>> welcome to daybreak australia. markets have just come online. annabelle: we are counting down to ages major trading opens. the top stories this hour. asian stocks getting a positive lead in as wall street nodes on record highs. investors weighing the rates and economic outlook as earnings season kicks into high gear. china's premier orders a more forceful response to the country's stock route as the benchmark crumbles to a five-year low. we are live at the goldman sachs global macro conference in hong kong with the bank's chief economist. >> i'm stephen engle outside the bank of japan headquarters in tokyo where economists expect

negative rates to stay in place amid easing inflation and soft demand. paul: let's take a look at how we are tracking markets in the asia-pacific. we have a staggered open. off to a slow start. already showing signs of a risk on sentiment. better by a third of 1%. we will get a better look at things when things get rolling. yields backing off a little bit in australia. the 10 year, 4.215. we are kind of off the highs we saw toward the end of last week. softness for the aussie dollar. we were close to $.66 yesterday. 66.68 at the moment. we will have a business confidence numbers for december later on. let's take a look at how we are tracking elsewhere. new zealand has been trading for a wild. the kiwi dollar backing off to

the worst performing g10 currency at the moment. trading 60.72 against the greenback. the nikkei futures have just started trading. they are flat at the moment. we are anticipating -- we are going to get the bank of japan decision later on. the nikkei reporting it sees the boj keeping the cpi forecast at 2% for the time being. china futures are interesting as well. in positive territory of the movement but we have seen chinese equities -- or the csi 300 hitting a five year low on monday. annabelle: does not seem to stop. we have u.s. futures coming online. steady so far. we had gains in prior session. it does seem like there has been a shift in sentiment. at the start of the year, we had traders expecting the fed would cut soon should they recognized

that was not going to be happening. the focus appears to be on the u.s. economy, the economic resilience as well. we are speaking to traders who are saying u.s. economy can withstand the higher rates. stocks continuing to push higher. you mentioned what is happening in china stocks. let's take a look at what happened with u.s. listed chinese equities in the prior session extending the slide. it is all these concerns around the economic health, commercial lenders. they held their prime lending rates unchanged. it is that question, what exactly are policymakers going to do to try to stop the slide in its tracks? paul: let's get a little more on that chinese premier calling for more effective measures to stabilize the nation slumping stock market to the balint -- something stock market the mainland hitting the five year low on monday. our executive editor for asian

markets joins us now. calling for forceful measures. what does he mean by that? >> if only we knew. there is a bit of skepticism from the early commentary. they are calling for more action but where is it. what is it going to be? what can they do that would hold the market in its tracks? what the market is calling for is something quite large in terms of stimulative measures. something game changing. with the officials have been talking about so far seems to be more liquidity, more bond sales, lower interest rates which has not been cutting the mustard with investors. the question is can they come up with something that will shift sentiment. what the market once is something that will change the economic outlook.

to get the deflationary force we have seen out of the way and to turn things around. that will take something more than you can come up with just by writing a quick shopping list. annabelle: when it comes to economic policies we see from china, is there any possibility perhaps this lack of action from chinese policymakers could end up being seen as a prudent measure and not to further inflate debt levels and something that could be seen as a positive? >> i think from the government point of view, absolutely. i think they don't seem unperturbed by the fact the economy is growing at 5%. it is not looking terrible. the fact is the market is asking for something different to what officials are asking. that is the dilemma at the

moment. i think you are right. there is some argument to be made for prudence. there is some case to think the way they are shaping the economy, dealing with those problems, doing their homework and getting things back on track may set the country up letter for the longer term with a focus on new technologies, renewable energy. those kinds of things. it is going to require a lot of patience to get there. investors who have been used to sitting on bounty us returns in the equity market don't have that kind of patience. paul: we have been hearing a lot about snowball derivatives. tell us about those in the impact they are having. >> really interesting here. this has been on the long-term radar for a wild. there are these investment products. not a small number. they are held by wealthy

individuals. you invest in product and it pays you a coupon. somewhat better looking than bond coupons over a time as long as certain conditions are attract -- are attached to the derivatives it is tied to don't preach certain prespecified levels. when the agreements are struck, those levels are usually a long way away and seen as unlikely to be here. the extent of the losses we have seen in the equities market onshore and in hong kong have taken us toward the trigger levels. what happens when you get to those levels is if you had them, your investment can get wiped out altogether. what that does is it triggers the people that had been selling the products to unwound hedges. exacerbating the losses even more. we are bumping into some of those levels. that has what got market into this. snowball is a good word.

