♪ >> good morning. we are counting out the asia's major market open. >> good morning from hong kong. let's welcome our top stories this hour. japanese stocks said to extend, the foreign minister may win the backing of arrival. decision day with a worsening virus outbreak set to delay a

planned stimulus taper. we are looking at china perhaps taking its toll on global supply chains. we will -- >> before we get to anything, i am told i have to formally welcome you to the show. thank you to join us on daybreak. i don't know why you leave it so long between appearances, but it is always lovely. [laughter] lovely to be here. we will be dance partners for the next two hours or so. >> i am excited you are here. people are split, depending on who you speak to. what did they do? the pathways are so long. the issue of dynamics and it comes to the markets, it seems they should stay the course. at the same time, delta doesn't

seem to be going anywhere. >> absolutely. does one-month matter? is it delayed? derailed? in terms of time frames, goldman sachs -- let's bring in that example of them, their previous forecast for u.s. growth at the end of august, a week ago, was 6%. they have cut that now to 5.7%. i guess in a lot of ways, when you start to get data that does point to more downside ahead, this is what you get. we are getting data out of china today too. haidi: always good to talk on china trade as well. of course we know -- when it comes to covid restrictions. the imports will be very interesting to see how the domestic demand story is coming along. we spoke to the former head of the wto, he is saying these two day coupling sources when it comes to the economy, not just

u.s. decoupling its economy from china, but also the crackdown on tech, and more broadly in a regulatory sense in china is -- for decoupling. david: in a lot of ways, everything we outline underscores the need to keep policy settings unchanged, or even more. when you look at risk assets, the nikkei is part and parcel to the story. there is a political element in japan with 30 k in play. when you look at how futures are trading at how some of these supports we might be also getting in terms of that index. let's look at how we are set up today as we approach. 30,000 here on some of these futures. u.s. futures are up. nasdaq futures trading on futures -- fields would be higher and that is what we are expecting when japan opens up in about 60 minutes. speaking of yields, new

zealand's 10 year 2% for the first time since 2019. we talked about the -- which we will get to an flesh that out further in the show. in the meantime, we have first world headlines. >> china has given local governments the power to set prices -- in the latest step to reform the private education sector. beijing says local governments should establish benchmarks and cap price increases the end of the year. china overhauled its private education sector in july, banning some firms for -- from making profits. the military -- seize power in guinea, plans to establish a unity government, urging mining companies to keep operating. members of the -- administration reassured mining firms the agreement would be honored. he also said -- have been lifted imports remain open.

singapore hasn't ruled out a return that has rolled out tighter mandatory testing to slow a surge of covid cases. it is rating the frequency of testing for high-frequency environments and will ban social gatherings at workplaces. new infections in the community rose more than 1200 cases last week, up from 600 the week before. 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. david: thank you. sometime today we should be getting the china trade numbers. have a look at where we are in terms of the trend. we are expecting to see slower but fairly healthy growth for the month of august. let's bring in correspondent -- to talk us through the forecasts for august. >> the forecast is around 60%

growth, exports down from 19%. two dynamics at play. what is the base effect. we are comparing it to a number from a year ago. the second part of the story is actually some slowdown in global demand. we are seeing that show up in the official pmi. new export orders have been -- the haitian pmi fell into territory. u.s. consumers face a longer road back. when you add it all up to the feeling of a bumper export story may have peaked, but it is at a good level. >> the dislocations to logistics we keep talking about, is that having an impact? >> it still remains one of the biggest issues facing manufacturers in china. no doubt about it. on one hand, these manufacturers say they cannot get the goods they need, they cannot get components they need to make their products on time. even if they can get them, they

are paying through the roof. that is impacting their own margins and adding to the whole global inflation story. on the other side they say even when we make these goods and we've got the finished products, we can't ship them to customers on time because of the ongoing shipping container crunch. the supply-side choke on manufacturers is still happening. it is real. there is no sign of a circuit breaker, you just have to listen to car manufacturers in munich yesterday with their warning they see the chip shortage going into next year and that is going to weigh on china's manufacturers too. haidi: here in australia, the -- and focused. economists are split on whether they will be delaying the -- that's bring in james mcintyre. they are weighing up a lot, but which way? >> we think they will continue

with the by announced in july. they started out at the beginning with $5 billion a week worth of bonds. they announced that were tapered $4 billion. the chart you brought up earlier in the bulletins shows the rba is buying well in excess of what is being issued. we think any delay that might have come from delta would be something that shifts the dial from november or february onwards when they may be considering moving. we think they will stick with where there are going. >> i imagine that dovetails into the ability of the economy to then rebound into the end of this year. what are your forecasts? >> that's right. we've got an interesting dynamic here. we have seen the economy rebound strongly from the first lockdown . australia achieved covid zero moped is not something we are

going to achieve on the others of this. we are going to be living with covid. that is likely to me in the recovery over q4 is going to be slightly less robust. we should see the economy recovering, gek to where we were in march of this year. maybe march of next year. not only is new software in victoria, we've got to reintegrate the whole economy. there are still covid zero states and we need to go through the long process of them getting their vaccinations up and that is going to weigh on the economy for some time, elongating what they can do. that is drawing out the normalization process over the next couple of years. >> all right. as it pertains to the shift in the three year bond to the 2020 for, might not be the case this time around. james mcintyre, bloomberg australia and new zealand economist. coming up, we talk china.

japan also coming up. trade numbers too. when it comes to the mainland amidst the global supply chain and the crisis and issues. brett elms from the asia trade center which consults companies on trade policy. also, the mark -- market outlook defying sylvia lum ski yet another warning. why she is not worried about that. this is bloomberg. ♪

