paul: good morning, i am paul allen and sydney. shery: i am shery ahn. welcome to "bloomberg daybreak: asia." a 50 basis point hike in march possible. china's manufacturing sector loses steam, and a housing market drop drag on activity of

small firms. the u.s. and u.k. work on russian sanctions rebound, the pentagon says putin is still boosting troop levels around ukraine. paul: let's look at how we are trading around australia and new zealand at the moment, it is a staggered open but we are off to the tune of about .25 of 1%, new zealand paring some of its early gains, 1% right now after we saw a positive close for u.s. stocks at the end of last week. nikkei futures headed for a brighter open, a lot of markets will be closed today for the start of the lunar new year holiday, there will not be any trading in china or taiwan or south korea, vietnam also closed. crude oil still trading, continuing to show gains, although more modest compared to

what we were getting used to, 87.54 four a barrel. s&p mini futures have begun trading, pretty flat right now. i hawkish fed, emerging markets are stumbling after an early rally to start figure. let's bring in the chief rates correspondent for asia. going to be a truncated trading week for stocks in asia because of the lunar new year but thou art like it's that are open likely to respond? >> it will be interesting, because we had the emerging surge last week we are asian markets were able to sustain that move. investors here were looking more at damage that had been done leading up to that compared to

what seemed to be a frantic search at the -- surge at the end. it might well be asia lies low. that helps to underscore the potential that these big jumps back up, big dip buying events end up being a flash in the pan because the weight of concerns investors have about what looks to be a difficult outlook for 2022. shery: is the volatility inevitable at this point especially given that we are now expecting quantitative tightening to start for many central banks around the world? >> yes, one of the things pushing volatility is also the potential for very rapid central bank rate hikes.

the fed was talking about the possibility of a 50 basis point hike and goldman it was saying get ready for five hikes, and we had quantitative tightening coming along, and part of what happens with this is first of all rate traders bet on evergrande rate hikes and we get a big jump in expectations for volatility. that could become a self-fulfilling prophecy. we have got things like these indexes for u.s. bonds moving up to the kind of levels that signal any gains are going to be difficult to sustain. we need to find calm out there, willingness for investors to accept the reason why central banks are tightening policies, because the economies are strong enough to warrant it, and at the moment people are focusing more

on the removal of stimulus. if traders got used to all of that stimulus, all of that cash sloshing around, all of that money people were capable of using to buy dip so long. we could see sustained appetite for assets when they get cheaper. the problem is they might go on getting cheaper for longer. shery: our chief rates correspondent for asia rates pointing to risks for markets, and does not help we continue to see economic woes in china, manufacturing slipping in january, coronavirus cases jumping and this five days from the winter olympics. let's bring in our chief asia correspondent, when it comes to economic news bad news could turn out to be good news and that we could see more monetary

and fiscal support from the government. what are we expecting in terms of what we saw with the economic numbers lately? >> i think the first point is pmi does .2 broad based slowing in the industrial sector. the slow down ahead of the lunar new year and the fact that factories are asked to curb output pollution. it is part of the manufacturing sector it down, a slow down in the real estate sector, the consumption story remains down. in both official survey and another survey that came out they are continuing to show signs of pains. input costs are high and that is pointing to ongoing ppi pressure. the authorities will want to put more support. keep an eye on smaller out put.

paul: what risk to the economy does the latest virus outbreak post? >> this is an interesting one to watch, over 30 cases inside the olympic bubble reported yesterday. on the one hand china is running a sealed operation up there around the olympics. they might be able to contain it. it highlights the challenges involved with the aggressive zero covid strategy. a lot of people are looking at the china story on the one hand, their containment of the virus is successful. they have about their factories to operate and supply global demand. the question is how sustainable

is that, how much disruption will there be as they tried to control the variants going around, and the olympics will be a test to see whether or not there is spillover. what does that mean for zero covid and what does it mean for the economy going forward? top issue when it comes to figuring out how much china's economy is flowing. paul: our chief asia economics correspondent there. the u.s. senate is close to agreeing to a sanctions bill for russia, which could include penalties for vladimir putin even if troops are not sent into ukraine. let's get over to our correspondent. we have any details of what types of sanctions might be included in it? >> it is the kinds of sanctions that the administration itself

has been talking about. we are talking about financial sanctions -- sanctions on the financial sector, energy. the point with this is it has kind of been brewing for quite some time, and there is a slight sense of disagreement here or hesitation about the tactics to use, and the administration itself does not want to fire off a bunch of sanctions right away, which is partly what this bill would do. their argument is once you have used them, you have used them and have given away that bit of leverage. there will be a briefing in congress by some of the most senior leaders, including military leaders on thursday as we head into the week, which

will present a bunch of arguments in this case to congress on the u.s.'s stance. shery: what are be seeing in terms of russian actions around the ukrainian border? >> we heard from the pentagon today that even as there are some efforts of diplomacy, including this taper proposal by the u.s. to respond to russian security concerns, which in russia's version are triggering for standoff, amid all that the pentagon said russia is still building up troops further around ukraine. we did not get details but that is what the u.s. is saying at this point. this week will also include a you and security council un --

un security council meeting requested by the u.s. paul: on the latest surrounding sanctions on russia as the ukraine crisis continues, let's take you to live pictures, we are anticipating the imminent launch of a falcon nine rocket, the payload this time, not satellites, this time it is a second-generation radar surveillance satellite. the rocket is fully fueled. we are expecting the launch to take place imminently. the countdown appears to have stalled. november and december and most

recently friday. we will continue to watch that for you. for now let's get to vonnie quinn. vonnie: north korea appears to of fired one of its biggest ballistic missiles in almost five years. early assessments from japan and south korea indicate pyongyang launch the intermediate range missile. the weapon is thought to have reached an altitude of more than 2000 kilometers and was flown for 30 minutes. north korea is fired more ballistic missiles in january than in all of last year. the president in italy has been reelected after a search for an alternative candidate. the former ecb had will remain as prime minister. he was initially seen as a top contender for president. lawmakers fear a return to political chaos without is leadership -- his leadership.

