haidi: hello and welcome to "daybreak asia." i am haidi stroud-watts in sydney. shery: i am shery ahn in new york. our top stories this hour. fears of a price war in global inflation as opec-plus abandoned its meeting with no agreement on boosting oil output. the rba is expected to pare back emergency stimulus at tuesday's meeting to reflect australia's

strong recovery. calls for china to allow more flights from europe as merkel and micron press president xi jinping for closer engagement. haidi: asian markets are setting up for what is looking like a mix to start to trading as investors really weighing up what that break down in the third round of opec-plus talks means potentially for the reflation trade in oil prices. in new zealand trading pretty flat at the moment. the aussie kiwi seeing most of the price action, dropping to a one-month low after a local bank forecasted a rate hike. we are looking to see if the rba is going to be perceived as being more hawkish when it meets later on today and is expected to just gently rain back some of its emergency stimulus measures. sydney markets up by .3% in the futures session and a bit of a mixed picture when it comes to the start of trading in tokyo. shery. shery: we are watching very closely what is happening with opec-plus. we could be seeing the biggest crisis since the price were last

year. let's get more from carlos. what is going on this time around? carlos: saudi arabia and the united arab emirates don't seem to be able to agree. they have had rifts in the past and they disagree in a lot of issues of foreign policy and it seems to be reflecting in their inability to agree on whether to extend the current agreement, how to calculate the quotas, so it seems to be serious this time , and the consequences could be very dramatic if they do not eventually come to an agreement. haidi: carlos, what are the implications here in terms of not just the oil markets but the broader reflation story? is

there a precedent for where we are at at the moment? they usually eventually come to some sort of united front even if we do see these tussles going on behind the scenes, right? carlos: exactly. the last time something -- it was even worse than that, the last time we had something this bad was when russia and saudi arabia could not agree. that was even worse because then the whole alliance collapsed and markets crashed. we are not saying that this is going to happen. i don't think anyone wants that to happen. but it has now become a risk. in the short-term, the problem is the market has been expecting those extra barrels they were going to bring back because demand is rising. people are driving, flying again, depending on where you are in the world. you know, people have -- life

has gone back to pretty much normal in terms of driving, commuting. in the u.s., the huge market that it is, things are coming back to normal, so you have a lot of demand, almost at pre-pandemic levels. stockpiles of crude in the u.s. have come lower, so you need the extra barrels. in the short-term, like you said, there is the risk of inflation which becomes even worse now. shery: more analysts calling for that $100 oil. carlos joining us from calgary. let's get to vonnie quinn with the first word headlines. vonnie: thank you. the leaders of germany and france are urging china to allow more flights from europe as one way for the nation to strengthen political and economic ties. the three-way talks also discussed cooperation in africa, local vaccine supply, and climate protection. the e.u.'s sharp criticism of

beijing's human rights -- facebook, twitter, and google have reportedly warned they may stop offering their services in hong kong if the government goes ahead with a changes to data protection laws. according to the dow jones, they were part of an industry group that raised concerns to the government in a private letter. they claim moves to address what is known as doc seeing, where private information is revealed -- doxxing, where private information is revealed publicly, could put them at risk. they are demanding a $70 million payment. the ceo told the dow jones he would not comment on whether the firm intends to pay up. he told the white house that they are not aware of any critical infrastructure hit by the ransomware or any victims related to national security. a patch should be released soon. u.s. investigators will scan the

seabed of hawaii to find the wreckage of a boeing 737 200 cargo plane that went down after losing power in both of its engines. the national transportation safety board says sonar devices will be used to locate the jet and its supporters. investigators plan to interview the two pilots of the flight who survived after they ditched the plane early on friday. 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 have vonnie quinn. this is bloomberg. haidi: asian stocks are set for a mixed open on tuesday. traders are weighing jumping prices. let's talk to our guests. i am wondering, at what point do you start getting worried that this is essential stalemate at opec-plus is just going to further fan inflation and push central banks to move quicker? >> good morning.

that is clearly the issue here. opec, obviously very delicate game theory going through the system. the ball is in their court to control supply and one cannot see a scenario where energy prices fall significantly from here. even with difficulty and production levels, the controls for the increase of production are the key opec members. it is quite a delicate conversation that ultimately involves a deal with some part of russia to get the right balance out going forward. there's not going to be any capex investment and therefore, one can say current prices are maintaining slightly higher, putting the pressure back onto the inflation bed out there. they have a narrative. haidi: this is a pretty bumpy start to the second half. where are you seeing the opportunities for the second half of the year? you talked about diversification being an even more major theme.

carlos: yes, -- >> yes, so second half is kind of the year given that the past year has been so exceptional and people are getting multiyear expected return in one year. still a risk on in different parts of the capital structure, but on balance, it's looking at a still accommodative policy around the world. there is obviously nuances to it but the pre-tapering has been engineered in the right way and markets are absorbing the potential risk right well so general growth and reasonable price, high yield for that part of the capital structure, real assets with a cpi hedge are the themes here. looking for -- haidi: we seem to have lost george there. george boubouras, head of research. lots more to come. this is bloomberg. ♪

shery: the regulatory saga involving chinese ridesharing company didi global is making chinese ridesharing company's a riskier bet. our chief north asia correspondent, stephen engle, is taking a closer look at didi and joins us from hong kong. what do we know? stephen: we have not seen the fallout on the u.s. markets and because of the u.s. holiday of fourth of july so later tuesday, we will get investors a first chance to react to the news. a whirlwind of news over the last week, following the big didi ipo in new york, followed by news that they were put on chinese regulatory scrutiny review process and only two days later on sunday, getting an

order to basically have the didi app taken down from app stores across china. they had to go through a list of rectification's data security and other national security issues, so you know, we have already had reaction on tokyo markets with softbank. softbank was a key investor. we have seen tencent as a key backer. tencent, alibaba, may 2 on -- alibaba, baidu. all in reaction to the latest tech crackdown in china on the regulatory front. didi, like many of these big platforms we saw eight months ago as well when the ant ipo was discovered at the last minute, many of these companies grew rapidly in the absence of comprehensive regulatory environment. the regulators are trying to plug the and catch up and this particular case, didi, is a little bit different because

they listed in the united states, exposing the regulatory uncertainty to global investors more so than perhaps the ant ipo. ant ipo was much bigger and it was not hong kong so it was a global offering. it was in shanghai as well and that could sensually expose many domestic retail investors in china to these expected losses if the ant ipo went ahead followed by regulatory scrutiny, as what happened with didi. listing first and then regulatory crackdown fairly quickly. dow jones newswire is out with a story this morning, saying that regulators in china approached didi in the days before if not weeks before the ipo in the united states, urging them to halt that ipo, at least suspend it and conduct an extensive review of their data security. the story goes on to say didi interpreted that not as an order but as a recommendation. and they went ahead with the

ipo, 4.4 billion dollars, the biggest chinese ipo in the united states since alibaba, and now, the rest, as they say, is history. we had this regulatory crackdown that has expanded not only to didi but now as well to two other companies. that also listed in the united dates just a month ago in june. that of course, backed by softbank and tencent as well and a recruiting company in china. both of these companies listed in the united states, now under regulatory scrutiny in china. haidi: if we look at this as a strategic, is this a reminder that their success that at the end of the day, the chinese tech giants should be loyal to beijing? stephen: that is a very good way to look at it, absolutely. at the end of the day, beijing is the regulator and state power. don't just take my word for it.

i read through the global times column yesterday, global times is the state media in china and fairly strident. they brought up the issue that this is not just about data security. data security is a big part of it, especially when you are exposing these companies -- that's not the right word. you are selling shares to foreign entities in new york, but they are raising up the issue of national security here. essentially, the global times says we must not let any internet giant control a super database that has more detailed personal information than the state and that goes right to your question. change the page. we see a global times going on to say china must be even stricter in its oversight of didi's data security, given it is listed in the united states and its two artists shareholders are foreign companies. you are seeing the root of this crackdown. shery: stephen engle with the latest on that tech crackdown across china. let's turn to the end of

research. george, so as steve was telling us, we continue to see this clampdown across china. this gtv chart on the bloomberg also showing the drawdown when it comes to those internet names across china. this is the hang seng tech index mirroring a peak 30% drawdown. does this make sense given everything that we have heard from steve? or is this an opportunity to add to some of these names? >> very difficult to add to some of these names. it's very clear that beijing is creating the narrative in north america. there will be issues at home. not to overgeneralize it. in the decade ahead, you will get two different correlated equity markets, all things being equal, mainly in china and hong kong. southeast asia can be the diversifier. but it ultimately makes a very

difficult landscape for us to be investing in and buying futures of any technology companies that have a footprint and this takes another second derivative so you have mainstream cyclical companies like nike in north america that very much have good earnings had reasonable valuations. we are going to have this challenge of investing through this cycle with these very common events coming out of beijing that we just have to adjust to that are presented as an opportunity. it makes the landscape a little bit more difficult and we have to work with trying to make that challenge a bit more amplified. shery: are there parts of the chinese market that are less risky? we heard about the consumption side of things and health care, for example, that's bound to really gain given the demographics in china. george: spot on.

consumer discretionary, we all know that china consumption in the decade ahead must increase substantially. we all know that chinese capital market reform, in their own way, must accelerate going forward. i need met savings from the rest of the world at the end of the day, notwithstanding these events we are experiencing at the moment, but yes, they have the opportunity to go from investment into consumption in the decade ahead and the pboc has its own policy prescription. it is an interesting challenge for us and how do you play that? the easiest way to play it is the second derivative and that is, you know, singapore, south korea, malaysia, indonesia. the derivatives of asia will benefit and get a high wage in the indices. you cannot ignore mainland china and participate in future earnings in some way. consumption, consumer discretionary.

but the beijing way of doing capital market reform, they need to do that and accelerate it in their own way. haidi: australian companies are benefiting. take a look at this chart for projected earnings. when it comes to the materials index, the highest level in over 13 years. other than the miners, which pockets of the australian markets do you see as being able to benefit from that demand out of china despite all of the cross-border tensions? george: just consulting firms that serve as both commodities. they require iron ore regardless for the next few years and there will not be any reinvestment, hence keeping the price higher than it should be otherwise. australian companies will simply have to pivot as they are very quickly with free trade agreements elsewhere in the agricultural sector, they are finding new markets where they can, but at the end of the day, australia will continue to be the beneficiary of iron ore.

anyone links to iron ore goes into the consulting and servicing of the industry. there is no substitute for the next few years. there will be no reinvestment into that sector for energy as an aside and therefore, prices stay elevated for the foreseeable future for the three year until china can find some viable substitutes of high-grade ore coming out of brazil, which has not happened yet. haidi: george, always great to have you with us. george boubouras, head of research at k2 asset management. germany and france are urging china to allow more flights from europe. we will get you the latest on the three leaders. this is bloomberg. ♪

haidi: angela merkel and emmanuel macron are urging china to allow more flights in from europe. the two leaders want president xi jinping to engage more closely with the bloc. we are joined by james. what can you tell us about this conversation and any outcomes? james: there is no outcome. ly on the agenda. relaxing those restrictions. if you recall, china counted almost $700 billion of trade with e.u. last year so easing those travel rules can only help boost that number and it's also worth noting that macron is keen to boost prospects in china. merkel spoke of a positive development. she signaled potential for china and the e.u. to work together in

africa. how that will play out with china's belt and road initiative is not clear. shery: tell us a little bit about where the e.u.-china relationship is at, especially after the investment agreement that they signed earlier? james: there was not an investment agreement. china's treatment of the uyghur minority has emerged as a key point of tension and you have to remember that the e.u. lawmakers in may halted ratifying that deal so today's talks could be seen in the context of taking an early gentle step to reheating that investment accord. haidi: where does the u.s. sit in this? james: it is quite hard to see the biden administration being overjoyed about this, quite frankly. washington has, it is fair to

say, a somewhat assertive line towards china at the g7 summit last month, but biden pushed xi and the chinese recovery to the top of the agenda. he is keen for the west to present a united front and today's call may not necessarily dubai did many favors in that regard. shery: james ludden in new york with the latest on that china -- e.u. relationship >> china -- that china-e.u. relationship. they will invest in distressed property. he plans to garner $5 billion in assets. the firm will form a joint venture with one of china's largest special situation asset managers. the two firms will commit as much as $600 million to the jv. china's antitrust regulator is said to be about to formally blocked tencent's proposal to

merge top videogame streaming sites. they reported that the company has not figured out how to meet government requirements on giving up exclusive rights to their content. officials announced a review of the transaction in december last year. it is set to debut in hong kong after raising nearly 14 billion hong kong dollars or 1.8 billion u.s. dollars in its ipo. it sold 85 million shares at 155 hong kong dollars each. it is the latest u.s. traded chinese firms selling shares in hong kong and the first among three chinese ev makers. they are planning so-called homecoming share sales. pay tm could smash the record for the largest member debut. the simtech start up is working on a $2.2 billion ipo. it will seek shareholders approval next week. it may raise that target to

around $2.6 billion but we are told the board's decided to start smaller and gauge investor momentum. it is backed by softbank and berkshire hathaway. haidi: we do have some breaking news when it comes to the chinese retailer. the preliminary first-half net loss being reported is between 2.5 billion yuan to 3.2 billion yuan and this of course after we heard from sydney saying that their major shareholders sold a stake with 10% of its holdings frozen. the third largest shareholder is divesting some of its stake in the company and we have seen that being frozen by shanghai court as well. lots of woes for this company. the chinese estate fund that included alibaba is set to invest in that retail arm of the company. we are hearing the pulmonary first-half net loss coming in at $2.5 billion to $3.2 billion --

2.5 billion yuan to 3.2 billion yuan. others see the start of another price war. that is next. t. total gym includes everything you need to get into the best shape of your life. for every body at any age. it works every muscle group, including your core, using your own body weight as resistance. customers love total gym because it's fun, fast and effective. nothing delivers full body results like total gym. and right now you can try it risk free and enjoy special savings too! get on demand workouts free, free shipping and more. call now!

shery: we have breaking news out of japan right now. we are getting the labor cash earnings year on year, a growth of one point 9%. a little bit of a disappointment against estimates, but still, growth from the previous month, which was a revised 1.4%. for the month of may, real cash earnings year on year, 2%. again, little bit of a disappointment against an estimate of 2.4%, and a slight slower pace than we saw in the previous month when it comes to

real cash earnings growth year on year. household spending year on year, 11.6% growth and of course, this is being helped as well by a lower base. it is also a much faster acceleration of household spending been expected but a slight slowdown from the previous month. remember, when it comes to household spending members and labor cash earnings in the month of may, we are sort of midway through the pandemic restrictions, so course, we will continue to watch the cash earnings, wages, and spending going into june when the state of emergency ended. haidi. haidi: we are going to stay with japan. starting an internet firm, recruit holdings is the fifth-largest company by market cap with a young chief executive at the helm. the ceo took the position in april and this makes him the youngest ceo among nikkei 225 companies. he thinks his firm has been among the best to a

post-pandemic future. he gave them bring his outlook for the next few months. >> it's also should be aligned with our vision and mission. we need to find friends, more friends to simplify hiring. i think it should be done. >> what did you learn during the pandemic, both in terms of business opportunities, and also internally about the company? >> the challenge we have been having is to convince folks to try new technologies. they are not marketing type of department people.

they are not saying that we need new technology, we need to try it. right? because of this pandemic, online assessments, online interviewing, online -- these type of technologies are well accepted from people. i think it was a great opportunity for us to move for the future with new technology. >> how about the use of new technology and ai, especially when you consider the threat or potential threat from larger tech companies? >> we have already started to have online assessments or interviews, but we are getting more and more data. millions and millions of people finished assessments and online

interviews. for example, somebody finished an interview within two minutes, spent 40 minutes. that's a big difference. these types of signals can improve our machine learning technology. ultimately, it can serve jobseekers and employers better. >> previously, one of the goals was to grab the most consumers by 2030. is that still in the plan? >> i'm thinking that is more the result. when i am thinking is at first, we need to build better products to attract jobseekers and consumers globally. and also probably employers. we need to be having more

products we can be proud of. this is the best in the world. that is more the current goal for what i am thinking. >> the ceo. take a look out the markets are doing. we are seeing qe stocks under a little bit of pressure after we saw the longest winning streak since early may. we had seen five sessions of gains for kiwi stocks, not doing much now, but we are seeing futures to the upside when it comes to sydney. we are awaiting that rba policy decision, expected to keep rates on hold as we continue to see the asx 200 gaining ground this week. the kospi rose yesterday and we are seeing a little bit of downside for kospi futures but right now, nikkei futures pointing higher after stocks fell yesterday and we did get cash labor earnings and household spending rising more than expected. equity markets, very conscious

of what is happening with oil prices, really playing into inflation concerns as opec-plus was plunged into crisis with the worsening fight between saudi arabia and the uae blocked and oil supply increase. brent rose for the first time since 2018 after the group failed to reach an agreement on bringing back curtailed output, leaving the market with tighter supplies than expected. let's get some analysis from the senior commodity analyst, daniel hynes. always great having you with us. this gtv chart on the bloomberg first of all showing something very obvious. when you have the opec-plus cutting down on supply, those lower output numbers supporting prices than on the second panel. what are you seeing in terms of prices given what we are seeing happened inside the cartel? >> you cannot argue with how the market is viewing things at the moment. certainly, their view that the breakdown in talks will see

current production limits being maintained rather than increasing, and then obviously, coming out a fairly crucial time. the driving season in the u.s. and europe, driving demand higher. with that, i expect prices to continue to push higher in the shorter term but i'm concerned about what i suppose the potential breakdown of unity within opec could mean for supply on the oil market over the medium term. certainly, the uae's demand for higher baseline production numbers to allow it to increase output, i suppose, does raise the risk that that unity, that compliance that the group has maintained, could break down, and i think that has been a big part to why prices have been

relatively stable even though you were seeing a strong rise over the past 12 months. and it could shape that belief in the market that compliance will continue. shery: could the relationship worsen as badly as it did last year during the price were? daniel: looks, it has certainly got the potential but i think for the moment, i can still see some path out of it at least in the shorter term. you can see that proposed 400,000 barrels per day increase allowed for the rest of this year and then the issue around the pushing out of that data for this apply to the end of next year, potentially tackled at a later date. but look, i think we have had some very strong compliance for two years within this group and that is always very hard to

maintain when you get so many differing sort of, you know, producers who have got obviously a lot of drivers dictating what they want today. i don't think it's going to get to the point that we saw recently, but you know, and certainly allow that perception from the market to wane around strong compliance. haidi: will the supply gap change the picture when it comes to u.s. shale? mostly, they have been on the sidelines, waiting for an outcome from opec. daniel: yes, i think that is an important factor to take into consideration, and i think saudi arabia certainly has been confident by the relatively cautious outlook that u.s. shale producers have taken so far. certainly, drilling activity has picked up but output has

remained relatively subdued. with those producers looking at returns rather than pure volume growth, a strong pickup in u.s. shale is relatively though as well. there is some comfort to opec and saudi arabia in particular. they will be able to increase output over the medium term without losing too much market share. haidi: it has been a horrid first-half for most of the commodities complex area taking a look at the rest of the calendar year, do you expect the talk about a super cycle? daniel: the fundamentals are very strong and we are certainly coming into a slightly softer period for demand.

