haidi: hello, and welcome to "daybreak asia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin in hong kong. shery: good evening from bloomberg's world headquarters in new york. i am shery ahn. beijing warns china's biggest companies of a wider crackdown on data security and overseas listings as didi's u.s. shares

plunged below their ipo price. samsung is set to report a huge gain in quarterly earnings on its memory chip business. we will break the numbers this hour. nomura pulls the plug on a big chunk of its had fund business after the hit from the arcade ghosts -- hedge fund business after a hit from the arcade ghosts -- archagos crash. this is a much wider and bigger surplus than we saw in the previous months of only about $2 billion. when it comes to the goods trade, also rising to 6.367 billion dollars. we did have very strong export numbers for the month of april and may. gains of over 40% although easing a little bit in june given the base effects but no, we are seeing the made goods trade surplus rising to more than $6 billion in the

and australia. sophie. sophie: we are seeing a risk-off tone. u.s. e-minis lower after u.s. stocks snapped a seven day advance so asia seeing a cautious start as we had to a session that has inflation plus trade data from taiwan and we are keeping a close eye on oil. wti heading higher after their options we saw on tuesday. different views from analysts. at ubs, they boosted their forecast by two dollars. jp morgan staying pat on their predictions for crude. aussie bond yields, we are seeing a push lower, seeing it basis as much as eightht points, tracking the drop we saw in treasury yields. pulling up the board to see the move in that, we have a 10 year rate notching its biggest decline since february for treasuries, capping a six day drop. in february -- zone back in february.

it weighed on u.s. shares. analysts say that china's text crackdown is raising questions on sustainability of u.s. equity evaluations. haidi. haidi: take a look at that big story. didi tumbling below its ipo price following china's crackdown on the company over data security. the message from beijing goes beyond a single company it seems. some are seeing the move by regulators as trying to actively uej chinese tech companies from listing in the u.s.. for more, let's bring in bloomberg's -- who joins us from new york. is this a firm reminder of where your loyalties should lie if you are a chinese company? >> yes, that is certainly the case. there's two reasons why didi is targeted by the chinese regulators. as our reporter in beijing and hong kong reported, didi received a warning from the regulators as early as three

months ago, asking them to delay the ipo because the company is worried about data security, and didi went ahead just one day before the 100 year anniversary of the chinese communist party so it's probably not surprising that it got punished for ignoring beijing's warning. certainly, this is a really -- it is a continuation on the crackdown on tech companies. the government is worried that these tech giants have controlled too much of the power -- they reached every corner of society, and they are worried that by listing in the u.s., they are potentially exposing all this sensitive data to the hands of the u.s. government, so it has become national security for them. shery: chinese firms continue to list in the u.s. about $8 billion raised by chinese firms in the u.s.? ye: yes.

actually, ironically, june was an extremely busy month for chinese companies listing in the u.s., raising a lot of money, and the timing is also interesting that didi is now being targeted after such a busy ipo. i think if you put everything together, china is worried about data falling in the hands of foreigners, foreign governments, and secondly, they publish a new regulation to try to increase the scrutiny of chinese companies and try and increase the data security and data flows. if you put all these things together, it seems like we reach the peak of the ipo's by chinese companies in the u.s. shery: what about those companies that have already listed in the u.s. when it comes to their prices and trading?

will they trade at a discount to other global ipo's? ye: that seems like the case. chinese adrs are lacking the global benchmarks, the tech benchmarks. it tech company in the u.s. had a nice rebound in recent months, but because of all these regulatory risks and uncertainties, the chinese adrs have been underperforming, and also what we are seeing is that all these tech giants, alibaba, baidu, they have been seeking a second listing in hong kong just to limit the risk of all these tensions between the u.s. and china, and also, reuters reported on tuesday that they are considering taking the company private although the company has denied the report. it seems like they are either going to a second listing or taking the company altogether and that is on the mind of a lot

of chinese companies listing in the u.s. haidi: it's interesting that way but is holding -- the company is holding onto those gains. ye xie joining us from new york. we will get more outlook on chinese tech and equities more broadly read i want to bring in joyce chang -- broadly. i want to bring in joyce chang. let me look at this chart. that is one of the ways you can view the malaise we have seen in onshore and offshore trading of chinese stocks. this is the hang seng tech index. about 30% from the previous peak we have seen. how much further down i'd is there as you consider even for a company like didi the fundamentals of the business, you know, the profitability. it does not seem to be changed by this. joyce: we really think that chinese stocks are going to be range bound here. it is not just the company story. at the macro level, we have seen some disappointments in domestic demand. we are seeing continuing

concerns about a slowdown in credit growth, and we do see the regulatory environment still tightening around the internet giants, so i think you will stay range bound here. i don't think it is going to come down that much more. you are supported by overall strong earnings. we have the eps growth this year at 15.6% when you look at the 12 month foreword from the nfci china. i do not see that much more downside but i clearly think that value is going to outperform here and i think we will see concerns also about just the pace of growth slowing, particularly as the rest of the world is picking up. we are forecasting that the u.s. and china are actually going to grow at a slower pace than the rest of the world. the peak in the u.s., we think that very recently -- and china in recent quarters. i think we will see other parts of the world outperform. europe in particular.

i don't see a lot more downside and we are seeing some value in certain names. like some of the better quality upstream names we think look attractive and we also think in the insurance sector that there are opportunities right now, but i think the macro outlook is -- we have taken down the growth forecast for gdp growth. we had 9.4%. 8.8% for full-year growth for the year. we are either going to see a range that persists and still, offshore stocks will be favored over the onshore. haidi: it is not just china tech . it's also heavily weighted sectors including health care, which has been a darling for a lot of pickers. really at the lowest levels in about four months. does that present opportunities,

particularly if you take a look at, you know, demographic trends that would still suggest these health care consumer facing names in the long run would do well? joyce: i think you are seeing some selective opportunities that are coming up here and then we think certain parts of the selloff have been overdone also in certain sectors which have lagged. where we are more concerned actually right now on the credit side is on some of the real estate sectors and we have taken down some of the real estate ratings across the board in emerging markets right now. so i think you will see some selective opportunities in health care and even some of these disruptive yes to sectors where there has not been a lot of concerns about valuation and insurance and also on the investors side, it seems like the numbers are coming in much firmer and that we like it is going to out and floyd and smartphone shipments. there is more predict abilities and the numbers coming out.

