haidi: we are counting down to asia's major market opens. fresh momentum expected to be injected into the equity rally, particularly when it comes to some ai, chip, amtek sensitive markets. japan and korea among them. it is all down to, i should say, happy nvidia day. this is going to provide more momentum into this market rally. paul: it does start to feel a little bit like we should have some cupcakes, or maybe a public holiday so everyone can absorb the enormity of what we heard. predicting another impressive blowout number for the current quarter of 24 billion. the expect -- also potentially a bank of korea decision. haidi: exports have been strong when it comes to korea largely on account of chip exports. let's take a look at the open. paul: all right.

what we have? haidi: he brought upside. we were expecting nvidia again shattering expectations to bring a bit more fresh fervor into the markets. starting to sound like a broken record. it is like waiting for goo -- we're away from the record high but continuing to watch for that level very closely. a nice gain in japan. topix up by about .5%. dollar-yen over the 150 level. that is a level where we see murmuring from the department of finance. also watching for the start of things when it comes to the fed. we had the fomc minutes. the take away his we see most fed officials more concerned about the risk of cutting to earlier than the risk of holding rates too high for too long.

perhaps we are also seeing a bit of readjustment of expectations when it comes to fed rate cuts across this market as well. that of course plays into the gap that we see when it comes to japanese assets in the u.s. korean markets, this is a key one when it comes to where we see the chip rally going next and that will be where we see the biggest reaction, particularly the likes of high next. also bank of korea decision day. we are not expecting significant dramatic change from the b.o.k.. that inflation fight continues given that inflation numbers are still higher than what the b.o.k. would be happy with. we are watching any kind of support for the won. this is the best performing major currency in asia for the last month. we expect the b.o.k. keeps rates unchanged at that high level of 3.5% for the base rate, the highest since 2008.

let's take a look at the big story of the day. nvidia earnings. nick turner joins us. you can cut these anyway but it seems like the juggernaut, the momentum we continue to get from this one company plays out for another quarter. nick: yeah. it is kind of amazing to watch when it hit because i think you have these skyhigh expectations, they obviously cleared them. even then people are like, is this good news or bad news, the stock dipped initially before roaring back. but a case where the forecast came in 2 billion plus higher than expected just for the current quarter. very clearly good news and obviously a lot of bullish remarks from the ceo. it seems like in the end people felt pretty solid on it. paul: one does wonder how much more upside there is for nvidia but it feels like we ask this

question every quarter. where are we headed from here? nick: one interesting thing is china has been a big story. nvidia is precluded from selling us most lucrative chips in the country. it is now making ones that are stripped down a little bit. you have a case where that was a quarter of their business. now it is in mid single percentage of the data center business. so they are kind of firing on all cylinders without the world's biggest chip market even working in their favor. so it is all the more impressive. haidi: it is interesting, because you flag some of the potential headwinds. a lot of these customers are potentially in housing chip capabilities as well. there is certainly more competition. there is the scaling down of capabilities for the massive market. are we kind of starting to see

in the next few quarters, particularly if you look at the diminishing return of big numbers, that things are going to get tougher? nick: i think so. amd is certainly a potential threat. they have a product they are pretty excited about protecting and it will make billions for them in their first year. and as you mentioned, you have the big data center, which are the most critical customers for nvidia these days, they are designing their own chips. do those eventually get so good or so plentiful that they can scale back their orders? maybe at some point down the road. but it seems like for now those are more distant threats. paul: all right. bloomberg senior tech editor nick turner. let's take a look at how some asian chip stocks are performing. we got a couple trading at the moment. sk hynix out of south korea enjoying quite the bump, better

by 3.5%. perhaps no surprise we are seeing asian chip stocks performing well off the back of that strong nvidia result. to talk to us more about this we are joined from hong kong by yifan hu, regional cio and head of apac macroeconomics at ubs global wealth management. i want to get your reaction to how we are seeing the asian chip stocks move in relation to what we just heard from nvidia. do you buy at these levels? yifan: i think for this year and also for the coming years, and at positive for the asian stocks, we call it abc. a is ai beneficiaries, b is banks, and c is consumption proxies. for the ai beneficiaries, we estimate the economy for the coming five years combined the

growth rate will be like 70% for the whole world. so i guess asia is also on supply chain of the ai. i guess that will also largely benefit from a global ai trend. we also see leading companies continue to beat expectations and putting further positive sentiment on the market. paul: we just heard from nick a moment ago saying a lot of this is happening, these blowout earnings are going on even without the participation of china due to geopolitical restrictions. can you anticipate that changing in the near term at least? yifan: for the overall asia-pacific this year, gdp growth we forecast will be better than last year comparing

to the rest of the world. i think all forecasts this year for all of asia is 5.5%. mainly for three reasons. first i think this year is further rate cuts. for the policy side it is more towards easing. for the second, export slumping will be a moderate recovery. and for the china side we think the government will continue its policy. so that will have a positive spillover to apac countries. we think with a stronger currency and also favorite macro development and stronger earnings. so we are positive for the apac this year. haidi: interestingly you are neutral when it comes to japanese stocks on a global basis. there is a lot of exuberance around japan at the moment.

are you being more selective? yifan: yes. i think we are overall neutral japanese stocks because it has already rallied pretty much. but we think still we will be selective. some sectors are still quite positive. one side is bridge large caps. for the large caps especially for the domestic economy such as banks and also some of the property developers real assets related. on the other side we think japan are some of the laggards. so we think overall there is still some positives for the laggards and large caps for japan. haidi: is south korea a better alternative to japan?

we are seeing the return of foreign buying and it has been one of the best performers. in addition to how we expect stocks like sk hynix to outperform alongside the likes of nvidia. do you think south korea is looking more interesting? yifan: south korea, comparing would last year at think south korea probably will be the first country in apac. and we also think for earnings will probably improve compared with last year. there could be chances for south korea and also for exports. this year could also pick up mildly. we see there are some opportunities for south korea as well. haidi: yifan hu, regional cio at ubs global wealth management. still ahead, marriott sees great

strength and its business in china and across asia. our exclusive conversation with the ceo is next. this is bloomberg. ♪ 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. you don't have to worry about things like changing tax rates

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paul: let's take a look at how chip stocks are doing in the early going here in the asia-pacific. no surprises. we are seeing a lot of green following very strong numbers. nvidia pritikin even better numbers for the current quarter. we have all these stocks in positive territory. the best-performing higher in the tokyo session. sk hynix as well better by 3.3%. it bit of analysis from bloomberg intelligence saying sk hynix sales of high memory chips could expand about 50% in the next few years based on nvidia's

strong results. haidi: china is banning major institutional investors from reducing equity holdings at the open and close of each trading day as part of beijing's most forceful attempt yet to prop up the nation's stockmarket. let's get more with our greater china or executive editor john liu. what do we know about this and what are the implications? john: what we understand so far is the csrc has gone to the major asset managers in china, the proprietary trading desk at the brokerages, and told them in the first 30 minutes of trading in the last 30 minutes they are not allowed to have a net sell position. that means they can sell some shares but they have to buy more than they sell. as you said this is the latest step the new head of that agency has taken since he took over right before the lunar new year holiday. the government has been taking all sorts of measures to try and bolster the market.

so far it has worked. the three trading days we have had since the holiday, they have all been in the green. paul: we also have china drafting a new law to promote the development of the private sector economy. how important is this going to be in terms of propping things up? john: what we understand from state tv is the law is being drafted to address some major concerns private businesses have. they are a major employer in the cities especially in the understand china has been having troubles with youth unemployment. so that is one outlet for creating more jobs. that concern has come from you will remember in 2021 there were all these unexpected policies around private education, around tech, the real estate crisis has not helped. we have a lot of small suppliers and contractors not being paid because developers like evergrande are having financial troubles.

