haidi: hello and welcome to "daybreak asia." sophie: i'm sophie kamaruddin in hong kong. shery: good evening. i'm shery ahn. our top stories this hour. the communist party of china celebrates 100 years. xi jinping is set to highlight his leadership as he makes the case for another term in power. asian stocks look set for a muted start.

traders weighing concerns about covid-19's delta strain and looking ahead to a key u.s. payrolls report. plus, more banks are pulling strings to attract and retain talent. citi and barclays, attempting to gain an edge over rivals with a range of benefits. haidi: let's take a look at how we are shaping up for this session in asia. sophie: asian stocks notching a fifth quarterly gain but the events did peter out into the summer with the index underperforming global peers. that is the white line here on this chart right now and we did have the index underperforming in global stocks by the most since 2015 in that april to june period. it is a widening gap with the u.s. and europe and we saw matt tam -- latam stocks looking to outpace asia. bnp paribas staying constructive.

maggart's catching up -- laggard s catching up. how we are setting up this thursday, nikkei futures gaining ground while the yen is steady above that handle, trading at the weakest level since march of last year ahead of the survey, the worst performer in the first half and it is set for more weakness and i want to highlight the ihs market and australia do manufacturing pmi coming in. still in expansionary territory and check out oil ahead of the opec supply decision. wti eking out gains after a two day rise and we have citi saying the market will stay in a deep deficit even if the cartel delivers one million -- one million barrels per day. the offshore yuan holding steady after a three-day decline, marking a 1.5% drop the month of june ahead of the politburo meeting as the pboc signals a desire to dampen the appreciation for the renminbi. shery: so important to have the

markets stable during this very important week. china's communist party officially marking 100 years of its founding amongst the pageantry on thursday. president xi jinping is expected to make a key speech highlighting progress for the prosperous and strong nation. let's get more from tom in beijing. we heard from the national defense ministry that he would be making an important speech, so what can we expect? tom: an important speech. it could start anytime in the next hour or the next couple of hours. we don't have the exact timing yet but president xi jinping will be standing in tiananmen square in the same spot that mao zedong stood when he proclaimed the founding of the people's republic of china in 1949. president xi jinping is expected to really reinforce the case that it is the chinese communist party that has restored this country back to a position of

wealth and international prestige. that is the view of the communist party, a country that is back in its rightful place. he will also underscore the proximity and that they now are to a moderately prosperous society, taking china closer to develop nations and certainly, they can tout some real economic achievements of course, around 800 million people lifted out of poverty and you have an economy that will be, by many people's accounting, the largest in the world by the end of this decade. the life expectancy has gone from 35 years to 77 years. per capita income is 10,000 u.s. dollars. this will also be an opportunity for president xi jinping to try and solidify his vision as the beating heart of this party and country as he looks ahead to the party congress next year, where he is very likely to push for a third, unprecedented third term as party secretary and president of china. the economic challenges of course are acute. the economy overall is starting

to slow. it is less than balanced. it has acute demographic challenges, a widening wealth gap. all these issues will need to be addressed going forward and of course, internationally, the opinion of china has plummeted. you had that pew survey, 15 out of 17 nations gauged by that survey suggesting a record high in terms of disapproval china following issues like the crackdown in hong kong, in xinjiang, the threats to taiwan, the handling of covid-19. the international stage is increasingly tricky for china. domestically, it has never been stronger. haidi: we love a big event at the capitol. blue skies, no traffic? tom: how did you guess? there are police everywhere, a partial lockdown of this city, and blue skies are certainly what they are aiming for. they are almost there. it is a pretty nice day in beijing ahead of this important

speech by president xi jinping. they placed some pretty severe measures to curb the industry, coal mining, steel industry, and even some ports have had to stop operations, going out -- all out to ensure blue skies and that the persistent pollution issues in china take a backseat at least for today. we are expecting some dramatic scenes in central beijing along -- in the next few hours. we have the speech and potentially a military flyover and a raid as well. -- parade as well. shery: a lot of safety ramp ups, security ramp ups. tom: pre-national security law, this would be a time when pro-democrats and anti-beijing groups and activists would come out into the street into victoria park in hong kong and mark this handover by protesting and showing their disagreement with the forces of power in beijing.

this is the 24th anniversary of the handover of hong kong from the united kingdom to china but we know the hong kong authorities have blocked all requests for protests. they cite covid-19 as the reason for this. we are hearing that there will be 10,000 police officers on the street and they may close victoria park itself. haidi: tom mackenzie in beijing. we will get more analysis on the chinese communist party ahead. we will be speaking with jude blanchette, with us a little bit later on. in the meantime, let's get you to vonnie quinn in new york with the first word headlines. vonnie: the u.s. and taiwan agreed to hold regular meetings after their first official trade belongs in five years following wednesday's meeting in taipei. they will establish working groups to discuss topics such as labor rights and intellectual

property. the chief trade negotiator says the meeting was an important step towards a full trade deal. sources tell us the trump organization's cfo, allen weisselberg, will be indicted on thursday for tax related crimes. the charges would be the first to emerge from this three-year investigation into the former president company. they are said to involve unpaid taxes on benefits. we are told neither donald trump nor his sons will be charged. the former u.s. defense secretary, donald rumsfeld, has died, aged 88. he was one of the main architects of the wars in iraq and afghanistan following the terrorist attack's of september 11. he drew fierce criticism for his management of those conflicts. two of the longest word in u.s. history. bill cosby has been released from prison. the court ruled that state

prosecutors violated his rights. he admitted in civil court to drugging and attacking a temple university employee. he served more than two years of a prison sentence of up to 10 years. 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. shery: still ahead, we are expecting japan's latest numbers. our guest from natixis joins us. up next, ig markets representative shares his markets outlook as we go into the third quarter. this is bloomberg. ♪

