling down on any pullbacks. smith million open -- google remain constructive

and u.s. growth. that means all the laggards, the names that have not rallied as much of the megacaps and large caps are likely to do well. if you look at the growth potential as well as, valuations, of history offer some upside potential. the forward we are looking at is the rotation. not getting out of megacaps entirely, but to look at having that rotation into the portfolio. with respect to asia, we expect this year is good to be quite volatile. a bit more rangebound. unfortunately not as positively as last year even though we are constructive. we would be surprised if we see another year like last year in equity market. this means that once we do see a correction materializing, look to double down on the names you like. we expect asia. india remains one of our top picks, indonesia as well. an overall, look at the seams that you like and affordable best, look to add. haidi: let's talk about two of this favorites.

you mentioned india. give us an idea of what you see as being good value given how expensive that market is. also an japan, a roaring start to 2024 even as you look at technicals looking pretty overbought. massimiliano: with respect to japan, we remain on the sidelines. we believe it will continue moving higher because the bank of japan remains extremely accommodative as of now. with respect to the difficult, if it breaks out, is to keep going. but this lingering danger of japan's back modernizing their monetary stimulus is a huge risk. was that materializes, there will be repercussions both on the equity and on the fx market with respect to the yen appreciating and japanese assets on the equity side declining. so we remain on the sidelines, even though we are cognizant of the fact that in the short-term term, this could get going.

with respect to the other themes we like valuations, we actually like things that are expected to have very good growth opportunities in the future which remain secular themes going forward. so to look at cybersecurity, that remains one of the big focus areas. clearly, ai, it will remain for quite a bit of time. and some of the names that have underperformed, renewables and clean energy are actually coming in cheap. if we get into an environment where interest rates will be gradually declining or basically staying lower, than all of these names which require much more capital in order to grow are likely to grow pretty well and get pretty good valuations. haidi: when it comes to treasuries, do you think there are segments of the market looking to bullish? what do you think, kind of on value, where yields will settle? massimiliano: the market is pricing in cuts to aggressively. nearly six cuts priced in this

year, we don't think that will be happening. we continue viewing two, maximum three cuts from the fed. six is too much. which means the 10-year should stabilize a bit higher than here, we are at about 4%, it should be stabilizing at around 4.25% from that of course, there will be fluctuations, but it shouldn't go much more than here. clearly, hiking days are behind us. we will be looking at cuts. it's unlikely that it will be moving materially higher than here. it should stabilize a bit higher which means that tactically, one could look at shortening rates. but it doesn't make sense. it makes sense to look at buying more into the fixed income space once interest rates increase a bit too much. you will see moments and opportunities when that happens, because eventually that one-off data will be moving into swiss market. you take advantage of that in order to keep adding to your fixed income exposure. look at the value of the curve.

5-souvenirs is probably what like the most -- 5-seven years is probably what we like the most. haidi: market is so avoidant in a large part. what catalyst would you need to find opportunities there? massimiliano: we have been waiting for -- for some time but it hasn't materialized yet. the problem is that the more we are waiting for a catalyst, the more powerful the catalyst needs to be in order to convince the market that china has turned the page. the only thing that will actually be a driving -- driving a meaningful and lasting move up in chinese stocks is a move with respect to the political side, or with respect to the business side the international market needs to have an understanding that the business rules are becoming more business friendly within china. and a bit of these geopolitical tensions will be declining.

but more or less it is the vision with respect to the narrative within china which has to become more pro-business, which hasn't been the case in the last 12 months. china will need to do more in order to convince all those international investors which are not in china, which are very skeptical on going back in because they have lost a lot of money in the last two years, they will need to do quite a lot. but that catalyst needs to come and needs to come quickly, otherwise you will be seeing chinese assets drifting lower. haidi: do you think investors are being complacent at this point on geopolitical risks? massimiliano: geopolitical risks are always very binary. unfortunately, it's hard to foresee them. but if something happens that escalates meaningfully, it will be obviously a big problem for everyone, from the markets point of view and from the social point of view, more importantly. on the markets side, yes, they are a bit complacent, but to be

honest, they were complacent also last year when those headlines were out there and it turned out no major escalations materialized. geopolitical risks remain the main risks for markets going forward. there is quite a lot of them along the globe, quite a few conflicts breaking out which is sad. when looking at asset allocations and investment rationales, global investors need to take these into consideration, you need to have some black swan or worst-case scenario hedging taking place. hopefully we will not be seeing a meaningful escalation which will be leading to a strong correction and even worse headlines for the world overall. haidi: max, always great to have you with us, massimiliano bondurri, founder of sgmc capital. that go to hong kong for a look

