♪ >> a very good morning. i am haidi stroud-watts. shery: i am shery ahn in new york. welcome to "daybreak asia." tech shares -- the trade. following treasury yields serve as a tailwind for equities. a hong kong listing could encourage more chinese tech

homecomings. we will hear exclusively from the ceo and cofounder of this company. haidi: the u.s., u.k. and e.u. shanks than china for human rights abuses in xinjiang. beijing retaliates immediately, putting western nations relations on course for a father downward spiral. haidi: this is how we are seeing the sydney open. some tailwinds for asian stocks following the high. we see tech making a return ahead of what we saw overnight, the bond yield situation dipping, and we have a series of very closely watched bond auctions later this week. that asx 200 up. futures trading lower 0.1%. aussie dollar seeing some downward momentum. also in side when it comes to the kiwi after the government allowed a new branch of restrictions as house prices

continue to search in new zealand. . the kiwi. is holding onto gains of 0.5%. when it comes to trading in u.s. futures, we saw the nasdaq 100 be the art performer, up close to 2%. futures a little changed still after the benchmark also closed higher. nikkei futures showing negativity going into the open. dollar yen holding at 1.08. shery: we start with the big homecoming listing of baidu. the company will make its hong kong debut in the coming hours. of a market tom mackenzie is on the ground as the baidu -- at the baidu technology park. how much demand have received so far for this listing? tom: the listing is happening when the hong kong market is down from its february peak, but demand seems to be there. this ipo has been oversubscribed about 100 12 times. they have managed to raise more than 3 billion u.s. dollars.

overnight he saw the rise by about 2%. it looks set at this stage, at least, to be relatively solid for baidu. but you are right, this is a big homecoming for another big chinese company listed in the u.s. we had. jb and alibaba that were all very successful. it is also about getting exposure to investors here on the mainland. you can see the stage behind me with the gong, getting ready for the 9:30 ipo?. if it is successful, baidu, you will get more of those sized and larger chinese companies listed that still are listed in the u.k., the likes of ite coming back and testing the waters here in hong kong.

haidi: they have also been making a big push in --. how successful has that been? tom: they have actually rebranded the business away from -- it used to be called an internet company with an ai foundation. now they are describing it as a leading ai company, kind of underscored by the gong behind me. you can may be just about make out, they have model ai chips built around the gong, you've got a little robot on stage who will be getting the gong that 9:30 local time. they have invested heavily in ai and they are starting to see that payoff whether that is in chips or autonomous vehicles. they have cloud services. their ai hardware division has seen double-digit growth. smart speakers -- they have a 20% market share. they have this aa chip unit where they are producing their own in-house chips. . they have raised about 230 million u.s. dollars and may

potentially spin that off at some point. they also have the partnership with one of the biggest carmakers in china to start producing autonomous vehicles. so investors are starting to show that there is some optimism. revenue streams are starting to come through. but, in terms of overall revenue for the company, the vast majority still comes from advertising sales. speaking to management here, they say that is going to change. at times to rebrand the business and shift towards online, that did not really work out, they were late with the mobile push. but the senior management of the company say, look, we have invested and it will work for us. we will end up being leaders in a space that was not getting the backing from senior officials in beijing. haidi: tom mackenzie in beijing at baidu's technology park.

be sure to catch his exclusive interview with the baidu cofounder and ceo robin li at 11:30 a.m. if you are watching here in sydney. let's get to vonnie quinn with the first word headlines. vonnie: the u.s., europe the u.k. in sanctioning china. the e.u. targeted four chinese nationals. the u.s. said it has sanctioned two chinese officials. the move drew an immediate response from beijing, who said it would impose restrictions on 10 individuals on the european side. australian prime minister scott morrison says the staff member involved in the sickening behavior in parliament has been sacked. 10 network broadcast allegations that a group of male government staffers had shared images and videos of sex acts over two years. approval for scott morrison's

conservative government is at a two-year low after the scandal broke his government. more than 18,000 people in new south wales have been evacuated due to severe flooding. another 15,000 may be forced to evacuate in infected areas later today. emergency responders made 250 rescues in the last 24 hours. bank of america -- a surge in energy use involved in bacon production. it says the power accounted for 0.4% of global energy production. emissions from bitcoin mining have grown almost twice, rising over 40 million tons in the past two years. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. ♪

shery: still ahead, big interview from the credit suisse asian investment conference. sophie kamaruddin is there for us. who are you speaking to? sophie: shery, we are on day two of this event where there are discussions including the future of clean energy and corporate governance. we will be sitting down with will stevens, aipac head of quantitative and systematic strategy. we will talk about the opening up of china markets. and we will be joined by the credit suisse head of china technology and securities research. we will talk about the digital economy. this is bloomberg. ♪ this is bloomberg. ♪

♪ sherry: we are in day two of the

credit suisse asian investment conference. it brings the country's top political, and financial. leaders let's get to hong kong, where sophie kamaruddin is joined by the first guest of the day. sophie: good morning. we are sitting down for an exclusive chat with will stevens, credit suisse's aipac head of quantitative and systematic strategy. thank you for joining us this morning, a busy agenda indeed during this conference. let's talk about market composition. the new ftse rules kicked in last year, allowing a ramp-up in institutional investing. what does this portend for investment in china, particularly for your size of the market -- slice of the market? will: we think the program represents what is essentially

another one of the key steps we have seen in the ongoing opening of the china capital markets liberalization process. one of the really important points to remember is, despite headwinds such as the trade war, u.s.-china tensions and the covid-19 pandemic, not only have we seen the market opening maintain, but it has accelerated through that period. that is thanks to the commitment of the chinese authorities to move opening up. specifically as it relates to us, it opens up a much broader universe of access to the h-share markets, whether it be convertible bonds, access to the starboard, some of the other new areas of the market that international investors are less familiar with. sophie: speaking of a-shares, they still enjoy a premium over there hong kong peers, albeit that gap is narrowing.