>> investor worries about the

spreading delta variant have been weighing on some sectors. let's look at how this plays into strategies. is there a sense that some of these reflation trades are being unfairly punished at the moment? for asia in particular, how big is the risk of the variant versus a patchy vaccine rollout? >> in the broader scheme of things, the markets are discounting a world where the virus is not going to go away and that investors are going to reward those countries that have adequate vaccine capacity and rolling it out effectively so some of the reason why you are seeing strength in u.s. stocks more broadly i should say as well as european equities versus their asian counterparts is because there is clearly that capacity within the u.s. and parts of europe to be able to produce vaccines and effectively roll them out. i don't think it is the whole picture at the moment. there is an element where the

markets are pricing in the best part of the global economic recovery and cyclical rebound we have seen over the last 12 months. there is an element of cyclicality right now but i do think we are seeing at the moment, the markets coming to the realization that they have to discount the risk and high probability, i really should say, that the covid-19 virus will be with us for the foreseeable future. haidi: i want to throw up a chart looking at the comparative underperformance in the asia-pacific region in the first half. a lot of analysts are saying we can see a broader rally going to the second half of this year. some of these underperformers playing catch-up. we have a chart showing the msci asia-pacific index rising 4%, well behind globe hear -- global peers. where do you see potential opportunities for catch up here? >> for me personally on the way that our clients trade, you want

to see where the most upside is and i inc. the trend is clearly towards developed market equities. europe in particular for the time being, if you want to play the value trade, but certainly in the u.s. and europe. there's two things going on, which goes back to the first question with asian equities. when you get cyclical rebound, you are looking at one or two years worth of profit markets need to discount and effectively anticipate. what we have got is the markets more or less realizing that we are probably somewhere closer towards the midcycle. valuations very rich, we priced and a lot of good news in asia and on top of that, we have also got the sense now that the global economy -- the engine room of the asian region is china is -- economically speaking, and policymakers are not looking to drive their economy any higher.

they are trying to tap the brakes very gently. i think we are really seeing what -- the markets discounting the next couple years of profit growth and that strength in the economic cycle. as well as the fact that the chinese economy, while it's not going to take any sort of downturn in the near future, has probably plateaued and will not be the void for the rest of the asian region and stock prices. >> with these changing growth dynamics, where does that put the u.s. dollar and asian currencies as well? kyle: for me, the said pivot a couple weeks ago was significant for the u.s. dollar and if you look at the charts as well as the fundamentals, i'm starting to become confident that the u.s. dollar is beginning something of an

has may be seeing its cyclical lows. we are quite familiar as traders anyway of that theory. we are moving to one end where we look at the u.s. economy's outperformance lifting global growth and keeping global growth strong, but as really the cycle gets fully underweight amateurs, we have the fed looking to pull back on support progressively as well as telegraphing rate hikes. that's not going to lead into a material change in policy for the foreseeable future. liquidity will be provided and that will be good for risk assets. it does mean that the relative interest rate differentials between economies is going to shift very much in favor toward the united states and that will probably put a little bit of our pressure on the u.s. dollar and downward pressure on asian currencies and put a little bit of stress on emerging markets that tend to benefit from a weaker dollar. shery: kyle rodda. we do see this hawkish turn, hawkish pivot from the fed and we could see more downside

pressure for the crypto market as well. bitcoin has seen its biggest quarterly drop since 2018, down 40%. haidi: we keep talking about this roller coaster. so far, we have not seen much impotence for further upside and when it comes to the regulatory in china fund, it could be yet more uncertainty. we are going to find out when it comes to the estimates of what the china bitcoin crackdown has set up for that puzzle so we will get hopefully a little bit more clarity on that but it's going to be an interesting second half for bitcoin either way, particularly if we see the easy money side of the puzzle. coming up next, robinhood getting hit with a record $70 million fine. how that could hurt ipo ambitions. this is bloomberg. ♪

>> free market and it is up to the federal regulators to make that decision as opposed to free marketeers like us to opine on that so i do not know how you regulate that. things are very difficult. a decision from the fcc, but the consumers are flush with cash and like the stock market. shery: reaction to robinhood's $70 million fine, the largest penalty ever ordered by the regulatory authority. bloomberg's investing reporter joins us for more on that. how big of a hit is this for robinhood? >> it's a blow to robinhood. it is pursuing ipo's this year. it definitely becomes famous and

earned a lot of new users over the past 1.5 years since the pandemic started to get financial markets in a tizzy. this comes as a foil to some of the blockbuster growth that the trading app has seen. >> how much is this a blow to trust that private investors and institutional investors will have in robinhood? annie: that's a great question. we will have to see how wall street and individual investors respond to that but some of the allegations in the settlement definitely showed that customer trust had at times eroded with robinhood so one of the issues they called out in this settlement was around options trading and it cited some issues

with customers getting approval to trade options when they should not necessarily have gotten those approvals information and some angry customers wound up writing to robinhood according to these allegations, saying that they were upset because they ended up using margins that they specifically did not want to so there were cases like that where you saw customers getting angry about how the platform was working for them. >> really tragic stories coming out of this as well as which highlight how influential this retail trading boom is in good ways and bad. annie: absolutely. there has been an enormous retail trading boom that has taken off since the beginning of the pandemic but then we saw it magnified so much earlier this year with the saga over gamestop

and amc and the other memes box so the question for regulators has been whether robinhood is shepherding those retail investors safely and securely. >> annie massa with the latest on robinhood. one billionaire says he is a fan of these credit fueled day traders. why he says the new trading trends are a really good thing for finance. he spoke exclusively with erik schatzker on bloomberg front row. >> what these two big movements are showing us is the need for inclusion. in wall street and the financial system, by individual investors, so you take wall street bets -- i read a blog the other day that there was a spac sponsor that set my spac is not for retail

investors. i am like, i am for a beta investor. would it be for me -- a retail investor. could it be for me? they are smart, highly educated, they make good decisions, and they want in the game. talking about one of the arbitrage situations, they figured out when i am in the market and they are doing that very successfully so good for them. take investing on your own hands. have fun at it. and yes, they will take risks and sometimes, they will make money, and sometimes, they will lose money, but i think it's a really good thing and it's really inclusive, and people want that in the world of wall street and investing. in crypto, you have a world of young people that want their own financial system and their own culture. and it is very powerful and i'm a big believer in it. blockchain technology is completely disruptive and on top

of that, the currencies, they will be worth more if more people adopt them. and it's highly likely that more people will adopt them than last. >> when there is a wall street bets driven short squeeze, whatever hedge fund happens to be short, are you sitting there and cheering from the sideline? orlando: i am cheering so much because i also don't like shorting. i don't like adding against people. i don't adding against companies. i don't like the short game. you are trying to hope somebody does poorly and spreading potentially bad information that does not exist on that company and this other movement makes hedge think about that again. >> sometimes, that information is good information. sometimes, it's real. sometimes, the companies being shorted are pretty lousy companies and maybe worse than that, maybe they are fraudulent. how do we deal with that problem if there are no shorts?

orlando: don't buy the stock. things will figure themselves out. just don't buy the stock. shery: orlando bravo speaking with erik schatzker. do not miss our big interview later and we will speak with don young tree -- with two ceo's. we'll have an exclusive interview with rishi sunak, coming up. haidi: let's get you a quick check of the latest business flash headlines. didi jumped as much as 29% in its trading debut before closing much closer to its ipo price of $14 a share. didi sold 10% more shares than originally planned, raising $4.4 billion. it is the second-biggest u.s. ipo by a chinese company after alibaba. prominent backers reached big returns, now worth $1 billion.

evergrande group says it has met a key requirement of chinese regulators as the country's indebted developer tries to ease investor concerns. in a statement to bloomberg news, the company says it type it that debt to equity ratio below 100 percent. beijing requires developers to cut the ratio to below that level as part of its three red lines imposed the curb leverage in the industry. tiktok says it deleted over 7 million accounts belonging to children younger than 13 in the first quarter. the app removed over 11 million accounts in a period with underage users violating guidelines. it introduces several features to make the platform safer, including a dedicated section for children aged 12 and under. coming up next, citi joins some of its rivals in touting flexible worker policies in a race to retain staff among wall street banks heats up. this is bloomberg. ♪

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haidi: china's ruling communist party is marking a century since its founding as it tightens its grip on the country and adopts an assertive foreign policy. tom mackenzie takes a look at the key periods in the party's history and where it is headed. tom: china's commonest party was a secret group when its first congress was held here in 1921. one hundred years later, it is the ruler of a fast rising world power. since coming to power, it has been at the center of key periods in modern china from the

great famine and disastrous cultural revolution to the reform and opening that propelled china's rise to the tiananmen square crackdown and a virus outbreak that exposed the authoritarian states floors before a successful containment was turned to the parties advantage. behind me is the site of the first national congress surrounded by a boutique shops and high-end restaurants. it is symbolic of the metaphor for says of the chinese -- metamorphosis of the chinese communist party which claims more than 90 million members and it has arguably reshaped china as much as any of the densities -- dynasties that came before us. more than 800 million chinese have been lifted out of poverty since the late 1970's according to the world bank. abroad, the party is projecting strength and defiance, pushing back against criticism and

trumpeting the merits of one-party rule has china recovers from the pandemic. 100 years on, it continues to silence dissent, whether on the mainland or hong kong. constantly employer its people to follow the party forever. shery: as we heard, it is a challenging period for china. we have seen a huge rise for the country but at the same time, u.s.-china tensions, not to mention the coronavirus pandemic that originated in china and be announced being the latest survey coming from the pew research center, how the negative views of china and developed nations have increased to near record highs. we are talking about here in the u.s., 76% of people have a negative outlook on the country and places that have more disputes with the country, those negative views are that people

who hold those negative views are even higher. 78% where you are in australia. haidi: it's interesting because we also had a similar study being conducted by the institute. we talked about it a couple of weeks ago. it's really interesting how much that sentiment towards china from the general public has deteriorated in the last couple of years. covid and all of the murkiness over the origins of the covid virus certainly play into that but even back in 2018, most australians had a favorable view of china. not so anymore. concerns over the leadership and for one of the very first times, unfavorable view about china's economic rise, which says a lot given that australia as well as a lot of other countries around the world and fitted from the economic ascent. interesting study. let's get to vonnie quinn with our word headlines. vonnie: hong kong's next digital

is ceasing operations thursday. the company is owned by him eli and was the publisher of the apple daily before it closed last week. the newspaper was forced to shut down after authorities used hong kong's national security law to arrest top executives and freeze funds. the front runners to become new york city's mayor has seen its lead narrow after officials issued a corrected tally from the mayoral primary. eric adams now leads with a 51.1 percentage of the vote compared with 48.9% for city sanitation commissioner kathryn garcia. the earlier results were thrown out because some test votes were wrongly counted. indonesia's is close to finalizing its listing rules. the stock exchange says the changes would allow multiclass

voting shares and a relaxation of curbs on lawmaking firms. it would pave the way for start up giants like a ridehailing firm to go public. thailand is said to reopen the resort island to vaccinated travelers as it plans to jumpstart its tourism industry. starting thursday, inactivated tourists would be allowed -- quarantine. the reopening comes as thailand apples with its highest single day death count, 53 new covid death on wednesday. 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: banks are upping their pace to recruit staff. citi is touting flexible work schedules. nabila ahmed.

barclays is throwing money at the problem but given the sentiment that we have seen, in particular among younger bank workers, is this a big part of the equation? nabila: there's definitely a race to retain bankers and money is part of the equation. it is a big part so barclays is saying that they are going to lift salaries by 15000 and associates and vice presidents by $25,000. what this will do is bring up first-year analyst salaries to $100,000. as you say, mental health is a big part of this. it's not just about the money. barclays was one of the first banks to come out and talk about this and protect bankers in the sense that giving them at least 25-day vacations per year and telling them that they have to disconnect from work at that time and giving them a consecutive 24 hours off, which is a pretty big deal on wall street. shery: they are not the only

ones throwing money at the problem, are they? nabila: that is exactly right. they follow banks like jp morgan, credit suisse, throwing money at the problem. some of them are more creative than others. it was offering all-expenses-paid vacations for staff. no working past midnight. you have seen others offer one-off bonuses and jeffries offering peloton bikes and other apple fit products. >> citi is setting itself apart from u.s. counterparts with hybrid work. how will that work? nabila: that is exactly right. citi has reiterated its position that it will allow all of its workers to work at least part-time from home and the other time obviously from the office and they aligned

themselves more with the european banks like ubs in saying so. remember that james fraser came out earlier this year and said that, you know, he wanted people -- she wanted people to have no zoom fridays. she is definitely trying to do a lot to make sure that people have a good balance post-pandemic. shery: nabila ahmed there. you can read more about flexible work policies in today's edition of daybreak. also available on mobile in the bloomberg anywhere app. when it comes to working during the pandemic, you and i know what it feels like going into the office. it's a little bit scary sometimes. there was one company in japan that caught my eye. it has a little micro economy. they trade stocks with each other and end up getting that money within the company paid out as bonuses at the end of the quarter and people who would go into the office would get paid

by their colleagues to stay home. isn't that interesting? haidi: that's really interesting. it is interesting that at the end of all of that, the cost savings that they made gets paid out to the employees. it is a bit like living and working within your own little videogame. we were having a debate earlier about whether this internal economy is a healthy thing or just something that is a little bit out of black mirror. haidi: are you -- shery: are you selling your own office supplies? i don't know. haidi: up next, we hear from ryan about the company's opportunities. this is bloomberg. ♪

haidi: we are looking at live shot's in hong kong. the flag raising ceremony, we are expecting the acting chief executive to attend that flag raising ceremony. that is taking place this morning. we are seeing that gathering there. we are seeing a gathering of protesters of course that has been fraught with some element of difficulty given the

political crackdown we have seen in hong kong in recent months and years but they had been gathering outside the venue of the official flag raising ceremony to commemorate the 24th anniversary of hong kong's handover. shery: it is really interesting that as we continue to see these gatherings being banned in hong kong, they continue to use the reasoning that the coronavirus concerns are the reasons that they are banning the gatherings. with the imposition of the national security law, it has become much harder for pro-democracy demonstrators to make their point across the city so we continue to watch what the implications of this is. demonstrators set to be near the venue right now. haidi: and hong kong ramping up that security level warning and it would be accidents holding any demonstrations as the city

is marking a particularly sensitive anniversary of the return to chinese rule and we are seeing just the beginning of that flag raising ceremony with police issuing those statements against potential unauthorized assembly. shery: a beautiful day. we do miss the city of hong kong and beautiful harbor views. right now, looking at the markets, oil holding steady. 73 dollars.50 -- $73/50 ahead of that. -- $73.50 ahead of that. sophie, the best first half recruit since 2009. is that going to continue? sophie: the opec meeting, that certainly will be key to this. they say that could push brent above $80. i want to highlight that alongside oil, we have seen the rally in gas futures as well marking the biggest first-half for gas 2008 with tight supply

in that space also a big theme so energy by far the best performer in the commodities space year-to-date while we are seeing precious metals very much in the laggards here with gold trading near an april low. switching out the terminal, global energy stocks are still on top this year. let's see how we are faring when it comes to global stocks. at the top, energy is the best sector for equities although we did see tech narrow that lead as we saw the rotation trade to stumble into the summer. jp morgan, marco pallotta bench not giving up on -- at jp morgan, -- some strategists warned that these outbreaks could set the stage for volatility to return to markets. ubs's representatives saying brace for that. the spread of variants lists the chance for a -- lifts the chance for a black swan event.

haidi: another high-profile oil player is expecting oil price volatility ahead. he was asked to simply speaking to bloomberg, saying u.s. shale producers are waiting patiently for opec to return supply before opening their chance. ryan: the demand is recovering, which is good. and the opec group has got discipline in terms of returning some of that spare capacity back into the market. u.s. companies have exercised discipline as well and that it's very helpful. the real question is, when demand recovers to pre-pandemic levels, excess supply comes back into the market, what is the price of crude at that point in time? so while i am optimistic, the other thing i say is you better get prepared for $50. if $100 comes and that the price of oil, drilling will pick right back up in the u.s. and all that apply is going to

come back into the market. you have to be prepared for volatility. >> you base it on $50 oil. a quick question on that point. capital discipline versus flex ability. if you needed to pump more oil quickly, will you and can you? what is the trade-off between capital discipline and managing the volatility? ryan: what we are looking for is a good, sustained price, something more than three days or three months. we wanted to sustain for three years and if we think we see that, we react differently if it was a sustained price and that is pretty sophisticated scenario modeling, trying to find that. we have a lot of growth potential. we have 23 billion barrels of less than $40 resources sitting in the company today so could we do more growth? yes, we could, but only if it did not come at the expense of good returns in the business and if there was a sustained call for that kind of growth coming from the oil market. alix: let's get to that $7

billion cash pile. you mentioned earlier that you are going to stay in the market for m&a. what does that mean? ryan: we are in the business every day, buying and selling and trading asset around our core areas. if you look past our history over the last -- we have been buyers of assets. we accumulated -- in alaska and it coordinated with the transaction at the beginning of this year but we also announced today that we have had transactions that will sell at 2 billion to $3 billion to continue to prune the folio. lowering costs applied, the breakeven of the company, and continue to make sure we are returning capital back to the shareholder and getting adequate returns on our capital that is competitive with the s&p 500. alix: rumors were surrounding shell that they might be offloading from their permian assets. are those kind of assets something you would be

interested in or do you want to diversify regionally? ryan: we don't comment on the market rumors either so probably the same answer he gave you. anything in and around the area that we operate and we have core positions, we would not be surprised that we take a look at things that are contiguous or consistent with where we currently operate. it really has to fit our financial framework to be competitive. alix: talking about rumors that were proven true, qatar petroleum is selling off some stakes for its huge lng project. all the majors are bidders there. what is the level of confidence you will win out on that? what kind of return would you expect? ryan: i am preaching again to the same point, but we are happy. we have a great position in qatar today, great relationships. we have put in a bid. we hope it is competitive but it has to fit our financial framework. we put in a bid consistent with

that and we hope to be a partner for a long, long time in qatar. haidi: we have plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: do have breaking news

when it comes to the japan survey. major indicator coming in for the second quarter. large manufacturers. the index coming in at 14, missing expectations of 16, but certainly a bounceback from the previous quarter of five. nonmanufacturing, the index for large players, coming in at one, less than expected. the manufacturing outlook is 13 and also missing expectations. coming in at three versus expectations of eight. amos on expectations. when it comes to the smaller manufacturers, a contraction of seven for the manufacturing index, slightly worse than expected for nonmanufacturing, smaller players, a contraction of nine. all around misses when it comes to the bank of japan second-quarter survey and perhaps a little bit surprising given that we were expecting sentiment to strengthen particularly among large manufacturers a little bit more there. let's bring in the chief --

this comes at a time when japan as well as the rest of the world and specifically here in asia where the vaccine rollout has been pretty patchy, concerns about how the delta variant is going to derail the recovery. >> indeed. although we did see some improvement in japan, we achieved 22% vaccination rate. it is certainly not -- it is better but not impressive. it's and the results for the survey. and what is discouraging is the nonmanufacturing sector showed the stop and go emergency measures and soft lockdowns have not really voted well -- boded well for the economy and it did worsen because although we are just out of emergency measures,

the economy is showing that is not good for it. it is worrisome for japan and asia overall. this is where we are generally. >> at the very least, you have a weaker yen at play, longest monthly decline streak was 2005 so the outlook is a little bit murky. does it change boj policy at all if the yen continues to stay pretty stable? alicia: well, we do need that for the boj not to take additional measures. what would be actually were some for japan is that the yen would appreciate and if it were to reach that, then we could see an additional path into negative territory and that would be even worse so in that regard, the fact that the yen is staying there on a slow but steady soft

mode, it's good news for the beer j. it does not push the boj to react at the wrong time because the economy is not showing enough strength. shery: the olympics coming up in july, how much will that help given all of the restrictions in place right now? alicia: hardly, hardly anything from the olympics, unfortunately for japan, because it not really -- i mean, you can't think of any consumption coming from such an event and that's why we are not even taking it into consideration. the only thing that has happened so far, we have shown the manufacturing sector because we have pent-up demand from the u.s., from europe, from china, but let's not forget, they are peaking especially in china, so that was the bulk of it.

now, not anymore because it is peaking. shery: tell us a little bit about what you are seeing in china given we have the 100 year anniversary of the communist party. will they achieve that stability they are craving for the next few years? alicia: stability, maybe they will achieve stability. what i know for 2021 is that growth will be positive but it will not be massive. and behind that, what we have is an economy peaking rather quickly because if you look at the fiscal space, it's not really used so local governments have not been issuing. this shows structural deceleration. what we are seeing in china in 2021 is already showing where it is heading. it is heading to structural -- slower structural growth, and this means that the next 100

years, if you asked me, will be slower. it might be very good as well, but it will certainly be slower than it has been so far in the late -- in the last 20 years especially. 30 years. it is a more church economy but growth will not be as appealing for -- mature economy but growth will not be as appealing for china. haidi: alicia garcia herrero. let's take you to hong kong this morning where we are seeing that establishment day flag raising ceremony as we do see every year, and of course, we are expecting the acting chief executive, john lee, to attend that ceremony that's taking place. there will be a reception later on at the grand hall of the hong kong convention and exhibition center. we have heard a small group of protesters have gathered outside the venue. there has been no public viewing area for this year potentially to discourage against those protesters, shery. shery: we will be following up

on what is happening over in china with the centennial. we will discuss the celebrations with richard mcgregor. that is coming up. this is bloomberg. ♪ (announcer) back pain hurts,

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>> we are live in hong kong this morning as we see the flag raising ceremony. this is the hand over of hong kong back to china. we are seeing among the guests john lee attending the flag raising. a beautiful view of the harbor. there will be a reception later at the exhibition center. we have seen this going into the 24th anniversary a clampdown on security measures and warnings

from police warning activists about holding demonstrations. this is a particularly sensitive anniversary. this comes at a time when we are also in beijing getting ready to celebrate the 100 year anniversary of the chinese communist party and we are waiting to hear from president xi jinping later. shery: you can see the beautiful view of beijing. we are waiting the celebration. a lot of pomp and pageantry has happened throughout china and we have president xi jinping delivering a speech. yesterday he spoke in the great hall of the people about how china needs more new heroes to

carry it into the second century . the national defense ministry talking about this speech from the president as china faces new challenges this century for the communist party. haidi: we've been talking about new challenges. to do research from pew center suggests that internationally, the opinion of beijing and leadership has deteriorated in the past few years. we see that in australia as well and there have been questions about the origins of covid-19 but also beijing's increase of -- increasing assertiveness. cyber, technology, defense and geopolitical points of view, there are growing concerns from partners, allies and globally about what the future looks like but domestically it's hard to argue against the resilience and

dominance the president and his party continue to play in the role in beijing. you can see pomp and ceremony is underway. tiananmen square and the great hall of the people is where the action happens. shery: and we have to mark the fact that there are clear skies and clear air in beijing. they have been stopping the cold mining and steelmaking. they wanted to clean up the air ahead of the anniversary. very important when it comes to china, the target of fighting climate change and bringing new renewable clean energy into the market. let's head to sophie in hong kong for a check on how we are setting up in terms of the markets. >> south korea, exports data, rallying considering --

continuing. we are waiting on monthly auto sales and vaccination plans for the third quarter. kospi slide to the downside after five quarters of gains. the opening japan, sentiment among large manufacturers rose to a high. asian chip stocks. nikkei little change. topics moving to the upside. yen is trading at a low. sidney the 86 200 cap day nine-month gain. -- the asx 200 is capping a nine-month gain. opec policy when it comes to supply. dollar holding steady after a solid showing that upended

bearish bets. some strategists see further gains. shery: right now we are headed back to beijing because president xi jinping is about to give a very important speech about the ministry of national defense. we have heard him speak this week, yesterday at the great hall of the people in beijing. he was talked about china needing new heroes going into this new century for the communist party. we just saw him make an appearance and have been awaiting this speech. we do not know when he will start speaking but it has been flagged as a very important speech that we are awaiting right now. haidi: absolutely.

