shery: hello and welcome to "daybreak asia." i am shery ahn in new york. sophie: i am sophie kamaruddin in hong kong. we are counting down to asia's major market opens. haidi: i am haidi stroud-watts in sydney. bitcoin falls back. amazon denies plans to accept

the cryptocurrency this year. the ev maker says shanghai is its primary export hub. the u.s. and china hold contentious talks but leave the door open for a biotin summit. shery: breaking news -- biotin summit. -- biden summit. shery: when it comes to the quarter on quarter figure, we are seeing growth of .7 percent which is slightly missing expectations of both of .8% and a slowdown from the previous quarter, this coming at a time when we continue to see south korea reeling from virus infections. the year on your number is still much better, a jump of 5.9% for the second quarter preliminary numbers, slightly missing expectations but still a jump given the low base we are coming off from 2020. we are seeing the second-quarter manufacturing members contracting a little bit, down 1.2% quarter on quarter and a huge jump on the year on year basis in the double digit growth, up more than 13%.

re accommodation and food services are a little bit weak. but this is still broadly in line with the government's expectations that we might see expansion of 4% this year for south korea. we will be watching those numbers very closely and we will be breaking down those numbers with an economist as well. haidi: of course, we will continue to watch her volatility as the start of the trading day gets underway in a couple of hours time on mainland china and hong kong. beijing's crackdown across various industries is continuing to hammer chinese assets. garfield reynolds joins us now. moved into china tech and food delivery. any idea on what the next target will be or is that going to continue to cause this price action? garfield: part of the problem for chinese assets, it will

sustain for at least a few months. nobody's quite sure where the hammer will fall again and also, the basis seems a little bit unclear. what this has done has highlighted an issue that has been bubbling away for a while which is that china has been becoming more authoritarian and shifting towards a more isolationist base relative to the rest of the world and along with that, their motivations for doing things are not capitalists. they are not in the same world as it were of a lot of investors so they do not necessarily mind if a bunch of companies see their shares dropped by huge amounts provided that the government is confident that what it is doing, for example, the education crackdown, which is aimed at making people more

likely to have children, that is a long-term aim. in the short-term, that causes the stock market wiped out. that does not bother the chinese authorities at all. when you have got that kind of situation going on, those sort of calculations being made on one side of the chinese authorities and the other side for investors, and keen about what is profitable, what is good for the chinese economy, then that will cause pain to traders for quite some time. shery: this pain, could we see it really expand and see a contagion as this chart shows? we are seeing that weakness has dragged on broader em performance as well. is this trend going to continue? garfield: you can add the china discount, whatever you might decide to do to the bearish --

up for emerging markets in general. a lot of investors had expected that emerging markets would outperform as the global economy rebounds from the pandemic and a high global growth environment has usually been good for emerging market. however, covid has proved to be more debilitating for emerging markets and now we have china added to that along with -- perhaps pushed back a bit now with concerns about the potential for tapering from developed markets and how that will drive up global interest rates and all of that speaks to the probability that emerging markets will underperform or if they do managed to outperform, doing it from a much lower base. haidi: garfield, watching evergrande. they had their third major

ratings in about a month. when does the dam when it comes to investor fears break? it has held up pretty well. garfield: well, the systemic risk from evergrande -- it is twofold. one is that it is the biggest property developer worldwide. it has become a bit less of a risk because it has been reducing its borrowing. it is still massive and therefore it is a bit less of a burden on emerging-market debt indexes. on the debt front, that has more chance of contagion than the stock market. the biggest worry on a macro basis and global macro basis is if evergrande was to collapse in a way that did severe damage to the chinese housing market,

china's property sector, because that is where a lot of chinese invest a lot of money and that would sour sentiment in china more generally and would also sour things globally if the chinese property market was to be seriously sustainably impacted by a damaging collapse. i'm not saying it's unlikely there will be a collapse but certainly what is going on has shifted the needle towards that being a possibility. compact what we are talking about before. china's decision-making process is not necessarily concerned with the sort of things that investors are concerned about. you can see the nuance for evergrande. it does a lot of damage to china's economy and the global economy in the short-term and beijing would be ok with that. shery: garfield reynolds, great to have your insights, bloomberg mliv editor with the latest on

those concerns over china. are you seeing any of that reflected across asian markets? sophie: we are seeing a cautious tone when it comes to futures price action after we saw the index far more than 4% into bear market territory, leading losses for the index on monday. we are seeing some consolidation with earnings and focus as well. there are still concerns around the growth outlook, u.s. real yields fell towards a record low and morgan stanley seeing further to go given the deteriorating outlook for some of these u.s. growth metrics. metals have been rallying given we are seeing rising demand amid some of the recovery so copper futures going higher here as we saw easy demand, a key catalyst for the space. tesla reported strong earnings beats given that its long-term protections -- projections look to top. we have the korean earnings

season ramping up as well. the transport and storage sector seeing a faster pace of earnings upgrades as noted by the lines in yellow on this chart right here. pulling ahead of the medical supplies index, which is the most heavily weighted stock on that sub index, wanting to see if there will be any updates on the first batch of vaccines which is expected to be produced in august or september. we are waiting on the update from sk hynix which is due to report today as well. the supply crunch will be in focus. shery. shery: let's return to the release of south korea's gdp numbers and year on year readings for the second quarter. it came in just under estimate. for some analysis, we are joined by bloomberg's top for the data, angela. great to have you back. what does this mean? are we still on track to the government

forecast of around 4% growth this year? where are you putting growth for the rest of 2020 korea? >> thank you for having me. today's number is slightly higher than expectations. while it is boosted by the favorable base effects market, you cannot expect investment to be the key growth driver. they hosted a robust performance in the second quarter. major i.t. sectors boost the investment. it was shown that. some of the earlier optimism around it -- but what is more important for us is whether it

manages to do it quickly enough. the growth outlook is on track. shery: you mentioned the ongoing outbreak of coronavirus cases. how big is the conundrum for the bank of korea when they are trying to or signaling that they want to normalize this year given all of the financial risks, the record high household debt, and then you have rising infections. >> the alternative to growth outlook has so many reasons. cases are around 1500 and this will and some to the growth forecast but what is more important to track, they are still relatively low and even though high-frequency indicators, it shows that the economic disruption is not as familiar.

this is something the bok is watching closely to manage this quickly enough. i don't think it will change the hawkish tone especially then. >> we take across the breath of the asian economy, how much do you see any impact from the resurgence of delta variant cases and the unevenness of the vaccine rollout? who is looking better and the other more vulnerable? angela: different asian companies will have different pace of vaccination rates. singapore has done reasonably well even though it is back to a lockdown. aussie on countries like indonesia and malaysia, thailand, or more under pressure. they will open up to conventional travelers. the vaccination rate makes it

difficult. even though vaccination rates have --the government is expecting them to be delivered by the end of august. if this can be achieved, some of the supply side problems, this will improve sentiment and help them recover. haidi: barclays bank regional economist joining us from singapore. still ahead, we will take a look at how investors are recalculating chinese risk when it comes to the stock market. the founder joins us. the u.s. and china leave room to talk at your what was a contentious meeting. this is bloomberg. -- talk over what was a contentious meeting. this is bloomberg. ♪

>> i am vonnie quinn with the first word headlines. president joe biden says no u.s. combat troops will remain in iraq by year's end. the president made the comment at opening of a meeting. washington is expected to continue to maintain the ground presence. it faces pressure from hard-line shieh factions who want all the remaining to have thousands leave the country. bloomberg learned the u.s. department of justice is investigating possible bank fraud by executives. it is widely used to trade bitcoin. the examination will focus on conduct that occurred years ago, specifically whether transactions were linked to crypto. it would mark a significant development in the crackdown on virtual currencies. bloomberg has been told that you can government is planning to move ahead with its back ship nuclear -- flagship nuclear

project. the chinese company has a 20% stake in the development of the power stations but bloomberg's sources says britain is looking at ways to remove it from all future projects. >> it comes with foreign money, invested in infrastructure projects, whether it is chinese money or wherever it has gone. money does not smell, as the expression goes. we have to avoid any form of technological control of our electronic and structural -- you know, we need to make sure that these power plants are able to serve the interests of the british people and not become a point of leverage over us. 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. shery: the u.s. and china left open the possibility of a summit between the presidents despite a contentious day of talks between

officials from both sides. washington says it is still considering the option of a face-to-face meeting. >> the president continues to believe in face-to-face diplomacy. that is something he has long been an advocate for and we expect there will be some opportunity to engage at some point but it did not come up in the context of these meetings and it was not the purpose of these meetings. shery: let's bring in bill faries. so what was achieved in this meeting? bill: this was an effort to get talk back on track that you had some pretty contentious meetings between u.s. and chinese officials in alaska. these were no less contentious or difficult but it was an important signal that both sides are talking despite a flurry of actions on the chinese and u.s. side in terms of sanctions and criticism of the other countries policies.

haidi: what would potentially come next? it feels like to all of the acrimony and tensions that came before, this is actually a pretty good outcome. bill: i think it is. there is a realization on both sides and some theatrics on both sides. u.s. and china each have domestic audiences that they are speaking to but the bigger picture here, realization i think is that they know that to keep things on track, they need to talk -- the next step presumably would be another chance for antony blinken to meet with his chinese counterpart and then for them to help set up some sort of a meeting between president xi and president biden perhaps on the sidelines of the g20 summit later this year. shery: bill faries joining us from washington on the latest for those u.s.-china talks. breaking news at the moment. we are getting the latest

results from sk hynix, reporting operating profits for the second quarter that beat analyst estimates. operating profit coming in at 2.6 9 trillion won, which is a game of 38% year on year had a slight beat from the estimate of 2.6 one trillion. consolidated net coming in at 1.98 trillion won. a gain of 67% year on year. sk hynix seeing the market growth demand at mid high 30%. ac 2021 market -- low 20%. we continue to watch what is happening on the semiconductors base as those global chip shortages continue. the positive year, dram profits could have increased given the price hikes and shipment growth. we are seeing sk hynix beating expectations slightly. we have heard from samsung and peers of sk hynix coming out

with robust business outlooks given what is happening with dram. we have been watching what is happening closely with the trends. right now, we are hearing that when it comes to demand, it is 30%. dram at low 20%. sk hynix saying the favorable memory market conditions will continue in the second half. chipmakers -- a big deal when it comes to tesla as well. we will get you more on tesla's eta's results from the earnings call. it is a really busy earnings season at the moment. this is bloomberg. ♪

shery: take a look at the crypto space right now. rod downside pressure but this after bitcoin rallied in the new york session. we saw it at one point, surpassing the level for the

first time since june. we have seen speculation that amazon could be accepting payments in bitcoin and cryptocurrencies. those reports were later denied. we had some gains for ethereum because we are headed towards that change in august when it comes to their framework. they are saying that that could reduce the amount of out and at the moment, under a little bit of pressure again. we have seen when it comes to tesla really taking a hit this time around because of this, huge fluctuations in the crypto market. haidi: they did report better than expected second-quarter results and the earnings call of course, we are going to get the latest from that ed ludlow has been listening in. what were the main takeaways? ed: may god record level deliveries in the second quarter but they were able to raise and cut operating costs and lean on

china where even though average selling prices are lower, they are better at building cars, churning out higher-margin products. they had a significant milestone and all of that was a company facing significant challenges and this is the most candid i have ever heard elon musk be. take a listen. >> it is out of our control essentially. it does seem like it is getting better but it is hard to predict. ed: you know, what is so extraordinary is that tesla was able to been in bull but it still could not find alternative supplies and when it did, it had to rewrite the code for semiconductors. elon musk said this inhibited their ability to build cars. >> what are analysts saying given the risks? ed: they are focused on how long

automotive growth margin was and how much they were able to expand that despite all of the challenges they face as a supply chain. it was not all perfect. the project has been pushed back into 2022. they had part shortages which impacted their ability to produce in certain factories. it still looks like there might be vehicles out of berlin and austin, texas by the end of this year. there is no great promise that this would be of any volume. this is hard if you have to eat some glass when you ramp-up in production, a painful process and one that they are bracing for. shery: ed ludlow in san francisco. here is a quick check of the latest business flash headlines. land rover is working to limit damage from the global chip shortage, setting up what it calls a full-time mission control center to manage supply chain issues. those issues derailed a run of positive earnings for the parrot. -- parent.

it is open to follow a successful covid-19 vaccine with a shot to reduce malaria using mrna technology. it will have one by the end of next year and will evaluate as many as 20 vaccine candidates. malaria kills some 400,000 people a year and has long been a difficult target for vaccine makers. a broker has canceled plans to take over its industry rival. the deal was worth $30 billion and would have created the world's biggest insurance brokerage. it faced scrutiny from the u.s. department of justice over concerns the acquisition was anticompetitive. it will pay a $1 billion termination fee to its competitor. coming up, we will get more insight on the risks from china's regulatory crackdowns with a provider that uses freedom metrics in the market

strategy. life and liberty indices founder joins us, next. this is bloomberg. ♪

>> we are on the verge of having platforms and companies that are so powerful and so influential in the political process that they are ungovernable. china has to realize that this poses an existential threat to governance and law. >> china has more interest in data protection for what it considers sensitive. these are the types of growth and regulation we should expect. >> the u.s. and china are in a tight competition to most u.s. policymakers and that has meant

that even on the u.s. side, there are increasing restrictions on which companies can seek u.s. dollars. >> this chinese leadership is so intent on exercising political cultural that they are willing to pay something of an economic price for it. shery: some of our guests reacting to beijing's sweeping crackdowns of its tech and education sectors. we have seen the downside pressure on the stock markets. when it came to hear in the u.s., chinese abr's wiping out, in a two day wipeout, it was the biggest since 2008, which is more than two decades. we are seeing shares under pressure. that is the line in white. the broader em index also down as well, really dragging broader emerging-market docs as we see the msci emerging market versus the u.s. ratio also at the

lowest level since february of last year so really broad downside when it comes to those chinese stocks and then emerging-market stocks. take a look at this other gtv chart on the bloomberg. we have not seen that sort of pressure when it came to the chinese yuan. we are seeing divergent fortunes . this coming at a time when we continue to see the yuan almost unchanged when it comes to year to date events. perhaps a sign that inflation is also a motivating driver here. if china ever decided they wanted to weaken the yuan, we can see that pressure and broader emerging-market currencies as well. our next guest says wall street has mispriced the regulatory risk of investing in unfree markets. they are the founder of life and liberty indexes and the creator of another index. she joins us from houston.

can we expect broader em pressure given what is happening in china? >> yes. thank you for having me. this is unfortunate. one reason people don't invest in emerging markets in the first place is because of these extreme political risks and this will only intensify that sentiment. with u.s. stocks being higher valued than ever, we don't really want to encourage or discourage people from investing in international stock, especially emerging markets. because china is such a large portion of index funds and strategies, this could be a drag on emerging market growth. haidi: for someone who has kind of watched this area for a wild, did this come as a surprise to you and if you were to look into a crystal ball, what other sectors do you think would be vulnerable from here? perth: i would not believe anyone who told you they knew

what other sectors are next because even the chinese government themselves do not know that. authoritarian governments cannot predict the future otherwise central planning would have worked much better so i don't know what is going to be hitting next. where the government has outside control, this is a risk that we have previously calculated -- miscalculated in general on wall street. we did not have any exposure to chinese thoughts because we are having a freedom related strategy but i think that the speed at which this happened came as a surprise to everyone. shery: you mentioned that they are a centralized government which is why this has been surpassed but doesn't that on the other hand also mean that they are more efficient? if there are problems in the market like financial risks, they can actually move faster, more decisively, and perhaps avoid longer-term risks and improve the health of the

market? perth: i think that is a myth that a lot of investors have believed up to this point. a market that is essentially a planned economy is more efficient and may be more predictable. but in fact, it is the opposite of that. it is the opposite of efficient when you wipe out value in this way. they are doing it so they can try and encourage more births because of the demographic timebomb that is going off over there which is due to another bad policy, the one child policy from 30 years -- china added to that demographic situation. you cannot fix one that policy with another bad policy. all these freedoms work together. reproductive freedoms are important. that is a personal freedom. shareholder and property rights are important, economic freedom. all freedoms work together parts of a bill and this is like ripping off your wheel. haidi: if certain things happen,

these companies and stocks will be a screaming buy. what would have to happen for you to get to that point? perth: china is a market with huge potential. no matter what happens, there are 1.4 billion people there. the market that is close to my heart is where i am from and i would love to invest in china if the government would step out of the way again like they did 20 to 30 years ago. if they would backtrack on some of these policies, let go of some of that control that they want on every aspect of everybody's lives in the economy, then that could be a huge buy signal. that is what i'm looking towards and i'm looking to the day that that happens. >> in the meantime, where do you go for em exposure? the big investors are getting out of their somatic chinese -- thematic chinese etf names.

perth: that is a very contrarian view that she had that is playing out very well. i would look into the emerging markets. our top holdings are taiwan and south korea. all the talk of china growth over the long run, we have not been that play out in their stock market. it has returned to 26% over a 10 year period. in comparison from a markets, south korea, has doubled that. taiwan has 168% in the same period. it is in the three-year market that we believe we will find the growth stories of the next decade. those markets have companies that are free to act on their own will, free to act in the best interest of the shareholders and other stakeholders other than the state. it does not always come first. shery: in south korea, we have seen more regulatory pressure to curb valuations.

the longest in the world since the pandemic started. in your notes, you say you also like chile, but we are seeing that constitutional rewrite that might be less market friendly. what do we have to keep in mind when you are investing in those freer markets? perth: even in the freer markets, there is no 100% free market. every market has this problem. sometimes, there will be that pendulum swinging the other way because it does happen in waves. inchile, it is -- in chile, it is a very free market compared to other south american markets. they hosted a communist party who is a front runner. in the market -- and the market reacted very positively to that. in markets that are relatively freer, you will still have problems but the institutions should be strong enough and there should be some level of checks and balances so there is

not this completely unilateral act on behalf of the government to kind of stifle growth. haidi: always great to have uss perth tolle, life and liberty indexes founder. that's get you to vonnie quinn -- let's get you to vonnie quinn. vonnie: the u.s. and china have left open the possibility of a presidential summit spite contentious talks. wendi sherman's visit to the city was focused on setting guardrails on the relationship. she was presented with two lists of key demands. sherman underscored u.s. concerns and said washington does not seek conflict with china. singapore aims to relax more virus curbs including beginning quarantine free travel in september and it marks the first on the economy set a timeline to reopen borders that have been mostly shut for more than one year. the city says it expects to have fully vaccinated 80% of its

population by then, allowing officials to ease mother s -- measures. in its final address to congress before his term ends, rodrigo duterte pushed her opening the economy to more foreign investment. the 76-year-old pledged pandemic support to help businesses, defended his much criticized drug war, and pushed for more tax reforms. protesters took to the streets and left-wing activists hung a huge banner that said "goodbye, duterte." -- pleaded not guilty to charges he illegally lobbied on behalf of the united arab emirates and lied to investigators about it. the foreman chair -- formal chairman appealed in new york city. it was his first in person appearance since his arrest last week. 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: plenty more to come on

"daybreak asia." futures going to a higher open. this is bloomberg. ♪

haidi: we are waiting to hear from the rba deputy governor, set to give a speech on tuesday. looking for hints on how this latest national lockdown, with

half of the australian population, are under stay-at-home orders. let's take a look at how we are shaping up in the aussie trading session. sophie. sophie: we have seen a gauge of consumer confidence in australia head lower but we are seeing bonds lose some ground with the aussie 10 year yield falling, rising towards 121 this morning. this covid situation remains a firm headwind, expecting the yield spread between australia and the u.s. will decrease further towards 25 basis points. this is the economic outlook. goldman penciling in a material risk that the rba will scale up bond buying. gdp is seen contracting this quarter. that could send the aussie and kiwi lower in the coming weeks. turning to stocks, the asx 200, we have seen it continue to hit fresh records this month. the benchmark is still lagging

global peers, trading at the lowest level in more than 20 years versus the ms guy while the index. text, energy, and financials are weighing on valuations for the asx this month with the centers leaving declines in july whereas materials are on top but the commodity boom with rising ev demand and renewable energy among key drivers for that sector. shery. shery: world leaders struggling to reach an ambitious deal when it comes to climate change. that is the latest setback in the fight against global warming. bloomberg has come up with its own long-term scenarios for net zero emissions. let's bring in the head of asia research. can we prevent the planet from warming more than two degrees celsius from preindustrial levels? >> yes, we can. although, we are sort of running out of time. if you look at the conclusion of the report produced by united

nations intergovernmental panel on climate change, you can see that they concluded that in order to keep us within the two degree pathway, ensuring that within the century, the planet does not were more than two degrees, we have to make sure that emissions by 2030 are 25% or more below 2010 levels. and here, the g20 is critical. it accounts for 80% of global emissions and unfortunately, the current 2030 target they set means that collectively, their emissions could rise by 45% by 2030 relative to 2010. now, they are likely going to do a lot better than that, but to get to that reduction by 2030 relative to 2010, we need to see a lot more policy action and this is where the concerns arise from the failure of last week's meeting. haidi: what are some of the

long-term potential pathways to mitigate climate change? ali: in the long term, the common approaches that i have been proposing are around improving energy efficiency, pushing on -- ensuring that is coming from clean sources. in any residual emissions to be captured using carbon capture and storage. the challenge is that we really need action within this decade. this is why the u.k. is trying to make a phaseout target as one of the primary goals for this year's negotiations. haidi: if you were to say what the government needs to do and what the corporations need to do now to reach these pathways? ali: yes, so in the scenarios we have run, these are three different scenarios on the long-term, the king at different pathways, relying on renewables

as well as nuclear, carbon capture, and storage, but the common conclusion is to meet that long-term goal, within this decade, we need to reduce reliance on coal by more than 70%, we need to accelerate deployment of renewables to make this possible, and we also have to accelerate deployment of technologies such as electric vehicles and heat pumps to make sure that there is more time for her to evade sectors such as heavy industry in the long term. haidi: always great to have you with us. sure to check out the rest of that report. our bloomberg head of asia research, ali izadi-najafabadi. shery: we are seeing the impact of the climate crisis already when it comes to commodities. coffee futures had a seven-year high. we are talking about starbucks erotica futures -- arabica futures. we are seeing a 30% gain just

this past week when it comes to coffee futures given that the top grower of coffee, brazil, is suffering from a cold spell and we could see temperatures dropping more even in the coming days. we are seeing natural gas futures topping the four dollar level because we are seeing sweltering heat here in the u.s. and canada. that has been hurting props as well and of course we have seen the china flood in hainan. coin, soybean, a little bit of a pickup. really not surprising when it comes to finance. esg finance. really, trying to obtain more people that can really get into sustainable finance. banks like hsbc, icbc, trying to hire those experts but the pool of candidates is small. haidi: and we know this is on the -- everyone from china to

indonesia really stepping up when it comes to these environmental, social, as well as just probably more esg related governance measures, right? be it to combat climate change, domestic pollution, or address issues of inequality, particularly post-covid. we are seeing some of these big financial institutions looking to hire more talent. if you have specialist knowledge in this area, that really sets you up well. it is very interesting that we are starting to see this shift. shery: in japan, those candidates could be earning twice what other analysts would be earning. and this focus on esg growing given the focus on inequality, on disparities during the coronavirus pandemic as well. haidi: we have seen that on wall street as well, right? these political a listers that have this policy knowledge to be

getting these very highly specialized and sometimes high-profile roles as well. be sure to tune into bloomberg radio. you can hear more from the days newsmakers, get in-depth analysis from the daybreak team. we are broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. we do have lots more ahead. this is bloomberg. ♪

haidi: we do have japan's ppi crossing the bloomberg in the last minute or so. we have seen a rise to 1.4% that is slightly softer than the 1.5% we saw in the month of may. overall, we have seen what has been four consecutive months of gains when it comes to factory gate prices in japan as we continue to see global inflationary and price shares across factory gate products and commodities overall. it does not really look like this number will be changing the name of the game and the direction for the doj which we know is continued easing. shery: let's turn to the latest business flash headlines because kathy would is exiting chinese stocks as beijing's crackdown on private businesses sends markets tumbling. it got rid of shares in tencent

every day last week. the largest fund now has less than 1% of assets invested in chinese companies compared to 8% in february. nick has cut evergrande credit rating by two notches. it said the property developers weakened access to funding was putting its debt reduction plan at risk. it expressed concern about margins as evergrande resorts to aggressive price promotions to boost sales. moody's and fitch downgraded evergrande last month. electric vehicle maker lucid group gained over 10% on its market debut after completing a reverse merger with the financier. speaking to bloomberg, peter rawlinson said the company is on track to hit key milestones, producing 577 vehicles this year and as many as 20,000 next year. >> we rely upon 250 supplies from around the world for 3000

parts so this is a significant logistic operation. and many of those to have produced wonderful results. here having to support some of those suppliers to get them across the line in terms of their component quality but we are getting closer every day now. i am confident we will have a fabulous motorcar in production this year. haidi: i know that you as well as me as well as the rest of the world have been watching the olympics and what i love about the olympics is a time to watch some of these more unusual sports you might not usually tune into. gymnastics, equestrian, and skateboarding. we have seen this skateboarding affect, the effects of a 13-year-old japanese competitor winning the gold medal for the skateboarding women's event. this filtered through to the

japanese stock markets and we will continue to watch some of these street where related names going into the rest of the tokyo session because what we have seen is a company which manufactures skateboards surging 17% after the news of that gold medal. shery: not just those directly linked to skateboarding. retail traders scrambling for names they thought could benefit from the wins including a company whose unit sponsors it. tsi holdings owns a u.s. skateboarding e-commerce -- we are really watching that. haidi: what i love is -- [laughter] the frozen seafood seller at one point up as much as 9.5% because it's building an logo are prominently visible in the background of the skateboarding medal ceremony so this is a bit like the restaurant that always -- shery: the panda restaurant.

