shery: you're watching daybreak: asia. haidi: we are coming to town to asia's major market open. the top stories this hour, investors weighing concerns about china's economy and the pace of that tightening. surging u.k. inflation triggering a bond selloff. officials see a need to scale back rate hikes at some point. tencent reporting first ever revenue decline and cut 5% of its workforce underscoring the extent of china's economic woes. shery: u.s. futures under a little bit of pressure. this after a volatile session in new york. s&p 500 negative through most of the session. plunging again. the reaction was all over the place because we have the 10 year yield near the 2.9%. the two year yield surged and pared back from some of the gains have been investors were

thinking about the potential of smaller rate hikes at one point. not to mention we are in the homestretch when it comes to u.s. earnings season. four out of five companies have beat or meet -- have beat or met expectations. crude prices under pressure in the asian session after gaining a little ground today given we had some bullish u.s. stock pile numbers. haidi: we are getting a steady stream of earnings in australia. evolution mining is crossing the bloomberg. for your people to coming in at 119 million australian dollars. a final dividend per share of three australian cents. revenue margins finishing the full year 2020 to ending june a bit lower. we had the claiming gold sales.

gold ended the day down 5% a year ago. higher costs playing into the equation. previously we had seen higher prices cushioned the broader revenue decline given we saw average copper prices up to -- up two and 12% respectively versus a year earlier. we have seen some of the haven demand for gold as well as the supply disruptions playing into the copper price story. all of that and more with our interview with the chairman will be joining us to talk through the results at 10 past 12:00 in sydney. let's get you to how we are setting up for the market trading day. >> lots of earnings coming through for that asx 200 including the a sx itself. lots of good interviews coming up. we are looking a little bit weaker here. you can see the last close for

sydney. japan pointing to the downside. what is driving that is the fed meeting minutes. particularly the concerns from policymakers, the risk inflation becomes entrenched. we saw that coming through from the u.k. inflation numbers rising to the highest level in 40 years. china's economic outlook as another watch for us. not just what we are hearing from the likes of goldman sachs cutting the gdp forecast but also what is coming through in company earnings. we sell tencent hosting its first ever revenue drop. take a look at what we are seeing in terms of global stocks. we had seen a lot of optimism around the outlook. the drop we had around june and july around 12% since then the question is whether this can be sustained. when you take a look at the relative strength, we are nearing close to the key 70 level. trading volumes have fallen off a cliff here well below the

historical low. that makes it sensitive to any of the fed ratings. shery: waiting for the open and the market reaction from the fomc minutes. they were perceived as perhaps slightly less hawkish than expected. let's discuss. kathleen hays. the markets tend to take anything that comes from the fed has less hawkish than expected. any excuse to rally. what do you make of what you saw in those minutes? kathleen: what i come away is the fed is open to smaller or bigger rate hikes. i think in their own minds they are watching everything closely. there watching the impact of the rate hikes and trying to decide how far they will have to go.

you are right. the markets solid as dovish. partly what they are seeing is the fed mentioning there could be this eventual pullback, dial back in the size and speed of rate hikes. here is a key phrase from the minutes. as it stands, they are agreeing, the fomc members, it would become appropriate at some point to slow the pace of policy rate increase is they mentioned they would do that. they also acknowledge the risk of hiking rates too much as many participants. there was also a risk the committee could tighten the policy by more than necessary to restore price stability. the minutes also show us fed officials are showing they are acting with resolve to bring down inflation. they all voted for the 75 basis point rate hike at the last meeting and they tech -- and

they kept the door open to the rate hike. the minutes also said they have to move to restricted care tory. -- to restricted territory. they said ongoing rate hikes are appropriate. michelle bowman who is a member of the board of governors speaking to a group of women about women in the labor market said one thing that affects the whole conversation. we were markets are still strong. you can see they are caught between a labor market that is still strong, and economy that may have slowed down but is not falling apart and inflation. i think the point is they are going to keep going. haidi: when it comes to the market reaction, there was something for everyone depending on what you wanted to see in those minutes. >> there definitely was a little bit for everybody. from the equity market perspective, keep in mind this is a market that has rallied from the june low and given that

these minutes were fairly nuanced, i think it gave an opportunity to investors and traders to pause and really think where do we go from here. basically take a breather. as kathleen said, the fed will keep -- rates will keep going higher. it just gave investors the chance to pass through those minutes because they were not that clear cut. for us in ages a day cannot forget china given the slow down and the earnings we had from tencent last night which are probably going to weigh on sentiment. you had the pullback in tech overnight given the bond yield and the long end -- jobs, 10

basis points. shery: what should investors watch out for given we have mentioned how global stocks are nearing overbought levels? japanese stocks are already at overbought levels. australian stocks are hanging around the 70 level on a very busy day of earnings as well. >> that is we have the jackson hole -- that is right. we have the jackson hole meeting next week shared that is going to be important in terms of what policymakers are going to say. it is still inflation. it is still concern perhaps the rally at this point has gone as far as it can given we do not have any certainty and it all depends on the data. i think -- as we heard, volumes are low. it is august. it is giving investors a chance to pullback a little bit and

china, are we going to see more stimulus from china? what is the economy going to do? it is pretty much the same thing, the same playbook. i think investors want to look at what the minutes said and whether they were a little more dovish. investors are going to sit back and see how the data plays out. see how the earnings season plays out. in the u.s., it has been somewhat better than expected. not as dire. we are coming to the end of the earnings season. that is what investors are going to be looking at. haidi: we are also watching the u.k. inflation reading. double digits, the highest in 40 years. as a troubling it is no longer just energy that is falling?

