shery: hello and welcome to "daybreak asia." sophie: i am sophie in hong kong . we are counting down to asia's major market opens. shery: good evening. our top stories this hour. asian equities may come under pressure after u.s. stocks suffered their worst drop in a month. beijing's new regulations way on chinese adrs.

kathy wood says china's clampdown is stunting innovation and equities are poised to reward disruptive strategies plus the taliban vows afghanistan will not become a terrorist safe haven. markets today were glued on chair powells comments out of town hall for educators and students. he emphasized how the covid pandemic is casting a shadow on the economy. we will get more details on his policy outlook at jackson hole next week. >> glued to what beijing is doing next in its regulatory crackdown. it was another tough session for u.s. listed chinese adrs. take a look at the chart we have, just taking a look at that. overnight, we saw some of these big tech names falling for a sixth straight day, 98 of china's biggest firms listed in the united states. they issued a set of draft rules preventing or aimed at

preventing unfair online competition. shery: we continue to watch the geopolitical tensions coming from afghanistan. we are now appearing from house republicans that the u.s. should stop the taliban led government from being able to use $500 million in ims reserves while watching closely what is happening on the afghanistan front. that is going to weigh in on what happens in the markets. let's turn to sophie to see what the set up looks like in asia. sophie: we are seeing cautious motions. we are seeing after the slump analysts turning more bullish on asian equities, saying it could be time to buy. these earning estimates could provide a little bit of momentum but not so for now. we are seeing bonds gaining

ground this morning with the ozzie tenure yield back below 113. we are seeing it traded at the lowest level since february. we are seeing a slight pickup ahead of the rb and z decision -- rbnz decision. it has weighed on the renminbi. we are seeing expectations for lower growth and profit expectations, and switching out the board for a look at the top line from the latest survey, we have global growth expectations at an april 2020 low and we have hit the peak boom as we are seeing above trend growth and inflation. paul. shery. haidi: let's get you some of the first word headlines with bonnie karen -- with vonnie.

vonnie: south korea wants to have 70% of its population vaccinated by the end of september, boosting rates that lag others in the region. the prime minister told bloomberg exclusively that the government will keep finding aid to small businesses -- funneling aid to small businesses. >> one of the reasons why we think south korea has succeeded in prevention as we did not turn to extreme measures like lockdowns. vonnie: for more cases of covid have been found in new zealand one day after the prime minister plunged the country into lockdown on the discovery of a single case. it was the first locally transmitted infection since february and is believed to be the delta variant. the level four curbs are the most restrictive and include schools, business, and public

venue closures. the u.s. is extending mast mandates for travelers on trains, planes, and buses, and will require people to wear them at airports and train stations through january 18 of next year as the delta variant continues to fuel new covid-19 infections across the country. vaccinations are ramping up, up to spring levels right now. 357 million doses have been administered in the united states. bloomberg learned the u.s. government may be poised to offer booster shots as early as september. the administration is finalizing a plan that will recommend the shot eight months after the second dose. so far, booster shots are authorized for those with weakened immune systems only. it would be subject to authorization by the fda. 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.

shery: let's get the latest on the situation in afghanistan where the biden administration says it has cleared the way for americans to travel to the couple airport. -- kabul airport. >> we are engaging with allies in regional countries and with the united nations to address the situation in afghanistan. we are in contact with the taliban to ensure the safe passage of people to the airport. >> joining us now for the latest is dan flatley. it seems the situation is calmer than earlier this week. what do we know? dan: i think that it's right at the moment. the u.s. has basically taken control of the airport with 3500 to 4000 troops that have arrived in waves over the last few days.

the problem still is for a lot of folks is that it lies in getting to the airport. the airport itself is largely under u.s. control but folks are still finding themselves stuck between the taliban in the airport essentially trying to move through kabul to get there. we know from state department and other sources that there are 11,000 american citizens in the country that they are still trying to get out. the pentagon has said that they are going to in the coming days be flying out about one flight per hour and try to get about 5000 10 9000 people out per day. that is an ambitious goal. it depends on the weather. we have a lot of folks get out of there, not just american citizens, but afghan nationals who work with u.s. over the last 20 years. these are interpreters, school principals, women and girls who

have worked in media, as journalists, who are now in danger of losing many of their rights and freedoms under the taliban, who have taken control of the country. haidi: this is being compared to the fall of saigon. he take a look at the stuff we see on social media. it has been called the biden saigon moment. i'm wondering what the domestic reception has been so far. you are a former marine. what are you peering from military and nonmilitary folk? dan: -- what are you appearing -- hearing from military and nonmilitary folk? dan: there was a treat yesterday by ruben, a member of congress, and a former marine who said that he has many feelings about afghanistan, too complicated to express in netsuite, but that he has not gotten any calls from

constituents about the situation in afghanistan even though he represents a district that has many veterans in it. i think that gives you some insight into where the public is. there is a bit of a disconnect between those who have served in iraq and afghanistan, especially afghanistan given the events of recent days, and the broader public. i think what is true, to a certain extent, is that the public wanted to get out of afghanistan, they wanted u.s. forces to withdraw from afghanistan. that is what biden was acting on and something that president trump, when he was in office, talked about, too. there is bipartisan support. was this withdrawal executed properly? in other words, was their intelligence that indicated that caliban could take over the country as quickly as it did? did the biden administration know about this intelligence? did they act properly in terms of planning? you are seeing a

lot of bipartisan pushback not just from republicans, who are quick to criticize biden as he is a member of the opposition party, but also from members of his own party from the democrats in congress who say this is unacceptable, the situation right now, and it needs to be rectified immediately. you see the biden administration trying to get the situation under control. i think what happens in the next days and weeks will go a long way towards shaping the public perception. haidi: dan flatley with the latest. coming up next, the snap lockdown and a dramatic market move setting the stage for a live rbnz decision. still expecting that 25 basis point hike today plus kathy wood hits back at michael murray, saying he does not understand the fundamentals in the innovation space. we will have that conversation, just ahead. this is bloomberg. ♪

haidi: investors are expecting a 60% chance of the rbnz hiking rates by 25 basis points today compared to 100 points earlier this week. of course leading to five cases. taking the nation into a snap lockdown. our next chassis a rate hike. let's bring in the executive director of micro sales. always great to have you with us. let me drop this chart, taking a look at what rate expectations are going into the end of this year. still expecting two rate hikes. a big drop from 100% to 60% for today's meeting. would it be prudent for them to hold given what we know about the inflation outlook and the housing market outlook? >> this is a really interesting