at the early movers. annabelle: still tracking a couple of different sectors in relation to earnings. they kicked off friday in the u.s., the latest season permit fourth quarter numbers. disappointments. we had burberry, london-listed, slashing its profit forecast by 100 million pounds, 100 million dollars. the ceo saying it is clear that demand for luxury goods is calling, particularly in the key markets, the u.s. and also mainland china. you have luxury stocks as well in asia a bit under pressure. shiseido, one of the standouts is the downside, off 2.2%. we also had delta airlines walking back its profit target in the latest numbers. now saying that adjusted earnings are likely to come in at six dollars seven dollars a share this year permitted the company has had a long-term profit forecast in place of more

than seven dollars a share for 2024. the carrier shares slumped down the most in 18 months. rivals as well were lower. your seeing mostly airline stocks moving to the downside, with the exception of korean air. certainly high costs seem to be countering the gains for a rebound in international travel. it is that focus on the earnings numbers coming out. shery: coming up as well we look ahead to the market opens in taiwan after voters pick their newest leader. our live report from taipei is next. we will also discuss the outlook for cheap, -- chip companies there. that interview is coming up shortly. this is bloomberg. ♪

>> we are telling the international community that between democracy and authoritarianism, we will stand on the side of democracy. shery: taiwanese president lai ching-te speaking to supporters after his victory on saturday. let's discuss the significance and implications of the election results this weekend.

joining us from taipei is bloomberg markets coanchor yvonne man, and our greater china senior executive editor john liu, yvonne, what message is the election sending to the international community right now? yvonne: you heard from lai ching-te saying this is an opportunity for voters to choose between democracy and autocracy and it seems that democracy won. the taiwanese now see themselves as more taiwanese than chinese itself and that is what probably swayed voters to vote for dpp in this historic win back over the weekend. we have not seen a party win three terms and arrow, so this is quite a milestone for the dpp. lai ching-te also won comfortably with a wider than expected margin. but there are caveats, because he only received 40% of the vote.

have the kmt and tpp got through -- had that dpp and kmt got through, with the coalition we would've seen a different result. the percentage of the vote, 40%, is the lowest we have seen since 2000. also, the dpp lost their overall majority in the parliament permit so this is the divided government that lai will have to govern which means that dpp will have to reach across party lines and work with other parties in the legislative yen to get legislate legislation through. that will impact the agenda of the dpp. haidi: what have we heard from beijing so far, john, we have heard a few comments from the foreign minister. john: the response so far, i would say has been muted. foreign minister wang yi was in cairo. at a press conference on sunday, he talked about the fact that no

matter what the outcome of the election was, it was indisputable that according to beijing, taiwan is a part of china. that has been the ongoing theme. we have also heard news from the foreign ministry in beijing, they have sent stern statements to the united states after the state department set congratulations to taiwan following the election on saturday. i think if xi jinping had his way -- he has plenty of problems. the war in the middle east. the war in europe. . the economy. he would rather not see taiwan blow up if it doesn't. shery: have to end very important to the chinese economy are the chips they produce. our very own stephen engle actually asked lai ching-te about the importance of the security of this sector during his first postelection press conference. let's take a listen. stephen: how do you help mitigate the risk that

increasing tension with china essentially could weaken that strategic advantage, that strategic importance of the chip -- that the chip industry provides to taiwan? >> as long as there is a quality and compatibility between the two sides of the straits, taiwan is willing to engage with china for exchanges and cooperation. we will vigorously assist the semiconductor industry in material and equipment r&d, design and manufacturing, packaging to testing, to form a more complete industrial chain. shery: yvonne, how challenging will it be for him to keep the competitiveness of the semiconductor industry with so many geopolitical challenges? yvonne: it's interesting in that soundbite, he said he is

reiterating he is still seeking some cooperation with china. i think that is seen as compromising comments from lai ching-te in that victory speech. so potentially that is why people are saying we might not see a huge reaction across markets as well. but we have seen that u.s. export controls to china have impacted taiwan semiconductors as well as the whole tech supply chain here, many u.s. firms asking suppliers here at where they are procuring their chips, whether it is from china or not. analysts we talked to said look, this dpp win might mean that, at least taiwan secures its position as an independent physician to fabricate chips and ai servers and perhaps because the dpp has a better relationship with the u.s., they might have better access to equipment in the u.s. as well. that is the good side to things here. but certainly this global trend of de-risking, decoupling. that is not going away despite this election outcome.

