haidi: a very good morning. welcome to "daybreak australia." i am haidi stroud-watts in sydney. shery: i am sophie kamaruddin in hong kong. -- i am shery ahn. the u.s. trade chief gets set for a first discussion with chinese counterparts. -- could speak with beijing officials on wednesday as she

seeks to build on a trade deal. big oil. exxon shareholders voting with board members while a dutch court orders shall to speed up emissions cuts. the justice department opens an investigation into the meltdown of a capital company that left big banks nursing $10 billion in losses. haidi: let's get it over to sophie kamaruddin, taking a look at the start of trading this thursday. sophie: futures little changed in asia after the index capped its gains. we will be watching chinese tech names after xiaomi's earnings came out. we have lenovo's report later this thursday. on the calendar, the bok policy decision. looking for any tweaks to inflation and growth forecasts. in new zealand, the are being governor -- rbnz governors

saying they see a path to tightening by mid-to-late next year. the kiwi dollar has given up the gains we saw yesterday, sparked by the rbnz's projections so the kiwi dollar back below 73. a head china's industrial profits due this thursday, the offshore yuan holding below 639, with activity showing traders are looking for a move below 635 potentially. shery: we are watching the trade front on negotiations could happen very soon with u.s. trade representative katherine tai expected to hold her first discussions with counterparts in beijing as early as tonight. the importance of tariff rollbacks as part of the next steps in trade talks. for more, let's bring in tom mackenzie in beijing. what is the u.s. hoping to achieve with these talks? tom: katherine tai has said previously that she wants to have policy continuity.

she wants to build on this trade deal that was negotiated by the trump administration. she wants to use that as the platform to encourage more trade deals in china while acknowledging structural changes will continue to be challenging. she wants to check in on commitments that china has made around this deal and see that it is living up to those commitments. she is likely, we are now hearing, to be having conversations with chinese counterparts. we don't know if that will be liu he who led the negotiations with the trump administration but it's checking up on that progress which will be a priority for katherine tai. on the chinese side, they said if you want any progress going forward, you will have to roll back some of these tariffs in place till on -- still on chinese exports to the u.s. market. shery: where are we at on meeting these phase one commitments? tom: china has not met the

targets and last year, for obvious reasons for that. the supply chain ruptures, the pandemic. they got 60% of the way there in terms of meeting those targets. the target was $200 billion of goods and services purchased from the u.s. on top of the baseline of 2017 levels both in 2020 and 2021. this year, they are making the targets despite having ramped up purchases of ant goods and energy products from the u.s. they are on track to miss that target again so no doubt, they will be quizzed about that part of the agreement. katherine tai may address -- strength the regime here to ensure u.s. companies do not have the intellectual property stolen. other areas as well that she is likely to push them on our things like financial services. and on that area as well as intellectual property, china can point to modest progress. you had goldman sachs announcing

that wealth management deal with icbc and a majority stake. shery: china is clamping down on u.s. corn imports right now. what is going on? tom: interesting timing just ahead of these trade talks the first time between katherine tai and her chinese counterparts. in three trade zones, they have pressured the authorities -- the authorities have pressured feed mills to cancel u.s. cargoes of u.s. corn. we are hearing it's a little under one million tons and to put that into perspective, so far, china this season brought about 20 million tons of u.s. -- thought -- about tournament -- bought -- bought 20 million downs of u.s. corn. you did see prices rising to the highest levels since 2013 for corn so that may be part of the play. going forward, the forecast is still that china is trying to replenish its corn supplies and replenish crucially its pork production as well and that

therefore, you still are on track according to some views for a record year in terms of corn purchases from the u.s. by china. haidi: tom mackenzie, our china correspondent in beijing. that's get to vonnie quinn -- let's get to vonnie quinn. vonnie: joe biden ordered u.s. intelligence to increase efforts to determine the origins of the coronavirus. in a statement, he said a report from the intelligence community was divided on whether the virus came from animals or a laboratory. biden said there was not enough information to make a confident assessment. the trial of an australian writer accused of spying in china is set to start thursday. she was arrested in 2019 and could face three years to life in prison. the foreign minister has complained about her treatment. in comments, beijing's industry -- relations have soured since canberra called for an inquiry into the origins of the

pandemic. boris is facing a barrage of criticism from his former chief adviser. during seven hours of testimony to mp's, dominic cummings laid out what he said was a disastrous handling of the pandemic. he called him unfit for the job. >> in any sensible, rational government, it is completely crazy that i should have been such a senior position in my personal opinion. it's just -- it's completely crackers. it's crackers that boris johnson was in there. vonnie: lawyers in the trial of four people charged in the downing of a malaysian airplane flight -- airbase. the boeing 737 landed in 2014 as

it flew from amsterdam to kuala lumpur. 98 people on board were killed. the four defendants were charged with murder. 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. shery: a tiny activist investment firm hands the exxon ceo one of the biggest setbacks of his career. we will discuss the battle at the oil giant later. the dollar rises for the first time this week. we look at the top market risks and what a stronger dollar means for global assets with a head of research, next. this is bloomberg. ♪

>> i don't see the direct funder paying back at all. we partner with many of them going forward. it's extremely competitive environment. >> the u.s. dollar rose for the

first time this week amid short covering as investors rebalance portfolios ahead of months en d. we are joined by an executive director and head of research. always good having you with us. we are seeing strength in the dollar. is this a temporary fluke and what does this mean for emerging markets that could be pressured with a stronger greenback? guest: hello. good morning. -- sustained u.s. dollar strength from here. it would obviously be a negative consequence for emerging markets, emerging market equities, and the u.s. dollar liability obligation and it would be too much pressure on the aggregate earnings to the exposure. sustained u.s. strength, just a short-term strength and stronger over the week. it may continue for a few weeks or so into june. sustained u.s. dollar strength

is going to effectively challenge the global recovery momentum. >> we are seeing the japanese yen stuck in a range, pretty weak still. why is there such a gloomy sentiment around japanese equities that would actually do well with a weaker yen? george: it is perplexing, but one thing that the japanese flow is all about is just trying to find -- it's trying to avoid volatility, just trying to find a play or a move that can limit the downside, whatever that risk is. look, flow -- it's not traditional over the last 48 hours, but nevertheless, that u.s. dollar weakness to continue against the yen would be what we would be expecting in 30 days time or the second half of the calendar year.