traditionally, the july and august period has in growth in demand to slow down, particularly in china. that pent-up level of demand we are seeing still has plenty to go and we have a lot of the supply-side issues across many commodity markets. the foundations, the fundamentals are still very positive. i still think over the last 12 months to 18 months, we continue to see very strong price increases. certainly some softness will see prices probably just trading sideways. haidi: daniel hynes, anz senior commodities strategists joining us. the world races for an oil shortfall. we have the details ahead. this is bloomberg. ♪ ♪

vonnie: this is "daybreak asia." i am vonnie quinn with the first word headlines. china's central bank says financial institutions should increase credit supply and provide more financials were to small and medium-size companies. the pboc noted -- it encourages

smaller banks to expand funding channels for sme's. in the countries securities regulator pledged to safeguard against risk at the untamed expansion of capital. pfizer's vaccine appears to be less effective against the delta variant of the coronavirus. in june, israel's effectiveness fell. its efficacy rates were keeping infected people out of the hospital at 93%. israel's data coincides with the lifting of virus restrictions. england plans to lift all covert curves in cruising -- including capacity limits from july 19. the government will no longer trust people to work from home. prime minister boris johnson says cases will continue to rise and people must learn to live with the virus and exercise judgment to protect themselves. japan will reportedly open the tokyo olympics, giving up

earlier plans to have spectators at the july 23 ceremony. the newspaper says ioc members, sponsors, and other officials will attend, but efforts are being made to downsize the numbers. venues with a capacity of 10,000 people or more will be banned from having spectators. as will events scheduled later than 9:00 p.m. goldman sachs is predicting england will win its first major soccer tournament and 55 years at the euro tournament. disinflation of the probability model taking into account factors such as strength, performances, and home advantage. england faces denmark when italy meets spain. 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: right.

when it comes to of course soft commodities, we have really been looking deeply at what happens to the soaring food prices. we have had global food prices at the nine-year high. it's good news when you get a report from oecd and the u.n. saying that prices are expected to come down although we will see demand growth slowing, not to mention output rising again. haidi: we have seen price rises from everything from the price of coffee beans to pizza down. this report saying we are not actually in a super cycle when it comes to price increases and demand increases and the expectations are that this a side will start to come down. this has been a concern because the worry is that the rise in prices is coming at a time when we could the more people

globally being pushed into poverty and hunger as a result. shery: especially during the coronavirus pandemic. it seems that in the short-term, we could see some near-term alleviation in terms of perhaps more farmers, farmworkers returning to their lands as they exit lockdowns and ease of travel restrictions helping. it's really interesting in this report. talking about consumption changes when it comes to what people eat. in the future, we could see people eating less red meat and eating more poultry, dairy products, given health and environmental concerns. haidi: lots of companies working on meat alternatives and phony meats and the like. demand is expected to grow 1.2% compared to 2.2% in the previous decade so that is quite a

significant slowdown. the other thing i thought was quite interesting -- we talk a lot about the labor market changes as a result of covid and closed borders. the report points out the agricultural labor market will get back to some semblance of normal production once orders reopen and some of these seasonal workers are allowed to travel again. really interesting report. let's get back to of course the major commodity of the day that we are focusing on, the opec crisis not just putting the global economic recovery and control over oil markets as fake but also could reshape the entire industries green future, rising crude and gas prices may impact he oil demand as well as future investment. let's bring in wayne. how do high oil prices, the stalemate, impact demand and the subsequent impact we will see? wayne: p oil demand will calm regarding -- peak oil demand will come regardless of prices.

there is limited impact in the pace of transition. the cost declines in technologies will play a way larger role that higher oil prices will in reducing price differentials between the technologies. take for example in the aviation industry. sustainability fuel is more expensive than traditional fossil jet fuel and higher oil prices alone are quite unlikely to single-handedly tip the scales from a cost perspective. there are however some industries or sectors where higher oil prices play a material role so for example, in the commercial vehicle segment, particularly for diesel trucks, where diesel costs make up one third of the total cost of ownership, high oil prices there would have some material impact on the cost competitiveness

between trains and others. for the passenger car segment, we expect to see battery electric vehicles reach cost parity within the next few years and also in china and the u.s. and that's not because of oil prices. that is because of rapid declines in technologies. shery: it seems road fuels such as gasoline will be heavily impacted as well. how has this affected investments in refineries? wayne: we have been dealt a blow after blow for a while. they have been facing overcapacity for a few years now. we know that the pandemic hit last year, which crashed global demand and refinery margins and we are in a much better place from a demand standpoint. countries outside of opec increases input costs so it

comes as no surprise to us that capital investment in refineries would be about half of what we saw in each of the last two decades and all of these expansion products will be focused on the middle east. most of these refineries are essentially chemical complexes. for example, 50% fuels. the complex will put it at 35% transportation fuels. the rest will be dedicated towards the chemical sector. making money aside, the strategy behind some of these projects will include things like energy independence, food security, and for eastern countries, a way for them to secure demand for decades ahead. shery: how have existing refiners responded to lower margins? wayne: there are a few ways. they shut down permanently and we have tracked 1.6 million

barrels per day shutting down permanently between 2020 and 2021. we wait for market conditions to improve before they come online again. the last one is where refineries invest more money to be able to produce biofuels, and this is a trend. we have seen more with the and european refineries where there is existing policies in place to support the biofuels industry. 1.i will add is that there is a trend we could see more of if governments support the refinery sector. this is a good example. six refineries have come off line and there's only two left operating. 8 billion u.s. dollars to support the current operating refineries. shery: our bloomberg oil analyst

there. we will have plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo and seoul. some stories we are watching today. in japan, nomura has suspended

coverage of dozens of companies including rakuten following the departure of two highly ranked analysts in tokyo. companies on the tokyo stock exchange's watchlist are at risk of being removed from the nikkei 225 index. previously, only firms on the brink of being delisted were removed. the changes take effect october 1. asahi reporting that the government in japan is planning to hold the olympics opening ceremony without fans, giving up earlier plans to have spectators. over in south korea, the health ministry now saying that a media every part said the government is in talks with pfizer and moderna to produce covid-19 vaccines is not true. health officials will be holding a briefing later at 11:00 a.m. local time. in the meantime, the ft is reporting that it is being investigated over allegations of manipulated search rhythms to prioritizes product. the fair trade commission

conducted an inspection in seoul last month, haidi. haidi: let's get you caught up with the rest of the business flash headlines this hour. credit suisse is planning to give its employees maximum flex ability. approximately 200 that will be able to decide -- staff will be able to decide how much of the time they want to spend outside and inside the office. bank said the rollout of the policy for the rest of its 49,000 global employees will be determined by regional guidelines. australia is boosting staff numbers overseas as it seeks more international deals. the australian company plans to have 60 staff in new york by 2026 and will increase its london employees from 40 to around 100. the firm is on track to more than double its size within five years to $376 billion. a chinese state backed fund will take a 17% stake in the company.

the retail arm of a billionaire's empire in a deal valued at 1.4 billion dollars. the fund is led by the state asset management committee and provincial government. alibaba and xiaomi are among the household names also partnering in the fund. ♪

shery: well-timed to "bloomberg markets: asia." from bloomberg world headquarters and shery ahn. haidi: our top stories this hour, fueling global inflation as opec abandons its meeting with no agreement on boosting oil output. the tokyo stock exchange had sees a realistic chance of extending trading hours. we hear exclusively from the

president. plus defaults threatening china bond investors. the riskiest corners of a $12 trillion credit market. shery: japan, south korea, and a stroller coming online. for the nikkei and upside of .3%. energy and industrial stocks leading the pack today, reversing gains we saw yesterday a broad outside and it is green across the board. we had may household spending numbers coming in better than expected, rising 11.6% year on year. the japanese yen still holding very close to the 111 level trading near the 15 month low against the u.s. dollar. take a look at the kospi, we are seeing upside at .4%, rising for second day. the korean won is holding onto gains after seeing its best day in a week against the u.s. dollar. we continue to watch what is happening on the virus infection

development in south korea, reversing relaxation of mass gross insult. and- the -- reversing- -- reversing relaxation of mask rules in seoul. haidi: the possibility of new south wales being extended the rv is expected to do a gentle unwinding of emergency stimulus measures. this morning, the aussie-q. week dropping to one month low after a local bank forecast rate hike. but we are not expecting that necessarily from the rba. we will see if we get a more hawkish tone to see if that trade is short-lived. we are seeing the upside of .1% as trading gets underway here in sydney for the equity session. we also see the kiwi dollar with strength at just over 70. our next guest expects 8% upside

for the regional benchmark index for asian the second half. but he says the path may be bumpy. joining us is asia-pacific equities strategist at golden -- goldman sachs. we have the delta variant and we have had an exceptionally good half of returns that have passed. is a going to be harder to get the same returns in the second half? >> i think so. it also depends on where you are talking about, which region. the united states has had an exceptionally strong first half. are you strategist things the s&p could finish this year about where it is currently at 4300 on the spx. in contrast, asia was outperforming the u.s. by 700 basis points in the first month and a half of this year, had a

significant reversal of fortune. it actually has slipped 14% in terms of relative performance. with asia only clocking about 4%-5% returns in the first half, we think there is an opportunity for some catch-up, driven by underlying earnings and valuations that are not especially stretched. we are looking for a percent return in the second half on a 12 month view about 13% in price terms and up to 15% if you add in dividend yield. that is not quite as significant as it was last year. but against losing money and bonds and making no money in cash and little in credit, we think equities still are the appropriate place to be from an asset class allocation perspective. haidi: i don't think any of us had prolonged opec stalemate, to start the second half, but this is where we are. who are beneficiaries and losers out of any prolonged price were

at opec? does it -- price war at opec? does it change the inflation and price outlook? >> it does in one reason we entitle our peace, better but bumpy, is a are still quite a number of macro uncertainties that will most certainly mean the path of performance equity markets will be anything but straight. we do envision some air pockets. one of those, the larger issue is inflation pressures. we have looked at this in detail and examined the spread between input costs, proxied by the consumer -- producer price index and output costs which would be the consumer price index. that widening spread between the two suggest there may be margin pressure. of course, if oil continues to have this increase, we have been expecting increases in oil prices. but this is a new supply-side shock, if you and. that intensifies -- if you

would. that intensifies underlying concentration concerns. if you follow the logic it suggest beneficiaries would be the ones upstream the economy, where's once more at risk would be the downstream ones to an extent they cannot pass through all the cost increases they are facing. so one of the strategies we have is an upstream versus downstream one, to take advantage of that margin differential. shery: what is a strategy you have in china? the gtv chart on the bloomberg showing it breaching that crucial technical average level. we have the regulatory concerns that add to the pile of concern over what is happening across the country. >> very true. we have taken a somewhat heroic stance and are overweight china. we think a lot of the bad news that has been accumulating has

been pretty well discounted in the market. it would be incorrect to say that all of the potential news or uncertainties have been price in, because you axiomatic they cannot say that. but if you look at the earnings we are looking for which is 23% this year and 50% next year, china having started the are strongly up 21% in the first six weeks of the year, then retraced all of that and it is close to the first-half flat. that means the underlying earnings have been occurring while the market has treaded water which means valuations have compressed. from a risk versus reward standpoint a lot of concerns the market is understandably focused on have been well reflected in prices. now, the recent news flow with regard to regulatory intensification is clearly the nearest and most significant pressure the market is facing. our broader view is, we do not think the regulatory authorities are trying to completely eradicate the profitability of

the private sector companies. we think what is going on is more of an attempt to level the competitive playing field, to close areas of regulatory arbitrage. and the most recent front, data security. we think the market overall can digest that and companies are adopting so we think on a longer-term view, the risk-reward set up given how much they are priced in, lends us to take more constructive you on the market overall. shery: when it comes to growth prospects across asia, we note china has been a first rebound in the recovery. how do you play that into your strategy of which of the next markets to outperform? >> it is a great question and there's going to be what you could call a rolling series of recoveries. the further south you go, generally, the worse the covid outbreaks have been. india is a great case in point. we are reversing the concern of

40,000 cases per day and that is come down very nicely. we are expecting a meaningful rebound to happen fairly soon. indonesia is a country where you have the most pressing immediate issue, in terms of average daily cases. they are over 20,000 a day. in that case there has been fresh lockdown's as i'm sure everyone is aware. so what you will see is a rolling recovery, where the peak of the recovery will be spread out over time, with southern asian economies being the ones probably the ones that will hit that peak later. we have had the issue of peak momentum in growth and earnings. that is generally sooner in north asia and more delayed in south asia. so as we go to the second half you will see the incremental momentum start to shift down from the north to south. haidi: i want to pull up this

chart and get your views on the chinese government drama. this chart showing the hang seng drawdown is nearing 30% from the peak. what you make of this? the timing of the regulatory action days after the u.s. ipo. is a reminder of the not so invisible hand of the state here? >> uh, i mean, there's a lot of different interpretations on that and the news flow is still coming in. so, i would not want to opine on motivation, and whether the timing is coincidental or not. i think we can say that there are clear efforts on the part of the state administration for --regulation, where the focus is on ensuring a level, competitive playing field, to reduce some of the inherent market, perhaps market abuses, can hear it in the economics of many internet industries, where there is a

terrific benefit to scale. and the largest players in a particular industry tend to have outsized market influence. so i think it is an attempt to protect the consumer, to ensure the competitive playing field is more level and that one is sort of playing by pharaohs. i guess the key point -- playing by fair rules. i guess the key point i would emphasize his those updating and refreshing regulations have been pretty well discounted and share prices as evidenced by the chart you have showed. so come up from a risk versus reward standpoint, one most has to take in consideration how much the market has already discounted. our view is a lot has been discounted. therefore, we think the risk reward is to the upside on a kind of six month view. shery: great having her insights, air chief asia-pacific equities strategist at goldman sachs. the oil markets, rent holding above $77 and barrel level,

reach for the first time since 2018. wti also above $76 per barrel. this after opec plus ended days of talks without reaching a supply deal. what next for opec negotiations? >> like you said, the opec plus group abandoned their monday meeting. what happened is, there was a tentative deal to boost output. but that was upended by a disagreement between saudi arabia and the united arab emirates over how to measure production cuts. i think the immediate consequence of this collapse in talks is that that production hike expected for august will not take place. so, you know, that potentially leaps market short of barrels just as the global economy is really recovering from the covid-19 pandemic. like you said, we have seen response in oil markets. crude is trading above $77 a

barrel in london. what happens next will really determine whether this breakdown in talks escalates into conflict , as destructive as the price for we saw last year. but i think we have to wait and see what happens next. haidi: does the u.s. still just as u.s. shale still wait and see what opec does or is there more flexibility for them to move more? >> i think we are still in a wait and see phase. the market is going to be watching keenly in the coming days as saudi arabia and the uae published prices and negotiate volumes for their august crude supplies. we know that talks are ongoing behind the scenes. iraqi's oil minister said yesterday he hopes within the next 10 days there could be a day for another opec meeting, during which, obviously, the

hope would be that they are able to reach some deal that satisfies everyone. in the meantime, you know, he said members will continue to honor their existing production quotas, and any impact on prices will likely be temporary. so i think we are in a wait and see phase. but, clearly, there is a lot of concern that, if the unity within the opec plus group continues to break down, and escalate, you could have a free-for-all, where members do not honor these production limits, and they sort of open the taps and flood the market. and then you have much more instability for capital markets. haidi: are asia editor aaron clark. let's get to vonnie quinn with first word headlines. vonnie: hackers behind the ransomware attack exploiting

kaseya software are reportedly demanding a single $70 million payment. he told them the company is not aware of critical infrastructure it by ransomware and apache should be released soon. -- and a patch should be released soon. facebook, twitter, said they could stop offering services in hong kong if the government goes ahead with laws. they say they raised concerns to the government in a private letter. private information is revealed publicly could put --at risk. china central banks say's institutions should increase credit supply and provide more support to small and medium-size companies. eight pboc notice monday encourages smaller banks to sell special bonds to expand funding channels for smes. the country security regular pledge to safeguard against risk, and against the untamed expansion of capital.

global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, we look at china credit where the lines -- the cohead of asia fixed income. next, more on china's continued crackdown on the tech industry, as it is widened beyond di -- beyond didi, to include two more companies that recently listed any arc. ♪

shery: the regulatory saga engulfing chinese ridesharing didi is making china's big tech platforms a riskier bed for global investors who piled into large listings in the crosshairs. our chief north asia correspondent stephen engle is taking a closer look and joins

us from hong kong. what is the latest with didi? >> it is definitely a risk for global investors. they want public last week with a $4.4 billion listing in the united states. the company has a lot of attractive attributes including profitability in the second quarter. but they have had their app taken down off all app stores as of sunday because of the regulatory order. and there is a lot of uncertainty. it is not just didi, it is other companies ensnared as well, essentially the same day, in this next round of regulatory tightening in china. full truck alliance, ymm, the stock coat, it went public with adr's in the united states in june as did the stock coat d -- code dz, also under regulatory scrutiny. it has been listed in the united

states with abr's in june. so there is a trend here and u.s. investors who maybe piled into some of these stocks have not necessarily had their chance to react yet to the slew of news. first, getting there deadi put-- didi put on regulatory review and then two days later having the app taken off app stores and out extensive review process and we do not know how long that will last, and how that will affect revenue streams, and what other rectification's are in the pipeline. so investors tonight, tuesday in the united states, will get the first chance. most analysts are saying likely to be selling going on. softbank shares saying -- saint to a seven month low yesterday, and hong kong shares also adding to their losses for the next -- from the last eight months or so since the aunt -- ant sega again

in earnest. haidi: curious timing. the head of that tokyo -- we will have an interview coming up shortly after the break. lots more to come, this is bloomberg. ♪

haidi: the tokyo stock exchange says longer trading hours could happen. the president spoke exclusively to us. >> our overall goal is to build up the market of choice for domestic and overseas investors, and listed companies, and also other market users. it is very important to remember that this market reorganization is not the final one. it is just the first step to transform tse, to become the

market of choice. >> the tse established a panel to discuss expanding trading hours. what feedback have you heard from stakeholders and investor so far? do you think these changes are likely, and if so, when? what would be the challenge to making trading hours longer? >> we started this discussion at the working group last month. there were many variety of opinions from the members, largely about the impact of an extension on the processes that are carried out after the trading ends, such as setting up baselines for investment trusts. and i do not know how long we will extend this time. however, i feel the trading hour extension looks more realistic, than the last time we discussed. >> recently, taiwan's apir

group, listed in the tse. what will the tse do to attract more overseas companies and how do you plan to compete with overseas exchanges? >> market in tse has been strong in the last few years. also the market highly rated, especially by asian startups. as you know, japan has a very stable democratic government. and the power of regulation is also very stable. and we have the japanese economy, the third largest in the world, with 2000 trillion yen in assets held by individuals. and the tse affair and open market with ample liquidity. you do not have any other markets like this in asia. with that background, we have

been promoting ipo business among asian companies. targeted cross-border companies, what we call cross-border companies. cross-border companies are three types. what is companies based abroad. the second is those companies originally based abroad but reestablished itself in japan is a japanese company. and the third case is those japan-based companies with foreign-born ceos. and we, from the beginning of this year, we have been, all of those three types of cross-border companies listing ipos in japan. we have so far as of today, we have 16 cross-border companies listed on tse, and we have a couple more in our pipeline this year. i believe that the tse listing is the optimal way for cross-border companies to

improve their market cap or corporate value. so we will continue to work with people in the ipo business in asia to continue promotion. >> the biggest corporate news now is about toshiba and how it worked together with the japanese government to influence shareholder meeting. could you tell us what you think about this issue, and whether or not the tse is considering any measures? >> obviously, we have been watching the toshiba situation carefully, especially since the independent report came out about last year's agm. and obviously, if this toshiba issue had a negative impact over the flow of investment by overseas investors that is not good for the japanese capital markets, so, from the perspective of jpx, we strongly request that toshiba discloses

appropriately and also promptly, any information needed by shareholders or investors for information

haidi: we have breaking news crossing the bloomberg regarding hong kong markets. pmi coming at 51.4 for june, softer than the may reading of 52.5 though still firmly in expansionary territory. a mishmash of covid and pandemic restrictions have rate -- w reaked havoc especially with the tourism sector with an impact today hong kong. we have seen the steady recovery in the jobs market in hong kong. but the finance chief recently said the full economic recovery

will rely on vaccination levels which we know have been quite low and stagnant for hong kong. but market hong kong pmi for june coming at 51.4. let's turn to china now and mainland trillion dollar credit market is the biggest after the u.s. and until recently one of the safest. but as beijing forces more accountability on its weakest companies, bloomberg has launched a new metric to measure stress. what is the purpose of the new credit tracker project? and why launch it now? >> this has been a really extraordinary year for chinese credit. beijing has really move to clamp down on risk as you mentioned in the market. and that is presenting a whole new set of challenges for investors. we are really seeing the idea of too big to fail no longer being a winning strategy. so the tracker aims to show and

