♪ >> hello and welcome to daybreak asia. >> i am in hong kong. we are counting down to me -- asia's major market open. shery: top story this hour, asian stocks set to slip as investors fight over post-pandemic growth outlook. china said to be the center of market attention. august inflation taking a hit

from the delta outbreak. we speak exclusively to -- to assess preparations for peak shipping season. >> of course as we see, some tepidness resumes. u.s. stocks and global equities. asia setting up for a weaker start as well, extending those losses wednesday. there does seem to be concerned we are going to see more volatility going forward and even some minor corrections, analysts could say, could make a big impact when it comes to the level of confidence. it doesn't help we have from the likes of the fed race, suggesting that perhaps there is a higher risk that inflationary pressures as a result of the supply-side stock we see across the globe as a result of covid might actually result in more permanent inflation. >> -- not helping the case for the rally we have seen in u.s. equities.

we continue to see downside pressure coming from regulatory crack downs. we started with concerns about china, now concerns about south korea. we saw groupon losing ground because they are our concerns regulators will step in and writing in intranet giants against abusing their market dominance. >> speaking of regulators, they will be keenly watching -- the dollar bond falling again after the report of a suspended loan rate payment. we are hearing ever grand is having conversations with one bank saying they would be back when it comes to an extension plan. this comes after stich had moved to cut its credit raping -- rating deeper. we talk about a contagion when it comes to ever grand, the systemic risk. we will continue to talk about that and whether there is any

prospect what the government will be thinking even they have moved to bailout -- >> you can't talk systemic risk with a company that has 300 billion in liabilities and takes 2% of chinese gdp. they are a major borrower when it comes to international markets. in china also, focusing on ppi numbers. given the delta variant outbreak. >> inflation numbers top of mind for investors as we get into the start of trading. let's take a look at what sophie is watching. what is top of mind for you today? >> top of mind is risk off sentiment we will likely see through asian markets. key stocks may be a bright spots, but -- looks to extend midweek declines. asia snapped at eight day rally. -- holding a hundred day moving average. as we had to friday and japan,

stock rally in tokyo may hit a speed bump when the nikkei showing signs of overheating. switching up the charts, turning to southeast asia, singapore's virus case count returned to a one-year year high. capital economics expect that government -- will hold back recovery in the near-term and export demand. thus far that has been removed. taking a bigger picture, switching out the chart on smart with the global growth outlook looking fragile. cities, a global economic surprise index have continued to move further negative. we have concerns around whether or not we will see the delta outbreak peeking across the world. in china, we have the second half slowdown looking to be more pronounced which has bloomberg economics forecast for china to -- 9%. >> let's get you to vonnie quinn

in new york with headlines. vonnie: japan's government has reportedly told the ruling coalition it will extend the coronavirus state of emergency for 19 regions until september 30. according to nhk, the emergency covers tokyo, osaka and 17 other prefectures. two regions will be downgraded to less strict measures. nikkei says japan plans to announce written group -- shortened quarantine requirements for travelers from two weeks to 10 days. the head of their who is calling for a hold on booster shots. to make more shots available for poorer nations. the director general says the focus needs to be on vaccinating the most at risk around the world. he complains of too little action in achieving vaccine equity, saying 15% of the one billion doses have materialized. one of the fed's largest internal critics of the risks in

u.s. real estate was an investor last year. financial disclosure is so often -- rosengren four real investment multiple purchases and sales. the boston fed says the trades were consistent with the system 's strong ethics rules. lawyers for elizabeth holmes says she is not the villain prosecutors have made her out to be as her criminal trial begins in silicon valley. holmes faces 10 counts of wire fraud and two counts of conspiracy to commit fraud. citing claims of revolutionary blood testing technology at her failed startup. she and former executive run nashville ronnie were indicted. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn figured -- quinn.

>> reassessing valuations in light of economic risks with money managers from morgan stanley to citigroup turning cautious on u.s. equities. earlier guests say the recovery has not been railed yet. >> things are almost back to normal. >> real economic activity is getting weaker. >> companies are starting to push back the back to office. >> major corporations have pushed off their full return. >> there was slowdown. >> the recovery delayed but not derailed. >> the variant is going to be a risk. >> but i do not think it is going to completely derail. our -- >> we have a healthy trajectory ahead of us. >> we anticipate a better 2022. >> the underlying recovery will continue. >> we are going to have to wait longer. >> our next guest says the overall backdrop remains firm and supportive. let's bring in lori heidel. great to have you with us.

i really don't think you can blame these analysts for bei little more cautious in the u.s.. look at this chart on the bloomberg, how far ahead the u.s. equity markets have gotten ahead of global. 's. our valuations justified? >> the economic backdrop remains firm from what prognosticators were saying earlier. we think there is more room for the market to run. having said that, we always were believers this would be a more elongated recovery. our initial forecast for 2021 was lower than our peers because we thought it would take longer and there would likely be bumps along the way. we have been looking to add positions on pullbacks. >> with those positions be solely in the united states? are there parts of the world where we continue to see optimism over cyclical markets like japan? >> we have been nimble as we

have traded around this market. we recently had added -- in europe and pair that back. we remain overweight they are and redeployed that into some of the more u.s. based sectors. small cap, for example. asia is one area where we happen cautious throughout. similarly we have tried to take a balanced approach focused on china. >> what is your strategy when it comes to semiconductor space? >> it is a great place to be. clearly, supply is constrained but we do think there is good demand and the ability to bring on additional capacity will come online. at the moment, we think there is going to be good support for pricing pressure. >> when it comes to these debates, does the supply

constraint worry you? that is exactly the kind of unhealthy task inflationary pressure we don't want to see. >> supply-side constraints worry in summer guards, but part of it is what is driving that. in some situations there are more temporary supply shocks and that would be a less worrisome supply-side constraint. labor markets for example, we recently had a big miss but it is hard to define how much of that is really that there is not labor available versus behavior on the part of labor markets. we saw wage growth looks pretty good, numbers projected a more healthy supply of labor. part of what we will be watching for is what the underlying dynamics are, not just the headlines. things that are more temporary can be resolved, the things that seymour retractable will be more concerning.

