annabelle: we are counting down to asia's major market opens. it is a resumption of trade for japan and korea that have been shut for extended breaks. and what the market will be coming back into as you have u.s. stocks notching their best three-day rally going back to november of last year. haidi: we are expecting a big jump potentially to around 2% when it comes to japan markets. also seeing upside indicated for australia. it is rba decision day. expected to keep rates at the 12 year high. watching out for perhaps some hawkish messaging as market expectations build of higher for longer and maybe even more tightening back on the table. annabelle: certainly something to be tracking later this morning. we just got the open of japanese equities coming online. it is that big earnings theme coming in across the course of this week. earnings that are due from toyota, tokyo electron.

these are the biggest and the fourth largest companies including topix waiting. definitely going to tell us how much companies are benefiting as well from those twin narratives of the weak yean and ai-related booms. you have the nikkei coming online, 1% to the upside so far. japanese yen of course, we have been tracking that trading. it has been fluctuating, but trading a little bit to the weaker side this morning and moving back up to that 154 mark. we did hear from finance officials in japan early this morning. the vice finance minister saying they are prepared to take appropriate action if fx moves are too rapid. but we have been speaking with different traders saying 165 could be possible by the end of the year. that is the state of play. let's switch and take a look at korea so far on the session, because you are seeing more moves here to the upside. the kospi up 1.6%, a little bit

of strength coming into the korean won this morning. reflecting the moves we have had in wall street over the past few sessions. bigger earnings for big tech, but also adding to it are expectations around the fed and following the softer than expected jobs report. the expectation we could see perhaps fed rate cuts by the end of the year. haidi: that is a similar picture when it comes to the rba. the tight labor market is one of the components of this broader economy that will be weighing on the rba in terms of restraining its ability to cut some previous market excitations of easing being the next step. we are watching the rba of course, also watching earnings as well given that we had anz, we want to watch, announcing that 2 billion aussie dollar buyback. first-half earnings missed estimates, a trend of handing back to investors sweeteners. a little bit of upside as we get

into the staggered open in sydney. we are watching australian bonds. in terms of the shortage, halting a three-day rally ahead of the rba. treasury bond futures taking a dip as well. a three year note auction to be walking along with marks from neel kashkari a little later tuesday. the aussie dollar holding steady at that 66.24 level. we have seen some moves when it comes to haven currencies, seeing that drop versus peers. watching oil and other commodities as well this morning. crude is extending what is still a pretty modest advance. still under $84 a barrel for brent crude. tensions in the middle east, israel rejecting a cease-fire proposal for the gaza strip. a broader risk on move for water markets, but some upside report for crude. we're also watching some other metals, iron ore prices up 20%.

so, watching iron ore and steel pricing and how that plays into some of the australian miners as well. and as i mentioned, treasuries, this is the picture before we get remarks from neel kashkari this morning. annabelle: actually let's stick with the fed theme and bring in our next guest to ex-pats -- who expects asia outperforming and easing cycle. with us is ray sharma-ong from abrdn. ray, curious were your views here. why exactly do you see the outperformance from asia in particular, especially when we already have the broader gauge around its highest levels of the year? ray: that's right. the reason why we see it is because in asia, you have higher growth in earnings potential than compared to the u.s. valuations in asia are a lot cheaper and currencies come with a higher kerry. if you have a risk complement in

the u.s. in the fed easing cycle, -- the trend shows asia outperforming the u.s. annabelle: are there any particular markets you like? ray: quite a few. key markets we like india, we like china, korea, and taiwan. india is currently undergoing elections. we feel there is a lot not in the price. election results will be released on june 4. so, should modi and the majority retain, it will be positive for markets. what is also important is the government will be announcing the full budget in july. a lot of the budget announcements have not been in the price in terms of what it can do for capex, earnings, tax receipts, which we think will be

a significant boost to the markets. annabelle: you are also more constructive on china now. haidi: there has been quite a lot of interest given how low valuations have been. do you see with the return of foreign flows over the last few sessions, is this a fundamental re-rating, or just coming off the bottom a bit? ray: it is actually both. we're positive on china but cautiously optimistic. we believe in being technical around this. the reason for the return in equity markets in china has been supported by a couple of drivers. first, we had better than expected macro numbers released out of china. we also had efforts by the chinese authorities. we have also seen very strong earnings results along with broad-based re-engagements with the u.s. as well as china. for this to maintain, we feel we need to see a few more things. fundamentals in china has to pick up.

earnings in the first quarter needs to outperform. we think the base is quite low. the second would be policy execution. china and several managers targeting the improvement in regulation of the equity markets. if they execute that wealth, it will lead to a stronger equity market with a better blueprint for investor protection. and lastly -- haidi: i was going to say, a-shares still? ray: definitely. we do prefer offshore over onshore. a-shares give you more exposure to tech and ai evolution. in addition if you look at between china and the u.s., there reengagements at the business level to talk about intergovernmental dialogue on ai. so we think this is where most of the offshore flows will go. annabelle: what about the

direction for the japanese currency? we have seen a bit of dollar softness of late with changing expectations around the fed and perhaps that could ease a little pressure on the yen. what is your outlook there? ray: the dollar is likely to soften. the fed already removed the profit ability -- probability of hikes in the near term. so it is a question of when the fed is to cut, and by how much. on the yen specifically, we have seen the ministry of finance japan actually intervening when the yen approaches 160. so we actually do think the trading range will be between 150 to 165. if it approaches 150, we think it will come with high carry 5% on an annualized basis. if it approaches 165, that is where you want to be more cautious because the ministry of finance likely step in. they want to dampen volatility.

annabelle: with those moves in the japanese yen of course playing into some of the gains we are seeing for japanese equities, that weakness, do you see that persisting, or do you see that any moves from here are going to be capped a little bit? ray: the japanese equity has more than just yen weakness going forward. it's undergoing a multi-generation -- we have seen strong corporate buybacks from corporate governance reforms push. before the japanese markets closed, a couple companies announced buybacks for the first time in nine years, and we see them in double digits. we expect more and more of these to come in. earnings will deliver, in addition to some gradual yen weakness. not so much as a key driver, but more fundamentals. it is a longer-term trade which we think will do well.

haidi: ray sharma-ong, always great to have you with us. still ahead, chinese president xi jinping continues his european visit. we will be telling you what top to the agenda during his meeting with french president emmanuel macron, next. this is bloomberg. ♪ when you own a small business every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. if you're short on time for marketing constant contact's powerful tools can help. you can automate email and sms messages so customers get the right message at the right time. save time marketing with constant contact. because all it takes is 30 seconds to make someone's day. get started today at constantcontact.com.

helping the small stand tall.

annabelle: chinese president xi jinping has held talks with his french counterpart, calling on emmanuel macron to help fend off what he calls a new cold war. for more let's bring in our asia government correspondent rebecca choong wilkins. when you have the eu as a bloc increasingly aligning with the u.s. and this risk of security and trade tensions as well, how likely is france going to be to heed that message? rebecca: i think this is at the heart of the object of xi jinping's visit. what he essentially wants is france, a leading power of the eu, to put a lot more space between the eu position in the u.s. position, particularly when it comes to a litany of probes we have scene into not just ev is but other areas of green tech. macron has shown himself

historically to be relatively open to a more independent position from the u.s. historically he has seen the eu as a way of charting and middle path for countries like china and not necessarily always wanting to move lock and step, particularly when it comes to these sort of policies. so in that sense, xi jinping certainly has some kind of optimism, or certainly hopeful that macron will be able to be understanding of his position, that he is at least a partner, that he can sit-down and have a robust conversation with. haidi: rebecca, when it comes to tangible outcomes, obviously the elephant in the room when it comes to this visit were the issues of overcapacity, not to mention the escalating security and diplomatic tensions. did that become apparent in any of these conversations? rebecca: well, we saw little glimmers of it here and there. i mean, when we had the sit-down between ursula von der leyen and emmanuel macron and xi jinping,

the readout from chinese state media was relatively positive, but it did point at some of the strains in the relationship. xi jinping very clearly saying, for example, that there is no such thing is china's overcapacity problem. and also, china sort of reiterating its position from the eu, from its point of view, is a major partner, as well as this sort of hint that the relationship does not target any third party, nor should it be dictated by any third party. perhaps a dig, an oblique reference to the u.s., perhaps an implication that the eu might be pushed around or moved by the u.s. haidi: rebecca choong wilkins there with the latest. some top corporate headlines, citigroup shifted the work hours of some staff in kuala lumpur to align with those in the u.s.