what is the positioning? will: a lot of people are focused on the spread between the a andh-shares. it is an interesting angle, not just for hedge funds, we think increasingly thinking about how investors delegate between offshore china and onshore china is going to be a critical investment decision for china and em-focused portfolios. why is that? currently we have a 20% inclusion factor, 20% to 25% of a-shares in the international benchmark. as it ramps up, investment decisions will be increasingly critical. why is that? if you look at the dynamics underneath offshore h-shares and onshore a-shares, we see different drivers. factor returns are different. return and risk profiles, understanding the differences is

increasingly critical and looking at those dual-listed names is critical to helping investors understand the dynamics. sophie: asian markets' very speaking broadly has delivered great returns. is value becoming the next momentum? will: sure. what has been interesting is from november through march, we have actually seen three standard deviation reversals, growth versus the value trend, with a few swings in value. those are the most extreme moves we have seen over that period. this is definitely a shift in the volatility regime as it relates to different factor returns. the question on people's minds is, is this just a one-off disruption or a short-term volatility trend? or arlene salac to establish a new ongoing regime where we may

see value have more sustainable outperformance? a review is, we think it has been bit risky for people to call it a return of that. but we may see a balance of factor backdrops, as opposed to the heavily skewed performance of growth and momentum that we have seen in the past. sophie: there are those looking for value even with that. with uncertainty still lingering, and numerous versions, that may still take longer, so what perhaps structural shifts are you looking for? will: at the credit suisse conference this week the overarching theme is accelerated disruption. that is a really interesting way to look at opportunities in the market. at key question investors need to ask themselves on the back of that is, following the disruption in different buckets of the market, are we seeing a

permanent dispersion, or mean reversion? so a new trend and then back to the old? if you look at china, for example, we think the opportunities in china, we are likely to see a mean reversion opportunities. the areas are targeting stocks that have a strong southbound flow in hong kong. in the asian market. names that are seeing significant institutional adoption. we have seen a huge takeoff in mutual funds and we think that is a long-term trend. we think japan may be more of a, sort of, dispersion event. we are actually seeing long-term change. a lot of that relates to corporate governance and the upcoming reforms that we will see next year. sophie: that may be one catalyst, the reforms, and the em tweak may be another, the nikkei 225 reached 3000.

may that be sustained? will: sure. definitely, people are looking at their relative performance of the nikkei versus the topix. in the short to medium term, i think the topix of performance is likely because it tends to have more value orientation where is the nikkei tends to be more growth oriented. it aligns with the current theme in the market. bite over the longer term, we think actually the corporate governance changes and capital management shifts for increasing dividend, increasing buybacks, aligning across shareholdings, all these are set to accelerate in 2022 both as a cyclical rebound coming out of the pandemic, but even more so because of the huge shifts that we will see in the tsc reform. sophie: we have seen the rise of retail investment in china. how are you managing for the

subsequent crowding out of popular trades with the participation of retail traders? will: over the last five years in china we have actually seen a reversal. we are seeing -- we have seen retail ownership of chinese a-shares declined by about seven percentage points from around 50% of total holdings to now around 42, 43%. retail has not gone china, but it has moved. what has happened is, rather than directly investing in the market, they have actually moved to be more active and investing in mutual funds. that is actually a trend that impacted the market significantly this year. we saw huge flows into mutual funds ahead of the chinese new year, veteran following the government's very concerned about bubbles, there has been

some talking down of the market, if you would, and we saw a quite significant unwind of that. while these things are different -- volatility around retail in china -- we think again over the longer term they are set to increase their allocation to domestic equities. sophie: likely to see mutual fund issuance increase, too. thank you so much for joining us. back to you in the study of. shery: we will actually have more from the conference. sophie will bring us more conversations. we will speak to the bank's had of china tech security research, and the president and cfo joining us later. we have breaking news. bloomberg has learned that -- is poised to raise $2.6 billion in a second listing in hong kong. the video streaming platform is said to be guiding its listing price at 808 hong kong dollars per share. that will be a discount of 2.6% to bilibili's monday closing

price. the company selling 25 million shares in its offering. its abr's have more than tripled in the past 12 months, and it comes as we continue to have these homecoming listings in hong kong, including baidu starting to trade today. bilibili is set to raise $3 billion in its second listing in hong kong. coming up, the u.s., u.k. and canada have joined the e.u. in sending beijing a message for human rights. we have beijing's response. this is bloomberg. ♪ this is bloomberg. ♪

>> the u.s., u.k. and canada have joined the european union by imposing sanctions against china over alleged human rights

abuses against the uyghurs in xinjiang. the move drew immediate reaction from beijing, which retaliated in its own action against e.u. stephen engle is live in hong kong with the latest. what do we know? stephen: the most important thing to take away from this is that it is showing a unified front of western countries against china on numerous fronts. we had the 24 new sanctions the united states imposed on china ahead of the alaska meeting over the hong kong issue. we also had 20 different diplomats from different western nations show up in front of a beijing court at the beginning of the trial of one of the canadians, again showing a united front. . this is another example, a highly symbolic move first by the e.u. they began by imposing sanctions that target four chinese nationals and one entity over alleged human rights abuses on

the uyghurs in xinjiang. . the u.s., canada and the u.k., which, by the way, chaired the g7 meeting this year, largely followed with similar moves which largely mirror the e.u.'s actions. here is dominic raab, the u.k. foreign secretary. he says, "we are sending the clearest message that the international community will not turn a blind eye to such serious and systematic violations of human rights, and we will act in concert to hold those responsible to account." this is the e.u. statement as well. we heard from the u.s. treasury director of the office of foreign asset control, saying, "chinese authorities will continue to face consequences as long as atrocities occur in xinjiang." again beijing clearly will feel its back against the wall is a united front forms on numerous issues targeting china. shery: beijing, clearly not happy with this. stephen: absolutely not.

what is interesting is the beijing foreign ministry, the foreign ministry of china fired back immediately, saying that they will impose sanctions on e.u. officials as well. they will sanction actually 10 individuals and four entities in the e.u. this is a statement from the foreign ministry affairs in beijing "this move is based on nothing but lies, misinformation, disregards and distorts facts, interferes in china's national affairs, and basic norms governing international relations, and severely undermined china-e.u. relations." so this is the springboard coming out of that already-testy meeting in alaska between u.s. officials and chinese officials, where a lot of people around the world were scratching their head, what's next? i guess that is the next question, what is next in this standoff.