♪ david: welcome back. it weak u.s. jobs report slowing down highlights. will may delay tapering, that is the view of many on the street including a source that says the u.s. may have -- ahead but

continues to believe we will end the year in green. joining us, ceo and cofounder at defiant etf. good morning morning from hong kong. peak u.s. growth does not mean peak rally or peak equity. why not? >> i think -- good morning -- i think that we are in this weird phase where covid has come back -- actually, it never really went away but the delta variant has spooked the markets. some of the areas that were really rallying in the past couple months felt like the roaring 20's. travel, leisure and hotels have fallen down again. investors have been on the sidelines again. although the market is rallying, there is a lot of cash that has yet to be deployed and i think we are going to see some positive results going into the

end of the year, particularly in tech. anything related to 5g, semiconductors, i think is going to end the year up. short-term, we will see positive results from travel and leisure. david: where does it meet? >> i want to be in all of those areas. i want to look at travel, hotels, airlines, anything that has to do with the reopen trade in china and the u.s.. cruise ships have been off more than half of their 52 week high. those are still good discount buys. what i like a diversified portfolio so i would like to pick up names we thought were at high multiples, but earnings proved them justified and crushed it. apple, microsoft, google continues to do well. they continue to invest in the cloud. i want to be in 5g.

it is a digitalized economy. anything that has to do with augmented reality, driverless cars, electric vehicles, telecommunications, anything that has to do with machine communications, it is dependent on 5g and i think all of the things that make 5g up against technology is going to benefit in five years. i want exposure to that and i want exposure to the reopen trade. haidi: you are saying there is going to be short-term volatility. at what point do we have the clarity to really look at valuations and discounts properly? sylvia: i think china is a tricky investment. there are companies i like in china, like jd. it is a behemoth retail oriented company that does all sorts of things from marketing to analytics to retail.

again, participating in a digitalized economy. 26% revenue growth. i like tencent. they got whacked by the government, but 30% year-over-year growth. there are opportunities like that that are interesting to look at. we have to wait and see what happens in terms of how far these regulations go protect japanese. how far will they be scrutinized? will that -- will they be held back? what could be interesting to look at is the government seems supportive of the new exchange in beijing to set up and fund raise for small mid-cap firms. it is the sense of the gilded names that have performed quite well which you could look to the u.s. and find the parallel type of company in china. those are suffering the most in terms of government crackdowns. we have to wait and see where that goes.

longer term in the next 6-12 months, china is the second-largest largest world economy and i do not think government wants to set the market back. we have to see when we get more positive rhetoric out of the government. haidi: the politics rally continues. once they get the dust settling over new leadership and clarity over what potential new policies, if any, might be in the pipeline, do we see another leg up when it comes to the reflation trade? sylvia: i think what will be interesting is that there is much anticipation and optimism around new leadership. i think japan is expecting to have a new support of government that is more in line with what we are seeing in the rest of the world in terms of supporting the market and small business mid-caps and consumers.

i think all of that will be a positive thing that drives the economy forward. david: thank you for joining us today. sylvia jablonski, cio and cofounder of defiance etf's. speaking of japan, let's pick up where we left off. futures above 30,000 on a lot of these contracts as we approach the open. their front-runner has emerged to be the country's next prime minister, former foreign minister and current vaccines are -- czar be sued get backing for ldp leadership. let's turn to stephen engle in the studio to talk us through. his him? >> it is his to lose. there are three weeks until the leadership votes. a lot could happen but it is lining up in his favor. we just need to hear from him. are you going to run? he has not announced.

clearly, everything is stacking up in his favor. he has the backing of the public, overwhelmingly, he has the most twitter followers, he is social media savvy, he has the backing of the biggest factions in the lgbt, he has the backing of the business community. now he has the backing of his chief rival according to the most recent public opinion poll. if sheba -- has run and lost every time to shinzo labbe. -- shinzo eight. we are hearing he is dropping out and likely his endorsement. as i said, he is sitting there with a -- four aces in his hand. is he going to play it? david: i think you should play. [laughter] haidi: he also has support from

the business community, which is why we are seeing this market friendly reaction. which areas in particular might see a boost? we have already seen on the market being up. he is bringing a different dynamism to this leadership race. we had each row, the former japanese ambassador to they knighted states on yesterday and he said, the continuity candidate just didn't grasp the job, selling the job to the people. he did not have a lot of charisma. kono perhaps does. he is younger than all of them. he is a different breed of candidate. he is also against nuclear power. that is why we are seeing green stocks, renewable energy stocks soaring. also, these old electric tokyo

electric power all down yesterday. perhaps there could be changes there. he is more progressive than suga. haidi: forever young. up next, we look at commodities, aluminum in particular. we get the latest on that just ahead. this is bloomberg. ♪

♪ david: welcome back. let's check in on crypto. quite some moves we are seeing. 52 .7 was your high a couple of minutes ago. essentially when you look at the galaxy index, we are up about 97% going back a couple of

weeks. that is impressive. this one is up about 1000% year-to-date. commodity markets, aluminum is a big story, the contractor be are seeing in -- copper. again, some of these big aluminum plays are traded on estrella and some producers like -- you want to watch but we are looking at aluminum. tenure highs on london, 15 year highs on the shanghai contract. >> -- haidi: let's look at what could happen in this story. you say aluminum, i say aluminum. [laughter] the military in guinea reassuring mining firms that exist that there -- will be honored. james has the latest. what are we seeing are the dynamics here? >> good morning.

from all accounts, it is relatively quiet on the streets. the capital. as you say, the new leadership, the military leadership saying it will allow mining operations to continue as normal. we are hearing from foreign operators that operations are proceeding fairly normal at the moment. it is difficult to get good information outside of the capital. but it sounds like things are still running relatively smoothly. what i would say is that it is a fascinating situation. the former prejudice -- the former president is not conceding power to this new -- yet. there is a lot to go on this story and there will be uncertainty in the aluminum price. >> i want to bring in the china equation. what does it mean for the --

iron ore project? china's way of to diversify their sources? >> that is the several billion dollar question a lot of people are asking right now. what does this mean? obviously, the great hope of china for this huge ore project is to dilute some of its reliance on australian ore, and china has been looking to diversify sources, a diplomatic spat between the countries has evolved over the past years. -- has been long in the development. one of the interesting parts of this project is that the government has just announced it. one of the main drivers of them awarding this contract to china and various groups involved was that they feel a long rail line in guinea, rather than making

more efficient alternatives. if we do get a new government in power, maybe they will be open to different ways of arranging that. in the meantime, a lot of uncertainty over whether the project will continue. david: our metals and mining reporter. a very quick check on your business flash headlines pared one of australia's biggest infrastructure investments has pledged nearly -- pledged to half carbon emissions. toll roads, airports and pipelines promising to a cut of 1.2 million tons of annual emissions by 2030. the move follows the global trend of asset managers celebrating plans to decarbonizing sources say indonesia has halted talks to go publicly to deal with bridgetown, backed by billionaires.

on this board are said to have changed course with enthusiasm on this market morning. an online travel company will likely explore a u.s. listing for a (woman) i don't want to look like this anymore. (man) what is happening to my body? (woman) why can't i lose weight? (announcer) you may be suffering from insulin resistance. measure your waist. females measuring more than 35 inches and males measuring more than 40 inches may have insulin resistance. to learn how to reverse insulin resistance and lose weight effectively, go online to golo.com. once again, that's golo.com.

david: welcome back. good morning, tokyo. 30 minutes to the opening. labor cash earnings for july much better than expected. almost double the pace when you look at the figures. 1%. many were expecting 0.4%. real cash earnings above expectations. i guess it a strange duck tailing -- dovetailing into household spending forecasts.

two point 4% is the expectation. 0.7% is the actual number. dollar-yen on the stronger side. equity futures pointing above 30,000. haidi: we have breaking news, at least some interesting elements that could build into this overall picture of financial reform and more investment vehicles and opportunities. we have that speech over the weekend from xi jinping, trying to inject positivity for market investors after what has been a tough few months. we are hearing from the china securities regulator had, now speaking about china's acquisition companies. also, talking about potentially seeing different parts of investment. we heard earlier they could be expanding their programs through hong kong and london. there's lots of different directional programs as well, as

well as the bond connect. it looks like there is more consideration as to whether the rpo's can be conducted through spac's. to japan, house hells their and across the world may have to reach deeper into their pockets this holiday season. orders are piling up amid a perfect storm of widespread bottlenecks and coronavirus. in asia, the disruptions we are seeing have forced factories to halt or slow productions. pmi readings point to a contraction in a number of countries but the crisis has rippled across the globe. the biggest companies are now -- risk in their outlooks. >> our margins take steps to mitigate challenges including chartering vessels extension specifically for walmart goods. general merchandise categories are running above normal giving -- given strong sales. >> we continue to manage the strong demand for home improvement products despite

significant disruptions in supply chains. we are leveraging their scale of our partnership with vendors to prioritize key skews in high demand categories. >> there could be shifting between -- to source product and bring it in via any number of new carriers. the team secured more ports and we got more shipping lanes then we have had in the past. haidi: staying on supply chains -- common. the scale and speed of this current path is unusual. deborah, great to have you with us. and to have a chance to chat. i think we have spoken about supply chains before during the u.s.-china trade war. that feels like a long time ago. are we seeing similarities? is this harder to resolve? >> this is a bigger challenge.

now you are looking at global distribution in global supply chain shifts as a result of both supply and demand changes. the sick -- the simple example is we still use the same amount of toilet paper but we use it differently. rather than buying institutional roles that are packaged in institutional packaging and delivered through distribution channels, much more home use. it's not yet -- it's not that you don't have enough, you don't have enough retail designed toilet paper. that shift takes time and effort. at the same time, we are changing supply and demand for different kinds of products. we also have disruptions in the supply chain itself which is that individuals who were supposed to be manufacturing everything from toilet paper to aircrafts are also disrupted as a result of covid. toss in the delays that come from the ripple effect of closures of ports, and having

the containers and boats in the wrong locations for what is needed today and the net result is tremendous pressure on supply chains, especially shipping and logistics. haidi: what we are also seeing is this really showcasing how inflexible global supply chains is. is there a better way to go about this? potentially going into the holiday season? >> i think supply chains have held up better than most people imagined. you could have said that heading into covid we would have a complete collapse of supply chain. in fact, i would argue walmart and home depot heading into the second, those are firms that are nimble. they are flexible. they are able to adjust manufacturing, sourcing, they are able to switch carrier lines. they are good at what they do.

in fact, we have shops that are largely full. that is a testament to the ability of supply chains to be flexible. we are still seeing challenges. that is a little like being in a car accident. a car accident shuts down the freeway and we have a backlog. it takes time, even after all of the cars are removed, for the traffic to flow through. some of this is just that demand as a result of the car accident. but also, by continuing adjustments and disruptions in the chains themselves. that has held up well, but it is hard to constantly adjusting and being flexible so you are seeing shortages in some areas and especially as we headed to the end of the year shopping season, for consumer goods it is going to get harder. david: looking further ahead, do we make the highway whiter?

doesn't the flexibilities, the underlying principles are just-in-time? is there a way forward? that companies should plan around further future disruptions that doesn't necessarily see costs going up? >> that's the problem. i could make a very robust and redundant supply chain, but it has cost attached to it. i can create my own supply chain. i can buy carrier space, by my own shipping containers, but that drives cost. you have a trade-off between the just in time and holding inventory. you have a trade-off between a flexible supply chain and cost. i think for some products and some companies, they are trying to find where is the sweet spot. sometimes the sweet spot in january is not the same in september. because more covid disruptions, shutdowns and factories.

you are seeing firms increasingly pay attention, which is good, to supply chain. it comes up over and over again in ways that were taken for granted pre-covid. david: let's look at the near term, the next few months. it seems the mass is a horribly skewed to it getting worse. i bring that up because a lot of things related and unrelated have to go right at the same time for these issues to disappear. meantime, you get a kit -- one case here or there to disrupt things further down the road. my question is, do companies now to -- now need to make their base case the previous case? >> it is a challenge. the questions that firms keep asking our how long does this last? if we are looking at another quarter, i do not necessarily want to disrupt my current practices. i want to set up new facilities.

i don't want to find new suppliers. if this goes longer and we are looking at another year or two, firms have to say actually, even though it is difficult and expensive, i need to find new locations. i need to think harder about what is coming in from where, especially for key products. that question has been bedeviling see suites for two years. i think everyone tries to be optimistic that at some point this covid disruptions will subside but the question is when? how long? how much cost are you willing to bear in the interim? firms are still grappling with that as you hear from all of the calls you are getting from the tops of different companies who are really trying to struggle with what is the best approach for my firm and how do we all collectively resolve the issue? haidi: of course on top of that,

it is not a very rosy politics land. we spoke with the head of the wto, saying the two strong decoupling forces, one, the u.s. and china and the other, the crackdown on tech in china. when you put all of this together, things are not looking great. >> sadly not. i do not think we are going to rewind globalization back to everybody being an island, but we are seeing extended disruptions in trade. i think these comments about regulatory disruption is not just in tech, but a lot of other areas. governments tend to support their own constituents and jobs over everyone else. when everyone does that, we end up with worse outcomes. so far in covid, we have seen

less of that and we might have put the longer it goes on, the higher the pressure is on domestic level governments to make sure their citizens have jobs and their costs remain under control. the harder it is then to get cooperation to allow globalization to move goods and services both in ways we are used to. we are at a -- an interesting inflection point in the way the world has worked and the way the world might have to work incoming times. that is a huge challenge for all of us. not just firms, but consumers and so forth. david: founder and executive director of the asian trade center. keep your eye on that. >> ho chi minh city heating virus edgers, maintaining its stay-at-home order until september 15 admits vietnam's

worst outbreaks. citizens will be able to access food takeaway services. 80% of adult residents in vietnam have been vaccinated. hong kong supported -- supposedly charged 10 men for allegedly killing police officers. the tenor accused of conspiring to place explosive devices with the intention of causing death or serious bodily harm. they have been charged under the city's antiterrorism law. angela merkel says she is shocked by the death of the clerk confidant days after he took over the role as impassive it to china. the 54-year-old was among merkel's closest allies, having gained her trust during the refugee crisis. in a statement, she says he had a deep humanity and extraordinary confidence. el salvador's president says the country has bought 200 bitcoins and plans to buy more.

they said brokers will make small bitcoin purchases before tuesday when el salvador adopts the currency as legal tender. businesses will be required to accept the digital currency and the government will accept it as tax payments. 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. david: i am glad you brought that el salvador story up. they did buy another 200 bitcoin, that's coming through there. they are now holding 400 bitcoin. the underlying story is making bitcoin now legal tender and they are prepared to buy more. market value and current prices are a further 200. bitcoin off highs a little bit, but closer to --

haidi: i wish i had bought 400 bitcoin. up next, south korea becomes the second major asian economy to legislate carbon goals. this is bloomberg. ♪

♪

>> we are working on a very large market. that gigantic market has a niche, super high performance cars. there is at the moment the discussion ongoing with the commission, but this is marginal. the very important point is that those cars are -- for the transition. clearly, one important aspect is that italy gets autonomously producing high-performance batteries. david: italian ecological transition minister on the countries super carmakers. from the europe's planned phaseout of construction -- combustion vehicles. porsche thinks it would be a mistake if the eu caves into italy's demands. the chairman and ceo spoke to matt miller in munich and

started by discussing the future of electric vehicles. >> with a very clear strategy, we will offer our customers and friends for the next years each of our segments a combustion engine, hybrid engine and electric engine. therefore, we will be flexible. for the 911 we created the idea and the 9/11 was a combustion engine as long as we can. we are offering other products other than electric. matt: i wanted to ask about china. i heard an interesting fact, your youngest buyers are in china. your three markets are the u.s., europe and china. are they the highest margin buyers? do they pay the most money, china? >> china is a very important market.

besides north america where we have -- the rest of the world, china counts about one third and it is correct, the youngest buyer of porsche is in china. that is big potential. to get all of these young chinese fans of our brand. therefore, we are looking forward to how the markets will develop into order intakes. we are at an all-time high in 2020 and this year we are going for another record. >> you are not concerned about the new regulations, the idea that they want to redistribute wealth? you still are going to sell as many porsches as you can. >> we are not worried and we are well prepared. from our sustainability story and also the investments we do in china. in the end, we can count on our

friends in china. >> you were talking about the battery supplier you're working with. it seems like at this show, everyone is scrapping to get battery production. you obviously want to get as many chips as you can. what does the supply chain look like? >> we are working together, sharing batteries. especially for the top segment of the batteries. these things we think are --. risk, high-powered entities, high energy density feathering new technologies fast charging and therefore we are risking jail. >> semiconductors are a different story and we are fighting hard to get the right volume up. we have to rethink how supply chain because the demand of

semiconductors will be higher in the future and therefore we are working together with colleagues from the volkswagen group who we think how to organize a supply chain. haidi: we will stay on the green theme. south korea has become asia's second major economy to legislate its decarbonization goals. the loss put a more ambitious 2030 target boosting the nation's commitment to the upcoming summit. david can, who covers the markets, what are we seeing as implications of the legislation? >> with the passing of this new act, south korea became the second major economy in asia to legislate its decarbonization goals. the new law requires the korean government to reduce greenhouse gas emissions by at least 35% by 2030 compared to 2018, a clear step up from the previous target

of 26% reduction. and to achieve a net zero carbon dioxide emission by 2050. david: how will -- well, throw politics into this. you have a presidential election next year, but how will whatever results come of those elections affect the implementation of this legislation? >> if we look at the breakdown, over 90% of the vote in favor came from the ruling democratic party. the opposing conservative party has either voted against or did not vote at all. the reason this bill will pass is simply because the ruling party owns a super majority in the national assembly. if the opposing party wins next year, there could be movements to either repeal or amend this legislation. for now, there is no clear front runner in the presidential race.

whether this law translates into tangible actions remains to be seen. haidi: what are the long-term benefits? >> the benefits associated with decarbonization is a complex topic. but there is a clear benefit from the angle of energy import. south korea probably spends about 100 billion dollars a year to import fossil fuels like coal, gas and oil. that is around 8% of south korea's gdp. if they can replace a big chunk of this energy demand with domestically produced renewable energy, there is a clear financial benefit for decarbonization in the long term. david: thank you so much, david ksng talking about long-term objectives. let's camp down the start of trade.

japan, a big shakeup. nintendo joining the index from the first of next month. real estate funds are among the biggest holdings of its hotel and leisure facilities with another one, get this ¥100 billion and cash earnings were out earlier topping estimates. the estimate was 0.4%. korean data coming out, the -- narrowed to 0.2 billion dollars. the finance minister is expected to attend the parliamentary budget committee meeting soon. south korea will now be accepted in hong kong beginning september 8. we have lots more ahead. this is bloomberg. ♪

♪ haidi: the big story we are watching when trading begins in tokyo, the major shakeup of the nikkei 225. nintendo added to the blue-chip gauge. what are investors saying about

these changes? were any of these a big surprise? >> investors are saying this is a little bit of a surprise. nintendo's inclusion was expected, the others not so much. people saying this is a positive move because you have three big companies with big earnings, huge market cap and great brand recognition. it is often referred to as the blue-chip index. technically speaking, the inclusion of these big market cap companies shouldn't have a huge impact on index prices, but it will surely have a positive impact on the sentiment. we will probably see a boost, but we will keep that -- see that in a few minutes. david: a lot of good news as we get underway in tokyo. our socks reporter. other stocks we are tracking, analysts changes nintendo, the

new members of the nikkei 225. game over. 30,000 watts. futures pointing to opening. maybe a little above that level currently. whereat 20. -- a new high for 2021 might be in place. this is wilbur. ♪ (announcer) back pain hurts.

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♪ david: hello and welcome to "bloomberg daybreak: asia." i'm david ingalls in hong kong. haidi: taking a look at the major market opening, advisors lowering rates and a reshuffle for the nikkei. its decision day for the rba -- it is decision day for the rba. china's august trade day gives

us a snapshot of the disruption to global supply chains. david: here we go. another day of gains across the markets. the nikkei very much and focus today on the back of some nice, round numbers. 30,000 the last couple of hours or so. also looking at some of the big names that are set to gain. we will see nintendo. getting included in the index. we shall see those up and running anytime now, if not already. the nikkei 225, around 30,000. an eighth straight session, the longest streak of gains going back to the start of the year. let's have a look at what we are seeing in south korea. a large part of the mci basket. a test perhaps again.

as far as that index is concerned. haidi: japan, also the big story, and the rba, with another, how they will deal -- with another round of actions. the bond market they may perhaps be sensible to tapering. we are seeing downside, really flat trading when it comes to the staggered opening. we are also seeing a little bit of weakness on the aussie dollar. it fell ahead of the decision, declining by the most in more than a week as covid concerns continue to weigh on sentiment. that rally we are seeing, the gain could get a bit more of a kicker, if we hear a bit more hawkish in us from the rba. that was a bit of a surprise, if we get some optimistic sentiment. this is what we are seeing in london. there are supply-side concerns. not quite resolving, despite the government's efforts to give

assurance to miners it is business as usual. we are seeing the futures up by 3/10 of one percent and broad games when it comes to the lumber commodities index -- broad gains when it comes to the bloomberg commodities index. on the balance of things, you have the bank of japan, japanese markets, brought expectations, the fed pushing back tapering plants on account of the u.s. jobs report. is sentiment still pretty intact for risk assets? >> think there is a good strong case. it seems to be supportive. we have seen speed bumps along the way for the global recovery. the recovery still continuing. there's been a downshift around the world. very elevated weights of growth in the forecast. very robust. i think we will see the market's

positioning. i think the markets will continue to perform. haidi: let's have a look at the trading with the nikkei 225, it's been a long time coming for nintendo. a throughput 5% gain. we expected the u.s. listed stock climb over 4%. the adr's with murate, rising also. it was a big surprise out of the three. additional to keyence and nintendo. we are still waiting for a bit more of a reaction hear from murate manufacturing at the start of trading.

the rally does continue. if we see someone at the helm who can get a better handle of the covid situation. do you see another leg of the reflation trade or a boost in cyclicals? >> absolutely. we have been favorable towards japan. the markets, and a cyclical way. around the world, the shift towards something that can be more positive and control the pandemic, the vaccination rates are setting to increase, consumption could be released within the economy, it does bode quite well for the japanese economy from here. continued global expansion around the world. cyclical stocks will continue to perform well. it is in japan's favorite the moment. david: we have a lot of

central-bank decisions coming up. you have the rba today, the atps out this way, the fed, the question is, the narrative six weeks back was vaccination progress is the economic progress -- you can equate those two things. it doesn't seem like a correlation between where you are with the vaccines is not closely related to where you are on the recovery. we have seen that with pmi's recently. do we need to rethink global growth? >> i think we need to rethink the prospects of global growth. in the u.s., vaccination rates have been pretty high, but slowed, with worries that we will see more of a resurgence. higher vaccination rates have broken a link between economic restrictions put in place when virus numbers go up and the fact

that it shouldn't disrupt the economy as much as the -- as much as in the past. i think the expectations continue. it is something that's being handled at the moment. if you look at the forecast for economic activity into next year, you're still seeing numbers that are close to 4%. . much higher for emerging markets. nuance talking about recession. we are moving past the acceleration of the recession. david: which is a good thing. let me interrupt you quickly here. we will resume the conversation any moment. murate manufacturing is up 2.5%. it's basically gone vertical

here. we are now at six 2000 60 on that specific index going all the way back to 1919 -- 1991. let's put everything together in the context of treasuries right now. the year and forecast is at 165. is that too low, too high, or just right? >> it's probably going to be around that mark. it is quite a difference from a few months ago, things have changed. there are technical factors that weigh on to it year end. the slowing of tapering by the fed does seem like demand will come out a little bit.

we see repositioning in the markets. they may start to put those back in place. there's a lot of forces. there's been trepidation so far. haidi: given the enthusiasm and japan and the regulatory sphere, do you see any kind of rebalancing of allocations to benefit japan to come? >> you have the chinese recovery, the u.s., then europe had a strong equity market. this wouldn't shift toward japan's performance from here.

there's quite a positive outlook for the market. david: on a positive note, that is kerry craig, global market strategist at j.p. morgan. we are now just about 60 points short of the 30,000 level. paul allen, he is in saddening with your first word news -- sydney with your first word news. >> the perimeter was planning to step aside. the prime minister would run for leader of the democratic party, throwing his

support behind the former parliament. the move would bolster opinion polls ahead of the september 29 election. the military power in guinea plans to establish a unity government, urging many companies to keep operating. they reassured mining agreements would be all night -- would be honored. ports remain open for experts. china has given local governments benchmark fees and cap price increases by the end of the the year. singapore has not rolled out a return to type virus curbs. it is raising the frequency of

testing for higher risk environments such as personal care services and more bannings of social gatherings. new infections rose to more than 1200 cases last week. up from about 600 the week before. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. haidi: still ahead, we will be previewing exports, expected to have slowed in august. plus the latest on china's crackdown. we are live in beijing, next. this is bloomberg. ♪

david: welcome back to the show. it's a big data point out today. the figures for august, out in a

few hours. we are looking at double digit growth. we are monitoring, compared to the has we had last year. here's more the expectations. >> we are looking at a slow down to 16%. we are talking about a base effect. appearing with figures from years ago. you're talking about some hints now of slowing global demand for chinese goods. the pmi indexes are capturing that. the orders for exports were weaker. the private sector fall under contraction territory. it all points to the china export boom slowing down. it slowly has eclipsed. haidi: the supply crunch, the shipping situation, will we see this have an impact on manufacturers? >> it's still one of the biggest

issues facing manufacturers, no doubt about it. on the one hand, they either cannot source their components to make their goods, or when they can, they have to pay through the roof for those goods not to cause impact in their own cost base and fueling t he global inflation story. we know that ongoing logjam in the shipping sector is continuing. manufacturers remain concerned about this. it's a key break on growth. no one expects a circuit breaker anytime soon. david: one of our guests talked about this in the context of toilet paper. basically saying that we do have a lot of industrial strength toilet paper, not so must-read -- not so much retail. imports, what should we be watching on that front? >> some expectation of a soft

ending on imports. china's consumer has taken a hit due to the aggressive lockdown on covid. much weaker than expected numbers would be surprising. but china's economy is slowing. haidi: our chief asia economic correspondent. dave, you have been waiting for this, they -- the nikkei 225, hitting 30,000 for the first time since april. trading at the highest since 31 years. we've got this political optimism. we've got them except for the cash the mixup for the -- the mixup f -- the mixup for the nikkei 225, as well. david: technicals are indicating we might be hinting at

overheating in the short-term. we will see if we get there. 38,000 is your high bike in 1989. still some ways to go. -- back in 1989. so some ways to go. haidi: there are still a few trading days left this week. in china, we've seen the government give local governments a power to set prices for afterschool tutoring, in the latest up to reform the private education sector. our turn editor joins us now from beijing with the latest. what does this incremental step -- how does this incremental step shape what the industry looks like? reporter: beijing's taken several steps to increase the scrutiny of the outside school tutoring businesses. the latest development has been local governments have been given the power to set prices for those tutoring services. they are going to cap the ability of those, to in cruiser fisa 10%. cap how much time these classes

can last 4, 30 minutes for online, 45 minutes if it is physical, in person tutoring class. they are also going to be asking businesses to submit the teaching certificates of their tutors. and do annual reviews. david: john, when the headline dropped, this needs a bit of clarifying -- ali baba, china does not approve the arrest of the ex- ali baba manager. and you take us up to speed on the news? >> a few months back, there were allegations from the alibaba employee she was raped -- her allegation was that she was raped by her manager during a business trip. the police investigated it. and china, there's a dual system, for criminal statute, which is more serious, requires a trial, can result in the

person, if found guilty, doing several years in jail. there's a different system for infractions such as drunk driving, where the police without trial can simply send someone to 15 days to what they call administrative detention. what they are saying is, during the police investigation, they said they did not find enough evidence to charge this alibaba manager with rate. they charged them instead with forced indecency. now this is the prosecutor coming back and saying forced indecency is not a a crime under the criminal statute but under this lesser administrator statute, that seems to be what's happening. the manager is being sentenced to 15 days administrative detention. david: hmm. john lui. coming up, we talk more about what's happening in the japanese markets with the topics and the nikkei 225,

getting a boost here. maybe political, with political uncertainty, with the inclusion of new big names into the index. more on that story, coming up. this is bloomberg. ♪

david: welcome back. just 23 minutes into the tokyo session, and equities are flexing. they have been for seven straight days, to the extent that some initial indications that we are now short-term overbought perhaps on those two benchmarks, something to watch as we move ahead. let's move to politics.

foreign minister and current vaccines -- our politics reporter has been tracking the story for us over in tokyo. is he going to then step up? >> yes. this has quite an interesting question you raise. kono is the most popular candidate for the next prime minister. the front runner. is the most popular among the public. that does not always translate into becoming the leader. there's a lot of trading among the big factions within the party. there's still everything to pay for in the next three weeks, as to who will lend out on top in the end. kono does not necessarily have the backing of the function he belongs to -- the faction he belongs to. he will have to gather support from other factions.

may be from younger members of parliament who want to see a more radical agenda. everything's able to change overnight in these kinds of elections. haidi: we are in the meantime seeing gangbusters sessions coming out of japanese equity trading. is this really optimism that we are going to see from new and beneficial economic policies, handling of the virus? there's concern that we are back to this revolving door leadership, right? >> we can't rule out the revolving door leadership. especially amid the pandemic. it is a very difficult situation to manage. if it is handled badly, that will reduce public support. that could -- there could be pressure to replace who the new leader is within a short time. what we are seeing in the stock

market, one thing for sure is the government has been conservative about spending the extra budget for the safe, dealing with the pandemic. another former foreign minister running for this position has made it clear he wants another extra budget. he wants to throw a lot of money at this problem. the stock market is very much welcoming that. i think we also see the other candidates, a woman potentially standing, and she's been very keen on maintaining, for instance, the promise on monetary policy, that's another positive. she would fit to that -- stick to that policy very tightly. i think there are various factors. another one is of course stability. if a more popular leader comes in, they are more likely to stay in power. more likely to see some continuity japan's leadershipi -- in japan's

leadership. haidi: isabel reynolds, with the latest. let's get you a check of the business flash headlines. a major shakeup for the nikkei two to five, contributing to the rally today. murata manufacturing and nintendo, joining. a cap -- nearing a deal. one of the largest divestments in recent years. sales could be announced in the coming days. apex partners are seen as a strong contender. next, china's trade date gives us a glimpse into the

impact of the global supply crunch. would talk to our greater china economist. this is bloomberg. ♪

>> merchants continue to mitigate challenges, including adding time to orders and chartering vessels specifically for more -- were walmart goods. >> we continue to effectively manage the strong demand for home improvement products despite significant industry disruptions and supply chains. we will prioritize high demand categories. >> there could be shifting

between q's 3 and 4. we also will secure more ports, more shipping lanes then we have in the past. david: some key executives there on an earnings call, talking about the impact here, the prospective impact on their own financials and operations given the global supply chain crisis. let's have a look at china. it's becoming over a third of delivery is for bmw. the co spoke to bloomberg -- ceo spoke to bloomberg about the ethics of doing business with china and about the brilliant joint venture. >> we are a premium manufacturer

of future mobility. so if course, first of all, on the human rights side, worldwide, we have the same principle, and europe, in the u.s., and china. it's really important and at the heart of our company. of course, specific changes, if they become dominant, we will follow that. >> operations and china, you are seeking to get to 75% of brilliance. the approval for that, you are expecting early next year. is that still the target? >> it shows that we have been are liable -- a reliable partner for many years. we foresee that in a couple months time, we will have the approval and we can go as planned. david: that was the ceo of bmw.

let's get you caught up on the things happening across the world. paul allen has your first word news. >> china is reportedly studying and expansion of the stuff nick -- the sputnik program along with improvements to the shanghai london stock nick. the chairman made the comments at a world federation of exchangers conference. he said china would expand the supply of products to expand capital markets. goldman sachs kept forecasts for u.s. growth this year, pointing to a head the american consumer. expansion is seen at 5.7%, down from 6%. goldman says the delta virus surge i discovered consumer spending. demand switches from goods to services. supply chain disruptions are also heading inventory

restocking. el salvador's president says the country has by 400 bitcoin as it prepares to adopt cryptocurrency is legal tender later on tuesday. they announced two separate purchases of bitcoin within a few hours, taking the total holdings to 400. businesses will be required to accept the judo coin -- the digital coin in exchange for goods and services. hong kong has charged 10 men for plotting to kill police officers during a mass rally in 2019. the 10 are accused of conspiring, placing explosive devices with the intent of causing bodily injury. german chancellor angela merkel says she is shocked by the death of a close confidant days after he took on the role of ambassador to china. the 54-year-old was among her closest advisers and gained her

trust during the 2015 refugee crisis. the chancellor had a deep humanity and extraordinary confidence. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ david: for equity bulls, here you go, a dish served hot and fresh out of the oven. u.s. futures, here we go. the nikkei 225, 30,000 is the level. 4% up within that market. the kospi index, coming up right now. we have a decision out of the rba a couple of hours from now. will they or will they not delay the taper? new zealand's tenure yield, back up above 2% for the first time since 2019. we are also looking at oil.

that brings us into the trade numbers coming up from august. our next guest has more on the port shutdowns in many places across china. let's bring in our greater china economist. your forecast and your expectation on trade activity in the months ahead. >> we expect moderation in august. we are seeing some disruptions in the ports. likely caused -- likely causing

numbers to be softer. if you look at the new export orders, we are already seeing below 50 over the past few months. that suggests we are probably starting to see some soft ending on goods -- softening on goods, spending on goods and services. david: in china, they are trying to cool the housing market. what are your forecasts here in terms of demand for raw materials? >> we are expecting the iron ore demand to settle down precisely for the reason you mentioned. we are seeing demand, infrastructure investment demand. near urging --

it could translate into a strong infrastructure investment. this is also why we are not expecting a very strong rebound for the chinese economy toward the end of the year. haidi: the rebound when it comes to consumer sentiment outside of china seems to be weighing as well. i want to take a look at the retail sales in the u.s. the chart on the bloomberg shows moderation when it comes to the retail sales growth since about march of this year. how much of this weakness is a starting -- is starting to weigh on china? >> if you look at export growth in china, we are already starting to see some softer momentum coming from the u.s. the demand is firmer.

we are expecting growth to continue to accelerate for the third quarter. they are some support to china's demands. for the rest of the year, for 2021, 2022, we expect it will not be in place for china like it was this year. haidi: we spoke with the former head of the wto. he spoke about the dual forces for the global slowdown. one of them is the decoupling for the u.s. and china. the other is the decoupling affect freddie crackdown in china -- for the crackdown in china. is it possible to predict the broader economic slowdown that it will cause? >> i think it is a very

difficult question to answer. if you look at the latest pmi and china, it was about number. worst and what we saw during the chinese new year earlier this year. i think some of that would be were attributed to what's happening with the -- what's happening in china right now. if you look at some sectors, like the tutoring sector, the online gaming sectors, because of the regulatory changes, we are going to see some impact on these economic activities. now they are talking about, it is likely over the coming years, they are going to have an impact on the property sector. on the positive side, if we see a better distribution of income between the poor and high income

group, that is both negative and positive impacts. david: you can see on the screen here, china has a basket of 30 stops equally weighted. talk to us about how you came up with this basket. >> basically, we tried to analyze the regulatory changes the government has done. we identified some factors in the policy changes, such as the renewable energy sector, the energy vehicles, semi conductors, also high-tech many fracture companies.

we try to avoid the sectors that would be impacted by regulatory changes such as the internet companies, the property sector, health care companies as well. this is how we eventually put some future on the balance sheets of the companies and come up with these. haidi:. interesting. we are getting the latest virus numbers out of china. reporting no local coronavirus case numbers for september 6. more to come, as we count down to the china trade and the rba decision. this is bloomberg. ♪

haidi: gains keep coming in for japanese equities today. the nikkei 225, there may be an inclusion of big heavy hitters on the nikkei 225, tokyo stocks. when it comes to the changes, what were the expectations? nintendo has been looking for this change for a long time. there were some surprises. >> right. nintendo was somewhat expected.

but the simultaneous inclusion of manufacturing was quite a surprise. because the previous reviews have resulted in some unexpected changes before, people were see ing nintendo brought the inclusion of all these three names as a positive move. that not all people had expected. david: talk to us about timing. we are expecting that nintendo angles. why change the index now? what kind of impact might we expect from these change -- this change moving forward? >> the key thing that happened earlier this year was that the nikkei made a revision to the methodology. in how the nikkei average is calculated.

the methodology of the nikkei 225 makes it more prone to while pricing in stocks with higher prices, like nintendo. that's changed now with this revision. this year, a lot of people were saying stocks like nintendo, with a high share price, could be included. now that it's included, alongside with keyence and murata, it is having a positive impact on overall sentiment. and we have a lot of other factors, like the political names, also a positive thing for the markets. we have a lot to look forward to from here. haidi: our reporter for japanese equities. here in australia, the rba, focusing on whether to delay or go ahead with by a reduction.

let's bring in our editor in sydney. what do you think is going to happen? >> it's very much groundhog day here in sydney. very similar to the august meeting. the central bank last month stuck with its tapering obviously and said that the reason it was doing so was with the stimulus effect coming next year, when the economy would be well into the recovery. it did say in the minutes of the meeting that it would be prepared to act or to respond in the event that it significantly impacted the recovery. we had increased cases, extended lockdowns, economists cutting forecasts. so it really is a question on whether the rba taper is meeting those conditions. his majority think they will different. -- they will defer. i wouldn't be surprised if they

stuck to their plan to taper. david: now, talk to us about the rapidly changing expectations as it pertains to on the economy would bounce back here. are there increasing doubts about that scenario not being there now? >> everybody expects a deep contraction this quarter. the question is really about the fourth quarter. economists have been cutting down with expect tatian's for the fourth quarter. a lot of that is being pushed into next year. the rba was confident they will get a big bounce back once the economy reopens. economists are doubtful about that. other states are running covid zero policies. there are going to be restrictions in place. it could be more of a subdued

recovery. 2022 is looking more likely as to when the real growth will happen. david: that's what they said in 2020 about 2021. haidi: [laughter] david: our editor out of sydney. pursuing the virus story here, let's take a look at singapore. one of the leash -- one of the nation's leading when it comes to inoculations. yet serious infections continue to go up. 85% of the relation has already been vaccinated. our senior medical reporter joins us right now, michelle cortez. michelle, is this a change in policy, what's happening? >> it does feel like sort of a groundhog day should -- a groundhog day scenario.

it's an interesting twist. the message from the government here in singapore has been for the past few months, we need to start to live with the virus, we are moving to more endemic phase, that means reopening by the end of the year. several officials signaled travel could have been somewhat more normal by years end. but now they are dealing with this rapid and unpredictable run-up in cases. we have several hundred a day now. there has always been a few factors here, vaccinations being one of them. a lot of people asking, what does it mean to have the best vaccination rate in the world if you are not going to do anything with it? however, there's a concern especially among the elderly population and with limited hospital beds to treat those folks, just the rapid spread of this latest uptick. a lot is still in the balance right now, for the time being, they have announced curbs last

night to limit social gatherings to one per day. to really try to get people more mindful of being more cautious of this trend. haidi: what are we seeing in terms of intensive care numbers? the government has said that is really the number to watch in terms of whether more restrictions will have to be reintroduced. >> it doesn't seem that high for outsiders. yesterday, they said there were 21 cases of serious illness requiring oxygen. six in the intensive care unit according to the health ministry, so it may not seem like a lot, but in a population of 5.5 million where the government is really trying to limit those bed capacities, that is somewhat concerning for them. we will see what that means. there is an odd balance here, we are talking about a domestic situation versus what they wanted it to become, a

reopening of borders. it's really the -- the latest uptick, it is really throwing us all for a whirl. david: coming up, overseas assets could hit a new record as a rush for the exit. we will tell you why, next. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines, talks to go public in a deal with blank check company bridgetown. they are set to have changed course, with enthusiasm in the waning. the online travel company will now have a traditional ipo. planning to raise as much as $223 million by listing a spac in singapore, in advanced stages of preparation, making it the first and singapore to offer blank check listings. they have not decided onthe pere

-- the perspective from. now, they are heading for the exit and rising amid a demand for anything that throws off cash. let's bring in our deals reporter. why are we seeing this sudden surge shedding foreign assets? this is a trend we have seen built over the last few years. it's really escalating now. >> yes. i think this is a natural development. the chinese firm had accumulated, buying assets over the last three years. now they have actually a bunch of assets they can actually evaluate and take advantage of to cash out. like a lot of poe's, privately owned enterprises, they need to cut that. we are seeing increasingly more soe's, state owned enterprises,

they are looking at opportunities to cash out. david: ok. any drawback or downside? >> as you may understand, given the current geopolitical situation, it is very difficult for these companies, when they sell, they may not be able to buy similar assets again once they exit. that's one of the drawbacks. david: ok. any chinese firms still buying assets? >> definitely. we see some other state owned companies are still looking at acquisitions overseas. but obviously, in certain regions, the middle east, portugal, areas like that. david: it is still not ending, for now. in terms of the chinese markets, what's coming up, we will see the chinese composite close to a new six-year high.

on the back of some news overregulation and measures, destabilizing prices. we were talking about, the nikkei, four points from the said hi. that's coming up. this is bloomberg.. -- this is bloomberg. ♪ it's moving day.

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david: it is 9:00 a.m. in beijing, shanghai, and here in hong kong. welcome to "bloomberg markets: china open." counting down to the open of trade on the mainland china and here in hong kong. the negate touching 30,000 points -- the nikkei touching 30,000 points. august trade numbers out of china expected to show easing