it is a bit like that ball gathering momentum. annabelle: we can't seem to find the bottom. that was the executive editor for asian markets. let's switch to the bank of japan because it is expected to keep its main policy-setting steady later on tuesday. our chief north asia correspondent is at the boj headquarters in tokyo. we surveyed more than 50 economists. no one is expecting any move. we have local media reporting we could get a change to the inflation outlook. stephen: the bank of japan is cautious right now. there was the new year's day earthquake and the subsequent airplane crash that dampened sentiment for any kind of rate hike to come out of negative rates. they are being cautious because they want more of a virtuous cycle in the economy and in inflation. in particular, wage gains.

in march is the beginning of negotiations between unions and companies on rate hikes. that is called the shinto. if we can see higher wage gains in those negotiations more than the hikes we saw last year, that will help set up the conditions governor ueda has sets for exiting not only the negative rates but the yield curve control. and other measures to see more of sustainable inflation. that is why the nikkei report is giving clues into their thinking. and how economists will be looking at what he says on any clues. forget today. they is probably not going to happen. there is not an economist surveyed by bloomberg that expected the boj to hike its rate today. we are looking at april because april will be after the

negotiations are completed. that is the momentum. 60% of economists expect april to be -- circle your calendar for the boj two day meeting for a potential exit of those rates. what the nikkei is reporting is about fiscal year 2024 and 2025. could see a projection from the boj in its outlook for more stable inflation. we might see the 2024 rate projection from 2.8 percent cpi down to 2.5 as energy prices have come down. more importantly, the 2020 five cpi forecast which is at 1.7%. it could be raised to 2%. that would indicate a more stable through fiscal year 2024 which starts in april through 2025. that would give a hint bank of japan feels that this inflation environment is sustainable.

paul: as you mentioned, markets have their eye on april. possibly july for rates to be normalized. looking beyond that, how much further than zero could the boj take rates? is that the ceiling? stephen: possibly but again, the bank of japan is gun shy. to raise rates too quickly. this economy has been hit in past by missteps by policy direction. just when things were starting to look good, only to see things reverse. that is why caution prevails. if you look at the six board members as well as the two vice governors and the governor, they lean on the more dovish side of policy. i think we are getting ahead of ourselves to think beyond july. july makes sense on many fronts because they don't want to be seen hiking rates at a time when

possibly the fed and the ecb are cutting rates. april looks like the more reasonable target for exiting negative rates and also yield curve control. depends inflation has stayed above the boj's 2% goal since april of 2022. most economists feel the setting is ripe even for right now. because caution prevails, because there were some other shocks to the system at the beginning of this year, perhaps caution will prevail. we are going to be parsing the words of governor ueda liturgy a -- governor ueda liturgy today when his press conference begins. paul: stephen engle awaiting the boj decision. the race for the republican presidential nomination converges in new hampshire on tuesday. is a test for a former u.n. ambassador nikki haley who is looking to establish herself to as a viable alternative

to former president trump. joe mathieu joins us now. how are the polls looking ahead of the primary? we have donald ahead but it is a very different set up in new hampshire to what we saw in iowa. what are we expecting to see? >> it is feeling a lot more similar at this point. things have changed quite a bit in the polls we follow in the last week following a big win for donald trump in iowa. this is supposed to be nikki haley country. there is a raft of polls that landed this morning showing her 10, 15 points behind donald. trump she was within single digits just a week ago. it has been interesting to watch the distribution of votes from of the candidates who have dropped out of the race. . yesterday was ron desantis. before that, chris christie and ramaswamy. it looks like some of those went to nikki haley but not enough. this is going to be an interesting contest tomorrow. new hampshire is known for surprises. the analysis for nikki haley is difficult.