kathleen: andrew bailey who is the governor of the bank of england when they did the 50 basis point rate hike indicated that was one of the concerns the price pressures are broadening out. that is the fear. it is one thing if it is food and energy. 10.1% year-over-year. that is quite a jump. look at good inflation. 13.5%. if you buy a car or clothes for your kids, that is a painful jump. this is something they are looking at closely. the economy is in recession risk. prices go up so much impinges on people's ability -- it impinges on people's ability to buy. they did any emergency meeting. they announced it on facebook

they were doing a 75 basis point hike. these are the kinds of things investors are watching and wondering what is going to mean for markets around the world. for now we know it means rates are going up. shery: matar policy and the market reaction. as we continue to watch the slowing economy in china and not to mention the ongoing regulatory crackdown taking a toll on the nation's most valuable company, tencent. reporting its first ever revenue decline after online advertising sales fell by a record. let's bring in our chief north asian correspondent stephen engle in hong kong. we are bracing for these numbers especially after what we saw with alibaba. how bad were they? >> they were bad numbers and we knew that. there were slivers of hope and the company's stock did rise 3% overnight on the caveat. chinese economy is definitely

slowing down or the momentum is slowing down and that is hurting spending. there is a regulatory overhang that is still persisting. it is not necessarily out of the woods spirit you had the first ever drop in revenue. online advertising sales falling by 18%. they slashed 5% of their workforce. first quarterly drop in staffing since 2014. pressures on that income. the caveats are the online advertising was a little better than the -- and then many analysts had feared. when you strip out the one-time gains or losses of jd.com, it actually fared about 15% better than expected. that is why the stock was up. where does tencent go from here? there is some belt-tightening going on. willard chen says tencent has tightened its belt.

it is no longer the runaway growth juggernaut we had expected. as the chinese tech industry embraces a downturn, you have to accept there is a downturn but argue embracing it -- but argue embracing it? tencent executives say they are going to focus strategic priorities -- international games, cloud software and we chatted video. financial services still up in the air. still talking to regulators about a fintech holding company license. no progress. haidi: we saw meituan rising. >> that is right or that was a big story yesterday. reuters reporting tencent would -- perhaps as much as 10% of its stake because of this ongoing regulatory scrutiny. beijing widely believed they

want big flap arm companies that invested so heavily in so many of these companies that became big in their own right through the last decade. in this antimonopoly crackdown that is still persisting even though the government officials and regulators have talked up the need to and the strength of the platform economy. there are still all these pressures. tencent's chief strategy officer when asked about this report, he said it is not accurate. meituan and tencent were up overnight. the other companies we talked about that are owned partly by tencent, kuaishou is listed here. they all fell because there is still regulatory pressure and there could still be pressure on

tencent to hive off the shares. haidi: our chief north asian correspondent with the latest. let's get you to vonnie quinn. vonnie: opec's new head says oil markets face high risk of a supply squeeze this year. the secretary told bloomberg fears of slowing consumption in china have been exaggerated. he said opec members and other oil producers are running out of extra supplies. he was appointed as opec's top diplomat. >> i think we are running on thin ice if i may use that term because capacity is becoming scarce. this is an issue. it is like an insurance policy. we do not want the oil markets to run on without the insurance policy. vonnie: goldman sachs has downgraded its forecast of china's for your gdp. down point -- down from 3.3% following weaker than expected

july data. goldman cited rising covid-19 cases. it is the second time goldman has cut its forecast for china gdp in one month. the biden administration is weighing iran's response to a european union proposal aimed at reviving the 2015 nuclear accord. officials are signaling a deal could emerge after a year of false starts. from a president withdrew from the deal in 2018. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, the latest on the power crisis in china and the fallout for the world's food supply. we will dive deeper into the. -- into that. wealth wide financial ceo joins us to discuss our latest investment strategy. find out why she thinks we are

in bull market rally. this is bloomberg. ♪

haidi: let's take a look at how u.s. futures are shaping up. s&p 500 scrapping the three days of gains should we have the fed

minutes which throughout more options. s&p futures down a quarter of 1%. weakness across the dow futures as well as nasdaq futures. nasdaq 100 over 20%. our next guest says this is a bull market rally. joining us as the ceo at wealth plan financial that is the question. there is a camp that says this is the peak of the bear market rally. it is just a pause we are seeing. >> yeah and we have a few technical indicators that are telling us this could be a more sustained market run. one is the 50 day moving average and 90% of the essence you 500 trading of of the average. that is a good number to keep in mind.

