>> this is "bloomberg daybreak: asia." we are ahead of trading in japan, south korea. a lot of markets born into green. strong moves in the u.s. session overnight. still there's the question of what happens in china next given the fate of evergrande. paul: that was very interesting, the winding up of evergrande yesterday. we will see how much more that court decision holds in mainland china. we've got the oil price moving, the asx close to a record, on the eve of a fed decision as well. annabelle: also some data to note, japan for instance, putting out its employment data in the last half hour or so telling us the employment market was pretty tight toward the end of last year.

we saw their job to applicants ratio coming in at 1.27, a little bit amiss on estimates but showing us that there is a shortage of workers across sectors. the unemployment rate, coming in at 2.4%. that keeps the hopes for which hikes very much and play. also it plays into our thinking around what the boj will be doing next. we know they want to see sustained salary hikes in order to drive demand driven inflation. you do see the nikkei posting modest gains to start following the s&p 500 crossing the 4900 mark. one stock moving to thedownside so far is toyota, just coming online. the big news overnight, they are temporarily suspending shipments of 10 vehicle models after the supplier to toyota disclosed certification problems with some diesel engines.

the problems for toyota seem to be piling up. we are seeing that reaction, down 1.3%. let's shift to what we are seeing in korea at the start of trade. we've got some gains further kospi. up more than 1%. perhaps tech driven. the s&p 500. crossed 4900. the nasdaq as well, up 1% ahead of results from the fivetech giants , amazon, alphabet, apple, etc. reporting in the days ahead. a lot to focus on here, the fed decisions, data, and borrowings from the u.s. treasury. paul: in australia as well, plenty going on. the asx right now knocking on the door of a record high, 7617 points at the moment. 15 points shy of the high. performing pretty well. it's information-technology

stocks leading the charge. we had a good day for the nasdaq as well. bonds today, we see the 10-year slipping. the aussie dollar, breaking through the $.66 level. take a look at the bond space,the early trading in tokyo. yields, rising a little bit. we saw them falling on the news the u.s. treasury estimates borrowing needs are quite a bit lower. $760 billion for january through march. down $56 billion. that did confound expectations around that. perhaps the short end of the curve looking vulnerable to more declining yields there. we are waiting on the fed as well one day before we get that decision. no change expected but we are keeping and i en marche! chaz a date for possible movement. we are joined by the head of aipac applied research

at axoim. a lot of news at the moment. many see 2024 as the year of predicting dangerously. what variables are you balancing? >> for the first time, economic variables and corporate earnings are subordinate to geopolitics. you've got a lot of things going on. obviously ukraine and israel and u.s.-china tensions, a presidential election in the u.s., etc. a lot of things going on that could potentially change the trajectory of some of the inputs into the traditional models were used to predict the economy going forward, even interest rates, oil prices, inflation and so on. that is really where we are right now. the forecast we make could change one week to the next,

as we saw with oil prices over the weekend. we saw the first casualties in the middle east conflict. we heard there will be a response. . everyone's waiting for that. things could change rapidly during this year. paul: there is interesting upside risk to consider as well. good news, on the cusp of a fed decision. the recessionary risk seems to be abating. the consumer looks strong. jobs look strong. do you think the urgency around easing is abating a little for the fed? >> the problem with good news being good news is, if you think about the good news for this year, it's a soft landing further u.s. economy -- for the u.s.

economy. and you would still maintain an inverted yield curve, good for bond investors. a hard landing scenario will return it to an upwards sloping curve. the longer we have good news, the longer the fed feels it doesn't need to support the economy and start cutting rates early. we have already seen the expectation for the march fomc meeting. 90% that they would cut, now it's back to 50-50. we don't know if we will get a march rate cut in the u.s.. it is pushed back to may. annabelle: the thinking in your note seems to be, if the u.s. can avoid a recession, so can the rest of the developed world. but that is something you disagree with. >> it is something that has a lot of assumptions built into it. europe is teetering on the brink of recession.

