haidi: good morning. shery: welcome to daybreak asia. asian stocks are set to follow wall street lower. jp morgan and goldman sachs led a retreat from russia. citigroup says it is assessing

the country. don't mess to begin her views on the impact of a covid resurgence in greater china. we have breaking news out of south korea. a surplus narrowing for the month of january. this is quite something given that we have seen that narrowing in the previous month. having given the higher export import prices given the energy rally and not to mention raw materials prices rally as well. the goods surplus coming in at $672.3 million in january. a little bit of a bump from the previous month, but still the current account surplus narrowing given that we continue to see the high energy import

costs. we also have breaking news out of peru. the central bank has increased its reference rate to 4%. this from 3.5% in the previous rate decision. we continue to see inflationary pressures around the world. we have seen a very strong peruvian -- in the past year. one of the big gainers. given that they are a big copper supplier and those commodities prices have rallied. we are now seeing peru lifting the rate to 4% raising rates for an eighth consecutive month given that inflation is near the 13 year high. take a look at how u.s. futures are coming online. up 1/10 of 1%. although nasdaq 100 futures are under a little bit of pressure.

u.s. stocks fell. the nasdaq 100 underperformed as yields turned higher. the 10 year yield pushing toward 2%. we continue to watch bond futures as wti is rebounding in the asian session after falling to below the $110 level in the new york session. the surgeon prices giving some concern -- surging prices giving some command -- concern. haidi: you are just seeing that story when it comes to rates being lifted across australia and new zealand on the back of what we saw in the moving treasuries and the big bump in inflation. it was the sixth consecutive lift causing concern. we're watching out for the reaction to the reserve bank governor talking about the inflation psychology as well

looking to see how australians react to price pressure to see whether these price spikes are temporary or being seen as more permanent. that inflation mindset being key talking about the plausibility and uncertainty about whether rates will move this year or next. a little bit of downside when it comes to the equity session in doing -- zeeland. president biden has kept up the pressure on president putin. >> the united states and the people around the world will continue to support ukrainian people. i believe as they defend their country. ukraine will never be a victory for pugin. -- vladimir putin. haidi: russia and ukraine failed to make progress as they held talks to end the war credit that is adding to inflation risks around the world. let's bring in jodi schneider and kathleen hays. the higher level talks also did

not result in compromise or progress. >> they didn't. these were the first high-level talks between russia and ukraine held in turkey. they left after 90 minutes with neither side feeling that they had made any progress. in the ukraine side, they came with clear demands that russia withdraw troops, that there be an immediate cease-fire, and that there be an improvement in humanitarian situation in the cities in ukraine. the russian side said they never thought about cease-fire, that is not why they were attending the talks. beside making little progress, the differences did not seem to change much. in addition to that, russia has been hit with a real exodus of foreign firms and foreign personnel from russia. today, we saw goldman sachs

saying it is not doing business in the country. consumer giants like mcdonald's and starbucks saying they will not operate in russia. russia is starting to think about ways to retaliate against those companies. may be taking over assets or perhaps even nationalizing firms that have left the country. that is another issue in this situation now that firms have started that exodus. shery: the disruptions in ukraine, not to mention from the pandemic. not only in the u.s., but in europe. >> where you are closest to the action is the price hikes potentially hitting hardest. ppi red hot and it's good to get hotter. 7.9% year-over-year in february up from 7.5% in january.

it is the calm before the storm. think about it. february 24, it was a most the end of february when brent crude got up to $139 per barrel in march 6, that didn't show up in the february cpi. the federal reserve, a signal that they go for the rate hike next week. most people say probably not because there is so much uncertainty around ukraine and russia. they are going to sit back to the 20 basis point hike. the ecb came into its meaning today. the question was more like we think they are going to be dovish because christine lagarde has not been ready to move toward rate hikes this year. instead, she announced that they

will move faster because they have gotten worried about inflation. this listen. >> the more -- the war in ukraine is a substantial upside risk especially to energy prices. if price pressures feed into wage rises, or if there are adverse supply-side implications, inflation could turn out to be higher over the medium term. >> the ecb is went to start it slowing of bond purchases now. it could end them as early as the third quarter. what is going on now a landmark moment for the ecb and the european economy. shery: make sure to catch our interview coming up in the next hour. acceleration of inflation in the

u.s. weighing on the markets today. what will you be watching in today's session in asia? >> it's going to be an interesting start for china and hong kong equities. after the route for the chinese tech stocks in the united states overnight on concerns about the accounting situation. it could mean delisting for the chinese names. we saw big falls across the board for the largest players. it could make a lively start for china and hong kong trading. the golden dragon index shows a dramatic fall overnight. probably the worst fall for more than a decade. interesting is the ecb move. it has implications for the fed. the ecb interpreted the war in

ukraine as being more of an upside risk to inflation rather than downside risk. they were willing to go ahead with cutting back bond purchases earlier than some people have been expecting. the fed itself could sound more hawkish next week. that is a very significant thing . we saw the euro on the lows of the day even though the ecb is hawkish. that will bring dollar-yen into play which is already above 116 and pushing to the upside. we will have an interesting session in asia today. >> will the respite from dollar strength short-lived? >> yes, if you see dollar-yen pushing into new highs 116.5 or

higher, it will lift the whole dollar asia complex with it. the yen is such a big currency that something people are involved and when it breaks into a new trading range, so many traders will go with it. we might see dollar-yen held closer to london time but the pushes to the upside, the asian session has been good for the dollar. people will be looking for dollar to make new highs. >> let's get you to vonnie quinn with first word headlines. vonnie: the u.k. government has announced sanctions on seven

russian individuals in retaliation for vladimir putin's -- invasion of ukraine. they face a full asset freeze and travel ban and will be prohibited from transacting. the move effectively derails plans to try to sell the football club. the ecb president is seeking to phase out dependence on fossil fuels by 2027. russia is the eu's biggest supplier of natural gas oil and coal. the u.s. is preparing new penalties against north korea after determining that the regime of kim jong-un used ecb technology. it would further block the purchase of foreign technology.

