shery: from bloomberg world headquarters in new york. sophie: we're counting down. haidi: welcome to daybreak: asia. our top stories this hour. the u.s. reports the lowest level of covid infections in a year, while the situation in the asia-pacific is getting weaker. the latest gauge of china's economy neighbor -- later,

hereby expected to show the recovery continuing. we hear exclusively from phil ch en about the internet of value and paving his own tap that -- path. shery: breaking news out of south korea, industrial numbers for the month of april. month over month disappointed, contraction of 1.6%, a downgraded month of march numbers which was also a contraction of .8%. this is missing expectations of the rise of .4%, we're seeing it bigger contraction than expected. these numbers are volatile. we have seen a contract and expand in the last year or so during the pandemic, but the year on year's ap, 12.4% gain. boosted by base effect. it is also coming from a revised downward, 4.4% growth year on

year in the previous month. we are setting up for those may export numbers this week. those are the key figures we are watching for and south korea. in the meantime, markets in asia. what are we seeing? sophie: on the last trading day of may, asian stocks having back-to-back monthly gains. kiwi stocks bouncing back after hitting a correction on friday. posse stocks looking to extend gain at a press hide. continuing recovery for australia but warning of recovery -- turbulence ahead. analysts expect a 26% gain as markets way a potential hawkish be ok. pulling up the chart. indian stocks have been on a tear. clinching a fresh record high, not too far behind after capping

a two gain. there was a question of a risk of a bubble at the rpi. some investors maintaining long-term optimism as well as earnings. we have seen india's new covid cases slowing down, although barclays morning the economic toll in india appears larger than expected. haidi: the u.s. has reported the fewest number of covid cases since the early days of the pandemic, but disease experts warned that the chinese government cooperation in tracing the origins of the coronavirus is crucial to preventing future pandemic threats. our deputy managing editor has the details. this comes at a time where a lot of analysts are returning to this idea of the lab leak theory. where are we at in terms of looking for transparency and details about tracing where this came from? reporter: exactly. this was something of a republican talking point for much of 2020, we heard it over

and over again from officials in the trump administration. maybe a little bit of a surprise to see the biden administration embrace this idea, and for the president to call for more study, for his experts to come back within 90 days with some conclusions. i think some of it may have been triggered by recent wall street journal reported about illnesses in wuhan at personal at that lab, something china has pushback on. in general, scientists and doctors in the u.s. really want the u.s. to push china to cooperate more, and get to the origin story in a way that so far, the world health organization and others have not been able to truly command. so we can deal with the next time, maybe we won't have a next time. shery: coming at a time where we see new infections in the u.s. hit new lows. reporter: exactly.

most of the news we have seen in the last few days has been very good. over the course of may, fires cases in the u.s. dropped by about half. as the vaccinations go up, infections go down. they have been concentrated in younger people who are less prone to side effects. it's interesting to see 75% of americans over 65 have now been fully vaccinated. in theory, you would probably say we are at herd immunity. over the holiday weekend, the start to sever travel -- summer travel. the highest number of airline travelers checks by the tsa on friday, going into the weekend. 135,000 people at the indy motor speedway for the indianapolis 500. even things like the highest box office numbers since the start

of the pandemic in the u.s. with two big hollywood films. it's all positive news. we don't know if there could be some turnaround. we also heard today from the ceo of tripadvisor said cities are making a comeback. people are not avoiding cities. he thinks people are taking longer vacations, using some vacation times and spending more money. for the hospitality industry that is very good news. haidi: it's been a busy weekend here in the u.s.. let's get to vonnie quinn with the first word headlines. vonnie: new covid infections in india have fallen to their lowest level in more than six weeks. the latest data show nearly 174,000 new cases, taking the nationwide total to 27.7 million. reported deaths remain 4000 for a third straight day. the government has announced

free education and health insurance for children orphaned by the virus up to age 23. [inaudible] has ordered residents to contain a coronavirus outbreak. cctv is reporting five confirmed cases and 21 a symptomatically infections have originated from the variant. the government said household members from the area can leave home to buy daily necessities. singapore's prime minister is expected to outline a plan in a speech later monday for tackling the coronavirus and reopening the economy. in a facebook post, he said the government aims to accelerate testing protocols and vaccination programs, offering every eligible person a shot by the end of august. 19 new cases were reported on sunday, including next known clusters. the head of the international

paralympic committee says he is satisfied with the precautions being taken to protect athletes competing in the tokyo games. concerns are mounting whether the event could be held safely during the coronavirus pandemic, immediately following the summer olympics. he says the event will help change the japanese mindset around disabilities. >> you don't see people with disabilities moving around. they are kept at home. this comes from an angle of super protection, overprotection. what we want to change. we come from a positive angle. is not that they are considered second-half citizens like and some other nations. but, the outcome of that is they end up not being active in society. 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. haidi: still ahead, we hear

exclusively about investing in tech in taiwan. generation next is later this hour. before that, we preview china pmi figures, more for the busy week ahead with an oxford economic employee. that is up next. this is bloomberg. ♪

shery: the latest gauge of china's economy later with manufacturing emi expecting to show the recovery continuing. let's cross to tom mackenzie in beijing. how resilient are we expecting those pmi numbers to be? tom: there is resilience. manufacturing is expected to slow by a smidge from the

numbers we saw in april. they say, ultimately the momentum in china is slowing. overall, the surveys suggest it will be in line. lumber is a bit of an outlier in terms of their analysis, but broadly the survey suggests 51.1% for the month of may. bloomberg economics pointing to a couple of factors. holidays in may may prove a bit of a drag on the overall manufacturing pmi number. the other factor in the downstream are the elevated commodity prices. in terms of nonmanufacturing, you are looking at a very robust number if the surveys are accurate. 55.1 versus 54.9. construction and services remaining very strong as the recovery in china continues. not :00 a.m. local time is when the data is out. haidi: in terms of some of these asset bubble risks, the conversations.