we have also retracted half as much on the s&p 500 from that trough so that is good news as well. where do we go from here? i am not saying there will not be any volatility but we do think it is time to reallocate portfolios and we do think there is an opportunity even when we look at retail sales. when we look behind the number, we look at nine categories that were up and four categories that were down. the consumer, albeit not as strong as the consumer was, is still outperforming inflation by at least a tad. haidi: you point out small-cap continues to outperform. what opportunities are you still see? -- are you still seeing? >> like the value across the board and capitalization side. we do like small caps across the way. if you do believe this is able

market run, then we have the opportunity for small-cap to continue to outpace given the trough it experienced a significant decline in the first part of the year. shery: we have seen stagnating treasury rates at the longer end driving off the falloff. when it comes to value stocks in growth leading the way. what do you make of that relationship? >> i do think there are opportunities on the growth side as well and specifically in information technology services. we see that as an opportunity because unlike goods that have had pricing pressures with good prices continuing to go up, you have wage pressures while in services you don't have the cost goods issue. we are seeing opportunities in that information technology services area. shery: do you worry about the

broader global macro picture? we have seen the weakness in the chinese economy with this chart in the bloomberg showing housing prices falling for an 11th consecutive month. has that already been priced in and absorbed the global economy? >> i don't think it has. i think we still have two absorb what is going on in china and get more transparency as to what is going on. you mentioned a moment ago out goldman declining their gdp estimates for 2022. we are going to continue to see these declines. we may be looking in the two handle instead of three on gdp. that is a steep incline in the chinese economy and that has not been priced in either domestically for china or globally. shery: it was really good having you on.

wealth lies financial ceo. you can get a roundup of the stories you need to know to get your day going on today's edition of daybreak. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪

haidi: a quick check of latest business flash headlines. bloomberg has learned apple is looking to launch its latest iphone. the funds usually hit the shelves a week and a half after the on -- after they are unveiled. how good has potent -- has posted earnings. it reflects the move to/earnings

and pivot. two has given a bullish forecast . easing supply shortages. the company is projecting stronger fiscal 2023 revenue than analysts expected. cisco expecting revenue to grow 2% to 4%. lots more to come on daybreak: asia. this is bloomberg. ♪

>> the ceo of hong kong exchange

is optimistic about the cities ipo pipeline despite a lean 2022. profits fell 27% in the first half but he said that listings are already picking up on signs of economic recovery. >> when we saw a little bit of uptick in activity in june at the markets in this part of the world, we saw ipo's quickly picked up. very good performance. we had all of those ipo's on the pipeline was replenished. we project when the market will come back but the reality is is easier to project 10 years away then the next six months. >> bloomberg forecast the pipeline to stay weak in the second half of a year.

national security views and cybersecurity reviews out of china, in that year you fell back to fourth in the world. what is your best case scenario for next year given how poor this year has been? >> i feel confident given the number of ipos we have in the pipeline. it has not decreased so much. >> but they have been small listings. >> we have some interesting listings. there are some that are interesting plus a lot of companies are converting from secondary to primary which is an interesting development.

companies saying i want to be listed in hong kong and primarily be listed there. a great development for our market. >> what about the homecoming? alibaba is somewhat of a homecoming but we see de-listings increase potentially in the u.s. whether it is tech companies or state owned enterprises. are you actively planning to pursue the companies to come here? >> we are always looking to attract new companies. but you have heard me say many times that i want companies to have a option to list anywhere in the world. the best thing for the markets overall is to give companies option to list everywhere. we want to be competitive and we want to attract and we will make

space for companies that meet our criteria. so i'm excited about the companies that are choosing hong kong as the ipo venue and some of them will move from the u.s. time we will welcome them. >> what about investment income? your investment portfolio you will -- almost the entire amount of what you posted in profit. a sizable amount of redemption. where do you stand with your external fund manager? >> the portfolio has performed relatively well compared to the indices they are tracking. this is a mobile portfolio. the thought process was we want

to avoid significant movement in the profitability numbers. when you combine that to the relatively attractive market interest rates going up it makes a sense to get a small portion of the portfolio, this is about 25%. >> do you expect the investment environment to remain challenging? >> it is difficult. there are a lot of variables that in -- that affected. inflation, recession, the current geopolitical situation, ukraine, so many factors come into play but without a doubt the first six months have been very challenging for all of the investors around the world. >> is the second have

significantly better or do you still see challenges? >> it is hard to predict. we want to make sure we have resilient riposte market -- resilient robust market and sufficient liquidity. it has been difficult because investors are being very cautious in terms of making their decisions. haidi: let's get a look at the market as we head into the start of trading in asia. >> ipo market, mainland china, we have all of these ongoing fears around covid zero policies and impacting growth and geopolitical tensions over nancy

pelosi's trip to taiwan but what drives that is creating a healthy ipo pipeline as a result . looking at china's share of ipo capital raised, 44% of the global total so what helps drive that is the risk of homecoming listings. more than 300 companies are risking being kicked off u.s. exchange by 2024. looking at companies preparing to list in china, another reason is the push we get from regulators to make it easier for companies to directly access equity financing and so we see more listings coming up, particularly on the main exchanges in shanghai and shenzhen but also the secondary board. smaller enterprises looking to list in beijing. the broader markets in asia, china is the focus.

goldman sachs downgraded the gdp forecast and company earnings came through, tencent posting the first ever revenue drop and watching the fed meeting minutes. let's get more from vonnie quinn. >> the fed agreed on the need to adjust the rate of interest hikes. traders are increasingly betting [indiscernible] inflation in the u.k. has jumped to the highest in 40 years. worse than respected by the bank of england. rising food prices contributed the most. pressure mounts for u.k. government and central-bank to

take action. the head of the u.s. cdc has announced a overall of the agency. they will make the agency quicker to respond to emergencies. rochelle walensky says the cdc failed during covid and made mistakes during testing. a member of the tokyo olympics planning committee has been accused of bribery. 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. this is bloomberg. shery: looking to australia's