shery: we have seen the outperformance in chinese bond markets given the rate differentials. we continue to see treasury yields in pressure. let me give you the question of the day and you can take it from there. when will the u.s. 10 year yields fall to 1%? let me just extend that question to ask, which asian assets would be impacted the most if we continue to see this downside on the 10 year yield? joyce: we have the 10 year yield rising by 50 basis points to 1.95 by the end of the year. we think a lot of -- i don't think you are going to see a scenario where the treasury yields fall to 1%. we are continuing to see a lot of interest in chinese government bonds. the those year to date have it 65 billion and that is after

hitting about 160 billion of foreign inflows last year, so to hundred 20 5 billion of inflows into the bond market, and we still have the entry into the index for the ftse world government bond index beginning in october. i think that interest in chinese bonds continues to be very strong here in chinese government bonds, just given what we do see as the continuing yield differential, and when we take a look at this on a 10 year horizon, even looking back, have had returns for chinese government bonds. u.s. dollar terms have been north of 5%. the appetite is still there and even these quarterly fluctuations that we are seeing does not change the fact that the allocations by foreigners to chinese bonds have been very low, only in the range of 3%. there is still a strategic one-off input inflows that are coming in from foreigners. shery: joyce chang, always great

having your insights. global research chair at j.p. morgan. let's turn to vonnie quinn with the first word headlines. vonnie: bloomberg has been told that russian hackers were part of a group which has been tied to the kremlin's foreign intelligence service. the group had previously been accused of breaching the democratic national committee in 2016 and of a cyberattack involving solarwinds. a spokesman denied its systems were breached. president joe biden -- to get vaccinated. biden missed the fourth of july deadline of having 70% of american adults partially vaccinated and 100 60 million people fully vaccinated. speaking at the white house, he discussed the dangers of the delta variant. pres. biden: we discussed how the delta variant is already

responsible for half of all cases in many parts of this country. it is more easily transmissible, potentially more dangerous, and it should be, because of reconsideration. look, let me put it another way. it seems to me that this should cause everybody to think twice. vonnie: a new report from the cdc says the benefits of messenger rna covid-19 vaccines clearly outweigh the risks including among young adults and adolescents, despite complications seen in a relatively small number of young men. concerns have been growing that possible side effects could threaten vaccine uptake. china's president, xi jinping, gave a speech to warn against politicizing the pandemic. much of the speech was devoted to discussing china's willingness to work with other countries. his tone was softer than the

rhetoric he used when addressing the nation mastery, saying china could not be forced by bullies. 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: still ahead, we tracked a slump in oil with a stronger dollar sparing -- and samsung is likely to report a huge gain thanks to its memory business. we will be hearing from a securities company later this hour. this is bloomberg. ♪

>> opec is holding this thing together. the market is fragile. i think that is what is reflected through volatility and you can see in the equities. >> either an agreement will be made and maybe the uae will get some type of dispensation or in

the worst case scenario, people hand in their membership cards to opec and it is a free-for-all. >> inflation is driving a lot of what the fed is doing as well. oil prices are the component that may not be transitory based on the issues that we are seeing right now out of opec us. >> if we were shorter term, which we are not, we would be selling our energy positions here, focusing more on those companies in the u.s. that are dividend oriented, income oriented, and less dependent on the price of oil. shery: some of our guests weighing in on the oil volatility and global implications following the opec write-down. take a look at wti futures gaining ground, .4%, this after seeing the biggest loss since the end of may after rising to the highest in six years so there has been a lot of volatility. this as a white house is saying it spoke with officials in saudi

arabia and the uae and it is encouraged by the ongoing opec talks. let's get the details from david stringer. what is going on with prices? david: that is the question, isn't it? certainly after the tuesday session in the u.s., it was a real roller coaster. oil futures in new york and ended the closed down 2.4%, largely on the back of that rising dollar which of course makes all commodities less attractive. those that are priced in u.s. dollars. earlier in the session, futures had risen to a record since november 2014 on the back of investors weighing up the prospects for a breakthrough in this impact we have seen in opec-plus and this crisis between saudi arabia and the uae . you know, that looks to be blocking that potential increase in oil supplies next month.

futures offer touch and what will really be in focus today is supply and also inventories. gasoline and crude inventories so that will be in focus. shery: we have seen the biden administration weigh in with the u.s. in its peak oil demand season with the reopening and summer and all that. i'm wondering, dave, when do we see a move from u.s. shale? david: that is an interesting question. i'm sure producers are watching with interest and looking through their options and considering what capacities they have to lift production. the white house getting involved, not directly, but the white house saying yesterday that senior u.s. officials have spoken to the uae and saudi arabia.

the two pivotal figures in this current crisis, certainly saying they are optimistic that there will be an outcome and the white house has focused on energy affordability and wanting to see the gains in oil prices reversed. also linked oil prices. it is a potential problem across the energy sector for the u.s.. haidi: the latest on oil with david stringer. number oppose the plug on its cash prime brokerage services in the u.s. and europe. etails just ahead. this is bloomberg. ♪

shery: nomura is no longer offering cash prime brokerage

services in the u.s. and europe according to bloomberg sources largely as a result of the deep losses resulting from the collapse of archegos earlier this year. nabila ahmed has more on this. there have been rumors about number up pulling back for weeks now so what are they doing? nabila: they were very hard hit by archegos. they lost $3 billion in the saga and the ceo promised to take that very seriously and they already made some changes and now, what is happening is that they are pulling the plug on a large chunk of their hedge fund business in the u.s. and europe, saying they will no longer offer services. this is a service which allows hedge funds to borrow against stock holdings. haidi: how does this play into the earnings outlook? nabila: luckily for nomura, in this instance, u.s. and europe is pretty small compared with earnings from its other markets

businesses and overall, the prime financing business makes most of his money in asia so the impact on earnings is going to be muted for now but obviously, it is not very good for relationships going forward. haidi: what does this mean for the future of their business in the u.s.? nabila: nomura has been trying to crack the u.s. for more than 100 years now. it had a number of setbacks. they posted pretax losses for three of the past five years in the ceo was really looking to expand the business in the u.s. and appointed a wall street veteran. -- to head its americas unit in the hope that that would help. a key plank of that growth plan was to earn more money from prime brokerage and financing was supposed to be a key piece of that u.s. prime brokerage expansion. they will need to find other ways to fulfill u.s. ambitions. it's disappointing for nomura