we have seen even tsmc expanding in japan, possibly building capacity in the u.s. in arizona as well. so this friend-shoring thing that janet yellen calls it, it is still here to stay, but the pace which we see that might slow down in another four years with the dpp. haidi: we have been reporting about this u.s. delegation of officials to meet with taiwanese politicians, potentially another test of tensions in beijing. we are hearing confirmation that the taiwanese president will meet with the u.s. delegation on monday. what we know in terms of what will be on the agenda, the purpose of these meetings? yvonne: what we know so far is that it is sort of a congratulatory toward, that is what we have heard from those who confirmed this trip. it is u.s. ex-senior officials

we are here that are here on this trip. as you say, they will be meeting with the president as well as the vice president elect who, as you know, is the former taiwan envoy to the u.s.. seems like we have seen these delegation come through with the u.s. japan also has made that here over the weekend, congratulating taiwan here unless democratic process -- on a smooth democratic process. this will be a test of what this means for the u.s. and china relationship given how timely this trip is, right, just days after the election outcome. but as john mentioned, the u.s. and china right now still want to maintain at least cooler heads right now given what we saw in san francisco. the meeting between xi invited. they still want to keep that -- xi and biden. they still want to keep that.

shery: from tensions in the taiwan strait to tensions in the red sea, we continue to see a tax houthi rebels in yemen. we have not necessarily seen big actions, from beijing despite the fact that their trade ships are really being affected their too. john: i don't think we will see any major action from beijing. it is not in beijing's interest to get involved in any conflict in the middle east. they do defend a great deal on oil imports, they need those. they need the shipping rates to remain open not only to get imports of commodity and energy into china, but to that goods shipped to europe. all the same, when the u.s., u.k. and other american allies are out the attacks, there is no reason for xi jinping and the chinese government to get involved in that. . they can stand back and play the neutral party and when it is time to come into peace talks, they will be ready to be part of that being -- be part of that

fee stock. haidi: our greater china at senior executive editor john the u.n. bloomberg markets coanchor yvonne man. you can get a roundup of all the stories you need to know to get your day going on this edition of "daybreak." terminal subscribers, go to dayb . it is also available on mobile, in the bloomberg anywhere app. you can customize those settings as well so you just got news on the industries and assets that matter to you. this is bloomberg. ♪ you can also turn to your ♪

shery: you're watching "daybreak: asia. the top corporate stories were following, bloomberg." has learned." apple is closing it ai team in san diego leaving many employees at risk of dismissal. sources say the group has at least until the end of february

to decide whether they will relocate to austin where they will merge with texas's portion of the same team. the ai unit is responsible for improving apples mart assistant. u.s. regulators wrote off more of their loans. according to earnings releases, net charge-offs at bank of america and wells fargo rose in the fourth quarter partly due to office loans. blackrock has agreed to buy global infrastructure partners for about $12.5 billion. the move takes the world with as many major into the top ranks of investors who make long-term bets on energy, transportation and digital infrastructure. blackrock will pay three begin dollars of cash and about 12 million shares. the deal is asserted to close in the third quarter. -- expected to close in the third quarter. haidi: take a look at how futures are opening up this morning as we have concerns

about more downside when it comes to equity assets and stocks in particular are because of this picture of potential erosion of forecasts around the region. we are watching shippers in particular. shipping stocks surging globally as we see the impact of geopolitical tensions. euro stoxx 50 futures up by 0.2%. german dax futures up by about the same amount there. we are watching whether this, tepid starts to the year potentially facing more upside for european stocks with what is projected to be a top earnings season -- ♪ ♪ ♪ ♪

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>> this is daybreak: asia. we are 30 minutes into the

session for japan and korea. 90 minutes in trading for aussie stocks. the set up very steady going. one of the factors that is adding to that is we have got u.s. treasuries shut monday for a public holiday. equity markets not trading later even martin luther king day. that is playing into the dynamic because you are not seeing much movement coming in the bond space currency a little under pressure for the most part here. slight dollar strength. equities muted today. new zealand the only one that has got any significance. noun 6/10 of 1%. the nikkei you can see fractionally higher. a lot of analysts are still optimistic on the outlook for japanese stocks over the course of 2024. i do want to put more into perspective the low volumes we are seeing. this is the average value.

the dotted line in blue is the projection over the course of today. right now trading volumes about 20% lower than what they have been on a 20 day moving average basis which is significant when you think over the last 20 days that has also been the christmas new year holiday break. traders have already been away. it is thinness on what has already been low-volume trading. haidi: we will be watching. stocks and futures begin trading soon. in terms of any reaction we have seen from the results from the election over the weekend. analysts have told bloomberg the democratic progressive party victory should bode well for markets. let's get more from our asia stocks reporter. with these election type events, we will try to remember the markets want certainty.

this presents a certain outlook out of the options on the table over the weekend. >> haidi, the dpp win for the presidency and loss of a majority in the parliament was priced into the markets. the volatility was up in the taiwan dollar and stock market two weeks ahead of the election. we saw we are not going to be seeing too much of an impact. the impact is not going to be that huge. a lot of that has been priced in already. we know the stock benchmark of taiwan has gained 27%. outperforming most of its asia peers in 2023. this is a huge market we will have to be watching. with the market priced in, we are not going to be seeing a huge impact. shery: we had analysts talking

about the fact beijing has remained -- has restricted its response when it comes to any confrontation with taiwan before the elections but they were saying perhaps in the next few weeks we could see more provocations coming from china. how could that factor into market confidence? >> that is right. we have seen analysts are saying the response, the direct response from beijing was a little muted. whereas we will be seeing the results a little more soon after like you said in a few days or in weeks. there definitely will be more of the volatility we will be seeing especially given there are high-stakes on the taiwan equities. it is doing well compared to other stocks. we need to look at how the result and out for the legislature. the dpp lost the majority.

the more china friendly party, the kmt, losing the majority. the balance of power lies with taiwan's people's party which is the tpp. we will be seeing a little bit of that pushback from the opposition when it to electing -- pushing with some of the policies. haidi: aside from politics, what is the outlook with it comes to earnings for taiwan stocks -- when it comes to earnings for taiwan stocks? >> we are hearing from strategist and analyst 2023 is going to of the the year of -- going to be the year of south korea and taiwan. we have already seen the stock of benchmarks doing well. thanks to the artificial intelligence boom and the recovery of the semi's.

we will see more of that coming back. also the exporters are going to be doing better in 2024. there are some sectors we are watching carefully. of course especially after the election you're going to be seeing the defense stocks that have been outperforming here, we will be seeing more of the movements as of the dpp spends more of the time and budget on the defense. we will also be seeing some of the moves in tech sector when it comes to chip making, tsmc has more than a 27% weighting in the taiex index. a lot of the text companies will be moving around it. when it comes to access of the chip making, will be seeing friend-shoring with dpp winning the election as they might have more access to that through

providers like asml. we could be looking at other stocks like tourism as well as energy sector where the dpp wants to move toward the more renewable energy policy. shery: our bloomberg asia stocks reporter. let's get a little more on the reaction to taiwan's election results and get back to taipei and yvonne man. yvonne: joining me now is jennifer from bloomberg economics and the former u.s. national security council head of china and taiwan policy. how big of a win was this for dpp? >> this is an unprecedented third turn for any of party in taiwan since they started the holding open elections. that is a major winner for them. at the same time they did not secure a majority in the ly. they will have some challenges advancing their agenda. what this represents is taiwan's

democracy is maturing. . the voters have decided no party should rule entirely on their own and they will have to share and compromise in order to advance their agenda going forward. yvonne: the beijing response so far has been quite low-key. muted right now. what is going to dictate what the beijing approach is going to look like in the next few weeks or months? >> i expect the next few weeks and months between now and the inauguration in may beijing may take additional steps to shape the incoming administration's approach. they have signaled they may take additional measures toward taiwanese exports. they may continue military pressure around the island. i would expect them also to go after some of taiwan's diplomatic partners. two factors are going to shape how far along the spectrum lego. the first is going to be signals they receive from taipei. they will look toward the inauguration speech and what signals they get from the administration's prostrate

