>> this is "daybreak: asia." we are counting down to asia's major market opens. we are looking ahead to central-bank reaction as we get more data to percolate through. also the divergence between the fed and the boj continuing to be a pain for the bank of japan. paul: we saw the yen move higher, stronger than expected factory gate from the u.s.. we are hearing from chris, from the rba. he is not ruling anything out when it comes to the future move of rates in australia. haidi: he said uncertain when he was speaking upstairs earlier at bloomberg offices in sydney. uncertain is also what we are looking ahead to in terms of how the yen plays out, in where the intervention comes. we are under that, but looking pretty close with the dollar at its highest, pretty much its highest levels we have seen so far this year, at least since

the little of february. the nikkei 225, stronger by .25%. we did have the first day of the fiscal year for japan. we are seeing investors at the start of this week doing profit-taking, particularly when it comes to the performers. we are seeing broad upside as the nikkei comes online. watching those chip stocks. we had news of further investment from the governor -- government, looking to make those two nanometer chips. that would be a significant uplift when it comes to those chip and ai and tech related names. topics moderately higher at this point. dollar-yen trading at the 151 level. 152 is potentially where we see intervention. of course, new year, same old issues when it comes to the battle between the dollar-yen. the same old currency problem confronting traders and the government. there will be big questions as to how the intervention will

play out, and how long it potentially can last, given we know currency intervention does not tend to be long-lasting. even if it is heavy-handed. intentionally, this is another risk when it comes to japanese equity rally. look at korean stocks. the we could see -- we could see those chip related names reacting. the kospi, smaller. but the index is just in positive territory. let's get more from our strategist, who joins us now. lots of questions as to how the yen intervention will be executed. is 152 the level? what will it look like? most importantly, how much two further buck do they get for how impactful any move would be? mark: the japanese authorities have been quite adept in the past, letting the market get into a position where they are long on the u.s. dollar and intervening afterwards.

that would suggest they would let dollar-yen rise through 252, if that is the path that is going to go ahead for. and they will wait until they feel the market is overstretched. and then they will do their intervention. . that has been a tactic in the past and it has been more effective. they will be looking for dollar-yen to rise further before they show their hand. there may be more than one round. it is quite possible they will use successive rounds of intervention to come in and support the yen. it is unlikely to be just one hit. that is the way that they have lived in the past. from the market's point of view, they will not necessarily be looking for 152. they will be thinking, it could even be closer to 153 or higher. certainly, ministry of finance, the bank of japan, have proved before that they are good at taken the market off guard. paul: they are good at administering the medicine, but how enduring is the medicine

likely to be? especially if we keep getting data out of the u.s. giving us upside rises. -- surprises. mark: it certainly makes it more difficult for japan. because as you say, now that people are increasingly looking for fewer interest rate cuts in the united states. it may be two interest rate cuts get priced into the market for the rest of the year which is positive for the u.s. dollar. it does not help the japanese yen at all. the japanese authorities have shown they can be coming in very big sized. they can be very persuasive. they will be thinking they can move dollar-yen by at least 500 pips. if it is 152, not get down to something like 147, or somewhere in that kind of zone. they will not be looking for a small move. they will be looking for something significant where they can persuade the market on top of the situation. the timing of it will be crucial. they will be paired to do it outside of asia. they don't mind intervening in

new york or in london. paul: bloomberg mliv strategist mark cranfield there. our next guest expects dollar-yen to weekend moderately. let's bring in our guest, aipac equity and credits at ubs wealth management. let's start with your views on the yen. can you define modest and do you have a number in mind that the finance ministry will be looking to defend? hartmut: on the former, maybe beyond let's say, 144 level, thereabouts. we critically look, as we just heard, i would agree that it matters what happens in the u.s. think in terms of interventions, we heard it a few times in the recent past. it can be that effective, it certainly helps that if they do. i think it remains to be seen whether we can have that effect. the is we see broader -- the key

is we see broader weakness happening. only then do we think that the end can outperform the other currencies. paul: if and when it happens, what sort of back to you expect to see on japanese equities, which have had a tremendous run over the past few months? hartmut: i would first and foremost expect some effect on the exporters. therefore, if you look at exposure in japan, where we had a neutral position, to focus a bit more on either value, or in particular, domestic stocks, financial stocks in particular i would mention. i think these are the promising ones within japan. on the margin, probably exporters a bit less so. haidi: when you take a look at china, you say you are focusing on the alpha. what does that translate to when it comes to sifting through what does look like perhaps an emergence of opportunities now?

hartmut: when -- what we are seeing in china is interesting. we see a couple of capital measures. and over the last couple of years, that has intensified. but also in the absence of growth like we used to see it. that could be an interesting opportunity. dividends, buybacks. we think some of the more traditional, especially in the short term, the more traditional sectors, they are interesting. including financials. this is probably an element where we think the market will focus on what these companies do more of the capital management. haidi: when you take a look at the broader ai and chip related rally we see across the board, and we just habit potential reporting of more investment from the japanese government. how much further is there to go for this?

and what is the next wave of opportunity when it comes to ai? hartmut: yeah. what we are seeing currently, probably still firm may a short number of months, the semiconductor space, very strong. we need to remember, this is still a cyclical industry, even now. we expect -- and we are already have started the upturn. we are in an upturn on the semiconductor side. what we think in terms of where we could go next, maybe toward the middle of the year, certainly in the second half of the year. we have already begun to switch the exposure. we still have a lot of semiconductor exposure. piece by piece, shifting it a little bit more into more cyclical. ai exposure, and especially into software, i think that is the prudent info for now. paul: do you see any risks to the ai story, particularly around supply chains?

hartmut: i would say the only risk -- what we are currently witnessing is the biggest -- the big investment, the demand for the semiconductors comes from what people call the hyper scaler. the important things, this broadens other industries that we just heard. that they really step in, and when the appetite of the hyper scalars flattens a little bit, that we also get other industries really significantly adopting. i'm pretty sure that will happen. that is maybe a risk, if they time it differently, if they are hesitant to do it or take the time with it. then that could be a risk. paul: have your views on opportunities in china changed recently? we have good pmi numbers out over the past couple of days.

do you think all of the bad news is in now and we are seeing signs of a turnaround? hartmut: certainly a lot of bad news. it's surprising. if you look at where evaluations stand, it is about half the multiple people were willing to have for years ago. is that not a little bit too much? you could see a bottoming here. within it, certainly as i mentioned in the short-term, probably some of the more traditional sectors, especially when you see stabilization in the economy. and the pmi's do suggest that is the place to invest. paul: all right. hartmut issel, head of aipac credit at ubs wealth management, thank you for joining us. let's look at our tracking in the u.s. treasury space. did see yields rising across the curve on the back of the

stronger-than-expected data out of the u.s. we are still seeing not a great deal of movement. and a lot of that seems to be prized in. what was priced and was a rethink on what is going to happen next with the fed. rate cut odds for june, they are now below 50%. the expectation around when we will see easing from the fed, that keeps getting pushed on out. a deep dive into china's economy with the china economist who will suggest risks to growth and why they see an uneven recovery across sectors. up next, our interview with christopher kent on the nation's of future framework for monetary policy. this is bloomberg.

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paul: we are seeing very modest gains for the a sx today. got a lot of stocks trading, that might explain why it is a muted session. there are few standards. this is after china removed its remaining trade strakes on

australian wine. this is the first opportunity that investors have had to react to that news. material sector performing well. we have seen a modest recovery in iron ore prices after reasonable data out of china. energy, the other sector doing well in australia. a 5.7%. if we look at the brent price, finding support as well. oil is holding there a five-month high. if you reasons for that. we have what appears to be an israeli airstrike on a compound in syria. israel is not claiming responsibility but that is threatening to ratchet up tensions in the middle east in the middle east and their conflict around gaza. we have the opec-plus meeting this week, where we are expecting the cartel to carry on with some of its production curbs. we are seeing the yield on the 10 year. in australia, not moving a great deal. because he dollar not moving a great deal either. we did hear from the rba's chris kent here in the studio earlier

on. really holding the line that the rba is having a bob each way when it comes to what to do next with rates in australia. we will have the rba minutes coming up in a little while. haidi: to do next when it comes to the levels the yen that is confounding. the same currency problem confounding japanese policymakers despite the start of a fiscal year. we are hearing from the japanese finance ministers saying, they are refraining from providing specific views when it comes to future fx moves. saying they are not determined only by monetary policy, occurring to the divergence between the boj and the fed, and therefore leanne and the dollar. it is determined by various factors, saying it is important those moves are stable and reflect fundamentals, excessive moves are undesirable. we have heard this before. the authorities are watching it move with a higher sense of urgency. they are not ruling out any options against fx moves that are deemed to be excessive.

