haidi: very good morning. i am haidi stroud-watts in sydney. we are counting down to asia's major market opens. shery: i am shery ahn in new york. welcome to "daybreak asia." japan's biggest lender flags a loss that may be linked to the fallout.

jp morgan says the total tally for banks could add up to $10 billion. most asian stocks look set to climb on the last trading day of the quarter. investors eyeing more u.s. stimulus while staying weary of upward pressure on bond yields. mission incomplete. the world health organization says its probe into covid-19's origins did not properly waive the possibility of a leak in china and it could go back for more data. china finalizes a sweeping plan to control the outcome of hong kong's elections. the city's former chief executive tells us it will help the government focus on key issues. we start with breaking news out of south korea. we are getting industrial production numbers and they are upbeat on the month on month and year on year numbers. when it comes to month on month, it is a growth of 4.3% and it is reversing a contraction in the previous month and it's also higher than the estimate of 1% growth.

the year on year number is a growth of .9% and this of course leading to five sessions of gains although it is a slight mist from expectations. remember, we have seen very strong external demand for south korea. we are getting march export numbers on thursday. we are expecting double-digit growth because of a pickup in ships or cars. we have manufacturing confidence numbers rising again. let's turn to sophie kamaruddin in hong kong for a check of the markets. sophie. sophie: taking a look at the open in australia, adding .2 5%. the biggest boost. they are kicking off to the downside with wti under pressure. agl sliding. the energy separation plan could put it at risk. we see the aussie dollar holding below $.76 for a monthly and quarterly drop and we are seeing yields go slightly higher in the

antiquities after we saw the u.s. 10 year yield climbed by closing above 170. seeing how we are shaping up elsewhere on the last trading day of march with growth prospects. the imf looking to upgrade its global growth forecast next week. we have pmi data from china later which is likely to show the recovery picking up on the mainland in march. they are overtaking the u.s. and we are seeing s&p e-minis move to the downside after a mixed session. value plays in focus. nikkei futures moving to the downside while the yen is holding above 110. 115 could be in play by the end of the year as we are seeing dollar strength continuing to find favor. that has weighed on commodities as well. gold heading for a nine-month low set for the worst quarter since 2018. haidi: credit suisse and other

financial firms are bracing for major losses related to -- su keenan is following the latest developments in the saga. jp morgan estimating the total hit could be up to $10 billion. su: that does seem very high but jp morgan's team of analysts estimated the combined losses of the banks could be between $5 billion and $10 billion. we saw shares in some of the banks rebound in the latest trading sessions, goldman and morgan stanley. goldman is ahead of the other banks in unloading positions tied to that. nomura flagged a loss of up to $2 billion. it appears credit suisse is the most heavily impacted with losses of as much as $4 billion according to the j.p. morgan analyst. the bank spent monday trying to

calm shellshocked while facing heat from its exposure to the collapse of green capital which happened earlier this month. the hits keep on coming for credit suisse. both the stocks and bonds have gotten slammed due to exposure, which was at the center of a huge margin call on friday, which continued through early this week. multiple banks that had been the prime grow bridge -- brokerage were forced to unload huge blocks of stocks in nine different companies, causing losses for those stocks through monday. in the latest session, we did see adrs and baidu and stocks of u.s. media companies such as viacom, cbs, rebound. shery: we know that another japanese firm, mitsubishi, took a hit. su: saying it's going to take a

$300 million loss but let's start with nomura. the debacle triggered a 16% decline on monday. it wiped out $3.5 billion from its market value. the ceo is having a banner in the year before having to announce their exposure. the first american arm has earned the most income outside japan this year and that loss could possibly not only end the honeymoon but wipe out a large part of this second-half pretax profit. in terms of mitsubishi, they have signaled that their security unit has a potential loss of 300 million dollars. goldman sachs appears to have escaped any significant loss, saying it will be immaterial. deutsche bank also appealing to

material loss and wells fargo. morgan stanley, their loss or exposure is not known at this point. back to you. >> su keenan in new york. let's get more on the recent market volatility and look at the opportunities it may present. great to have you with us. we saw the seesawing of stocks this week. this gtv chart on the bloomberg also showing how we have done quarterly -- it has been a mixed picture across assets. we have seen headed towards the quarter and rebalancing in the last day of trading of the quarter in asia. how do you trade the volatility? >> you're pointing out what is a really challenging market. it's very volatile. it is still a very fragile place to be in the world market. although a lot of the economic data is improving, we cited some of that overseas as well as in the u.s., off of low levels, we

are still in a very fragile place and there is a big disconnect and we have different pockets. just talking about that. issue as well as, you know, a lot of people from a retail point of view and all of that is playing into the rocky mist of the market. i think you need to be cautious at this point because you will have some opportunities in the near future. shery: so far, we have seen the weaker dollar help emerging markets at least but this gtv chart on the bloomberg now showing that we are seeing the dollar break out, seeing more strength ahead. what can we expect in terms of dollar trajectory and how that's going to affect other asset? terri: it is interesting that we are seeing things in terms of the dollar and is connected to this rise in interest rates that we are seeing here in the u.s., with the 10 year at 170.

there is room for that to go up to 2% and that will pull the dollar up so there's a lot more weighing on the dollar. looming budget deficit. that alone is a recipe for a weaker dollar. and cryptocurrency. that is a vote of no-confidence in the store value in the u.s. dollar, so i think we have things weighing on the dollar going forward. while we might see a little bit more of a rise, the medium term trend will be weakness in the dollar and that will potentially help a lot of these countries and the stocks and bonds in those countries. >> how much of that is part of your conviction that the likes of india and hong kong are good ways to kind of, you know, get a blue-chip access to foreign holdings? terri: it is still a fragile investment environment. it's a lot to participate in

e.m.'s. the strongest countries out there, the best prepared for managing for this volatility right now looked like india, hong kong, and there's etf you can purchase that mirror those. i think those can make some sense. they do better when the u.s. market -- the u.s. stock market is doing better but they also follow little bit harder. more volatility but a safer way to stay involved in the e.m. side through these rocky waters. >> terri spath. let's get to vonnie quinn, who has the first word headlines. karina: the world health organization's report on the origins of covid-19 has drawn fire with the u.s. and other governments joining in the criticism of the probe. the chief says it was too quick

to dismiss the theory of a lab leak. several governments criticized the report, calling it incomplete, and faulting the access provided by aging. >> -- beijing. >> they have not been able to pick up any firm arguments of proof of evidence that these labs or any of these labs would be involved in a lab leak accident. karina: meantime, -- >> meantime, experts agreed to revised down. the figure looked too high according to delegates. it comes before a key meeting thursday to discuss production levels for may and follows the recommendation from opec's top officials at the cartel should remain very conscious. at the previous meeting, that sense of caution that to a surprise decision to maintain output curves. it took six days to --

the inquiry and fallout is said to last much longer. egyptian investigators analyzed recordings and are asking questions about the ship speed, wind gusts. the suez canal authority chief executive distanced egypt from responsibility, blaming the wind and possible technical errors. china finalized the plan to ensure it controls the outcome of hong kong's legislative elections. changes include reducing the proportion of directly elected seats and requiring future candidates to be vetted by a national security committee. hong kong will hold its election in december. the former chief executive said the new system will help the government focus on key issues. >> this is the root of a lot of problems in hong kong. that has led to -- for decades, very high and still rising prices. vonnie: 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 am vonnie quinn. this is bloomberg. >> still ahead, the stalled vaccine rollout in hong kong and how it will impact the prevalence of vaccine hesitancy. the professor joins us later. up next, the imf is raising its world growth forecast but only two countries are driving that positive outlook. this is bloomberg. ♪