the banking regulator has been warning as well. tom: the vice chair over the weekend stating that there is this divergence around monetary policy from the eem on one side, brazil for example, where you have seen some rate hikes versus what is happening in the developed markets, the fed, were monetary easing and support continues. that divergence is leading potentially to the risk of some asset bubbles bursting. the regulators and officials are saying we need greater global coordination in terms of the regulatory framework on financing and financial sector. but we also need to monitor cross-border capital flows. that is a concern. they say they are getting their own house in order, pointing to some new debt at the local government level they say they have checked, and also financing in the property sector that was a risk, they say that has been

contained. shery: what we know about huar ong? tom: they have successfully repaid two bonds. a total of millions of dollars, suggesting in the short-term they have access to liquidity. this built on our own reported to have suggested that there has been a deal between huarong and a state-owned bank. near term the betty pressures seem to be easing, but if you look at the longer maturity bonds, they are still priced at a point where default is a risk. the bigger picture is that huarong faces refinancing or repaying $6.2 billion of bonds this year alone. haidi: oxford economics thanks chinese growth will be strong.

for cheap australia economist joins us from sydney with the eco-look ahead. asset bubbles bubbles overusing, on the others we are seeing the great return of inflation. where does china sit? obviously, that data is key. reporter: i think china's recovery to a great extent is the global recovery. industrial production has been strong. it all centers around consumers. the consumer spending piece. it will be interesting to see at what point households catch up with the rest of the economy, and how we see the pivot away from the government stimulus support, which has been such a key driver of shoring up the

commodity market. specifically, how households pick up the slack. shery: and of course where china goes, australia follows. in terms of the commodity cycle and growth expectations, if the rba really go to give much guidance on potentially joining the likes of canada and new zealand and talking about tightening? reporter: i think it is a little bit too soon to be explicitly talking about tightening. certainly talking about raising the cash rate. the run of data in australia [inaudible] we do think and we get around to the first cash rate, it will be sooner than early 2024. before we get to that, we will get specific guidance around which government bond they are targeting for that three year

yields target. what they are going to do around easing as well, that will be announced. [inaudible] there is gradual movement in that direction. shery: let me turn to india. we are getting the gdp numbers this week,. to mention the rbis rate decision. the indian economic growth against china's economic growth, and we are projecting now perhaps india's growth will peak in about 15 years or so. what are you expecting in this week's numbers? guest: year on year, right about 1%. extremely weak performance, but in the context of the pandemic. keeping in mind that the second wave of cases that devastated

the country really hit after the third quarter came to an end, april and may, an ongoing story now. as we get the data for this current period, it is very likely on a seasonally adjusted quarter on quarter basis [inaudible] that will show up in the next. the key question is going to be how does india roll out the vaccine, wrote this reopen its economy. getting back to trend growth is the immediate concern. shery: what are we expecting from the rbis later this week? we are now seeing financial assets rallying across the country. guest: i think the signals are around continued support for the economy, that is right in the current context. whether or not we see any specific easing we will have to wait and see.

there will obviously be concern on the one hand about the economy, lockdowns, and on the other hand around inflation. it is certainly showing up in india. there is a lot of pushes and pulls for the rbis to consider, it all of that will factor into the decision. shery: the oxford economics chief of australia economics, thank you for your take on the key decisions on the eco-front this week across asia. coming up, our exclusive interview with a boj governor. his thoughts on inflation and the future of the central bank's policy, next. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo.

stories we are watching today. the south korean government will start giving moderna and j&j shots in june. astrazeneca has been approved but the rollout has been slow. the climate summit also continuing, john kerry, the u.s. special envoy for climate will be participating. we are also watching the national pension service which is south korea's largest investor. they will adopt new screening policies and in void investing in coal-fired power plant, seeing this green focused investing across the world. over in japan, credit suisse is cutting ties with softbank, distancing itself from a key backer. this after conflicts of interest allegations. meanwhile, we are now hearing from a newspaper that japan could be considering allowing black cap company listings, now

the tsc along with the government and regulators will start those discussions very soon. we are hearing they may not be enough doctors in japan to support the olympics. this as we continue to see those surges in infections across japan, putting a heavy burden on the health care system there. haidi: we will have more on that story later. in the meantime, the bank of japan governor's backing the fed's view that inflation pressures are transitory. and an inclusive interview, he said the global price concerns are most relevant to the u.s., and bill of her come low inflation. he said no, of course. he turned bloomberg -- told bloomberg. >> i think the discussion about inflation is particular irrelevant to the united states. some economists have pointed out

the risk considering the large-scale economic measures, and progress with vaccinations. in fact, international commodity prices have risen recently, in the u.s. inflation rate has accelerated. as a result, markets have been somewhat unstable at times. now, the fed pointed to the following two factors. first, the recent acceleration in the inflation rate is due to the base effect and temporary restriction in the supply chain amid rapid recovery. second second, the labor market

is still significant. given these factors, the fed emphasized it would maintain and accommodative stance of monetary policy, so that inflation dissipates over time and long-term inflation expectations are anchored around 2%. i think this policy stance is based on the recognition that it will take time to overcome low inflation once it is entrenched. as you know, this is also a lesson learned from japan's experience with prolonged inflation. that said, because it is true that central banks around the world, having conducted monetary policy are facing significant uncertainties due to the shock of covid-19. in this situation, the

appropriate conduct of monetary policy and effective communication are important, in terms of ensuring market stability. so the bank of japan will continue to closely monitor developments in global financial markets and the global economy. turning to the outlook for prices in japan, for the inflation rate is likely to increase gradually, but is expected to take time to achieve the price stability target of 2%. the bank of japan will continue to persistently conduct powerful monetary easing in order to achieve that target, 2%. reporter: does this mean we will have to wait longer in crutches like japan and other countries for a change in policy? >> of course.

each central bank has to its monetary policy to its own economic price. so that even if our economy recovers from the impact of the covid night -- covid-19 pandemic, we expect by the end of this year activity welcome back to the level before the pandemic. but, as you know. our inflation rate continues to be very low. it will take time to achieve this 2% target.

in that sense, the bank of japan 's substantial monetary easing will continue. ♪

vonnie: this is daybreak: asia. two leading u.s. disease experts say china's help is needed to trace the origins of covid-19, telling cbs information supporting the wuhan lab leak theory has increased, and said beijing has not provided evidence to disprove it. other experts say it puts the world at risk of future outbreaks.

russia's envoy to the united nations say the fifth round of talks aimed at reviving the nuclear accord has resumed indiana. tweeted that there was an understanding of the countries involved that the current round would be the final round. iran had agreed to a one month extension. benjamin netanyahu's opponents are edging closer to ousting the prime minister. a former ally says he is joining forces with the former finance minister to form a new government, and says only a new coalition can when. netanyahu is on trial in jerusalem on multiple corruption charges. the u.s. says it reimposed sanctions on a state owned enterprises in belarus. the treasury says the list includes industrial plants and oil. last week, the white house said it was working on penalties

after the belarus and government forced down a jet and arrested a journalist. president biden has pledged to address human rights with vladimir putin. tensions remain high. u.s. blames russian-based hackers for cyberattacks in the u.s., although biden has stopped short of directly accusing the kremlin over the colonial pipeline had. [inaudible] condemned russia and its support for belarus. 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 our asian markets. sophie is in hong kong. sophie: i want to take stock of where we are with emerging markets. equities and currency separate back to back monthly gain, the gauge fx hitting a fresh record

on friday as the dollar traded near a five month low. we have bank of america saying they see asia exports helping underpin potential gains for the currency complex. when it comes to the conversation around whether or not a hiking cycle may be looming, seb is cautioning that market pricing is heading for a correction unless we get data that may confront a tilt towards more hawkish outlooks. inflation outlooks from south korea, highland this week. falling up the terminal. while the region is dealing with virus outbreaks in malaysia and vietnam, asian stocks are proving to be resilient, with the gauge said to outperform the s&p 500 since january. indian stocks in pole position,

hitting a fresh record on friday. shery: not to mention rising cases across japan with the olympics just two months away. there are concerns that the country does not have enough doctors to support the games. organizers have cut down the number of medical staff on standby because of outbreaks around the country. let's bring in our deputy tokyo bureau chief. how likely is it that the tokyo olympics will still go ahead? reporter: that is a decision only the international olympic committee can make, and they are not budging. we don't see any signs that the central government or the tokyo government will portray cancellation either. -- push for a cancellation either. cases have increased and we are still in a state of emergency that will run through june 20. although cases are declining, the vaccine rollout is not progressing as fast as in many other hotspots around the world, the u.s. and europe.

it is worth noting the japanese government never promised vaccinations would be done by the time of the limbic's. their plan is to make sure the athletes and people coming in are vaccinated as much as possible, and then keep them separate from the general population. they still have one tool in the toolbox. they can refund all of the tickets and hold the olympics in an empty stadium, and that can provide one more layer of protection. haidi: one of those efforts would be to potentially have all of the spectators needing to be vaccinated, regular testing. we are hearing sums of -- reports this can happen and spectators would bear the cost of this. reporter: that's right, the daily newspaper reported that this morning. they said that capacity could run two up to 400,000 tests a day, assuming all of the spectators want to pay for those tests and go ahead and see the event. there is still a possibility the

stadiums could be at half capacity, for example, that required tests. it is unlikely that many members of the general population under the age of 65 will be vaccinated by them, so they are looking at a whole lot of tests. shery: we are talking about how the health care system in japan could be overwhelmed. how likely is it we will have enough doctors on the ground? reporter: several medical associations and doctors unions have said it will be tricky. we do think that about more than 70,000 people will come into the country, that is stripped-down from what it would be. asked -- fans from overseas will no longer be allowed to watch. just with athletes and their entourage, tens of thousands of people come again. several of these doctors unions have said the games should be canceled in like that they don't feel confident going ahead. to head of one organization said he would like to see daily new cases in tokyo get down to 100

or fewer by the end of june to call the olympics say. at the moment, we are in several hundreds of new cases per day, still a way to go. haidi: the deputy tokyo bureau chief. coming up, and its list of interview about investing in tech and paving a path in taiwan's tech industry. this is bloomberg ♪

shery: this week on generation x, we hear from phil chen. he represents a new generation of a taiwan business leader, with eyes set on future tech trends like augmented and virtual reality, and blockchain. he is the grandson of a tycoon who was the chairman and cofounder of an industrial conglomerate. his aunt and uncle established their own successful tech companies, including htc. 10 himself set up the virtual reality unit, and launched what is claimed to be the world's first crypto smartphone. he spoke exclusively to berg about investing in these tech industries.

>> thanks big thing is something in the public blockchain space. something i call the internet of value. i think what the internet has allowed us to change the information. starting with bitcoin, we are able to exchange something from value. that will open up everything from commerce, to trade, to property rights. the next big thing. one of the titles of my talks is this is bigger than the smartphone, this internet of value. the next big thing is all built around the simple idea of and action -- encryption. once you have encryption, do have digital property. and you can exchange things on the internet. i can't name one company, although there are a few like

ftx. this whole space of the internet of value being able to exchange digital property. we are this far into the information age, and there are no laws or regulation around digital property. ones that is defined, that will unleash the next one. reporter: what is the future of gaming? you were the head of htc vibe, the headset company. there is still evolution going on there into 5k video, 120 hertz refresh rate. 120 degrees field of view. it is evolving. the fan box wargaming is fast. have we reached the potential? >> i think the way people are designing the future workplace, future education spaces. a lot of it is taken from

what we learned about gaming. i would say we are using gaming methods. obviously what fortnite is doing with epic. they are building these worlds where people interact, and we are learning a lot about how people are behaving and interacting in these virtual worlds. i think the key battle is the meta-verse. what are we doing? how are we learning, how are we thinking? everything we do in the physical world are more and more being shifted into the virtual world. and the time we spend on the virtual world becomes more valuable. i think using gaming metaphors to design these worlds is a great start. but, i think at the end of the day we need to design spaces and tools in this virtual world that will help us be more productive. which is part of our thesis.

we are investing in more productive, remote work, virtual spaces. reporter: much has been made during the pandemic of the so-called taiwan mafia. i don't know if that is an appropriate term. but a number of taiwanese americans, perhaps coming back to taiwan from silicon valley. are you seeing a significant brain influx to taiwan? >> absolutely. i would say taiwan punches above its weight in terms of the number of successful entrepreneurs that are taiwanese in the valley. i think the taiwanese in the valley is like serbia or australia in the nba. based on their population, the number of representation and talent they have. taiwan being such a small country, as you said, yahoo! and

youtube, twitch, the list goes on and on in terms of successful entrepreneurs, taiwanese in the valley. i do see a lot of taiwan. in fact, we are an active process of helping more of these taiwan entrepreneurs to come back. yet, taiwan has been missing that. now we have a set of talented engineers, but then a lot of people from silicon valley who have a great sense of product and services. we are hoping that the combination will spark new ideas and new companies, new start ups. which is what a lot of the people, the entrepreneurs from the valley are doing. we are getting together on a regular basis.

we are trying to pair local teams with that talent. and a lot of sparks have been ignited in this process. reporter: how representative are you of the next generation of visionary taiwanese business leaders, who are going beyond, hopefully for taiwan, beyond manufacturing? >> i would say my aunt at htc, my ankle. they started a new generation of investors and a new frontier with technology. obviously, with semiconductors and smartphones. i have learned a lot from that. i grew up listening and understanding everything, and later having an opportunity to work at htc and learning about project management. i have been involved in shipping over 100 million phones.

i am familiar with building, design and engineering, marketing sales and distribution. i would say the next generation is understanding the implications of that. understanding 5 billion people have this handheld computer, what does that mean? what are the new things that will impact and have a deep influence characteristic for the way we behave and interact with computing in the future? reporter: do you see your ancestors that built up modern taiwan's tech industry as being a springboard for people as yourself? you feel a personal responsibility to carry on that legacy? >> i would say i see our role as

a potentially critical role, whether i am able to deliver that and play a role in that.

haidi: a disappointing job report, signed the labor market is starting to tighten. labor shortages as economies reopen and burgers must be matched with jobs. reporter: in the wake of april disappointing data, there are indications that the u.s. job

market is already tightening. weekly initial unemployment claims fell to the lowest level since the pandemic began. >> of course, there are people on the sidelines were getting generous unemployment and say we know this is going to expire, and i think they're individually saying, we think the job market is going to be strong, so why don't i just wait? reporter: mcdonald's, chipotle, under armour, bank of america, target, costco and amazon have all boosted hourly pay rates, while announcing thousands of new jobs. this trend may force the fed to re-examine its commitment to a looser monetary policy, whether to treat this as a transitory moment in the recovery, or a structural change. labor shortages are also a concern in australia, where the government is offering incentives and travel bonuses to move workers quickly into open jobs. while in europe, coronavirus travel restrictions have

disrupted efforts to meet a surge in demand for specialized workers, blunting the impact of massive monetary and fiscal stimulus. haidi: we do have some data just breaking out of japan. the industrial production numbers for the bluerun ventures number -- preliminary number coming in well below expectations. that number at 2.5% month over month, expectations were 3.9%, slightly better than the previous reading of 1.7%. that you're coming in missing consensus of 16.9 consent -- 60.9%. we have been expecting a little bit of an offset coming through from a small outflow of capital goods, exports to asia have been strong. but we have also seen three mansions and extensions of the state of emergency across japan, that will be weighing on some of those numbers.

retail sales missing expectations, 12% year on year, missing the estimates of 15% and retail sales, contracting 4.5%, the worst contraction than expected. supermarket sales, we are seeing 15.5% gains, that is bang on expectations and an improvement from the previous reading. we are seeing the renewed measures to contain the virus in japan weighing on the numbers, and of course those measures have been extended into june. just weeks before the tokyo olympics. shery: quite surprising, because we also have south korea's industrial production missing estimates earlier when we saw those april numbers. here is a quick check of the latest business flash headlines. india extended an emergency credit program to airlines and hospitals help question them from the impact of a wave of coronavirus infections. the loans were previously aimed

at specific sectors such as small borrowers and are available until the end of september. the prime minister's administration is turning the focus to protecting the economy as a devastating surge of covid infections. apple was said to be planning to add to its global retail presence, even as stores in inner cities struggle with that accelerant shift to sales online during the pandemic. the company says retail locations offer an opportunity to experience new technology, and ask questions about products. the company operates about 500 stores globally, including 100 and europe. thailand's biggest meat producer closing its factory after authorities found more than 200 covid cases among its workers. it joins other businesses that had to halt production due to the virus. thailand's covid infections reached a record earlier this month, as the new wave spreads

through prisons and factories. they decay news says japan is considering changing black listings. the paper says discussions between regulators, governments and the tokyo stock exchange are set to begin in coming months. the report says japan is likely to have more checks and investor protections than in the u.s.. aussie online property exchange and some shareholders are looking to raise $910 million ipo, the biggest in australia this year. bloomberg has learned it would issue around 20% of the shares with the rest from controlling shareholders and other investors. it will be renamed and the price has been set at around 17 australian dollars, giving it a $2.6 billion price value. shery: we are just minutes away

from the open of trade. let's turn to sophie for what to watch. sophie: we are watching softbank, credit suisse cutting ties to distance itself. nissan also on the radar, lead year reporting it plans to stop work at three plants in mexico. plus, the carmaker reporting to build an ev battery plant in japan and the u.k.. watching share sales, the offer will be for domestic and international buyers with pricing set for june 9. keeping an eye on vaccine related plays in south korea, planting to use moderna and johnson & johnson next month. recall the partnership to make vaccines outside of the united states starting in the third quarter. quick check on how markets are

faring so far in the asian session this monday. we have kiwi stocks bouncing back after entering a technical correction on friday, aussie futures pointing to further gains for australian stocks. this after clinching a fresh record high on friday. the economic recovery still ongoing, but saying there could be turbulence ahead for australia. we saw downside boost for nikkei futures this morning, considering the extension of the state of emergency in parts of japan, the question over whether the olympics will go ahead. kospi futures are pointing higher, settling higher, analysts projecting korean stocks will outpace asian peers over the next 12 months, projecting a 26% gain in that time. shery: coming up, we are discussing the upcoming china pmi numbers. we get a preview with michelle lam. plus more markets inside with a

jp morgan asian equity strategist. the market opens in sydney next. this is bloomberg. ♪

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haidi: welcome to "daybreak: asia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin in hong kong. shery: i am shery ahn in hong kong. our top stories this hour, stocks look for a steady start as investors continue to weigh inflation risk. the yuan comes off its most rapid weekly gain this year. china pmi numbers are do about

one hour from now. we get a preview of what to expect with michelle lam. malaysia announces a two week national lockdown all singapore's prime minister prepares to reveal his vision for controlling covid. haidi: let's look at help major markets are opening across asia. this monday morning, sophie. sophie: we are wrapping up the month of may with parts of japan and malaysia under lockdown, the state of victoria and australia also under lockdown and in tokyo stocks open to the downside. a healthy breakout of a two month downtrend of the end, gp slightly higher here ahead of the biaggi's bond buying private as we digest latest factory output data from japan. we saw it arise at a faster pace in april but missed estimates. in south korea, additional output following a: but the cost beginning ground, heading for a 71 the game. the korean won separate gains.

switching out the board to check out on antipodes, a fresh eye extending gains, sydney, qe stops bouncing back from a correction that entered on friday. i had of -- ahead of china pmi data, we have regulars warning of speculation. shery: let's bring in our next guest because markets are vastly underestimating the longer-term impact of inflation. joining us is mixo das, investment strategy analyst. whatever investment -- what are investors missing now? >> the focus has been too much on near term trends in inflation. the same will be true for the may output. [indiscernible] that is one. the second thing people worry

about is the supply-side and supply demand mismatches across several industries. semi conductors, shipping, a variety of commodities as well where we are seeing supply chain packages which will provide upside pressure on prices. for most people, for most investors there are only two types of inflation pressure concerns they are worried about. once we get through this period inflation will get back to being low for long as we have become used to over the last several decades, but a policy structure is changing and this is where investors are not fully grasping the reality that the way we do fiscal policy has changed or it you can see this in the numbers, and market policy, policy makers have committed to accessing a higher level of inflation, higher level of volatility inflation, and as that happens you will see inflation moving structurally higher. i do not think this is in the price yet? . shery: we are already seeing

this tie into the pboc and regulars across china warning about rate hikes, potentially bursting mobile asset bubbles we are seeing already. is this a concern? >> these are two separate issues i would say. when you think about long-term acceptance of inflation, this is really something that will start to become evident later this year and perhaps into next year. what we are talking about in terms of managing certain parts of the economy as we recover from covid and we see supply blockages causing price pressures, that management of the cycle from emerging-market central banks is a near-term issue, so we will see that coming through, and i do not think the pboc will have significant targeting. from a market perspective, we are generally not very focused on these policy adjustments in

the near term. haidi: what about regulatory adjustments particularly pertaining to the rally we are seeing in china? taking a look at the csi 300 having its best week since resuming trading in europe. buyer signals are being raised when it comes to the shanghai context. is it fully priced in the situation when it comes into regulatory overhang? >> in china, china markets have underperformed the broader region since mid-february really since the chinese new year, and that has been a combination of the fact that there has been credit pricing, regulatory pricing at more recently within commodities as well, so we have seen sentiment in china deteriorating quite rapidly from the early part of january. what we are seeing right now at least over the last four weeks, we have seen the asian indexes

has been rising from different levels, so that is a good sign for markets, and the china-asia index broke up from the range it has been in since early march just last week. there is definitely strong momentum in this move, and we do think china's markets will start to outperform from here. haidi: our investors underestimating the longer-term impacts of reflationary come back in china? >> i think this is true everywhere, right? investors are underestimating inflationary pressure across the world, and from an equity market perspective, the easiest way to express this is being long value, and this is why we structurally upgraded value in january this year and maintaining this move that policymakers will shift to using more fiscal policy, and that

will create sustained inflationary pressure and push bond yields higher structurally from here. you will start to see value are -- outperform, small caps outperform and these are the two best ways to express is on a long-term basis. there will be cycles within that. we are prepared to position for the cycles as they come and go, but longer-term investors have to consider both core allocation into value, which has not been the case over the last 10 years, and i think there is a generation of investors out there to whom this is an entirely new concept. shery: this chart on bloomberg right now showing asian value starks -- stocks outperforming other stocks for a few months already. where do you find the stocks? a lot of people saying japan is a good bet given how cyclically tilted they are, but now they do not seem to be as positive anymore. >> i think japan is still a good

bet. if you think about value from a global perspective, it is worth a lot more from a sector basis then from a regional basis, and there are reasons for that. the increase in bond yields we have seen as been good for value on a sector basis but we have not seen that follow-through out of regions. japan and emerging markets have outperformed, and there are good reasons for that. when you think about it from a sector basis, in every market we are starting to see commodity play, financials, and rates into place, reopening place as some of the laggards of previous years, all of those are starting to move. when you think about value, commodities, rate sensitive, laggards, reopening, and on a tactical basis we will rotate among these four when we see the opportunity. haidi: mixo das, good to have

you. the bank of japan governor's backing the fed's view that inflation pressures are transitory. in an interview he said global price returns are the most relevant in the u.s. and it will take some time to overcome low inflation once it is his grace. he told what lessons he has learned when dealing with pro flight prolonged deflation. >> i think the discussion is particularly relevant to the united states. the fed emphasized that it will maintain accommodative monetary policy so that inflation of 1% over time and long-term inflation expectations are well anchored around 2%. i think this policy stance is

based on the recognition that it will take time to overcome low inflation once it is entrenched. as you know as we have learned from japan's experience from lung deflation. it is true central banks around the world have been conducting monetary policy while facing significant uncertainties due to the shock of covid-19. in this situation the appropriate conduct of monetary policy and effective communication is important in terms of ensuring market stability. >> does this mean we will have to wait longer in countries like japan and other countries or a change in policy? >> of course, each central bank has to adopt its monetary policy

to its own economy price and financial situations so that even if our economy recovers from the covid-19 pandemic, we expect by the end of this year we would come back to the level before the pandemic, but as you know our inflation continues to below, and it will take time. i must say that in that sense the bank of japan's substantial

monetary easing will continue even after the recovery from the pandemic is achieved. shery: that was the bank of japan governor speaking exclusively to bloomberg. let's turn to sophie for what to watching the markets. sophie: for asian stocks this morning after the regional index caped a two week gain, we could see the emissary index look to outperform, i'll modestly so. flipping out the chart, indian stocks on a tear with the nifty clenching a fresh record as new cases moderate in india and investors are looking through the second wave in the country with gdp growth at 10% for this fiscal year even after several