we need to wait for him to speak. we have heard him speak the last couple days about what the next 100 years and the need for new national heroes to drive policy priorities. let's bring in people who know more about this. tom mackenzie joins us and stephen engle. you have both covered this communist party story over years . tom, what can we expect from the president today? tom: what we are expecting to hear from him is reiterates of what people argue is the case he will make for the chinese communist party and the achievements they have made in the last central. he can point to some remarkable economic achievements but it's also about projecting china and getting it to a place where it

is retaking a major role on the global stage as a country with strength, economic power, wealth, and economic -- and economic strength. there is a marching parade and we have seen some helicopters fly by. this is about underscoring the idea that china is regaining its place on the world stage. but the challenges economically internationally or acute -- our acute. -- are acute. shery: we see record negative views from a broad about china and the chinese leadership. -- from abroad about china and the chinese leadership. tom: at of 70 nations surveyed, 15 are at a record high about

disapproval of china and president xi jinping. the country is becoming increasingly isolated. joe biden trying to coordinate more closely with allies. it's dangerous because in china, arguably the china -- the party has never been more popular or stronger because of successful handling about covid-19 but internationally, it's the opposite. covid-19 has fueled the discontent. also the crackdowns in hong kong that has led to international discontent when it comes to china and its policies. president xi jinping is standing in the same place as the official david hundred years ago

declaring the start of the chinese communist party. shery: is it clear what beijing's intentions are in the next hundred years? steve: i can draw the parallel in beijing to what will transpire in hong kong. i have covered a lot of these pageants. i have been to the insurance -- the entrance of the forbidden city. that is where they declared the founding of the people's republic of china. there is symbolism today. the communist party of china is huge on the symbolism which is on show today. usually there is a grand military parade with xi jinping coming out saying hello, comrades. good work, comrades. this year's more tones down on the military side but symbolism

is on full force and we see that in hong kong as well. obviously to a lesser degree, but there is a large police presence in hong kong. 10,000 police officers will be out on the streets today. as i drove in this morning, i went through to police roadblocks -- two police roadblocks and solve the deployment of a police water cannon truck. we have seen around the cordoned area a small protest of four protesters carrying a banner saying free all political prisoners. but there is symbolism to show that this handover anniversary will go off without a hitch. shery: please stick around. but we want to bring in our next guest, eric robertson, to give

us an economic view. thank you for hanging around. tell us a bit about the chinese economy and market outlook given we have seen a rally when it came to chinese stock last year but now this year it is starting to languish. eric: i think the operative word for chinese markets and economy at the moment is stability. it was mentioned in a previous interview and i think it is correct. the economy was one of the first to recover coming out of covid and this year what we have seen is perhaps some of the momentum stalling, but still it good levels. we are not seeing a loss of momentum per se. we are seeing in some ways a rebalancing of the economy and i think this is important in terms of sustainability. the export sectors which led the

economic recovery are still strong but perhaps at a plateau. we are seeing a pickup in domestic momentum in the services, consumer spending. so i think that's good news in terms of economic stability. on the market side, the currency has been stable recently, around a six point five against the dollar after a significant rally against the dollar in the middle of last year. on the right side, 10 year bond yields have been stable, around 3.1. i think that stability is working in china's favor in terms of attracting international portfolio investments. so i would expect that to continue into the second half of the year. the operative word is stability. haidi: and we are expecting --

what are the implications? eric: we have a view that the yuan will be stable for the balance of the year. i think into the second half you could see a move above 6.5. so a slight weakening against the dollar. i would not read much into it. i think that will in some ways reflect the rest of the world catching up economically to china. so a narrowing of growth differentials. some other central banks around the world will start to move in the direction of normalizing monetary policy on the policy differential will start to narrow. so it's not so much that china is losing ground, it's just a reflection of the rest of the world catching up. we have talked a little bit about the plateau of economic momentum. one think -- one saying it means as it takes pressure off the pboc to tighten monetary policy

so they will keep things on hold for the foreseeable future. haidi: does the yuan continue to be the anchor currency for emerging-market -- markets? eric: great point. if you look at the currencies in asia aside from china we have seen good stability. there have been pockets of weakness and leaders and laggards but the strength of the r&d in the second half of last year and first half of this year has gone in some ways toward improving stability or reducing volatility of a number of the currencies in the region. we have seen that with the korean won and taiwan dollar, singapore dollar, and relative to other emerging-market regions, we would argue that asia is the lower volatility.

i think that's an important anchor for the second half of the year. shery: we saw chinese authorities tried to clamp down on commodity trading. it did not like the commodity rally we saw in the last few months. how destabilizing has that been so far? eric: i think it's a good point and i think we have to keep in mind what is driving that policy response. the headline inflation numbers and china have been relatively stable but ppi, manufacturing prices, factory date prices, have been extremely strong this year and a lot of that has to do with very strong commodity prices. in many ways, monetary policy is not really well-equipped to control or canteen -- contain inflated. so i think policymakers have

tried to clamp down on prices through measures designed to control speculation and to keep those prices under control. you have to remember that for those companies importing commodity prices, the ability to pass on those prices to their clients is limited so it hurts profit margin. so i think there's a desire to keep underlying inflation under control. shery: eric robertson, and bloomberg subscribers can watch all the action on live go and find other big diary entries coming up later or some events you missed out earlier. you can check out the ceremony in hong kong and the pomp and pageantry of the celebration in beijing marking 100 years. this is bloomberg. ♪

haidi: hong kong is commemorating the 24th anniversary of the establishment of the hong kong special ministry, also known as handover day to mainland china. and this is the inside of the convention center where the reception is taking place and john lee is expected to speak a little later. and of course we have heard about the intense security measures warning against protesters. there was no public viewing for the flag raising ceremony this morning to prevent protests. we have heard there has been some protest activity taking place on the reaction from police but this continues as we

see the implications of the national security law and political freedoms and ability to demonstrate being restricted in the city. shery: and beijing really tightening their grasp on hong kong. now this is the celebration ongoing in the capital city of china. it is 100 years since its founding. we are awaiting president xi jinping tacoma deliver a speech. we are told it is -- to come out and deliver a speech. we are told it is an important speech. yesterday we heard about the need for new heroes to carry china into the next century. outlining how far the communist party has come in the last 100 years but also the grip over the party and country. this as we continue to see disputes and intentions over hong kong and other regions in the south china sea, not to

mention taiwan as well. alibaba is making a comeback after paying the antitrust fine, part of a crackdown on the internet empire. the e-commerce giant is planning to invest in sydney.com -- suny.com. what do we know so far? >> my colleagues have just reported that a consortium led by alibaba has neared a deal by the stake in a conglomerate. that would be on top of the 20% stake alibaba already owns in suny.com. this is another salvo over the

stranglehold of electronics and the fact alibaba is joining shows the company is ready to get back to dealmaking. we are hearing an announcement could be made next week but negotiations are still in flux. shery: is regulatory approval something that could become an issue given that it has been a struggle for alibaba in the past? >> the deal we need to be approved by the state administration for market regulations. a powerful watchdog in beijing. if this is the same regulator that previously penalized them for not declaring past investments in retail groups. the 2.8 billion fine as part of the investigation. haidi: let's get back to hong

kong where the city is commemorating the 24th anniversary of the establishment of hong kong region, also called the handover day. top executives have gathered in the hong kong convention center for the reception part of the celebration. among them is the acting chief executive, john lee. we have seen small protests outside the venue. the flag raising venue is right outside tiananmen square earlier on. would be protesters have been discouraged from turning up today. a lot of that has happened in the last year using the reason of covid. you can see the ceremony

perception taking place and one big item on the agenda is the national security law going into the next 100 years of the communist party has been the identity of hong kong. shery: let's go to beijing because we can see what is happening. president xi jinping is about to address the public. we have been waiting for this speech. we heard him speak earlier this week talking about how china needs new heroes to carry the communist party into the next 100 years since the founding in 1921. president xi jinping speaking now. take a listen. >> the first of july is a great and solemn day. the beginning of communist china and the nation. we gather here to join all party

members and the chinese people of all ethnic groups around the country in celebrating the seminary of the party. looking back on the glorious journey the party has traveled over 100 years of struggle, and looking ahead to the prospects of the rejuvenation of the chinese nation. to begin, let me extend warm congratulations to all party members. [applause]

on this special occasion, it is my honor to declare on behalf of the party and the people through the continued effort of the party and entire nation, we have realized the first centenary goal of posing a moderately prosperous satiety -- society aimed at all. we have brought about a historical solution to the problem of poverty in china and now we are toward the second

goal of bringing china into a great modern country. [applause] this is a great and glorious conversation for the chinese nation and the chinese people and the communist party of china. [applause] comrades and friends, the chinese nation is a great nation. with a history of more than 5000 years.

china has made several contributions to human civilization from the war of 1840. china was gradually reduced and suffered great [inaudible] the country entered much. people were subjected to great pain and the chinese nation was plunged into darkness. natural -- national rejuvenation has been the greatest dream of the chinese people and the

chinese nation. to save the nation from payroll the chinese people put up a courageous fight as noble minded patriots sought to pull the nation together in a formal movement in 1898 and the revolution of 1911 and a barrage of plans to ensure national survival. but these all ended in failure. china was in urgent need of new ideas for a new organization to rally forces.

roche -- russian global influence rose [inaudible] in 19 21, people were undergoing -- in 1921, people were undergoing great awakening. people were becoming closely integrated with chinese workers union and chinese government was formed. the founding of a chinese government in china was quite an event. it profoundly changed the course of chinese history in modern times. transformed the future of the

china people and nation and altered the landscape of development. since the very day of its founding, the party has made rejuvenation for the chinese nation its aspiration and mission. all of the struggle, sacrifice and creation through which the party has united over the past 100 years has been tied together

by one ultimate thing. bringing about the great rejuvenation of the chinese nation. [applause] we realize national rejuvenation , the party united and the chinese people in fighting with unyielding determination, achieving great success in a new democratic revolution. through northern expedition, the revolutionary war, war against russians and the war of

liberation, we thought armed revolution with armed revolution, tackling the three mountains. and establishing the people's republic of china, which made people masters of their country and secured our nation's independence and liberated our people. the victory put an end to china's history as a semi-colonial society. to the fate of total disunity that existed throughout china and to all the unequal treatment

imposed upon our country by foreign powers and all of the privileges they enjoyed in china. it created a fundamental condition for realizing national rejuvenation. through tenacious struggle, the party and chinese people showed the world that the chinese people have stood up at a time in which the chinese people [inaudible] [applause]

national rejuvenation allowed the party to unite and lead the people to build a stronger china with self-reliance, achieving great success. by carrying out the revolution eliminated the oppressive system that had existed in china for thousands of years and established a different system. in the process of social construction, we overcame imperialist powers and made

profound social changes to china . with great transformation for china from a poor and backward country with a large population into a socialist country laying down fundamental conditions under a foundation necessary for realizing national rejuvenation. the party and chinese people through national struggle showed the world that the chinese people were capable of not only dismantling the old world, but also building a new one, that

only socialism could save china, and that only socialism could develop china. [applause] to realize national rejuvenation , the party united and let the chinese people forge ahead, achieving great success in the form of socialist modernization. we established the party's primary stage of socialism.