>> is the global growth glass getting more than half full? it now looks stronger than it did two months ago. our bloomberg economics and policy editor kathleen hays is here with what the drivers of this optimism are. it also comes with a caveat. kathleen: this is a curtain

raiser for the imf world bank spring meetings, which start next week where she was talking about what she sees, what the imf sees in the global economy, and very interesting, caught a lot of attention. she sees the forecasts that were made as recently as january, getting upgraded to go to the far right hand. he can see the imf was looking for global growth, going from an estimated 3.5% down in 2020 to 5.5% this year and about 4.2 percent next year. she also noted that they would upgrade china's 8.1% gdp forecast. hot to even harder. for the u.s., 5.1% increase for this year and that's also supposed to be revised higher. our bloomberg economics team is looking for a gain of 7.7% in the u.s. this year, powered by more than $5 trillion worth of stimulus over the past several months.

now, the warning comes here. she noted that governments around the world, the total fiscal actions amount to $15 trillion. net 3.5% drop in global gdp in 2020 would have been three times worse. she sees a multispeed recovery powered by u.s. and china, while millions face homelessness, hunger, destitution. she said economies are diverging because vaccines are not going to everybody and this is something that is a danger, something that other economies have to be on guard. we heard a lot about that from both institutions. shery: no wonder we are paying so much attention to this fiscal package. president biden will present in pittsburgh on wednesday. what are we expecting? kathleen: there is nothing new to expect but the way joe biden is going to frame this. speaking on wednesday in pittsburgh, for example, pittsburgh is seen as kind of an

emblem for a big city that was based on manufacturing, for years, went down in wealth, went down in just about everything, was wrought back to be a leading city in the u.s. now, powered by health care, technology, things that most cities would like to have, particularly coming out of the pandemic. one of the chief economic advisors to joe biden says the infrastructure package will total $2 trillion to be spent over eight years. joe biden is also expected to proposed tax hikes. not specifics when he talks tomorrow or later today in asia, but enough to pay for the infrastructure plan. when we talk about the dollar weakening, bigger budget deficits, certainly, that will be important. he will also introduce the american jobs plan. as this happens, we saw consumer confidence soared today , just one more indication that the stimulus has certainly had

an impact and the question is now how republicans and democrats are going to tosoh after this next very ambitious plan. shery: our global economics and policy editor, kathleen hays. let's turn to china. it's v-shaped recovery from the coronavirus pandemic has accelerated the country's most significant economic shift, this rapid catch-up and likely toppling of the u.s. as the world's biggest economy. that's bring in tom in beijing. so how close is beijing to overtaking the united states? tom: pre-pandemic, the consensus view amongst economists was that that would happen in 2030, that china would become the number one economy by 2013. that has been move forward by some economists by two years to 2028 because of the way that china rebounded, posted growth, the only major economy to post growth in 2020 after crushing the virus. other metrics that took shape last year, china actually, in

terms of global trade, increased that share by a record. in terms of foreign investment into china, that increased above the level of foreign investment that went to the u.s. for the first time on record. now, nomura are saying this could happen as soon as 2026 and that will be dependent on the currency strength. but certainly, xi jinping says -- and he said this in the last few months -- the time and trends are on our side. he is feeling confident that china will soon be the world's largest economy, but of course, joe biden is not taking this sitting down. he said this is not going to happen on my watch and he has in fact strengthened those restrictions on key technologies being shipped to china and he is of course stepping up plans for investment in innovation, and as kathleen was saying, in infrastructure up or he does not want to see this happen. president xi has the five-year plan and that is focused on innovation, r&d spending,

ensuring they can build out key technologies for the future. there are longer-term challenges for china's leaders. debt is front and center, total that to gdp at 5%. demographics out, a rapidly aging population. what is happening today is we will get the latest gauge of china's current economic recovery. it remains on a pretty sure footing. we will get the nonmanufacturing pmi data at 9:00 a.m. local time for the month of march. it is expected to show a tick up on both fronts. exports are strong out of china. the services economy is expected to rebound as consumption t icks up. haidi: we have a new report on human rights from the state department. it shows this friction on these issues from washington and beijing. tom: this is an annual report put out by the u.s. state department, and in this report,

it accuses china of crimes against humanity. and it officially labels china's policies and actions, it's crackdown and changing, as, and i'm quoting, "genocide." in fact, the u.s. secretary of state, antony blinken, came out and said we are going to look at imposing consequences on countries that abuse and violate human rights, and he points to the kind of actions the u.s. has taken on china over its policies and shin jane including visa restrictions and sanctions on some chinese officials, but you are absolutely right, haidi, to say that this has now become front and center an issue and a point of friction between these two countries. it was on the fringes under the trump administration. now, it is very central to these frictions between the two countries, and that will continue. haidi: when it comes to looking at the origins of the coronavirus, we had set aside the whole land leak theory but

the head of the who is saying that more time and more -- lab leak theory, but the head of the who is saying more time should have been spent on this possibility. tom: china would have loved nothing more than to have seen a clear repudiation and renunciation of the theory that the virus originated in that wuhan lab. now, the report did not go that far, and of course, as you say, the head of the world health organization saying we need to look at this again. that will not play well in beijing. they would like to see that siri buried. as far as they are concerned, they have been promoting in-state media and through some officials that the virus came from other countries. that is the narrative that beijing wants to spin. this commentary from the chief will not sit well with officials in the chinese capital. shery: tom mackenzie in beijing with the latest. we will get more analysis later. speaking with fred newman and

barclays representative. more to come. this is bloomberg. ♪

>> get you a quick check of the latest business flash headlines. fourth quarter profit missed as it accelerated its core businesses into making electric vehicles. the company said net income in the quarter fell 3.7% to 1.6 billion dollars, slightly below analyst estimates. the taiwanese smartphone assemblage joins a rush of tech firms making a rush into auto manufacturing. xiaomi is betting on ev's, betting $10 billion to manufacture them. the cofounder and ceo will leave a new division to invest an initial $1.5 billion into smart vehicle making.

xiaomi has deep pockets for the project and has no plans to invite outside investors as it aims to take full control of their car making business. a chinese start up, one of the most used ripped currency while it apps, has raised $30 million net by venture partners. the financers saw participation and existing backers. beginning in 2016, it has 12 million users who use the platform to stash over $50 billion in crypto asset. the investment management launches the first new exchange traded fund in two years. it tracks u.s. and global companies engaged in space exploration and innovation. it will be the best debut in etf history with more than $294 million worth of shares changing hands. coming up next, we will be

discussing the vaccine rollout in hong kong. biontech vaccinations remain -- in a city. benjamin from hong kong university is with us next. this is bloomberg. ♪

shery: looking at the day ahead, in japan, mitsubishi usg is on watch. it joins a growing list of financial firms reeling from the fourth unwinding of bets. we are also watching global carmakers getting a reprieve for the key auto chipmaker. it damaged one of its factories recently. also on top, we have eco-data. we are getting the latest

industrial production numbers a little bit later. over and south korea, the bok releases its 2020 annual report and it will also post fourth-quarter intervention data and we have already seen the confidence among south korea manufacturers just rose to the highest level in almost 10 years as optimism builds over the economy's growth prospects. on the corporate front, we are watching sk hynix, which has been raised to positive outlooks by s&p. they were appointed as a co-ceo. as we head to the open in japan and south korea, that's go to sophie in hong kong for what to watch. sophie. >> chinese pmi data ahead of the bloomberg intelligence saying that the economic conditions in china were tapering from the pboc. you have stocks moving higher. the asx 200 being led higher by

bhp and we have banks asked on the front foot after the rbnz relaxed rules allowing for 50% of earnings to be paid out in dividends to shareholders, so the aussie share market gaining more than 1% this morning. we have nikkei futures moving slightly to the downside at singapore. the yen trading above 110, and s&p e-minis rising .1%. commodities are under pressure with oil and gold slipping on the face of a stronger dollar which is trading around a november high. hsbc and pimco saying they don't expect a super cycle in commodities. also cautioning of an inflation head fake with markets overly focused on upside risks. prices running below central-bank targets over the next one year to two years. over at hsbc, inflation will stay nailed to the floor across

asia with no single central bank in asia expected to raise rates this year. even in india and the philippines, over the back half of this year. we heard from the governor this morning, saying the lower power and key food costs are lower in the philippines. haidi. haidi: hong kong is yet to announce when the biontech vaccination will resume even though the secretaries for food and health recently expressed optimism. it holds that its rollout last week amid reports -- joining us now is the professor of infectious disease and epidemiology at the university of hong kong. great to have you with us. at the end of the day, even if there was nothing sort of meaningfully problematic with dispatch, this does not help the levels of vaccine hesitancy that we are already seeing in hong kong. >> it is not ideal.

so far, 6% of people in hong kong have received vaccinations but we know that has to get to a much higher level. 60%, 70%. there's a lot of hesitancy. people may be and see. haidi: what was the issue with this? you are saying that there's nothing really meaningfully defective about this, so what would happen to this batch, particularly given the context of a shortage of vaccines around the world? ben: that's right. there were problems with some vials having leaks and those have been reported in other countries as well so the authorities in hong kong asked biontech what was going on. biontech replied, you better stop using the vaccines until we have figured out if it is really a problem or not. i think they replied that there does not seem to be any problem from their side. maybe it is something that happened after the vaccines left their custody after they arrived

in hong kong. it may be something that happens naturally when you freeze these glass vials down to -70, sometimes they will crack. it was two in every 1000 vials that had a problem. i wonder whether something similar has happened in other places and i hope we can get restarted. there does not seem to be a particular problem with that batch or any of the other batches we have in hong kong. haidi: why do you think hong kong in particular is dealing with such high levels of vaccine hesitancy? we see it everywhere, not just vaccine hesitancy, but also arbitrage, wanting to pick one typo vaccine over the other because of the efficacy or safety profile. but is there something specific to the level of distrust you are seeing in hong kong? what should the policymakers be doing to try and improve that? ben: part of it is this trust. the other part of it is complacency. i think we will see the same thing in other parts of asia

where we have been so successful in controlling covid in the past year so the risk to each of us has been very, very though. less than one and 100 people in hong kong have had covid in the past year so the -- 1/100 people in hong kong have had covid in the past year. it's not like europe or the united states, where the uptick has been enthusiastic. people have not realized maybe they are getting the vaccination -- it's much safer than getting the infection because we have not had much infection around but that is because of the measures we have had in place, the social distancing, the quarantine, and so on. we cannot keep those in place forever. once we have a high vaccine coverage, it will be safe to do that, but in order to get the high vaccine coverage, we need a lot of people to get vaccinated. shery: it does not help that perhaps hong kong people are distrustful of the government, especially when it comes to chief executive carrie lam. in this environment, what can be

done? ben: all the health experts are doing their best to encourage people to get vaccinated, reminding people that really the vaccination is much safer than the infection and we have to get back to normal as a community. we have to make the decision to get vaccinated. and then the government are thinking about incentives. maybe people would be allowed to visit their friends or relatives in hospitals, elderly homes, if they have been fully vaccinated. maybe there is also discussion of travel but i'm not sure if that is going to work out. maybe there will be some other incentives as well to encourage people to get vaccinated because for hong kong, it's important we get that high vaccine coverage. shery: those vaccine passports, i have heard people here in the usa they just want to get it over with because they want to travel places and perhaps having a shot will help that. do you think there could be a path forward for these vaccine passports? ben: i'm not sure if they will

eventually come to fruition. i'm not sure if they will eventually work out. you need to think carefully about what you want to achieve with a vaccine passport. in hong kong, we have people arriving in hong kong for a reason. we want to keep infections out of the city because every time they come into the city, it is a lot of work to deal with them. if we allow vaccinated people in from other parts of the world, if they can be infected because the vaccines are not 100%, if we allow people in who have been vaccinated, that could still pose a risk of bringing in the infection. in hong kong, i'm not sure it's the right thing. in other countries, maybe if they want to reduce the amount of infections coming in, they might go for it. some tourist destinations in europe are already starting that but in hong kong, i don't think it will work out for the reason that we want to keep infections at zero and that is difficult. >> i think we are seeing a

similar situation when it comes to that complacency in australia . how important is it to get a population fully vaccinated even when there are very low case numbers, when it comes to economic activity, when it comes to borders being able to reopen? ben: those communities, you have to make a choice. in australia, in hong kong, we could stay like this for another year, another two years. we have the quarantine for people on arrival, social distancing measures when they are necessary if infections flare up to get them back down to zero, but that the kind of life we want to live for the next few years. we all want to get back to normal where we can travel and don't have to worry about social distancing measures coming in but that will lead a high vaccine coverage, whether it is australia, china, hong kong. now, the critical thing is to persuade people to get vaccinated, to persuade people to make that choice to get

vaccinated, and as we have seen in hong kong, maybe incentives will be one of the things that we need. but it's going to be difficult. shery: ben cowling, professor of vaccine epidemiology at the university of hong kong. thank you very much for your insights. i got next exclusive interview with a chief executive on sweeping changes to the city's electoral system. this is bloomberg. ♪

vonnie: this is "daybreak asia." i am vonnie quinn with the first word headlines. banks may see total losses in the range of $5 billion to $10 billion. it says losses from the unwinding of trade will be "very material." it expects to see full disclosures from other lenders by the end of this week. jp morgan previously estimated losses of $2 billion to $5 billion. germany is limiting the use of the astrazeneca vaccine and will only come in the shot to people 60 and older after fresh data on potential side effects of the jab showed rare side effects predominantly occurred in younger recipients. it is a blow to the vaccine and another that to europe already beset with vaccine delays and controversies and a surge in cases. u.s. state department's latest

human rights report accuses the chinese government of crimes against humanity, signaling continued tensions with beijing under president biden. the annual report reaffirms the decision to label china's treatment of uyghurs as genocide. the secretary of state, anthony blinken, says the u.s. is looking at consequences for u.s. rights violators. new york mayor bill de blasio -- suspected hate crime against an asian woman and vowed to bring the perpetrators to justice. police are still investigating the incident in manhattan in which a man viciously attacked a woman while making antiaging statements. the biden administration has a range of initiatives to curve violence amid a surge of attacks over the last year. 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 am vonnie quinn. this is bloomberg. haidi: china has finalized a

sweeping plan to overhaul hong kong's election laws, making changes to ensure candidates are all patriots loyal to china and the communist party. the former hong kong leader sat down with our chief north asia correspondent, stephen engle, for a wide-ranging interview on these controversial changes. >> changes today and also in the past 12 months have caught international attention with problems leading to -- justifying these changes have not. one year ago, 18 months ago, we had elected the legislatures -- legislators of hong kong, going to the united states, asking for the u.s. to sanction china and hong kong. that is disloyalty. they were enacted. that's one of the examples or incidents that led to the changes in the electoral system. >> but how is it good for

representative governments when we are reducing, by all accounts, reducing the number of directly elected seats and also having a new vetting committee of fewer than 10 people, choosing all the candidates for higher office in hong kong? >> we have a vetting process in the electoral laws of hong kong. the vetting perilous in the hands of district offices who at the time of the elections became election officers. now, we are putting the power in a vetting committee, which is more open, more transparent, and more consistent across the districts hong kong wide. secondly, why are we expanding the powers of the nominating committee? the nominating committee has always been part of the election process in hong kong. it is executive led political structure.

now, the chip sector elected the -- they are nominated by the nominating committee. >> who should be on that vetting committee? if it will be fewer than 10 and an odd number, most likely, it will be a nine-member very powerful body. who should be on that? >> these people should be impartial. there should not be any conflicts of interest. much in the same way as we had the vetting powers of the district officers in the previous law. >> we have to address the concern not only in the united dates, but in japan, in the e.u. , who say this is a step backwards in democracy and the pledges china made in the u.k. and to hong kong. for what we see in the basic law, article 45 and article 68, which clearly state that the ultimate aim is for universal suffrage. tell me, how is this a step

towards universal suffrage and not a step backwards? >> we have to do it according to the articles in the basic law. the articles say, ultimately, we will have universal suffrage as a way to elect. it also says, in the same article, that the candidate would be nominated by a nominating committee. in 2014, when -- we actually tried this. we went through the whole notion of going to the central government. the central government agreed. we put forward to the hong kong people. the opposition with the same people who went to the united states last year and the year before last to sanction china and hong kong. they objected. basically, they scuffled the entire initiative on the part of the central authorities of beijing to move or to achieve universal suffrage. according to the basic law.

which means nominating committee nomination and then election. the opposition wanted civic nomination, meaning everyone in hong kong could nominate a candidate. that is not according to the basic law. >> i covered the protests when you were the chief executive and by my account and talking to the rank and file in hong kong, it's that the vast majority never wanted independence or were calling for independence. it was a very small minority who wanted that. so how do you reconcile to those people that we have gotten this far and that they are being -- they are paying the high price? that they are no longer able to have half the elected seats in legislative council. they have no say. >> i agree. the majority of the people did not want hong kong independence as such, but at the same time, they wanted to defy the powers

of the central authorities, beijing, and they did not want to follow the basic law. shery: let's cross to hong kong and stephen engle. we knew this election overhaul was coming. the amendment of the hong kong basic law, but what impact will this really have on the city? stephen: obviously, it depends on who you ask. if you ask a pro establishment individual, he says this will allow the government to get to the meat and potatoes of governing without the filibustering tactics of the pro-democracy camp. they will also tackle some of the deep-rooted, deep-seated issues that were plaguing society. the wealth gap, which by oxfam's account, is the widest of all developed economies in the world as well as land reform. and he was chief executive,

there was this vision tomorrow. he wants to reclaim a lot of land off the west coast of the hong kong island and build no income housing and more land because of the high price of living in the city. he says perhaps he has signaled in the interview as well that land reform should now be one of the top priorities for this revamped legislative council and the government of carrie lam in, let's face it, her final year in her first term, at least as chief executive. now that the national security law has been promulgated onto hong kong, electoral reform is tackled. now perhaps the big challenge is land reform. one thing that they did announce yesterday, that the postponed legislative council elections that were supposed to be held last camber, delayed by a year because -- under the -- well, i guess the reasoning was the coronavirus outbreak. of course, the pro-democracy

camp, which resigned en masse, said it was likely because of the electoral reform changes which were coming down the pike from the national people's congress standing committee. that has been now set for december of this year under of course these new rules. the legislative council will be expanded from 70 members to 90 members. instead of 35, half of those 70 being directly elected, it will now be reduced to just 20, and again, i go back to the main question about the all-powerful vetting committee of less than 10 people, which will decide all of the candidates. it will be the national security department of hong kong as well as national security police, who will be inventing and approving the candidates who can stand for the legislative council elections, and no legal review of those committee -- of that committee's decision -- can be had. carrie lam in a press briefing yesterday did say it does not rule out pro-democracy candidates standing for elections, again, as long as

they pledge allegiance and patriotism to china and the communist party. >> stephen engle, our chief north asia correspondent there. we have breaking news when it comes to japan industrial production numbers. they have come in weaker than we had expected. a contraction of 2.1% so that month on month number, the preliminary number. we were looking at expectations of a contraction of 1.2% and it fell from the gain of 4.3%. the year on year number, a contraction of 2.6%. also much worse than expectations, a fall of 2%. the overall decline is not surprising given we did have the extension of this state of emergency weighing on domestic demand. we also had logistics and supply chain disruptions on account of a number of earthquakes that may have also implanted output despite what we continue to see as strong external and global demand there. we have lots more to come on daybreak asia. this is bloomberg. ♪

>> here is a quick check of the latest business flash headlines. new zealand's central bank -- restrictions on bank dividend payments. the rbnz will allow lenders to distribute as much as 50% of net income to shareholders. that decision partly reverses steps taken in april last year aimed at providing more credit to the economy through the

banking system. the remaining 50% limit will be lifted in july 2022, subject to no worsening of economic conditions. bank and agricultural bank are the latest of china's biggest lenders to report the surge in earnings. profits at bank of china group 70% in the fourth quarter while ag bank posted a 60% rise as the economic recovery propels lending and to ease pressure on borrowers. analysts see a further rebound this year after the government used requirements for banks to help pandemic hit firms. a taiwanese battery maker is said to be considering going public later this year with the u.s.-backed merger as one of the options on the table. bric sources say a public listing could lead to a tight bill you dollar valuation. the company specializes in batteries for electric vehicles and is trying to tap into demand for the technology. we are minutes away from the

opens of trade in south korea and japan. let's turn to sophie for what to watch. sophie: nomura has been in focus in the wake of the block trade fallout. mitsubishi is on the radar after japan's biggest bank warned of a $300 million loss related to a european securities unit, but companies are saying the loss will not have an impact on the business capability. we are keeping an eye on sk hynix as the chipmakers outlook was raised to positive by s&p global. hyundai motor on the radar as well. it confirmed it is halting production at one of its plants to stop one week from april 7 on ongoing trip and parts shortages. and korean air also on watch here. this as the carrier plans to

sell about 200 billion won words of bonds. haidi. haidi: all right. we do have the market open coming up next in tokyo and in seoul. that is almost upon us. this is bloomberg. ♪

♪ ♪ shery: welcome to "daybreak asia," from bloomberg world headquarters in new york. haidi: i'm in sydney, asia's major markets have just opened for trade. file out from archegos, jp morgan bank says the hit could be $10 billion. most asian indices look for a

positive end to a volatile quarter. mission incomplete, the world health organization says it has proven covid-19's origins didn't come from a lab leak in china. shery: mixed picture at the opening in japan and south korea, let's turn to sophie kamaruddin for all of the action. sophie: a busy last day in trading for margin asia. japan data falling 2.1% on a monthly basis. recovery is anticipated. jgb traders on the bond by plan today. the nikkei is set to end the month below 30,000, while the yen is trading above $1.10, ever higher u.s. yields on a u.s.-led covid recovery being anticipated. the imf, u.s. and china leading

the rebound. it is set up its global forecast next week. m u.s. g. warrant of loss on hedge funds bets. in south korea, the be ok like -- the bok scene is likely to support the nascent recovery and later would get the bank annual report. the korean youa -- korean yuan is steady, manufacturing confidence at a high for a decade. the kospi, a gain but the pace has slowed this year. the australian dollar is set for a monthly and quarterly drop in the asx has whittled gains, up over 2%, banking the biggest sector, the dollar a clear lacquer. -- dollar a clear

lagger. oil slipping ahead of the opec-plus meeting and gold holding at $1700, worst quarter since 2018. ian assets very much and focus us central banks face pressure to get ahead central bank tightening. reports say inflation will stay nailed to the floor in the region. haidi: the dollar is near full-month highs, doing well as traders mull over president biden's spending plan. bloomberg surveillance for payrolls to rise by $650,000. joining us from bangkok's global market strategist stephen engle. great to have you with us, looking at this chart, the comeback kid, if you will,

highest levels since november and the first quarter we have seen of gains -- that is not the right chart, but still a very useful chart on quarterly assets, but are there concerns strengthen the dollar is going to weigh on sentiment? >> it is a reflection of the higher yields right now and tightening financial conditions. that is quite negative. we are seeing that in commodity markets, oil and gold. the dollar had capitalized on weaker equities and is now trying to cancel -- and is now starting to cancel out higher yiel we are seeing in the markets fx traders concentrating on a smaller u.s. dollar against low yields for at risk currencies. those currencies' central banks remain quite dovish. the euro has come under pressure of light. haidi: i want to bring back the

chart that looks at process at performance at the end of the quarter, in order of performance , commodities, stocks, the dollar index sex and fx credits, followed by treasuries. where are you looking at extending positions and where do you think we have come to the end of the road of performance? >> i think we are having a bit of a reality check correction on two fronts. china credit is dwindling slightly, china is looking to pay her some of the froth. we are looking -- pair back -- pare back some of the froth. but if we look at the hair on fire arguments, cross assets right now are at very low levels, if we look at the stock market for instance, record highs. what does that tell me? it tells me the market continues to trade at the fed's average

inflation targeting. i think there is room to trade a list biden hits the panic button and raises interest rates, and i don't think that is going to happen for quite some time. the big elephant remains air travel. when that happens, oil will lift off. we need to get covid cases under concern. -- under control. that is a medical concern, but also market concern in this revolving carousel of risk that we find ourselves on, day in and day out shery: -- day in and day out. shery: you mentioned biden's package, where will we see the impact in asia? stephen: the impact should be on commodity prices, and that is where we would look. we are certainly looking at malaysia, which exports a lot of oil. you would think oil is getting a substantial boost right now. but the problem we are having

right now is how this thing is going to get paid for, and i think this is where equity investors are, quite a lot right now, because all roads lead to tax hike junction. and that is a negative one. when you look at the infrastructure package, you have to take everything with a grain of tax time salt. end and thing we get -- and until we get those conditions ironed out, things are going to remain unsettled. but anytime you see more stimulus coming to the market, it hints of more exports. that is certainly a factor in growth factors, especially in asia and korea and those are factors we are going to continue to buy into. shery: take a look at oil, the gtv chart on the bloomberg showing volatility surging. we have the suez canal fiasco as well. but when you look at the commodity right now when you have the opec-plus meeting this week also, how do you trade this? stephen: there is not such a big

buy-on dip as there was a few weeks ago. this is a reflection of a couple technical things. technicals are being sold out of their long positions, but we look at etf liens -- buy-in's, a roland carry trade, that has left -- a role and cap -- a roll and carry trade. we are getting to an inflection point right now. opec is going to monitor this market very closely and for the next month or two, i think we are going down the path of production cuts. the writing is on the wall though i think right -- on the wall, though. i think russia and saudi arabia are looking at this, russia's going to cut more oil, that is going to result in more oil coming to the market, whether next month or the month after.

we have to face the reality check on more oil is going to be coming back to the market. there is talk of super cycles, but i just don't buy into it right now. shery: thank you, stephen, axi chief market strategist. archegos has a huge loss from an unidentified american client. a person close to the matter says it is tied to archegos. significant losses in the wake of a selloff tied to archegos selloff. let's talk to vonnie quinn with first word news. vonnie: the u.s. and other

governments are joining a criticism of a who probe. the who chief says the virus spread was too quick to be attributed to a lab leak. it was called incomplete and faulted by lack of access by beijing. it took six days to reflow the ever given, but the fallout is expected to last longer. egyptian investigators are asking questions about speed, 40 mile-per-hour wind gusts, and the use of tugboats. the u.s. canal authority chief executive distanced egypt from responsibility, blaming wind and human and technical errors. china has a plan to control the outcome of hong kong elections. changes include reducing the number of elective seats on the board and requiring candidates to be vetted by a national security committee. hong kong will hold its legislative council election in

november. reports say the new system will help the government focus on key issues. >> this is a root of a lot of social and political problems in hong kong that led to, for decades, very high and still rising prices. vonnie: another experimental spacex rocket suffered a mishap, exploding at the end of a test flight, missing its landing and sending debris crashing onto the launch site. the prototype lifted off in heavy fog in texas, flew to 10 kilometers before shutting down its engines due to a rumbling sound. elon musk says it is investigating what is happening. 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 am vonnie quinn. this is bloomberg. ♪ haidi: scale a -- still i become

a chinese pmi data tops manufacturing. coming up next, tallying up the archegos damage, j.p. morgan says total losses could add up to $10 billion. this is bloomberg. ♪

♪ shery: shares of japan's largest bank are following -- are following. mitsubishi is warning of loss investors say is linked to archegos. adam, talk us through the details. adam: the first thing to note is that this morning, which is the first time stocks had a chance to react to the news, it is down 2.5%. we learned last night that essentially, mitsubishi ef j

financial took a $300 million hit related to what has been going on unwinding these massive positions. in a sense, you are seeing investors saying, this is an impact, but nothing to the degree we are seeing in reaction to, say, credit suisse, and at nomura in japan as well. it is a relatively small read this morning. but what has been happening over the past three days in japan, we have pieced together how this fund liquidation has played out across markets. there are a number of japanese firms we know are involved in this. at there is a possibility others may still be at some point linked to this. so it is still early days, and there is a lot of work going on.

but for now, nomura and the securities union are both involved in the situation quite heavily. haidi: before this week, the firm looking like it was in particular shape, does this meaningfully change that now? adam: that is the case, really. when quintana came into the job on april 1 of last year, the pandemic was just kicking off. it was a difficult time to become in charge of any firm, let alone a financial firm with a big securities business, and a business that looked like it was going to have a tough time with the pandemic. we now know that they look to banks around the world, not just nomura in japan, a lot of banks have benefited from the increase in volatility we saw in global markets. they did well off the back of that. and nomura told us essentially that profits had been very

strong when they reported nine-month numbers that took us to the end of december. they reveal those numbers recently so all in all, it was looking pretty good before the start of this week. and the $2 billion they have said they may need and up -- need to end up taking a hit on is essentially reshaping the narrative that jeter had been able to demonstrate how well he was running the business over the last 12 months. of course, it is just one area. many areas are doing well still, but i think what this does do is, it just refocuses attention on, where does responsibility lie at financial firms? not just at nomura, but how risk management was assessed during this crisis that needs to be unwinded, ultimately, and they have to take responsibility for these things. and does bear some responsibility. and it remains to be seen what

ultimately the number will be. these are just estimates at the moment of how the hit -- how much the hitch could become a bit it has certainly put a damper on the first 12 months for kintara. haidi: adam haigh there. a number of other big banks had exposure to archegos, and credit suisse is bracing for a loss one analyst says could reach $4 billion. su keenan joins us. what are we hearing? su: a team of analysts at j.p. morgan has put out the most compelling numbers. they are saying bank losses for all of those financial firms exposed to archegos could be between $5 billion and $10 billion. we saw shares of some of the banks impacted actually rebound in the latest trading session,

goldman sachs and morgan stanley notably. goldman sachs says it believes any loss from archegos would be material. we don't know about morgan stanley or deutsche bank, appearing unaffected, but by all accounts, credit suisse appears to be the most heavily impacted, with the j.p. morgan chase analyst estimating it could be as much as $4 billion. bloomberg learned credit suisse spent much of monday trying to calm shellshocked staff, after it exposure to the collapse of green flow capital earlier this month. one analyst says the hits keep on coming for credit suisse. both its stocks and its bonds have been hit because of its exposure to archegos, again, a family office run by a former hedge fund are, resulting in

an epic margin call the began last friday, continued this week, and and involves nine bellwether stocks, big chinese tech firms and u.s. media firms that had week-long losses heading into monday. a lot of those shares, particularly baidu, adr and cbs viacom rebounding in the latest session. shery: one analyst is warning risk management is now an issue for these firms with exposure? su: yeah, we heard as much from adam is now. analysts are advising investors to keep an eye on credit agency statements, because poor risk management is clearly an issue here. and many have seen it as an emerging issue for credit suisse. while credit suisse is not the only bank to take credit hits from archegos, the debacle is the latest in a series of losses. green solar, it had to close down a interim loss in the fourth quarter. back to you. shery: bloomberg's su keenan.

plenty more to come on "daybreak asia." this is bloomberg. ♪

♪ shery: the world health organization's director general and several governments, including the u.s., say the mission to trace the origins of the coronavirus was too quick to dismiss a chinese lab leak. he is asking for more data. governments also criticized the report, which was a joint study between the who and china, calling it incomplete and faulting access provided by beijing. the research concluded coronavirus probably spread from bats to humans through another animal. bloomberg's jason gail spoke to the alliance health president, who participated in the study. >> what we know is that in the second, third week of december,

the outbreak really spiked and began to accelerate and amplify, both within that market, with people going to that market, and across the city of lynn -- city of wuhan, from what we can see. if you trend that back to what the origin would be, it fits in clearly with both the genetics and what is called modeling about break patterns. this suggests somebody getting infected from an animal within the last three or four months of 2019. we don't know whether that happened in wuhan in that market , it could have happened somewhere else, on a farm, and the farm came in with a vendor -- and the farmer came in with a vendor. but we do think want was a significant outbreak site. jason: it seemed the report

provided more indication or more support for the theory that it may have been an intermediate animal that played a role in transmitting the virus from the bat to humans, is that correct? >> i think that's is fair to say. what we really found wise, we found a pathway that was plausible, where -- whereas there wasn't before. if you remember the sars outbreak in 2003, this was in a wild market where animals infected with the virus were engages there, and people getting infected from them. we don't have that missing link. we didn't, until this mission, no one animals were getting into the market. what we have learned is that the types of animals that carry this virus were in that market, maybe not alive, maybe frozen, maybe killed before we got there, but they were there. and the sources those animals

were coming from where the virus was found in bats, it is the closest virus related to sars cov 2. so it is a pathway and it is a pathway ended fits what happened with sars. jason: you talked about may a plausible link between southern china and wuhan involving animals. but do you think that link could extend to other parts of southeast asia, with the type of horse you bet that is known to carry coronaviruses, cambodia, thailand, places like that? >> it is plausible that a bat in one of the chinese provinces could infect another animal or even a farmer who then brought the virus in. people move across those borders, animals move across those borders every day and by the way, bats fly across those borders. those have been the pathways that we now need follow-up.

and the recommendations are written in the report for that sort of future work. jason: do you think this kind of report will dissuade people that the virus came out of a lab? >> well, i will say straight up that that is nothing goal of this report. the goal of this report is to say what do we know? what is the evidence and what does that evidence tell us? they laid out what needed to happen, what studies needed to happen, and then we examined the data, what does it tell us and what does it mean? and what we found was significant evidence of a potential animal pathway, significant evidence of community spread in wuhan,

suggesting that that was the center of the outbreak at the time. when we went to the lab and looked at the available information about a lab leak, we found no credible evidence. ♪ haidi: the latest results from china's big banks, airlines and it big stock, we get market reaction next. this is bloomberg. ♪

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vonnie: this is "daybreak asia," i'm vonnie quinn with first world headlines. the imf will up rate its forecast for monitory growth. the managing director says economic expansion this year will be higher than the imf january projections of five point 5% and growth in 2022 will also be higher than the higher forecast of 4.2%. the fund updates its report tuesday, april 6. a human rights report accuses

the chinese government of crimes against humanity, signaling increased tensions between beijing and president biden. the report labels chinese treatment of uighurs as genocide. secretary of state anthony blinken is looking at consequences for human rights violators, including visa restrictions against chinese officials as an example. at the trial of derek chauvin, the x police officer charged in the death of george floyd, they wrapped up the second day. the prosecution says the police chief will highlight its case, portraying javan as one who betrayed the police department by the excessive force death of a black man. another experimental spacex rocket exploded at the end of a test flight, missing its landing and sending smoke and debris crashing onto the launch site. the starship prototype lifted

off in heavy fog from texas. it flew to an altitude of 10 kilometers before shutting down engines. spacex chief elon musk says it is investigating what happened. 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 vonnie quinn. this is bloomberg. ♪ shery: we are a half-hour into training in japan and south korea, let's turn to sophie. sophie: here is the lay of the land in asia and so, the kospi lifted this morning while the aussie share market stood by mining and banks. the index eats that sees the best month since november, nikkei off about .5%, stocks and kdi the big drag, mst also under pressure over block trade concerns. checking in on the offshore you

uan, holding steady but on course to halt a three-quarter advanced. a dollar bear is the outlook improves for a stronger u.s. economy, and higher u.s. yields in emerging assets. this is a surprise winner in asia for 2020, stan chart forecasting 7650 by year end, a bearish call. comedy -- commodity prices higher, upside risk to inflation, tightening among traders in the second half, but not everyone agrees, bfa among them, saying central banks can stay accommodative given that they don't see a fed rate hike until the back half of 2023. pimco warning of an inflation hike.

haidi: a chinese liquid giant has given a weaker than expected sales forecast figure for 2021 after it posted its lowest annual sales growth in five years due to the bent, drag -- due to the pandemic drag on consumer spending. our guest joins us, not much going on when it comes to all these banquets? david: it comes down to that. the wholesale price is what draws attention when they raise the price. when you go out in china and go to retail stores, it is extremely expensive, which underscores this broader point that this is a company that basically has an elastic -- ine lastic demand for its products. its growth depends on then being

able to raise the wholesale price. the headline was slowest growth in five years. why protected into 2020 14 mood china -- 2021 for moutai, it comes down to being able to raise prices. as our bloomberg analyst noted a couple months ago, if they turned to raise prices, it might then draw a regulatory scrutiny. but this chart also highlights the key point for this company, that it is an extremely profitable company, good rant, 90% draws profit and 50% net income profit average these last 10 years. shery: david, turning to chinese banks, we saw some recovery and earnings. is that trend continuing? david: yeah, what a pivot. we did get the other to completing the big four the other night and we put that all

together for you, an extremely big pop in profit growth. agbank was up ticks doing percent, bank of china up 56%. -- up 70%. i guess there is a perception that as the economy recovers they will be asked last to provide more support to the recovery, but improving the outlook for chinese banks. i guess the question is, what happens to that story in 2021 as the economy recovers? those will still obviously remain on the balance sheets. we heard from president of the bank of china. here is what he had to say. i think we have a graphic of that. and we have this, don't worry, as long as the npo ratio remains slow, there is nothing to worry about. back to you guys. shery: bloomberg anchor david

ingles. chinese pmi official numbers are out in about half-hour, preliminary numbers suggesting chinese consumers got out this month, boosting spending on travel and entertainment. hsbc's head of asian economies frederic neumann joins us. fred, glad to have you. what are your key takeaways? frederic: the pmi might take up this month -- tick up this month, but this is a phenomenon after the chinese new year. but the broader picture is that the chinese are starting to talk to the reins on monetary policy a little bit to cool down infrastructure and housing construction. that is likely going to slow in coming months. the hope is that consumers will step up and replace that.

but it is not clear consumers are really in the mood to step up yet. we might be in for a bit of sequential cooling, just a tad, nothing much to worry about, a tad of cooling in coming quarters. and that is in contrast to the u.s., where things are about to take off, really. shery: where are you seeing the economy headed later in the year than? -- year then? especially with all the infrastructure spending in the u.s., something we could see commodity prices rising. frederic: we are more skeptical on this. mainland china still consumes more than 50% of global commodities, most major commodities, and in parts come over 60%. so if you have the chinese construction sector cool down, that is usually a headwind for commodity markets. now, commodities may remain rarely high, but it is hard to

see a further upside for most main commodities that feed into chinese construction, coal for example, so it is not really looking like a super cycle. at the u.s. economy rebounding is great for services, but that is not commodity intensive. super cycle no, the commodities staying here and perhaps giving back a bit of ground, but it is not to be inflationary. haidi: we have a great story out about the chinese economy potentially overtaking the u.s. economy two years earlier, by 2028, 2 years earlier than pre-pandemic estimates. what does the growth potential of the two countries look like to you, heading into that possibility? frederic: in fact, a lot has been written about the u.s. economy growing faster than the chinese economy over the past two quarters. that is true in sequential terms.

we are going to see a bit of a pop. but make no mistake, the chinese economy remains a juggernaut. even if it cools slightly at the margin, it will deliver slightly higher structural growth than the u.s.. it will catch up. 2028, 2029? it depends on how exchange rates evolve, for example. but broadly speaking, it is just a matter of time between the chinese economy out steps the u.s.. when it comes to per capita income, that is another matter. but certainly from the size of the economy, china is just about there at the end of the decade. haidi: does that mean conditions you are seeing warrant pboc tapering? frederic: that is right. but they are doing the right thing. they have injected stimulus, the economy is back to its normal run rate, perhaps a little lower, but things have normalized in china. so why keep the foot on the gas?

you want to make sure you have a sustainable financial policy and that you're need debt. chinese policymakers are not just looking at the next year and the year after that, they are looking at the next five or six years, and they want to arrest the rapid rise in debt. and that is where perhaps the pboc is in contrast to the fed. the fed is prioritizing clearly, inflation and unemployment. it is less concerned about instability at the moment. for the pboc, it is the other way around. that is what you see the diversions between the two central banks. it is even reflected and currency markets at the moment. haidi: what is the biggest difference between economic performance in this part of the recovery? it is at the -- is it the vaccination rollout? and what does that mean for parts of southeast asia, or even australia, where the rollout has been in doubly slow? frederic: it comes down, if you think about growth the next two quarters, it is all about

vaccinations. we need normalization of activity. we need to reopen borders. remember, in southeast asia, many economies rely on tourism and travel in a broader sense, trade and nervous is. as long as we don't vaccinate the populations to a certain degree, then we can't relax those restrictions. the other risk, something we see in india, is that unless the population is vaccinated to a critical level, there is always risk of a renewed resurgence or a pocket of resurgence, which would close back down. so we need the vaccine, sooner rather than later. shery: great to have you with us, asian had of economics frederic neumann. we get to berkeley's chief economist giving us or take on the data. but up next on "daybreak asia," an exclusive interview with the

hong kong chief executive on changes in the hong kong system. this is bloomberg. ♪

shery: china has finalized a sweeping plan to overfall hong kong election laws, making sure all candidates are patriots loyal to china and the communist party. former hong kong leader cy leung sat down with our chief asia

correspondent stephen engle for a wide-ranging interview on the changes. cy: changes today and in the past 12 months have caught international attention. but the problems leading to justifying these changes have not. a year ago come 18 months ago, we had elected leaders of hong kong going to the united states, asking for the u.s. to sanction china and hong kong. that is disloyalty, ok? they were elected. that is one of the examples that led to the changes in the electoral system. stephen: but how is it good for representative government when we are reducing the number of directly elected seats? and we also are going to have a new vetting committee of fewer than 10 people choosing all candidates for higher office. cy: we have a vetting process.

that is the electoral laws of hong kong. venting our was in the hand of officers who, at the time of the elections, became elections officers. now we are putting the power in the hands of a committee, which is more open, more transparent and more persistent across districts hong kong wide. why are we expanding the powers of the nominating committee? the nominating committee has always been part of the election process in hong kong. we have a chief executive-led government, and an executive led structure. other parts are in and -- are in the hand of the chief executive, who is nominated by the nominating committee. that is in the basic law too.

stephen: who should be on that committee, most likely it will be a nine-member body? cy: much the way we had vetting power in the hands of district officers in their previous role. stephen: we have to address concerns in many places who say this is a step back for democracy and the pledges china made to the ok and also hong kong for what we see in the basic law, article 45 and article 68, which clearly state the ultimate aim is for universal suffrage. how is this a step toward universal suffrage and not a step backwards? cy: as you mentioned, we have to do it according to articles in the basic law. the article that says universal suffrage as a means to elect the chief executive also says in the same article that the candidate

will be nominated by the nominating committee. in 2014, when i was chief executive of hong kong, we actually tried it. we went through the whole motion with the central government of the central government agreed. the opposition were the same people who went to the united states last year and the year before last argue that the united states should sanction china and hong kong. and they rejected. and myself and the committee moved for universal suffrage, which means nominations and then elections. the opposition wanted different nominations that is not according to the basic law. stephen: i covered the protests.

entering the umbrella movement, you were chief executive. talking to the rank-and-file of hong kong, the vast majority were not calling for independence. it was a very small minority who wanted that. so how do you reconcile to those people that we have gotten this far, and that they are paying a high price, that they are no longer able to have half of the elected seats in the legislative council. they have no say. cy: i agree. the majority of people who walked through the central district of hong kong for 79 days did not want hong kong independence as such. but at the same time, they wanted to defy the powers of the central authorities, beijing. and they did not want to follow the basic law. which is a harm. haidi: that's get more from chief north asia correspondent stephen engle, coming to us from hong kong. we knew these changes were coming, what is the impact on

hong kong that you are seeing? stephen: if you ask the pro-democracy camp, which all the pro-democracy legislators in the legislative council last year resigned because of these new steps coming down the pike as well as the pledge of allegiance, loyalty, patriotism and the like, they would say this is a death knell for democracy. even though carrie lam in a praecipe thing yesterday said, all potential candidates are open to go before the venting committee. of course, the vetting process. as long as they pledge of allegiance and patriotism to china and the communist party. so this is now the second major move by beijing. first, it was the national security law. now, we have electoral reform. and in that white-ranging interview with cy leung, i asked him what his next -- what is next, if beijing is putting its

stamp on hong kong and changing the way things are done, what is next? c.y. leung, the big issue when he was chief executive was land reform, and his proposals to make more land by filling in waters and tilting to alleviate the wealth gap, building low-income housing to alleviate this crisis, if you will, and perhaps even lessening the influence property tycoons have on this economy. it is something that state media in china has stated the past couple years of protests, that the root of this, one of the roots, as been the inequality gap in hong kong. that we also talked about, him signaling land reform could be the next push coming, not only from the hong kong government, but as well by beijing. shery: chief north east asia

court -- chief asia correspondent stephen engle with the latest on hong kong. be sure to tune in to bloomberg radio to get in-depth data from our team broadcasting live from hong kong, listen on bloomberg radio plus or bloomberg.com. plenty more ahead. stay with us. ♪

♪ haidi: a quick check of business

flash headlines. chinese startup iron token has raised $13 million in a series of funding led by venture partners -- $13 million -- $13 30 million dollars in a series of funding led i venture partners. investors have used the fund to stash crypto assets. u.s. spac merger one of the options on the table that could lead to a multibillion dollar's evaluation. the company specializes in batteries for electric vehicles. another company is betting on ed, earmarking $10 billion over the next decade for manufacturing. the co-founder is expected to

invest $1.5 billion on electric vehicle making. xiaomi has no plans to invite in outside investors. let's look at stocks at the open of trade in china and hong kong. sophie: accompany rejected reports that it will help shall xiomi develop electric vehicles. other report cards across class sectors in asia, banks, airlines, property. china bank lifting property estimates for 2020, the largest listed residential developer in the country. in taipei, they are watching han high shares after the company missed profit estimates, the company warning of component

shortages that could last until 2022. that could affect 10% of its shipments. in the ev space, we are watching this battery maker, reportedly weighing going public by us back later this year, which could give the solid-state at three maker a multibillion dollar valuation. we are watching hot glove in kuala lumpur, the company saying its listing is staying on track despite action by the u.s. expressing forced labor concerns. those concerns yesterday saw shares in kuala lumpur fall more than 5%. shery: coming up on "bloomberg markets:, china open" key march pmi's due in just a couple of moments. we will get reaction from barclays'jian chang -- reaction

from barclays' jian chang. we are looking ahead to the start of trade in shanghai, shenzhen. this is bloomberg. ♪

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♪ tom: it is 9:00 a.m. in beijing and shanghai. welcome to ""bloomberg markets: china open," i'm tom mackenzie. breaking news, latest gauge for chinese economy, pmi coming in at 51.9, above the survey. estimates had been 51 point two. so