shed light on some of the riskiest corners of china's corporate market and to place in historical context how well they -- the incredible high wire act beijing is looking to do. looking to increase at a record pace this year but at the same time stave off the threat of contagion risk. shery: what types of metrics does it look at? >> we look at a range of different metrics to create this heat map that shows stress across time. that ranges from the value, face value of default in china, yields a junk-bond. and replace these and historical contexts, compared to previous months, to see what is china's market showing, resilience or where threats are starting to emerge. shery: so why is china allowing

defaults to rise at this record pace now? >> yeah, we really have seen beijing moving to clamp down on financial risk. and not just in the credit markets, course. also in the tech sector. in the education sector. really when it comes to credit, we have seen this extraordinary and explosive gross -- growth of china's credit market, the second largest in the world. what we have seen that allowed to happen is firms that have had unadulterated access to credit, to build and expand in a reckless way. so really what we are seeing this year as this move to try and curb moral hazard. to try to change the way fundamentally investors are viewing the market. and also to introduce more discipline for companies themselves. to allow companies that are failing, companies who businesses are struggling, to fail. shery: china credit team later

wilkins with the latest on that china credit market. our next guest saying she expects continued inflows into the chinese government bond market. given that diversification to global bond portfolios. joining us is the head of asia-pacific fixed income at alliance. great to have you back, jenny. let me ask you as a first question what i asked rebecca, why are we seeing this effort by the chinese government, to really make the bond markets more transparent, for account ability? to really reduce moral hazard and financial risk? why now? >> first of all, covid does not really change the overall trajectory of china's default past. for credit investors like us it is not the default itself that scares us or concerns challenges us. it is how default risk is priced. how distressed securities are traded.

and how defaults are dealt with. the key challenge we are looking at in the market is the lack of those factors, particularly consistent, transparent, and predictable resolution process. we have seen progress made in areas over the past 12-18 months. and there are new rules and regulations on resolution on five pockets, on market-making, and all. again, covid does not change the overall course of china's default. as we get back to normal we should expect more defaults to happen again. haidi: so why now? why is the chinese government doing this now? is that that they see they have more leeway to do it now? >> things have been normalized. if you look at china's overall gdp growth numbers and the pmi, they have been robust. and you have the inflows, strong

inflows into china's bond market. the government would like to attract more investors into that credit market, which again, is a second largest in the world. haidi: is more helpful or more confusing for investors? we know at the heart of all of this is the ability to do, to grassroots due diligence, which a lot of international investors do not have. does too big to fail help them? >> well, i think is more important to look at policy, overall policy goals. from a more holistic perspective. if you look at the government intention, the government reiterates its intention to support private sector and sme, that is one. and its intention to keep the property sector from overheating, that is to. and three, the intention to deleverage and let the market for us to drive it. right?

so the most important -- and above all this, which is still most important policy goal, which is the bottom line, as well, is to avoid --. haidi: when it comes to international ratings companies, do you think the ratings we are seeing come the changes we are seeing, is actually reflective of the fundamentals of these companies? >> the rating agencies have their own frameworks. and we think it is much more important, it is equally important at least, for credit investors, to do your own work. we have our own framework to analyze credit and rate credit. the thing is, the market right now is, you see, the market volatility increased with more trivial headlines nowadays. that tells you the market probably is more driven by technicals and sentiment. and that valuation is further from the fundamentals. so there are a lot of noise, there are a lot of headlines. and that crowded the more

structural and fundamental trajectory of credit. shery: how long will these rate differential benefits last when we have the fed now starting to signal moves? >> well, currently year to date the inflow -- very strong. having said that, now we see a positive feedback loop between the inflows and appreciating currency. that means you have more inflows, the higher the rmb and the higher the rmb, you have more inflows. we know that this positive feedback loop can potentially turn into a negative feedback loop which presents new challenges for pboc to manage overall liquidity and systemic risk. of course, now we would, we expect the short-term momentum to slow down. the fed started to talk about talking about tapering. we see the last pmi data, it is

weaker than expected. in the second have a small reversal of data between the u.s. and china. and the rate differentiation, differential, probably is weakening a little bit. but i think overall we remain constructive on overall rmb outlook and on the inflows of china. haidi: cohead of asia-pacific fixed income at alliance, we appreciate your time. next, china's communist party once the world to see the country's continued rise as inevitable, but is it really? we discussed. -- we discussed. -- we discussed ♪ ♪. ♪

haidi: vonnie: this is "bloomberg daybreak: asia." opec plus abandoned meetings without a deal, tight supply and rising prices. delegates said talks failed to resolve a dispute between saudi arabia and uae against the plan to boost supply but extend quota limits until the end of next year. this means production will not increase in august, those talks can be reactivated. the leaders of germany and

france are urging china to allow more flights from europe as one way for the nation's to strengthen political and economic ties. the three-way talks discussed cooperation in africa, global vaccine supply, and climate protection. the european union's sharp criticism of beijing's human rights record has raised tensions. and eu-europe agreement is on hold. england plans to list all covid curbs including social distancing and venue capacity from line 19th. face masks -- july 19. face masks will be voluntary and the government will no longer instruct people to work from home. prime minister boris johnson says cases will continue to rise but people must exercise judgment to protect them selves and learn to live in the virus. pfizer's vaccine is stopping severe illness but appears to be less effective against the delta variant. in june israel saw the effectiveness of the shot dropped to 64% from 94%. its efficacy rate or keeping

infected people out of the hospital slipped to 93%. the israel data coincided with lifting virus restrictions. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: when will china overtake the u.s. to become the world's biggest economy? these questions are consequential for executives when we were long-term profits will come from and investors evaluating global reserve currency and strategizing over geopolitical flashpoints. joining us to discuss this is bloomberg economic economist. air, lots of prediction -- erik, a lot of predictions. do you think this will happen and when would it? >> it could happen very soon and it may never happen. we have estimated, long-term potential growth for china and the u.s.. based on that, we project how

soon china can catch up with the u.s.. so, you know, a couple of key factors will determine china's potential growth. for example, in particular, the fertility rate and how old people can work until they retire. these are going to determine wage growth, employment growth. on the other hand, you know, tightest domestic reforms. and how china may be, possibly be isolated with the outside world. these are going to determine china's productivity growth. so we built around this key parameters. we have explored base case upside and downside scenarios for china's growth. in our base case, if everything goes on track, we think china might be able to overtake the u.s. as a number one economy at the start of the next decade. but that is far from certain, so

as i mentioned, a couple of key factors are going to influence results. in a downside case scenario, it may never happen. we consider it to extreme downside scenarios. what if china is hit by a financial crisis, and what if the official gdp is overstated? in those cases it will make that catch up more impossible. shery: so, barring those downside scenarios, what are the main challenges china would face? >> yeah, i think one key challenge on the demographic side. the latest census showed china's fertility rate is low so this means a population is going to decline to --soon. working age population is declining and it will decrease at a faster speed than we thought. this means the so-called demographic dividend which supported china's growth over

the past several decades is becoming a demographic drag. given this drag, this means productivity would be more important, or critical for china, to sustain long-term growth over the next few decades. but that is another challenge. so, as we have seen, you know the external environment has probably becoming more hostile post-covid. so china is going to face, you know, more isolation, from especially, the western economies. this means the ideas, the flow of ideas, the flow of innovation, might be blocked, to some extent. so this will make china's productivity catch up even harder. shery: what can the chinese government do to address those challenges you mentioned? >> i think the government is already action in. they just announced to relax the first policy to three children. although we do not think that will move the needle much. but i think it is a good sign that the government is willing

to, you know, push forward, population policy, reforms. to mitigate demographic drag. so, the delay of the outcome of the delay of retirement age is under discussion so we think it is going to be, you know, implemented pretty soon. although you're going to face some --anger. in the future we think the government should consider more refund -- reform in employment policy and tax policy and housing policy, trying to reduce the costs for raising children and doing more, the key constraints for china's young people too, you know, getting married. it is not because of the limits, it is because the higher costs. so on the other hand we think on the productivity side, the domestic reform, it is already being discussed a lot. so, you know, you know, playing

level field between sod'and -- sod' -- soe's and private firms. president xi has given a blue print on the reform agenda, so the question is how fast he can deliver. shery: be sure to tune into bloomberg radio to hear more from the days big newsmakers, get in-depth analysis from that daybreak team broadcasting live from our studio in hong kong and listen via the at radio plus or bloomberg radio.com. more ahead, stay with us. ♪

here is a quick -- shery: the latest business flash headlines. credit siu said it is the key to give maximum flexibility. 13,000 staff will be able to decide with teams and managers how much time they want to spend inside and outside the office. the bank said the rollout of the new policy to the rest of its 49,000 global employees will be determined by regional guidelines. australia's biggest pension fund is boosting staff overseas as it seeks more international deals. australian super plans to have 60 staff in new york by 2026 and will increases london employees from 40 two around 100. the fund is on track to double

in size within five years to $376 billion dollars. standard life aberdeen has gone ahead with this plan to rename u.k. asset manager now officially known as aberdeen spelled abrdn, in lowercase. the april announcement of the change elation mockery on social media by the chief executive officer said the short name makes it easier for people, to look for the company online. >> aberdeen is a city in scotland at a university. abrdn is a unique asset. aberdeen is easy to say and search. haidi: the solar industry spent decades on the cost of generating electricity and out of shifting focus to make panels more powerful. joining us is our asian energy reporter. where are we in the price

dynamics and is this game changing moment? >> yes, we are at an inflection point now. solar power has become cheaper and cheaper over the last 20 years. over the last decade the cost have fallen 90%. it is now cheaper than coal, in a lot of areas. that does not mean that solar industry can rest on his laurels. solar power now can out price coal when the sun is out before full decarbonization we need solar power to get cheaper so you can pair with hydrogen generation or batteries, to get around-the-clock clean energy. that is why solar companies are switching out toward trying to make these panels more powerful. haidi: how much of all of this equipment and power generation in the solar industry is dependent on china? >> quite a bit of it actually.

china basically dominates the solar industry, ever since the turn of the decade, and polysilicon production started moving over there. it has really captured all facets of it, from polysilicon to waivers to cells to panels. -- wafers to cells to panels. trina solar, some of the most innovative players and they have done a great job to bring down costs. they will be guiding seller into the next generation of higher powered panels. haidi: our asian energy reporter. the other big commodity story, the move in oil. when it comes to the asian session, wti taking out the 2018 top now trading at the highest levels in six years. this is where we are when it comes to brent as well. the market continues to wait and see what the long-termer long impact of the opec plus standoff will be. we are seeing modest gains, .25%

across asian equities and the nikkei 225 up .4%. across asian markets you see the outsized performance when it comes to energy stocks, for example, in japan we are seeing gains of over 2%. shery: not surprising that we are following those oil moves closely when it comes to the winners and losers in fx bloomberg has a study where correlates the average fx response coinciding with 17 rapid moves in oil prices. not surprisingly we see the biggest winners in oil-producing nations like russia when you have a move this baked in oil prices. there -- a move this big and oil prices. they're the largest net oil exporter so you will expect to see that ruble gaining ground. colonial -- columbia as well, the second largest exporter in the emerging-market session. so we could see the dollar-columbia peso falling 5%

given those moves. and many oil exporters in asia, as well. haidi: and when you take a look at fx, for example, winter and losers. losers, the turkish lira, the indian rupee as well, and then dollar pair with both of those, climbing reaction to the news. that oil imports for turkey 3% and 4% respectively. those are highly idiosyncratic pairs we are talking about. there are also talking about rising 1% in the aftermath. japan's oil and parts of the second largest after new zealand in the area. other factors when you take a look the response and it comes to currencies, not least how central banks are going to navigate, potentially an air of prolonged tighter oil supplies for longer. shery: not surprising the japanese yen trading at a near 15 month low against the u.s. dollar.

u.s. future getting .1% as markets are closed monday on independence day, after the s&p 500 launched another record friday. we will watch the open on tuesday. taiex futures pointing hires as well as a 50 futures when we are seeing the offshore you want holding at the 646 level. we already saw china pmi falling to the lowest since april. we will watch factory gate inflation numbers out of china later in the week. haidi: and later on today we do have the rba decision. it seems investors have made up their mind as to the dental unwinding of stimulus. also -- the gentle unwinding of stimulus. u.s. stocks have been offer the independence day long weekend. tech investors may it a root stock on the resumption of trading, particularly for didi and other chinese tech names. the impact of the lighting and -- the widening beijing

crackdown on tech companies. we will be joined with more insight later into china's credit markets, that clamped on as well. -- and that clamped down as well. this is bloomberg. ♪ ♪ ♪

look, if your wireless carrier was a guy you'd leave him tomorrow. not very flexible. not great at saving. you deserve better... xfinity mobile. now they have unlimited for just $30 a month... $30. and they're number one in customer satisfaction. his number... delete it. i'm deleting it. so, break free from the big three. xfinity internet customers, switch to xfinity mobile and get unlimited with 5g included for $30 on the nations fastest, most reliable network.

>> welcome to "bloomberg markets: china open." david: counting down to the open of trade in the chinese mainland and here in hong kong. showing beijing is going all out to control the country's most valuable resource, which is big data. yvonne: the fight between the saudi's and the uae blocks a supply deal. david: