paul: good morning, we are counting down to the major market open. shery: welcome to daybreak asia, our top stories this hour. elon musk taking twitter private, one of the biggest leveraged buyout in history. testing expanding to most of beijing.

concerns the outbreak could stop global g we are getting breaking news and south korea, the first quarter gdp numbers slowing from the previous quarter. we are seeing growth of .7% which is beating analyst expectations. growth of 3.1%, it is a bit of a slowdown from the previous quarter. we have seen manufacturing hold up, for the first three months of the year. we see strong exports in south korea and the consumption seems to be picking up event the social restrictions are easy a little bit. we are seeing a slowdown from the previous quarter. paul: we will be opening for trade in australia in an hour. the first trading day after the public holiday on monday.

we will be keeping an eye on resources companies, quarterly production numbers in the last little while. we are watching the 10 year, flipping a little, following the path of the global peers. our yields are coming off at the pace a little bit around concerns of the potential widening of lockdowns in china. the offshore yuan sinking, hovering around 657.23. the public holiday, off by a third of 1%, the yen strengthened against the dollar but not by that much. it can be explained by the flight to safety across markets, especially with treasuries rallying, when it

comes to u.s. futures we are not seeing in the of movement unchanged at the moment. we are talking about the really late turnaround that we saw with the u.s. stocks, the buyback, we have big technology earnings ahead of that too, the nasdaq is not doing much at the moment. crude is bouncing back from the losses in the new york session. we see the concerns over chinese demand and the dollar has been pretty strong. two days of news was around twitter, shares rose given the news of the $44 billion buyout. paul: ellana must manage to get his way with twitter, the $44 billion deal is one of the biggest and it was unanimously approved by the board.

let us get over to ed ludlow, you have had a busy day. what changed to bring this about and what does the future hold for twitter? >> according to sources, what changed was the middle of last week when we got the disclosure that elon musk had the finance committed to make the deal happen. you had wall street banks, committing to finance 25.5 billion dollars of debt. a margin loan against the value of some of the on lost stock -- unlost stock. that is what we found out, the deal was done, $54.20 a share. he does have that equity, there is no question on how the deal will be financed.

shery: tesla's shares have felt today. >> this is company number five, talking to insider, one of the biggest questions that twitter has is what will the management structure be going forward? we do not know that but this will be the fifth company, that is a pretty big spectrum of companies he is involved in and we have been talking about the buzz word key man risk. is he stretched too thin? he can pull this all off. shery: the huge task that elon musk has now and the responsibility on his plate. investors weigh growth fears in

china and tighter fed policy to fight inflation. let us bring in the global bond space. there are a lot of concerns and it seems that investors are worried about the economic growth prospects for the world. >> it is not just economic growth prospects, it is what a central bank is going to do in response and the inflation question. one of the concerns i have had about what is going on with china which was slowing down before covid came back so strongly to buy this is the slower china actually threatened to add to the supply chain concerns that have seen inflation so high. . you have a situation where china is trying to not get much traction with its economy to

turn it around and at the same time the bed is determined -- fed is determined. not discouraging at from hiking rates because there are a lot of inflation and drivers and the dynamic slowing the growth over the longer-term. we have all sorts of assets jumping around wildly. the two year yield has been at 2.5 and 2.8%. that is pretty extraordinary. we have a fairly stable federal reserve outlook in a lot of ways. they will keep on hiking. paul: we have the pboc supporting the yuan lowering and the foreign exchange ratio. is that going to be enough? >> almost nothing china is doing is turning out to be enough. they have the difficulty that

what you may call the political policy response to covid of lockdowns is kind of clashing with the attempts for a monetary response to help the economy. the pboc's instinct is to nibble around the edges, on the currency, and that needs to drop further to help the economy. you do not have this full on easing move that has usually been the response in most countries to go along with a serious covid impact on the economy. as long as you got this policy makes it is hard to see china getting much traction until covid becomes less of an issue. shery: where are we when it comes to the pandemic in china? >> of course, we are talking

about the economic costs, china's transition has taken hold and it has happened. you have the two largest, richest cities in the crosshairs, potential lockdowns coming. that is what a lot of residents feel is coming to their city. the lockdown started march 28 and there is no end in sight. new local cases found every day and the death toll is going up. 51 is the latest tally reported for sunday, shanghai. beijing sees what is happening and when they ordered mass testing the biggest district, the home to all of the foreign consulates and central business district, it is an economic engine in itself. when they are faced with testing yesterday, tomorrow, and friday and in addition announced that 11 more districts, 12 out of the

16 districts, the most populated parts of beijing, they are not required for mass testing are on the outskirts. they have three days of mass testing and what has happened in other cities who have done mass testing? a large number of them have led to lockdowns. that is the concern in beijing, the two most influential cities in china, they could be simultaneously under lockdown. paul: let us get over to the first word headlines. >> the white house says it is preparing a longer-term financing package for ukraine. that is after a u.s. official visited kyiv and committed military financing. lloyd austin told reporters the goal is to see russia weakened

out of the country has lost a lot of military capability. the european union and india have agreed to boost cooperation. it is part of a plan to a slower rate trade talks with india who help them visit away from russia. russia was the third largest trading partner. sri lanka's cabinet has agreed a plan that gave the president wide-ranging executive powers. this is after a no-confidence vote against the administration. the government failed to leave an interest payment on bonds. compress been held in contempt of court for failing to turn over records related to a new york investigation. hey is ordered to pay until he complies. the attorney says trump is an

honost person. 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. paul: expert advice on how to value and manage carbon assets as an asset. that is coming up later on. rapid declines in the yuan adding another dimension to the selloff and the strategies for site inflation. this is bloomberg. ♪

>> the chinese element of the store is dominating. >> china is continuing to be very strict. >> a big policy ever. >> intensifying across the board. >> stocks running out of steam. >> china is one of the factors. >> all of the cyclical dynamics are unprecedented. >> that added to inflation. >> it is hard to make long

calls. shery: some of the conversations we had on bloomberg tv. our next guest says the rapid decline in the yuan as another dimension to the selloff and sees outflows in bonds and equities. the head of asia strategy, it is good to have you with us, the chart on the bloomberg showing the outflows from chinese capital markets. hitting a record high, will valuations help here? >> first evolved, what we are seeing is more outflow today than we had in the first quarter of 2020 because of covid. that is an unprecedented outflow that you have to put in the context of 2021. it could be much more than that.

now, if we are looking at the silver lining, the onshore market, we do not have the kind of valuation you would see on the offshore markets. it is very spectacular in terms of where we stand in terms of valuation versus the market. the move that we saw yesterday was maybe we are going to see bonds going beyond the market but we are not there yet. shery: will earnings help at all at this point? what are you expecting? >> what we can expect is, we can see the major problem for the equity market and the global assets. the market is going to be a zero covid strategy.

mid march we saw the fed coming, we saw it continues on the equity market, especially on the regulatory tightening. the issue has been on the covid policing. we are not seeing the implementation, there is going to be the strategy. for the global market, there would be the additional risk of a more inflation coming from the supply. this is what we are seeing today. paul: i want to get your thoughts on japan as well, a week yen at the moment, does that make japanese equities more appealing at the moment? >> first of all, we have seen a

correlation between equity markets and the yen collapsing and it has not really returned. if we see the yen is very weak, we see the pass-through rate, the difference between the in and out price, a particular rating, that is not the reason to come back on the japanese equity market. it has a very strong, cyclical element. we are going to be concerned of the growth slowdown, the message we get from the u.s. equity market. we do not want to take exposure on japan. you have a certain type of exposure, interesting

valuations, you can inc. of one -- think of the markets. at some stage you could use japan as a control, if it is happening, we should have them hedge as well. paul: on the subject of the bank of japan, you do not expect any change at this meeting despite it being one of the most closely watched meetings? what would mean some action? >> we saw last week maintaining the framework in place. i think if we are seeing the yen continuing to depreciate going at 2.3 percent, inflation, there

is no core inflation in japan that we are seeing. inflation is getting the target and being some concern under the corporate margin, this is what good move the needle -- could move the needle. there is a reason, a huge debt and to keep the debt at a level which is fine for the public finance, it needs to be under control. if we have some range for the use, that means we could get some concern on the sign-on's and then on the yen as well. paul: the head of asia equity strategy at societe generale.

we have much more to come on daybreak asia, this is bloomberg. ♪

shery: we are seeing some upside in after hours trading for technology stocks, even for tesla after elon musk's buyout share of twitter, one of the largest in history. twitter has arisen in the new york session, it gains ground. it is down 7% this year already, that sounds like a big loss but compared to other mega cap tech names, it is doing pretty well. auto toys like gm or ford, we are watching the big technology earnings coming out later in the week.

we are watching those very closely because we are talking about the nasdaq 100, headed for the worst month since 2018. rising yields are not helping the high-value tech names. these are the names we are watching in japan as we countdown to the start of trade. softbank is struggling to raise funds after the largest tech investor putting more money into the start. doubling down on the u.s. capital market by seeking to expand into more lucrative areas. buyout firms including cvc and kkr are considering bids for toshiba. paul: let us get a quick check of the latest business flash headlines. a surge in emerging-market trade , volatility from the war in

ukraine, sources say the increase came as a bank traders cashed in the russian and ukrainian credit default swaps. barclays is due to report on thursday. based on toshiba after they said they would open the door to potential buyers, and potential deal, a buyout of toshiba with the market capitalization of almost $18 billion could be the biggest ever deal in japan. cathay pacific is adding more flights from london to hong kong as the airline attempts a rebound. as many as three daily services will be available, up from as u.s. two per month after hong kong said it would reopen it to nonresidents. shery: we do have an alert, the chinese city of baotao has

reported a lockdown after reporting covid cases. this is the largest city in inner mongolia with a population of around 2.2 million. it has been known for processing we are earth minerals, important in the making of batteries and other manufactured products. this is on the back of so many other cities across china already seeing lockdowns or restrictions including shanghai. we see fire is testing expanded in most of beijing and this affecting the chinese economy and weakening the chinese yuan which fell to the lowest level against the dollar in 17 months. trading at 6.57 to counter the yuan weakness. we are discussing all of that

next, this is bloomberg. ♪ this is xfinity rewards. our way of saying thanks, with rewards for the whole family! from epic trips... to the original jurassic park... on us. join over 3 million members and start enjoying rewards like these, and so much more in the xfinity app! and check out jurassic world: dominion, in theaters june 10th.

paul: you are seeing live pictures of tokyo, jobless numbers and the unemployment rate is 2.6%. that is falling from a month prior. the note coming in at two point 6%, the job to applicant ratio remaining at 1.22%. another piece of data, we had no

expectations of changes the japanese yen, to reiterate, the unemployment rate is 2.6%. we have a big interview coming up in the next few hours. a former japanese vice finance minister tells us what level he thinks could prompt action from officials. let's get to vonnie quinn. vonnie: the white house says it is preparing a financing package with more details to come. that's after u.s. officials committed an additional $322 million in foreign financing. lloyd austin told reporters the goal is to see russia weakened and the company -- country has lost a lot of military capabilities. the philippines may hike its key

rate as the central bank on one's accommodations. they may choose to wait one more cycle before making any moves. they have maintained rate increases are appropriate. >> the next meeting is may 19. hopefully i will show first quarter growth. vonnie: the hong kong foreign correspondents club is suspending an awards show over concerns of the national security law. they are worried about unintentionally breaking laws. they will continue to promote

press freedom and hong kong. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: china has put a floor under its currency after the yuan posted its biggest loss since 2015, driven by concerns that lockdowns may wreak havoc the economy. kathleen hays is here with more. what was really interesting is we saw -- thought the weaker yuan would help the chinese economy, but policymakers are saying, not too fast. katheen: it's a more interesting story the more we think about it. first of all, it is classic central-bank action operating procedure. if you have a percent monday, another full percent the next day, a 2% drop in a week is just

too much. that can be stabilizing, that sends a signal to the world something is wrong. the world is worried about that the economy looks less likely to get anything like a 5.5% or 5% growth rate. some have it at 4% or below, a lot because of covid lockdowns. china continues to pursue this policy. there are so many reasons for this. what they did today was cut to 8% from 9% starting may 15. these are the words of the pboc. they are aiming at increasing banks capabilities of using foreign-exchange funds. it is supposed to help up more liquidity into the system. it follows two hikes last year,

one as recently as december when the yuan was getting so strong and they wanted to slow it down. the idea is you don't have to have so many reserves, maybe you won't want to holds dollars as much. economists are saying it shows a symbolic move, they are just unhappy with the speed, the degree of weakness. paul: does this mean the pboc's hand could be forced when it comes to taking more aggressive moves? katheen: we have a great piece on the terminal, bloomberg.com as well. it points out that yes, there is a concern. what is going to happen if you keep cutting rates? what if they cut the rrr again? you're putting more liquidity in

the system. you going to weaken the yuan further. the thinking is a could slow them down, some people are saying the fact that the pboc only cut the rrr by 25 basis points is because they were getting concerned by this. anymore rate cuts puts more pressure on the yuan. they are taking a more cautious approach. if you weaken the yuan, you're going to have cheaper imports. that could boost your inflation. there are all kinds of ramifications. step one, put a floor under the yuan. beyond that, maybe it does slow down the pboc. paul: kathleen hays.

up next, we will speak to an investment manager that focuses on sustainable real assets on carbon assets and portfolios involving climate change. this is bloomberg. ♪

shery: ambitious emission

targets have brought the market for carbon offsets to unprecedented levels. the market allows funding for green projects. prices for credits have gone up as more companies set at zero goals. bloomberg thinks prices could rise for people. let's bring in mali. what are the main challenges? guest: the main challenge is around offset type. to put this in a clear context, you may remember a couple of months ago when the beijing winter olympics was going on, the organizing committee committed to making the olympics carbon neutral. what they have done is bought

offset credits. they got heavily criticized. those credits were coming from treeplanting projects. the other side is around 600,000 credits for renewable projects. the issue is that the projects were built along, go, and they also don't remove any emissions. there is a debate in the markets whether credits should be limited to projects that remove emissions, but also to put a timeline around when the credits have to be expired by. paul: which countries are leading in carbon offset supply? guest: historically, developed

economies were obligated to reduce emissions and they were allowed to use those as offset credits. that meant supply from developed economies like china and india were the largest. that is starting to change, since 2016, about 50% came from asia, primarily developing asia. after asia it was africa and latin america. paul: let's bring in our next guest from new forest, a sustainable real assets investment manager that managed more than $5 billion.

thank you for joining us. i want to ask how many forests you manage and what is the value? guest: we manage over one million hectors of plantations, conservation areas, carbon projects, timber processing. carbon pricing is becoming an increasingly important driver of investment strategy and value for institutional clients. paul: let's talk about carbon pricing. can you talk about the mechanism of how it works and what is your outlook? guest: we have had exposure to government regulated markets. in new zealand, australia, the western climate initiative. those are creating significant new value. in some of these markets, we

have seen prices go from 15 dollars to $70. we start to incrementally extend rotations, but as the price goes up, that gives us opportunity to plant new forests and new plantation development as long -- along with -- those are some strategies our clients are looking at in these markets. shery: how much in terms of opportunities are we talking about? how much interest already you seeing among investors? guest: to address not zero by 2050, we can get there without a sustainable land-use transition. 30% is going to come from perfecting forests.

this is increasingly recognized as a sustainable land-use transition. from an investor perspective, they saying let's incorporate anything from an additional 100 to 400 basis points. some investors are saying no, i would like to invest for the carbon asset either because they think the price of carbon is going to increase, and/or, it becomes a critical part of their own portfolio. those are the strategies that are starting to emerge in changing the nature of investment, land and forestry. shery: what are we seeing as the next challenges?

guest: there are two or three challenges. first, carbon as a cash flow is a new cash flow. things like policy rest. -- risk. secondly, we had a discussion just before around the integrity , we have both high-quality carbon. shery: of course, we know the

climate change and extreme weather has exasperated the shortages when it comes to food, grain, we continue to see the rising food prices. the indonesia band, according to the agriculture minister, this coming at a time where have seen palm oil rally in the previous session, given there were concerns about indonesia not allowing those exports to go through, now we are hearing indonesia will allow those palm oil exports. that has sparked a swing in prices, and in the previous session, it's down 5%. we will continue to keep an ion food basis. we are seeing that record rally. next, there may be an investment

opportunity. here the exclusive conversation with the ceo. this is bloomberg. ♪

shery: japanese markets will open in a few minutes, we see strength for the japanese yen. mckay futures are pointing slightly higher. we are watching jgb futures and higher given the boj is ending higher. we are watching that yield that 4.5%. paul: it might be an interesting investment opportunity for fans of mozart and beethoven. a issuing orchestra is betting it can make money through concerts and an online platform that connects performers. the japan national orchestra was started last year by a 27-year-old pianist. he sees the for-profit endeavor

as a way to gain appreciation for classical music. >> when the pandemic at the world, many music students lost opportunity and they wanted places to play. so many eager and talented artists out there but many don't have occasions to play. i came up with the idea of gathering music lovers and giving them opportunities to perform. i encountered goals i needed to clear. one is finance. you need money in order to gather talented artists. if we are to attain our goals, we need to be profitable. a stock company is better than a university corporation. >> is that almost a year since you created the company. how is your business going. >> our goal is to have orchestra

recognized by is many people as possible globally. i won second place at a prestigious competition. i myself came up with this idea so i should play a leading role on making it famous. i have cleared that mission. we want as many people as possible to listen to our music so eventually we can help gain younger artists. we will work hard towards the goal. >> the classical music industry is a traditional field. i wonder if you received criticism about your business. how would you respond to

critics? >> the average age of classical music fans is in their 50's, 60's and 70's. i believe there are many peoples in their 20's who enjoy classical music. different ways to enjoy music are spreading. there are some critics, but no one who has complained to me directly. if you want to criticize, that's fine by me. i would not hesitate anyway as i have good reasons for every decision i make. >> being a ceo and being a musician require different skill sets. what is your vision? >> i have met many company managers and ceos and realized there artists -- this is exactly

the same procedure musicians take. i want to be ceo and musician and i think the time has come where one should be both. this style of musician will be more common over the next five years or so. >> you have an experience of teaching piano. considering the current situation regarding ukraine and russia, do you have any thoughts? >> not only piano but i also taught japanese. when i see images of russia, it makes me happy but i feel sad when i see something awful. i can only play the piano. i feel so hopeless and sad. ♪ there are concerts held in japan, but artists from russia have canceled participating. it's regrettable opportunities

are taken away from young musicians to play under the current circumstances. i myself love the opportunity to play with a young musician. >> developers to establish a music economy. can you explain your vision? >> i'm in my 20's and i have a lot to learn. once i'm ready to establish, i want to be a person who has deep knowledge including business and management. i want to create an academy where students from all over the world study. before achieving that goal, i want a prefix will where people can enjoy music. i want to see more people carrying musical instruments. he establishing an academy is my ultimate goal. paul: if pianist speaking with bloomberg. get more from this interview on tv .

you can tune in for japan ahead every week to hear from leading names in japanese business. as his custom, we are getting the latest covid figures out of shanghai. the city reporting 52 covid deaths from monday, 16,980 local covid-19 cases. this as concerns swirl over uncertainty about the status of beijing and whether they could be left -- next in line. we heard earlier the largest city in inner mongolia has locked down after reporting two covid cases. shery: we continue to see covid cases and more restrictions, now seeing the chinese yuan we can, not to mention more policy moves to stop that. in the next hour, market opens in sydney, seoul and tokyo. we will get you the latest. this is bloomberg. ♪

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paul: there are concerns an outbreak could sap global growth.

elon musk secures a deal to take twitter pilot that's private. shery: take a look at japanese equities. we're seeing a little bit of strength for the japanese yen. it's past the 128 level against the u.s. dollar. jobless rates coming in, slightly better than analysts had expected at 2.6%. keeping an ion y --take a look at the south korean open. seeing the kospi fall. korean won weakness has continued for three consecutive weeks. we are seeing a little bit of upside for the korean won, first quarter gdp numbers earlier today slowing down from the

previous quarter, still coming in better than economists expected with growth of point 7% quarter on quarter. x 5dre [inaudible] d paul: seen catch-up, 8/10 of 1%. keeping an eye sectors. seeing iron ore price weakening. we have a staggered open so we will keep an eye on this. the aussie 10 year yield also pushing lower following global peers. on that note, trading in u.s. treasuries is underway, easing off a little.

that narrative continuing to play out. seeing crude oil. s&p futures looking flat right now. we have some news out of china regarding, a record 33 local covid cases on monday, the previous high was 32 cases on march 23. cases are rising, we are seeing concerns swirling. unprecedented lockdown.

our next guest sees upside in equity markets and sees internet names as too cheap to ignore. we have a portfolio manager. we have a chart on the terminal indicating how cheap chinese stocks are getting. you have to wonder, where is the entry point? we are hearing the cheap story, it's like catching a falling knife. guest: we have been waiting on the sidelines for a while, that is why we are making the call now that a lot of the bad news is taken to the price, so we think the mega cap internet that forms that sold out so heavily

on regulatory concerns are looking very interesting. we are seeing other pockets of the china markets. things like cosmetics, made in china initiatives. there are pockets of opportunity in china even though the news seems to be negative. there are things we are looking to buy because we see opportunities, in 2030, we will look back and think, why didn't we guide china? -- by china? paul: you are going long on china. what names do you like? guest: i am not able to speak to specific names, what we do like

are certain sectors within china, domestic consumption, the local brand, things like clean energies, manufacturing of raids, high-end ip names. across the spectrum, there are many pockets. interested in. we are still watchful on the property space, we think there may be more in the developing stocks and the bond markets. given more time, it is such a diverse market. it's very liquid. i don't think people realize that. there is a lot to buy.

we were following prices for palm oil, soybean oil given the food crisis and food supply chain disruptions. what are the implications when you are trying to allocate your oil? guest: we are starting to see the inflation uptick within the asian region. it hasn't been as extreme in more developed markets. the general thinking is asian central banks have been slower out of the gate, the fed and the u.s.. we think inflation will work itself through the system.

it's not as severe as in other parts of the world. that said, we are mindful. looking to play this through things like dividend yield stocks. you are getting a really good yield. the last four rate rise scenarios have been able to pass through the cost to tenants and to increase rent that feed into revenues. i think there are opportunities within asia, we are also looking at the reopening. tourism is 4.5% of gdp in the region, in thailand it is 13%, hong kong it is 10%. there are reopening plays whether it's thailand or singapore. shery: what about growth plays? as tech earnings -- we know mega cap tech companies challenges,

you have the korean or taiwan market. guest: the growth plays have sold down, the market has been more of a value driven market recently, that plays into what we do in large part. companies the book cheap relative to what we are worth. the large-cap, mega cap tech names. we think long-term those businesses will be winners. in taiwan in particular you're getting pretty good dividend yields. in an inflationary environment, collecting that dividend is very attractive. shery: always good to have your thoughts. we have an alert on the bloomberg twitter, rating could be cut on the acquisition by

elon musk. we are hearing s&p saying twitter ratings are placed on creditwatch negative. this of course as the s&p ratings agency expects to resolve the placement which would result in multiple downgrades of the company and they can assess the capital structure, open strategy and governance as a private entity. this follows a $44 billion deal on one of the biggest leveraged buyouts in history, unanimously approved by the board. let's cross to ed ludlow. ed, eddie implications from this audit out the potential downgrade, and what was the thinking by elon musk? reporter: i don't know was hugely surprising, dead was a big part of this deal -- the

loan to value ratio is 20%, markets having to put up $62 billion worth just to borrow $12.5 billion. it was interesting, the statement from twitter said the new entity would be owned by a wholly owned entity controlled by mosque. there is no suggestion there is anything apart from mosque. mn paul: he was running two companies. is he getting spread thin? reporter: the immediate reaction

from investors is no, the key risk is diminished. he can pull all of this in one go. he has a track record of doing so. moving from place to place, working on his cell phone, tweeting on the air. this is all in a normal day. paul: ed ludlow. let's get to vonnie quinn. vonnie: the white house says it's preparing a financing package for you rain -- ukraine. u.s. officials committed millions of dollars in financing. lloyd austin told reporters the goal is to see russia weekend in the country has a lot of capability. the philippines may consider hiking its key rate in june.

the governor says policymakers will review growth data and may wait one more cycle. >> the next meeting is on may 19. hopefully will show first quarter growth around 6%. on the basis of that, maybe we will wait another cycle. maybe that is the time we will consider policy hikes. vonnie: the european union and india have set up a trade and technology. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg.

paul: thanks. let's take a look at how we are doing in australia. the indexes of 2.3%. checking in on a couple of stocks, petroleum is weaker by 4.3%. numbers weren't too bad, the price of oil is up 3% on quarter. bit of a disappointment in terms of that number. seeing some pressure on woodside. this is the world's largest producer of a critical ingredient in steelmaking. output was up 31% on quarter, nickel output is down 1% on quarter.

mixed bag of results. both of these stocks. still to come. we will preview hsbc earnings. aging races to avoid a shanghai style crisis. more details next. this is bloomberg. ♪

paul: we are tracking the fallout of the global supply chain crimes. a city in the northern promise -- province of mongolia has rare earth minerals continue to exasperate, the total number of container ships.

shery: the westbound journey to europe takes longer, 118 days. terminal users can read about stories in our newsletter. china has put a floor under its currency after an unprecedented lockdown. for more, we're joined by stephen engle and kathleen hays. let me start with you and the latest on these new cases across china.

reporter: ships are piling up on the coasts,, faced with the lockdown situation. it's compounding each other. beijing does not have as much manufacturing. it's the political capital.

this has been home to the central business district, embassies, the most populated and largest geographically in terms of geography, the mass testing that began yesterday, a lot of residents are seeing that as a possible precursor to what happened in other cities when you have mass testing followed by a lockdown. paul: let's get more on that. we have the pboc changing

foreign reserve requirement ratios for banks, but does this address the underlying cause, and we are likely to see more action? katheen: it's interesting. talking about new virus cases, lockdown. this has been driving weakness, this expectation is we are going to cut the reserve ratio for banks holding foreign exchange reserves to 8% from 9%, it's intended to slow down the drop.

foreign-exchange policy central banks do when they have a currency moving so quickly. the pboc said they are increasing capabilities to use the foreign-exchange funds, grease the wheels of the system. it follows two hikes that were done to limit the yen rise when it was getting stronger and stronger, the idea that it will help reduce thanks desires to hold foreign currency like the dollar, because when they hold yuan, the reserve requirement is not so high. it comes after these hikes. the question is, will they have to do more? they're going to see how this goes.

if that puts more liquidity in the system, it weakens the yuan further. you do not want import prices rising, it's complicated but it looks like the pboc is expected to put the brakes on monetary easing until they can get that you want stabilize. paul: plenty more to come. this is bloomberg. ♪

shery: we are seeing european futures gaining ground, this is following asian equities higher. we have seen the euro seeing weakness even after emmanuel macron's win. in the previous session, stocks

were lower. perhaps we can see a change this time around. take a look at wti and brent. he's gaining a little bit of ground, we have seen it falling, wti is $98 a barrel. this is amid a rout in raw materials. of course, they continue to look at aggressive tightening and that is being felt in the commodities space broadly, which has really affected those losses. we saw a weekly loss for oil, seeing a rebound in the asian session. paul: still to come. hsbc reports first-quarter earnings in the coming hours, watching for any impact from the china covid lockdowns. we will discuss that next. this is bloomberg. ♪

>> the chinese element of the story. >> widening lockdowns. >> china is very strict. >> big policy error. >> we are having a risk off moment. >> stocks are running out of steam. >> more downside. >> china is just one factor. >> the dynamics we are seeing are unprecedented. >> it's hard to make a long

pause. shery: our next guest compares weak earnings to last year. great to have you with us. are you expecting the weakness? is it about generally rising costs? guest: those are two of the factors. first quarter last year was $4.5 billion. a strong quarter. one of the problems is, there were only three quarters of that during last year. in the most recent quarter, it had very high credit costs including goodwill impairment of

about $1 billion in total. you have a repeat and be higher. shery: let's talk about hong kong and china. they have a large footprint there. i was that not going to help given the situation? what are you expecting? guest: we have to remember hsbc owns 60% of hang seng bank, and it's unlikely that bank will give a positive outlook to hsbc. at the same time, they have a stake in bank of communications in china, that could also be a poor delta year on year. as you mentioned in the intro, operating costs could be a problem, and hsbc has never managed this particularly well. retaining talent in hong kong is

probably very expensive. this can come through. paul: what about exposure to property and china? guest: there could be reasonable impairments there. there are many sectors where this can come through. not only in terms of china property, but also hong kong property, transportation. paul: we are entering an error -- era of rising rates. guest: this should be improvement in rising interest rates, mainly improved nest

interest yields. the problem is, if that is offset by rising credit costs, lackluster rising operating costs, net insurance has been at a loss for a long time. may not have a positive impact during the whole year. paul: we are seeing a chart at the hsbc share price, off about 4%. do you have a price target? guest: we do not do targets or recommendations, but it's very clear what is happening. hsbc has more exposure to geopolitical risks than most banks. complex and highly global.

i would imagine the market capitalization of hsbc comes down a lot further in sort of mirrors banks that have exposure in eastern europe and russia. shery: tell us more about that exposure. guest: the latest data we have seen is about $1 billion of exposure. admittedly most of that is not lending. also for this exposure we have seen, about $3 million off-balance-sheet. that's usually not what you want. the markdowns, we do not know. the numbers could be $500 million, this bank may be involved in lots of indirect exposures.

paul: we are speaking about results and you can catch that conversation on daybreak middle east. let's get to vonnie quinn. vonnie: thank you. elon musk has spot twittering a big leveraged buyout. the deal was unanimously approved by the board and is expected to be completed later this year. shares closed up nearly 6%. china is expanding covid testing to most of beijing, raising

fears of an unprecedented lockdown. officials say there will be tests in 11 out of 16 districts. the shutdown fears are sparking panic buying of food and other staples. hong kong foreign correspondence club is suspending its annual human rights press awards. the awards were due to be announced next week, but the club released a statement saying is worried about unintentionally breaking the law. the former president has been ordered to pay $10,000 a day until he complies. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg.

shery: the philippines central bank is considering hiking rates in june as it begins to unwind pandemic error. >> the next meeting is may 19. we will look at data, and hopefully it will show first-quarter growth around 6%, on the basis of that, maybe we will wait another cycle. >> the risk of aggressive fed rate hikes, and imf warning, hitting individual economies.

he said if the u.s. raises rates , you do not want to get behind the curve. are you concerned? >> to me, what makes a big difference is the difference between the real interest rate in the u.s. and philippines. our inflation rate is around 3%. in the u.s. it's a .5%. we cannot afford to wait. shery: you are not seeing second round inflation materializing anytime soon? >> right now there is no evidence. for example, we are in crude leasing wages.

it's at the middle of the depreciation in the region. we are not concerned, it is within our target range. that is the assumption in our model.

katheen: lowering the rrr rate is on the table? under what conditions? that seems to go in the opposite direction of raising the key rate. >> that's not related to the crisis. by doing that, you are taking so much from the banking sector. to allow them to lend out the money rather than the central bank getting the money, that was not allowed to the public. paul: the philippines central bank governor speaking to kathleen hays. still to come, softbank is walking away from some of his lossmaking firms after getting

hurt by tech valuations. we will have the details in a moment. this is bloomberg. ♪

>> here we are. the offer is accepted. >> the biggest criticism of twitter over the balance of the last decade, the platform is

essentially the same as it was. >> how to the twitter board by into this? ultimately they had no backup. >> i am more interested in knowing and how the platform is going to change. >> i'm excited to see what he's going to do with the company. i'm excited to see how plays out. shery: take a look at softbank, we are seeing the biggest gain in about three weeks or so for the company, surprisingly, softbank is emerging as a beneficiary of a weaker yen, gains for japanese equity markets given exports are more competitive.

that has not necessarily been the case as of recent days, but we are seeing softbank, sony seeing resilience, although i have to say, the yen strengthening a little bit around the 127 level. paul: it is edging away. more on the softbank story. what does it mean for startups? reporter: today, the markets -- as you know, there has been a big plunge in technology shares globally, growth shares are plunging as the interest rate environment changes. thanks shift their stance,

softbank, pulling back. depending on of the market conditions remain bad, it's possible for softbank to continue to scale back on its investment, making the environment challenging for start up companies. shery: because of those overseas startups we have seen for softbank, that's one of the key reasons benefiting, broadly speaking we are not seeing the trend highly correlated across japan as we use to the past. reporter: that is true. the correlation could be a bit

tricky, it depends on whether investors are dollar-denominated or based on yen. for softbank, the outlook is pretty much tied more to market conditions of technology shares in general and interest rates environments. definitely should be looking out for interest rates and the yen as well. shery: our technology reporter with the latest on softbank and the weaker japanese yen. this, as we hear from the finance minister of japan saying the report we saw earlier this week that he had discussed currency intervention with the u.s. treasury secretary janet yellen are untrue. speaking in tokyo at the moment, also saying the boj buys bonds as part of monetary policy, that

has led to more weakness on the yen as the boj tries to cap yields. we have seen reports saying perhaps the finance minister has spoken to janet yellen about coordinating fx intervention but he is now denying reports that that is untrue. we have not seen them do that, given the weakness, it's been a key question. paul: let's get a quick check of the latest business flash headlines. credit suisse is considering a management overhaul. the ceo is struggling to turn around the bank after a series of scandals. bloomberg has learned they may replace long-standing executives including its top lawyer, cfo

and heads of the asia-pacific region. barclays saw a surge in emerging markets trading, declining to $644 million in volatility. sources say the banks traders cast in russia and ukrainian credit default swaps. cathay pacific attempts a rebound from covid-19. starting in june, as many as three daily services after hong kong says it will open to nonresidents in may. before the pandemic, -- shery: up next, a preview of what to expect in china and hong kong as covid concerns continue to grow. this is bloomberg. ♪

shery: the benchmark csi 300 is opening at its lowest in two years. we continue to see pressure on the chinese economy, ongoing lockdowns. pressure has been mounting on chinese leadership to take more steps to support the economy, we have had the chinese yuan

dropping to the lowest since 2015. the pboc is moving to help curb the weakness in the yuan by trimming reserve ratios. paul: let's bring in our markets going for -- coanchor. david, what are we watching? david: shery did an outstanding job, lining up our set up for today. the last time we had a drop on the csi 300 of this magnitude was when many on our team and hong kong were basically asked to start working from home, and we had no idea. that was the day right after the lunar new year in 2020. we're back here with market

reaction to those levels. i would be interested to see how markets react to what you are talking about. you look at allowing apart from everything else, as it pertains to beijing, testing the entire city. some news coming through we might get the yuan trade and

stocks and hong kong at some point. shery: the laundry list you gave us, plus, let's not forget earnings. david: we have not started with earnings. i'm going to keep it short. hsbc, leading the big names, have a look at the list, and if today is a pause in the market rout, investors might be able to focus on fundamentals. paul: david ingles. some of the stocks we are watching as mainland markets open and half an hour's time. take a look at chinese banks after beijing took those measures to bolster its currency , reserve ratios down 8% from 9%. china construction bank and all of those others listed, we could

see them move today. still to come, projections for treasury yields at the fed meeting, also assessing the market impacts of china's recent easing measures. little bit of weakness in australia, the asx is off to .3%. seeing significant selling in the market, the market was closed the last three games. most sectors are weaker around the material space. shery: energy down with the asx, not surprising that we did have that pressure on oil prices, although it's rebounding a little bit. that's it from daybreak: asia. market coverage continues as we look ahead to the start of trade and hong kong. standby. this is bloomberg. ♪

♪ david: good morning from hong kong where it is 9 a.m. and the city. 9:00 in taipei and shanghai. i could go on. in any case, welcome to the china open crude i david in glass. let's get to top stories today. surmounting on china's leaders to put the economy before ideology. that is a covid lockdown taking the markets. the currency of yuan paired its