resolutely upon reform and opening up overcame risks and challenges from insurrection and founded and developed socialism with chinese characteristics that bring about a major turn which is significant in the chinese party that has enabled china to conform itself from a highly centralized economy to a market economic remain with policy [inaudible] across the board it also enabled

china to achieve the historical leap from -- to the world's second-largest economy [indiscernible] and raising the living standards of its people and modern prosperity. these achievements fueled toward national rejuvenation for rapid development. through national struggle, china showed the world that by pursuing with form and opening up, a crucial move in making china what it is today, china

has [inaudible] [applause] to realize national rejuvenation , the party has united and lead the chinese people in pursuing a great cause through a spirit of self-reliance and innovation, achieving great success for this capitalistic era. socialism with chinese characteristics ushered in a new era and we have strengthened the

party overall leadership and coordinated implementation of strategy and upheld an improved system of socialism and capacity for governance. we remain committed to our government and developed a strong system of interparty relations. we have overcome a long list of major challenges and filled the first goal and set up strategic steps for achieving the second goal. all historic achievements and changes in the cause of the party and country have divided

the cost of national rejuvenation with more robust stronger material foundation and a source of inspiration for taking greater initiatives. through tenacious struggle, the party and chinese people have shown the world that the chinese nation has achieved the tremendous transformation by growing prosperous and becoming strong and by china's national rejuvenation. [applause]

over the past 100 years, the party has united and led the chinese people in writing the most magnificent chapter in chinese history and embodying the spirit. the great path we have pioneered and great achievements we have made and [inaudible] [indiscernible]

[applause] comrades and friends, 100 years ago the pioneers of communism in china established a communist party of china and developed the great founding spirit of the party which is compiled of the following principles. upholding the truth and ideals. staying true to original aspirations. fighting bravely without fear of sacrifice and remaining loyal to the party and faithful to the people. this spirit gives the party a source of strength.

[applause] over the past 100 years, the party has charged forward with great founding spirit through struggles. it has developed [indiscernible] history has kept moving forward and the spirit of the party has been passed on from generation to generation and will continue to promote our greatest tradition so that the great founding spirit of the party will always be kept alive. [applause]

comrades and friends, we also all that we have achieved in the past hundred years through the chinese people, chinese communist, and chinese nation. chinese communist with conrad -- comrades --as their chief representatives have made tremendous and historic contributions for the rejuvenation of the chinese

nation. we express our thanks. [applause] let us take this moment to cherish the memory of our comrades. [listing names] and other revolutionaries who contributed greatly to china's revolution and to the founding

celebration and development of the communist party of china that have cherish the memory of the revolutionary martyrs who bravely gave their lives to establish and develop the people's up a -- people's republic and cherish the memories of those who gave their lives for reform and opening up to modernization and we will cherish the memory of all the men and women who fought for national independence and liberation from people from modern times. they are contribution for the motherland and our nation will

be immortalized and their spirits will live on forever in the hearts of the chinese people. [applause] the people are the true heroes that create history. on behalf of the city, i would like to pay my highest respects to workers, farmers, and those across the country, people's

organization and all members of the people's liberation army, the people's armed elite force and public security police and fire and rescue services at all socialist working people, and to all members of the united front. [applause] haidi: that was president xi jinping speaking in beijing at the 100th anniversary of the founding of the chinese communist party. you can continue watching and listening on the terminal live go. not a lot of surprises, only socialism with chinese

characteristics can develop china and talking about the achievement of the goal of moderate prosperity. one thing he continued to say is that this independence is widely achieve -- attributed to mouth. -- mao. well the next 100 years the about defiance? >> it's pretty hard to predict the next 100 years. let's look at the next 10 or 20. i think he has set china on a firm path. it is about growing wealth, power, economic power and military power, technological power, it is about sovereignty but also about implanting or spreading sovereignty overseas in a sense. in other words, the status of china. he has sent some pretty firm goals and has planted his flat

pretty firmly in the sand with this speech once again. haidi: what does he mean when he talks about the need for more national heroes? it something he said earlier this week. is there a sense that there will be continued desire? who will be the main players in the party in the next 10 years? >> it's interesting. china has always had its official pantheon of past leaders and he name checked all the previous party secretaries except for a few. but the party has also always wanted to have a more emotional connection with chinese history.

so he said we have always had model soldiers and model workers. i think they would like to have that continue, and emotional connection for ordinary people who do not relate to the leaders themselves. shery: we'll president xi jinping be front and center the next 10 years? >> it looks that way. it's dangerous to make any predictions about chinese politics in the next five to 10 years. there is no doubt there will be some surprises. but all signs at the moment, the party congress next year is that he will stay on. there is no indication that he would appoint successor's. given his power at the moment -- successors. given his power at the moment, you would not want to be

appointed a successor of him because he would immediately become a target. so depending on his good health, i would say he is here near and medium term. shery: it is probably hard to gauge in a country like china, but what does public support like for him domestically? >> it is hard to gauge. all the surveys that have been done by the pew research group, otherwise outside polling groups, i think the party whether people like it or not has a great deal of legitimacy. in some respects that is not surprising because they have had three or four decades of mostly uninterrupted economic growth. most people's lives are getting better. and the party controls the narrative. they control the media. so they can match the economic growth with a story that gives them credit for it. so i think the party has a lot

of legitimacy. the president is harder to judge. the anticorruption campaign was undoubtedly popular. there was nothing that made ordinary chinese people angrier than seeing people make out with illicit gains from the state. so i would say he is an imperial figure that can work in china. i would not underestimate his standing but it is impossible to say definitively. haidi: the foreign disapproval aspect, does it play nicely into the playbook that chinese people rise up from colonial rule, the self confidence aspect he speaks to? >> i doubt it doesn't. the communist party has always been about struggle and in previous speeches, not much

today, but he has been about struggle against outside forces, foreigners, to restore china to its proper place as a powerful and respected nation. the backlash could hurt china. we've seen a massive backlash in developed countries in the last two or three years and china thinks it can withstand that but it is not favorable to be on the off side so many countries. it is not helpful for china's own aims to grow and get more powerful to make mortal enemies of the united states. shery: richard mcgregor, great to have you with your insight. for those of you watching now, you can continue watching the party centennial celebration on live glow -- live go. the president is speaking now saying the party leadership is in the interest of chinese

people and he is delivering the speech talking about a moderately prosperous society. live go gives you that function. this is bloomberg. ♪

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