haidi: japan. [laughter] shery: right. plenty of stocks to watch. let's turn to sophie for those. sophie: the earnings reaction to sk hynix, this after earnings topped estimates for the second quarter on the boom in server demand which lifted chip prices. continuing this quarter with new iphone launches, other mobile phone launches, and data center expansion amid the drivers for demand. we are keeping an eye on asian suppliers like lg chemical. we are keeping an eye on diane swonk biologics today on its earnings report, waiting for any updates in the doctrine of its first covid not, slated for late august and early september. haidi. haidi: we will be catching up with a securities company, warning investors to be cautious on china texans antitrust issues first emerged.

our guest says china has a number of wildcards and still sees potential buying opportunities. his view when it comes to the risk profile for china, next. and of course, market opens in sydney, seoul, and tokyo are coming up in the next few minutes. this is bloomberg. ♪ and there you have it -

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♪ >> i am highly stroud-watts and sydney. looking at the major markets, top stories with our. impact trading begins after a wall street hide. despite a wipeout in chinese stocks. bitcoin falls back after plans

to access the tokens this year. the u.s. and china hold contentious talks to leave the door open for cheap summits. the third rating downgrade cut by risks. japan, south korea, and australia. how are we setting up? haidi: we are seeing whining of the risk off moves with tokyo giving ground. nikkei five adding 2/10 of a percent. the yen is holding above 10. jgb is lower ahead of a 40 year option. turning to south korea, we have the gdp report growing slower than expected. it may be concerning giving the pickup in infections in south korea. the kospi as adding less than a percent. the korean you want is gaining a little bit.

closing of the board for the open in sydney. we have a raft of earnings do this week. we have materials. at the top of the pops this month. helping live -- lift toward records, topping 7400 this morning while bonds had lower ahead of the rva speech later today. heading lower after we saw u.s. stocks hit fresh records overnight. gaining ground. assessing the demand outlook. a lot of focus on greater china markets. the wipeout for chinese education and tech stocks. we saw the index fall into bear market territories on monday and we had nate one is the biggest drag. we have that stock following the moca's on record in hong kong with food delivery platforms being below. 's -- haidi: another blow

forever grand deciding not to declare the second dividend they were considering. they said that in taking consideration the environment, the rights of shareholders and long-term development of the business, they have decided the capital special dividend proposal. they were considering it to revive confidence in the tumbling stock price weaken the deal for investors. analysts were looking at several different scenarios that would have different implications. investors like equity and bondholders have been rationing wages and report banks due to supply. just in the last couple of days, we had the third cut to the ratings by a major ratings company, s&p global ratings taking it down by two notches. evergrand needs to assure marketers it has good ammunition

when it comes to borrowing and fending off short sellers. no to the special dividend. alex does not expect much outperformance from china. it is a buying opportunity in the long term. senior multi-asset strategist. always great to have you with us. one of the myriad charts that show the levels of distress and drama we are seeing when it comes to the trading in these chinese names in hong kong and mainland china. this chart showing the performance of the long china trade. there is focuses on seeing the returns into a consistent picture. what sort of discount would you need to see in some of those names to be compelling? guest: well, look. i think it is not even about the

discount as much right now. it is trying to quantify the underappreciated rest to earnings and risk their credit. that is the difficulty. it is very difficult to quantify these risks if we do not know what is happening. i think investors in general are scrambling or struggling to put a narrative around what is the driving force here. it that something about trying to have less reliance on foreign capital in general? is it about data or not investment related like demographics? it is difficult to quantify that. i think long-term, if we do believe a low rate environment, a population using more consumer driven tech products and driving earnings this is, not a positive long-term story. it is just until we can quantify the near term, it is difficult to come in.

haidi: you can probably say there are two risk profiles. one would be a group of companies like education, tech or they not be profitable or exist after this. if you take a look at the other section, some of the other tencent backed companies, food delivery, for example, they could come through on the other end of this. maybe they would be fined or streamlined. mr. gerard: i think that is exactly right. we have been conflating these issues as one sort of issue on the china stock market. it is not. there are a number of crosscurrents and we have to understand where we might see businesses that are being regulated out and businesses that are just coming back into greater control. again, difficult to quantify at this point but that is what investors need to do in terms of finding their discounts. haidi: are there places

investors can take shelter -- those sectors that benefit from the president's policies like tv and clean energy? -- ev and clean energy? mr. gerard: i think within the energy space, there are a number of places that we will continue to see investment better earnings, better opportunity to head. even when you look at the china index overall, it has been quite a split between the industries. it has not been kind of a yearly directional trade. there has been sector dispersion. these issues are seeming to be quite regulatory focused. yes, i think there are places including the ev side which we know will get more attention.

just one point on that. what we do not know is what is coming next. that is another difficult thing that china is -- removing onto something more regulation of the auto industry? this is a difficult point. there might be another story around the corner and intrastate -- industry we are not concerned about. i think investors are waiting for this to shake out. haidi: senior multi-asset strategist. let's get to vonnie quinn with the first word headlines. vonnie: president joe biden says no u.s. combat troops will remain in iraq by years end. the president made the comments at the opening meeting with the iraqi prime minister. officials say washington is expected to continue to maintain military presence. rackspace a stressor -- pressure from -- iraq faces pressure from

officials who want america to leave the country. u.s. heads urged americans to avoid traveling to cds -- spain appear to -- spain. spain reopened its borders to u.s. taurus in june. -- tourists in june. maternal will expand its trout to children under 12 to gather data among worries that mrna shots trigger heart side effects. --mioderna. the your time -- new york times report moderna and pfizer are planning the straws of the request of the fda. the u.s. department of justice is investigating possible thank fraud by executives. it is widely used to tray bitcoin. the examination will focus on conduct occurring years ago. this will be whether it hits banks. transactions were linked to crypto.

significant development in washington's crackdown on virtual currencies. 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: back the breaking news. ever grand has decided against issuing a special dividend in another blow for investors. what is the significance of this? john: they were set to meet today. that has occurred already. the board and the chairman had a couple of options. there was a option of a cash special dividend which seemed relatively unlikely. there was the option of issuing shares to shareholders. that seemed relatively unlikely. what of a lot of investors have hope for potentially was ever grand would give out shares in subsidiaries. the shareholders of the main company.

that includes the new energy vehicle. subsidiaries include property management. companies listed in hong kong. there was this opportunity for investors to get share in the business. if ever grand were able to reduce its ownership and put up removed -- they could've removed the debt associated with its own companies. haidi: s&p global ratings cutting ever grants writing by two notches -- ratin by two nothces. john: if we have seen anything, it does not to see on -- seem to be on ever grand side. dad had problems with the creditor who asked a court to freeze 132 million yuan in deposits. while that seems resolve, we had the situation with the banks in

hong kong deciding not to lend mortgages to buyers of properties that ever grand had not yet finished. it seems to be one thing after another and obviously, s&p in its notice said the ability of the company to pay off that debt seems to be reduced. haidi: analysts keep saying ever grand needs to accelerate asset sales. what are the sources of funding available? john: one thing they're trying to do is list their tourism business as well as their bottled water business. if they can get those deals done, you could see a way for them to raise a substantial amount of cash they could use to pay off some of this debt. the company is trying to sell as much property as it can and it has been doing that at a reduced rate. cash has been coming in. on the s&p side, a side effect of this is discounting margins.

at the margins of suffering. his positing questions about how strong financially evergrande is. haidi: we speak with the security as his warnings on chinese tech energy and education comes to proration. the meetings between u.s. and chinese officials. it could still be a step toward a summit. joe biden and xi jinping. this is bloomberg. ♪

♪ it's -- haidi: the u.s. and china left open the possibility of the summit between their presidents. contentious talks between officials on both sides. washington says it is considering a face-to-face meeting.

there was obviously posturing on both sides given the need to play the domestic audience. overall, was their hopefulness coming out of the meeting? carl: yeah. i would say definitely, there was some, at least continuation of talks in the future looks like a possibility. i mean, to frankly not to a lot of [indiscernible] when you look at the radar, you're looking at questions from officials. [indiscernible] china came strongly with a list of demands such as the removal of sanctions to calling on the u.s. to stop affecting chinese companies. it describes the relationship as firmer. on the u.s. side, there is a long list of areas that washington was criticizing. basically, a lot of

differences. a very public airing. there was elements of positivity. haidi: we have seen really that has still at a between the two sides in the lab -- alaska talks. how challenging is it to make any progress in a public meeting? carl: exactly. they're very public but also quite short and quite complicated especially given covid but the main challenge is how to get across to the domestic audiences in both countires while not appearing weak. it is the main challenge of not shying away from those instances but at the same time finding away to collaborate and

cooperate. haidi: with the latest on the u.s. china tensions, one thing that both sides seem to agree on is the need to rein in big tech, whether in china or the u.s., seeing more regulatory steps. an nyu professor it says the best power and influence american and they cap -- big tech companies have a nass will make them -- a mass will make them ungovernable. the u.s. government will need tighter restrictions he says. >> the progress technologically has been enormous. better chips. better software. better devices. the effect on society has been ambiguous. we have many good things but also some bad things. i think that the bad things all trace back to this pivotal decision by google followed by facebook to switch to the advertising model.

the targeted advertising model. this has had all kinds of repercussions that we are now living with like the pandemic driven by vaccine hesitation that has been fostered via social media. we combined in norma's technological progress with a really bad business model and we are paying the price. dr. romer: should wait break up these companies --- reporter: should we break up these companies? amazon with cardboard boxes. is it the standard oil of new jersey? dr. romer: you know, first, i worked on the government side of the microsoft case. i helped design the proposed apps ops breakup of microsoft with -- which the judiciary rejected at the appeals court level. i think it is unlikely the judiciary that is more

conservative now is going to approve a breakup of these firms. i think we have to be realistic about that. what i think we need to do instead of focusing just on breakups or at least government force breakup is to change the incentives to get them to ship away from -- shift away from targeted advertising, surveillance buying model, and go back to the old model where people pay to get things. so we can use things like the tax code as i suggested to create incentives for firms to stop relying so much on advertising and to rely more heavily on subscriptions, the way netflix does. haidi: is this tech dominance related to the stickiness of a high on appointment rate, of the stickiness of the low participation rate that we are seeing in the u.s. labor market? dr. romer: yeah. i don't think so. reasonable people can differ but i don't think this is the problem. i think fundamentally, we have been, for 20 years, in a mode or

the congress was not able to do anything. all of the work fell on recovery to the fed. we use low interest rates to try to recover. that meant we ended up not recovering fast enough and far enough to ration down the key metric we should watch, the unemployment rate for 25-50 year olds. what we are headed toward a need to do is what we saw under reagan, which is very aggressive, loose fiscal policy, stimulative fiscal policy, and as we did, tight monetary policy to keep inflation in check. i think we just have to recognize it takes a long time. it is a slow process to get people back into jobs. we just have to keep mushing -- pushing on the recovery long enough to get back where we should be, with a lot more people employed. haidi: i want to stay on this

point for a minute. there has been a question around how much the enhanced unemployment benefits contributed to the stickiness of the participation rate remaining solo. there have been a number of studies challenging that. other people are saying the economy has not gotten back. we still have people -- childcare is still an issue. what is the main why behind the stickiness at this point in the pandemic? dr. romer: if you look back at the recovery from the recession of the early 2000, getting people back into jobs is a slow process. it is very easy to kick people out of jobs. that happens very fast. remaking these matches between employers and employees just takes time. ♪ haidi: an nyu professor and chief economist.

plenty more to come on daybreak asia. this is bloomberg. ♪ . ♪

♪ haidi: a quick check on the business flash headlines. kathy lee would is exiting chinese stocks during a crackdown on business. tencent earned 5k holdings everyday that's week. innovation etf's have less than 1% of access invested in chinese companies compared to 8%. its delivery outlook this year after a second quarter earnings. the ev maker posted a record profit -- profit of 1.1 billion dollars marking its eight straight quarter in the black. higher sales market wide. bitcoin related impairment.