shery: we will be watching. chief asia correspondent stephen engle in hong kong with the latest. here is a click of the latest business flash headlines. baidu rose as much as 2% in premarket trading ahead of its debut on the hong kong stock exchange, after it priced its local offering at two point 7% below its u.s. shares. baidu says it's retail of her was 112x -- retail offer was 112 times oversubscribed. singapore technologies engineering has offered $2.4 billion for u.s. defense electronics maker cubic. topping a previous deal involving aliens investment management. the proposal values cubic at $76 a share. they agreed to by the firm for $70 a share last year. ste engineering says it plans to

sell its operations to an affiliate of blackstone. a top cybersecurity officials says thousands of microsoft exchange servers are still compromised by hackers. he warned that security patches applied after an attack wouldn't necessarily affect hackers and several measures were needed. microsoft blamed china on the attack on its servers earlier this month. and this is a picture across asia. markets looking like this. the asx 25%. kiwi stocks rising 0.7%. we are seeing a higher lead from wall street. tech was leading the gains. we have seen the aussie dollar and the kiwi dollar and the pressure, more because we had a drop in iron ore prices. china has reported a

plan for production cuts there. nikkei 2000 also down. , and exclusive interview with the asia-pacific head of credit suisse. this is bloomberg. ♪

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haidi: we continue our coverage from the credit suisse asian investment conference. the growing desire of bank ceos to return to offices. this as the vaccine rollout accelerates. >> when it comes to our investment banking, the human interaction is very critical, especially for credit suisse. we cater to the large corporate

entrepreneurs. a lot of the discussions needs to be in person. we are encouraging our staff to work from home. at the same time, we want them to be meeting with the clients. come up with ideas. what are the best ideas? you need to do it in person. using zoom and all that stuff, but you need to find the right balance. for every company, it is going to be different. >> what is the right balance? we heard 60% in the office, 20% at home. how are you looking at it? >> i think for us it is too early to assign the percentage. i do think that we will see significant percentage working from home. i think we will also have to figure out what is the right balance. it will depend on the clients.

we are the very client focused firm. it is important we understand what the client needs. i think for us, the good thing for credit suisse -- we do have the ability to adept. -- to adapt. we have a lot of flexibility in the way we manage our business. i would like to make the adjustment as we go. how clients react and so on. >> we talk about a change in environment. that includes the investment landscape. front and center is rising yields. what are you telling your investors and what questions are you receiving? >> the back end, the longer data yields have been rising. that is a good sign there is a strong confidence. you have seen some of the predictions for the growth this year.

one of the fastest in history, at least in recent history. i think we have to put into a perspective. i do think inflation will start paying up again. -- will start picking up again. >> what are you looking at? >> our analysts have their own numbers. i will leave it to them to put up what the right prediction is. i think the most important -- but we advise our clients is be mindful of what is happening in the market today. valuations are right at all-time high in many places. at the same time, you will have a quite strong recovery in the second half in many economies

around the world. we are working closely with our clients to adjust the portfolio interviews and investments. >> i want to touch on china. a key market for you. the group ceo says he wants to triple the headcount in three years. does that include hong kong yoga what is -- hong kong? give us some perspective. >> the number is unsure. i do think as he mentioned, china is very important for us. starting from a lower base. >> is there a number you have right now? >> there is a number, but let's -- for right now. invest heavily in the market. the second largest economy in the world.

we are 51% now. he mentioned and i mention we will try to get a 100% as soon as practical. but also, we are investing in the rest of asia as well. topline growth for the region has been close to 24%. last year, almost 20% of the group's revenue. this is where the group is counting on the growth. haidi: the credit suisse asia-pacific ceo speaking exclusively to haslinda amin. is the exclusive tv partner for the asian investment conference. take a look at the day ahead for south korea. president moon jae-in will receive his first astrazeneca

shot as he tries to ease concern about safety. plus, north korea's jim juncker -- kim jong-un ones deeper ties with china to combat quote, hostile forces. lender mufg is into this push in wealth management. morgan stanley has sent a top executive to tokyo to help build their business. we are watching nissan. prosecutors have charged two u.s. citizens with helping carlos ghosn escape trial. haidi: we are staying with chips. with the recent surge in prices, some signs are showing the global supply crunch may lead to price shock in the next six months. let's get over to our micro strategist. this potentially could play into

the inflation infatuation or debate. >> very much. it is one of those things that i am sure is on the fed's radar but may not be a transient surge as they may have appeared to semi conductors need to be ordered six months in advance because of the manufacturing process and the manufacturing of the product. they are being ordered for roughly september, october delivery. because of that shortage, the prices are being bid up. prices have increased somewhere in the neighborhood of 20%. larger companies have contracts with the producers. they are bound to oblige or abide by the price, but they are not obliged to sell. others willing to pay more will

get the chips. prices are going to go higher. according to a source i spoke to yesterday, he expects the price will increase every quarter this year carrying into 2022. shery: whether it is through inflation pressures in the future, this takes me to our question of the day. how do you trade the global chip shortage? where do you see the biggest winners and losers as a result of this? >> on a macro space, you would see interest rates go higher. being short that fixed income markets is a good space to be. if you see the tech stocks take a bigger hit as a rates go up, you would want to stay away from the tech sector. even as prices go up, consumers will still be buying certain items as the stimulus hits. if there is an inflation expectation, they may by a more of those items -- they may buy

more of those items sooner. haidi: could we see this play into a translation in fed policy? you are saying if this does play out the way you are modeling get, the japanese inflation will not be the reflation we are expecting. >> it may have them acting as early as next year instead of 2023. the problem with the inflation as we are speaking, the larger manufacturer, somebody like apple has a 61% profit margin. they do not have to raise the price of an iphone. general motors has something like a 10 or 11% profit margin. 5% of their cars are made up of chips. a big jump in prices is going to affect their margin. the biggest hit comes from the real tight margins.

people who sell to walmart and amazon. they have to pass the cost along because they can shery: bloomberg micro strategist vincent cignarella in new york. with these overheating concerns over the economy, we are watching what washington is doing. funny: sources are saying the washington -- the by the administration is considering as much as $3 trillion for the next stimulus bill. infrastructure and climate change -- expected to be presented to joe biden this week. fed chairman jerome powell says the u.s. economy is still far from a full recovery but seems to be gathering steam. millions of americans are still hurting. the fed support would continue for as long as the recovery takes. treasury secretary janet yellen will face the committee this

week. the european central bank has finally delivered on his promise to boost the bay -- the pace of emergency bond buying. net purchases climbed by within 21 billion euros. policymakers had vowed to increase buying earlier this month. data has shown little pick up until no. we will get through redemption figures later. new zealand has announced measures to increase housing supply and remove tax incentives for property speculators to tame surging prices. house prices surged more than 20% in february. the government is under pressure . 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 vonnie quinn. this is bloomberg. haidi: coming up next, senior

fellow and bloomberg contributor neil ferguson says whoever rules taiwan may rule the world. will a taiwan crisis with china toppled the american empire? this is bloomberg. ♪

shery: we are waiting for the start of trading in taiwan

because we are watching the taiwan dollar. it fell one per se in a six-day retreat, which is unusual because we have seen strong gains in previous months. we have the fading of the global tech shares and taiwan semi conductor accounting for huge waning in taiwan that is leading to outflows out of the economy. we are watching the taiwan dollar. we are watching it in the geopolitical sense as well after talks with china in alaska. the u.s. secretary of state said taiwan was one of the issues in which washington and beijing remained fundamentally at odds. our next guest says for china, the u.s. stands with taiwan remains an intolerable state of affairs. let's bring in the stanford university senior fellow niall ferguson. when we are talking about the

u.s. stance, it is kind of ambiguous. you don't recognize it as a state but still support its security. how sustainable is this? niall: it is 50 years if you can believe it since henry kissinger's secret mission to beijing when he began the process of cutting a new deal between the united states and the people's republic of china. part of that deal was the u.s. would no longer recognize taiwan as an independent entity, would not support moves toward independence. woody centrally accept china's claim there was one china and that taiwan was part of it. in practice, the u.s. continued all the way to continue to support taiwan's security, to sell it weapons and interestingly in recent years,

the support for taiwan has become somewhat more obvious. it is still an ambiguous policy. when the council on foreign relations argued for an end to ambiguity, the u.s. should explicitly support taiwan, nobody in washington jumped to agree with him. this ambiguity has continued for a remarkably long time. here is the thing that has changed. china is way more powerful. its military capabilities are much greater then they were in previous crises over taiwan, which means the u.s. cannot send a couple of aircraft carriers and say back off in the way it did as recently in the 1990's. what is making the situation unsustainable is the growing strength of china and the clear resolve of xi jinping to end taiwan's de facto autonomy when

he is president. maybe as little as five years. shery: what was interesting this time around was the rhetoric. despite this ambiguity and the growing presence of china, the rhetoric coming from the u.s. coercion, aggression. not only in taiwan and hong kong but shin jong as well. why make public statements heading into negotiations? niall: one of the things not many people could have foreseen has been that the biden administration is tougher on china issues than its predecessor. it is fascinating how much continuity there is. it is not like biden has taken the tariffs off. it is not like the tech war has been canceled. all the things that began with donald trump seem to be carrying on. what strikes me is the rhetoric,

particularly on human rights and democracy questions are touching even on issues that are clearly unambiguously chinese domestic matters like the treatment of the uighurs. all of this has been ramped up by the new secretary of state, tony blinken, and jake sullivan. and by joe biden himself. we are in a strange situation which i am not sure many people for saul, that a democratic administration sounds even more hawkish on china issues than donald trump and mike pompeo did. this partly came about because last year, the budding campaign took a decision they could not be seen to be soft on china because it might play to their disadvantage domestically. u.s. sentiment has turned hostile to the people's republic of china especially in the last year because of the pandemic. this began as a calculation.

they are now forced to follow through. on the chinese side, the rhetoric has gotten a great deal more strident in the last year. we have become used to will for your plumber see. -- used to wolf warrior diplomacy. it has elicited a good deal of hostility from not only the united states but from european countries too. haidi: we have heard from at least two top chinese generals talking about a possible confrontation with the u.s. we know the military budget is not likely. do you think under this administration we are surprisingly closer to the risk of the thucydides trap? >> it is an idea my old friend

put forward in his book destined for work. the argument getting ever since ancient times when there is a rising power and incumbent power, it is quite likely there will be a showdown. we can see this in the defense spending data already. china is increasing its defense budget significantly. the most significant somewhere any the order of six or 7% to the u.s. under donald trump increased its spending. we have already an effective arms race going on because china has acquired the capability with land-based missiles to sink american aircraft carriers. if the commitment to taiwan is going to be credible, it needs a significant increase in not only taiwan's capability but also in the u.s., and ability to project power.

let's not forget the other countries interested. from japan's point of view, if taiwan came under the control of the people's republic, that would pose a major challenge to japan's security. the japanese are interested in this. in recent talks with the defense secretary, the issue came up. from the point of view of the thucydides trap, china and the united states have taken a couple steps closer and ending up in a conflict over taiwan. taiwan has the potential to combine elements of the first cold war, from cuba, from berlin. you have alluded to taiwan's incredible importance in the economics of the semi conductor manufacturing. i think that the danger is unquestionably rising. wars often start weekly -- often

start because the two sides underestimate each other. i think the u.s. may be underestimating xi jinping's resolve. xi jinping may be underestimating joe biden's resolve. haidi: always great to have you with us. be sure to tune in to bloomberg radio to hear more from the newsmakers. you get the in-depth analysis from the daybreak team. you can listen in via the app or on bloombergradio.com. we have lots more ahead. this is bloomberg. ♪

haidi: a quick check of the latest headlines. unexpectedly left his private equity giant months earlier than expected. former u.s. regulator and one of his proteges will head the private equity firm. investors welcomed his departure. the goldman ceo david solomon has vowed the bank will try harder to ensure jr. bankers get at least one day off a week. he promised to beef up staffing or activity levels are highest. it comes after a group of analyst raised alarm about burnout.

the global chip shortage is idling more car production lines in north america. just after ford announced health. some analysts are estimating as much as $61 billion in lost sales for carmakers this year. shery: coming up, plenty more from the credit suisse asian investment conference. the head of china technologies research joins us on baidu's big homecoming day. plus, the market outlook. here is what we are seeing so far. futures pointing higher at the moment. we just had goldman sachs lifting the topics 12 month target to 2150. the boj shifting its etf portraits policy to the broader topic. goldman lifting the nikkei

target to 32,250. not to mention that the japanese yen has been weak against the u.s. dollar. kiwi stocks at the moment rebounding from those losses we saw in the previous session. not to mention sydney stocks are being led higher by utilities and real estate. when it comes to aussie and the kiwi dollar, they are under pressure because we saw the risk aversion over the turkish lira slump. not to mention what has happened with the central bank governor getting fired. we are minutes away from the start of trade in tokyo and seoul. 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. our top stories. asian stocks set for gains as tech shares lifted benchmarks. closely watched treasury auctions this week. baidu makes its hong kong debut in 19 minutes.

all signs point to a strong start. we will be hearing from the ceo and cofounder. hong kong's vaccine nationalism could be hampering the pace for its rollout. shery: japan and south korea coming online. we are seeing upside for the nikkei and the topics. materials and communication stocks reading the gains. we had goldman sachs upgrading their 12 month target for both indices. when it comes to the topics, seeing a 12 month target for 2150. the boj shifting its purchase policy to the broader topics. the japanese was slightly higher against the u.s. dollar. we are seeing haven demand. do watch out for japan's yield curve. take a look at what is set -- at what south korea is doing for the moment. the cost beginning 7/10 of 1%.

we have seen some positive sentiment and of the korean yuan rising in the previous session as we saw the solid export numbers for the first 20 days of the month. south korea's finance ministers saying earlier today they will flexibly adjust government bond issuance if needed. haidi: this is what we are watching when it comes to cross assets across some of these things across the 10-year gilts. coming up to a bunch of key auctions to gauge investor demand. an extraordinary amount of supply we have had across markets. we are also watching s&p futures breaking out from the range bound trade come up to tenths of 1%. -- trade, up to tenths of 1%. i want to mention one of the currencies we are watching is

the kiwi dollar. seeing a steep decline as well as kiwi bond yields after the prime minister and governor announced a suite of new measures to tackle what we have seen as rampant prices. a bid up for bonds. rate hike expectations for the rbnz eating pushed back further. let's get some market analysis. we continue to come back to this reflation inflation infatuation theme. let's start off with where you sit on this debate. is it a transient reflationary take that will settle down or are we in for a real inflation globally? >> i think what we are seeing right now is a bout of semi-transient inflation that is

-- from very weak inflation last year. it does not seem likely we are going to get a strong set of inflation numbers over the medium term. there are a lot of reasons for that. one of the key ones is there is a lot more slack in the labor market in the u.s. than what most people are giving it credit for. the unemployment rate has come down, but there is a significant amount of underemployment. there really does suggest wage pleasures are going to take much longer to come through than what is being anticipated. that is going to keep disinflationary measures alive. haidi: where do you find the opportunities given that outlook? >> in that situation, i think it is going to be the case where the fed and other global central banks are going to have to keep monetary policy extremely accommodative for probably three to five years before we start to

see meaningful top about interest rates being moved higher. we are seeing treasury yields move higher and the yield curve steepen. that is reflecting some of the transitory reflation aspect. underlying that, what we are going to start to see is growth expectations increase. as the real yield starts to increase and receive economic growth flow through to earnings growth, that is going to be a significant tailwind. it is going to be a significant tailwind for emerging market asian market equities. these are the opportunities that are still there even with equity evaluations at relatively high historical levels. that is no barrier to further rallies. shery: where do you see the rotation will lead us in terms of opportunities? >> the rotation we see day today is being driven by the

volatility in treasury yields. when yields go up, we see tech stocks selloff and a rotation into value. when they go off, we are seeing the rotation reverse. that is something that is fairly normal in an early cycle with volatility coming through and the uncertainty with the monetary policy outlook. we think that steepening of the curve is going to be sustainable. we think treasury yields will likely breach to hundred basis points by the end of this year. that is going to give a sustainable impetus to the value rotation and a lot of and performance we saw in value over the last five years or so will begin to unwind. that does not mean tech stocks will selloff. we think rotation into value is important over the next year or so.

shery: tech stocks seem to be challenged also because of regulatory risk whether it is in china where the authorities are clamping down on monopolistic practices or in the u.s. when it comes to privacy concerns. >> the regulatory outlook for tech globally is challenging. it is because of their own success to some extent to china is a good one to look at closely. we have clear commitment from china to focus on growth, to focus on self-sufficiency. they went to improve their environmental it outcomes. all of those are going to be driven by innovation and research and development and improvements in tech capabilities. that has been hampered by somewhat uncompetitive behaviors and monopolistic behaviors. large companies dictating and

dominating that space. i think the regulation is a positive in the medium term. it will allow improvements in productivity. i think that is the goal. i think that is the goal globally, to open up playing field and allow significant improvements in productivity. a positive in the medium-term but that is going to be challenging in the near term. haidi: i want to bring you closer to home for the last bit of this conversation. are you more constructive on most trillion stocks and assets given the pace of the economic recovery, given what we are seeing in terms of labor market data, retail sales and the like or do australian stocks continue on in this range where they seem to be stuck at the moment? >> we are positive on australian equities. we think there is significant

upside being generated by the economic recovery. we think australian recovery will big up after the vaccines are rolled out. after global demand picks up and restart x reading. -- start exporting can that will be i -- and start exporting. in finding a home in australia equity markets and australian investments. that for us is the start of a fairly positive five-year cycle where we can see equity markets pushed through to new highs. there is strong opportunities here at home in australia. shery: great to have you with us. global cio for advisory services in tasmania. let's get to vonnie quinn. vonnie: the u.s., u.k. and canada joined the european union in sanctioning china over

alleged human rights abuses of uighurs in china. the u.s. said -- the move drew an immediate response from beijing who said it will impose restrictions on 10 individuals and four entities on the european side. australian prime minister scott morrison said a staff member involved in what he calls disgusting and sickening behavior has been sacked. it follows allegations that a group of male staffers had shared images of sex acts. more than 18,000 people in new south wales have been ordered to evacuate amid severe flooding across the state. the premier says another 15,000 could be ordered to evacuate

tuesday. emergency responders have been making rescues to the tune of 850. anka of america has been sounding the alarm over a surge in energy use. it says the power accounts for a 4% of global energy consumption. that is comparable to many developed countries. emissions from bitcoin mining have grown alongside a spike in its price, rising more than 40 million tons in the last two years. 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 vonnie quinn. this is bloomberg. haidi: still ahead, our exclusive interview with the baidu co-founder and ceo rapidly. -- ceo robin lee. we will be returning to the credit suisse asian investment conference.

sophie is there. who are you speaking with next? sophie: i will be sitting down with the credit suisse head of china technology securities research in a half-hour. he will weigh in on the cloud migration. later this morning, we will hear from the president and group cfo of pay p.m., one of india's most valuable startups for his view on the changing financial services landscape. this is bloomberg. ♪

shery: we will start with the big homecoming listing of chinese search giant baidu. the company will make its hong kong debut in the next hour. tom mackenzie is on the ground of the baidu park in beijing. how much demand have we seen so far? tom: we have the stage behind us.

the gong is ready for the 9:30 ipo kick. it has been oversubscribed 110 times. they have managed to raise 3.1 billion u.s. dollars. there is demand for the secondary listing. the context is we have seen a number of big names, chinese technologies listed in the u.s. looking for a second home in hong kong. they have all been successful. part of the rationale is the backdrop of these u.s. china tensions. also getting access to this broad market here on the mainland. there is a lot of people here who use the services of baidu and may want to invest. that is part of the thinking of the team here. so far, it looks like they are pretty well-positioned. there is a view you may see additional listings if baidu

proves successful. they have raised 3.1 billion u.s. dollars. haidi: baidu has also made a big push into artificial intelligence. i am curious how they have structured this part of the business and how they had much success so far you tom: there are number of different lines to the business. the shorthand was and remains that baidu is the google of china. internet search is the key driver of revenue for them building out a super app to rival what we have with tencent. they have the search engine part of it. they have video as well. they are trying to pull that altogether to create the stickiness for them more than 500 million users.

a big focus has been investing in artificial intelligence and autonomous vehicles. now those investments are starting to pay off. in the last few quarters, you have seen double-digit growth in terms of revenues from ai powered hardware devices and cloud services as well. going toe to to with alibaba. they have a product that has 20% market share. in terms of autonomous vehicles, they have the apollo program. they have a partnership with one of the big auto producers. they are going to start producing their own electric vehicles. that is a key focus for the management team. monetizing that product. the big picture is revenues from advertising on the search engine part of the business and the app accounts for 70% of overall revenues. they want to start to diversify that more could you are start --

that more. autonomous vehicles will be a few years down the line. baidu has not always hit the beat in terms of trying to transform its business. they think with this investment they will be well-positioned to capture the focus on artificial intelligence. they have a chips unit for which they have raised 230 million u.s. dollars. you have the gong behind me and a robot that is going to be striking that at 9:30 local time. haidi: be sure to attach tom's exclusive interview with the baidu founder and ceo. that is 11:30 a.m. if you're watching in sydney. lingering concerns over the chinese produced vaccination. we will have the latest next.

this is bloomberg. ♪

haidi: hong kong's vaccine rollout is being hampered by plunging confidence in shots produced by mainland chinese firm sinovac. that is expected to further hurt and economy already affected by the pandemic and the pro-democracy protest and a 2019. -- protest in 2019. i have seen a lot of my friends who are thinking a lot of places around the world would not fall under the categories where they would be eligible to get a shot already. they are already getting these vaccines in hong kong. is that because of the low take up? >> hong kong toys and he the last few weeks has dramatically

expanded the eligibility of people in the city. becoming one of the first places in the world to expand it to healthy adults over the age of 30. the reason they are doing that is because the take among actual priority groups, which people in the rest of the world would recognize, health workers, e central workers, that sort of thing. the take-up was extremely slow. by the time they started expanding the eligibility, only 5% of the priority groups had signed up. the government was pleading with people to come and get these vaccines. hong kong, only 7.5 million people. quite a wealthy place. was able to secure these vaccines in good numbers. it is just a matter of people not coming out and getting the

vaccines even though they are available. shery: what is the problem then? is it a lack of awareness and public actually -- public education about the vaccines and what are public authorities doing? >> even before the vaccines were available, there was some survey evidence to show only around 37% of hong kong ours were interested in getting a vaccine for kobe. this was a place that was -- for covid. this was a place that was already hesitant to begin with. in terms of the delay of the biontech-pfizer vaccine, sinovac was the first one to arrive. sinovac was pushed out as the first vaccine available. carrie lam and her top officials got an ocular the. it formed a cornerstone of the vaccination effort. after only around 100 50,000 doses, hong kong had already seen seven deaths and a few dozen adverse reactions which in

some cases were pretty serious. that really spooked hong kongers who were already hesitant to get these vaccines. especially compared to some of the early information and data that came from the western clinical trials from pfizer, moderna and these other western produced vaccines. sinovac had not put out much third phase clinical trial data. hong kong actually delayed the approval process for sinovac because they did not get that information. they ended up exempting sinovac from publishing peer-reviewed articles about the vaccine and brushed through the vaccine. at the same time, the mainland has been much more hesitant to give sinovac vaccines to anyone over the age of 60, which is exactly where hong kong started the vaccination drive, with the elderly and residential care homes.

there is a sinovac spokesman who told us the deaths were unexpectedly high and officials were standing with hindsight, obviously the vaccine rollout the way it happened may have spooked people into not coming up. -- not coming out. unfortunately it looks like it may take us a little longer to get to that herd immunity level. fortunately for people in their 30's and 40's who have no pre-existing conditions and don't work in health care, this is one of the few paces in the world -- few places in the world where you can go online and easily sign up for a vaccine. both of these vaccines are safe. it is just people in hong kong have proven a little more reticent than authorities thought. shery: our asian government senior reporter on the

vaccination drive in hong kong. nintendo is teaming up with a game maker that made pokemon go to bring its content to augmented reality. the deal has the potential to help nintendo boost its presence on smartphones where it has had limited impact so far. the two companies plan to release a smartphone game this year. they work by superimposing digital images on the physical world. a chinese video streaming platform is looking to raise as much as 3.2 billion u.s. dollars. it is selling 25 million shares at a maximum price of 988 million hong kong dollars. shares are expected to start trading next monday. oracle has sold $15 million in

bonds. joining downgrades from fitch and moody's in the process. they are to be used to repay debt through the next year. fitch says it is a deviation from its expectation that oracle will reduce will route -- will reduce its debt upon maturity. the agency cut its rating to triple b plus. haidi: let's take a look at the state of play when it comes to markets. this is what we are seeing across the region as asian groups tentatively follow some of the gains we are seeing after the leadership we saw on wall street. the nikkei 225 up by 9/10 of 1%. also seeing karin stocks up by 3/10 of a percent. in new zealand, we are seeing falls when it comes to the kiwi below the 100 day moving average for the first time since november. these rate hike expectations

from the rbnz being pushed back. the rbnz expected to keep the short end anchored for some time. coming up next, we have our big baidu exclusive set to debut in hong kong. this is bloomberg. ♪

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we've got you covered. so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save at xfinitymobile.com/mysavings. shery: baidu debuts on the hong kong stock exchange one hour from now after raising $3.1 billion. it is the biggest homecoming from a u.s. rated -- in bloomberg exclusive, the ceo and founder discuss the rationale overshooting hong kong. -- over choosing hong kong. >> baidu is based in beijing. we want investors in asia who are in the same time zone.

can easily invest in baidu. they can have a better opportunity to grow with us. there were u.s. china tensions the past few years. we are not that concerned about the listing. -- about delisting. having another exchange for baidu stock is overall good for the investors and good for people around the china area to share our growth. tom: you are not the only ones we have had. alibaba. it seems like a bit of a hedging strategy. was that part of the calculation? >> it was, but i would say more importantly, it is how we get more exposure to the asia based investors. how do we let chinese investors

share the baidu growth story? we all wanted to list it domestically. hong kong is a choice. after evaluating all kinds of possibilities, it turned out hong kong is probably the best for us at this time. tom: are you happy with the adrs? have there been discussions about delisting from the u.s.? >> we always thought that was a small possibility. we understand some of the investors who were concerned about that. tom: you have raised more than 3 billion u.s. dollars. what is the priority for putting that money to work? >> baidu is based in china. we earned our revenue mostly in ehrman b.

-- in renminbi. a lot of times we need to use u.s. dollars. it could help us to expand our -- our business quickly. in a lot of cases, we need that flexibility. tom: rather growth prospects for the broader business looking like heading into the rest of the year? >> this year, -- last year because of covid, it was effective. this year, the core business will have a good growth rate. more importantly, the new ai cloud or intelligent driving. it has been growing very fast. it has reached a point that the scale is not that small. investors could start to feel -- 40% of your total revenue.

the current revenue base become larger. the growth rate becomes higher. i think people were impressed by that. although it was not a surprise to me. it has always been divided like that. tom: i believe advertising revenue accounts for 70% of overall revenues. at what point do you see non-advertising revenue overtaking advertising revenue, and if so, what time frame? >> it will happen. i cannot see accurately which year, but i think the trend is clear. baidu is not alone to if you look at other -- is not alone. if you look at other internet companies, for most of them, advertising is the major part of the revenue. for us, it is like a monopoly.

as a large platform, hundreds of millions of people come to baidu every day. besides showing them ads, there are lots of things we can do. we can charge membership fees. we can do livestreaming. we can offer online games. we can have transactions. there are lots of ways to make money like this. we just got started on that. haidi: that was the baidu cofounder and ceo speaking exclusively to tom mackenzie. let's take a look at how baidu could perform when it starts trading. what are the implications for the hong kong exchange as well as other stocks when we see the level of demand for this one? >> i think one key stock that is

benefiting from this whole homecoming trend is the hong kong exchange. that stock is up 115% in the last 12 months. in terms of overall impact on the tech stock as a whole, it seems that will depend on the treasury yields. we are seeing the hong kong listed tech stocks more than 22% from a february high. they are in the bear market territory right now. the treasury yields have been going up in recent weeks. baidu again, that u.s. listed stock has not been performing very well. down 21% from a february peak. that does not bode well for its trading debut. yesterday, we saw a rise of only

2%. although it's overnight performance was up 3% -- although its overnight performance was up 3%. shery: we are also following the broader tech base of what it could mean that comes to these homecoming debuts in hong kong. today, we had news about billy billy raising $6.2 billion. >> the deal pipeline is definitely strong especially in the last few weeks. as you mentioned, the bilibili proposed a maximum price for hong kong listing. that represents a premium of 12.3% with a closing price in the u.s. we are actually seeing more. we have tencent coming up in the next few weeks.

we saw $17 billion be raised from the homecoming trend. that trend is not going away as we heard from an interview with robin li. there is a hedging strategy among chinese tech giants to get a second listing in hong kong. shery: the bloomberg asian stocks editor. let's get to vonnie quinn for the first word headlines. vonnie: sources say the biden administration is considering as much as $3 trillion in measures for its next stimulus bill. that may include up to $400 billion for green spending. with infrastructure and climate change two of the key pillars. the proposal is expected to be presented to president biden this week. fed chairman jerome powell says the u.s. economy is far from a full recovery but seems to be gathering steam. he told the house financial services committee millions of

americans are still hurting and the fed support will continue for as long as the recovery takes. secretary janet yellen will face the committee this week. the european central bank has delivered on his promise to boost the pace of emergency bond buying. net purchases climbed by 21 billion euros last week. fallowed to significantly increase buying earlier this month. data had shown little pick up until now. new zealand has announced measures to increase housing supply and remove tax incentives for property speculators. house prices surged within 20% in the year. the government is under pressure to as more first-time buyers and people in lower incomes are prized out of the market. 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 vonnie quinn. this is bloomberg. haidi: coming, credit suisse head of china technologies research joins us from the asian investment conference. this is bloomberg. ♪

shery: here's a picture of trading across asia.