one today. you could not have scripted this better or more controversially. what is interesting to note as well is that generally, they make the decision at the end of last week but obviously on the day itself, can still make a call on the size and director of the move. everything is still on the table but the market pricing has moved significantly. over 60% chance of a 25 basis point hike where we had pretty much that chance of a spike before the case was announced so i would say at this stage at the official call for j.p. morgan's we see the rbnz proceeding with that basis point hike because clearly, they have met the inflation level in terms of their targets. we know that there are supply shortages within the country and a lot of these things in my mind have been accentuated more by what is happening with the lockdown in some ways. even though we have a temporary lockdown, a lot of the pressures we have seen emerge in the economy have been around the fact that the new zealand has

had to operate in a bubble for some time. if anything, that will be pushed out even longer for the moment and those pressures will remain. housing is the other side of the coin and clearly, that is what caused the rbnz earlier in the year to move away from that using bias and becoming concerned about the property market. they have deployed macro prudential measures which are starting to maybe take hold but i do think at this stage, that has been their largest concern in the last few months and i think that could dominate today versus the lockdown. haidi: has it also modeled the outlook for the key we? -- kiwi? do we see a rebound? laura: the last 24 hours has been quite interesting. we think positioning had been quite short hanging. -- since the last decision.

it has retreated with the broader dollar move that we had overnight with ozzie and qe under pressure again. that looks like a trade that continues to push back higher, so i think actually, given that we could get the hike today, the trajectory going forward, there was far too much baked into the rates curb in new zealand if you look at where some 2% rates are at the moment. it is 15 to 20 basis points. there was so much pricing. it was steep to this point and that have been reflected in the positioning as well so there is more of that to come out, particularly if you get a dovish message which seems to be consensus at this point. there were forecasters looking for change today. haidi: is there a chance that the rba could make a u-turn on this? laura: yes.

even though our official call -- as you get more information over the next month or so around how long the lockdown's are going to extend in australia, the vaccination programs -- how lockdowns maybe continued. the rba will start to realize that going forward, the next quarter of growth will be impacted in the reopening next year will have a difficult path. from that perspective, they will be updating their forecast lower. we will move outside the central scenario where we don't think they will slow the tapering. they will probably stick with that pace. shery: this dtv chart on the bloomberg showing how bullish bets on the dollar have returned. what is the prospect of a greenback #laura: technically, --the greenback?

laura: that is one that traders continue to push higher from here. they have been under pressure as well and we do see that will continue in the short-term but also dollar asia, donna correa is another one yesterday, getting a lot of attention in that move. a lot of model buying going through the market which will push on from here. it is constructive for the dolly in the near term, the fed tapering in the minutes will be important in that regard as well. shery: laura fitzsimmons, thank you. we will be speaking with the rbnz governor later this week. you don't want to miss that conversation and of course, we are talking about dollar strength given some of that risk on sentiment that we had today across wall street. concerns that the economic recovery will lose momentum amid the resurgence of covid weighing on consumer discretionary stocks.

u.s. listed chinese stocks something. let's bring in our markets reported. u.s. retail sales numbers really not helping. >> it was a risk option. risk off worries. you have it with the delta variant already building up and you have the retail sales, a disappointing miss. for a consumer economy, never good news. a sustained message across corporate earnings, bank of america fund survey. it is across the board here. haidi: when it comes to chinese adr's, also falling again. beijing ramping up on its crackdown. it has to work out what an adequate discount is going to be for these stocks. >> while china tried to moderate its growth, some of the regulatory scrutiny -- they do actually make sense. for the foreign investor, this is not good news. chinese text, you can see that diversion is lacking compared to

european tech. you will also see this idea that when you are talking about tech being the bid that a lot of people had come in the best of both worlds. this haven play that they were always going to be needed in this work from home era versus the fact that it is exposure to an emerging market to the likes of china so there is this best of both worlds dynamic but right now, investors pulling out of that sector altogether, whether you are kathy would, a hedge fund, or the average retail trader. shery: you have to look into investing into china carefully. thank you so much with the latest on the broad moves that we saw across wall street. she has been laying out her case as to why her firm has been paring chinese tech holdings for months. in an exclusive interview, she told bloomberg how she thinks there has been a change to beijing's stance on innovation.

>> china has made it a priority to invest in innovation and if you listen to elon musk, he will tell you that i go to any city in china, any major city, and talk to the mayor of that city, he is going to be an expert in technology. a lot of them have engineering degrees, computer science, and so forth. the whole country is focused on becoming number one in innovation. i am wondering if something is changing that. every month, there has been some new form of increased regulatory oversight, crackdowns, social engineering, nationalizing the online education companies, and i think they are referring to the divide between more wealthy and lower income people, definitely responding to that.

but they are also clamping down. they seem to be retreating in a sense when it comes to allowing any kind of data to come out of the country so it seems like that could be contradictory to their desire to become one of the most innovative countries in the world. >> i know you do not have a huge china presence right now but when you pull out of china even more given what is going on? cathie: they are sending a strong message. you know, when they use expressions as they did with the online education companies, they said that it had been hijacked by capital. that sounds a little rough on capital. i think the valuation of the market is going to stay down for a long time until they become

more inviting to foreign capital again. and maybe want to integrate a little bit more into the world than they seem to right now. we do own, and some of our more specialized funds, some chinese stocks. we have tried to stay away from those that are privy to a lot of private information and our online, although you cannot stay away from all of them. we have minimized our position significantly. and in our flagship fund, we do not own any more chinese stocks. haidi: cathie wood speaking exclusively on china. the superstar fund manager hit back at michael after he bent against the flagship atf. he assured contracts against more than 235,000 shares. she said she does not think he understands the fundamentals

that are creating explosive growth and investment opportunities in the space. up next, our exclusive interview with south korean prime minister , talking about the nation's campaign to vaccinate its population. this is bloomberg. ♪

shery: south korea wants 70% of people vaccinated by the end of september. the country does not need lockdowns. >> one of the reasons why we think south korea has succeeded in prevention is because we did not turn to extreme measures like lockdowns. we maintained an open condition while getting help from our citizens as well as delivering policies that are acceptable to those citizens. we also cannot say that our

approach was mistaken. if you look about all the efforts our citizens put in and looking at the numbers of serious cases and fatalities, we believe that the approach the government took and the measure our people followed were not wrong. >> you initially vowed to reach herd immunity by november but it seems like there has been some problems with vaccine supply. do you think that plan is still possible and can people live without wearing a mask once you reach herd immunity? >> we believe moderna will keep its promise but we are not just looking at magenta, -- moderna, we are looking at various ways such as cross inoculation with other companies, in order to reach a 70% per shot vaccination rate by the end of september. if we were to be ambitious, we could reach a 70% rate for a second shot by the end of october or at least mid november and because of how quickly the delta variant is spreading, some

experts are saying 70% vaccination rate should not be the goal but at least 80%. also, there's been recommendations to take a -- covid approach but we don't think we comcast nbcuniversal is investing in entrepreneurs to bring what's next for sports technology to athletes, teams, and fans. that's why we created the sportstech accelerator, to invest in and develop the next generation of technology that will change the way we experience sports. we've already invested in entrepreneurs like ane swim, who develops products that provide hair protection so that everyone can enjoy the freedom of swimming. like the athletes competing in tokyo, these entrepreneurs have a fierce work ethic and drive to achieve - to change the game and inspire the team of tomorrow.

haidi: when it comes to vaccinations in the workplace, breaking news out of qantas, saying it wants front-line employees to be fully vaccinated by november 15, saying it will require all employees to be revaccinated by march 31. this of course as we see almost 10,000 staff being furloughed. that nascent recovery in the domestic business put on pause as a result of the extended lockdowns across large parts of australia but we are here and that they expect by march 31 for

all employees to be fully vaccinated. let's turn to ronnie quine. -- let's turn to vonnie. vonnie: the telegram is offering reassurances to: fears in afghanistan -- the taliban is offering reassurances to calm fears, preventing the country from being used as a terrorist safe haven. civilian and military flights have resumed one day after desperate scenes at the airport. the taliban says it will guarantee the safe passage for americans trying to reach the airfield. european leaders express their frustrations at president biden's decision to pull out the remaining u.s. troops from afghanistan. angela merkel says the nato mission was fundamentally dependent on the united states. emmanuel macron stressed the taliban took possible -- kabul from forces in a matter of hours with no resistance.

a group of u.s. solar manufacturers has filed petitions requesting federal investigations into chinese firms that circumvent tariffs by manufacturing overseas in places such as malaysia, vietnam, and thailand. the legal team says the filing seeks to apply existing tariffs on chinese companies to those in the three countries involved as the u.s. maintains its pressure on china's solar industry. findings from a delayed report published in the online journal of scientific reports reveal evidence supporting scientists initial hypotheses that the covid-19 outbreak did stem from infected wild animals. the publication reveals animals known to harbor correa viruses including minks were sold in wuhan for years -- corona viruses including minks were sold in wuhan for years. 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. shery: 10 sent shares have -- tencent shares have tumbled. the company is also expected to report its first profit decline in almost two years. let's bring in our chief north asia correspondent, stephen . this coming as we get fresh regulatory pressure from beijing as we get these results. stephen: absolutely. after the market closed in hong kong, we will get second-quarter results. they are not expected to be pretty. the consensus estimate by bloomberg is for a net income decline of 7.1%. but if you look at some of these regulatory pressures and what it is doing on key drivers of growth like advertising, this big crackdown on online education and other services,

their big drivers have added revenue -- they are big drivers of added revenue. -- ad revenue. analysts are expecting it as well in the next third quarter and if that happens, they are expecting a more than 10% decline in the next quarter in the income so that would be the first time ever that tencent would never have back to back quarterly declines in profit, for a company that is such a juggernaut in hong kong and in the tax space in china. you are absolutely right about this latest sentiment. it seems like every day, there is a new statement or proclamation from a different regulator, a different agency, or a different state media outlet, keeping pressure on tencent, because they are in social media and there's been lots of calls about clamping down on moral hazards, whether it is in gaming or online entertainment. they are a big player here. i mentioned online education.

then there is the overarching antitrust cap town that is ensnaring tencent as well. -- crackdown that is ensnaring tencent as well. do you buy the dip? it is a trough. do you wait this out? this is a stop trading at 21 times next year's earnings. this is a stock that trades at 30 times. on a valuation basis, it looks cheap. the pressure, the risk is pretty high. haidi: we have some news from a report just out that riot games, video videogame unit of tencent, is denying claims from a california agency that it was misleading employees about their rights to speak to regulators about sexual harassment allegations that the company, saying it is an effort to smear the game maker, and it comes against a backdrop of these cultural issues that we have seen at ali baba as well.

they addressed accusations of sexual harassment as well. stephen: obviously, there is added scrutiny on the me to movement in china in the tech space following that case of alleged rape between a manager and employee which blew up on ali baba, understandably. tencent is a bit ensnared. they opened an investigation into allegations of sexual harassment, sexual discrimination, and sexual assault back in 2018 and the agency is alleging that riot games, which is owned by tencent, had secret agreements and class action with about 100 women, more than 100 women and allegedly did so without announcing that there was this agency investigation into these claims.

this department is asking a court to instruct riot to inform those employees who signed those employees of their rights. another headache for 10 sent to deal with. we will have to see how this plays out. haidi: with the alibaba case and sexual assault accusations garnering a lot of criticism as well. stephen angle with the latest on china's tech sector. they released a little bit later with the blue lotus capital advisor, who will be joining us. philip is joining us as well. you can turn to your bloomberg for more on tencent's results. you can get commentary and analysis from bloomberg's expert editors. singapore -- increased its holdings in several prominent

chinese technology companies before sweeping moves to reign in the private sector caught the market price of rice. let's get more from haglund to for southeast asia. even for an investment behemoth, that timing could not have been worse. >> you are right. no one saw it coming. it spread so wide to education and gaming. like steve said, you have to be careful. the risks are getting higher. if you take a look, you see that they have been buying up chinese shares in terms of didi global. it added to shares of by do as well as -- baidu as well as chinese companies. you have to deal with uncertainties to deal with regulation. i want to point out how badly

they have been hit by the clampdown. if you take a look at his shares in didi, it lost 42% of the value and about 35% but where it was hit the most is education, online education. new oriental education, it lost in excess of 70 plus percent. that gives you the magnitude of how temasek has been hit. in my early conversations with temasek, it takes a longer-term approach. it sees beyond regulations. you will have to wait and see the risk appetite for temasek to hang onto these investments. shery: you can imagine how badly hit they must be given how big china is in terms of its overall portfolio. stephen: let me put --has linda -- haslina: let me put that in perspective. this is a company that manages

in excess of $200 billion. that is down from 29% before but having said that, in terms of the total value, total amount of investment in china, it added 14 billion sing dollars. china has helped it in terms of its returns. it saw 25% returns in the last financial year, the largest in more than 10 years. whether or not it can continue at that pace, that is the big question. something that is really interesting, it is always invested in new companies. it has always helped the chinese industry. it is one of the earliest investors in alibaba. it has always been attracted to the growth of china. let's wait and see how it all pans out. it has paid dividends before but going forward, how will this all play out? haidi: we have seen that chinese

crackdown hurting all of those tech giants. when it comes to southeast asian companies, they seem to be doing pretty well. we are talking about southeast asia's most valuable company which sees a strong demand for its e-commerce and gaming products. they actually raised in the annual forecasts for two key businesses after reporting a surge in revenue. the shares right here, rising sevenfold since the beginning of the pandemic. shery: -- haidi: it is quite extraordinary. we are seeing them locked in this fierce battle with some of the regional leaders. being able to offer all of these e-commerce and syntax offerings becoming a dominant player there. the online spending market, if you take a look at southeast asia more broadly, expected to triple to more than three hundred billion dollars by 2025. it is a hugely lucrative market and we can see why some of these

players are doing well in light of their counterparts in north asia. perhaps not so much. asian earnings season is at the halfway mark. let's get to sophie. sophie: the path asian stocks is not cut and dry despite the decent earnings season we have had in asia. it is down more than 10% from its march peak. we have seen equities track higher. using the earnings analysis function on the terminal of the 739 companies listed on the index. 55% have delivered earnings. at bnp paribas, as they note, these beats are not enough to drive stock performance. as stephen angle pointed out, unlikely to see tencent get an earnings bump. switching out the chart, we are seeing more calls to buy asian stocks. check out the white discount we are seeing for share prices to

bullish price targets from analysts as compared to the u.s. and europe that does signal asian stocks may have ample room to run higher and we have seen more analysts seeing it is time to buy. 70% of listed names have bullish ratings, the highest ratio since at least 2010. shery: coming up next, we take a look at hong kong's implementation of the anti-sanctions law and the rotations it will have on the city. we will be joined by woodrow wilson international center for scholars global fellow, michael davis. this is bloomberg. ♪

shery: china's top legislative body will take the first steps towards implementing an anti-sanctions law in hong kong this week. the move follows the national people's congress passage of the law in june and raises concerns banks and other multinationals will be caught in intentions between the u.s. and china. given most trade in u.s. dollars, it may give the u.s. a slight advantage. joining us is michael davis, global fellow at woodrow wilson international center for scholars. thank you for your time today. given that they have to choose between the two sides, if firms go to american way, what would that mean for hong kong and china? michael: i guess it would mean

that companies would have to either escape or find ways to separate and maybe create new entities to deal with here -- i am not here, but in the hong kong -- in hong kong itself. and i guess we are going to have to see. right now, it is all very opaque. we know china is mostly this week going to add to this sanctions law -- the basic law. we don't know exactly how it will be implemented in hong kong. shery: would it be better for china to leave the log vague in order to give them -- law vague in order to give them flexibility to implement it? michael: they were not vague when it came to implementing the national security law. they were very specific about what they wanted to do. we know the chief executive of hong kong has been calling for

-- i assume she has consultant with mainland officials -- calling for it to be implemented through local legislation, which was not done for the national security law, which is the normal approach. the justice secretary in hong kong likewise said it can then be crafted to address concerns in hong kong, but again, like i said, we do not know what will come out of beijing. haidi: what are the sector specific risks when you take a look at hong kong banks that have a tendency to need to comply with u.s. laws? michael: i think the pressure on them, especially, is either to separate any international business they have in the u.s. by some corporate separation, you know, creating new companies so that the operation in hong kong is not a company that operates in the u.s., but then we don't know if that will work

if the sanctions from haniger in the opposite direction of those from the u.s., then the companies will have to sort out how to do this. all of this causes risk. this is the real problem. it creates a kind of uncertainty. some of the reports i have seen, bankers basically just hope they enact this thing as a statement but then do not enforce it very much so we don't know whether the banks are going to just kind of go along and hope and pray. -- hope and pray that nothing reaches them or whether they will be involved in trying to separate their businesses in some way or leave hong kong entirely. my phone went off. haidi: clearly a very busy man. saw after for his use -- sought after for his use. what would potentially help

bring hong kong closer to beijing? will sanctions help, economic diplomacy help, or should the focus be on more humanitarian efforts like opening up quotas for immigration? michael: i think that is kind of where the u.s. has been stuck. there's been lots of hearings and efforts to sort out is there a way to get beijing to ease off on hong kong? so far, there has not been much luck. they targeted sanctions at individuals but the hong kong autonomy act and hong kong human rights and democracy act in the u.s. all allow for targeting companies, targeting banks in particular, and so whether they will move that up into that depends on the sino-u.s. relationship if they are doing it in the economic area. perhaps they will not be very aggressive about this. we just don't know.

a lot is outside of hong kong. it does pull hong kong into the clashes between china and the united states. shery: michael davis, it was great having you on. that was the global fellow at woodrow wilson international center for scholars. we are awaiting those numbers coming out we are getting the trade members first. what are you seeing? haidi: that is right. we are seeing the trade balance adjusted of $52.7 billion that is bouncing back to a surplus in july, and that is being driven by stronger exports. we see exports coming in at exports coming in less than expected and pulling back from the june number as well. imports coming in at 28.5%, weaker than expected, pulling

back. perhaps not unexpected given lease on the extended date of emergency. that impact when it comes to restrictions on domestic consumption as well as demand. we are taking a look at the pickup and exports continuing to outpace imports. shery: we are finally getting the core machine orders. it is a smaller contraction than was expected month on month of 1.5%. the expectation was for a contraction of almost 3% but this of course coming after three months of expansion for those core machine orders month on month. we are seeing the negative pressure coming from weakness in the services sector. not surprising given the delta variant spreading across japan. we will continue to watch those numbers closely. waiting for the year on your numbers which is a rise of 18.6%, which is beating expectations. but that of course does factor

in the base effect from last year. we have plenty more to come on "daybreak asia." this is bloomberg. ♪

haidi: a quick check of the latest business-class headlines. the world's biggest crypto exchange is hiring as the

company faces u.s. regulatory scrutiny over money laundering and tax evasion. the ceo told us his number one priority -- regulatory experience. >> the u.s. is very mature on the crypto regulation part. they have a cryptocurrency on the nasdaq which is positive. he is bigger than the internet. he has far-reaching financial impact. hopefully, we can avoid that. >> twitter is adding an option for users to report misinformation for the first time. it says not all flande tweets will be reviewed by fact checkers. the experimental run -- the experiment will run in the u.s. and south korea.

they will identify problem areas to focus on. morgan stanley is stepping up vaccine requirements to provide documented proof of shots by october 1. all workers are required to be inoculated. almost 90% of morgan stanley employees have promised that they are vaccinated. shery: we are counting down to the start of trade in tokyo and seoul. we have already seen some of the key economic numbers out of japan with exports missing expectations and core machine orders coming in slightly better than estimates. we are watching japan's virus emergency which has been expanded to seven more prefectures and extended until september 12. we have a few earnings left to come this season including real estate investment trust japan excellent. in south korea, softbank and caret has become one of the nation's biggest startups, scoring at a 2.7 billion dollars valuation and we are looking at the entertainment industry.

second-quarter operating profit that beat estimates. it was amiss for j y p -- a miss for jyp entertainment. sophie: citi keeping qantas on watch. plenty of earnings to digest from down under. we have in the consumer space -- delivering the results. we are keeping an eye on resource companies today. it is back in the black and boosted its dividend. it will pay a special dividend on its profit jump. it plans to scrap a dual listing. it completed an asset sale. haidi: we will be hearings from the ceo -- hearing from the ceo. andrew cole will be joining us with the results in the coming hours. plus the head of other companies joining us later this week. we have the market opens, look

ahead to sydney, seoul, and tokyo, in just a few minutes time. this is bloomberg. ♪ (announcer) looking for a better way to lose weight and feel good?

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shery: "daybreak: asia." welcome to "daybreak: asia." -- welcome to "daybreak: asia." haidi: looking at major markets opening in asia, our top stories, asian stocks under usher is used -- u.s. equities have their worst drop in a month. rising covid cases in new zealand dampening talk of a rate

hike. tencent earnings later and shares fall amid the beijing crackdown and criticism over online gaming. sophie: in tokyo, muted moves on the nikkei. jgb gaining a little ground, the latest trade figures digesting from japan showing that growth is slowing for exports in the country as the delta variant spreads. checking on the open insult, first just vaccinations by the end of september 70% in the face of rising virus cases. we have seen optimism dam over concern in ship capacity, the kospi losing ground, and the korean won continuing its decline, eyeing the 11.79 handle against the dollar this morning rejecting the open in sydney,

staggered open, ghb shares taking a hit. the woodside deal confirmed and plans to scrap a do a listing. the asx 200 off .4%, plenty of earnings to digest from them. we have retail, coal and minerals among those reporting earnings. we are seeing australian bonds gaining ground, the 10-year yield trading at seven-year lows with concern over lockdowns, debt tightening this wednesday, the kiwi dollar holding losses below 70 in front of that. check out the offshore yen. shery: global markets have been trading in a narrow range as we had to the jackson hole symposium next week. our next guest is paying more attention to the regulatory

crackdown in china than to the annual central-bank event. joining us from singapore is the asia-pacific equity strategist at goldman sachs. tim, great to have you. what are your clients worried about on what are you telling them? tim: the most topical issue is the regulatory tightening taking place in china. we have seen very, very dramatic rise action following tightening in various sectors related to social parts of the economy. that is front and center in investors' minds. jackson hole is topical as well, and concerns over potential timing and magnitude of u.s. tapering, something in the back of investors' minds. but the issue now are the regulation in china and the rise of the delta variant and how it might affect growth outlook, the two key issues investors are vocus thing on. shery: on the china crackdown we

continue to see a turnover in volume that is pretty high. the gtv chart on the bloomberg shows it. are we seeing investors chase after cheaper stocks there? is that a good idea? tim: well, there is definitely mixed interest on china currently. first, there is a widespread in terms of investors we are speaking with, some of whom find it very difficult to engage in china and take a more bearish view, others looking at this as a significantly discounted devalue opportunity, particularly the areas most affected by regulatory tightening. our views are to prefer the offshore asia market to the onshore h and adrs for a variety of reasons, but mainly because the onshore asia arc it will be less impacted by regulatory tightening taking place, because of the composition mix of sectors and a variety of reasons. we are seeing this type of

differentiation within the marketplace secondly, -- within the market. secondly, there are clear opportunities when than the market, some sectors that are more socially oriented are in the limelight of regulatory tightening. those will still remain under pressure despite values emerging. but other areas that have the full backing of policy support, foundational technology, d carbon -- decarbonization, those areas of a bright future and that is where investors are learning -- investors are looking for opportunity. haidi: this goes back to knowing through the five-year plan and the ratings, so would you be avoiding all consumer-facing companies, business models and i guess, avoiding any company in the business of collecting data? tim: no, i think that is too extreme a conclusion.

what is called upon now is a more nuanced approach to china. the areas that are under ongoing regulatory tightening, there will likely be a cloud over them even though there may be some value merging once we find a new equilibrium. but even within that, and in the area you mentioned about consumer, there are opportunities. i will give one example. there has clearly been a tightening a property going on for some time because the key areas that are central to family and household, education, property and health care, have all come under recent regulatory tightening scrutiny. within the regulatory market, certain areas will continue to do well. there is properties for living not for speculation, so for property management companies they will continue to do well, we think, because people still need to be living in houses and consuming services associated with that.

if you take a more nuanced approach and drill down into areas that would be less immediately affected by the continuing range of regulatory tightening, those could be opportunities that present themselves. haidi: this is such a fascinating, dramatic story. over 1% drop in the kiwi with just one covid-19 case detected, a lockdown and now rate expectations falling from 100% 60% in the last day. you extrapolate from this that there is an added risk of file for economies dealing with delta in this way, rather than a lot of other economies that are learning to live with it? tim: very good question. the answer is yes. but to expand, we are seeing a delayed time in terms of projected recovery of economies to something like their peak of activity levels. -- pre-covid activity levels.

and in asia, there is a challenging intersection of events, which is that the very success many economies have had avoiding the spread may have meant a bit of a lack approach in deploying vaccination. so you have the combination of a more virulent form of the virus time economies are protected by a lesser percentage of the population that is vaccinated. we have seen that in asia, the philippines, less so in north asia where nexen nation rates are rising. -- where vaccination rates are rising. so the story sets up investment opportunities for next year, because you could have a staggered base of recovering. and i think the market may start to trade that sequential trade in outlook and that may be one of the themes that starts to emerge as the second half deepens on we get into 2022. shery: another theme that has

been emerging as the worsening outlook for the chip industry. how vulnerable are korea and taiwan? shawn: i am really glad -- tim: i am really glad you asked that question. there is a big debate in the market on this. we just had a corporate day for korea and published reports on feedback from the two largest tech stocks and chip stocks in the kospi index in korea. and we have a constructive view, we think the demand for various chips is better than the market is currently fearing. there is going to be ongoing g rick -- ongoing recovery in chip demand, whether it is automotive or data cloud or whatever. there are going to be challenges in terms of the migration of

geometries which will reduce the real yield, so we are much more constructive on the ongoing supply-demand outlook, and in the market overall for those stocks in particular their pricing gives a skewed risk-reward will file to the upside. so we are positive on korea and overweight on taiwan and think the market is unduly concerned and therefore this presents an opportunity to reengage. shery: good to hear that. because i was really surprised about the grim outlook of the chip industry. tim, thank you for your perspective, tim moe, goldman sachs group let's get to vonnie quinn with headlines. vonnie: the taliban is offering reassurances to calm fears enough dennis dan, including pledging to build an inclusive

government, protecting women's rights within sharia law in preventing the country from being used as a terrorist safe haven. civilian and military flights have resumed after desperate scenes at kabul airport. the taliban says it will guarantee a safe passage for americans trying to reach the airfield. european leaders have expressed frustration at president biden's decision to pullout mating u.s. troops from afghanistan. exiting german chancellor angela merkel says the nato mission air was dependent on the united states on french president emmanual macron stressed the taliban took kabul from biden-backed u.s. trained forces in a matter of hours with no resistance. south korea wants 70% of its population vaccinated by the end of september, boosting rates that lag others in the region as rates search. prime minister moon told

bloomberg exclusively the government will funnel aid to businesses hurt by distancing measures that will do all it can to avert a lockdown. >> one of the reasons why we think south korea has succeeded in prevention is because we didn't turn to extreme measures like lockdowns. vonnie: global news 24 hours a day on air and on bloomberg quicktake. i'm vonnie quinn. this is bloomberg. ♪ haidi: earnings as well as a big deal between bhb and woodside, take a look at csl. this is the plasma-based biotech company, pharmaceutical maker also the manager -- the manufacturer of the astrazeneca vaccine. we are seeing upside of 1% at the moment. when it comes to vhb, obsession lows but still down by 6%. this, as investors really have

concerns about the viability and attractiveness of the merger deal with this petroleum company to offload oil and gas assets. woodside up two point 7%. woodside investors had been questioning the attractiveness of this tie up. aussie minerals, 2.9 percent lower in the early session. we will get the view from the woodside ceo, joining us later on bloomberg markets. shery: we will preview tencent earnings with shawn yang. but up next, chinese stocks in the u.s. hit i another wave of selling pressure as china ramps up there crackdown again. we will get you the latest. this is bloomberg. ♪

david: authority --

shery: authority is beijing continue the crackdown on some of the largest companies, later developments targeting -- latest developments targeting online competition of the entertainment sector. we got our chief china markets corresponded. sophia, and seems everyday we get new action from beijing on new regulation, new moves, what are they trying to achieve? ? >> don't forget, criticism from state media, also very influential. what is happening is very important politically for the communist party. next year is when xi jinping is up for his third term. it is about maintaining security for the party, ensuring survival of the party in the long-term. this means tackling any source of social discontent. this is what we are calling the three mountains, education,

health care and property. these are making it difficult for current people in china to afford. is about comment -- it is about common prosperity, and big tech companies, monopolies, have huge profits in these factors that make it difficult for the communist party to reach that goal. haidi: what comes next for chinese financial markets? sofia: any company that falls in this, we would be looking at. you saw the selloff overnight in the u.s.. u.s. investors don't understand how china can carry on with this regulatory crackdown. we are calling it a crack down, but it is the first time china has regulated any of these industries.

and a lot of u.s. hedge funds and big u.s. investors had built significant stakes in these companies like tencent, alibaba, huge companies now seeing this drawdown. so more uncertainty and selloffs are like a. shery: our chief china markets correspondent sofia horta e costa in hong kong. get more analysis available online at the bloomberg technology channel on youtube. ever brand shares are in focus again after it was announced the founder stepped down as chairman of the onshore unit, real estate development. let's get more from rebecca wilkins. what is the latest in this ongoing saga? rebecca: the chairman is stepping down of the key onshore unit of ever grand hyundai. the concern for investors is whether this it is creating

effective distance between the onshore operations of ever grand and its onshore unit that usually wouldn't be a you because of concern but in this context, investors are going back and restructured gentle losses and that is drawing scrutiny to the extent of which offshore investors may not see their assets protected in any sort of scenario as payment. shery: does the timing of the move exacerbate those concerns? rebecca: absolutely. ever grand is saying this is par for the course however, the other question is investors and ever grand are trapped in this crisis of confident, this spiral where almost every piece of news that isn't overtly productive is prompting a drop in bonds. we see the 2025 dipping down

today in terms of $.39 on the dollar right, fresh lows to evergrande. shery: china editor rebecca choong wilkins. coming up, more of the latest withdrawal of u.s. forces from afghanistan dead remaining americans in the country. this is bloomberg. ♪

♪ >> we were clear eyed going and when we made this decision, that it was possible the taliban would end up in control of afghanistan. we were clear eyed about that. as the president said yesterday, we did not anticipate it would happen at this speed, though we were landing for these potential contingencies. >> ending our military mission was not easy.

we were faced with a serious dilemma -- either leave and risk seeing the taliban regain control or stay and risk renewed attacks and an open-ended conflict. we never intended to stay in afghanistan forever. >> we at captain touch -- had cap in touch -- we had kept in touch with kabul, wherever they are. the taliban won the war. shery: key leaders commenting on afghanistan. to get more, joining us for the latest is asia government managing editor dan kincaid. and, how secure is kabul airport? dan: it appears u.s. troops appear to have a handle on the crowd. so, the chaotic scenes that took

lace earlier this week -- took place earlier this week are not going on at the moment. the u.s. is moving people out and getting people out. how long the process will take is unclear right now. it is expected to last through the week. there are american citizens to remove as well as afghans that are at risk of the taliban regime. haidi: of course, the taliban said they won't allow the region to become a hotspot of terrorism and they have vowed to build an inclusive government that includes women. they are saying some of the right things. are there expectations they have changed? dan: the taliban for a while has been saying public statements that the main thing they wanted was to get the americans out of the country. and as long as that happened, there wouldn't be a civil war.

and yes, they are saying all the right things. they know that they are under the spotlight. they know their record on reaching women is a major concern of the international community as well as whether afghanistan will turn into a safe haven for terrorists again. they addressed both of those in the first real press conference they have had since taking kabul yesterday, and sought to alleviate global concerns. obviously, there are self interests, the more moderate they appear, the less likely countries like china and russia in particular can quickly recognize them and start supporting them and giving them financial support. so, whether they have changed their ways, analysts are very skeptical. i don't think we are going to know for sure until we are a year or two in, to see how they start treating our people and

whether these promises they are making our reality. shery: u.s. lawmakers are urging authorities to stop the taliban from accessing imf reserves. how soon do we know how they will engage with the taliban as a government entity? dan: the taliban already view themselves as the government. they haven't announced a constitution or anything, but talks are taking place. the u.s. is in touch with taliban leaders. there has been dialogue going on for years in doha. there are reports afghan nationals, the ones that are still in the country after the president fled, going to doha and speaking with taliban leaders. the u.s. is in touch with them as well and has secured for them safe passage from the airport. so there are international community's daily with the taliban is the government of

afghanistan. the question now is, international recognition to allow them to access different funds and be part of the imf or access reserves, bank assets. so, the u.s. holds some cards here, and diplomatic recognition is a major one that they are holding. talks are taking place at the moment. haidi: asia government managing editor dan ten kate. up next, our exclusive interview with the south korean prime minister who talks about lockdowns and covid that is next. this is bloomberg. ♪

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vonnie: this is "daybreak: asia." i'm vonnie quinn with first word headlines for the u.s. government may be poised to deliver booster shots as early as september. we are told administration is finalizing a plan to receive the booster eight months after receiving a does pretty boosters are so far advised for people with weakened immune systems only. it will be subject to approval by the fda. findings from a delayed report published in the online journal of scientific reports after a year and a half reveal evidence

supporting scientists initial hypothesis that the covid outbreak stems from infected wild animals. the june publication reveals animals known to harbor coronavirus including minks were sold in wuhan for years, including the market where the earliest viruses were traced. a group of u.s. global manufacturers requests -- petitions a request for investigation into chinese firms manufacturing overseas in malaysia, vietnam and thailand. the group's legal team says the filing 62 apply existing tariffs on chinese companies in the three countries involved as the u.s. maintains pressure on chinese industry. waiting for a prime minister by 4:00 p.m. local time wednesday following the resignation monday of the prime minister and his cabinet.

officials will be permitted to email, facts or even use whatsapp to report their choice. the king of malaysia has the discretion to decide who has majority support. 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: south korea wants 70% of its population vaccinated by the end of september. that would speed up one of the lowest inoculation rates among major asian economies as cases serve. -- cases search. in an exclusive interview, prime minister kim boo-kyum says the country can weather the storm without resorting to lockdowns. >> one reason we think south korea has succeeded in prevention is because we didn't turn to extreme measures like lockdowns. we maintained an open condition while getting help from our citizens as well as delivering

policies that are acceptable to those citizens. we also can't say that our approach was mistaken. if you think about all the efforts staff has put in and also by looking at the numbers of serious cases of fatalities, we believe the approach the government took in the measures our people hollowed were not wrong. >> you vowed to reach herd immunity by november, but there have been problems with supplies. you think that plan is still possible? and can people live without wearing a mask once you reach herd immunity? kim: we believe moderna will keep its promise. but we are not just looking at modernity. we are looking at areas ways, including cross inoculation with other companies, to reach a 70% vaccination rate. if we were ambitious, we could reach a 70% rate for the second shot by the end of october or at least mid member.

and because of how quickly the delta variant is spreading, some experts are saying 70% vaccination rate shouldn't be the goal. but at least 80%. also, there has been recommendations to take a with covid approach, but we don't think we are at that level just yet haidi: south korean prime minister kim boo-kyum speaking exclusively with bloomberg controversy on all lee. 1080 five more coronavirus cases as been confirmed in south korea, and the government says 24% of the population has been fully vaccinated. this is great progress, but still pretty low relative to other oecd countries. we continue to track the biggest vaccination campaign in history come over 4.7 billion doses given across 183 countries so far. check out the bloomberg vaccine tracker on the terminal and

bloomberg.com. what looked like a sure bet on a rate hike by the reserve bank of new england -- new zealand, today in doubt after a handful of virus cases put the entire country into strict lockdown again. bloomberg global policy editor kathleen hays is here with a less than stirring preview. before these cases, we expected they would hike 2.5%. now what? -- hike to .5%. now what? kathleen: let's remind everybody the rbnz confirmed that with lockdowns and all the uncertainty, they are going to have a rate decision by 2:00 p.m. in the afternoon in new zealand and their press conference would follow at 3:00. but in terms of what is going on, the rate hike that has dropped like a stone is all about the lockdown. you can see this chart let's

look at it again because it tells the story that markets were pricing in three hikes this year, 25 basis points today, two more by the end of the year. the chance of today's hike is now down to about 60%. westpac asb bank now saying, they are not looking for the hike. dropped the forecast. rbnz says it is a coin toss, maybe they will, maybe they won't. bloomberg economics is saying it would be a mistake now, the risk casting uncertainty over the new zealand economy. surging cases in australia, new zealand, other parts of the world could reverberate. bear in mind, they had not been looking for a rate hike until 2024. this is in keeping with their forecast. haidi: when you look at inflation, when you look at the housing market, is that why economists are sticking to the high forecast? kathleen: important question. because coming into this, there were big reasons economist for calling for rate hikes this

year. how much will that change? it depends on the lockdowns probably. but on a plummet. to 4% in the second quarter, it was 4.7% first quarter and rbnz didn't even see it falling to 4.6% by the end of next year. really racing ahead. inflation, let's look at this chart, now above target at .3% rbnz, that is the blue line moving sharply higher, they thought it would peak at 2.6% this year. it has exceeded the forecast. you did speak earlier to anz. she said going into this that the economy is overheating, that they must start hiking. she still sees the rbnz maintaining a positive based case scenario, but they are going to acknowledge the risk and also acknowledge they are looking at the economy, keeping the positive outlook, depending how long it all last. >> it could have everlasting confidence.

it all depends on case numbers the next three days. and that is indeed the only data that is going to measure markets this week. kathleen: we have heard that before, not so much in new zealand, because they have been so good at tamping that virus out of existence, it seemed. at asb, nick copley is saying if the lockdown is short, we could see the ocr, official cash rate come on track for 1.5% by the end of next year. haidi: we will be watching that come a very exciting reading today. global economics and policy editor kathleen hays. we will be speaking with the rbnz governor later this week don't miss that interview. a lot to talk about. daybreak australia friday in sydney and hong kong. if you are watching out of new york, turn to your bloomberg for

more on the rbnz later on. that is that tv and you can get commentary from bloomberg expert editors. up next on "daybreak: asia," along year for tencent investors who are looking for a bottom after the 43% slump they might not get much reprieve. we get analysis. this is bloomberg. ♪

♪ shery: take a look at commodities right now. copper leads the move lower in the london session. and given we have a stronger dollar, not to mention concerns about demand with the delta virus spreading. also, china officials halt operations at a port in the economist region due to virus cases. we are watching copper futures right now seeing a slight upside. gold futures also under pressure. again, strong dollar. the biggest gain in about a month. also, mixed eco-data in the u.s.. consumer sentiment has been badly hit, not to mention retail sales missing expectations for july. when it comes to oil, extending losses we saw in the new york session. it is the longest losing streak since march. demand concerns, given the

delta variant. cotton hitting a seven-year i, this as china demand is rising as we are also seeing concern oversupply. the u.s. surprised the market last week i cutting estimates for the domestic crop. we turned to sophie for what to watch across asia. sophie: fluctuations in asian stocks this wednesday morning. the nikkei looking to extend losses into a fifth day potentially. this index falling more than 1%, highlighting growth blaze and tech shares. defensive on -- thanks gaining ground, lifting the asx 200 back up above the 7500 point level. bhp earlier losing more than 1% on the back of its earnings report card and plans to move its primary listing to australia. switching up the board, swings for south korean stocks, the korean won under pressure, i the

1179 level as we are seeing -- under pressure, at the 1179 level. macau bank rallying, this on the back of a solid report card. its market cap has stopped $36 billion on an optimistic outlook for the korean online lender. we are seeing investors shy away from chipmakers as well as chinese tech shares. hang seng tech index losing 43% from its peak as the clients quickly accelerate in recent days over the past five sessions with the index losing more than 3% tuesday. that is the worst session for the asia tech index since july. the fund manager survey pulling up the board, investors see deming prospects for the sector, china the third-most crowded trade in the sector. haidi: we are going to stick

with china tech, tencent due out with earnings later, adr slowing 4% over criticism of online gaming and crackdown measures by beijing. our next guest says issues with tencent are related more to internal problems than regulation. shawn yang is managing editor of blue lotus equity advisors. let's take a look at the pain for tencent on the gtv chart, market cap dipping $400 billion u.s at $400 billion u.s. as a result of the stock selloff. it is in danger of being overtaken by visa. after this slump, is there further pain? i would suspect so, given you

have again cut your price forecast. shawn: i agree with you. a lot of people point out the regulation issue but i think actually, a lot of recent issues, the recent selloff, is due to tencent internal issues. i would say definitely that tencent is probably [indiscernible] but if you own tencent at this level, you probably understand the magnitude. for three quarters, their numbers are not good. in terms of numbers, i mean revenue and profits in terms of their earnings. i think investors are awaiting a catalyst, even though that is the valuation. personally speaking, [indiscernible] i haven't seen [indiscernible] on tencent get. haidi: is the fact that they have done a lot to get along with the regulators, can they do more?

are there issues like preferential tax scenarios, bigger pressure points? shawn: you know, a lot of things are unconfirmed now. as a peer internet company, we think it is likely to be true because for a long time, large china internet companies enjoyed preferential tax rates. but going forward, i think that is going to be removed. secondly, i think that some people are discussing the game issue, because this already happened in 2018. i remember the first time i was interviewed by bloomberg was about this event. i think this has already been brought under control, well-managed. so i don't think there is a further issue about this.

third is probably about protection to players under 18 years old. we already see that tencent has implemented some system to be focusing on this group of players. shery: given that we have no certainty when it comes to china's regulatory crackdown, is there any space in the chinese tech sector you consider adding onto with these cheap valuations? shawn: we still prefer the individual stocks should have eps, should have already -- should have earnings. stocks that have losses come i think investors will take a [indiscernible] view. secondly, they are not going to be reform based. other stocks, we talk about

citigroup. even though the main market is in southeast asia, they learned from tencent and alibaba. so i think these stocks probably are [indiscernible] shery: other results out this week as well? shawn: billy billy, people were praised for its traffic. but when market sentiment is bad, most people focused on its week monetization capabilities. billy billy is the low growth margin -- bilibili is a low growth margin and as young

users. that's why we have downgraded bilibili. shery: shawn yang, managing director at blue lotus advisors. this is bloomberg. ♪

♪

haidi: a quick check of the latest -- vonnie: a quick check of the latest headlines. quanta says it cabin crews and airport workers were have to be i knock elated against covid-19. woodside petroleum surges to profitability after announcing a deal with age the, the result representing a big turnaround from a $4 billion loss in the same period last year. mining benefited from higher copper output and stronger metal prices, profit of $194 million. aussie minerals is maintaining its forecast for copper and says it will go ahead with 435 million dollars expansion plan

at its coal mine -- goldmine. we will hear from the ceo of the results in the coming hour. we are on earnings watch across this busy season in asia, everything from tencent and geely out with their results. >> we are halfway through the earnings season in asia and it remains to be seen how much upside can seeing if we get beats from companies. so far, lackluster response in share prices given concerns over regulatory risks and the delta spread. this index is off 10% from its peak this year while u.s. piers have continued to outperform. we continue to see an earnings bump, upside 5% for tencent and geely. southeast asian e-commerce, we

saw see group raise guidance and we could see these names gaining ground. shery: with a regulatory crackdown in china, we are watching the yuan and other currencies being used around the world. we have seen the share of you on payments and international -- yuan payments and international payments rose in june. with the new regulatory crackdown, what is going to happen as investors trim down on yuan assets? we are going to get data to get a better picture on that. haidi: to look at the impact of this regulatory crackdown, whether it has weighed on interest using the yuan, increasingly a global currency, but investors are trending the

assets from their portfolio as a result of new risk aversion. other thing that is interesting, yuan trading becoming a boring story. look at the chart, trading volumes taking a slide amid low currency volatility over the past month. even dedicated traders are looking elsewhere for more price action. looking to see if we get more revival in that trade. shery: the summer lull. the economic rebound is giving officials room to focus on tackling financial risks. joining us now is china economy editor james maybury. james, but data are you watching? james: last month, the government released data on the amount of bonds they sold the first half of the year. local governments, cities, provinces, sold 1.9 trillion

dollars in refinancing bonds. but they only refinanced $1.2 trillion in yuan on the books. a lot of economists were looking at that almost 700 billion you uan gap and they think that is being financing -- being used to finance off the books government debt and they say off the books government debt is a security risk this year. this is not a new problem, but the government stepped up the rhetoric this year. we really need to deal with local government debt that is off the balance sheet and local government financing vehicles that governments use to borrow money that they can pay for construction and things like that. it looks now like local governments, cities, are doing what they are being told and trying to refinance away some of this debt, pay some back and ring that off the books onto

their balance sheets. haidi: we heard from the central committee meeting that the president this week called for curbing financial risks. what does that translate to when it comes to policy? james: interesting. we saw earlier this year one of china's richest provinces collected a pilot loan for common prosperity, how china can achieve -- this year, they announced they got rid of absolute poverty and the new goal is to achieve austerity to alleviate the wealth gap between the very rich and the rich and the rest of the country. that is over the next five years. xi jinping, how that is going to translate to policy whether that means tax changes, is going to be interesting to watch and very unclear at the moment what that could mean. shery: james make our, china

economy editor. coming -- james, our china economy editor. markets coverage continue as we look ahead to the start of trading in hong kong shanghai -- and kong, shanghai and shenzhen. this is bloomberg. ♪ (announcer) back pain hurts,

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