23 million dollars after the cryptocurrency plunged in the second quarter. land rover is limiting damage from the global chip shortage, setting up a four-time mission control center to manage supply chain issues. these issues derailed a profit earnings. last quarter, the big tech deficit contributed to a net loss in $600 million. let's get a recap of sk hynix comments coming up to the earnings report. there in a conference call and remember, they posted second-quarter earnings that top analysts estimate a boom in semiconductor prices. the supply and demand dynamic is projected to improve in the second half. the mobile markets rose slowing and the second quarter. this the markets will recover the second half as covid cases

are controlled in india. they expect growth of server dram in the second half. the company giving a bullish outlook with favorable conditions continuing after operating profit rose to 2.3 billion dollars in the three months ending in june. the supplier asking hynix lots of focus on the semiconductor space with a global chip shortage. hynix expects market demand for chips to rise by more thna 20% this year. diggy one thing the child -- rides in stocks may continue for something -- dickie wong saying the rise could continue for sometime.

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♪ haidi: let's get your look at markets across asia. sophie, what are you seeing? sophie: we are seeing bonds falling and stocks rising. japanese stocks getting back for a third straight sack -- session. the kospi resuming its advance. they appeared to take the gdp report in stride. the economy is on track to grow in line with projections. in australia, they are set for another record high this

morning. materials eating the charge. copper futures are continuing to rally with prices climbing further to 9800 -- $9800. this ahead of real reporting earnings ahead of wednesdays watching -- bluescope shares are rising 2% higher on an upbeat outlook on strong steel demand and prices. watch audit mineral rising more than 9% on a strong quarter which puts them on track to hit their copper output for the year. switching to stock movers in north asia. climbing more than 1% on its earnings. we saw this company also project strong growth for chip demand. rakitin moving to the downside.

this after we saw s&p cut its rating to double b plus with a negative outlook. shery: another company that got a credit rating downgrade was ever grant with s&p ratings being the third downgraded by a global ratings company in a month with the world's most indebted developer. the latest news that they decided against the clearing a special dividend. joining us to discuss the broader chinese market is dickie wong. it seems like every single day, a new headline coming forever grand. how -- for evergrande. junk bonds took a hit earlier last week. >> first of all, it is no surprise to me that they decided

not to declare any special dividends. as the group there such. almost a half year ago, i already suggested investors not to touch that group. not only evergrande property but other companies. this too hot to handle. in my point of view, there are no such company that is too big to fail. chinese governments point that out too. this is a clear effect. i will see a new round of downgrades no matter what the agency. even a brokerage firm. at this moment, don't buy on panic. even though the share prices plummet more than 50% in a year. as we all know, there are rules

that the chinese government, are taking few serious -- so basically, any property developer reads these lines and it is final. in fact, it affects the overall sentiment of other chinese property developers. not only the share price, but the bond price. even some of them are in better shape. not all are on the redline. not all share lines are affected. shery: your warning to this property developers extends to tech stocks because we have continued to see the downward pressure on those tech giants when it comes to regulatory screening. >> in fact, you can see even last night, most of the chinese

companies plummet another thing. in the past one-two months, you can see the increasing tension between china and u.s. finally coming to some kind of financial wall. i don't expect any more chinese companies will be listed in the u.s. and not even in the new york stock exchange or nasdaq because of the policy. you can see some of the chinese companies are facing more pressure from this later -- from regulators. the regulatory risk is always around when we handle its share and companies trading in u.s. or the chinese companies. in the middle of the, out expect u.s. -- chinese companies

looking for a secondary listing or dual or listing in hong kong. before that, tencent, companies like dd, are facing intensifying pressures from mainland china. i don't expect the share prices rebound in the short time -- short-term. they already listing in hong kong and some of them like tencent are facing antitrust regulatory pressure from the government but not only antitrust but everything. we can see chinese government have more control over internet or technology rated technology, but every single sector. which sector will be the next? this is a question we need to ask ourselves before you buy those chinese listed companies in the u.s. i would expect technology,

pharmaceuticals. all the adrs in the u.s. will be left behind. haidi: what about domestically? are there the same kind of assumptions growth as well? as you say, pharmaceuticals could be targeted. poverty, we know is a major issue for a long time for the government. we see the crackdown in government as well. >> on the other hand, chinese government may introduce more fiscal policy. to reach their goal in monetary policy. they already cut the reserve requirement ratio. it doesn't help the situation or help the sentiment of the overall chinese market. as we all know, property is very

key in these indexes and -- in the mainland. when we talk about intensifying the records, -- inflationary pressure, not only technology and internet, not only cybersecurity, basically everything. in terms of value, the chinese companies in asia are already cheap. you may not think it's really cheap but if you were a hong kong or hk investor, you would not be happy. the dow jones tried to hide. at the same time, it is one year low. it is something that is left behind. i think the trend will continue. the longer trend for domestic or consumer markets are in better shape.

as long as they are not touching any antitrust or cyber security, as long as their only listing in the u.s., i think they are in better shape. -- they are. haidi: do you think there will be more to way past action? it has only been one way so far. >> you may think so. in my point of view, i don't really agree with that. in the longer term, the tension between these two countries, china and the u.s., will be eased. this is something we had think about. second of all, when you invest in u.s. listed chinese companies, there is definitely some kind of risk in the near term. haidi: great to have you with us. >> thank you!

haidi: a pleasure to have you. one of the things that feels like a long time ago we were talking about didi's listing and the potential to come home and have these homecomings, we have not heard much on that front. it seems like listing in hong kong at this moment what the market fall off is a risky proposition. shery: surprisingly or not, wall street remains silent -- quiet on the didi listing. there is a 25 day silence for these to go public we haven't heard anything like research or bolus -- bullish research on what to come for the company. you can tell what you have this regulatory scrutiny coming from china. the consensus that we heard from most analysts about the chinese crackdown is that nobody knows what policymakers will do next,

right? with bloomberg learning that penalties could include a forced delisting, it's not surprising we see them on a record low. haidi: we say that every time, just in terms of the precipitous fall we are seeing from that first day of trading. if who we just spoke to earlier is to be the lead, there will be further downside to come for we see any sort of potential for investors to bottom fish these stocks. shery: we will watch the markets open in china with the latestev. 20 more to come on daybreak asia -- plenty. this is bloomberg. ♪

shery: vonnie: this is daybreak asia. the u.s. and china have left open the possibility of a presidential summit between the top diplomats. her visit to tangent was focused on setting guardrails on the relationship. -- tanjin. in return, she underscored u.s. concerns and says that washington does not see conflict with china. singapore aims to relax more virus curbs including quarantine

free travel in september. this is the first time they set a timeline to reopen borders that have been mostly shut for a year. the cities say they expect to have fully vaccinated 80% of its population by the end allowing officials to ease measures with larger gatherings for fully vaccinated people. and his final address to congress, regaled with that they pushed for opening the economy to more foreign investments. the 76-year-old pledged to businesses. he is much criticized for the drug war and pushed for more tax reforms. ahead of his speech, protesters took to the street, having a huge banner that read goodbye duterte. the founder of donald trump's inaugural committee appeared before a judge in new york city.

this was his first in person appearance since he was arrested last week. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: they close 11% higher after going -- going public on a spac merger. >> we are going into production this year and we are on track for this year's production schedule and next years. and this amount means weekend accelerate -- we can accelerate our growth as a company and mitigate risks. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. -- anchor: speaking of your shareholders, you had to make an appeal to that this transaction

and spac done. a lot of these investors are retail investors. what does it mean to have such a large retail base on who owns your shares? >> isn't it wonderful that it has reached so many people in the retail sector but, we have an illustrious roster of traditional institutional investors as well? we have this dimension, this diversity which is attracted to our technology and the mission. i think it is a great situation. anchor: in terms of that, it seems like it will set you up for execution risk. in that, you gotta reach your targets. with the retail base as big as you have, you got it reach the targets to deliver. what are the factors? what are the? see gotta monitor to make sure you can hit those numbers? >> execution is everything now.

i tell my team that every day. we haven't achieved anything until we have delivered our car to satisfy customers. i spent time in the factory every week now, making the teams operate we civilly. this is a huge push now in execution mode. the main factory -- factor is getting the quality right. we started building our run of production plants. we have already started that. make no mistake. his of the cars that once the quality is right, will be sold to customers. shery: within that -- anchor: surely, you will see the supply chain issues come through. we saw a delay of production because of the supply chain. how bad is it out there right now? >> it has been hit by covid and that is undeniable. it means that our quality people have not been able to visit

certain suppliers to do their audits which would be the norm for a business like ours. we will lie upon 250 suppliers from around the world for 3000 parts. this is a significant logistic operation. many of those suppliers have produced wonderful results. we are having to support some of those suppliers that need that extra help to get them across the line in terms of their component quality. we are getting closer every day now. i am confident we will have a fabulous car in reduction this year. anchor: it's not just chips, it's things like cobalt and lithium, goods to make the cars. in the longer term, there will still be resource problems. will you have to bring some of that internally? you have to make acquisitions to shore up the supply chain? >> that is not an immediate solution. regarding the chips, we are pretty good because we bought

ahead for the near term. in the longer term, the problem will go away. in the medium-term planning, at the beginning of next year, we have risk mitigation strategy including alternative sourcing for some chips and alternative designs to accommodate those. i think we are in a good position. we have a number of plans in place. member, it's not like we are going into true mass production immediately. we will gradually scale up our eduction on s-curve. because of that, you don't have the demands in the near term for the major automaker would have. play that to our advantage. anchor: what will production look like when you begin? >> we will move from two cars a day, 10 cars a day, 20 cars a day, and so on.

if the quality is not right, we will slow it down and get it perfect. this is the sort of approach our discerning customers demand. shery: we want to check the asian crypto stocks trading at the moment. we saw those moves in bitcoin. a rally past that 40,000 level at one point. speculation that amazon could get involved and they denied those reports. we are now saying about two months in japan. technology in korea is the worst day in a week. we continue to track the crypto moves closely as we see that volatility. we have seen a theory him rally in the new york session we are seeing broad downside pressure given that speculation. perhaps, we will have more crypto trading but it got denied. take a look at those tesla asian suppliers. they provided pretty strong

profits outlook as well. samsung sei rebounding from the losses we saw in the busiest -- previous session. panasonic adding about two per 5% of its revenue, also coming from tesla. they are also seeing their best day in a couple of weeks already. haidi: shery: we will have plenty more to come on daybreak asia. we will have more from the markets as a come off the record highs from wall street, as well. this is bloomberg. ♪

shery: beijing sweeping crackdown's of its tech sectors have unleashed shockwaves across global markets. especially in the u.s. were chinese stocks have suffered their biggest loss since 2008. great to have you with us. what does this really mean? is the chinese government closing foreign money on china ink? --inc. >> not quite. they want the foreign money but they want the foreigners invest. invest in china but through

other indices for fixed income. what happens is sometimes, beijing might feel a gets hijacked by foreign money. what we see is all the hoarders from tech companies and startups. they had the structure whereby they are incorporating for cayman islands an operating company is in china. even though beijing will say ok, we will do an afterschool program, they have said that for years. three years, actually. foreign money keeps pumping into these companies because they expect china's middle class will use those programs. beijing is calling -- calling a stop to this. they want the foreigners to invest on beijing's terms. haidi: you can think about all of the policy priorities of beijing and how that can affect the property sector, pharmaceutical sector, commodities sector. can investors presume what the

next potholes are? >> it is very tough. there are a couple of things like they have guidelines you can follow. the chinese communist party celebrated the first 100 year anniversary of the party, right? they want to have another 100 years. in the middle class, life is getting tough. big cities are very expensive. middle-class has to pay for private school education, expensive housing, they work hard and have no social benefits. there are a couple things we can look at. they stay away from the tech sector. also, don't be too clever with the capital cumulation or raising -- accumulation or raising. haidi: always words of wisdom let's take a look at the stocks there, we are watching sophie go

into -- bracing for this session, right? sophie: we are keeping a close eye on tesla suppliers in china, as well. this after a strong set of earnings from tesla. they will double revenue in the second quarter. according to bloom berg intelligence -- bloomberg intelligence. it is the most heavily weighted stock on the china index which is up 14% this year. it has been less impacted by the regulatory crackdown amid a rotation. shanghai securities last night flag how these traits are looking crowded. state video warned about green energy stocks and the hsbc sharing. the pboc may ease policies. shery: we will discuss the outlook for those chinese

education and tech stocks as well as in the next hour. hsbc managements. that is it from daybreak asia. china market opens is next. this is bloomberg. ♪

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>> 9:00 a.m. in beijing and shanghai. welcome to bloomberg markets. david: it's get you your top stories. hong kong and shanghai open after u.s. listed chinese stocks suffering their biggest wipeout in 13 years. >> decided against declaring a special