economist downgraded their forecast recently to factor in the impacts of the cyclical lockdown. shery: still ahead, more on pmi out of china in under one hour. michelle lam says she is expecting numbers to confirm a robust recovery. we singapore's plan to reopen it virus cases fall across major hotspots. this is bloomberg. ♪

vonnie: this is "daybreak: asia." i am vonnie quinn. the u.s. says it is we impose sanctions on nine state owned enterprises in belarus. the president says -- and all trading platform. the white house as it was working on penalties tolerating belarus's government after it

forced on every on their passenger jet and arrested a journalist critical of the country's president lukashenko. president biden is set to raise human rights when he meets president putin in geneva next month. tensions between the u.s. and russia remain high. the u.s. claims russian-based hackers or cyberattacks in the u.s., though biden as stopped short of accusing the president of the colonial pipeline that. washington is also condemned rush's support of a belarus after the fourth lending of that flight. new data show u.s.: desk fell over the weekend to 362, the lowest in 11 months. bloomberg figures showed the u.s. added slightly more than 12,000 new cases, the fewest since the early days of the pandemic last year. that's one covid-19 i've declined consistently since late february as vaccination campaigns take hold. two u.s. disease experts say

china's help is needed to trace the origins of covid-19. a commissioner of the trump administration told cbs that it supported -- that supporting the u.s. loudly theory has increased. other experts told nbc not knowing how the virus started points the world at risk for future outbreaks. new code infections in india have fallen to their lowest level to more than six weeks. latest government data shows nearly when were 74,000 new cases, taking the nationwide tilted 27 .7 million. reported does remain below 45 -- 4000 four third straight day. the government has announced free education for children orphaned by the virus with benefits up to age 23. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: staying on the virus,

singapore will outline its covid-19 plan as it looks to progressively open its economy again. the city state recently opposed a lot done to contain enough taking cases. let's get to highest limit -- haslinda amin. it would expecting to hear? haslinda: we are expecting to hear a multipronged approach, vaccination, testing, contact tracing. in a facebook message over the weekend we had the prime minister singh we will do all of that, or of that at a faster pace. it is been so difficult or singapore to open up its economy. what was wearing was the variant first seen in india. we are in the midst of a one month lockdown, and cases at three much stabilized prompting the government to talk about reopening of the economy, but it also begs the question of

whether the approach. it is observing zero tolerance when it comes to new cases unlike the likes of the u.s. and newgate where we have seen hundreds if not thousands of cases but life is back to normal. we will see what the prime minister is to say at 4:00 p.m. local time but we are positioning for a reopening of the economy. haidi: in malaysia, announcing a two week national lockdown. what is the situation there? haslinda: it is pretty dire if you take a look at new virus cases, we have seen a record for five straight days, and we are looking at about 9000, exceeding 9000 cases a day, much more than what was expected, 8000 by next month only, a dire situation prompting the prime minister to impose a national for two weeks. we also heard from the director

general of health. she says malaysia has to race for worst days and that the icu unit have been pretty much operating at 100% despite more beds being included. there is been anger on social media. what is trending is the hashtag that translates to failed government. it is complicated there because it is under a state of emergency that is been opposed since january which means parliament cannot meet to overcome the situation, a dire situation in malaysia, and the prime minister is under a lot of pressure, so was the health care system. haidi: our chief international correspondent for southeast asia. australia's trade dispute with china could escalate over one

tariffs now. we -- wine tariffs now. we will go to the latest x. this is bloomberg. -- next. this is bloomberg. ♪

haidi: the world health organization -- wto has set up to resolve complaints about bully imports. australia may be about to take another dispute over wine imports. what is the next step? >> these disputes typically take between one and two years to of the gulf -- to resolve. it was a year ago when the tariffs were hit with over 70%. there is a reprisal for calls for an independent investigation into the origins of coronavirus. china banned from the 5g

buildout in australia. china vows to vigorously defend itself at the wto. a three-person panel as been set up and will look into this. there was another development is well in new zealand throwing it support behind australia in the dispute. scott morrison is in new zealand for talks which will be focused on china's aspirations in the indo pacific, and in the development as well, someone saying the country is in the flows of willing to take a dispute over wine imports over china to the wto as well. australia gathering its courses to take these disputes to the world party. shery: no shortage of sore points in the australia-china relationship. an australian writer finished in china. do we know what happened? >> it was over and done with one day last week. dr. yang accused of spying.

he says he does not know who he is accused of spying for. he is an australian citizen who has written about democratic reform in china. he has criticized the ccp for what he describes as corruption and economic policy as well. he was pulled off the plate when he arrived with his family in 2019 and has been a detention ever since. he has been interrogated 300 times. he said during his court appearance in a message he released after that that he wants some of the evidence that he gave during those interrogations under what he described as torture to be ruled inadmissible. she could only speak for between three and five minutes because he is so tired and weary but he was allowed to submit 100 pages of its own evidence. he says the charges on espionage

-- who am i working for. the doctor as to wait and see what the verdict is, and the maximum penalty is death. haidi: let's get you a check of atlas. as it made its biggest bond payment since blues defenseman's two months ago. it is a manager million dollars bond due june 3 and one of the company's onshore units had made upon the -- paid a pond on sunday. -- the company has not yet missed a payment. the federal reserve is said to have warned deutsche bank about compliance. the fed warning came in an annual letter would signal the bank is not a during two confidential agreements aimed at fixing its risk management practice. we are told top executives are bracing for sanctions, including the possibility of a large fine. india's has extended emergency

credit programs to airline and hospitals to up cushion them from a wave of coronavirus infections and deaths. the loans were aimed at specific sectors and are available until the end of september. the prime minister's administration is turning its focus to protecting the economy as a devastating surge in infections ends. more on that, india set to release gdp numbers for the third quarter on monday. virus cases have fall into a six week low. we take a look at what to expect. this is bloomberg. ♪

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vonnie: this is "daybreak: asia." singapore's prime minister is expected to outline a plan in a speech later monday for tackling the coronavirus and reopening the economy. in a facebook post he says that the government aims to accelerate testing protocols and vaccination programs offering every eligible person at least a first shot by the end of august. at 19 new cases were reported on sunday, including six not link to known clusters.