job data looking to show hiring momentum slowed in july. this comes after some strong months when it comes to jobs in australia. what would this mean for the rba? >> the bank is expected to increase interest rates by 50 basis points but some economists are talking about the risk of 25 basis points next month. if the numbers are disappointing and it shows a slowing in momentum today -- together with yesterday's data report which was lower than expected, it could push the rba to go slow on the tightening. haidi: if numbers fall short does that potentially change the path? >> yes. we have seen them hike by 50

basis points, more than what they call business as usual. they've done it since june and the expectation is they will probably slow from september or october because there is uncertainty around how consumers would react. we see a slowdown in the housing market already. rba is worried about hard landing in the economy. haidi: wage numbers came through and are less than half the pace of inflation. do we expect to see a pickup in wages? there is a tight labor market so that's not why it isn't growing. >> labor market is tight so it is surprising that it is not reflected in the wage price index. there is anecdotal evidence that people are getting higher wages

and big sign-up bonuses and year end bonuses. economists expect the wage price index will pick up and will have 3% which the bank has wanted to see for a long time. haidi: let's look at stocks ahead of the markets opening in sydney. treasury seeing a rise in evolutionary profits. mining net income down. lower value of gold sales but price of gold has been rising. watching for numbers out of the asx. a number of interviews add details to those reports. those conversations will start

right around noon in sydney. 10:00 a.m. in hong kong. this is bloomberg. ♪

haidi: we have asx earnings. for your income coming up.

slightly higher than estimates. we are looking at talking to the new ceo of the asx later today. that stock is down 9.3% year to date, still underperforming compared to the broader australian market which is lower. there has been concern when it comes to the slowdown of tech development but ipo's and some activity we see, 67 around $30 billion australian raised. there's been a lot of interest when it comes to short-term rate review products given the changes we see across monetary policy curve. stay with us for an exclusive interview as we talked through

the results at 10:40 a.m. watching in hong kong. opec's new chief says oil markets face a risk of a squeeze this year. production capacity is dwindling. they spoke with manus. >> i think we are looking at economic growth levels deteriorating to historical levels for now. you're right that we are seeing signs of potentially a crisis. i do not know what winter will look like. utility bills skyrocketing in europe and the u.k. and germany and governments are acting to take the burden off consumers. this boils down to investment. lack of investment, chronic

underinvestment for several years is taking us here. that is the major issue. i think it requires a holistic solution. it cannot just be solved by telling opec to produce more. this is a dichotomy. looking at the g7 statement calls on opec to act responsibly to add supply to the world but at the same time asks for stopping funding of fossil fuel investments. how can you have both? manus: do we need energy -- do we need to accept that energy is delayed not denied? >> transitioning out of the use of coal, the world uses coal so we need to agree on the definition of energy transition and i do not think it means we

should stop using oil and gas on fossil fuels. i think we should collectively work together with tech providers and international oil and energy companies to find ways to advanced technology and de-the production of oil or gas -- and de carbonized the production of oil or gas. the solution is to try to find technology, ways and means to de carbonize fossil fuels instead of moving away from them. you cannot just take one and --

take one and replace one and it would overnight. shery: a heat wave in southwestern china is curving hydropower generation and a growing threat to the energy supply. the world's top battery maker is closing a plant in the province as drought crisis work in -- worsens and this extremely hot weather is going to persist. well above the 30 year average. it will moderate slightly at the end of the month. let's bring in the head of powerful renewables of energy transmission. dennis, this is -- i think the population is similar to germany. but how big is the manufacturing hub and how important is it to the businesses? >> thank you for having me.

for the central area this is one of the major production sites in china so the company makes 10% of the solar power in china and [indiscernible] they rely on hydropower's so the very hot weather that is already affect the power generation, [indiscernible] since haidi: commodity is important for energy transmission we see all over the world. how long will the power crisis last on what does it mean for prices? >> on one hand we have the power

but on the other hand have to transmit the energy on transportations or consumable energy and china is the manufacturing hub for the global factory [indiscernible] and solar pay -- solar panel supplies 50% of the global module so prices are already at the high level. we are seeing that we have to

shut down resources. we are at historical peak level right now but seeing in cases that this issue will extend for more than five days. capacity is not completely shut down yet because it would cause issues so we have to monitor closely. haidi: does climate change become a bigger ongoing issue? >> yes. we have seen that extreme weather has already caused a lot of interruptions in the economy,

industrial production. last september we had some power outages in northeast china and the policy driven on the energy efficiency manufacturing as well so we think extreme weather and stoppage of energy supply because of the ukraine war will impact energy causes and causes of renewable installations as well. haidi: thank you so much for joining us, we appreciate your time. we have more to come on daybreak asia. this is bloomberg. ♪

shery: here's a quick check of the headlines. hong kong exchange posted their fifth straight drop with income plunging 22%. type covid rules have limited business travel and more chinese firms [indiscernible] the ceo says he is confident of a pick in ipo's next year with 180 applications filed.

tencent posted their first revenue decline after online ad sales fell. revenue followed 3% which was more than forecast. lending also plummeted. and a drop in staffing. tencent says they plan to sell much of their stake -- says that reports that they plan to sell much of their stake is an accurate. -- is inaccurate. haidi: we are getting a debrief on tencent earnings. market open is up next. this is bloomberg. ♪

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shery: we are counting down to asia's major market opens. we are watching for power crisis unfold and we are watching for the commodity space lifting, a big manufacturing hub. haidi: a big earnings day out of australia. we will watch for the start of trading in sydney. we are digesting implications from the fed messages. it will be interesting to see how asian investors and their take. >> a lot for investors to passover this morning as we look at the open in japan, korea, and australia, treasury numbers coming online and the shorter duration is following the move we saw in the two year yield and later paring back after fed officials signaled the potential for smaller hikes ahead. we are watching the yen just

back below the 135 level slightly. the weakness has made the nikkei become one of the first markets in asia to turn green this year even though it is coming online to the downside this morning. strategists are saying any gains could end up -- and it being short-lived. new research points to a risk of a global recession and is weighing on japan's biggest exports and trading houses. in korea we are watching the tech heavy call stack pullback again in the nasdaq and futures are pointing to a lower start as chipmakers are in focus, another warning on the chip outlook. the latest from analog devices saying uncertainty around the economy is starting to impact bookings. the korean won looking weaker at the start of trade.

in australia, a major earnings day. a staggered start for the exchange. it takes a few minutes to get results for the biggest markets and companies but asx has reported it met estimates. it is lower at the start of trade in line with what we see with the asx 200 and in bonds following the move we had in treasuries and the aussie dollar is weaker ahead of some key job data from australia. shery: our next guest recommends switching equity exposure from growth to defenses. let's bring in that head of asia research mark matthews. what does this means in -- what does defensive mean in terms of sectors and regions in asia? >> it means consumer stocks like nestlé, telecom companies like at&t, basically companies with good yields and assured cash

flow. we are not selling -- we are not advocating all growth and put in defensive but we think in an environment where rates will keep rising and we do not foresee rate cuts until march of next year the big rally in growth stocks and in some cases up 40% is excessive and now the nasdaq running into the 200 day moving average so we just think the market should cool off a little bit and defenses would do better in that environment. shery: is that what you got from the july minutes, that the fed will not pay for it -- pivot? >> the markets seem to like the minutes on balance because it started going up after they came out and i think the interesting thing in terms of potentially less hawkish was acknowledging that there was a feed through into borrowing costs, that was a

lagged impact and they did not want to overdo it but i think on balance, the tone to me did not suggest a major pivot so we are still looking for more rate hikes to come. they are more than halfway through. we think the total rate hike cycle this time will be 300 to 350 basis points and they have hoped 250 five already but there is more to go. we saw stagnant growth in retail sales in the u.s. and in australia wage growth continues to lag less than half the pace of inflation. does this plead through to concerns about household spending over forward? >> i am not sure what is happening down under but that wage growth in america is very strong. the atlanta fed tracks wave --

wage growth and i think for people staying in their jobs, the number was up 6% over july of next year -- last year but if you switch jobs, to my regulation it was almost a 9% pay increase the wages in america are rising strongly and that would feed through into inflation. we are not advocating that it will keep going up. we think oil will come down and we see house prices starting to soften but at least on the wage side in america it is very strong. haidi: your other view on energy is really compelling. tell me the reasons why you think concerns about an energy crisis in europe are overplayed at the moment. >> to be frank, i hope i am not insulting anyone, but we think politicians and journalists are exaggerating the nature of the situation in europe to get airtime and in fact if you look

at storage capacity in northwestern europe, which is really the economic center of the continent, it is above where it has been on average in the last five -- in the last five years, 78% fall. we see strong supply increases coming out of the u.s. and other places to replace russia is so the weapon russia had which was energy exports to europe is diminishing rapidly in terms of value because we do see a big supply response and we look for oil to be about $75 a barrel this time next year. shery: we see increased focus on renewable and ev's. how close are you following what is happening in sioux tribe given the manufacturing importance for manufacturing

lithium? >> i think renewable and electric vehicle story will continue to beat expectations as it has over the last 10 years. a lot of people do not realize that 30% of all new cars and china sold today are electric vehicles and 15% of all new cars globally are electric vehicles. we were not supposed to hit those numbers for another three years. my mother is buying an electric car and she is in her 80's. i think the fleet will switch rapidly to electric and we want to be in the renewable and ev space. we want to be careful what we buy because they will be big oversupply in select areas like batteries but it is a space we believe in. haidi: good on your mother. i'm still trying to convince my

parents to go down that route. let's get you to vonnie quinn. >> opec's new head to says global oil markets face a supply squeeze this year as demand remains resilient. he told bloomberg the fears over consumption in china are exaggerated and that opec members and other oil producers are running out of extra supply. he was appointed this month is opec's top diplomat. >> we are running on thin ice because extra capacity is becoming scarce. this is lake an insurance policy . we do not want the oil market to go on without the insurance policy. vonnie: u.k. inflation has jumped the highest in 10 years. a worst result expected -- a worst result than expected by the bank of england.

pressure is mounting for the government and central bank to take action. the biden administration is looking at iran's response to a eu proposal revising the nuclear accord. both sides signal a deal could emerge after a year of false starts. trump withdrew from the accord in 2018. president biden has made it a top priority. 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. this is bloomberg. haidi: we are getting results out of country gardens, china's largest builder that has been beleaguered and recently dropped to junk territory and downgraded in june. numbers are coming through. preliminary report, a profit

warning saying the six months profit, net income between 200 million yuan and 2 billion yuan so we will watch for the reaction in markets but we are seeing the company lose their investment grade rating. let's look at the early movers in the session with annabelle. >> cindy listed stocks -- satan a listed -- sydney listed stocks, all in the red.

a lot of delay and replacement. they need to consider what they need to do to get it to work. we are watching evolution mining . there ceo says the performance in the past did not deliver but they are confident about the outlook ahead. trans urban, solid earnings coming through in volume. long-term the outlook looks bright but it is more than 3% lower. shery: stay with us later today for exclusive conversations about those earnings. we will delve into them with senior executives from evolution mining and asx breaking down

results. that is just after midday in sydney. up next, hong kong exchange is confident about a pick in ipos in 2023 after the fifth straight drop in quarterly profits. more on our conversation with the ceo. this is bloomberg. ♪

haidi: an ongoing regulatory crackdown is taking a toll on tencent that reported their first ever quarterly review decline with advertising sales falling by a record. stephen engle is in hong kong. the analyst reaction was that this was not as bad as it could have been. what were the standout numbers for you? >> we expected bad results and you just ran through that online advertising was not that great. but the big jobs cut was also a blow to the former juggernaut. it really reflects the state of the economy and the regulatory pressure that still exists and

regulators are still implementing reforms whether it is in gaming or fintech. so that will all be there but the big question is if this is the bottom of the trough for tencent. other companies like alibaba have been under for more than two years of regulatory pressure and in this year the slowing economy. some say tencent are just tightening the belt and cost cutting is going on as the downturn. i would say they're just dealing with it, not impressing -- not embracing. performance largely depends on progress on operation optimization now but the backdrop is regulatory pressure and when the chinese economy will creep back up if covid zero starts easing. shery: what is happening with

nate one? >> according to the chief strategy area officer it's not an accurate story we got yesterday from reuters. it became a big story that perhaps tencent as part of the scrutiny and oversight of the tech platforms was going to strong arm tencent to selloff part or all of their stake in a food delivery giant but tencent is saying that report is not true. but how far down the path are we in this regulatory scrutiny? bloomberg intelligence as it might be premature to conclude the tech crackdown is over as reforms are still being implemented but i want to highlight quickly that our guest later is at city and says management in the call asserting

the regulatory environment will further improve from the rectification stage to normalization. she has a price target of 468. stock is currently trading at 303. a 54% upside in the next 12 months so there is still optimism for tencent right now. shery: let's look at the economic challenges in china because reports say local authorities could issue an additional 221 billion dollars in debt to boost infrastructure investment after the chinese premier called to bolster progrowth measures. let's bring in john. more debt. do authorities have the leeway to do this now? a few years ago it was about

raining and leverage. are we going back to the old playbook? >> i think the playbook at the moment is increased infrastructure spending to get the economy growing again. the premier raised the possibility of an additional bond sale. that's the outstanding amount of government debt and the margin of that amount to the debt ceiling china has so there is still a margin of 1.5 trillion u.n. so they are raising the possibility we will use that amount and they are looking for any way to squeeze additional spending out of government coffers and beijing is looking for different ways to boost the economy. haidi: in the property sector we have the numbers from country garden. how big a drag do we continue to be in and do we see a policy response that could potentially

change that trajectory it is headed in? we >> -- we have seen satellite data from a private firm that shows although infrastructure spending by the government has increased in july but even that increase isn't enough to make up for the big drop off we saw in residential construction. this market has seen prices drop every month this year and as long as prices are going down it is hard to see buyers coming back into the market. we also have mortgages, another reason buyers are staying away. it's hard to see a recovery anytime soon. shery: not surprising goldman tactic -- goldman sachs is cutting china's gdp growth for test. -- forecast. getting farther and farther away from the 5.5% target. >> this is the second month in a row that goldman has cut.

july and now. the for your target to 3%. china has plenty of problems. covid outbreaks. and now electricity shortages in western china because of the heatwave combined with drought and lack of hydro leading to industrial users and now residential users having electricity cut back. haidi: john with the details. aco says he is optimistic despite a lien year in 2022. nicholas told us listings are already coming up with signs of economic recovery. >> when we saw a little uptick in activity in june and the markets in this part of the world performed a little better, ipos quickly picked up and we

have had 16 ipos in july. very good performance. we had all those ipos and the pipeline still around 180 so the pipeline was replenished and we continued to see, it is hard to project when the market will come back. it is much easier to project 10 years from now than what will happen in six months. >> the ipo pipeline has been forecast to stay week by bloomberg intelligence. companies are navigating the new listing requirements at of, cybersecurity reviews, national security reviews. $5 billion in ipos so far this year compared to 30 plus billion the year before. in that year you fell back to number four in the world after the nasdaq and shanghai. what is your best case scenario for 2023 given how poor this year has been? >> i feel confident, given the

number of ipos we have in the pipeline. the pipeline has not decreased much. we've been talking about this for some time. >> but they are small listings. >> right. we have some interesting listings. a lot of companies are converting from secondary to primary, which is an interesting development of companies saying not only do i want to be listed in hong kong, i want to be primarily listed in hong kong. a great development for our market. >> what about the homecomings? we are seeing delisting increase potentially in the u.s., whether it is state owned enterprise or tech companies that ran afoul of regulatory scrutiny in the u.s. and china.

are you actively putting a plan together to pursue the companies to come here? >> we are always looking to attract new companies. but you have heard me say many times that i want companies to have an option to list anywhere in the world. the best thing for our markets is to make sure companies have an option and they can list here, europe, the u.s.. we want to be competitive. we will make space for any company that meets our criteria so i am excited about all of the companies that choose hong kong for their ipo venue. some will move from the u.s. and if they meet our qualifications, we will welcome them. haidi: more to come on daybreak asia. this is bloomberg.

haidi: european futures are opening up and we saw a retreat with european futures up 1/10 of 1%. equities in the region retreating after five days of gains with a decline in bond yields with ongoing concerns about inflation and u.k. inflation accelerating more than expected, the highest in 40 years and into the double digits. watching for the reaction continuing in sterling. expectations from deutsche bank that the powers will boost if u.k. government tightens -- they are watching for a move on the back of that but that was the largest winning streak for stoxx

600 since march but we will see if there is a bounceback. shery: energy prices very important in the inflation future. oil prices in the asian session under little pressure given the demand concerns on recession fears. natural gas pausing gains we saw recently despite concerns about domestic winter reserves and a worsening energy crisis in europe. asian gas futures higher for a fourth consecutive session. coming up, more on bloomberg. this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!!

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>> although we still have about 4 million people out of the

workforce we still continue seeing low unemployment rates. a tight labor market has historically pulled in more workers. shery: the minutes of the fed july meeting reveal concerns of cooling-off rate hikes even as they need to push further into restrictive territory. kathleen hays has the latest. how dovish or hawkish was the minutes? kathleen: a little of both and that is what is interesting. the fed is looking at where it has been and how much further it has to go, what to do next in terms of hikes. and minutes that are basically from a month ago. let's look at what they said.

markets saw a dovish tilt that they will maybe eventually dialing back on rate hikes. the more they raise rates it could be appropriate to slow the pace of policy rate increases to see how this is impacting the economy and inflation. the fed also suggesting that they might eventually have to dial back, there's a risk they could do it more than necessary to restore stability. they keep looking for a pivot. in terms of the other side of the coin, they stress that they are acting with result to bring down inflation. this is the kind of thing jay powell was stressing at the last meeting at his press conference

and minutes show that every official, it was a unanimous decision, they need to see to restrict the position, that could move the -- that could be to 4% or higher next year. outside the minutes, michelle bowman spoke at conference about women in the labor force and one thing she said pertains in a way to monetary policy that the labor market is still strong and even if it cools off a bit it would be a green light for the fed to keep going on the rate hikes and get inflation under control. haidi: retail sales. flat on the surface but stronger when you look at oil and gas prices. kathleen: what you have to

remember with retail sales is it's a dollar-based fees -- dollar-based figure. it's not adjusted for inflation. if gas prices fell, the dollar amount accounts for a bigger amount of gasoline. same with used cars. those prices have fallen a lot. that's when you take out used cars you get closer to 0.7% for july. not so bad. it looks like even though consumers are going on more vacations onto nice restaurants but they are still buying a lot of goods. when we look at target and walmart and big retailers we see there is so much in the torah because they had to order a lot last year when we were coming out of the pandemic and you could not get stuff but now it is accumulated. the consumer is still spending

but when your margin -- mortgage rates are going up and higher rate hikes are working through the economy, that is watching. haidi: on the geopolitical front we see development when it comes to u.s. and taiwan with reaction from beijing. they started formal negotiations on a trade initiatives and the first round of talks was set for early this fall. this move will heighten tensions in china but the first round is expected to take place in the fall and will cover regulatory practices, agricultural trade and other issues on the goal is to deepen the relationship and

advanced mutual priorities based on shared values, innovation, and economic growth and this comes after nancy pelosi visited the islands and the military drills in response from beijing. we still have the plans on paper for the u.s. and chinese leaders to meet later this year. there was a recent phone call where they talked about potentially removing trade sanctions between the countries. this is all in doubt now with the acceleration of trade talks between the u.s. and taiwan being announced. monetary policy continues being front and center in asia. philippine central bank expected to deliver and mother rate hike. straight like that standpat despite soaring prices. let's start with --

they made a surprise move last week and they are expected to go up another 50 today and it's just a simple inflation story remaining above six petén -- 6%, well above the target and even though the economy is slowing, and household spending and demand is holding up though the feeling of the central bank is there is wiggle room to put through interest rates and bring down price pressures. the question will be what signal it will send at the pace of rate hikes from your after. there will -- they will be a point where some central banks are going to step back and ask how rate hikes are impacting. the philippines are expected to move today and that bigger news

will be what signal it sends for the future. growing unrest in -- shery: growing unrest in sri lanka with soaring prices that the economy is so weak what can the central bank to? >> inflation up 60%. there is a view among bloomberg economist that they think central bank will stay on hold because what is happening is supply driven inflation pressures. food and commodity prices and those prices coming down globally so maybe a feeling that the central bank will wait and see how things go and politically there has been a degree of stabilization. it's lending itself to maybe securing new financing from the imf and other lenders and there is the aspect of the cost of

borrowing. if sri lanka puts up interest rates it would increase debt further and on and inflation basis the case is there for a hike but considering other factors we think they will stay on hold today. shery: the u.s. and taiwan starting formal negotiations on a trade initiative. let's bring back annabelle for reaction. >> implied overnight volatility on the you one spiking close to the red we saw. this will inflame tensions after pelosi visited taiwan earlier and talks are set to take place

in the fall. more details will come through but negotiations will cover trade facilitation, regulatory practices, and i correction stance. a lot -- and anticorruption stance. a lot that could risk the ire of beijing. trading is not underway yet, 15 minutes out from the open of china. u.s. futures are still pointing towards a weaker start at trading in the next session and we are watching the u.s. dollar weakening a little but other factors are at play including fed minute. haidi: let's get to vonnie quinn with the headlines. vonnie: more on those minutes. federal reserve officials agreed on the need to eventually dial back the pace of rate hike.

minutes show official worry about the risk of over tightening. stock traders increase betting that said will boost rates 50 basis points next month rather than 75. expected growth of 3% in 2022 following weaker than expected july data and energy issues in china. goldman cited rising covid cases. it's the second time they have forecast lowering china's gdp in a month. you an expert -- a u.n. special reporter on slavery is saying there is evidence of use of force labor in china, violating

human rights. the u.s. cdc is overhauling the agency to make it quicker to respond to emergencies. rochelle walensky says the cdc failed to meet expectations during covid and made mistakes in testing, communication, and data sharing. a former top member of the tokyo olympics is arrested on bribery allegations. she is accused of taking money from executives for favorable treatment and sponsorships. 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. this is bloomberg. haidi: up next, tencent sales

have fallen for the first time ever and we will get an earnings debrief. we will find out more, next. this is bloomberg. ♪

shery: looking at asian stocks, we see most sectors under

pressure with material stocks leading to decline. energy higher 3/10 of 1% on the asia-pacific index as oil prices rebound in the new york session given a u.s. stockpile. pressure continuing in the asian session. we were watching taiwan futures closely. stock market gaining ground. we just got news the u.s. and taiwan are starting negotiations on a trade initiative and we are seeing the upside for the offshore yuan up 10% -- 1/10 of 1%.

we could see more uncertainty in the region. we saw a lot of volatility when pelosi was in the region and now we see the downside and taiwan futures. haidi: we heard from the white house months ago that they were perfecting details of the new strategy when it comes to a relationship of taiwan and that relationship for trade in particular and we are getting news of the trade talk soon to get underway. sticking with china, tencent lugging their fifth straight revenue decline. the next guest says stock will turn more constructive toward year end and anticipation of accelerated revenue growth in 2023 is a part of that.

it feels like even though these numbers were ugly they were not as bad as they could have been. is there hope for a turnaround? >> yes. it is. it is not as bad as it looks given the slowdown expected and the profit is better than expected given [indiscernible] criticizing on cost-cutting effort but this quarter they show they stepped up in the cost-cutting initiative so profit base is what investors are probably looking for, yes. haidi: when you look at the price target it's at 452 dollars, 50% higher.

is this realistic? is it fair value given what expected improvement you might see? >> the target price is the next 12 months so that is based on the 2023 estimate and this year has been challenging for many companies in the world and given they've been doing a proactive approach in re-accelerating revenue growth, we hope advertising decline will narrow down with potentially seeing growth next year. overseas they are launching a number of new titles, most will come out later at the end of the

year and beginning of next year and that is why we mentioned investors will potentially look beyond this year. shery: we heard from this chief strategy officer that they are not necessarily up. the reports of divesting are inaccurate. do you expect it to happen eventually? >> it will be timing. from time to time they will evaluate investment portfolio and if they will be similar to venture capital and portfolio, as the business matures or if they feel the need to invest in

new emerging tech, they might divert some stake. shery: what that divestment be done domestically given the fact that beijing does not want to see more influence growing for the company and alibaba? will they try to grow internationally? is that feasible? manus: i guess there has been investing, especially on some game studio overseas in the last 10 years. from time to time i think they will see if the opportunity rises and valuation looks attractive, they will probably look more out of china but it depends on the valuation versus internally domestic whether china sees opportunity. shery: alicia, good to have you

with us. we are seeing market moves on the u.s. taiwan trade initiative. annabelle, what do you say? >> early trading for japan and soul, defense sectors could be some of the most active stocks we have had with pelosi visiting . in terms of reaction today looking muted but recapping the headlines that came through, it u.s. and taiwan beginning negotiations on a trade initiative. a lot of reaction when we get the opening of taiwan trading and mainland china trading soon. yousef: -- haidi: a lot more to come on daybreak asia. this is bloomberg. ♪

haidi: let's get you the latest about news that just crossed the bloomberg, the commencement of trade initiative conversations between the u.s. and taiwan are expected to start early in the fall according to the trade representative office. this adds more uncertainty given geopolitical outlook, reaction from beijing we saw from nancy pelosi's visit. let's get more on the potential reaction out of china. we see a reaction when it comes

to offshore pricing. how does this complicate matters given expectations for u.s. and china relationships and the meeting that is supposed to happen later and the idea that we could see alleviation when it comes to trade sanctions now with these negotiations set to go underway between taiwan and the u.s.? >> i think the key question will be how china reacts. they have not reacted yet so markets are getting ahead of it. taiwan stock exchange pointing to a lower open. not a huge move. this is the narrative weighing on markets. we saw the volatility around what happened when nancy pelosi visited taiwan. so the key thing is if china will react and how strong will it be?

this is the latest in what will likely be seen as a provocation against china. this is not a significant trade negotiation and will not change economics. it's more symbolic. shery: sophia with insight on what we could see in the market. a lot of volatility already when nancy pelosi was in the region and how china reacts did. -- reacted. now we see futures down 8/10 of 1% after we saw gains for taiwanese stock in the past for sessions so we are already coming from a high level but it looks like we might see a jittery market as we head to the china open. haidi: extra uncertainty given

all the existing volatility facing markets at the moment. we will get more insights on these. k wealth management i think downgraded their forecast as covid zero ways on economic process. -- progress. and tencent giving a negative outlook. that's it for daybreak asia. we are looking at the start of trade in hong kong, shanghai, and shenzhen. stay with us. bloomberg markets china open is next. this is bloomberg. ♪

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