cross strait policy. they have been sending signals they want to maintain open lines of communication with beijing during this period. that will be important for how beijing sees the trilateral relationship and the management of the administration as it comes into power. yvonne: lysing to has been labeled by china as a instigator of war. can we expect him to be the continuity president and follow in the footsteps or will he have to pave his own why? >> i think he is going to stick with -- i think she has set out a moderate cross strait policy. i expect him to follow that going forward. in terms of staffing we are likely to see him retain a lot of the focus from her administration should and a particular his vice president elect is someone who has served as taiwan's representative to

the united states. very much in line with size perspective on the more moderate approach to cross strait perspective. what she has done over the last eight years is carve out what the dpp's approach to beijing is. the 1992 consensus is not what the dpp believes is the right approach but what is the right approach? he is going to continue that process moving forward. yvonne: you mentioned the divided government and the epp is going to have to reach out to other parties. what collaborations are you foreseeing? as the kmt and the tpp going to join forces? there is still a lot of bad blood. >> the key point would be the selection of the legislative u.n. speaker. that will tell us a lot about what kind of power the dpp is coming into with. who it might be working with. if there is a power-sharing

arrangement, we might see that formalized. in terms of the pivot point, the taiwan people's party is going to be a pivotal role in probably exercising as much in flinch and leverage with those eight seats -- as much influence and leverage with those eight seats as they can moving forward. yvonne: thank you for joining us here in taipei. haidi: sticking with taiwan, he pledged to further develop the taiwan chip industry dominated by tsmc. the president-elect told stephen engle how his administration continue to grow the industry while balancing engagement with china. >> how do you help mitigate the risk that increasing tensions with china you centrally could weaken -- with china essentially

could weaken the strategic advantage? >> as long as there is equality and compatibility between the two sides, taiwan is willing to engage with china for exchanges and cooperation. we will vigorously assist the semiconductor industry in material and equipment are nd, designed manufacturing, packaging to testing to form a more complete industrial chain. shery: let's bring in our next guest who says the chip sector is turning the corner after a prolonged slow down and prefers name such as tsmc and mediatech. great to have you with us. it is interesting you are more optimistic about 2024 and the chip sector because usually the sector closely correlates with

the global macro economic picture which still seems fragile in 2024. how do you see this rebound happening? >> thanks for having me on. it is a good point. this cycle, the tech sector already went through a fairly deep recession. recall last two years we had quite a bit of brakes on the sector. quite a hangover on all the tech goods coming out of covid. inventory that took the last 18 months to bring down. we had quite a bit of inflationary pressure. this year we do see headwinds easing. the inventory and supply chain is coming down. inflation is starting to moderate. we are starting to get another year away from the big room in covid driven demand. this year what we see driving it, cloud ai continues to try to

catch up to demand at least through the first half. stabilization on pc, smartphone, general server. we are starting to see a move toward the ai on etch device which we expect to be marketed aggressively. more of a contribution as we head into next year. we are balanced. we expect mild recovery. the -- don't need to be in a rush to build inventory. we still have auto industrial which is later to correct still going through adjustments. autumn line, i think we are heading into a mild year after a tough 18 month downturn which led the macro this term. shery: who are you thinking will be the winners in 2024 given the ongoing challenges but also the optimism you talk about whether it is the supplier demand side of things? >> a few areas.

advanced technology. when we get the. outlook for advanced foundry, they have room to outgrow the industry largely with a very high share of ai products. we still continue to see the advanced products move to more advanced technology notes which carries a higher price. the other factor i think can win , member sector which went through a tough period, we are seeing in our headline of a note early this month which was new year's fireworks. memory price is starting to see a surge. i expect that to do well. relatively for equipment, we are coming off a period of lower investment where some of -- you can say global players but we are still seeing strong momentum both from china and we are seeing memory capex which came down quite a bit the last year and a half starting to come back to address things like high

bandwidth memory which goes into ai servers. shery: it was interesting being at ces last week in vegas because everything had to do with artificial intelligence one way or the other. you mentioned the demand for cloud ai to continue this year but is that going to be the main narrative in 2024? when i was at ces, what i was hearing from consumer electronic companies is they want to use ai in everything from television sets to anything you are using at home like appliances. >> it is a shift. last year, if we go back to taiwan's computex show, everything was about cloud ai. in the thick of chatgpt, that runs off the cloud. the big investment and the big winner was the ai and gpu's that go into ai servers. this year we will start to see widening out and ces started that. we expect the galaxy lunch to be about that. bringing ai to devices.