shareholders who have been waiting for this bank to really crack the u.s. market. haidi: nobel ahmed with the latest woes the flipping nomura -- nabila ahmed with the latest woes for nomura. !rnthe move marks the first enty by japanese bank into india's retail finance business. jafthe lender will eventually acquire the rest of the credit firm. it is a unit of singapore's estate investment fund. investors will get the chance to take macquarie bank acquire in germany after $35 million in losses linked to the scandal. the appeals court in munich overturned an earlier ruling which told investors they had to file their case in london. investors are alleging a or a bond led to a controversial tax

scheme without their knowledge. they denied a report that the term and is planning to take the company private. shares jumped 40% in new york after they reported a consortium led by chinese estate firms would offer as much as $100 a share to delist, so they parrot games to close 6% higher after saying it was not true that is chairman held discussions to go private. coming up next, trading steadily in the hong kong trade -- grain market. the first of the big electric carmakers in china hits the market. don't miss out on our exclusive interview. a payment platform will be joining us a little bit later and we will be speaking to the ceo at 11:40 a.m. in hong kong. what's more, coming up. -- lots more, coming up.

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shery: take a look at u.s. futures right now, down .1%. this after stocks declined in the new york session, snapping the longest winning streak in almost a year. this of course coming at a time when we are also getting the latest results coming from apd. eric adams has won the democratic primary in new york. we were waiting for those absentee ballots to be counted.

they have now been counted and ap is calling the democratic primary in favor of eric adams, who was leading after the absentee votes were counted and that represented 14% of democratic primary ballots. those were around 125,794 after they were counted. eric adams has now won the democratic primary in new york, and given that democrats outnumber republicans by 7-1 in new york city, the winner of the democratic primary is likely to win the general election in november against the republican nominee. let's discuss all of this with jodi schneider. it took a while for us to really see the results here, but of ours, this is still not the final say, is it? this is the absentee ballots being counted. what are we going to hear from the board of elections?

jodi: -- this probably will not get certified until next week. it is looking like 50.5% of the vote going to the 50% threshold. supporting 9.5%. it was not immediately called because of the complicated voting system. officials said it probably won't be certified until next week that it looks like -- [indiscernible] -- at this point and they are separated by several thousand votes. haidi: jodi schneider with the

latest. let's take a look at how we are setting up in this asia market session. sophie: we are seeing some downside futures and qe stocks are off .3%. i want to focus on what is happening for japanese markets if we could because we do have the yen trading. this as we are seeing futures higher following the overnight action amid concerns over the u.s. economic recovery ahead of the fed june meeting minutes. we see u.s. yields for the 10 year drop for six straight days and jp morgan seeing that slide in u.s. yields since friday morning. that seems outsized, all considered. while they have canceled the recommendation, they are looking for higher rates by year-end. this on the supply mismatch and anticipation for a fed tapering.

shery: the chinese electric vehicle maker pulling off the fifth-largest listing, becoming the first tv producer to complete a so-called homecoming share sale. it has traded steadily in the market before wednesday's exchange debut. the asian stocks reporter joins us from singapore. what does this signal about the debut? >> yes, so essentially, the market performance was flat. it's expected because all of the regulatory risks -- at this point. we are looking at relatively quiet trading, may be little changed or it could go into negative before the ipo price. at this point, it seems a little uncertain because of so many questions around chinese ev makers. haidi: and chinese tech in general.

we heard that shares would be eligible for shortselling in hong kong after debut as well. it is not going to give i guess a venue for some people to express how they feel about the chinese tech sector right now? >> i would think so. that is a good one. it being eligible for short turning gives investors and traders that there is more regulatory risks ahead chinese ev makers. the announcement of regulations from the china state council, how they want to regulate securities more. we have a note from analysts saying that chinese ev makers are among those that collect a lot of user data, which is understandable as they tried to look at that and include more

technologies in auto. we are seeing some concerns there. haidi: our guest in singapore with the latest. we will be hearing from the president in just a few hours time and he will be giving us his take on the pressure on u.s. listed chinese firms recently amid beijing's regulatory crackdown. china has been targeting of course cryptocurrencies. sonali basak spoke to brian brooks earlier about bitcoins association with money laundering and fraud. brian: they seem to think that regulation is bad or scary for crypto. the number of people participating in this market has gotten so big that you need basic frameworks and that is a sign of the maturity and growth of the market more than it is a sign of something bad. what i think it does mean is that exchanges like ours, the biggest in the world, need to be very sophisticated about how do

you allow decentralization to occur, how do you bring these assets to the market, while ensuring good risk management, compliance with law, the disclosure of what you are selling to your customers and those kinds of things? that is why we are so excited about bringing the commissioner on board. we need people with those kinds of backgrounds who can bend policymakers in senior roles to help us navigate these shoals and successful companies will try and compete with that kind of talent. >> can you clarify the relationship for viewers between the company in the u.s. and global, the roads biggest crypto exchange by far? i know they are separate legal entities, but can you explain how you are owned by them or what is the relationship? brian: we are not owned by them at all. we share a common founder. didi --binance licensed the name

and some technology from binance .com. it was clear the world was segmenting into two basic kinds of market. ÷hój■elcteldk&] was the learning about crypto, did not have crypto licenses or requirements, and then you had an emerging right of the world that started putting crypto within a revelatory framework. we were founded precisely to be a regular tour -- regulatory compliant board. we will eventually have all 50 state licenses. and then there are other parts of the world served by a different company but other than licensing the name and technology, we have a separate board of directors, separate ownership, and you know, you might think about us as a binance brand of exchange. we are the eighth biggest in the world. different companies. >> we got the brand here in the u.s. now. when we talk about the u.s. regulation or lack of it, i am