>> we appreciate your time. lori is staying with us because we will be talking about august inflation. we see debt and regulatory concerns looming large. we will be talking through economic implications. another big guest coming up, asia-pacific head weighs in on the global supply chain crisis. we will also be hearing from pakistan. downgrade for the region. this is bloomberg.

♪ >> eco-data coming out of china later. those inflation numbers two and a couple of hours. factory life maintaining the same pace as july well -- while

consumer price -- let's get a check with consumer price inflation. how will the adult outbreak have affected them? >> it is expected to have slowed consumer prices. indications we know the services sector was wack during august, that means less travel. that will take pressure off the cpi rating. the food story has been mixed. pork price in deflation, food prices falling, but other prices increasing. end story is that consumer prices will be 0.8%. not much of a consumer story inspected -- expected in china. >> the gap continues to widen with consumers. what are we expecting factory gate prices to signal? >> the relapse and the real story on inflation is on the factory side. the indications are probably a stable 9%.

we had mixed developments. midstream prices remain stable but all the factory owners and executives continue to complain that income prices remain high, commodity prices are high, transportation costs are high. today's numbers will continue to add to the whole global inflation story on whether or not this is a transitory shot or more permanent. >> how will this affect the pboc? >> we had the second quarter report from the pboc which give us an indication over where they are heading. there are continuing to look for ways to support the economy. and i think most people read the document -- most people think there will probably be a reserve rate or a requirement cut rather's than an interest rate. i think the signal from the pboc is that they are willing to -- the economy but not broad scale

stimulus yet. >> chinese stocks trading. the u.s. fell after regulators in beijing some in the gaming companies again, including tencent. state street says china's discounts on equity valuations given the uncertainties around the ongoing crackdown. with us is laura hano. they could for your time. what do you see as being adequate discounting given what we don't know about the runway of the regulatory impact and what else lies in store across various sectors. is the risk premium adjusted adequately or is it too soon to tell. >> our forecast is that china's growth rate will be around 16% to 18%. that gives you a fair amount of leeway that even at these levels you could have good potential. the recent correction, that 1%

increase gives you a little more wiggle room in the event these crackdowns continue to be on the mind. >> this would be for industries that still continue to survive, albeit with greater restrictions and limitations. do you see a repeat we have seen with education where they go for nationalization? >> it is a delicate balance. china is still very focused on long-term growth. china is very much focused on being a global player. there is a fine balance between trying to put in place regulatory frameworks or other kinds of elements that manage that growth or create that kind of shared prosperity that has been a hallmark for political backdrop, versus doing something that is so destabilizing it risks capital flight which is something they don't want. there will continue to begin

fair amount of policy experimentation, but we believe the current backdrop provides good cover for investors given the valuation levels. >> is that for every sector in the chinese markets? or do you go perhaps into some of those sectors more protected, given the policy path taken by beijing? >> parted it is what your investment philosophy is. china has become such a large portion of the emerging markets index, that wholesale getting out of china on the back of these issues is not feasible. unless you charge -- carveout allegations separately. as an active strategy, we are looking at places like technology and health care and some other consumer oriented sectors where we think there is better potential. >> thank you for sticking around from state street with her views on both the u.s. and chinese equity markets.

next, the bloomberg scoop, goldman makes a high profile external higher. we have more on the bank's new head for asia. this is bloomberg. ♪

♪ >> goldman sachs hired mckenzie had to karen asia-pacific operations. in the bank's most prominent outside higher for asia avenue are as goldman moves beyond international probes into its role of looting malaysia's investment fund. for more, sally bakewell. who is kevin sneed are and how surprising was this? >> this one definitely elicits a few questions. he was the top guy at mckenzie

until earlier this year when he was ousted by senior managing partners. it appears to be related to the fact that his efforts to resolve a number of crises they were facing were not up to scratch. it is particularly interesting because goldman has its own troubles in asia. its own asia business took a battering last year after being -- for the scandal with probes into the looting of malaysia's run mbd investment fund. what we have is -- who was fresh from mckinzie but with issues surrounding his departure. [no audio] >> we seem to have lost sally. however u.s. finance editor. let's get a check of business

headlines. a possible departure from softbank's business friends, the sole senior managing partner is discussing leaving the firm. -- has been involved in three dozen of softbank's -- and only three out rincon. heap -- three out rank him. he has co-authored 14 papers. fidelity investments -- estimates of valuations for the second time this year, underscoring the outlook for the fintech trying to china's regulatory purse. the money manager cut valuations and market cap to about $70 billion come at down from $144 billion. 235 billion dollars just before the ipo was suspended. by don set to be in discussions for $4 billion in bank loans as the crackdown on china's internet crops that -- sources

say tiktok is in talks with lenders to pay off debt. bloomberg reported in july that baidan would work to ensure security compliance ahead of. this listing dollar bonds fell to new low wednesday over a report it -- suspended interest payments for two banks. ever ran toward one of the banks they would not sign off on the payment due november 21 and asked to wait for instructions on the pension plan. treating earlier crippled developments deeper into junk. let's get back to our u.s. finance editor. i suppose going on from all of that, what is the significance now of the trainees markets to goldman's business? >> this shows it continues to be -- the company got ready for approval for a wealth unit in the country.

it is among a number of wall street firms who want to continue to grow their opportunity and it is going to be a tricky path for them to navigate because tensions between the u.s. and china continue over everything from human rights to trade. -- has a huge amount of experience in the region. he has global connections and clients and chief executive officer indeed held that experience in his appointment. in some respects, he may well fit very well in driving growth for the bank, considering he has spent so much time in the region and considering he has dealt with a number of complexities relating to it also. >> what are some of the other big bets they are making around the asia region? >> i think -- is a huge place

for growth. it has just been a thorn in the side of the -- tensions between china and the u.s.. we understand that banks continue to be interested in growing their presence and discussions have been going on at a high level. bloomberg has reported and trying to continue engaging u.s. executives and chinese officials. but these things happen, as the u.s. has warned. biden himself warned companies against too much presence in china because of its unreliability. they are navigating a complex environment. goldman here to appoint sneader is an interesting step and

indication of how complex it is. >> our u.s. finance editor. we're counting down to the start of training -- trading. these are the stories we are watching today. -- ceo doesn't see room for merger. he told the italian newspaper he is not sure it would make sense on an operational front. vision funds senior managing partner is discussing leaving the firm according to bloomberg sources that has been involved in more than three dozen of softbank's bets including soft technologies and it is one of the most senior bonds. an eco-data, august money soft numbers and machine-tool orders. in south korea, peace and defense after north korea appears to have held a military parade. tech stocks in focus as we saw that regulatory scrutiny. bank of korea holding a board meeting for their monetary

meeting ahead of their report to parliament. this is bloomberg. ♪

>> we are in a different universe, it seems in the u.s. and europe. in the u.s., you had a commitment to purchase exactly the same amount every month. this is a clear-cut commitment. tapering means something. in europe, there is flexibility. >> the inflation situation in europe is different from the u.s.. when the covid shock came the economy was not performing well. inflation was too low. so, it is a different situation

from the u.s.. >> it is aced -- a short-term blip we are seeing and hawkish ecb members, among others, are once again too short-term focused. we think the ecb at-large will -- >> hopefully there will be something vocal on this which is to be expected but given the new guidance and do outlook it will be very long time before there are positions. >> we need to watch to see if they are switching. even though they certainly could be reduction in demand, purchases for pet plants this week, i do not think lagarde is going to do anything else but stretch the point. >> some guests weigh in on the decision. policymakers will have to decide whether they dial down emergency stimulus but the composition of the governing council is leaning

dovish. that means the hawks may not get their way. elections won't help their case. that is why today's meeting may actually be good despite high expectations. >> also not helping come of the uncertainty from the fed's leading leader. the leading leader saying the u.s. economic growth slowed to a moderate pace in july through august. the delta variant was the main culprit. supply chain disruptions also adding to labor shortages and that is continuing to be a challenge across the region. this coming on the back of those disappointing august jobs numbers switch u.s. labor secretary marty walsh is tying to a decline in the middle class demographic. >> you think about the middle class, the decline in the middle class and the decline in the labor movement, they are unparalleled.

if we truly want to have a society where we build a true middle-class were enough of america can get into the middle class, we are going to have to see an increase in the labor movement. the labor movement knows they are going to have to change in some ways the way they operate. i think there is a perfect storm. there is opportunity and energy and willingness to organize, but organize the industry step might not be organized but understand their business models are different. >> this week marked labor day, but also the end of supplemental unemployment insurance for a lot of american workers. are you in favor of renewing that? do you think that might help the problem we are having with labor participation where we have a lot of job openings but a lot of people not taking jobs? >> we will see how much of a rolet has at some point soon. the states that ended it early, 22 of them, we didn't see any increase in hiring in those

states. but i do think as we get through the virus and now we are dealing with delta, we want to make sure these benefits were limited. the congress voted in the american rescue plan to limit them until september 6. september 6 came and it is gone. myself and secretary yellen are allowing states, if they choose, to see fit, to extend benefits on a state-by-state basis. they can use rescue plan money, which is an opportunity if they need to expand benefits. if you watch your show all day long, you see certain states unemployment rates are very low, some states are higher, so i don't think there is a need right now to extend those benefits unless the state sees fit. >> marty wash -- marty walsh with david westin.

>> egypt finance minister says the economy is capable of facing challenges from a resurgence in covid-19 infections. mohammed told us in an interview that gdp growth will get an added push from government spending on mega infrastructure projects. he also says inflation has remained within targets. >> we have -- in terms of supply chain, significantly and it helped us to maintain food prices and to maintain inflation within the pelican i improvement in the infrastructure also supply chain which we are still working on. >> coinbase ceo blasting the fcc for what he calls sketchy behavior. the company received a warning that regulators plan to sue. the crypto exchange says the sec has an issue with a new -- that is launching which allows consumers to earn interest on

crypto holdings. ceo ryan armstrong says the regulator will create an unfair market as it tries to shut down the lending product. cafe specific says it fired what it calls a small number of aircrews who chose not to get vaccination and didn't provide proof of medical exemption. the hong kong-based carrier said keeping its customers, communities and families safe is of the utmost importance. the carrier warned in june that the crew needed to be fully in ocular aided by the end of august or face employment review. 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. >> futures pointing to a lower open across asia. >> would looks like japan will join the regional downturn after the nikkei two to five caps an eight nikkei under pressure this morning.

rbc capital adam cole assessing the decoupling of the yen from japanese stocks this year which has seen outperformance for tokyo equities really pick up in the past few weeks. even so, rbc not seeing the dollar yen following stocks high with another leg higher seems to come more likely from strengthen u.s. yields than domestic politics. pulling up the chart, we have seen treasury yields move higher but taking a bigger picture view, not much to shout about with average forecasts looking at the 10 year rate at 164 in the last three months of the yen. before we get there, pimples signaling resistance. and mark treasury yields. >> [indiscernible] pledging to launch stimulus packages over the short term and to defeat deflation long-term. -- promised the 2% target.

[indiscernible] >> i do not intend to change the tax rate for the time being. i hear different opinions saying it should be cut admits the covid crisis or raised considering future finance. i am not committed to what they say and i do not plan to change the rate for some time. >> let's get more from our politics reporter in tokyo. what are the declared candidates offering in terms of fiscal and monetary policy? >> i think we have the selection for the leadership of the ldp coming up. september the 29th. this is an extremely important election for many reasons. one being it is a dominant -- in parliament and therefore the person who wins effectively becomes the next prime minister. they also have to face a general

election in the weeks after that. they have to pick a person who is capable of leading the party into a decent election results. [indiscernible] she has come out and said she wants to see more fiscal stimulus but we have also seen -- also say tens of trillions of yen in stimulus. he has been specific in the near term i think we are looking at -- being stronger on that angle, being very strong about the inflation targets. were not saying he is abandoning it, but i think -- has enterprise to bit more. >> who else can we expect to raise their hand before the deadline? >> we are expecting at least one

more. former foreign and defense minister, he is the most popular option among the public. as we have seen in the past, often they are to some extent -- by the major factions within the parliamentary party. you don't always see the most popular public figure become the next leader. everything is still to play and we do not know who is going to win and we are waiting for an election platform which could come this week. >> in tokyo with that update on japanese politics. up next, thl is among firms facing the brunt of the supply chain disruption ahead of the holiday season. asia-pacific head of -- joins us exclusively to discuss challenges. this is bloomberg.

