haidi: good morning. we are counting down to asia's major market opens. shery: welcome to daybreak asia. our top stories this hour -- china's security regulator calls for talks with the sec after leaks over beijing's crackdown trigger leads -- cell -- leads to a selloff.

square in an all stock agreement worth 28 million -- $28 billion. haidi: these are the stocks to watch going into trading in sydney. we are seeing more positivity when it comes to the start of trading in asia, that risk off sentiment we saw, asian buyers looking to buy the dip after what was a pretty horrible week last week. we are expecting something of a u-turn when it comes to the timing as well as bond buying purchases and that cash rate staying on hold as parts of brisbane go into lockdown, further weighing on the economic recovery across the nation. chicago nikkei futures up as

well and a bit of a recovery from friday's session, just shy of half of a percent. shery: we are waiting to see how the markets react to the back and forth between beijing and washington. china's security regulator seeking more talks with its u.s. counterpart after the sec halted ipo's on chinese firms until risks are better disclosed. a trillion dollars of value wiped out. we have more now on this. what is the latest? guest: over the weekend, we did get the securities regulator coming out saying they want to have talks with their counterparts about chinese companies continuing to list in the u.s. we had the pole at euro meeting in which they said they wanted to improve regulation for overseas listings of chinese companies. in the second half, that push

that started with the education companies is going to continue, same with didi, we expect those to continue. haidi: it was a wide-ranging set of discussions. what does that tell us about the potential targets or how broad this approach could be. john: i think there is a general trend for increasing scrutiny, be it monopolies, be at how workers that deliver food are paid and that they get insurance for health and retirement. but the politburo said, they highlighted the second half was full of uncertainties. that's the government trying to balance two things that it wants to do it once. shery: when it comes to balancing the u.s.-china relationship, when will we see

the next opportunity for a breakthrough? john: the big breakthrough could come in october, when there is the g20 leaders meeting in italy. if that were the video for a xi jinping am a joe biden summit, you could see the two leaders hashing out a lot of things there, potentially moving forward, be it trade talks, talks about hong kong or variable other things that are out there. haidi: in terms of pmi numbers, what does that tell us about how panicked we should be about the slowdown as we see the flareups in the eltel variant in china? -- the delta variant in china? john: there's obvious headwinds. you mentioned the delta variant, we have had more cases in july than we had the five months

before combined. that's an obvious concern. but you see the politburo press forward with these regulatory tightening's. in some ways, it suggests policymakers are somewhat comfortable with the pace and trajectory of the economy. haidi: let's get to vonnie quinn with a first word headlines. vonnie: beijing will step up efforts to halt the spread of covid-19, including suspending flights, trains, and buses from regions with higher cases. the capital reported to local cases, one and a symptom attic case on sunday. in the eastern province has suspended all flights in and out of the airports after a rise in delta infections. israel is saying new cases are arising with people who are fully vaccinated and the

positivity rate among those vaccinated in january is double those vaccinated in march. those infections are problematic for people aged 60 and older. an apparent effectiveness decrease over time has led them to these shots. and -- secretary of state antony blinken says there is no justification and warns of an appropriate response to come. this comes after the israeli prime minister and the u.k. blamed tehran. neither offer direct evidence and iran has denied responsibility. kim jong-un reportedly says they plan -- the planned joint exercises with south korea and the u.s. will cloud things. they will closely watch to see if they go ahead with the drills. a statement last week called for

reconciliation on the peninsula. 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. shery: still ahead, the latest on the tokyo olympics as it enters the final week of competition. up next, the vice chairman of 1879 advisor shares his view on u.s. stimulus and more. this is bloomberg. ♪

shery: six weeks of negotiations wrapped up on sunday with a $515 billion infrastructure package they hope to put to a vote and pass this week. kathleen hays joins us with the latest. what is in it? kathleen: they are going to have to read fast if they want to make any amendments.

it has traditional infrastructure spending and everybody knows it goes beyond roads and bridges. chuck schumer, who is one of the leading democrats in this bipartisan group who hammered out this will says he sees it passing in a matter of days. it's just a question of hammering things out. let's look at some of the details. roads and bridges at the top of the list, 110 billion dollars. we have electric grid update -- remember the big problem in texas? that is the kind of thing you have to fix. rail and amtrak getting 56 billion dollars, expanding broadband. everyone agrees the country should have better rod band penetration. joe manchin, democratic senator from west virginia known as being a moderate and the vote

maker on a lot of these votes because with this narrow majority in the senate in terms of power, they need him on their side. here what he said about what he sees next. >> by this evening, hopefully we can start the process. we should finish by thursday. >> and you think it will pass? >> i do. when you see chuck schumer and mitch mcconnell voting for the same thing, it's unbelievable. kathleen: the senate can pass the boat and when the house comes back you will have democrats saying now we have the reconciliation process where we with a simple majority it, larry us -- get kamala harris to vote for it, they say we are voting on traditional infrastructure and joe biden has been caught in the middle of that but this is a

very important step forward. shery: there is a lot to be done, but this could be historic. we've been talking about an infrastructure deal for years and years and you would expect the president to do a victory lap stop and said he's going on the policy defensive. why? kathleen: we can talk about the virus resurgence, that delta variant, it seems the white house has been caught off balance. only this week, the cdc putting the indoor mask wearing recommendation back on the table . that's one of the things -- that's important -- the eviction moratorium has just ended and president biden started talking to people in congress. you knew it was going to expire this weekend, so people are wondering why he waited so long. people saying it's too late to consider this. however these things work out, the issue is the people are

saying the president after a pretty good first run of months in office is looking like he's got to take responsibility for what doesn't doesn't happen and people are saying at this point, he's slipping a bit. we will see what happens in the few weeks ahead. how he can push both aspects of the infrastructure spending bill forward. shery: kathleen hays, we do want to discuss what's happening on the fiscal side, not to mention the monetary side. the u.s. government has already provided $6 trillion of stimulus in march of last year. our next guest says there's plenty of that unspent money that should find its way into the economy over the next several years, with potentially more to come. the vice chairman of 1879 advisor's joins us. always great to have you with us.

given all the fiscal spending, not to mention the supply chain disruption, does this mean inflation should be a concern? jim: i don't think so. i think the way jobs that will be -- it will be offset by productivity. while we see a little stubbornness among unemployment, once we get through the summer, after the additional federal benefits wear off, we will start to see some improvement. i also think it is creating wage pressure because there's not a lot of need for some people to go to work. but at the end of the day, we can tolerate a healthy amount of inflation as long as we have activity to offset it stop -- to offset it. shery: we saw chair powell's comments last week.