curious as to your thought as to why it has been so slow to see something a little bit more formative out of the fcc and the other regulators, whether it is setting up guardrails, proving etf's. there does not seem to be any real momentum at least not that i can see publicly. brian: that is a great comment and it says more about the u.s. regulatory system then it says about quick though, to be honest. if it is, in this country, we set up a lot of different regulators and gave them each their share of turf. the issue is, having run one of these agencies, there is a little bit of inherent turf conflict between the fed and the fcc and the cftc. everyone is trying to grab a little bit of turf so it is hard to get clarity. if you look at the united kingdom, where there is basically a single regulator for the system, it is easier to get clarity. you have competition among agencies, overlap in their

jurisdiction, and at some level, it is tough to deal with. we are not as far behind as people might think. at the end of the last administration, all of the major regulators got together through the president's working group on financial markets and started providing clarity on certain crypto assets and that is an example of how our regulatory system can adapt if all regulators work together. shery: brian brooks speaking to sonali basak and romaine bostick. our guest joins us to look ahead to samsung's results and the outlook for chips. this is bloomberg. ♪

haidi: we have breaking, samsung's second-quarter preliminary earnings are a. we are seeing operating profit for the second quarter of 12.5 trillion won. that beat estimates of 11 trillion won. sampling saying they see second quarter earnings are affecting a one-off gain in the business. memory business expecting more than a 30% jump from a year ago although investors had asked patience have grown ever high. we will be getting the estimates

of revenues and operating income for the last three month period but also of course, we get the full financial results with profit numbers a little bit later this month. shery: we will see what the preliminary numbers mean for the stock, which has been going nowhere when it comes to the samsung shares flat this year despite the kospi rally in the double digits, up 15% this year. we are joined by korea technology analyst at cls a securities. -- clsa securities. sales, 63 trillion won. >> yes, first, thank you for having me on your program. results were indeed very strong and we believe they were driven by the strength in the company's semiconductor business and there was also someone off gains related to the display business. we think that the strength in sammy's -- semis and the display

business has offset weakness in smartphones, where shipments plunged by 20% sequentially. shery: a key issue is how sustained these gains will be going into the second half, right? what is your outlook? >> we think the strong performance in the second half is very much sustainable. we think third-quarter operating profit well report a double-digit increase and in the fourth quarter as bob. this will be driven by the strength in the semiconductors. that pricing is very strong and we expect gains to continue until the first half of next year so we are seeing currently very strong demand from multiple customers that include pc's, data centers, cloud customers, and smartphones. shery: will that mean the stock

price will do better this year or really remain flat? >> indeed, despite seeing positive revisions to the consensus earnings year-to-date on the back of strong memory pricing, the share price performance year-to-date has been frustrating and we have seen that its foreign ownership has fallen substantially this year. we think that as the company continues to deliver very strong numbers in the coming quarters, it is very likely that the shares will reflect strong earnings momentum. haidi: i want to throw up chart, taking a look at that outsized impact and the weight of samsung within the kospi, it is skewing overall valuations that we see on that broader market. if we do get the super cycle later on this year in the third quarter as expected, does that give a boost? that improves operating margins

substantially for samsung. >> sure, sure. in the second half, we are expecting cloud customers to continue to place orders so they are building inventory for net demand from pc graphics and mobile customers. this is driven by that as well. for the full year, we can expect b6 d as /18nu1q1"á(áu(á)jr' a very good position to post nearly 40% operating profit growth for this year. this trend will continue next year as well. given what we are seeing, the demand related to 5g, that is expected to continue. we think the share price will follow the earnings growth in the coming quarters. haidi: what about the consumer facing side of the business? do you expect shipments and smartphones to improve given that we have had a slump going into what has been a less

marketable tokyo olympics? >> we think in terms of the shipments can a, we think q2 was the worst. companies saw declines in shipments primarily due to weakness in india and southeast asia, where covid-19 was raging. but from the third quarter, we are expecting recovery. this will be driven by companies launching three new foldable phones, plus also, you know, demand coming back in markets like india, southeast asia, and of course, the demand in developed markets is on the recovery track. we think that overall, globally, smartphone shipments will recover sequentially in the third quarter and recorder, and samsung will be able to maintain its current market share. samsung is benefiting from the u.s. government sanctions on

huawei and also the recent exit from the smartphone business. haidi: really great to have you and those insights on breaking members. let's get you now to vonnie quinn, who is in new york with the first word headlines. vonnie: china's state council has issued a sweeping warning for the country's biggest companies. values tighten oversight as data security and overseas listings. the announcement follows the crackdown on didi, including its security review and the removal of its ride-hailing app from online doors. less than a week after debuting on the new york stock exchange, didi shares fell to below their listing price. the white house says it is encouraged by ongoing opec-plus talks. it confirmed the administration has spoken with officials from saudi arabia and the united arab emirates in the hopes of reaching an agreement to stem the rise of crude oil prices. u.s. crude jumped to the highest in more than six years after a

feud between saudi arabia and the uae blocked a presumptive supply increase, plunging opec c placenta crisis. a bipartisan group of -- opec plus crisis. r?

mention, their big tech stocks, trading on blockchain. su: and for almost a year now. it is moving at the speed of light. what we have is these synthetic stock markets trading on blockchain. what you are looking at right now is mirror protocol, a project put together by terror form labs, a south korean company that uses the blockchain to trade these tokens so they are not actually trading the stocks but the programming allows the traders of the tokens to reflect the prices of the stock so that they are able to track them, get exposure to the price, possibly do some arbitrage. what we have is a facsimile of the market, so these big tech stocks like tesla, apple, amazon, even some popular etf's, are being mirrored. we should point out the volume of these so-called fake stocks is a tiny fraction of what you would you on the regular

regulated new york stock exchange or nasdaq, but many of the cryptocurrency enthusiast, who are happy to see these kind of securities traded via blockchain, point out the potential upside here could be huge. haidi: for now, it looks like -- are they worried about being replaced? what are some of the concerns? su: it is true that the exchange executive is not about this because of the minuscule volume, but this was one of the top, most read stories on bloomberg, so clearly, wall street is watching. what we do know is that it is very different from the digital artwork and the highlights of the nba that we are seeing being posted on blockchain in the non-fungible token universe. different because there is now a lot of questions about how virtual stocks or digital stocks fit into the global stock market, and more importantly,

into the brokerage industry. the ceo sees himself as a modern-day robin hood of finance. he says that the power of unlocking financial services were disenfranchised people around the world merits going ahead quickly. better to move fast and break things, he said. he and others are pomona and's -- proponents and say that and waiting for frameworks to come together around the world and then waiting to design this stuff is really counterintuitive. they also believe that avoiding the barriers that are part of the financial and banking industry is a benefit, not a bug in the system. the proponents here are hoping to provide wealth creation to the masses. there is a very long way to go here. back to you. haidi: su keenan. be sure to tune into bloomberg

radio to hear more from the big newsmakers. broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. we have plenty more ahead. this is bloomberg. ♪

shery: we are counting down to the start of trade and tokyo and seoul. over in japan, we will see how nomura starts trading. a bloomberg scoop says it will exit a large chunk of its businesses after deep losses from the archegos collapse. we are watching this company after its deal to buy a stake in india for $2 billion. the japanese government expected to deliver at least $180 billion in new stimulus. in south korea, samsung and its peers will be in focus at the open after those better than expected earnings that we just got plus lg also will be releasing its own second-quarter guidance. meanwhile, the nations may current account surplus widened to nearly $11 billion and we are wanting the virus front because the government is inspected to announce whether it will modify social distancing rules in greater seoul amid the virus

resurgence. we heard from the prime minister already, signaling using to calm in two to three days -- to come in two to three days. sophie. sophie: on the corporate front, we are watching samsung sdi on local korean media reporting that it is in talks to build a 30 gigawatts car battery plant in the united states. we are keeping an eye on nintendo in tokyo after stock was downgraded to hold from buy. the announcement of the new switch council is exhausting nintendo shares. the bond market front and center this wednesday after the jump we saw in treasuries. aussie ntb bonds tracking that rise. when it comes to the rbnz, westpac bringing forward its tightening, expecting rate hikes. worsening in february and may, followed by gradual tightening. haidi: more and more voices

bringing that date forward. we get more markets insight ahead of global asset allocation. the market opens in sydney, seoul, and tokyo, next. this is bloomberg. ♪

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♪ >> welcome to "daybreak: asia." >> i am sophie kamaruddin in hong kong. >> we are looking across the region. what are we seeing? >>au+7 downside moves that moren 1% for the indices. near a one-week high. jgb, higher.

stocks to watch in tokyo, nintendo under pressure after announcing its new consul, which. -- gaming console, which did not get a lot of enthusiasm. nomura down 2%. daily numbers hitting a new record. we are waiting to see if they will announce new social does measures or raise that level in south korea. we are seeing downside moves for the kospi this morning. we got the latest current account reading from south korea, widening for the 13th straight month. samsung lower by 0.5% in castrated, after the company -- cash trade, after the company reported results.

looking forward to the open and australian markets, the asx 200 down, the aussie dollar below 75. société générale saying they do not think that rba can prevent the currency rising. brent pushing higher. we could see a push above $80 a barrel, given the breakdown in opec talks. the 10 year yield off nine basis points. the 10 year yield for treasuries, slightly steady, higher at that level. we have jp morgan saying the moves for u.s. yield looking outsized. this is after the biggest drop. >> the equity markets a down day. our next guest maintains a positive view, but expects gains

to be unevenly distributed. he joins us now. always great to have you with us. who will be the winners in the second half? >> the winners will be the ones who have lagged the market. we think they can have good catch-up potential. from the rollout of vaccines, 30% have received their first shot. two months ago, we were below 10%. using cyclical markets in the global economy accelerating and benefiting from the reopening. it is one of the markets we will still buy into, particular on weekdays like today. >> we are seeing upside for oil prices. the bloomberg terminal is

showing how big a rally it was for energy stocks globally. about 30% gains this year. what are we seeing in terms of energy stocks and how, is there room to rise, given the price action in oil? >> absolutely. we think oil can go to $80, so there is more upside. the energy stocks did well this year so far, but a lot of them are still below the pre-pandemic levels. we think this will catch up. they are pricing in $55 to $60. there is a cap to the current spot level. the future curve is indicating that flattening over the next couple of months, particularly at the longer end of the curve. that will start to rise. that is more upside for energy

stocks. it is one of the key overweights in our portfolio.y2y ñ■ i want to look at this chart. it is skewed to the valuations for the broader kospi index. is there a value trade given the stock is gone nowhere, but we see beats and positivity when it comes to the space? >> semiconductors did well last year. samsung as well. currently, we are more neutral. we think there is an inflection point on the u.s. policy side, and that may weigh on growth stocks. in asia, tech has lagged more than the u.s., therefore, there is a catch up on asian tech.

currently, korea, samsung has a large weight in korea, but the broader space in asia, we see upside and technology names, probably more geared towards e-commerce stocks and consumer-related stocks rather than the other side. >> does that include china? we have been talking about the regulatory crackdown. is there value after the selloff given the pressure across chinese stocks now? >> we are eight months to nine months into this antimonopoly efforts. i think that can continue. also these companies have started to price that in. we saw large companies have

started to gear investments to some of the sectors the governments and policymakers would like to see to address some of the issues. there is definitely value. they are cheap compared to u.s. peers. the earnings look strong and there is upside potential in the next couple of pointers on the earnings side, but investors would like to have clarity, and they don't like uncertainty. we think at this point that it becomes interesting to add to this name, to look for buying opportunities, but you may need more time. don't expect a quick rebound. these measures are continuing. they will be down the value chain, going into smaller companies, but all these uncertainties will weigh on the price action, but the value is

there, therefore, if you have a longer-term investment horizon, it is time to add to this opportunity. >> always great to have you with us. let's get back to samsung. beating analyst estimates. 53% rise from a year ago. let's get the details from stephen engle in hong kong. he has been parsing the results, which look better than the most bullish forecasts. what jumps out at you? >> for samsung. they beat the street again handily. 53%, we were expecting 30% gain in operating profit, so even the most bullish estimate, samsung blew past that, and there getting no love on the market. adrian is lukewarm on the hardware space. the chip space has gone gangbusters, as memory chips have in the big buoy for

samsung. dram modules up in the second quarter. the big chip shortage, high demand, so what is wrong with the stock? we will talk about that in the second. the results were really good. the question is has this super cycle been losing steam? nomura thinks there will be a second super cycle, but now, people are going back to the office. there is some concern that the cycle we saw over the last year and a half as they were adding to capacity, that that would lose a little steam. good results with a few question marks going forward. >> perhaps that is pressuring

the stock? analyst have been bullish on samsung, right? >> yes. the stock has gone nowhere for the last seven months. it started at 81,000 the first day of the year, so it has dipped below that. there is a buy rating with a 105,000 price target, but the analyst said samsung may have been one of the most boring stocks of 2021, so i go back to my first statement, poor samsung, the biggest constituent in the kospi, the index of 50%, touching records, but samsung can get to know love. --no love. >> pretty early in the trading

session, so let's see where that goes. it doesn't help that the broader market is still down. the latest on samsung. let's get to vonnie quinn with first word headlines. vonnie: thank you. the white house is encouraged by talks ongoing that confirm the administration has spoken with saudi arabia and the uae to reach agreements to stem the rise of crude oil prices. it is the highest more than six years, after a bitter dispute between saudi arabia and the uae blocked the supply increase. bloomberg has been told the russian government hackers breached the computer systems of the rnc last week. they were part of that group which has been tied to the kremlin's foreign intelligence service. the group has been accused of breaching the dnc and 2016, and a cyberattack involving

solarwinds. an rnc spokesperson said it systems had not been breached. after the summit between joe biden and vladimir putin last month, an existing agreement is set to expire july 10. u.s. and allies want to avert shutdown. russia has been reducing aid, arguing it undermines the sovereignty of the bashar assad regime. a bipartisan group of lawmakers injected new life into president biden's infrastructure deal. the caucus endorsed the agreement the president reached with democratic and republican senators. it calls for a standalone vote. it is contrary to nancy pelosi, who links any approval to spending bills. 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. >> right, didi shares plunge. this, as another firm returns home. it is trading steadily ahead of its debut. will the crackdown didn't demand? this is bloomberg. ♪ -- dent demand? this is bloomberg. ♪

>> getting back to our top story, didi tumbling in the u.s. trading session, following the crackdown over data security. the message from beijing goes beyond that, saying they are trying to discourage chinese

companies from listing in the u.s. let's bring in our chief correspondent. is this a shakeup when it comes to overseas listings? >> definitely looks like it. we had a big announcement from one of china's government bodies late yesterday saying that it vows to step up regulatory oversight of overseas listings. that is key. historically, the u.s. has been a popular destination for chinese entrepreneurs to sell the chairs to go public. china does not have much control over it. it is not part of the approval process for mainland companies, so vowing more oversight of chinese companies trying to list overseas, and the clampdown on security picking up, a sure sign

that in the tech clampdown, it was fintech, monopolies, and now it is cybersecurity that is the focus of beijing. >> when it comes to data security and tightening its clampdown, what is the message beijing is trying to send to these tech firms? >> if you are a tech firm with vast amounts of data, remember that didi has almost 500 million users, how many trips, where people are going, real sensitive data. if you have this data, not so your shares her hand over control to foreign investors. that is the clear message. there is a lot of suspicion that other companies that have this data will be reluctant to list in the u.s.. there are 34 companies that are queued up to list this year, and

a record pace of fundraising for chinese companies in new york, so this could delay that. bytedance, another high-profile chinese company, a lot of concerns over whether it can sell shares this year as well. >> our chief china markets correspondent joining us from hong kong. xpeng pulled off the fifth because hong kong listing this year, becoming the first ev producer to complete a share sale. it was steadily in the green market before the debut. our correspondent is in the city now. what does this tell us about the debut? >> yes, you are right. this is interesting. it is a homecoming. also, the timing is interesting.

it priced the deal before the crackdown on didi and the state council announced that, so we will see how the market responds. for now, the price tracks closely to the overnight u.s. closing price, so the gray market is steady. a lot of that was priced into date with the trading. >> xpeng would be eligible for shortselling. do you see the risks some investors might try to express their concerns about broader china tech through this app? >> it could well -- this avenue? >> i think it is possible, but the demand in the market is hot, so we will see.

>> given the crackdown and uncertainty, what is the outlook for more deals in the pipeline? >> for now, companies might have to pause and think about their plans and wait for details from the state council or from china would it means for them, what regulation would be like. the ipo market is always tied to the market sentiment. for now, it looks all right. it is soul-searching time for a lot of companies, particularly with data sensitivity. >> always, always soul-searching in this market. just a reminder that we will be hearing from the president of xpeng in just over an hour, as that stock makes its debut in

hong kong. this is bloomberg. ♪

>> we are seeing modest gains in the asian session. on tuesday, there was fluctuating trade. we have seen regulators in the chinese government taking action against one company allegedly providing crypto-related services. a gain of 1%. we are shy of that 60-day moving average. if we break above that, analysts say that could lead to a relief rally. we have not seen that yet. beijing targeting cryptocurrencies. we were speaking to a ceo

earlier about the association with money laundering and fraud. >> the premise seems to be it is bad or scary for crypto. we are at a transition point. the number participating has gotten so big that you need basic frameworks, a sign of maturity and growth of the market. what it does mean is an exchange like ours needs to be sophisticated about how you allow decentralization, bringing in assets to the market, while ensuring good risk management, compliance with the law, disclosure to customers, and that is why we are so excited about bringing him on board. we need people with backgrounds as policymakers in senior roles, and successful companies will try to compete with that kind of talent. >> can you clarify the relationship between the company

in the u.s., and the company globally, the world's biggest crypto exchange by far. i know they are separate legal entities, but how are you owned by them, or what is the relationship? >> we are not owned by them. we share a common founder. the u.s. licensed the name and technology. a couple of years ago, it was clear the world was segmenting into two markets. most of the world was still learning about crypto and did not have crypto licenses or requirements, then an emerging part of the developed world that started putting crypto and a regulatory framework. we were founded to be a regulatory licensed exchange, so we have 43 states that allow us to trade.

we will eventually have all 50 state licenses. there are other parts of the world served by a different company. we have a separate board of directors, ownership, and you might think about otis as a -- about us as a binance branded exchange. >> when we talk about u.s. regulation or lack of it, i am curious quite its move has been so slow to see something more formative out of the sec and other regulators, setting up guardrails, approving etf's. there does not seem to be any momentum publicly. >> that is a great comment. it says more about the u.s. regulatory system than crypto. in this country, we set up

different regulators and give them their turf. i know this running one of these agencies. there is a turf conflict between the fed and the other agencies. everybody is trying to grab turf. it is hard to get clarity. in the u.k., there is a single regulator for the entire financialuhu system, so it is easier to get clarity. here there is compeg agencies and jurisdiction overlap. we are not as far behind as people think. all of the major regulators, myself included, got together through the president's working group and started providing clarity on certain crypto assets. that is an example of how our regulatory system can adapt if our regulators work together. >> that was brian brooks speaking to bloomberg. don't miss another exclusive interview with a fintech startup

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>> the government may raise it social distancing measure in a few days, the number of daily coronavirus infections could exceed 1000 for the first time in six months. let's go to seoul, south korea. where is the latest surge focused on now? >> south korea was going to lower social distancing levels

starting july given the vaccination rate, but that decision has suddenly reversed over the weekend because we saw this huge spike in cases among the population, people in their 20's and 30's. so that causes a surprise for a lot of people. we are seeing a huge jump in certain areas. the government is considering raising the social distancing level again, which could impact some businesses, private companies, and consumption. today, we see that being played out in the korean stock market, consumer stocks, outdoor activities-related stocks, travel stocks that have been gaining on expectations of the vaccination are now falling, whereas the health care and vaccine-related stocks are

gaining ground. we will see in the next couple of days whether the government will raise the social distancing level to curb the latest spike in virus cases. >> if they do, what are the measures expected to look like? >> if they raise the social distancing level to the highest, we will see a limit on social gatherings. that includes past 6:00 p.m. not being able to gather more than three people. we have a ban on private gatherings of more than five people. that is a limitation on social gatherings. we will see a limitation of business activities of restaurantsyñ p.m. lately, the government has imposed on drinking outdoors past 10:00 p.m., because a lot

of young people have been drinking alcoholic beverages outside when the restaurants closed, so these are some of the measures we will see. the most strict measure is the band, gathering of people more than three people -- ban on gathering of people more than three people. >> we are seeing in south korea, 1212 cases. we have not seen 1000 cases being exceeded in six months, so this is a new high when it comes to coronavirus cases daily and south korea, coming at a time when more than 5 million people have had their second covid vaccine, according to south korea. the slow vaccine rollout is a problem in south korea and also australia. >> yes, a huge problem in australia. we are still trying to make our

way out of this effort, as well as the lockdown potentially being extended, as we see large parts of asia, the delta variant , and the flareups of the virus having an effect. the lockdown in sydney will be extended by week, as health officials

we will get more details in half an hour, but what are we expecting? >> there was a crab and it -- cabinet meeting and they were supposed to extend the lockdown to july 16. local media is reporting this as a given, but we will have that press conference at the top of the hour, likely to be confirmed. the latest case numbers, another 18 were reported, 11 were not in isolation for the infectious period, and that points to the problem. people were out and about as stores opened, stretched definition of what an essential services, and for people being out for other reasons than the four crucial reasons. the premier says without the lockdown things would have been worse. this is what she had to say. (q)tainly has been effective in not doubling and tripling the figures we were worried about. it has given contact tracers the ability to main control over the virus, but unfortunately, was a small number of people do the wrong thing, it does result in extra cases. > we will hear from the premier and 25 minutes, where we are expecting to hear the lockdown has been extended by one week. >> it is not surprising we are seeing the grand prix canceled for the second year in a row. >> yes, it is interesting. the victorian state government is blaming the slow vaccine rollout in a cap on arrivals. it is strange, because it was the victorian government lobbying hard for that reduce cap, so no surprise that formula one has pulled that race. they wanted assurances that the race would go ahead no matter what, but the victorian government cannot give that assurance. the tourism industry call it a very sad day. there is some hope with getting business more on board with the slow vaccine rollout. the treasurer is having a roundtable meeting with 30 business leaders today including ceos of big companies. there is an idea workplaces might be vaccination hubs. woolworths is offering pop-up vaccination hubs, so the

intention is to speed up getting shots in arms, because only 70% -- 7% of the population is fully vaccinated. >ñ]uty>> paul allen in sydney we latest from australia. let's go to vonnie quinn for first word headlines. we have more vaccinations and virus in the u.s. vonnie: absolutely. fortunately, president biden appealing to americans who have not been vaccinated to do so. he missed his self-imposed deadline of having 70% of american adults partially vaccinated and 160 million people fully vaccinated by the fourth of july. he discussed the dangers of the delta variant. >> in today's briefing, we discussed how the delta variant is responsible for half of all cases in many parts of this country. it is more easily transmissible,

potentially more dangerous, and it should be, because of reconsideration, look, let me put it another way. it seems to me it should cause everyone to think twice. vonnie: a new report from the cdc says the benefit of mrna vaccines outweigh the risks. this is despite complications seen in a small number of mostly young men. concerns have been growing that the delta variance -- variants continues to spread. present xi jinping warning against politicizing the pandemic. much of his speech was devoted to discuss china's willingness to work with other countries. he said last week that china could not be bullied.

china's top economic planning body has been put in charge of a plan for the biggest polluters in the world. the national development and reform commission has been leading the effort for several months. we are told they will also develop a plan for cleaning up carbon-intensive sectors. 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. >> shares lower for nomura after bloomberg reported it's not offering cash prime brokerage services in the u.s. and europe as a result of deep losses from this year's collapse. our finance reporter has more on this. we have been hearing rumors about this for weeks, so what are they doing? >> yes, we heard that nomura's

prime brokerage employees in new york were exploring other job opportunities and telling key clients to establish new relationships. we have confirmation that they are pulling the plug on their hedge fund business in the u.s. and europe and will no longer offer cash prime brokerage services to bar against stock holdings. they have been trying to rein in risk and figure out the best way forward since losing $3 billion. >> how does that play into earnings? >> the good news for nomura shareholders is the impact on earnings is likely to be muted. nomura's prime brokerage revenue in the u.s. and europe is small compared to other markets in the region. overall, the prime finance business makes up most of its money from asia, but obviously this is damaging in terms of