there will be an appropriate response taken, according to the finance ministers speaking in tokyo. they have refrained from providing a specific view on future fx moves. we heard from the boj chief saying the recent yen weakness, he sees as being excessive as well. we are in intervention watch. 152 to the yen is where markets see that kicking in. you can get a roundup of those stories and more to get your day going in today's edition of daybreak. bloomberg subscribers can get that at dayb on the terminal and the anywhere app. you can play around with those settings for the news on the industries and asset classes that matter most to you. this is bloomberg. ♪

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haidi: take a look at the movers we are watching in 20 minutes or so of trading in japan, and over in korea. upside of 2.5%. making what it calls the formal commitment to spending and jobs to the united seals workers union, backing up a pledge it made earlier as it looks to build support for that. some $14 billion acquisition of united states steel corp.. it pledged no layoffs before 2026, as part of this u.s. steel bid. that document formalizing those promises there. we are also watching rocky 10, they have offered one and a quarter billion dollars in a junk-bond in return to the u.s. market. . $1.8 billion of notes sold since

january. . they have been happening markets to pay down debt or the tech firm returning to the high-yield bond market with the 1.25 billion dollars after what has been a strong rally in debt that it's all this year. . some of the other names we are watching, samsung electronics and tokyo electric power in focus as well. paul: japan has approved almost $4 billion in subsidies to chip venture rapid us as it commits more running -- more money to playing catch-up. for more, let's bring in our executive editor for agent technology. you sure can't doubt the japanese government's commitment to this. is 3.9 billion dollars went to be enough to help make them a force in semiconductor manufacturing? peter: japan is making very aggressive bets in the semiconductor industry. it comes in the wake of the covid pandemic in the supply chain stocks -- shocks we saw the time. the country were determined to

rebuild the capabilities it had in the past. there are a few different ventures p they are backing fab in japan from the leading maker of semiconductors now. this investment in rapidus, is a very young company. it is less than two years old. it is run by a group of local executives led by a former top executive at tokyo electron. it is a long shot did to create another foundry. a company that will make custom-made chips for customers the way that teas emc and samsung do for customers like apple or nvidia for that matter. rapidus has not done this before. it is a competitive market. it will compete against tmc. this $4 billion is going to go for the construction effort, by the equipment, and they will try to move toward being able to create a founder that will compete with the global leaders in this space.

haidi: there is also subsidies at play for the likes of tmc. what has the government, given it has asked for an extra budget for this, what are they hoping to get for this investment? peter: the investments they are making and other places like with tsmc and with macron, one of the local players too, those are a bit more older generations of chips. those are in porton for the automotive industry which is a cornerstone of the japanese economy. rapidus is really more cutting edge. they want rapidus to be able to create advanced semiconductors that could, for a variety of customers, including local customers, that could help them compete in the cutting edge areas of technology, like artificial intelligence, like these quantum computing. some of this area where japan has not been able to produce chips in the past. there are a full of companies that can make chips that are so advanced.

samsung is one. the list is very short. the fact that rapidus, a company that is only about 18 months old, could leapfrog into that competition into be a viable competitor is considered a long shot. haidi: executive editor for asia technology, peter elstrom, in tokyo. bloomberg opinion columnist and former new york fed president says banks should focus on -- he told us the era of social media and 24 hour banking will mean that deposit runs will be faster. outflow rates much higher. >> the regulars have been focusing on increasing capital, they have not been focusing on how to deal with that problem. we need to build up the fed's last resort function so it is credible to depositors so they don't run. one way to do that is to require banks to pledge collateral to the window of the fed, equal to all of their liabilities.