what was your take away and will they be able to avoid another taper 10 to given how well they have coordinated the monetary path, will they continue to succeed? jim: i don't think they will ever avoid a taper tantrum. i think there will be one no matter what. eventually, liquidity has to be swept up and a steeper yield curve is part of a healthy economy. at the same time, sweeping up that liquidity, it has gone into a lot of asset prices and when the interest rates start to make some of those more risk on opportunities a little bit less rewarding, that's what a taper tantrum is going to be. haidi: should we be concerned about different inflation scenarios playing out? we might be setting up forestalling inflation?

jim: i don't see that. i think we have a great opportunity for growth ahead of us, but i think the risk of any type of systemic i is offset by a rebalancing of prices. we saw a lot of costs and homebuilding accelerate and they are starting to come back. i can't believe used car prices are going to stay just as high as they are. some of the components we have seen that lead to inflation are going back off and i don't inc. we will see a systemic type of inflation. certainly not stagflation. to have stagflation, you need inflation and we don't see the argument for inflation. haidi: let me get to the rest of the retail trade -- amazon is one of your top six. are you still constructive after

the shakiness we may have seen with peak amazon during the pandemic? jim: our price target is not based on where they are going to be this quarter or next quarter, but what we see in the value five years down the road. they were steaming a lot faster than we expected because of covid. a lot of the opportunity for amazon was frontloaded because of the pandemic and that is good for amazon in the long-term. people are not going to forget how to use amazon. now they can go bay -- they can go back outside and we did not expect the run-up we saw, the fantastic revenues during covid were sustainable. so this is predictable and expected. a more important part is does it give them a leg up on longer term standard growth and will people shop more and more on the

direct to consumer and online channels? shery: and as we speak, we have a headline coming from china, they will keep opening up and securing overseas ipos. how do you feel about the chinese relationship and where chinese adrs are going given what is happening now? jim: i think actions speak a lot louder than words and the actions we have seen out of china give a lot of investors pause. we in the united states always have because of the rule of law. we love investing in countries that are developed markets where shareholders rights, or contract are honored and shareholders can't have the rug pulled out from underneath them. to what extent that happens with the large global companies seeking to build their market share in china, it's hard to say at this junction. investors have been bitten and regardless of everything else,

they will be cautious going forward. haidi: we appreciate your time. you can get around up of the stories you need to get your day going. bloomberg's drivers go to daybreak on your terminals and it's also available on the mobile. this is bloomberg. ♪

>> we clearly see inflation now in the united states. >> every corner is worried about inflation. >> i'm somewhat undecided come but we may well have an incipient inflation problem. >> i don't think this level of inflation is a precursor for a large inflation boost.

>> it is more structural. >> you have to take into account input costs and a clear area where there are some challenges today and it will persist for sometime. >> the global supply chain is not working exactly as it should be. >> you see a bit of inflation, but it is transitory. >> we will transfer some of that to our customers. >> in the second half, you could see a bit more price pressure. but it is too early to say. shery: ceos speaking on bloomberg about inflation concerns. we spoke exclusively with the goldman sachs chief economist who told us the continuing spread of coronavirus means the bank expects a significant deceleration of growth in 2022. >> we are looking as we go into

2022. 6.5% growth in q2, probably more than that in q3. 1.5%, 2% by 2023. that's partially because the return to full utilization in the service sector is a slow process. one data point that is very important, the office occupancy rate in the united states is still only 30% of the pre-pandemic level. even in texas, it's only 50%. i think those numbers are going to be much higher eventually, but it is a very slow process. >> 1.5% to 2% trend growth at

the back end of 2022. you are looking for 1.5% -- that's the call. help me understand how you reconcile that with your call from the federal reserve. >> the policy call is the fed is going to be gradual exiting from the current policies. we have tapering starting in early 22 announced at the december fomc meeting. a gradual 15 billion, so it takes until the end of 2022 until tapering is done and then, whether you get rate hikes thereafter depends on the criteria the fed has laid out are met. 2% inflation, confident you will be above 2% for a while and for

employment, windows conditions are met, they will hike. our baseline is that happens in late 2023. but it could slip into 2024 and that is somewhat later than what market are pricing for these things. i think it is consistent with a growth forecast that is strong in the short-term but decelerates quite a lot because of the withdrawal of fiscal stimulus and less of a boost from reopening. >> people getting back to the office and they delta very and will subside. why do you disagree with city macro strategists that put out a report today saying the stagflation surprise regime is tactical in nature and shouldn't last more than a couple of months? >> i agree on the flechette side

of things. we see a big increase in inflation and we think it's transitory. we have a chart -- a sharp deceleration. in terms of core pce, we think we will be below 2%. i think on that part, we have a similar view. on the growth side, we've been optimistic about the rebound in growth in 2021 because you have seen a massive amount of fiscal support and a big boost from reopening. those things have not quite played out yet but they are temporary. the reopening is a one time boost to the growth rate. a permanent boost to the level but a one time boost to the growth rate. a lot of the in norma support of

2021 isn't repeated and 22. haidi: the goldman sachs chief economist there. let's get a check on the business flash headlines. there -- the world most indebted property development will sell 7% of their -- they have been trying to reassure investors about its financial health. macau's gaming revenue for july missed expectations as new covid-19 flareups put opening under question. it was lower than the median analysts estimates. malaysia has accused finance of illegal operations, and a statement from the securities regulator says they should stop marketing to malaysia consumers.

they noted that finance.com does not operate out of malaysia. coming up, we have the latest on the tokyo olympics as they games enter the final week. this is bloomberg. ♪ (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it.

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vonnie: this is daybreak asia. china's economic activity continues to ease in july as a recovery in the second half of the year and growth risks mount. it was below the median estimate. nonmanufacturing gauge eased to 2.3, in line with forecast. consumer spending recovered.

china securities regulator said it wants to increase communication and oversight with the sec after the u.s. watchdog hailed the -- halted the ipo of chinese companies, citing rear -- citing risk disclosures. the u.s. senate has finished the task -- that text of a bipartisan infrastructure built which is now ready to move to a final vote likely this week. lawmakers met to iron out the language. the legislation marks the against federal spending on infrastructure in decades stop passage will set the stage for both parties to debate president biden's larger $3.5 trillion plan. deadly wildfires along turkey's southern to -- southern mediterranean coast are forcing evacuations as firefighters worked to contain them.

the fire has claimed at least eight lives. parts of italy and greece are also affected. 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 get the latest on the tokyo olympics. the bubble separating a general population from the games seems to be holding up even as covid cases in tokyo hit a record high. let's get more from our tokyo bureau chief. what's the latest on the covid situation? >> the bubble does seem to be holding up. there were concerns ahead of the games that tens of thousands of people coming into the country could bring new variance and affect everyone else here in tokyo or the other way around, that the local population would end up affecting the athletes. that that is not what the

numbers are suggesting. they change every day but the staff at tokyo 2020 are among the most frequently tested people in the world. there are a few dozen cases but they are stable day today. cases are climbing with the seven-day average increasing massively. that does suggest they are keeping the athletes safe. case outside the country going up, including cases of the delta variant. shery: we are hearing from a sprinter from baylor is saying she is being pressured to leave tokyo citing pressure from officials? sophie: the latest we have is a tweet from the ioc saying there officials have met her and her there with her at the airport and that she feel safe with them and they are going to follow-up up and see what they can do in

regards to possible asylum claims. we will be talking to japanese officials and see if they will say anything in regard to possible asylum. media reports did say this athlete was being forced to go home after a critical social media post and she refused to go. very much keeping our eyes on that one. haidi: that tokyo olympics has put an uncomfortable spotlight on mental health. u.s. gymnast simone biles withdrew from the summer games. >> we are proud of simone. she is proving beyond a shadow of a doubt that she may be the top gymnast ever in the history of this sport and clearly, she went to tokyo with nothing but an idea of winning more gold medals and proudly representing america. the reality is we are all human beings. haidi: i have to wonder if this

is one of the defining legacies of the tokyo games, how unusual it has been for athletes and organizers and will this be the takeaway for future olympics and expectations for these athletes? sophie: part of the legacy, absolutely. you have statements from high-profile athletes, part of trying to see athletes mental health as part of overall health. the spotlight is on athletes engagement with media and social media. social media is a huge tool, especially with athletes connecting to fans. but if they are exposed to negative posts coming through, it can magnify challenges to their mental health and i'm sure that something that will be part of ethics training going forward, how to cope with social media and the pressures there and how to take care of mental health. that will be something athletes

and those who look out for them cannot do without. shery: you can see more of our olympics coverage and keep track of the results of the tokyo games with bloomberg's metal tracker on the terminal and at bloomberg.com. let's hear more from the visa ceo who spoke about the firm's vaccine mandate, planning to vaccinate -- mandate vaccines for employees returning to work in the fall. >> from the beginning of this pandemic, the safety of our employees has been our top objective. in most of our offices, we are at a place where employees have the choice to come into the office were not. the vast majority are not coming in to the office. our plan in the fall is to begin asking employees to come back. we have not fully decided what we are going to do.

i'm very much encouraging all employees to get vaccinated. i think it is very, very important. it's possible we will come in with a vaccine mandate. we are going to be very considerate about the vaccine for all employees what we have not made a final decision yet stop unvaccinated people, if they are going to come to the office, it's going to include mask wearing and testing on a free basis but we have to figure it out. >> what would influence that decision around a vaccine mandate? >> we are in the midst of collecting vaccination information from our almost 10,500 employees in the u.s. everyone is supposed to let us know by monday where they are at. that will play a role in what we do but we are watching what happens in terms of the variant

itself, what doctors are saying. i spent 45 minutes on the phone with our chief medical officer the other evening, so we are tracking the science and what local officials are saying. we will put all of that in the mixer and decide what is best for our employees. haidi: coming up next, a take on hsbc ahead of those second quarter earnings. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo and seoul. in south korea, we got trade data over the weekend that has exports of chips, computers and other technology products boost overseas sales to a record in july, even as the pace of growth in overall shipments slowed. north korea's leader says planned joint military exercises between south korea and the u.s. will cloud enter korean relations and pyongyang will watch the -- as south korea goes ahead with them. in japan, we are watching manufacturing pmi data. we will get those figures to

you. we are also watching sony. they are pushing horizon forbidden west back, the latest in a year of delays across the industry. and the earning waves in tokyo continue. they will be reporting later on monday. haidi: -- asian wealth management volumes also being key. our next guest says hsbc is key to local credit costs. what are you expecting to see and what would be encouraging numbers? >> i think we are expecting to see that credit costs don't come down quite as much as people are hoping for, quite as much as we saw with some of the biggest banks in the u.s., and that's

because hsbc has not taken that much in the way of provisions in terms of loan loss reserve ills during last year. another concern is its net interest income is a fair degree lower and this could be an unintended consequence of the bank having de-risked its loan book during last year. at the same time, hsbc is one of the most liquid banks of any of the largest banks in the region. haidi: we have to bring up this chart looking at interest margins. i also want to throw up another chart that takes a look at the stock lagging the benchmark in london and hong kong. i want to talk about whether the chinese regulatory crackdown -- hsbc has changed its stratus see

-- it's strategy dramatically to focus on the china region. is this going to be a huge detriment as we see the volatility from the chinese market? daniel: it could very well be. the bank has a long track record of restructuring, reese credit -- rescheduling, changing its focus, going into markets and exiting markets. so this is not new. it's par for the course for hsbc. but with what is going on now and its focus in that part of the world, it makes it more difficult. we have to remember this is a bank with a huge amount of exposure in the u.k., over $300 billion worth of loans. we forget about what's happening because of the pandemic but we also have brexit and this could be a fairly big negative for hsbc during this year and next year. shery: when it comes to business across asia and how representative hsbc wants to be

of china and its business there, what do you make of the latest crackdowns with semi-different sectors and how that's going to have an impact if at all for the company? daniel: it's very difficult to forecast these geopolitical risks. we know hsbc has sent very senior level executives to hong kong and know it is entrenched in the region. it has to figure out a way to make all parties happy. that is simply not an easy task. and it is unique in the world because of its geographical distribution and its head office. there's no other bank like it. this raises an additional point where this bank is so incredibly complex, so global in its breadth, and at the same time, regulators put it as one of the banks which is globally systemically important, so it requires a high level of capital buffer, more than any other bank

in the world. shery: what does that say for the likelihood of more dividends, buybacks and so forth? daniel: for many people, we focus on tier one ratios. that is important for banks. but basil three leverage ratios take into account the off-balance-sheet and this is where hsbc has over $800 billion worth of commitments. tier one ratio for this bank is fairly high versus jp morgan and city, those are the two other banks in the top bucket globally, but on basil three, they are all pre-much the same. i gets fairly difficult to see any large scale share buyback or reinstatement of dividends for hsbc.

shery: thank you very much -- a preview of those hsbc numbers that we will be getting very soon. we will be speaking to the cfo of hsbc about those results when they break in a few hours. that conversation at 2:30 in sydney. be sure to tune into bloomberg radio to hear more and get in-depth analysis from the daybreak team broadcasting live from our studio in hong kong. plenty more ahead. stay with us. ♪

haidi: fortis says it sees its chip shortage extending into 2020 two, but raise its forecast thanks to a surge in prices in models that are coming harder to find. >> what we see happening for us at ford, the chip crisis was a disproportionate issue in the second quarter. one of our key suppliers in japan had a fire at their fabrication facility and that tamped down production in the quarter. 70% of the volume we lost, more than 70% of the volume we loss was due to that. they are up and running and we will have those chips flowing to a starting this quarter. all in all, we are seeing a 30%

sequential improvement into the fourth quarter but this situation is opaque. we are managing it week to week, day today, and it is something we will have to deal with for the rest of the year, potentially into 2022. >> when you start building ev's, it requires enormous amount of copper and nickel. how about all the components that go into making batteries? is it pot -- is it even possible to forecast the supply of these when you know demand is so high and it's hard to get a sense of supply right now? >> that is the silver lining coming out of the chip crisis. we are new company, spending a lot of time benchmarking others will stop we are talking to our partners, leaning into how they manage a complex supply chain and applying those learnings to what we are going to do with batteries. we've got to get to the source and do strategic buys and make

sure we have multiple sources for certain commodities that will be critical to us. we are learning a lot from the chip crisis and will apply that to our purchasing process. our industry has typically been focused on just in time supply. we are shifting, more strategic, focusing on how we manage through the supply chain. batteries will be a key component going forward and we will be deeply involved in that from a strategic standpoint. >> when will the chip shortage not be an issue anymore? >> that's hard to say. we've talked to all the manufacturers undergoing deep into the supply to understand what's happening. they are telling us they are increasing capacity and that is important but no one can call when this is going to ease. we see it going through the second half of the year, potentially into 2022. we will manage it as best as we

can. one of the things that helped us drive the topline revenue is incredible demand for our products. we have incredible demand for our new products and it is allowing us to manage the best we can but it's also providing the opportunity on the top line, stronger mixed management to get everything we can out of the situation. >> that's a very diplomatic way to say you could raise prices and people will come flooding because demand is that great. particular on car lots, i'm wondering as supply chain issue start to ease up, how can you keep prices this high and keep them going up? >> strong demand for our products. we've been consistent in this. as supply and demand become more imbalance, you will see price reductions and you'll will see pricing moderate over time. but our product, the strongest product lineup i've seen that in

the 30 years i've been at ford. that will continue to give us the tailwinds on the top line and we see that happening through the rest of this year and strengthening next year because we will be launching the new ronco now, launching maverick and then the f-150 lightning coming. we have not -- we have a lot of product coming that will keep the tailwinds coming. shery: the ford cfo john lawler there. korea's elegy energysolutions says it is planning to be carbon neutral by 2050. the world's second-biggest battery maker converts 100% renewable energy by 2030. they are the latest south korean kind but he to go green. exxon hinted at a change in strategy after reporting its highest profits since the start of the pandemic. it's a profit of $4.7 billion in the second quarter. the ceo says the oil giant would

prioritize balance sheet repair ansi extra cash from energy prices used to pay down debt. oil search has agreed to a all stock takeover offer. they say they will unanimously recommend shareholders vote in favor of the revised proposal. due diligence is expected to last for weeks. it gives shareholders 38.5%. >> let's get the latest on the multi-billion-dollar deal in the payment industry. we know the buy now pay later space has been so hot lately. what we know about this deal? >> the deal will create an online or digital payment powerhouse. for jack orsi who is the ceo of square and twitter, it's their

largest acquisition today. they say they have a shared purpose -- "we can connect our cash app and seller ecosystems to move even more products. translation, they are leveraging the population of this by now, pay later platform. both built his us is to make the financial system more fair and inclusive -- translation, to appeal to millennials. they are offering accounts for small businesses and the combined company will allow for a loan aspect, a by now pay later aspect. after pay does allow consumers to buy now, pay later. what we are going to see what the offer is that it is more than a 30% premium to after pay's last close and the board

recommended its shareholders approve the deal if it goes through. it's expected to take place in the first quarter of 2022. shery: what is next for the two companies? su: this will accelerate after presence in the u.s. market. you both interviewed the co-ceo and cofounder in late june. he was talking about overcoming the global leader in the by now, pay later space and millennials were driving this method of payment which we know took off and exploded in popularity during the pandemic. the company let's consumers buy things and pay over four installments. there no fees or interest on the loan if it is paid on time. and we see a lot of reaction or

are likely to see reaction in this relatively new company that has been else up along this platform to cash in on the popularity of this new format. this will be closely watched and the largest acquisition foursquare today. shery: let's get a quick check of the markets because we see u.s. futures gaining ground at the moment, up .4% after the s&p 500 posted a weekly decline. that's translating to asian futures with sydney futures up .7%. japanese futures also higher after we saw losses in the last friday session. kiwi sock -- kiwi stocks off .4%. coming up, a take on the outlook

and asia. and reaction to market sector crackdowns from michael avery. the market open in tokyo is next. ♪

shery: welcome to daybreak asia from bloomberg world headquarters in new york. haidi: asia major markets have just open for trade. investors are weighing disruptions in crackdowns as a new trading week begins. square buying the lender for 20 billion u.s. dollars.

hsbc to report same quarter earnings with fixed income trading and restructuring costs in the spotlight. shery: japan, south korea and australia opening now. we are seeing pressure, so gains in early trading session, the nikkei, we see materials and health care stocks leading those gains. we saw that fourth monthly gain against the u.s. dollar. also feeling that upward pressure, the entire week given that we have bond options again this week. how shery: we are going to get pmi never sent a few minutes. real estate is feeling a little downside pressure.

the korean won holding the 1151 level. we will switch the board to see what is happening in korea, the kospi 32 when i level up .5%. u.s. futures gain .4%. haidi: it seems the resumption of bias coming as a result of selling we have seen especially given by the chinese crackdown. front and center we are seeing here in australia watching after pay, one of the stocks to watch, it has risen 30% after agreeing for the offer to be bought out by square, trading at $125 versus the offer price. across a broader part of the market, the staggered open .3% higher in sydney. the rba meeting this tuesday, we expect a reassessment of expectations. they are expected to do a u-turn

when it comes to tapering expectations. rate hike expectations as well, no changes expected in the cash rate in tuesday's meeting given that brisbane is entering a three-day snap lockdown. most parts of new south wales and large parts of the australian population under lockdown. kiwi stocks up .25%. corelogic numbers coming through as well, we are seeing a pullback. australian housing valleys increasing 1.6% in july, slightly softer than what we have seen in the first seven months of the year. shery: right. for now, let's get to vonnie quinn with first word headlines. vonnie: finance securities regulators says it wants to increased medication and oversight with the sec after u.s. watchdog halt of the ipo's of chinese companies, citing improved risk disclosures. this came in response to beijing

clamped on private industry after didi pushed forward with a listing despite reservations from china. beijing is considering whether booster shots are needed to protect vulnerable groups from covid. officials say there's not enough evidence to set their child is needed for everyone. they say the delta -- enough evidence to say a booster shot is needed for everyone. the delta variant a higher percentage now. the u.s. senate finished the text of a $550 billion bipartisan infrastructure bill now ready to move to a final vote, likely this week. lawmakers met over the weekend to iron out the language in the legislation marks the beginning and biggest infusion of u.s. federal spending on infrastructure in decades. passage will set the stage for both parties to debate president biden's larger 3.5 truly dollar plan. the u.s. blames iran for an attack on in israel-legged oil tanker off oman that claimed two

lives. secretary of state antony blinken says there is no justification for the assault and warned of an appropriate response to come. his condemnation came after israel's prime minister and the u.k. blamed tehran. neither offer direct evidence and iran has denied response ability. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: we were talking about the snap lockdown this weekend and we are hearing now that will be extended until august 8, until next weekend and we have seen they reported 13 you covid cases in the past when he for hours. victoria -- the past 24 hours and recorded -- and victoria recording a few cases in the past when he for hours and in the next hour we will hear the latest case numbers.