wenzhou has ordered residents in one of its neighborhoods to stay home to contain a coronavirus operate. the infections stem from the very first detected in india. five confirmed cases and 21 a symptomatic infections have originated from that variant. at the government says only selected household members from the area impacted can leave home to buy daily necessities. a senior official at china's making regular warned recent interest rate hikes by emerging economies could lead to global financial asset bubbles bursting. they say unprecedented pandemic easing measures by developed countries at large bubbles even as emerging country start to tighten up. he maintains countries must better coordinate financial regulation and improve monitoring of cross-border fund flows to mitigate risk. the head of the international paralympic committee it says he

is satisfied with productions -- precautions being taken for the games. concerns mounting over whether the games can be held safely during the coronavirus pandemic and immediately following the summer olympics. -- says the event will change the japanese mindset around disability. >> you do not see persons with disabilities moving around. they are kept at home, and this comes from an angle of super protection and overprotection, and what we want to change, we came from a positive angle. it is not that they are considered second class citizens alike in some other nations, but the outcome of that is they end up not being active in society. vonnie: tennis start naomi osaka good phase disqualification from the french open after refusing to face a news conference following her first round victory on sunday. she has been fined $15,000 for

the no-show. she said she would not speak to the media claiming the matter as a mental health issue, saying having to answer questions after facing the loss can create doubt. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: india is set to release gdp numbers for the first quarter later monday. that reading is expected to reflect a slight pickup before the latest wave of cobit infections hit the economy. there seems to be a disconnect between pandemic pain and the record rally on the india stock markets. sophie kamaruddin and our chief asian economics course want to join us now. what are we expecting to see and gdp numbers? >> good morning. this gdp figure will reflect where india was at the start of

the year, all about momentum in the economy coming out of last year when lockdowns were eased. there was pent-up demand in india in terms of spending for everything on -- for everything from mobile phones to cars. economies -- economists are talking about growth just shy of 1% for the quarter compared to one year ago. there is base effect in all of that, but it bigger story is how circumstances change, because this quarter does precede the ferocious outbreak in the virus we have seen since then. haidi: all of the money flooding the market leading to this red-hot rally. >> liquidity we have seen piling into indy's markets have help maintain the rally, the nifty and syntax as markets prepared to look through the second wave. drivers perhaps remain intact.

foreign investors piling into up the nifty and syntax gain more than 5% with new cases having stabilize at least according to the official numbers, and we have seen india's hot equity market stayed rapid ideas, defenses pace of shares held since 2019, especially in the tech sector. a company targeting a $3 billion fundraiser this year, and there is room for more gains on the horizon. the more cautious voices were earnings estimates looking a little too optimistic at a potential for another wave of errors in india. haidi: are growth expectations in india in doubt because of the virus yet? >> clearly there is big overhang. there are a lot of restrictions and curves in terms of commercial activity and in terms of social movement. the slow pace of vaccinations is

weighing on sentiment and we have the central bank this week they may increase of purchase and bonds to make sure there is enough liquidity going around the system. that said, that there is evidence or signs the caseload is starting to be, and even as a economist downgrade their growth forecasts, the expectation is that india's economy will grow around 10% in its fiscal year that began on april 1. there is some time in peak of consumer spending. all told, economists are holding by the view that despite everything we have seen over the last weeks and months with the virus surge it could still end up the gear being the world's fastest major growing economy. shery: a week rupee was a problem for the rbis so far. where are we on the currency as we head toward a decision later in the week? sophie: we have seen the review

make a comeback this month, being the best performer among asian forex among 2% against the dollar after a five-week gain. we are looking toward a move of the 72 annual as well as we have seen hi carrie and low volatility for the currency which could keep it looking attractive to investors. haidi: that was simply, written and art asian correspondent with a look at india. let's get more analysis later on on the indian markets. we will speak to asset management had of equity research. coming up next on daybreak asia, we are expecting china may be a might numbers in less than 30 minutes time. there are likely to show the recovery is likely on a robust track.

this is bloomberg. ♪

shery: a rapid appreciation of the one against the u.s. dollar probably will not last according to a former chinese central bank official who called the trade overbought. our chief china market correspondent joins us now. there has been a lot of commentary from officials around the yuan.

how strong a signal is this? >> it seems to be a coordinated commentary from officials, x officials, state media saying essentially speculation that the yuan will strengthen or accelerate a strengthening path is not correct. this morning from the x pboc -- ex pboc official saying the yuan is overbought trade, the focus being trade rather than manage currency rather than it being something that reflects fundamentals is the key. when you look at the chart he does have a point. the yuan is in afford territory. you have the relative strength index firmly below 30, so it does seem like a coordinated approach to say that you want -- yuan's strength is too strong, blaming it on the market,

speculators and not suggesting a strong intervention from the pboc. haidi: if job earnings does not work could they make some of the stronger measures? >> we will be watching at 9:15 as usual, any strong buyers on the weak side could suggest the pboc is acting to slow gains in the currency. any gap greater than 100 would be a strong signal there, unfortunately the pboc has refrained from using it to guide the currency in any direction. it wants to be seen as essential and allowing for two way flows. what will be interesting to see is how far they can push this, and how much further the currency appreciation will the pboc step back from the market and allow currency traders to drive the currency and

indirection. unfortunately, does the market believe the pboc? if you have a market that thinks the pboc will eventually intervene and is not intervening it suggest is currently comfortable with the yuan's strength. haidi: our chief china market correspondent. we will get more on the yuan. we are expecting official may pmi data out of china in 20 minutes time. if that comes in as expected, solid 40 when it comes to manufacturing, strong external demand which could give greater support. i am joined by michelle lam. great to have you with us. let me start off with our question of the day. how much upside is there really for the yuan rally to run for the rest of the year? you are quite moderate it comes to your call on the rmb. you say it is due to strength across the euro as well.