exit polls in portugal show the socialist by minister as won the election, is third term -- his third term. -- the fed of japan says investors should not be worried about restrictions on share buybacks. the tokyo stock exchange president says he thinks it is unlikely that prime minister kishida will follow through on talks of blanket regulations. the topix slid into a correction since late last year. >> i believe mr. kishida has a quite cautious stance on uniform regulation of share buybacks, and because he is giving

consideration to each company's individual circumstance and decisions, so i do not think is going to be an impact on capital markets. vonnie: get more from that exclusive interview in our japan ahead segment it about three minutes -- 30 minutes. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: from the rba's policy direction to -- moody's analytics on what to expect. this is bloomberg. ♪

paul: let's look at a busy week ahead on the economic front, a trio of majors central banks following the fed this week

starting with the reserve bank of australia on tuesday. a governor may announce the end to the bond buyback program. it will be the bank of england and ecb's turn on thursday with a stronger case for a hike in the u.k. as inflation surges. we also get an opec meeting before it can't u.s. jobs report on friday, and also on friday, at the start of the beijing winter olympics. china's official purchasing manager survey released on thursday show a moderation in factory production. our next guest says the pboc will remain on the front to stabilize the economy through the first half of 2022. joining us is moody's analytics senior economist. we were expecting a contraction, but they are still in positive territory.

with that in mind, how do those pmi's look to you? >> the key take away from the pmi data we got from january was that the economy stumbled early in the year, and that explains why the pboc has been on the front foot from this year and late last year to try and stabilize the economy. china's economy is facing a number of headwinds. on one hand there is zero covid policy, meaning recovery is potentially bumpy and on the other hand we have the slowing property market, so that keeps sure on the pboc to keep maintaining an environment that is conducive to helping struggling businesses as well as household. paul: in terms of maintaining that environment, exactly what

do policy settings look like? we have become used to seeing these big spending plans, big splurges on infrastructure. >> what we are seeing is the pboc is taking a targeted approach. five your reductions in the loan primate, rrr -- prime rate, rrr reductions. we are getting that rather than like it overall stimulus. it is more about a targeted approach, because at the end of the day policymakers remain concerned about the buildup of financial market risk, particularly in the property markets. they do not want to reinvigorate the property market, because that leads to heightened concerns about the sustainability of strong price

gains that would result from that. shery: we have a couple of other big events coming up this week especially with the rba. there is expectation they will be announcing the end of qe, cash trade futures projecting the first rate hike midyear way before what the rba has signaled. at the same time i have to wonder what happens once the borders are open. wouldn't that dampen pressures and when the rba moving a little ahead of what could happen next? >> that underscores the heightened uncertainty and the difficult job the rba has at the moment. what has triggered the more aggressive possibility of rate hikes, the upside surprise to q4

inflation data combined with a strong jobs report for december. those two factors show inflation pressures are running stronger, and domestic demand, employment, labor market is healthier than what was envisioned. given that international borders will be reopening, that does create uncertainty about just how much that is going to lead to weaker wage growth or pressures, just because we know wages are quite subdued in australia. it is a difficult balance. the rba is dealing with uncertainty when it comes to their future policy path. what will be a key thing to watch in february is whether the rba will continue to try policy organization to wage outcomes, because they seem to have acted themselves into a corner by saying they will not move until

they see a material strengthening and wage growth. paul: there is a huge divergence between when the rba says it will raise rates and when the market expects this to happen. we have seen the market force the rba's had before on yield curve control. what is the chance of that happening on rates? >> there is a strong probability of that happening. there is little doubt in february we will see rba ring ford their expectations on when interest rate hikes will actually occur. it will be interesting to see how descriptive they are on when they expect to move on rates. at the moment their guidance has been movement before mid-2023 is unlikely, but there is no doubt that will be brought forward, and financial markets are paving the way on this. shery: what are you expecting to

see in india's budget this week? >> the budget will be interesting to watch. there is a lot of pressure writing on the government -- riding on the government to get this one right. the economy has struggled with covid, hundreds of millions of jobs have been lost, so they need to find a way to improve that, particularly in the informal sector, on the other hand with emerging markets under ongoing pressure they need to keep a close eye on the fiscal position, because india is a candidate that is vulnerable to emerging markets losing favor. it is a balance the government as to get right with this budget. paul: katrina ell, senior economist, thank you so much for joining us. let's get back to spacex in florida. we were hoping to bring you a

technological ballet of a falcon nine rocket landing, facebook -- someone saying it we they are sending down. we have plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪

shery: a check of the latest business headlines, china evergrande says certain creditors have seized a plot of land in hong kong that was used as security for a $520 million financing transaction. evergrande told the hong kong stock exchange the potential fail will not affect its operations and debt restructuring. the developer says it is seeking legal advice and is in active

discussions with the lenders. blackstone is doubling down on a ship putting together about $11 billion for a second private equity fund for the region. it says it raised $6.4 billion from investors and will receive an expert $6.4 billion on its global fund. blackstone is invested more than $20 billion in asia since 2016. the goldman sachs ceo's compensation jumped to $35 million for 2021. the bank disclosed to a regulatory filing that solomon will receive 12 million-dollar in cash and the rest in stock awards, double his payout from earlier. we have plenty more to come on "bloomberg daybreak: asia." stay with us. this is bloomberg. ♪

