>> it is almost 11 a.m. in singapore and shanghai. i'm haslinda amen. asian stocks again. the sector dominated by data. also ahead, g7 finance chiefs last trade track princes -- chiefs blast trade practices. india's modi government has been its legacy on a $534 billion infrastructure boom. we get a view on how things have changed on the ground from a logistics firm. we have avril. risk sentiment rebounding. >> that is what we are seeing. this is tracking wall street's performance. thanks to the renewed optimism

about the fed's rate path. maybe we could see some moves or cuts. stocks are gaining ground but some risks to watch out for. towards the end of the week we will get the fed's preferred gauge of inflation and while it is expected to show moderation, as our colleagues have been pointing out, it could be driven by volatile airfares. don't forget we also have some fed speakers due. it looks like the hawks may get more airtime than the doves. just like that, asian equities getting the bed. csi 300 pretty flat. coming off a week when those properties support measures, the skepticism of whether it will be enough, really rain on sentiment. also the taiwan strait tension.

among currencies, we are seeing recovery in the yen. cannot say the same for japan's 10 year bonds. continued selling. the expectation of the boj's policy normalization. but i guess to your point about how we are going to be data focused this week, let's flip the board and take a look at what we are seeing out of china. industrial profits rose in that is against the backdrop of exports having returned to growth, domestic demand improving, so some signs of that recovery. haslinda: that's right. lots of data to digest. avril hong, thank you. some of the top economic news we are watching. core pce data. this will be a key indicator for the u.s. of course on the back of uncertainty remaining over when the fed will start cutting rates. financial markets remain convinced that easing is coming. a slew of data in japan.

inflation will climb back up. production likely rose, unemployment probably fell. the overall picture set to boost the boj's confidence he can go ahead with more rate hikes. the pmi's survey expected may 31. recent data has painted a mixed picture of china's economy, suggesting the recovery remains fragile. it remains pretty uneven. let's get more insight was shane oliver, head of investment strategy and chief economist at amb capital. lots to digest but the pce will be crucial for the week. shane: i think it probably will be and for us it will come after the markets have closed. those numbers will be looked at closely. there's a chance that core pce will come in at .2 percent.

probably a high .2% but it knocks the annual rate down if that's the case and has the effect of dropping us out of the range it's been in for the last few months. so that would certainly be good news. but obviously we will know that one months worth of lower inflation numbers is not enough. the fed wants to see a run of lower inflation numbers before they cut interest rates. haslinda: does it essentially change anything though, shane? we have gone from six cuts for the year to perhaps one or two. what are you expecting? shane: well, i think the reality is, the market was expecting six, at 1.7. the expectation was that would start around march, believe it or not, and of course we have

now gone through that, june and july looking unlikely, so there's not a lot of meetings left by the time you get to september, so i think the odds are less the economy slides into recession with very much weaker inflation numbers, we will likely end up with about two cuts this year, probably in september, maybe another one before christmas, but i don't think those pce numbers will change anything, except add to confidence that we will get those tasks. haslinda: risk appetite has not been dented all that much. we have talked about how risk sentiment is not like that. when do you see higher for longer impacting sentiment or maybe not at all? shane: i think what's happened this year is that we have seen the cut expectations and

the delay in their timing but the markets have said, oh, it does not matter, we have stronger profits, so therefore somewhat bad news on interest rates has been replaced by better news on profits. so as long as you get some combination of that sort of mix going forward, than higher for longer interest rates is not a major problem for the market. the problem would arise, force, if we get much weaker economic -- arise, of course, if we get much weaker economic data and inflation remains elevated. if we get stagflation, that would be bad news for markets. i think the more likely scenario is we get softer inflation numbers, markets like that, and of course the next issue would be will economic growth be too weak going into next year -- going into the end of this year and 2025, which would turn the story around again. there's the risk you might have a recession and obviously that has been concerning in the last

few months. haslinda: so, shane, when it comes to bond yields, are they trending higher? shane: they may in the short-term but i think the more likely scenario is they will head down through the remainder of this year and going into next year mainly because we are going to see somewhat slower inflation numbers that will confirm the likelihood that the fed will cut interest rates starting in september, two cuts next year and more this year, and we will see weaker economic growth. we are already starting to see signs of that. march quarter gdp numbers came in at 1.6%. that might be revised down to 1.3% or something thereabouts. but i think that slower growth and slower inflation will enable bond yields to drift lower. of course, there is uncertainty around the u.s. election, which i guess is a separate issue, but a trump victory could be more

inflationary, but then i guess that's still several months away, not until november, before we know the outcome of that. haslinda: shane, the big debate now is neutral rate. where is neutral and what's driving it? shane: that's an academic question. it's a bit like where is -- that i would think for the u.s. it's probably not too .5%. it's one of those starts. a bit like the natural unemployment rate. economists will have multiple different views on this. i suspect it's probably higher than the fed's 2.5%, the latest projection. you have to allow that we have come into a world that is more inflation prone than what we had five years ago prior to the

pandemic. these policies of deglobalization, protectionism, low employment -- low unemployment, bigger government, more subsidies, more regulation, although sorts of things -- all those sorts of things. of course, artificial intelligence could go in the opposite direction. but i suspect the new rate is higher than 2.5% but it's hard to know how much higher. haslinda: shane, given the assumptions that you have just made in this conversation, how should a portfolio be looking like right now? shane: i think there is still more upside. i would have a slight overweight to share markets. i would not be too overweight because we have had big runs in markets from the bear market

lows in 2022. we certainly had a big run up since the correction last october. so we are going to get some volatility. it will be more constrained than what we have seen and more volatile. i think is just evidence. we have seen that over the last few weeks and month or so. it's going to be a rougher ride but the broad trend remains up. that's why you would still want to remain that way. i probably have a neutral to slightly long-duration position in bonds, because ultimately, i think bond yields will go down. haslinda: all right, shane. hang tight. shane oliver of amp capital. still ahead, our exclusive interview with one of india's largest publicly held logistics companies executives. keep it here with us. this is bloomberg. ♪

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haslinda: welcome back. china, japan and south korea have held a rare trilateral leaders meeting today in seoul.

singapore is reporting the chinese leader, li qiang, is stressing ties between the three countries are unchanged. let's bring in our chief east asia correspondent, stephen engle. the conference took a break of almost five years so this is significant. stephen: it is significant. this is an opportunity for china to improve relations with two of its closest strategic neighbors and necessarily -- and not necessarily with the u.s. at the table either. this is evidence in the read-out of some of li qiang's comments as broadcast through chinese media, leader urging japan and south korea to uphold free-trade, oppose camp politics and the spirit of autonomy --

and uphold the spirit of autonomy. then again, we have also been hearing, as these three gentlemen, including kishida and the president of south korea are making comments. they seek transparent supply chains. kishida focused on exchanges and free travel between japan and china and cooperation with asean. also a free-trade agreement discussing -- discussion. beijing clearly would like to court japan [no audio] and south korea [laughter] --headlong with the u.s.

but not surprisingly, south korea and kishida of japan have talked about the threat posed by north korea and any potential3 [no audio] [laughter] missile tests forthcoming out of pyongyang.

distorting global trade, existential threat to exporting nations like germany, which has a strong industrial base, so essentially the g7 providing a unified voice to counter some concerns they have over china's trade policies, and again, this was supposed to be a meeting that focused heavily, and it did, on engineering a way to fund the defense of ukraine, perhaps using investment returns of seized money from russia, and they have moved the ball forward on that, and perhaps there could be a communique that comes out of that resolution, a unified voice from the g7 at the leaders meeting in july in southern italy, but on the shores of that lake in italy this time, they talked very squarely about the threat coming from china and the potential dumping in various

advanced economies around the world because of their overcapacity. haslinda: and as of all the tension is not enough, a u.s. congressional delegation has arrived in taiwan. clearly this will upset beijing. stephen: they came pretty quick the trip after the inauguration. we were there for the duration just a week ago of li qiang. subsequently, we saw a fairly surprising, if you think about the history of the exercises, they are not necessarily surprising but we did not know it would come so quickly, so we saw about 111 military aircraft from china flying various sorties around taiwan, dozens of pla naval ships also encircled taiwan. the u.s. government has called this a military private -- military provocation >> markets, headlines, and breaking news 24 hours a day at bloomberg.com, the bloomberg business app, and at bloomberg quicktake. this is a bloomberg business flash. [no audio] [laughter] [no audio]

[laughter] 33333333333333333 ahead of the big conference on june 4 to seven. some of the biggest names will be coming to taiwan over the next couple weeks. could be the biggest ever. haslinda: we await china's response. stephen engle, thank you. let's bring back shane oliver. we have rising temperature and's -- rising tensions all over the world and potential flashpoints yet here we are with the stock market edging higher and higher, pretty much risk appetite intact. is the market underpricing risk? shane: i think to some degree.

the incident does worry me that investor confidence is so high on many measures. if you look at the vix index or the so-called fear index it's actually very low, suggesting there is complacency there. i can understand why investors have been somewhat complacent. is because even though we have these flashpoints and we have had them for some time now, the disaster scenarios, or the scenarios that would be bad for markets, have not come to pass. there were issues around taiwan but it's not full out war. it's just the same thing that's been going on and off for many years. we are seeing more in the middle east but is not actually disrupting -- seeing war in the middle east but it's not actually disrupting the flow of oil into the international economy. we are seeing trade disruptions in the red sea but trade is still occurring. these things are negative at the margin but not enough to cause major disruptions.

that's why the markets are not so focused on them. the fact that you have got relatively high levels of sentiment, low levels of the vix, tells you there's not a lot. if anything goes wrong and one of these tensions do flareup, than obviously share markets will be vulnerable. but trying to time that, i think, will be really, really hard, as it has been for many, many years. you are waiting for the event to occur if it does and then respond because odds are you get the timing wrong. haslinda: the added risk from geopolitical tensions, would that perhaps deter you from being attracted to chinese stocks even though we have seen some recovery there? shane: not necessarily. there is a risk factor and it does raise long-term questions, but i don't think they necessarily are significant in the short-term to the extent that it should dissuade an investor.

if you look at forward price-earnings models across asia, it is trading on something like 23 times, which is very high. the asian average is 13 times. in china it is 10 to 12 depending on which index you look at. so there is value in chinese shares and we could see some pickup in stimulus activity. we are starting to see some. that could be a positive factor for the market at a time when the other extreme is looking choppy or like it might go through consolidation. haslinda: we had someone weighing and saying the spillover from geopolitical risks could be far and wide across all asset classes. how do you protect yourself against such risks? what is the best play.

shane: that's a good question. trying to predict that is going to be really hard. when your ago you could have said that, two years ago. every time these events, long markets go into a bit of a spin and then say let's move on. we saw that in 2022 with ukraine and the war is still continuing. we saw that in 2023 in relation to the war in the middle east as it flared up again. >> the most crucial moments in the trading day. this is "bloomberg markets: the close" with caroline hyde, romaine bostick and taylor riggs. but obviously, ifyou get a serious flareup adversely affected oil surprise -- oil supplies, you won some hedges. gold is a potential hedge. you could consider selling or buying vix as a potential hedge. you have to be careful there because that's a volatile asset class. you might have some defensive shares, particularly as we go into not so much yet yoon suk yeol but as we go through the months of august and

september i suspect is where there will be vulnerability, particularly ahead of the u.s. election, and so that's where you might want to have a somewhat defensive portfolio through that period. haslinda: great insights. thank you. chain oliver, head of investment strategy and chief economist at amp capital. claymore ahead. keep it with us. this is bloomberg. ♪

percent as we speak. we are tracking chinese e-commerce stocks rising after the government vowed support because of that. we are seeing the likes of some e-commerce companies drop -- companies jumped 10%. plenty more ahead. quibi here with us. this is bloomberg. ♪

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haslinda: welcome back. market shares plunging. an index of .3%.

investors shrugging off the possibility of a spillover from trade tensions on the back of the g7 meeting. we also have the u.s. re-imposing tariffs on hundreds of goods imported from china, part of a broader plan to increase duties in strategic sectors. the index up .4%. in terms of the yuan, 724.50 is the level we're looking at. it is a weaker dollar story today. global funds are only cautiously adding to their holdings in chinese stocks. as china goes to lunch, japan is back. admiral hong on top of development there. avril: we are tracking japanese equities moving higher in line with their asian counterparts but they are underperforming. if you look at how they are faring, slight gains. the topics is led by the

dollar-yen. a bit of a recovery. this is a story of a softer dollar. i want to talk to about the bond moves in japan. we have continued expectations, perhaps ramped up a little bit. they will start normalizing policy perhaps faster than previously thought, and we did get towards the end of last week the boj governor saying that those long end yields, despite them hovering at 12 year highs, he does not seem to think that is an issue. he says this should be guided by the markets. still, they did touch on this earlier today and he said the move would be cautious in terms of re-anchoring inflation expectations. you see there's a lot of pressure on japanese bonds despite what we saw in u.s.

counterparts. they caught a bid friday. they are pointing to some upside the start of the next trade session against the backdrop of that renewed optimism. but put this in context. treasury markets have been upended this year, a repositioning of what the fed will do. haslinda: who knows what the fed will do? avril long, thank you. we may soon get some welcome support. the treasury department is preparing to launch a series of buybacks. the central bank begins to taper. mark joins us for more. let's start with fed speak. they are likely to be cautious. >> yes. i think they are well flagged,

structural. the backdrop of this week is yields will continue to nudge higher. the narrative we are adjusting to is that inflation is still sticky. there's no justification for central banks. ecb will probably get away with one. i still don't see how the fed can be discussing rate cuts soon. >> we had a conversation with shane oliver who said it's likely to trend lower. what are the chances he could be right? >> that's been the narrative for a while, that yields will ultimately trend lower. the concern is the next move is lower. the idea of rate hikes has been rapidly dismissed so i don't think many people are thinking that way. that is a consensus view. the likelihood the consensus is right will be high. i'm saying the consensus is being overestimated and that

there's a risk that in fact yields are not trending lower. we are going to slow the pace and that will help ease the stress. i think the fed has managed that well so far. i think the fundamental drivers here are what level of interest rate policy is adequate for this economy and this is an economy that is still holding up well, growth is still strong, and monetary policy does not appear to type. if you look at markets in inflation and didn't financial -- and financial conditions it indicates yields should be higher. >> we hear from the fed saying that policy is restrictive. the question is whether it is restrictive enough given where inflation is now.

might be a different narrative from here? >> they will be slow to change the rhetoric in terms of the reaction function of the fed remaining dovish. they are trying to be clear about we will cut as soon as we get an excuse. they have been clear since the december fed. the problem is they have no excuse to cut. it's arguable fed policy is restrictive. there's not much sign for it now. it's true there's long invariable lags. that's definitely true to some extent. there's no real sign it is restrictive. >> the fed is data dependent. we have data coming out this week. how is it likely to play out? >> of course central banks have always been data dependent. i think they got into a dangerous world of getting -- of

giving too much for guidance and backing themselves into a corner and they used this phrase to say we are not pretty committed. they are trying to give themselves optionality. there's two aspects, the data that comes in and the policymaker's reaction function to the data. we have a fed that has an extremely dangerous reaction function. if the data gives them an excuse to cut, they will cut. if the data is neutral or anything but enforcing hikes they will not hike. it's ultimately those two inputs, data and a reaction function. >> and japan? >> they will ultimately hike rates by more than was priced into the market. i think it might be several hikes and i don't think it will change things. we have realized that this is a country that needs to normalize

policy. .>> i'm still bearish on the end. i have been for three years. i still remain bearish. i think don't confuse that. i think yen is one of the worst currencies in the world on crosses. deeply negative real yields. until the boj significantly changes policy, which may happen , until they significantly change policy, than the yen will remain bearish on crosses. haslinda: great stuff. still ahead, an indian logistics company says it expects growth for its international supply chain business in the second half of the year. we will find out why. the chief strategy officer will join us for an exclusive interview. this is bloomberg. ♪

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>> there is some parts of india already close to 50 degrees celsius temperature. that is close to the record levels. while it is difficult to manage heat, a segment of markets, companies that held their products, such as beverage makers or equipment maker's have benefited because of additional demand. we have seen the earnings forecast for these companies have risen more than the market in recent weeks thanks to the demand their products are doing in the peak summer months and

these stocks have rallied. >> thank you for that. let's stay with india. there were fourth-quarter results over the weekend, including a 6% revenue increase. the company says it expects growth for international supply chain businesses in 2024. ravi joins us. good to have you. how much clarity do you have in the coming quarters? can you do better? ravi: if you look, we are quite optimistic. it's been a stable business. if you look at our second business, in that business, we

are developing initiatives and have seen significant cost improvements. as an outcome of that, costs went up 15%. and this is despite the fact that a large part of that improvement happen sequentially from january until march, which means it's much better. considering this, we believe the gross profit margins remain healthier in the coming quarters. the largest weakness, the supply chain business -- the largest business, the supply chain business, in that we have recently seen a pickup in demand. we have started to see some green shoots. a couple months ago, cargo was asked for about a week in advance. now it's about a month in advance. i can tell you that on many

trade links, it's gone of as much as four to five times. we believe that should help us increase volumes and should also help us improve margins further. haslinda: ravi, you talk about cost. how is that playing out for you in a strong dollar environment? i know you have operations in 180 countries. we have the rupee trading -- hovering at record lows, close to record lows versus the ust. how are costs playing out for you? ravi: most of our international business is transacted in u.s. dollars, meaning we are buying in u.s. dollars and also selling, so it's a hedge that plays out. we have some things that play out locally, but the financial hedge is not really subject in

that sense to the u.s. dollar. haslinda: we know you are about to enact a restructuring plan. how is that playing out for you and are you already benefiting from that? ravi: that's playing out really well for the company, the management and the shareholders. cargo terminals are doing well. the final leg of restructuring is now underway. we expect some entities to become separate. we have a sharp business focus. it's gone very well and as we reach the final stage it will be good for all stakeholders. haslinda: which will be the game changing division for allcargo, you think? ravi: i think the way we are positioned in our -- play globally, it's a unique blend of

physical infrastructure with market dominance and a lead in technical advancement, a combination that is so unique. i am bullish about the supply chain business. and back home in india, the way the economy is bound to grow. we have course will be looking at the election results but it's unlikely to see some surprises. the indian economic growth story is likely to continue. that means higher consumption in manufacturing lead demand. we expect in india manufacturing and consumption to growth significantly -- to grow significant. we are hopeful about these two. haslinda: ravi, allcargo acquired fair trade recently. how is that working out? ravi: we acquired about 75%, you

know, last year and considering the economic environment, we were able to renegotiate some terms. it's been a good time to advance and help us improve that. in germany, we have one company left, and that's fortunately in one of the largest markets in the world. with the restructuring, i think is -- think everything is coming out quite well for us. it's a special year for us. we are celebrating 30 years of allcargo logistics and things are well positioned for growth for us. haslinda: given that everything is falling in place, is there reason to think you will be in a position to make more acquisitions? ravi: i don't think there will

be any further acquisitions at this point in time. we are well placed. we have everything covered. we have been able to develop a unique position in international trade and domestically. we will look at building strong will commercial themes across the world where we see an opportunity and at this point we don't see a need for acquisitions. we are doing well. with these economic conditions abounding, we should have a good second half of the year as i see it. haslinda: ravi, thank you for that. ravi jakhar, chief strategy officer at allcargo. an exclusive interview there. another story where following out of india. asia's richest man is setting his sights on africa with the new telecoms venture. it will provide network infrastructure, applications and smartphones for a ghana based company. they are planning to provide 5g

broadband services to mobile operators and isps by the end of this year. it's been trading for about four minutes now. let's check how they are doing. in the green, in the money. indian rupee trading at .831050, flat versus the usd. pushing back against ocbc's takeover bid for the company. why they think the billion-dollar dollar offer is still too low. keep it here with us. this is bloomberg. ♪

haslinda: we are taking you back to the lion city. a group of minority holders of great easton are resisting a takeover bid from ocbc. our finance reporter joins us in singapore. good to have you with us. they say it is too cheap. it is at a discount. what is fair value. >> to be fair, the offer price is close to 40% premium of the stock price before the announcement was made on may 10 so it looks very high in terms of price.

they argue the current offer is a discounted invented value so we still have time to see. other shareholders disagree with this group because great easton just appointed ernst & young as independent financial advisors and ey will make a recommendation to shareholders. they still have time to think about it. haslinda: they still have time but do they have options? . chanyaporn: that depends on ocbc . there is some chance, analysts think, that ocbc may do that a little bit but the threshold to cross for takeover is quite low for ocbc because the company

already owns more than 88% of great easton. once ocbc acquires up to 90%, there's a chance that that share will get suspended and we will go from there. haslinda: you have to wonder how this might play out. chanyaporn: yes. it is a bigger -- it is a very big takeover deal we should watch over over the next few months. haslinda: what are some of the things that you are watching out for? chanyaporn: we would have to look -- we will have to look at the time when the physical offer is dispatched to shareholders and see the number of shareholders, how many of them will accept the price. so we will watch after the 90% threshold is crossed. that's a significant point to share. haslinda: what does it mean for ocbc shares in the coming months do you think? how might that play out? chanyaporn: that's a very question, haslinda. it has been beneficial, ocbc has

gotten benefits from great easton in terms of accrual. in terms of earnings, it's maybe not much to think about, but currently, we have two boards, ocbc board, great easton board, although ocbc is the majority shareholder, so some analysts argue that it would be easier for the management if great easton is delisted. haslinda: a billion-dollar deal. that's not enough. our senior asia finance reporter chanyaporn chanjaroen with her take on it. a look at how we are doing in the markets. it's an update for asia. investors betting on the rate cut to be made by the fed this year. mxap index of about .5% after suffering its worst week in more than a month. of course, paul krugman says he's highly uncertain about the

rate past. he sees confusion, delusion over rates. we will talk about it on the other side of the coin. we are keeping an eye on utility stocks, which are leading the gains at this point in time. china of course the one we are watching. it is the u.s. reimposing tariffs on hundreds of goods imported from china. that may just weigh on the balance. it's an update for asia. that's it from bloomberg markets: asia. horizons: middle east and africa is next. keep it here with us. this is bloomberg. ♪

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