>> it certainly we have our own solution for customers. we have our own fleet of aircraft. same time, we have a network, a global network with all the carriers. shipping line centerlines. we can leverage those relationships and we will be able to buy those options for our customers. i think to a lesser extent at dhl we are less effective. >> there have been delays, whether because of the -- or the ability to keep up with the increased demand. do you expect these delays to keep going into the christmas

and holiday season? >> certainly i would think so. i think there are two different markets. run is the secrete market. i would reckon that fair a good part of next year, not just this year, but next year we will continue to see the changes we face. i would reckon that at least relevant to the first quarter of next year, the -- will not improve. when it comes to the second half of next year, it depends very much how -- is coming back to the market. >> some of those issues have been -- bloomberg showing our viewers how those calls have ballooned to decade highs. but do you expect those costs to stabilize. >> i think it is a very difficult judgment based on the current situation because of the high rates we encounter now, it

is a combination of different factors. even before the pandemic, there were already issues in terms of congestions, delays because of the infrastructure issues in certain countries. and then came the pandemic. there were lockdowns, reductions of manpower, creating the troubles we face now. of course added to the delays, we are running short of container boxes. that also creates an extra layer of challenges. in the last few months, we encountered extra incidents like the suez canal congestions. we have the -- and the -- closure, all of these are adding fuel to the fire. i do not think the current situations will resolve.

i would reckon we should expect the new normal. >> an array of challenges, but it -- when it comes to demand, there is a lot out there. where are you seeing the most volume? what product categories are important -- are popular? >> during christmas, consumer products and in particular, e-commerce is coming on strongly. also, household products that are also being ordered. i think the other area we continue to see pharmaceutical products and health care products. certainly laptops at all of these are under high demand. >> when it comes to supply chains, do you think there is anything else that businesses can really do as well as

logistics forward to be able to make them more flexible and adaptable giving the growing and changing demands of the pandemic right? >> i think at dhl, our advice to our customers are a few things. first, we have the stream assessment. that is to analyzed and assessed the supply chain of our customers and identify all of the weak points in vulnerable areas to the supply chain. then we would have to take action now to mitigate the risk they are exposed to. the other vibe -- the other advice we have to customers is that they should plan really well ahead for the christmas season. plan manufacturing schedules earlier and more accurately so as they do not miss the boat.

>> be prepared. thank you. that was our exclusive conversation with dhs asia-pacific ceo. the highly anticipated fraud trial -- fraud trial is underway. we get an update next. this is bloomberg. ♪

♪

>> -- is finally having her day in court. prosecutors have called the case of about fraud, lying and cheating. her lawyer says she is not the villain in this case. joining us for the latest is our west coast reporter ed ludlow. -- we are in for turbulent weeks as arguments given in the coming months, but where did the defense focus their attention they want? >> they leaned very heavily on the idea that elizabeth holmes acted completely in good faith. that she didn't set out every day for 15 years to be fraudulent, sheet jet newly believes in the work in terms of blood testing technology and the idea they set out to lower the cost of lab tests. the defense made this point that because the company had failed

ultimately, this was 2018, prosecutors are simply trying to vilify her for that reason. failure around does not equate to criminal offense, is what they try to argue. although, there were scant details on how to back that up going forward. >> what mention was there of her former boyfriend? >> go again, we thought this would be the center of the defense. this idea that the president and coo from the early days had been involved in an abusive relationship with holmes. that he had been psychologically abusive and controlling of her. for that reason, we were led to believe by unsealed court documents that they would argue she could not have had the intent to mislead investors were deceived customers because she was under someone else's control. that is something sonny has completely denied. they mention very quickly his character, how he joined in the

early days and was a powerful influence and they did mention the relationship, a side which we hadn't seen but will in weeks to come. >> what are we expecting in the coming weeks and months? >> it is going to be a long trial. it will be interesting if the defense puts elizabeth holmes on the stand because the prosecution says they have documentary evidence she had conversations with her employees, her own brother that would have brought to her attention feelings and problems within the company, prove she knew what was going on. legal experts and sources say that they won't pressure on the stand, they will wait to downplay this idea of fraud and play up that she was acting innocently and really believes in the cause. >> extraordinary story that is about to get more interesting. ed ludlow, west coast reporter. let's get you a check of the

latest headlines. bill gates taking control of the four seasons hotel chain in a bet the hobbled plug -- luxury travel sector will be -- cascade investment agreed to acquire a stake in the hotel company from kingdom holding company. game stock extended trading after reporting a second quarter lost. it comes on the backs of revenues that be concerns. the company is planning to become more of an online merchant. >> we are focusing very heavily on china's crackdown on tech firms. we have to look at korea because internet giants including -- have taken a hit after lawmakers warned against them for abusing their market dominance in this pursuit of profit --

we are headed to the korea open. why are lawmakers in south korea blaming tech companies? >> good morning. these lawmakers of the ruling democratic party have warned that they wouldn't just sit back and watch this growing list of cookout. cat cow has been one of the most beloved companies in south korea. it started as a small messenger company, which has become the dominant messenger app in south korea. there is no life in south korea without it. in the last years we have seen this company growing influence in all areas of life including banking, sharpening -- shopping and mom-and-pop areas. there has been concerns about how kakao has been growing its

influence. it's strategy has been to gain market share first with cheap prices and want to have enough market share, take a bigger cut from companies like hair shop owners who don't necessarily have enough negotiating power lifelike kakao. >> what is the outlook when it comes to big tech? we -- >> we haven't seen such huge falls like yesterday's and for a neighbor which is kakao's rival land kakao has seen $10 million in market cap wiped out in just one day. regulatory issues are not just one time issues. even though lawmakers have not legislated or proposed -- to control these companies right now, they will continue and they will be watched. >> let's turn to sophie who is watching those revelatory risks

for korean tech. >> take a look at what stocks could position to rise this out at citigroup. analysts think about neighbors being free from risk assets. one reason is the conservative approach which has not seen the company take a direct entry into businesses like mobility, food delivery and logistics which are in the crosshairs for lawmakers. keeping an eye on hyundai motors , helping operations until september 13. sydney stock upgraded to buy after that steep selloff. the bank said it is overdone. china is still robust. in tokyo, we are watching renewable energy stocks after ldp leader hopefuls spoke of the need to restart energy to some degree to meet decarbonization targets. >> will get back to seoul,

sydney and tokyo. asian stocks could slip at the early part of the session on growth concerns in u.s., regulatory crackdowns drawing down on sentiment. this is bloomberg. it's moving day.

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shery: hello and welcome to "bloomberg daybreak: asia." i am shery ahn new york. shery: at -- haidi: and i am haidi stroud-watts. asian stocks that is that as investors continue to fret over the post-pandemic growth outlook. bloomberg's credit tracker finds stress levels are eating even as

bonds play all-time lows. singapore gaining, and an e-commerce company. shery: let's turn to sophie for what stocks to watch. sophie: stocks to watch and japan include energy stocks, renewable energy in particular. -- book of the need to restart nuclear energy. look at what is going on with tokyo share market, downside pressure for the nikkei and topix which has signal overheating after an eight day rally, the yen holding on at the one spot level. moves were dollar-yen will come from u.s. yields marching higher. switching up the board to check out what is happening in the open with south korea, a board meeting for monetary and credit policy thursday. kospi extending declines for a third session, off by .5 of 1%

while we are seeing the korean won accent losses after the biggest drop in one week. fintech names under pressure in seoul. wrapping up for south korea's internet sector. switching at the board, checking what is going on in the asx 200 after the drop on wednesday, downside moves for the asx 200 wealthy aussie yield curve flattens. take a look at what is going on with u.s. e-minis, downside pressure, leading the drug early in the asian session. this markets are debating whether you should be getting exposed to cyclical, this week reducing exposure to cyclical factors. haidi: staying with that strategy, our next guest says he

does favorite cyclicals, but he is looking at the balance that exposure of tech and health care as well. joining us now is alex, great to have you with us. when it comes to cyclical place, does that mean you would be digging further into japanese equities even after overbought territory in the last few days? >> yes, i still like cyclicals globally, especially on the back of the recent selloff as we see delta concerns peaking and rising vaccinations, but on japan we are still positive. we have been positive for most of this year. we think there are upward earning revisions ahead of us. they are late in starting the vaccination program but they are ramping up so we think we have a reopening ahead of us that tends to favor cyclicals. haidi: the other headwind other than delta globally, is there an

argument that investors here companies are being summoned by regulators, but perhaps the willingness for these companies, tencent, others to go along with these regulators to make changes something comforting for investors? >> markets will certainly adjust , and we have seen rapid change in the regulatory picture in china, and that is where we have seen quite a bit of volatility. markets are unsure with the impact will be. over time with companies adjusting to new regulations, over time markets will also adjust, but it will take some time to get a better sense of how these regulations are impacting markets and impacting their ability to grow. it will take some time for markets to injustice he with the impact on fundamentals is. shery: we are now seeing kakao

falling in the korean session after plunging 10% on wednesday. is regulation in korea something you are worried about? >> not something that we look up that closely. as far as career grows -- goes, we are concerned more about the global picture. if you look at the indexable from a korean equities perspective, it tends to correlate with global conditions in terms of global trade, industrial production, semiconductor prices. there we are still optimistic and recent numbers were quite strong. from a company specific level, yes, but we tend not to get down to that level and look more at it from the macro picture, and it still looks relatively positive. shery: we have seen more flooring outflows -- foreign outflows in south korea. what has changed there? >> we have seen outflows across

asia recently mostly driven by foreign investor flows on the back of what we have seen around concerns from the regulatory picture in china. we have seen outflows out of em bradley -- broadly. you have korea, china, taiwan are the three largest in terms of exposure within em funds, and the broad flow is impacting korea at least recently. haidi: health care is the sector you are constructive on. where are you saying the most compelling opportunities? >> it is very broad, u.s. health care providers, pharmaceuticals. for us it is about health care innovation. we are thinking about moving into midcycle. we like cyclicals on the back of continue reopening on the world. it shifted quick, so mid balance for structural growers, and that

is where we like health care, health care innovation, and health care technology we think it still has a potential. shery: great to have you on. the government in japan is seeking to extend the state of emergency. this is the fourth state of emergency across japan, including tokyo, and now we are hearing the government is in fact hoping to extend that emergency for tokyo and large parts of the country by more than two weeks to september 30. the current sunday expiration day -- that was the original expiration day but we continue to see high levels of delta variant infections putting a strain on the medical system. more than 70% of the japanese population is under that virus state of emergency, and the government is planning to extend that emergency for another two weeks.

let's get to vonnie quinn with the world headlines. vonnie: the u.s. secretary of state has criticized hong kong authorities for arresting four members of a group that organized an annual vigil to commemorate the 1989 tiananmen square massacre. in a twitter post blinken called the rest politically motivated at a blatant abuse of law. they accused the group of colluding with foreign forces. lawyers for theranos founder say she is not the villain she is made out to be. she faces 10 counts of wire fraud and two counts of conspiracy to commit fraud. claims of revolutionary blood technology at her fields are. she and her former executive order indicted. one of the federal reserve's largest internal critics of the risk and u.s. real estate was an active investor last year.

financial disclosures have said the president rosenberg missed stakes and failed to disclose multiple purchases and sales. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: we are getting more baking lines out of japan, the economy minister now speaking in tokyo, saying the government is seeking to extend the state of emergency, the fourth state of emergency in japan given the coronavirus outbreak. they are planning to extended to september 30 as we continue to see i levels of infection with the delta variant spreading across japan. the virus state of emergency include not only tokyo but large parts of the country already.

more than 70% of the population are under that virus state of emergency, nikkei continuing to fall, already at a one month low. we have seen selling because of risk positive sentiment. we are seeing the japanese yen hold steady at that 110 level, the topix also dumb. take a look at movers in korea, we continue to see downside for names like kakao and naver. we saw double-digit losses for the stocks as we start to see more hints of regulation against internet giants, korean lawmakers warning these giants against of using market dominance. haidi: it is an echo of what we are seeing in china. we are going to try to get more insight when it comes to the chinese economy, whether the regulatory crackdown is having an affect -- impact.

our guest will be joining us to go through those expectations as well. everbright's dollar bond falling to fresh lows, the contagion risk deepens. we get more on the mounting debt risks in china. this is bloomberg. ♪

shery: looking at side's credit situation, despite the liquidity crisis at every brent and concerns about the company, it seems a broader market contagion is so far been contained according to our china credit tracker which measures conditions in offshore and onshore credit markets. it shows stress levels dropping in august for both the onshore and offshore market. property developers hold a large share of the lowest quality debt, and data showing the pace of default is slowed.

the number of defaulters has dropped sharply for the first time this year, but there are provinces showing more distress as this map shows in red. this does not mean the credit market is out of the wood, billions will be coming due in the next 12 months with september and november being critical for chinese firms facing repayment pressure. haidi: speaking of repayment pressure, dollar bonds of falling to fresh lows after a report that this firm plans to expand loan and trust payments. our credit editor joins us now. i guess another incremental downside to element for evergrande. what are we expecting in terms of this extension proposal being promised? >> it is really interesting, the downgrade hardly move the bond that all. what push them further was this

report that evergrande a suspending interest payments on loan, and one of these lenders is awaiting a plan for possible extension. investors are looking for clarity on this. that is due on the 21st of september. this is worrying. there are these potential for missed payments going on, it not happening in the public market. it shows the dexterous evergra nde is currently facing. shery: remind our viewers how important this company is when it comes to potential systemic risk for broader markets. >> i think is important, it is asia's biggest issuer of junk debt. it makes up a significant chunk of indexes with high yield, so whatever we see, the big moves

in evergrande we see a group of weaker rated property friends -- funds. beyond the credit market we have to think about the broad network of supply, contractions, and of banks. we also have a financial relationship with the company. shery: our credit editor with the latest on evergrande. it is not just property developers facing scrutiny agenda. we sought china -- tumbling after china's video game makers were summoned by regulator. an ev maker fell, unveiling to biggest fundraising plan since didi/ . let's bring in stephen engle. let's start with online gaming, it would there? >> never a good sign when you

were summoned by the regulators, and that is what happened with these gaming companies, including tencent and others. we have some of the details on state media what they were told to do. i am sure it was marching orders on how to rectify areas of the best is the government does not like. we are curing agencies, and i am talking about the publicity department of the central committee, i main body in the government and also the national press and publication administration, they have told these gaming companies they must enforce new regulations that came down in the less company the -- last couple of weeks which limited games to three hours a week and other areas of gaming they want cleaned up. they also must and their focus on profit -- end their focus on profit to prevent addiction by

minors. let's also avoid obscene and unhealthy tendencies says -- such as money worshiping and effeminacy. haidi: i like to think about -- a lot to think about. the stock price, investors did not like that at all. >> it went down about 6%. this is an interesting case, and we also have bytedance going to bank seeking upwards of $4 billion. ne-yo has announced they will go to the market and seek to million dollars at the market. it is -- $2 billion. these are companies that expected to do large-scale ipo's , but because of regulatory scrutiny in china, but listing

scrutiny has been increased in united states, they are turning to alternative areas,neo going at the market for $2 billion. this could be for cash issues among supply chain disruptions among semi conductors, and bytedance are taking advantage of the low interest rate environment and they are going to repay debt and replenish gas. it begs the question, is this in lieu of delayed ipo's either in hong kong or the united states? haidi: stephen engle there, to get more context and analysis on john's crackdown on these tech giants is on redlines and china big tech. lots more ahead. this is bloomberg. ♪

>> i think that china is going to have one kind of very strong creation in the technological future. it is one of the reasons we call it the land of upscaling. silicon valley has some too, but it is very much a game on circumstance. haidi: reid hoffman speaking about china's future amid its crackdowns on peer to peer conversations. shery: that crackdown in china continuing and effecting the commodities space especially when it comes to the property sector and construction taking a hit. copper minister rebound but only after falling the most in the previous two days. iron ore under pressure given the steel output, weakening the outlook.

a new picture for aluminum, now around the highest since 2008 given the political turmoil in guinea adding to worries about tightening supply. haidi: we have been talking about the supply chain constraints, the commodities to rate complaining -- plain into the supply chain risk as well. someone is said the supply chain is improved significantly and tells bloomberg inflation will start coming down once supply balances begin to normalize. >> you came to covid-19 with a low interest rate environment. low interest rate environment, so with covid-19 you start making decisions and you spend money with the stimulus package, blah, blah, blah.

after that, description, a huge disruption in supply, with demand starting to pick up. it caused inflation, which we are witnessing now. once the current imblanace -- imbalance comes back to imbalance i am expecting inflation to start coming down and things will move to normal. >> no material costs for you and the budget in subsidies then? >> currently, yes, i am facing the increase of some goods, which are mostly imported. we are one of the biggest importer of wheat. we are affected by a high increase in wheat prices, also

oil prices went up and other materials. temporarily in essential goods and materials are causing disruption. manus: but your base case is temporary. you are not worried about an early taper by the federal reserve in terms of their bond buying program? >> look, we are monitoring that, we are closely following. that will affect the cost of borrowing. when extent this will affect particulars normally in the international market. this will be 2023 rather than 2022, so let us wait-and-see. manus: as we look at the

numbers, $30 million of local egyptian debt is held by foreigners. the risk is this, are you prepared and are you ready for a taper? >> look, it is not the first time. i remember october, december 2019 with emerging markets, we saw $20 billion. we have to be ready always. manus: are you ready for that exit is of a capital? are you prepared for that? >> with such a situation it would not be the first time. it happened with us over the last three years twice. shery: the egyptian finance minister there. bill gates is taking control of the four seasons hotel chain.

in a bit the travel sector will rebound from islam. an investment company agreed to a stake in the company. cascade will pay $2.2 billion in cash to boosted chair in holdings 271% from 48%. a possible departure from softbank's vision fund, sources tell us a managing partner is discussing leaving the form. he has been involved in more than three dozen of shopping's beds and there are only three executives who outrank him. chinese share in unicorn hello are said to raise funds after abandoning u.s. ipo plans. the antgroup back started is seeking $300 million in a private fundraising round.

coming up next we get more on china' is crackdown as fidelity scratches its evaluation of antgroup for the second time

vonnie: this is "bloomberg daybreak: asia." japan a government will extend the coronavirus emergency for 19 regions until september 30. emergency covers tokyo, osaka, and 17 others while two regions will be downgraded to less strict measures. nikeei -- nikkei -- fed of the who is calling for a whole and offer a booster shot through the year to make more

shots available for poorer nations. the director general says the focus needs to be on vaccinating the most at risk around the world. he complained of too election in achieving vaccine equity, saying less than 15% of the one billion doses have yet to materialize. north korea appears to have held its first military parade since president biden took office. according to a new station the south korean military is monitoring the situation and beyond yang -- pyongyang. it was unclear if kim jong-un attended. they typically broadcast parades 12 hours later. -- becomes goldman's most prominent higher for asia. mckenzie management voted to

remove the leader earlier this year after a single team of top executive as he sought to resolve scandals over past client work. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. haidi: let's get you straight to sophie. sophie: this thursday is right across the board for asian equity markets, early of the session with japan training that downturn stepping in a taken for nikkei225, softbank among the biggest drag to japanese socks too far. the cost be heading for a third day of losses. in sydney, asx 200 lower. switching that the board, a closer look at stock movers in seoul, one highlight, extending

some, the -- falling as much as 5.4% and naver extending losses. citi saying it is better for positions to write out their regulatory risk. stocks in japan, utility names, we are seeing some of that sector gained ground, as kono speaks of the need to make carbonization targets, the likes of texco jumping. shery: let's turn to regulatory risk in china as beijing's crackdown on various sectors can in you. the big question, is china's still investable? here is what some guest on bloomberg tv had to say earlier. >> i think china is investable. >> what is happening is data security is low, it is something we are still observing. >> in some ways these measures

are making it favorable for investors. >> it is in economy we cannot live without. >> the contours of it are not entirely clear. >> they are moving toward favorite regulation, trying to create a level playing field. >> there are some investment opportunities. shery: in under an hour's time we get data out of china. our next guest has one of our lowest estimates for cpi and is also just below consensus on ppi. our guest joins us from hong kong. give us your estimates for inflation numbers and why. >> the market is anticipating our data for august due to the double whammy of flooding and the covid resurgence. it is likely to be hard-hit, and

these developments will force inflation. the vegetable price search -- surged due to flooding. the service price may have fallen because of stringent containment measures that affected contact intensive activities such as travel, tourism, entertainment, and tapering. we think the consumer price may have edged up month on month, but year on year inflation, 7% from 1.0% in july. that is lower than the market consensus. shery: to your point on growth taking a hit in china, there is been a heated debate over what common prosperity means,

especially whether these policies promoting equality will lead to sacrificing growth. where do you stand? >> i would say the government has achieved a moderately prosperous society this year, so it is a natural next step to target common prosperity. i see it as a return to the traditional socialist agenda, that is to create a society with abundance and everybody do their best. i think this is no longer just a slogan, this is a clear, concrete objective to be achieved by the year of 2049, and this will feature prominently in policymaking in the future. the government is made clear it is not about egalitarianism, it

is not about rubbing the rich in terms of tools to achieve common prosperity. they highlight the need to greet a comment level playing field by creating equal access to public service, for example, education, social security, and housing, and i think the challenge for the government is to avoid suffocating entrepreneurship. haidi: does a return to the socialist characteristics mean we should expect more nationalization across other sectors? >> i think the government, especially in the vice premier made it clear it is very important to continue to support the private sector because of its to gdp, tax revenue, innovation, most

importantly. i think the government also made it clear they would protect property rights, intellectual property rights. i think they want to reduce the disparity in terms of income and wealth, and they will you will's -- will use government tools like taxation audit wealth in order to create a big middle-class, which will provide a relatively stable social structure, and in the meantime it will be beneficial for consumption. haidi: is the bigger problem demographic, and are policy measures to try to fix policy mistakes going to have any effect at this point? >> i think the demographic -- the census released earlier this

year suggest china's demographic dividends are being exhausted, but on the other hand that is exactly china's policy agenda has started to change. to encourage a third child, but in order to achieve that, common prosperity is coming to the beach or to reduce the cost of raising a child, including education. all of the regulatory policy, the common prosperity theme, these are all quite consistent, and that is also in response to less favorable demographic changes. shery: our chief greater china economist there. as developers have/evaluations when it comes toantgroup's

valuation it really underscoring -- our guest is joining us, this is such a come down from what was the crown jewel in corporate china, what are the details of this latest evaluation cuts? >> right now evaluation they are assigning to ant is $70 billion -- $78 billion. at the peak of the ipo they were planning a valuation as much as $235 billion. it is unclear whether this was due to valuation cuts or a fund holding change, but it does add downward pressure to all of the funds that look at fidelity for guidance in terms of where they are assigning the valuation. if you look at global funds

across the world, carlisle, gic, these are the names that have invested into ant. shery: what does it mean for these funds? >> it is unclear because not all funds disclosed their holdings. we learned a few months ago companies were cutting their valuation of ant but it is unclear how much these funds are adjusting the valuation. for ant it does seem like the ipo is still many months ahead. there is been talk about a revival given the overall. shery: coming up, online gaming and e-commerce firms take a tumble after launching the secondary -- largest a very

offering -- secondary offering to date. the details are just ahead. this is bloomberg. ♪

haidi: following post-market rate after offerings. and bonds in the largest secondary offering of the year today. our chief southeast asian correspondent joins us now.

>> first of all, that 3% drop is really a drop in the ocean, because it has some 70% year today, are the causing the den. 11 million shares worth $3.8 billion. if you add volumes worth $2.5 billion it will be the largest since t-mobile in the u.s.. it is unclear why they are raising funds. it has been aggressive in southeast asia and wants to capitalize on digital transformation. 70% of adults have gone online, and since the pandemic started we have seen 17 million more online consumers, so there was a lot of potential in a region of about 600 million people, so that could be the reason why sea is looking to expand.

shery: tell us more about the company's broader strategy, especially when it comes to focus on gaining. >> it was founded on gaining, it was a game downloaded about one billion times, that is a lot, but it is gone beyond gaming, e-commerce, it has gone into digital banking, insurance, wealth management, other financial services. it wants to be everything digital to all of its consumers, and it has paid off. look at its revenues in the second quarter, 160%, but in terms of profitability, it is good to post a profit. investors seem to be quite happy with the strategy so far. we talk about how the stock has surged 70%, and their expectation is that the stock will continue to do well. one of the founders of sea is

sitting pretty, i suppose. let's see how it goes from here. shery: our chief southeast asian correspondent with the latest. let's turn to this battle brewing between coinbase and the fcc, the regulator threatening to sue coinbase if it lodges a new product that allows users to earn interest on the digital asset. the ceo is calling the approach sketchy. su keenan is here to break it all down for us. could this impact the industry? >> absolutely, and it is well known that -- views cryptocurrency as the wild west. it is the result of a planned launch that would offer interest

on stable going. that triggered a warning by the sec effectively to the entire industry that it would sue coinbase if it let investors earn interest. coinbase blessing the sec saying it would create an unfair market if it tries to shut down lent. shares of the biggest crypto exchange were down 5%, managing a loss to the closed by almost 3%. coinbase did reveal in a blog post that it had received a notice, a formal rather scary notice by the sec to any company that they may pursue enforcement action and have opened a formal investigation. it is also a request for more information. the coinbase ceo as said we are being threatened with legal action before a single bit of actual guidance has been foot --

put forward to the industry. he also notes litigation should be a last resort and not a first resort. haidi: in the meantime one piquant supporter mark cuban is urging coinbase to be aggressive in its fight. >> we are talking about mark cuban who is a big adversary of the sec having won a case when he was unfairly accused of insider trading. mark cuban has put out a series of tweets in which he urges coinbase to push back in a major way to try to prevent the agency from winning a legal ruling that would allow it to assert more authority over digital points -- coins and defi. even former officials of the sec

i indicated they are a bit shocked at the aggressive posture the sec is taking against crypto. bitcoin and other digital assets have taken a hit in the last 24 hours. there was that flawed rollout in el salvador to make crypto a legal tender there, and there is no concern of and sec crackdown and increased scrutiny. haidi: coming up next we take a look at the hurdles of the #metoo movement in china at -- in the wake of the alibaba case. we are looking at what the victims are burying their. this is bloomberg. ♪

shery: here is a check of latest business flash headlines, by is said to be in discussions for $4 billion in the bank loans as a crackdown on china's internet sector cast out over the timing of its ipo. sources say the tiktok owner is in talks with federal lenders for a syndicated loan to pay off debt. bloomberg reported in july bytedance was working with regulators to ensure data security compliance ahead of its listing. evergrande's dollar bonds to new

lows on a report that it plans to suspend interest payments. according to rtd intelligence it told one of the banks it would not sign off on a payment due september 21 and asked her to wait for instructions on that extension plane. it earlier cut the developer's credit rating into junk. neo dropped the most intimate weeks after unveiling plans to sell off $2 billion of shares, the biggest u.s. fundraising planned by chinese firm since -- listing and would please cash amid supply chain descriptions and ahead of its plan hong kong listing. haidi: the decision by chinese prosecutors to drop charges against the former alibaba executive accused of rape underscored the challenges facing women. the details of this case,

developments, what does it tell us about the legal framework for sexual assault survivors? >> i think it tells us how high the bar is in order to prosecute these cases successfully, because good knee -- need a high bar of evidence, which some legal scholars have described as 80% or higher that this event took place, which includes videos or screenshots. shery: what does this say about the biggest hurdles for china's #metoo movement? >> i think it shows companies need to institutionalize anti-sexual harassment policies and not leave it up to individual managers. it is likely more cases of china's #metoo movement will continue in the workplace. haidi: how much of this is an issue of the fact that the central government is wary and concerned about any type of

activism, and within that is feminism and something like me too? >> it is impossible to know. this is a very tricky subject, so no one would give us the smooth answer, but there is of course an intersection. shery: carry with the latest, let's turn to sophie for some of the stocks to watch. sophie: we are watching tesla suppliers in china and across asia after the carmaker reported a near 50% monthly jump in domestic china shipments in august. china's property sector very much on watch amid concerns tightening may have gone too far, which morrissette -- the second half. it is too early to ease property curbs, due in part to the and prices in homes remaining

historically high. we are keeping an eye on chinese gaming companies, regulatory's with further oversight, which sent adr's tumbling. a bottom may be forming for chinese internet names, including morgan stanley. we have seen tencent shares buyback above levels we saw before the late july garage on regulatory hits. shery: we continue to see broad downside for markets across asia, nikkei225 down .6 of 1%, being led by discretionary stocks, around that one month low. we have seen risk on sentiment in the previous patient that is evaporated, especially as we heard from the japan economy minister that the government is seeking to extend the state of emergency given virus cases across the nation. prime minister suga will be

hosting a news conference at 7:00 p.m. local time, the kospi down .7 of 1%. i third day of losses -- a third day of losses. 's in south korea it may be facing regular tory pressures. watch out for names like kakao and naver. we have kiwi stocks also down .3 of 1%. haidi: and of course really following the debt we saw in u.s. stocks, the s&p 500 retreating for a third straight day. we saw the dip in the nasdaq 100. this is where we are when it comes to u.s. futures, also inching lower about .25 of 1%. we continue to see that downside when it comes to china's tech with the summing -- summoning of chinese regulators, seeing adrs

suffering overnight. treading pretty steady at the moment at 6.4609. -- discussing is market strategy and the view of the market economist reacting to the latest inflation numbers. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. -- this is bloomberg. ♪

♪ david: this is my kitchen table and also my filing system. over much of the past three decades i have been investor. the highest calling of mankind was private equity. then i started interviewing. >> i watch your interviews. i have learned in doing my interviews how leaders make it to the top. >> i asked him how much he wanted, i said to 50. i didn't negotiate. i did no due diligence. david: i have something i would li