even if she wins here, where does she go next? she is trailing donald trump by a wide margin in haram state of south carolina -- her home state of south carolina. it would be a bad look for her to lose there. annabelle: the strength in the campaign so far seems to be she is not donald trump. anyone anti-trump would want to go to nikki haley. is that messaging strong enough and she have enough runway left to pivot around and get voters excited? >> you're putting your finger on something important and that is enthusiasm. in the polls i mentioned, not just today. this was a problem a couple weeks ago. donald trump has a far more passionate following. we seldom go out in subzero temperatures in the iowa caucuses. there is a question about what will take place here tomorrow. donald trump under the latest poll from monmouth university leads nikki haley by 18 points

among all potential voters. the lead grows significantly among those who say they are extremely motivated. he held a rally across the street the other night. he has a way of excising people here in a way nikki haley and none of the others have been able to. if there is going to be an opportunity for her, it is going to be here. that has been consistent. that is where she has invested her money. annabelle: sensing a real make or break moment. that was joe mathieu in new hampshire. we are live from goldman sachs annual asian conference in hong kong. will be hearing from their chief economist and head of global investment research shortly. first, motley fool asset management tells us they are still finding opportunities in small caps. this is bloomberg. ♪

that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy.

>> the fed has not done well in the past three or four years or five years in terms of trying to find the magic fed funds rate that will either increase inflation or produce deflation. are they wise enough now to know exactly what the fed funds rate

should be at any point in time or even six to 12 months down the road? i would be cautious. paul: bill gross on what he thinks about the fed's rate strategy to joining us to talk about this and the market, shelby mcfaddin, investment analyst at motley fool if. we consider some of the data we have seen out of the u.s., it is pretty good but do you have any concerns for the macro picture if the fed leaves it to long before they start easing? >> i would agree there is a little bit of a risk on both sides. we have seen that in the meeting minutes that have come out. you're trying to find the balance between not over tightening but not under tightening. right now at this current pace especially given the fact they have been holding for so long, that is a little bit of an attempt by them to stanch any

future pleading if they were to have over tightened. in this case they are a little more concerned about undershooting and turning back a bit too early. i'm not sure the data is there to say it is time to reverse course right this moment. there is a little more time to see how it shakes out. paul:paul: we have seen the markets aggressively coming back expectations around rate cuts especially around march. when do you think we are going to see some of those cuts start to come through? >> i think there is probably some room for optimism for them happening this year. it is going to be very data dependent. we are going to get a lot of consumer data coming in from q4. we are going to be seeing any impact from the resumption of student loan payments. production say it should be minimal but we need to see it play out. there are probably a few more months of economic data they need to encompass these changes

and events before we can say it might make sense for us to be done here. we are slowing down. we are on the right track with the fed is going to want to see we are not going to plateau and we are going to continue to approach the target rate. annabelle: if we are seeing the expectation for fed rate cuts being pushed back by investors, it does emphasize earnings that are kicking into gear. what are you expecting out of the reports and what you want to hear from ceos to justify the gains we are seeing? >> i do think any operators and capital allocators will be making their plans based on whether they truly believe we are going to be in a structurally higher interest rate environment or not. certain companies that have not been delivering on things like cash flow, investors might be more cautious on accepting any extra borrowing or new capital projects. investors will be listening

keenly for increased roi, increased cash flow, increased efficiency given the fact they are uncertain whether funds will be affordable under the near future or if we are at a new level of affordability. if mid to upper single digits is going to be the new going rate for investing in capital projects. annabelle: how does magnificent seven shape up in that sort of environment? >> when we look back at 2022, we saw that big haircut. a lot of that was priced in. we did see a lot of it come back. when we think about the magnificent seven, there is such an exposure to duration should there is such a big sensitivity to being in higher interest rate environment. some of it is priced in. there is a chance the market has not accepted this might be a new normal. if it is, the point of acceptance might be a downturn

for those stocks because the cost of expanding the business will go up. the more mature businesses with greater cash flow are likely to succeed but any portfolio that has -- could have something to reckon with if we are in a structurally higher rate environment annabelle: we did hear from bill gross little earlier. it wide-ranging interview. in terms of the magnificent seven, he picked microsoft out of the pile as in a stock he particularly liked. i know you like resolved as well. can you explain why that member of the magnificent seven stands out? >> what we like about microsoft is they have been a high-powered high-quality stock before a lot of the aie evaluations and froth have come in. they have been delivering on hardware, software a long time. the are a cash cal if you will.

it is a well operated business that stands its ground when it comes to positioning itself well in the hoarding for chips they have positioned themselves well. they have made themselves a competitor when it comes to generative ai and attracting talent. if the tide were to come in on the mag seven, it is not that we expect they would be immun but they would be less likely to lose a substantial part of the ship because of the foundation they have built for decades. annabelle: those earnings from microsoft out in one week from now. investment analyst at motley full asset management joining us from new york. plenty more to come on daybreak australia. this is bloomberg. ♪ you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts,

and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall.

annabelle: you are watching daybreak australia. the latest in geopolitics now. a report says israel has offered a two month pause in fighting in gaza in return for the release of all hostages led by hamas. axios quotes on named israeli officials saying the pozo has been presented through qatari and egyptian officials paired prime minister netanyahu said israel had what he called an initiative aimed at freeing hostages without giving details. the u.s. and uk's say airstrikes have hit eight more houthi targets in yemen as the group continues to disrupt commercial shipping in the red sea. the latest in a series of strikes getting january 12 trying to protect vessels in a waterway that accounted for 12% of will trade. the attacks and response have provoked fears of a wider regional war. ♪ ♪

♪ ♪ ♪ ♪ hi, i'm jason and i've lost 202 pounds on golo. 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.

annabelle: you're watching daybreak australia. taking a look at how shares are faring half an our inner -- half hour into the session. up .3%. it tracks what came through on the wall street session. investors are continuing to shrug off concerns of any sort of fed pivot could be delayed, focusing instead on the outlook for earnings, on u.s. economic resilience, and expectations that u.s. stocks can power higher. otherwise today we are also taking a look at the data docket on what we are are expecting from central banks. boj very much in focus, is set to hold rates steady. all of the economists we surveyed not seeing any changes to negative rates. also to its program of yield curve control. the messaging we get from the conference will be key.

the focus likewise also ships to china in the next couple of hours, given we have seen the csi 300 slumping to a five-year low and we had the chinese premier flagging more forceful measures, so that focus really on trying to stabilize the stock market. i think what is going on in china's economy, the outlook for equities as well be -- it's bringing together investors in top leaders in business, finance and policy. yvonne man is standing by with our first guest. yvonne: this is the 15th year goldman sachs has had this and we are excited to have jan hatzius, head of global investment research at goldman sachs, to kick off the conference for us. great to have you back in the region. honestly there is a lot to talk about the fed and how soon they can start this cutting cycle. do you think is the fed really

achieving that soft landing? jan: i do. that has been our view that we are set for a soft landing for the last year, or over a year. and a year ago, we said that this cycle is different coming into 2023. this cycle is not like the traditional overheating, demand driven cycle, but a normalization post-covid, which allows you to bring down inflation even while maintaining reasonable growth and employment growth. i think that is playing out. and so the fed is on its way to achieving the soft landing. obviously no guarantees, but i like what i am seeing. jan: we heard from governor waller last week and he said we have to be careful, at least in no hurry to start cutting rates. seems to lead to a repricing on

the market. but there is still a chance that a march cut is now a coin toss. but you are saying goldman sachs is quite likely. how strong of a case is it for a march cut? jan: it is still our baseline because i think it is consistent with the inflation data and what we heard from chair powell at the december press conference when he said that they would like to cut well before inflation gets back to 2%. now, core pce inflation has been running at 2%, actually slightly below, for the last six months. the year-on-year rate is still closer to 3%, but by the second quarter we will probably be pretty close to 2%. so if you combine all of those things, then a march cut would make sense. that said, a march cut, or cuts in general in the next few months, are somewhat optional because of what i said earlier. the economy is holding up pretty well. we do not think it is essential that they cut here, but it would

be consistent with the signaling. stephen: -- yvonne: what do you say to the critics? the consensus was we would have recession last year in the u.s. that was wrong. rates are now at a restrictive level that usually leads to some sort of recession. you are seeing it in the soft data as well. how do you explain that right now? jan: there will always be a range of indicators. if i look at the entire set of indicators on the labor market, i think the cracks are pretty limited. yes, there was some weakness in the ism, nonmanufacturing number, the visitation number. we have definitely seen a slowdown in hiring. but the thing that concerns me most in recessionary cycles, namely layoff waves, i am not seeing that. layoffs continue to be very low. and i would say on the impact of

the funds rate, the impact of monetary policy, i am in the financial conditions camp. i look at the impulse from financial conditions to growth. that was very negative in late 2022, early 2023, after the fed had been going at 75 basis points a meeting. now it looks much more neutral. i am just not seeing the big hit that is going to put us into a recession. yvonne: is that fed put restored in markets do you think? jan: fed put, i think people usually refer to a fed put when they are talking about the fed taking out insurance against a big declined in asset markets. and we are not seeing big declines in asset markets. of course if you did see a big decline in asset markets that would also have implications for fed policy. that is perfectly legitimate. fed put is often used in a somewhat pejorative sense but it

makes perfect sense that the fed response to changes in financial conditions by adjusting their policy. yvonne: you mentioned about where we might see to -- where we might see 2% inflation this year. how should a look at middle east tensions? should i just ignore that shipping rates have spiked, that there are hints of commodity inflation? what could end this disinflation trend? jan: as far as headline inflation is concerned, headline prices will have a bigger impact than on core inflation. so far what we have seen out of the middle east post hamas attack's has been pretty limited. we have seen a big move in oil prices in the shipping cost impact is probably still measured in maybe basis points or small numbers of tenths of a percentage point in terms of the inflation numbers. so, so far this is still more of a limited head. of course geopolitics is hard to

predict. there is a lot of tension in the middle east that could escalate and if it does escalate it would have a more significant impact and we would try to put that into our forecast as soon as possible. yvonne: i don't know how many questions you are getting about the election in the u.s. happening at the end of the year. increasingly it seems like there could be another trump presidency. how are you looking at that right now? especially if we see an imposition of tariffs or even tax cuts in the u.s.? jan: i do think it will be a very important for 2025 and 20 26, what happens in the election. by the way, not just the presidential election but also the senate and the house. if you had unified republican control of the white house and both chambers of congress, then i think you probably would have a higher probability of a fiscally more expansionary solution. there is certainly an increase

in tariffs potentially on the table given what trump has said. so that is definitely important for u.s. trading partners. it is not just important for the u.s. economy, but also for u.s. trading partners. and ultimately governments and businesses are going to have to deal with whatever ends up happening. it is a little bit too early to tell. but i think especially in the second half of the year, it will be a significant market mover. yvonne: obviously it is something china is watching closely. if you have as resilience growth that you are projecting for the u.s. this year, is that enough of an offset given the weakness we are seeing in china for the global economy? jan: i think it has been enough of an offset to keep global growth at 2.6%, 2.7%, if you aggregate by market exchange rates. that is roughly the global trend gdp growth rate, even with china

decelerating, and we have decelerating further in 2024 from 5.2% on 4.8%. we think global growth is going to be relatively stable. the u.s. is relatively stable. there is some acceleration in some places. hopefully some acceleration in europe as we go through the year. so we do have some natural offsets in the individual country growth numbers. yvonne: how worried are you of macro weakness in china? are we likely to see a stabilization of the property market? what are you looking for signals going forward? jan: my expectations is the headwinds that china is facing from demographics, property, property-related debt, that those still have a ways to run. the property adjustment is not yet close to done. you could argue -- and in fact our team has argued -- that the impact on annual growth from property weakness probably diminishes somewhat over time, in part because the property

sector just shrinks. then it is going to have a smaller impact on the macroeconomy. but he's headwinds are still out there. that is the main reason for deceleration and growth. policymakers are stabilizing in the sense that they are providing support. they don't want growth to slow too much, but at the same time they're not willing to really use the bazooka to provide a very large amount of stimulus. they are experienced with past cycles where they have been very aggressive in stimulating, especially through property-related debt, has not been positive. yvonne: jan hatzius, chief economist at goldman sachs, joining us here at the global macro conference for apac. paul, back to you. paul: thank you very much. we are going to have more insights from goldman sachs global macro conference throughout the day on bloomberg tv. you can catch these interviews in the coming hours. ceo of the singapore exchange

and while says he is expecting more robust trading activity once global rates have normalized. he told us southeast asia's unicorn should consider coming to the market as conditions improve. >> southeast asia, 10 years ago we had few unicorns. today, southeast asia has 80 to 100 unicorns. and with market conditions more conducive, companies will come to the market. coupled with the fact that we do have a very effective success into asia. that allows participants to obviously trade the whole asia through the group. >> who do you think right now is your biggest rival? i know you are trying to get business from the hong kong stock exchange. what about here in london? has brexit changed the appetite for listing in the u.k., and can you take advantage of that?

>> it is counterintuitive for the singapore exchange group. we probably have more collaborations with many other markets than any other exchange group in the world. more will come with the other markets connected with china. and i think exchanges are probably better by collaborating to create a bigger marketplace. >> you must be a rivalry with them. if you look at london, do you think brexit has changed london listings? >> london has historical significance. obviously a strategic location coupled with enduring resilience. i am sure that over time london remains -- >> income gave a big boost to your 2023 fiscal year earnings things to higher interest rates. what are you expecting for this year as interest rates go down? >> as rates normalize over the

next 12, 24 months, trading activity, in particular the stock market, will increase. coupled with the fact that asia continues to lead growth. there will be financial flows into asia. annabelle: that was the singapore exchange ceo speaking with bloomberg's francine lacqua. you can watch us live and see our past interviews on our interactive tv function tv . you can also dive into any of the securities or bloomberg functions we talk about, plus become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪ hello, brent. hi? if you had to choose, would you watch paint dry or compare benefits plans?

compare benefits every time. come on, you know how complicated benefits can be. well, i run payroll with gusto. they make it easier to find benefits like medical, dental, and vision for my whole team. man, i think i'm going to need new glasses. don't worry. i've got you covered. yes! choose benefits without the mess. that's working with gusto. ♪ dramatic music ♪ [flight attendant alert] [baby crying] [snoring] [luggage rattling] [baby crying] ♪ dramatic music ♪ ♪ upbeat music begins ♪ for everyone who's endured the bad seat, finally, sweet, sweet redemption. the lexus tx. three-row luxury that treats every seat like the best seat. (♪♪) sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh

business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh paul: state and federal governments in australian are targeting net zero emissions by 2050 at the latest, resulting in a plethora of policies and mechanisms to support in 2023. let's get the outlook for this year with our associate. what are some of the big opportunities should be looking out for? >> policy has been the real driving force in helping australia the carbonized we

think governments are going to keep up this momentum going into 2024. firstly on the clean energy side of things we predict governments will support 5.6 gigawatts of new large-scale renewable capacity this year. to put this into context currently australia has 23 gigawatts of live scale renewables operational around the country. we are talking about a lot of policy which could receive support this year. the support could come in the form of tenders like what we saw in new south wales last year where they were awarding long-term energy service agreements. for it might be in the form of direct investments like in queensland and victoria. we also think on the storage side of things, we are expecting one point nine gigawatts of utility scaled batteries to become operational in 2024. but if we look outside the energy sector and say look at transport, we expect that ev

sales will grow by 60% this year , albeit from a low base. this translates to about 160,000 new electric vehicles being sold across the country. the federal government will also announce it has delayed fuel efficiency standards which will set the guard rails for australia decarbonizing the transport sector. annabelle: so what are some of the hurdles that australian is facing when it comes to accelerating the low carbon transition? tushna: yeah, so some of the biggest hurdles that we expect -- and it will definitely not be smooth sailing going forward -- but if i focus on the clean energy sector we think our grids will be the number one hurdle. australia's electricity network was originally designed to support large centrally located coal assets around the country. as we are seeing smaller renewables come online the grid is really struggling to keep up.

we are just not building transmission and distribution networks fast enough. now, we don't expect this to change going into 2024, because regulation -- we are seeing a lot of social licensing issues. at the same time supply chains remain really tight. paul: what else are you watching this year apart from more things? tushna: another big industry to keep an eye tushna: on his offshore wind. tushna:there is no shortage of ambition and a lot of hype around the industry. currently there are 70 gigawatts of offshore wind projects that have been proposed for this nascent industry. this is really surprising considering outside of victoria, that is not much policy or any targets. so we predict no offshore wind projects will be financed in 2024. another big thing we are watching out for is the safeguard mechanism. so, this policy was introduced to target large emitters outside the power sector. and the government will release new baselines this year.

these baselines might be stringent and big emitters might have to pull back how much they are emitting. annabelle: all right. that was our bloomberg associate tushna antia joining us from sydney. coming up, analysis on japan's extended stockmarket rally, as strategists say ap could be approaching. that is next. this is bloomberg. ♪

paul: the top corporate headlines we are following today, blackrock is said to be selling an offer us complex in shanghai at about a 30% discount. sources tell us the asset manager is marketing the property in northwestern shanghai at a reduced rate to speed up the sale. blackrock bought two towers of waterfront place from -- for a reported $167 million. scrutiny of boeing's manufacturing quality has expanded after federal regulators told airlines to check door plugs on a second 737 model, where operators have also found issues with fasteners. according to boeing data, more than 500 of them have been delivered globally, although they do not all use the door plugs.

the faa says the move will offer an added level of safety. alphabet's lab for pioneering technology is said to be laying off dozens of employees. sources say the division known as x has been ramping up discussions on external funding from venture capitalists and other investors. it's intended to more easily spend projects out of x with support from outside backers. annabelle: let's take a look at what is happening in japan because the nikkei index you can see here, up more than 9% so far this year. we are above the 36,000 level. we have seen it going all the way back to 1990. what is concerning strategists now is that the rally is looking increasingly concentrated in just a handful of large caps. that tells us perhaps that the rally, or the peak could be approaching. let's get more with our senior asia stock reporter hideyuki sano. talk us through why the

stockmarket rally is lacking breadth at this point in time. hideyuki: hi there. so, if you look at the nikkei's gains it is 9.2% which is very good. but if you look up individual stocks, gains have been concentrated in a smaller number of large cap shares. so the index of the 30 largest companies, they are up more than 10%. the upshot of this is that only a third of japanese nikkei stocks have been doing better than the nikkei. and only 60% of the entire market is doing better than the nikkei. so, japanese stocks are doing very well, so you might think fund managers are very happy. but they are not, actually. they are not so happy because so

many shares are not doing well and underperforming. paul: what are the implications of this rally being so narrow? hideyuki: before, this could be a sign that the rally might be ending. the idea is that this could suggest investors don't have a strong confidence in the broader market, therefore they are buying only a small number of stocks. on the other hand there are some other things starting with large caps so this is not something to worry. but what most people agree on is that the raleigh -- the rally needs to broaden out if the nikkei is to reach a historical peak, hitting 1989, up 7% from current levels.

and japanese companies need to show that their profitability is rising. if you look up evaluations they are no longer cheap, but their profitability is still far below numbers you see in the u.s. and europe. so the upcoming earnings will be very important to keep the momentum going. paul: all right. senior asia stock reporter hideyuki sano in tokyo. these are the stocks we will be watching when trade opens in korea and japan at the top of the hour. nippon steel following the statement by president biden's top economic advisor that the company's buyout of u.s. steel needs serious scrutiny. sony is in focus. the japanese company is seeking $90 million intimidation fees and is evoking arbitration after scrapping their merger plan. watching hyundai engineering and construction as well. market open next. this is bloomberg. ♪

haidi: this is daybreak: asia. we are coming down to major market opens. a few seconds out for the start of trade in japan. the attention going to be focused not only on tokyo with the boj but there is the attention coming down to china's markets. we saw the csi 300 hitting a five-year low. paul: that is right. it was not just the csi 300. stocks in hong kong taking a beating. the hang seng fell below 15,000 points on monday. a level we have not seen since 1997. we heard from chinese premier calling for forceful measures to address this. annabelle: one of