if they know that is the case, they don't have a reason to run. it is the contagion issue that was so striking that we need to address that was evidenced last march. >> two you think the key to answer that question are with the fed or elsewhere? i'm thinking more about deposit insurance. is there's thing we need to change quickly? >> could raise deposit insurance. but that requires congressional legislation. the other problem with that is it is basically increasing what is the moral hazard. people will not be less careful. we saw during the s&l crisis, that snl with -- i think the addressing it is a better way to guard against that risk-taking. >> we're talking about bank crises. and seeing equity markets at all-time highs. how do you think this fomc is thinking of what is happening with financial conditions, beyond what they look at?

looking at equity markets, high yield spreads. when you hear the chairman talk about financial conditions, he says they are tight. when you hear market participants talk about them, they say something else. >> i was surprised by his answer at the press conference. he didn't really want to talk about financial conditions whereas in the past, he has talked about it a lot. he applied at the financial conditions were still tight. i don't see that. the stock market is up dramatically. bond yields are down. since the end of october, we have had a dramatic easing of financial conditions. there is a bit of a battle going on. the long lags of monetary policy versus the easing of financial conditions. if you are trying to figure out what the impulse of monetary policy, you have to figure out the balance between those things. my opinion is monetary policy is not exerting that much restraint on the economy. that is why the fed has been on this path of having to stay higher for longer. i another aspect of it is

so-called -- it is higher than what the fed officials are assuming. it is very interesting. the fed thinks the federal funds rates can go back to 2.6%, that is an immediate rejection in the long run. . if you look at market expectations of were interest rates will go, they have them coming down to 3.6%. and 100 basis point gap between where the market thinks the fed is heading and where the fed thinks the fed is heading. the fed is more optimistic about the scope of rate cuts over the next few years. paul: bloomberg opinion columnist and former new york fed president phil dudley speaking to bloomberg's jonathan ferro. let's take a look at tracking on the foreign exchange markets we follow. the aussie dollar, not a huge deal of movement. the one in focus today is the yen. not a lot of movement, but 151.66, hovering around 34 year lows. we are closely watching for intervention. we have heard more strong words from the finance minister -- ministry's, talking about how

they are watching these movements very closely. in the yen weaken the further off the back of stronger-than-expected factory data out of the u.s. haidi: we have seen markets trading range bound. let's look at our futures in europe, settling up at the moment. we are seeing euro stocks looking flat. not a great deal of conviction there. we are seeing a potential upside when it comes to european cyclicals, autos, and banks. see more room to perform, as we see this equity rally becoming more broad. has been increased optimism about macro scenario, in the earnings background that -- backdrop in your. much more to come here

haidi: we are getting some rba minutes from the march meeting

minutes. in march according to those minutes reiterating they will do what is a seri to hit their inflation target. since then we have had soapdish cpi coming through far the headline number. there are seasonal factors. solid outcomes consistent with the expectation we will continue to see broad disinflation as a trend. the minutes indicating the cpi is higher but returning to target. it is not possible to rule in or out future changes to the cash rate. talking about significant uncertainties but the risks remain broadly balanced. the minutes referring to returning target remaining the highest priority. the theme of uncertainty, the ability to -- the inability to will in or out any measures of the final leg of the policy cycle is key to what we

heard from the assistant governor when he spoke earlier to us in sydney. the rba is set to switch to a new framework for the info mentation of monetary policy. the assistant governor for financial markets did outline those changes in a speech at bloomberg's sydney offices and we asked him how those moves will help the central bank streamline its operations. >> what we have announced today is a new system for lamenting monetary policy. what we will be transitioning to in the future. that really is about the plumbing, the nuts and bolts of moving money around. us achieving our cash rate, close to the cash rate target but it is not what that target is. what that target is is monetary policy. it is just how we achieve the target at any time. haidi: it is also about responding to the imbalances within the system structurally coming from the last few years. >> it is about responding to the running down of the large level

of reserves. we call that excess reserves in the system. we and other central banks issue unconventional monetary policy. that put a lot of money in the account. those are unwinding as the bonds mature. it is about looking to the future and thinking about how what we need to do to, what system we need to transition to. haidi: when it comes to the moderation, a lot of it will depend on underlying demand. do you have an idea of scale, of timing of how the framework will play out? >> what we have chosen is what we call a full allotment allocation system. that means the banks come to us in for a fixed price they can borrow reserves, pledge collateral for 28 days at the moment. they can take what they want as long as they have sufficient collateral. what that means is the supply

reserves is going to depend on the bank's demand. the banks have their own estimates. we can come up with some rough ones. until we get there, we won't know. it should transition fairly seamlessly from one of access to ample. we know we are there when banks start showing up in larger numbers and quantities at our operations on a weekly basis. haidi: until we get there we won't know is a good phrase to describe a lot of aspects of where we are at in terms of monetary policy. upstairs you were asked to give one word to describe monetary policy settings and trajectory. i'm going to give you a few more words if you want. can you elaborate? >> the starting point is to say the board has made it clear the interest rate path that will best bring inflation down in a timely manner is uncertain. and so they have not wanted to rule anything in or out with regards to interest rate changes.

we are in a better place than we had been. inflation has come down a long way. it does look to be moderating. the path according to our forecast is a gradual moderation from here. labor market pressures are easing. they're still tight but they are easing. that is because growth is slowing. that brings demand into a better balance with supply. all those things are in place. the central forecast predicated on further good things happening including productivity growth but there is a lot of uncertainty around that. the key point is those are reasonably well balanced as best we can tell. because of that, the path is uncertain. the next rate change, don't know if it is higher. don't know if it is going to be a lower interest rate. haidi: when you talk about the inability to rule out shocks, how much of those risks do you worry about that might be external, that might be geopolitical, that might be election driven policies of other countries? how much of it are domestic,

structural, macroeconomic we have not seen in the data sets yet? >> it could be both. as a small open economy, we are always subject to developments offshore. we have talked at length about what is happening in china. china is a major export market for us should there are concerns about the property sector and problems they are trying to deal with. that can have an impact on things like demand for key commodities like iron ore. that can move our economy around. domestically, things can be moved by what people here in the australian economy are doing, particularly households. how are they are going to -- how they're going to behave in the future. that will be a key point for where the economy goes. haidi: the assistant governor at the rba speaking to us earlier. the assistant governor also spoke about the uncertainties

coming from china. there is a little bit of good news in the data. the factory number beating expectations in march using optimism about hitting the ambitious growth of 5% this year. growth target i should say. despite the pickup in the pmi surveys, economists are cautioning a remains to be seen how sustainable rebound will be. joining us is michelle wim, greater economist economist. we know data in the first couple months of the year tends to be patchy in the best of times. are you confident the corner has turned for china's economy? michelle: i think judging from the march pmi data and also the january data, there are some signs of the economy at least stabilizing or picking up. i would say there is still cause for concern. if we look at it january

february data, it is true the industrial production is surprising to the upside. if we look at the retail sales, i would say the momentum is still sluggish especially on the goods front. going back to the march pmi data, if you look at manufacturing, the majority was driven by the new export orders. especially for consumption demand, it remains to be seen if it is starting to recover more notably especially if we consider what is happening to the housing sector which is decelerating at this stage. haidi: you talk about the sluggishness and i think the thing i am always watching his confidence. sentiment. the concern about the stagflationary aspect of how households might be feeling at the moment. do you see any signs of that staging a turnaround? michelle: i think unfortunately

for economists there is not a lot of data to gauge the consumer confidence. but i think the indicators we look at, the house prices, they are still falling. if you look at the data and some other private sources, if you look at the stock market, i would say things are starting to stabilize. that is a correction we have seen around the turn of the year. it remains to be seen if we are starting to feel the stabilization of the economy impact running to the household confidence. in terms of the wage growth for the quarterly data, we only have the quarterly data for last year which we noticed the growth momentum has still been sluggish especially for the urban cities compared to the rural cities. i would say if we look at the private data sources in terms of