but in the interim, looking for some sort of yen weakness versus that u.s. dollar going forward. doesn't have to be now. haidi: do you think there is further room to run when it comes to the chinese equity rally? george: blimey, as they say. that's an interesting one. they have pockets where you can see that liquidity really reaching out in different parts of that economy and they do have some bubbles that have been engineered and the consequences of that stimulus, but we can see further upside. for example, global equity exposure in the dm, and we have funds by mainland chinese earnings. they have been up. what is the longevity of it? the difficulty with editing aggregate earnings in mainland china and hong kong, for that matter, in those markets, is the policy will piven and change so often as they try to engineer something a little bit different to what other markets are doing, so they really do not like the

bubbles that have been created from their own stimulus. shinzo international, for example, alibaba, and tencent -- it's at the top of security, as an example. one thing china does need going forward nevertheless is global savings to help its momentum and capital market reform. there are structural issues but they have pockets of bubbles in their economy. haidi: we have seen australian stocks on quite the winning streak. how sustainable is not given we have seen iron ore prices now 25% off the peak? george: yes, we all know supply -- we all know fortescue, you just cannot reinvest into that area. we know why the price got up there. it's not going to fold to 100 to 150 anytime soon. the 175 range seemed reasonable. the economic recovery required

is to the end of this year. hopper might come up as well. that has structural elements for demand. copper and iron ore volume will still continue, still in good demand as economies continue to expand coming out of the reset of march 2020. talking about through 190, it's a moot point. there will be demand for copper and iron ore. but there's no reinvestment into new supply and that is the issue here. shery: and yet china continues to try to really tamp down prices of commodities, right? we have seen really trying to take away the frost in metals -- froth in metals prices, banning capped a currency mining, other parts of the economy, and property taxes as well. what do you make of these targeted approaches, targeted measures, in order to take away the froth coming from chinese

policymakers? george: the chinese policy prescription is a little bit different from the rest of the world. it will be a bit more direct. a lot of piecemeal policy pivoting and you are just trying to follow the flow. it's very difficult. so we know, obviously, in diem markets, is coordinated fiscal and monetary stimulus, accommodate being the bigger buyer for bank debt and managing the yield curves, etc. the china policy is very difficult as a fund manager because, again, not to overuse the word, but they are pivoting, piecemeal. there is a bubble some policy stimulus and liquidity, which is no surprise, and they are going out of their way to mitigate that bubble. that's created, that's -- debts created is a normal part of liquidity. they are looking very carefully at the wary of this policy

response. aggregate earnings in mainland china will be expanding very well and above average versus other markets of the decades ahead that they are doing their capital market reform and we are just trying to work at the pivoting my piecemeal response that china -- pivoting, piecemeal spots that china has. it creates unintended consequences. it's very difficult to second-guess them. you just have to react to it, unfortunately, and say what the outcome is. haidi: always great to have you with us, executive director and head of research, george boubouras, joining us from melbourne. a tiny activist investor takes on the board of u.s. oil giant. what that means for the company and the wider industry. this is bloomberg. ♪ yeah that's the thing when there's these --

haidi: a tiny activist investment firm has -- exxonmobil board. it's unprecedented in the oil industry. our reporter, kevin crowley, joins us now. this could be a third seat that is still being determined but regardless, is this an inflection point for how the credibility of esg and how seriously it is perceived within big oil? kevin: it certainly is a watershed moment. the environmental campaign has really been gathering pace in europe and here in the u.s., but now, it's very much in the boardrooms of the very biggest companies, oil and gas companies on the planet and this is a situation where the ceo of exxon puts his personal credibility on the mind to reject -- to encourage shareholders to reject this activist investor and the shareholders roundly decided to

vote against him with the two dissident directors being elected so -- just in the last couple of hours, blackrock, which is exxon's second-biggest shareholder, came out and said it supported three of the activists -- the activists, the directors, which is a big rebuke for exxon. shery: so what happened here? how did we get to this moment? kevin: exxon's financial returns have been deteriorating for some time, long before the pandemic, and the pandemic really sent the company's financial performance into a tailspin, and this kind of opened up the opportunity for environmental concerns to come to the fore. exxon was in a weak state, and the activists really capitalized on that but when it came to the

actual vote, it was climate concerns that loomed large and exxon's intransigence did not fit well with a lot of investors who saw this as a good opportunity to send a message to management which clearly had not been getting through for many years. haidi: a double whammy for big oil with shell being told they need to be cutting their missions faster and more. what are the global ramifications of this across the industry? kevin: that's right. also, chevron lost a shareholder vote as well today. conoco lost one earlier on this month. there certainly is big calls for big oil to change course and now it's not just about pledges, it's about action, and shareholders need to know that the management of these oil companies is on board with the energy transition and not try to resist it. shery: kevin crowley.

chevron also criticized by shareholders who backed a climate oppose all. we heard from chevron's ceo, mike worth. >> there were times not too many years ago where it came up infrequently in discussions with investors. today, it comes up in every discussion and oftentimes, if the first thing that comes up in a situation so i'm not surprised that it is high on their minds. i meet with investors all year long and this has been a regular topic that we have been hearing about and you are right. investors do want to see higher returns. our industry is one that has not been in favor with investors because our returns have not been as strong as they historically were and so, we have got work to do. it's why i really talk to our people about just for words. high returns, lower carbon. nighthawk to investors about -- when i talk to investors about that, they say that is what we are committed to. >> today was rather

extraordinary because exxon mobil was taken on by a tiny activist investor. it lost seats to them. shell is being ordered to slash their own emissions by a court in the netherlands. do you worry that this will go to the courts as well, not just in the general meeting? kevin: i --mike: i have not seen all the developments that have occurred today but this is a very active environment we find ourselves in. there are lawsuits filed on various aspects of climate around the world and we do not believe that is a fruitful way to engage in dialogue in this issue. we think they generally distract companies from the real important work, which is working on technologies, working on progress, and taking actions. ultimately, the lawsuits have not proven to have much merit, and i don't know how the suit in

the netherlands will play out. we look to be challenged and we are taking action. we intend to take more action. >> to be challenged by activist investors in particular, are they a threat to the business model in general, to the business model you provide in terms of oil and gas? mike: i think activist investors, other investors, they want to be heard. they want point of view. and look, we engage, as i said earlier, with our investors all year long, so we are listening, we are engaging, we are as transparent as we can be. we issued a very lengthy report on climate change and our company's resilience in a variety of scenarios. we did an analysis under very aggressive carbon reduction scenarios to look at how our company would fare under those. investors of all types are, you

know, focused on this, as we are . so that's part of the environment today for companies that are providers of energy. and i believe our industry as part of the solution. we have the technical capability, project management capability, the engineering acumen, and the financial capacity to be part of the solution. >> chevron ceo mike wirth speaking with caroline hyde. let's get you a quick check of the latest business flash headlines. amazon agreed to by the mgm movie studio for $8.45 billion. it is amazon's second-biggest since buying whole foods in 2017. it also follows investments of $11 billion on content for its streaming services last year alone. mgm has added 25,000 hours of content to the library. -- diminish the power of mark zuckerberg over the company. it declined proposals to replace

zuckerberg with an independent representative and turned down a bid to eliminate his special class of voting shares. the outcome is frustrating for some who want more independence. chinese regulators reportedly ordered tencent to put its finance related businesses into a new financial holding company where they can be better supervised. financial authorities have not certified which of $.10 businesses could be impacted. -- tencent's businesses could be impacted. samsung electronics and sk hynix are his top picks. we have that conversation ahead. this is bloomberg. ♪

>> this is "daybreak australia." i am vonnie quinn with the first word headlines. dina said to be clamping down on foreign imports on concern that they spiraled out of concern. perhaps less than one million tons. beijing is restricting imports into three trade zones which are not counted towards purchase quotas. bloomberg has learned the european union is aiming to hit belarus with a new round of sanctions by june over the arrest of a generalist.

we are told the strictest measures could target the soil and nutrients used in fertilizer and belarus's biggest export. -- 88 individuals including president lukashenko. in afghanistan, the taliban is warning no u.s. bases will be allowed in the region after the u.s. withdraws. pakistan has said bases will be forbidden on its territory. speculation grows the u.s. will want a nearby area even after it pulled out of afghanistan. eight people plus a suspect are dead after a shooting at the california railyard serving silicon valley. the gunman was an employee of the valley transportation company which provides transit services to parts of the bay area. the shooter was identified. no immediate motive was given. elizabeth warren has called

jamie dimon "the star of the overdraft show." she made the remark as the countries chief testified virtually on capitol hill at about the state of the industry. she noted hefty fees on consumers struggling during the pandemic and says jp morgan made 1.5 billion dollars from overdrafts last year, seven times more than competitors. 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: let's take a look at how markets are setting up this thursday session. sophie: we are seeing wti stall after a four day gain. markets way iran's return against the reopening theme. the chairman of india's biggest oil refiner says answering the question about when we will see the return of indian asset types

is a difficult question in the. we are seeing nikkei futures little changed. they are among the cheapest in the space. that typical theme on the reopening. japan is a few months behind the reopening of the u.s. as well as europe. looking at a calm start for markets. currency is looking fairly muted but switching up the board, we have investors saying we could see the return of volatilities to make a comeback as markets are just not ready for any taper surprises. so they are recommending buying up to a you out against anticipated swings and we have seen a jp morgan gauge of currency volatility fall to a march 2020 know so we will see if we may see any moves. jane fully saying -- jane saying buy in dollar-yen. >> the department of justice is

investigating that implosion back in march. the fiasco left big banks in europe, asia, and the u.s. nursing more than $10 billion in losses. joining us now is bloomberg wall street correspondent sonali basak. -- joining us now is our bloomberg wall street correspondent. >> first of all, it is a bit short on detail but we know they are asking questions of the bank. -- this is a cross-border issue and what is interesting is while journalists have pointed out, the meltdown did not come up today when the bank ceo's met with the senate. they are meeting tomorrow again with the house who has already asked a lot of questions about this. we know that other senators have

been asking other financial regulators about this as well and a lot of money was lost. there are a lot of questions that still remain about this meltdown who was responsible and how much so much money was lost. >> beyond an airing of grievances and frustration, are we expecting any kind of regulatory outcome from this? >> the point that i had been speaking to a lot of my sources about was that this is not the big -- not the only big lever institution that we see issues with in the last 24 months. we have seen repo market issues to the point that regulators have had to step in. we have seen the hedge funds levered 101 on certain treasury trades. we have seen it all in the last

three or four months so i think that regulators will be taking a greater look at leverage outside of the banking system. they will be trying to take a look at greater disclosures. they have said that family offices are outside of the purview of the sec. there is very limited things that they can do. it will take congress, it will take the sec and a bevy of regulators to do something about this. haidi: given all of the risks you mentioned, no met under -- no wonder they were grilled. what were the highlights? >> mostly about their place when it comes to equal access to lending but also wages. wages were a huge part of this. how much the bankers are paid relative to their lowest paid employees and whether the employees should unionize. there's also a lot of questions about competitive threats to the u.s. economy. everything from the u.s. debt

level two just the u.s. banking system alone as china grows in dominance. a lot of questions asked. a lot less still to be answered. and a lot still to be mapped out between the relationship between washington and wall street moving forward. >> our bloomberg wall street correspondent. let's take a look at trading in nvidia after hours after the biggest u.s. chip market -- chipmaker by market value reported a bullish forecast, saying demand for chips would continue being in gaming pc's, gaming centers, as well as increasingly in the currency mining. we are seeing downside of 1% for nvidia despite revenue coming in at $6.3 billion being reported there. that's get more on chips. our next guest -- let's get more on chips. our next guest is a senior analyst to give us some more

perspective. you say the pricing of that shortage has been sort of digested by markets by now? >> yes. we did some in the semiconductor , having some sentiment in the market. -- strong demand will drive the price high. we also expect the memory -- rebound in the second half of this year. shery: can we expect that post-covid activity to continue? >> yes. investors are worried about the covid-19 -- probably weaker.

it's for last year. we highlighted that, you know, that -- you know, the -- the trends will continue. it covers the economy. -- demand for the semiconductor. >> it was great having you on. up next, xiaomi's latest earnings were a beat as growth in the smartphone business outpaced rivals. details, just ahead. this is bloomberg. ♪

haidi: xiaomi is narrowing the market share gap with samsung and apple. -- removed from the government blacklist. stephen engle has been taking a look at these numbers and he joins us from hong kong. xiaomi is the world's third-largest smartphone maker behind samsung and apple.

how are they playing catch-up? stephen: they are in a bit of a sweet spot because 5g is picking up speed in china and europe and its biggest market out overseas in india even though india has its own problems with the covert outbreak. essentially, revenue is being driven by 5g use smartphone shipments, leading into profitability which beat expectations. net income up to 6.5 billion yuan that beat estimates. tax refunds contributed to the profit beat but when you have revenue jumping from more than expected at 55% growth on the back of those smartphone shipments, that leaves the company to say they are going into other areas. they had a $10 billion bet on new initiatives into electric vehicles so this is where xiaomi is heading. strong revenue growth from smart phones. it is narrowing the gap with world leaders, applicants

amazon. it still has a long way to go but in china, it is fitting as well by a return to men -- retrenchment by huawei. they are doing well, strength to strength, except chip shortages are a problem that could be seasonal. it will not be results this year. in india, they own 28% of the smartphone market. they have tremendous challenges. >> staying in tech, we are hearing about tencent and regulators giving some opinions about their businesses. stephen: this is a financial magazine, influential in china, confirming what bloomberg news has reported and that tencent has indeed been ordered to fold its financial interests. the platform and other financial services into a financial holding company which by law would have to be overseen by authorities like the people's

bank of china. essentially to contain risks. it is coming down the pike like what happened to alibaba's ant. we don't know which units will have to be folded in. the report is saying that essentially, the company has to come up with its own suggestions before authorities tell tencent what to do. that's where we are right now. against the backdrop is as we have this antimonopoly crackdown in china, the big tech companies like tencent, like alibaba, mike baidu and as i just talked about, xiaomi, they are pledging to plow so much of their new areas, fundamental tech and infrastructure like ai and the like, these are areas that the chinese government, not coincidentally, while these companies -- once these companies to plow into.

shery: let's turn to amazon. it agreed to buy mgm film studio. the deal sets up the e-commerce giant to become a more formidable force in the streaming industry and puts more pressure on its retail rivals by offering its customers more free tv and movies for the price of a prime subscription. emily chang delves into the details. >> the past is not dead. emily: the multibillion-dollar deal between amazon and mgm means you could see james bond or rocky in your shopping cart also included, the pink panther and robocop franchises as well as the oscar award-winning film, silence of the lambs. >> fava beans. emily: it is amazon's biggest acquisition since buying whole foods for $13.7 billion in 2017 and jeff bezos has not been shy

about spending a on his media darling. >> hilarious. you should go into comedy. emily: amazon shelled out $100 million on content freight dreaming services in 2020 alone and has made an $11 billion commitment to thursday night nfl games. buying a story studio makes amazon a more credible heavyweight in the increasingly crowded and competitive streaming market. just last week, at&t sealed a deal to merge it warner media operations including hbo with discovery, shaking up the entertainment hierarchy yet again. is this just the beginning of long-awaited media consolidation? it is the biggest move yet by a tech giant to rock the hollywood vote. emily chang, bloomberg, san francisco. shery: up next, the bok is likely to hold its benchmark interest rates at today's meeting. we discussed what could be in

store for korea's economy. tune into bloomberg radio to get an in-depth analysis from the team broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. plenty more ahead. stay with us. ♪

shery: counting down to the start of trade in seoul. the korean won at the highest level in more than two weeks against the u.s. dollar. foreign investors buying the nations stocks again but that has not been enough to lead the kospi out of negative territory. we are seeing futures down .4% and we are also watching korean bonds because they rose ahead of the bank of korea's policy meeting. the yield should rise faster in the next few months as economic indicators improve in line with expectations. let's discuss because the faster than expected economic rebound is not expected to spur any policy changes when the bank of korea meets today but it could lead it to operate its forecast and open the door to the end of this run of record low rate. kathleen hays is here with a preview. so big bets on an upgrade from the bok. kathleen: a lot of focus on that

upgrade because people are trying to figure out if the economy is picking up and if you are seeing a stronger economy. you think may be the bank of korea will have to say maybe we are going to make that first rate hike, that first lift off, sooner than we thought? we heard it from the rbnz 24 hours ago that they are thinking of maybe moving things forward so let's start with a look at inflation. inflation picked up, exports picked up, the consumer spending has gotten stronger but inflation is high, do you think that will make the bank of korea move? the yellow line jumped a bit of -- about 2%. it was down to 1.5% and steadily moving up. the red line shows you what economists are looking for. it will come back down below the target by the bottom line is this, the bok is expected to say it's a big surge off of a week inflation number and several week inflation numbers a year ago -- weak inflation numbers a

year ago. exports are booming. stimulus is craving more global demand. you have progress on the virus that's also in there. 40% increase year-over-year in april, up 53% in the first 20 days of may. that's going to make the bank of korea say if this keeps going, stronger economy. that is the kind of thing we will see may be in their forecast reflected but in their thinking. that's what we want to hear. >> how is the virus playing into the bok's thinking given its bill not under control? kathleen: it's a question of the bank of korea looking at their daily virus cases. they are still in the hundreds. it's not as bad as many other countries. there's 51 million people that could be vaccinated. 5 million of them vaccinated so they are moving in the right direction. that is something that they hope was going to boost consumer

confidence that has been on the rise. the korean government hopes to achieve herd immunity ahead of his november goal so that's a plus. bloomberg economics points out a relatively slow vaccination pace. they have the virus restrictions, social distancing, etc., and that's damping what could be a stronger rebound in confidence and in the economy. shery: what does all of this mean for the bok's policy messaging? kathleen: what we are waiting to hear is just how confident are they? do they move up their forecast? number one, they have to look at exports. that looks good. strong global demand. but the covid uncertainty is there. numeral economics says a sustained rapid recovery, if that is what the numbers are showing, it could lead the bok to move sooner on normalization. they see the first rate hike in the third quarter of next year versus the first quarter of 2023. forward futures markets are looking for something coming up

even sooner. i love this chart because you may not recall but bank of korea was the first major asian central bank to start raising rates after the fed made its first rate hike in 2015 so people are waiting to see, could this happen again? once the fed starts moving towards its normalization, will they be the first to follow? upgraded economic forecast. maybe they will move sooner. maybe they will be ahead of it. who knows? there is so much focus on these forecasts and what the bank of korea says at the press conference. >> kathleen hays with a preview of the bok. we are getting breaking news on the climate front my hearing that australia's government and one of the country's biggest producers of fossil fuels has now won that court battle in the federal court in melbourne against a class action that was launched by a group of eight teenagers aged 13 to 17 and an 86-year-old nun who was

seeking to block a mine expansion. it was a common-law duty for the minister to protect future generations from climate change harm. the ruling paves the way for the environment department minister to approve that development for whitehaven coal that will produce 10 million tons of mostly metallurgical coal a year. this comes on a day we have seen wins from climate activists across the world, whether it being shall being told -- she ll or exxon. shery. shery: those activists getting a big win against big oil. here is a quick check of the latest business flash headlines. the tiny activist investment firm has won two seats on the exxon mobil board. engine number one was established less than six months ago and has no history of activism in oil and gas. exxon mobil vocally opposed the nominees in the lead up to the vote. the results sent a signal that

institutional investors are increasingly ready to force corporate america to tackle climate change. royal dutch shell has been ordered to slash its omissions in a dutch court ruling that could have far-reaching consequences for the rest of the global fossil fuel industry. shell has plans to reduce emissions by 20% within a decade. the court says it needs to cut them by more than double that amount. shell says it expects to appeal the ruling. let's turn to sophie in hong kong for the stocks to watch as we head to the open in japan, south korea, and australia. sophie: in tokyo, nissan and sk reports it's in talk with the u.k. government to build a factory. we are watching shares which may move after signing a manufacturing agreement for astrazeneca's covid vaccine and we have chipmakers very much on one chapter in videos bullish forecast -- nvidia's bullish

forecast. it wanted to help complete its intel deal. we are keep an eye on -- they are competing to buy a stake in the company. we are keeping an eye on the iron ore sector this thursday after we saw prices for the raw material fall into a bear market this week. morgan stanley saying higher scrap use of iron ore in china indicates a demand for the material may be past its peak. haidi. haidi: still to come on "daybreak asia," hour join -- our guest joins us. she will be joining us for that bank of korea rate decision. another guest says he is more optimistic on a-shares in the near term. whether that rally has further to run. we have the market opens in sydney, seoul, and tokyo, next. this is bloomberg. ♪

>> the demand for wework space

today is higher than before the pandemic. we were able to operate on a cost flexible basis. >> cash, $1.4 trillion of cash, one of the most notable aspects of this report was stellar. shery: welcome to daybreak asia. tom: we are looking at the major markets opening across asia. our top stories, the u.s. trade chief gets ready for first discussions with chinese counterparts. it comes as china clamps down on some imports. the bok is likely to hold its benchmark interest rate as virus

weighs on korean domestic economy. hear why despite a recent round , an investor -- shery: let's turn to sophie for what to watch. sophie: the yen trading above 1.09 and range of the currency volatility. that could be the time to buy on the dollar yent o protect against -- yen to protect against potential swings. attractive entry points for japanese training. more headwinds remain. you have japan government downgrading its business view for japan. economists are seeing an increased risk of a double-dip recession if the olympics are canceled. in south korea, we are waiting on the bok policy decision.

we are watching when it comes to inflation and growth forecasts. let's split the board for the moves in south korea at the start of cash trade. the kospi, little change. the korean won steady. we are waiting on the government's june bond buying plan. president moon is waiting on a meeting. chipmakers on a bullish outlook. a unit in china pushing ahead its deal. we are seeing samsung also moving ever so slightly this morning to the upside. flipping the board after a fourth day winning streak for the asx 200 was snapped, we are seeing gains come back. keep an eye on the iron ore sector after we saw futures prices for the material fall into a bear market this week. we are seeing the kiwi dollar on

the back foot after hitting a three month high on the rbnz's projections. the governor reiterating we could see tightening by the middle of next year for new zealand. brent coming online slightly under pressure. j.p. morgan raised the oil price forecast for this year. brent hitting 80 bucks by the end of the year. we are seeing a reopening in the u.s. and europe. on the calendar today we have chinese industrial profits. one company trading below 6.39 with room for further appreciation. at citi, they expect we will not see moves beyond 6.40 given they anticipate the dollar depreciation will slow down. they still see the u.s. leading the shift when it comes to tightening. haidi: joining us is david chao at invesco global markets. given the bok decision, i want to start there. is there further room for

specific opportunities in korea given how much retail opportunity and how red-hot this rally has been? david: there are a few things going on in korea, both in terms of the money flowing into the equity markets, but recently regulators allowed investors to short equities as well, which i think is a countervailing force. i think korean stocks continue to be cheap. we know technology companies, semi conductor companies occupy a large percentage of the kospi. given the shortage of semi conductor chips -- [indiscernible] haidi: what are your favorite semi plays on the shortage given that we hear from every relevant consumer or producer, that bottleneck in production issues will continue? david: i think the shortage

issues will continue for a few years. this is a double-edged sword. not only is this beneficial to the semi conductor companies that control a lot of percentage in taiwan and korea, but a lot of companies around the world that rely on supplies from taiwan and korea are certainly thinking -- are suddenly thinking they should diversify their supply chains. governments around the world are thinking about investing in foundries for themselves. shery: well that happens, concerns over supply chain disruptions leading to inflation. we have this chart on the bloomberg that shows gold has been gaining ground in the past few weeks. how do you diversify and protect against price increases? david: i think it makes sense. as we continue to see yields rise, the dialogue from now until the end of the year will be about inflation, inflation, inflation. that makes sense as investors

start adding to their inflation hedge, especially in gold and commodities and real estate. shery: is cryptocurrency a diversifier? david: i don't think it is a diversifier. it is a volatile asset. it is not a good store of wealth. shery: what do you make of the chinese rally we are seeing? will that continue? we are seeing more efforts coming from beijing for targeted measures to really take away the froth. david: i think the 3.5% performance that we saw a couple days ago, the best year to date performance we have seen, that is driven mostly due to a strengthening expectations for the rmb in the near term. some of the regulatory actions against cryptocurrency and commodity investment

speculation, some of that capital is moving over to chinese markets. i think chinese markets in the near term -- we have a 100 year anniversary of the tpp coming up on july 1. optics are very important. i think equities have a move to run in china. shery: that was david chao from invesco global markets. this is the stock price on lg right now, which is falling in the double digits. this after their suspension was resume. they resumed trading after being suspended since april. the losses right now seem big, but given they have been suspended since late april, this is really mild considering all of the market moves recently. let's turn to vonnie quinn with the first word headlines. vonnie: the department of justice is set to be opening a probe into the archegos fiasco

that led big banks -- left big banks with more than $10 billion in losses. it's unclear what potential violations or entities authorities are examining. president joe biden has ordered u.s. intelligence to increase efforts to determine the origins of covid-19. biden says there wasn't enough information to make a confident assessment. the trial of an australian writer accused of spying in china is set to start in beijing. he was arrested in 2019 and could face three years to life in prison. australia's foreign minister has complained about the writer's treatment. relations between china and australia have soured since

canberra dug into the origins of the coronavirus. judges in the trial of four people charged in the downing of a malaysia airlines flight have inspected the wreckage at a military airbase. the boeing was shot down in ukraine as it flew over amsterdam to kuala lumpur. all people on board were killed. the four defendants are charged with murder. global news 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: next, the biden's asian lead says engagement with china is over. that is ahead of the first expected talks between the trade reps and her counterparts in beijing. we get the bank of korea's may rate decision. kathleen oh will be with us for what she is expecting. this is bloomberg. ♪

haidi: a u.s. trade representative is expected to soon hold her first discussions with her counterparts in beijing. china is said to be stressing the importance of tariffs rollbacks. joining us for the latest is our greater china exhibit of editor. -- executive editor. it seems beijing has that clear line where they want to see those tariffs dropped. >> under the phase one trade agreement that was signed under president trump, there was supposed to be these regular period catch-ups. those have not been happening. there will be a lot of attention on this call because it will be the first discussion between senior economic officials between the two countries.

two, there have not been many high-level interactions between the two sides. we had the call between president biden and president xi. we had that contentious episode in alaska. i think everyone wants to see where the two sides are, what atmosphere there will be before talking about taking those tariffs away. haidi: in the meantime, where are we see in the state of fulfillment when it comes to the phase one trade deal? john: the chinese side has not reached the milestones that were set out in that agreement in terms of purchases. partly that was the pandemic, its impact not only on china, but in the u.s. to supply certain goods. even before the trade deal was signed, there was lots of questioning about how realistic those targets were. we are seeing that play out now.