and there have been over 200 reporting record daily highs in one state. a pretty steady start, beijing pushing ahead with a crackdown on every thing from technology to private education and property, leading sec to a halt ipo's of chinese firms pending risk disclosure. let's bring in the head of asia-pacific financial markets research at rabobank. this started happening with didi global and all the drama in the last few weeks. every once in a while i think i wonder what michael thinks about all this. >> [laughter] i am flattered that you think of me, thank you very much. i am not -- [inaudible] haidi: michael, your keeping us in suspense. do we still have you? [laughter] all right, it does look like

after that buildup we have lost michael every. we will try to get him back but in the meantime we will get more. this is bloomberg. ♪

haidi: let's try again with michael every, head of asia market research at rabobank. give us your most intelligent take you have on, i told you so, when it comes to china? >> basically, i think everyone recognizes that china is a political economy rather than just a dynamic market it is both at the same time. politics clearly has shifted. and the market has been caught flat-footed by this. you read through the buy side and sell side comments on this. i do not read a lot of other people's research.

but on this particular topic it is interesting. the voices are either saying they do not mean it, in which case you have to say, logically, the missed medication between what beijing just dead -- miss communication between what beijing tested and what everyone thought they were going to do automatically brings in a lot of political risk in the market meaning you have to reprice. and the ones who are saying they don't mean it are saying they do mean it that they clearly flagged they were going to do it so we are not worried. first of all a, why were you surprised? very expensively surprised? and what else have beijing flag today are going to do that might surprise you? because people are being very selective in terms of what they read in speeches and say well, they said there were going to do this. but we do not think actually meant that. in short, it is very important to look at the politics. the politics have clearly changed. it looks to me, as if we are moving toward now, a structure to try to do under different terminology, what the west is calling bill back better or

leveling up, which is to try to deal with inequality and a lopsided imbalanced economy. now if you're going to try to do that, you're not quite a have such high-growth, and you are not could have such high returns. it is a simple as that. you cannot now inequality and have high-growth growth and high returns of the same time. -- you cannot narrow inequality and of high-growth and high returns of the same time. haidi: it feels like some responses to the cracked up from analysts have a list been pavlovian. we are sort of trained to believe the chinese markets in a certain way and will always produce these opportunities for an acceptable level of risk. does that mean this does not necessarily change and it kind of institutional push into china? >> i do not think it will change the push because, as you said, it's a pavlovian response. i think it is a wrong response. i think people will only learn that lesson very painfully. very expensively. probably with repeated beatings. that is the message they need

to, logically, take from this. yes, capitalist to be welcomed. it is not been shut out completely. but it needs to flow to sectors beijing wants, not more generally. it is not free market. the centers beijing will wanted to flow two are not going to be that giant, rapidly growing firms with incredibly high growth and high returns. it is going to be a much more mundane performance, that has social benefits, for china inc. and for beijing. that cannot possibly be as high return. by the way this is not specifically a chinese issue. i think the same dynamic and wind will blow across the west given that everyone is talking about building back better. i do not know how long it will take before that hits us and where will hit first, probably the u.s., but it will become a new theme. i think it will be a shellshocked for markets who believe they have a god-given right to get these high-growth high returns always. shery: which is why you say in your notes wall street will keep feeding the dragon until it gets burned. are we seeing authorities,

regulators here in the u.s., actually try to avoid that? with the sec now stopping registrations of u.s. ipos by chinese companies. >> i think the sec move is the most muscular one they have made on this front for many years. you can see it has already triggered a response from their chinese counterparts. can we get back to win-went? -i- win-win? think the sec will say yes, do what we have. but i'm hearing from analysts is the same nature, pavlovian response that, don't worry, this is good for hong kong. all the ipos will shift to hong kong. yes, they will unless the sec or white house who just gave a public warning about doing business in hong kong close that loophole also and say that a such an obviously what we will not allow u.s. capitol to flow to ipo's if you use that as a backdoor, as it were. and even more serious position because we have taken a large

step towards the partial u.s.-china decoupling i have been warning about for around four years now. will that happen, i'm not sure. logic suggest that it could. shery: in trying to gauge the thinking a beijing now, what did you take away from the meeting -- the politburo meeting? >> the economy is slowing and they are not sure what to do about it. they did not have a radical new proposal. there will likely be more fiscal spending. monetary policy and fiscal policy are joined at the hip so will likely be a bit of both. that make sure things up in the short-term. structurally, things need to change. there needs to be more money in people's pockets and real terms. what are the easiest ways to do that is to deal with the kind of structural issues beijing is now pushing ahead with, which is, as i have said, it in any other words, building back better, leveling up -- building up better/leveling up. that does not mean china will be

the same for markets going forward it has until now. haidi: michael a little bit of a u-turn. obviously the other top of mind issue at the moment, the delta variant. concerns about stalls leading to stagflation in some major markets. how does this play out? does the rise of delta change the growth trajectory? >> will come i think it does if we start to move back toward lockdowns again. we are seeing australia has been hinting at, and even the u.s. in the past couple of days. were we to see more lockdowns, obviously, it is terrible for growth and terrible progress is confident, starts to get people scratching their heads and say, how do we ever get out of this? which was always a risk from the very beginning here. if we vaccinate people thinking along what, new variant that would be the vaccines and we would have to start all over again. we are seeing signs of that with

people talking but the need for a third shot now, when we have not vaccinated even one-shot for the vast majority of humankind. it is far from good. if you then meet that with further fiscal stimulus, which appears likely, in some countries, that will be stagflationary. the economy will be slowing down. supply chains are strained. and you would just throw more money into that. so it is a pretty toxic cocktail if you thing about it. haidi: michael, i can noise reline you to deliver the good news to us. -- i can always rely on you to deliver the good news to us, right? [laughter] we are watching, by now, pay later names. afterpay getting an overture from's gray -- from square to buy for $29 billion, and expanding digital payments and after pay into consumer lending as well. we are seeing a huge dump at the start of trading 29% still up

27%. and other big names including dominant player zip up by 12.5%. also taking look at oil as well. discussion seem to be continuing. we hear australia's second and third biggest oil and gas companies will merge to become one of the largest in the region and in the top 20 globally. we see oil search trading up by 7.7 5%, santos a more modest 2.8%. oil surge on monday saying they had agreed to improve the oil share from santos giving shareholders 0.275 santos shares for each one held to the combined entity will have a market cap of about $16 billion and competing against the likes of woodside petroleum to be australia's biggest independent lng producer with that tie up. lots more to come on daybreak: asia. this is bloomberg. ♪

shery: china seeing a rise in virus cases, reporting ever since july that almost equal the sum of new infections in the previous five months. the government is now considering giving booster shots to vulnerable groups to help contain the spread of the delta variant. greater china executive editor, john, has more on this. given the infectiousness of the delta variant, i'm not surprised. to a know how effective a third booster shot would be? >> so, i think that is what the authorities are trying to determine at the moment. it is obvious that china has had a number of smaller outbreaks. in the city of -- nanjing there infections. in this city hit by flooding

earlier in july also infections. also a dozen cases related to a hospital there treating people infected who are flying in from outside the country. so you can see across the country these little flareups. obviously that is causing authorities to think what they can do and a third booster shot is one option there considering. haidi: how much does that potentially way on the strength of the economic recovery going forward? >> if we start to see lockdowns across the country, if they start to escalate, and authorities have to start locking different locations. preventing people from moving around, restricting traffic, that could have a real impact on the economy. obviously we have already seen some slowing in the last couple of months. that could be exacerbated further. haidi: greater china executive editor. china's economic activity did continue to ease into line. official manufacturing pmi of following from 50.9 250.4.

the nonmanufacturing gauge also fell to 53.9 in the forecast. malcolm, we see the moderation in the pmi numbers. how worried are we about the economic recovery, particularly as we see the regulatory smacked down, potentially also causing downside risk? >> it is not time to panic. you know manufacturing pmi remains in the expansionary zone. the was weaker than ask -- then economists thought it would be in july. but it is still above 50. in some ways this fall back on the manufacturing side was inevitable. this was the first part of the global economy really to recover. china's factories got revving up again and it drove that v-shaped rebound probably at levels that were not going to be sustainable going forward. so a bit of a normalization was inevitable. the favorable thing for china's

outlook is there looks to be a rotation. second quarter's were encouraging. they showed consumption which had been lagging the recovery was starting to pick up. nonmanufacturing pmi numbers remain fairly healthy, above 53. you know, there's some health. mainly concerning our sub index in the manufacturing pmi, some forward-looking ones also did not read to well. new orders, new export orders, also weekend. -- also weakened. if the global economy recovery falters with renewed virus concern that can mean less demand for chinese export. -- less demand for chinese exports. and delta could be a worry. but it is not panic time yet. shery: expanding on the regulatory crackdown, what does that tell us about china's economic priorities? >> well there has clearly been a shift as michael every spoke so

well about. for a long while china was seen as summer that was prioritizing rapid growth. there has been a change in the narrative, and an evolution in the narrative over recent years. things like environment were prioritized. you add up all the regulatory actions we have seen over recent months and it is becoming increasingly clear that we are in a new order here. the label dubbed around this is, the common prosperity focus, not a new focus from china's leaders, they have been speaking about this, they need to share the wealth gains for decades. it has become increasingly common. what we are likely to see and are seeing is focus on national security, on common prosperity curbing inequalities in income, and stability, which is trying to get rid of gangbusters

growth. and some of the excesses. and set -- and spread some benefits more broadly. all to tackle rising discontent. whether gig economy workers without benefit struggling to pay. -- struggling for pay. parents squeezed by increasing home prices and tuition costs. for small businesses squeezed by tech giants. as michael every said, none of these are uniquely chinese complaints, or think they're having to deal with. it is the policy response that is uniquely chinese. haidi: they are not even new complaints, malcolm, right? the complaints over the property market, drug prices, access to health care, right? two we have a pretty good idea of which sectors and industries -- do we have a pretty good idea of which sectors and industries will be affected? >> that is the trick, isn't it, and china? you never get a really clear idea. in europe or the west you can

watch parliament. we can read a free press. in china it is all about smoke signals. the latest catchphrase from xi jinping's, and trying to decipher what they mean and when they will be implemented. numerous experts have been pointing out, some of the signals around banning for-profit or afterschool tuition, these are not new. xi jinping has been calling on that for quite a while since, some say in late 2018 he said that. yet a couple of weekends ago, it was shock as investors were taken by surprise. the trick here is trying to keep tabs of what is coming out of official circles in china. but, you know, there's no magic cure here. we have to just try and decipher which of those signals are going to. be ample meant it. and then the timing -- which of those signals are going to be implanted. then the time he becomes -- we

have to discern which of those signals will be implemented. and then the time he becomes key. but more regulation and scrutiny means lower returns for investors. shery: here's a check of the latest business flash headlines. china evergrande is selling stakes to ease funding pressures. the world's most indebted property development will sell 7% of the network to tencent and 4% to an unidentified buyer. ever grande has been offloading and spinning off assets as it tries to reassure investors about its financial health. macau gaming revenue for july missed expectations as new covid-19 flareups on the mainland put border openings into question. just over $1 billion was lower than the median analyst estimate. progress in reopening the border of macau and mainland china remains him even with some provinces -- remains uneven with

some provinces seeing a rise in virus cases. up next, more pmi data out of asia in a few moments. this after china's manufacturing gave came in softer than expected china's manufacturing came in softer than expected.

vonnie: this is "bloomberg daybreak: asia." the sister of north korea's leader, kim jong-un, reportedly says joint exercises between south korea and the united states will cloud inter-korean relations. in a statement she says pyongyang will closely watch to see if the south goes ahead with the drills. the two sides leaders released statements last week calling for reconciliation on the peninsula. beijing will step up efforts to halt the threat of covid-19,

including suspending flights, trains, and buses from regions with bar virus cases. -- regions with virus cases. two local cases and one infection sunday. in a certain -- in eastern china, all flight suspended out of a local airport after local gutter after a rise in infections. new cobit infections among people fully vaccinated was some cases described as critical, health officials warn positivity rates among those vaccinated in january is double those vaccinated and march with infections problematic for people 60 and older. an apparent decrease in effectiveness over time has led israel to begin booster shots. wildfires along turkey's southern mediterranean coast are forcing evacuations, as firefighters were to contain 100 blazes across the nation. cities including istanbul barred visitors from inter-nearby forests and national parks due

to fires which have claimed at least eight lives. parts of italy and greece are also affected. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: we are getting a series of asia manufacturing pmi numbers. the standout now is indonesia. we have seen the july manufacturing pmi fall to 40.1 versus 53.5 in the previous month. this would be the lowest since june of 2020. vietnam now not doing that great, the second month in contraction territory coming in at 45.1, better than the previous month. when it comes to taiwan, they outperformed. the pmi number again and expansion tory, coming in -- in expansion territory. south korea also in expansion territory since october of last year. we are seeing the diversions.

-- diversions. -- divergence. japan doing better than expected coming in at 53. china's pmi numbers, china's economic activity continue to ease. south korea exports of chips helping boost oversee sales. let's dissect these numbers and bring in the is a pacific economist at citigroup. it seems we continue to see, these numbers from southeast asia. indonesia really not doing great. northeast east asia continues to see strength. is this what we are seeing in the broader economic recovery? >> the broader story has been, we have passed sequential peak of growth momentum so we are seeing a slowdown in right now it is uneven. obviously there are two major

differentiating factors. the spread of the delta variant and vaccine management have been a huge headache for south and southeast asia. you see the pmi data out of indonesia, not a huge surprise to the extent we have seen a surge in cases and engineers at, as you know. therefore leading to tightening restrictions. cases have come down from the peak in indonesia. we still have high cases in thailand, vietnam, malaysia. now there is a concern about delta variant and philippines. the last week we have had more expansion and implementation of tighter restrictions. we have the easy q, metro manila and philippines imposed for two weeks. we have thailand and vietnam extending. that is having an impact on factory production and manufacturing. the other thing is to extend the in demand electronic components, especially chips, continue to be strong. that is why we see the outperforming a taiwan and korea.

shery: is that what we see in china? the pmi numbers there, was a supply issue? >> china was a number of factors. we know that china's growth was potentially slowing. exports have done relatively well. but even in the u.s. as the economy reopens their shift toward u.s. consumption, toward services. in china we have cases where after a strong momentum, the legs impact of tightening especially with the impact of credit and the structural push for decarbonization, also supply-side constraints, creating a bit of a slowdown. in the pmi data out of china, we had u.s. orders declining for four months in a row. when you factor in prices, material prices being high, that will put pressure on the sme sector. we expect we will see more targeted easing the second half of this year. haidi: given we already are seeing a slowdown in the recovery, is this the wrong time for a regulatory takedown? >> you have to differentiate

structural issues and cyclical issues. yes, slept china is slowing down. the question is, is the slowdown fierce enough to deter chinese policymakers from pursuing structural and social objectives? at this point we do not think so yet. we think they have policy tools they can use to mitigate and slowdown in some sectors they want to do. for example they might try to slow down or cushion sme through targeted liquidity easing measures. an easy access to credit. i do think the regulatory cracked does create uncertainty. and the uncertainty risk premium is not friendly to investment. there is certainly a risk. they do not try to provide more regulatory clarity. this uncertainty risk premium could be a deterrent to investment. but again, at the moment we are not thinking chinese policymakers are too worried. we do not think they will turn around and slowed on the regular tory easing dramatically. i do think we are going through

-- we do not think it will turn around and slow down regulatory easing. they may want to clarify concerns and hopefully clarification will reduce some uncertainty. i think we are seeing some positive light to the extent that the psr see is engaging with market participants. there was news that cs already wants to engage with the u.s. sec. hopefully there'll be some clarification that can remove tailwind concerned. haidi: that communication could be a good thing, right? when it comes for calling for improved policy efficiency, what is the polyp romaine? -- what does the politburo mean? >> one thing that has been surprising to us is fiscal policy, especially off budget fiscal policy. the local government special yuan issue was especially behind targets, there has been slow implementation of that. we expect in the second half,

although on budget fiscal policy has been on track, off budget local government quasi-fiscal spending may have room to step up, and get this local bond issuance, projects going through, some infrastructure can kick in and hopefully that policy efficiency help provide more fiscal support in the second half. i think that is one way we are interpreting it. i think in terms of policy efficiency china still wants to address some financial imbalance risk. they are concerned about debt and leverage in the property sector. this is why when you talk about policy easing on the monetary front in terms of liquidity easing, i think we are going to see a kind of combination of may targeted easing for smes but at the same time there is still concern about developer financing. they're still the risk they might tighten developer financing as they try to manage distribution of were credit is going. shery: will there be broader economic impacts coming from the u.s.-china geopolitical tension?

when we hear about the sec now looking registrations of chinese companies doing u.s. ipos? especially where the access to capital could be restricted? >> geopolitical tensions are at the forefront. at this point we do not expect there will be a complete financial decoupling. given the volatility u.s. seen in china listed shares in the u.s., it should not be a surprise that if i were the sec and have responsibility to u.s. investors, i would obviously want more disclosure to protect investors. to the extent, this should not be really that, and he is price. possibly that communication between sec and ctr see maybe china's position on scrutiny on listing could be clarified to sec so there will be more understanding. again, i do not think the policy steps china is doing and regulatory tightening is targeting. because they want capital axis

to ds. to me that is -- capital access to the u.s.. they have the desire to mitigate some of the costs in terms of allegation and health -- education and health. real estate for example, more domestic objective driven. but a lot of tech companies also listed offshore. that created ripple effects. it does show you this china tightening means domestic policy objectives have primary goals. we hope -- because china also affords to domestic policy objectives, i think chinese -- foreign capital is important for china. it wants to innovate and develop and become a more intensity economy. so i do not think they will want to shut off capital markets, in that respect. haidi: china chief asia-pacific economist. we see china's 10-year yield falling for basis points to

2.81%, the lowest since june, 2020. government bonds extending declines with the benchmark 10 year, at one point climbing the most since january but we see that fall in the yield now to the lowest since june, 2020. next, hsbc caught in the middle. the bank report earnings in a few hours. the lender, perhaps to global for china. perhaps too chinese for the rest of the world. we get the outlook, next. this is bloomberg. ♪

shery: the picture across asia now, we see the nikkei gaining 1.5%. every sector on the nikkei now in the green, led by materials and technology stocks. korea a mixed picture up .3%. it has been way down by the tech companies and material companies in south korea. this despite that we saw pmi numbers out of south korea again in expansion territory. japan also beating preliminary numbers. and sex 200 up .9%. q. week -- asx 200 up .9%. and kiwi stocks -- we continue to watch the earnings picture. hsbc will report second-quarter earnings as market pressures put extra focus on costs.

let's cross to our asia finance reporter. what are analysts expecting? >> hsbc has traditionally been one of the bigger dividend payers in europe. now that the bank of england says it, it can resume paying dividends and doing buybacks, that is a big focus of the earnings today. analysts and shareholders expect to hear how much the bank will pay out this year. another focus is costs. the bank had a miss on that in the first quarter that is going to be a big thing to watch. they have already cut 35,000 staff in a bid to keep a lid on costs. that is going to be something people are watching. in terms of trading, we know there fixed income currency and commodity business trading is going to be down about 30%-30 1%, in line with what we saw from wall street ranks -- wall street banks a couple weeks ago.