the move is part of efforts to assure a smooth transition to one-day settlement cycle. citi also created a task force that will solely process -- focus on the process known as t plus one. it joins other financial institutions preparing for the shift. nomura is targeting 20% revenue gains were as global markets unit over the next two years. they expect 25% to 30% growth in credit products and inequities, with the rest coming from wealth management. the business has returned to profit after three years of losses that included a $3 billion hit for a scandal. take a look at trading in anz. the lender seeing a downside of over 1.5%, announcing a 2 billion australian dollars buyback after first-half earnings missed estimates. the ceo told us where they are seeing pockets of strength in their businesses. >> we came off a record 2023.

and what really delivered here, revenue was flat at a really strong level for expenses well managed. and i think it really shone through the value of having a diversified portfolio for as you know the australian retail market has been subdued and we ask. it's to that like our peers -- i saw a lot of strength in the result and we are very well positioned for the environment. haidi: you are joining us on rba day. after 4.25 points of hikes, how are you see in the mood when it comes to clients, customers, and the broader economy, and how is that impacting your business? shayne: clearly there is stress on the economy. that is to be expected, given the interest rate rises, cost-of-living pressures, etc. so the market is subdued,

particularly here in australia and new zealand. and we see that. and we see that with more customers struggling. although the number of customers struggling is still, from a historic point of view, relatively low. so we have these hardship programs that people are finding it tough. the number of people in our hardship program is .3% of all of our customers. now, it is devastating for them, but it's .3%. 79% of our customers are still ahead their repayments, so they are paying more than they are required to do. 50% are ahead by more than three months. there is a remarkable resilience still in the economy, although things are subdued. haidi: with competition fears in australia, how vindicated are you with your international strategy? i wonder you can give us an update, given there were discussions with pension funds to bring into india, investment in the economic zone, and maybe an update on how procurement licenses is going in the chinese market for anz. shayne: the point of difference

for anz is where the most diversified of the major banks. new zealand, small business in australian, and institutional. the piece we really shine in terms of our point of difference is institutional, which services some of the world's best and biggest companies around the region of asia-pacific. we operate in 29 markets around the world and that business came through very strongly. it has been hard work. you cannot just turn up in singapore or india and china. you have to work really hard. and we work really hard building a strong foundation with the right customers, investing in things we think do better than others, which is facilitating the movement of boosting capital around the region. in all the right places we need to be, we have all the licenses we need to have, and we have the customers that we need. annabelle: that was anz group

cdl shayne elliott speaking to us a short time ago. you can get a roundup of all the stories you need to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminals. it is also available on the bloomberg anywhere app. you can customize your settings so you only get news on the industries and assets that you care about. this is bloomberg. ♪

haidi: israel is rejecting a cease-fire plan back to buy hamas saying it falls short and its operations in rafah will continue. let's get the latest from michael heath. was a surprise this did not come through? michael: it was. there was such a push from the u.s. and the middle east and from the gulf countries, egypt

as well, to try and get this done and to try and get those hostages out and get relief into the civilians in gaza. so there was a lot of work put into it and a lot of pressure. the firing of a rocket from the rafah area into in israeli checkpoint that killed four soldiers did not help the situation. israel has since begin morning people in raw for they need to move because in operation will begin. the difficulty here at the end of the day is that neither of the warring sides appear to see it as in their interest to stop fighting right now. and there is a bit of a game of bluff going on at the moment. i think hamas expects israel, the u.s. in particular, will push israel into a cease-fire. benjamin netanyahu is of the view that he has got to complete this operation and display -- and destroy hamas to give himself a chance of forming

another government there are a lot of forces working against that. israel said it will still go into negotiations to try and exhaust them, but for all intents and purposes it looks like it is not going to happen, unfortunately. annabelle: so what do you think, if an invasion of rafah seems inevitable, how extensive can be expected to be, or is it too early to say at this stage? michael: it is too early to say. they are not talking about moving people out of the whole area. there is an estimated 1.4 million people there. this affects about 100,000 people. off the record, an israeli official was saying to move a large number of people out of rafah would take a few weeks. there have been airstrikes taking place, it looks like they are targeting areas at the moment. we just cannot tell how extensive it will be.

but israel has been pretty steadfast. even the opposition has backed this, that they must go into rafah. there is an estimated 5000 hamas militants there. they can't leave hamas in charge and leave the door open. haidi: the question is where are these people going to go, and that remains a question, particularly if you are talking about the entire population of that area. there are more than 600,000 children part of the population. president biden has said this is a redline. is there a sense that israel is taken that seriously? michael: israel smoke and mirrors, isn't it? could president biden cut off aid to israel? it is difficult to say. israel is doing what the u.s. had wanted, which is to start moving people out. but where do they go? some of the reporting we have had on the ground is people are not responding to the israeli warning, because where will they

go? the rest of the strip has basically been destroyed. israel says it is put it -- it is setting up tents around the city of khan younis further north, but there are so many people, there is so much disruption. it is difficult to see how you can move that many people out and clear the area to just have a straight fight between hamas and israel. and it is in hamas's interest to keep as many people there as possible. haidi: operationally, it feels like we are getting to a point where the end might be in sight. is there conversation about what gaza looks like after this? michael: it is a real problem. this is exactly what the u.s. and the gulf states and other parties want. they want a plan for afterwards. israel has been specific in avoiding exactly that. there are big issues at stake. the u.s. and saudi arabia have a sickly got to the point -- have basically gotten to the point

where they will have a deal where the u.s. will be a strategic ally of saudi arabia to protect it from iran. saudi arabia intern would recognize israel, which would enhance israel's security. but the caveat is israel has to begin this process towards a palestinian state. this is the most right-wing government in israeli history. the idea that this group, of all people, would allow this to happen -- they are talking about sending israeli settlers into gaza, they are not talking statehood. there are huge stakes here, but whether it can be pulled off, it is very hard to be optimistic, given what we have seen in recent weeks. annabelle: that was our bloomberg editor michael heath. let's head now to the milken conference that is closing out the first day. we actually have elon musk being interviewed right now by michael milken. closing out the first full day of the conference. they are currently speaking about exploring and colonizing other planets. take a listen.

>> -- is precarious and rare. and that you should really think of human civilization as being like a tiny candle in a vast office and we should do everything possible to make sure that candle does not go out. [applause] >> i thought one of the interesting things for the people on x viewing this session and the people in the audience here, is that maybe i'd give you a few of your quotes and you can comment on them. let's start with this one. free speech. freedom of speech is and they're all coming?

those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

annabelle: taking a look at how

markets are tracking. we have japan and korea coming back from extended breaks and looking at the nikkei in particular because we had some data points drop ingrid this is the final reading for april for the bank of japan pmi composite and services. both of those holding fairly steady from the prior readings and importantly, holding above that key 50 mark. 52.3 the composite reading and 54.3 for services as well. what else we are tracking today is just that general optimism coming into the session so far. a bit of a catch up as well, given we see u.s. equities having their best rally since november overnight. the 50 day moving average threshold crossed by the s&p 500. so it is a little down to the earnings theme. we have seen solid numbers from the big tech space, but also, as always, expectations around the fed and these predictions we could see perhaps a fed rate cut as soon as september of course really playing into --

haidi: this kind of narrative that keeps shifting. higher for longer. when does the first cut come through? bloomberg economics doesn't expect that until well into the second half, and a lot of economists say not at all for the year. but the rba expected to keep things unchanged with a policy decision later tuesday. they should be releasing economic forecasts. our economic reporter joins us now for more. the forecast will be interesting. the level of hawkishness and the communications will be interesting too. >> in the february statement they used the word further interest rate increases cannot be ruled out. in march they dropped that to make it, we are not ruling anything in or out. so they kind of watered that down and it was seen as a dovish line. whether they bring back further

increases cannot be ruled out in today's statement or whether they keep it as it is will be something the markets will be closely watching out for. and also important to note that in the february economic outlook, expectations from markets and economists both look for interest rate cuts later this year. now, there is expectation that there could be a hike. haidi: we have seen globally a rate cut that has been pushed back. in terms of market pricing, is there a sense we are seeing a similar level of pullback in terms of excitations with the fed? swati: we had our inflation report last weekend that was pretty strong, higher-than-expected. it's 3.6%, markets were expecting 3.5%. so it wasn't huge, but the fact

that we are not seeing that disinflation trend continue, and something that happened overseas as well took markets off guard. and we saw market pricing for rate cuts go away, but we're also seeing roughly 35% to 40% probability of another interest rate increase by august. annabelle: outside of inflation, what else are we hearing on the economic front, or what are the other data points telling us? swati: the labor market is pretty strong. unemployment is still low. and it's expected to remain low. we have some forward indicators on the labor market which are still pointing to strong demand. another interesting thing is the housing market continues to be strong. we had auto sales data for march, which was a record for the month of march. so if we kind of look outside of

retail sales data, which is weak, it looks like the economic momentum is going on. and that is some solace for the reserve bank, which wants to ensure that the economy is in soft landing, and that they are able to preserve labor market gains. so, even with strong inflation, if they do need to raise interest rates, the economy can probably stomach that. annabelle: that was our economics reporter swati pandey. the state street ceo says capital markets have shown strong resilience in weathering serious challenges in recent years, from wars to the pandemic. he spoke at the milken institute conference in beverly hills. >> before talking about the future, let's talk about the recent past. if you think about what the world has been through in terms of the challenges it has faced, and any kind of challenge in a

real economy translates to the financial economy. so we have had a pandemic, a once in a century kind of pandemic. and we have also have ground war break out in europe. if you think about how the capital markets have actually adapted to that, how you have seen underlying economies repair themselves. again, the capital market is very much a function of what goes on in the real economy. and i think you have seen extraordinary resilience in the real economy relative to what any of us would've expected. >> what do you think was behind that resilience? ron: not to sound jingoistic, but i think a lot of it was the u.s. led the way in terms of certainly in the repair of supply chains. what we were talking about in the middle of 2020 was the potential of this for going on for four, five, six years, and the rebalancing would take that long. in fact, led by u.s.

corporations, but also large corporations around the world. it was led by large companies figuring this out and saying, what do we need to do here? >> if you think about the pandemic, global companies are rethinking their supply chains and that has led to a new investable idea. walk us through the new investable ideas coming off of the pandemic and a lot of things being different. ron: let's stick with supply chains for a moment. i think maybe with globalization we went a little too far because supply chains became highly, highly optimized, with very little built in, if you will, slack, or, for that matter, capacity for the unexpected. so what you are seeing now is really a much more -- is much more resiliency built into supply chains that have single source, double source, triple source. you are seeing some activities brought back to countries, reassuring.

those are not political statements as much as they are, you know what? we ought to have a little capacity in whatever country, here in the u.s., here in germany, here in the u.k. finally, we are seeing opportunities created for other countries. maybe a country like china had it all, or a large portion of it, and china is not going to lose everything but you are starting to see other countries in southeast asia, all of these represent investing ideas. carol: we were all focused on this weekend over the annual meeting at berkshire hathaway, and warren buffett saying wall street creating -- do you agree with that assessment? ron: i think there's a concern about market valuations, and it's really a concern about a relatively small number of companies that are seeing lots

of valuation expansion driven by things like ai in the belief in ai. a couple things i would say about that. if you take the s&p 500 index, which is cap weighted, and equal weight it, it's not that overvalued, and by the way, there's opportunities and a lot of other companies. you are talking about seven companies in the s&p 500. that would be point number one. point number two, which i do think we need to think about. i'm old enough to remember the advent of the internet. carol: not that old actually. ron: if you think about the mid to the late 1990's, there was that same kind of excitement and exuberance around a few companies. the internet was going to change everything and change everything right away. then 1999 and 2000 came. and we could find ourselves in a situation like that again. because the hype of a technology oftentimes isn't met by the

actual implementation of it. so, if you ask me what do i believe, i think that artificial intelligence in all of its forms will be a fundamental game changer for many industries. is it going to happen overnight, and is it going to reflect the valuations you are seeing in a few companies? probably not. haidi: ron o'hanley there speaking with carol massar and romaine bostick. take a look at some stocks we are watching in the japan and sydney sessions. some other earnings dominating. anz is one we are watching in sydney. we are coming off session lows. we saw to clients of as much as 2.7%, the most since the middle of april. cash profit missed excitations about returning money to shareholders with a share buyback in line with the trend we have seen across other lenders. analysis looking at the core profit loss, likely due to a higher than expected cost scenario.

also looking earnings from japan. fast retailing is one of them. we're seeing potentially when it comes to expectations, earnings out a little bit later on this week. we did have april sales up by almost 19%. there are some pretty high expectations that the chinese recovery could fuel overseas sales a segment and profit growth for fast retailing, after what has been a challenging few quarters. so, international markets will be the key focus. also watching nintendo, up 3% in the session. sales and operating profit expected to have slumped by 10% or more in the first three months of the year. nintendo continuing to rely on the switch console, which as we know, is aging. so when we get to those numbers, a lot of the attention will be focused on the roadmap to a successor to the switch console. we do have more to come here. this is bloomberg. ♪

annabelle: taking you to some live pictures from the milken institute, beverly hills, the conference closing out the first day. you can see elon musk being interviewed right now by michael milken. they have been talking about exploring and colonizing other planets. elon musk has also spoken about

the outlook for regulation in california in particular. let's listen in. >> there's not an inevitable upward trajectory. a lot of civilizations have risen and fallen in recent years. >> yes. i suspect most people in this room have actually read history. but if you haven't, i would strongly recommend it. [laughs] it sounds obvious, but there's been so many civilizations that have risen and fallen. many that we just don't have much of a record of. like i mentioned, the ancient sumerians. their language was forgotten for a long time, until it was finally decoded only in the last 200, 300 years. 1800-something. in the 1800's i think.

but, very recent. for several thousand years, nobody understood what those tablets meant. because they were the ruins of a long dead civilization. and there are many long dead civilizations. at some point, our civilization will come to an end, too. we just don't want to be anytime soon. annabelle: elon musk speaking onstage at the milken institute conference in beverly hills. what has not come up in that conversation so far is the outlook for tesla and tesla's operations in china. that is something we got insights on from our guests from a conference in hong kong. >> tesla really needs china. the biggest car market in the world. they want to lead on self-driving globally, and they were not doing that without china. so that helps them close that gap. but that still -- but they still have a lot of work to do to become a leader on that. i would not say tesla is in trouble at all. they are still selling a huge amount of cars here.

>> the markets are going quite fast. it's natural people want to come in. for us, competition is welcome. we've confidence in the portfolio we have. we think will be competitors coming in should bring in a lot of credibility for the segment. so it -- i am hoping that will help us grow the category. annabelle: let's bring in tu le, managing director at sino auto insights. i am interested for you views, because we know tesla has been under immense pressure in china. wek -- weak sales. we saw upside coming back after we saw indication it would receive in civil approval for its full sale -- how much do you see that helping tesla along? tu: i think it gets them into the game. currently they are not in the game.

companies like nio, huawei has several brands they have partnered with that have intelligent driving systems. it is a fairly mature and intelligent market, the full self-driving. with tesla being allowed to offer that to the chinese consumer, i think it makes their vehicles more attractive, but we are still talking about a three-year-old and four-year-old e.v. where, in a market where refreshes happen every six, 12 months. annabelle: that really does seem to point to tesla's biggest problem in china, this perception it has an aging look or an aging lineup. what do you think could shift that? they are bringing out new models and they are going all in on their robotaxi, for instance. do you see any of that helping them there in particular? tu: i see it helping

incrementally, but at the end of the day there are two things that china offers that the rest of the world does not. it's a production base. 50% of their production came out of china last year. about 600,000 units were sold in china. and it is the largest market in the world. so what creates the most growth opportunity. but with an aging lineup and vehicles that are well over $25,000 u.s. in china, it doesn't bode well. instantly, you could create some credit ability with a model 2 that is around when he $5,000, $20,000, but even then byd lives in that segment and there are a number of brands due to the price war that have come down. so on a model 2 that launches in the next 12 months, the features that would have to be substantial, including a full self-driving feature to really