>> we are seeing some trends in supply chain easing. those are easing, it is a driver of why we are seeing the surge in inflation that has been coming through in the first part of the year. it is moderating as we progress in the year. >> we are tracking the fallout of the global supply chain crunch. the eu is gearing up to put billions of euros in state aid

to a massive cutting edge semiconductor production site. there is a similar push in the u.s. and aims to secure supply line in the region. ports of los angeles and long beach has delayed charting fines as the number of aging containers at declines after the fee in last october. there are possible alternative arrangements. caterpillars signaling to the market that demand in china is going to decline. companies essay sales of construction -- the company says sales of construction supplies eased. shery: getting products on shelves will remain expensive for a while yet. even if crop prices decline.

agricultural commodity prices are beginning to peak and we would likely see a decline by the second half. the supply chain is grappling with high costs in energy, packaging, and transportation. you can read more about those stories in our new supply -- new newsletter called "supply lines. " paul: will is showing gains. tesla posting a gain. $100, chevron ceo says that could happen within the next few months as geopolitical and supply challenges amount. -- mount. >> we have had some noncash charges in the fourth quarter, it is difficult for analysts to anticipate. they will understand afterwards. when you look at cash, this was another record quarter.

record cash flow and our annual free cash flow was 25% higher than the best year we have ever seen before. the underlying business is very healthy. we increase our dividend by 6%, that is the 35th year in a row or we have increased our dividend payouts by 20%. others in the industry cut evidence through the pandemic. we yield twice what the 10 year yield on our dividend were. our buybacks are at the top of the guidance range. we are set up for a good 2022. >> the top line looks amazing, the cash flow is really strong. the share prices are on an absolute tear of late. you are going for a 6% increase in the dividend? my question to you is, are you

favoring the dividend over buybacks because of the incredible run you have seen in the share price? >> we have many shareholders who value dividends. your earlier segment about companies and industries that provide steady, reliable dividend growth over time. our shareholders value the dividends. we have a robust capital program which is down significantly from what it was a few years ago. disciplined reinvestments, a strong balance sheet, and cash that is her to those needs. -- that is surplus to those needs. we have repurchased shares. our investors understand our track record and i think it is consistent with what they expect to see. >> the run-up in share price has to do a lot with the run-up we have seen in oil. $91 a barrel.

you anticipate $100 oil and in what timeframe -- do you anticipate $100 oil and in what timeframe? >> we are in what has been an up market as the economy grows and we begin to put the pandemic behind us. we have seen demand growth being very strong, even before we see people returning to normal office commutes, international travel, or business travel. demand has been strong and supply has been struggling a little bit to keep up with that. that is reflected in the market. we have geopolitics that are present again, a few years ago these types of events did not seem to really impact commodity markets and today they appear to be doing so. $100 is certainly within the realm of what we could see in the next two months,

longer-term, we think markets rebalance and prices moderate. >> you make it extra production coming on stream if we get to $100 -- get extra production coming on stream if we get to $100. what i have heard of most when i have talked to energy ceos at the moment, every conversation i have had includes the word discipline. do you think that discipline is maintained? what are your plans looking like in the permian? are you increasing reduction? how do you see the list of developing? >> we have had a record, permian was up 10% quarter on quarter as we closed the year. as we looked at 2022, we were a couple of -- looking at a couple of contracts in asia that was going to expire. we plan to grow in 2022.

we are responding to the demands in the market. our budget is at the low end of our external guidance. our company plus noble energy we acquired the pandemic, in 2019, capital spending was twice what it was in 2021. we are much more capital efficient today. we can generate the production and the growth in a much more capital efficient manner which allows us to generate the free cash which can then flow back to shareholders. that is our plan. others in the industry has similar plans and i think that discipline is what this industry has needed. shery: speaking with bloomberg, let us get to vonnie quinn with the first word headlines. >> raphael bostic says the central bank could raise rates

but have a point in march as needed. he stuck to his benefits of three quarter-point hikes. he added that all options are on the table and consumer prices may justify a more robust rate increase. china has reported 34 new covid cases linked to the winter olympics including 16 athletes or officials. beijing is following a system for the games, people are off from locals and tested for the virus each day. at the opening ceremony is this friday and vladimir putin is among the high-profile attendees. india is a likely to have fiscal consolidation in its budget. the government is increasing spending by 40% on the year. the expected tax rates will remain unchanged with officials rely on income come debt sales. the budget deficit is expected

to be wider than the gdp. an agreement on sections of bills even as moscow has not sent troops into ukraine. it could be applied based on what they, and has already done. the u.k. is looking for ways to target has a wealth of russian oligarchs held in the london property markets. global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: north korea appears to have fired one of his biggest ballistic missiles in almost five years, heading to the largest series of tests since kim jong-un has taken power. john, what sort of missiles are we talking about here? >> this is one of the biggest journeys of tests since kim

jong-un took power. what they have tested has been a hypersonic system that uses a high-speed maneuverability to get around u.s. operated interceptors. they tested long-range cruise missiles and assigned to fire into the radar and hit south korea and japan. they tested what is an intermediate range ballistic missile. they have not tested this since 2017. this has a range one to hit military bases in guam. paul: timing is everything. why is north korea doing these tests now? >> i think that they are saying it went of of opportunity with the u.s. busy in ukraine, inches high with china. they are looking to gradually increase the ability of their missiles to evade u.s. interceptors and strike targets further away.

the window is open for these tests, they are not getting much of a pushback from the u.s.. their ability to have incredible strikes and creatures mesh increases each time they test these weapons systems. shery: what has washington said so far? >> we got some updates from washington after the most recent tests. biden reiterated that they see these tests as destabilizing and asking for kim jong-un to return to nuclear disarmament talks that have been stalled for three years. they have not changed the situation that would entice him back to the table. paul: still to come, we bring you another big interview in this week's japan had.

-- ahead. why investors do not need to fret over the new policies. we speak with hiromi next. ♪

shery: it is time for japan ahead. yen holding at the 115 level. retail sales numbers are coming in just a few minutes. nikkei pointed to the downside. paul: here are the top stories we are following in japan at the moment. the central bank will not be switching the bond your target -- bond year target. utilities are buying coal in response to surging and natural gas prices and we will be watching security shears at the moment after japan's biggest broker announces a profit. shery: we know for a fact that the japanese prime minister is no stronger -- stranger to

roiling the market. we talk about capital gains tax and restrictions on share buybacks. sentiment has yet to recover with the topics in correction territory, from the september peak. the head of the nation's benchmark exchange is telling investors not to worry. hiromi yamaji says the prime minister will take a cautious approach as they revamp the market segment. hiromi yamaji: the aim of the market restructuring is to build a foundation for companies to work towards corporate and value improvement. in a sense, the important part is that -- how does companies -- those companies can use the selection of a new market

segment as an opportunity for change? i would like to encourage everybody to focus on not just the number of companies but also the kind of change inside of each company. >> you have been looking to attract more foreign companies to lift in japan. there has been some success in convincing some asian countries to list here. what have you been doing to further this? hiromi yamaji: the japanese ipo market has been strong in the past couple of years. also, the other market is highly rated among asians. you can raise an apple i'm out of capital -- ample amount of capital. the last share in 2021, we had

five listings of what we called cross-border companies. as we have been doing promotions , ipo promotions, especially in asia. those companies, those asian, high-growth companies with cross-border and links to japan. we have been seeing the result of it. because of those five listings, we are getting a one inquiry and we have improved our information provisions. including those closed border company listings. i believe that for those cross-border companies with links to japan, listing in tokyo stock exchange would be an optimal way to improve their corporate value. we continue to work on ipo's

with those people who are in the ipo business in asia. >> let me ask you about foreign investors interest in japan. we have seen a little bit of declining interest from foreign investors in japanese stocks. what do you think needs to be done? >> if you look at the cash equity market, we have a 60-65 percent of everyday trading volume. if you look at the real estate market, it is 75%. for many, there is a good interest of the japanese market. we have to continue to improve the accessibility of our markets and the attraction of the japanese market from the viewpoint of the investors. including english disclosures. >> something that investors have

been talking about and that is the prime minister's vision of new capitalism. this has a lot of impact on the markets and it could be seen as a shift away from some of the policies of the more your liberal policies of the last 10 years -- neoliberal policies of the last 10 years. what is the impact on the market? hiromi yamaji: the financial services minister mentioned his old press conference. the share buybacks are water used to determine profits to shareholders and improve r.o.e.. how to share the profits from growth, it is a decision of the management of each company after carefully taking all of the stakeholders into consideration. i believe mr. can she do has --

kishida has the uniform regulation of buybacks. i think because he is getting consolation -- giving consolation to each company's individual circumstance and decisions. i do not think it is going to be at an impact in the -- it is going to be an impact on the markets. >> habit mentioning bringing spac's into the japanese markets and you have stunted -- started a study group to examine that. what you think the advantages will be -- what do you think the advantages will be? hiromi yamaji: it is important to promote diversification for district companies. that is for sure. i think spacs are different from

those of the conventional ipo's. we need some kind of deliberations including from protections and perspectives. especially, it is important to note that the ipo market, in the u.s. market as of different than the japanese market. in japan, the main ipo market individually is enjoying this. we have to carefully mark out what issues are relevant in consideration of this point. >> in the u.s. there has been some talk that they expect market is cooling. investor interest is waning. as we head into a tightening cycle with the fed expected to raise rates, do you think that

it is a little bit late for japan to start? hiromi yamaji: we have been hearing those, we are thinking quite carefully. it is possible to make it possible. make the spec possible in japan. whether we can do the transactions are based on the actual needs of the issuers and investors. it is not useless to discuss now. even if it looks like it is too late. paul: that is hiromi yamaji. you can watch more on tv . that is available to all terminal subscribers. you can do in to hear every week on bloomberg television. we are getting breaking news at the moment.

industrial production numbers for the month of december, these are partial figures, the construction of 1% on the month, worse than anticipated. they were expecting a .06% contraction. not quite as sharp. it is growing at 2.7%. the expansion of 2.7% is a little bit weaker than expected by the market. shery: same thing for retail sales. a month on month is a contraction of 1% instead of it being anticipated -- of the anticipated 2.2%. the year on year is only 3.4% year on year. both numbers month on month and year on year also really are slow down from the previous month. not surprising, given that we are talking about the emergence of the omicron variant.

the first case of community spread happening in osaka prefecture last month. more to come on daybreak asia this is bloomberg. ♪

paul: we have session lows off by more than a quarter of 1%. most sectors are higher but they have way financials of material

-- but the heavyweight financials and materials taking a hit. when we get going at the top of the hour, up next, we talk investment strategy with lombard odier. this is bloomberg. ♪

shery: welcome to daybreak asia. paul: in sydney, asia's major markers have just opened for trade. asian stocks set for a caution start after an gracias -- an aggressive fed and growth concerns. legal advice after oaktree c is a large land plot in hong kong.

top picks and the ones to avoid in the year of the tiger. the index for 2022. shery: we are seeing a japanese markets coming online with nikkei down, lower by materials and financials. we have the nikkei rebounding, so in contraction territory come up about 11% since september. the japanese yen holding level. retail sales numbers out of japan earlier, both are missing expectations and come in below what analysts had expected. the 10 year yield holding the same level since february of last year. we saw the gains after that, paul, south korea closed on the new year holiday. paul: let us look at how we are pretty in australia.

-- how we are trading in australia. new zealand is in positive territory by a point 06%. -- .06%. this is an unofficial inflation or read, popping up against the top of the pig of australia's -- top and of australia's target end. we are expecting some commentary around the future of the bond buying program and also the future part of rate increases. what the market is expecting in that regard. we have the australian dollar low, the qe dollar is weaker against the surging greenback. inflation numbers, we will bring them to you as we get them. shery: given that price

expectations are taking the focus of the markets, our next guest says to focus on strategies that are best positioned for the taming of inflation in 202. 2. it is great to see you. these inflation concerns are coming at a time where we are seeing markets across asia really feeling the pain. markets entering corrections, be a markets, and so forth. that chart looking pretty. where do you go to take cover? >> obviously, there has been a bit of pressure, not only in the last 12 months but since the start of the year, especially last year. if you look at the overall asia index, it is doing better than u.s. equities. for us, that is an interesting

signal. last year, there was a combination of pretty difficult marketing environments for china. there was not a full reopening of south asian economies. the two trans could combine to create a pretty mixed a year except in taiwan. however, this year, at least the people see this as more encouraging. policy is turning in the right direction and south asia is likely enjoying much better gdp growth this year compared to last year. that is due to improving public health conditions. we do have the sad story in the background that will be a source of volatility in the end. over the longer-term, by the end of the year, the indices will end up higher. we are conservative on the recovery prospects from here. shery: is that because you are

seeing a larger valuation incursion in asian markets? >> the reason that the index has a bit of discounts in u.s. equity, that discount has to widen over the last 12 months. it remains quite compelling. look at the indices, roughly about 40 percent discount. korean markets are about have in terms of the next 12 months earnings. there are also reasons about the 2% down with the exception of india. our understanding here even the transitions we are seeing in the market and the positioning of the fundamentals and the positioning of these markets, there is sufficient evaluation here that should give investors a bit of comfort as we navigate this environment. paul: we also have an

environment of the strengthening u.s. dollar. is the fed always thinking about emerging u.s. opportunities? >> the first half of the will be a typical navigation for investors in the region. including the broader emerging markets. we are still dealing with some vague elements of the guidance from the fed. there will have to be clarification. our strategy is to focus on the asia opportunities. because of that is the most stable compared to the rest of the emerging markets. the future could be quite different. think about the political development in the u.s.. it is quite likely we will get a gridlock in washington dc and make policy more difficult going forward. that is not a supportive environment there. emerging markets as a whole, they continue to see improvement in vaccinations and blick health

conditions. the second half of the year, the emerging markets will get a good investment call. we do think that there will be at least be a technical opportunity in the middle of the year. paul: we see the bloomberg commodities index surging for the six weeks in a row now. how long do you see that lasting? >> obviously, given the geopolitical sources of this new trend as well as the underlying fragility in the market, it is something that we continue to monitor. i was thinking that if we somehow avoid an incredibly destructive conflict around ukraine and that will lead to a more stabilized commodity prices for the remainder of the year. certainly, it deserves, -- it requires cyclical exposure in

your per folio to -- in your portfolio to navigate it well. there is some upside for the energy prices and food prices may be in the first half of the year. the policy typing that we see from budgets materialized and we will see discounts stabilizing by the end of this year. that should be a neutral development for global equity markets. paul: thank you. let us get to vonnie quinn for the first word headlines. >> u.s. senators said to be near agreements on a russia sanctions bill that could include penalties even as moscow does not send troops into ukraine. restrictions could be applied based on what the common has already done. the u.k. is looking for ways to target the wealth of russian oligarchs held in the

property market. 34 new covid cases a link to the winter olympics. beijing is following the closed loop system for the games. 60,000 people including competitors and organizers cut off from locals and tested for the virus each day. the opening ceremony is this friday. vladimir putin is among the high-profile attendees. the president of italy is reelected after a search for other candidates. draghi was seen as a top contender for president but lawmakers feared a return to political cry also that his leadership -- also worried about political chaos without his leadership. the head of japan's benchmark

-- it is unlikely that the prime minister will follow through on blake regulations. the topic has slid into the corrections since he raised the possibility late last year. >> i believe he has a cautious stance over the uniform regulation of share buybacks. i think because he is giving course direction to each company , individual circumstances. i do not think it is going to be an impact on the markets. >> global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. shery: coming up, why it is betting on the shipping and travel sectors in the the euro the tiger.

-- in the year of the tiger. china's pmi numbers shows that the slowdown is extending into 2022. this is bloomberg. ♪

paul: a developer has seized a piece of land in hong kong. china credited -- a reporter joins us now. how significant is this land seizure? >> evergrande is confirming that the others have reported. we do not have many details. the report stated that oaktree

capital had seized this plot of land in hong kong. it was being used as collateral for a loan that had been given that they had defaulted on. the broader significance in this is the $20 billion worth of debt that evergrande seized to restructure is probably quite minimal. the risk is that this type of thing continues to happen. we have seen these rising tensions between the offshore creditors, the bot on the committee and evergrande itself. the committee is saying that the restructuring presence is a very opaque for them and they threatened enforcement action. evergrande has come out to say at a request patients and that they will have an initial plant in six months. -- evergrande has come out to say and request

-- patience. shery: they will be disposing of the noble company. what are you expecting for the month of february in terms of consolidation? not to mention bond repayments as well? >> that is key. february is taking off, the raising of cash and assets will be key. we have been seeing that picking up. we can expect to see a little bit more that after chinese new year. holidays tend to slow it down. for many of the most stressed developers, they are seeing a bit of a breather in february. coupons coming to, that is a

small amount compared to previous years. in addition to those indicators, we will be looking at any other kind of show or equity or convertible bond type sales to see if this is channeling an alternative way of raising cash. we know the primary market is still shut, it is unlikely to reopen without more policy easing. the three channels that we are seeing less bond payments coming to and asset sales could offer some reprieve for february. shery: the property sector, one of the key challenges for beijing. the economy continues to slow down. we are seeing weakness in manufacturing and services and activity. small business is the smallest since the start of the pandemic. kathleen is sure the numbers. what we get on the pmi numbers

-- what did we get on the pmi numbers? >> slowdown. it is a trend. everyone is wondering about china's economy. the property market meltdown, the fact that covid-19 tom omicron variant has broken out. people who cannot come to work. you see visual help, the white line is manufacturing, the most important one of the two. 50.3 down to 50.1. look at the trend, it is getting weaker. the blue line, services. it is now down to 51.1. heading lower. look at the yellow line, the difference is that it focuses on small, medium-sized businesses. it has been close to 50, it is the yellow line, 49.1. let us take a look at a

subcomponent of china's official manufacturing pmi. small, medium, and big size businesses. the small business pmi is a 46 in january lowest since february 2020. nine months in contraction. these are forces for china that are not going to be eliminated right away. construction is one of the things that came back stronger and help the services pmi maintain the strength that it did. there is a lack of demand from many different sources. particularly with an ion what is happening to small businesses. one of the things that is being considered is more targeted focus on fiscal spending and programs. to help small businesses get through the call. paul: we have had delayed

inflation numbers for australia, .4%, 3% on year. that would put inflation right at the top of the rba target band. a number of central banks meeting this week. a lot to consider. >> is your inflation barely getting too high enough like the reserve bank of australia? or is it way to highlight the federal reserve -- high like the federal reserve? stepping up to fight inflation, the ra should be rba. raising the inflation forecast and setting the stage for a faster rate hike, maybe even in the third quarter of this year. the bank of england to raise is

a rate to 1%. they have been vocal about their hawkish and is. that is baking a cake. and comes to the central bank, the head of the ecb is expected to say that she can see the inflation pressures and does not see the need for a move this year. you can see this is again, inflation is feeding into all of this. in terms of numbers, there are some really interesting ones. in asia, japan's and the output. when you think about how much that economy is surviving the covid cases, that will be a key measure of how experts are doing. -- exports are doing. south korea is out, that is important to see how chinese exports are going. we have indonesia, philippines, thailand, and on friday, friday

is a big jobs report for the federal reserve. jobs are being pushed aside considering what the fed is looking at considering how aggressive their move needs to be. paul: central banks and economic policy editor, kathleen. you can get a roundup of the stories that you need in today's addition of daybreak. -- edition of daybreak. you can customize your settings so that you only get news on the industries and assets that you care about. this is bloomberg. ♪

shery: china has it detected an additional covid cases linked to the winter olympics as athletes and stakeholders arrived ahead of the opening ceremony on friday. 34 new infections were reported.

more on this, china appears to be going ahead despite the infections? >> yes. this is exactly the situation we saw last year with the tokyo olympics. the olympics are like a steam train that is going to keep going. when you look at the number of infections coming out of china, at the moment, they do not seem to be on the skill that is going to make people rethink these games or how they are going to be held. paul: china is running a closed loop system to keep this under control. does it actually work? >> yes. it looks like it is working so far. the olympics has thousands of athletes, officials, and administrators, media. even though this is the winter

olympics, the stakes are quite high. we are looking at a few dozen infections within a bubble. i know that they are trying not to call it a bubble but a closed loop system. at the moment, they have it under control. things are proceeding as expected. paul: let us get a quick check at the latest business flash headlines. spotify is taking steps to stop the spread of covid misinformation after it supported podcast host joe rogan. other artists have pulled their songs from spotify. they have clarified rules on what is allowed on the platform. equity partners are making a deal for a citrix takeover that

could be announced on monday. who would be valued at around $30 billion. goldman sachs ceo's compensation jumped to $35 million. the bank disclosed it, $12 million in cash and the rest in stock rewards. other is double his -- that is double his previous payout after a scandal. walgreens has begun the sales process for its boots international drug unit. it is considering bids. the store could be worth $9.6 billion in the sale. the capital and cdc capital who have teamed up on a bit are considered the early favorites. shery: take a look at the markets rating, we are saying for the relations between gains

and losses in the japanese market. we are seeing a gained ground and we are back to paring back gains. there is a lot of uncertainty around the central bank picture. not to mention the intense frustrations in the market. moving a quarter percent after seeing the rally on friday, even then, we had a late day sort and a lot of volatility. the s&p 500 leaked -- sweep out. we are seeing new zealand is down, kiwi stocks are gaining. we had data earlier today which shows the japanese retail sales of missing expectations and more covid numbers in south wales as well. that is as we have korea away on

holiday. ahead of japan's benchmark, what investors do not need to fight over the prime minister's new policies. we will hear from the president of the t

paul: the japanese prime minister is no stranger to whirling the markets, and he sent a chill through japanese stocks late last year with talk of a capital gains tax and financial restrictions on share buybacks. sentiment has yet to recover, the topix in correction territory, the head of the benchmark exchanges telling people not to worry. hiromi yamaji says he will take

a cautious approach. >> i believe mr. kishida has a cautious stance on uniform regulation over share buybacks, and because he is giving consideration to each company's individual circumstance and their decisions, so i do not think it will be an impact on capital markets. >> one of the think the prime minister has mentioned as an engine for growth is to introduce special acquisition companies into the japanese market, and you have started a study group to examine that. can you tell us what you think the advantages would be? >> sure, i think it is very important to nurture and promote

diversification or methods for companies. at the same time a spac is different from conventional ipos , so we need some sort of deliberations, including from the investors perspective, and also it is important to note many investors in the ipo market all over the world is so different from that of the japanese market. in japan, the main investors of ipo markets are individual investors. we have to work it out in consideration of these points. >> in the u.s. in the last couple of months there has been talk that the spac market is

cooling, investor interest is weaning, do you think maybe it is late for japan to start? >> we are thinking quite carefully. it is possible to make the spac possible in japan, and the way we do transactions depends upon the actual needs and issuance. it is not useless to discuss now even if it looks like it might be too late. shery: hiromi yamaji speaking with bloomberg. hear from the leading names japanese business monday on bloomberg tv. turning out to blackstone, the world's biggest asset manager is betting big on investments in

asia, it has raised $11 billion for a second private equity fund in the region. su keenan as more. -- has more. >> almost 100% of the investors in the first asia fund have rolled over and went to be in this second asia fund. blackstone says it raised $6.4 billion from investors and will receive an extra $6.4 billion from its global fund. the stock shot up. the geographic diversification and an increased focus on environment and social government. you are looking at the one your chart. the first month of 2021 a great time to be a blackstone investor in the shop -- stock, it shut up

120% -- shot up 120%. the first asia private equity fund is indeed a heavy, the second will have a mix of investment across asia pacific. it is working on three advanced deals in australia, japan, and india. it is doing due diligence. the big investment comes despite increasing risk from inflation and geopolitical tension. and while global markets have come down in recent weeks, the selloff could present a very good time for investors flush with cash. laxton says it expects to see very attractive opportunities in many of these cities in the asia-pacific and the deals that they now offer. paul: blackstone says it is

closing in on a big milestone, $1 trillion in assets under management. >> they hope to hit that by 2026, it now looks like they will get that sooner. the president and interview with bloomberg pointed out they hold a record $155 billion in fourth-quarter, putting them a lot closer to that goal of managing $1 trillion by 2026. there are some that say they could hit it four years earlier or later this year. distributive will earnings rose by 55%. they have $1.8 billion in related earnings. he warned investors to brace for a slowdown in deal activity intact and fast growing companies, the market repricing as a result of what we have seen

with the volatility in the market, that is an understatement i would say. in all a very exciting announcement regarding its fundraising. shery: su keenan there with the latest on blackstone. we have seen so much volatility in the markets despite this optimism about the opportunities in asia, it is not surprising we are seeing ipos running out of steam this year and we are talking about a tough start to 2022. we are talking about global ipo prices this year at $26.7 billion, already a drop of 60% from the same period a year earlier, not surprising given rate hikes, geo political tensions. even hong kong has not been spared from these declines. paul: it is a global phenomenon,

and the usual suspects are to blame, the fed, geopolitics, but also south korea pulled a $1 billion listing on friday, and in new york we had nine firms khalaf ipos so far this year, a capital trust company among them. we have seen the tech frenzy coming to an end, 4 billion scrapped just this month. shery: nine out of leicester's 10 biggest ipo underwater. that includes didi. some of those asian names being the biggest underperformers and the biggest flops in terms of ipo returns. coming up, the u.s. is seeking talks with north korea after pyongyang fires one of its

biggest missiles in years. the details ahead. this is bloomberg. ♪

vonnie: this is "bloomberg daybreak: asia." a fed president says the central

bank could raise banks by have point in march. a prediction of three-quarter rate hike starting in march as the most likely scenario. he had it all options were on the table and stubbornly high consumer prices may intensify a more robust hike. coming up break in the housing market drag on activities at small forms. official ppi gains declined, and manufacturing index fell to 51.1. march of the above consensus forecast. chinese factories often ca lull -- see a lull before the holiday. attorney acosta as won party elections. his party as pledged discipline and higher household incomes to

recover from the pandemic. -- coming back in the match lasting five hours, 24 minutes. it was the spanish player's first grand slam title breaking a three way tie with roger federer and new mexico which -- novak djokovic. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am vonnie quinn. this is bloomberg. shery: north korea appears to of fired one of its biggest ballistic missiles in a most five years adding to its largest series of tests since kim jong came into power. john herskovitz in tokyo. what is north korea testing right now? >> this is the biggest series of

tests since kim jong-un came into power. they use maneuverability and high speeds to escape u.s. interceptors. it has tested long-range screws missiles that can fly under the radar and have a range that can hit south korea and almost all of japan. on sunday, and intermediate range missile, it has a range that could take it to u.s. military facilities in places like guam. paul: what are we to make of the timing? why is north korea doing these tests now? >> for two reasons, it sees an opportunity with the u.s. busy with russia and ukraine, and we have the presidential election and south korea coming up in

march and it typically likes to make its presence felt. they're doing tests that increase the range of new weapons. shery: what is washington saying about this? >> we had a readout where they repeated the line where they see these as destabilizing moves and they reiterated their call for kim jong-un to return to nuclear disarmament talks. it is not a change in tone. kim jong-un has said he refuses to return to talks, and there is not anything coming out of d.c.

that appears that will make him change his mind. paul: john herskovitz in tokyo. what a businesses should be looking out for in the year of the tiger, justin chang joins us with the feng shui index next. this is bloomberg. ♪

shery: here is a check of headlines, blackstone is doubling down on asia putting together about $11 billion for its second private equity fund for the region the world's biggest alternative asset managers as it has raised $6.4 billion from investors and will receive an extra $6.4 billion from its global fund. blackstone has invested in asia since 2016. china evergrande says certain creditors have seized upon of land in hong kong used as security for $520 million financial transaction. evergrande told the hong kong stock exchange the potential sale will not affect its operations and debt restructuring. the developers says it is seeking legal advice and is an active discussion with the lenders. paul: as the year of the ox

comes to an end let's discuss what we can expect for a hong kong markets in the year of the tiger. someone is forecasting a good year. we are joined by an analyst. what are the key findings from this year's feng shui index? >> thanks for having me here, right? the lack of fire or metal means the hang seng index will experience twists and turns. that will mainly happen in the first quarter. after that the hang seng will return to stable growth and peak over the summer. the hang seng index will gather in speed and finish on a high note into the new year. paul: there are a few sectors as well the index is pointing to a positive year for.

can you tell us about those? >> water is going to be the star of the year so that means trade shipping and trouble will be up. education and clothing should do well. shery: are you coming back with this forecast after pausing for two years in the feng shui index ? was that from uncertainty of the pandemic? >> thanks for the question. our index was on last year as well. as to your question on omicron or covid, we did not have any specific forecast on that, but we do offer guidance on how you can mitigate negative energy. shery: tell us a little bit

about that. we will definitely need that guidance. >> for example, we have a prediction on direction basis applying star principles. avoid center because there are too much earth forces, so guidance there would be using small metal objects to dissipate earth forces. paul: you mentioned as well in the index travel might be making a comeback. what is the feng shui index telling us about that? >> well, first, all industries are quantified by one of the five elements, and travel is classified as water. water is the star of the year. shery: if i am remembering this

correctly, i have been told my sign needs water, so perhaps this year will be a good year for me hopefully, but there are unlucky zodiac's out there, right? >> that is correct. as you can see from the cover of our report dragon and dog has fallen into water, so they will have a challenging year. fear not, i know how you can mitigate negative energy. one advice our master gives is to focus on your better qualities, take care of others, maintain what is right or wrong and think critically. shery: that is very good advice even if you are not following the feng shui index. tell us, are there some zodiacs

that should avoid or go after certain markets, like you said the hang seng index is weighted toward certain elements. is there a balance that needs to be achieved this year? >> i am sure there is a question on everyone's mind. we do not have predictions for other markets, but as for the hang seng index we think the lowest point is going to be in march and september, so it investors should be defensive during those periods. paul: if we look back over the history of the feng shui index, typically how accurate is it? >> our feng shui index started in 1992. it is not very well known because it successfully

predicted a major turns of the hang seng index. it is in its 28th edition and it is a fun break from our traditional investment research, so we hope it investors do not take it too seriously, but for actual investment recommendation talk to our stock analysts. shery: that is good advice, but it is fun to have you every year. justin chan with this year's feng shui index. we are 30 minutes ahead of the market open and some socks were keeping an eye on, we are watching macau casino stocks as judiciary police has arrested the head of the city's biggest junket operator on suspicion of illegal activities. the ceo as been detained by

police according to a statement sunday from the hotel group. we are watching casino stocks very closely, and we are also seeing reports of more related arrests in macau, citigroup saying it will not have much impact on shares. we have had authorities resting a founder already, so this is a call from citigroup, it casino stocks will be those to watch today toward the open in mainland china and hong kong. paul: let's look at how we are trading in this part of the world, asx has had an exciting day, slowly pushing toward positive territory, it has been all over the place. when sector that is higher in

australia are materials and financials, new zealand staying in positive territory, and nikkei have an apache day as well, seeing a few swings catching, better by .4 of 1%. communications and information technology stocks performing well in japan at the moment. e -mini futures off by .25 of 1%. still to come, we have a chief greater china economists explaining what will be china's latest pmi figures mean for broader economic growth. morgan stanley doubles down on asia given their best positions to benefit from the rate cut. this is bloomberg. that is it for "bloomberg daybreak: asia." markets coverage continues.

markets in china, vietnam, and south korea closed as well today. this is bloomberg. ♪

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>> good morning for the asia-pacific, the neglect am in a hong kong, asia-pacific and shanghai, welcome to the china open. i am david ingles with yvonne man. >> china's growth continues to slow with manufacturing output slipping and covid-19 outbreaks curbing consumption. exciting and aggressive 50 basis points. goldman now