the u.s. is also ordering increased surveillance in the yellow sea. the indian prime minister ruling party swept comfortable when -- win signaling that voters still trust him in the wake of the pandemic. the polls showed the incumbent one with a wide margin. for other states are electing legislators. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, a ceo joins us to debrief the rail operators recent earnings and tell us what is in store for hong kong passengers among the virus shock.

but our discussion first with a ceo talking about mainline chana -- mainland china and hong kong. this is bloomberg. ♪

haidi: the new business value

jumped over 20%. the insurer also announced a buyback over the next three years. joining us for an exclusive interview is the aia cio. congratulations on these numbers. let's start with the buyback. how did you reach this decision? >> good morning. the buyback that we announced today is the first one since ipo. it reflects the consistent strong performance of our business since ipo. we have built up steadily over the last 10 or 11 years and we have now decided that looking at our balance sheet which is very strong looking at the growth prospects we have and amount amount we need to set aside for future growth which is considerable, that the $10

billion is beyond the needs we have currently. we have 24.8 billion before the buyback. we still have lots of capital available for future growth. haidi: where do you see the value of new business coming from them graphically? is it the recovery in mainland china and has been the impact of the latest wave of the pandemic in hong kong? >> china is obviously a critical market for us. it's our largest market for new business. you have seen us continue to grow that steadily over the past years. including a further 10% growth in 2021. despite the rest of the industry having difficulty, our differentiated model in china helps us to weather the storm of temporary disruptions due to the virus. what we see is that we have a diversified business. you saw that in 2021.

the 20% growth overall. that was spread across all of our markets. all of our segments showed good growth. a very strong performance. >> the sales disruptions you talked about, how does that compare with what you are seeing right now to previous waves and what is the share of the amount of covid related claims you have received so far? >> we have obviously seen some increase in claims. unfortunately in india, indonesia and philippines the places worst hit by the virus. in terms of overall claims experience, it is still very good and we have seen it variances against expectations in 2021. we have seen that consistently in the past and obviously, we look to pay our claims as much as we can. to be there for our customers. we have seen good experience

overall. shery: after the pandemic, we have this russian were in ukraine and market volatility because of that. how is that impacting you? >> the first thing to say is that we are 100% asia business. we have strong local businesses in all of our markets. that helps us in terms of geography. if you look at our investment portfolio, we have minimal investment to russia and ukraine. we have limited investment in europe. that is part of our global portfolio. overall, we think we are in the right place from an investment point of view and from economic growth perspective as well. there has been a target for china of 5.5% and that is our largest market so we see a lot of opportunity for growth going forward. we are very positive about the future. >> although your direct exposure

to russia is limited, the fact that we continue to see equity volatility, equity prices taking a hit. how is that going to affect the embedded value of your company and your business? >> the value of our business depends on our earnings and 60% of earnings come from insurance and fee-based sources. what we see is that we get variation from year-to-year. it is the overall trend you have to look at. we saw our embedded equity group sort last year and over time, we see that that growth continues. we may see fluctuations from year-to-year, but this is a long-term business. we see over multiple years we built up the growth continues, the earnings growth. then the cash comes out and you see that with an 8% increase in dividends and as haidi just mentioned, the $10 billion buyback.

we think we are unique in that sense and that we have very strong growth, the earnings, and the cash coming together. haidi: what about the volatility coming from fed rate hikes and the tightening monetary policy situation globally? >> higher interest rates as you might imagine are good for us. as they are for most financials as they increase our earnings and cash flow. in terms of liabilities, we are well matched from a duration perspective. moves in interest rates don't really affect our balance sheets because our liabilities move in the same way as our assets. overall, higher interest rates are positive for us. >> we do see the fifth wave for hong kong dragging on. that as well as things like foreclosures and the reopening of the economy.

how do you see that impact the longer it goes on a new business? >> the disruption from the covid impact clearly people can't meet and our agents sometimes have to stay at home. our customers have to stay at home. we equip our agents with tools, high-quality digital tools and we see the phenomenon is temporary. the omicron variant the last three or four months then the wave moves and people go back to normal. what i can say is that our hong kong business grew by 37% last year. we think that is strong growth from the domestic segment. we are encouraged by that and when the border to china opens, we have the mainland chinese visitor business coming back which will add further to our growth. we are positive about hong kong and optimistic for the future of hong kong and the business of hong kong. shery: it was really good having your insight. thank you very much and joined

again soon. we have another big interview coming up in a few moments. a ceo joins us to discuss the public transport operators resolve amid the growing headwinds in hong kong. this is bluebird. -- this is bloomberg. ♪

>> a clothing chain is joining the exodus from russia. it will temporarily suspend operations joining the growing list of firms exiting the country. the move is a reversal from an earlier announcement that it would remain in russia. it had said that clothing is a necessity of life. one company is said to have repaid its $2 million bond. vladimir putin said the payment

to bondholders from hostile nations should only be made in rubles. sources tell us the bond holders received the cash and dollars. sources are telling us that tiger global management raised $1 billion through a private bond sales. it is said to have issued the debt through ap morgan and it was broken down into maturities of 5, 7, and 10 years. it is said to use the capi -- the proceeds for working capital. shery: we are seeing stocks led higher by materials. tech and consumer discretionary is weighing on the index. nikkei futures and s&p futures are pointing higher. this as the japanese yen fell to a one-month low. we continue to see the global bond selloff.

we have already seen the kiwi 10 year yield at the highest since june 2018. mas as well.atching for the bond pliny more ahead, this is bloomberg. -- contee more at xfinity, we live and work in the same neighborhood as you. we're always working to keep you connected to what you love. and now, we're working to bring you the next generation of wifi. it's ultra-fast. faster than a gig. supersonic wifi. only from xfinity. it can power hundreds of devices with three times the bandwidth. so your growing wifi needs will be met. supersonic wifi only from us... xfinity.

>> from a market risk perspective, we were positioned and have managed quite well through these early days. the second and third order impact of this crisis are harder to judge. shery: that was the deutsche bank ceo talking about the lenders exposure to russia. wall street titans are joining the growing corporate retreat from russia. jp morgan and goldman sachs have announced they are winding down operations there in response to the invasion of ukraine. we are getting the latest

headlines with a hedge fund returning all russian like cash. trying to distance itself from sanctioned companies or individuals after vladimir putin's invasion of crane. the board deciding to redeem all capital expected by sanctions imposed by the u.s., eu, and u.k. as well. he had started his fund about seven years ago with money that included about $100 million from an entity linked to russia. let's discuss the latest developments with someone who leads our finance coverage in the u.s.. when it comes to wall street, how much exposure to these banks had to russia? >> their exposure is quite small. goldman sachs which just announced it is withdrawing from russia today only has 18 employees in the country and total credit exposure of $650

million. jp morgan is similar in that he has a few hundred people there and russia is not among its top 20 countries of exposure. city is different. it has 10 billion of exposure. in a stressed scenario, the bank can take a $5 billion hit from its russia exposure. >> it is difficult for citi because they wanted to exit the retail sector. >> this does upend that process. citi is trying to withdraw its retail operations across the globe and russia was a big part of that. this makes that very complicated for the bank. it is trying to go through a big overhaul. the steps like goldman sachs and jp morgan, they ratchet up the pressure on a lot of banks to do this. we know they are all having

these discussions and we can possibly expect to see more. >> let's get you to vonnie quinn in new york. vonnie: russia and ukraine's latest attempt at diplomacy has failed to make any progress. following the first talks since the invasion began, top lemat met in turkey but made little headway after 90 minutes. after the meeting, the ukrainian foreign minister said his russian counterpart indicated attacks will continue until moscow's goals are met. russia is moving closer to seizing and nationalizing foreign-owned firms. the ministry has outlined new policy to take temporary control of departing companies where foreign ownership exceeds 25%. courts could consider requests to bring in external managers in an effort to preserve property and employees. a chinese tycoon helped trigger

one of the biggest price strikes -- spikes in history. he is shorting about 150,000 tons. sources say he has told banks and brokers that he still thinks prices will fall and he would like to keep the trade in place. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: hong kong railway operator and developer beat estimates. the company warned that the fifth wave of covid cases may bring further challenges to its operations as we cross over to hong kong where stephen engle is standing by. >> thank you. get to our guest.

he is the ceo of mtr or. -- corp.. it runs the subway and trains here. it also has big property portfolio retail malls and some residential. the for joining us. your results were pretty good for 2021. underlying profit beating expectation. it is coming off a terrible year. 2021 was the calm between two storms. you have the protests, now a big wave of coronavirus at the beginning of 2022. what do you fear are the long-term damages from what we are seeing right now? you talked about fundamental challenges going forward. how is this year going to shape up? >> if we look at 2021, we saw a recovery from 2020.

we saw a recovery of the patronage for the local domestic trouble. the boundary between hong kong and mainland china remains very restricted, therefore tourism has not picked up. even for 2021, we suffer from the loss of tourist related trouble. our transport operations still saw 4.5 billion hong kong dollars lost. yet our property model gave us a diversified portfolio. with the property development profits coming in last year, we were able to report a reasonable profit level. >> what are your mitigating factors and procedures for a prolonged outbreak? we seem to have seen the latest wave peak, but we are still

getting 30,000 cases per day. there is rumor of a lockdown, mass testing. you have had an outbreak among your staff you've had to withdraw some of the services. i hate to be a pessimist, but what is your worst-case scenario for 2022 question mark under zero covid and we don't know when it's going to end? >> our top priority is to write over this difficult time. our mission is to keep cities moving. that's what we have been doing for 2020, 2021 and this year. there has been impact on service because of a staff shortage due to covid infection or because of their family members infected they have to be isolated. we are seeing colleagues

returning to work after isolation and recovery. we are hoping that the situation will be under control. in some extreme cases, we have critical staff like the train captains and the control room staff. in some extreme cases, when the shortage becomes severe, it could impact our service. at the same time, the demand has dropped significantly. patronage has gone down quite a lot. we hope that as we progress, the pandemic will be under control and as we can see in 2021, the recovery could be swift. >> could be a swift recovery. if this peaks in the next couple of months, you could see a recovery in the second half

significant recovery because bloomberg intelligence is talking about earnings dropping as much as 40% if it subsides in the next couple of months. 60% down if it does not. >> i can't predict future years profit however, we do see the resilience of our business. we have the property business and the transport business which in 2021 has seen a notable recovery. >> let's talk about your property business because you operate the shopping malls, you have new things coming online either southside of the island, a park near where i live. you are betting for the future on retail even though the mainland tourists are not coming back in. you also have to give rental

concessions. you have so many tenants throughout the city. are you being pressured to have further concessions to tenants? >> just like many other companies, we have investment portfolios like shopping malls. our aim is to keep cities moving. there is no point in squeezing our tenants until they leave. the better strategy is to live with them to try to get over the difficult time so that when recovery comes, they can get into business straightaway. that is what we have seen in the past. >> can i get your unvarnished view? you probably read that letter to carrie lam that got out last week. he is always been a positive guy

for hong kong, but he talked about the long-term damage to hong kong and hong kong business environment. the borders continuously being closed and the reputational damage. can you give us your unvarnished view on the subject? do you fear that hong kong has lost its edge and people will not be coming back? many people are leaving the city. >> i believe he sent a second letter encouraging us to move forward. this is also in line with our mission to keep cities moving. it is not just in the sense of keeping people movement, but keeping the city moving forward in a sustainable and healthy weight. -- healthy way. hong kong has its own attraction.

we have seen a growth in business in hong kong. in mainland china and elsewhere. we continue to invest a significant amount over 100 billion hong kong dollars in the next few years into building new railways and through our property and the advanced version community model. we will be building new communities and new railway lines in hong kong. >> icu will get the cross harbor link -- i see that you will get the link delivered in june or july. what would be the cost to your company of a citywide lockdown? >> the government has announced that even with universal testing possibly with lockdown, the public transport will continue

to move and operate. there are essential personnel who need to provide essential medical and other utility service to the city. therefore, public transport is important to keep moving in order to keep these people to go to their work and keep the city operational. >> the ceo of mtr corporation. we appreciate you coming on and discussing franklin -- frankly about the opportunities in our ritual home. -- mutual home. shery: we are talking about south korea because we are now expecting south korea to see daily covid cases of up to 370,000. this is according to local media. we continue to see record cases in south korea topping 300,000 already.

this as the new wave of covid infections is not only affecting south korea but also japan. we continue to see a little bit of the easing of those restrictions continue in japan as well. we had the household spending numbers for the country in january posting its first year on year rise in six months. a gain of 6.9%. a base effect is also being felt. last year, japan suffered from strict straight emergency -- state of emergency. >> the situation in hong kong is leading to an exodus when it comes to certain set. the city seeking to attract foreign workers with super skills in an effort to position itself as a global city.

>> we have always been very open to talent from all over the world and we are a global city. we want to become even more highly differentiated global city, a global mega-city full of opportunities brimming with cooties and talent. making sure that we can be the hub and also the magnet to attract this talent from all over the world. the whole series of measures today in terms of people seeing that traveling is a lot more restrictive these days rose out of this pandemic. a lot of it is order controls, public health measures and so on. there are tighter restrictions when it comes to allowing foreign talent. >> what we are trying to do is

be able to differentiate the high talent, the really super skill sets talent that can come to our country to work, to complement our existing workforce. then together we can work hand-in-hand shoulder to shoulder move up in competing in the world. >> might your new point system be too rigid? some say that it gives preferential treatment to nationalities which are not well represented in the country. >> at the end of the day to open the door and let in everyone, we're are trying to say let's have a little bit more differentiation in terms of where we want to be. >> singapore would be open to issuing visa issuances as

opposed to local talent? >> they are mutually inclusive. as long as they are able to help us in terms of leveling up our local talent and they complement us, i think we will be open to it. >> we are seeing labor shortage. the government has said that it is confident of resolving the issue in a couple of months. what is driving that optimism? >> there are tens of thousands of people out there who have gotten approval to come back in. it's lack of flights, the quota coming in, the border controls. in the next couple of months notwithstanding a new variant, i think we should see that -- easing coming up quickly. >> you are also the minister in charge of power. with all charges -- oil charges

surging, the situation in ukraine is not helping. how might that play out in the economy of singapore? >> we don't have that much imports from ukraine and russia. the immediate impact is going to be quite limited. if this strikes on longer, invariably the shortage of these commodities in terms of natural gas, crude oil and so on would eventually have an effect on us as well. we are watching this closely. however, the reassurance that we get to all of our singapore citizens and everyone who lives here is that there will not be power outages arising as a result of shortages because we are quite well set up. >> it might impact the growth target because the government baseline oil price is $80 per

barrel and it is likely to be higher than that. >> today, we still feel optimistic about the 3% to 5% target we have set. the core inflation is about 2% to 3% and the cpi is about 2.5% to 3.5%. pretty much, that doesn't change on a day-to-day basis. let's see how this unfolds the next couple of weeks. haidi: that was the singapore manpower minister. much more to come on daybreak asia. this is bloomberg. ♪

>> here's an indicator of the state as we see volatility. look at this map showing activity in the black seat. russia appears to be leading through ships carrying grain. this is the first time we have seen movement since the start of the war. >> the world food program is warning the war could have a catastrophic impact on food security for the world's poorest. let's bring in our guest.

it seems it is not necessarily their production that is the issue right now, it's sending the food supply where they need to go. what are the biggest challenges right now in the biggest parts of the region that will be affected? >> we had a number of logistical challenges prior to the outbreak of hostilities between russia and ukraine. prices were already it'll -- elevated the night took off in the war state -- they took off when the war started. the need for the grain in north africa and the middle east is acute. if it's off the market for more than a few months or less, we could see real problems. >> we have already seen governments tighten their exports when it comes to food supplies during the pandemic. it seems this week alone, indonesia wants to tighten their

exports over palm oil. with more countries resorting to food protectionism, how much will this add to the inflationary concerns? >> it adds greatly to the inflationary concerns. when you look at how the price mechanism works, prices go up and people ration their consumption as a result. countries try to keep their prices low in their own markets by directing trade barriers like what you're talking about. that can be successful locally, but it causes prices to go up even more externally. >> are there any advantages to reducing the amount of geopolitical risk you might be exposed to given the prime example we have seen play out right now? >> very much so. the problem here is that so much of the grain and food needs to travel so far to get to where it needs to go. if you look at the distances

between the alternate sources of supply for the middle east and north africa, is a huge bump going from the black seat to australia or the united states or south america. lowering geopolitical risk is always a good idea and in this case, you are seeing one of the problems of relying on an area that might have been riskier than we thought it was. >> then you seat major economies like china prioritizing the ability to look inward for the food security regardless of the outcome of this particular war. what is the endgame? what does the future hold when it comes to food security and broader equality? >> the boom and russia -- in ru ssian and ukrainian agriculture has been the big story. people have come to rely on it and now that it has been cut off

, although i heard encouraging news from you about cargo getting out, to be cut off that requires significant realignment of global agricultural activity. that realignment will be painful and the pain will be distributed in order of how much your food budget is relative to your overall income or wealth and that goes for countries as well as individuals. >> it's a very sobering conversation. great to have you with us. coming up, ukrainians ambassador to south africa talks about the development of each country. what it wants from asian allies. we have market opens coming up. it looks like a downward date when it comes to risk sentiment as we had the inflation in the u.s. removing the risk appetite from the u.s. markets. we are seeing the k futures pointed lower -- nikkei futures

pointed lower as we had to the start of trading. this is bloomberg. ♪

if you're a small business, there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose fiber solutions with speeds up to 10 gigs to the most small businesses. that's virtually everywhere we serve. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

shery: welcome to "daybreak: asia." haidi: asia's major markets have just open for trade. our top stories this hour, asian stocks way declines on wall street, bond yields higher in raising the odds of steeper fed hikes. russia and ukraine peace talks fail. discussing the exposure of asian economies to the war with an

ambassador to south korea. plus china puts tough reforms on hold to focus on ambitious growth targets, wrapping a key political meeting of the year. shery: we start with south korea's export numbers for the first 10 days of the month, rising 14.9% year on year. truong external demand and double-digit growth for those export numbers for the first 10 days of the month. when it comes to import numbers, again of 15.3% year on year, as we have already seen the current account surplus narrowing earlier today, given those high energy imports are inflating the bill right there. the kospi moving around .10% after seeing its best day in two weeks. the korean won also under little bit of pressure, as we'd seen risk appetite improving after the presidential election but right now we're seeing broad

downside pressure when it comes to the asian equity space with the nikkei also dropping .8%, being led lower by real estate and industrials. if you flip the board he can see the topix is also down .9%. by the fact that we do have a weak japanese yen against the u.s. dollar, were talking about a one month low versus the greenback, as we've just seen january household spending posting its first year on year rise in six months, and we continue to watch some of those companies that have exposure to russia, suspending new investments in russia. haidi: we continue to watch the geopolitical implications on the corporate world here in asia, he really is about that bonds selloff. most keenly felt here when it comes to australia and new zealand. sovereigns being sold off after that u.s. inflation threat but

also the concern that price pressures could be even more intense given that rating came and even before we sell the latest leg of upside for energy and commodities. taking a look at the equity session, a little bit of weakness here in sydney. most of the losses coming from real estate, tech, and energy seeing another day of declines. take a look at futures in the u.s., just marginally higher at the moment. a bit of recovery when it comes to the treasury yield and your crude continuing to push a little bit higher but well off the highs we have seen in recent days. let's get some analysis on what happens next in the market. let me start with the big question everyone is asking, which is our question of the day. what is the inflation print tell you, given there's a real possibility that further

inflation ratings will be even hotter than what we've seen. james: certainly i think the biggest shock of this war is pretty much priced in, but the second order or even the third order effects i think there is still room for markets to find equilibrium, which looks like a not so great scenario. as you pointed out, we still haven't seen the effects of the price rise in almost all of the entire commodities complex, you would imagine next month the cpi print would be higher than not. are you preferring to sit on a bigger buffer of cash, or are you being very selective?

james: we've been reducing risk quite effectively in our balance portfolios, and now sitting pre-much in a high level of cash. as i mentioned, i think we've seen a bigger shock than we probably have to watch out how the second order effects layout. although we are monitoring the situation from a few areas globally that had become a little bit more attractive. we will be waiting to redeploy our cash as we see a good opportunity, with the talks on cease fire. shery: china with inflationary pressures having been muted compared to the rest of the world, while at the same time you have all these regulatory issues. chinese adr seen its worst day

since 2008. james: they have a price moving mechanism there so a bit of price shock at a certain point, but beyond that, it's anybody's guess. we always think investing in china takes a bit of patience. we do have positions there. don't forget that this prosperity is such a critical guidepost. regulatory gestures here and there are unlikely to go away anytime soon, but the chinese market still compares well in terms of valuations. the catalyst for improved performance of the market really depends on earnings outlook and further monetary and/or fiscal stimulus, as we would expect

after the mpc meeting. shery: what is your best case for that, even that it's such an important geopolitical year for china. can we expect that support to be forthcoming? james: we've seen monetary easing here and there. everybody is looking forward to a bigger fiscal stimulus sometime this year. i think the mpc meeting doesn't set a target to be disappointed, so they will have to do something to medicate the internal -- mitigate the external shock coming from ukraine. haidi: back at the start of the year you were pretty bullish when it came to energy as a diversifier in your portfolio. is that still your position? james: indeed, we like energy, not predicting what is happening over in europe, but energy

stocks in general are trading reasonably well. they're starting to give good dividends and now with the windfall of rising prices, we continue to like energy. but energy stocks don't always trade closely in correlation with the underlying oil prices. also be aware that again, we've seen the biggest shock, it could go up or down in the near term. so we want to be very selective into this area. shery: james, it was good talking to you. we continue to watch some of those stocks in japan and south korea at the open. japanese companies limiting

their exposure to business in russia. japan tobacco, take a look at that drop of 3%. they are one of russia's largest markets and they employ close to 4000 people. take a look at some of the stocks in south korea, conducting a feasibility study of an iron ore project in austria. a broad downside across the markets right now as we continue to see the kospi lose ground. hyundai motor down .9%, going by two other automakers about to recall almost 733,000 vehicles over defective parts. let's get to vonnie quinn with the first word headlines. >> do u.k. government has an out

sanctions on seven russian individuals in retaliation for vladimir putin's invasion of ukraine. they say the full asset freeze and travel ban will be prohibiting them from transacting with u.k. businesses and individuals. the european commission president seeking to reduce russian dependence on fossil fuels by 2027. russia is the ease biggest supplier of natural gas, oil, and coal. it will prevent -- present measures to limit electricity prices. and determining the kim jong-un regime used icbm technology in his latest launches. senior white house officials

intensified intelligence surveillance in the yellow sea. indian prime minister narendra modi's ruling party swept to a comfortable win in the country's most politically significant state, signaling voters still trust him despite economic hardship in the wake of the adamic. polls show the incumbent with a wide margin. for the states were electing leaders. 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. haidi: still ahead, the ukrainian ambassador to south korea will join us to talk about the late subelements in the war and how it could influence trade flows and the global economy. plus ukraine and russia failing to make progress in high-level peace talks. kyiv says moscow plans to

continue its aggression. details ahead. this is bloomberg. ♪

haidi: let's get a look at

futures in what was a session dominated by inflation. we're seeing a little bit of moderation when it comes to losses. s&p 500 futures looking steady at the moment, nasdaq trading pretty much flat. nasdaq 100 taking the brunt of those losses with higher borrowing costs, little bit tech heavy weight. euro stock futures just getting positive at the start of trading when it comes to the future session, about about .9%. surprising the market with a faster stimulus exit, concerned more about the wrist to the inflation picture as opposed to the russian invasion of ukraine which continues. shery: let's delve into what is happening on that front. ukraine and russia have failed to make progress in the first high-level talks since the war began. the ukrainian foreign minister

says russia conveyed it will continue its aggression. let's bring in our senior foreign policy reporter in washington. nick, just week we heard from ukraine side that they were open to russia's demand for neutrality but there doesn't seem to be any progress at all. what is going on? nick: that's a great question, this is what we are all trying to figure out right now, the degree to which the diplomacy signals that russia is willing to perhaps take a step down the de-escalation ladder and start making concessions beyond the maximalist demands that vladimir putin and his officials have put forward or whether it is all just a ruse and the campaign will continue. speaking to u.s. officials over the last couple of days, they are very skeptical. there is an offer by israel to mediate between russia and ukraine. volodymyr zelensky has said he will consider some sort of neutrality, whether that would

be enough to satisfy putin is still very much an open question. haidi: what more pressure can the u.s. and western allies push? we're hearing of increased tariffs from congress. nick: there are all sorts of things the u.s. could still do, it could go after more sanctions on russia's nuclear sector. there is a great deal they could do, they could do secondary sanctions to punish any entity overseas for doing business with russia. they are looking at all those things, but the question is what happens when there is some tentative step toward diplomacy? russia has said u.s. sanctions amount to essentially a declaration of war and they see it as extremely escalatory steps and want to strike back. this is a u.s. -- a decision the

u.s. will have to weigh. shery: of course we've been watching what beijing will do in all of this. this chart on the bloomberg showing how the yuan ruble fixing has increased exponentially and china doubling the yuan trading been for the ruble, given the signs of distress liquidity. what else can we see from beijing in order to support moscow? nick: so much of this will be the broader strategic element, but obviously the big when there will be oil, the degree to which russia is willing to -- china is willing to buy more russian oil as western countries try to wean themselves off of russian hydrocarbons. that's really going to be energy, coal, and petroleum products. haidi: our senior foreign policy

reporter there with the latest page jpmorgan and goldman sachs have announcer winding down operations in russia in response to the invasion of ukraine. do we see a big impact and terms of the operational changes being made here? >> we definitely have to be clear that operations these banks maintain russia or certainly not a major contributor to the bottom line. there is a great deal of criticism in the moves there making, goldman sachs this morning became the first major u.s. bank to announce the winding down of the operation and russia, followed soon after by j.p. morgan which announced a similar decision. keep in mind is not just onshore russian operations were talking about. if you read the goldman sachs statement, it does imply they're

trying to wind down various market contracts tied to russian entities. it does have credit exposure that amounts to almost a billion dollars. the fact that it is blinding that down indicates the seriousness with which they are looking at it. shery: when nursing perhaps russia devised -- devising plans for the exodus. nick: obviously finances not the first thing that is looking to get -- looking to get out of russia. other industries planning similar moves, whether it's mcdonald's or victorious secret, -- victoria's secret. that's why you seen announcement coming out of russia where they look at ways to nationalize these industries and looking to get them operational again so

that the people who are out of work will still have something to do. but it's just another sign of mounting distress in the country when they have to resort to these options. shery: we have seen chinese adrs plummeting in the new york session. the worst day since 2008. as we earlier this week saw the sec identifying five chinese companies that perhaps they were not able to inspect in terms of their accounting oversight, more than potentially raising the risk of delisting. yum china was one of those farms and is finally reacting saying the stock might be delisted in 2024 under those terms. yum china is talking about -- saying the sec will be prohibiting their securities and will continue to monitor and evaluate the options, and they

could be facing delisting. the european central bank unexpectedly accelerated its wind down of monetary stimulus. will speak to jean-claude trichet for his views on this next. this is bloomberg. ♪

haidi: the european central bank unacceptable he excel paraded its wind down monetary stimulus -- unexpectedly accelerated its wind down of monetary stimulus. >> i think the market's reaction is understandable, because the new decision of the ecb was not clearly anticipated.

i think that it was naive to think that the ecb would do nothing when the inflation projections were augmenting quite conservatively from 3.2% to 1.4%, it was really something which was clearly in the cards, but the governing council, and i take it that it was an intense discussion, took in my opinion a good decision based in political wisdom which is more important than ever when you have such a balancing act, you have the warring ukraine, the push on inflation which was already very big. it's a good decision in my opinion because it is clearly based also upon flexibility, adaptability, and it seems to me that in such situations you have to be alert of the essence and

also it's good because the most important for the ecb is to stabilize the inflation expectations medium-term, which today are reasonably stabilized at 2%. >> earlier we spoke with a former chief economist at the ecb. he said he didn't think the tweaks that made today were actually necessary. do you view this decision as a necessary move in this current economic environment for europe? >> yes, indeed. i trust that it was a good decision for all the reasons i mentioned. also because it is based on flexibility. we don't know yet what will happen in the third quarter of this year, of course and the fourth quarter of this year. on the other hand you cannot have a central bank immobile

when you have a level of core inflation at 2.7%. the line is really high now at 5.8%. 12 months ago it was 1.1%, in february last year. so you see clearly, i think it's good for all partners, all parties concerned that the central bank says my fixed point is anchoring inflation expectations, if they have done nothing, it seems they would have taken some risk there. haidi: former ecb president jean-claude trichet speaking to bloomberg. toyota trading in japan, we're hearing they will cut their japan april output by 20% from earlier plans. they will also be cutting there

may output by 10%. they have stock production at two factories in japan due to a cyber attack on a supplier that cause it to suspend all domestic reduction earlier this year

>> this is "daybreak: asia." russia and ukraine's latest attempt at diplomacy have failed to make any progress. the first high-level talks since vladimir putin's invasion began. top diplomats met in turkey but made little headway after 90 minutes of negotiations. ukraine's foreign minister said his russian counterpart indicated attacks will continue until moscow's goals are met. >> we also raise the issue of a

24 hour cease-fire to resolve the most pressing humanitarian issues. we did not make progress on this , since it seems that there are other decision-makers for this matter in russia. we agreed to continue efforts to seek a solution. >> russia is moving closer to seizing and nationalizing foreign owned firms. new policies to take temporary control before foreign ownership exceeds 45 -- when he 5%. external managers will be given the power to freeze chairs in effort to preserve property and employees. singapore seeking to employ higher caliber employees. the manpower ceo said it's part

of the broader push to boost employment. singapore last week announce one of the biggest overhauls to date on factors such as education and skills. >> what were trying to do is valid but friendship and increase skill sets to come to our country to work to complement our existing workforce. >> 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. haidi: europe is undergoing the biggest refugee crisis since world war ii. you data now showing over 2 million people have fled ukraine since the russian invasion

began. bloomberg's tom mackenzie reports from the border between poland and ukraine. tom: we're on the polish-ukrainian border, where a number of refugees continues to arrive. the united nations saying 1.2 million people have crossed over from ukraine into poland just in the last three weeks alone. we're now three weeks into this war and the needs of this -- these people are very acute indeed temperatures well below zero and difficult conditions. at the top level the house -- house of representatives signing off on finding to help the united terry and crisis -- humanitarian crisis on the ground. european officials saying they expect to see the first tranche of e.u. money coming through as early as next week. this is a reminder of the numbers and the home and -- human toll of the need for

spending for those people whose lives are very uncertain and their prospects very much unknown. it's already a population of women my children, and the elderly. for bloomberg, i'm tom mackenzie. shery: the international community continues to show united front against moscow over its invasion of ukraine. south korea has announced additional sanctions and the president is expected to take a hawkish view on foreign elect -- foreign relations that would be more in line with the u.s.. massacre, thank you very much for joining us at this very difficult time for your country. tell us how is the situation back at home. >> this is that a critical juncture. as you mention, the russian war in ukraine could make the

biggest humanitarian crisis all over the world. the first step is already done, we had the first round of negotiations at a high level between our minister of foreign affairs so we expect the quickest result -- resolving of the situation. shery: so far we have failed to see any progress, despite the fact that ukrainian officials have been open to discussions of ukraine's neutrality as demanded by russia. so what is next? >> this is a difficult question. it's in the hands of negotiators. we are open for discussion, and as our minister said, ukraine is not a critical juncture.

we are able to sit at -- will him to sit at the table, we're waiting for putin to sit at the table of negotiations for discussions and resolving the situation in ukraine. first of all, putin has to stop its invasion, open the humanitarian corridor's, and were thankful to the international community and south korea in particular for its efforts to sanction russia, but we need to do more. haidi: i was going to ask what more are you asking allies and here in asia in particular to do? >> what more, let me say that putin has violated human rights,

as well as international rules and agreements. there is no single reason left for the civilized world not to push russia with full scale sanctions, i would say. we need to hit harder, so this could be the introduction of full-fledged trade embargo with russia including oil and gas, closing the airspace and not allowing crossing into russian space and stop implementation of joint infrastructure, withdraw large companies that are already down and stopping trade with russia.

withdraw from russia, global companies like apple, microsoft, hulu, etc. haidi: are you surprised by beijing's response? do you think more action, a higher level of condemnation from beijing would have more of an impact on moscow? >> i'm not surprised. the force of china is predictable. china should do more especially in the humanitarian field to provide ukraine with more humanitarian assistance as well as financial assistance.

it's already done, but it's not quite enough, i think. ukraine is the biggest exporter, especially of sunflower oil for china and corn and grain. i think china understands what will be the consequences of this war in ukraine. shery: what are you asking from the south korean government and the incoming administration as well? >> we highly appreciate the position of korean government to draw a plan for ukraine to help support the deteriorating humanitarian situation following the russian invasion of ukraine. the korean government provided's

us with to moving dollars of assistance and the first carveout already sent to ukraine several days ago. the shipment was sent by air cargo and more will be delivered in the next two months. at the same time we hope that korea will not stop at this point and expand its humanitarian and financial support to ukraine. as i said, ukraine now is at a critical juncture where we need to defend the very existence of our state. therefore assistance from korea

is also important for us. we are aware that the republic of korea has so far excluded the possibility of military systems to ukraine and we are also interested in procuring supplies of equipment for the armed forces of ukraine. haidi: ambassador, in these talks, obviously they have yielded no compromise. prior to that was the idea of how some compromise could be reached on the idea of compromise without ceding any territory. what does that look like, and can you define that for us? >> let's receive the explanation of the suggestion by the foreign minister.

shery: ambassador, thank you very much for your comments. we have one more question. haidi: let me rephrase that, if democracy in ukraine is not upheld at the end of all this, what are the implications when it comes to alliances and the strategic relationships within asia? >> we appeal to the international community to provide the voice now for ukraine. yesterday i met the former secretary-general of the united nations organization, ban ki-moon, and discussed with him his assessments of the stopping

of the russian invasion in ukraine. he's very concerned by the development of the situation and promise me to do his utmost and to convey to putin the idea that he should end this war as soon as possible. also during the governors session, he presented to me these papers, by the independent group of global leaders working together for peace, justice and human rights established by nelson mandela. they issued a joint statement calling for a special criminal tribunal to investigate the alleged crime and hold president

putin to account for the invasion of ukraine's sovereign territory. after that, we really need the unit international community to help us defend ourselves and were grateful to our partners, the united states, the united kingdom, canada, germany, poland, the baltic states and the others for supplying us with military assistance, with weapons, and right now we are in desperate need of a no-fly zone over ukraine to prevent russia from bombing our civilians and infrastructure. haidi: ambassador, we really appreciate your time with us today, u.s. ambassador to south korea. much more to come. this is bloomberg.

haidi: china's ambitious growth target this year of about 5.5% means it may have to rely on many levers to achieve that priority of economic stability.

what is the key take away from the mpc that wrapped up today in beijing? >> i think the key take away is that in 2022 the priority is going to be stability. and how do you get stability? you'll have to prime the pump a bit with fiscal spending because will get the budget announced today and will like to be heavy on infrastructure spending. those will be the marching orders for the various leaders of the various provinces when they leave beijing after it wraps up today and essentially provide economic financial stability. there is xi jinping right there, and political stability ahead of the big congress in autumn when xi jinping will likely secure a third consecutive term. 2021 was all the dirty work. it was the crackdown on big tech , the crackdown and regulation on the property market. that are a lot of headwinds in addition to those, including but

we just talked about with the ukrainian ambassador to south korea. that is the war in ukraine and the impact it's having on commodities. obviously oil and nickel and wheat, prices have skyrocketed. this is it delicate balancing act geopolitically and financially and economically for china to reach a goal of gdp growth of about 5.5%. it is ambitious, but again we have to read the tea leaves and see whether the big tech crackdown and the property crackdown is waning and what they can do in addition to priming the pump and adding a lot of shovel ready projects to the mix. shery: stephen engle, chief north asia correspondent there. coming up, insurance provider aia aiming to return surplus capital to investors over the next three years. catcher exclusive interview with the cfo barth jones, next.

this is bloomberg. ♪

haidi: a hasia buyback of the next 10 years. we ask about that plan and the outlook for his business. >> the share buyback we announce

today is the first buyback since ipo and really reflects the consistent, strong performance of our business since ipo. we've ill to occur steadily over the last 10-11 years and we have now decided that looking at our balance sheet, which is very strong, seeing the huge growth prospects we have and the amount we need to set aside for future growth which we believe is considerable, this is beyond the needs we have currently. we have 24.8 billion before the buyback of 10 billion, so we have loads of capital available for future growth. haidi: what about volatility coming from the tightening monetary policy situation globally? garth: higher interest rates are good for us, as they are for most financials, as they increase our earnings and cash flow.

in terms of liabilities, where well matched for duration. movements in interest rates don't really affect our balance sheet because are liabilities gone the same direction as our assets. haidi: that flows onto things like border closures and the true reopening of that economy. how do you see that as having an impact the longer it goes on a new business? garth: the disruption from the covert impact, our age and sometimes had to stay at home and our customers have to stay at home, but we equipped our agents with tools, very high quality digital tools, and we see the phenomena and is temporary. the omicron variant, for example , the last three or four months and the way it moves as people go back to normal. what i can say is our business

grew 37% last year which is strong growth from the domestic segment. we are very encouraged by that. when the border opens will have the mainland china business coming back. we are very positive about hong kong and optimistic for the future of hong kong and the business in hong kong. shery: investors in china and hong kong bracing for losses this friday after historic drop in chinese equities in the u.s. session. that's get our preview of the open with david ingles. it was the worst day since 2008 here in new york. how ugly could it get? david: i won't be surprised, if the hang seng, and we start talking about 20,000. the magnitude of last night's losses, and we can debate whether it was an overreaction,

there was really no new information there. i would push back and say maybe jd.com is simply adding to the list of concerns. overreaction is a function of sentiment, it shows that sentiment is weak in this market. every small thing is really pushing people to sell. and delisting concerns, one of the many other things existing in the market for investors to bring more risk premium into this equity group. i'd say were probably set for a weaker open today. haidi: does this fundamentally change the outlook for chinese stocks given their so much hope for stimulus from the government? david: that's a very good point. that's really what many analysts have pointed to. when you look toward the second half of this year, that will be the main difference between the

china scenario, europe, u.s. and china, where you have perhaps stagflation concerns in the former and in the latter you don't have a lot of inflation concerns at the moment. nor does it seem to be in the pipeline to the extent we're seeing it in the u.s.. the other thing are valuations. goldman sachs, credit suisse came out and said there's enough value on the table whether it's hong kong or the h-share market to have some value here. morgan stanley is looking more short-term and saying we could see more losses. it looks for now like morgan stanley is correct. is it a value trap or the best value opportunity of a lifetime? haidi: david ingles there ahead of the china open. coming up we will discuss how oil prices are weighing on

inflation going forward after u.s. cpi hitting up multiyear high ahead of the energy spike. and wrapping up china's mpc meeting and given us an outlook for chinese equities. shery: our market coverage continues. that's it for "daybreak: asia." ♪

david: happy friday morning from the asia-pacific. it is 9:00 p.m. here. welcome to the china open. let's get to your top stories today. markets under tremendous pressure. inflation -- fewest inflation print in 40 years. a surprise decision by the ecb to hasten its stimulus exit. chinese equities