shery: we are already seeing china trying to tamp down on those quarantine reports from the u.s.. -- those import reports from the u.s. john: the chinese government has started to look into whether some of those purchases are going into those in china where they don't count against china's annual quotas for purchases. they are being mixed with other things to produce feed that is shipped into china. that investigation prompted some chinese buyers of corn to cancel their purchases. we are talking about a million tons, which is a relatively small figure compared to the overall purchases. haidi: john liu there. china's money sliding from everything into commodities to housing. let's bring in our

correspondent. this is a story as old as how long we have been covering china, this great big rolling ball of money. what are the hotspots we are looking at now? >> that is exactly right. hot spots, the flavor of the month is commodities. we have seen the government cracking down on speculation in obviously crypto. housing is a big problem in beijing, and it has been since the financial crisis. we have seen state banks taking mortgage rates in some cities. the government reviving the property tax for the first time in a few years. also the yuan, which is starting to overheat now, a lot of commentary around that. beijing is increasing efforts, especially in may, to ensure price stability right now. shery: not just the yuan, but

what about the csi 300 overheating? this chart showing how it has moved above its 100 day moving average, not to mention this 5200 level. are we seeing the side effects of these targeted interventions in other areas? sofia: that was interesting, because there was some chatter that might be government intervention. the theory, which we have not really nailed down, but the idea that one analyst floated yesterday was there was some government intervention in the stock market to reignite momentum there. you can see from that chart the market did absolutely nothing for the past few months and then shot back above the 100 day moving average, which is the key resistance level. the theory is if there is a market that needs to overheat, stocks is the lesser of the evils there. an overheating market is -- an overheating stockmarket is more

easily controlled. the government did control that bubble earlier in the and has done july in last year. it is more easily managed. it does not impact inflation. surge in commodity prices is a big policy problem because of the way that can be passed down to the consumer. an improving stockmarket, a stronger stockmarket boosts consumer sentiment and consumer weaknesses is something the economy is still struggling with. it is an important time for policymakers just as we get into the 100 year anniversary of the communist party. haidi: our chief china markets correspondent with the latest. we are getting the latest as we wait the press conference on the victoria virus situation. the melbourne lockdown will be expecting to take place from midnight tonight in melbourne

and go for at least seven days. we have heard a range of five to 10 days being discussed. the latest report suggesting it will be at least a seven day lockdown. this after we saw an increase of 12 more cases. the number of exposure sites has also increased. we are talking about 70 exposure sites, including highly dense sites like a football field and a number of nightclubs. we will continue to await confirmation for that press conference. it usually takes place 11:00 a.m. melbourne time. shery: enxt, -- next, activist investor khairat con says cryptocurrencies -- carl icahn says cryptocurrencies are here to stay. more from him ahead. this is bloomberg. ♪

shery: take a look at the crypto markets. bitcoin fluctuating around the 40,000 level. at around 38,000. this after it shot past 40,000 in the new york session, but then it bounced off the 200 day moving average around 40,600, which shows you how difficult it is to regain that momentum. we have seen a lot in terms of elon musk's tweets railing, roiling the markets. the crypto index by bloomberg rising about 11% before keeping up its gains. holding around the 2400 level. it theory m gaining 1.3%. -- ethereum gaining 1.8%. we see china continue to crackdown on bitcoin mining and increasing those punishments,

saying they are not accepted as digital payments. haidi: we have also heard the activist investor carl icahn weighing into the debate as well, saying his interest is getting into cryptocurrency in a big way. he could put more than $1 billion into an alternative cryptocurrency. he is taking a stake in the insurer allstate. those shares rose on the announcement. we asked him about the future of activist investing. >> the whole concept of activism is to get on the boards. we have done it innumerable times, some successfully, some not successfully, to go and make changes. a lot of these comey's have hidden jewels -- these companies have hidden jewels in them and the board of management does not want to do anything and they are laid to waste. as activists, you are going in and finding that you have assets that aren't producing enough and you want them to do so and

enhance value. that is what it is. >> it is important to add value now when we have an economy running hot. is the economy in the u.s. running too hot? what do you make of this inflation debate? if we had to take a debate every time we heard "transitory," we would not be in this role. -- a drink every time we heard "transitory," we would not be in this role. >> we are pumping a lot into this economy. you already have inflation. you have to be able to deal with that inflation and put on the brakes. otherwise, eventually we will hit a wall. i don't know if that time is here yet. on a value basis, a lot of these companies are ridiculously priced. so eventually you just can't have this without excess

inflation. there is going to be a price to pay for it. when? i don't think robinhood and all these guys are necessarily bad. i think they serve a purpose. money is funneling back into companies. some of these companies might be ok, but a number of them are -- the risk-reward is absurd. i go back to my example, my favorite one, because that is what i know a lot about, you've got people to support for only 2% return the germans on these malls. -- the insurance on these malls. this is being done by bernstein. we are moving into certain excesses right now. >> what would it take for you to be an investor in crypto? carl: i think a natural manifestation of this inflation,

it is not yet there, but you had it in the 1970's. if you have that, it is a phenomena that is going to be looking for other stores of value outside the dollar. we are a reserve currency now, but if you keep printing the money, it is not going to be there. i am not telling you that is going to happen for sure. i'm not telling you it will happen, but this cryptocurrency, you look at it and say it has no value. that is what the critics say. i don't own any at this point. if you are looking for something where you might have another store of value, the criticism is a big wrongheaded when you say, well, what is the value of a cryptocurrency? well, what is the value of the dollar? haidi: activist investor carl

icahn on cryptocurrencies. we are getting an alert from the chinese embassy in the west regarding the origins and tracing of the coronavirus. china saying that the origin probe should be global and transparent and support examinations of all early covid cases globally. this statement also pointing fingers, saying some people have been playing a trick of political hype when it comes to origin tracing of covid-19. they talk about blame shifting making a comeback, as well is what they call the conspiracy theory of a lab leak resurfacing. this statement from the spokesperson for the chinese embassy in the u.s., saying they back an investigation that is full, transparent, and evidenced based to prevent future pandemics. it comes on the same day we heard from president biden calling for the u.s. intelligence community to look closer to a definitive conclusion on how the pandemic started. shery: let's turn to the business headlines. facebook's board rejected two

proposals to diminish the power ceo mark zuckerberg exerts over the company. it declined a proposal to replace zuckerberg as chairman. it also turned down a bid to eliminate his special class of super voting shares that gives him a 58% stake in the company. the outcome is frustrating for some shareholders who want more independent oversight. amazon agreed to by the nearly centuries old mgm movie studio for $8.45 billion. the deal is amazon's second-biggest since buying whole foods in 2017. and full as investments of $11 billion on content for streaming services last year alone. mgm has about 25,000 hours of content to amazon's library. a number of single-family offices in singapore have doubled in the pandemic. why asia's super rich are choosing the city state. this is bloomberg.

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haidi: xiaomi is narrowing the share gap while its competitor puts more pressure on its top rival alibaba. our chief north asia correspondent stephen engle joins us from hong kong. xiaomi now the world's third-largest smartphone maker after samsung and apple. how is it catching up? stephen: with strong revenue and leveraging its phones in the 5g area in china and europe, india

to a lesser degree, and they have tremendous challenges in the india market, they are the number one player in the indian market. generally smartphone sales account for 60% of revenue. in the first quarter, 5g sales were strong, the fastest growth of all the top vendors. 48.6 million total handsets shipped, up year-over-year. that allows the ceo to go into other areas. they pledged to spend billions into electric vehicles and other appliances in home and wearable devices and the like. they are doing well. revenue beat estimates handily as well as net income. i want to change the page to another top company in the tech space. revenue there more than tripled. that is good, to about 3.5 billion dollars u.s. net loss also narrowed from a year ago.

they never posted a net profit yet. they are also pledging -- also pledging to put revenue into areas the communist party wants them to invest in. such as investing in china's agri logistics systems. haidi: when it comes to tencent, we are hearing they will funnel financial interest into a holding company. does that mean more oversight? stephen: greater supervision is the key. we are hearing from a magazine that the authorities in china have indeed asked tencent to puts its financial interest into a holding company. that law in china means oversight by authorities, including the people's bank of china. this is something we knew was likely going to happen and mirror what happened to ant group from alibaba.

what we are hearing according to sources is regulators are waiting for tencent to submit its own plan for holding -- for folding into a holding company before they tell tencent what is required of them. this will be an ongoing process. it is all against the backdrop of companies like tencent and alibaba. i just talked about pinduoduo. these big company earning reports are saying net revenue is good. net profit will be hard in the short-term. margins might be squeezed because we will start putting incremental profits into new areas. coincidentally areas like fundamental deep tech like a.i. and all kinds of tech infrastructure like the cloud. they will put incremental profits into these key areas that will not only be good for the company's, but good for the -- companies, but good for the

communist party. haidi: our chief north asia correspondent stephen engle. let's get to vonnie quinn with the first word headlines. vonnie: china is set to be clipping down on some corn imports on concern overseas purchases have spiraled out of control. it prompted some cancellations, though fewer than one million tons. bloomberg learned beijing is restricting imports into three trade zones which are not counted toward official annual purchase quotas. taiwan's president says intervention from china blocked an almost done deal with biontech for covid-19 vaccines. the president says the island only deals with pharma companies directly or through covax to avoid legal and political risks. taiwan secured almost 30 vaccine doses, including overseas and domestically produced ones. bloomberg learned the european union is aiming to hit belarus with a new round of sanctions by june over the forced landing of

an air flight and the arrest of a journalist. we are told the strictest measures could target a soil nutrient and belarus' biggest export. 88 individuals have been sanctioned. u.s. senator elizabeth warren has called j.p. morgan ceo j.p. morgan the czar of the overdraft show. -- ceo jamie dimon the czar of the overdraft show. warren says j.p. morgan made almost $1.5 billion from overdrafts last year, seven times more than competitors. global news 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: an australian writer goes on trial in china later on today.

he is accused of espionage and could face life in jail in a trial held behind closed doors. a china government reporter joins us now. you are at the courthouse. i imagine security is pretty tight. what are we expecting today? >> good morning. i arrived here about 30 minutes ago. the security is very tight. a lot of areas have been cordoned off. they are asking reporters for their passports and press cards. we were here a couple months back for the trial of michael. at that time, security was dense too. today it sets up furthermore. we are expecting the trial to begin. we do not know when it will end. we do not know whether there will be a verdict. there is uncertainty around it. the authorities here have not been transparent in telling us

details around the next steps in the trial. haidi: what sort of consular assistance has australia been able to provide? >> one of the things the country has been asking for is the ability to attend today's hearing in person. that does not look like it will happen, but my understanding is there will be a presence from the australian embassy shortly. they will go to the site entrance of the court and try to gain access to the preceding. if in the event they don't get access, which is highly likely, we are expecting a statement from the australian ambassador to china within the next 30 minutes. shery: what sort of expectation do you have in terms of what yang is facing? the supporters and family of a

detained journalist will be watching this with great concern as well. colum: the main point will be the verdict and the length of th e sentence. these types of charges can lead to sentences ranging from three years to life imprisonment. it will be a very important indicator as to how other similar cases may be handled in the future. haidi: china government reporter colum murphy. we are'minutes away from the bank of koreas rate decision. the focus will be on inflation, which has crept beyond the target range. we will hear from bank of america securities' kathleen oh. this is bloomberg. ♪

haidi: asia's superrich are choosing singapore as their haven with the number of single-family offices dublin since the end of -- doubling since the end of 2019. what is the phenomenon we have been observing? >> singapore has become a safe haven for the superrich thanks to its relatively safe status when it comes to covid-19 as well as the huge number of incentives the government has brought to encourage more

wealthy families to establish family offices and bring family members to the city state. haidi: how is that affecting the broader singapore economy? david: if you are trying to run a risky -- a whisky bar, all of these people need things to do. the property market has been enjoying a boost in key areas like luxury apartments and bungalows, the local lingo for mansions. if you look at luxury cars like rolls-royces, they hit all-time peaks. the number of sales in the first four months of this year would only be seen normally over the span of an entire year in singapore. haidi: we are starting to see activity when it comes to private jets as well. david: that is right. i certainly don't have one. if i wanted to, i would not be

able to park it here in singapore. it is quite a challenge, according to folks in the industry. part of that wave came over when covid first hit in march. in many cases, they simply have not left. shery: we are less than an hour away from the open of trade in china. let's turn to sophie for what to watch. sophie: stocks are mixed in the asia early session. the regional annex holding at a 50 day moving average. s&p health care is falling on its earnings. we are seeing a supermarket operator slumping as much as 20% on its trading update. materials have been helping to keep the asx 200 in the green. in tokyo, the nikkei is snapping a five-day gain. markets have been calm in japan. pulling up the chart on the terminal, all quiet on the dollar yen front.

trading in the tightest range since 1975. capital flows staying close to neutral. one bank saying now may be the time to buy dollar-yen, this as markets weigh the trajectory for a global policy lift off. one bank expecting a quiet summer. saying investors are better off in three months' time. let's pull up the board for quick stock movers on seoul. chipmakers on the move. one company fluctuating, up 4/10 of 1% as we get a report it set up a unit in china. check out costco shares rising after korea's biggest steelmaker ran on a lithium plant. lg shares sliding as much as 20% as trading resumes after being halted from april 28 as the group split into two holding companies. one investor says table stocks

like lg, samsung, and hyundai are trading extremely cheap with the market yet to price in effects from these companies. shery: we could get any minute now the bank of korea policy decision. economists expecting no change for the key rate. the central bank is likely to revise its growth forecast. our next guest says she is not getting too excited. joining up is kathleen oh, korea economist at bank of america securities. what will you be watching today? kathleen: thanks for having me. i think this morning's meeting will be interesting, not in terms of the policy rate, but more so in terms of the changes the bok will be making on their growth forecast. we are looking for a large jump in their gdp forecast by 50 to 60 basis points.

this is definitely larger than usual the changes they make in their gdp forecast. i will be closely watching the bpi inflation forecast for this and next year. right now they are quite muted at 1.3% and 1.4% for this year and next. if they make a large change in inflation, that could send quite a hawkish signal to the market. shery: especially given we already saw that 2% bok target achieved in april. are they going to continue dismissing that as transitory, or could we see a rate hike sooner than later? kathleen: actually, we see them dismissing it as a transitory rise in inflation for the second quarter. we are forecasting for may, cpi inflation higher than 2.3% at 2.6%. that should be released next week. this is largely based on the oil price effects. once we get past this affect, by

the summer we see the high base from the fresh food price stretching the headline number below 2% for the summer and onward. in the second half of this year, we think inflation will follow the bok's target of 2%. haidi: when it comes to the impact of the virus, is this going to be a short-term or short-lived impact when it comes to sentiment? kathleen: the sentiment right now in korea has recovered to somewhat pre-pandemic levels in terms of the consumer index details in terms of spending, consumption, growth outlook. but the slowdown in the rate,

especially for the second dose, is concerning. korea achieved nearly 6 million first doses of inoculation. that is around 45% of the government's target for the end quarter. the completion of the vaccination has been quite slow, just around 2% of the population. i think that could be a downside risk to the consumption recovery and the labor market recovery going through the second half of this year. haidi: there is one thing that can't be stimulated by fiscal stimulus, tax reform, and it's a sheer demographic story south korea is facinng. is that a downside risk investors should be looking at in the coming years? kathleen: i think the downside risk from the demographics, the rapidly aging population, has been a story for years. i don't see it being a near-term

downside risk in terms of the g dp forecast, but down the road five to 10 years in terms of the potential growth for korea, even through 20 years and onward, unless there is a strict measure that could encourage and boost the fertility rate to go higher, i think it's going to be a structural risk to the potential growth outlook down to 20 and 3 0 years onward. haidi: kathleen, stay with us. we are awaiting that bank of korea decision. you can tune into bloomberg radio and hear the day's big newsmakers. we are broadcasting live from our studio in hong kong. you can listen via the app or bloomberg radio.com. we will have more ahead. this is bloomberg. ♪

shery: breaking news out of south korea. we are getting the bank of korea's rate decision coming in at 0.5%, leaving the key interest rate unchanged as expected. this is not quite surprising, but we are watching the inflation and growth forecasts that are expected to be raised

by the bok, given we are seeing strong external demand in south korea. exports have been surging, even though we see domestic risk with elevated virus cases and social distancing restrictions continuing. inflation ticked above the be ok's 2% -- bok's 2% target. it expects the uptick to be transitory. let's bring back kathleen oh at bank of america securities. as expected, the bok kept the rate steady at 0.5%. what is the risk of keeping rates at this record level when already we are seeing household credit in the first quarter reaching new records? kathleen: of course the buildup in the financial imbalance, the risk to financial stability, is a concern for the bok and wider economy. we are concerned that even the dovish members in the committee

in the april meeting minutes showing quite a concern about the buildup in the financial balance in terms of debt accelerating and the sme debt added up to that because the pandemic. i see the bok trying to address this issue. so far the government has stepped up with macro measures. going forward, the bok will focus more on the financial stability and risk to this in their meetings going forward towards the second half of this year. i think the tone could get more hawkish around this topic. for me, what's more important for members is a more stable growth recovery in domestic demand and the labor market. while they do show concern about financial stability, addressing it with a rate hike

should likely come after the recovery gets more stabilized next year. haidi: you mentioned the labor market. when do you see the recovery to pre-pandemic levels? kathleen: we just see the headline number. the unemployment rate has come down to three year average of 3.7% already. it is the detail of the number of jobs gained in the sector. we need the jobs more balanced. i think the bok has also mentioned they are looking for more inclusive growth in the labor recovery. we need numbers coming up in the non-tech sectors and services, not just many fracturing. in order for the service sector job numbers to recover to the pre-pandemic level, we first need to have heard in unity reached. -- herd immunity reached.

haidi: consumer confidence has been rising for a fifth consecutive month. with rising infections, how big of a risk is it if we see a dent in consumer confidence? kathleen: actually, i think the consumer sentiment has been shooting up on the expectation that the vaccination is going to roll out to the wider population through the third and fourth quarter. i think the expectation that has been building is a positive signal, unless there is a halt in vaccination, i think a slowdown in the run rate would not be much of a factor that hurts the consumer confidence at this point. i think it is imperative that the government finds a way to accelerate the runway through

the summer and support the continued confidence going through the third and fourth quarters this year. haidi: that was kathleen oh. great to have you with us. career economist at bofa securities. we are getting an update from the bank of korea. they are raising inside the 2021 gdp forecast from 3% to 4%. that is a robust hike in growth expectations. 2021 cpi at 1.8%, a big jump from the previous projection of 1.3% consumer price inflation. 2022 gdp is seen at 3% versus 2.5% in february. cpi for next year is seen at 1.4%. that is unchanged in february. interesting elements in terms of whether they see the inflation

picture to be transitory. 2021 gdp for korea has been raised by the bok to 4% growth from 3% growth. let's look at what sophie is watching. sophie: we are watching nvidia players. we are watching tsmc as well. local media reporting the company started productions of iphone chips. we are keeping an eye on xiaomi with smartphone growth outpacing rivals. the company warning the chip shortage will likely worsen. the company also looking to be eligible potentially for the ft se china index. keeping an eye on tencent. local media reporting the tech giant has been reported to set up a financial holding company. shery: we are headed to the chinese open. that is it from "daybreak: asia."

we will continue to watch the markets. hong kong, shanghai and shenzhen open next. this is bloomberg. ♪

♪ david: this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind. i've often thought was equity. [laughter] then i started interviewing. i watched your interview. i know how to do some interviewing. i learned how leaders make it to the top. >> i asked him how much he wanted. i said fine. i did not negotiate with them. i did no due diligence. david: i have something i would like to sell.