>> hello and welcome to daybreak: asia. >> good evening from bloomberg's world headquarters. our top stories this hour, asia stocks are set to slide as treasures way valuations. opec-plus predicts an oil shortage this year but seized supplies slipping into surplus in 2022. >> and south korea becomes the

first country to and apple and google's domination of payments on their mobile platform. so let's start off with some downbeat news. the delta variant is weighing on the entire world. inflation is also a concern. we are hearing this from consumers in so many surveys. the issue is if people are not confident enough to go out, they are probably not confident enough to shop in stores anyway, and this is the kind of pullback that may push towards the yes the fed has time to wait camp. >> consumer confidence is the focus in australia as well.

consumer confidence probably did ok for second energy. it is really going into third quarter numbers the impact of the south are lockdown. really, we will be taking a closer look at these gdp numbers because even though we have these higher prices weighing on volumes, underneath, we do expect the overall commodities to be fairly robust. >> and ever grant's woes just seem to get worse and worse. they said they had the risk of the faulting on their bonds and defunding on the new outside normal litigation. it is down to 34.7 cents on the

dollar. i think you can see it on this chart. the more investors try to sell assets, the more people lose count the and the less likely they can dig out the whole. >> is a mixed start to the trading picture here in asia as investors are weighing delta concerns over whether earnings can sustain the rebound. we are seeing new zealand up around 10%. they added 5%, the best month for qb stocks since november that we saw. we are also seeing nick a futures pretty flat, watching out for that rebalancing and potentially the inclusion of nintendo will be big to watch. nintendo is a big downside after

11 straight months of gain, the longest stretch on record when it comes to aussie stocks and continuing to watch crude amid those comments from opec us. the dollar-yen is still trading range bound at 110. let me start off on this terminal chart that takes a look at some of the risks in the near-term for asian stocks. really facing the short-term test when it comes to that 50 day moving average. the index is up slightly over the year and is slightly back in positive territory. so is there a concern that future earnings, given all the uncertainty over delta won't be able to sustain levels we are seeing? >> that certainly is a bit of the caveat for earnings and people have already been removing some of their most

optimistic forecasts already. there may be further to go on that front but maybe the symbolism of president xi jinping going to the providence -- province of alibaba ways hometown is more important than anything to do in the short-term. the rebound in yesterday's hang seng tech index and the set higher -- ended up 3% higher in this probably has to do with the fact that xi jinping has come out with this policy for new housing, which seems to be a positive step and he has planned it close to the home of jack ma so from an investor's point of view they may say this has caused hot rhetoric between tech companies and beijing so maybe we are seeing the end of the big clampdown on tech companies, it could just be a thawing of relations and that's a positive thing for china's stock market.

if the government has done what it needs to do in terms of reining in the major tech companies, that is a positive sign because at least it takes away the major headwinds and uncertainties. it is not mean to say regulation is coming to an end but maybe the worst is already priced in. it is pretty remarkable on a day when china pmi was so weak and yet the index finish so strongly so clearly there is something worth watching in the days ahead. >> i want to ask you about your because the higher than expected print on german inflation, had to ecb officials expecting we have a look at paper. -- at tapering. it was a reason european bonds sold off today. what do you see there? >> absolutely. it was a big deal and probably

more significant than anything in the short-term. i think investors really got used to the idea that the ecb was a long way from ever doing qe tapering work rate hiking. -- tapering or rate hiking. these ecb officials are on the end of the scale anyway they are asking for some kind of phasing out so the fact that they are looking for the stimulus to be curtailed so quickly is possibly a bit of a surprise and it is likely to have a bit further to go because when you look at german yields in particular, it is still significantly below 0% with psychologically is an area a lot of players will go for so they would like to see german yields closer to the zero line. we could see the momentum take

german yields a bit higher in the short-term. traders in the rate and currency market as well will be watching the ecb probably more so than the fed in the days ahead. romaine: you can imagine there are a lot of short positions that could spur some buying. and you could follow the story and all of the days trading on our market life. -- market live blog. there's all kinds of commentary and great analysis from expert editors so you can find out it is affecting your essence right now -- investments right now. >> president biden has declared an end to two decades of u.s. military operations in afghanistan, offering an impassioned defense of his withdrawal plan. speaking from the white house a day after the last american forces left the country, biden called the airlift unprecedented. he said he was not to extend the

war forever. >> we succeeded in what we set out to do in afghanistan over a decade ago. and then we stayed for another decade. it was time to end this war. >> opec-plus expects global oil markets will continue to tighten even as they continue to revive output. data presented to the group's technical committee indicate world inventories will fall at an average rate of 825,000 barrels per day. the numbers should reassure the coalition ahead of a widely suspected increase. chile and central-bank have shopped economist. government stimulus propels consumer demand. policymakers lifted the overnight rate to 1.5%. the decision is the clearest

sign that the bank is concerned about overheating. >> the european union has hit its target of 70% of adults. eu commission president ursula von der leyen says the bonds go higher. italy will require travelers on planes, fairies, and other public transport to show proof of transportation -- of vaccination or a negative covid test. the test will also be required at italy's schools and universities. global news, 24 hours a day on air, on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> still ahead, more on the china crackdown is the company threatens to ban e-commerce companies. coming up next, we take a look at bond markets. this is bloomberg.

