haidi: welcome to daybreak asia. >> we're counting down to asia's major market opens. shery: i'm shery ahn. our top stories this hour. asian stocks dipping as the delta strain sour sentiment. democrat said to post new corporate and capital gains taxes as bidens of economic plan

faces pushback from his own party. plus, new polls put japan's vaccination minister as front runner to succeed the prime minister. haidi: one of the big data points we watch out for is the u.s. consumer data imprint. we see if it will continue to paint the picture of what fed chair powell has told us, or if we are going to see renewed signs that it is a bit more persistent. the forecasts are that we will see a fourth straight month of some -- of consumer price pressures gaining at the annual pace of 5% or greater. a key for bond investors potentially to get a little more clarity, particularly in light of that bigger than expected jump in august for wage growth. shery: not to mention the ppi numbers. it really dampens market sentiment because people were thinking, perhaps the fed will

have to act sooner but when it comes to the global capital markets, excitement all around. $40 billion worth of deals just last week. september traditionally very exciting when it comes to new listings and really a lot on the pipelines right now. haidi: a lot of the pipelines when it comes to eco-data -- this is one of my favorite data weeks for for -- for china, when you get the domestic activity numbers. retail sales, industrial production, in particular watching retail sales because we know there have been delta outbreaks, targeted lockdowns. and see if that plays into consumer sentiment and the amount of spending we see. also coursing the tech rackmount, the regulatory crackdown across different sectors is starting to have economic weight. shery: really when it comes to the targeted lockdown, not having a bite in the japanese market for now, at least for now. when we saw the prime minister announced his resignation and

then this usually to when it comes to the markets in japan from the likes of j.p. morgan securities, analysts are becoming more positive on japan and we have seen foreigners buy into the japanese market this year, on turn to be the highest since 2014. foreigners are accounting for two thirds of japanese trading. something to watch out closely four. haidi: we will watch the start of a new trading week. we take a look at what is life ahead. sophie cameroon watches the market. >> we could see a tepid start this week. the offshore yuan holding ahead of the china -- the chinese data. growth is rising at the slowest pace since december 20 18, underscoring the downward pressure on the chinese economy. gold holding steady below 1790 after the first weekly loss.

pulling up the chart, amid the debate and inflation has speak -- has peaked. we have seen global gas prices outpacing gains and other commodities. as you can see from the white bar on this chart, economists warned elevated energy costs could be another list that another risk factor for price pressures. we have seen container freight showing no signs of easing the line on the chart here. our colleagues know that the container shortage will maintain the upside pressure, which leads to japanese marine transportation companies to run higher. the country's largest shipping company, that is seeing a 230% year to date jump. shery: we have breaking news coming from the financial times. we are hearing that beijing wants to break up alipay.

the one billion press -- one billion plus users super app. they want to create a separate app for the loan business. this according to the financials i'm saying this would be the most visible restructuring yet of the fintech china as we continue to see regulation and scrutiny among chinese tech companies. regulators have already ordered at two separate the backend. we will be watching to cf news of more regulation actually continues to affect the broader markets and sentiment, as well. haidi: huge applications for the lending business, long seen as the ground to offer jack ma's empire. let's get more analysis from brian jacobson. he joins us now. brian, they're such a difficulty in predicting the correct valuation. how much visibility do we have

given that we continue to see the incremental chipping away of these profit streams? guest: probably little to none as far as the visibility. i think that is why one of the reasons we are looking at investing across emerging markets is to savor more of those areas, like latin america mama emerging europe, middle east, north african, south africa. basically, emerging markets ex china. it's not that we don't like china. it's just we would much prefer to take more of a security selection specific approach to investing their as opposed to a scattershot index approach because we think some of the bigger beneficiaries of this more -- if you want to call it egalitarian economic expansion they are trying to orchestrate here, is more on this cult -- on the smaller cap to mid-cap size. when you look at a lot of major indexes they are dominated by the major cap tech companies

over there that are also in the crosshairs. haidi: tell us about some of your selective themes or names that could prosper from the common prosperity themes. themes that are not participating in the disorderly expansion of capital and order. guest: i cannot mention specific names but as far as the different sectors that we really like, they are more those geared towards consumers. if you think about if it is a more a gallon terrien lift to the economy, where is the common prosperity seems times to the consumer, anything that health care, consumer staples, consumer discretionary, but not necessarily luxury retailers are still being more discriminating as far as who is actually selling two more of your typical household. we think those would be the biggest beneficiaries. shery: we saw the yuan

strengthening on the call last week. that faded away quickly. how do you factor in the fact that we might be getting more geopolitical tensions? guest: that's one of the reasons why, broadly speaking, i think a lot of people thought that the president would take a different approach to china then the president -- then president trump did, but it is very much of the same cloth, just a slightly different tone. shery: do stick around. brian jacobson, wells fargo asset management senior investment strategist. he will stay with us. we discussed the administration, set to be weighing a new investigation into chinese subsidies and of the damage to the u.s. economy. let's bring our chief north asia

correspondent stephen engle in hong kong. steve, is this an extension of the frustration we have seen from president biden when it comes to that not even a phone call on friday? reporter: it could be. as brian pointed out, the administration has a different tone when it comes to china but the frustration is still there. obviously as we heard that joe biden expressed some of the frustration on the phone call with xi jinping last friday. for his part, xi jinping also saying that the policies of the white house, whether trump or biden, have caused serious difficulties in the relationship between china and the u.s. it was the second phone call but there are lots of issues to get through -- to get back to what it was pre-trump administration, if that is even possible. one way is to of course go after china on the subsidies front and

we are learning from sources that the bloomberg news scoop that the biden administration is weighing a new investigation. the investigation has not been formally launched according to white house officials. however they are looking at possibly looking at this investigation into chinese subsidies and the impact they are having on the u.s. economy. we are hearing the u.s. trade representative, as well as the commerce secretary gina raimondo, met on friday to discuss a possible task for -- possible path forward. haidi: we just heard the news, the report from the ft that asia -- that beijing wants to break alipay. the $1 billion super app. they want to create a separate loan business. this is, as a surprise? reporter: as we explored this issue quite in-depth in the special red lines, i was surprised back in the early days