germany has some negative numbers. the consumers in europe are not the same as the u.s. they are not spenders. they are savers. you are not getting that consumer boost to the economy in europe. the ecb will have to start cutting rates. it was about four months behind the fed in raising rates but it might be the first to cut. we didn't get that last week. christine lagarde has been tight about when she would entertain a cut. that's what it's needed -- is needed in europe especially with the fiscal situation not being good at all. saying that you have to cut back, you are over budget. so fiscal stimulus is not going to happen. you need to have monetary stimulus. it's up to the ecb right nowfor europe . annabelle: what do you think

about the outlook for china and how it stimulates its own economy? we have seen the monetary side fairly limited and more push needed from the fiscal one. >> this is the first time in 12 months you have rumors of a big stimulus coming i know we got a -- know we got is a regulatory change. we are not seeing the big bazooka stimulus we used to see from china that we saw in 2015 with the china crash. people keep waiting for that. sentiment has turned sour in china. we are going to stop shortselling. as of monday, it will be harder to short the chinese market. these are really not the kinds of measures the

indexes were looking for. you will see a lot of outflows out of china benefiting japan and korea. you could argue globally the last two years we've only had one bet which is the tech sector. if you didn't have that, you would underperform, period. that is still going on right now. it's all about big tech and this shift of the global supply chain away from china and into other areas just in case. annabelle: playing into that theme it was one of the big, drivers over the course of last year, the s&p 500 hitting a record. . the nasdaq as well. ahead of the tech earnings. is that something you expect to continue over the course of this year? >> it's a very big week. we have five of the seven reporting this week. valuations are stretched already.

above the long-term average. above the median. you will need stellar earnings to push the market up from here. it's only one sector. we thought the rally would broaden into other sectors because we had the soft landing scenario but it really contracted back in january of this month. uncertainty is back and people are saying, these forecasts are 50-50. you can't really broaden your horizon with just a 50-50 forecast. it's still going to be big tech until the fed says, we are starting the cutting or easing cycle. paul: want to get your views on everybody's favorite market at the moment being thenikkei. we have seen a lot of upside. we have seen banks outperform the broader index in japan. do you see more to come for

japan's financials? or as the boj lifts rates? or has then been president? >> financials -- or has this been priced in? >> financials in japan suffered starting way back in 2016. they are getting less pressure on margins from having positive interest rates. i think that will continue. the problem's not really -- the interest rates is one part of it. the economy's still strong. the boj wants the economy to be stronger through consumer-led inflation. not all that is good for banks. it is secondary to the tech sector and the china relocation and supply chain issue. but still a positive for japan. the nikkei is enjoying the. the yen is still we. it is still ok -- enjoying that.

the yen is still weak. it is still ok. annabelle: thank you for your time this morning. we are just over 10 minutes into the session. the showing is fairly positive. we are tracking the gains in the nikkei, the kospi, both moving higher. , it's the tech storythe theme, playing into it. big gains over the course of this week. we are very close to a fresh record high for the aussie benchmark. 7632, the level to track, we will see if we can close above that to end the day. kiwi stocks, the notable laggard in the region. but positivity across the screen. the question is how that moves throughout the session given the futures for hong kong

and china are pointing to a little bit of weakness. playing into that has been the theme around evergrande. watching if they will watch a hong kong order to liquidate the assets of the chinese property giant. we will preview the possible scenarios, next. this is bloomberg. ♪ or filing returns. avalarahhh ahhh hey, brent! if you had to choose, would you watch paint dry or compare benefits plans? compare benefits. gusto makes it easier to find the right plan for my team. i think i'm going to need new glasses. no problem. you're covered. choose benefits without the (grunting)

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morgan stanley. annabelle: you are watching "bloomberg daybreak: asia." now that a hong kong court has ordered that liquidation of evergrande, the big question is whether that decision will be followed in china. let's bring in our chief north asia correspondent, stephen engle. where do we stand at this point in time? >> it was headed toward this foregone conclusion there would be a liquidation.

it came to a head yesterday with the hong kong court,ordering the liquidation . the big question remains, will the order be recognized and implemented on the mainland? the bonds and stocks traded but the bulk of the assets, $248 billion worth of assets, it will probably get a fire sale price on that if they are actually liquidated and china. -- liquidated in china. there are so many variables here. they have $33 billion in liabilities. the assets don't match that. someone is going to be left short. but we don't know what the communist party, essentially running the courts and china, whether they are going to basically follow the hong kong order. there is no precedence for this essentially. back in 2009, northstar auto, a similar thing happened on a smaller scale, the courts and china did not follow the hong

kong unwinding order, essentially. there are a few other examples, hna group, they took four years to go through a bankruptcy process. it wasn't necessarily a kind of liquidation the hong kong court ordered yesterday. it was more of an open disposal type of process where that restructuring went on. it was a spaghetti bowl of affiliates that operated throughout that process. but it took four years. a long process. then the czar -- than the economic czar -- matt: then the economic czar in china saying to follow the directives from the central government and do not allow the disposal of all these presales, funds in escrow essentially. when something like this

happens, there could be a raiding of the cookie jar and people start grabbing what kind of cash and assets they possibly can and that is what the central government definitely wants to avoid. the last point i will make is, when i talked about that discrepancy between the assets on the mainland and also the liabilities on the mainland, the central government wants social order. they want the uncompleted buildings to be completed. the units to be delivered to those who paid those presales. are they going to be top of the food chain as far as being paid? so many questions to be answered. paul: so, big, messy, complicated. a lot of competing interests. how long is this going to take? [laughter] >> you just said it. it's going to be messy, long, competing interests. was going to happen to evergrande -- what's going to happen to evergrande's affiliate and property services?

there is a spaghetti bowl of different competing units. there's going to be an unwinding, trying to figure out where certain funds are and who gets them? foreign or dollar bondholders, will they get the short end of the stick? [laughter] i can't tell you how long this is going to take. precedent says, it takes a long time. hna took about four years. this could be a long, drawn out process. we will be talking about this. like i sent to annabelle earlier, this is where it starts getting interesting. paul: stephen engle there. we will get more insights on china's property market in a few minutes and hear why ubs is starting to change its view on the embattled sector. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

paul: u.s. officials say president biden is seeking a response to the deadly attacks on u.s. forces and jordan. it is -- that is tough enough on iran and its proxies while avoiding a wider conflict. patrick ryder spoke with bloomberg earlier. >> we will take deliberate, appropriate action. our focus is not to broaden the conflict. from the very beginning, we've been focused on ensuring the situation in israel does not broaden into a wider regional conflict. what you have are iranian proxy groups exploiting the situation, conducting these types of illegal attacks against forces in the region to preserve

peace and stability. we are going to do what we need to do to protect our forces will also cognizant of the fact that we don't want a wider regional conflict. >> who were the perpetrators behind these attacks? >> what we know right now is we are confident these attacks -- this particular attacked against this facility was by iranian back to proxies. -- backed proxies. it carries the signature of hezbollah which has conducted attacks in the past. this is something we continue to look at specifically. >> when you look at this, for people following this, listening to what's developing in the middle east over the last month or so, how big is the difference between those groups and iran themselves? >> for a long time, i ran has used proxy groups around the region to enable itself to have plausible deniability, enable itself to implement policy, and importantly,

to essentially try to expel the u.s. and other countries at odds with its own policies and views from the region. in large part, what you are seeing in iraq and syria is this proxies and to a degree iran exploiting the situation, the tensions in the middle east in an effort to expel the u.s. and the coalition from iraq and syria. and again those forces, particularly in iraq, are there at the invitation of the government of iraq, to assist in the last defeat of isis, that is the mission we are therefore and that is what we continue to remain focused on. >> -- does iran have plausible deniability this morning? >> they organize, train, and equipped these groups and we will hold them accountable. >> you will hold iran or these groups accountable? this is the issue, which one is it? >> i'm not going to telegraph

or forecast our response. we know that iran is behind these groups. we are not seeking conflict or war with iran but we will take necessary measures to protect our forces and we will respond in a time and manner of our choosing. annabelle: that was the u.s. department of defense press secretary, major general patrick ryder, speaking with bloomberg's jonathan ferro. we are seeing u.s. oil futures and higher in asian trading with traders awaiting the biden administration's response to the deadly attack on its troops. fresh news on steady output from opec-plus appears to have put the brakes on last week's rally. bloomberg's su keenan joins us from new york. a lot of questions as to the direction of oil from here. su: the u.s. military will choose its timing on any response. that puts the oil market on edge. traders continue in this waiting

game to see how the u.s. moves. white house officials have said the u.s. is seeking a response that is measured. tough enough to deter iran but it has to be not so dramatic that it sparks direct warfare with tehran. markets were poised for correction with the west texas intermediate flashing signs of being over about the last two sessions. but the competing forces, the geopolitical risks versus the supply is what is causing a lot of the volatility here. wti was up 7% this month. it will end the month with a gain. traders are concerned that not only could the u.s. response risk further escalation in a key area for global crude, but there is this overarching concern about ample supply, which is bearish on price. our fresh export figures show opec-plus output is robust and holding steady. that's why we saw the wti

drop below $77 in new york trading before rebounding as asia trading got underway. brent crude, trending in a similar pattern. the oversupply issue is bearish but a lot of traders are concerned about which way we may go given the overhang of this geopolitical risk. paul: su, meanwhile, we have been hearing thered sea crisis could send oil above $90 a barrel. what's the thinking? su: if there is any escalation, that's where they see oil prices going above $90 this year. without escalation, petrobras says it's a different story. you are looking at a petrobras ship. they say the ships are fairly protected. they rarely use the red sea

for the cargo. but this area is a very "fragile" neck for the oil and gas business. many were not paying attention for that for decades, he says, but yemen is on what side and some i'll be on the other, a very oil rich part of the group. -- and somalia on the other. a very oil-rich part of the group. petrobras says ships have not been affected. it does not ship much oil through the gulf. but prices could go above $90 if there is escalation. he says oil should continue trading between $70 and $90 this year. capital's john kilduff says known of the actors want a full-blown war -- none of the actors want a

paul:. some breaking news on the bloomberg. retail sales out of australia. a contraction of 2.7%. we were expecting a contraction. just not that big. 1.7% was the analyst view. big reversal from the expansion we saw in november. it does suggest a lot of households frontloaded their holiday season shopping and tightened the belt sharply in december to the tune of 2.7%. seeing the aussie dollar losing a little but of ground. currently above $.66 u.s.. let's take a look at how we are tracking in markets around the region should the nikkei having another reasonably good day better by a third of 1%. the asx talking on the door of the record. two points away from the intraday record of 7632.

7630 for the asx. better by two thirds of 1%. the kospi verbally -- the kospi firmly in track. leading the gains. annabelle: also worth pointing out one big laggard in the session so far. this has come online the last couple minutes. japan aviation electronics industry. after the bell yesterday it launched a tender offer for its own shares pricing those at ¥2605 each. the offer it forward is a 14% discount on monday's closing price. agreeing to the tender of 24 million shares. japan aviation planning to spend nearly ¥70 billion on the tender offer. it is running until february 28. that stock reaction you are seeing is to japan aviation

watching a tender offer for its own shares should it is the second time this week we have seen an easy looking to shore up further cash. let's move on to something else plunging in the session. that was china evergrande shares. we had the liquidation order in hong kong court that cemented the downfall of a company that exemplified the country's real estate boom and bust. it is not clear how the liquidation order could be implemented in mainland china. woodbrook economics as if it does go ahead, it is going to be an additional blow to the confidence of chinese investors and potential homebuyers. it could shatter any remitting hopes among creditors the government will bear out distressed the loafers -- will bail distressed developers. head of hong kong china property and research at ubs joining us in the studio. i know you cannot talk about evergrande specifically but i am interested in when you think in terms of the sentiment.

is this something that is negative for the property sector or a positive because it draws a line under the messy saga? >> thank you for having me today. i think this is likely to accelerate the debt restructuring for the other private developers. so far, the other private developers are delaying their restructuring process. with the latest news on evergrande, the widening order, this is likely to -- the company will have to accelerate the debt restructuring because otherwise the bond holders will become impatient. the implication here is based on the announced restructuring program so far, there have been debt to equity conversion. our expected will be a lot of equities being printed going forward. annabelle: in terms of the other developers, do you think the market is wrong in focusing on

the negatives here or should they have been focusing on the positives? these are the companies that have managed to weather the issues in the credit cycle. >> definitely because we are talking about the sector roughly about 10 trillion, 9 trillion roman be on new home sales. with most of the listed developers restructuring their debt. basically, not much players being left. it is likely the soa developers will dominate the market share. paul: what are your expectations around risks for investors in china's property developers more broadly if beijing does not uphold the hong kong court's decision on evergrande? >> i think the damage has been done to the market because based on the bond price they are trading, really low expectations already. also given that over the past

one or two years, the -- in china had been reiterating the project condition is always the top priority. the investor has a pretty low expectation already regarding the widening or the restructuring process. paul: where do you see property evaluations hitting china now? >> there are two types of valuations. one is about the physical property price valuation should the other is the equity price valuation. first of all regarding the equity price valuation, the equities has been falling three years in a row. valuation had been at a multiyear low level. even though the s oe developer trading at 0.3 to 0.6 times. suggesting investors are bearish on the sector. on the flipside, anything

positive suggest markets or government easing support or urban valuation to support demand, that is likely to drive a massive outperformance here. on the property valuation, the property price from peak to now roughly corrected by 20 to 25%. evaluation we looked at is about the rental yield. right now the rental yield is about 2% for tier one cities. which is still lower compared to the mortgage costs. suggesting people holding the property will have to expect further price appreciation because otherwise holding properties -- annabelle: i am interested in how you think the large developers and you are seeing the s oe's could be the big winners out of this. how will they need to pivot

their company strategies? >> number one is deals. going to the prime location because of the reduced competition. instead of going to the lower tier cities, the coated tier one or tier two cities. then the cities they go to the more prime location because of limited competition. second thing is some of them also are transitioning to do the commercial property investment like the landlord. going forward, there will be an extreme. one from property sales and another from rental income. annabelle: what you think about the property measures we have seen so far? we have seen beijing and other cities trying to stoke demand from consumers in the market. it has not had much of an impact so far. it would be something that shifts that? >> over the past one or two years, the chinese government has been trying to stimulate the household sector by removing the

restrictive measures but so far the impact has been pretty limited or not as effective. the reason is because the household sector has been suffering from of the in cub job losses or uncertainty about income expectation should what is needed to stimulate demand back to market here is coming from the central government. this is the reason we are turning more positive regarding the recently announced program which is the urban valuation and the social housing. these two are the central government leverage to take up some of the excessive imagery from the market. annabelle: that was the head of hong kong and china property research at ubs. you have more coming up on evergrande's rise and fall in china's beleaguered housing sector when we speak with charles chang of s&p global ratings later on bloomberg

markets: asia. more ahead on daybreak asia. this is bloomberg. ♪ 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 wealth-changing question -- are you keeping as much of your investment gains as possible? high taxes can erode returns quickly, so you need a tax-optimized portfolio. at creative planning, our money managers and specialists work together to make sure your portfolio and wealth are managed in a tax-efficient manner. it's what you keep that really matters. why not give your wealth a second look? book your free meeting today at creativeplanning.com. creative planning -- a richer way to wealth.

paul: malaysia gets a new king on wednesday when the 65-year-old billionaire sultan officially takes over. the role has largely been

ceremonial but in recent years the mark barton -- the monarch has laid a bigger part in determining who takes a look up our. let's bring in bloomberg's senior editor. tell us more about the sultan. >>. -- >> he is -- it is the southernmost state of malaysia. it is malaysia's second most populous state. it is a strategic vocation next to singapore across the causeway. it is ruled by the sultan. in malaysia, it is a unique constitutional monarchy in which nine hereditary rulers -- nine states of hereditary rulers take turns to be the king of malaysia. they rotate for five year terms. next up is the sultan. he is a colorful character. annabelle: colorful and someone who has not been perhaps shying away from displaying some of his wealth so what do we know about

his financial position? >> one of the things we did in our story is attempt to estimate the sultan's wealth and so what we found out was looking at the wealth and his family's wealth and looking at the assets that are easy to calculate the net worth for, we worked out he is worth at least 5.7 billion u.s. dollars. that is just the surface. there are probably a lot more wealth. he is probably worth a whole and more and he is one of the richest people in malaysia. paul: he is certainly rich and he is about to become more powerful. can you tell us more about that? >> yes. as we mentioned earlier, the king in malaysia is a mostly

ceremonial role. i the past few years, you can trace it back to 2018 when the coalition that ruled malaysia for six decades since it gained independence was ousted and it created a political vacuum. what is happening more as governments are collapsing or in the last general election, november 2022, resulted in the first hung parliament. one of the powers the king does have that is not ceremonial is the king can step in to choose a prime minister in situations like that if an election is inconclusive or the government collapses. the current king has done that three times. the sultan has a lot more power. annabelle: bloomberg senior editor tom redman. you can read more on the bloomberg terminal or online.

here are some of the other geopolitical stories we're continuing to track. qatar says negotiations to free hostages taken by hamas during its october attack on israel are making progress. the prime minister says talks are moving to a place which could lead to a potential permanent cease-fire. qatar is the key mediator in talks between israel and hamas. >> right now if i would describe it, the progress we are making in the last couple of weeks, we are in a much better place than where we were a few weeks ago. annabelle: we have learned russia is considering an indefinite suspension of wartime capital controls. the measures are ended easing pressure on the ruble after international sanctions over russia's war in ukraine. the restrictions require exporters including wiggle producers to repatriate 80% of their overseas earnings.

90% must be sold for rubles. you can watch is live and see our past interviews on our interactive tv function at tv . you can dive into any of the securities or bloomberg functions we talk about plus become part of the conversation by sending instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . ♪ paying my team with gusto takes just a few clicks. they automatically file my taxes for me too. can i run payroll too? choose payroll without the pain.

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annabelle: this is daybreak: asia. bring you the breaking news crossing the terminal. china's 10 year bond yield falling to the lowest level since 2002. a more than two decade low. what has been driving that is this expectation we will have to see some monetary easing after the central bank steps loose in liquidity. the yield slipped back to 2.8 5% . levels not seen since 2002. what is clear out of all of this is china's economy remains extremely fragile. we had liquidation order for evergrande yesterday capturing the headlines but the weakness in china's economy is continuing to persist. there is the property market route. there are other issues at play. more of the structural ones we continue to talk about. there is the call for policymakers to deploy more stimulus to try to shore up growth.

one of the moves we head toward that end was last week the pboc pushing through the rrr cut set to take effect in a couple of days. paul: let's take a look at some of the corporate headlines we are tracking around the world. the brazilian mining giant has reported a bigger than expected increase in fourth-quarter i when or production. the world's second largest supplier of the economy delivered more than 89 million metric tons last quarter. the average estimate among analysts was for 83 million. the output may undermine prices which have been resilient despite china's slowdown. elon musk says the first human has received a neuro-link brain implant. he says the patient is recovering well with an initial result showing what he calls promising neuron spike detection . the start up a mist to create a computer brain interface that will initially unable people with paralysis to control external devices with their thoughts.

it has raised more than 500 million dollars in venture capital since 2016. ibm has told u.s. managers still working remotely they must move closer to an office i august or leave the company. a memo sent earlier this month all managers must report to an office or client a location at least three days a week. ibm has closed several u.s. offices since the pandemic began potentially complicating return to office plans for workers. scrapped plans to list electric vehicle business due to a lack of appetite amid a slowdown in demand. it was seeking a valuation of a .7 billion dollars for the business which is almost as much as the market value. the performance of ev-related listings fell 35% over the past 12 months. annabelle: recapping the headline that crossed the last couple of minutes, china's 10

year bond yield falling to the lowest level seen since 2002. that tells us how much concern there is around china's economy. the health of the major economy and the push that is coming down to policymakers to push through further easing. it is interesting because overnight we had the s&p 500 hitting a fresh record high. at the same time, the optimism is not translating to what we are seeing in chinese futures. dropping ahead of the open in half an hour down half a percent. one of the reasons we have seen investors in china turning or looking for alternative assets outside of chinese equities because the appetite has continued to run high. investors are burned by years of underperformance. that has fueled price distortions in funds that are tracking the assets. let's get more with our analyst.

what is happening because there has been a big focus on the etf's tracking japanese assets in mainland china. >> chinese equities, it has not performed. investors are searching for yield elsewhere. they're going to usa, s&p 500, nasdaq at an all-time high. they're going to japan. we have seen the nikkei return almost 30% last year. investors are trying to go away from their chinese about and go into in alternate asset class. the problem is a lot of the fund houses have a quota in terms of how much they can invest overseas. this quota is coming to their peak. as a result, ritual funds, etf's are reaching this level and they can no longer trade. what this means is you can no longer buy into this etf. some of these etf's have started to trade at a premium.

you funds msci u.s. 50 traded at a 43% premium last week. whenever the etf trades at a premium of more than 10%, the csrc will put out a warning to investors. some of these funds have had almost 12 mornings the past week so this is a huge amount to this is a caution to be careful. take note of these etf's are trading at a premium should annabelle: given those warnings that have come through and the market dynamics and rules around at, do you think we can expect the trend to continue or will it be stopped in its tracks? >> the trend is going to continue because people don't have faith in the chinese economy. people are fleeing. they are looking for places to put their money elsewhere. usa has done well. japan has done phenomenally well. you can expect more people trying to diversify their assets. one of the things that is going to happen is we can see more etf's being halted or having their creation halted where you cannot buy into this etf. some of the things that may alleviate this is some of the

issuers may issue other etf's. china universal is going to be listing at msci u.s. 50. because it is a new etf, they may not have the court a problem some of the current issuers have should i think we could see more halting coming. we could see more warnings coming. the premium does trade at a discount. it does vary based on market conditions. it is not abnormal for an etf to trade at a premium or discount. we have seen this in bitcoin when they had their creation halted. it is fairly normal for this to happen. i could see more etf's in china, the ones who have a quota being halted. paul: besides the potential for more halting, what else could possibly happen in the etf space in china? >> one of the things that could happen is we could see other etf issuers launch more products

with foreign underlying's. there clearly is demand. there is currently only 32 etf's that have a quota. china universal has filed for an etf tracking the msci usa. one of the things to be cautious of is whether the csrc will approve it. they would like to keep the money onshore. they would like to see investors invest into the market to that is why have seen the support of the national team invest into the csi 300. we have seen a lot of influence into csi 300. that is the csrc telling investors we are here to support the market. you don't need to go to invest in the usa or japan. you can invest locally in this market. it will be interesting to see what the csrc does in the coming weeks. could see more halting coming in , more products launched with foreign underlying's.

paul: bloomberg intelligence etf analyst rebecca. let's look for the stocks to watch when the market open gets underway. byd and appears after the company reported earnings. still fell short after analyst expectations. poverty shares in focus as the nation's top economic official calls on city authorities to follow through on easing measures for the housing market. we will be watching evergrande property services as it resumes trading in hong kong. have a grand and ev has applied to resume trading. a quick look at how markets have positioned. we are watching the asx about 10 points shy of the intraday high. that is it from daybreak: asia. market coverage continues with thesta of hong kong, shanghai and shenzhen next. ♪