haidi: hello, and welcome to "daybreak australia." i am haidi stroud-watts in sydney. sophie: i am sophie kamaruddin. kathleen: good evening. i am kathleen hays. now for our top stories this hour, is in stocks set to open higher after wall street hits another all-time high. investors bracing for a wave of second-quarter earnings as concerns persist about the delta

covid variant. negative impact after leaders order it to remove 25 more apps over data security concerns and we hear exclusively from nissan ceo on the challenges of innovating in the electric vehicle market. haidi: earnings season is top of mind for investors as we await those key numbers. let's take a look at how we are setting up in asia. some gains untapped. sophie: we are seeing some fluctuation when it comes to futures so far but nikkei futures are just holding onto two day gains and we have s&p e-minis slipping ever so slightly after we saw u.s. stocks hit a fresh record high. keep a close eye on the oil patch after we saw declines for crude. in asia, we are seeing new restrictions being opposed across the region and that could be dimming the outlook but we have crude holding steady this morning. check out the offshore yuan.

a countdown to the trade reports for june as we await to see if we may see signs of slowing growth in china given the pace of recovery has led the rest of the world but that might indicate the other places other countries may want to think twice before they ease on their pandemic stimulus. when it comes to the china picture, we did see china tech stocks despite overseas listings but the gap between china's tech names and u.s. peers, that has widened and continued to widen after last week's rough week, the worst for chinese tech names in four months after regulators set their sights on didi. kathleen: quite an impact on these moves by the chinese government. obviously, dealing yet another blow to the nations tech science and people invested in them. bytedance shelving its u.s. listing plan after regulators warned about data security while

dd saw impact on its revenue up to 25 of its mobile apps were removed and tencent feeling the impact after a streaming merger was scrapped. let's get more from our markets reporter. what do you make of the chart we just showed? this is having a real impact, not just on these companies, but potentially on parts of china's economy. what are analysts saying about this? >> it is quite a sharp contrast. u.s. stocks reached an all-time high while the chinese tech centers hammered because of uncertainties regarding the regulatory environment. uncertainty that the keyword -- uncertainty is the keyword because this is a campaign by the chinese government to regulate not only the tax sector but also the online tutoring companies being hammered by the regulations, tightening

regulations. so it is an ongoing uncertainty in these sectors and nobody knows how this is going to end. haidi: it makes it hard for investors, right? are these valuations looking pretty tantalizing or is there too much potential downside to be able to say that yet? jin: there seems to be still some analysts like goldman sachs who think the fair value is 14% below here. even after such a huge decline, valuation is not achieved if you look at the tencent valuations, about the average of the last couple of years. the global investors to try to -- haidi: our markets reporter there. the treatment of ethnic uyghurs by china has been criticized in

the new report. it is one of the six places in the world that are witnessing more risking atrocities and crimes against humanity, they save that spring in jodi schneider -- they say. let's bring in jodi schneider. jodi: [indiscernible] -- at risk of tragedy. the u.s. is looking for new ways to prevent violence. -- u.s. congress today -- atrocity prevention -- human rights -- seven pages. it could only be called a wave of -- actions in changing including saint -- actions in xinjiang. they question what more can we do?

-- secretary of state, antony blinken, represents some of the toughest -- on the agenda. they should continue with sanctions and other kinds of options to stop atrocities. kathleen: i actually had a quick question, jodi. yellen making a new push in brussels to repair ties with the e.u. what is she specifically asking for? jodi: she really wants -- e.u. block to band together with the u.s. to be tough on china, particularly in the area of economic practices, what she calls human rights abuses. -- the biden administration.

-- the previous administration but at the same time, trying to get some of these -- take some of these steps. basically, it is a push. kathleen: jodi schneider, thank you for joining us. our bloomberg politics editor. continuing on janet yellen having a bit of trouble getting her first word pick through congress or the white house. vonnie quinn has all the details with the first word headlines. vonnie: bloomberg has learned that yellen has been withdrawn. the white house told an economist that she will not be nominated. she is a former obama era appointee who worked for

hillary clinton and was slated to be nominated as undersecretary for international affairs. president joe biden is calling on cuba's government to respect the right to peaceful assembly after some of the largest street protests in decades. the u.s. stands with cubans in their calls for freedom and pandemic relief. police were shown to attack demonstrators. during an event and address, the cuban president called on his supporters to confront protesters. lawyers for the ousted myanmar leader say four new charges of corruption have been filed against her. she is currently on trial in the capital on charges that include sedition. lawyers say there will be a hearing on the new charges later this month. the united nations says world hunger probably surged to a 15 year high in 2020 as the

pandemic curves incomes and access to food. a new report reveals as many as 811 million people were undernourished in 2020, about 1/10 of the world's population. the pandemic has put healthy food further out of reach for many people with food prices spiking to the highest in almost a decade. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: still ahead, australia's trading relationship in the indo pacific region. the high commissioner of singapore joins us. coming up next, we will be getting more insight with the cohead of asia-pacific fixed income. this is bloomberg. ♪

>> china's rapid trade growth is expected to have moderated in june. it comes among renewed concerns about china's economic recovery. that spring in enda curran, joining us in hong kong. this seems so timely to me because a surprise rrr cut by the people's bank of china, making people say they are worried about the slowdown, all the more focus on the big numbers coming out this week. what story do you expect the report to tell? >> exports have been central to china's recovery. when we expect today's numbers to confirm a slowdown. we are still fairly healthy growth, talking about 21% year on year export growth in june, down to 28% amongst earlier and that reflects some kind of cooling in global demand. we had early signals on china's export stories from korea which is about where the global trade

is. china's own pmi's are stuck in contractionary territory, pointing towards a softening on the export side. it is built-in -- adding to the mood music of a slowdown. we are talking about maturing, not necessarily stumbling. kathleen: -- -- how does monetary haidi: how does monetary policy -- haidi: how does monetary policy change for that structural shift? enda: a lot of the conversation has been about what the pboc has done and the surprising with the reserve rates and requirements for banks. a lot of people tell you that will not do anything for export and import demand. one of the numbers we got is expected to be a big correction in imports, for example, down from 51% in may to 28% area in the month of june.

on a headline basis, that would say while consumers are really weak, the import numbers reflect what is going on with commodities prices and the base effects from the year before. it has nothing to do with the pboc. the takeaway is at the pboc is concerned about where the economy is headed, getting ahead of the curve now, taking something of a preemptive move and that is where they are trying to get more money to the economy to support those parts of industry that needs it most, especially the small and medium-sized enterprises. the data today will probably point to the slowdown in china's economy and the pboc is very much back on watch. haidi: enda curran in hong kong. chinese sovereign bonds rallied on monday. 10 year yields at an 11 month low. they lowered the reserve requirement ratio for banks. our next guest says he wishes he added more when it comes to china banks. and brad gibson, a lot of

this is making me scratch my head. when it comes to china bonds, is there further to go? brad: there is. we are not overly bullish. we can see the chinese 10 year bonds are at the low end of their range. a little bit lower. it's at these low levels. the rrr cut has a massive injection of liquidity. the permanency of that move and potential for more does signal that they have adopted a more cautious stance for the economy. there is room for rates to rally further. at the very least, it has reduced the tightening. many investors were positioned for inflation to be higher, for bond yields to rise.

they will have to reassess their positions. it has removed that risk for the china bond market. haidi: when you take a look at the opportunities based on policy divergence, which central banks would you be looking at in this part of the world? brad: that's one where we expect gains from durations with rallies. across sort of developing and developed markets globally, it does appear to us at the reserve bank of australia is likely to be a laggard. we already thought they would be a laggard before the latest lockdown in sydney, but relative to central banks such as the bank of canada, the rbnz, it does feel to us that the reserve bank of australia is far more focused on wages, etc., so a long way away from talking about tapering or indeed tightening.

there is potential outperformance during rates relative to canada and new zealand, but it is a story we have not seen much sign of yet but the australian dollar could underperform some of its peers. kathleen: a couple of things going on in the u.s. that could reverberate through global bond markets. in asia, i want to pull up the bloomberg chart, just showing the inflation. the cpi is expecting a real hot number, up four point 9% year-over-year. expected to be at least that month when we see the number for june. the breakevens, the five year breakevens, they kind of have leveled off and pulled back a bit. when are you expecting in terms of the inflation message? can bond investors say that as the u.s. story and it can infect the fed and u.s. bond yields? can you put it aside if you are heavily invested in other markets? brad: --

brad: it is hard for investors to ignore u.s. inflation and bond markets. it is a dominant teacher. i do think that u.s. policymakers -- a very significant rogue member. we are still in a period where inflation is still high, the base effects, and then rebounds from covid, it's really only going to be 2022 that we get a stronger beat on where inflation is likely to sit. in our mind, potentially the breakevens at these levels, whether it is 2.25 or towards 2.5, time to start nibbling again and also, markets such as europe, where breakeven inflations are very low. we are not expecting inflation to get back towards the ecb target anytime soon.

there is room for inflation or breakevens to form in european markets. we got more exposure relative to u.s. breakevens at the moment. haidi: do you see improvement in appetite for corporate credit in asia? do you think sentiment is likely to improve? brad: interesting. we spend a lot of time -- the last six months to 12 months, if you think about what chinese policymakers have done, they don't let a good crisis go to waste. with this strong economic rebound, they have used that economic rebound to start targeting structural reforms, getting rid of some speculation in the commodities market, monopolistic behavior in the tech sector, etc., all of those headwinds have created issues. we think that those headwinds

are probably peaking at for a rrr cut, there is potentially support coming. kathleen: a rrr cut doing some good then. thank you so much, brian gibson at alliancebernstein. more on the outlook for china ahead. trade data analysis from credit agricole and barclays, hsbc, and bearings on the outlook for equities, and do not miss an exclusive -- with aberdeen. renee goldman gives his first interview since taking the rains in january of this year. up next, the fda as a warning about the risk of a -- find out why. this is bloomberg. ♪

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

and seoul so let's take a look at the big stories we are watching today, starting in japan. we expect to flesh out its climate change policy. separately, the company sees solar being cheaper than nuclear power by the end of the decade, plus a drugmaker is pushing on with a second drug to combat alzheimer's. it was first developed with biogen and controversially approved by the fda. let's move onto korea. the bank of korea seeing its monthly money supply figures at noon local time. too many rate hikes are priced into government bonds at this time. swap markets are considering three increases over the next 12 months, more than bearings korea. the covid delta variant is spreading rapidly in seoul, haiti. haidi: -- haidi. haidi: the fda is adding that

warning about the risk of a rare immune disorder to johnson & johnson's covid vaccine. the u.s. regulator said the data was insufficient to say definitively if that had caused the illness. as with any new drugs coming onto the market, we expect to see these adverse events. what do we know about this affecting some people back at the j&j shot? -- some people that get the j&j shot? >> of that, 95 were hospitalizations, one was a death. this is an incredible he condition and the u.s. food and drug administration revived the fact sheet for j&j to warn vaccine providers and doctors of that disorder within 42 days of being administered dose. we know that you should take into consideration the tingling feelings in legs and arms and sometimes this points to muscle

weakness or paralysis. but typically, people with this syndrome ultimately recover. we know the fda is watching this closely. there is not sufficient data right now to suggest causation, but it is the latest in a number of setbacks that have limited j&j's reach to americans. kathleen: how confident are doctors, scientists, that if someone gets the jab, gets a vaccine, and shows up a few weeks later with a symptom, that doctors are really taking it seriously enough to say maybe that is a side effect of the vaccination. riley: i think all eyes and ears are peeled to be assessing the side effects, whether it is rare blood clots, this specific syndrome, or others. it is important to be able to december short is actually

related to the vaccine and what is not. this is science working in real time and it is important to mention that vaccines by nature have an effect on the immune system. they help the body bolster its natural defenses and this is not anything new to vaccines specific to covid-19 shot. immune conditions like this that attacked the nerves, scientists have addressed in multiple types of vaccines from flu to shingles to assess that connection. in the process is working as it should. you should certainly be attuned if you received the vaccine but this is an incredibly rare commission at the end of the day. kathleen: thank you so much. u.s. health care reporter riley griffin. now a quick check of the latest business flash headlines. a video game streaming site has terminated a merger after chinese regulators rejected the proposal. the case marks the antitrust agencies first projection of merger deals by china's internet firms.

authorities say the merger would give tencent an anticompetitive edge in game streaming. they are said to order tencent to give up exclusive rights to music labels. they will be fined 77 thousand dollars for misreporting the acquisition of two apps. the penalties are a result of an antitrust investigation into tencent music which has long held the lead in china's music industry. the chairman has stepped down from the chinese retail giant after losing control of the company following a government led bailout. he will resign and be appointed as honorary chairman to guide the firm's future growth. he sold a 17% stake to a state back consortium in a 1.3 billion dollar bailout next week. up next, nissan's president and ceo discusses balancing innovation with cost of

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

kathleen: j.p. morgan chase taking center stage on tuesday as it kicks off the latest parade of financial earnings for u.s. banks. j.p. morgan and rivals have warned the pandemic related surge in trading revenue is slowing. su keenan joins us with more, getting us all set up for this. a lot of anticipation. a lot more optimism today than there has been in the last several weeks. su: the market was off to the races.

j.p. morgan, 2% on the day. not a bad game but that is trailing all of its peers but one in terms of year two performance. if you look, you can see j.p. morgan like the rest of the banking industry had big gains until june and that is when the ceo, jamie dimon, signaled trading revenue would probably drop in the second quarter by more than previously expected. j.p. morgan, the first to report this week, so a lot of focus will be on that but we also heard from other bank executives from morgan stanley also managing expectations downward on that trading revenue. analysts preparing for weaker showings of combined earnings from the bank. we will be down 5% from the year ago period. the focus, beyond trading revenue, will be on lending, increased income, banks

preparing to return to the office, and deals have been on the rise for many of the banks even as the trading frenzy has sort of eased off. we have heard from so many of the banks on details. we will be getting more of that. most banks expecting everyone to come back by the end of this summer, pushing for vaccinations. we will also be getting a lot of analyst questions on these calls about the return of dividends and buybacks, a key area of focus. haidi. haidi: these ro serve releases, we are watching what are we expecting? >> the fears of loan-loss reserves being used by the banks turned out to be overblown. none of these major reserves were needed so when the banks past their stress test, there was a drumbeat of excitement about how much they will be giving back in the way of dividends and buybacks, and what that would amount to.

analysts are saying we can look at about one billion reserve release windfall that will be split between the three banks you just saw. j.p. morgan chase, bank of america, wells fargo. analysts say wells fargo turns out to be the biggest in terms of the total share of reserves that will be added back to its bottom line for wells fargo. $545 million. bank of america, to have a 74 million dollars. you might recall j.p. morgan chase slashed its reserves. it is expected to release 230 9 million for the second quarter and being the first up to report, we can expect to hear from j.p. morgan chase before the tuesday opening bell at 7:00 a.m. new york city time. haidi: su keenan with that look ahead. taking a look at the oil patch, it was above $74 and there's concerns about the delta very and that is causing the slippage in prices that we are seeing. sophie: we are seeing that

reflected in market structures for physicals oil markets. we saw the time spread flipping to 34 u.s. cents after hitting 99 at the start of this month. this as we are seeing the delta variant across the world here in asia included so we are seeing a retreat in bullishness for the oil demand recovery picture. as the variant continues to hit asia hard, which is the key swing demand center, that is a big negative for the complex. southeast asia's biggest economy, indonesia, getting hard-hit. daily traffic levels down by 1/5 this month and this week, given the impact on the recovery outlook for indonesia, you have bank indonesia trimming its growth forecast and fitch solutions also revising down its outlook for its extension in indonesia to four .1% from 5.1% to reflect the covid-19 variant.

kathleen: nissan was an early entrant into the ev market at least a decade ago. the japanese carmaker, along with other automakers, is facing the challenge of keeping costs down while focusing on innovation. nissan ceo discussed the outlook for ev production with haslinda amin for the upcoming bloomberg sustainable business summit. >> definitely the cost. we are -- but again, we should not -- ownership by price. of course, we are continuing to study how we can look at the cost of the system such as the battery, motor, as well as these materials. for example, by having more

parts between ev's and e power, which we have, we will be able to achieve more. we can make the same specifications. lower costs encourage an increase in sales. they need further cost reduction. haslinda: if i were to get you to look into the crystal ball, when do you think -- when do you think ev's will go mainstream? what will it take for the faster adoption? makato: that is a very good question. from what i can tell, i think the speed of the market is different. you see china, japan, and now, the u.s., and how it can match

our technology to customer needs -- for the u.s. market, it still has a lot of customers. and how we can make sure the performance of the ev could satisfy the customer so these are the areas where i answered earlier how to make -- we can give value to the customer and this is what we are concentrating on today. haidi: that was makato uchinda, nissan's and ceo. we are bringing together business leaders and investors globally to drive innovation and scale best practices for sustainable business and finance. south korea is planning to invest $35 billion into its ev battery industry by the end of the decade to come to the likes of japan and china. the government says the

company's will be key players. let's go over to our head of asia research. who is really leading battery manufacturing here? >> about 580 gigawatts of production around the world. in terms of location, china accounts for 80% of that but when we look at the battery makers, it is really a competition between the top three for china, korea, as well as panasonic with its joint venture with tesla and there is a whole host of other korean and primarily chinese manufacturers in the top 10. you have sk innovation. you have the former nissan affiliate, which is majority owned by invision and these are all trying the for dominance around the world.

right now, the capacity that i mentioned is actually, depending on the manufacturer, heavily underutilized. you are seeing the ev demand pickup quite rapidly which may have manufacturers increase their utilization rates. >> what are the incumbent automakers doing? ali: very good question. nissan is an interesting case study. a decade ago, when nissan entered the ev market, it set up its joint venture. at the beginning, it wanted to focus around in-house sourcing. quickly, it became clear that trying to scale up manufacturing improved the technology while reducing costs, trying to do this on its own with just one partner would be very difficult. today, when we look at the major automakers around the world, they are pretty much pursuing a three-pronged strategy. they have joint ventures at

their home markets and in japan with panasonic. china, you have shanghai automotive, and in europe, for example, it has set up a joint venture. for overseas markets, many of them are looking at sourcing from two or more suppliers, particularly in china. in china, many international automakers are sourcing from byd as well as see atl, -- catl. a lot of them are taking equity stakes in startups and looking at utilizing these startups to develop new technologies and then potentially in the future, acquire them and bring them in-house. kathleen: it sounds like there is a lot of momentum building here. thank you so much. up next, australia's high commissioner to singapore, will hodgman, joins us to talk about strengthening trade ties in the end of pacific region. -- in the pacific region. this is bloomberg.

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haidi: we are getting some breaking news. we are hearing that the biden team is weighing a digital trade deal to counter the influence of

china in asia. that plan could include countries including japan, canada, and she lay -- chile. we are hearing that officials have been talking about proposals for a digital trading agreement covering in the pacific economies as the biden administration is seeking new ways to check china's influence in the region according to people familiar with the plans. these details are still being drafted but it could potentially include not just canada, australia, new zealand, and singapore in that mix according to one of the people we spoke to . that process is not yet public but we are hearing about this potential digital trade deal as part of a broader biden administration tactics to counter the influence of china in this region. that's get you the latest headlines. vonnie quinn is in new york. vonnie: the cdc is looking at reports over a rare disorder in people receiving the johnson & johnson covid-19 vaccine. data show a small risk of developing the neurological

disease. the cdc says it has about 100 pulmonary reports from about 12.8 million doses administered. j&j says it has been in discussions with the fda over the issue and the chance of occurrence is very low. confirmed coronavirus cases in the united states soars by 47% for the weekend. the increase comes as a delta variant spreads while vaccination rates continue to fall. covid-19 infections in new york city climbed for the first time in months, doubling over the past two weeks. dr. anthony fauci says ideological rigidity is preventing people from getting inoculated. boris johnson is urging people to stay vigilant after most are lifted next week. england faces up to 2000 hospital cases a day in between 100 and 200 deaths a day. the government says the country could also see hospitals coming

under pressure and a new vaccine resistant variant emerging. >> this pandemic is not over. this disease, coronavirus, continues to carry risks for you and your family. we cannot simply revert instantly from monday the 19th of july to life as it was before covid. we will stick to our plan to lift legal restrictions and social distancing. vonnie: global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: sydney's latest outbreak means plans for an australian travel bubble has been delayed until at least the end of the year and that is from the australian trade minister and he said that while opening up the travel corridor remains a priority, the scale of the sydney outbreak means those plans are on hold.

that's crossover to juliette saly with our next guest. we are very disappointed in these latest developments. jessica: you cannot --julia: -- juliette: let's get to will hodgman, also impacted by this. commissioner, do you think it is likely that we will see some kind of travel bubble between singapore and australia by the end of the year given the spread of the delta variant, given the slow vaccination rollout in australia and the fact that singapore is moving away from a covid zero strategy, which australia does not seem to want to indulge? will: it is a firm commitment that was reinforced with a visit of australia's trade minister to singapore, but also our prime ministers met just one month ago. there is a very strong commitment for officials of governments in australia and here in singapore to progress

the system, the operational capabilities, the requirements that will be necessary. given the outbreak in australia, the unpredictability of this virus, it is more likely that travel will be possible towards the end of this calendar year. >> we have also got this isolationist policy on the back of the slower than expected vaccination rollout. what concerns are you hearing from businesses here in singapore? juliette: -- will: it is concerning to those living abroad about the ability to travel home for those who need to do so and those arrangements can be made to ensure that can occur, but also, it is important to note that australia's policy settings are not one of isolationism, not one of a

policy-setting that seeks to eradicate the virus as prime minister morrison has recently announced in a four-point plan out of the covid virus. it will be necessary for us to increase the vaccination rates, which is occurring in the last week or so. to increase that rate, and to ensure that we are able to manage the virus in communities across australia in new south wales, there is an outbreak now. measures are being put in place. as is happening here and very similar to the policy settings in singapore, it is more about adapting to live with what is endemic rather than pandemic. >> let's talk trade because we have seen relations between australia and china for a since 28 -- fray since 2018, asking exporters to start to diversify.

are you seeing australian businesses in were australian companies see more business in the aussie on -- asean region? juliette: there is great demand -- will: there is great demand across the world, with our partner region. there is enormous opportunity and that is why the minister was here, starting off what was a five legged trade mission which takes in singapore, vietnam, korea, japan, and the united states and it demonstrates the importance of these markets. despite the restrictions that covid is placing on people traveling, we have been able to support the export of australian products into the region, where there is a strong demand, supporting australian business and keeping those strong and important connections between our strong trading partners and that includes singapore which is australia's sixth-largest trading partner. >> we just had some breaking

news in the last couple of minutes that white house officials are discussing proposals for a digital trade agreement, covering in the pacific economies, weighing the trade deal to counter china in asia. they have a digital free-trade agreement but if we can get your reaction to this and the diversification away from china. will: you make an important point. australian singapore were able to strike what is world leading in terms of a digital economy agreement that was struck last year so australia and singapore are the front runners, but needless to say, there is opportunity for other similar arrangements including in the southeast asia region which was part of the discussions yesterday between the minister and his counterpart in singapore so we will look with interest as to what is unfolding with respect to other countries but

importantly, australia and singapore have a digital economy agreement which is all about adapting to a digital environment to making trade and commerce on e platforms more simple, more efficient, and the work here is well underway. haidi: we also have a lot of disruption because of the pandemic to supply chains. what role is singapore playing here to alleviate that for exporters, particularly when we see exports between australia and singapore? will: we have been able to ensure that strong connections between our countries have meant that while australian exports -- into singapore and the broader southeast asian region, supporting australian business and jobs, but similarly, we have been able to ensure that into australia, singapore has shipped

vaccines, has been able to return australian's home over the last difficult 1.5 or so years, so there are very important connections between our countries that continue, notwithstanding the disruptions to rates and aviation industries, but there is a strong commitment by both our governments to ensure that they can continue as we emerge from the covid pandemic. >> scott morrison has also called on asean to work more closely with the security partnership. do you see more cooperation between asean and the quad? will: they are very complementary. australia has a long-standing relationship with asean. we were the first partner back in 1974. it is literally our region so it is important that australia continues to have southeast asia at the center of our foreign policy, which we do. the quad is an arrangement of

like-minded countries similarly inclined to ensure that trade is open and free, that international rules-based order is adhered to, and that our broader region remains stable and secure, so they'll complement you and they very much meet our objectives here in southeast asia. >> high commissioner, going back to the virus, to singapore treating it more as an endemic rather than pandemic, that will be key in opening up singapore even more and it is obviously going to be incredibly important for this region. your thoughts on that and i guess whether or not we see australia take that stance. will: that is australia's policy position given the prime minister -- prime minister morrison's recent announcements. what needs to happen first is to escalate the vaccination rollout which is occurring, nine million doses administered in australia with a rapid up, the supply of

vaccines becomes more readily available to australia. so as we move towards the end of the year and the very strong commitment and expectations that all australians wanting to be vaccinated will be so, then that will further open up the opportunities for trade and travel to go to a higher level between australia and singapore. >> high commissioner, we thank you for your time and let's hope you and i can both get back. will hodgman come australia's high commissioner to singapore. kathleen: terrific interview. plenty more to come on "daybreak australia." -- "daybreak asia." this is bloomberg. ♪

>> here is what we are watching as we count down to the start of trade. keeping an eye on japanese fishing tool makers after monthly orders show slowing growth. we are keeping an eye on panasonic as well. over in seoul, keeping an eye on hyundai motors as the carmaker plans to suspend -- four weeks to prepare for the evs. a company is seeking to raise as much as 8050.9 -- 850.9 won.

it may -- markets open, next. this is bloomberg. ♪ (announcer) back pain hurts,

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♪ anchor: hello and welcome to daybreak: asia. i'm kathleen hays. co-anchor: i've sophie

kamaruddin. haidi: i am haidi stroud-watts. our top stories this hour, stock center open higher after wall street hits another record. investors are rain of the delta variant again. the biden administration considers a digital trade deal to counter china and asia by putting to planet, australia, and singapore. the looming threat to gober -- global commerce is seafarers beginning to hit supply chains. kathleen: let's take a look at the markets. open across asia and more to come. sophie in hong kong. sophie: this tuesday in tokyo, japanese stocks bounced 2%. at a slower start this morning while the yen is trading weaker. futures gaining ground. machine toolmakers, keeping an

eye after orders slowing for foreigner customers. authorities are warning arising volatility over concerns of the delta variant. the korean yuan trading study around 11.47. on futures are changed to the downside. checking in on open in sydney, goldman lowering its third-quarter gdp it .6% versus 1.1% expansion because of the city lockdown. i continues to be a concern. gains by .1% while the aussie dollar -- dollar gaining ground. lifting the currency. check out the offshore yuan, below 648 ahead of trade data fromchina for j john beating toward theu secondne, report.

we have holding above $75 a barrel, wti $74. bullishness for oil recovery demand pulling back. haidi. haidi: part of this is the surge in covid-19 cases with the delta variant. that has come from the attempt to revive a return to normal. this opening up. this is braying concerns about the reflation trading markets. our next guest still likes economic reopening things with cyclical sectors and travel. director of asia and equity research. lorraine, that is riskier than if we had spoken a few weeks ago. are you being selective within reopening? are there opportunities with in that space? to get through the

bumpy nest? lorraine: we are looking beyond the pandemic. we are expecting vaccinations. you know, we are seeing the delta variant being a near-term concern. but we still have -- the new virus is what is maintaining our view to look beyond the pandemic. to answer your question, we are looking for where value is. in hospitality, we are looking at being selective. we think the airlines are pretty pricey overall. we think that areas -- gaming, for one, and aerospace and defense with room to play. haidi: when you take a look at valuations coming down, we will talk about china tech. it seems every day we are getting new additions to the

steady drumbeat of regulatory action and the crackdown by beijing. when do valuations that toxic enough for the rest to be worth it? lorraine: we are looking at really solid businesses with preferences. when we are talking about economy with an established franchise -- alibaba and tencent --at the current cash flow generation capabilities, we think the values are arating. a lot of these policies going through the system -- not all of it is predictable but we think with the strength of their moat s, in terms of their ability to generate income from the network they've built up, those two stocks are names we like. we have them wide mode rated.

policy makes it difficult for new entrances. haidi: a lot of emphasis on banks in the u.s.. big banks are reporting on tuesday u.s. time. kathleen: what about in asia and china, when you look at banks, there is? 's over banks around the world. what do you see there? lorraine: the thing about the banks we like is we are expecting imporvement in their interest margins to lift earnings. particularly in china, we expect an uptick in the cycle they've been going through for years so we are looking for imprvements in loans growth. there is not going to be one huge boost for these few

positive trends going on. that is what we continue to like in korean and chinese banks. we see value in quite a few franchises. kathleen: do you have any mention -- we surprise people. she is positive on that industry, those companies. lorraine: um, just in general, we don't have --we do have names we lock -- like but the trend is similar. we have buy calls in korean and japanese banks. within chinese banks, we prefer chinese construction bank. the welcome management space will spearehead growth. whenever there is opportunity to pick up tier two and smaller private banks, we would like them, as well.

kathleen: more broadly, in terms of surprises, when you look across the spectrum, you have talked about airlines and gaming and travel. is there anything else that might be something we would be looking at, um, as much as you are at morningstar? lorraine: one of the things we are watching out for is the u.s. markets are valued fairly compared to asian markets, slightly overvalued. there are only less than 12% we have buy calls on. it's a systemic risk. we are looking longer term which is why we like value but that will create hiccups with headwinds -- slowing growth, with which you have situations with shifting consumer spending

away from goods back into services. it will look like falling demand. we expect things to slow in china. that is built into our current assumptions. kathleen: director of asia equity research at morningstar. vonnie quinn. vonnie: u.k. prime minister de-risk -- boris johnson is urging people to say vigilant after pandemic restrictions are lifted next week. scientists estimate engman faces up to 2000 hospital cases a day, between 100 and 200 deaths a day. the government says the country could see hospitals coming under pressure and a new vaccine were distant variant emerging. pm johnson: this pandemic is not over.

the coronavirus continues to carry risks for you and your family. we cannot simply revert instantly from monday the 19th of july to as it was before covid. we will sit to our plan to lift legal restrictions and social distancing. vonnie: confirmed cases of the united states soared by 47% for the week ending sunday. it came as the delta variant spreads while vaccination rates fall. covid-19 infections in the new york city climb for the first time in months, doubling over the last two weeks. dr. anthony fauci says ideological resilience is demanding people from getting vaccinated. president biden is calling on cuba's government to respect the right to peaceful assembly after some of the largest protests in decades. he says the u.s. stance with cuba with calls for freedom and pandemic relief.

during an address, the cuban president called on his supporters to confront protesters. lawyers for the leader say for new charges of corruption have been filed against her. tucci has been in detention since the military q in february. -- coup in february. lawyers say there were being a hearing later this month. 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. this is bloomberg. ♪ haidi: still ahead, previewing the shadow trade with dariusz kowalczyk. we get the latest on china's big tech crackdown. warning of a negative impact after the apps taken down in china. this is bloomberg. ♪

♪ kathleen: breaking news. the white house officials are discussing proposals for a digital trade a demon -- agre ement as washington looks

counter china's influence. let's cross our executive at her. -- editor. given what we know so far, what do you see behind this? what does it mean for china? john: i think countries all over the world, u.s., europe, china, or waking up to the importance of data to the economy at large. everything from manufacturing to services to investment banking. now the u.s. is starting to plan for, how do we allow trade across borders on the economy is ever more data-dependent? if the u.s. is able to come up with a plan for its allies and europe and korea and japan, it could disadvantage china if china is not a part of that. haidi: does china have enough homegrown champions to be able to, i guess, to bring to life

this idea of the two internet's? john: i think china has shown it can supper -- set up its own regime for how to govern data, how to govern the internet. the question is how vibrant will that space be if it is not able to internet --interconnect with the rest of the world. the u.s. and china are in a competition to have sway over their technologies over the future and china is going to be cut off from the rest of the world. how innovative can it be? kathleen: do you think there is room for compromise? does the chinese government say, hey, we have. to get on track? we have to signal to joe biden that maybe we can all get together in a deal that benefits everyone? john: i think it would be a good argument to say if there could be a deal struck between the u.s. and china, that would be good for everyone.

free flow of commerce. freer trade. the ability of companies to invest higher around the world, that would argue to me and everybody's benefit. can the economics overcome the politics? that is hard to say. haidi: in the meantime, as the net closes from the u.s. and its allies, we are seeing the drumbeat of china's own crackdown on its own industrial and anti-champions. what is the endgame? john: i mean, i think china strategy of house in order, the governments all over the world are coming to a realization of how big china --technology has become and how regulation is sort of behind the curve. you have china coming down on didi forths -- forcing the company to remove its apps from app stores. you have the regulator knocking

back a proposed merger. you have concerns on the data and competitive side. haidi: the decision to shelve -- it could be you weaponized by investors, pursuing legal action against didi. that is a view by the bloomberg opinion, missed. -- columnist. go through what could happen here. lorraine: first of all, i would like to say everything is a security block. sexual harassment, climate change, anything that is worthy can be considered security. if the company stocks are down 20%.

basically, some regulators say go ahead. some others say no. didi got a yellow light instead of a red light. didi decided to go ahead and say the yellow light violated the traffic law. kathleen: if i was a judge, i would be sympathetic for -- towards what they have done because it got a yellow light

but this is uncharted territory. every week, the chinese government comes out with something that cannot be done it. it seems like if you are dealing with going country in the u.s. where you want to do business, and you are doing with those laws, you have somebody behind you was when the rug out from under you. reporter: uh, yes, absoutely. at this point, it would be hard to argue that. you never know what the chinese government will do. in case they say, specifically, having a statement saying before the ddi pio -- didi ipo, you said you had violated a cybersecurity law. it's a very good case. the shareholders can wait. it depends on the attitude toward china, whether they are willing to accept.

they will be in big, big trouble. they collected 4.4 billion dollars at the end of june. haidi: i have u.s. john what the endgame looks like? if you have -- shuli: thinking of this as a zero sum game is not necessarily productive. the hong kong bond market always follows the u.s. market. if u.s. investors have issues with big tech, the tech index toppled too. 1/3 of the hong kong market

money came from the u.s. the hong kong is in a bear market. the valuation will be low. in shanghai, the market has so many investors. the ipo process has been slowed down dramatically because the government is paranoid. i think that argument, -- [indiscernible] china tech is blood from the u.s. is good for the china market. haidi: always great to have your insight. it bloomberg opinion. we have more to come on daybreak asia. this is bloomberg. ♪

♪ ♪ vonnie latest business flash headlines. : the world's largest chipmaker is in talks to require sas inst itute, between $15 and 20 billion that extends into software. fas institute has been profitable for 44 years. [indiscernible] verizon was infringing related to data transmission. virgin galactic dropped 17% after a plan to sell $500

million in shares. the push to go green. kathleen: nissan was an early entrant in the ev market. the japanese carmaker is taking a challenge of keeping costs down while focusing on innovation. nissan ceo discussed the outlook for ev production for the upcoming bloomberg's sustainable business on it. >> definitely the cause of the company with growth and we are making that flexible. we should need wager on the ownership by price cuts.

we are continuing to study how we jump over to ev costs, looking at the cost of the system. by colonizing more parts between ev's, we will achieve farther economic scale. we can make the same specifications. our lower costs wiill increase and higher sales volumes to file cost reduction. kathleen: if i were to get you to look into the crystal ball, what do you think ev's logo mainstream in the u.s. and europe and asia? what will it take for the adoption?

>> good question. that is what we are trying to decide. what i can tell is the speed of each market is different. we see china and japan the -- and the u.s. how we can match our technology to customer needs. u.s. markets have a lot of customers interested in the big car and how we can make sure the performance of ev will satisfy the customer. how we can make our competitiveness and give the value to the customer. kathleen: nasal president and ceo. haidi: seymour promote -- haidi: nissan president and ceo.

seymour on the sustainability solving -- summit. the asia-pacific ceo gives us his first interview since taking the reins this year. this is bloomberg. ♪ look...if your wireless carrier was a guy, you'd leave him tomorrow. not very flexible. not great at saving. you deserve better - xfinity mobile. now, they have unlimited for just $30 a month. $30 dollars. and they're number 1 in customer satisfaction. his number? delete it. deleting it. so break free from the big three. xfinity internet customers, take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds. so many people are overweight now and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it. conventional starvation diets don't address insulin resistance. that's why they don't work. now there's golo.

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vonnie: this is "daybreak asia." the u.s. state department says china's region is one of six places in the world at risk of atrocities and crimes against humanity. report similar to congress cited a wave of actions the u.s. have taken to punish china for alleged abuses including export controls. the report also highlights alleged atrocities in myanmar, ethiopia, iraq, syria, and south sudan.

bloomberg learned u.s. treasury secretary janet yellen top job in her department has been withdrawn. the white house told her she will not be number needed and offered no -- not to be nominative and offered no reason. she was scheduled to be nominative as undersecretary for international affairs. the centers for disease control is monitoring reports of a rare disorder and some people receiving the johnson & johnson covid-19 vaccine. it says data shows a small risk of developing neurological disease. the cdc says it has 100 preliminary reports from 12.8 million doses administered. j&j says it has been in discussion with the fda over the issue, and the chances of recurrence are very low. the united nations says world hunger probably surged to a 15 year high in 2020, as the

pandemic occurred incomes and access to food. a new report reveals as many as 811 million people were under -- were under nourished. the pandemic has put healthy food further out of reach from many people, with prices spiking to the highest in almost a decade. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: let's take a look at markets. sophie kamaruddin is in hong kong. sophie: asian stocks pushing higher for a second session after the bounce on monday, led by china and japan. in tokyo we are seeing softbank lead gains on the nikkei 225. the kospi gaining .7%. authorities on volatility watch. the focus on oil this morning. we are seeing crude recoveries a touch. checking in on oil.

wti and brent on focus, this as we seen brent now at about $.76 in -- concerns. he's doubtful e.m. is the next vaccine trade. flipping the board we have j.p. morgan and goldman sachs expected to rise regardless of opec concerns. ing noting if there is a slump in crude, chief valuations will support oil-related commodities. we are seeing dipping slightly higher with stocks. on the offshore yen, you have cnh holding below 6.48. citi bullish on an overweight china duration. on expectations foreign demand will dip. haidi: thank you so much.

white house officials are reportedly discussing proposals for a digital trade agreement covering indo pacific economies. it seems to counter china's influence in the region. let's discuss economic and markets implications now with -- very timely to have you with us. as this news comes out from the white house. we don't have many details. what would be the impact? how important would this be for trade outside of china? is it something that would hurt china? what do you see happening here? >> without getting much detail, the key point is the u.s. is trying to counter china not only politically but also economically. and it is trying to ensure it is not only china signing various

trade agreements, economic agreements in the region and globally, but that the u.s. is also at the table and has influence over all those economies who rely a lot of time economically and are looking for a counterbalance with america. so we expect that the u.s. will try to have immense and this will be a counterweight to the growing influence of china in asia and globally. kathleen: this comes at a time when the rrr cut, a surprise last week, raised a lot of red flags. oh my gosh, china must see a big slowdown in its economy. news like this, this kind of development while china is cracking down on tech giants, does that also suggest that there are risks now for china to grow based on these kind of steps they are taking and steps other countries are taking? dariusz: chinese growth faces

downside risks because domestic demand is not fully recovered from the pandemic. china was very hot last year because of fiscal stimulus. it was pulled back this year, and what was left was private domestic demand, and car sales are still below 2019 levels. so we have not still recovered. they are not enough to bring us the kind of growth in the long run china needs. so this year, they will still grow 85%, but this growth will gradually slow during the year. interestingly, for the first time since they reported 40 years ago, we have a long. period of the u.s. growing more than china will.

that means a lot of investors will be looking at china with a little more caution. we're seeing a lot of hedge funds buying dollar on this kind of growth divergence as they are -- this initely a sign investors are following, and a beginning of a trend of underperformance of the chinese economy. haidi: is this just a structural shift? is this demographic? if so, how can policymakers fight this? dariusz: in the long run, demographics is the main risk to china, because we are seeing in our demographic for china, population declining by about 80 million by 2050. it already fell by 50 million by 2010, followed by another 180 by 20150. -- by 2005.

if you have such a -- that's a key reason why chinese growth will be trending lower after this year. what it means for investors is no need to panic. just buy chinese government bonds. every country which has this kind of demographic trend has long-term yields trending towards zero. i believe in the long run, the same will happen here. we will be arguing for a long time. we believe that for long time investors, it remains a great opportunity. haidi: so the bond rally continues in china. talk to me about chinese tech. with the crackdown and the structural shift we are seeing, we are told this is beijing getting their house in order. what are the opportunities within its strategy and also within the broader industrial policy for china? dariusz: we don't trade equities, so i don't analyze

equities in general. but by and large, chinese growth will continue in the medium-term after this year to be stronger than many other key economies. it will continue to attract portfolio investment as a result, including investment into the chinese equity market. so, while the crackdown on the tech sector is a significant cyclical headwind for those companies, we believe the ownership of chinese equities, which accounts for 4.5%, has to increase dramatically over the long run. those kind of crackdowns will come and go, impact various sectors, but they are not a reason to withdraw from chinese stocks overall. haidi: great to have you. i feel like it has been a while since we have had you on daybreak. coming up next, the delta variant moves through asia.

we are seeing the recovery for oil now at risk. this is bloomberg. ♪

haidi: climate change topped the agenda during the summit in venice, with policymakers putting pressure on the private sector to help green efforts. they told the bloomberg summit

that private firms can do more on carbon pricing. >> i think this is a very important initiative. of course it will take some time for sovereign governments to reach consensus. so that they will be very good carbon market and taxation. and also i think this would be very important to incentivize to accelerate the process of moving to know zero. so we're watching this very closely, and if there's international agreement on this, i do believe international financial institutions should follow. >> it looks good on paper. the thing is now it is who does what. how much global coordination is

there, really? >> so far as the mdb's are concerned, as you know, we've worked very closely together as a team. in aiib we've worked with the world bank and other institutions to enhance investment in climate change mitigation adaptation. in 2020, there's about $66 billion provided by the mdb's, along with cofinancing from the private sector, $85 billion. a total over $150 billion of the resources are allocated for climate change mitigation and

adaptation. so this is quite a number, a big amount, but i think it is not enough. so far as adaptation is needed, asia, as you know, has a gap of $70 billion a year. there is a lot to be done. so there is cooperation between them and the private sector. haslinda: not just about mitigation, it is also about adaptation. the pandemic has provided an opportunity to look at things differently. resources have been reallocated from energy intensive sectors to greener sectors like health care. how can we build on that? >> many countries are faced with the dual challenge of recovering from the pandemic, and also to sustain the economy.

particularly to sustain the economy in the countries which are highly indebted. in our view, this is very much important for many countries to do with both. in my view, climate change mitigation adaptation and growth are not mutually exclusive. indeed, they are mutually enhancing based on very good policies. so, first of all at this moment, it is very much important to ramp up efforts to contend the pandemic, which is still raging with new variants. but with the vaccines rolling out, i think probably before the end of this year or next year, we can basically bring the pandemic under control. and the next issue is how to sustain economic recovery from the pandemic. so i think emerging from the

pandemic, the human society should be well advised to pay more attention to the enabling environment to improve the ecosystem for the economic develop, and environmental protection. kathleen: sticking with the virus, most seafarers remain unvaccinated, risking outbreaks on ships. that could cause trade disruptions just as the u.s. and europe recover and companies start stocking up for christmas and more. let's bring in k-1 how to discuss more. the virus cuts so many ways. why are so many maritime workers still unvaccinated? >> that is a good question. we have told -- we have been

told that there are 1.7 million global seafarers. these are the men and women we depend to run the ships to get our packages from china to our doorsteps. and the bulk of them, only 2.5% of those, are vaccinated at this point. that is a really troublesome marker and everyone from shipowners to the ship managers are basically sounding the alarm bell that it is going to be a really tough christmas season unless government really get their act together to vaccinate the seafarers. that is because most of them come from developing countries like the philippines, india, indonesia. companies that are really struggling right now to get their own populations vaccinated. haidi: almost every story that has come out of this sector during the pandemic has been so nightmarish.

does this potentially have pretty chaotic implications? >> yeah. right now is really peak time for the shipping industry. for example, we have already seen a dearth of containers coming back to china that are needed. and on top of that you have shipping rates going through the roof. we have also seen lots of disruption at ports in southern china being the most recent example. but delayed shipping has really clogged up the supply for weeks. that is just working itself out. what we have also seen with the delta variant and all these other variants is that is also affecting seafarers as well. in a story we put out today, you can see this listing of recent ships that have been besieged by covid-19, where seafarers have gotten sick. every time these days at fara gets sick on a ship, it is often because of the variants.

you have ships that are waylaid that are quarantined on the sea for at least two weeks basically out of commission. of course that causes huge disruption. this is peak shopping season, right before the christmas holiday. if this continues, the crisis on the sea is only going to get worse. haidi: virus spikes are also threatening the recovery in oil demand across asia. elizabeth, what a difference even a few days makes. post-opec we were talking about the tightness and supply. what are we now seeing? elizabeth: i think in crude markets, things have not changed that much. i think we are seeing a slight dip in the past few days, but more or less the market is still pretty strong.

but i was just looking at the oil product markets. things are getting a little bit softer. it is pretty hard to gauge the market at this point. to give context, previously we have seen margins for fuels like gasoline and diesel doing much better on the back of europe and the u.s. reopening. we have traders and cargo from asia to the west, and that propped up margins somewhat. in the next few months with all these outbreaks going on, asian finance have to really focus on their visions. right now it is not looking that good. some of the market stuff has been hit by lockdowns recently. just look at indonesia, australia, malaysia. even when you make up 70% and 14% of asia's -- the delta variant across asia is

something to be reckoned with. that is not even all the markets that are seeing outbreaks right now. so yeah, really something to look out for. kathleen: and of course is terrible to see the virus, particularly the delta variant hitting so many people so hard in asia. at the same time, the story you are reporting on, this potential softening and demand comes right after opec-plus failed to get that production agreement. so in a sense, is the silver lining in this cloud -- people were talking maybe $100 a barrel oil, but that is now seemingly off the table. elizabeth: yes. i think at the moment we are not really seeing an impact on crude oil. i guess that is the silver lining come as you mentioned. however, if the outbreak worsens

, especially in markets like china and india, we could see more impacts on oil futures ahead, especially if collectively the impact is large enough to force asia refinance to cut rates. so that will be quite a hit to oil. kathleen: thank you so much. elizabeth low. a lot more to come on "daybreak asia." this is bloomberg. ♪ bloomberg. ♪

kathleen: the founder of one of china's largest retail conglomerates has stepped down after losing control of his firm. his resignation follows the government-led bad out the company -- bailout of the company. rebecca, what do we know about why he stepped down? are other chinese billionaires vulnerable? rebecca: ultimately this comes down to the financial health of the company and the fact they had to have this government-led bailout. even firms like alibaba coming in there as investors. the broader picture is the financial discipline angle we have seen. beijing stepping up to improve

financials across the board. as part of that, its access to the credit market. there's been incredible access to bonds and very cheap borrowing. that is what helped companies like suning, these wayward, potentially reckless conglomerates. haidi: is the default also expected to pressure the rest of the market? rebecca: certainly i think this is another side of that coin. trying to curb financial risk, access to funding. i think it's a fairly regional player, and not one of the big developers, so it is not expected to have a massive spin over. however, there is broader stress we are seeing hitting chinese property developers. haidi: coming up, kendra

schaefer joins to discuss the broadening tech crackdown. also speaking to william fong, giving his outlook on the chinese open. kathleen: plus interviews with corporate leaders and investors driving innovation from bloomberg's sustainable business summit, including an exclusive interview with the nissan ceo. that is it for "daybreak asia." our market coverage continues as we look forward to the start of trade in hong kong, shanghai and shenzhen. standby for bloomberg markets china open. this is bloomberg. ♪ this is bloomberg. ♪

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yvonne: welcome to "bloomberg markets: china open." we are content down to the open of trade in the chinese mainland and hong kong. our top stories, dede warns of adverse impact after beijing forces them to remove apps. china's june traded is out the next hour. bloomberg economics sees marginal declines for exports and imports. top u.s. banks set