also numbers that came out of japan around inflation to watch as well. haidi: potentially pushback from the video j -- from the bank of japan and weakness in the yen but nvidia excitement is still there but we are seeing a return to reality when it comes to seeing central banks led by the fed staying higher for longer and what does it mean to sustain the momentum of the rally. annabelle: set a high for longer will play into the direction of the japanese yen. michael wilson saying everything is converging for further yen weakness, trading around the 157 bark today and we had japan inflation numbers out earlier calling for [indiscernible] still above the price target of 2% but we see the yen

depreciation fueling concerns of the cost push inflationary pressure could be here to say -- here to stay. playing into a perhaps is the slow down in the rise of food prices and perhaps businesses a little cautious to pass costs onto consumer because they are aware of the cost of living pressures building. equities down 1.5% today. it's not just a story of japan's inflation. u.s. numbers came out overnight and we saw further resilience come into the u.s. economy. pushing out expectations for fed hikes to december fully priced and for the first quarter point cut for fed officials so a distance here but equities 1.5%

to the downside is we get underway this morning, japanese yield went to note because we are at the 1% mark so rising just a little bit here about that has been the really big trend that we are seeing, we are going back to levels we have not seen before the experimental policy led by the governor of the boj. let's change on your different stocks we are watching this morning. samsung. we are getting reports it failed the nvidia test and we will get more details but nvidia rather samsung has been a key supplier into nvidia and nvidia working with samsung before the delivery of memory chips so you see samsung off by 2% and that will not be a great indicator for the kospi and the kospi 1.3 percent

samsung to note as well because it was one of the top picks at the seoul conference this year and other in play as well haidi. haidi: downside pressure when it comes to australia in the first couple minutes and much of the trend we saw yesterday we the miners extending losses into another day and materials and utilities down 1% at this moment and we see potential for upside when it comes to energy but we are watching the commodity story closely but there is a sense of perhaps after trading close to record highs the past few months that outlook is looking more bearish for australian equities there is a great deal of economic uncertainty globally and over china's mom -- china's property market recovery is given a reality check after we see the rebound and iron ore so consumer discretionary stocks in particular are poorly placed in

terms of underperformance according to some analysts we have spoken to. across treasury yields surging showing that strength of the u.s. business activity side with labor markets traders being pushed back into pushing back the timing for rate cuts until the end of the year so in particular the sensitive to year yield rising the most to the highest since may 2. let's bring in will dobson. let's look etsy pi numbers. more or less in line with expectation but certainly not where the boj wants to see and will probably not be enough and there is creeping concern about impact of the weaker yen now. >> absolutely and that is the conundrum in the balance for the boj, trying to keep inflation around the target level, not having it come down too fast too

far but also not going to far ahead of target. close to the levels where the government authorities last intervened in the market to dampen the weakness of the yen and we have slowly been moving towards those levels but it is the pace that matters and the fact that we have had that little check in the depreciation of the currency in the past couple weeks we will probably give them some reassurances so perhaps we are out of intervention zone but on the other hand we are looking at key levels and it is something for everyone to keep in mind. annabelle: we are five minutes into the session and every sector is in the red.

is this because of concerns we saw in the u.s. session and cuts pushed from november to december? why do you think investors are so spooked? >> it's difficult to unpack everything but everyone is struggling a little bit of late and with the fed so data dependent, every new pieces of information we get can change where the fed moves. this week was noteworthy because we had the strong pmi's yesterday and that usually does not move the market much but because they came right after the said minute were more policymakers are probably talking about a positive ability -- possibly -- possibility, it's giving everyone a sense of caution again about the tightening of a fed and if central banks will have to do

something more radical to get inflation under control or looking long into the future and beyond with the u.s. election for example. it has been a great month overall for risk so on the flipside as we get towards the end of the month maybe people are deciding to be a little more cautious. maybe people are thinking more about trading strategy and where to go over the summer and it will be -- and if it will be volatile at this may be able take some trips off the table. haidi: expectations for china, australia has performed well particularly in commodities related areas but at this point the policy does not seem to be a game changer so is there a reality check when it comes to broader recovery on china

exposure? >> i'm not so sure. i feel like the property sector is starting to come around a little bit. analysts have said they are not sufficient but they certainly show a good deal of intent so finally get to grips with the situation. i think if you look particularly, a company has been under pressure of late and it gives me a sense that there are firmer efforts to get the property market under control and start turning around. we know it would take a lot of time because it depends on consumer confidence and there is not a great deal of that in the market. a still very depressed bond market. on the other hand if there is more of a will to turn this around, you could start to see signs that more confidence is

gathering and with chinese equities we have seen a big rally from the bottom, we have had a little setback in the past few days, but there has been renewed confidence and if we can hold at these levels and gather more momentum, perhaps it will bring in retail investors for example, which so far is one of the elements that has been missing from the rally. annabelle: that was paul dobson. we are headed through the morning session and seeing a lot of equities in the red but samsung is one we are tracking today because it is dropping 2.3% and there is a report behind that declined that is coming through from reuters this morning saying that samsung hbm chips are failing nvidia tests because of heat and power consumption problems and those problems affect to be affecting

the fourth generation standard chip [indiscernible] that are being brought to market this year so we know there has been a lot of anticipation around samsung supplying chips to nvidia and hbm is a key focus for them particularly because they are a lagarde behind sk hynix we want to check that report from reuters and you can get all of our stories by going to dayb on the terminal and you can also go to the bloomberg anywhere app and customize your settings so you only get news on the industries and assets that you care about. more ahead. this is bloomberg. ♪

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annabelle: hedge funds at the hong kong investment leaders conference are looking at opportunities in japanese and south korean companies in our next guest is positive on [indiscernible] electric. you can see we have tripled shares more in the court -- you can see here shares have tripled here in the course of the year.

japan was a big take away from the conference but we heard pix from korea and some stood out but why are you focusing on hyundai electric and what is the process you went through? >> with this race of ai demand, one ai server will consume 10 times more electricity versus the general servers we've used in the last 30 years and the reason is we are getting new architecture by using gpu to copulate the data and the only was the cpu so you need more electricity to support ai. hyundai electric is one of the biggest supplier and are

competitive so the support equipment of ai, especially the u.s. government right now is hosting including the csp they are supporting that no china policies so 30% of the supply has been taken out believe [indiscernible] can actually take shares in the future. annabelle: let's make sure we are clear. the business hyundai electric competes in around transformers, most competitors are chinese and you think those of the companies at risk of being embroiled in a greater war between the u.s. and china could get sanctioned and hyundai electric is the one that would stand to benefit as a non-chinese company? >> exactly. annabelle: ok. are there any concerns that plenty electric -- hyundai

electric, any concerns they could get swept up in the sanctions risk? >> i [indiscernible] the most clear reason is with ai demand is exhilarating massively. you still have six months to a year lead time to sit the products but now lead time extended to three or four years. some customer we even heard they are willing to pay 50% of the payment just to get that [indiscernible]

to ship two or three years after so customer need it but keep policy for every government and corporate right now is pieces people wanted [indiscernible] annabelle: -- haidi: you worked in china for manufacturing. does not experience and insight make you more interested in the opportunities on the china side of the tech divergent and chip were? >> yes because if you look global -- look globe, not only u.s. developing ai. so i think whose supplier whose focus on the space will benefit. everyone will benefit. the most important is this is not actually not new technology, this is technology to support

electricity transmissions agreed in the last 100 years has been through the cycle many times so managing of the industry has the awareness of that they should be cautious when that demand sudden spike. that is the behavior we have seen in this industry versus the other industry what we have covered in the technology so that actually the behavior speaks to more demand driven position for the supplier in the next three to five years so i think globally we do see a lot of opportunity not just in u.s. but europe, japan, even some areas like [indiscernible] and other places. haidi: one investor earlier said ai is a revolution and

evolution. after the first phase, what is the process for identifying sectors that will benefit in that second phase or third phases as technology progresses and parts of the market saturates? >> we are just in a very early innings on implementing infrastructure for the whole ai developer right so this is basically just like the second year people realize this is going to change our lives in the next hundred years so we will need a lot of compute, a lot of data center, a lot of electricity. so this probably take the next few years we will see infrastructure to be ready. the most important is even on the software side the foundational model is still in evolving stage to keep perform

and that actually is amazing the speeds if you look at openai they launch the newest model in 12 to 18 months despite the difficulties has arising multiple times so after this becomes stabilized i think of the demand and applications will begin to have the real shape so i do have the expectation that demand will grow in a more linear way however [indiscernible] more than a trillion in our estimation so that is the opportunity every company and enterprise will not miss so that is the reason why infrastructure i think opportunity can extend a little bit longer than people expect. annabelle: this topic is sunday

electric and sees -- hyundai electric and sees price stop doubling. we will have more on daybreak asia. this is bloomberg. ♪

annabelle: chinese premier heads to seoul this weekend for a summit with the leaders of japan and south korea in the talks for the first time in five years. our correspondent joins us. we look at china, japan, south korea they all play a big role in chipmaking. will that be a key focus of the talks? >> it will certainly be a big part at a time where china faces restrictions from the u.s., the

netherlands, and washington continues to court korea japan to expand limitation of exports to china at a time when korea is the largest provider of chips to china and japan also the largest provider of silicon wafers to china so premier league will use the trip to shore up china's security and big states for japan because they have big companies with big presence in china they will be worried about potential retaliation here and i'm as of the as an because washington is said to be pushing for a deal with korea on these cuts by june before the g7 summit and then the japanese and korean laid -- leaders are looking to perhaps visit the u.s. in july for another trilateral summit with biden and so a lot of negotiations to be had before the meetings here to manage these relationships. annabelle: and there is not just

ships, there is military, north korea, what else will they discuss? >> security issues in the east china sea and south china sea will be in focus because korea and japan and u.s. strengthening mechanism and holding joint drills in the east china sea where there was a territorial dispute over the islands and taiwan also in focus because we saw japan's sent to its largest ever delegation to attend the inauguration of the president one day beijing very angered by that we saw those huge military drills over taiwan yesterday and a north korea the perennial issue for south korea the nuclear missile program and allegations of weapons grade exchange with moscow that both moscow and pyongyang have denied but you believe korea japan will be pushing. [indiscernible] haidi: some say the summit would

be a turning point for the full restoration of three way cooperation. is that a lofty hope? >> yet in the last four years since they had the talks a lot has changed and you really cannot see this geopolitical situation shifting fundamentally because china is still the largest trading partner for korea japan but looking at new investments it is declining from korea japan recently and korean exports to the u.s. over top exports to china for the first time so it looks like the ground is shifting but the good news is these three countries looks set to still adopt a joint statement out of the summit detailing some of the outcomes and we could look at perhaps collaboration in areas like science and tech and dealing with limit change and infectious disease they could

create -- create people the people exchanges and perhaps efforts to further boost trade and investment as well. whoa haidi: look at how futures in europe are coming up for the friday session as we weakness is stated across the asian session sort of pull down to reality after the nvidia story and hope of sooner rate cuts is starting to sort of peter out a little bit across europe we are seeing a downside there and weakness across german dax futures they are as well and it has been a point of sort of a week of difficulty for european stocks more generally the loss of momentum being carried through in the previous trading session as well as soon as we got the u.s. business activity accelerating at it as soon as it saw -- as soon as it came through we saw erasing gains largely brought about by the reaction to nvidia and we are watching how currencies trade given the move we have seen

across treasury yields and also the dollar the sent and issues means to be the one weighing across global equities at the moment as the enthusiasm over nvidia starts to fade a bit. more to come. this is bloomberg. ♪ people couldn't see my potential.

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annabelle: take a look at japanese assets. a downside with the equity session. all three of 30 -- all 33 subsectors for example the topics following the data from the u.s. being a major driver that the fed might staying higher or longer on the biggest

decline is toyota was one of the big losers we were seeing and also seeing sort of quite a bit of pressure from industrials as well and inflation numbers perhaps not helping the picture calling for a second month but still above the boj target of 2%. in terms of gauging market reaction and what the boj does it comes as the yen's recent depreciation continues to fuel concerns that inflationary pressures might still be here to say and let's bring in brian who joins us in tokyo and we have heard murmurings from the boj that they are still on track and committed to the normalization but the data is not exactly pushing them in the right direction. >> that is absolutely correct. there are two ways to look at today's figures. the main gauge slowed for a second straight month and service prices, which are a key

indicator of underlying trends, slowed to 1.7%, a bit of a surprise. on the other hand the main gauge at two per 2% has been at or above -- 2.2% has been at or above target for three straight months and there are three big factors that would highlight upside risks in coming months. one is utility subsidies will be phased out starting in may. those shaved almost half a percentage point off the headline figure in the latest month so that would be an upward factor. we also have the weaker yen. there is some concern that was start putting cost pressure on inflation through imports. then there is the way tykes -- wage hikes we saw in the spring. the gains are in excess of 5%

the biggest increase in more than three decades and we would expect them to show up in payslips starting in june so the bottom line is the boj is probably still on track to pursue normalization through another rate hike in the next few months. annabelle: what do you think the path is ahead for policy normalization? how many hikes will will likely see? >> the market consensus is fairly split. we have seen at the most calling for two hikes before the end of the year. some say underlying inflation is losing momentum so maybe only one and done. the next boj chief economist that a couple weeks ago he sees a case for up to three hikes before the end of the year because it is really all about

rolling back through the excessive easing, not tightening policy but just rolling back some of the excessive easing to a more normal state of affairs so it is hard to say exactly what we are looking at but with two seem to be the main scenario economist are looking for. annabelle: that was brian fellow in tokyo and japan was one of the key names that souls conference last night summit in hong kong gathering a lot of different investors and hedge funds together to talk about key stop picks and next guest was a key speaker and highlighted opportunities in the country and focused on a pharmaceutical drug maker that recalled health supplements that led -- that left five people dead and over a hundred in the hospital. seth, great to have you in the studio.

let's start with the outlook on japan's economy and the outlook for the boj. you have been investing in japan for so many years and through different phases of the economic cycle. how much do you focus on the macro and how much do you just look at individual companies you can target and try to push them to be changes? >> everything i have seen in these companies, i have seen real change and increased focus on returns and profitability which flows through to wage rises which was maybe in fact doing some of -- affecting some of that data. annabelle: at a macro level as well because with inflation data it makes me think there is a concern highlighted by our bloomberg economics team that some companies now might be relet didn't to pass those price

pressures onto consumer given that the cost of living crisis people are facing is that something the company sees? >> absolutely. there is a real reluctance to pass on the pricing to consumers. the way to start that is raising wages and then you get price hikes. they can continue a prices have not changed in many stores and many products for over 30 years so there is the beginning start of that but also a big proponent is raising wages across the board for employees. haidi: optimism over government reform japan inc. is one of the drivers of the recent rally we have seen over the last few months so how much of the potential is yet to be realized still you said there is form but we have yet to see much substance. >> we have formed out and now we

have to focus on substance. there is an enormous amount to do when we are in early innings. now that we have form of independent directors of companies they have to hold management accountable and there is an enormous amount of room to improve margins and leadership of companies that are suffering sometimes under nepotism and sometimes sonority of the system and i think there is -- seniority of the system and i think there is room for improvement. haidi: also optimism by korea right in closing the valuation gap and a lot -- japan is finally close to getting there than there is hope for korea as well and this is still early stage and not optimism but is it one of the markets you are perhaps trying to replicate the progress that has been made? >> competition is good for everybody. korea started to value up a

project and they have a long way to go and we are spending a lot of time looking at korea and only a little time really investing in korea. i think there is a lot of opportunity. a lot has to be done in the regulatory environment. [indiscernible] we have yet to see that in korea. there is an enormous amount of potential. there are different issues but we are not even at the starting gate yet. annabelle: big questions around the inheritance tax their. what was the process you took to identify that pharmaceutical stop? >> we like companies that are cheap and potential. this has a lot more potential. it has been hampered by

governance concerns. [indiscernible] focus on the need to find causation of when there is an issue within one of the projects instead of just correlation actually the medical supplements business you would be happy to see here about correlation and then issue a recall and a lot of governance concerns and we are at the seven generation of the family running the country so that does not necessarily highlight the best of governance and even the delay in this case of reporting to the board you can have a form of the board of directors but if you do not tell them about it will can they do so in this case [indiscernible] annabelle: corporate governance, scandals, nepotism, and other factors. you talked about three options

the company had to pursue. which is most likely on what conversations are you having with them because i can think for a seven generation family company it is probably not easy to enact any sort of change. >> it is easier than ever before because there are higher expectations about what companies and management should do and what the board should be doing. i highlighted nepotism, underperforming management, the board not holding management accountable, and what the company could do. they could go ahead we have seen the apology from the company but they can go ahead and add to show returns on their own as you see in other companies and then i highlighted otherwise they can go ahead and if they do not want to be held accountable that is fine, they can do in mbo and go ahead and privatize themselves, there has been a massive surge in privatization in japan of companies who do not want to hold themselves to the highest standards or one that just wants

to hand off management to their son, it is always a son, and then just do in mbo. [indiscernible] oil go ahead and we can work with them to improve the governance that might be improving the board and other means we have also. annabelle: working with you, what is the probability u.s. side to that and what is the upside in that scenario? >> 70% upside. 40% the others. the upside is the greatest. at this stage the whole [indiscernible] is ready to hold them accountable. i cannot say which door they should choose but they need to choose one. annabelle: if you were to search

by your name you will see you were working with many companies across japan. how many more are in your sight? >> a lot of companies we are working on and we are long-term investors and up doing an enormous amount of work in these companies so we had to do months of work in the companies. fortunately we have a big team to help us do that. it ends up being a lot of companies spending a lot a lot of time on. haidi: we have had these conversations with you throughout the process and talked with you a lot about japan. are the conversations becoming more amicable? in dealing with these companies, especially new ones, is it becoming more of a two-way

street? >> yes, much more so than ever before. they understand what we are talking about more than ever before. as it used to talk about it 10 years ago here they didn't understand what we were talking about but now the expectations are higher and it is more widespread and companies work with us faster than ever before and there is an acceleration in that engagement. annabelle: that was seth for sure they are on we have more to come on daybreak asia -- that was seth fisher there and we have more to come on daybreak asia. this is bloomberg. ♪

annabelle: we are 45 minutes into the session looking at how equities are performing at it is pretty grim out there is down six tenths of 1% on the benchmark this morning but every sectors in the red telling us the story around the changing expectations for fed rate cuts actually we are seeing those pushed out to december of this year after we had more data come through overnight and really just telling us that the u.s. economy is resilient so the fed not really in any position to be looking to reduce the benchmark and that is weighing on the pictures so far. lots of different dues coming through company specific we've been talking about stock picks

and samsung was one but samsung is being affected by another report and this is from reuters actually this morning which we may have actually matched now but essentially we are hearing that samsung is perhaps facing some issues around the heat conducted on their tips since it apparently could have a failed a test this is actually reuters reporting here but that would be a key concern for the company hpn is a key growth area lagging behind in the development of these and stop down 2.5% today haidi. looking at stories we are following in corporate headlines in the u.s. commodity futures trading commission orders jp morgan to pay for supervision failures in the regulation said the failed properly -- in march

jp morgan was fined by the office of the comptroller of the currency and federal reserve over similar gaps. spacex has initiated discussions about selling existing shares. sources say would unveil an offer in june with shares priced around $110. boeing scrapped a plan to generate cash again this year after a significant out low in the third quarter and this will be -- the delivery was have been compounded by china's request for additional certification on some aircraft part. >> caac has asked for additional validation on our lithium battery and because of that we have not been delivering

airplanes to china recently. haidi: india's biggest airline says it plans to launch a product to attract first time visitors. they reported a quarterly profit that beat forecasts and this underscores the revisions to move behind their current offerings. >> if you see all the steps and echo has been taking in the past two years, it really -- indigo has been taking the last two years, we started with increasing exposure, a massive order of planes, and in april we announced [indiscernible] annabelle: looking at shares this morning actually jumping after perhaps what we just had

an interview right now with set fisher ceo and founder of oasis and this is a stocky highlighted yesterday at the sole conference overnight that is closed-door but highlighting it as his pick and the one that could outperform in the next year and the reason he focuses on the drugmaker it actually recalled health supplement products that left five dead and over 100 hospitalized but he says the r.o.e. on stock price both of those have really underperformed and he is looking at the options for the company. take a look to go private or work with oasis to improve governance and in that last scenario he said they could see 70% upside for here if they choose to engage with oasis and we will have more ahead watching that dog of course and a lot more in the session on daybreak asia. this is bloomberg. ♪

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annabelle: sigg nt is said to be shutting down the returning capitals to investors as they face insider trading investigations -- in that -- investigations in hong kong. let's get more from the leader of our asia investment coverage and this has been a very closely tracked story not only by people in the hong kong finance

community but globally as well so what is the latest at this point in time? >> our colleagues have been told the decision to return capital to investors came after the insider charges sparked concerns for [indiscernible] fidelity has a huge impact in the market, they manage almost 5 billion in assets as of last month and global capital or global investors for stellar returns for a number of years. what is happening at the firm at the moment, the company has about 140 employees, mostly in hong kong, new york and london and they could be affected. also the case is still in motion so on the insider trading charges but more is to be seen

as the case unfolds in court. haidi: an extraordinary turn of events to write and we see this insider trading case is moving to a higher court in hong kong. despite have implications in terms of what potential penalties could be -- does this have implications in terms of what potential penalties debate? >> the analysis is by moving from the imaginary state -- magistrate to district court they could impose sentences of up to seven years if convicted as appears -- as opposed to two or three years in the lower court. haidi: an extraordinarily turn of events. but something we are watching is this order we have seen from the likes of hsbc to return to office is five days a week and we know a lot of us have been doing that even through the

lockdowns we have always been in the office right other than a couple of students of reporting from home but it is interesting that we are seeing increasingly this pressure across wall street and much of the corporate world to return to normal and i think it is fascinating because i think there was one point during the pandemic where the assertion was that this will change the nature of flexible working practices forever and it is true a lot of other businesses probably will not go back to full-time in person work but it seems like for perhaps some of the traditional industries that we see across finance that is certainly not the case. annabelle: will you coax people gently back into the office and we saw people a couple of years ago, subsidized transport and providing lunch but now they are going for the stick approach, if

you want to keep your job, get in the office and now we are hearing from those banks up to five days a week and that's interesting because those of the banks on wall street that were known to be more flexible in allowing staff to keep working remotely after the pandemic but it is a regulatory change coming through for the financial industry regulatory authority which is said to read rules for monitoring workplace in the coming weeks so i guess for the hr at those different lenders you can say it is not us it is government officials and that is why you have to get back into the office. haidi: one of the other banks weighing two require their workers to commute back into the office so very interesting across the landscape for office real estate which took such a hit from work from home but of course as we round out the working week we are taking a look at how the last session across greater china will not just china taiwan shaping up at

the moment. s&p futures pressure for taiwan and china in fact taiwan stocks have been holding up pretty well despite the start of expansive military drills the most in the year this week by china around taiwan so some of the geopolitical risk is really not weighing the benchmark t ws index closing above 200 for the first time ever when it comes to china we are still seeing some downside pressure. this is bloomberg. ♪

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david: we are 30 minutes away from the opening bell, last session of the week. happy friday in hong kong, shanghai, and change in. yvonne: asian stocks of a strong u.s. data spurs events on the fed hold until december. nvidia with a splash of reno wall street while the sec opens the door first but