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. the fed signals it's making progress on reaching the taper threshold or. exactly when that may happen. chinese regulators could get greater power to block overseas listings, plugging a loophole

used by tech giants for u.s. ipo's. 8rreports japan will declare a w virus state of emergency for tokyo to last through the olympics. we will discuss all of this, whether it is the fed, infections, the china tech back down. how are we setting up? sophie: this morning, s&p e-minis looking flat. asian futures are looking little changed while delta variant concerns are building as the who urged caution. epidemic curbs putting much almost vertical. malaysia, for instance, their daily case count staying above 7000 in the week leading up to the bank decision today, watching to see if the central bank will revise its gdp outlook while holding rates at a record low. we had the pboc focus after china's estate cabinet discuss -- state cabinet discussed the need forfr a rrr cut. this may signal that beijing

will want to see resistance to yuan appreciation continue. check out what is going on in the bond space as this risk °%ku sentiment. the aussie 10 year yield losing ground, trading your february lows. haidi. -- near february lows. haidi. haidi: officials were not yet ready to set a taper timeline although it did want to nail down a man in case you have to move sooner. various policymakers saying they expect the condition for tapering to be met earlier than they had previously anticipated. let's bring in enda curran. will tapering happen? 3a good morning. it did not explicitly spell out a timetable for tapering. there is no doubt that the fed officials are now thinking about when they can wind back to asset purchases. they say in the minutes that the economy is recovering faster than expected. r@l,61xl

2stapering is happening faster than they initially thought. ú??there is some uncertainty. the fed officials are wondering what is going to happen with inflation as these apply block continues and they are still unsure what is going on with the labor market. there is talk of job shortages in the u.s., talk of plenty of slack, too. but tapering is not a done deal but certainly, that is the path fed is on and we should get more details next week when jerome powell speaks to congress on july 15. haidi: we are seeing a shift in the monetary policy. how significant would a particular rrr cut be? enda: we are talking about the fed heading towards tapering and the pboc easing again. they are talking about these rrr cuts basically trying to help banks to lend more to small and medium-sized businesses. we know that the economy has

been slowing although i don't think analysts had anticipated it was slowing to the point that the pboc would need to step in again. exports have been coming off. we will get a read on gdp next week and some key activity indicators. that would help us understand what is going on on the retail side of things but even if the pboc does move towards a rrr cut, i don't think anyone is expecting broad-based easing just yet. we are talking about something targeted, something specifico help the small and medium-sized enterprises and those being impacted by slowdowns or the impact of high commodity prices and the slowdown in exports so there is a shift coming from the pboc but not yet a broad-based easing. shery: good to have you on, enda curran. our next guest says larger asian markets have done well on the reflation trade as the same inflation trends are not a concern. we are joined by belita ong, chairman at an investment

company. great to have you with us. how long can we expect this goldilocks scenario to last? belita: the goldilocks scenario could last for quite a while. we are at a point where the central banks all over the world very much have a desire to keep interest rates low. unfortunately, we have not seen any significant, long-lasting signs of inflation. short-term, there are clear inflationary pressures because we are coming off a low base from last year. the thing to watch for, especially in the u.s., is that, whether or not inflation will be persistent. right now, there are lots of signs right down the road of companies offering bonuses because there are not enough people working when september rolls around and the extra payment from the government ceases and kids go back to school, we will see if people do come back and fill the jobs

market, which will alleviate wage pressures. haidi: what about in places like japan, where there has barely been any inflation over decades? belita: that is a good question. if you look at some longer-term trends that show increased productivity, and globalization, both of which are very powerful forces, that really keep inflation in check, those lasting so even if the cost of wages in china has gone up -- like many other countries, where l?s you can get cheap manipt((uu)ing costs -- while it is pretty clear there are pressures for inflation, the long-term pressures are still not clear. people can make the case that we are not likely to see some inflation for quite a long time. haidi: where does that leave your portfolio?

are there areas where you do see persistent inflation with good investment opportunities? belita: not really. the one area you are seeing persistent inflation is where currencies are week. in asia, we have a lot of opportunities for good investments. in taiwan and korea, because of their importance in the technology supply chain, and india, where the long-term fundamentals are very strong. though in those countries, inflation does not seem to be such a big problem. india is dependent upon the price of oil. it profited greatly last year and you can see that increase because oil prices were so low p:xbut now, they are back up ag, which is a problem to some extent for india. haidi: we still see undervalued opportunities in the semiconductor space, particularly in korea. belita: we think the korean

market, even though they did spectacularly well since last year, the current market is up 150%, which is astounding. prior to that, it was the worst market in asia for about eight years. even though we have this big rise in korean stocks, companies have been largely ignored. there is a small piece of the global stock market that has been ignored by some people for a long time, so finally, it is emerging and we believe that there are links to this rally in korea. korea is very volatile but despite that, there are very good companies with reasonable valuations. haidi: belita ong, you will be staying on with us to talk a little bit more in a second. that's get you caught up today -- let's get you caught up to date with the first word headlines. vonnie: malaysia's largest political party has withdrawn support for the ruling.

they are calling on the premise or to step down and for a temporary leader to be installed pending fresh elections. he had earlier installed his deputy in a bid to retain the party. they reconvened this month. india's prime minister, narendra modi, has overhauled his cabinet in a bid to repair his tarnished image as the nation emerges from its catastrophic covid outbreak. 28 junior ministers were sworn in in new delhi. ahead of the reshuffle, india's health minister resigned. haiti's u.s. ambassador says security forces will need international help to investigate the assassination of the president at his private residence. the interim prime minister says highly trained killers murdered him and wounded his wife, who was evacuated.

parliamentary terms expired without elections being held. authorities in dubai say a fire caused by an explosion on a commercial ship has been brought under control. the massive blast lit up the city just after midnight local time. a team worked to put out the fire. no deaths or injuries have been reported. 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, ubs global wealth management, dominic schnider, joins us to discuss the outlook for commodities. up next, beijing is considering closing a loophole that allows chinese firms to list shares overseas as ridehailing company didi has just done. the details, just ahead. this is bloomberg. ♪

haidi: let's get you your latest business flash headlines. mccoury is said to be exploring a joint offer for sydney airport. the firm has been speaking to pension funds about challenging a $17 billion postal. the purchase of sydney airport would rank as australia's largest ever acquisition. citigroup wants most employees back in the office in september at least part-time. the human resources chief said health data had improved in both countries. it opened u.s. offices to workers who volunteered to come back. citigroup said it will let staff remotely some of the time, a much more flexible position then many of its rivals. it committed to $8 billion in commercial property loans can 2021 more than double its

previous record. demand for new loans has soared as construction picks up, debt matures, and j have refinancing. it fell late last year when the real estate market froze. shery: didi fell for a third consecutive day as china is reportedly considering a move to close the loophole. crackdown on the ridehailing giant in the broader sector has drawn some higher from congress -- ire from congress. let's bring in our guests. so what are lawmakers here in the u.s. saying about all of this? >> they are saying that they do not like the fact that u.s. investors don't really know what will happen when chinese companies list in the u.s.. they paint this picture of the 401k investor seeing their money

go proof when the ipo price is now lower than what the initial was. and what is interesting is i'm seeing some anger not just that the chinese government for the regulatory action but also at the u.s. legal system that is allowing this. i'm seeing some questioning of should we be allowing chinese companies to list on these new york stock exchange is? haidi: i want to bring in our china executive editor. what do we see as a response from didi at this point and what can they do to damage control over the situation? >> the first thing they can do is try and explain the chronology of how all of this happened. there has been reporting by us and the wall street journal and other media that chinese regulators were suggest that delay their listing as much as three months ago. that has really thrown into question how all of this happened. i think the recent news about china considering closing this

loophole that a lot of these tech companies have used to list in the u.s., using a vehicle incorporated in the cayman islands, which beijing had inns of -- no means of regulating, that might change this dynamic and you could see a lot more scrutiny of chinese companies trying to list in the u.s. >> it is really interesting. the ipo suggesting there was some anticompetition regulatory action taking place already in beijing. what are the chances of something actually happening here? what are the applications going forward? john: it is hard to say. we have not heard from a ton of lawmakers, but we have heard from some pretty important ones. one of the last bipartisan issues in washington might be when you invoke the idea of competition with china. there is a bill going between the house and the senate right now so that bolsters

manufacturing and other industries an one lawmaker i spoke with today said that could be a vehicle. these tosoh very early stage, but that could be a way that they could we regulate some of these issues they are having with chinese listing in the u.s. shery: given all of this pressure, not only from china but also here in theymrth■ u.s.e have seen a lot of pressure on the text there. this gtv chart on the bloomberg showing how the hang seng tech index has really slumped to percent since its february high so what are the implications right now for the markets going forward and also about those potential new listings that we were looking forward to from chinese firms in the u.s.? brody: obviously, the chinese regulatory regime is moving from something a little bit more laissez-faire to something much more tightened with greater scrutiny. i think that is the overhang for the market. looking forward, i think if

china is going to make it more difficult, increase the amount of reviews that any company that wants to go through. you might see the end result of that being more chinese names listing in hong kong and shanghai. the scrutiny we have been talking about that u.s. lawmakers have put on the subject will only add to that motivation. haidi: brody ford in new york and john liu in beijing. still with us is the chairman at dalton investments. i really did want to get your insight on this. take a look at another chart that shows another bearish signal looming when it comes to chinese and hong kong listed stocks. we are looking like msci china is about to or not that can bearish cross. we have seen them moving to the lowest in the year with momentum basically just vanishing. what does this mean for investors? prior to this, it felt like some of the chinese tech names, regardless of which market you

are talking about, were a good diversifier in a portfolio is you are heavy u.s. market developed stocks? >> it has underway to china for a very long time, to our detriment, i will admit. the rest of the investing in china are often binary. there is no way to head off against regulatory risk, given the u.s.-china conflicts, geopolitical risk. in the case of a company like dd, which is just a progression from ant financial and the review of the 34 tech firms including tencent, for -- to make sure that they were proper and that their procedures were doing things like other companies, that is just a series of actions that show china wants more control certainly over data. and also over the capital markets and how companies might

have to report their earnings and provide information to foreign regulators. to me, the chinese market is still a market of growth and it certainly has opportunities and one should be very careful i think in investing in china and that will continue to be the risk because of the government intervention. shery: valuations are starting to look effective. is that tempting to jump back in? belita: i think you can find sharp evaluations in a lot of places in asia without having to deal with the same kind of regulatory risks. the japanese market is very reasonable. taiwan and korea are very important in the technologies supply chain and there are wonderful companies in both of those countries that are reasonably priced. finally, india is a strong long-term story because you have the large democracy, lots of

talented entrepreneurs. it spells a long growth path ahead. there's so many themes you can invest based on in india that will be profitable for many years. shery: always great having your thoughts. coming up next, the white house is looking at taking up the mix of governors in the fed which could reshape policy towards the biden administration's agenda. we will have more details on that, coming up. this is bloomberg. ♪ ♪

shery: as joe biden waves the potential renomination of jerome powell as chair of the federal reserve, sources tell us that

white house officials are discussing the use of reopening from the board to reshape the central bank. let's bring in scotland been. -- scott. what priorities are they looking at in order to reshape the fed? scott: what we are looking at is not who will join the board or whether powell is going to be appointed, but what is the overarching strategy for the biden administration with respect to both the renomination of powell and the several openings on the board now opening up in the coming months? so the key issues they are interested in our inequality climate -- are inequality, climate, bank regulation. those are some of the key issues and as they of people, and the president decides whether to reappoint mr. powell, they are

going to be focused on those issues to really have the president put his imprint on the board. haidi: continuity will be the name of the game. do these have a meaningful impact when it comes to the trajectory of monetary policy going forward? scott: that is the interesting thing is that we really have not heard of monetary policy being a key consideration in this process. it really comes down to some other priorities including inequality, bank regulation, so on. what we do have is one very interesting nugget of reporting that janet yellen, who will see a key influential figure in this process, she is -- we have reporting saying that she is pleased with chair powell's performance handling the fed and the economy through the pandemic.

that shows potentially some satisfaction with the way that she has one monetary policy. when it comes to something like inequality, you can also imagine that going in a dovish direction as well because historically, the fed has tightened before benefits of job growth have spread to all groups, especially african-americans. that has become an increasing priority. if inequality is a priority, you can see that maintained or even strengthened with additional appointments from the president. shery: what could be the timeline and sequence of events starting now in this potential shakeup? haidi: -- scott: we could see something coming based on historical patterns. we have seen reappointment of the fed chair as early as august. it could come as late as november and that is when i

believe president trump announced that he would appoint mr. powell as chair to replace janet yellen back in 2018. it could really come anytime in the next few months but in addition, you have several other spots opening up. you have the vice chair for supervision, his term actually expires in october, but elizabeth warren has made no secret of her dislike for his views and performance as vice chair for supervision and i also have the vice chair, richard clarida, his term as governor is ending in january, so you have several other openings potentially. haidi: bloomberg's u.s. economic policy editor in d.c., scott lanman. our exclusive interview with indonesia's finance minister. he will be speaking with us about the past to the post-covid

recovery. do not miss out on other big interviews later on "daybreak asia." we are speaking with our air asia group ceo in the next hour. this is bloomberg. ♪ in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

vonnie: this is "daybreak asia." i am vonnie quinn with the first word headlines. regulators in beijing are planning rule changes that would allow them to block chinese companies from listing overseas even if the unit selling shares is incorporated outside china. the move would close a loophole used by the country's tech giant. firms structured using the variable interest entity model would need to get approval before going public in hong kong or the u.s. boris johnson has ordered

written's national security advisor to investigate the taker of the u.k.'s biggest semiconductor plant by a chinese owned company. lawmakers say the deal could pose a security threat. they acquired a chipmaker which makes chips for the car industry , 5g, and facial recognition. vetoing the deal could strain u.k.-china relations. joe biden met with members of the security team to discuss possible responses to ransomware attack's against u.s. entities, blamed on russian link tankers. biden is facing pressure to react following a massive july 4 hack and cyberattack against the rnc. the white house would not say if the administration should be did the attack to the russian government or criminals. the former south african president, jacob zuma, has been taken into custody to serve a 15 month jail sentence for condemned of court -- contempt of court. he is said to have handed

himself in. he was found guilty of violating an order to testify before an official panel. 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: indonesia's finance minister expects the budget deficit to stay elevated next year as the nation's worst coronavirus served hampers recovery efforts. in an exclusive interview with haslinda amin, are guest discussed the impact of rising oil prices. >> it is one of the areas which will affect that. on the one hand, ports, indonesia will receive revenue if the oil price increases, but we also see on the indonesian side production of oil and gas.

oil recovered from -- in production so the higher price will provide more revenue. >> we know you are planning a tax overhaul to boost government revenues amid surging virus cases. as the resurgence changed your calculations of when and how you implement your tax reforms? >> we are going to discuss this in the next three months. in the next three months. +t[+ vk&9sxogogb:2ñu/"!n&/iz weeks, e parliament is going to be in recess so we will be discussing with them. some of this affects reforms that will be implemented, but at the same time, we will -- in the

economy. >> what might be delayed? may be tax on your high net worth. what are the potential delays? >> we will calculate first and then look at the strength of the recovery and at the same time, because we are introducing a tariff on it, it is not going to be like one across so we will definitely calculate this, providing good quality as well as revenue, but at the same time, we also have to be very mindful whether the indonesian economy is strong enough at this very moment. >> what are the chances of delaying your budget deficit targets through 2023, minister?

can you limit your budget deficit to 3% by 2023? >> we have to look at the second quarter of this year, 2021. we have a very strong recovery until april, may, or even the first half of june. the delta variant -- in order for us to be able to manage the virus. so with that, it is going to be a -- affected on the third quarter of this year. overall, the growth this year will be between 3.7 to 4.5%. it depends on how fast we will be able to manage the increasing virus transformation. with that assumption, next year, we will still have a recovery

and momentum, so with that, i think we are still very optimistic. ñ down the deficit to belowy9■z$b, 4.7 to 4.85 with the parliament. we will submit the budget low for next year. we will decide the point of the deficit we are going to choose. js".÷(ae will try very hard in 2023. at the'c# same time, we will be w5 ÷ conflict;0phy will not f©

minister speaking exclusively to bloomberg's haslinda amin. i+v3@■kltqh state of emergency in tokyo throughout the olympics according to a public broadcaster in japan. the tokyo games are set to begin on july 23. sophie jackman joins us now with the latest so how does this actually work4nñ with the emergy in place? what happens to the olympics? >> it is very unlikely that the olympics will be canceled at this point. they should go ahead. we still have two weeks ago and this state of emergency was within the territory of plan b for the organizers. they have said that they still have some tools left in their toolbox to reduce the infection risk if an emergency is declared and that centers on holding all the events at the olympics without any spectators. we are expecting a decision as soonest today on that when the stakeholders, including the ioc and japanese government hold a

five party meeting so we are expecting that. those events will be held with no fans in the stands at all and this does not change all the existing virus measures the olympics has in place including regular testing and keeping athletes separate from the local population as possible and organizers said they are confident that will be enough to keep the gamesii decision here? >>lah a surprise. reports suggested that the existing less strict quasi-emergency measures would continue into the olympics but cases have been on the increase in tokyo since the last state of emergency ended on june 20 and that puts pressure on those health systems here and that is another factor they will be considering. the japanese government certainly has to tread very carefully here because the public opinion on holding the olympics during this pandemic has been a sensitive point in polling and it will be a general election a couple of months after the olympics and probably

in october so they cannot afford to mess this up and lose any public trust. sophyñyp jackman as0!ñ we count downar in tokyo. the associate professor discussed the measures that need to be in place for the event and spoke about rising cases in the u.k.. >> we have to look at the country across the pond, united kingdom. it had similar vaccination rates to us around 60%. 67% vaccination is extremely impressive. despite that, we have seen rising cases over the last six weeks in the united kingdom. cases almost doubling every single week. right now and in the u.s., there is a tipping point. cases are on the up so we should be wary. >> let's use the u.k.. is there anything to worry about as far as hospitalizations and

deaths are concerned? >> what we have found is that countries that have higher vaccination rates and hospitalization -- vaccination rates, hospitalizations are lower. the delta variant has been reported to be more dangerous. if you are vaccinated, your disease is likely to be less severe and many countries have successfully vaccinated the elderly, those who are immunocompromised, transplant mó> this is not totally unexpected. even when we started down this path of vaccinations, there was a lot of talk about new variants hopping up and the need to reformulate some of these vaccines down the road here. what do we know about the process for doing that? >> vaccines are constantly being evaluated, constantly trying to identify through genomic sequencing the mutations that are making the vaccine more of

your land -- virulent, and making sure it matches those mutations. we do it every single year with the flu and every year, we are prepared with a new flu vaccine so it's not beyond the realms of our capabilities as a country. >> are we at a stage where we have to start thinking about these covid variants as an annual shot that people will need, presuming that they are willing to take them? >> i think it is very likely that this will be something like the flu. and that repetitive vaccinations are going to be needed. flu is seasonal, which is where we have this annual shot. with covid, i think it is uncertain whether it will be an annual shot or just a booster shot as newer variants emerge. >> if you were to parachute into tokyo today and give counsel to a beleaguered government trying to do this jane norma's event,

there will be no fans, let's say, but even with that, you have many sports with multiple people involved, basketball, whatever. how do they do this, given covid? how do they do this given the fears of variants like we are seeing now in spain, portugal, and other places? >> i would be saying why are we doing this? when you're vaccination rates are less than 20%, you are putting your populace at risk by inviting individuals who may be carrying the delta variant, which we have already seen in tokyo, with the ugandan team. while -- why are we doing this? why is it important to have the olympics? if you are going to have the olympics, we had to do universal mass mandates, you will have to restrict unvaccinated individuals from entering gaming arenas, hñu will have to have on-site facilities for isolation and quarantine if

someone has symptoms or is symptomatic, and then rapid, quickly available testing, to identify individuals who are symptomatic quickly self-isolate. shery: johns6qh/ hopkins is supported by michael bloomberg, the founder of bloomberg lp, the parent company of this network. plenty more to come on "daybreak asia." this is bloomberg. ♪

shery: it has all been about the bond markets with that rally in treasuries taking meals february lows. sophie, what are you seeing across asia? sophie: we see the bond game continue. cautious tone pervading markets. jgb futures have turned slightly lower but we have speculation that tokyo may be placed under a new state of emergency that could push jgb's higher. the aussie 10 year yield trading at a february low ahead of governor loza speech online. ahead of that, citigroup saying the outlook for inflation and wages, the rba could tip her -- taper. switching out the board, keeping a close eye on korean bonds, which rallied this week on the jump in virus cases in south korea but some strategists say

that drop that they have seen of lay in yields has been excessive in light of the broad recovery. the security company seeing two rate hikes by the end of next year when the governor ends his tenure. chinese bonds jump on wednesday amid calls for pboc easing with one analyst saying a rrr cut may happen in september and thus far, china's policy makers a relatively neutral stance for the pboc. two the china-u.s. yield gap wide. haidi. haidi: we have not seen a rrr for quite some time and we are watching these fx markets and currencies moving against the dollar but also some dovish surprises from the ecb. andrew just talked about the pboc. we are watching the euro and the yuan. they expect the euro dollar to trade around 120. joining us now is a cio.

as we see the reversals we have seen and the upside momentum in the dollar has been sharp, does that double down when it comes to dollar bulls, and does that mean less interest? >> we are still in an environment where the euro-dollar is probably going to go sideways. i know we have seen a little bit of strength to keep in mind that we are accelerating globally in terms of economic activity. the data out of europe has been very solid. overall, we have the ingredients in here for euro support as well so they are offsetting forces at work so more or less looking at the edwards trajectory euro-dollar so that's why you have the 120 that i gave you. into next year, i think it is interesting. we are not going to accelerate anymore. at the same time, it becomes obvious that the fed will move and en suite taper, where are rates going to lift off? that will trigger dollar strength so into next year, look for dollar

strength and we will probably talk about euro-dollar heading to 115. shery: -- haidi: that takes us to dollar china. our question of the day, how would a dovish pboc shift affect assets? if we get that rrr cut, does that suggest beijing really is resisting against for yuan appreciation? >> the indication of rrr cuts since the second-quarter gdp numbers may be don't look matt rosie's so clearly, there is a need for more credit growth overall to make sure the economy does not decelerate too much. even though we have to go a little bit dovish, the initial reaction could be quite positive. the market was worried there was too much tightening going on and that has also been weighing on the stock market so a little bit of the looser pboc would help the stock market here and that could attract some inflow.

think about china. we still get yield compared to the u.s., so from a purely asset allocation point of view, you want to beat china, that is the cny beyond the current account surplus, but also, probably the downside limited, dollars cny looking towards any move. that is an environment where we are looking at the upward trajectory into next year when it comes to dollars cny's. an indication that the tide is shifting. shery: central banks around the world watching inflation concerns closely which are affected by what happens to energy prices. this gtv chart on the bloomberg, this function, grr go on the bloomberg showing you how energy stocks have outperformed so well this year, up 30%. do they have further room for upside right now? >> yes, we think.

if we look at the profitability of some of these energy companies, some of the markets still underestimating how much profitability we can actually get. there has been a spending cut as well. the valuations, which are clearly not demanding -- highly undemanding. in the low teens compared to the overall markets. if i look at the forecast, we are looking at $80. has a deficit of 1.5 million barrels which warrants a higher price from here. looking at the $75 to $80 range in the second half of the year. shery: gold has been touted as an inflation hedge. we are continuing to see it rally. where do you see the metal going from here? >> positive on commodities

overall. we want people to take some cyclical and reflationary positions. a lot of people say i want to buy gold because of inflation. sorry, that is not how it works. it is all about real rates. at one point, the 10 year will go up although it has been lower than we thought. but real rates, if the economy improves, 50 basis points contraction into real rates, going up, less negative, that will reign in gold prices. we urged everybody, if you have a tactical position, be ready for even lower prices ahead. we do not have the investment demand needed to keep it where it is. shery: dominic schnider, thank you. we do have an alert on the bloomberg. t7w account surplus coming in right now at ¥1.979 trillion. this is a wider than expected

and widening from the previous month of april. the adjusted current account surplus, we are just waiting for that number, but this of course as we have continued to see export growth across japan, across the region. we are seeing the current account surplus expanding to ¥1.979 trillion, wider than the previous month and also much higher than estimate. be sure to tune into bloomberg radio to hear more from today's big newsmakers and get in-depth analysis from the break take -- daybreak team. this and in via the app, radio plus, bloomberg radio.com. stay with us. ♪

shery: we are counting down to the start of trade in tokyo and seoul. over in japan, the government is trying to minimize the financial burden of green and other growth initiatives. it is cost-cutting. the banking arm of goldman sachs is opening a branch for corporate cash management services. it plans to start operations in september. we are also -- sources tell us that he left the asset

management company to pursue other opportunities. over in south korea, virus officials will update on the pandemic situation later thursday with case numbers and vaccination numbers due in the next hour. we are also watching hyundai. they voted in favor of a possible strike with one coming as early as this month. and another company reporting the government will announce a plan to boost battery production . samsung executives will also be attending that. let's had to sophie as we head to the market opens. what are you watching? sophie: south korea and the netherlands agreed to expand cooperation to whether the ongoing chip brunch. it is a key supplier for samsung and sk hynix. we are keeping an eye on names as the government considers raising virus measures.

the test maker gets closer to listing, setting its ipo price at the top of the marketed range. in tokyo, we are keeping a close eye on a company which is due to report results in the wake of its announced new medium-term plan and guidance. they said the plan looks relatively optimistic. haidi. shery: let's get you a quick check. haidi: mccoury is said to be exploring a rival joint offer. the firm has been speaking to potential partners including pension funds about challenging that $17 billion proposal by ives them investors. the purchase of the airport would rank as australia's largest ever acquisition. a cash strapped chinese developer may undergo a court lead restructuring according to sources. a creditor filed a bankruptcy petition and a local court. it will trigger a restructuring or liquidation unless the settlement is reached. a singapore-based company held a

51% stake this year. coming up next, so their views will be announcing payment in bitcoin or ether of april diamond that could fetch as much as $15 million. we will get the latest from the deputy chairman. ♪

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>> hello and welcome to daybreak asia. haidi: looking at the major markets opening across asia, bonds gain. >> chinese regulators what

greater -- might get greater power to block overseas listings. the biggest party pulling out of the ruling coalition. sophie: blackrock -- growth is looking [indiscernible] the yen is trading study -- study.

this as we digest the fed meetings. the yuan holding steady. >> you have aussie bonds gaining

ground as well while the 10-year treasury yield is holding steady. we saw it you break the 130 mark overnight as we digested fed meeting minutes. check off the offshore yuan holding steady. we will be keeping a close eye on this as to whether or not beijing will continue to reign h■ h■ h■ hóhñ■ñ[%in appreciatis speculation over a potential rrr cut from the mainland. i wonder what backlog had to say. rose in china slowing at the same time and that is raising concerns given that policymakers may not respond in a timely manner. they are raising concerns over the clampdown for the tech industry for china at blackrock. >> our next guest remains bullish on asian equities and type this by the risks from china's crackdown. joining us now is christopher smart. always great having you with us. valuation starting to look

attractive on tech across asia? >> in some cases, they are. generally, we think of technology as one of the places where they have to make some invest because of the way technology is changing so many industries and sectors around the world. the selloff in asia provides some more attractive entry points but the thing that we are learning again with the news out of china is that this is not a sector that is at all free from regulators. as we are seeing in the u.s. and europe and in china as well, you have to take but there is plenty of ammunition that the government has at its disposal.

the real task for an investor is to understand [indiscernible] >> we are seeing the likes of the ecb tweaked their inflation outlook. in the fed meeting minutes, ours

overestimating or under messaging inflation? >> we believe the economy is on track for a strong reopening this year and next year. we had a central banks really saying, it's not that you think we are behind the curve, we want to overshoot to make up for lost time. we have been living through several decades. this is their moment for a studyo trajectory.

haidi: is the regulatory risk out of china the exercise of sovereignty via the company something investors have underestimated? >> they should not have underestimated, if they have. i think it has been clear for some time that china wants to be careful that its largest companies are not held hostage to u.s. regulations and sanctions which might be viewed in beijing as unpredictable. i think it is also clear that there are certain regulatory concerns within china about payment systems and data regulation. so i think this is increasingly something tech investors need to

generally take into account. it is true in the u.s. and europe and in china. not just the tech or political differences between the u.s. and china, but within china as the chinese government tries to regulate. >> we have breaking news out of japan. the company recommends declaring another virus state of emergency in tokyo and we are headed to the olympics july 23 so this declaration could raise the likelihood that the olympic events in the capital are held without spectators. this is coming at a time where tokyo has concerned -- confirmed 920 new cases on wednesday, the highest since may. so the government recommends declaring another virus state of emergency across the capitol. christopher, how are you factoring in these virus resurgence is in japan and other parts of asia? >> the news from japan you just

mentioned is disappointing and the japanese government has been struggling to deliver because of all the reasons and efforts they have put in. so it is a shame to hear this latest news. i think one of the things that has held treasury yields and boosted the bearish outlook for financial markets has been the resurgence and delta variant -- in the delta variant and other variants. vaccines still appeared to be very effective and even if there are rises in cases, the number of hospitalizations and deaths has been slower. it will be unlikely we will see major lockdowns like we saw last year, even if we see particular measures taken in australia and

other parts of asia. shery: christopher, it is always great having your thoughts. we want to hear a little bit more on the potential cut in china. >> chinese state media reporting banks reserve ratio requirement might be cut to bolster the economy. reports being shared by the premier. china's recovery from pandemic has shown signs of faltering after activity in the service and ginny -- service industry slowed. in an article published on tuesday, a former director at the people's bank of china argued a recut -- future tightening. taiwan may unveil plans to

partially ease covid curbs for next week. officials waive the need to revive the economy and global spread of the delta variant spirit easing of controls would include allowing and restaurant dining. there were just 39 new cases thursday. the world health organization is urging caution over reopening as hospitals have seen increasing infections. more than two dozen countries have reported epidemic curves and vertical spikes. officials are asking governments to be careful and not lose progress made so far. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ haidi: breaking news when it

comes to the virus implications in japan. they are recommending a declaration for the viral state of emergency in tokyo. just weeks ahead of the start of the olympic games. the prefectures are continuing with virus measures and a state of emergency for tokyo will be july 12 to august 22. japan was planning to declare the new state of emergency in tokyo throughout the olympics. virus cases have been increasing and this raises the further possibility of the games being held without spectators. we have heard the state of emergency is unlikely to trigger the cancellation of the olympics. they are set to begin july 23. officials from the organizing committee have previously stated they are prepared to go ahead and hold events without

spectators if the japanese government puts emergency measures in place during the games. so we are hearing japan recommends declaring the emergency be held through august 22. we will be talking with tony fernandez next about events. and some of the reopening's we are starting to see around the region. this is bloomberg. ♪

>> we are still looking at the developments taking place in japan with the economic revitalization minister saying japan has recommended to declare a virus state of emergency in tokyo. the she mora -- nishimura saying they will continue with those measures.

virus cases have increased and this raises the possibility that we will see many if not all olympic events be held without spectators. the olympic organization committee has previously said they are comfortable with that but we are not expecting this to trigger any cancellations for the olympics. this comes as a lot of countries in asia are starting to see covid-19 as a virus to be managed, not eliminated. joining us is tony fernandez, a man well-placed to talk about air travel. we are all waiting for the day we can safely get back on a plane. when do you see that day coming? >> soon. we see what is happening in

america and europe with the success of the vaccines, even though cases are going up. we are a few months behind europe. i would imagine september or october in southeast asia we will start seeing travel resume, especially domestic, then international. we have already been given word that those who have been vaccinated would be allowed in and you see the reopening in thailand. so the time is coming. haidi: how frustrating has it been to see vaccination rollouts across key markets? for example, singapore. how important is it for you that the governments really get the level of herd immunity up? >> there has been some vaccine distribution inequality but it is now ramping up. we cannot blame the government because supply was not coming.

malaysia started vaccination in february but only now is the volume coming in. they have done very -- a very good job of doing 340 1000 vaccinations per day. we just have to play catch up -- 347 -- 340,000 vaccinations per day. we just have to play catch up. quarantine rules for those who have not been vaccinated is the next important step. shery: at what capacity are you operating internationally and mystically? >> -- and domestically? >> internationally, negligible. domestically, about 20%. shery: do you expect the numbers to go up? >> i think we will see domestic travel outpace 2019 because the

national borders won't be fully open. by the third quarter. i think by second-quarter of next year we will begin to hit the numbers we were pre-covid. haidi: are you in favor of vaccine passports? is that what we will need to get to in order for life to resume? >> it's out of my control but i think it will be inevitable that governments will allow for that. like a united nations yellow health book we used to show at border control. it is nothing new. i think it is needed to calm everyone down. we have been in talks about our

own vaccination book. shery: how quickly could you bring the workforce back to revamp getting in the air? >> we have a recovery plan staged out, but that is a limiting factor. that's not going to take very much to get back on. we are well prepared, even up to bringing back the remaining 80%, we can activate that in about a month. shery: which international routes are your most hopeful about right now? >> singapore, thailand, indonesia, we are hoping china will open as well, india might be a little further out, but if we can get southeast asia open and then china, that will look and then south korea and japan. shery: given that exports have

been booming and trade it going well, how is your logistic unit doing? >> very well. we have used this time to build additional business. that is adding to the volumes to the logistics business. we are taking our first freighter. we have not had one. nine of our plans -- planes have removed their seats. freighters are secondary but we think we now have a diamond in the rough and eight is a benefit of covid that showed -- and it is a benefit of covid that showed the huge potential. we are very bullish on that. haidi: do you see more types of acquisitions that would be

useful in diversifying or pandemic proofing in this situation? >> yes. the biggest asset we have is our data and that enabled us to bring -- to build other businesses now in thailand and singapore. we will continue to look for acquisitions that make sense. there are many companies who would like to work for us that are giants and many small companies would like to tie up with that. we are working on three acquisitions as we speak. shery: tony, it is great to have you back on the show. next, u.s. shareholders after beijing's intervention sent market value plummeting. the latest fallout from china's

crackdown, next. this is bloomberg. ♪

>> china is reportedly considering a move to close a loophole. the giant is facing shareholders suing in the u.s. on top of these suits against didi, we now have lawmakers in the u.s. wanting to act against them. >> that's right. there has been reporting that chinese regulators suggested did delay their listing as long as three months ago so there are questions about how much the company do and if that was appropriate.

with tensions the way they are between u.s. and china and bipartisan support for a tougher stance on china, the outcry by u.s. lawmakers is not surprising but will add additional pressure on whether or not more chinese companies will go to the u.s. to list. haidi: it seems like a big risk to take. does that mean they will be a boon for shanghai and hong kong? >> one of the things we reported yesterday was chinese regulators are considering closing a loophole that lots of tech giants used to list their shares in the u.s. they were setting up vehicles in the cayman isles -- cayman islands. now beijing is looking for ways to revise rules to give it the power to stop the listings from happening. so in this case, if the regime had been in place it could be

possible that beijing could have stopped it from happening. shery: what happens to the companies that have already gone public in the u.s., such as alibaba? >> the part of the change in regulatory regime would require companies like alibaba if they wanted to do additional share cells to show they meet -- sells that they meet all of the requirements. it would not include additional share selling, but there would be additional hurdles the company would have to go over. haidi: next, a very interesting conversation with sotheby. how they are accepting payment in bitcoin for a diamond that could fetch $15 million. and we will9p8:çds8 -- this is

bloomberg. ♪

haidi: china is set to declare -- japan is set to declare a new state of emergency in tokyo. this does not necessarily mean we will not have the olympics. what are the implications? >> no one on the becks is very unlikely. we think -- no olympics is very unlikely. we think they will go ahead. the state of emergency goes

until august 22 so it will cover the whole olympics. organizers had a said they would watch to see how the government responded to virus increase. so they still had tools in the toolbox and the main one is holding events without spectators. we probably will not get and ask -- we will probably not get a decision on that until later today when a meeting is held to decide how to react to the state of emergency. it is not a hard lockdown. it is really aimed at stopping the local population from moving around as much as they have been. it does not change the rules for the athletes, daily covid tests and separation. haidi: how does the japanese

public feel about this? >> they have been feeling lukewarm about the olympics as a whole during the pandemic but sentiment did improve in recent weeks as athletes started to come in. but it is something where the government will have to tread carefully. cases have been increasing and that puts pressure on the public health system, and people will be feeling that. there will be a general election a few months after the olympics and the government is aware they cannot afford this and they are looking to find a balance and keep everyone satisfied while calling off the olympics at the same time. shery: we have south korean infection numbers coming in. 1000 200s 75 in the last two hours. -- 1000 200s 75 -- 1275 in the

last 24 hours. let's check on japanese bonds. sophie: we have a five-year option and when it comes to korea, bond futures advance given the case count rising we could see the government impose a stricter curve. treasury trading steady after falling for a seventh straight session. stephen measure says he could see the 10 year yields fall by 1%.

wells fargo is staying bearish on bonds. the dollar weakens but today resiliency. read it is in focus, losing ground. key rates could stay at 1.75% well covid case count is still a concern in malaysia. haidi: china could be cutting the ratio to bolster the economy . this comes as there recovery from the pandemic has shown signs of petering out.

we have not seen this come out of the toolbox in quite some time. what level of growth could be expected in the coming quarters? >> it's an interesting signal we think. it is possible that much policy could ease their margin. this suggests the pocket of weakness in the economy is causing concern and policy circles. the recovery is on track but there are pockets of weaknesses. consumption is still weak. in particular small private funds.

support put increase in the second half of the year but might not necessarily come as a form of triple cuts. [indiscernible] haidi: what about interest rate cuts? >> they were thinking possibly the interest rates would stay put for some time as well. on one hand you see recovery, production is peaking, facing the supply side bottlenecks and weakness on the consumption side but you have inflationary

pressure and we think the pboc will be very cautious in terms of moving interest rates. we would see the pboc try to preserve monetary policy so once the fed raises the interest rate is possible the pboc might ease the monetary policy. >> boris johnson has ordered britain's national security advisor to investigate the takeover of u.k.'s biggest semi conductor plant by i chinese company -- plant by a chinese company.

hades u.s. ambassador says haiti will need international help in order to investigate the haitian president. the prime minister says highly trained killers murdered him and injured his wife. former south african president is in custody to serve a sentence for contempt of court after failing a last-ditch attempt to avoid jail. he had been found guilty of violating in order to testify about actions during his nine years in power.

india's health minister has resigned. president modi wants to hold elections next year. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: malaise is largest put -- malaysia's largest political party has withdrawn support and for temporary leaders -- what does this mean for the government? >> if he remains prime minister,

the first option for his removal would be a no-confidence vote and the second and third could be to reject a royal address or defeat a budget but those require the parliament. so it looks as though he will remain in less something else could happen. haidi: one of the broader implications for the economy? markets are relaying on account of the covid outbreaks. >> political instability is never a good thing. international investors would be defeat -- deviating from malaysia throughout the crisis

that began last year. at the same time this situation erodes from poor handling of covid situation and that resulted in the political backlash. parliament has been out of session since the beginning of the year with a emergency degree -- decree in place. shery: how bad are the virus infections now across malaysia? >> could you repeat that? >> the pandemic. how bad? >> malaysia had nearly 7000 infections, the highest month. a state of emergency was implemented in january and daily cases have nearly doubled, which was why there has been so much

criticism of government's response. haidi: next, a rare 101 caret diamond goes on the block in hong kong, expected to fetch $15 million in auction. and people can use cryptocurrency for the first time. this is bloomberg. ♪

haidi: sotheby's will accept bitcoin at the sale of a 101 caret diamond. to discuss ahead of the auction we have the deputy chairman of jewelry for sotheby's. what is behind the decision to accept crypto as payment? we are not talking about a contemporary artist here. >> sotheby's has been leading the market with innovation and exceptional client experience. so this is not our first time with cryptocurrency. in may we accepted

cryptocurrency for a banksy item. we think the moment is right to introduce this. there is a strong appetite for jewelry from collectors across the globe. haidi: is this because there has been increasing demand from your clientele to pay with cryptocurrencies? are you concerned about the volatility of the capital? >> no one knows about the future but we have seen a strong appetite for jewelry and other luxury items from collectors across the globe, especially asia. so these days -- sotheby's in

2020 was bought by asian clients and they are a younger generation. in 2020, 30% of the jewelry auction was people under age 40. so we opened the possibility. it is a continuation of our commitment to innovation and better client experience. shery: i did not expect young people to be so interested in diamonds. is this a new trend or something that has been going on for a while? is it just exclusive to asia? >> i think in general we see the high quality diamond is still very popular and strong in the market, especially since this year damage price has grown by over 10% in certain grades.

[talking over each other] shery: right now our understanding is that sotheby's as an auction house does not take the risk of the volatility, right? >> we are investigating better experience by accepting cryptocurrency as payment. so we want to lead the market with this kind of innovative experience. haidi: you have talked about the demand in statement jewelry pieces. what do asians want to collect? >> we see that last year we sold

three consecutive online auctions sold out in jewelry. we sold 70 million u.s. dollars. this is an interesting dynamic market we are experiencing. on one side is the pandemic but on the others we are moving into more digital innovative opportunities. a fascinating opportunity for us to explore. shery: be sure to tune into bloomberg radio to get in-depth analysis from the daybreak team broadcasted from our studio in

hong kong. plenty more ahead. stay with us. ♪

haidi: citigroup wants most u.k. and u.s. employees back by september at least part-time. they said health data in both countries had improved. they opened u.s. offices to

workers this week to those who offered to come back. employees can's -- can keep working remotely some of the time. and an $8 million deal to property loans, more than double the previous year. construction has picked up and there are low interest rates for refinancing. tell me is selling debt through a bond steel. this includes green bonds. 220 basis points for those green bonds. beijing -- chinese developer may undergo a court led restructuring. a beijing-based creditor has

filed a proxy petition against the company in a local court. it would trigger a restructuring or liquidation must a settlement is reached. they owned by a billionaire family and has a 51% stake. shery: china's most leveraged chinese real estate company is not shy about publicizing shrinking date but the developable rarely mentions they are ramping up issuance of short-term ious. let's talk to rebecca in hong kong. so it is technically not classified as debt but how problematic could it be? >> the real concern here is that even though they have taken significant steps toçcrñavow÷w÷e debt, the ious effectively are adding to the debt and has

become an alternative form of fundraising. they have significantly more debt than other chinese developers and there is this question about how do investors really read the balance sheet when it comes to ever grant -- evergrande? they are trying to juggle short-term debt in other parts of the balance sheet. haidi: when it comes to what comes next, will we see further restrictions from the government? >> that is the fundamental question and investors are asking whether or not the account payables will start to be included in the red lines and if that is the case, they would

certainly face significant challenges in what we have seen is even though the debt part of the balance sheet has headed back, the total liabilities has risen over the last year or so. and really fundamentally, we are seeing a lot of doubt from investors around what will happen with this debt. bonds are sinking much faster than we saw in september. so a lot of concern for the company. haidi: we are counting down to the open in kuala lumpur. >> futures are higher as we saw the solid export report from taiwan. they are weighing cut economy against covid risk.

inmate alicia, stocks -- in malaysia, stocks lagging. the benchmark has fallen 6%. rhp has more speed bonds -- speed bumps ahead with political risk adding to the cloudy risk. they are recommending to stay defensive and buying up debt. [indiscernible] haidi: we continue to monitor the drama and headlines. chinese regulators have reportedly threatening how to close the loophole that would usually allow a unit selling shares outside of china to be

able to publicly list in the u.s. but now we are hearing the hong kongme1 exchange plans to shorten the time from ipo pricing to when they can start trading to two days to make the entire process more efficient and attractive. good timing if you are looking at hong kong or mainland china as your best options. shery: climbing to a three month high because people are expecting given the pressure you are mentioned, we will see more home listings in hong kong. so this two day cycle will make it less risky for investors to have exposure to u.s. market fluctuations. haidi: it looks like a renaissance for listing closer to home might be in store. coming up we will talk more about that and the economic outlook for china. we will discuss whether the pboc should be cutting the rrr and

what consequences would be in the u.s. that's it for daybreak asia. markets coverage continues with the start of trading in hong kong and shanghai. this is bloomberg. ♪

>> this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind i often thought was private equity and then i started interviewing. >> i have learned from doing my interviews how leaders make it to the top. >> i asked him how much he wanted, he said 750, i said fine. i did not negotiate with him, i did no due diligence.