haidi: a very good morning. we are counting down to asia's major market open. shery: welcome to daybreak asia. our top stories, sterling rises as brexit talks are extended again. london and brussels welcome progress, while british business is fleet -- pleading for more time to adjust to a potential no deal divorce. the u.s. starts to roll out the pfizer to the entire country, as

american covid-19 deaths near three founder thousand. -- near 300,000. president trump and other white house officials will be among the first to get the shot. japaneseh quarter survey is expected to show growing business optimism as exports rebound. australia coming online. let's get straight to sophie kamaruddin for the markets. a two day decline for the asx 200 we are seeing marginal moves to the upside for the index this morning. macquarrie saying shares down under are set for double-digit returns next year if vaccines work as claimed. the value rotation continuing in australia and bond yields 2%. you have the aussie and kiwi extending gains at 2018 highs in mid prospects for u.s. stimulus. nzx 50 under pressure after a delayed opening on connectivity

issues, which have since been revolved -- resolved. you have the yen trading around 104 and nikkei futures in chicago coming online to the upside by .8%. u.s. futures nudging higher after we have the s&p capping the worst week since october. cable and focus on the front foot, earlier jumping more than 1% with brexit talks extended past the sunday deadline. wti trading above $46 a barrel. as the demand outlook may be looking to be burnished by more countries approving government vaccines. steel demand returning to europe and asia as well, making crude a big buyers recovery trade. the cheapest reflation asset. and with vaccines slowly rolling out, they expect and's -- investors to return to the oil sector and prices to continue.

haidi: we are going to stay with the vaccine. u.s. will be ruling out the first doses of the pfizer shot monday, shortly after it won fda approval. ros krasny has a latest. what we know about the rollout so far? ros: well, we know that shipments actually started leaving a pfizer plant in michigan on sunday morning. they are very sensitive vaccines that have to be stored at extremely low temperatures. they started shipping out and --posedly will get to 145 so over the next few days we are going to see more people who have access to the vaccine, we believe it is something like two million shots in all will be going out this week or very soon. at the front of those lines for the vaccines are health-care workers and nursing home residents. and as we learned a little

while ago, members of the trump administration. and all three branches of top u.s. government. in who is of interest at the front of the line and how that is going to work out. because there is certainly not enough to go around at this point. shery: definitely. so what do we know about a potential second vaccine? ros: we know the food and drug admin attrition has an advisory committee meeting on thursday where they will convene, independent experts on vaccines. they will hear all of moderna's data and test results and so on from their clinical trials. and if things go similarly to what happened in the past few days with pfizer biontech, we could get a decision on that really by the end of the week. the experts after the meeting guideand that vote will the fda as to whether to approve

the vaccine or not. if that is the case, you could see the moderna by the tens of millions start to move early next week. shery: ros krasny in washington with the latest on those vaccinations in the u.s. let's now turn to karina mitchell for the first word headlines. karina: but latest u.s. relief package worth $908 billion is expected to be announced later monday in washington, although one of its key negotiators says there is no guarantee it will be passed. senator joe mansion told fox talks have been running all weekend, and a bipartisan bill should be unveiled later. they can beating $916 billion package from the treasury is also being circulated on capitol hill. president trump is repeating his threat to veto a defense spending bill passed by congress tweeting the biggest winner would be china. it is not clear what the china reference meant, and the white house has not offered any details. the $740 billion defense authorization act passed the senate on friday after earlier

clearing the house. it also includes moves to overall money laundering protections. in other news, iran is planning to double oil production next year amid optimism of easing u.s. sanctions under the next administration. tehran aims to pump 4.5 million barrels of oil and gas a day, and increase daily exports to more than 2 billion barrels. , the same time iran sent a tanker to venezuela to load oil in defiance of sanctions. the national security case against hong kong media tycoon jimmy lai has been adjourned until april, as prosecutors investigate charges of colluding with foreign forces in defiance of china's crackdown. lai is accused of calling for foreign sanctions and other measures between july and the start of this month. the court heard over the weekend that about 1000 twitter post helped form part of the case against him. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more

than 120 countries. i'm karina mitchell. this is bloomberg. shery: hopes of a post brexit trade deal remain alive after breakk. and the eu another deadline and keep talking. bloomberg sources say a new u.k. proposal on creating a level playing field might end the deadlock. alex morales joins us from london. so what does this exactly mean? because the deadlines in the brexit the negotiations do not seem to have any meaning anymore. do we have another set of deadlines? what is next? alex: you may well ask, deadlines have come and gone and this process over many years. they have not set a new deadline, so we do not know how long this could go on. what we do know is there is a fixed deadline of december 31, 11:00 p.m. london time. that is when the u.k. exits the transition period with or without a deal.

given how many deadlines have come and gone, you can envisage this process going right to the wire. any deal they strike has to be passed by both the u.k. parliament and the european parliament. so you can well envisage a partiesn where both approve a deal december 31. haidi: we heard the eu was saying to call was useful and constructive. how much progress is there to be made on these key issues? what is still outstanding? are they closer? alex: the fact that they have extended the talks at all is obviously a good sign. earlier last week it was looking pretty negative. lion andla or von the boris johnson said they were prepared to go after mile. boris johnson said he was prepared to be as creative as possible but was the warning the most likely outcome at the -- at the moment is the u.k. dropping

out on wto terms from january 1. shery: let's say they do get a deal. johnson will still have to go back home and pass this through parliament. so what is realistically the timeline here in order to get an agreement? alex: i mean, the timeline again , they have shown again and again that they can push this right to the wire. forced.m. on december 30 -- december 31 is the ultimate deadline. i am sure they both have emergency procedures that they can recall parliamentarians. then again i imagine they really want to get this out of the way by christmas if they can. what sort of contingency plans are being put in place? alex: british businesses are tearing their hair out at the moment because as things stand,

we are fewer than 20 days away from the end of the u.k.'s membership in the single market customs union and they do not know what arrangements will be in place from january 1. they do not know what custom services there will be or if they have to play tariffs, and they want clarity on all of this. you can sense the growing frustration in the message they are giving to government. they just want to know what are the rules going to be. bloomberg's u.k. government reporter alex morales in london. you can read more about brexit in today's addition of daybreak. it is also right on your mobile in the bloomberg anywhere app. coming up next, steve mcqueen from moody's analytics takes us through the busy economic week ahead in asia. we get data including the likes of china's industrial policy decisions due in japan,

indonesia, and the philippines. later, the former boj monetary policy board member is joining us to preview this week's boj decision and also imminent release of trade data. a lot more to come. this is bloomberg. ♪ this is bloomberg. ♪