so this law is supposed to address some issues to guarantee the rights of small business owners to try and address this confidence issue. paul: greater china senior executive editor john liu there. despite the issues in china's economy, the marriott ceo anthony cap alano -- anthony capuano says the hotel chain is seeing a travel rebound not just in asia but the u.s. as well. anthony: the u.s. has reached a normalized environment a little more quickly. if you look at the experience we had in our business last year, we saw global rev par revenue pearl available room, which is the metric we use to the strength of the business, increase about 15%. single-digit growth you're at home in the u.s. strong double-digit growth internationally. some of that is because those markets open a little more slowly. so they benefited from easier

year comparisons. even as we look into 2024, we guided on our earnings call three to 5% this year. again, disproportionately stronger internationally. >> let's sit international for a moment. u.k., germany, arguably in recession, japan in one, china struggling. you don't see it in quite the same way and i find that really interesting. are you seeing a bounceback? which region are you more constructed on? anthony: asia broadly is really strong from a travel perspective right now. we think about asia in two buckets if you will. apac and greater china. greater china is fully recovered to pre-pandemic levels. although interestingly, largely on the shoulders of domestic demand. if you look at cross-border airlift, it is only about 60% or 70% recovered to pre-pandemic

levels. so we actually think there is still a fair amount of upside to the china recovery story as more and more cross-border travel recovers. i will be in china in two weeks and i'm anxious to see how it feels in terms of international travel. i was there maybe be nine months ago and it felt very domestic. i felt like i was one of the few international travelers. so it will be quite interesting. when you look at the apac markets, they are booming. thailand is very strong. singapore is very strong. i was just in vietnam, really strong both from a development perspective and an inbound travel perspective. and the last comment i would make, you have seen china create some visa-free travel zones across the apac region and that is really impacting demand patterns. >> we talk about banning iphones. is there a problem was staying

at a marriott hotel in china? anthony: no. it's our second largest market. we just opened our 500 hotel in china. we have another 400 hotels in the pipeline behind that. the vast majority of our portfolio is china-owned. the vast majority of our workforce is chinese. so we see great strength in our china business. haidi: marriott ceo anthony capuano speaking with our colleagues there. you can get a roundup of the stories you need to know to get your day going into today's edition of daybreak. bloomberg subscribers can find that on dayb on your terminals and it is also available on the bloomberg anywhere app. you can customize those settings so you just get the news on the industries and assets that matter to you. this is bloomberg. ♪

paul: hsbc ceo noel quinn says the firm has strong confidence in the china economy. he spoke with bloomberg after the company saw its profits sink in the last quarter after taking unexpected charges on holdings in the chinese bank and from selling its french retail operations. >> i am very pleased with the fact we have been up through 40 billion of pbt which is a record. also i am very pleased with the return on tangible equity. we have been working hard to make sure we delivered returns and be did that last year. we had a return on tangible equity of 15.6%. i'm also really pleased with the dividends. $.61, the highest dividend for the full year since 2008. and we completed $7 billion buyback and announced another to billion-dollar buyback this year. i am really pleased with that. strong capital generation.

i believe with the cet1 ratio of 14.8% we have strong potential for future capital distribution as well. in the fourth quarter we did have some noise in the numbers. we had three principal items. the first one was we rebooked the loss on sale of our french operation now that we completed that transaction. it is neutral for the year because we took a credit on that in q1 and we have chit -- we have taken a charge in q4. there was an adjustment for hyperinflation in argentina driven by the devaluation that took place. that is really a technical issue. and the third issue, technical issue. we had an investment in bow, for 20 years. every quarter we have to do an evaluation in use test. we do that again this quarter, updating the model. and it compares the value in use the carrying value. and the value in use dropped below and that resulted in a 3

billion charge. i want to make clear that has no impact on our capital position of any significance. it does not prohibit distribution, because it is noncapital impactful. it is a technical accounting issue. and i also want to reiterate, we have strong confidence in the china economy. we believe there are huge opportunities ahead. and we believe that our partnership with bocom has been a good partnership for 20 years and that status has not changed. >> given what you just explained, are there any large asset sales ahead? is there anything you are thinking either you need to selloff or that there could be some kind of accounting concern? noel: i think we have the final leg of our candidates to come at the end of q1. that will be a big sale completion. we are on track for that at the end up q1. that will allow us to, as we have already announced, purchase proceeds.

we would like to use it as a special dividend of $.21. we continue to look at the portfolio to make sure the portfolio is strategically correctly positioned and no businesses are underperforming. but we have done the material transactions. but we will continue to adapt and change if we feel part of the portfolio is not strategic or underperforming. if you revert the underlying profit before material notables, q4 reports would have been a 7.3 billion pbt which is well up on the prior quarter in 2022. >> going back to potential significant sales, are you close to identifying any new acquisitions? noel: we have done quite a few. i was pleased we have announced the acquisition of city banks wealth business in china. that follows to other

investments we put into china recently. taking shareholding in our insurance joint venture from 50% to 100% anti-securities joint venture from 50% to 90%. so our confidence in china is still strong. we have done three bowl dawns there. we will look for it particularly in our wealth management business. we believe buying additional product capabilities, specialism for distribution capability would be interesting but we will not announce anything on that. if and when we have a transaction to complete. haidi: noel quinn there. we will be watching hsbc in the session today after it fell the most in about four years on those numbers. taking a look at how futures in europe are opening up. we are seeing asian equities looking mixed. u.s. futures climbing. the big moves are in ai and chip

related names as we saw nvidia surging in the after-hours session. european futures looking robust, .6% higher. we are seeing european stocks edging lower but still pretty close to a record high. some caution ahead of the nvidia numbers. that potentially adds momentum now that they have been delivered. futures up by about half a percent as well. very much a mixed day when it comes to trading in asia. paul: let's look at how we are doing on fx markets. the won will be in sharp focus, currently strengthening against the greenback. it is of course bank of korea decision day and we will have that decision for you within the half-hour we expect and we will be unpacking that. we are expecting a hawkish hold from the b.o.k. and that is reflected in the currency markets at the moment. not a great deal of change for the yen. bill parked at 15040 in the

dollar spot index has been going sideways. we had some commentary out of the fed earlier pretty michele bowman saying the time to cut is not now. also noting price pressure in some sectors especially housing is still to hybrid and we heard from -- still too high. and stagflation is back on the agenda. perhaps we are not going to see as many fed cuts as we might have anticipated when we began the year. the aussie dollar little change. stay tuned for the bank of korea decision expected within the hour. plenty more to come on daybreak asia. this is bloomberg. ♪

paul: we have some numbers out

of japan. pmi numbers for the month of february. a slight slowdown from what we saw in january. 50.3. still in positive territory. manufacturing, 47.2. the services pma from g1 bank is still in positive territory, 52.5. the yen, not a lot of movement. still above the 150 level. foreign ministers from g20 countries are gathering in rio de janeiro. this is the first time the world's top diplomats are meeting since the hamas attack on israel. a president recently compared actions in gaza to world war ii.

in diplomacy terms, that is an interesting way to start a meeting. derek: it is not shaking hands of friendship. the g20 is starting off with multiple geopolitical crises at the forefront. realistically, it is not quite clear how they will be able to tackle these or if they will be able to tackle them at all in a kind of unified way. there has been a fair amount of reporting that suggests g20 foreign ministers and the leaders later on this year may not be able to reach an agreement on language regarding some of the world's biggest flashpoints. that kind of unity we have seen in previous years not being the case this year is one of the defining features as we are coming up.

paul, we are seeing this conflict between israel and hamas. we talk about it on the show a whole bunch. it is not just an israel-hamas conflict. you are talking about wider-sca le issues. shipping disruptions up to the suez. and massive disruption of revenue into egypt that is causing them problems and raising the cost of goods shipped around the world. that is adding to inflation. all of this is an everybody problem. the g20 has been designed since it was set up to be a place for the biggest nations in the world to come together and be able to talk about their problems. that is going to happen. they will get together and they will talk. are they going to be able to get closer to a resolution on any of these big things?

that is the key thing we are all watching for as the foreign minister start to meet in rio de janeiro. haidi: this is not the first conflict where these leaders have struggled, failed to find consensus. it is interesting contrasting where we were a year ago, where russia seemed to be on the cost of defeat. things have changed quite significantly. does this change the tenor of discussions with the participation of the russian foreign minister? derek: it is interesting because sergei lavrov has been a part of these discussions. vladimir putin has not gone to the last couple of g20s. the last one in india was a lot harder to reach an agreement. they eventually did get there, which was a surprise and a diplomatic who. in bali the year before, it was

easier to get there but it was a struggle. now in brazil, it seems like it will be a lot harder to get there. the thing that i am watching, haidi, is not necessarily what is happening in the main room but in the side conversations. what message does the u.s. bring to brazil? what conversation do they have there? are they able to move anything on the israel issue? what about with south africa, the next g20 host? it is the key country bringing case against israel to the world court. what sort of conversations are happening there? we see a lot in front of the camera but a lot of diplomacy happens on the sidelines and toward the shadows. that is where the real news will be. that is the headlines i am really watching for. paul: the news does tend to come

out on the sidelines. there is always that focus at the very end on communication. is there a potential way around this problem, just not to put anything out? derek: there is. you can do that. there is no ironclad rule that says everyone has to agree on all the language in the statement. the host can just go out and make a statement and say here is what we discussed. you can put in the communique that these issues were discussed. there are many different ways to word it to say this is an issue of concern but we do not necessarily agree on the full bank of solutions. there are outs here. there are exit ramps, as i like to say, to this difficulty. that unanimity is hard. you all asked about ukraine, and i do want to get back to that. i think the level of unanimity

that the world is struggling to reach here does sort of, aside the level of difficulty that some folks are having, particularly the united states, in figuring out how to reach future ukraine aid packages. you are hearing from volodymyr zelenskyy and kyiv, the struggles they are having with western aid not necessarily being as quick as ukraine things it needs to be or as much as ukraine thinks it needs to be. there are suggestions the biden administration is looking at more advanced weaponry going to kyiv. the biggest thing at issue is the $60 billion-plus package that congress is stalled on and making legitimately no progress toward actually getting through right now, the big divide being between donald trump-aligned

republicans in the house and the biden administration itself. haidi: breaking news managing editor, let's take a look at how broader markets are trading on the back of what was release and euphorbia with those nvidia numbers, shattering expectations. this is what we are seeing with trading in japan. tokyo and korean stocks seem to be the biggest beneficiaries in this part of the world. the nikkei up over 1%, potentially as we continue to see it trade. the 1989 record high we have been looking for for quite some time. a little bit softer ahead of the bank of korea decision. looking for signaling as to where they are. also looking for some support. one of the best performers in this part of the world. alongside the turnaround we saw

in korean equities. sidney stocks a little softer, about .3% lower. kiwi stocks staging a pretty good rally. one moves we are watching is the -- flag carrier after the aftermath of the post-covid travel boom. what jumped out to you when it comes to these numbers? >> it is a big week. the stock was up for the first time in five sessions. the good is it just beat estimates. the bad news it was still down 13%. the new ceo said this morning those are positive early signs. she said the airline has been listening to customer feedback. she does not just answer to the customer. she has to keep shareholders happy.

they are used to big returns from qantas. we saw numbers that were interesting. there will be a $400 billion share buyback. there will be new initiatives like faster wi-fi on flights and fled credits for 24,000 employees. these earnings show the tight rope they are walking between trying to restore the brand to what it was and try to get customers back literally on board and keeping shareholders happy. paul: there is another issue around reputation, which has suffered over the past few months or years. there is a new chairperson. how is this likely to impact that? karen: the reputation has been shredded in recent months. they have had accusations of price gouging and things that have turned customers off. at the same time they announced a new chairman who is an interesting choice. someone who is a known industry veteran in australia and the x chair of a huge company. he is being brought on board to

get the airline back to where it was. returning to one of australia's most trusted brands. they will have to deal with a lot of public anger over price gouging, concerns they were charging too much when people were struggling to make ends meet. this will be a crucial next you months for qantas. customers will be watching and some will the markets. paul: we are also watching after it reported a 41% jump on first-half profits. it is on the back of it second-highest on record. our commodities reporter is here. what were the standouts of this report for you? martin: this really shows how iron ore has been the big performer for mining companies this earnings season. this week we have had bhp suffering a 2.5 billion on

nickel. a slump in net profit. glencore also seeing a decline. iron ore prices despite all the talks of china's slowdown have been doing reasonably well. prices rose last year. churning out near record rates of production. profits up 41%. it has benefited from being a very focused producer of iron. haidi: we know iron ore is a cash cow. we also know there have been forays into hydrogen, other investments as well. how is that playing out? martin: still at the very early stages. the iron ore business has always

been fortescue's core. there billionaire founder is leading the push into green hydrogen. during this year they have finally approved a number of projects. the money they are getting from iron ore at the moment is going to help feed some of that push into other areas. a lot of the projects will not be up and running for a long time. they will be hoping the iron ore price stays relatively resilient over the next couple of years. haidi: as you have said there has been this interesting decoupling between how the chinese economy is faring and a fairly resilient levels of pricing and demand for iron ore. did we get much guidance on what to expect going forward? martin: yes, you have seen iron

ore prices come down a little bit already this year. this week there have been some -- in the market. look, i think broadly speaking, last year was a good year for commodities demand from china. this year is looking cheeky in terms of expectations. a month ago or two months ago people were a bit more hopeful in terms of more decisive measures. as all the miners have pointed out, they are waiting to see how some of the policy initiatives from beijing feedthrough into final demand. that affects commodities across the board. it is not just iron ore but copper, aluminum and everything else. paul: commodities reporter martin ritchie. we will hear from fortescue exclusively later on today. we have other exclusive

interviews after their results. more to come in a moment on "daybreak asia." this is bloomberg. ♪ thanks to avalara, we can calculate 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 haidi: in all the excitement when it comes to nvidia, that has month such a big fundamental driver of market exuberance, the

other half is what happens with the fed. it has been interesting, the consensus seems to be the fed voters and participants see much more concerned about the risks if they were to cut too quickly as opposed to the risks if they were to hold the rates higher for longer. balance sheet talks will guide the eventual decision when it comes to the runoff. some noted the starling inflation progress. paul: there seems to be a consensus around the idea that cutting too soon and then having to lift rates again is not a terribly good look. we have had conversations from j.p. morgan. a warning with a stagflation vibe. . he said investors should be open-minded that there is a scenario in which rates stay higher for longer. he said we have had one wave of inflation. there are questions if a second

wave can be avoided. this idea is also reflected in the bloomberg question of the day, which raises the question, how long until it is only three fed rate cuts. it was not long ago the people were talking about seven. now we are down to four. it begs the question when we will get all the way down to three and where this ends. haidi: there is a lot of uncertainty that we have not gotten to. we have a lot of geopolitical uncertainty. as we kick into another gear for the risks domestically from the u.s. from the presidential campaign, that should be interesting. take a look at how we are seeing this play through with u.s. treasuries. a muted reaction to the minutes from the fed meeting, policymakers are more concerned about moving too soon. we did see the u.s. removing highs -- remaining near highs.

we saw the longer term treasury yields near their highest levels of the year. twenty-year bonds stayed elevated after those minutes. the expression of caution, we are seeing a pretty steady picture when it comes to the dollar. u.s. futures is where it is at, equity futures. the nvidia results are playing out throughout the session. paul: let's talk about stocks. take a look at the nikkei. chip stocks are performing well in south korea and japan. the nikkei just about 200 points away from that december 1989 record, 1.3% right now. that milestone back on the watchlist. new zealand also performing strongly. a lackluster day here in

australia. the stocks that have reported earnings, including fortescue, are doing well. let's take a look at fx markets. it is bok day. we are awaiting that decision as we speak. we are seeing the won strengthen. 3.5%. a hawkish old. that is being reflected in some of the movements. the yen, very quite at the moment. 150.36. on the back of the fed speak, crab walking sideways. the aussie dollar a little bit stronger, just better than 65.5 cents. haidi: that decision just

crossing the bloomberg, more support for the currency. bank of korea leaving the key interest rate unchanged at 3.5%. nine out of 10 surveyed forecasting for the bok to hold that rate at 3.5%. there is indication, the inflation fight for korea is not yet over. the base rate is unchanged, 3.5%. we are talking about the hawkish old for now. the reason calling has not been enough for them to start cutting. kathleen oh is an economist at morgan stanley who joins us for her reaction. no surprise in the headlines. kathleen: hi. of course, the bok decision this morning is as expected, a unanimous hold. our focus will be on the quarterly forecast macro data on

the gdp and inflation. we expected to be unchanged numbers like november. haidi: we have seen an increase in communication not just from the bok but other central banks warning about the volatile nature of inflation. is the bok concerned we could see one step forward, two steps back with how it comes to how inflation proceeds from here? kathleen: i think the bok will be concerned about the trend of inflation, not just one month or two months of fluctuations in the numbers. when we see the overall trend inflation both on the headline and core, we see numbers coming down and stabilizing on a trend basis. i think the good news for the bok would be inflation expectations have been coming down. for february, it has been unchanged at 3%. on a two month basis, it has

come down from over 3% to 3% and is likely to go under 3% going forward. paul: expectations were correct around cpi and gdp growth. bok remaining the 2020 four growth forecast at 2.1% and the cpi forecast at 2.6%. can you talk to us about how you see the consumer playing into the story? we have seen retail sales contracting and south korea. what is your outlook? kathleen: of course we do see outperforming overall but domestic demand had been weakening. the services reduction has been coming down. retail sales have been slowing down for four consecutive quarters now. that should play into the inflation stabilizing going forward. the demand pressure should we can. we see the number headline

coming below 2.5% from the second quarter -- onward, closer to the bok target. paul: how about the manufacturing picture, particularly for south korean semi conductor manufacturers? if you strip out seasonal factors, what is your outlook? kathleen: we have just had the 20-day expert stated that did show the headline number was down. the per-day basis, removing the noise from the lunar new year continued to show a strong momentum in exports that should imply the manufacturing, especially in the tech sector, had been quite resilient. that is our outlook going forward in the next two to three quarters. continuing to push the growth number overall on the gdp. haidi: i wanted to talk a little bit about the report when it

comes to careers reforms. we have seen some of that reaction when it comes to the positivity into korean equities. do you feel it is different this time when it comes to these reform measures? kathleen: i think it is clearly a positive step the government is making efforts to reform capital markets in the corporate sector. we have more comprehensive framework this time and more details should be coming out next week. for now, both the government's commitment and the reaction by investors seem quite positively received. at the end, we will eventually need to see the details next week coming from the government will be key in making them reform different from previous years. paul: just before we let you go, very quickly, when the policy from the government gets announced on the 26th, what sort

of reaction do you anticipate? kathleen: so far we have had very positive reaction from investors. we have seen costs doing a lot better since the announcement in january. we do think both the expectations should be reflected on the markets and we do have positive expectations from the details. the details are very important from the government. paul: kathleen oh, chief economist at morgan stanley, thank you so much for joining us. bok staying at 3.5%, maintaining cpi and gdp growth outlook. china markets open next. this is bloomberg. ♪