gain any significant share. haidi: what does it tell you about the dedication to this market? we know his recent visit came at the expense of his scheduled visit to india, obviously another key burgeoning market. do you think doubling down in terms of justice presence and has personal investment in china is going to have an impact? tu: i think it is going to have the biggest impact. the united states and the european union are slowing down with ev growth. it's still growing, but it's flattening out a little bit. hybrids have become a major player that are taking sales away from fewer battery letter vehicles -- from pure battery electric vehicles. the china market should hit around 10 million units of ev's this year. so the china market for tesla gives them the most bang for their buck, but it will also be the toughest nut to crack due to

the speed at which competition happens, and the downward pressure from the price wars. haidi: given the cost pressures, given the renewed dedication to china, do you think the expansion of the china -- of the shanghai plant is kind of a done deal for the new budget model? tu: i think they are going to have to be very, very careful with that. as they continue to build capacity, they are looking at india now, and they already have austin, so they have to be careful about expanding capacity because the capacity needs to be sold are there domestically or needs to be exported. at 1.3 million units at current capacity at shanghai giga, they probably just need to focus on that first, see how well the model 2 plays out. and then maybe look at long-term expanding doubling capacity. because tesla is going to use

china as a manufacturing hub, just like every other automaker. volkswagen, gm. so long-term, they are going to be here and need expanded capacity, but in the short-term they need to be very careful about how they invest that capital. annabelle: what about for the chinese ev makers? we know overcapacity has been a key friction point between china and the eu in particular. we have president xi jinping as well on a three nation trip of europe right now underway. but those overcapacity concerns that have been flagged by the bloc, how much do you think that is going to impact chinese automakers in turn? tu: the overcapacity is primarily currently on the petrol engine side. you see russia taking a lot of chinese exports, latin america, but mostly on the petrol side. we are seeing the ev growth into

exports pretty extreme. but i would not say there is a ton of overcapacity in the ev space. what is really putting pressure on the eve of makers to expert -- on the ev makers to export is the price war. they are missing out on sales in china because there are so many competitors. and so that creates pressure. it is not due to overcapacity, it is because they are not able to sell the current capacity they have in the china market, so they are being forced to move it abroad. and so, i think kind of creating that nuance makes a difference when you have these types of conversations about overcapacity. haidi: tu le, really great to have you with us, managing director from sino auto insights. turn to your bloomberg for more on elon musk is speaking at the milken institute. terminal users can watch that live go-- that at live go.

♪

annabelle: taking a look at the moves we are seeing on hong kong stocks, on a tear. the biggest winning streak since 20128. -- since 2018. shuli, two fears are perhaps

driving this rally. shuli: the fear of being cut and the fear of being -- of missing out. as the earnings season unfolds they realized, oops, they are cutting growth outlook and the japanese yen is so volatile it slid all the way into 160. that means dollar-based investors are not making as much money as domestic investors. on the other hand the latest readout that came out april 30 showed the chinese government seems open to taking a different approach to solve its economic problems, that the policy paralysis is over, and we all know that chinese shares are very cheap. annabelle: is it china suddenly looks more attractive or other

places look less attractive? shuli: people are afraid of being caught because they bought really high. china, the rally could be pretty big because it is just so cheap. annabelle: of course we are attracting hong kong moves very closely. longest winning streak going back to 2018. we will have more ahead with the opens in hong kong, shenzhen, and shanghai. that was shuli ren there. more ahead. this is bloomberg. ♪

hey you, with the small business... ...whoa... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall.

you're probably not easily persuaded to switch mobile providers for your business. but what if we told you it's possible that comcast business mobile can save you up to 75% a year on your wireless bill versus the big three carriers? you can get two unlimited lines for just $30 each a month. all on the most reliable 5g mobile network—nationwide.

wireless that works for you. for a limited time, ask how to save up to $830 off an eligible 5g phone when you switch to comcast business mobile. don't wait! call, click or visit an xfinity store today.

♪♪ ♪♪ ♪♪ ♪♪ sandals jamaica sale is now on! with rates from $199 per person per night. visit sandals.com or call 1-800-sandals >> morning. welcome. >>