of this now 9, 10 month saga with amt, i was surprised it was not broken up earlier. we learned thatant would be folded into a holding company which would be overseen by the pboc. obviously, the beijing authorities are worried about these companies. these are the two micro lending units of at. the fact that only 2% of those loan psycho out are funded by alibaba, the rest are underwritten and securitized by the state banks. so there is a big risk there obviously. to break out and sell -- and separate them, which is their biggest revenue generator. alipay used to be, but it is not. it will shake up the valuation of ant if you celebrate alipay

to the most profitable parts of the business. we will see how it plays out. haidi: those two combined, almost 40% of total revenue. definitely one to watch. we will monitor the story but that is the latest we have from stephen engle. lets k2 vonnie quinn with the first word headlines. >> north korea says it successfully testfired a new type of long-range cruise missile on saturday and on sunday. the state news agency says the missile that targets 1500 kilometers from the launch site. last week north korea staged its first military style parade since joe biden became u.s. president. kim jong-un presided over the event. the yuan nuclear watchdog has signaled progress in talks with irani and officials in charon over access to the country's expanding program. tehran says iaea inspectors will

be able to replace damaged surveillance cameras and memory cards. access had been granted under the 2015 nuclear accord. a new pulled conducted by nikkei and tv tokyo suggests japanese vaccination minister kono is the favorite to replace the prime minister as leader of the ruling ldp. 27% of respondents opted for him while former dispense minister ray second with 17%. lawmakers vote for a new leader september 29. epic games has filed an appeal after a court mostly sided with apple and its antitrust lawsuit. the judge rejected epics claim that the iphone maker is a non-napoli and not order apple restore fortnite to the app. they did say that they have

engaged in some anti-competitive conduct, ordering into allow developers to let users pay for transactions online, circumventing apple fees. 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 vonnie quinn. this is bloomberg. shery: still ahead, the chief asia-pacific economist joins us to preview china's activity data and other things to look out for on the economic front. up next we continue our discussion with wells fargo asset management ryan jacobson ahead of the key u.s. inflation trend this week during this is bloomberg. ♪

>> my forecasts for inflation have remained high and will begin to move down next year but i do see upside risk to this forecast.

it is possible the higher price could cause longer run inflation expectations to rise above the levels consistent with our 2% goal. >> i do not think we are anywhere close to the kind of carter era double-digit inflation. but i do think we are in very serious danger of repeating almost all the mistakes of the 1960's and early 1970's. shery: both of them morning that inflation may be hotter than expected. wells fargo says we may be already past inflation fears. brian jacobson is still with us. this chart on the bloomberg showing us how u.s. and european inflation prices have outpaced other parts of the world, especially the u.s. with that

line in whites. when can we expect prices to ease? guest: hopefully we get an indicator of that this upcoming week. really, the inflation surprises and that is what we are focused on, because that moves prices. if things are already embedded in expectations, this is about -- are the rises going to be to the upside or downside? when we look at some of the activity as far -- as far as the breakevens, it looks like investors maybe are beyond peak inflation fears. sadly that has coincided with a. of time in which we might be passed peak growth optimism. you have those two things working against each other a little bit causing volatility that we saw this past week with the u.s. equity markets. this upcoming week we are expecting to see inflation, that pays throttle back a little bit. it will not be a smooth path but we expect that maybe next year

at this time we will be much closer to the fed's target then what we are now. shery: how do you position your portfolio for that? guest: if you think about some of the areas most sensitive to inflation, may be a little resilience to inflation surprises, we like short-term, high yield in the u.s.. some of our portfolio is more inflation oriented, a real return mandate. it is overweight short-term, high yield is we think it has resets with the interest rates you can earn. it is inflation and much better than what you can find in other parts of the fixed income market. other parts of the equity market, like emerging markets, we really like emerging markets oddly. as i said in the previous parts of our interview about under waiting china, the more latin america, emerges -- emerging

europe. those are the parts of the market where we see value and momentum accelerating. haidi: is it a function of how fast cpi will moderate. is it being wrongly calculated by market assumptions at the moment? guest: we do think markets might be a little too sanguine about how quickly we get back to the fed target, like it will be a smooth path this is just transitory. supply chain's are going to reengage. we will not have to worry about these pricing pressures. we think it will be much choppy or. i think that illustrated what madame lagarde's comments where last thursday with the ecb press conference. the ecb forecasts where they talk about back to 1.7% inflation next year. we think that is maybe too rosy and outlook. it could be something closer to 2% to 2.3% over in europe and

slightly higher in the u.s. markets might be expecting we get back to normal sooner than probably what is reasonable. haidi: brian jakes of -- brian jacobson there. house democrats are said to propose raising the corporate tax rate to 26.5%. among other plans that fall short of presidents ambitions, joining us is the congressional reporter. what do we know about this proposal? reporter: we know the house democrats are trying to put the presidents ambitions to move a big major social spending package and they are not quite going as far as his proposal. so for instance they are proposing tomorrow, publicly, inc. of 26.5%. that is less than what joe biden wanted at 28 and some other minor changes to what the president wants. it is not quite as aggressive as

he wanted, but they are moving ahead. shery: but there is a reason for that. does it improve the chances of passing bigger social spending packages? reporter: there are as you know, only house democrats can afford to lose three votes on everything and there is a very solid group of house moderates who just do not want to see the rates probably as high as biden is projecting -- is offering. so this is clearly a move to try to soft and some of those increases so house democrats is -- house democrats will go along. shery: you can get a roundup of the tax plans and other stories you need to know to get your day going in today's edition of daybreak rid bloomberg subscribers, go on your terminal. this is bloomberg. ♪

shery: we can't enter the start of trade in tokyo. here are some stories we watched today. in south korea we are watching for further developments on north korea's long mange -- long-range missile testing. u.s. envoy's are currently in tokyo to meet with japanese and south korean counterparts. when it comes to the be ok on potential growth for the south korean economy -- we will be watching subsidiaries as regulators ramp up its own version of tech crackdowns. the group is shed 16 million -- billion dollars in market cap as of last week. over in japan two separate bowls put vaccination minister tara cano at the top -- at the front of the line to replace yoshihide suga. we will see inflation data remaining elevated at 5.7% year on year. we will also keep an eye on