we are seeing health care leading the gains on the nikkei and reversing some of the declines we selling to the boj -- of the declines we were seeing. we are hearing from the ministry of finance saying japan will used to ¥.2 trillion of virus reserve funds. 1.6 trillion yen on aid to firms that have been hit by shorter hours during the pandemic. the cost beginning ground. they a sex 100 being led by utilities and real estate. new zealand stocks higher at a time and we are seeing the kiwi dollar under pressure after the governor announced a series of new measures to tackle property market price increases. the virtual credit suisse agent investment conference begins at second day on tuesday. the event brings together top global, political, academic

figures as well as institutional investors. let's cross to hong kong where sophie is joined by another guest. sophie: good morning. i am here with the credit suisse head of chinese technologies research. thank you for joining us face-to-face to discuss the outlook for china's cloud computing capabilities. under the five-year plan in china, cloud computing and economic growth become more intertwined and that means development of the latest industry and infrastructure will be key, which in turn means it will enable the substitution china is during up for. that means cloud will be more important for chinese players like huawei which has seen its business dented by u.s. restrictions. the competition will likely get more fears on the mainland.

who will be the biggest winners? >> we do see the -- in this area, china is five years behind the u.s. this is more on the infrastructure at the surface. we do see there is a potential for china to speed up. the cloud migration -- huawei is switching from smartphone to the cloud industry. we see the infrastructure as a service that is more mature. less than 10% like china telecom, huawei and aws etc. baidu are getting in this area.

this part will be growing robustly. in terms of the other cloud services, we do see -- there is a high potential. it is very fragmented. that makes 10 years. sophie: in china's cloud market, dominated by the big players. alibaba, tencent. is there room for smaller entrants to grab market share? where could they gain some ground? >> because we see this market is going very fast, there is room for each player because they can focus on certain application or industry. for example, health care or financial service. some have good connections with

the government. this will capture the growth here. the giant players are more focused on the large enterprise moving. these will be the market as you allow them to grow. in the long run, you can expect some of the consolidation. sophie: what are the opportunities in china's personal market? alibaba launching a service to compete with tencent and baidu. >> for personal, it depends on your applications. if alibaba has a lot of developers like thousands, they can properly focus on the comprehensive offering. for some game developers, will focus on tencent.

i think individually, they will have some kind of a choice. i think this is important. sophie: trends are driving higher spending on cloud capabilities in asia and that is driving suppliers like google cloud and aws to boost their investment. how did china's players stack up globally? >> here willing to invest over 200 billion or 300 billion. we do see -- to expand the cloud service overseas. we do see the data centers have already established the oversea

s data centers. the providers preparing for these chinese companies to expand their service in the overseas market. just like bytedance, tiktok expanding its service overseas. the service provider is actually tencent or their own supplier. they will expand along with her growth. sophie: cloud capabilities will enable autonomous driving. what are the prospects of china pulling ahead in this race? >> i think cloud is als ride -- also riding on this infrastructure. what can actually benefit is -- we see iot is the way to go because --

also the cloud network. the next stage the technology will ride on the infrastructure already getting more mature in the next five years. sophie: let's talk about the global chip shortage. it is part of the challenges chinese companies face given the restrictions from the u.s. and there is an impetus now to develop in-house chips. bytedance announcing it will start down that path. it is not going to be a smooth road. idc saying companies only provide for 30% of domestic demand by 2030. what is your outlook? >> this is not an easy task for all of the manufacturing independently. semiconductors is a global industry. for china, this is a big topic.

they will continue to invest. offering solutions. the key is they can capture this capability, make their own ship for the applications. -- their own chip for their. we can see apple doing their own ships. they are not manufacturing it . bytedance, it is kind of a strategy in the markets. eventually, if we are looking to china to fuel these demands, it is difficult because it requires some advanced technology outside.

to empower their solutions and capability in the market. sophie: that is a long time coming. >> i think this is a difficult task because we see not only -- kind of like shortage in the global chip supply. as long as the manufacturing to increase the capacity throughout this year, -- the balance will take time. we see the shortage come from late last year. in the second quarter, we expect some time of improvement. we also expect this will continue throughout the year. sophie: what are the implications for companies

seeking to raise funds going to market as we see a ramp-up in domestic capabilities? >> i think there are so many ipo's. in terms of domestic substitution, only in the semi conductor but also the software itself. we expect -- this year we still see some of the software company's to list in china. a platform for them to raise funds, to support their r&d and expansions. thank you so much for joining us. the credit suisse head of china technologies securities. to the -- back to the studio. haidi: bloomberg tv is the exclusive media partner for the credit suisse annual agent investment conference. we will have a lot more from that event including an exclusive interview with one of india's most valuable startups

10. -- startups. be sure to tune in to bloomberg radio to hear from some of the big newsmakers as well. you can get analysis from the daybreak team. you can listen in via the app, radio plus or bloombergradio.com. this is bloomberg. ♪

haidi: a quick check of the latest headlines. thousands of microsoft exchange servers are still being compromised by hackers. the security patch is applied after an attack would not -- and for the measures were needed. microsoft blamed china for a massive cybersecurity attack on its email servers. oracle has sold $15 billion in bonds. the proceeds are to be used to pay debts throughout the year. fitch says it is a deviation from expectations oracle reduce its debt upon maturity. the agency cut its rating to triple b plus. beta-2 -- baidu rose ahead of its debut on the hong kong stock exchange.

baidu says the retail offer was one hundred 12 times oversubscribed, plunging the company to reach retail will reducing shares offered to institutional investors. shery: we are live in beijing up next ahead of the buys you -- ahead of the baidu trading debut. plus, the former assistant u.s. trade representative discusses the future of superpower relations and allay the sanctions over human rights in shin john. let's take a look at what asian markets are doing. a broad upside with the nikkei gaining ground. the kospi giving up its earlier gains. a time when we see a little bit of emerging market volatility. we did see u.s. stocks rising. we are seeing tech and health care leading the gains in japan. the asx 200 gaining ground. utilities and real estate

leading the gains. kiwi stocks seeing some upside after the government announced new measures to tackle property prices. the china open is next. this is bloomberg. ♪

>> it is not :00. i am tom mackenzie, counting down to the internet giant's hong kong listing after raising over $3 billion and at some common. we're going to hear exclusively from the cofounder and ceo rapidly on the companies future