the fed and the bank of england are among 16 policy meetings this week. four are in asia. let's bring in moody's analytics chief economist steve cochrane. great to have you with us. at this point in the year, and was somewhat vaccine optimism ahead for the new year, what are you expecting from central bankers? bankers think central largely are going to hold tight

right now. particularly in the asia-pacific region. easewere pretty quick to monetary policy earlier in the year. and i thought they would hold steady in about a month or two, and actually indonesia and the philippines came through with rate cuts last month. so i think that probably they are at the end of the run there, everyecovery has started, country in the asia-pacific region is now seeing good quarter to quarter economic growth. and i think they are probably going to leave the heavy lifting justscal policy now, and rely on fiscal policy to direct spending towards industries that need the help and direct spending in a focused way towards households, individuals that need the assistance as well. haidi: what are you expecting from the bank of japan? speaking of central banks that

have really used up a lot of firepower, what more can i do to extend support, particularly as we continue to see inflation data not see much movement? steve: that's right. and actually speaking of the balance between fiscal policy themonetary policy, government announced recently another round of fiscal policy will extend well into 2021 that will go to support households and businesses, and also help to generate investment in greenback and other advanced technology. so given that the central bank in japan has very limited theons, i think they are obvious candidate simple to hold steady and allow this fiscal in keepinglay a role a floor under the economy and trying to generate a little bit of a spark in economic recovery next year. they are likely going to keep their policy rates at -.1%.

if anything, they will do what they can in terms of quantitative easing to keep the 10 year bond yield near zero. and if that means a little more bond buying, then that may be part of the announcement from the bank of japan. but largely there is not a lot of room for the boj to move, and japan is really kind of the obvious place for where fiscal policy has to play a critical role. shery: with the little leeway the boj has left, not so much on the fiscal side of things with the japanese government, how important is it that they now switch their response to the pandemic from short-term cash needs, liquidity, to something more medium-term? say, helping businesses that are going bankrupt? that's actually not only in japan. i think over the next six to nine months, i think this will be per -- where policymakers are going to have to turn to make

sure it remains steady. in a number of countries throughout the asia-pacific region there are many debt --ment holidays in my guess is that policymakers across the region will probably extend those a bit, may be passed middle of this year, at least to make sure that the economies have truly gotten back on their feet and vaccines are beginning to make a difference in terms of business sentiment and business investment spending and such, and then find a way to gracefully ease those debt payment holidays and manage the company's that are in financial trouble. so it's going to be a difficult balancing act, no question about that. shery: does that hold true for

china as well? because we are seeing a surge in default, and perhaps understanding is that policymakers are letting dad businesses fail. steve: look, china seems to go through periods where they recognize the fact that debt loads are quite high in china, gdp ratio jumped over the first nine months of this year, total jet the btv -- total debt to gdp to close to 340%. when the economy is doing well, then policymakers there turned their attention to managing debt load, and that seems to be what they are doing now in terms of allowing some companies to default, or at least to be restructured and taken over by other firms. i think that will be the direction that policymakers take in china.

the economy is doing quite well right now. it is really firing on all cylinders. policymakers in china did a really nice job of pumping liquidity into the manufacturing sector in particular early on and getting it back on its feet. now the export machine is running again, and even domestic demand looks pretty good in china. now probably is the time when backymakers in china turn towards the level of debt and trying manage that down a bit. shery: steve cochrane, great having you on. moody's analytics chief economist. next, china takes only small steps towards reaching its climate goals. how serious is beijing about its carbon neutral pledge? we have that next. this is bloomberg. ♪ e that next. this is bloomberg. ♪ the usual gifts are just not going to cut it. we have to find something else. good luck! what does that mean? we are doomed. [laughter]

that's it. i figured it out! we're going to give togetherness. that sounds dumb. we're going to take all those family moments and package them. hmm. [laughing] that works. wannit's timeight and for aerotrainer. a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time. it allows for over 20 exercises. do the aerotrainer super crunch, push ups, aero squat. it inflates in 30 seconds. aerotrainer is tested to support over 500 pounds. lose weight, look great, and be healthy. go to aerotrainer.com. that's a-e-r-o trainer.com.

president xi jinping

announced only incremental increases to china's climate goals, disappointing those who had hoped for more ambitious targets. let's cross to tom mackenzie in beijing. this was supposed to be the summit before president-elect biden came in and we had this huge deal and agreement for climate change. thoselly did not satisfy climate change activists. tom: that's right. it was seen as a disappointment, particularly the pledges from xi jinping. of course he made that commitment earlier this year, which surprised many in terms of the overall ambition to be neutral on carbon emissions by 2060. that came as a surprise. since then, experts have been looking for more concrete details. they were hoping they would get more from this speech over the weekend. what he did say was that china was going to commit to reduce its emissions per unit of gdp to

emissions by the more than 60% from 2005 levels by the end of 2030. that does raise the target. now he says more than 65%. he also committed to increasing the nonfossil fuel part of the energy mix for china by 2030 to more than 25%. but that was seen at the weakest end of the forecast in terms of commitment that those experts had been hoping to hear from president xi. he also made no mention of all of the coal industry, and china mines and burns about half of the world's coal. nonetheless, the state media have held this as an example of president xi jinping taken resolute leadership in the climate change fight. that is the front page of the global times talking about tough targets to reduce co2

emissions. a slightly different stance from the expertsdia from that we have been hearing from, particularly greenpeace. they have said these short-term actions from china need to align with the longer-term goal of net neutral on carbon emissions by 2060. we have yet to get the details from president xi. meant to build momentum into next year's talks in glasgow. so what does it mean with what to expect for next year? we know president biden is expected to rejoin the paris agreement as well as announce the net zero target for the u.s. as well tom: it was meant to be a climate catalyst for climate talks in 2021 in glasgow. the talks this weekend were meant to spur more action. you are right, as joe promised when he takes over after january 20 in the u.s., to rejoin the

paris climate accord. pledging to cut admissions by at least 55% by 2030. the u.k. has pledged at least 68%, to cut emissions by at least 68% on the end of the decade. canada outlined plans to spend $12 billion to cut emissions. pakistan said they would build no new coal fire plants. but let's take away from the u.n. and those in charge of climate talks was a lot more needs to be done. the u.n. secretary general said that the world should now declare a climate emergency to accelerate the efforts. he says after five years after the paris agreement, the world is still not going in the right direction. beijing.m mackenzie in let's get you a quick check of the headlines. crown resorts is facing a class-action suit alleging the government and risk failings triggered and money laundering cory caused shares to plunge.

