haidi: oh, and welcome to "bloomberg daybreak: asia." sydney: i am sydney. shery: and from bloomberg headquarters in new york, i am shery ahn. global stock selloff as concerns mount about china property risks and fed tapering. market contagion now testing president xi's resolve as they

wonder how far he will go with his property crackdown. plus, cryptocurrency slump, behaving more like a risk asset than a haven. haidi: and, of course, it is all about contagion, a lot of questions being asked. was this a selloff that needed to happen customer crypto evaluations so stretched that people are looking to revalue portfolios? but regardless of the market dynamic, it is a risk and a contagion that we are seeing spreading from everything from the aussie

tuesday, there was a global selloff. let's bring in stephen engle. the irony of course, it is not trading in the early part of this week, and we are looking at some of that angst, and what about the new slow that we are expecting from evergrande? >> there are so many questions, and it goes on holiday tomorrow. we have the bank loan and interest payments, and they have

kind of gone quiet, and, of course, they are likely not to be paid. testing the market in a real storm, yesterday, across many sectors, banks and insurers and property developers on multiple fronts. the big question is, will this lead other policymakers in china to test it a bit, and to limit the market contagion? but, do you know what? china has shown it is willing to stomachs severe market losses, like what happened with the tech companies, and what happened to online tutors, to the video gaming immunity, to the macau casino, and over the last year, there has been the tightening of the property market. they have raised rates for first-time buyers, introduced rental controls in cities, suspended some centralized land sales. they have revived talks, i should say, on a possible national property situation,

three red lines, the debt metric that they estimate, these three red lines, they want to borrow again, and, the evergrande saga, which is the poster child for all of the woes in the market. at the same time, these controls could come to hong kong. the question is, how far do they go before we start with the kind of financial turmoil that you want to prevent in the first place? >> with that market turmoil, you said that china is closed, and now going to the mid autumn holiday? stephen: yes, that is right. do you close at your positions and lick your wounds and then reassess on thursday, the day when those big bond payments are

due? there is the one for evergrande and 36 million dollars on an onshore bond, but again, the contagion spreads across the base of huge developers, like henderson here in central hong kong. they all took it on ancient because of reports as well over the weekend that these kinds of curbs that i just read out could be coming to hong kong. there was commentary to break up the monopoly in hong kong, and there was land reform and controlling what is the world's most expensive residential property market, so lots and lots of combined pressures in this market head of the holiday. one particular company was sinic , a very unfortunately named company. it was down yesterday. it has a $246 million bond due

in october, what is it, the 18th, and it was downgraded, as well, so this kind of contagion is spreading for those who have dollar bonds, and, by the way, the market cap is down below what is owed on that bond. >> stephen engle with the latest on evergrande and keeping us updated on that saga. one thing that helped boost the market, the u.s. soon reopening its borders to most foreign travels, helping the airlines trading today. this among fully vaccinated, the news coming as a number of americans who have died of covid-19 has now surpassed the number killed in the 1918 influenza pandemic. joining us now is our bloomberg san francisco bureau chief. so what do we know about these changes in the u.s.? >> this is the lifting of the broadband that has been in place

for most of the world, europe, brazil, and they are requiring people to be vaccinated, -- this is the lifting of the broad ban. this is a significant opening of the borders, and pretty strict in that the vaccinated was still have to cement tests and do contact tracing and cement phone numbers in case there are spreads, so they are trying to do their best to open the border and keep a close eye on what people are doing. >> when it comes to the clinical trials, what is the outlook for approval from here? kara: the results from pfizer and biontech, saying things about the antibodies, about one third the size of the adult dose in a trial of thousands of kids,

so they expect it to qualify for emergency use authorization, and anthony pyeongchang -- and anthony fauci talked about this by october, halloween time. kids trying to get back to work, worrying about transition with the delta variant. definitely significant for many parents here in america. >> our san francisco bureau chief with the latest on the pandemic. let's now get to vonnie quinn with the first word headlines. vonnie: india will resume exporting covid vaccines next month. the world health organization initiative. in april, the delta virus variant swept through major cities. there was a push to quickly vaccinate developing nations around the world. india expects to have around 300 million doses on hand in october. u.s. house democrats have unveiled legislation to fund the

government until the year end and suspend the debt until 2022, part of a spending bill needed to keep the government open past the end of this month. and pressuring republicans who pledged to vote against borrowing. kennard as president, justin trudeau, set to retain power after -- canada's president, justin trudeau, such to retain power after elections. the liberal party winning 155 of the 338 house of commons seats, compared to 119 for the opposition. results are due later. and the wto ruling to reject claims oversoul or panel tariffs. earlier this month, the wto said china failed to establish that washington's import caps were inconsistent with the wto rules

on the measure. there is a veto of that ruling, with no body able to immediately hear the appeal. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. >> still ahead, moneylion is going public. we will be talking about that with their ceo. coming up next, fear spreading throughout the markets. a guest joins us. this is bloomberg. ♪

>> i think the federal reserve certainly understands that china is an important player, and china, if it had a hard landing,

it would have serious consequences. i think at this point, it is really premature to reach that conclusion. the chinese have done this before, and when it starts to actually affect the rate of growth and employment, they tend to ease off on the brakes. shery: that was a senior advisor to bloomberg economics, bill dudley. washing to price in the risk, this could derail economic growth, -- rushing to price in the risk. let's bring in the captrust ceo, mike. tell us about the last bit of exposure. mike: yes, i mean, we were nervous about what happened to jack ma, right? where in the

world is jack ma? and we made the decision at that point that the regulatory environment appeared to be getting worse, and that is not generally a good recipe for investors. i think you are seeing that play out now, right? i am no china economist, but i do know when the government metals as much as the chinese government is meddling today and picking winners and, more importantly, punishing losers, you see what happens, so that is not a very complicated decision for us. if the large hand of government, particularly the super large hand of the chinese government, starts taking its revenge, it is time to move on. haidi: what is less clear and harder to price still is the contagion effect, right? you start to see this across the commodities and currencies, particularly when you're talking about places like australia that have such vulnerability to the