the consensus estimates for hsbc shares are 23% higher than where they are now so analysts expect the company to do well in the second half. but there are clouds on the horizon. you have china regulatory issues , costs, what is going on with loan growth. we expect this quarter revenue will be done because analysts do not expect they will the able to match results in wealth management and loan growth slowing. shery: given china's exposure, does that mean they are facing bigger troubles? >> that is a good, really good question. basically, hsbc was the number one dollar bond issuer for hong kong chinese macau companies so far this year. so any kind of ruptures in the chinese market is expected to hurt them there.

they have obviously cut thousands of jobs to refocus their entire business on asia. it is their growth engine. but growth has been muted in asia, as we see the delta virus popping up in different parts of the region and also volatile vaccination rates. those will be some issues analysts are watching as well. haidi: asia finance reporter, ahead of hsbc earnings. we will be speaking with hsbc about those results with across the bloomberg in a few hours time at 2:30 p.m. in sydney and 12:30 p.m. in hong kong. tune into bloomberg radio to hear more from the days big newsmakers in-depth analysis from the daybreak team now broadcasting life in the studio in hong kong. you can listen on the app radio plus art bloomberg.com. more ahead, this is bloomberg. ♪

haidi: french carmaker renault said it lost output of 200,000 cars in the first half because of the chip shortage. rising prices of raw materials could hit profitability further this year. bloomberg spoke with the ceo about the scope of the impact. >> the good news is that, despite the fact that we had a higher impact than we

anticipated, the results on track with our plan, so we are back to profitability. this is certainly good news. we anticipated at the beginning of the recovery already from the third quarter of this year. now that we are in, we know we see the difficulties and problem continue, and we are maybe seeing recovery on q4. that means we will not be able to catch up and get back to the hundred thousand units losses we planned at the beginning. this is the situation. but we will endeavor the supply chain constraint and try to continue to stay at this level of profitability this year. this was at the end the message and our guidance in the analysts conference this morning. >> to be clear, the chip crunch

perhaps clearing up in the fourth quarter. of course we still have issues of the delta variant covid spread. what are the risks to that outlook specifically? >> i think two of them you mentioned, the chip shortage will continue probably throughout the first semester of 2022. we will have some fluctuations are uncertainty, lack of visibility. we have of course, the pandemic is not completely overcome especially in some markets, where we have the supply chain production capacity for some components. we are seeing that for example, in malaysia, the impact on us. there is another thing that will probably hit the industry more in the second half which is the growth of raw material prices that is kicking in now. which we anticipate on the order of 500,000,000-6 enter million euro. this is part -- 500 million euro

, this is part of the calculation. everything has been integrated and we stay we try to stay at least at this level to the end of the year which by the way, 2.8% let's say, operational margin, is what we promised the market by the end of 2023 and we are achieving that level with two and a half years in advance. so we keep fighting. it is a very challenging environment. but that makes the thing interesting. haidi: the renault ceo speaking with bloomberg. shery: a quick check of the latest business flash headlines. oil search shares jumped after the agreed to a sweetens all stock takeover offer from santos. oil search says it's board will unanimously recommend shareholders vote in favor of the revised proposal. the due diligence is expected to last for weeks and the deal would give oil search shareholders 38.5% of the merged group. afterpay soared after square

agreed to bite in it all stock transaction worth $29 billion. the deal with -- the deal is san francisco-based square's largest acquisition as it moves into consumer lending. it allows consumers to buy on credit and pay overtime. the deal is expected to close in the first quarter of 2022. simone biles withdrew from the olympic events. fisa has an inlet pick -- visa has an olympic sponsor deal and is invested in biles for the game. >> we are proud of simon. >> we are proud of simone. she has proven beyond a shadow of a doubt she is maybe the top gymnast ever in the history of the sport. clearly she went to tokyo with nothing but an idea of winning more gold medals and proudly representing america. the reality is, that we are all

human beings. shery: malaysia accused by nancy of illegal opera-0- -- malaysia accused binance of illegal operations. the securities regulator said binance should also stop marketing to malaysia consumers. binance said is aware of it but that finance.com does-not operate out of- binance.com does not operate out of malaysia. haidi: we have been covering the outsized impact commodity prices have had on agricultural commodities including hog prices. part of the story has been the devastation of african swine. now the latest tory on the bloomberg showing chinese producers -- the latest story on the bloomberg showing chinese producers of a hog's taking this to a new level, multistory hog hotels.

they are taking by a security seriously. there temperature suit -- temperature controlled and maintained to make sure no diseases or viruses get inside. we are talking 13 stories of vertical hog farms. bleak looking. very high-tech. shery: i mean, they seem to be really trying to follow some of the practices we have seen in europe here in the u.s. as well, right? not surprising given food security has become such a top priority given what happened with the devastation from the swine fever in 2018. half of china's heard of 400 million pigs have been wiped out. that would be putting it into context. the entire annual output of the u.s. and result combined brazil combined. not surprising they want to avoid such an incident again. look, we're going to go -- i

cannot make this you turn guys. we are going from pigs to markets. a commodity prices to markets. haidi: [laughter] chinese markets. shery: regulatory pressures in china. pmi numbers. let's bring in our china expert. david and glaze, you will be watching the hog's. you will be watching commodities. >> yep. when you look at pmi numbers on the weekend, the sub measures of inflation, a lot of that has to do with the food basket in china. that is my pivot. [laughter] i don't have a thing else to say. another way to ring fence the way biotech and germs and virus cases -- and you are just talking earlier on, this is the thing that has emerged in the last week or so. the virus trade back in china

when you have cases coming through. relatively speaking compared to the rest of the world almost zero but 99 new cases today. you had the vice premier visiting the covid-hit eastern city of nanjing. and then being confident they can ring fence it. i'm watching a lot of these chairs today. haidi: a lost opportunity for upon a pun about pigs flying. we are seeing winners emerged after the destruction of the past couple of weeks. . david: yeah, reit's are good example of that. retail sales coming out ties into the virus story which has been largely nonexistent, in single digits and's may. another part of the market that has done well you see on your screen, new energy shares,

chipmakers, for example. a lot to watch. haidi: our china markets coanchor will be up next. shery: stay with david, we do have the china markets open. this is bloomberg. ♪ and there you have it -

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>> 9:00 a.m. in beijing and shanghai. welcome to "bloomberg markets: china open." >> good morning. counting down your first session this week on the chinese mainland in hong kong. let's get to your top stories. beijing, responded to sec u.s. regulators suspending chinese ipos until disclosures are improved. >> china pmi data shows the recovery is slowing adding to concerns the global economy has peaked.