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♪ >> china's economy took a hit from the delta virus. service sector pmi contracted sharply for the first time since 2020. we are also looking at a private gauge of factory activity in our next guest says that traditionally reliable signals like these global pmi's are a little less useful then watching inflation figures. joining us is the portfolio manager at matthews asia. she said i really want to get to ever grant but first i have to ask you we were talking to she kumar from his own private company and he is concerned the bond market is underpricing the amount of inflations.

when you look broadly globally and particularly in asia, how does this fee will have on markets are positioned -- fuel how bond markets are positioned? >> bond markets are definitely underestimating. power to put myself in the shoes of chairman powell, i would put myself on the side of managing expectations now because there is really no upside to talking expectations up. one thing that has been really missing from the conversation has been about inflation expectation. so for the typical joe on the street, we have seen prices go up and they are expecting to see prices go up. with expectations hovering, it is really overpricing that inflation risk. >> so you have the potential for yields to move higher. when you look at something like

ever grant that financial melodrama, i suppose it is a tragedy rather than a comedy. what does that mean for china's bond market? is it just contained to people who own those bonds? is it something that could spill out and be a broader mike it greater -- market driver? >> to continue on your, market participants are quite uncertain. we saw that in a price action whereby many bonds traded in tandem so when ever grant hit, many even high property that even high quality property developers took a hit. as of about citgo, we definitely saw a solid decoupling of the rest of the chinese property markets. it means that it is increasingly clear that the train continues to keep going and unfortunately, it looks like it will be a train wreck.

this looks like an idiosyncratic risk. >> isn't it actually a good thing for credit investors? >> that is right. one or two weeks ago, credit regulars talked about the need to harmonize regulations. there are two different markets the interbank market and the bond market that trades on the stock exchange. there could be regulatory arbitrage so they are working to harmonize those types of regulations. overall, i think chinese regulars are taking steps in the right direction, especially with respect to bond markets. the other sectors where they are putting out quite a few new revelations such as gaming, such as delivery services, those may

be surprising at this point, but over the long run, they may contribute to the long-term strategic viability of many businesses because they promote competition and increase consumer loyalty. >> when you take a look at these companies, as you say, cardinal sins are being committed when it comes to the structure and that enthusiasm. what does it mean when measuring calls them too big to fail? >> evergreen and four -- huarong will go down in the history books as debunking the myth that there is something as to big to fail but there is something i would coin as to big and too strategic to fail and the key

distinction here is that size in of itself does not matter. size has to be coupled with strategic importance. i.e. if the company has many links to the rest of the economy , it is too strategic to fail, and this is no different than the rest of the world. we saw it in italy we saw it in the united states with some financial institutions. the idea of a financial institution exists all over the world. but in the case of ever grant is not something anybody should count on. >> always great to have you with us. to get around about today's stories go on to your term to customize the settings is the industries and assets that

matter to you. this is bloomberg. ♪

>> we are counting down to the start of trade in tokyo. here are the big stories we are watching today. in japan, the defense ministry is seeking a record budget as it tries to bolster its capabilities amid simmering tensions with china. a former boj member says the central bank will keep pumping up stimulus regardless of who wins japan's coming elections. probably very soothing to the fiscal oil. and japan seeks to regulate a number of firms. also today, we will watch for korean trade figures due out the

next hour and this is important bellwether for all of asia, up 40% in the next days of august. daily corunna cases are expected to rebound again to around 2000 and a final stage clinical trial on a covid vaccine candidate is being designed by a south korean drug maker sk bioscience. oh the latest on the vaccine front -- >> the latest on the vaccine front, a study of moderna showed it made double the antibodies compared to the shot made by pfizer. we had data about the moderna vaccine. how significant are these findings? >> this study did not address

vaccine effectiveness specifically. it was involving 2500 health care workers in belgium aimed at comparing one part of the immune response versus moderna shots and as you mentioned, they did raise the level of antibodies twice as high. but our immune system is complex and involves more than just antibodies. neutralizing antibodies are what is causing the infection and these were not specific we studied at the trial in belgium. the mayo clinic in the u.s. released data moderna vaccine was associated with a twofold increase reduction against breakthrough infections.

we don't yet know if the higher level of antibody that the vaccine produced does translate directly to effectiveness but we do know that antibody levels two-way, supposedly waning from a higher baseline means you will have a longer duration of action. we don't know that for sure. we know that the vaccine contains much more mrna than pfizer and is typically given over four bang weeks -- over four weeks. >> keep in mind we have seen a significant degree of vaccine arbitrage. is this going to get into a situation where people will be wanting moderna over pfizer and

what happens with the booster shot? >> we know that the best vaccine is the one that is available to right now and the faster we get people immunized, the better. we know that over time, better vaccines will become available but we can already see from countries like israel where they have been introducing booster shots since july that there is some promising data coming out that shows these extra doses are beneficial in both reducing code cases and hospitalization in the face of the more infectious delta variant. >> thank you so much. we continue to track the biggest vaccination campaign in history with more than 5 billion doses given across 183 countries. check out bloomberg's vaccine tracker on the terminal and

bloomberg.com. now, a check of the business headlines. the hong kong stock exchange will resume trading wednesday. the company can resume trading and has fulfilled requirements to resume guide. shares were halted after the latest annual report, a net loss of $87 million. china ever grant says it risks a defaulting on his effort to raise cash as it explores the sale of various assets. net income plunged 29% in the first half while total liability climbed near a record. ever grant bonds sank to fresh lows as investor confidence continued to fall. new york downplayed the impact of chinese gaming curbs on its earning. this firms revenue of $3.1 billion of revenue second quarter with online game services counting to three.