trajectory of chinese growth. what about this point, and where do you think -- we are just kind of seeing a bit of a washout? what do you think are the fundamental concerns being affected by the chinese story? mike: well, i think china's story is going to affect long-term economic glow -- growth. i think that will put a damper on things. i think you are seeing some of that. i would not say it a day of negative prices contagion yet. we will see. there are other areas of concern. we are becoming a little more interested in taking risk. we would love to see the market fall another 5% or 6%, not because we like negative pricing terms but because we think we could make the market stronger. the u.s. market has been very, very resilient. as you pointed out earlier, the moving average, we would love to see it pullback another 3% or so and check out some of the weaker hands. we are positioning our portfolios for 2022 at the

moment, what we see is a lot of weakness in some of the small-cap names, some of the names that are more cyclically oriented. we believe that covid is peaking. the delta variant is beginning to peak. in six months or six weeks in three months, we will have a different narrative around covid. we expect people are acting on the fed's tapering. we expect to see that. we expect to see them raise interest rates. we expect that the quantitative easing will slow down. the fed is in a really difficult spot now, particularly now with china. i think we are actually getting a little more interested in becoming more economically sensitive and putting a little more risk on the table that we were maybe 2, 3 months ago. shery: you mentioned the fed and what they are doing towards tapering, but what happens with fiscal stimulus coming from the billions of dollars that has poured into the economy, as it

starts to taper, as well? would that have a bigger economic impact, and, therefore, be a challenge to your cyclical narrative? mike: yes, you know, look. that stuff, there is no question we are at peak fiscal stimulus. we are at peak monetary stimulus. covid is probably peaking. we are probably passed peak inflation. if you look at the market internals, small caps are down, i think 25% from the peak, and that was before today. small-cap index down 5%, whereas the large-cap index barely down at all, another marker down 10%, so we have seen a lot of rotation away from small-cap. those things are actually becoming a little more interesting from a valuation perspective. we are starting to see, curiously, small-cap relative corporate performance begin to pick up. again, we just think this is a nice set up for some fundamental

risk on. not this week. we would love to wait. >> mike, we have run out of time. michael vogelzang. this is bloomberg. ♪

haidi: some interesting development on the m&a front, topping a proposal we had yesterday of $2.50, and they are under negotiation for at least seven weeks, apa

disappointed with this situation with brookfield, become of the latest of the infrastructure targets of part of the buying spree. we have seen the interest in the sydney airport spark, and of course, another sale yesterday, as well, shery. shery: let's take a quick check of the business flash headlines, where the u.s. unit of mitsubishi initial group has received a cease and desist order from u.s. regulators, citing a practice with technology and risk management. the office of the control of the currency you found noncompliance. the order requires assessments. also staffing deficiencies. u.s. auto regulators will look at the tata airbags that escaped

recall. the agency has not found a safety risk, but evaluation is needed. it is a years long effort to replace the airbags that can explode in a crash and spray metal shards. and cryptocurrencies, bitcoin fell almost 11% at one point, before pairing losses. let's bring in bloomberg's su keenan. they are saying these digital tokens are behaving more like stocks than digital coins. su: yes, if they were digital gold, they would have risen, but they sold off big time, like a tech stock. the price chart, if you looked at one and two hours ago, you would have seen ac of -- a sea of red with a percent and 9% drops, but they have paired their losses, going down almost 11% at one point, managing two pair losses.

and some other tokens, such as does coin -- dogecoin, took a drop off, and you can see this action in the three-day chart. there it is. analysts are now predicting a choppy week with a pullback to 41,000. the picture, your today, you can see already starting to recover from a steep drop in july. they say there is likely support at 40,000, but some were really taken aback once again by the swiftness of the drop in crypto prices across the board and the fact that this latest volatility reignite's questions, is this a diversification for your portfolio if it falls like a rock when stocks drop? a call for the sec to crackdown again on cryptos from a number

of investor advocates. haidi? haidi: coinbase? su: yes, coinbase quietly announced in an update to a blog post that way -- that they were dropping a product that would have paid yields on cryptos held in their customer accounts. the sec has made it clear they want to really crack down on anything that comes in their purview, such as paying yield on any platform. as you know, the sec chair, gary gensler, has called crypto the wild west. meanwhile, robinhood after hours got a brief pop in the stock come up about 2% before giving back the gains after announcing a new crypto wallet app. this is a long-awaited move that

will make it easy for customers to sell and receive. haidi: su keenan their paid coming up next, moneylien going public this week -- su keenan there. (announcer) looking for a better way to lose weight and feel good? how about the one with the 98% success rate and the more affordable weight loss solution? that's golo. there are no monthly fees and it's guaranteed to work or you don't pay. how can golo offer all of that? because it's not like any of those diets you've already tried. it's the new way to lose weight. no stimulants, no starving, just results. results you'll keep for life. no more sacrificing to lose weight only to put it back on. no more sacrificing, period. it improves your lifestyle and delivers incredible results. with over 2 million satisfied customers, golo is the new way to lose weight. this is the only program i have ever done that i have never deprived myself of anything.

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vonnie: this is daybreak: asia. pfizer and partner beyond tech say their covert shot is safe for children and uses strong antibody responses. the findings are from a large scale trial in kids age five to 11. they could pave the way to begin vaccinating gradeschool children within months. pressures to immunize kids has been climbing in the united states with a surge in deltek cases. the u.s. will soon open air travel to most foreigners as long as there vaccinated against

covid. the new rules will replace the current system expands foreigners arriving from places like the u.k., china and india. on vaccinated american travelers will need to test within one day of departure. policies are expected to star in early november. the biden administration says russian restrictions on natural gas exports mean some european countries may not have enough supplies to heat homes this winter. european gas prices surged on news at that a moscow company opted not to pump more gas to the continent in october. u.k. government is winning of a long difficult winter with high energy prices tipping power suppliers into bankruptcy. former u.s. treasury secretary steven mnuchin has started a multibillion-dollar private equity fund. he has raised about two and a half billion dollars. most of the money is from middle east sovereign wealth funds including saudi arabia's public

investment funds. it was launched of this year with a focus on technology, financial services and fintech. 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'm vonnie quinn. this is bloomberg. shery: take another look at cryptocurrencies right now. we are seeing them headed down as we continue to see the broader market selloff. it coin headed for the 100 day moving average, which sets around the mid-40,000 levels. we have seen el salvador's president saying the country has bought the dip. we had some crypto related news including robinhood testing a crypto wallet. our next guest runs moneylion, backed by names including jp morgan and nomura. they're planning a cryptocurrency rollout enabling users to buy and sell cryptocurrency within the app. they're planning to go public

later this week. joining us as cofounder and ceo dee choubey. you are adding crypto trading to your app. tell us how this would work especially when it comes to charging transaction fears. what is the plan? dee: moneylion is for the hard-working american in the united states. 87% of americans have never touched cryptocurrency. our approach is to make it educational and build into everyday transactions. every time you use digital banking solutions, you can round up into bitcoin or ethereum. for a first-time investor, if you think about the mass market in the united states, it is a compelling opportunity. you guys have been pointing out the volatility of the cryptocurrency assets. it is important for first-time

investors to get acquainted with the inherent volatility that is embedded into these asset classes. shery: are you worried about going public through a spac this week not only because of the market volatility being bad this week but also because we have seen the post merger blues higher companies have gone through. dee: going public via spac or direct listing for us is -- at the end of the day, we are confident in what moneylion is going to be delivering to shareholders, employees and customers. we are building a very sustainable real business that has an incredible growth trajectory. in fintech in the united states, there are significant tailwinds. we were in the early innings of digital transformation. more important for us is the confidence in the plane we put

into the market. it has been a long process to get through the process but we are in a great position to transform our business model and change the way a virtual bank, a physical bank makes money in the next two to five years changing consumer demand and changing consumer needs. haidi: there have been a few hiccups this week. market volatility. we saw shares falling after they voluntary a added the disclosures. you confident the dust has settled enough to not meaningfully impact the way forward to this listing? dee: as you know, the way a spac usually works is it is three transactions. it is a merger. it is a private placement. we are confident and we are enthused by the investors in our pike. we have had conversations with all of them. they are all taking a long-term view on where the consumer

demand will be in a one year, in two years or three years. the vehicle allows investors to take a long-term view on emerging trends, emerging technologies and emerging ways for consumers to interact with products. with that said, the investors are supporting us through the process can understand while there may be short-term volatility, it is the long-term fundamentals, the systemic changes their backing. haidi: your co-founder is malaysian. i am wondering what the parties are outside the u.s. and where you see growth in asian markets. dee: refound the business in 2013 and are cofounder is chinese malaysian and we started an office with a few engineers and it has blossomed to over 220 engineers now in data science,

artificial intelligence. in all of asean, right out of college, folks looking for a high tech machine learning job, they come work for us. we are going to be using the foothold we have with the team and region to expand in the future. right now, it is a u.s. focused business. we are focused on the hard-working american. we'll will be looking at opportunities to use the foothold in malaysia. we are excited about asean. some of the trends we see about digital transformation will also player in the southeast asian regions as well. from a population perspective. from the adoption of mobile devices to the acceptance of fintech. i think there is an incredible opportunity to grow in southeast asia. shery: how are you factoring in potentially more regulation as well as competition? >> we are built for both of them. we started the business in 2013.

have always taken the view it has to be a transparent relationship with the regulators. we pride ourselves on a good two way dialogue in the states. if you look at the united states, each state has its own local financial services. if you look at whether it is asean or other geographies, you have dialogue with regulators, you take into account some of their policy objectives. haidi: we really appreciate your time this week. let's take a look at how we are setting up when it comes to these markets in asia. sophie: the focus on evergrande and the fed decision. we have japan coming back online. dk futures, singapore extending losses down 1%. risk off tone likely as we sell the benchmark.

watching autos and chip laden names as more carmakers flecked their production impact from semi conductor shortages. japanese markets will be playing catch-up. china's markets remain off-line. we have seen the msc ci china index extending your today losses on monday. down 17% compared to the 11% rises for em stocks making for the widest absence 2004 and concerns over evergrande contagion. the ongoing contraction in china's credit creation. that is happening in tandem with a slowdown we are seeing in property sales. we can show you that picture as the functions for the market team has been pointing out. this access for developers means they will hold off projects and demand for steel and iron ore. taking a closer look at iron ore, which is down 50%.

our colleagues at the market team noting it is not over yet. as the longer-term demand outlook is also getting dampened by china's ambition to be carbon neutral by 2060. shery: coming up, there is a fortune to be made in the commodities complex if you look outside the base metals. a pure metal that would drive a clean energy transition may be the next big investment opportunity. this is bloomberg. ♪

>> we have been here before. we have all heard lots of pledges. lots of positive noises. let's see where we get to. the united states is crucially important. it will make a huge difference. i think it will send a massively powerful signal to the world. the developing countries i have been talking about. we in the industrialized west really do take it seriously. shery: u.k. prime minister boris saying the u.s. is crucially important to helping developing nations tackle climate change. that as the u.k., china and nations around the world face a difficult winter with a global energy crisis, soaring gas prices have taken the focus off climate dredges and driven a

return to dirtier power sources. let's bring in the head of the gas research. we have seen coal prices more than doubling this year. how does this impact the green gas push? >> great question. ever since china, japan and korea announced net zero targets, their energy companies and utilities came under increased pressure to show they were making tangible result in terms of decarbonizing their portfolios. they are all users of natural gas. transacting in these green lng cargoes was a step in that direction. the latest report by bloomberg news -- the trade has been concentrated with asian buyers. there is a brewing criticism that these carbon offsets are

doing little to actually reducing the emissions profile of burning this natural gas. haidi: at a time of high lng prices, our buyers willing to pay the green premium for this type of lng? >> it seems ridiculous to be paying a premium on top of these current prices we are seeing. we are seeing u.k. potential bailouts for energy companies. risks of power outages. but this trade of carbon neutral , lng cargoes has largely been concentrated in asia. it appears most of these cargoes are being transacted under the pretext of existing bilateral relationships or bilateral contracts, which means they are not subject to the high prices we are seeing. whatever the green premium might

be even though the market is wondering what exactly the premium is, that green premium might be a little more palatable for these types of cargoes when they are being transacted with existing buyers and sellers together. however, if an lng buyer has come into the market to purchase an lng cargo, it would be much more unlikely they are willing to tackle on a green premium on top of a heavy price tech already heading into winter. haidi: head of lng and gas research funds. that shift from fossil fuels to clean -- to clean energy. investment opportunity. let's bring in our energy reporter. what are we seeing?

>> i think a lot of us understand things like copper and nickel are familiar industrial metals and are going to be important in the energy distribution. we are going to be drilling down into the implications and not shift away from things like coal and oil. looking thank -- looking at things like obscure materials and the type of demand. lithium, cobalt. we have taken a look at some of the couple of key products. each of those high-speed chargers along in on the highways globally and there are that early tens of millions of chargers being installed. every single one of those has 25 kilograms of copper. things like solar panels just here in australia. we know the explosion in solar has been replicated everywhere. all of those panels need vast

volumes of things like silver, silicon and steel. huge wind turbines. they have fast requirements of concrete, steel, electronics. a whole kaleidoscope of material. there are huge opportunities and a lot of these commodities are at the early stages. shery: are we seeing investors already positioning for that and what would be the risks? >> investors are. investors we have spoken to said the time really is now. this is a time when the producers of raw materials are looking to bring on more supply. we are seeing huge surges in clean energy stocks. dozens and dozens of companies with exposure. they have doubled or tripled in value since the start of last year. we are seeing the emergence of futures contracts any things like lithium and cobalt and

dozens of planned or reducing ipo's and new companies like battery producers, solar companies that can give investors exposure to the sector. one note of caution for investors is is this the right moment? are valuations to frothy echo we have seen some of the gains in previous eras. we have seen spectacular crashes in green stocks. the long-term opportunity, people seem to agree is there. it is a question of when is the right moment to enter. shery: our asia energy team leader. bill gates has raised more than a billion dollars in corporate funding for his breakthrough energy catalyst program, which is set up to accelerate the commercial viability of solutions to the climate crisis. larry fink as among those coming on board. gates and fink spoke -- spoke to erik schatzker.

>> it is exciting that we have got seven founding partners here for catalysts. these are companies that care about climate and even beyond getting rid of their own emissions are helping to support the projects that will reduce the cost of making things like aviation fuel or hydrogen and so it is not just their missions that will be impacted here as we take this over a billion dollars in capital we already have and that is just the start and fund these projects. we are going to bring the cost down so all companies and all countries will be able to participate in using green products. i saw this as a key element. i first went to seeing how upfront larry has been on this issue. they encouraged me to get a

group together. we have got five other companies who are leaders in this space announcing substantial commitments. we start with over a billion dollars to help fund scala projects that will help bring the costs down. there is a lot of leisure -- a lot of leverage because they will be government money, tax credits that will pull together dozens of these projects. >> and you have got in addition to microsoft and blackrock, you have bank of america, you have general motors. i may be missing one. american airlines. >> those are the seven founding partners who are going to help guide this effort. we do expect to bring in more companies. we have announced catalysts is looking -- is working with the e.u. and the united states see this effort as company entry. designing these projects well,

which of government was doing by itself would not have the breadth of expertise you need. our expertise, the company's expertise with the government in our taking a lot of recovery money, you have committed a lot of capital. congress is debating substantial money under the two different bills. if those go through, it will allow the effort to go full speed. dirk o'leary, you are one of the first people bill approached in his effort to get this off the ground. what convinced you to support him? >> need to rapidly find ways of bringing down the going premium to move to a more sustainable world. at this moment, we are spending more time focusing on -- if we don't find new technologies, it is going to be highly inflationary to get to a green world and we are going to leave many parts of society

behind. it became real to me we needed to be focused on investing in technologies very rapidly. importantly, we needed to invest in new technology that may not turn out good. we need to be investing in new technology in the onset of these technologies. if they work, they are going to be enterprises and ideas that may be blackrock could fund later on with our corporate money -- our quiet money. at this time, it was important for us in our position as an organization to put our capital to work to start accelerating the idea of science and technology coming forward to rapidly try to find solutions to a move to green biofuels, to green cement and green steel. haidi: we do have lots more to

come on daybreak asia. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo. some stories we are watching as japan comes back from a long holiday. mitsubishi after the u.s. banking unit received a cease and desist order from regulators

over its risk management processes. keeping an eye on honda after the carmakers said factories in japan were operating at 60% below their planned pace for the past two months given the ship shortages and delays in shipments. we are following the latest developments on the ldp leadership. one poll shows another candidate leading. haidi: continuing to watch that race. are going to get a quick check on the latest does not flash headlines. two years after the ipo crash, he works as it will begin trading october 21. shareholders will meet virtually october 19 to vote on the plan. shares will be listed under the ticker we.

accelerating consolidation in the largest u.s. oil patch. the deal will give conocophillips a daily additional production level of a thousand barrels of oil equivalent. shell will distribute $7 billion to shareholders. shery: some stocks we are watching after the u.s. is set to open. air travel to most vaccinated foreigners. we are seeing these stocks coming back from holidays. in japan, qantas airport -- qantas airlines trading. take a look at the broader markets. kiwi stocks are down 9/10 of 1%. we had seen the kiwi dollar also pressured all week. we are seeing sydney futures under pressure. miners had suffered.

nikkei futures, a little bit of catch-up given they are coming back from holiday. coming up, we will update you on asia supply chain disruptions with the hong kong importers and exporter association. this is bloomberg. ♪

i really see the tendency. the tendency. shery: welcome to daybreak: asia. haidi: taking a look at the major markets opening in asia. asia looks set to extend the global stock selloff as concerns mount about china property risks and fed tapering. the market contagion testing resolve as traders question how

far he will go. macau's government meets casino operations as rules trigger a record plunge. we are breaking ourselves for the market sophie: stocks falling more than 1%. the nikkei could be pushing through the 30,000 level. we are keeping an eye on carmakers. as more players flagged production impact from the semi conductor shortage. keeping an eye on airlines as the u.s. eases travel rules for vaccinated visitors. you have japan airlines getting 11% of its annual revenue from the americas. at stock down 1.4%. we have jgb's gaining ground as the yen is looking steady. hanging onto overnight gains. these concerns over evergrande contagion. flipping the board.

the kiwi dollar getting sold after the rbnz pushed back against an aggressive rate hike for next month. the aussie dollar is nudging higher after a three-day drop stabilizing with iron ore futures trading at 60 -- trading at $96 in singapore. php is losing ground here. extending losses for a third session and weighing on the asx 200. check out the offshore you on. trading above dashed offshore yuan -- offshore yuan. could push to 660 over next month. i holiday on wednesday. we saw the deep slump in hong kong shares with property tech and banking stocks getting pummeled. that is seeing the hang seng near the level that was established during the 2008 global financial crisis. shery: concerns over what is happening in china with what is happening with evergrande, not

to mention the central bank decisions this week expected to announce some sort of tapering. our next guest says she is confident about about ages expanding middle-class. we'll bring in the senior investment director for asian equities. it is great to have you with us. take you for your time. the anxiety this week seems to be broader about what is happening with the real economy in china, which is why you are seeing this huge hit in the commodity space. if you have chinese economic growth decelerating faster because of problems evergrande evergrande with, crack towns in other sectors as well, how much can asian consumption hold up the ground if china worsens? >> thank you for having me. i think china is still very important to the overall picture

of the asian consumption so let's start with that. if we were to look at some of the recent data on why the weakness is coming through in china, half of that is covid related. china has a zero-tolerance policy against covid. the ways of such in covid cases that we have seen in china, we have seen lockdowns happening in mass testing happening. that has affected consumption activity as well as economic activity to a certain extent. as a result of that, consumption and china is pretty weak. on top of that, we are also seeing some fears of prosperity and what that means for migration in china. we think over the long term that will mean the outcome of prosperity will mean that will expand the middle class in china

and the consumption and china will be very much in tact. that should pull up over the long-term. asia as we start to see vaccination pace picked up, hopefully economic activity returns. when you put that altogether overall as we move toward the end of the year and into next year, we see an optimistic picture of consumption in asia. shery: in the meantime, that short-term problems take us to our question of the day. how long will evergrande little assets given we have not heard anything from beijing as of yet on anything concrete to resolve this crisis. >> that is right. i think all eyes are waiting for that. that is why there's so much fear in the market at the moment. our view is that there should be impacts from what is happening to evergrande and that is

because it will impact the banking sector. it will impact some of the home appliances sector. it will impact the construction sector. we think the bottom line is that there is quite a systematic risk and that is because this is been induced by the tightening path in the property sector that china has been all over the course of last year. china is very aware of this risk and is watching very closely. i think it is a matter of when. that is a pretty tricky call. vonnie: evergrande it is about three to 4% of the overall chinese property market in would is a very fragmented market. what this means over the long term, it should favor players having a low leverage balance sheet and they will have a sector in the long term. i think in the short-term it is

going to be more volatility but we don't think it is going to be a systematic risk. haidi: what kind of analysis and approach are you taking to sift through the regulatory uncertainty and make your stock picks in china? >> i think what we are seeing is there is a broad selloff across many different sectors. therefore, we feel the best way is to be active and to look into the underlying fundamentals in the company because even though you have a big sector selloff like health care, within the health care sector, there are pockets that would benefit from tailwinds that china is going to -- the key is to the discerning about how the stock will be impacted fundamentally and take a look at the valuation. yes g is important because a lot

of regulatory crackdown by china has to do with esg. haidi: does it change the path of the economic recovery and the path of policy normalization for other central banks? >> i think if you look at china versus other central banks in asia, they are on a different path of policy normalization. as we have known for the most part of what we are seeing, china has been on a tightening and has started to normalize policies. you can say we are ahead of the curve from a monetary normalization cents. the rest of asia has yet to start on that path with the exception of the korean central bank.

i think as we start to see the fed increase rates and about to taper much later on, we should see central banks in asia moving in the same direction. inflation pressure in asia is in edge of and that is i think as a restart to raw vaccines, the central bank is trying to support economic growth. i do not think policy normalization is undercut at the moment. haidi: it was great to have you with us. let's get you to vonnie quinn who has the first word headlines. vonnie: the united states who will soon open air travel to multiple -- to most foreigners as long as they are fully vaccinated. the new rules will replace the current system, which bans non-americans traveling from places including the u.k.,

europe, china and india. unvaccinated american travelers will need to test with than one day of departure. the policies are expected to start in early november. pfizer and beyond text say there covert shot is safe for children and produces strong antibody responses. their findings are from a large-scale trial in kids ages five to 11. they could pave the way to begin vaccinating gradeschool children within months. pressure to vaccinate kids has been climbing in the past few months. new zealand's central bank -- in a speech published on tuesday, the assistant governor said the uncertainty means global policy makers tend to keep their base rates unchanged or move and 25 basis point increments. that prompted investors tuxedo back in -- in october.

the sec is went -- is expanding its morning. risks that beijing could crackdown on such arrangements is another way. the sec says investors should review the annual report of companies. a volcano on spain's atlantic ocean islands of lipoma is still erupting. more than 5000 residents have been forced to leave their homes with about 100 buildings destroyed. no injuries reported. lava measured at more than 1000 degrees celsius is moving toward the sea at 700 meters per hour. the volcano last erupted in 1971. 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.

shery: still ahead, we hear from the hong kong chinese importers and exporters association. the committee member discusses supply-chain shock and the profit outlook for the apparel sector. we will discuss how far president xi jinping will go with the crackdown. this is bloomberg. ♪

>> there has been a lot of discussion about whether china is investable. i believe it is not. the contract law is not there. private property rights are not there. it has only gotten worse. evergrande is just the latest negative for investing in china.

shery: the research president speaking about china's real estate crackdown. take a look at what softbank is doing. it is at the lowest level in two weeks. we have broader topics declines. now falling on the china market exposure. down more than 5%. the share declining to 15. softbank corporation declining at the moment the evergrande feeding into asian trade as we saw with soft ink after the global domino selloff. hoods bring in our chief north asian correspondent. what can we expect on evergrande today as the chinese markets are still shut down on holidays? >> perhaps more nervousness on the markets. as we have been waiting for quite some time, any kind of guidance or market stabilization, comments perhaps from the chinese government.

we do know over the last week authorities have hired financial advisors. they are working on what would be china's largest debt restructuring. we have not seen authorities directly comment on this market turmoil we have seen across the globe last night and into today. china is on holiday yesterday and today. then hong kong goes on holiday tomorrow. market participants perhaps waiting on the sidelines until there is greater clarity. this is what the greater china economist had to say. even though most people he says don't expect evergrande to collapse all of a sudden, the silence and a lack of major actions from policymakers is making everyone panic. i expect china to at least offer

some verbal support soon to stabilize sentiment. we have not gotten that yet. the challenge for officials is how far do you go before these tough measures threaten to create the kind of financial instability they are trying to avoid? will run through a quick list of things have you have only been watching the tech crackdown, the property market has had significant regulatory and market tightening. they have tightened mortgage approvals in the last year. they have raised rates for first-time buyers. they have suspended some centralized land sales. even revived talk about a national property tax and there are three shootings in pays redlines. so they don't overextend themselves. there is chatter in the last couple of days a lot of these regulatory curbs could be extended to hong kong. it is a perfect storm right now.

haidi: it was a perfect storm when it comes to the selloff across all sectors in hong kong. they are going into their own mid autumn holiday. what happens before you are about to go on break? do you take more money off the table? >> i don't think i am going on break. here in hong kong, the market might be on holiday tomorrow but there will be a lot of chatter ahead of thursday. the bond coupons are due on 84 million u.s. dollars of evergrande offshore bond and 36 million dollars on onshore bonds. no indication whether they are going to meet those coupon payments. the 30 great day -- 30 day grac periods for it to be considered on default that is white is culminating in panic. yesterday on the markets, all the big developers here plummeting. anderson taking the most in one year. there is a concern there could

be some regulatory pressure coming onto hong kong. there has been a lot of rhetoric being used in state media. there was one particular company with the unfortunate name, sinic . it has a 246 million bond. it was downgraded recently. it is a small developer but emblematic of the contagion and the sentiment. haidi: you would think they would be more cynical perhaps. we will get more analysis from bloomberg intelligence asia real estate senior analyst patrick long. great to have you with us. what is the priority now to get around the crisis? >> it seems the situation has started to pop out. the evergrande and the challenge now is in terms of the risk is

that when we have that problem like this one, what evergrande prioritizes is a mixture of stability. that is what is important. when we have had this situation, evergrande -- the banks or contractors or suppliers. i think the contractor suppliers are important on that one to ensure the consistency can continue. i think one solution they are going to give the buyers of those wealth management companies is get the properties. the property is very important. otherwise it is very difficult for evergrande to continue to survive.

that is why i think we will see going forward is they try to prioritize further in terms of the consistent and for the loans on the others, that may be potentially, we wait for a little bit more. shery: we have seen the impacts on other chinese developers already. does this signal there could be broader risks for them as well? >> i think it is possible to see more developers fee also affected. we talked about the interest. they cannot pay their loan interest. i think they will become more cautious in terms of paying those loans. to borrow money from the banks will be more and more difficult. we found high leverage.

that this max with some of -- a difficult situation. shery: i will continue watching the crisis. that crisis really reverberating across markets in asia. firmly risk off especially with the nikkei catching up to the losses coming back from holidays. communications, industrial stocks. the topics down as much. we are seeing the asx 200 also down 3/10 of 1%. this has we continue to see the mining giants under pressure given the slump in iron ore. miners shooting prices given the slump in the middle. plenty more to come. this is bloomberg.

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shery: fed chair jerome powell faces a communication challenge if he leads toward preparing stimulus while trying to dampen speculation that foreshadows rate hike. senior advisor to bloomberg economics bill dudley says the bank may face a credibility issue. >> there is is a risk to the great ability because inflation is higher for longer. inflation expectations are starting to rise. they sort of put it on themselves in terms of when they can raise rates. they said they are not going to raise rates until they had to percent inflation, had full employment and are confident for could stay above 2% in the future. if expectations get unanchored, that could push inflation up. >> take it back to the history

of the social economics of grant along and the other young turks out of your berkeley here. we are making up as we go. what is the theory that you would propose to maintain this valuable, this precious credibility? >> i think the fed should be a little more flexible in terms of when the are willing to raise short-term interest rates. if inflation expectations become unanchored, that is a problem for actual inflation. i would think they would have to react to that. the current regime where they don't do anything until they reach maximum sustainable employment, it might turn out to be too late. >> how concerned are you about reaching consumer confidence surveys that show consumers expect inflation to be above the fed's expectation over the next three to five years at a time when this is also dampening their optimism?

>> the new york fed published a household survey of expectations about inflation and the most recent reading is quite disturbing. the three-month inflation expectations are up to 4%, which is double what the fed is actually targeting. >> how concerning is best to you? consumers do not always get it right. this does signal a credibility issue beyond markets for the federal reserve to address. dirk a key question is whether people trust the fed. if people trust the fed, then inflation expectations will come back down. if people don't trust the fed, expectations will stay high. that will push up inflation and the fed will have a problem. >> do you think the market could potentially have a problem or a disruption if the fed does not signal tapering soon enough? >> i think the fed is going to signal tapering pretty soon. this meeting, they will reinforce the idea they are

making progress toward their goals, sending up the notion tapering will be announced in november. haidi: senior advisor to bloomberg economics bill dudley. 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. it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours?

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>> this is daybreak: asia. india will resume exporting covid vaccines month. this will go with the world health organization's covid initiative. the push is to quickly vaccinate developing nations around the world. india expects to have around 3 million doses on hand in october alone. china has appealed a wto's

ruling that rejected its claim. earlier this month, a wto panel said china sales to establish washington's import cap were inconsistent with the wto's rule. u.s. house democrats funding the government until year's end. the risky move aims to pressure. canadian prime minister justin trudeau appears to retain power after a close election however, he may fall short of regaining a majority. projections showed his liberal party winning 155 of the 388

seats. official results are due later. 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. this is bloomberg. >> let's go to sophie cameroon. >> take a look at sidney stocks. banks are under pressure. we have bhp and others gaining ground as iron ore is stabilizing in singapore after a nine-day drop in future is there -- in futures there. electronics are among the biggest drags. there are concerns over evergrande and the contagion risk for markets from china. and nomura says exports are

sensitive. we are seeing -- [indiscernible] concerns over slowing growth in china. the offshore you want holding above -- the offshore yuan holding above 6.48. the drag from evergrande, you have s&p global credit analyst saying there is no direct support from the government unless there is a risk of more developers failing. asia was flat amid these concerns but developers said there was a delay. a quick breakdown of how the topix.

carmakers are falling amid the chip shortage. gas and electric stocks are higher. shery: markets are digesting -- the be og starts a two day meeting as well. let's start with bank indonesia. not much change expected there. why? >> what central bank would like to make a move ahead of a fed meeting? you can make an argument that they could consider cutting their key right now. inflation is below target. take a look at this bloomberg chart. it is been downgraded. not much of a bounce back from

negative growth last year and below the rate that indonesia is used to when it comes to growth. they do have virus cases falling. that is a plus. but it will be a year until 75% of the population is vaccinated. that is why maybe -- that is why people say maybe they could cut but they are worried about a taper announcement from the fed weakening them further. they are already under pressure because bank indonesia signed on to a third tranche of a burden sharing agreement with the federal government buying bonds to finance covid actions that need to be done to support the economy. and there was a recent warning about indonesia's triple b warning. bank indonesia will keep policy on hold today. haidi: boj, no change expected.

the latest report talking about deflation. >> a lot of people are wondering what they will say especially with there being an upcoming general election. the leadership has put it on the back burner. the key measure for inflation on a monthly basis fell down to -0.2 on the latest reading. you would think that would spur some talk but there is also concerned about gdp. they look at this chart, japan's gdp did bounce back after the pandemic. there were two quarters of growth and now a rebound. there is a dark cloud over the third quarter because of the extended lockdowns and the sense that this will eat away at consumer spending. what is is -- what is expected to happen at the boj meeting is

a downgrade of the assessment of the economic outlook. they will consider financing small and medium businesses to help them get through. and a lot of focus on governor kuroda's press conference. i anticipate questions about leadership. haidi: we will continue to watch that race. we stay with the bank of japan. governor kuroda to become japan's longest running bankhead at the end of this month. he has evolved from an idealist to a more efficient stimulus approach. let's get more from paul jackson. he took the helm of the boj in 2013. gosh, i am feeling old now. what we are still nowhere near

2% inflation. he says they have had success. a lot of people saying they should scrap that target or lower it altogether. paul: if we look at the 2%, as the only yardstick to measure the current performance, we have to say that it is a failure. the boj is predicting that inflation will not be at 2% even when governor kuroda leaves in april 2023, a decade of failure. if it is only about inflation, yes, it has not been a success. but why is governor kuroda still around? he must be doing something right. i think he puts the boj on the same page as the government. corporate profits have been up which has also helped stocks keep markets calm.

he has a very steady hand for markets and investors and he kept government borrowing costs down with the yield curve control you just mentioned which was a replacement to his earlier onto tate of easing. there is a lot of politics there and that is why he is still around. shery: how does he fit into the leadership battle right now? paul: we have the uncertainty over who will become leader. people want to know what the fed is doing. this is not the time for any major change in the trajectory of the boj. i don't think any of these candidates will jump in and say, we want change and we want it now. i think they will see governor kuroda as a steady hand and they will keep him around for the

rest of his term. it is after that, after we get out of covid, after we get into a more normal economic water -- the failure at the moment is the reform vaccine czar. in the past, he has said he wants the boj to style its exit from stimulus. he has also pointed out that 2% inflation should be the result of growth and not a target to be aiming at. his idea going forward may be more -- may be for a more conservative governor to come in. some of the other candidates might also hit on the idea of a downside. one is the most gung ho on this idea.

shery: we will have to leave at there, paul jackson. we do have the broader market and given this property sector crackdown, the issues with evergrande, we are hearing from a hong kong property developer and they are disputing reports on china pressuring hong kong developers. we had heard earlier from the real estate developers association that they were unaware of individual meetings among central authorities and developers as we continue to see hong kong developers fall to the 2016 low as these concerns about evergrande and the broader property sector crackdown continues. there are reports that china is pressuring hong kong developers. we will discuss supply chain pressures with michael hui from the freedom industrial corporation. this is bloomberg.

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>> supply shortages globally. some of the key concerns include the slowing recovery from the pandemic and inflation. to talk further about the supply chain disruption, we have our

next guest. coining us now is michael hui, the hong kong chinese importers and exporters committee member. he also is managing director of the freedom industrial corporation. reichel, great to have you with us. -- michael, great to have you with us. what is the greatest worry right now? michael: our association is made up of a wide range of importers, exporters and manufacturing companies. they have been impacted by the recent supply chain fluctuations including the high costs of materials and the issue of u.s. dollars. companies require a lot of metals such as aluminum, they are seeing their raw material costs rising, doubling and even

tripling in some cases. and on top of that, given the container shortages, especially those going back and forth to the u.s., not only containers are getting more expensive. there are also long queues and delays and even if they could get to the other side, because of the bad luck there, they may not get there on time for the customers. >> how crucial do the members you represent -- a lot of these businesses that will be affected going into the crucial holiday season. how desperate are these times given that we are just a few months out from christmas? michael: actually, it was going pretty well in the last few months especially because southeast asia, the production

base, they are not doing so well because of the pandemic situation. we are seeing some orders coming back from that area to china. so, everything was going good until three or four months ago when prices started to go out. seeing our fabric price going up 15%, 20%, easily. we are doing a lot more resourcing and cutting down our profit margins. i am sure a lot of our colleagues and people in the industry are doing this to make sure that a customer, when they see the price adjustment, they will not have a total shock. shery: is the holiday demand helping to offset some of those pressures? michael: well, it is good that

we have more business but because of the margin, it is getting thinner and costs are getting higher. so, i see that all in all, we are above plan compared to last year. the hong kong trade development council put out a report a few days ago and in a survey they did, it shows that most of the hong kong exporters are not very optimistic about the christmas season. in fact, they are seeing customers doing smaller orders and quicker orders. that shows that buyers are getting more cautious. they are worried about covid and also the delta coming, back and forth. and we are closing down all over

the place again. haidi: and the covid picture especially around southeast asia and a new outbreak in china, is that affecting your members? michael: yes, definitely. for the customers, honestly, we have not seen a customer in person for almost two years now. it is very difficult to do business and have new development. also for us, as we have to go back to china to the factories to do new development, we have to go through quarantine. now, it is up to a 21 day quarantine in a hotel. in fact, i am in quarantine right now. just to go back to china to do business. it is really a disruption to the normal business conduct and you

look at the exhibitions -- everything is getting disturbed. haidi: michael way, good luck with -- michael hui, good luck with the rest of your quarantine period. the macau government is open to suggestions to the revisions of casino law. that is just ahead. this is bloomberg. ♪

>> a quick check of the latest business headlines. the u.s. has issued a cease and desist order. the office of the comptroller of the currency also flagged for noncompliance. it requires a bank to improve the assessment controls. [indiscernible] the move could lead to an expansion of the call back. the agency says additional evaluations are needed. it is been a years long effort.

general motors say they are preventing fire risks in both batteries. they have plans to start replacing the defective battery in october. chevrolet has dealt with inpatient customer since july. shery: macau's government says it is open to options for revision of gaming laws. joining us is our media reporter. what happened at the meeting. --what happened at the meeting? >> yesterday's meeting was the only meeting where the macau government high -- during the meeting, the casino operators all expressed their support for the revision and said they are willing to work with the

government. on the other hand, there were questions for example regarding what counts as a legal cash deposit. the government did not give an answer because they said it was a public consultation and they were there to listen to people's views and suggestions. haidi: did authorities give any details on how they plan to revise the gaming regulations? >> they did not give many details about what investors mostly care about. for example, a lot of investors want to know how the government plans to directly supervise the gaming industry and how they plan to increase local ownership in casino companies and what conditions companies need to fulfill before the government approves their profit distribution such as dividends. again, the government officials said at the meeting that they

were there to listen to people's views and suggestions and not to get their own answers. and a lot of casino operators have said they will submit their detailed opinions in writing later. shery: and our viewers can see that chart how casinos how casig the hedge. what should investors be watching out for next? >> the consultation period will last until october 29 and the government will hold another four meetings for members of the public to get their own opinions on how to revise the gaming law and officials said after the consultation period, they will include the feasible opinions into their final proposal which will be passed by the local legislature. all of that will be expected to happen before june next year and that was when -- and that will be when the licensing of the

local operators will expire. haidi: that is our media reporter, shirley. falling to a 20 16 low. what is the damage? >> the top four groups saw a $6.7 billion wipeout in asset value on monday alone. check out hendrickson, down by 13%, the biggest drop since 2008. china will order housing price control. we have seen there may be a push for developers to build more subsidized housing. bloomberg intelligence, should hong kong government rollout a more aggressive policy, looking

ahead, the group still looks well-positioned to keep the lions share of the sales in the city. >> we are seeing the nikkei and they topix playing catch-up -- and the topix playing catch after the weekend. utilities is the only sector gaining. there is a debate and japan over the energy mix. whether it should include nuclear energy as well. when it comes to the a sx 300, we are seeing gains in oil. rebounding after the new york session. wti above $78 a barrel. korea is away on holiday. he we stocks are down 0.6%. coming up, hedge funds growing.

the cio will join us for the hong kong market open in just over a half an hour. and the outlook from fidelity as the evergrande contagion spreads. this is bloomberg. ♪

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>> 9:00 a.m. in beijing and shanghai, welcome to bloomberg markets china open. david: counting down to the opening of trade. ever grande hitting a global markets and testing beijing is resolved to crack down on the property sector. yvonne: the fed taper plan looming over the dollar as investors rush into havens. david: