paul: good morning. i am paul allen in and we are counting -- shery: asian stocks sat for a steady start after rallying the u.s. session. fears are easing of contagion from china's debt crisis had beijing lays down the law to evergrande. regulators urge that developer

to avoid default and repay retail investors. fast food restaurant company yum china set some ambitious targets. our interview with joey want is next. paul: let's talk about the bond selloff. the bank of england indicating that it ends the qe program at the end of the year. it will be very interesting. u.s. yields surged to 143. interestingly, the threshold that morgan stanley nominated for triggering what it calls hedging will prompt even more, sherry. shery: very technical words. we are watching them closely as we continue to watch evergrande because we have seen more optimism about the economy. the central bank rate hikes coming but evergrande has been

that sore point. this week, with concerns easing a little bit about what evergrande might do, about whether regulators would step in, that has helped market sentiment but when i read the headlines and what regulators are telling evergrande and what bloomberg has learned, i really don't see that big of a difference because there is no indication that regulators are offering any financial support. i do want to hear more about this from steve and we will be talking to him shortly. paul: exquisite timing because today is also the day that china launches this southbound link of its bond connect program so that coincides with all the concerns over china evergrande's bond holdings. this bond connect will have an annual quarter of $77 billion, but market watchers, as you might expect, expecting a little bit of risk aversion when this opens today, sherry. shery: not the best of timing.

we are watching equity markets across asia. he restocks trading at the moment at the highest level since january as we get a little bit more risk on sentiment around the world. he restocks gaining for a third consecutive session as u.s. futures are also pointing slightly higher. the s&p 500 gained ground in the new york session. we did see with the broader market gains, wti searching to record highs. brent has entered overbought territory. nikkei futures pointing higher, .2 percent, back from a holiday. we have the cpi numbers in about half an hour. let's turn to the big story, china evergrande's deadline to pay interest. no indication that it has been paid. to take all measures possible. stephen angle in hong kong.

as i was telling paul, i don't understand what this means because it does not seem that there is any concrete plans to offer them any sort of financial support. >> according to the sources we have spoken to, there's no indications that sources are planning to offer financial support to evergrande and it is unclear whether officials believe the company should eventually impose losses on those foreign or dollar bondholders which is a key question. we know from a couple of days ago that the one bond that was the interest payment that was due yesterday was negotiated and resolved according to evergrande. no details on that. it is the dollar bond we have not necessarily gotten much details. sources say financial regulators in beijing have issued evergrande they brought set of instructions urging it to take all measures possible to avoid a near-term default on the dollar bonds with added emphasis.

complete the unfinished apartments and repay investors. keep in mind, minimal count, at least 1.5 million unfinished homes to customers who pay down payments on their homes. they are not happy. 70,000 or so people have bought wealth management products including employees of evergrande. there's some $6.2 billion of returns not yet to be paid. people are not happy about that. the government wants social stability. china may be willing to let evergrande fail as long as they can navigate a soft landing to that chaos that has broiled in the market so far. paul: the cash crunch seems to be spreading. word now that it's unit can pay some staff to edward about this? stephen: given -- it is an

asset evergrande tried to sell. new energy vehicle group. they have also not been able to sell their hong kong headquarters or other core assets. perhaps the vultures are still circling, looking for a better deal. sources are telling us right now that some employees have not been paid in the most recent paycheck time as well as suppliers. that puts into serious doubt there quite ambitious mass delivery plan set to begin next year in 2022. it is a chicken and eg thingg -- egg thing, vicious cycle. paul: the great central bank exit has begun among the world's major developed economies as norway hikes its key rate and the u.k. signals it may follow suit by the end of the year.

some em banks are having to choose between recoveries and curbing inflation. let's bring in and occur in. what is the significance of the bank of england signal on a hike? >> it's all about inflation. plus the bank of england in the halt camp and it suggests some of the inflation will not be so transitory after all. the u.k. is experiencing a big spike in energy prices. inflation over summer months hit 3.2%. economists are saying a rate hike now could come as soon as november. it's worth remembering that you could have had the bank of england hiking rates while they are continuing their action -- asset purchase program. they are continuing to stimulate the economy. that is one scenario it economists were talking about. another scenario is the fact that the economy -- the

underlying economy has softness in the labor market and industrial activity. perhaps this hike will not come in november but in the words of barclays, their own economists say they made a point that if the hike does come, it could be a painful hike for the u.k. economy. paul: inflation has been a top concern for developing nations as wild. we did have two rate decisions. i want to start with turkey. that was a wildcard. it seems that president erdogan got his way. enda: you look towards an emerging economy with accelerating growth, accelerating inflation. other emerging economies have tightened but the tent -- turkish central bank could hike interest rates. that is being interpreted by political pressure.

the government has been applying pressure on past governors to do so and it looks like that is what happened this time around. in the case of turkey, more interest rates are expected. paul: yesterday, we heard from the philippines central bank. what is the scenario there? enda: a more sober take from manella. they are dealing with faster inflation but they think that it is manageable for the moment and keeping an eye on the underlying growth story. the philippines do not have too much room to lower interest rates further because with a tapering on the horizon now, that limits what central banks can do. but nonetheless, neither is the governor in any rush to hike interest rates either. he is trying to strike a steady balance between keeping an eye on inflation pressures and making sure he's doing what he can to support the economy. the philippines has been hurt very hard by the ongoing covid

lockdown p or his message coming out of the meeting yesterday was that we do have accelerating inflation here but we think it is manageable and my number one priority is making sure that this recovery gets over the line. paul: and occur in in hong kong. let's get to monaco and now for the first word headlines. vonnie: nancy pelosi is vowing to avert a shutdown as the white house starts readying government agencies to prepare for one. , cracks may pass a stopgap spending bill. republicans are opposed to the measures. the house passed the bill to keep the government open and suspend the debt ceiling. republicans are expected to block it in the senate. the biden administration may force companies in the semiconductor supply chain to provide information on inventory and sales of chips. that will be done by invoking a cold war era national security law. the commerce secretary said the goal is to alleviate bottlenecks.

her team has saw more clarity for months as to how companies allocate trip supplies. the european commission confirmed that trade and tech talks with the u.s. will go ahead as planned after france saw to have them postponed over a contract dispute with washington. according to draft documents, the e.u. and the u.s. will discuss topics related to supply chains and trade challenges. the talks are aimed at boosting their joint position on china. 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 clan. -- i am vonnie. this is bloomberg. shery: china will make the first sale of oil from its strategic reserves. he shares his market insights. this is bloomberg. ♪

shery: we are counting down to the start of trade in tokyo and seoul. in japan, we are watchingmihuho -- mizuho. their top executives have taken pay cuts because of it. on the politics front, it's the final week of campaigning for the ruling parties top spot. the race is fairly open and the four candidates will be doing virtual town hall meetings to firm up support. we are awaiting eco-data. we last saw manufacturing pmi at 52.7 while services pmi lagged at 42.9 in august and we get inflation data in a few minutes. we are expecting that core cpi

to pop from deflation in the previous month. in south korea, the bank of correa will release a regular financial stability report at noon local time after the board meeting at 9:00 a.m. and we will be watching correa's crypto exchanges, their stocks later at the deadline for cryptocurrency exchanges to register with the financial intelligence unit. the clampdown might see many small crypto exchanges shutting down and north korea saying that it is too early to declare an end to the war according to the korean central news agency. that is after moon jae-in proposed this when he spoke at the u.n. general assembly earlier this week. let's turn to the markets because investors embraced a view that a reduction in the fed stimulus affirms a recovery from the pandemic. our next guest thinks that is a positive for market spirit he said sentiment could be dented by higher labor costs. for more, that spring in the director of asset management.

also given we do have concerns of peak growth, peak earnings, what are you expecting in terms of stock levels in the next few months as we head towards the fed decision? >> the u.s. actually is having higher because we have seen turmoil caused by ever grand this week. the symptom and -- -- the sentiment remains bullish. the other markets are not doing well. they deal with exposure in china. earnings remains ok. we still have 5% to 7% upside in the s&p. shery: you are reducing exposure in china. how much are you talking about? how much is that withdrawal? where do you still remain invested?

alex: we deal with explosions in hong kong and china -- 40%. exposures are mainly because people would probably be worried about the financial sector and the property sector as well. they are affected by that. we like the utilities sectors. those are less affected. they would still be doing ok in the current environment. paul: they're very good day for the hang seng index. the real estate sector up by better than 4.5%. do you think those sorts of gains are sustainable? alex: i don't think they are sustainable. i think that is a relief rally. i think probably will still

watch the development of ever grand very cautiously so this is just a relief rebound. it is sustainable. people fear the contingent effects of ever grand. i think it will not have a major financial impact on the financial side. it will probably have some fundamental impact because many homebuyers actually would delay their decision to buy and also the loan market is affected as well. i think this is what we need to see in china right now. paul: i assume you are avoiding chinese real estate stocks but what are you investing in? alex: we are putting money in utilities. this is a strong cash flow

company. it is very fast. we have some manufacturers affected by sentiment and the public sector. if we see some relief in the public sector, it will probably rebound strong. very aggressive in the program. we are putting money into potential insurance. that stock is a little bit depressed. a chance to accumulate. shery: there's been a lot of debate whether or not evergrande will pose a systemic risk. alex: i don't think it will have systematic risk because everyone knew that evergrande is a bad boy. they are offering high yields.

people know the risk. there exposure would not be huge compared to their portfolio. the impact might not be too large. if it spills over into the loan market, probably, it would have a bigger impact. that will probably have a delayed impact later on. paul: alex wong, director of asset management, thank you so much for joining us. and be sure to tune into our special live coverage of evergrande and what measures it can take to avoid defaulting. that starts at the market open in hong kong and china. this is bloomberg. ♪

> wall street's return to the office bringing with it confusion. you and i have been in the studio for quite a while but when it comes to wall street, it is becoming tougher to bring employees back since they left the office on the onset of the pandemic and we are now seeing companies taking this range of steps to make the return, the transition easier. my favorite one is what citigroup in london is doing, actually greeting their employees with puppies. isn't that the best? you have little puppies and dogs reading you. why don't we have that at bloomberg? paul: i am a cat guy. interesting. kittens. that might be something. some people are having to deal with the commute for the first time, hands-free meals. therapy puppies. sometimes, i do have to pinch

myself and remind myself that the great-grandparents of some of these people probably survived the blitz in london. might be time to just harden up and get back to the office. shery: we continue to see these wall street leaders trying to really encourage employees to come back. wall street has been at the forefront of trying to bring employees back, but then we saw the rise of the delta variant and we continue to see so many countries struggling with vaccinations so it's really not surprising that they are trying everything they can in order to bring them back. i got to say, i love my pop. -- puppies. paul: a lot of people like working from home so it will be eight foot transition to make. the world's largest cruise operator, carnival, expects to have more than half its fleets sailing by october. it has been sidelined by the covid-19 pandemic. 65% capacity by the end of the year.

the company has repeatedly changed the dates for its restarting. a huge boost of its share price in new york. yum china plans to open 1300 new stores in 2020 one, outpacing expansion from last year. the ceo said that the smallest satellite restaurants see a payback period of two years to three years. they also want to double the number of coffee shops in the country by year-end. currently, there are 22 stores about to open in 2020. >> the opportunity for this market is fantastic and we certainly hope to grow. paul: b.p. is temporarily shutting some of its u.k. gas stations as a truck driver shortage affects fuel deliveries. a small number of tesco branded sites have been affected. the u.k.'s exit from the e.u.

has tightened the labor market. nike shares fell in after-hours trade with the company posting first-quarter sales that missed wall street estimates. this comes as production and shipping delays hobbled nike's efforts to meet strong demand for shoes and athletic wear. sales in china also remained lackluster, rising just 1%, sherry. shery: take a look at the currencies market. we saw the downside pressure on the dollar against major t10 currencies except for the japanese yen. the dollar holding steady when it comes to the member dollar index. the japanese yen at the 110 level. this as we are expecting the cpi numbers in less than five minutes time. core consumer prices poking back above the waterline. we have a deflationary reading in july. this as we continue to see a little bit more risk on. minors have bounced back.

banks have bounced back. the q. week dollar also holding at that level. in new zealand, we are watching the rb and said because they said that they will proceed with a proposal to tighten restrictions on lending. take a look at key restocks as well. we continue to see gains up for a third consecutive session. the january hyatt, this as market pricing for an october 6 rate hike has eased a little bit over the past week. we did get those trade figures earlier today. sydney futures up .1%. we are watching financials and tech stocks that gained ground in the previous session. japan is coming back from a holiday. u.s. futures slightly higher after we saw the s&p 500 gaining ground for a second session. paul. paul: coming up next, brent has had a 2018 high as global oil surprise -- supplies tighten. we will see how long that lasts

with the coming online flat today. this is bloomberg. ♪

>> we are getting cpi numbers out of japan when it comes to the core cpi numbers excluding fresh food. it is flat as expected, coming above the deflationary reading in the previous month. perhaps those prices of non-fresh food and accommodation supporting inflation pressures but when it comes to the headline number, it is though deflationary territory, a contraction of zero point percent, which is a bigger deceleration than analysts had expected.

also bigger deceleration than the previous month. exclude fresh food, exclude energy. we are talking about core cpi. that is also about deceleration of .5%, which is more than analysts had expected. perhaps the pressure coming from the lower chart is weighing on consumer prices. we are expecting bloomberg economics that core cpi will rise 2.2 percent in september because we have higher energy prices. in fact, let's stay with the price of oil because brent crude futures are the highest in three years. this as we continue to see shrinking global supplies. sue keenan joins us with the latest. some of the largest oil traders and banks say prices surge even higher. su: brent crude could go to $90 if winter is colder than normal. we have seen oil prices move higher and brent searching as --

it has been closing at the highest since october 2018 above 77 a barrel. it is clearly on track to hit 80. technical indicators are warning of a pullback before it moves higher. let's dip into the bloomberg because energy remains the top performing commodity sector of the year. not only are global supplies tightening much faster than expected, but here in the u.s., supplies are the lowest than expected. that is due to the impact of hurricane ida. 30 million barrels in the gulf area, making it the most destructive storm. briefly looking at west texas intermediate in the u.s., it is now at the highest since july so ida's pains are remaining. interestingly enough, we are not seeing a lot of energy stocks rise with the commodity.

not impressed is the title of this chart. in the white line is oil. the paul: paul: blue line is the s&p 500 energy sector. you can see they are heading in opposite directions. all. we did see brent prices dipping. china will make its first sale of oil. >> and china announced the timing of its first sale would be september 24. in other words, imminently. and that was after announcing the historic moves last week with -- and that bloomberg reported. this was an unprecedented intervention by the top crude, order to lower prices. at least, that is the aim. the initial auction will be for 7.4 million barrels of crude according to the national food and strategic reserves administration. the china agency responsible for this. it will involve a number of grades. let's look at a three-day chart which shows the intraday moves

of brent crude. they did jolt prices lower, down 74 before brent recovered. it will tap its oil reserves to ease the pressure in raw materials. china is facing the surging cost of commodities not just for crude buffer: natural gas, adding to the rapid rise of the nation's so the tapping of the strategic reserve is being closely watched not just in china but kind of around the world. back to you. shery: we have breaking news when it comes to the january 6 attack on the u.s. capitol. we have continued to see the investigations in congress. they have now subpoenaed former aides to president trump. the subpoena issued to

christopher miller. we had heard that the house committee was asking for documents from the pentagon. we are seeing that the latest on that attack investigations are subpoenas to different president trump aids including marc meadows and steve bannon. let's get to vonnie karen with the first word headlines. vonnie: they have instructed china of a grand to avoid a near-term default on dollar bonds. a source tells us the developer is being urged to focus on completing senate projects and repaying individual investors. the dow jones reported that beijing helped local agencies and as ease to prepare for the potential downfall. signaling a reluctance to bailout the company. a panel of experts has recommended covid booster shots or americans who received the

pfizer jab under 65 years and older and long-term care residents and those under 18 with underlying medical conditions. the panel did not recommend extra doses for people who work at high risk of exposure. that puts them at odds with the fda. the director will need to sign off on the recommendations. india has delayed plans to overhaul its military and its getting a new life. the prime minister's government is integrating the army, air force, and navy and the biggest reorganization of its military. india is moving closer to the united dates and its allies which are strengthening defense cooperation against china. modi will attend the meeting at the white house on friday along with his counterparts from australia and japan. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

paul: white house is looking at invoking a cold war era national security law to get information on chip sales and data. the goal is to alleviate supply chain bottlenecks and stop any hoarding. delivery wait times keep creeping up. let's bring in our white house are order, just insane. what does the commerce department want to know and how are they prepared to get this information? justin: there is a survey that they want all the companies involved to fill out and what will -- it will help them understand where the shortages are, where the bottlenecks are, and you know, if there is hoarding happening, if people are not accurately reporting their sales -- when they get everybody in the room, everyone is pointing fingers at each other about where the problems are.

it's got 45 days to provide this information but the new term that the white house is threatening that they could invoke the defense production act or use other tools available to force companies to turn over the information if they want to. shery: this is a very archaic cold war national security law. justin: they have used it more frequently to address vaccine shortages. we had some issues with syringes and the nose swab they use in the u.s. so it has been a tool of the biden administration has used more frequently despite it being a little archaic. we don't know exactly how it will play out in these circumstances for something they have used more recently. paul: justin sink. china tells media companies to boycott men who express a more

feminine style. the university of amsterdam -- discusses the consequences for the lgbtq community. this is bloomberg. ♪

paul: a growing campaign for conformity. chinese regulators --

androgynous pop idols and anyone who does not follow gender norms. a little earlier for bloomberg equality, i spoke with the university of amsterdam lecturer, who researches digital media and china's clear cultures -- queer cultures. >> a considerable amount of clubs are associated with this, celebrities. it is in this context that celebrities become the new front against big tech. >> i am struggling to understand why with the lgbtq community be drawn into a conversation that is really about cracking down on big technology?

>> because in china, there is a pattern for such issues because this topic -- massive support for whatever -- it can draw mass attention immediately so that is the reason. also a set target for the regulators to use. paul: can you give us a sense of what it is like to be part of the lgbtq community in china today and whether or not this policy will have an impact on that? >> well, we look into china's lgbt cultures, one that finds a lot of contradictory developments. for example, in the first three decades of the people's republic of china, homosexuality was a fight of ideological

confrontation between socialism and capitalism and by then, homosexuality was regarded as a capitalist disease. since china has opened up in the 1980's, the english term gay was introduced to china. since then, china's homosexual people began to align themselves with this gay identity. even before the 2008 beijing olympics, it is a precursor to the publicly traded company and it was reported by the news agency in a very positive light to show china's inclusiveness and diversity to the world. even last year in 2020, china's homegrown company became the first of its kind in the world to be listed on nasdaq. from the recent policy, it seems like china has arrived at a

point when there's new strategies and workarounds to be created to survive the crackdown on the marginalized culture. paul: you mentioned that this was viewed as a capitalist disease. to what extent is this crackdown about pushing back against foreign influencers in china? >> in the past decade, a lot of sites created a space for nonconforming culture to flourish. for example, we have boys love, which refers to online fictions designed to depict intimacy and romance between two men. this was from japan. but the adaptions of boys love

fiction have received wide acclaim in china and these video sites produced a lot of shows and a lot of male contestants under the influence of that culture rose to fame with their unisex clothing and heavy makeup. but this gender nonconformist style was not very well received -- was very well received from young audiences. china's gender culture and diversity culture has seen a lot of progress over the past decades but their fame does not come from professional skills such as singing, dancing, and acting. they rely their lawn -- on their large internet followings.

it refers to celebrities who rely on their large online followings. so also in big tech platforms, they rely on online data to attract venture investment and to sustain their market value so in this way, the proliferation of feminist male celebrities -- paul: do you see any consequences from this policy? >> although this policy does not target a get lgbtq people, the word used in this policy is a gender slurve which, you know, has been widely used against gay men because of the stereotypes that people have. it's unlikely -- it is likely to

encourage bullying and violence increasing. if the government condones a slurve, then it cannot be wrong to use it to attack people. shery: be sure to tune into bloomberg radio to hear more from the day's big newsmakers and get in-depth analysis from the daybreak team. we are broadcasting live from our studio in hong kong. listen via the app, radio plus, or bloombergradio.com. you can get a roundup of the -- plenty more ahead. stay with us. ♪

>> emphasizing heavily on the in-depth research on the environmental issues. the geological and local contexts. we really want to prove that. it is not altruistic philanthropic work. it's all about data and information. after our investment, we transferred this company into creating more impact with quantitative data, yes. shery: you can watch more from this interview with members represented on the new -- representative on the generation next. sundays in new york.

yum china plans to rapidly expand its presence in mainland china and says new store openings in 2021 will outpace those from this year. stephen angle spoke with the ceo about the ambitious growth target. >> we know we will do it much faster. we will open the next 10,000 stars much faster than the first 10,000 stores. the first 10,000 stars took us 30 years, 30 years plus. if we just look at our opening number in the last few years, 2016 and 2020, a couple of new scores -- stores. the economy stays at a modest growth rate. the opening number has gone up. why? it is something i just mentioned

earlier, agility and innovation. in the past investment, 3 million or 3 million plus -- right now, we can do it at one million, two million, three million. it's very flexible, and then we just look at the location, what customers want, and then we have the very agile model stephen:. stephen:you talked to investors about supply chain digitalization. what does that look like to you and how far along are you? joey: the key question is what is next. we continue to go backward. we are working on this digitized nation, automation. what about the supply-side? what about the digital linkage? that is how we can really

improve the productivity of our entire supply chain because we are one of the very few companies. we have our own logistic centers. if we could go through the difficult and incredibly important hard work, i believe, again, it will benefit our business. stephen: how do you hold onto that proprietary data that must come with the digitalization of your supply chain? joey: we use data for internal operational improvement. we don't exchange. we don't sell any of this data. it is for our own internal understanding and learning about how can we manage our inventory, our operation, and mesh that with what customers need? that gave us a huge amount of upside of having this data. paul: -- shery: columbia is

seeing a strong economic recovery from the pandemic antenna is emerging as an foreign investor in the country. i spoke to the colombian president about the strengthening ties. >> we have seen an important amount of chinese investment in columbia. they are participating in infrastructure projects. recently, a chinese company won the bid for the metro. they are also working in the 2% proposals in the navigation program that should be open by the end of this year and we have seen a lot of four generation highways that have been attractive to chinese companies, and yes, there is a good amount of investment. we want this investment from everywhere and in the case of china, we have a relationship that has lasted 40 years and then we want to continue strengthening it and we are also opening opportunities for colombian exports in that market.

we see this as a good bilateral opportunity. shery: does it cause tensions with washington? ivan: what we have said is that columbia is a country open for business. we have rule of law. whoever wants to participate in open bids in a transparent way can bring their investments to columbia. at the same time, we are trying to reduce our trade deficit with china. that is why we are trying to keep opening opportunities for our exports in that specific market. paul: that's colombian president ivan duque. hong kong-based insurer fwd has filed to go public in the united states. the company says a number of investors indicated interest in subscribing for up to $500 million of the american depositary shares on offer. bloomberg sources revealed to the insurer could seek to 3

billion in the u.s. ipo. if it is backed by richard lee and its operations span across 10 markets in asia. china's southern power grid -- $4 billion stake in abu dhabi national energy. they have reportedly stalled. the two parties earlier discussed about a 10% holding in abu dhabi's biggest utility before negotiations hit a snag over evaluations. sources tell us it is unclear if or when talks could be revived. shares fell in after-hours trade at with the company posting first-quarter shares -- sales that missed estimates. this comes as shipping delays have hobbled nike's effort to meet the strong demand for shoes and athletic wear. sales in china also remained lackluster, rising just 1%. we are going to be watching stocks for asian supplier and swing trading kicks off in japan, south korea.

trading gets underway at the top of the hour. be sure to tune into our special live coverage of evergrande and what measures it can take to avoid defaulting on debt obligations. the market open in china and hong kong. it opens in sydney, seoul, and tokyo are next. tokyo returning from a one-day holiday. nikkei futures traded out of chicago right now are weaker by just a little bit. class b futures are weaker by .3%. in australia, we are setting up for modest gains at the open of about .1% as well. it might be worth keeping an eye on some chip stocks at the open as well. the united states signaling it might invoke a cold war era law known as the defense production act to demand inventory and sales information from chip suppliers amid easing bottlenecks. we have the open for you, next.

tokyo, sydney, and seoul. details in a moment. this is bloomberg. ♪

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♪ shery: welcome to daybreak: asia. i'm sherry on. -- sheri ahn. paul: asian stocks look to track u.s. gains, central bank stir caucus. china's southbound bond closes

the loop of the year-long program under the shadow of evergrande concerns. stephen: i am outside the china evergrande hong kong with the latest on authorities telling a company not to default. shery: right now, japan, south korea and australia coming online and we are seeing rod gains with the nikkei seeing its best day in more than two weeks. the topics, every sector in the green let higher by utilities and consumer discretionary stocks. the japanese yen holding steady at 110. we saw weakness in the previous session against the u.s. dollar. we have a stronger u.s. dollar that is impacting the japanese yen. we have seen cpi numbers today, cpi remaining flat as expected, rebounding from reflationary

ground in the previous month. the kospi gaining .4% at the moment, the cost tech up as the korean yuan gains ground against the u.s. dollar, the korean yuan rebounding from the worst drop in june against the u.s. dollar and the kospi covering from a two week low. paul: off and running here in australia, the xx has a staggered open so we are looking flat at the moment. earned gainers include financials and energy stocks, bhp off the pace. currently seeing modest gains, about .2%. no change to the kiwi dollar despite a big blowup in the new zealand trade fs it in august 2 eight 2.1 billion dollars deficit and it comes when auckland is in lockdown, the biggest city, an outbreak of the

delta variant. market analysis now with cb investment corporation head of research benny lam. benny, the market is taking signaling of bed tapering in stride. vaccination rates improving globally as well. do you see the risk receding or taking a breather? benny: the risk is taking a break because tapering is much expected in the market. but remember, tapering may end in the middle of next year. we still have a low interest rate environment for the next several months. so, i think the market loss of liquidity, you can feel it in the heat in the stock market. i think the market right now has turned back to the fundamentals of some of the countries' numbers. and we also are looking at record earnings growth in the

second half. all things that we have to watch right now. paul: i know you have made changes to allocations. tell us about those. benny: the evergrande crisis has affected lots of socks, so earnings growth in second half of the sectors is what we are seeing. shipping sectors is a great what. the second one will be financials in hong kong, recently we see the wealth management connection. and that will create lots of opportunities for the sector. evergrande problems will also

affect other developers entering the market, if they have to cash out all their sales to pay back debt. shery: do you expect evergrande fears to spread to the broader market, the sentiment being hit across china. banny: sentiment will be a factor for all sectors. the construction sector is one of those affected and also banks. because china bank have sources to loans in the property sector and evergrande could have a contagious effect on investment in china. shery: you mentioned wealth management on the bond connect also watching this week. give us your take on what the

impact will be on financial markets. banny called for the moment, not much. we call for direct investments. i think all the financial sectors in hong kong, banks and security forms, should prepare for selling. that is actually feeling the heat in the market for more cross-border transactions in the future. paul: how is the china growth outlook looking at the moment? banny: in the second half in china, over all, growth is up in the third quarter but remember, we have a huge lack of growth in the first half. slower growth in the third quarter and fourth quarter is also not affecting the whole picture, the momentum in the chinese economy.

the problem we have to watch for right now is employment conditions in china. conditions in china right now i think are still ok and i don't think they will put a big heat on the unemployment rate. i think we will see more of the momentum we have seen in several quarters in the chinese economy. shery: the nikkei is coming back strong right now and we have seen optimism in japanese stocks. is this a market you would buy into? banny: in japan, if you change their leadership, the most important thing we have to watch for is a new policy on growth for the japanese economy, because after the hit for covid-19, i think we will have slow growth and even negative growth momentum. so, i think new leadership would help affect growth, the growth

momentum of the economy. the market is actually good for us, we are watching some of the sectors to buy, and all the policies they put on the market. i liked the old way of the japanese economy because at least we knew that in the first half of the term, they would have a lot of good policies for shery: economic growth. -- for growth. shery: these are stocks leading the gains in japan, sony hitting a 52-week i, increase of about 3% from the previous close. we have seen sony seeking to take over network z entertainment and has bought 20% year-to-date already. chips are key concern when it comes to some of these stocks including toyota and we have heard in the u.s. that the u.s.

is weighing invoking a defense law to force companies in the semiconductor supply chain to report information on inventory and sales of chips. that could provide more belief in the chip market. softbank has been fluctuating this week because they are exposed to china. the latest we heard is that they are investing in a robotics company behind the new york covid testing company. let's get to first word headlines. vonnie: house speaker nancy pelosi vowing to avert a shut down as the house warns government agencies to prepare for one. pelosi says democrats may pass a stop gap spending bill without the debt increase in it. this -- republicans are expected to block it in the senate. the biden administration may force companies in the semiconductor supply chain to

provide information about inventory and sales of chips. that would be done by invoking a national security law. commerce secretary gina raimondo says the goal is to alleviate bottlenecks. the white house has sought clarity for months on how companies allocate chip supply. the european commission says trade talks with the u.s. will go on as planned after france sought to have them postponed over a defense dispute with washington. the eu in the u.s. will reportedly discuss topics ranging from technology and supply chains to trade challenges and the climate. the talks are aimed at boosting the joint position on china. 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. ♪ paul: still to come, china

pushing its plan to transform the largest gambling hub. observers say a casino crackdown is just part of the move. details in a moment. plus, regulators want evergrande to avoid a near-term defaul dollar bonds. this is bloomberg. ♪ next.

♪ >> i don't think china evergrande right now is a big brick on the wall of worry. >> they may be done. >> it is probably a safe bet chinese authorities will go a little bit overboard. >> this is going to be a big slowdown in growth. >> a bit of a correction, but not exactly a huge crash. shery: our guests weighing in on the evergrande crisis.

the deadline to pay interest on a dollar bond for the company has passed, no indication the coupon has been paid. sources say regulators have urged the developer to take all measures possible to avoid in your-term default on dollar debt. let's bring in chief north asia correspondent stephen engle, at the evergrande center in hong kong. stephen: the big question is, will chinese central authorities in beijing allow evergrande to fail? it has 300 million dollars in liabilities. it is having financial troubles. but beijing thinks it can navigate a soft landing. if it can't navigate he stop lending, if there is a hard landing, the question is, how far-reaching will the contagion be? sources are telling bloomberg news that financial regulators in beijing evergrande have met with evergrande --in beijing

have met with evergrande executives and given them a list of things that would like to see. on top of the list, no short-term order-term default on their dollar bond. the coupon was supposed to be due yesterday. there are more bond coupons that are due in coming months, to the tune of $194 million u.s. by october 11. the sources say there was no indication in that statement to evergrande that beijing at this time is willing to offer financial support to appease bondholders. a person familiar with regulators says the company is urged to communicate proactively with those bondholders, and secondary to not having a bond default immediately, they must

do two things to maintain social order -- complete unfinished properties as fast as they can't, and repay individual investors who invested in wealth management products. paul: meanwhile, the cash crunch at evergrande seems to be spreading. we are not getting word the ev unit can't pay staff. what do you know? stephen: somewhat not surprising because it is a non-core asset. evergrande china --china evergrande ev group as a planter rollout a massive vehicles next year but we hear from sources they have not paid some employees and probably more importantly, they have not paid their suppliers. that is going to have a trickle-down effect on getting those cars out and getting in much-needed revenue to pay off those liabilities. i might add on the question on

the potential bond default, we did hear from at least two bondholders by 5:00 p.m. last night that they had not been paid. paul: chief north asia correspondent stephen engle. be sure to tune in for special live coverage of evergrande and what measures it can take to avoid defaulting on debt obligations. that is in the next hour. next, exclusive interview with a young china ceo about growth targets and expansion plans. that is just ahead. oomberg. ♪

♪ shery: to many investors come at the macao push to extend oversight over the gambling house has come as a shock, but the long-term observers, it was the latest move in china's grand

land to transform the 24 prettily -- $24 billion economy. joining us now is bloomberg reporter shirley ghao. with the crackdown, what kind of city does china want macao to be? surely: the china master plan for the southern bay area of chinese cities including hong kong and macau, macau would become a global leisure and tourism hub which has sports events, conventions, exhibitions and the latest macao crackdown came a week after china released a plan to encourage macau to diversify in a nearby island. and this island is supposed to have high tech manufacturing, cultural tourism, conventions, and chinese medicine. china plans to steer the macao

economy into these sectors instead of relying on gaming too much. paul: why does china want macao to move away from gaming? ? surely: the government is to reliable -- >> the government is too reliant on gaming. there is a capital outflow problem china wants to fix. at this capital outflow problem is facilitated by so-called junk is that sometimes breach -- so-called junkets that sometimes breach chinese law, and providing shadow banking services to high rolling betters and macau. shery: what does it mean for the

future of casinos there? shirley: they are likely to be forced to invest a non-gaming areas, but they are not experts in these areas that they are facing a lot of competition in regions like hong kong, which is very close to macau and has an established exhibition and convention industry. it hosts a lot of major international events. and a southern chinese island ha inan, has seen a doors and recently because of its tax-free status. hainan wants to develop similar industries. the latest crackdown and macau is going to affect the ipn high rolling gamblers further -- a fact -- the latest crackdown and

macau is going to affect high-rolling handlers further. the future of the sector is very dim. paul: bloomberg reporter shirley zhao. china says new store openings in 2021 will outpace those of last year. bloomberg's stephen engle spoke yum china yum china to --spoke to yum china's joey wat. >> the first 10,000 stores took us 30 years. we will definitely do the next 10 thousands much faster. if we look at our new store opening numbers in 2016 and 2020, we doubled the number of new stores. when the growth of the chinese economy stayed at modest growth rates, the store opening has

gone up -- the new store opening number has gone up there and why ? because of agility and innovation. in the past, investment gold was 3 million plus and right now, we can do it at one million, 2 million, 3 million. it is very flexible and we just look at the location, and we have our model going to that. evergrande -- stephen: supply chain digitalization, what does that look like to you? joey: we can't go backwards. we are looking at store digitalization. but what about the supply-side, the digital linkage between a

store and the supply chain? that is how we can really improve productivity of our supply chain, because we are one of the few companies that, we have our own supply chain, our own trucks, our own logistics centers. it is incredibly important, hard work and i believe it will benefit our business. stephen: how do you hold onto proprietary data? joey: we use data for internal operational improvements. we don't exchange, don't sell any of this data. it is for our own internal understanding about how we can manage our inventory and mesh that with customer needs. and that already gave us a huge

amount of upside, having this data. shery: our exclusive conversation with yum china ceo joey wat. the china power grid buying a roughly $4 billion taken abu dhabi national energy. the parties discussed a 10% holding in abu dhabi's biggest utility before negotiations hit a snag overvaluation. sources tell us it is unclear if or when talks could be revived. hong kong-based insurer as wb has filed to go public in the u.s.. -- insurer swb has filed to go public in the u.s. the insurer could seek to raise up to $3 billion in a u.s. ip out. swb is backed by billionaire

richard lee and izzy intend markets in asia. the cruise operator carnival hopes to have half its fleet sailing by late october. carnival''s business has been sidelined for more than a year over the covid pandemic. it is aiming for 65% capacity by the end of the year, although the company repeatedly changed dates for restarting. the news who's did it share price in new york. -- boosted its share price eight new york. paul: the nikkei roaring, higher almost 2%. all sectors of the nikkei currently higher in financials leading the way, the sector better 2.8 percent. energy performing as well, that sector hired 2% as we see the oil price finding. here in australia, the eas axes looking flat. we will probably be in negative territory for financials, the heavyweight sector higher two

thirds of a percent and propping up the market more broadly. the kospi is up six percent right now. new zealand, flat. more in a moment, including evergran and there you have it— -woah. wireless on the most reliable network nationwide. wow! -big deal! ...we get unlimited for just $30 bucks. sweet, but mine has 5g included. relax people, my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one upping itself. switch to xfinity mobile and save hundreds on your wireless bill. plus, save up to $400 when you purchase a new samsung phone or upgrade your existing phone. learn more at your local xfinity store today. ♪

shery: breaking news out of japan, pmi numbers for preliminary september figures when it comes to manufacturing. 51.2. it is a slight easing from the previous month, but when it comes to the services side, very close to the expansionary line, 47.4, a much better number than

42.9 we saw the previous month. when it comes to services, in construction -- in contraction territory since the pandemic the composite 47 point seven, an improvement from the previous month but still in contractionary territory, not surprising given we have japan under a state of emergency given the repeated outbreaks of coronavirus. vonnie: a panel of experts advising the u.s. cdc recommended covid booster shots for americans who received the pfizer jab who are 65 years and older, also long-term care residents and those over 18 with underlying medical conditions. however, the panel did not recommend extra doses for people whose work with them at high risk of exposure. that puts them at odds with the fda. this cdc will need to sign off

on the recommendations. the biden administration may force companies in the semiconductor supply chain to provide information on inventory and sales of chips. this would be done by invoking a cold war era national security law. commerce secretary gina raimondo says the goal is to alleviate bottlenecks. the administration has sought more clarity for months on how companies allocate their chip supply. the u.s. house committee investigating the january sex attack on the u.s. capitol has subpoenaed aids to former president donald trump including mark meadows, danskin vino. subpoenas are for documents on a deposition with a deadline to produce documents set october 7 and depositions a week later. india's long-delayed plans to overhaul its military get a new lifeline. the prime minister's government is integrating the army, air force and navy, the biggest reorganization of the indian military since independent.

-- independence. and yet is moving closer to the u.s. and its allies as they strengthen cooperation against china. there is a meeting friday with counterparts from australia and japan. china has sentenced a former chairman to life in prison, according to a statement. he was found guilty of taking riots during 1994 and 2018. 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. ♪ shery: we are less than one hour away from the open in china. we are watching evergrande. our next guest says, given uncertainty surrounding the developer, markets may worsen. but in the long run, sees

opportunities. let's bring in jenny zeng, head of asia-pacific income at alliancebernstein. what factors are you watching at making these selections to see who the winners and losers are in chinese property? jenny: good morning. chinese property right now is in the darkest moment, but there will be a dawn for some. we are looking at the fundamentals of this company right now. their most important thing is refinancing capability. can those developers survive a prolonged shut down of the offshore market? chinese developers all have pretty tight liquidity, some better than others, but they are pretty reliant on the offshore market for normal financing, the

cash structure. and now, because of what has happened to evergrande, plus the overall tightening by the government on the sector in terms of sales and mortgages, we see the market is very stressed. we are seeing a considerable amount of chinese bonds are at stress levels. that poses a big challenge for them. shery: how much is the pboc helping would large cash injections into the financial system? jenny: the pboc did pretty large injections recently. that is not surprising. we need to understand that for the chinese government, it is always about stability. even for housing policies, it is about stabilizing the housing prices, rent price and stabilize expectations. when they see there is a sign of potential systemic risk in the

system, they would act. so, it is actually a very good sign and we see beijing inching towards having more support to the broader economy. now the question is, will they relax the property sector? for now, we don't see that. paul: how likely is that the government is going to find some scapegoat for this crisis, somebody who can act as a chilling warning for the future? jenny: evergrande is kind of a warning, isn't it? evergrande to an extent was extremely expansionary and aggressive in terms of its operations. but at the same time, it is very typical of a model of a chinese developer business model, putting on debt on the balance sheet and having a very complex

structure. so i would think how they deal with the evergrande restructuring, whether it will be smooth and orderly, that will be a crucial factor for the next three to six months. paul: restructuring, containing the initial fallout and risk of contagion is one thing, but in terms of contagion risk, is it possible to contain all of it? we are learned today that evergrande is going to have trouble paying the staff of its ev unit and there are going to be creditors and suppliers that are going to have trouble as well. it is tough to calculate how far it will spread. jenny: you are right, a very complex situation for evergrande , just given its size.

what government cares foremost again is stability. what could possibly trigger social instability is the sme's, and i would be very surprised if the government doesn't do anything to make sure those people are getting settled and are satisfied. for the rest, just leave it to the market. shery: not a great week to be launching the southbound bond connect. what can we expect from this facility? jenny: it is still a milestone for china to further opening up its capital market. there is a $20 billion daily quota and a $500 billion annual quota. there was no quota for the north bond when they first opened it. this tells you authorities are being more cautious and more prudent in terms of opening the other way around.

they are always more prudent on outflows and want to control the outflows. right now, it only opens up to a relatively small market. the chinese way of doing things is to test the water a little bit and see how it goes. if it is smooth and orderly and there is a lot of interest, that they will gradually open it up to a further, broader market. we are pretty constructive on this area. [no audio] paul: jenny zeng, cohead of asia-pacific income that alliancebernstein -- income at alliancebernstein. special coverage of the evergrande situation opens in

the next hour at the open of the market in china and hong kong. and another report on the south opening.

♪ paul: the new channel for chinese investors opens friday

as markets are roiled over concerns about the evergrande crisis and the health of other developers. let's bring in our bloomberg reporter. start with evergrande. >> the latest state of play is that there are still filings from the company over whether it paid the coupon that was due yesterday, that is the coupon of the dollar bond. we are hearing from our sources that there has been no payment made as of yet. the conclusion would be that the 30-day grace period kick starts today to give evergrande time to negotiate with bondholders and the company needs that time to get an agreement on how to restructure it dollar bond debt and ease this creditwatch that china has been really pushing evergrande to do.

we had a report yesterday that china does not want evergrande to default in the short-term and is really pushing hard for the company and its management to avoid this at all costs, and the 30-day grace period gives the company more time. shery: this comes as everybody is anxious over evergrande, and now we have the southbound bond connect opening. what do we know about the flows given the mood? >> the northbound channel has been open since 2017, giving investors access to the north shore market through hong kong. this is closing that loop, giving onshore investors access to debt issued in hong kong.

the hong kong dollar denominated debt. we are hearing from analysts that it would be a slow start, as it was for the northbound connect as well. and investors are likely to buy the riskier end of the spectrum. developers in evergrande tends to be high-yield, bringing the high-yielding docs to 15 percent, highest in a decade. you are likely to see some buying of that. there is still a lot of concern about the market, of course, and i would like to point out also that there is a daily quota for the southbound connect , 20 billionyuan and an annual quota 500 billion. there is no quota for the northbound and that shows china still wants to control the outflow of capital even though the yuan is still strong and we saw record inflows into the

northbound in stocks and bonds. shery: what do we know in terms of sentiment and prompt by pboc actions lately? >> it has helped. we put out a story noting onshore markets have been relatively calm. the yuan is strong, money market rates have been suppressed, the overnight rate fell. some of the biggest injections we have seen in short-term liquidity since january. some short term loans are due today, so we would expect another action from the pboc today to ease money markets going into the quarter end,

where banks tend to need more cash regardless of whether there is a credit crisis. the pboc is showing markets that it is there is a backstop if needed. shery: sofia horta e costa, chief markets correspondent, bracing for an exciting day with all these evergrande headlines oil prices continue to rise because of shrinking supply. eight an effort to ease prices, china announcing it is ready to start selling oil roms strategic reserves. bloomberg's su keenan joins us. su: we know that the timing of tapping the reserves is september 24 or imminently. the announcement was made last week. it is an historic opening of the strategic reserve to bring down prices. the initial auction will be seven port form billion barrels of crude, according to the

agency responsible for this. the option is going to involve -- yes, the move is designed to lower oil prices. let's look at a three-day chart of brent crude. the announcement did indeed weekly and immediately jelled prices lower, down to $74, but they quickly recovered, heading for $77. that may indicate that this is liquidity absorbed by the market. the unprecedented move is designed to ease the pressure of rising raw material prices per china facing a surge in cost of commodities not just for crude and other energy prices such as: natura gas, but in general is it -- such as coal and natural gas.

a lot of analysts and banks are saying we could go much higher. it looks like brent crude is on a path $80. goldman is saying it could go to $90 this winter if we get a colder than expected winter. let's look at brent crude. as mentioned, it did close at a three-your high, highest since october 2018. charge watchers say technical indicators are flushing warnings of a pullback and that perhaps it is overbought. if we dip ie bloomberg,energy re top-performing commodities sector of 2021. commodities have been on fire. energy commodities leading the way, higher by a mile. what is also important is that not only are global supplies tightening, but here in the u.s. we have supplies at the lowest 2018 because of hurricane ida.

even though that was four weeks ago, we are still learning extent of damage. hurricane ida wiped out 30 million barrels in output, making it the most destructive storm on that basis in 13 years. shell platforms will remain off-line until early next year. back into the bloomberg, a different chart titled not impressed. you see that energy prices are not rising with oil prices of late at the white line going higher is the commodity, the blue is the s&p 500 index energy sector. even though we saw big oil stocks like exxon higher on the day, the general group has been moving in the opposite direction. shery: we have seen that discrepancy for a while. su keenan with the latest on oil supplies and tightening markets. when we look at commodities, futures a fallen 50% already this year.

we know that farming in china is a volatile business and we are hearing from beijing they want producers to keep their numbers at a reasonable level in order to tame prices. paul: that is right, a lot of farmers are getting rid of less protective reading sows and that is having a profound impact on price. hog prices are extremely volatile in china. we saw the rise to high levels during the african swine flu outbreak but now the price is collapsing and there are predictions they may not recover until towards the middle of next year. shery: and given that pork prices are so important for consumer inflation, we are watching those prices closely. paul: tune in to bloomberg radio to hear from the newsmakers and get analysis, listen on

bloomberg radio plus or bloombergradio.com. stay with us.

♪ shery: business flash headlines -- yum china plans to open up 1300 new stores in 2021, outpacing expansion from last year. the ceo told bloomberg

exclusively that pizza hut satellite restaurants have a payback. of 2-3 years, faster than bigger stores. yum china also wants to double the number of coffee shops in the country by year end. currently there are 22 stores about open, the first of 2020 >> -- first since >> 2020. >> the opportunity for the market is fantastic. shery: nike posting first quarter sales that miss wall street estimates as production and shipping delays hobble nike efforts to meet strong demand for shoes and athletic wear. sales in china remained lackluster, rising on the 1%. bp is temporarily shutting u.k. gas stations. a small number of other sites have been affected.

the u.k. exit from the eu has constrained the flow of workers from the continent and deliveries have also been impacted. paul: going up on bloomberg, special on the evergrande sacca. david and glass joins us. david, what is on the agenda? -- david ingles joins us. what is on the agenda? david: whether you looking at dollar-denominated debt or property shares, there are two things. the pain seems to be around evergrande and recovery rates of 25%-30% of renick and assistant -- 25 percent-30% are fairly

consistent. there is a larger conversation in china around common prosperity. the people's agreement is a very big topic when it comes to inflation and anybody holding dollar debt there. what will that mean after evergrande restructuring is one part of the conversation. the other is whether the pboc comes in, that was the reaction in shares yesterday, in a big way to inject more liquidity, into the system,, then telling us they have the backs of these market. we have a special guest coming up who has skin. in. the game. we will talk about conversations they are having with their own investors and clients. shery: we are really glued to

what is happening at evergrande and we are seeing market turmoil , and we are looking at another big development, the southbound bond connect. what should we expect? david: on any other day, that would be one of our top stories. it goes live today. it is the second part of this tunnel that comes from the mainland and allows mainland investors, and you look at who is involved, the daily quotas, annual quotas, market makers, who is on this side and that side, allowing mainland investors to bring their money here, and invest in yuan -denominated bonds as a larger stepping chinese efforts to

internationalize their economy. we will see a connection between this and what is going on at evergrande. paul: tune into our special live coverage of evergrande in the next hour.

♪ >> 9:00 a.m. in beijing and shanghai. david: good morning from hong kong, counting down your last sessions on the chinese mainland and in hong kong. bond yields across the world surging, asian stocks gaining following a rally in the u.s. over optimism over global growth . we are yvonne: