>> i'm paul allen in sydney. we are counting down to asia's major market opens. >> our top stories this hour, asian stocks heading into a risk off session. the omicron overhang and efforts by central banks to rein in inflation are bringing caution into markets. the virus is forcing businesses to rethink back to office.

goldman among the latest making changes. anxiety over china's property sector includes -- continues with a plunge in another developer bonds and shares. >> let's take a look at the markets. trade beginning in australia, this tuesday morning. hard to get a read on things because of the staggered open but the asx hitting a little weaker, off 0.1%. we had the news earlier that a pharmaceutical company is in a trading halt. expecting news on an equity rating connected to the planned acquisition of a company. watching for announcements from csl. new zealand has been trading for a couple hours, off by about 0.4% following a u.s. index lower and new zealand, one of the laggards, off 1.5%. nguyen -- new zealand getting another injection from the government. it has been struggling with

ongoing lockdowns. nikkei futures, a bright spot, in positive territory by a fifth of 1%. shery: it is not only constraining the markets, omicron's spread posing a challenge to wall street efforts to get back to the office. let's bring in carol wetzel for more. let's talk about how fast covid-19 is spreading again, infections topping 50 million in the u.s. at a time when mask mandates are being renewed. >> we are seeing a rise in cases after the thanksgiving holiday in which a lot of people gathered indoors. there are concerns that into the christmas season, more people gathering indoors in colder weather, having parties, will fuel another surge in cases. california reinstalled a statewide mask mandate and new york did something similar.

cases are rising in the northeastern united states, areas like new york, massachusetts, new hampshire. there are strains on hospitals there. fidelity investments based in boston asked workers to start working from home again. paul: tell us more about that return to office that appeared to be underway, now not the case. >> we keep hitting strides where we think we are at a place where people can get back, only to be knocked back down by these variants. fidelity owns -- joins other companies that have been planning to come back in january, like google and uber in san francisco, that have done away with that and are not setting a return timeline. it is a rocky start to getting people back to the office. depending on how omicron plays

out, what we see in the christmas holidays may be more of the same. shery: how much clarity do we have about the severity of the omicron? how much vaccines help at this point? >> there is a new study out from the university of oxford that looked at the pfizer and astrazeneca vaccine and showed a 30 fold drop in the omicron variant compared to delta. this reinforces the need for booster shots to help stop that, which has some evidence. we still don't have an idea of the severity of disease with omicron and how vaccines relate to that. it has been promising, signs and south africa that many cases appear milder, but we are waiting for data to see how these cases play out, what the rate of hospitalizations are and how damaging it will be. paul: kara wetzel there.

it has been less than a week after china evergrande defaulted. the market has a new developer to worry about. a property giant saw a plunge in its share and bond prices monday on concerns it may not be able to meet repayments. let's bring in our chief north asia correspondent. what is happening? >> there are jitters in the market right now. a sudden plummeting of the bonds. it had a contagion to dollar rent yuan notes. what is worrying as we bring up the prices of these bonds we supplement, more than one particular you on -- yuan bond, that is not the one there. that is unchanged. that is today's pricing. it felt to just $.45 on the dollar, more than 50% on that

bond. maybe we can change this and see the chart as the selloff. this is one particular yuan bond that is due in 2025. there you go. look at the far right. you can see more than 50% plunge in that bond monday. what is particularly worrying, the contagion as well coming from the defaults we saw last week from evergrande and kaiser -- and kaisa. what is particularly worrying about shimao is, it was considered one of the more cash rich or more reliable bond issuers. a lot of these bonds have investment grade ratings unlike many of its weaker positions -- weaker position peers. when this, the contagion, the liquidity problems exacerbated by these regulatory clampdown's

on the property market, and it spreads to a company like shimao , the market, particularly in this case, react sharply. we will have to watch how the bonds fare today. six of the local bonds yesterday did halt trading. its share price come up about 12% area jp morgan, cutting the equity rating to underweight from overweight with a price target of just $5.50 hong kong dollars. the average price dollar -- price is over $22 but it is now seven dolightts. jp morgan saying it has further downside. shery: how much does it put -- help that regulators seem to be making it easier for regulators to convert yuan to dollars? >> it is critical. the state of the -- the state administration for foreign exchange is a laborious process

for these larger sums. let's take this example, property developers who need to convert yuan into dollars for offshore payment of their debt obligations, which has been in focus when these dollar coupon and interest payments have come due. often they used to full grace period to meet those obligations. evergrande didn't meet the obligations. the foreign exchange process is cumbersome because of the capital controls china has on foreign exchange. we are hearing from sources that they have instructed various branches to make sure they have the required quotas available and those transactions from yuan to dollar or other foreign currencies are expedited. this is according to sources saying bloomberg best -- telling bloomberg best. shery: let's get to vonnie quinn with the first word headlines.

>> we are told the u.s. offered to resolve the trade dispute with japan imposed by president trump. the proposal is modeled on an agreement that was all they similar disputes between the u.s. and eu in october. the potential truce comes as the biden administration works to sign a framework pack with asian nations next year. south korea plans to begin the discussion to join the asian free-trade pact. this after mainland china and taiwan formally submitted there is in recent weeks. their obligations create a sense of urgency that it shouldn't be left out of the deal that looks to grow. korea says it could revitalize the pact into a more comprehensive and transparent agreement india's consumer prices surged close to 5% in november, a level within the central bank's target of 2%-6%. rising food and fuel costs risk further boosting inflation,

which is the second-fastest in asia. the reserve bank of india left interest rates on hold but said pressure is in the near term. chinese monthly activity data is due wednesday with expectations the economy slowed further in november. the property crisis likely dragged down investments. retail sales are expected to weaken on the month. the downturn prompted beijing to shift direction but it is unclear if that will reverse the effects of the real if it's a -- real estate sector crackdown. global news 24 hours per day, on-air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. paul: let's get a quick check of woolworths in australia, the food retailer sliding, off by about 7%. woolworths announced direct and indirect covid costs have impacted the first half. food ebit is expected to be

1.9-1.2 2 billion. the impact of covid is being felt by woolworths and shares of the retailer are off about 7% in australia. the broader asx, weaker about 0.5 percent. how asia is leading the way in a sustainable finance growth. a partner at dws will join us. next, sean joins us for his latest report on the outlook for currency markets as central banks around the world get set to meet this week. this is bloomberg. ♪

shery: the dollar is broadly higher ahead of the fed meeting, with the market racing for powell to potentially reiterate his hawkish tone. let's bring in our next guest to

seize the greenback strengthening next week and beyond. with us now is sean callow from westpac. we have seen a little downside pressure for the dollar with the index falling to that 95 level last week. will this week, or this week's meeting be the turnaround for the dollar going forward given fast tapering? sean: there is a risk off, the old buy the rumor, sell the facts thing. expectations that the tapering will be sped up so the qe program is finished by the end of march and the projections for higher inflation and so on, but we think if we are talking about, if you were going to sell the dollar, you have to buy the euro, which we think is a risky move hours before the ecb meeting, which we expect to be dovish.

with the momentum in the u.s. economy this quarter, with the fed having to move up its tightening timetable, the u.s. dollar should be on firm footing so if there is a pullback after the meeting, we think people will get in there and buy for the new year. shery: what about the japanese yen cross? for the longest time given the policy we saw, we thought we would continue to see pressure on the yen, but given the omicron variant we have seen couples -- popo -- periods of strength for the yen. sean: when you're yelp -- your long dollar yen might be about risk aversion, there is an -- a lot to worry about with the omicron variant in terms of threat to global activity in the coming months, particularly with the northern winter, the greatest danger. we think in equity markets, the fed could be hiking rates in

terms of the equity outlook but we think those episodes are probably going to be pretty sweeping and the strongest correlation between dollar-yen and one major variable is the u.s. 10 year bond yield. so long that is -- as that is trending higher, which we think it will be above 2% early next year, that should support dollar-yen. paul: we have been seeing the aussie reversing its losses against the yen, although that is not happening today. what does that tell you about risk appetite? sean: it is helpful for the yen that we would have the u.s. stock market at a record high at the end of last week. if we are talking about relative monetary policy, certainly you've got the bank of japan very much on hold, there is no inflation breakouts in japan so the boj will be sticking to that 0% target on the 10 year for

quite some time. in that regard, the yield strength is moving in the aussie's favor. having fallen in recent years, they are structuring me -- it. the rba is taking baby steps away from its most aggressively dovish stance of no hikes until 2024. if they keep doing that and the australian economy is as strong as we think next year, growing by more than 6%, that will keep yields tilting and the aussie's favor. australia has a strong trade position. that helps as well. paul: as you are probably aware, 20 central banks meet this week. divergence appears to be the theme, they are going their own ways to varying degrees. what opportunities does this open up? sean: very risky for kerry given the volatility.

there are low yields and they will remain so. the bank of japan, very much on hold. the swiss as well, nothing much going on their in terms of their yields being incredibly low. the ecb, we think while they do, it is not absolutely clear cut, the decision, they do have to weigh the reality that inflation is trending higher and may be more persistently above target than they thought. it is not a slamdunk but we think they will be on the dovish side. bank of england probably a dovish call this week but the job markets are recovering pretty well. if they can get through the winter without too much savage from the current covid wave, they will be raising rates next year. paul: sean callow, thanks for

joining us. you can get a roundup of the stories you need to know to get your day going. bloomberg subscribers, go to daybgo on your bloomberg mobile and customize your settings so you only get news on the industries and assets you care about. this is bloomberg. ♪

shery: counting down to the start of trading, japan and south korea. some of the stories we are watching, bloomberg told now that washington has made an offer to tokyo to resolve disputes over tariffs imposed on japanese steel and aluminum under former president trump in 2018. we are watching japan's biggest bank mitsubishi usg expanding its fund finance business in new york and london as it taps

demand for diversified lending. it expects 40% growth in the amount of loans to provide private equity funds and other investment firms this fiscal year. moody's upgraded nissan's outlook to stable from negative and affirmed the unsecured debt rating. we will watch them at the open. in south korea, november import data shows prices rose 35% year on year. export prices were also up by more than 25%. the central bank will release minutes of the november rate decision meeting when the bank of korea root -- raised it to 1% with one board member voting against the decision. paul: ubs's record penalty for tax fraud has been slashed by more than half by a paris appeals court. the bank will have to pay about $2 billion for helping wealthy french clients stash undeclared funds in swiss accounts. our asia finance reporter has

the details. why did shares go up after what seems like a heavy penalty? >> like you said, the fine was half of what investors and the market were expecting for the charge. it was that between 2004-2012, ubs effectively helped its wealthy clients hide assets from authorities. effectively helping them evade taxes. the fine was slashed from what it was originally. initially, the fine against the bank was going to be 3.7 billion euros. the court handed down this week just 3.7 5 million euros as the actual fine against the bank. there are other penalties as well. ubs's lawyer said the court considered that it didn't really know just how much the tax evasion amount added up to, and that is why the penalty was

reduced. shery: how close are we to a resolution? what is next for ubs? >> that is a great question. ubs is talking about appealing. the bank decided play hardball on this matter in 2017 when, instead of just settling, they decided to take it to court and they appealed it once. they are talking appealing again because they don't like some of the penalties that have been handed down. on top of the actual fine, there are confiscation payments and other payments the bank has been asked to make. ubs is appealing that. if they do that, the fines that have been announced will be suspended while the matter is solved. it could take months to play out. paul: our bloomberg asia finance reporter. a quick check of the latest business flash headlines.

the battle over a canadian nickel exporter is heating up after an offer was raised following a breakdown of bhp's deal. it is owned by a billionaire mining magnet and is offering $1.10 per share canadian, which is higher than bhp's bid. the owner says they won't entertain alternate offers. nso group is continue -- considering shuttering its pegasus unit and selling the firm. according to sources, two u.s. funds discussed taking control and closing pegasus, which makes software that contract mobile phones. sources say the firms would inject $200 million into pegasus and turn it into a defensive cyber security. pfizer agreed to buy arena pharmaceuticals in a cash deal valued at 6.7 billion dollars. shares surged 88% monday, short

of the deal price. pfizer wants to speed up the development of one of their leading drug candidates for inflammation. analysts say this is owing to come under close student t -- screwed and teeth. -- screwed and t -- scrutiny. offices remain open if they can't. in new england, fidelity paused its voluntary return to the office pilot program, stopping non-essential workers from coming in. the program remains in effect in other locations. shery: we are seeing the offshore yuan holding steady, but this after significant strength last week. we have the pboc setting its reference rate at a weaker than expected left -- level, perhaps a signal it is striking a balance between slowing a surgeon the yuan and permitting

aggressive intervention. there are signs perhaps the chinese authorities are ready to start supporting the economy more. we had seen pressure for the british pound as well, it dropped along with guild yields. we continue to see more virus restrictions in that country, not to mention the boe rate decision is coming up thursday. we are watching the cad, broadly lower at the 1.2 eight level after the bank of canada said they are committed to bringing inflation to 2%, the target rate. we continue to watch what is happening with the turkish lira. we have seen a bit of a rebound, but after the tumble of 40% since the september rate cut, we are seeing no signs from policymakers in turkey that they will hike rates again despite the fact that we are below the level in the turkish lira when they acted before. come our exclusive interview with a ceo about his plans for singapore, the u.k. and the need

for broader regulation of the crypto industry. this is bloomberg. ♪ so, i started listening to audible about two years ago. a friend of mine recommended a book to me, and i got hooked really fast. and then it kind of just became a lifestyle after that. i've found new authors. i've found new interests. i've found all of these wonderful things. audible has all the entertainment you love. text listen4 to 500500 to get thirty days free. i like thrillers, true crime podcasts, news podcasts... science fiction, space dramas... a lot of classics. i listen almost exclusively to the audible originals. i also think it's pretty special that they get audiobooks that aren't released anywhere else. my friends listen to audible as well. i'll recommend a lot of things to them, especially the new sandman series. you can find things that will take you to new worlds.

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paul: tracking the fallout of the global supply chain crunch. these are thus top stories. g7 finance ministers pledge cooperation to fix supply chain issues that led to a surge of inflation. the group said it would look to anticipate and avoid a future supply crunch. france announced measures to support industrial firms suffering from supply difficulties including loans for up to 10 years. as much as $790 million of lending will be made available

to bolster working capital. u.s. cannabis getting hit by the supply chain crunch. the hyper local nature has so far allowed it to be insulated from global shortages but producers in need of chinese electronics components are starting to feel the impacts. shery: logistics costs, the monthly u.s. logistics managers index climbed for a second month in november, reflecting warehouse costs. it showed rising inventory in transportation -- and transportation expenses would respond, saying they any significant release over the next 12 months. terminal users can read more about those stories in our newsletter. paul: let's take a look at how markets are doing in the asia-pacific, new zealand and australia open. in new zealand, the index weaker

by 0.4% and new zealand continues to slide, off 2.5%. announcements that new zealand will get a further $330 million in liquidity to help it through covid struggles. the asx off by 0.3%. real estate, communications services and materials are on positive territory. the worst performing stock and australia, woolworths the food retailer come off more than 9%, saying sales growth moderated in the second quarter as covid costs will impact earnings. we have the nikkei opening up the top of the hour, a softer open. slightly positive territory for the s&p. shery: a bit of upside for crypto. this, after we saw the tumble in the new york session. bitcoin now, more than 30% below its record high and popular

tokens like those going -- dogecoin falling. the bank of england warning about crypto related risks. su keenan joins us with the latest. i know it is hard to pinpoint what drives the volatility in crypto assets, but what do we know? >> we are starting to see crypto behave like a risk off asset in that we've got a negative macro environment. we've got the central bank meeting, the omicron variant, all of those causing tech stocks to selloff. bitcoin is down. you are looking at the bloomberg terminal, the bloomberg galaxy crypto index. it took a big hit, more than 7.5 in the latest session. we are also seeing a lot of more popular coins, not just bitcoin but dogecoin and others falling more than 10% in the latest session. you are looking at the latest

trade that suddenly, there is green on the screen but just a few hours ago we were looking at 8%, 9% drops across the board. bitcoin and crypto supporters will say that you are seeing, we are coming off the weekend, bitcoin trades 24/7, there is a lot of liquidity at times, 20 47 trading explains the natural volatility we are seeing. a lot of spin on this from other supporters is that some investors are withdrawing in anticipation of a bounce, an unusual explanation but some technical supporters point out bitcoin is now below its 200 day moving average. it fell to the 47,000 level. we could see it fall even further to the 45,000 level. it would appear that the risk appetite for some crypto investors, not what it has been in the past, at least for the near term.

paul: the bank of england is concerned about managing the risks crypto poses. can you tell us about this? >> they have spoken about this before but they are now reiterating the warning and putting it as part of their december monthly report, citing the potential stability risks to the u.k. financial system. in the december financial stability report, it says the central bank's financial policy committee believes crypto assets are becoming more interconnected with the greater u.k. financial system. there are concerns growth in the assets could transmit shocks through the financial system and they are warning the use of leverage could amplify volatility. they want enhanced financial frameworks in place,

translation, they want tighter regulation. they say it will take a while to ramp up the regulatory focus, so they want to get started now. they are concerned that there is no direct risk at this point, but they are starting to see a lot of different companies start to offer crypto derivative trading and services, according to the report, enhanced framework is needed to manage risk. in other words, they are looking to develop a regulatory standard that doesn't exist at this point. a sign of the times. paul: su keenan, thanks so much. by nancy withdrew a request to open a crypto exchange in singapore, which started last year. ceo changpeng zhao spoke about his plans there and in the u.k. as well as the need for broader regulations of the toe industry.

-- the crypto industry. >> this was the original plan. we invested in a local regulated exchange called xg. we will have two duplicates in the running for a small market. singapore is an advanced market and is pro-crypto. we think we need both applications. we invested in xgx and will hopefully use that in the future in singapore, as a singapore service. it is not a huge price. many people misunderstand the situation. they get worried. we are not leaving singapore. we are invested in singapore. singapore is one of the leading countries in the world for crypto and blockchain. x you told me something similar when you were winding down the binanc3e u.k..

you said you are building the u.k. arm up again. what are your plans in great britain? ask for the u.k., we are in the process of reapplying for a license. in the u.k., we try to do different things and we are in the process of applying for applications again. u.k., everything is on track things sometimes go through what you call volatility or changes in plans. but we are proceeding full speed ahead in the u.k. and we have a large u.k. team now. not large, but we have a u.k. team based in the u.k., we have an office there, we established a fiscal presence, all the requirements for getting a license. >> talking about your plans in london, what is it that is more difficult to comply with when it comes to u.k. regulations? money laundering regulations? is that why this takes time? lax honestly -- >> honestly, that is the easy part.

in the banking district, in the crypto industry, at least on par with the banks so that is an established process. in the crypto world, we use what -- we look at blockchain analytics to determine which transactions come from where. there are fairly mature third-party tools used for that. that is the easy part. many regulations focus on centralized exchanges, they don't look at defi or nft's or many other things. we often talk with regulators to say, how do we regulate these other parts? we are wanting to help regulators have a broader view of the crypto industry. the crypto industry is not just ycml. we have to think about listing framework, how do you

choose which pointillist? what is the criteria? how do we handle customer disputes? in what situations we can't -- compensate users or not? we want to educate regulators to look at broader scope. shery: binance ceo changpeng zhao. here is vonnie quinn. vonnie: the white house is seeking to bolster ties around southeast asia as a counterweight to china. the secretary of state is on a three-day tour of the region and due to give an address in jakarta tuesday. the by dentist -- the biden administration is expected to focus on areas of cooperation like fighting covid-19 and climate change. time magazine named elon musk the person of the year. publisher said few people have had more influence on life on earth and potentially life off

earth. the award has an previously presented to barack obama and mark zuckerberg. this capsule run in which musk solidified his standing as the world's richest person and turned tesla into a $1 trillion business. a financial regulator issued rules on kabul to mainland china. -- travel to mainland china. those eligible our staff and directors with regional roles and a main preface to travel to the province. each company has one pre-registration with a limit of two executives per calendar month. u.s. lawmakers are reportedly nearing agreements on legislations aimed at punishing china for its treatment of uighur muslims. the new laws would restrict trade of goods made in the region. a deal could be voted on by year end. global news 24 hours per day, on-air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm vonnie quinn. this is bloomberg. paul: still to come, we talk sustainable finance with priscilla lu who sees asia leading growth. this is bloomberg. ♪

shery: take a look at the

commodities space. under pressure towards the $71 per barrel level, we have seen concerns of other risks from the omicron variant. u.s. natural gas futures settled lower, down about 0.4%. forecasts of a milder winter, leading to price pressures. u.s. natural gas futures have been down about 40% since their october peak when the price topped six dollars. when a different picture from europe. gas and power prices closed at record highs. we are seeing in tensions between russia and ukraine affecting the markets. paul: the pipeline has been completed, but it hasn't been signed off. very much a bargaining chip in the ongoing standoff. take a look at this chart for

natural gas inventories in europe. they are not where you would want them to be. currently hovering around 63%, sounds healthy but that is the level you normally see in europe around the middle of january, not where we are now. sort of eerie close to the beginning of winter rather than the middle or the end. natural gas prices in europe, closing very near to record highs. shery: perhaps unsurprising we are seeing the focus on renewable energy when it comes to the energy space. let's talk about corporate sustainability, because this is becoming mainstream. financing linked to these targets, seeing a rise. southeast asia posts a record year. let's bring in our head of research. what has driven the recent growth of sustainable finance? >> we have seen an increase on

the demand side and the supply side. on the demand side we see many institutions, particularly pension funds, those looking long-term, really increased their appetite for buying sustainability linked loans and debts. this is to ensure that over the long-term, their portfolios are transition proof. on the supply side, many entities, utilities, are looking at transitioning their assets. they are issuing green bonds and green loans to fund the transition. paul: what role if any are a pack financial centers like singapore playing in sustainable finance? >> tokyo and hong kong have played a central role for local markets. we have seen tokyo be very crucial for japanese companies, hong kong for greater china. singapore is interesting. singapore has maintained when it

comes to finance. it has launched interesting initiatives around, for example during green taxonomy, it was the first market in the region to start this effort earlier this year. shery: what will be the biggest driver of this sector for 2022? >> the fundamentals are still there, basically demand for these sustainable or green financials will remain and continue to grow. it will be interesting to see, certainly macroeconomics and the quantitative easing we saw through the pandemic, that had an impact on the growth rates we saw this year. the first year, we saw over $1 trillion worth of issuing chose -- issuances linked to green and

sustainable bonds. whether it continues through 2022, we expect it to continue to grow but the growth rate will be affected by the macroeconomic factors. the other side is around concerns about greenwashing. we have seen improvements on taxonomies, how much these efforts accelerate relative to this. it will be interesting to watch. paul: let's bring in our next guest, who is expecting asia to become the fastest growing region for sustainable finance over the next decade. priscilla changpeng zhao -- priscilla lu, you were at the bloomberg summit this month. you said asia will be the fastest growing region for sustainable finance over the coming decade. it has been a bit of a laggard

so far. what is your thesis? priscilla: what we are seeing really is that asia being the hub of manufacturing and industrial growth, it will have the demand for continued sustainable investment. so what we will continue to see is the gdp growth as well as manufacturing production continue to increase, from china, india, japan, korea, indonesia and so on. these countries are continuing to be the manufacturing and production hubs for many of the international global institutions and corporations. there lies the opportunity for sustainable finance. we believe over the next decade, because of the focus on ensuring accountability and also to be really more responsible with respect to environmental materiality's, it is important

that the financing becomes driven by these industrial growth areas. paul: what is the main challenge to green financing, achieving its goals over the next decade, as you see it? priscilla: i believe the main challenge is really for all of the different regions to adopt policies that will ensure governments and compliance with respect to reporting, tracking, and visibility as well as accountability for the financing being directed to support sustainability. that is where many of the international institutions are coming up with standards and frameworks for benchmarking and tracking and monitoring, such as the new taxonomy and the common ground taxonomy. these are all attempts to provide frameworks, benchmarks that could be tracked and ensure accountability and visibility. shery: who in asia is ahead in

these and who is lagging behind? priscilla: certainly, china with the government focus in this area is committed to supporting the policies and and forcing accountability. it will really be able to ensure that there is continuance in terms of the adoption, and making sure that many of the cooperations will continue -- corporations will continue to adopt and adapt and advance in terms of systems and reporting, to ensure the improvements for governance and compliance continues. shery: earlier, a reporter mentioned greenwashing. what are things we should watch out for? priscilla: i think the cooperation and collaboration between various corporations, as well as asset managers and financial institutions, are important. the sharing of information so

there is sharing of experience as well as input in terms of what to report, how to report, the key parameters that should be cracked and also, that is important. that collaboration is critical to advancing, basically the transparency as well as visibility and accountability. shery: priscilla lu, great to have your insight. be sure to tune into bloomberg radio to hear more from big newsmakers. get in-depth analysis from our team. listen through the app, radio plus or bloombergradio.com. plenty more ahead. stay with us. ♪

shery: we are getting more clarity on what will happen with south korea and the cpt pp. the regional trade deal is the child of the tpp, the one the u.s. withdrew from. we are getting more clarity from the south korean finance minister that they have to take into account the new global economic order especially as you have china and taiwan wanting to join the cpt pp. perhaps a signal that it is a

difficult situation for korea. they have a strong alliance with the united states, but they have a trade partnership, which is huge, with china. they have to break with the u.s. on that diplomatic way caught of the beijing olympics, as well -- boycott of the beijing olympics, as well. paul: the korean president was in australia for a visit. a number of defense contracts were signed. the idea of seoul joining was welcomed by scott morrison. agreements, or rhetoric around the quad, walking a delicate blue medic line, saying it has the potential to maintain peace and prosperity in the indo pacific but moon was clear that the visit has nothing to do with china. couldn't put it more explicitly than that. the markets are coming up in korea and japan.

futures, currently looking a little off, may be poised for a weaker open. markets in australia, weaker. kospi futures in positive territory by 0.2 5%. stay with us. this is bloomberg. ♪

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shery: welcome to "daybreak: asia." paul: asia's major markets just open for trade. our top stories this hour, the overgrown overhang, more fragility weighing on investors. the buyer is not deterring hong kong's plans to reopen, and

bitcoin, the slide extends into a fifth week while tokens are slumping even further. shery:essure on the broader asian market with it nikkei and the topix down lower, were talking about a reversal from the previous session with the japanese yen holding. we do have the boj policy decision but reasserting their stance, not tolerating the bonds and short-term rates at zero. take a look at the korean stock market because the kospi is down -- down .5%, losing ground for a third consecutive session. we've had some regulation

concerns over korean gaming stocks leading the index lower. the korean won is also under a little bit of pressure against the u.s. dollar after rising in the previous session. we are waiting for those jobless -- jobless rate numbers later in the week. paul: a quick look at the markets here in australia at the moment with the anc weaker by .25%. we wait news of a possible acquisition of a swiss pharmaceutical company. slowing sales for food and beverages in the second quarter and a possible hit to profitability on expenses related to covid. the aussie dollar holding up reasonably well against the greenback at the moment. shares pretty much consolidating their losses around .4% all

morning and the kiwi dollar little changed. related to the english premier league, there have been a significant number of paces, 40 two players and staff tested positive in the past week. in that respect we have manchester united's matches, upcoming match against brentford now postponed. first-team operations now halted at manchester united training complex. concerns spreading over the outbreak of covid in the english premier league. let's move from football back to the markets. our next guest is expecting inflation to fall, joining us from hong kong.

transitory, that was meant to be a 2021 word. what are the implications for rates? >> one of the things that is interesting when we get the 6.8% cpi, what happens is, bitcoin or some sector stocks, even some commodities, with the so-called inflation hedges that of all fallen. it reduces longer-term growth and inflation expectations. at the moment the fed is in a very tough place because it needs to state hawkish to remain credible. but then it makes -- if it stays there credible it's likely to bring down longer-term expectations and that is not

desirable, either. by the second half of next year it will be much less concern about inflation and more concerned about policy. we're likely to see supply chains recover and that is really what is driving up inflation at the moment. this is definitely lasting longer than a year, the inflation scare. i think it will still come down next year. paul: in the meantime we do have central-bank meetings and a monetary policy divergence is happening. china potentially easing from an investment perspective, what should these -- which of these narratives are more compelling? >> i think the china story is becoming relatively more compelling. it's obviously had a harrowing year because of very politically driven tightening, and today we

are still suffering from the real estate part of that policy tightening. think we will probably continue to see more negative lines from that aspect for a little while, but i think last week sent a clear message, officials of all regions and departments need to get things rolling relatively early, and that is the message being sent down from the central government. compare that with what the fed needs to do to gain credibility encase case china does become more resilient to what the global market might feel from that action. shery: the message we heard from

chinese authorities in the past week, we've seen this chart on the bloomberg already showing that the csi 300 has broken out of its recent range. >> that's a clear sign that the market is moving toward that message. it's also happening when the rest of the world's valuation is very different, very much higher. i think this could last for a while longer. it's about restoring confidence in earnings growth, it's about getting earnings revisions back into positive territory, which i think will happen in the first half of next year. so i think this is a pretty stark contrast in terms of a policy and growth trajectory. remember, china's four q growth is going to be miserable. if are going to make this 5% target that we expect the government will set, then they need to do a lot more. shery: what does that mean for

other assets? we've seen the chinese want pretty strong. especially coming from the fiscal side of things more than monetary easing, what does that solve for the currency? >> i think the currency largely will stay in range. probably looking at a 3% rate, so what is going to happen, we've already seen the positive carries that the see in my has over the dollar, to appoint that makes the current exchange rate seem overvalued. even if it comes with better economic news, we might see the renminbi weaken. the pboc has clearly signal that they want to reduce seeing in

life strengths and that will affect chinese currency a bit. weaker chinese currency might be a bit better for the efforts to bring in stronger growth next year. shery: ken peng, always good to have you with us. thank you so much for that. we have some breaking news, we want to tell you about china mobile because they are out with their preliminary net income coming in at 114.3 billion yuan, preliminary operating revenue also coming in at about 844.9 billion yuan and also the top range being 852.6 billion . broadly in line with expectations for china mobile. this coming at a time when china mobile has felt that pressure

from their delisting here in the u.s., but for now when it comes to their operating profit and net income, coming in broadly in line with expectations in net-net $114.3 billion level. also watch for lg, because we are seeing significant downside pressure for the stock, which is down almost 7% at this point. this would be much lower than the pressure we are seeing for the kospi. this coming at a time when we have seen the shareholders offering 6.50 7 million shares of -- according to terms of a deal that bloomberg has seen. so shares are being offered at a price between $79,800 -- korean won each. so we're seeing a downside pressure on the stock, down 6.9%.

that's get to vonnie quinn with the first word headlines. >> were told the u.s. has offered to resolve its differences with japan imposed by president trump in 2018. sources say the proposal's model on an agreement from the u.s. in october. the biden administration is working to find an asian framework next year. hong kong's financial regulator has issued rules on quarantine travel to mainland china. those eligible to preregister our staff or directors of a license corporation in a pivotal role. each company may submit one preregistration for two executives within a calendar month. chinese activity data is due tuesday with expectations that the economy slowed further in november. retail sales figures are also

expected to weaken. beijing shifts policy direction but it's unclear if that will reverse effects of the real estate sector. and a level still within the central banks ban up 6%. rising food and fuel costs the second fastest in asia. the pressures may persist in the near term. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. paul: still to come, high inflation, a growing list of risks to the global economy. that conversation coming up. up next, fresh concerns for china's property sector.

will have details on that next. this is bloomberg. ♪

shery: less than a week after china evergrande defaulted on debt obligations, the market has a new developer to worry about the property giant saw a plunge in its share and bond prices on monday on concerns that may not be able to meet its upcoming debt payments. rebecca, look at that chart, it's amazing how the bond has really gone off the cliff right there. what is happening with that company? >> essentially there is concern over the fund's ability to repay

all of its various obligations. six months ago we started to see some of the onshore bonds dropping and unusual for that company, the bonds have lagged. onshore the notes around $.80 on the dollar, so there's quite a disparity there. it has raised a lot of concerns because it would be such a surprise to see any kind of real -- it's one of china's largest property developers by contractor sales. unlike the pricing was sought evergrande for example, it's not something that's been long in the market. until quite recently it still had a number of investment grade quality ratings.

it has struggled in ways that are wearing the market. it's a little bit reminiscent of the fantasia surprise when investors are taken offguard about the difficulties there. paul: shimao said it is looking into market rumors that it blames for the selloff. what is it talking about there, and also the reaction we expect today? >> investors are looking for any kind of clarity. that kind of disparity suggests there's some information that global investors, there are concerned about obligations on repayment paving investors are still very much in the dark when it comes to that in particular. that will certainly be looking for more information. paul: rebecca they're following the fortunes of shimao. the bloomberg crypto index has

shed close to third of its value from the peak. this is bloomberg. ♪

shery: bitcoin is now more than 30% below its record high. others fell more than 10% in the latest trading. bitcoin right now below its 200 day moving at -- moving average. we've seen a rebound a little bit. the bank of england is warning about crypto related risks. i know it's hard to tell, but what can we gauge on what is driving these moves? >> to paraphrase one strategist, if there is a view that is crypto insured, it's really not playing out.

you can see why the strategist says volatility has been deadly. we look at the bloomberg galaxy crypto index, it has slumped as much a 7.5% in the past 12 hours and is down 30% from the record. a wild ride by any standard. it's not just bitcoin, ethereum also at a new level. you're seeing a little bit of greenback on the screen. others fell within 10% in the past couple of hours. and concern about a weakening macroenvironment, changes in the bank policy, the omicron variant. crypto is caught in the middle. bitcoin entering its fifth week of declines, breaking below the

200 day moving average putting it below the 47,000 level. some are saying 45,000 could be its next stop. the balance is not around the corner. so bitcoin may not be a good hedge against inflation. as consumer prices rise per one report. concerns weighing on a lot of high risk assets. for veteran crypto supporters, -- short-term holders of the pain apart could get washed out, only to see crypto currency rise again. paul: bank of england is concerned about managing the rapid growth that crypto poses to the wider world.

>> they've mentioned these concerns before but now they have included them in their december financial stability report. the concern is they say the rapid growth that is in the unregulated crypto market could bring a high risk of market turbulence to the u.k. financial system. they want to see enhanced frameworks imposed. in other words, rules and regulations, and they see a need to start managing the risk as soon as possible. the goal is to create some kind of regulation now, before there is a problem. now the banks financial policy committee is saying that crypto assets are becoming more interconnected with the u.k. financial system. there is a concern that the use of leverage could amplify this so they are starting to work on ways to manage the risk. shery: su keenan there with the latest on the crypto space.

and china withdrew an effort to open a crypto exchange there. >> we are not that disappointed, this is the original plan. we call it stx. singapore is a very advanced market. we're just going to close applications there and we will use that hopefully in the future as a singapore service. it's not a huge surprise.

i think many people understand the situation -- misunderstand the situation. we are not leaving singapore, we are very much still active in singapore. >> you tell me something similar when you were winding down financial -- binance u.k. and now you're building up the u.k. arm again. what are your plans in great britain? >> we are in the process of reapplying for the license there. we are in the process of applications again. so in the u.k., everything is on track. so we're going through some changes in plans, but we are proceeding speed ahead in the u.k.. we have an office there and all

the usual requirements for getting a license. >> what is it that is more difficult to comply with when it comes to u.k. regulations? is this around money laundering regulations and is that why it takes some time? >> those things are done in the banking and crypto industry, on par with the banks. that's a very established process. in the crypto world we look at blockchain to determine which connections, very much there are tools used for that. that is the easy part. many of the regulations only focus on centralized exchanges. they don't look at many other things.

we often talk with regulators and say how do we regulate this other part? we really want to help regulators to have a broader view of the industry. either in the centralized space, we have to think about what to list and what is the criteria there. in what situation who we compensate users or not. that's what current regulations don't look at and we want to educate regulators to look at a more broader scope. paul: let's take a look at crypto link docs -- after they tumbled overnight. the monic sin japan is off about .75% right now.

and the leading south coat -- south korean crypto exchanges up. plenty more to come on "daybreak: asia." this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist, and one of the millions of students we're connecting throughout the next 10. through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities.

paul: we have business confidence numbers. easing a little confidence. down but still in positive territory. still well above the long-run

average. business conditions rising two points to 12 driven by strong employment which is recovering well. retail and transport business conditions improving noticeably during november. the asx off by a third of 1%. many economists have struggled to predict the future during the pandemic but they are upbeat about next year they could easily be blindsided again. here are what some guests are saying about the biggest risks to markets year. larry: the three biggest risks are omicron, inflation and overextended markets. >> the pandemic. >> the covid situation and covid policies. >> the pandemic and geopolitical risks. >> there are warning signs, inflation and other political

events. >> the geopolitics of china, russia, and iran. >> there are likely to be twists and turns. >> 2022 is another year of rebuilding. it will be choppy. >> the market is responding to interest rates. >> interest rate sensitive. >> i'm not sure the market is ready for three interest rate hikes next year. >> fed efforts to slow inflation lead to recession. i think all those things are sources of risks for markets. shery: central banks feeling the heat for now but nomura sees a different backdrop. let's bring in sonal varma. great to have you with us. we have seen the supply chain disruptions hurting most of the world leading to inflationary pressures but how varied has

demand strength been? and what does that mean for gross stagflation in your? --next year? sonal: the focus is mostly on inflation. we do think it is important to differentiate what is driving inflation in different economies. there is strong demand and supply chain pressures but outside of the u.s., it is mainly supply chain issues driving inflation. this might lead to much slower demand because this crimps profit margins and consumer demand has not picked up. while there is a big focus on inflation, stagflation right now, we believe the risk is more

of low growth and stagflation is the bigger risk. shery: who is at risk of underperforming next year? sonal: if we look across asia for instance, or even in the global context, there is concern around emerging markets. while inflation is not a concern in asia, it is a big challenge in em's outside of asia. the divergence we have seen is set to continue in em into 2022 more broadly. in asia we are more negative on the consensus of south korea and philippines. in south korea, there is the risk of japanification.

in the philippines, be low vaccinations, we think there is a big risk for growth disappointment. paul: and china as well. in your report, you say the worst is yet to come. how bad do you see a getting? -- it getting? sonal: there has been a change in mood because of the shift in policy that we are seeing right now. our view is the real policy that will turn around china's growth really needs to come from the relaxation of the redlines on the property sector. china relaxing its zero covid strategy because that is a constraint on consumption. we have not seen that.

not to forget that we have the winter olympics coming up next year. while we have seen incremental policy easing, our view is we think growth will continue to moderate. we have growth around 3% in the fourth quarter and also in the fourth quarter of -- first quarter of 2022. we will see more material policy easing. worst yet to come in terms of the growth -- growth outlook still. paul: 3% growth rate in china seems curiously believable -- seems scarcely believable considering what we are used to. what sort of response would you anticipate? sonal: for now, most policy

responses on the fiscal and monetary side that we think will eventually come next year. on the policy side, another 50 basis point in rrr is what we are expecting. on the fiscal policy front, we think the government will relax constraints for local governments so we could start seeking more focused on infrastructure projects heading into next year. but it is not just the measures that will help. at the end of the day, the factors leading to the underperformance need to be reversed and that includes a relaxation on property related measures, relaxation of the zero covid strategy, and some easing on the carbon emission process. and we do think some of these measures will be relaxed along

with the other measures i mentioned. shery: when it comes to the chinese yuan, we have seen considerable strength. but we have seen downside pressure especially on emerging markets. i wonder what your currency you is given the lower currency rates making inflationary pressures more for these countries that are already having the hike given those rising prices. sonal: broadly, our view is the dollar will continue to strengthen into early next year because this is really about u.s. growth outlook and we think that will continue. and the monetary policy, the difference between the fed and other central banks, remains more broadly. we do think em currencies will

be under pressure. specifically on china, we have seen the authorities allowing the yuan appreciation which is an important signal. but from a flow standpoint, we still think the capital account is in a reasonable surplus. there are restrictions on border controls so no outflows on the resident side. a flow picture continues to support the yuan. on the whole, it is still a stronger dollar view beginning in 2022 and that will be pressure for em currencies. paul: the nomura chief economist for india and asia minus japan. a quick check of the markets. selling across asia pacific. the nikkei in japan weaker i

about a third of 1%. information, technology and industrials weighing their. the kospi is weaker by 0.4%. lg corp down about 7%, the most in six months. one member of the founding family is seeking to sell their entire stake. here in australia, we are off about 0.2 5%. the materials sector is a rare bright spot. new zealand continues to edge a little lower. shery: take a look at toyota motors. we are watching the company as they are expanding the suspensions of their plants. some of their operations. we have seen downside pressure in the last week although in this session we are seeing a little upside. their spokesperson commenting in

an email statement saying they will expand the factory halts. no real change in the global production plan for 2020 one. forecast of 9 million. be plant -- the plant that was halted -- given the supply chain issues, it has hurt japanese carmakers and carmakers globally. toyota saying the output halt will impact 14,000 vehicles. the toyota ceo will also be holding a news conference about their ev battery strategy. bloomberg users can follow that on live go. hong kong's financial regulator plays out rules for quarantine free travel to mainland china. this is bloomberg. ♪

vonnie: this is "bloomberg daybreak: asia." the white house is seeking to bolster ties around southeast asia as a counterweight to china . the secretary of state is on a three-day tour of the region. he is due to give an address in

jakarta. the biden administration is also said to release an indo pacific strategy. focusing on covid-19 and climate change. u.s. lawmakers in the house and senate are nearing agreement on legislation aimed at punishing china for its treatment of uighur muslims. if passed, they would restrict the trade of goods in the region. a deal could be voted on by year end. south korea plans to begin a discussion process to join the asian free trade pact. this after mainland china and taiwan formally submitted bids in recent weeks. there is a sense of urgency in seoul that they should not be left out of the deal. korea said they could revitalize the pack into a more comprehensive and transparent agreement. time magazine has named elon musk as person of the year the publisher has said few people

have had more influence on life on earth and potentially life off earth as well. previously, the award has been presented to barack obama and zuckerberg. it solidifies his standing as world's richest person. we are told the u.s. is offering to resolve its trade dispute with chart -- with japan over steel and aluminum tires imposed by president trump. the proposal is modeled on an agreement that result a similar dispute between the u.s. and the eu in october. the potential truce comes as a biden administration works to sign an economic framework with asian nations next year. 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: sticking with the virus, more data on the level of protection provided by covid shots against omicron.

the variant necessitates a booster shot. our guestbook spoke to us earlier. >> how many cases or percentages of omicron -- those are true. there is some percentage of the population that has tuned out everything but i think most people realize this is a new variant and we will have to respond accordingly. >> given the fact that omicron is expected to become the dominant strain in the united kingdom, as boris johnson was outlining this morning, is the booster shot going to be considered required in order to be fully vaccinated? >> i think that is becoming a distinct possibility. with each study that comes out suggesting actually good news which is that three shots of the mrna vaccine, people have a reasonable degree of protection from omicron. this is not the case of complete as gay from the vaccines.

the third does it really seems to help which could change the policies. >> companies have really led, private companies, when it comes to setting policy. in the u.s., two thirds of companies will mandate vaccines for their workers whether or not there is any sort of overarching law or policy. how have you seen the discussion changing among private corporations to get the booster as part of the requirement? >> i think the recognition right now is that to have a safe workplace which people want, you really cannot open up to omicron and doing things that are necessary to prevent this virus from getting into the workplace, spreading in the workplace and wreaking havoc on the plans that companies have, is a priority. i think that companies are looking at the data does like public health officials are and it would not surprise me if they start requiring that third shot.

the third shot is very safe and a protects against omicron so it is pretty logical that we could get there. paul: the johns hopkins bloomberg school of public health is supported by michael r. bloomberg, founder of bloomberg lp and bloomberg philanthropies. hong kong's financial regulator has issued rules on quarantine free travel to mainland china. this as a northern chinese city is reported to have logged the first omicron case. let's get more from our managing editor. what are the details on hong kong's reopening? >> well, these rules announced by the financial regulator really need to chart how business travel may resume and it will still be quite limited. only staff directors of licensed corporations who have roles in

the region and whose main purpose of travel is to go into southern china's guangdong province will be able to preregister for this travel. that really does limit. companies will also be permitted to send just two executives each calendar month. they are keeping quite a tight rein on this as they start getting going. shery: hong kong is also requiring travelers from highest risk covid places to spend their first week of a 21 day quarantine in an isolation camp. what is the reasoning behind this? >> just when we thought hong kong could not get any more hard-core with its quarantine, it makes a range of travelers from various countries do

a staggering 21 days in quarantine. they have taken it a step forward with the omicron variant. the approach they are making to most places where omicron is detected is that they will be moved to a special high risk list which requires 21 days of quarantine and the first week of that is at a makeshift, purpose built isolation facility in hong kong. they will be able to watch people a lot more closely and test them more. less of a chance of transmission then there would be at a hotel environment. after that we get they are not positive, they go into another two weeks of hotel quarantine. this officially is being applied to travelers from the u.s. and any ex-pats going back and

forth. the south china morning post says this will also be applied to those from the u.k. shery: the latest on those covid restrictions. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to the terminal. you can customize your settings so you only get the news on the industries and the assets you care about. this is bloomberg. ♪♪

shery: the country's largest wireless carrier was removed from the new york stock exchange in january due to an investment ban ordered by former president trump. joining us for the latest is charlie. tell us a little more about the listing plan and how significant it is. charlie: china mobile said last night that it has gotten approval from the chinese securities regulation commission to issue a shares in shanghai. according to its prospectors, it plans to issue 846 million

a-shares. based on the company's hong kong list of shares, the company can raise roughly $5 billion and that would make it one of the largest stock listing in the asia market. usually, a-shares are listed trading at a premium to their hong kong equivalents. the actual amount of money that could be released could be much higher. paul: how is the company going to use these stock proceeds? charlie: mainly used to expand its core business and also upgrade its so-called 5g network and also smart home technology as well as other stuff. mostly about the network

expansion. shery: charlie, bloomberg's shanghai bureau chief looking forward to the china mobile listing in shanghai. we are now seeing the chinese yuan holding at the 637 level. incredible strength on the chinese yuan. this as we have also seen more signs of the chinese authorities signaling more fiscal and monetary policy supportive of the broader economy. u.s. futures rising 0.2% after the s&p 500 dropped from a record. travel shares led away lower given the concerns about the omicron variant. we are seeing taiex futures closing down. and ftse a 50 futures were also down. risk off sentiment which will be

felt across the markets in asia. we are already seeing the japanese nikkei and the kospi both losing ground. that is it from "bloomberg daybreak: asia." our market coverage continues. standby for "bloomberg markets: china open." this is bloomberg. ♪

>> it is a 9:00 a.m. in beijing and shanghai. welcome to "bloomberg markets: china open." coming down to the open of trade. >> stocks fall