the wage gains, such as the job recruitment data agency, it seems the wage momentum is still not very strong for us to see a big support to improvement in consumption right now. paul: do you think policymakers in china can claim vindication for not using the bazooka stimulus we had all become accustomed to? michelle: i think it depends on what you mean by the bazooka. for the monetary policy expectations, we still expect some policy rate cuts and rrr cuts for the rest of the year. different march surprise, it could be the case we could be seeing the stimulus coming at a later stage rather than a early-stage. for the property easing, they have already sent signals there could be more demand coming through a couple weeks ago. we could continue seeing local

government relaxing the restrictions even in the top tier cities and even mortgage interest rate cuts. there's also a question of whether we could see this translate into a recovery in the housing sector. for now, the big bazooka for example like further insurance in the cgp's, the chances less likely given the positive momentum we have seen for the first quarter. paul: we had a warning from ray dalio this week if china does not get on top of its debt it is facing the risk of a lost decade. do you have any thoughts on that? michelle:michelle: i think it is true but at the same time the government is sending some signals it is tackling the issues. for the central government and the npc, they decided the issuance of cgp's to try to open a new door to open the financing

of a key strategic project should it allows them room for the local government and financing vehicles to cut back the debt. more importantly, china needs structural reforms to unleash the demand of the consumption should if -- of the consumption. if we talk about financing infrastructure projects, that is not going to increase the share consumption in the old world economy should that is what -- the old world economy that is what economist need to think about. redo some of the payments. -- reduce some of the payments. temporarily improve consumer confidence. that is most important for us, for product consumption demand right now. paul: greater china economist. thanks for joining us. still to come, we will have a preview of teslas first quarter deliveries and why some analysts are expecting the first sales quarter decline in four years.

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>> the board has made a clear it thinks the interest rate path that will best bring inflation down in a timely manner is uncertain. they have not wanted to rule

anything in or out with regards to interest rate changes. paul: that is the assistant governor at the rba speaking to us earlier. let's check in on how markets are tracking at the moment. in australia going sideways. modest gains. a lot of stocks trading asked dividend which debt trading ex dividend. treasury line performing strongly after just before the long weekend china lifted trade strikes on australian wine. the nikkei having a good day. that will be in sharp focus as keep an eye on potential yen intervention. the division of finance making its usual noises about that today. the cost be looking flat. also watching japanese chipmakers at the moment. news from the government today. going to give a further $3.9 billion in subsidies to its chip venture. committing more money to japan's ambitions to catch up in

semiconductor manufacturing. you see that rising tide lifting all boats. i'm of those names in japan performing pretty well at the moment. talk about tesla releasing its first-quarter delivery results this week. some analysts expecting the first sales decline in four years as demand for in these and elevated -- demand for ev's and elevated interest rates takes a toll. tell us some more about the reason for the slowdown in tesla sales. >> what we are seeing is tesla is being caught up in a broader slowdown in the ev market. being a pure ev manufacturer, it does not have other models to fall back on should say -- for help -- to fall back on the likes of toyota does. rivian is also cutting prices of its suv. apple is pulling out of its project. it looks like the ev boom we saw

the last few years we have peaked for now. it is not all doom and gloom. bloomberg nef forecast ev sales globally will rise 22% this year. that is down from 30% growth we saw last year should a bit of a slowdown at a lot of the growth is coming from china which is a much more competitive landscape than the u.s. where tesla does a lot of its business. haidi: it is a huge market for tesla. they have increased prices at a time when there is aggressive pricing for michael carmakers. >> we have seen that with byd. byd has gone on an aggressive price cutting around this year. the popular siegel hatch is the equivalent of less than $2000. byd reported march sales were up 46% year on year. it is going from strength to strength. that is making it hard not just for tesla but other ev players in china. then you have new competitors

coming in to the chinese market. we saw one come in with its new suv. it is starting around 30,000 u.s. dollars. the model y in china starts it 50,000 u.s. dollars -- starts at 50,000 u.s. dollars. it is a huge gap for tesla to make up. what we have seen in china the last couple of weeks is tesla trimming production at its shanghai factory. does not often happen. by making workers work a shorter week. in the last weeks of march, it flagged a price increase that took effect yesterday. that does seem to be an attempt to try to pump up sales in the dying days of the first quarter. haidi: opal business and asia -- global business in asia editor. other corporate stories we are tracking this hour. bloomberg has been tesla boosted headcount by 86% last year in austin, texas. the firm has over 22,700 employees in the region where

tesla turns out its model y's and cyber trucks. texas is home to multiple musk firms including a gigafactory and a launch site for spacex. citigroup is said to have them permitted a fresh round of job cuts in its is investment bank last week. sources say technology, media and telecom were among coverage areas hit the hardest. we have seen bankers in jr. roles affected. the cuts come as citigroup has said it included the major actions around its reorganization plan. mackenzie is offering nine months pay and career coaching services to some u.k. staff who would like to leave. the move comes after the firm earlier warned some u.s. consultants they were running out of time to win promotions. mackenzie and its peers have trimmed headcount and slow the pace of hiring over the past year as demand from clients decline. nippon steel has made a commitment to suspending jobs to the steelworkers union.

as well as a promise of no layoffs before 2026. the new president has pledged to pressure ahead -- to press ahead with a new takeover. president biden says u.s. steel should be american-owned. be sure to tune in to bloomberg radio to hear more from the big newsmakers and get in depth analysis from the daybreak team. broadcasting live from our studio in hong kong, you can listen in via the app that is radio plus or bloomberg whittier.com. more ahead. -- bloombergradio.com. this is bloomberg. ♪

haidi: counting down to the market opens in mainland china and hong kong. on the earnings front, 2023 numbers are due out on tuesday. bloomberg intelligence is the company posting 70% profit and revenue growth year on year. let's get more from our senior analyst should it is always interesting in terms of being a commercial consumer bellwhether. even the weakness we have seen in consumer sentiment, what are we expecting? >> absolutely. we are expecting 17% growth in the sales which will drive sales to 150 billion yuan.

this is ahead of the management target of 15% growth this year. what it boils down to than is a 17 sang growth in earnings this year as well. this is a robust set of results we are expecting given that the consumer sentiment is depressed at the moment. paul: never mind the consumer sentiment being depressed. analysts still really like the stock. it is something like 51 buyers. where is the enthusiasm coming from? >> i think it is the fact the company managed to deliver consistent results in terms of its sales as well as earnings. if you look at growth margin, it is at an industry high of 92%. i don't think you can see any other companies with that type of growth margin should the operating margin is very healthy. and with the opportunity to

further expand going forward. what we are looking for in the set of result in particular is direct to consumer sales contribution. that is one of the key drivers for growth margins going forward. haidi: we talked about expansion. certainly in terms of product market and the demographic expansion, they have been working a lot on that particularly in it comes to enticing younger consumers. how much of that effort is paying off? we have seen a lot of collaborations. chocolate lines. there is a showroom in sydney. >> yes. they have been very busy over the past year in terms of both product and channel development. on the product side, they have got some chocolate. they have alcoholic latte. in march they announced some

sparkling wine, a blueberry sparkling wine. at the end of last year, they announced a collaboration with one of the most popular artists in asia. in collaboration to develop some product. on the product side, they are trying to tap into the younger market as well as what i would normally call the xiconomy. on the channel side is the direct to consumer sales i previously mentioned. it includes an app that is growing substantially since the launch as well as other products such as we chat many apps -- chat mini apps. they're trying to redo nice there rand and make it trendier for the younger population. paul: bloomberg's intelligent

senior intelligence analyst on the earnings which we will get later today. time to check some of the stocks to watch when markets open in hong kong and mainland china. keep an eye on chinese ev stocks after nio announced a boost for deliveries in march. peers byd reported a rise in their march vehicle sales. asia tesla suppliers are going to be back in focus. analysts rapidly lowering their projections for deliveries from tesla. some expect to see the first decline since the early days of the pandemic. that is it from daybreak asia. markets coverage does continue as we look ahead to the start of trade in hong kong, shanghai and shenzhen. the china show up next. this is bloomberg. ♪ and with the right help, i can make this place i love even better. earn up to 5% cash back on business essentials with the chase ink business cash card. make more of what's yours.

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david: we are half an hour away from the opening bell. you are watching "the china show." >> a muted start for stocks in asia.