to the smartphone, the pc. also smarter industrial and smart home products where if you put some of that generative ai processing on the device, that helps faster latency. you can address a lot of the personal things you have on the device where it is more secure. keeping it more private. it is more real-time versus going up to the cloud. there are synergies. we expect hybrid. some processing on device but also in the cloud. that is a broadening out. the good thing for the tech sector is a broader set of companies enough it if we see a better sector. i think -- next year we could see more potential driver earnings for the sector. shery: good to have you with us. head of taiwan research at ubs. we will be following the semi

conductor names at the open in taiwan. it will be the broader investor reaction when it comes to the dpp winning the presidential elections this weekend. haidi: that is right. we were just speaking to the asia stocks reporter talking about the idea some of the certainty has already been priced in when it comes to at least equity risk appetite. and potentially as we get past any kind of near-term market reaction, it is likely to subside quickly. bloomberg intelligence saying within the next one to two quarters judging by historical trends, will likely to see the returns are focused when it comes to the fundamentals. we are seeing trading up by nine tens of 1% when it comes to the ftse taiwan index futures. seeing at the moment a good rise after the dpp win. other ongoing areas of focus for

investors in taiwan. tech earnings rebound up to 25% this year. the course of the outlook when it comes to the fed and other central banks. much more to come here on daybreak asia. this is bloomberg. ♪

haidi: over the next hour, the pboc will announce its decision when it comes to the medium-term

lending rate. the bank has signaled it may deploy liquidity tools to boost economic growth. spring in our china economy editor who joins us from hong kong. this would be an incremental move. what are the expectations and in terms of expectations of actually making a meaningful impact on confidence chaz been the main issue when it comes to lynn -- confidence which has been the main issue in it comes to lending? >> it is widely priced in their is going to be a cut to the key policy rate. the wearing rates on the medium-term lending facility. you are right it is probably not going to make some meaningful impact in terms of the confidence issue we are seeing a but maybe it does help ease the debt pressures china is facing. the pboc does have to do something. a policy rate trim is one step in the right direction especially when you look at some of the data we have had

recently. deflationary pressures are still prevalent in china. we saw some weak credit data come out late friday especially in corporate financing. particularly week there. this is probably not going to be enough. we see additional liquidity injected into the financial system should trying to ease some of those pressures a bit. there are mounting expectations may be the central bank has to take more advantage of other targeted tools to aid growth and ease some of these pressures. maybe that involves more targeted lending through other sectors. there is more that has to be done here clearly. shery: we are also expecting plenty of data out of china this week including the 2023 gdp and growth rate. the expectation right now from economists is we did see a big rebound especially in the fourth quarter so i wonder if that will make a difference to what policymakers want to do this

year. >> it probably will not make too much of a difference. the 2023 data is likely going to look pretty positive. i'm sure beijing hit if not surpassed their official growth target of 5% for the year. . you have to remember the fourth quarter data when you're looking at it on a your on your basis compares to a an incredibly weak 2022. december 2022, we so some continued covid restrictions we saw massive outbreaks of covid throughout the country. that put a damper on activity. those numbers are going to look rosy. you have to zero in on what the month on month it looks like. we are still seeing issues with confidence. . still seeing issues with the housing sector. the housing crisis unfolding. deflationary data is still a concern. all of that does indicate we are not out of the woods. china is going to have to come up with more policies on fiscal

and monetary side to build momentum into 2024. regardless of what the data looks like, a lot more attention being paid to with the first quarter of this year is going to look like. shery: our china economy editor. more to come on daybreak asia. this is bloomberg. ♪ my stylist curates unique personal looks that are just for me. kind of nice. i like that. it's easy. give them your size, your style, your budget. -now, this is a nice shirt. i keep what i like and send back the rest. -now my wardrobe stays updated with fresh fits created just for me. did you see that texture? this just feels really good. fits perfectly. -what can i say? my stylist gets me. they get me. and they'll get you too.

shery: take a look at some of the stocks will be watching when markets open in tokyo. some of these may move to given the ruling dpp victory. analysts saying the wind removes key uncertainties in local markets noting china's muted response. you have a few semi conductor names we are watching closely. the chip sector so important for taiwan. we have seen the taiex seeing volatility in the two weeks ahead of the vote. seeing upside in futures at the open in taiwan. that is it from daybreak: asia. or markets coverage continues. standby for bloomberg markets china open. ♪

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