equities as foreign investors pick up japanese stocks. foreign funds are on track to post the best year of buying since the heyday of it. haidi: quick check of the latest headlines. china hna group has found investors for its airline businesses. according to exchange filings, thailand in airlines will receive a strategic investment. both units plan to issue new shares to investors and for the repayment of debt. the plan is subject to approval from a chinese court. they are said to be considering options for a packaging company. a private equity firm has been interviewing banks for a strategic review of it in the first half of 2020. 2022, i should say. valued at about a billion should they choose to sell it or go for an ipo. risks to the copper supply have

to banish. workers agreed to end a strike while union members except today new wage proposal. the world's top copper producer is coming to an intense. of contract renewals and workers are using high prices and profits as leverage in top. which of the digital payments company considering a market debut for a direct listing or initial public offering. they have a valuation of $95 billion, making it the most valuable u.s. startup. shery: coming up next, the japan vaccinations start cementing his vexed -- cementing his position to become the favorite for the next prime minister. we discussed his chances next. this is bloomberg. ♪

wanna lose weight and be healthier? it's time for aerotrainer. a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time. it allows for over 20 exercises. do the aerotrainer super crunch,

push ups, aero squat. it inflates in 30 seconds. aerotrainer is tested to support over 500 pounds. lose weight, look great, and be healthy. go to aerotrainer.com. that's a-e-r-o trainer.com.

>> this is daybreak asia. i'm vonnie quinn with the first word headlines. u.s. democrats are set to propose a 26.5% corporate tax rate as part of president biden three point $5 trillion economic plan. bloomberg has been told they will propose a capital gains tax rate of 25%. key democratic senators are casting doubt on the timeline for pushing the agenda through congress. joe manchin says he is concerned about inflation and higher corporate taxes. sri lanka has yet to name a new

central bank governor after its governor announced it would step down on tuesday. his departure comes as sri lanka faces dwindling reserves and revenues, looming debt repayments, and struggles with extended lockdowns. they are forex reserves drop to $4.8 billion in july after use some to repay $1 billion of debt. eastern china is bracing for the arrival of typhoon -- of a tyson, which shanghai province closing schools and suspending air and rail services. the international airport canceled flights from 11 a.m. on monday. two of china's main ports have raised their emergency response. china's national health commission has sent a team to deal with a covid outbreak.

state media is reporting the cities saw 64 positive cases over the weekend, half of which were locally transmitted. authorities have placed more than 1000 close contacts under medical hoppers -- observation and neighboring townships have conducted almost 2000 tests. 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 am a vonnie quinn. this is bloomberg. shery: let's see how we set up for the major market opens across asia. what are you seeing? >> coming down to the tokyo open we may see the rally halt somewhat after a bullish broadcast ramps up for the cyclical heavy japanese market. piercing the aussie and kiwi dollars firmer this monday morning. well there is uncertainty over the delta impact, the bloomberg economic team is noting that vaccine progress in places like

singapore and south korea, as well as the inflation pickup, is adding to the case for monetary policy tightening. now in new zealand, we have some cpi, largely transitory but emerging wage pressure there. it reinforces the case for the rbn z. shery: we will also see more geopolitical tensions. north korea's as it successfully testfired a new type of cruise missile over the weekend, just days after holding its first military parade since the president took office. for more, let's bring in our asia government editor. john, how significant is this? reporter: it is a new type of weapon they launched. a cruise missile, something powered throughout its flight. it goes low and slow and has a range of 1500 kilometers according to north korea. this means it could hit all of south korea and most parts of

japan. so this type of weapon, if it is when north korea says it is, presents new challenges to south korea, japan, and the u.s. as they try to defend the airspace against something north korea could launch in the region. >> do we have any better idea of what the biden administration's approach to north korea's you reporter: we will get a little clarity in the next couple of days. joe biden's envoy to north korea is heading to asia. he is due to have talked tomorrow in tokyo with his counterparts in south korea and japan. the team a said it is open to talks with north korea but so far kim jong-un has shown no interest. joe biden has also offered an incremental approach. he has indicated he is willing to trade disarmament for some aid that would help the north korean economy but north korea has said it is not ready to sit

down at the table and it does not look like it will anytime soon. haidi: new poll suggests japan's vaccination minister kono is the favorite to replace prime minister yoshihide suga. he announced his official candidacy on friday at a news conference touching on everything from energy policy to vaccinations. >> [speaking foreign language] japan is no longer the top leader globally anymore. we must push and open the heavy door to make a step forward now. i want to work with all of you to make japan more competitive again. haidi: let's bring our politics reporter in tokyo. we now have three candidates officially in the running. what we know about the main policy differences between them? can we expect anyone else to join the race? reporter: although we do have these three candidates, kono,

the most popular in the opinion polls, the former foreign minister, and the former internal affairs minister, who actually would be the first woman prime minister if she were to win the election. all three of them said that japan need some extra spending right now to get over the hit of the covid virus on the economy. but they also have mentioned several things that have set them apart from one another. one of them has emphasized revising japan's middle-class class. he has talked about redistributing income in japan and revising the tax system which is something that has been very interesting to the financial community in japan. and she has been interested on the inflation goal of 2%, so monetary policy is one of her main ones during and if we look at kono, for many years, he has been very much focused on increasing efficiency. he is pushing the idea of

digitalization, increasingly -- increasing the efficiency of both government and business. shery: in japan's political system, being popular does not mean you will become prime minister. so what are the chances of success here? reporter: you're absolutely right. although kono has won all the opinion polls since the election has been in the pipeline, the general public does not get a say in this election. it is a party election so the party leader, only members will get to vote. having said that we have a general election coming up so when the party makes its choice it will be bearing in mind who would be the best person to lead the party into a general election and get the general public behind them. that will be one of the major factors. if you look at the mechanism of the election, if none of the three, or if any other candidate

step forward, but if none get more than 50%, the election goes to a second-round limited only to the party -- the parliamentary party. then you get the push and pull of horsetrading among the senior lawmakers and there could be a lot of other factors coming into play, apart from public popularity. shery: she will keep us updated on all of that, joining us from tokyo. that race to replace yoshihide suga has sparked the return of foreign investment to japan. overseas traders are set to buy the most japanese socks -- stocks instate state a. foreign investors account for two thirds of stock trading. let's bring our equities reporter. is this all about potential stimulus members coming with a new leader? reporter: yes, that is surely one big catalyst behind the recent foreign buying. but of course, there are other

factors that foreigners are counting on. the prime minister suga's surprise decision to step down was a huge positive impact. apart from that, you have potentially positive earnings coming up in october and following infection rates and increased vaccination rates, combined with all the reasons why foreigners are not buying equities are now. haidi: could we see further gains? what is the outlook? reporter: yes. many people are saying foreign investors are probably poised for buying into the short-term, to walk into the elections. so potentially a couple of months more buying from here and then, like you said, since the buying continues to account for two thirds of trading in the market, we can expect a boost

for japanese equity. of course, the question remains whether the buying will consist beyond the ele persist beyond the election and depending on the prime minister. there are things to watch out for in the longer term. haidi: our equities reporter there. coming up next, we break down japan's factory prices. they come out in the next few minutes. a key start to the week filled with indicators on inflation. we also have some of the other eco-data out this week that we will take a preview look at. this is bloomberg. ♪

>> experts say the covid 19 pandemic is not slowing any signs of slowing down. >> we just do not yet know how this will play out with one exception. this service will find you if you are not previously vaccinated and protected or have not had natural infection. this virus will find you. this is one that wants to burn all the humid would in as a coronavirus forest fire and will not leave much left unburned. that means 6.4 billion people in

the low bill income countries alone that from an infections two point are at risk. haidi: let's get to michelle cortez. i was reading to the story and it one point jumped out at me. the pandemic is biological but also social, political, and economic. what does that mean for what the end of the pandemic looks like? >> and we talk about the virus we know how it works. it wants to go from one person to another, continue replicating. the unknown variable is the way humans are interacting. we do have a number of tools now that can help us control this outbreak. we have vaccines, masks, social distancing, treatments, different countries and different people are embracing different things and that is the unknown variable.

that is why some researchers are telling you what the virus can do, because science is science, but we do not know what the people will do, because there'll be some places like the covid zero companies keeping it out entirely but will remain vulnerable because they have not gotten as much immunity. they could deal with us longer than countries that have for better or worse completely been walloped by the virus and are closer to the endgame because immunity has been reached by many of those people either from prior infection or vaccination. shery: the u.n. general assembly starts next week. what can we expect in terms of a global push against covid? reporter: the general assembly is gathering together to figure out how we get some progress against it comes to vaccination. we do have vaccination production happening on a mass scale. the vaccines themselves are not

being distributed equally and when we talk about that point earlier, the different countries have different responses to this. there are many countries that want to get vaccination levels higher and yet cannot get enough of the injections. there are other places with a plethora of vaccines and fewer people who are inclined to use them. so what will -- what we will talk about at the yuan is how to get manufacturing pumped out higher and get the vaccines where they need to go. shery: michelle cortez in hong kong. the impact of the delta variant will show up in important economic indicators like u.s. inflation, not to mention key chinese activity data due this week. bloomberg economics expects china's rebound to take a hit last month. let's bring in achieve asia-pacific economist. always great to have you with us. what numbers will you be watching closely for to gauge

where the global economic recovery is going? guest: we have a few numbers for china. it is actually quite important, because except for exports, we have had poor data. on the domestic side, we were a bit worried about the july data. so i this mportant to see what is happening on the national front side for china. we had inflation as well. so the question is, these prices, which are not going any higher, are not showing the enough way we already have the manufacturing. this is what the pmi data old us. so are we going to confirm that that will go further? shery: we got the ppi out of china. we saw the huge diversions with the cpi numbers. we are finally getting u.s. cpi numbers.

what are we seeing in terms of transmission when it comes to inflation in china to the rest of the world? guest: cpi numbers -- i want to clarify. they are high but they are not really going beyond what we have seen. so if you look at the acceleration there, for me it is a sign, together with pmi, that we will see some slowdown. now, for exports from china, i think the shipping cost, and this is basically covid related, for supply chain disruptions. i think that will continue for a while because we are but the other side of this, meaning can china really markup these prices? i think we are in a different mode. i do not think, and a nutshell,

that china will explore as much inflation as people were thinking beyond the supply chain disruption related to covid. that is all we have there simply because china is the largest exporter. but it is not beyond that because it is important because demand is going basically down. so they will be overcapacity in china. haidi: what about the downside pressure from the regulatory overhaul. how do you see that playing out? guest: very good question. let me start with the property sector. we are focused on how exposed they are to developers. that is one aspect of the story. of course, bondholders.

but i want to focus on the more direct impact, china's demand is now household behavior, including the most important investment, the housing investments. they are because of the massive row of pre-cell, franking task friendly speaking for the whole sector, i think we will see lots of hesitation from households to buy houses. this means we will see weakening demand. that is coming at the worst of all times. as you were mentioning, the developers will suffer on many sectors. so it will have huge consequences on the real estate sector, in my view. haidi: we are waiting for the japanese ppi but i want to get your views on japan. we had heard from one of the

leadership candidates that he is casting doubt on the tube loose it -- on the 2% inflation target he think there needs to be a re-sync of economic policy and goals. does he have a point yet guest: let me start with the ppi number's. the reality of things is, inflation in japan remains very low. we have gdp numbers. so when on earth is it supposed to be back? this is the question really. i think the point being made is that the doj knows that no matter who tapers, including the fed, they cannot do anything about this. if anything it is a really for them. i think they need to come up with different measures to basically reflow the economy. shery: we are getting the

numbers right now. year on year growth of 5.5%, which is slightly below analyst expectations. a little bit of an easing from the previous month. when it comes to the month on month numbers, ppi flagged factory price inflation. a flag, no change, which is below analyst expectations and also easing from the previous month. of course we have seen them unable to pass to the bird and the cost to consumers despite the fact that commodity prices have been rallying. so give us your take of the ppi numbers, year on year, 5.5% gain. what do you think, given that we continue to see soaring commodity prices, but at the same time a stronger yen? guest: in a way, japan is on the side of china in the sense that it is very obvious that producers cannot pass on the prices to consumers.

this is a big issue because we should be in a very goldilocks type world right now. because of 20% expenditure in japan, so this is worrisome. i think it is very worrisome we do not see much of this going through. into the ppi prices. haidi: always great to have you with us. we are getting the first indicators of global trade. imports, a boost of over 60% year on year. the daily act fridge exports seeing a gain of 31.7% as well. a really good indicator as to how much the delta variant and almost logistics and supply chain disruptions have impacted

regional and global trade. more to come on daybreak asia. this is bloomberg.

haidi: a quick check of the headlines. china's hna group has signed investors for his airline and airport businesses. one will receive a strategic

investment from one group, while another will receive one from another. both hna units plan to issue new shares to investors. the plan is subject to approval from a chinese court. singapore city development is selling its stake in chinese developer -- in a chinese developer for one u.s. dollar. they have already written down almost all of the $1.4 billion invested in the mainland firm last april. the pandemic and china's three red lines policy have increased liquidity constraints. a group is considering options to buy packaging company, including selling or taking a public. the private equity firm has been interviewing banks for a strategic review in the first half of 2022. they could be valued at about $6 billion. shery: of course, we are headed

for the major market opens across asia. let's turn to sophie for what stocks to watch. >> in japan we are watching toyota after it announced a production code for this year. bloomberg intelligent still expects the carmaker to meet profit -- to meet guidelines but lower offsets as well as favorable currency rates. switching out the boards on the geopolitical front we are watching asia defense-related names, particularly in tokyo after the north korean state media reported a missile tests over the weekend. in australia we keep an eye on the net zero carbon -- carbon goals costing more than $7 billion. we open on sydney airport. this is the company spoke to a group of pension funds that brings us to -- brings a takeover officer. shery: we will be discussing the markets coming up. ayla shares his global markets outlook. the opens in sydney and tokyo

are next. this is bloomberg. ♪

introducing xfinity rewards. our very own way of thanking you just for being with us. enjoy rewards like movie night specials. xfinity mobile benefits. ...and exclusive experiences, like the chance to win tickets to see watch what happens live. hey! it's me. the longer you've been with us... the more rewards you can get. like sharpening your cooking skills with a top chef. join for free on the xfinity app and watch all the rewards float in. our thanks. your rewards.

>> is trying to get vendors to put a much more robust separation for defense in place as quickly as possible. >> hello and welcome to daybreak: asia. i am shery ahn in new york. >> taking a look at the major markets opening in asia. our top story is asian stocks show growth and inflation wears. a bumpy start after reports that beijing wants to break up alipay.

the u.s. may be ready to amp up the trade war. let's look at how this is all shaping up. >> there is a little bit of pressure after japanese stocks cap to a three week game. the topics are still trading around 1990 highs. development in japan has sparked a jump in foreign influence, sparking the best year since 2013 and bullish outlook ramps up for japan. the also have some economic data. switching to check on the open. we are keeping our eye on reopening players after australia and new zealand procured extra covid vaccines. the asx 200, little change.

this was paired well with the jump that we saw. we are seeing prices for aluminum continue that advance at the 3000 level this morning. we are seeing some downside pressure but trading around five dollars here. morgan stanley seeing trading of 10 bucks. that may challenge the transitory environment. watch the reaction to pyongyang. we are seeing some downside pressure for the kospi after we saw it snap a two week game. more losses while we are seeing the korean won under pressure as well. all of this as we get the latest flash trade numbers. >> our next guest is -- has

recently downgraded his northern equities exposure. great to have you with us. remember how north they shifted this during the onset of the global pandemic because of their ability to rein in covid. even now, their electronic export, it is trade, what seems to be the problem? >> a few things are going on. the political situation in china, the implication that has four more of a clampdown in certain sectors in china have actually cascaded down to the rest of the region. there are certain sectors that are very strong but what we all know from the china numbers that will come out this week is that the restrictions that were put in place are going to have an impact on chinese economic

activity. what we are also seeing as well is that some of the hesitancy around china is starting to cascade into the rest of the region. we are seeing a little less interest and a little bit more skepticism on the likes of korea and taiwan going forward. we just paid back our exuberance on the region. we actually think the next quarter or so could be quite challenging for north asia relative to the emerging markets growth. >> is that an overall assessment or do you have some selective places across the asian markets you could still see some growth? especially in the long term? >> southeast asia is really good here. we have been somewhat defensive on south asia for some time. this has been happening in places like india and indonesia. we are entering the interesting. here.

they are opening up to ensure that economic activity remains ongoing in this part of the world. south asia versus north asia might become similar over the next few orders. the region as a whole is facing a lot of challenges. what is interesting with your previous guest is they should be a supportive time. for asia. there are more global factors with the potential tapering and liquidity that are also starting to have an impact on the region as well. if you're looking at a more challenging second half of the year, this could happen both north and south. >> do you think markets are miscalculating the pace with which we might see moderation

and that transitory factor? that we look at for u.s. inflation and it had been lower, it is going lower very slowly. we do think that inflation is going to go low toward the end of the year. i think most people have that on the horizon. the pace of the slowdown in inflation in the second half of the year will remain very slow. that creates a bit of an issue for the fed. the fed has preannounced that tapering is likely to happen later on this year. the fact that inflation will remain somewhat sticky pushes at any subject matter around interest rate hikes for the foreseeable future. that should be somewhat

supported for markets. there is a lot of uncertainty about inflation. as long as we don't know the trajectory of inflation going forward, it is very high. that will add an element of uncertainty with respect to whether or not central bank can bring forward monetary policy normalization. unlikely but it will be there and it will impact market sentiment for some time. >> let's get your views on china. beijing was to break up alipay and split of that highly lucrative loans business. none of that is surprising given what we have seen so far but you say less investable, that is how you characterize chinese equities. does that make them on investable at this point? >> equities are a challenge. if you are an investor looking at china, you would be better off looking at the s&p market right now given relative yield

and yield elsewhere. what we are seeing is fixed income looks to be the main asset class born investors are looking at. i wouldn't say that china is uninvestable. but if you look at china as a country, you would be favoring this. we look at it from an intercountry play rather than looking at specific asset classes. we think there are challenges for equities. we think there are opportunities in other asset classes in china other than equities. >> does that mean the credit market is more investable in china right now customer quick the problem is we don't really know in terms of restrictions and in terms of what is coming out from the high-end of chinese officials, we don't know how this plays out. we are looking very closely at some of the language that is

coming up in china. the capital term has also hit the headlines as well over the last couple of weeks. that seems to be a term that is coming more and more interview with an official announcement. it is very difficult for us to look at some of the markets in china and have a very strong view until we realize if we are over the worst of it. some of the comments that have come out from china have suggested this is not a blanket pushback in terms of capital investment and capital expenditure within china, it is very targeted. until we know the actual targets are not in the firing line, until we know the sector and the asset classes that will be most impacted by this, it is difficult to create a strategy for china until we really know what the endgame is from a political perspective. >> always great to have you with us. let's get you to vonnie quinn in new york with the first word

headlines. >> thank you. u.s. democrats are set to propose a 26.5% corporate tax rate as part of president biden's economics plan. bloomberg is also proposing a top capital gains tax rate of 25%. the key democratic senator is pushing the biden economic agenda. joe manchin says he is concerned about inflation and higher corporate taxes. >> you will not have my vote on 3.5. there is no way we can get this done by the 27th. if we do our job, there is so much apart from us on where we are as far as working with people, it makes no sense at all. >> north korea successfully has fired a type of long-range cruise missile on saturday and

sunday. the state news agency says this targeted 1500 kilometers from the launch site. north korea staged its first military style parade since joe biden became u.s. president. kim jong-un presided over the event. sri lanka has yet to name a new central bank governor after john locksmith announced he will step down on tuesday. his departure comes as sri lanka has dwindling reserves and revenues, looming debt repayments and they struggled with an extended lockdown and of record number of covid cases. epic games has filed an appeal after the court mostly sided with apple in a lawsuit. the judge rejected their claims that the iphone maker is a monopoly.

the judge did however say that apple has engaged in some anticompetitive conduct, ordering its developers to let users pay for transactions online, circumventing apple feed. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> look at all of the movers in japan. we are seeing them both losing ground. this as we heard from toyota that they will be cutting their full year production outlook. that would be about 3% of production, 300,000 cars given the spread of the coronavirus in southeast asia and how that has disrupted semiconductors and other key parts. they are falling the most since august 20. this is a top supplier of toyota. it already issued a relatively conservative profit outlook. we are seeing it take a hit

along with toyota. >> we are watching trading in sydney. we are seeing that stock hit a 52 week high. there was a consortium of investors presenting that revised bid over the weekend. that was about a 10% premium. there has been some optimism around the business of sydney airport. they are still hopeful that international borders might reopen by the end of the year. still ahead, joining us to talk about the trends and the outlooks of china's m&a given the regulatory crackdown. next, we look at the prospects for alipay. the chinese regulators are looking at splitting off its

alipay and loans business. this is bloomberg. ♪

>> china is looking to break up alipay and create a second -- separate app for his loans business. let's get all the details from stephen engle. >> this is something that has been brewing since this was discovered last november. we had learned that the micro lending units probably had already been folded into a new entity. this story essentially puts more meat on this bone and talking about the details, saying that they will separate the back end of those lending platforms from

the other financial operations and bring in some new shareholders as well as spin off the user data part of the business. that really underpins many of the lending decisions. then they created a new credit scoring venture. we did hear that and would likely be folded into a financial homing -- into a financial holding company. they want them to go back to their roots as a payment service. it has expanded into consumer lending as well as insurance and other riskier financial assets. they are not regulated like a bank. they do not have the capital buffer requirement as a bank, all of that will be changing under these new structures. >> what does this mean for the evaluation question mark >> you

probably guessed it, it probably knocks it down again. we were reporting that fidelity, based on its own holdings would put the market valuation at about $78 billion by the end of june. 78 is way down from the last in february of about 140 4 billion and 235 billion pre-ipo. we will have to see how the market response to this news. it is confirming a lot of the things we already knew. we have not gotten a statement from ant when we reached out to them. we will see if hong kong trades again. they had a bit of a rally last week. it went back down on thursday. that was on the gaming news. the hang seng tech index rallied on friday. maybe it is zigzagging back and

forth again today. >> stephen engle, our chief north asian correspondent there. china and big tech are available online on the bloomberg technology channel on youtube. let's stay on china. bloomberg has learned the biden administration is weighing a new investigation into chinese trade subsidies and their damage to the u.s. economy. let's bring in our asian government editing manager. how much of an investigation is this following that 90 minute phone call between resident biden and president xi? >> it indicates the administration is really figuring out what to do. they're trying to pressure china on trade. this goes back to the trump administration, the trade war, the phase one deal.

but it has not articulated what they are going to do with the $300 billion in an punitive tariffs that were put on during his administration. part of this is reviewing that and looking at the options they have to pressure beijing. these investigations to -- could take months to unfold. they could lead to other remedies. there is deftly pressure for wall street. american businesses complaining that they are hurting business. they are -- it is politically very difficult for biden to do anything without taking action on china trade. how this balancing act will play out remains to be seen. >> do we know what specific steps the u.s. could take? if they need launch investigation -- if they indeed launch an investigation.

quick's there could be many remedies. the trumpet administration launched similar investigations that led to a range of duties. the power of the presidency to issue these kinds of tariffs on chinese goods is immense as we have already seen. this question is more of a political one. you have the biden team frustrated that chinese officials, john kerry in particular is trying to get the chinese to up their ambition on emissions and climate change. china is saying all of these issues are linked. we are not going to give you anything on climate change unless you uplift to these sanctions and tariffs, the huawei cfo, her case. this is all part of that bigger picture. how does the biden team work with china and get them to

cooperate on issues that biden cares about without triggering any ramifications. this is a big puzzle that can't be looked at in isolation right now >> there was -- that was our asian government managing editor. get your day and we going. bloomberg subscribers can go to that on their terminals. this is bloomberg ♪

>> a quick check of the latest business flash headlines. according to exchange planning,

they will receive a strategic investment. hna and per structure will get one from developing holdings. they plan to issue new shares for the repayment of debt. the plan is subject to approval from the chinese court. male business has they are reviewing which of their businesses overlap as lawmakers singled out some of these units. separately, korea's fair trade commission is investigating whether the founder failed to properly report information. shang chi has topped the box office for a second week straight. disney released the film

exclusively in cinemas and it surpassed estimates on its opening weekend. >> i'm just counting down the days so i can watch this movie. i am just waiting for her to be streamed. i am really excited about it. ticket sales have dropped about 50% from the debut but it is on par with other marvel installments and actually doing better than like widow which plunged about 70% after their debut. do you guys have it in australia? i want to go to the cinema but i am also debating whether just to wait. exciting. >> yes, some of the behavioral ones are have people worried about going back to a credit cinema. i am really looking forward to it. i wish it. i wish he was being streamed because i'm one of those people who will give of the big screens for just being able to have the relaxation of being at home with

that. i am really looking forward to that. >> me too. i watched black widow screaming when it came out. it was so good. it is still on disney plus. i can always go back and watch it if i want. this pandemic has brought so many changes but i think one of them, a great change for one has been the fact that you can actually watch those big blockbuster movies at home with the comfort of just being home, getting your own popcorn and chips and not worrying about people around you. >> hitting pause. you can go to the bathroom. >> that is a big one. >> of course, we had the lockdown. we just re-watched it on tv. >> good movies have to be rewatch to. especially the marvel installments.

details just ahead. this is bloomberg. ♪ in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

>> this is daybreak asia. i am vonnie quinn with the first word headlines. the biden, administration is weighing a new investigation into chinese subsidies as a way to pressure beijing on trade. bloomberg has been told that they were going to discuss the initial inquiries. they have asked outside consultants to help quantify the damage from chinese subsidies. new pulling suggests japanese

vaccine administrator is the favorite. he declared his candidacy on friday, joining former ministers . lawmakers vote for new leaders september 29. the yuan nuclear watchdog has single progress over access to the country's expanding program. the inspectors will be able to replace emery cards but this is not lost. they stop short of fully expanding the access, granted under the 2015 nuclear record. eastern china is bracing for the arrival of this typhoon with them closing schools and

suspending air and rail services. flights will be canceled from 11:00 a.m. on monday. airports will suspend flights from 3:00 p.m.. two of the main ports have also raised their emergency response. global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> a picture in early trading across markets on this monday morning. what are you seeing sophie? >> the nikkei 225 losing .4% while the kospi is being weighed by cookouts bank. they were shown some downside pressure for chip exports and growth for south korea. now we are seeing upside moves for kiwi and australian stocks.

they have had additional covid vaccine supplies and we are seeing minors gain ground in australia along with energy stocks. flipping the board, we have wti above $73. apple is taking longer to come back from the hurricane impact. forcing that market tightness narrative. they do expect a significant oil rally into the summer. the bank reckons it would be hard for investors to ignore inflation in the most important physical commodity markets. they have seen price gains across the materials. aluminum at multiyear highs. this is the white bar right here. they are seeing decent gains among commodities. the prospect of even higher energy costs, that is higher inflation.

there is some threat to energy because of virus outbreaks. we have seen improvement in major economies like china as well as india. there is virus resurgence risks. they say the worst is over. >> let's delve deeper into the pandemic. larry summers says the pandemic is the single biggest national security threat for the u.s.. he told bloomberg's david westin that president biden's vaccine mandate is absolutely necessary. >> i think this is going to be with us in very serious ways for a very long time. unless we get the vaccination rate up and what he did is necessary to get the vaccination rate of. i think it is supported by the vast majority of americans and i think what will be accepted

ultimately by most other americans is this. it is like fluorite of the water. it is like the tests our kids have to take to go to camp or go to school. this is like going through security at airlines. our complicated and dangerous world required things that did not used to be required. this is an example of that and we are struck, he is doing it right now. two years from now, it will be hard to imagine a world where there have not been vaccination requirements for the administration. i think there is a crucial dimension of all of this. that is what is happening globally. it is still not getting enough attention. this is something i have been focused on for a long time,

leading up to the g20 with our panel. we need much more global vaccination. we need much more preparation for the next pandemic. this is the biggest vulnerability for our national -- our national security from the rest of the world over the next decade. that the virus mutates and takes a new form, that a different pathogen comes along and that we are not ready. that is by far a greater risk of americans losing their lives prematurely from a foreign threat relative to military conflicts, relative to terrorism, even for the next few years but relative to climate change. we just need a major effort to stop this threat.

americans right now are dying at a rate of 9/11 every two days. maximizing our preparedness for threats of that kind. that also means engaging in the global dimension. that has to be a central priority for our country. i am encouraged by the reports of what the president is going to be doing for the u.n. general assembly, meaning encouraged by the signs. real and bold u.s. leadership on that issue in conjunction with other countries is the single most important foreign policy and national security challenge facing our country. >> that was larry summers on wall street week. experts say the covid-19

pandemic is not showing any sign of flowing over the next three to six months. everybody will have to be affected or vaccinated before it ends. >> we don't know how this is going to play out with one exception. this virus will find you if you are not previously vaccinated and protected or if you have not had natural infection, this virus will find you. this is one that wants to -- there is not going to leave much unburned. 6.4 billion people are at risk. quite a bloomberg senior medical reporter has the story. what is interesting and challenging is that so many different places are doing completely different things. the u.k. could be dropping mandatory testing for traveling as well. how do you contrast that in

light of what new zealand is trying to do. >> the risk here is that human decisions and the way we respond to the virus is going to determine how we all come out of it. to your point, in new zealand where they are still making sure there is no virus in the entire country, they are going to have to be grappling with this for a much longer time because should the delta variant get in there, everyone is vulnerable who has not been vaccinated. the vaccination rates are lower as opposed to a place the united kingdom which has been hit by wave after wave of infection. they have a natural immunity built up. likely they will come out of the pandemic quicker. they will have had many more infections and millions more deaths than new zealand but they will actually put this behind them most likely before new zealand does. that is the rub. it depends on how you want to

get out of this. >> china has been doing pretty well with reining in the covid-19 infections but it seems a new outbreak -- a new outbreak is worrying authorities. >> that is exactly the situation and that is what i was referring to when talking about new zealand. china has done a remarkable job at keeping coronavirus at low levels but they keep having this thing where they have new more and more new cases. a person came in from singapore or perhaps somewhere else that had a delta infection, that person has to -- now there are 64 cases. that is in that province of 100,000 people. they are testing everyone and locking down. they think they could get up to 5000 cases there. they think this is going to -- they are going to have to work very hard to keep everyone in the houses, make sure everyone is vaccinated and if that virus

gets out to the next place over, they are going to be dealing with this for weeks. >> that is the latest on the global pandemic. we continue to track the vaccination campaign with more than 5.5 billion doses given across 184 country so far. check out the bloomberg vaccine tracker on the terminal and bloomberg.com. coming up next, joining us to discuss the outlook for china mna seen amid the beijing crackdown. this is bloomberg. ♪

>> investors are still trying to navigate beijing's crackdowns and president xi's attacks on the disorderly expansion of capital. our next guest says dealmaking has made a remarkable comeback in 2021. are we seeing -- when you talk about the rebound we see, is this much more inbound than outbound at this point? >> you already highlighted the remarkable comeback. the numbers increased by over 80%. that is outstanding.

if we look at the numbers in more detail, we can see that income into china really doubles over the same timeframe. to look at this tournament, we will have to take a step back. they gradually came down to 60 billion last year and now there is major turnaround. in terms of fundamental drivers, one of the keys has been china opening up. we see more deals, bigger deals than those happening in the mainland. >> i want to throw up this chart we have at the moment, china cashing out overseas assets. this is all about towing the line when it comes to regulatory

requirements, deleveraging when it comes to some of the sectors. is this a trend that could be set to continue question mark >> the numbers are excellent. it is important that we are not misreading the numbers. i would not call it a selloff. we are returning to a new normality. irrational and diverse environment. this take a step back. 90% was outbound only. the vast majority of that is missions only. by now, things have changed. we have moved on to the much more rational management

approach. we are seeing asset holders really want to be taken advantage of. >> what is the primary driver when it comes to disposal of foreign assets? are we talking about companies like hn day that were in financial distress? >> there are a lot of considerations here. i would not highlight any particular one. the important thing is new normality. they have not seen a large number of disposals. deleveraging, cashing in and locking in financials but also,

accessing deals were things have not worked out. multiple considerations. >> i was surprised to see that you were talking about inbound mna's rising to new heights. why we have so much regulatory concern in china? >> i am a big believer in the numbers. there is 30 billion in inbound mna. if you go back, those are numbers we typically see at the end of the year. they are very keen on china, very bullish. they are moving this into the mainland. >> great to have your perspective, joining us from -- the administrators of h&h group

have strategic investors for the airline businesses. what do villains are we seeing? >> we are seeing some kind of key development. they had this very lengthy credit. this is coming over multiple hours. it is such a complex restructuring. this is a really complex and interesting event to watch there. they will accelerate the principle on this loan payment. that is a little bit more with

an expectation. for wrong -- while wrong -- huarong is moving to streamline his business. -- it's business. >> how is beijing's property crackdown affecting debt in china question mark -- china? >> we are seeing another development with singaporeans investing in this chinese firm. that comes after the firm ran into trouble a couple of months ago, they were said to have missed payments on some of its debt and on the back of the redlines crackdown and this crackdown on the quiddity. they have really struggled to make good on debt pain -- debt

payment. some of the vulnerabilities where foreigners may have invested or admitted exposure to some of these smaller chinese property firms. >> coming up next on daybreak shanghai, canceling flights. we get more details ahead, this is bloomberg. ♪

>> china's eastern provinces are set to close schools and cancel flights to city airport. >> what do you see in terms of preparedness for the typhoon and the destruction that is expected ? >> in response, shanghai just announced it will cancel most flights. it will shut some schools down monday and tuesday. all flights will be canceled at the international airport.

the schools and kindergarten will be shut down. >> we have seen huge bottlenecks for global trade emerging for covid-19. whether set -- will this just add to those concerns? >> yes. definitely. we just learned that shanghai has cut off port operations to 10 related businesses and other ports have been affected. we don't have the details yet. this is what we got from the shanghai international port group just now. they buy ships to take some precautionary measures. >> how do we expect this to feed

into what is supposed to be the start of the busiest time of the year? going to the holiday season, it is going to add further disruption to what is already a logistics industry that is struggling. >> that depends on the type of impact covid will have on the operations. i think it will only be effective for a couple of days. i don't think it will have any major impact on supply chain. quest that was charlie with the latest on that typhoon. we have seen shipping rates continuing to store given the botts that we talked about for global trade, the covid-19 pandemic, before that we had the trade tensions between the u.s. and china. you can see those record container rates because of those china foreclosures. this will not help at a time when the shipping cost has

reached 13 your highs. >> i remember went we were having conversations about such an existential crisis for global container shippers. how times have changed. it really is twofold with the spike in demand and consumer goat -- consumer goods. >> the holiday season as you mentioned earlier. we are all getting ready to do our holiday shopping. in the meantime, let's turn to sophie for what to watch in the market. >> the eastern coast of china is bracing for the impact of the typhoon. we are keeping our eye on chinese core operators. this after the government instructed major platforms to review the workers rights. 10 key players.

holding up the chart, alibaba shares have underperformed, tracking lower since they got pulled back in november. we could see the pressure ramp up as china seeks to break up alipay. a quick check on some japanese video gaming stocks. we are seeing some of them gain ground after the court ruling that ordered apple to allow developers to give customers other options for mobile apps. >> let's take a look at how the markets are trading on this day. we are getting that u.s. cpr rate on tuesday. is it going to signify that transitory narrative that markets are buying? we have seen asian stocks looking pretty steady. these growth risks in particular.

the nikkei 225 is also up about .2%. taking a breather after this multi your highs, trading in japanese stocks. we will look forward to the start of trading in china. that is it for daybreak asia. this is bloomberg. ♪

>> welcome. >> counting down to the opening. let's get to the top stories this morning. tech shares and focus with beijing reportedly said to break up a company and create a separate app. yvonne: data precludes