relationships going forward. >> what does it mean for nomura 's future in the u.s.? >> nomura has been trying to crack the u.s. since 1908, when the founder this is new york and decided he had to have a wall street business. the u.s. is an important market, because it does have the biggest pool of banking fees. the chief executive who was appointed last year has been pushing to expand the business in the u.s., and even appointed a wall street veteran to head the american unit and promised to add non-japanese outside directors. one part of this expansion plan was to earn more money from prime brokerage, and financing was supposed to be a key piece of that expansion. they will now need to find other ways to fulfill the u.s. ambitions. very disappointing for nomura shareholders. >> asian stocks are falling,

including energy, but oil prices resuming gains, indicators pointing to more upside for crude, and were waiting for key numbers out today to give us an indication of where we go from here, but what are you seeing? >> markets for brent have pushed deeper and deeper into backwardation. it is signaling more bullishness with the breakdown in opec talks , with citigroup saying brent will top $80 earlier than expected. when it comes to the stock play this morning, we are seeing the impacts and other energy-related names, waiting on the nikkei 225, off more than 2% in tokyo. chipmakers are waiting on the kospi with samsung down, even when it projected a jump in profit.

some sectors rising 14% after a global agreement reached by 50% stake in the firm, helping to lifted the asx 200, as gains in health care in tech outweigh resources and financials. they are falling in sydneyo-, the decline in bond yields. checking in on the aussie 10 year yield, up by 10 basis points this wednesday, following the overnight drop in the u.s. 10 year yield towards that level. we are seeing cash treasury study. check out the kiwi dollar holding study as well. this as capital economics says it is less competent in its bullish forecast for the kiwi, saying it is hard to see how great expectations can move forward from here. west side is tweeting their forecast for the rbnz, calling for a rate hike. >> coming up next, didi may feel

more pressure on stock options gifted to executives. the details are ahead. this is bloomberg. ♪

>> didi this closed it handed executives and board members shares worth millions.

that has concern booming over the company for investors. let's bring in our wealth reporter. it is the upshot? >> these awards have been catching some industry observers with a surprise. they were rather unusual. also, the magnitude staggering. $3 billion among an unknown number of executives and board members. while this detail has been buried in regulatory filings, it certainly added to the uncertainty today when it was reported. >> why were the grants issued, and who are we talking about in terms of the recipients? >> they are worth around $3 billion and were issued to an unspecified number of senior executives and board members. we don't know who or why. it is worth noting that didi is

a controlled company, the two founders control the majority of shares. that rarely sits well with investors. >> how does this compare to other companies when they list? is this unexpected? >> yes, these are typical, but these grants were stock options granted within near zero stock price, meaning they are essentially free shares given to executives, something we don't see in the u.s. we have seen it occur in china from time to time, but in that sense, it is another wrinkle to this situation probably makes investors feel more uncertain and uncomfortable, given the backdrop of the situation in

recent days. >> that is our wealth reporter. tesla rethinking its strategy in china, following attention from regulators, negative press coverage, and online criticism. joining us now is the person who leads our asian transport coverage. they have been a lot of woes, protests on test vehicles, online criticism and such, but what is the outlook for tesla in the market? >> there is a degree of concern about how tesla will continue performing in china. they have just faced negative press and offense over the past -- and events over the past, including the auto show in april

with the protests. there have been questions regarding military complexes, housing, government bodies reviewing tesla ownership, but the problems keep on coming. another setback happened this last month was beijing ordered almost all the cars sold in china, more than 290,000, there was a virtual recall to fix this safety issue with autopilot that required a software upgrade, so there is concern about what kind of long-term damage this might do to tesla. >> when we were watching this red carpet treatment for tesla from beijing, we thought it was strange compared to other businesses. was this inevitable given the u.s.-china tensions now?

>> this story epitomizes the dangers or challenges, i suppose, if you will, of doing business in china for foreign companies. it is often one social media storm away, and that is what is happening with tesla. their cars are highly popular. if you look at the sales numbers for may, and june sales will be coming this week, they are selling well, one of the top-selling electric carmakers in china. you have to wonder how much of this negative press is around the edges of a very solid following. >> thank you. we have seen firms during the pandemic amassed tons of money,

and we finally have this, with firms holding $5 trillion, companies raising cash on record amounts of debt in 2020, not surprising given low rates, right? >> yes. the question is what do they do with that cash. a lot of them are sitting on that extra capital given the uncertainty in the outlook, so it will be interesting to see how that amount of ammunition is deployed, as we have seen incredible corporate bond issuance. >> where did they spend the money, dividends, share buybacks? there is a reason why they are so optimistic. it's not just corporations holding cash, but households with record savings, so there is

always a buffer for the stock market, even with tightening for monetary policy. we will have more ahead. this is bloomberg. ♪

>> here is a check of the business flash headlines. the pentagon has ended a $10 billion computing deal with

microsoft after years of wrangling. instead, amazon jumped 4.7%, while microsoft was little change. after pulling off a big media deal, it is not done yet. speaking at a conference in idaho, one person said maybe a consolidation would only accelerate, and he intends to be a catalyst. he discussed the acquisition of the businesses, including hbo max and warner film studios. a container ship operator looking to raise $500 million to fund projects to reduce environmental impact. the company is selling blue transition bonds for projects that may include building ships powered by low carbon sources. we are less than half an hour away from the open across china. let's look at what stocks to watch. >> in hong kong, evergrande.

one entities saying the bonds are no longer a buying opportunity. speaking of declines, we are watching taiwan, as we saw the unemployment hit the highest level since 2013. we have seen 500,000 people out of work, so inflation data is to after the jobs report. we are watching the hang seng tech index capping a five-day drop, given the clampdown. >> it's not just that. four out of the five heaviest weighted sectors on the index are under pressure. i want to look at pharma.

almost every analyst says biotech is one aspect they are bullish on, given the pipeline, but we have seen valuations falling to the lowest in four months, as concerns about regulatory tightening over drug approvals. if you have the risk appetite, you could do some bargain, right? >> we are on the lookout for that. we have seen chinese stocks underperform the markets in the past year, but it is regulatory concerns, right? the drug market, oncology drugs, a slew of approvals for treatments in the pipeline, but debt, antitrust issues, so much for investors to consider. >> let's look at how they

perform in hong kong and the mainland session today. the regulatory crackdown does not fundamentally change the business case for these businesses. we will hear from the president of xpeng in the next hour. this is bloomberg. ♪

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