they claim crown engaged in misleading or deceptive conduct by insisting they had robust systems in place to comply with money laundering laws, including at as a vip and junket operations. australia's government is extending an assistance package to domestic airlines by eight weeks. domestic aviation support program was supposed to end january 31 but will now go until march 28. the government is also extending a 50% waiver of domestic air services charges for passenger and air and medical flights until the end of march. deutsche bank may move some of its 4600 new york city staff elsewhere in the u.s., although there are no plans yet. it is discussing how to let more employees work from home, or in other cities. yorkmight cut their new staff in half. but she added manhattan would remain to a degree the bank's u.s. hub. shery: here's a picture across

asia. we are seeing the asx 200 adding gains,straight weeks of the longest winning streak since june. the aussie dollar also gaining ground, around its 2.5 year high, surpassing $.75 u.s. level. kiwi stocks reversing some gains. new zealand third-quarter gdp numbers later in the week, expected to see a sharp rebound. nikkei futures and u.s. futures, both in positive territory after japanese stocks lost ground for two sessions in around. and that japanese yen is holding steady at around the 104 level. a big interview later. linkedin membership in asia has surpassed that of north america. we will speak exclusively with the vp for aipac in china. next, brexit talks are extended again. but a deal looks some ways off.

we will hear the latest from brussels. this is bloomberg. ♪ is bloomberg. ♪

karina: this is daybreak: asia. the u.s. has launched a vast operation to roll out a vaccine to the entire population is american covid-19 deaths approach 300,000. fedex and ups picked up the first pfizer shipment from michigan facility to president trump and other washington officials to receive a shot within days. the general in charge says he hopes all 50 states will have some vaccine by wednesday. globally reported virus cases have top 72 million, with no signs of any slowdown. germany is being ordered into a

hard lockdown starting wednesday would non-essential stores closed and children told to stay home and a ban on gatherings. tougher measures are inevitable. president moon is -- the european union has called on china to allow a bloomberg news a staffer who was detained last week in beijing to have access to a lawyer, medical care, and contact with her family. has worked with bloomberg since 2017 and was detained by the beijing national security bureau on suspicion of endangering national security. bring backsion to rocks from the moon is on track. the chinese probe has moved out of lunar orbit after it docked with about two kilograms of samples. it is expected to touch down in northern china, bringing back the first lunar material since a solar craft in 1976. it's named for the ancient

chinese goddess of the moon. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. post-brexit for a trade deal remain alive. we are keeping a close eye on assetng, as is our cross team member. what is going on in terms of how much is being priced in that we may still get that hard brexit, or could it just be the optimism that the two sides seem to be finding momentum in these talks? >> there is momentum and of course the pound is still up .7%, so people were encouraged by the continuation of talks. we have seen this so many times, but it looks like at least traders see some kind of momentum right now. but volatility is still high.

they are keeping abreast of a wide range of options. shery: we have the bank of england meeting this week as well. what else could affect levels on the pound? joanna: you get into the year-end time where liquidity starts to become an issue as well. especially if we start getting headlines saying next week if you get into christmas and new year holidays, you could see a lot of big jumps either up or down as you get that thin trading. shery: what are you seeing in terms of options? joanna: there are some big strikes around 133, and the pound is just above that right now. so that will be an interesting level to watch. for instance, the bank of australia saying you could see it fall to 128 if there is no agreement and go up to 136 if there is a deal. so, definitely a lot of volatility around that range right now. aery: coming up next,

bipartisan group of lawmakers in the u.s. is planning to unveil the full $908 billion stimulus bill monday, but there is no guarantee that congress will pass it. we will get the latest. this is bloomberg. ♪ ♪

arei: let's look at how we

setting up the start of the trading week. sophie kamaruddin is taking a look at the markets in hong kong. sophie: half-hour into cash trade, australian shares up . 2%. macquarrie seeing upside for aussie shares in 2021 with earnings and reflation trade driving gains if vaccines work as claimed. hoping economic momentum in australia it's a peak in april. we are seeing stocks and a delayed off after opening on connectivity issues which have since been resolved. nikkei futures in singapore coming online to the upside. capital's benchmark worst week since october. let's check in on some currencies, very much in focus, sterling. on firmer footing against all g10 peers, rising more than 1% against the greenback.

hovering around that 91 level. offshore yen edging below that 653 mark ahead of tuesday's data dump from china. more upside for the currency index next year. per dollar for6 the renminbi. you have new york crude extending gains above $46 a barrel. optimismd vaccine providing some support. edging lowerres ahead of a fed policy decision later this week. u.s. steel may recover after dropping on stimulus worries which sent the u.s. to year yield heading back to a record low friday. shery: let's talk more about that because we have a bipartisan group of u.s. lawmakers signaling it will have a $900 billion relief ready on monday, as they struggle to break that stalemate in washington. kathleen hays has the latest.

we are now hearing from a spokesperson for speaker nancy pelosi, saying she spoke to secretary mnuchin and they will speak again monday. how much process has really been made since friday? kathleen: the focus has shifted bipartisan group of democrats and republicans who put forward their own 908 alien dollar proposal last week -- $908 billion proposal last week. they are set to unveil it monday. something happened was the senate was unable to pass a big stimulus bill, the one that was on the table for weeks, but apparently mnuchin and pelosi are still discussing it. because they could not do that, they approved a one-week stopgap spending bill, so the money would keep flowing until they get this done. that is also hanging over their heads. democratic senator from west telling, mr. mnuchin,

fox news the bill will be passed before the holiday break. that is at the end of the week. here is what he said about this. he said the plan is alive and well and there is no way, no way that we are going to leave washington without taking care of the emergency needs of our people. but the talks that were led by pelosi, mnuchin, mitch mcconnell, the senate majority leader, have just not gotten it done. there are two big sticking point. liability protection for businesses, they do not want lawsuits coming out of things that had to do with the virus. democrats do not support that. republicans do. republicans think you are going to bailout states. anyway, the bipartisan plan being proposed, we knew this last week. instead of a $1200 stimulus tech, they are talking about $300 week on up limit benefits.

another leading democrat is urging compromises. because no one ever gets anything they want. cnn reporting very interestingly that the bipartisan group plans to split their proposal. so, from that $908 billion they will take the $108 billion state smallery will have a one -- presumably to get to some kind of compromise. chuck schumer, another leading democrat, in the senate he is the minority leader, says he hopes everyone can come together around this game of eight plan. we are hearing a lot more about compromising. but it remains to see what happens after they formally present this monday. can they get it done by friday? haidi: the fed is one of 16 central banks globally holding their final meeting of the week -- of the year this week. what are we expecting?

kathleen: i'm going to be in heaven. the federal reserve everyone agrees is probably the big one, although there is a lot of important meetings. everyone is trying to figure out , they have been fighting the virus, they need stimulus, many of them have done all the stimulus they can. in the fed's case, another thing that has happened is we have seen the labor markets showing signs it's not stalling out, but it has really lost momentum. let's pull up a chart we have brought up a few weeks ago. you can see over the past five or six months how those outsize job gains after the big drops have really tapered off. the unemployment rate is falling. that is partly because so many people are so discouraged they have left the labor market. recently we have seen jobless claims pulling back as well. as a result, the fed is almost zero on the key rates. cutting rates that they do not want to go negative leaves them only one option for right now, looking for bond purchases,

quantitative easing. we waiting to hear if they decide to lengthen maturity a bond purchases. if they get worried about the 10 year note, announced something about that. they will probably just announce that they are changing the amount of bonds they purchase or lengthen the maturity yet, but they are going to be looking at the quality of the bonds, etc., opening the door to that down the road. one more thing is important for the fed although it will not change policy. summary of economic projections, their latest view for gdp, unemployment inflation, and adopt a law, what they expect for interest rates. hikes are cuts, presumably none of that will change except maybe the unemployment forecast will be better because it has come down so much this year, and maybe inflation. their outlook may come down as well. haidi: all right. kathleen hays there. gains ind doordash saw

their debuts last week along with a slew of other ipo's that's a healthy demand. larry summers told bloomberg what he thinks these mega ipo's are saying about the economy. that we areact creating these very valuable, terrific companies says something very special about american capitalism, and that is a strength. the process, coveted shares of share,popping by $70 a people getting rich a very quick, lifting the stock, that is a travesty. that is why people do not like the morality of our financial services industry, and this kind of gilded age stuff in the midst of covid, when children and our country are going hungry, when mothers are not able to take care of their kids and support their families, this is a symptom of terrible excess.

>> how much of this is a result of the federal reserve? because there is so much liquidity in the marketplace. certainly that is sustaining an awful lot of these valuations. larry: the questions you can ask about the long-term valuations, but the fact that the stock was sold at $68 and immediately jumped to $140, making those who were lucky enough to get access, billions of dollars. that error has nothing to do would liquidity. that has to do with the way our wall street is organized. and that ought to be a priority for someone to clean up. shery: former treasury secretary larry summers speaking with balance of power anchor david westin. here is a quick check of headlines. reports from india say workers bangaloree plant near vandalized iphone assembly equipment in a dispute over unplayed wages and longer

working hours. the economic times says video images of damage exists, and police were needed to disperse the angry crowds. -- thent is operating by incident is said to have been caused by non-western workers. workersk has told tesla demand is so high that production needs to increase, as much as possible, for the rest of the summer. he did not give specific numbers, but the company needs to deliver more than 181,000 cars in the last three months of the year to hit its annual target of half a million. s&p dow jones says it will remove apartment investments from its benchmark index to make way for tesla. iser carmaker mclaren planning to sell one third of its formula one unit to a consortium of u.s. investors, as the group tries to fix its finances and fund future top-level auto sports. msp capital and others will

invest almost $250 million in mclaren racing to acquire a 15%, which will rise to 33% of the end of 2022. the deal would value the recent units at three quarters of a billion dollars. counting down to the latest hong kong survey in japan. economists are expecting less business pessimism. we will have analysis from a former boj board member. plus, stay tuned for an exclusive interview later with india's biggest steelmaker. . this is bloomberg. ♪ oomberg. ♪

shery: we are waiting for the imminent release of japan's fourth quarter survey. economists expect it to become less pessimistic as exports rebound. we are joined by former bank of japan monetary policy board member and professor of economics, sayuri shirai. it's always great having you on. thank you so much for joining us. as we are awaiting these numbers, the state of the japanese economy, as i mentioned -- we also have that extra fiscal pottage -- package from the government. are things finally looking ok

from japan -- in japan? sayuri: at the moment, covid-19 infection is growing. --i think shortening hours. in the near term future, we might have an adverse effect on the economy. but in november when the survey was asked, i think sentiment was better. shery: what are we seeing in terms of consumers in japan? because i talked to friends there, and they are not really happy with all this travel campaign, given that infections are rising. i think many young japanese at this moment are traveling quite a lot, even now with global -- growing infections, because the campaign is --

[indiscernible] iswe stay at a hotel, 50% discounted, so that is creating a flow of people, which makes it difficult to contain the increasing covid-19. shery: right. we're now expecting the hong kong -- we are expecting the numbers out in any moment. we have seen so many months now of negative numbers. right now we are getting the large manufacturing number at a contraction, -10. actually beating expectations. the expectation was for -15. and is pessimism easing from the previous quarter. when it comes to nonmanufacturing outlooks, -6, expectations, but still negative territory. we are below zero when it comes to the large manufacturing index for five consecutive quarters. nonmanufacturing index, three

consecutive quarters, despite the trade numbers improving. when it comes to all industry right now for large companies, a contraction of 1.2% for the fourth quarter. the expectation was for a gain of 11%. -- of .1%. the outlook for manufacturers is still negative. let's return to our guest, sayuri shirai. what do you think of the numbers? it seems the pessimism is easing but we are still a negative territoty, not to much in does not look good. sayuri: -- not to mention that 22222ets [indiscernible] systems have been doing well. the level ishat,

still negative. it is recovering. it is only a small part of this deteriorating situation. also investment is not doing much. production is slowing. companies areean making more investments at this moment. haidi: we have seen wage growth essentially stagnant despite all the efforts that reflation from policymakers and in real end adjusted terms you are seeing wage growth falling. does that mean we should not expect much of a sustained recovery when it comes to spending? sayuri: yes. weak because wages

are not growing. both real and nominal. it is dropping. have a decline. like construction is picking up to some extent. it is because of this government campaign. the government is providing subsidies for people to travel, and also able to go to restaurants and eat out. artificially creating demand. setting that aside, the consumption demand is relatively weak. haidi: when it comes to expectation for the bank of japan this week, what more can they really do in terms of the outside policy response that we saw from the boj even pre-covid? is there much more they can do to support the recovery, or is

it down to more heavy listing -- lifting on the fiscal side? sayuri: the bank of japan this month introduced emergency covid-19 liquidity for the banks. at this moment there is a great demand for this kind of credit. it's because basically companies are borrowing quite a lot. investment but for operational reasons. so there is high demand for the credit. banks are borrowing from bank of japan, because they can get money cheaply. programse of that, this is likely to be extended from march of next year, another six months. so that is highly expected. having said that, the bank of japan is already buying a lot of noets, so there are

additional tools we are expecting. liquidity facilities is expected. all right. theresor sayuri shirai joining us from tokyo. coming up, as another brexit deadline passes, ben wellings will tell us why he believes the eu has already moved on. person shares in outlook where he sees opportunities in 2021. tokyo is almost upon us. let's look at how markets are trading so far when it comes to aussie and kiwi action. new zealand having a little bit of a blip with the market open today. .4% lower. about a quarter of 1% higher when it comes to treating in australia as we get added exuberance about the vaccine

rollout now underway in the u.s., as well as hopes of a stimulus deal getting done. features looking pretty positive going into the start of trading. continuing to watch rice action when it comes to the pound. another deadline comes and goes over the weekend. we are now seeing fresh momentum ingested in those bilateral negotiations, potentially setting up for still hope we could see an orderly brexit after all after the final deadline. a lot more to come including the start of trading in seoul and tokyo. this is bloomberg. ♪ . this is bloomberg. ♪

shery: welcome to daybreak: asia from bloomberg's world headquarters in new york. haidi: asia's major markets have just opened for trade. starling at the euro rising as brexit. talks are extended. london and brussels see progress is asking for more time to adjust. the boj's fourth quarter reading indicates much less corporate

pessimism as exports rebound and the u.s. starts to rot the pfizer vaccine to the entire country as american covid-19 deaths near 300,000. president trump and other officials will be among the first to get the shots. the full tokyo open is upon us. the latest survey beating expectations with sentiment rising from this hemp -- from the pandemic low hit in june. a little change after a two day decline. going into 2021, more local analysts are seeing weakness for japanese stocks by midsummer as a rally is seen cooling. proper buckland warning the yen strength may prove a headwind. we are watching developments around the go to travel campaign in japan. local media reporting more cities may be excluded including tokyo. in south korea, virus cases

topped 1000, which may see the virus alert level raised. the pickup in exports we saw last week may offset the domestic drag according to bloomberg intelligence. we are seeing a little boost in the kospi this morning. just slightly under pressure. edging towardn the 102 level. let's check in on the mood in sydney. the asx 200, we are seeing some gains by a third of 1% after a two day drop shared banks and tech shares providing a boost and sydney while the aussie dollar is extending gains at a 2018 hi. we are seeing some moves to the upside here. this as the benchmark marks the worst week since october. we had vaccine rollouts providing a risk on tone. the u.s. 10 year yield coming

back by two basis points. recovering. pound on the front slept this morning. back above 133. brexit talks extended, which bloomberg economics says does complicate the boe's meeting on thursday. shery: let's discuss the central bank decision because we are -- because investors are looking to numerous decisions this week. for are looking confirmation of continued monetary easing as one of the key supports to asset prices. isning usith his outlook the chief asia market strategist management.an asset always great having you on with eyes. supportivese very central banks. we have vaccine optimism. as the only way to go for

markets across asia up or are we stretched given the incredible rally we have already seen? >> good morning. the key here is investments have risen. there could be some room for consolidation. the mood has been aggressive. i do think the prospects of better recovery as well as the support from central banks should continue to underpin strong performance for asian markets going into 2021. shery: where are you looking because we have already seen the pog and the pboc stepping back, not doing much more than they have already done. >> in terms of the boj, the room for easing is limited. they can continue to pledge to print more money to buy bonds but they have really maxed out compared to the past few years. that the the fact chinese economy domestically is recovering steadily, it does not

need to do much at this point. banks, theretral is a lot more room and desire to ease. going into next year, they are likely to keep the status quote because we do not have much inflationary pressure right now and it is still going to take time for the vaccine to work through the population and for the economy to revive. that is going to take another six to 12 months. banks in asia and around the world are likely to stay guarded on any downside. -- any downside surprises in the econ haidi: where do we go when it comes to this rally we are seeing in chinese assets? i want to throughout this chart taking a look at the msc i china sh. it seems to be nearing some resistance. you have the likes of citi calling for the likes of six to the dollar. do you see these playing out or

have we had a point when it comes to the equity rally as well as the yuan strength against the dollar where there is going to be a break in consolidation? >> in terms of the equity market, it is similar to what i mentioned earlier. you could see some consolidation given the strong momentum. i do think there is room for sector rotation going into 2021. many of the lagging sectors because of the pandemic could be the leading next year. i'm still bullish on the yuan. i think the weaker dollar will help to push the yuan stronger. i think the central bank will increase two way risks. we could see some policy options available to bring the yuan a little weaker, just introduce some uncertainty and some two way risks to the market.

fiscalit is premature tightening in this part of the world a risk? >> i do think we are going to see some fiscal consolidation after an extraordinary year of fiscal stimulus coming from the asian economies. at the same time, two things to remember. fiscal policy always come with an automatic stabilizer. if the economy continues to up,ver, tax revenue picks social bed -- social benefits come down. that will pull the deficits. given the funding costs for many of the asian governments continues to be low. i do think the policy buyers will be supportive of growth. if vaccines are being distributed around asia and it is going to take time for some of the hard hit sectors to recover, government support is still much-needed. shery: we are seeing incredible recovery when it comes to the

trade numbers that center around electronics in northeast asia. what are you liking in terms of sectors? >> electronic sectors, tech sectors remain our core allocation in the medium to longer term the next two to three years. going into 2021, many of the liking sectors of 2020 -- the areing sectors of 2020 going to benefit from a more comprehensive recovery globally. i do recommend investors to diversify both geographically and sector to capture the benefits of the recovery of 2021. shery: always great having her thoughts. chief asia market strategist at j.p. morgan asset management. let's turn to karina mitchell. karina: sterling rose in trade tothe u.k. and e.u. agreed stall brexit talks.

between described talks boris johnson and arson love underline as constructive and useful. they say despite missing several deadlines, they agree negotiation should continue. president trump is repeating his threat to veto a defense spending bill, tweeting the biggest winner would be china. the white house has not offered any further explanation. the $740 billion defense authorization act passed the senate on friday after it cleared the house. it includes moves to overhaul money law protection. to --lans tehran aims to pump 4.5 million barrels of oil and gas a day. and increase daily exports to more than 2 million barrels. i run has sent a tanker to venezuela. -- iran has sent a tanker to

venezuelan peer the national security case against jimmy lie has been adjourned until april as prosecutors investigate charges of colluding with foreign forces. he is accused of calling for foreign centers and other measures between july and the start of this month. form 1000 twitter posts part of the case against him. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm karina mitchell. this is bloomberg. still ahead, brexit negotiators agreeing to go the extra mile. ben welling tells us why he thinks that e.u. has already moved on. the first vaccines rollout. washington plans to deliver 3 million doses on monday in what is being called a dude a moment. this is bloomberg. every year, we set out to do one thing: help the world believein h.

and this year was harder than ever. and yet, somehow, you all found a way to pull it off. it's not about the toys or the ornaments but about coming together. santa, santa, you're on mute! just wanted to say thanks. thanks for believing. i hope my insurance pays for it. can you tell me how much this will be? - [cashier] 67. - sorry. - wait, have you heard about goodrx? goodrx finds free coupons to help you save up to 80% on your prescriptions. - wow, i had no idea. - [announcer] goodrx, stop paying too much for your prescriptions.

haidi: a d-day moment. that is what some in the u.s. are calling the rollout of the pfizer vaccine on monday. we are hearing president trump and other top government officials will be offered the vaccine within days. roz cries in is in washington. i will start off with this plan for officials and all these people deemed essential government workers to receive the vaccine. this is as much about vaccinating them as it is about creating public confidence. >> i think that is absolutely right. the way it is being presented is these are essential government workers and it is about the chain of command and certain people from the white house and other branches of government. there is a little bit of controversy. we have been getting feedback from readers. it is going ahead. it is really only a few people.

as you said, something like 3 million doses are going out in the list -- the next few days. they started leaving the pfizer plant in michigan today. on the way to hundreds of hospitals around the country. something like 3 million shots going to health care workers and nursing home residents. a lot of people lining up to be in the next batch. people like airline workers and meatpackers and teachers. a lot of people are keen to get the vaccine and restart their lives. shery: doses will not be enough for everyone. when can we expect the next vaccine at it seems like it is going to be moderna? ros: exactly. facing the food and drug administration advisory committee on thursday where independent experts will hear the results of the clinical trials and raise any concerns. they will vote at the end of the

meeting about whether they think the vaccine should move ahead in the process. if it goes the way the pfizer and biontech vaccine went this week, there could be an approval within days. maybe friday. maybe over the weekend. that vaccine would rollout. there is additional vaccine behind it. many shots going out over the next weeks and months. could be the second or third quarter of 2021 before there is enough vaccine circulating in the populace to say the u.s. is at the level of herd immunity. there are still months to go but progress is being made. the same time, before we get to that point, we are still seeing cases climb. deaths climbing in the u.s. as well. where are we in terms of what the government can do to -- can

do to push through the stimulus at this point? ros: we have heard in the past hour or two that speaker nancy pelosi and treasury secretary mnuchin spoke again today. they will speak tomorrow. there are two competing plans. big proposal is coming of a bipartisan group of senators. that is supposed to be revealed tomorrow and address some of the various concerns republicans have about state and local aid, about liability. i expect you will hear more about that in the morning. there is some optimism that after weeks and months of an impasse that a compromise could be made. to the millions of americans losing extended benefits toward the end of the year, it is crucial and you would think that

members of congress get that but it has been a long road. optimism about the vaccine but still a lot of economic pain and k shaped recovery -- and a shaped recovery. some populations are doing quite well but others are struggling. shery: bosque resonate in krasny in ro s washington paired up next, the improving sentiment. japan's survey shows less corporate pessimism as experts rebound. this is bloomberg. ♪

haidi: japanese firms are showing less pessimism as higher exports strike production. business sentiment improving quite a bit more than what was expected. what did this latest data charge

show us? >> thanks for having me on. i think you are right. it is a clearer than expected sign that over the quarter, the situation has improved. trade leding global by asia improving. manufacturer's encouragement. we can see in the survey details that automakers -- there sentiment improved significantly. in this latest survey. we have vaccine developments as another positive. another round of stimulus from the government. we should also add that we are still in negative territory. companies are still pessimistic about where they are about the future. that pessimism is stronger among smaller firms. it is a better-than-expected result. we are still not out of the

woods. we have record infections. there is plenty of uncertainty. one thing i would like to point out is the cash does the talking. plans,look at the capex that is down 1.2% expected year on year. that is the worst figure in a december tankan since 2009. it is a clearer than expected signal of improving sentiment, but it is not 100% clear. shery: what does this mean for the boj echo not a lot of expert -- for the boj? out a lot of expectations about what they can do. >> that is a good point. programcovid support has been helping a lot. if you look at the bankruptcy figures, you will see here we

are. we have been in a crisis and bankruptcies are down year on year by over 20%. that reflects government loan the ¥120 trillion loan program from the boj, which also ramped up corporate bond buying. support,ram of covid we are expecting the boj to extend that on friday. but keep all the main levers, interest rates unchecked. bery: can they continue to -- not do as much as they did before if you have a stronger japanese yen? we have topped the 104 level against the u.s. dollar. haidi: that is a good point. -- >> that is a good point. a year ago, 104, people would have been in total panic mode.

covid has shift the expectations, the goalposts, the comfort zones and i think one of four looks a lot more comfortable than it would have done a year ago. in our monthly survey, economists say the trigger point for the boj on dollar-yen were -- where that was wonder more or year ago -- 100 or more a year ago, we are a ways away from paul jackson, our japan economy editor in tokyo. economic advisor is warning of a vicious cycle of health and policy issues as the virus continues to spread around the world. he told bloomberg what he thinks may break that grim pattern. >> all year, we have been looking for virtual cycle. virtual cycle between public health, the economy, policy and

behavioral issues. how you and i behave when it comes to the health issue. now, we are looking at a high probability of a vicious cycle. public health is deteriorating. policy is not doing anything. the economy is slowing going into a recession in europe and people are becoming more hesitant to interact socially and economically. we need to break that cycle. the only thing that breaks it in the short-term term is the policy side. we have to get control of the health side again. unless we move on policy and health, you and i will be talking about this vicious cycle. do you think the conversation you and i are having is relevant to financial markets? >> it is to some extent because i am a believer in the limit to how much a can disconnect wall street's main street. main street.t to

this market has strong technical us. -- wall street has provided an umbrella that has provided the markets from all sorts of things. a lot of people in the marketplace will say, what you say is interested but is not a day one issue for me. day one issue for me is we have to see my money coming in. theave to see a repeat of valuation for airbnb. for a while, the market will continue to operate on this technical driven by liquidity weight. haidi: that was the allianz chief economic advisor. it's get you a check of the latest headlines. deutsche bank may move some of its 4600 new york city staff elsewhere although there are no concrete plans yet. we are taking a look at

australia's government extending an assistance package for domestic airlines by eight weeks. on january 31end but will go on until march. the government is extending a 50% waiver of domestic air services chargers for passenger and medical services flights until the end of march. alleging --s crown engagedims in misleading or deceptive content -- deceptive conduct by existing it had robust systems in place to comply with money laundering laws. let's take a look at what we are seeing when it comes to trading in asia markets. caution as we continue to await further vaccine developments. we are seeing it upsides of a tense of 1% on it comes to trading in -- of 8/10 of 1%.

the kospi has seen modest gains. territory positive for trading in sydney. we have a big interview later on bloomberg tv. linked and membership in asia has surpassed that of north america. we will be speaking about that aipac ted the vp for coming up next, brexit stock -- for aipac. come, the british prime minister and the european commission president agreeing to keep negotiations live. fromll get analysis next ben welling's. this is bloomberg. ♪ ben welling. this is bloomberg. ♪

shery: gains and losses of the cross equities in asia and a mixed early session so far. let's turn to sophie in hong kong for the latest. moves: we are seeing across asset classes. gold around 1837. asian stocks, we are seeing that push higher at a record level. japanese stocks are leading those regional gains. the nikkei 225 adding 7/10 of 1%. vocal analysts say they see downside moves this year. the kospi is higher after a

six-week event. this despite concerns the virus alert level may be raised given the pickup we have seen in cases in south korea. let's check in on some stock movers. i want to highlight softbank, which is jumping in tokyo after its robotstake in .nit, boston dynamics in seoul, we are seeing shares of biotech gain ground. in sydney, banks providing a big boost. anticipating that ozzie yields climb toward 2%. let's check in on currency markets with the dollar under pressure. we have the yen testing at the 104 level. pairing it earlier

gains. kim monday seeing the table back at 136 on a brexit deal but i drop toward 128 if there is no deal. that would likely see u.k. interest rate expectations adjusted slightly lower. haidi: with trade talks -- trade talks between the u.k. and the european union have taken another term. go the extra mile. our next guest is not sure the u.k. even once a deal. joining us from middleburg is a welling --rt, then ben wellings. another deadline has come and gone. where do you think the mentality is? late last week, it felt like both parties were ready to walk away. that the e.u. had emotionally moved on. is it palatable or possible for a deal to be found now?

ben: that is a good question. i think the people are trying to go the extra mile as they say in terms of the negotiations. it does seem to have run out of steam. your point earlier on -- i am not convinced the u.k. government wants a deal anyway. the machinations over the last four years around brexit means that the hardliners are in charge. of u.k. 70 hard view and i think the european union whilst regretting the loss of the u.k. and very important trade that the u.k. played are ready to move on with a different agenda. we have got another movable deadline. but i'm struggling to see where

the deal is going to land at this moment in time. haidi: i think one of the things we have been talking about is this idea of british paidtionalism having political dividends for boris johnson. has it gotten him to a point where he has backed into a corner and cannot find the compromise? ben: this is the whole issue of redlines. it predates johnson and goes back to theresa may. the point is that theresa may herself seems to be backed into these very uncompromising positions by the hardliners who are now in charge in the u.k. government with boris johnson at the head. , there been aes series of decisions made from the u.k.'s bargaining decision. aboutk. has its own ideas redlining at the single market .

business would prefer to retain access to the market, which was the moderate brexiteer position. that seems to have lost out to this more hard-line interpretation. some of this is to do with domestic politics in the u.k. in constituencies in the northeast of scotland and southeast of england who are heavily fishing dependent and the way that sovereignty over me --ng rights has beco this does not apply to northern island where deal has been worked out. they have been a series of positions that is difficult for the u.k. to back away from without seeming to concede the united kingdom's independence. maneuver of room for from the u.k. government. shery: not a lot of room for

maneuver when it comes to businesses. even if you get 11th hour deal, it seems those businesses will be stuck with not being prepared enough to deal with the consequences of what is happening december 31. ben: it is the classic thing about uncertainty. whatever deal comes out now -- let's imagine a deal does happen. surely it has got to be the thinnest and weakest of agreements. like i say, i'm struggling to see where that would come and i think there are people in the u.k. government that really want this so-called australia style relationship with the european union, which is a misnomer. it is really just code for no deal. we know that australia is negotiating a free-trade agreement with the e.u. anyway. that would imply the u.k. should

be doing the same thing. that is the terminology because it seems to resonate with the domestic audience. disruption on the 31st of december when the transition ends. shery: we have the bank of england deciding on rates this week. what does this mean for the economy depending on the outcome of these negotiations? it hinges on the outcome but presumably, business will not be all that thrilled. jolt to supply and services. coming, dislocation even with or without a deal. but especially without a deal. i think this is one of those cases where politics trumps economics.

the complaints of business or the bank of england, which we are seeing -- which are seen by the hard brexiteers as being too soft, i think a lot of those complaints are falling on deaf ears. notwithstanding the significant influence that these sectors have over government policy. thing, exit has upended our normal assumptions about the relationship between business politics and ideas. beuppose we ought to expecting in that regard. there will be choppy waters ahead. cannot expect boris johnson to give in very much. if there is a hard exit and that confusion sets in over the coming months, what does that mean for his political future and the government in the u.k.? ben: that is a good question.

i think it depends on what kind of tories support him. some people will applaud getting out of the e.u. entirely. for some, that was the whole point. in a way, their wishes will have come true. of course, brexit has exposed and hardened some very serious internal divisions within the united kingdom. there will be a lot of people who will be dismayed by that. constituencyore might be what you call soft brexiteers. those people who did not want the kind of soft dislocation they are likely to get with the new deal. it might take a softer interpretation that sovereignty is about voice within his additions rather than outside of them. -- within institutions other than outside of them. i think it will harden positions. harder, positions

will harden around those leaders and figures that exemplify them. i think the question is how it lands as well in some of those constituencies that voted for the conservatives this time last year rather than the labour party and what kind of economic damage is layered onto the pandemic from a disorderly brexit. ben wellings, thank you very much for joining us. you can read more about brexit in today's edition of daybreak. mobilelso available on in the bloomberg anywhere app. coming up next, some relief for a major -- for major banks. on individual sanctions over hong kong. the details ahead.

this is bloomberg. ♪

karina: this is daybreak asia. i'm karina mitchell of the first word headlines. the latest u.s. relief package is expected to be announced monday in washington although

one of its key negotiators says there is no guarantee it will be passed. senator joe mentioned told fox news talks have been running all weekend and a bipartisan bill should be unveiled later. a competing package from the treasury is also being circulated on capitol hill. the u.s. has launched a vast operation to rollout a vaccine to the entire population as american covid-19 deaths approach 300,000. fedex and ups picked up the first pfizer shipment from a chic and facility with president trump and other top washington officials to receive a shot within days. the general in charge of the operation says he hopes all 50 states will have some vaccine by wednesday. globally, reported virus cases have top 72 million with few signs of any slow down soon. germany is being ordered into a hard lockdown starting wednesday with nonessential stores closed, schoolchildren told to stay home and a ban on gatherings at new year's eve.

is tightening restrictions. president moon is talking of curbs at the strictest level. the latest boj reading of corporate sentiment in japan improved for a second quarter has exports and the wider economy strengthen. the survey of large manufacturers picked up -10, still negative but extending the bounce from a pandemic low of -34 in june. ae government has announced seven -- a $7 billion package to retain the recoat -- the recovery. to have access to a lawyer, medical care in contact with their family. wasinese citizen who detained on suspicion of endangering chinese security. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

i'm karina mitchell. this is bloomberg. the u.s. treasury department says it has not identified any bank or other financial institutions went to a group of people -- linked to a --up of people this would be a big relief for banks. they have scrambled to comply with these sanctions. >> absolutely. the number of banks have had to comply, including state on the banks from china for fear of basically being cut out from dollar funding and overseas networks. for many of these, banks including american and hong kong ve had to comply with his order that came down in october. the state department issuing a list in october of some 10

people that would be sanctioned including the most high-profile executive, chief carrie lam who famously at the time scoffed at the impact it would have on her financial situation. only then to tell local media here that no will have her and she has paid her salary, which is one of the highest for the leader of the world, that she was being paid in cash and she had stacks of cash piling up in her home. thanks have had to complete -- banks have had to comply with a u.s. order but they are breathing a sigh of relief because this is the statement coming from the treasury department, which was mandated to reply within 60 days of that state department issuing of the list. this is with the treasury department said it at this time, treasury has not identified any foreign financial institution

that has knowingly conducted a significant transaction with a foreign person identified by the state department. they will continue the vigilance and look out for any activity that does meet the criteria. isdi: we are looking at what going on with the media mogul jimmy lai. he is being charged under the national security low. >> that is right. related issuewhat because under the national security law, -- this is not retroactive. these are for alleged crimes he committed under the national security law between july 1, which is the first full day of implementation of the law and december 1 and prosecutors were telling the magistrate over the weekend when these formal charges for colluding with foreign forces were levied on him, they specified the offenses as him calling for a foreign entity. did not say the united states but essentially it is, to impose

sanctions and that he allegedly activitieshostile between july 1 and december 1. he was on bloomberg television. i have interviewed him several times. in may.n tv here he said, our only salvation is for president donald trump to impose sanctions. he went on to say the most would be initial move to freeze the bank account of top chinese officials. hasokesperson for jimmy lai said it appears the evidence right now that has been put forth to the magistrate comes from these kinds of interviews he has given to media. not just bloomberg but others. he had been denied bail. the case has been adjourned until april 16. paraded beforeas the cameras in shackles and chains this weekend will most likely stay in jail waiting the

next day in court on april 16. our chief north asia correspondent stephen engle. protecting the currency could strengthen to levels we have not seen any newly three decades. we will get the outlook next. this is bloomberg. ♪

shery: here's a quick check of

the latest headlines. reports from india say workers at an apple plant near bangalore vandalized assembly equipment in dispute over unpaid wages and longer working hours. police were needed to disperse the angry crowd. ae plant is operated by taiwan-based company and it seems to have been caused by workers entering the premises. isn musk told workers demand so high that production needs to increase as much as possible for the rest of december. the company needs to deliver more than 181,000 cars in the last three-month of the year to hit its annual target of half a million. says it will remove apartment investments from its benchmark index to make way for tesla.

is planning to sell a third of its formula one unit as the group tries to fix its finances and fund top-level auto sport. acquire 15%, which will rise to 33% by the end of 2022. the deal would value the racing in at three quarters of a billion dollars. haidi: foreign cash making a beeline toward chinese markets is propelling the yuan even higher. let's get some analysis from our china markets reporter. that we are going to see six to the dollar by the end of next year. >> six to the dollar or even stronger. it is not just the inflows caused by index inclusions and

stocks in the bond market. it is also the extreme bullishness on the em age of reach generally. china obviously a huge chunk of that. the high-yield premium that chinese assets have over the rest of the world, that is set to continue. we do have the 10 year government bond yield in china . had the spanish and portuguese bond yields subzero last week. that is a pretty juicy yield. call fromof bullish economist, that is particularly strong. the consensus is strong inflows and strong yuan next year. shery: how big of a conundrum is that for the pboc? >> strong currency for any country -- it means exporters

are under pressure. the good thing right now for china is export growth is strong because there is global demand ppe products. at the moment, it is kind of ok. if globalis economies, other economies in the world start opening up, than that export growth will be under pressure. -- then that export growth will be under pressure. the pboc is tightening policy. it issued -- it indicated the party is to reduce debt in the economy. that will pressure market rates. the yield gap will only get wider. what can the pboc do? can it encourage outflows? or can it reduce or narrow the s yield premium over the rest of the world. those are the kinds of things we are looking at for next year.

as long as the rest of the world still has extreme strong demand for chinese products, then export growth is still ok. it is one of the most interesting stories and biggest themes in our markets for next year. atdi: we are also looking what the next step is when it to the chinese equity rally. the ms ci china still hovering at the highest levels since the index inception in 1995. what analysts telling you the next steps are? do we see this consolidation continuing? valuations --s they are kind of high everywhere in the world. in china particularly, that has been a concern as insiders start selling. expiring at the first half of the year after china

encouraged equity financing and companies to sell shares. the ipo market listed in china and hong kong was very strong. that is putting pressure on valuations. we are seeing single-digit gains. king.year that is what analysts shery: our chinese market editor. as we head to the cheney open, let's turn to sophie for a check of what to watch. stocks had their worst week in september. we are watching railway construction shares after it was said that china will invest $4.7 billion in the railway network. --ching solar and given that they see 75 gigawatts of solar and capacity being added. ihh health care. that is asia's most valuable hospital group.

amid the immunization drive, the ceo saying it will help meet its targets in the next five years pay those are some stocks to watch at the open. that is it from daybreak asia. our coverage continues as you go to the start of trade in hong kong and shenzhen. this is bloomberg. ♪

tom: it is not :00 a.m. in beijing and shanghai. welcome to "bloomberg markets: china open i am tom mackenzie. david: i am david and glass. our top stories today. markets across regions. u.s. futures on the up. the prospects of ul