>> yes, i expect there will be more upside in against, the u.s. dollar by the end of this year. i think this will be a story about dollar we is over the next couple of months or second half of the year. we expect western economies to slow, so the growth differential between china and the rest of the world will narrow, so that will be a driver to wait on so we expect to see quickness starting next year. haidi: i went to the rope this chart taking a look at inflationary impact not just when it comes to rising china but how we could play out for the rest of the region. look at import costs and trade focused pmi sub gauges.

it is transmission in china passing on inflation as strong as some of the rhetoric would expect? >> if we look at the past relationship, it is actually not that strong. even though we are seeing ppi picking up close to 7%, we expect impact on cpi will not be very strong as suggested by the relationship. we are now seeing recovery in consumer demand to gradually -- as outlook is more under control. we do expect quarter cpi will be looking up toward 2% by the end of this year. shery: i was going to ask because consumption and retail as been pretty weak compared to manufacturing and the industry side of things across china. if we see a jump in cpi how much will this mean for a jump in and

even recovery? >> i think improvement in court cpi will make policymakers more comfortable about normalizing policy. there could be a small window for interest rates hikes if we continue to see strengthening and consumer momentum as well as momentum for the manufacturing sector -- capex momentum for the manufacturing sector. if we look at consumer data, [indiscernible] when we look at spending for the labor day holiday it is 20% below the level of 2019. we need to see more data pointing to strengthening and private domestic demand to get to the conclusion of monetary policy. shery: markets have been trying to gauge what policymakers are trying to do right now especially when it comes to the

tolerance of yuan strength. given the rhetoric coming from policymakers what are your expectations of how much strength can they still be ok with? >> i think another index we watch is the index that is reach the peak in 2018, suggesting further appreciation in the basket is probably fairly limited, and i think at the end of the day if we are going to see what we can is driven by the dollar and strengthening of other major currencies in the world, china policymakers will be more willing to tolerate appreciation in the renminbi against the u.s. dollar. in the near term there is more

tension about whether policymakers should offset commodity price inflation. this is actually not something china wants to be ending about. at the end of the day china is a fairly large exporting country, but over the meteor -- medium-term when we see a transition from external demand to domestic demand from china, internal circulation, ultimately in the medium term we are bullish on the currency. haidi: we had china's banking regulator warning about the risk of global asset bubbles. what about internally? we see the red-hot market when it comes to equities, systemic concerns, and we know deleveraging is back on foot. are these serious concerns

investors should be contending with? >> definitely, and this is the reason why we are expecting a deceleration in growth momentum over the next couple of quarters. we have seen a lot of policy announcements relating to out the central government once to contain the shed out debt risk of local government. we have also seen greater tolerance as illustrated, so a couple last year. right now it seems the market is complacent about that risk, but policymakers have not really announced plans on how to resolve the restructuring of this company, so they are really trying to educate markets not to

place any hopes about guarantees that will be provided by the central government. instead, if we see a large eating -- largening and the credit spread this will be favorable for the company -- the recovery. shery: we will have plenty more to come on daybreak. this is bloomberg. ♪

shery: look at the commodities space, we are seeing brent slightly higher after we saw oil getting the most since mid april on a week to week basis. we have on tuesday at the opec+ meeting where they will be deciding oil production, and we are seeing upside for iron ore and steel rebar in the last training session. we are headed toward that open as bloomberg has learned we have seen the government asking futures traders to pull back at those bullish futures bets when it comes to trading. it we have seen iron ore falling 20% since its may peak not to mention rebar as dropped by

one/five cents that level earlier this month. futures also higher during the last training session but we are watching that closely as we continue to see pressures and warning signs coming from chinese authorities as goldman sachs says buy the dip although they do not expect the chinese government to be able to temper those commodity prices in the near future. haidi: chinese factories, farms are baring the brunt of commodity because as beijing tries to rein in the surge. let's get more from our senior editor for commodity and china -- in china. which sectors are suffering? >> if you are a buyer of commodities you will be suffering the most because you have to put an enormous amounts of cash down and you are it is a situation where you are buying into a rising market. if you were buying copper, coal,

corn, those areas of the economy, factories, power plants, farms, those of the people suffering the most at the moment. shery: what is the picture right now for chinese factories? >> if you are a fabricator of metal, so you shape metal into rods and wire and that kind of thing, and you sell your products further into the supply chain you are in a situation where you cannot pass on those costs, so that is where a lot of china's factories are squeezed, because what we have seen is ppi as jump to but consumer price inflation has not jumped because household spending remains low but softer, so the costs are getting stuck with chinese factories at the moment. haidi: we are seeing all power companies within china losing power as a result of how high

coal prices has been. is it sustainable, and what happens from here? >> you have got a situation where anything over 800yuan, power plants that michael are losing money so that could force them to pullback which will exacerbate the problem. you have temperatures rising in china, and along with industrial production, curbs on multiply because of safety inspections in the wake of recent accidents, you have a situation where some parts of china are short uncle -- on coal so it could reduce supply, raise imports, although that may be unpalatable given the situation. shery: jason rogers there. a check of the latest headlines.

a thailand's acme producer close its factory for five days after authorities found more than 200: cases among workers. it joins other businesses at that have had to a halt production due to the virus. thailand's covid infections reached a record this month as a new wave spread through prisons and factories. apple is said to be planning to add to its global retail presence even as stores in inner cities struggle with an accelerating shift to sales online during the pandemic. the company says retail locations offer an opportunity to experience new technology and ask questions about learning after the products online -- learning about the products online. haidi: let's look at the state of markets on this monday session. sophie: reaction and malaysian for the government imposing a lockdown, lagging asian peers this monday morning, as gail

index futures falling 1.1% after the benchmark cap a 2% gain. our hbc short-term pain capital saying yes, market investors have been anticipating these tighter measures, given increasing counts of covid in malaysia we only have essential economic service sectors allowed to operate during this lockdown, the government saying more aid relief, auto and qe stocks could benefit unsupportive policy. we see other earnings today as delivery of vaccine, along with hospital operators. switching of the board, turning focus to singapore, watching stocks tied to reopening ahead of the prime minister's speech on how the city state plans to attain infections. shery: coming up, main china pmi

due out and justifying -- due out in just a few minutes. and that is it for "daybreak: asia." market coverage continues. standby for bloomberg markets: china open. this. ♪

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>> happy monday, it is none :00 a.m. in beijing in shanghai. welcome to "bloomberg markets: china open." >> in hong kong count -- counting down the open of trade here in the mainland. we are getting the pmi numbers for may, tom, what we have? >> manufacturing is that 51, in line what bloomberg economics forecast.