-- counting to point to -- to 2/3. this is from the net earnings call looking at new requirements and regulations will keep teenagers away from games as far as possible. we want companies in this industry together support this regulation. that is what we heard in the earnings call. financially, it goes on. sources say bmw chinese is close to a deal by asset after his main partner in the country defaulted on obligations. the dealer said to be worth over $250 million. they entered restructuring last year after defaulting on debt. up next, oil ends with the biggest monthly losses this year. opec-plus is inspected to boost production and this will put downward pressure on prices with

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♪ >> turning to commodities, a big story. oil is under pressure as opec-plus producers gather to consider put. -- consider output. let's start with this forecast ahead of decision. supply too much, supply not enough smart >> opec and its allies are expecting that the global oil market is going to continue to tighten but then that it will flip and there will

be a surplus by 2022. this data was said to be presented by the technical committee and was inspected to allow opec plus producers to be comfortable with the widely expected decision to go forward with the output release. opec would be adding 400,000 barrels a day each month and the forecast is for world inventories to decline by a rate of 800,000 barrels per month. even if this group cannot fully restore its own output, the market environment remains challenging. looking at nymex oil prices holding steady as asia trading begins but if you look at the month of august, oil has had its largest client and we saw a decline in the latest open session heading into this with concerns about the opec must decision but there's also the aspect of the hurricane ida

coverage -- recovery. it is expected to be quick. bloomberg is seeing natural gas futures rise because of the damage. we are also seeing gas prices at the pump take up. labor day, which is the end of the holiday, the big holiday that comes at the end of the summer driving season. we are expected to see prices at about four dollars but again oil is down slightly in part due to the fact that we are seeing a quick little recovery from hurricane ida damage. >> taking a look at aluminum prices hitting the highest in a decade. analysts are saying it actually has further to go >> -- further to go. >> aluminum is used in everything and the jump in prices is fueling concern about

inflation. if we look at the policies china has imposed conserve electricity , that has actually led to a decrease in supply so a smooth forecast in major financial firms that see prices continuing to move higher. and when you take a look at bloomberg, analysts are saying you can hardly see these prices retreat. a very different story for iron ore. prices have are treated as the market anticipated a pickup in demand. that hasn't lot to do with china's weaker than expected august pmi. >> for more on the bloomberg

meeting -- on the opec me, go online to get more from bloomberg's expert editors. >> search and rescue operations continue in the southern united late. more than one million homes in remain without electricity. however, new orleans levee system still with more than one foot of rain passing biggest test. prices in chicago sank to a seven-week low after hurricane ida damaged equipment in the busiest agricultural port. the u.s. is the world's just corn supplier and about two thirds of its grain pass-through ports surrounding new orleans.

the u.s. once more involvement from japan and china in the global fight against climate change. john kerry is in asia to reinforce that message head of an international summit in scotland. john kerry met the prime minister and beijing has confirmed he will visit this week for a talk with the chinese counterpart. >> angela merkel is taking aim at efforts by olaf scholz to topple her conservative block in this month's election. social democrat leader has been painting himself as merkel's rightful successor but the chancellor has pushed back, criticizing schulz for refusing to rule out operations with the anticapitalist left party.

the bank has already paid within $5 billion in fines and legal settlement. we are told regulators are threatening new sanctions over the slow pace of action. sources say that wells fargo is seeking more trying to forgo its operations. global news, 24 hours a day on air, on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. >> more data out from asia today. we are watching how the delta variant affects upland. gdp figures will be learned in a few hours time in the meantime india having already weathered a deadly wave of 19, we are joined by our chief north asia correspondent. taking a look, i was the first quarter will be worse than second. there will be some bright spots in the print today.

>> the second quarter already is backwards looking but nonetheless, economists are talking about a slowdown from 1.3%. there is a bit of a -- the real story is where things go in the third. that is all because of the virus affect and lockdown affect. how deep will that contraction be and i'll say keep an eye on today's number because of the second quarter does come in negative, it doesn't set australia up for a technical recession. i know that sets us up for a policy debate. >> so let's move to india. why is the economy so resilient when they have had a terrible time? >> they had such a ferocious quarter the virus.

unless, there is a base effect story. we are talking 21% the government does not measure like that but we are talking about a contraction. that quarter is already ancient history as india has moved on christians have been. we know that factory production is doing well, export are doing well and the story is holding up so now despite that huge hit to earlier in the year, that is pent-up demand and those kind of conditions will come together to make sure india gets growth. that would make it the fastest growing major economy in the world. >> we also have other pmi figures coming up this morning. what are they likely to flag?

>> in southeast asia, there has been a severe covert outbreak. factories have been shut down production has been shifted out of that region. a factory makes leather handbags and has to be flown out. so it will be interesting to see how korea taiwan are holding up because we know korean experts have been holding up. >> companies like alibaba are set to continue authorities tightening screw of fake products. this is bloomberg.

>> china is planning to further tighten oversight of e-commerce companies such as alibaba by holding them accountable for intellectual property violations. stephen engle has more on this. what is the latest on this? >> intellectual property.

i hate to age myself but i have been covering china for 30 plus years and intellectual property violations used to be top-of-the-line of complaints the united states in trade negotiations. of course, the economy has evolved since then so it is interesting to see how the chinese government now is putting a strong emphasis on the protection of intellectual property and cracking down on what has been a long-standing plaint from trade partners of the united states of e-commerce platforms being flooded with pirated goods. this is statement of market regulation saying this market watchdog has put out a revision of the e-commerce law to protect consumers and crackdown on violations of into literal property and holding these

e-commerce platforms accountable for ip violations. essentially, e-commerce platforms will be restricted from business operations or even have their licenses revoked if they failed to deal serious violations of ip rights vendors on their platform. this market watchdog has put this out or discussion amongst the party bigwigs and they will come back and revisit it. you can see this has become a priority of not only the american but locally. chinese authorities are going after them and we have already seen it and shanghai. that there are a lot of consumers in china who have filed complaints against having these pirated goods on these websites. >> iron member when you got your

pirated goods from the silk market in beijing. that is probably dating me as well. but investors are hanging on every word by xi jinping. what are we hearing from the committee meeting now? >> you're talking about the silk street market. the call that the north fake market, because there is a lot of north face. i was there 30 some years ago. it is all closed down now and piracy often goes down online. they officially reveal a host of measures to deepen reforms and his agenda and top of the list is fighting monopolies. he stressed the importance of strengthening anti-monopoly regulation and it's definitely an indication that this crackdown that surfaced almost a year ago wiping hundreds of billions of dollars, that this

is deepening. also, battling pollution and shoring up strategic reserves is also top of the list. >> steve engle has been covering china for a long time. for more analysis on china's crackdown particularly on its tech giant, china and big tech available online bloomberg technology. that's the channel on youtube. let's turn to japan for the prime minister wants to dissolve the lower house of parliament and is ugly planning to call a snap election. we were expecting a snap election sometime after the olympic. what are we hearing as the latest element -- development? >> the timing of political

events has changed quite a bit. we were initially expecting a leadership election and then an election sometime after that. possibly at the lower house of parliament or even waiting until the end of the term. but the prime minister had said again and again when asked about the timing of the election, he always said the top priority is dealing with virus. but clearly, he is thinking about his own electoral eight because now he is talking about holding the snap election in october and that may entail putting off party leadership elections and the reason he might do that is because the party leadership is not looking so great for him. >> i'm interested in the defense

ministry trying to get a record $50 billion defense budget. we know that anything about defense and the military has been sensitive for many years. what is the story here? >> something that is always in the background in terms of the defense budget is china. japan has become increasingly and openly concerned about things like the situation in hong kong, about the tensions in taiwan. taiwan is very close to japan. the nearest point is 100 kilometers or so apart. japan knows that any event that happens in taiwan directly affected so it needs to keep up its defense capabilities and that is one reason why they are looking for this budget but it is part of a whole government budget. this is just a budget request, which is the biggest on record

in japan's history so it may be beaten back a bit by the finance ministry but i think those tensions with china are always in the back of people's minds at the defense ministry. >> we will see perhaps a bit of a game changer. we will see. be sure to tune into bloomberg radio to hear more from the big newsmakers to get in-depth analysis from the daybreak team. listen via the app, radio plus or bloomberg.com. plenty more ahead. stay with us.

>> we do have some breaking news at the moment when it comes to a couple of numbers out of japan. we are seeing second quarter spend rise year on year, better than the expectations of 3.5%. second quarter sales of japanese companies seeing a rise year on year. corporate profits also rising by almost 94% year on year. we will see how that plays out what it comes to the start of trading. we'll see just a bit of a lift in the end. -- in the yen.

dollar-yen, i should say. but it beat up pretty much aspect of corporate profit sales and capital spending, up 3.6%, also more than expectations. >> let's take a look at zoom shares, taking a tumble after a company gave sales forecast that fell short of analyst estimates, raising concerns about how the platform can maintain avenue growth as schools and businesses return to in person operations. i cannot imagine living without zoom now, let's listen to the ceo of zoom speaking. >> understanding growth and thinking about the chair of zoom, you have to understand that we have two coursing it's of our business -- cores of our business. first of all we crossed over our

first billion-dollar order and have 64% year-over-year growth. we have lots of momentum and we offer a big upsell in a financial services company which has moved into being our largest customer, so very excited about the growth there. the headwinds we are seeing is in the mass-market business. this is an area that grew dramatically during the pandemic. pre-pandemic comprised 36% of our revenue and this is the segment of our business where customers are starting to move around the world again where individuals are traveling. hopefully, many of you are moving around the world and are able to socialize in person and

doing in person happy hours and enters rather than over zoom and that's what we are seeing headwinds. >> i know you have been on the phone with investors all day, including with an investor with a big stake in june. what is normal look like fortune? >> how much will people be using zoom on a regular basis when normal operations return for a sustainable time around the world? >> companies like will are delaying their back and this is what we're hearing from many of our market customers. we saw a very strong performing around q1 and continue in q2.

we all see companies that are thinking about what we do to get back to work and we are all preparing for a hybrid work approach and that means there is an opportunity for zoom rooms but you need that technology in the office to make it work the way it does today and have a great experience. we are excited about the potential there as well as just really doing well and that's what we're focused on for the long-term strategy. >> speaking of long-term strategy, you just made a huge acquisition in 59. are we going to see you make more bets like this to build out what zoom can offer? >> so we are really in that will transition days where we went from a media company to a platform company and i just

talked about the products in that room and the contact center is a really important art of the extension into the platform. we will continue to look for other opportunities to extend the platform. >> that was the zoom cfo speaking with emily chang. south korea has become the first country to force apple and google to open up their app stores other payment systems, potentially setting up radical president around the world. could this now be repeated in other lucrative markets like the and the u.s.? >> that's the big question. there have been disputes and other countries about whether apple integral have to have to open up their app stores.

south korea is the first country to force google to open that up for other services and that sets a precedent that could be repeated in other markets. companies like epic games, the creator of fortnite, have argued they should not have to use the payment services of these companies because it is too expensive for them to use those kinds of services rather than just doing it directly. >> really quick, what does it mean for the bottom line of companies? >> it is certainly a threat. if it is just south korea, it won't have a tremendously big impact on these countries but it begins -- but if it begins spread, that will have a more significant impact on the companies. >> thank you so much. get ready. market openings in sydney, seoul

and tokyo our next. importantly, korea's export numbers for the month. how are they holding up? keep it right here. this is bloomberg. ♪

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>> hello and welcome to daybreak asia i am kathleen hays in new york. >> i am haidi stroud-watts in city. our top -- in sydney. china threatens to ban e-commerce companies as regulators intensify the crackdown. plus, the bidding war for bankers.

chinese hedge funds offer graduates 300 grand. >> we have some very exciting breaking news here for korea for the asian region. exports in korea the first 20 days of the month are up 34.9% year-over-year. that is a little bit stronger than the estimate but a lot stronger as well than the previous month. these are strong numbers across the board, a good sign for asia broadly since what happens in career with exports seems to happen elsewhere as well. that is image stronger than the estimate at 1.4 5 billion. there is so much concern right now about the rise of the delta variant about renewed lockdowns in various places because of the virus. we saw that chia -- china pmi

and service index dropping pretty sharply. for korea, a pretty good sign and a big way to start the hour. we watch the korean stock market open. it will be interesting to see how this feeds through investor sentiment. this is coming in a bit stronger than expected. korea just had that surprising rate hike last week. i bet they are congratulating themselves right now for having made that very smart move. we are seeing a bit of a decline so far, about a quarter of a percent. we have a little bit of a decline there. the readings are mixed so far. something people are waiting very closely to see is the budget. bond traders in korea are

waiting to see the 2020 to budget because they are waiting to see the details for bond issuance in 2022. now we move on to japan. the big story there is a much greener view for investors. this puts the nikkei up just about have a percent. it looks like the yen is at 1.10. it had been testing the 100 a moving average. the 10 year also weaker. the big news in japan today is if nintendo will be added to the cake. -- nikkei. changes have been made by regulators. now the door seems to be wide open. that is another thing investors will be watching very sleepy.

>> whether that campaign will be fulfilled after all these years. look at my part of the world, we are seeing a lower start to trading when it comes to that february open here in sydney. we are getting the second-quarter gdp numbers. some strength when it comes to the value of exports. the third quarter numbers won't be very weak from consumption as well as a services point of view. the aussie dollar along with the kiwi, strong outperformance. seeing a little bit of upside when it comes to aussie training against the greenback at the moment. a big moment for aussie stocks as well. 11 straight months of gains. this is about a 10th of 1%. the kiwi dollar holding at 70.51 u.s.. asia is outpacing the regional benchmark. that 50 day moving average, look at the chart. we are seeing that correlation with u.s. stocks slightly back

in the positive. the index is back up slightly for the year overall. let's bring in the asset management. let's look at what is top of mind for investors at the moment. with the pmi's coming up, we have the china services pmi, is there a sense that investors are starting to focus back on what it means if we have achieved the global peak in the recovery. >> indeed. we have been expecting a peaking of both, earnings, everything probably starting now. we will position accordingly because as we move over to the initial phase of the economic recovery, we have a position to watch more normalizing growth. whether it is earnings growth or gdp growth and therefore, i

think it is better to take a more balanced approach rather than focus too much on the cyclicals. we moved to a little bit more balance and stocks that tend to do well in the next stage of the economic growth which is moderation. >> in that moderation, where do you still see patches of interest in valuations and growth opportunity? >> we talked about this last time. we continue to be quite constructive on the sector. being reopening or not. in particular, we are still focused on the software and internet side of things. companies that facilitate electronic publishing, enterprise solutions, cloud computing and so forth. these sectors, these companies, if they exhibit quality earnings

in the past, they tend to do well. >> if you watch bloomberg tv 24 hours a day, you will see a number of people warning against investing in chinese stocks. because of the crackdown because of the heavy-handed regulation. are people going to miss out on opportunities or would you agree that you have to be very careful investing in china now? >> i think that is a good point. i think no question, the risk of investing in china has risen quite a bit because of the reset. in general, our china equities team has raised the discount rate on investing in china so the hurdle becomes higher. however, having derated quite a

bit in terms of the market since april, we are seeing things, stock market prices stabilizing in august. is it time to go back? we don't think so. the milestone would be for the government. we see company specific spot checks but i think in the next couple of months, they might come up with a more credible and institutional framework so that becomes more transparent. i think if we see that, it may be the beginning of the

bottoming of the chinese stock market. >> he always have to look ahead if you want to make money. are you in the camp that says stick with consumer discretionary and big tech at this point because you don't have certainty about the virus, etc. but are you -- or are you in the camp that says look at reopening trade, this will start getting better. where are you? >> if we are looking at china, we are probably in the sectors that are more in line with a long-term government policies such as green energy, sports and fitness. anything that goes well with the third child policy. before we see framework coming out, we will probably avoid this because we are still seeing their earnings being trimmed

down by analysts at the moment. >> thank you very much. let's get to vonnie quinn for the rest -- for the first word headlines. >> president biden has declared an end to decades of u.s. military operation in afghanistan. speaking from the white house today after the last american forces left the country, biting called the airlift of 20,000 people last month unprecedented. he said he was not going to extend the war forever. >> we succeeded in what we set out to do in afghanistan over a decade ago. then we stayed for another decade. it was time to end this war. quite the oil markets will continue to tighten this year, even as they revise outputs.

data presented to the group technical committee said that road and mentors will fall at an average of 800 what a 5000 barrels per day over the next four months. they reassure the coalition ahead of a widely expected supply increase for october. the central bank has shocked economists but the biggest interest rate in 20 years as government schemas propels consumer demand and inflation above targets. policymakers unanimously lifted the rate by 75 basis points to 1.5%. the bank toward is concerned about overheating in one of latin america possible richest economies. the european union hit its target of full vaccination of 70% of adults. the number still must go higher. italy will require travelers on planes and other public transport to show proof of vaccination or a valid negative

cover test. the green pass will be required at italy's schools and universities. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> still ahead, the all out effort to raise funds fall short. we will discuss this with the managing director and portfolio manager. next, more on the china crackdown as it threatens to ban alibaba if they continue with ip violations. this is bloomberg. ♪

>> pay very close attention to the china market open after

beijing moved to curb medical expenses and the past hour. regulators unveiled more plans to tighten oversight on e-commerce trancelike alibaba. -- giants like alibaba. let's bring in our chief asian correspondent, stephen engle and sofia. let's start with stephen. more regulatory concern for china tech and for the health sector. we know what she will drop next. let's start there. >> it is a widening net. the latest news coming down across the bloomberg terminal about the medical pricing sector. approving plans to reform pricing in medical services and also medicine, the top line coming down and saying china wants to curb overly fast growth in medicine expenses.

this really points to the challenges the chinese authorities are grappling with in an aging society. also, a booming market economy. it looks like the chinese authorities want to put more of a firm hand on the tiller when it comes to prices that were reflecting market speculation in medical services and in medicine. the regulator will have perilous like five cities for a trial program and then roll that out by 2025. that is on the medical services. the other big story we have today is coming from another regulator. that is the state administration for market regulation. the market watchdog is warning e-commerce platforms like alibaba that they must tighten their oversight of e-commerce platforms to prevent violators of intellectual property rights.

cracking down on piracy and holding them accountable for any ip violations being done by the vendors on their platforms. according to this draft revision , that will go into consultation and solicit input from other bodies in china until october 14. essentially, they will restrict, they are warning these platforms. they are warning them that they will restrict them from online business operations or even have their licenses revoked if they fail to deal with the serious violations of intellectual property rights of vendors on their sites. >> we continue to watch the crackdown in the property sector. ever grant's default warning is sending that shiver through bond investors again. >> what was interesting about the earnings release last night was that even though the official debt levels have fallen, ever grant needs to hit

this target for leverage in the property sector. it is very close to reaching one. it met one in june but when you actually look at the income statements, short-term liabilities are cropping up. even though the debt levels are falling, you are seeing the problem is not going away. ever grant owes a lot of money to suppliers. it's said construction projects are being delayed or even halted by suppliers because of these delays. even though ever grant has cash to pay bondholders, it does not have enough cash to pay it suppliers. the problem is still very much there. >> it is snowballing, there were sick gets, the deeper the hole. >> that would be interesting. to be honest with you, i looked at that headline and it was full wrong -- huarong international

finance. that would be very interesting to see. it is not a very liquid stock. we will see this at 9:00 a.m. today and the cash open at 9:20. that could be where it is in the market. people have not been able to trade this stock since the end of march. that is a five-month band. a lot has happened since. how will investors price in this bailout? the recapitalization of china and harlem? this will be the first time they can see this play out in the equity market. >> watching that and ever grand. thank you to stephen and sofia. you can get more context and analysis when it comes to china's crackdown, particularly on the checked out -- tech

giant. ♪

>> we succeeded in what we set out to do in afghanistan over a decade ago. we stayed for another decade. it was time to end this war. >> that was president joe biden giving quite a speech just hours ago about the u.s. exit from afghanistan. following the u.s. military exit from afghanistan, the secretary-general says nato remains committed to aiding anyone at risk in leaving the country and has the capability of conducting long-range strikes against terrorists there. >> to ensure that afghanistan

does not become a home for international terrorists. nato allies joined the united states going into afghanistan in 2001 because of the terrorist attack on the united states. for those 20 years, we have prevented afghanistan from being a safe haven for international terrorist. that will also be the case in the future. we will follow the new rulers in kabul. we will make it clear that nato allies can destroy from -- destroy terrorists from long distance. >> i really want to focus on the important resolute support mission, the idea of the

italians in the rest of again stan -- west of afghanistan. turkey is in a unique position. explain nato's relationship with nestor erdogan and the new -- mr. erdogan and the presence in afghanistan. >> i would let you think and praise and commend all those men and women who have served there for so many years. their efforts and service was not in vain. turkey has played a key will in operating their. they have offered to continue to support the airport and the airport in kabul is a vitally to the world to get humanitarian aid in but also to enable safe

passage for those who want to leave. nato allies have strongly stated that we will not forget all of those still in afghanistan. we will continue work to ensure they can leave afghanistan. >> will that support the on the adjacent borders of afghanistan to continue to get people out? >> we expect tell event to live up to their commitments both on safe passage but also on open land borders and of also what they have promised when it comes to preventing terrorist organizations being able to reconstitute themselves in afghanistan. >> how can nato assist your members and what we are hearing in interviews? general commend of the united

states, and baxter bulletin, congressman davis and others also go back to a relationship with a new afghanistan, china and russia. how can nato respond to that perceived new alliance? >> for us, it is obvious, all the countries in the region and that also includes china, it is in their interest to have a stable afghanistan, and afghanistan where terrorist groups like isis cannot work against any other country. there are differences between russia, china and nato. it is becoming a place for

terrorist organizations to plan and organize and conduct terrorism against other countries. we do have breaking news. we are hearing that turbotax is in talks to buy mailchimp for over $10 billion. we are hearing this from people familiar with the matter that could see another buyer emerge from the company. we have heard that private equity funds and other tech firms have been interested when this idea was flagged and there were looking at selling a minority stake. mailchimp had about $300 million in earnings before interest depreciated. we will watch this. they are in talks to buy mailchimp for more than $10 billion. up next, ever grand spooks bond

investors with warnings. this is bloomberg.

>> this is daybreak asia. i am vonnie quinn. search-and-rescue operations continue into southern united states with the death toll from hurricane ida claiming at least four. more than one line homes and businesses in new orleans and southern louisiana remain without electricity. new orleans's levee system withstood more than a foot of rain. passing its big test since the restoration after hurricane katrina. the u.s. wants more involvement from japan and china and the

global fight against climate change. john kerry is in asia to reinforce that message ahead of an international summit in stockholm beginning next month. south korea posner national is, has moved a measure to ban outdoor operators from forcing developers to use their online payment system. a part of the website says this means companies that operate outdoor such as google and apple must allow other users access to a variety of payment systems. it is likely to take effect as early as next month. new research published in a u.s. medical journal says the moderna vaccine produced double the amount of antibody's. this is one of the first to compare immune responses

produced by both vaccines. it did not examine whether the antibody variants led to a difference in efficacy between the two shots over time. global news, 24 hours a day. powered by 2700 journalists and analysts in over 120 countries. i am vonnie quinn, this is bloomberg. >> we have the pmi's coming across asia. weakness when it comes to the recovery. particularly as i'm number of these -- as a number of these came on. this is on the back of the services number for the pmi in china, week yesterday and we are expecting more rocking is to come when it comes to the manufacturing pmi. looking to ease today as well. this is what we are seeing, weakness across all fronts. moderation and south korea and taiwan. further falling into contractor returned to when it comes to vietnam.

a little bit of improvement in malaysia despite concerns of delta there. we are seeing marginal improvement for indonesia as well as a little bit more weakness for thailand and the philippines. let's look at what those numbers mean with -- what is striking to you out of this round of pmi's? >> i think there is a big and deepening divergence between northeast asia and southeast asia. that is what jumps out at me. if you look at the vietnam numbers, deep in this territory, this is the worst since very early on in the pandemic. this reflects covert outbreaks and covid lockdowns and how they are impacting production. factories have been shut down. workers were encouraged to sleep overnight in factories to keep things moving. southeast asia is being hit hard.

pretty good numbers near south korea and japan. that might suggest that there is some more slowdown ahead, even for the good performing economies. >> the good news was the exports for korea in the month of august. 34.9% year-over-year. that is usually a good sign for the region. what is the outlook for the region in the annual holiday shopping season? >> all the anecdotes suggest demand is very strong around the world for consumer made goods in asia. the problem is getting those goods to the market on time. who we know the supply chain logjam is continuing. it is driving up the cost of

both the input materials to the finished product. it is fine to say we have a strong demand story globally but this is one of the areas economists are saying could trip up asia's economic recovery. it could spill over into next year and global recovery. >> thank you so much. global bond selling off after inflation data on the upside. some officials argued for phasing out stimulus. the u.s., japanese, aussie and new zealand bond yields are arising this morning. let's get more with stephen chang, it is surprising to me to see how the combination of that much longer than expected jump in inflation in germany, officials coming out and saying maybe we should start looking at

this. how much of it has to spread around the world? is that nervousness for bond investors? >> at think inflation has been of a topic and has been considerable debate about r that is transitory or not. what he -- what we heard over the weekend at jackson hole is that jerome powell has not created any sort of tapering. the bond market has been steady over the past week or so. our own view is that yield my trend up a little bit over here. growth will be a little bit slower. a very quick pace from earlier. it was still be at a pretty solid clip even if it were to slow down somewhat. we are maintaining our duration stance. >> i have to ask you about ever grand.

it is a story that just feeds on itself, they try to sell stuff off and raise more money. the bonds are falling with the benchmark do. is this an ever grand issue, a broader chinese bond market issue? is this something that could reverberate outside of china? >> let's focus on ever grand first for the earnings result list yesterday. those were not very good numbers. we as bond investors focus on their revenue and some of their gross profit margins have been dropped a lot. the best estimate is that it has not fully reflected some of the aggressive promotion they have done in recent months. liquidity getting tighter and what we have known for some time

and also being highlighted by the company now is that they are facing issues in terms of potential payment for their suppliers and also, that could be more legal issues ahead and the market pricing is already trading at a very deep discount level. it is a question about what kind of restructuring we might see, what kind of recovery value we might say but what is encouraging overall in terms of china property is we have seen a range of companies and this is a result season. there are many companies that have posted solid and resilient profiles. we think the park it has looked passed earlier this year in july when there was a wave of selling more on confidence issues. now they differentiate between different companies.

we are still invested into china property and making sure we have active company selection and picking the best profiles. >> you have seen the likes of haram and ever grand. do you think the regulatory crackdown will ultimately create a more favorable environment to chinese credit investors? >> at think these companies are very large. for china property, we think there are policies drone from the top down. overall, housing policies have been on the tight side to ensure there is less leverage in the system. they want to do risk it. there were announcements to try to increase some of the regulatory monitoring of those

developments and we think that might lead to lower profitability for the sector. within the sector, there are many companies that will be quite solid. there will be some headwind from a sector level in the next few months. i think that has been getting some support from various different state players. >> let me get your views on korean bonds. we did see that reissuance target and the proposed budget. is that a bigger story in korea or is that still expectations for the cycle from the be ok? >> i think the question about what the be ok might do from here would be what we are watching more closely. there has been some movement

between the mpc members within be ok. at this point, we are more neutral in that market. >> we step back from china. if you're looking in asia, where are the best bond buys? where have you put that money now? there are so much nervousness over inflation and uncertainty over the virus. >> at think what you see is there is a lot of negative sentiments and bad news priced into the market. we are other more positive on growth ahead. china makes it neutral to easier while they are tightening in selective sectors such as education and housing. i think there are some cyclical names that we will be favoring. auto names, transportation names in china, india, the consumer services names in asia.

we think there will be some decent as we can continue such as indonesia banks and because i government bonds. >> we really appreciate your time. we will talk all things energy. the details on that just ahead, this is bloomberg. ♪

>> let's get a check of the markets. this is turning out to be a pretty steady session. we are seeing some return policy as it looks to be rebalancing. a mixed picture. we had that slew of asian pmi numbers. this shows how the covid delta variant has been playing out. here in australia, terms are more negative. .8%. this after 11 straight months of gains. we are sealing -- seeing new zealand after a stellar month as well.

overall, the asia-pacific region shows a 10th of 1%. >> let's get onto commodities. aluminum hitting a 10 year high. oil under pressure. su keenan joins us. i want to look at the opec-plus. because one of the reasons oil closed lower today, crude oil in the u.s. is expectations that they will boost out but there is this mixed bag of forecasts. >> going into this, they put out a forecast they believe the global oil markets are going to continue to tighten in 2021, even as the opec producers put more oil out on the market and when we get to 2022, they see a flip into surplus all over again. this data was said to be presented at the joint technical community gathering before an expected decision.

that will certainly allow opec producers to feel comfortable with it. they are expected to proceed with a widely agreed-upon output increase in october. opec would be adding 400,000 barrels per day under this agreement and the forecast is the decline will be an average rate of 800,000 barrels per month. short-term would not make much of a difference. even if the group can't fully restore until now, they have a lot of options here but if you look at the way oil has been trading as they count down to this decision, this has been the lowest in the latest session. we dive into the bloomberg and we see this is the biggest monthly drop we have seen for the year. august oil retreated.

a combination of factors but we are seeing in overnight trading in asia, oil prices ahead of the decision. >> talk to me about aluminum. >> we have a number of analysts. you have everything from soda cans to appliances to cars feeling concerns about inflation and then you have these chinese policies. these chinese policies are impacting demand and pushing aluminum to new heights a decade high was reached in the latest session. the chinese rules, this is the top producer here. this is to conserve electricity and cut emissions. that is a big factor. if you take a look at the forecast from major financial firms, you will see that they see prices continuing to move higher.

dropped into the bloomberg. you might be able to see the shanghai contract and the london contract for aluminum. these continuing to show why these analysts expect prices to move higher. one of them sang with these prices, they can hardly retreat with demand intact. futures are down more than 30% from the peak. we also have the fact that there is a concern about chinese consumption, the cpi numbers in august were weaker than expected. investors are seeing prices retreat after they weighed what would normally be a seasonal pickup in chinese demand. >> you can of course get more on your bloomberg for more on that opec-plus meeting. we can get live commentary from bloomberg's expert editors. coming up next, the bidding war

for bankers are raising the stakes again. chinese firms offering as much as this for this. we have the details next. this is bloomberg. ♪

>> let's get a quick check of the latest business flash headlines. in talks to buy mailchimp for

more than $10 billion. they offer digital marketing services to small businesses including social advertising and automation products. it is the software company that owns turbotax. last year, it bought the personal-finance website credit, for $7.1 billion. kathy wood has been increasing her stake in japan since the middle of august. this is all after selling some of the stock in may. they now hold $70 million worth of receipts. shares are up over 4% in japan. the total production issues with apple's new smartwatch could limit supplies or cause shipment delays. the source says the problems are linked to a new design that cause -- the series seven is expected to be unveiled in the coming weeks.

google has delayed the return to office until next year. work on campus will remain optional until january 10. it did not specify a mandatory return date. u.s. regulators are unhappy with wells fargo's competition for victims. the banks already paid more than $5 billion. we are now told regulators are threatening new sanctions over the slow pace of action. wells fargo is seeking more time to fulfill its obligation. morgan stanley boosted sellers for a second time this month. in china, tech oriented firms are offering as much as triple

the wall street rate. this bidding war continues. why the two raises in less than a month? >> the bidding war for young talent is intensifying on wall street. this move by morgan stanley is designed to give that bank competitive with its peers. first year bankers will now get $110,000 a year which is higher than the 100,000 they announced a couple of weeks ago. this will bring them in line with their biggest rival, goldman sachs and keep them in the game as they try to attract young talent. >> as far as other banks, how much do we expect moves there? >> this move leaves them ahead of the rest of the pack. you have other big banks such as bank of america and j.p. morgan still at that 100,000 a year mark for first year bankers.

you could see some of them move because talent is so scarce and they need to attract and hold onto these junior guys at a time when they are really scrambling to service clients who are pursuing record amounts of mna. this is really threatening to swamp bankers. you could see further moves by some of the others pretty soon. >> some of these companies in china are offering a lot of competition. >> in china, it is an interesting combination of two factors. you have the pandemic keeping many young graduates at home rather than traveling to the u.s.. travel just isn't so easy anymore. secondly, you have this huge rise in wealth in emerging markets. that together is creating a situation where young grads are

being offered as much as $300,000 a year to work in quad funds. they are starting weight and maybe taking a nap at lunch time, playing some ping-pong in the office before they work into the evening. what is really interesting is that this in turn could further heighten the talent war on wall street if they are losing talent they would typically get in the u.s. who are now choosing to stay-at-home and china. >> are in our -- i remember the first time seeing my colleagues here all going out to lunch. this bidding war is going to continue. i am sure there will be further updates. look at trading. we are seeing a steady but mixed session. look at futures. we saw that rebalancing but we saw positivity.

better trading u.s. futures, taiwan futures. we saw a pullback when comes to the pmi numbers. we are seeing a mixed picture when it comes to the eco-front. we will be watching very keenly some of these property place. as well as potential default risks plowing into this saga as we continue watching the likes of these e-commerce players tightening. the dollar china trading ahead of that. overall we are seeing the asian-pacific trading pretty flat at the moment. >> let's look at bond markets across the region. interesting that we are seeing a selloff both in the aussie and the new zealand 10-year.

it is the continuation of the selloff that started in germany. that is it from daybreak asia. the market coverage continues. standby for bloomberg markets china open. this is bloomberg. ♪

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>> i would say that cryptocurrencies are a bubble. if you invest in areas you don't know well, will do poorly. >> i always found investing from a very young age to be fun. >> john paulson's made one of wall street's most lucrative trades of all-time. >> he said john just got the monthly result. i think it's a mistake. >> it was no mistake. paulson earned his