haidi: hello and welcome to daybreak asia. sophie: we are counting down to asia's major market open. kathleen: and good evening from new york. here are our top stories. asia stocks may lag behind the u.s. despite the s&p 500 hitting a record high. traders are weighing inflation and covid-19 risks amid key earnings reports.

facebook reports strong revenue growth but warns of headwinds in the fourth quarter. internal documents highlight the company's struggles. crown resorts said to be unfit to run its flagship melbourne casino as a royal commission inquiry finds the company engaged in conduct that is quote illegal and exploitative. haidi: let's get you straight to the third quarter preliminary gdp numbers that have just come through. we have seen a slightly softer print than expected. rising 4% year on year. when it comes to the breakdown we are seeing manufacturing gaining by .2% quarter on quarter, 5.9% year on year. we are seeing a gain of .3%, softer than the .6% and a pullback from .8%. we all saw wholesale contract

.8% quarter on quarter, although a gain of over 2% year on year. the economy has been bucking pandemic headwinds. really some of the cushioning scene from the impact of supply chain disruptions and virus resurgence. let's bring in the korean economist joining us from hong kong. great to have you. in terms of initial reaction, little more muted than what economists were expecting. >> the number came out slightly slower than expected. we are forecasting 4.3% with 0.6% quarter over quarter growth. but it is understandable given the fourth wave situation in korea during july and august would be domestic consumption may have slowed slightly longer than expected.

although we saw the shock was shorter lived compared to previous waves that the shock on the mobility might be longer-lasting than we expected. but certainly we expect the turnaround by the fourth quarter as korea achieved 70% of population getting fully vaccinated as of the past weekend. haidi: does this change the calculus for expectations in november? >> i think for this year for november hike is almost a done deal. the governor has been very solid about giving a strong message for his concern over the financial imbalance is much larger than the growth trajectory we are looking at right now. even with the 4% year-over-year growth with today's print it is

still ok for the b.o.k. to continue with their forecast for this year at 4% year-over-year. it is for the outlook next year i think is a bit of a concern given that there is external demand, slowdown possibility, with china macro stability. kathleen: 4% gdp growth for many countries is still considered quite good. when you look at the exporting status of south korea, the biggest exporter in the world even though it is the 11th largest economy. you know whatever is happening in china and we have seen that chart deceleration in gdp in the third quarter, and people are concerned about the fourth quarter. how big of a bite cadet take out of korea's gdp -- could that take out of korea gdp growth? >> external demand is a very important part of the korean gdp and china takes up about 25% of that in the export by volume.

the china activity is extremely important. so this year we actually see the strength supported by others let the u.s., europe and even some of the emerging markets demand holding out. that could offset the slowdown from china for this year at least. but for next year we are looking at 4% year-over-year growth for china. that is a huge slowdown compared to this year we are forecasting at 7.7%. for korea, we just scrapped off 30 basis points from 3.5 to 3.2 on china instability and there could be more downside risk if the policy easing in china does not come in effectively on time. kathleen: that is for the -- let's talk about the korean consumer. it is export driven to a large extent. nevertheless, the korean consumer also mix a difference. what do you see, particularly

with your confidence that covid, the worst may be behind in the country? >> we are optimistic about semester consumption. the vaccination -- about domestic consumption. the vaccination rate has been on schedule and in line with our baseline. korea achieved 70% of a totally vaccinated population as of this past weekend, and that is 80% of the total adult population. so korea can officially kick off normalization, back to normal plans from early november. and the government had given out a blueprint of lifting the business restrictions and plans to distribute another round of consumption vouchers. all these rolling out measures does put a fed risk to the domestic consumption through the fourth quarter and next year. so we think domestic activities on the retail sector should be

able to offset some of the slowdown from the export sector next year. kathleen: thank you very much, commenting on the korean gdp, third quarter coming in a little lighter than forecast. let's get a look at the market. sophie: looking at the sydney open, gaining ground. on monday we have plenty of trading updates to consider. oil search rising on the back of its solid report card. it narrowed its output guidance given it expects to invest less than initially anticipated. in wellington we are seeing .2% after the new zealand market came back from the long weekend. to year yields push higher as we get repricing for the rbnz policy outlook from kiwi bank. nikkei futures pushing lower after japanese stocks on monday. earnings from names like panasonic and other suppliers

after tesla clinched a deal with hertz, pushing shares to above $1 trillion, helping lift the s&p 500. stock movers in sydney we want to highlight, operators in focus after the inquiry into crown. crown shares jumping 11%, the most since march. haidi: yeah. let's talk about the outlook for crown. our managing editor emma o'brien joins us. we are getting crown's response now. they say they will work cooperatively with the government and they are reviewing the report and the government response. is this a second chance? because clearly investors are loving stopping short of removing the license. emma: yeah, that is a curious reaction. up as much as 12%.

obviously investors expected this to be worse. at least he melbourne casino is allowed to keep running, unlike their property in sydney. that is probably the silver lining here. you would think any potential investors, and of course you have blackstone and star entertainment circling crown for a couple of months. you would think this strict government oversight for the next two years would be a deterrent. but perhaps they may view it, and perhaps this is what shareholders are doing, as a chance for them to just get through, clean things up over these next two years, and then i n the clear after that. kathleen: so what will they have to do now to walk that path? obviously it seems a lot of people are figuring, hey, they really got a lucky break to get this two year reprieve, clean up

their act, and keep going. what will that cleanup entail? emma: they are going to have a special manager appointed to oversee the casino in melbourne, which does provide the bulk of crown resorts' revenue, more than 65%. they have quite a lot of power to veto board decisions, unfettered access to their books and records. which you would think would have any company quaking in their boots, but as you say, it's probably being seen as a reprieve, a chance to clean up there at -- their act and get in line with what regulators are asking and keep on operating. but it is pretty intense as to what is being asked for by this report and the government. haidi: blackstone and star have

been circling. will this quell their interest for now? emma: i think it remains to be seen. we will be reaching out to them and seeing what they have to say. you wonder whether two years, intends oversight, unfettered access to the books would be a deterrent to investors like that. but they may have a longer term view. i think we just need to see how they move next. kathleen: we certainly shall. thank you so much. still ahead, we get the outlook on currencies with jp morgan executive director. next however, elon musk now worth a quarter of a trillion dollars as tesla hits the trillion dollar market cap mark. the latest on what boosted the stock. this is bloomberg. ♪ this is bloomberg. ♪

vonnie: the lire has been making a recovery after turkey's president dropped a demand for 10 western ambassadors to be expelled. erdogan said they issued a statement to undo what he called slander for turkey to release a businessman and critic who has been jailed for four years. the u.s. is super -- is a economic aid to sudan -- the $700 million package had been intended to support sudan's democratic transmission -- transition. sudan will appoint a new government. hong kong has convicted a second person amid a sweeping crackdown

on political dissent. he faces up to seven years in prison after being found guilty. he denies the charges. the two trials held so far focused heavily on the use of political slogans. freedom of speech is being eroded. 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'm vonnie quinn. this is bloomberg. haidi: facebook shares rallied in late trade as lid is results showed more people are using the app than predicted. it was a bit of a relief for investors but going forward, there are serious concerns, particularly when it comes to the younger demographic. >> yes. today's results came on the heels of some revelations concerning internal documents at facebook which show facebook is losing its grip among some of its younger users, including

teens and young adults. they are not signing up for the platform at as high numbers and spending less time on the site. that raises concerns among investors on the earnings call. chief executive officer mark zuckerberg said look, this is going to be a priority. he said facebook is going to retool some of its teams to continue to attract that young adult cohort. kathleen: so he is going to try and do that at the same time digital advertising is the name of the game. how many ads you can get. if you cannot keep the younger audience, how much bigger of a deal is it that all the revelations about the internal debate within facebook over illuminating hate speech, incendiary -- illuminating hate speech, -- about eliminating hate speech, how much will this

be an extra burden? naomi: one of the things that mark zuckerberg said during the call is facebook faces competing priorities. and one of them is enabling free expression he said, and another is taking on offensive content like hate speech, like disinformation. and he says but he really talented the success of his team in tackling these issues compared to other social media companies. he said those problems did not originate with social media, and social media companies by themselves will not be able to fix it. and so i think we saw today during the earnings call a full throttled defense from mark zuckerberg about his company's effort to tackle some of those kinds of ills on the platform. kathleen: thank you so much. social media reporter naomi

makes. we -- naomi nix. we -- i love this tesla story. it has had a huge push up in the stocks of two companies. the stock of tesla obviously soaring. while you see facebook kind of lagging behind. some people might call it a change of leadership in the market among big companies with many people say tesla is. at the same time it seems to be the real interesting story is partly hertz, four months out of bankruptcy. their interim cdl after three years of ceo of ford was voted out of the board. now he has the chance to try and electrify the car-rental market with a $4.2 billion purchase.

a big boost for tesla. and plans to be running these cars around the u.s. and europe by november. haidi: that was part of the reason how we saw tesla being vaulted to that for the biggest u.s. company position. and it is important not just in terms of the cars and this deal, but the significance of this. going mainstream. it gives anyone who is curious about driving and electric vehicle, driving a tesla, essentially the opportunity to test drive one through hertz. when it comes to ev's we also have the chinese a startup unveiling details of his new products and features at its tech day including faster charging infrastructure, as well as, yes, a flying car. the vice chairman spoke exclusively with us about their ambitions.

>> rp seven is our flagship vehicle right now in china. it is one of the best selling devices in the china market. we have seen a strong interest level in our presale program. we are announcing official sales today. this marks another milestone as we have delivered our first and now this is the second flagship product for us to deliver in norway and we are very excited about it. tom: what are you doing to convince buyers in europe that your products can compete with those european incumbents that are now firmly fixed on transitioning to electric vehicles? >> european automakers are very strong and they have a strategy for ev, but we see a similar dynamic. for us, we need to focus on

producing the best design, the leading technology, and with a differentiated driving experience we can provide a very attractive proposition to european customers as well. it will take time but we are very confident of our product strength. >> what is a new technology that will actually really help you move forward? is that charging technology, batteries, something else? >> i think it is all of the above. because the product cannot have shortcomings. for our product, the p7, it has one of the leading driving ranges for similar products. it will have top-of-the-line smart cab and technologies with voice, with attractive features, with content. and also has driving capabilities and we are seen as a leader in china in that area. that package coupled with beautiful design i think we'll have a very strong appeal to

customers. tom: i want to zero in on the battery technology. i know you have been investing heavily in this area. talk to about the raw material prices which have spiked. are you able to absorb that cost? what is it doing to margins? are you looking to pass that on to your customers? >> the material price increases have led to a number of changes in the industry. first of all, it forces players to look into cheaper designs of batteries. that is why they have become more and more popular in china and globally because it is cheaper than lithium batteries. but also as the scale of the industry increases i think is a saving you can expect. there's offsetting factors that really play into the dynamic. for automakers, ourselves, we will focus not just on leading technology but the right balance of cost and capabilities.

and i think and so far, we have been absorbing the price increases of batteries ourselves and i think we have a strategy to put that in the containment. kathleen: xpeng vice chairman speaking exclusively to us. next, korea and taiwan are seeing the biggest upward revisions and earnings estimates so far this year as we a rate -- as we await results. a preview is coming up. this is bloomberg. ♪ this is bloomberg. ♪

kathleen: a quick check of the latest headlines. ubs is said to be discussing an end to the standalone status of a key unit that deals with some of its richest clients. we are told that comes amid internal wrangling about how profits are shared between

wealth management and investing banking business. the cohead of blackstone is reporting a plan to leave. don mccormick broke the news to the company last week. sources say he may pursue other opportunities in academia instead. his co-head is said to become sole head of asset management according to the report. citi winding down its consumer banking business in south korea. they will continue to provide services for contracts until they expire or are terminated, but no new sales will happen. -- mastercard is making it easier for banks to offer cryptocurrency rewards by inking a deal with -- mastercard will also make it easier for consumers to spend cryptocurrency. shares surged more than 230% on

the news. haidi: let's look at how we are trading so far in the sydney session. looking ahead to the start of trading across other asian markets. we are seeing a rise when it comes to sentiment in asia. record s&p 500 close overnight. excellent earnings and progress on the economic agenda hoping sentiment even as the debate over inflation continues. upside of .3% when it comes to trading in sydney at the moment. crown resorts trading higher after a little bit of a relief. more on that in a moment. new zealand up by about .1%. nikkei futures a little softer about .1% lower. s&p futures up by about .1%. korea trading when it comes to the cost becoming online after a weaker than expected preliminary third-quarter gdp read. crown resorts trading higher by

10%. investors feeling relief after we found that report finding them unfit to run their flagship melbourne casino but not stripping them of their license. also seeing high when it comes

>> we are going their inflation that is higher than americans have seen in a long time. it is something that is obviously a concern and worrying them but we have not lost control. kathleen: the debate over price pressures is picking up a bit of steam. going on to twitter. there is janet yellen. former fed chair. larry summers, a former treasury

secretary, had their job under bill clinton and he comes to twitter to complain about her saying she is wrong about inflation being a problem. sync it will be transitory. i think the gap between what they are saying and what real people, businesses and consumers are seeing is actually widened in week -- recent months. until the treasury recognizes what is wrong, they will not deal with it successfully. people who are buying gold or wanting to push bond yields higher are concerned that they will not go quickly enough. haidi: in fact, they are a paid contributor to bloomberg but goes on to say that the secretary has a twice it has decelerated. this is misleading. if you look at a 12 month cpi inflation rate are at 5%.

even with the brightest lines and even most well-informed mines, we heard from the former fed governor saying he says potentially sustained inflation above 2%. conversations at this level, there is so much an disparity as to what people believe. kathleen: it has been an unprecedented situation. we have a pandemic making a difference like something like inflation. let us bring in the strategist from jp morgan to put this in a bigger context. for you, daniel, welcome to the show. in the context of a dollar, you are a dollar bull. how does this work out. -- how does this work out? if it goes on too long, and have to hike rates faster, will that support your bullish case and will that happen? guest: yeah, certainly if they become more responsive to stick

into high inflation and back off a little bit from this idea that it is all transitory unless you need to look through it, that repricing of the fed should be supportive through other means. we are seeing repricing everywhere. we think it makes the most sense for the u.s., given how the u.s. has led cyclically in part because of the large stimulus. we think it makes sense for what you're seeing in the u.s. and that yields will lead the dollar higher, particularly against lagging low wielders. kathleen: what kind of levels do you see potentially for dollar-yen, you are versus dollar if this kind of trend, a slow-moving fed and inflation exist? how much stronger could the dollar get against these major currencies? guest: for our highest prediction is the near dollar. we have had that trade on for

some time. and none consensus trade for a while. we have been having a target of 112. again, we have recommended that for a while. just to make the case and point, we have had repricing of more aggressive central banks that are more responsive to inflation. the fed is not price that off until september. it is earlier than we are thinking but well within the range of expectations and what the fed has been signaling. that repricing makes sense. at the same time, that is also been repriced and is lifting off in 2022 of next year buys december. we think that is highly unlikely. we are expecting more divergence and deviations in terms of how central banks are being priced and how those expectations are evolving. ultimately, again, that should be contributing to a trending lower in euro-dollar. we also have dollar-yen upside.

we are doing that more in options form. it is only slightly higher than where we are right now. i think that if yields continue to be as dynamic as they are as double yields back up, there will be more upside to dollar-yen. haidi: the yen has been so strangely unmoved until recently. where to for the chinese currency? especially as we get the flurry of downgrades on economic growth? guest: i think it is an interesting one. sometimes, it is very dynamic to the underlying macro story. sometimes, it is less so. i think there are concerns about the china macro story, ever grand, we have been downgrading our china growth forecast for quite a few times in the last couple months. that doesn't necessarily translate to in -- a bearish view. we expected to grind higher.

amid a strong dollar environment, you might get more of that strength in trade-weighted through the higher dollar. you might see more of a dollar stand wide. that is basically the view they given the balance of payments and flows dynamics the hind it. it doesn't look like it will reflect kind of macro downsides concerns through weakness there. haidi: commodities correlations? what are you seeing that when it comes back to the aussie? guest: the commodity market is such an unusual situation right now given that a lot of the inflation and what we are seeing in the commodity sector is due to more supply-side dynamics than demand-side dynamics. that makes it more interesting. to the extent you are seeing the supply-side effect. rather than strong growth driving these prices higher, typically, you wanted to strengthen as the underlying

commission depreciates. if it is happening simultaneously and we are seeing some of that, that would typically be a downside for the commodity currency. it is been messy and i think you see that in the price action. when we had that first spike in the energy crisis, those prices did not but did in a lag since i wouldn't say necessarily that commodity crises is the best way to express a bullish commodity view. i think you need to look currency by currency and what the brought out macro conditions are of these currencies. for example, we are short kiwi. it is seen as somewhat of a commodity currency but for example, the central bank is overpriced there. one of our newest trade recommendations is to long it. haidi: there's so many videos and credit factors coming in at the factors that perhaps, in normal times, so to speak, you

would not look at. if you look at the fact that asian central banks are starting their tightening cycles in certain spots, where you see the opportunity in that divergence? are you concerned about tapering in asia? guest: this is another area where things are messy and the relationships we are used to do not apply. typically, central-bank hiking means go this good and inflation is coming up. cyclically, they will have strong currency. this time around, it is different. we have had this deviation of central banks in asia having to respond to inflationary concerns. a lot of this concern is due to supply side rather than strong demand-side dynamics. it is not necessarily the case that you want to buy the currency of these heightened that hiking central banks. if there hiking not necessarily because growth is strong but they are concerned about financial stability and their credible the as central banks whereas compared to the other

markets, they have the credibility. again, it is quite messy. i think to your question about what to do about asia, i think if your scenario is higher energy prices, some concerns about china macro downside, and higher u.s. rates, some of these low currencies, it is not a great mixture for asia necessarily. haidi: great to have you with us. we got as kate earnings coming through. beating analyst estimates. against expectations of 1.3 trillion year on year. that estimate of that 4.6 trillion there. 3.3 trillion one against one trillion year on year end sales also pretty strong. upside beating on estimates.

45% year on year. sk really has been expected to report some strong earnings after of course, it shares about 15%. chip prices have been robust in driving some of those gains. expectations are that some of these pricing factors will remain weak in the short-term as their industries are still going through these inventory adjustments. they will be focusing on the outlook for on the ram memory as well. pretty strong numbers from them at the moment. kathleen: one other newest chips was named one of the best in the world. this is definitely a company that everybody is watching and when you step back on the world chip shortages and what happens next, it is good to see they are doing as well as they are. it will be interesting to hear what happens next and how the markets react as well. up next, results from oil majors and utility players up next.

the impact the energy crisis has had on the cop 26 summit. more details ahead. this is bloomberg. ♪

vonnie: the u.s. has issued new travel regulations requiring proof of full vaccination against covid-19 along with the

recent negative test. people from countries with low vaccine supplies who are not traveling on tourist visas and those under 18 will be exempt. the new rules effective november 8 note the severe travel restriction some people from china, india and most of europe. facebook shares gain in late trading after reporting strong user growth on the social media and announcing a share buyback of as much as $50 billion. in the earnings call, mark zuckerberg flagged revenue headwinds, stemming from apples was action -- frustrations from collection. negative press around facebook was a coordinated effort to paint a false picture about the company. the sec has won a concession in a strive towards regulating the 131 billion stable coin market. the treasury department and other agencies have a report this week saying the sec has significant authority over tokens. it will also urge congress to pass legislation specifying the

coins should be regulated similarly to banks. blue origin will build a commercial base station before the end of the decade. they say it will be operating as a mixed business park with offering services need to normalize space flight. they will team up with sierra space which is backed by groups including boeing and red wire. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: the latest results from oil majors and utility players this week. we will reveal the impacts of energy crisis on operations. crude oil prices have also risen. what do we see that has been impacted on the refiners themselves? reporter: thank you for having me here.

basically, a refinery makes a margin by buying crude and selling the products. that margin is largely dependent on the straight of their oil demand which we know, has required significantly over the past year or so. however, the surge in national -- natural gas prices has pushed industries such as power producers and lng trucking to change from gas to oil. that pushed demand in the margins even further. however, such national -- natural gas prices have pushed out refineries utility costs as well as the cost of hydrogen chemicals in stock which is an important part for things like hydrocracking. generally speaking, refineries that have higher fuel consumption and those that require more hydrogen will see that margin have more immense

pressure from the surge in natural gas prices. however, refined margins are just seeing some improvement. kathleen: do you expect the price of oil to remain high going into next year? reporter: we are in a situation where demand is slowly picking up. however, oil prices can oil that's really higher it will depend on if there is a greater extent of this. we could be driven by either gas prices rallying even higher or if we have a colder -- colder than normal weather, based on forecasts, we are really not thinking about that at the moment. opec compliance has to remain at a high level. if all those conditions are met then suddenly, we think oil prices could rally even further. if the converse is true, we head into the winter and there is a virus resurge that tempers our virus recovery, particularly jet

fuel demand, oil prices could face some weakness. another concern for oil prices would be a significant chunk of if they come back online. it could suddenly cause a change in oral prices. that is unlikely scenario based on what we have seen. haidi: saudi arabia announced a plan to be carbon neutral by 2060. a lot of that relies on carbon capture. what impact will that have? reporter: i think it is encouraging that a country so invest in fossil fuels is committed to hit this ambitious target of reaching zero, especially with cop six around the corner. saudi arabia announced plans to produce 9 million net trick -- metric tons of blue and green hydrogen by 2030, each year.

that is half of today's argent production so that is quite a large number. we have seen that they saw their fists test first -- first shipment of blue among last year. you also find blue hydrogen project agreement with them earlier this year. it seems like it is making quite a concrete baby step towards reaching its initial target. by and large, based on our analysis and new energy outlook, if they hit net zero by 2050, green and blue hydrogen has a big part two plates of this is an encouraging development. kathleen: thank you so much. i want to get to the story about exxon exxon mobil is weighing salary increases, bringing back some benefits.

it's trying to halt people leaving the country -- company. we are seeing a lot of companies around the world, particularly when it comes to working from home but in this case, it is interesting that when the pandemic came on and obviously, exxon was worried about its business even though it is the biggest most profitable oil business in the world. they had plans last year to cut 14,000 workers, 15% of their staff by the end of 2022. and now, they are turning around and saying that the ceo himself saying they are looking forward to showing employees a different path forward. i think a lot of people are wondering what it is but quite an turnaround. haidi: if you are wondering where a lot of these highly desirable employees are heading, a lot of them are heading to tech and pharma. likes of amazon, other big tech and pharmaceutical giants are picking them up. it is unusual position for them to be in. prior to the pandemic and the

layoffs, they were one of the well considered employees -- employee -- employers in the u.s.. the high base pay opportunity for travel and job security but the pandemic during a demand slump that oil market crash, suspending travel, suspending contributions to retirement lands. all this has contributed to be fair, what we have seen and called the great resignation, right? kathleen: it will be interesting to see the steps employers take post-pandemic will have just as exxon appears to be doing. let us get to breaking news. japan services producer price index. it is industrial, looking at manufacturing companies. this is services jobs. it is less than expected year-over-year in the month of september.

that is less than the forecast. it was 1.0% the month before. ppi is much stronger. i was just reminding myself that ppi right now in september with the industrial manufacturing side, services is a very important question for the japanese economy as it is for so many economists. a face-to-face contact job has pulled back. that is restaurants and all kinds of things. these slow price increases are lower than maybe not a surprise. wendy more to come on daybreak asia. this is bloomberg. ♪

haidi: as we broke earlier, their third quarter earnings are above estimates. let's get the details from our reporter from seoul. taking a look at these numbers, what is the impact of the inventory adjustments and the pricing that we are seeing? reporter: sk as we reported, had court record quarterly sales and operating profit slightly above the estimate. it looks like the third quarter was pretty good for the membership makers which are the second largest. it probably got and a fitted from the launches of new smartphones by chinese phone

makers, the key client apple and they continue to see strong demands for personal computers and other tech gadgets that people need as they stay at home. analysts also see they are going to report strong earnings for the current quarter going ahead. the company has also reported the sale prices for its memory chip which is that they stayed pretty strong and it will continue to see some growth going ahead. there -- kathleen: there been a lot of caution that it should be good but will it? how is that doubt, even though there is a lot of demand and charges when it comes to the chip world, people still wondering how companies are doing. how has their stock been doing? reporter: the company stock has

been pretty weak. it is fallen about 15% so far this year despite reporting pretty strong earnings. we have seen a similar case with its rival which this year has been pretty weak as well. we can see this as part of the broader portfolio readjustment by global investors who are trying to reduce their growth and add more value stock. as we expected that tapering coming on. also, the weakness in the local currency which did help their earnings during the third quarter are actually a negative that the global investors see when it comes to buying the value stock which is the last incentive to add value stocks like sk hynix. another thing that may explain weakness in the stock is that next year, we might see weaker cycles for the memory chipmakers

and prices may go week. maybe behind the share price. kathleen: busy earnings counted from south korea. sophie: bitterness production partner for the co-vaccine in south korea paid we are expecting we could see some weakness what it comes to profit on the supply chain disruptions of hit the auto industry. we are keeping an eye on this and so after they missed their earnings miss to third quarter two to the recall for batteries and the impact from chip shortages on shipments for the company. going forward, we expect they will have soaring prices. we are looking at the wider ev space. battery makers after test was hurts order speaks to the broadening access to ev. you're watching suppliers like panasonic in particular, after announced plans to roll out a cheaper battery. haidi: market opens comes up

next. we will have the latest. we will see how investors are taking a look at those sk hynix results as well as gdp numbers from korea. this is bloomberg. ♪

kathleen: hello and welcome to daybreak asia. sophie: i am in hong kong. haidi: taking a look at the major markets opening in asia. our top stories this hour. the stocks will rise after the s&p 500 hits a record high. they are eyeing corporate earnings as the debate over corporate earnings intensifies. facebook has strong corporate earnings but has headwinds in

the next quarter. they struggle to attracting and hate speech and information online. global chip shortage is giving sk hynix a boost. they see record sales as memory prices surge in the third quarter. kathleen: let's go to sophie and how this is still going. sophie: we are seeing a risk on move in asia. japanese stocks moving higher. we got names to look out for an panasonic shares are in focus. we are seeing them and other tesla suppliers following their deal with hertz. we have the yen trading in a tight range while the bond buying later this morning. switching out the board and turning to south korea after the kospi snap a three-day drop. can we take a look at the korean share market? we are seeing a lot of changes for the kospi so far this morning. they are gaining ground despite

their earnings list for the third quarter and the korean won opening steady, this as we digest the latest gdp data from south korea which did come in lower than expected but over at bloomberg economics, they don't think that will derail the rate hike for november. sk hynix focus on its third quarter results. shares up this morning. memory chip demand boosted sales and does expect the appetite to continue but they did flagged that we could see supply issues away on components when it comes to server market. pulling up the chart on the terminal, we have seen strong demands for chips off these earnings outlooks for south korea in the first half of the year, especially that optimism has mattered, they are still leading this year when it comes to estimates along with taiwan with given the exposure to exports. we expected to be a key support for the recovery in south korea

this year and going into next year. we are watching to see if the week investment from the third quarter it may weigh on the outlook, kathleen. kathleen: thank you so much. let us get it over to vonnie quinn for the first word headlines. vonnie: we are hearing at least two holders of ever grand dollar maturing in march 22 receive the interest before the end of the grace. the grace time for another is happening this friday. creditors are still bracing for a debt restructuring that could rank among the largest ever in china. australia's crown resorts we placed under strict government supervision for the next two years after they were found unfit to hold its casino license. investigation found a litany of wrongdoing including underpaying casino taxes and illegally allowing its guests to use credit cards to access funds on the casino floor. they could still lose their license if it doesn't satisfy the government that has been

reformed. facebook shares gain in late trading after reporting strong user growth in the social media app and announcing a share buyback of $50 billion. in the earnings call, ceo flagged revenue headwinds, sending step -- saying the restrictions on data collection. he says the negative press was a coordinated effort to put -- paint a poor picture of the company. >> as expected, we experience revenue headwinds this morning including apples changes that are not only affecting not only our business but millions of small businesses and what is already a difficult time in the economy. sophie: vonnie: deliver is making its recovery after they expelled several envoys. he wanted to undo slender calls by the earlier joint commands. they wanted the release of a government critic who has been

jailed for four years. u.s. is suspending economic aid to sedan after they arrested the prime minister and other government officials. a state department spokesperson said the $700 million package had been intended to support the democratic transition. sudan's military rulers say they are dissolving the highest position -- decision-making body and will appoint a new government. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. haidi: our next guest says the q3 corporate earnings season is promising to be a strong driver of the chip preferred equity market. that is the u.s. and euro area. kenny see the down cycle in asia changing the story? let us bring in the cif of management. we continue to see divergence when it comes to earnings expectations going forward between those two key markets

and here in asia. where do you find the opportunities then? guest: from in asia perspective, we are focused on india we are seeing the strong performance there as being encouraging. the economic information and pickup in the vaccinations is improving quite significantly as well. overall, we have a way to go with the it within an asian context. from a global perspective as you mentioned, u.s. and europe is still our preferred way ahead in terms of the vaccination cycle, recovery doing well, similar military -- monetary and fiscal policy. the movements from asia -- u.s. and europe are still strong for us. haidi: when it comes to the plate and that we are seeing asian central banks and a number of them starting their tightening cycle, are there

other opportunities in the gap therebetween policy? guest: i think the key for policy going forward, we are seeing inflation picking up globally. people in the emerging world are treating that fairly differently. they're starting to tighten policy in the face of that. i think the key to the prospects here. when policy perspective and a relative market performance perspective is what happens to the dollar. clearly, the dollar has strengthened modestly. over the course of our six months, it has strengthened modestly and that has put some currencies on the back foot a little bit. that doesn't help them at all when it comes to managing inflation and inflation expectations. word the dollar to definitively turn lower, authorities in china would provide a strong anchor and we are seeing some's signs of strength in recent times. if that were to come to pass,

that would ease the pressure on central banks across the emerging world and in asia. that could be a very strong back tail and for asia but at the moment, that course marriott might not happen but we would like to see the dollar peak out now and move definitively lower and the next 6-12 months to reassure us. kathleen: we have a headline on the bloomberg. this raises concern over memory demand even though the latest porter look good and it seems like chips are a hot commodity, right? there are shortages of all kinds in your view, question of the day, how will supply chain woes affect assets of all kinds? guest: it is an extremely complex question and you can argue about supply chain and chips, energy, etc., right?

is putting pressure on inflation in the short-term. we do see the subsiding as the supply chain constraints ease. as we see the demand to remain strong but people respond to that demand in a more coordinated and stronger fashion. from that perspective, the key for equity investors is this rising and prices affecting margins. the definitive response so far from the earnings season in the u.s. is absolutely not. we are seeing earning surprises around 12% positive so far. it's early but have reported that 12% earning surprise. but the profit margin estimates are likely to be revised higher despite fears they could go the other way. kathleen: that seems like a pretty straightforward pick, right? when you look at china and the

wide reaching reforms that just don't seem to stop. is it easy to say don't bother with that? is a harder question is where are the specific opportunities? eventually, this levels out or some companies will thrive and others will not. when you put these portfolios together and make your recommendations, how do you factor those in? guest: within china, these sectors there are industrials and technology. it is almost a geopolitical context here. we are seeing increased desire to be self-sufficient in certain areas. yes, you got the headwinds for the property sector most obviously, increasing now and the financial sector as well. you do see these challenges to different industries. it seems to be a rolling concerned that we have more protectively, we would say would be the technology space for instance as the country trust -- try some more sufficiency and

chips. this is not the social media or in the tech space. from our perspective, we would say it is the best place to be for investors to hunker down from a china perspective. haidi: as we get into copy six and this realignment of rio -- commence various nations, -- commitments from various nations, will there be more green and climate related opportunities given the enthusiasm in area already? guest: we do believe climate change will be a definitive theme and trend over the coming decade. it is not just in the coming weeks and months. it is a much longer term thing. we do see significant opportunities in that space. as you mentioned, evaluations in the space are quite expensive

but relative to the opportunity, we still see long-term investment opportunities. it is huge. we believe there are definitive areas that will do well. one could argue that higher oil prices in this regard, in terms of the search for alternative sources of fuel or energy, that plays into that theme. it reduces the green premium and increases the opportunities for alternative energy sources to become profitable. overall, we think it is an interesting area on a multiyear perspective. kathleen: thank you so much. cio at standard charter wealth management. still ahead, we discuss the new report of m&a intact with the head of bubble technology practice. perhaps, the week headline figures, we parse to the report.

this is bloomberg. ♪

kathleen: facebook shares rally after its results show more people are using its absent predicted. tom, it is a mixed bag. it is interesting to get the facebook earnings report on a date when our bloomberg team releases all this latest information about the difficulties facebook has had in figuring out how to clean up its approach to speech, incendiary hate comments. how do you weigh that? when you look at facebook now against the backdrop of an earnings report that in many respects was very solid yet cap -- very solid? reporter: what is coming ahead,

let us not look back. let us look forward. there are a few things that were really inspiring confidence for investors. one of them was the buyback of as much of 50 million dollars. that is something that were be encouraging to shareholders. the others that was mentioned was better than expected user numbers. that is always good. that is always important. the more users, more potential you have to raise revenue from your advertisers. and then thirdly, just this emphasis on what we will do in the future. we are redoubling efforts to attract younger users and later on this week, we will hear a lot more from mark zuckerberg's plan for the meta-verse. this is facebook's product in ar and vr. there will be a whole event on

thursday on that. they will be spending $10 billion investing in this and that will reduce operating profit by $10 billion next year. a lot of things to look forward to. i think what mark zuckerberg and the other executives are trying to get the investor community to think about what facebook can be tomorrow and get them to stop thinking about the facebook of yesterday which is a facebook that has had such a hard time with hate speech, miss information, harmful content, divisions and ways that their platform has been used to really feel political divisions across the united states, across asia, and other parts of the world. haidi: the facebook papers reinforces what people have been talking about which is that the demographics are changing. young people are not coming onto the platform the way that it used to. it was said in the earnings call

that they are worried about snap, tiktok. when you put that together with their lack of ability to use m&a to achieve that meta-verse? does the growth trajectory from your look tougher? reporter: they are struggling with younger users, teen users and young people across the board. that is something that the whistleblower who is behind the leg of all these documents, has been calling attention to that and saying that facebook has not been forthcoming enough with investors about its challenges around young people. she wants the sec to look into that, to figure out whether or not they have been disclosing as much as they should. anything that they can do to win back young people, get them engaged, whether it is on instagram, whatsapp or facebook, and now they are talking about vr and ar. will those products be

compelling enough? so far, we haven't seen that. we haven't seen that there is an offering there that is super compelling for young people. mark zuckerberg is talking a really big game when it comes to the meta-verse. changing the conversation, putting a lot of emphasis on and spending a lot of money on it. haidi: rate to have you as always. -- great. in terms of asia, this distressed credit watch, we are seeing that trading continues to be suspended. they did not pay bond principal and interest that was due on monday. china becoming the latest one to miss that payment on a dollar bond. it is a further incremental son a distressed in their real estate sector. china said they did not repay the principal on that bond that was due on monday. that is according to a filing of the singapore stock exchange on tuesday morning.

company working with its legal counsel and is expected to engage in independent financial advice soon. they request to extend the maturity of that dollar bond by three months. this comes as we continue to watch for china of a grand group with that grace period of that interest payment on a 2024 bonds that ever grand is expiring this week. kathleen: let us stick with the property outlook now. they reported a jump in profit in a higher than expected share buyback. in an interview with bloomberg, they also play down the lenders nearly $20 billion worth of exposure to the mainland real estate sector. >> not that the direct lending exposure to any chinese property direct -- developer that is in the red category that we are confident and countable with the credit exposure we have got to

the chinese real estate market at the moment. we have just been through exercises as a result of looking at credit provisions in china. we are comfortable that we have managed to get back a significant amount of reserves this quarter and i think you should read into the buyback. the fact that we are confident that we are selling in our positions. anchor: talk about the impact on capital markets and bond markets? you have given the ongoing ever grand sada. you thinking we are only beginning to see the impact on markets? or are we near the end? >> i think the ever grand situation has been followed for months now. i think people have been able to . i'm not say never. i don't -- i'm not saying we won't see any material forward as a result of this. anchor: hong kong is a critical

market for you. is he hong kong property market insulated? do you get a sense from what is happening with ever grand? >> as you say, it is a third of their profits. it is our most important market. i think hong kong real estate market has proven to be resilient. many many cycles. -- resilient through many many cycles. our exposure to the hong kong property market is significant but our coverage rates are high. i don't see any particular spillover at the moment. anchor: the france from leaving -- the french left hong kong would be happy to hear that. we have had a lot of talk about risk aversion to china. i don't mean to give you a laundry list. do you think global investors, risk appetite for chinese assets is weekend? materially weekend backup >> --

materially weekend -- weakend. >> we are continuing to invest heavily. for us, we continued to be very bullish about the long-term growth opportunity. haidi: we have lots more to come on daybreak asia. this is bloomberg. ♪

haidi: they are considering an end to the status of its global family office which caters its riches claimants -- clients. let's get the details from our

finance reporter. what is in new arrangement mean for ubs? reporter: this would be one of the biggest changes yet. the chief executive who took over about a year ago, they are working in an agile manner. they will be better at working across divisions. this move is under consideration would really throw the streamline of their operations. what they are considering is having a fixed profit share agreement between the wealth management team in the investment banking team rather than the model they have now where is shared based on different products and services. kathleen: it seems like there is a lot of internal bickering? is that why there considering the changes? reporter: you put the nail at the head. at the heart of it is an internal power struggle. you have that meeting, the ceo's desire for a streamlined business and that creates a

scenario where the banks global family office which is really at the heart of these talks, at which case, caters to the most complex wealth clients. we are talking about forwarding that to the rest of the business. we know that ubs wealth heads are unhappy that the unit typically shares about half of its profits with the investment banks. they are like that because they are by far the biggest moneymaker at the bank and generates $4 billion in profits. you compare that to the investment banks which is 2.5 billion. this changes oh allowed the wealth division to recapture some of the investments -- profits had at the investment side. kathleen: up next, we will take a look at being releasing a new report on the case for big tech m&a. we will look at the details at the head of their technology practice. we will take a quick look at the

markets as we go to break. you can see we got green on the screen. nikkei, the kospi, aussie stocks, new zealand as well. moving higher. some good strong e this halloween, xfinity rewards is offering up some spooky-good perks. like the chance to win a universal parks & resorts trip to hollywood or orlando to attend halloween horror nights. or xfinity rewards members, get the inside scoop on halloween kills. just say "watch with" into your voice remote for an exclusive live stream with jamie lee curtis. a q&a with me! join for free on the xfinity app. our thanks your rewards.

>> this is "daybreak asia." hong kong convicted second person national security law. this amid sweeping crackdown. he faces up to seven years in prison after being found guilty of incitement to succession. the two trials have focused

heavily on the use of political slogans. adding to fears that freedom of speech is being demoted. us issued new travel regulations requiring proof of full vaccination against covid-19 along with a recent negative test. however, female from -- people from low vaccination and those under 18 will be exempt. the new rules executive novembe. the sec has won a concession towards regulating $131 billion stable coin market. they published a report saying the sec significant authority over tokens. the report will urge congress to pass legislation specifying the coins should be regulated similarly to bank deposits. new origin is planning to build commercial space stations. company says the station will be designed to operate as a mixed

use business park in space. with the aim of providing the services needed to normalize space life. the jeff bezos founded team will team up with the sierra space backed by groups boeing and red wire space. global news and on air, pored by 2400 journalists and also, vonnie quinn. >> sales soared record high. lets get the details from our tech editor. how unexpected was the record revenue for the company? what does it say about the inventory adjustment? >> i'm not sure they are that unexpected. if people paying attention to the assessments, they are estimating record revenues. it's in line with people building up stockpiling chip for

the holiday season. one of the examples is supplies to apple. hynix pointed out it's beggest growth is ram -- [ indiscernible ] >> chip makers like intel have been warning about growth. intel has been taking whole kind of revamping what it's trying to do with the chips it makes. hynix expects growth to continues. it's clearly just justified for hynix? >> looking at the data on the sales, they did slow down dramatically in the third quarter.

it does same like sales was slowing down. hynix acknowledges that. it still sees more demand there. it's still more optimistic than competitors. >> that's where hynix might be less optimistic. most market observers do expect prices to go down because because of pc's. hynix continue if try to stay competitive. one thing that this is, it improves operating process in the past quarter by 220 cents. the company is doing well in terms of controlling cost. i think it's own optimism. >> all right, our tech editor.

moving on to big tech companies and regulatory scrutiny. which is growing worldwide. most m&a in the sector benefits consumer and doesn't hamper competition. let bring in david crawford he's head of the global practice technology. welcome to the show. your conclusion you admit, m&a spending doesn't hurt competition. it benefits consumers. you acknowledge this is a provocative conclusion. what did you find? >> i think the big headline here that's really exciting, we did this research we wanted to take it a fact-based look what was happening with the tech m&a. it has been enormous amount of press coverage on the topic. when we did that, we went and

looked at the largest deals of the five largest providers. across those deals it's around 80% or 90% of the deal value is benefiting competition increasing the level of competition and as well benefiting consumers a great deal. >> i assume you have lots of clients who do m&a, big tech companies pitch to ask you, you said you were interested to find this out. do your clients feel they are under attack to see what's really on? to have something that defends their activities? >> i think may be some of our clients feel that way. it was just a topic that rose to the top of our i.p. agenda at the practice level. we do believe that any business model that's this successful should be scrutinized.

but topic of m&a being used to extinguish competition, we felt was over blown. >> david, there's lots of concerns over the growth trajectory some of the big tech giants including likes of facebook without the ability to leverage off these convenient m&as. do you expect activity to die down across the sector as the tightening continues? >> i think that's up to regulators. i certainly hope not. i think our research suggest that the m&a is creating value. concepts that with great innovations. once acquired we're invested in a way that allow them to globalize and bring their innovations to a much broader audience. that's good for consumers. it's great for consumers. it lowers prices in many case. in other cases it add new

competition and brought a new sector of competition. i certainly hope not. i do think, of course, all m&a's should be scrutinized about it seems that regulators have done a pretty good job. >> what about security point of view? that was one of the criticism when we had facebook down and instagram down and whatsapp down at the same time. lot of people were saying, i have no way of reaching my loved ones with all three things down. is that good enough reason? >> to regulate their m&a activity? >> right. >> i actually think those companies, big large, influential, is evidence important they come and how much they brought to customers. should they have backup plans and alternatives? yes, certainly. i think it's not a reason to

regulate their m&a activity. >> when you look out over the landscape, where do you think the biggest opportunities for m&a are now within the big tech sphere? >> i think each company has its own road map of m&a. typically, just working with subset of these clients, they are thinking about some blend of two primary modes. one is to secure a foothold in the new domain that they will invest in and grow. it's an area they can bring value. the other is to secure or bring scale economies to domains in which they are planning. you have to literally answer that question how you feel company by company where the acquisitions will likely be. >> david crawford thank you for being with us. head of global technology practice. coming up next, he manages to

keep his casino licenses despite illegal and dishonest behavior. this is bloomberg. ♪

>> crown resort was higher after he was allowed to keep his license. that's despite a report into illegal conduct. you see this reaction, shareholders breathing sigh of

relief. >> that's right. it's strange logic. crown they are allowed to keep their casino license. they will operate for two years under supervision. in practical terms is a manager will be appointed to supervise that company. that person will be allowed unfettered access. shares are up because they could have been a whole lot worse, victorian premier said he was willing to cancel crown's casino's license. the report was damming. it found widespread and egregious engagement in unethical conduct. >> those are some charges. it's a beautiful casino. people like to go there. what does this hold for the

future of crown? >> it is a lifeline allowed to keep their casino. earlier this year, crown was as denied a license to operate its brand new casino in sidney. it's a huge billion dollar building on the water front there. which never been allowed to open. another casino in perth under investigation for misdeeds. crown is severely weakened. blackstone group is showing interest in crown. it is an appealing business that has monopolies in both melbourne and perth. what a spectacular fall from grace. this is a company that iced to have casinos in las vegas as well as here in australia and

now it's reduced to operating and supervision at its flag ship. >> let get to sophie for the latest on the markets. >> taking a look at the asian stops. kospi is building on the event. staying below 1170. trading around five week high. they do see weakness for the currency this quarter. jumping on is deal for down stream chemicals. over in tokyo, check out ntt

shares gaining nearly 5%. i want to focus on panasonic. they are aiming to sell this battery model to other customers alongside tesla. >> breaking news news in elon musk, he is elaborating his deal with hertz, hertz purchasing 100,000 teslas to be end by end of 2022. $4.2 billion revenue booster for tesla. elon musk is the car sold to

heather have no dos counts. getting the full profit out of that. he too is seeing strong inflationary pressure at least in the short-term. something that lot of governments and officials worried about around the world. we're getting the prime minster out of japan, he is talking about setting up a new social security panel discussing pay. we know that new capitalism spreading the wealth, reducing inequality, boosting workers wages are a key part of his platform. his vision to the future. very important to get voters on board. moving along to comments from taiwan's president threatening to upened us-china ties. taiwan and mainland is not sword nantess to each other.

jenny, i'm not too surprised. this speech has sparked quite a big reaction. >> that's right. what she said was nothing new. when she was reelected in 2020, she said she considered taiwan an independent country. in beijing those comments really stung. state media and diplomats wanted two-state theory. really this is much more a sign of frustrating tensions and how tense things are. as this situation comes to flash point in us-china relations. >> the rhetoric isn't new. is it the timing that we're seeing this? >> exactly. i think that is much more to do

with it. during the pandemic, taiwan received global praise for handling of the coronavirus. on friday, we saw high levels of diplomats from the us and taiwan have a video conference about taiwan having a greater participation in the united nations which has been expelled from 1971 when beijing wanted a seat at the table. all of this is ramping up pressure in beijing on taiwan and pressuring president joe biden to clarify us position. on friday biden said he would defend taiwan in chinese attack. at the same time, it puts pressure on xi jinping. this was a commentary asking why

he didn't push back harder. it could be now he's prioritizing. >> you can watch us live and watch interviews at tv go. you can dive into any of the securities or bloomberg functions. this is bloomberg. ♪

>> details of new products and features at tech day. >> it is one of the best selling mid size sedan in the china market. we have presale program. we're announcing official sales today. this marks another milestone for

xpeng. >> what are you doing to convince buyers in europe that your product, the xpeng product can compete? >> the european automakers are very strong. they have strategy for ev we see similar dynamics. we need producing technology and really was differentiated. we're very confident about product. >> what is the new technology that will actually help you move forward? is it charging batteries? >> it's all of the above. product cannot have

shortcomings. for our product, the p7, it has w. of the leading rangers it has driving capabilities that we already seen as one of the leader in china in that area. i think with that package, couple offed with beautiful design, it will present a very strong appeal to customers. >> brian, i want to zero in on the technology. i know you've been investing in this area. talk to us about the raw material prices. are you able to absorb that cost? are you looking to pass that on to customers? >> i think the material price increases have led to a number of changes in the industry. you also forced to look cheaper

designs of batteries. that's why lp batteries have become more and more popular in china and globally because it's cheaper. also, the scale of the industry increases. there's also saving that you can expect. i think there's offsetting factors that really play into the dynamic. for automaker, ourselves we will not only focus on the leading technology but the right balance of costs and capabilities. so far we have been on -- absorbing price increase. we have a strategy to put that in the containment. >> that's brian gu. auto industry has been hard hit by the chip supply shortage. that's something people around the world are watching very

closely. >> third quarter report card from taiwan, media tech to seen doubling from year ago to $1 billion. bloomberg intelligence that retreats from the smartphone chip market, that has helped to accelerate media tech market share grab. >> our mastercard is making it easer for banks to spend the cryptocurrency. master surges surged. paypal says it's not pursuing

takeover of pinterest. ending the speculation of a potential $45 billion deal. last week bloomberg sources revealed that the company dissed a potential acquisition. paypal saying that it's not pursuing pinterest at the moment. shares grew 3% on the news. pinterest sank about 13%. netflix long time credit rating was upgraded. the streaming service is now raised triple b. the upgrade reflects expectations that company will pain taken leadership position in streaming despite the increasingly competitive environment. coming up, the market outlook. she's staying positive on asian equities. despite an outlook for the region. more on china's regulatory future with university of hong kong angela jang.

we'll continue to watch the market coverage. stand by for bloomberg markets. china open. this is bloomberg. ♪ moving is a handful.

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>> 9:00 am in beijing and shanghai. >> let get to your top stories today. some positive news out of earnings boosting sentiment across equity markets as inflation risks continues. >> modern land misses a bond payment and latest on the stress in china's property sector.

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