>> you are watching daybreak: asia. coming to you live from new york, sydney, and hong kong. >> counting down to the market open in tokyo and seoul. australia has just come online. the top stories this hour -- asian stocks are set for a weaker start. the dollar strengthening. more fed hawkish in us. the san francisco fed mary daly says the bar is high for slowing the pace of tightening. >> ics as raising to a level that we believe is restrictive enough to bring inflation down. and then holding it there. >> and oil extending after opec agrees to the largest cuts of 2020. the u.s., slamming the decision as shortsighted. >> we can see at the start here

snapping a two-day rally. what is driving that is this coming back into the markets now that this narrative had been building toward the peak of rates for the fed. -- what's really driving that is this broader understanding coming back into markets now that this narrative that had been building at the peak of rates for the fed are the major central banks, that is really overdone. we are not nearing any sort of policy pavement. that is being reflected in what we are seeing in yields this morning, looking like this. particularly seeing the moves in the long-duration 10 year. also a sign of recession for years generally that remain front and center for traders. let's take a look at the broader markets. we do have the kiwi stocks already trading this morning in the red. the chicago nikkei futures, looking like this. we could still see the market trading lower at the start, was not the most liquid

contract. we are also keeping an eye on the direction of the dollar, firming a little bit. we are seeing the yen now trading back near the p1 45 level. >> -- key 145 level. >> the dollar had a bit of a stronger data day. as fed hawks came out, two of them in tandem, mary daly and raphael bostic, making it clear not up a bit, -- not a pivot, it is rate hikes that lie ahead. that is one thing that w -- th at weighed on stocks. he had a rally at they meet all of the day. we are seeing a little bit of a bounce off. no big signal here waiting for any kind of news overnight going into tomorrow that we will get a sense of where things could go. futures, a little bit of the rise. a big move up in the 11 basis points on the benchmark 10 year. 3.75. maybe the decline is over at

least for now. nymex crude continues to move up a bit after opec-plus said it is cutting its output, the most since 2020. $88 a barrel, the third day of increases. >> let's take a look at the reaction to fed speakers, including mary daly. i want to bring in our chief correspondent, garth reynolds -- garfield reynolds. what is this telling us about market expectations for the fed? even though you have the likes of mary daly and other fed speakers pushing back on this idea of a pivot, you look at something like this, some segments of the market are still not listening. a cut is still priced and for the next year. if you take a look at the blue line signifying we see a lower rate by me, you can interpret that to see march has been the peak. is this still just a market looking for a reason to keep that pivot hope alive? >> i think it is part of it.

i think it is also, we are in unusual territory. i think you can argue at the very least what the market is pricing in, it is pricing in a policy. i.e., the fed is going to end up hiking rates more than the fed will be comfortable with. it is going to push us into a recession. inflation is expected to come down very rapidly. but that is only going to happen if you get a recession -- we've got people in the equities market over the last couple of days saying the equities market had fully priced and 96% priced in a recession. what might go on is the fed does not go as high as the market for years. it might end up having a lower terminal rate but still keeping it there. that is part of -- there were hints of that and what daly was saying. she was asked by bloomberg's michael mckee who said, what is more important,

hiking rapidly or holding rates high? she was leaning towards the holding rates high side. so maybe that cut turns into a lower rate. a lower terminal rate. but the fed is very determined to keep it higher. that will have a range of impacts which are going to reinforce the potential for a recession and go on making it very tough for bonds and especially for equities. >> i really like mike mckee's question in that regard. what they are trying to do is avoid the mistake of an early 1980's under volker. they stopped hiking rates too soon and had to come back and to even more. is a dollar just going to keep going higher and higher until we know that the fed has gone to the point where they can't hike anymore? is there some sort of natural peak for the dollar now? >> the dollar is already off most of the charts. unless you want to extend back to things like the plaza

accord. when i got stronger against what was in the deutsche bank and japanese yen. it is hard to see a peak dollar coming just yet. the concern has to be that first of all you get u.s. yields rising. u.s. yields rising and staying high. you get a recession, what happens in a recession? initially the dollar goes up. i think, though, if you do get a recession, that would be about when you would see the dollar peak. because at some stage, you would get serious pricing for rate cuts. you might start to see strength come off. but it will be sometime before you get a dollar peak. because again, a stronger dollar helps the fed to contain inflation. so the fed is not going to do anything to stop the dollar strengthening. there is not much else out there that's going to act. the dollar strengthening. >> that means we've gotta lot of weakness and other currencies. that was the chief correspondent

for asia and mlive contributor, garfield reynolds. let's move to an action-packed day in the oil markets, opec-plus cutting its limit by 2 million barrels a day, leading to a rebuke by the biden administration. meanwhile the eu approved a fresh package of russia sanctions that may triggered output cut by russia. bloomberg's su keenan joins us. let's start with the rally in prices. the magnitude. is this the beginning of another study move up? >> it is certainly the beginning of a more intense round the volatility. big moves in the oil market. really came ahead of this opec plus decision, as the alliance telegraphed that they were going to make a much bigger cut than the one million barrel a day cut that was expected. their plan was for an output cut collectively of 2 million barrels a day. not only more than expected,

but in fact the largest cut since 2020. this was the first meeting of oil ministers in person. opec's moves drew criticism from the u.s., which we will get into. and efforts by the e.u. to impose a fresh package of sanctions. including a cap on the price of russian oil, drawing huge criticism from the russian deputy prime minister who was also in attendance at the vienna meeting. what was unique about this particular meeting is it is a for us and we have seen the oil ministers in person since the pandemic. but again the russian deputy was harsh with criticism and not agreeing to cut production. take a listen. >> the price cut creates a very bad precedent. >> we've got technical difficulties. what i can tell you is the

russian minister stated that this could backfire on the eu. in other words, attempts to cut russia production or put a price cap could actually cause the russians to cut back on the amount of oil that they are putting in a market making the situation for the european nations even more severe. >> we also have heard from saudi arabia's top oil officials warning the lack of clarity on a price cap is just adding more uncertainty to the market. >> bloomberg caught up with the saudi oil minister after the meeting. again, he did not pull any punches in terms of his criticism on the u.s. feeling that the u.s. led this effort by the european nations to put a price cap. finally the european union just agreed on it today. and he believes this is fanning the flames of uncertainty. which is the very reason that opec-plus did this major cut back.

meanwhile, what you have with the biden administration is a lot of fury. biden has swallowed his pride and flew to saudi arabia in july, fist bumped the saudi prince. sort of promising that there would be more oil on the market. there is the opposite. let's take a listen at what the white house is saying about all this. >> we are disappointed that opec made this decision. as the president mentioned, we think it is unnecessary. if you look at the global environment, where supply continues to be the predominant challenge. we have been working for some time to take action and encourage action globally to make sure that supply actually matches demand. >> and if we talk about supply and demand, there are some interesting aspects of this, many oil experts will tell you that opec has been undercutting its targets to begin with. so perhaps a cutback will not be

as severe but nonetheless we've got new turmoil and volatility ahead. >> bloomberg's su keenan there. we do have another spacex launch happening at the moment. the falcon9 rocket launch of 52 starlike satellites from the air force base in california. this was delayed to be able to support the crude launch that they had earlier, when it comes to the starling satellite, to try to make way for the crew five astronaut flight which did take off earlier. that delay, really stemming to create something of a traffic jam, if you will. this being pushed back for nasa earlier on once a. this launch is now happening from california's vanderburgh space force base, accounting for that one day delay, to focus on the launch for the crew five mission for nasa.

this delay really does give them a little bit more time to be able to focus on that. but that is now happening as we are watching that right now. this is just about happening wednesday night eastern district time. supporting the mission they previously launched into one other starling mission. we will be watching for the separation and the first stage will be landing. stationed in the pacific ocean. let's get a look at some of the stocks that we are watching here in australia. energy names on the move after that big decision from opec-plus. >> that's right. picking up on what su was saying, the ramifications of this major cut. the biggest one we have had since 2020. taking a look at the names and us really at the start of trade, the open of wti, still moving a little bit higher one hour into the session. a little bit to be expected

because we did see energy one of the biggest gainers for the s&p 500. we will have the japanese and korean names in an hours time. >> let's get you to vonnie quinn with the first word headlines. >> the u.k. prime minister has sought to rally despondent members of her ruling conservatives at the party conference in birmingham. the annual gathering, overshadowed by humiliating government clampeddowns to cut prices on britain's highest earners. a bruising few days, in which members of her own cabinet openly questioned her plans. >> we gather at a vital time for the united kingdom. these are stormy days. in these tough times, we need to step up. i am determined to get britain moving. to get us through the tempest, and put us on a stronger footing as a nation. >> the wto's global merchandise trade will slow next year. it says manufacturers, households are grappling with a mix of issues including the

ukraine war, high energy costs, and central-bank rate hikes. the wto expects trade growth to fall sharply in 2023 to 1%, compared to the previous forecast of 3.4%. >> we have just released our forecast. it is looking quite grim. a little more grim than we had thought. a real slow down and it is happening for several reasons. of course, the high energy prices in europe arising from the war in ukraine are a big factor in this. and household spending. the monetary policy tightening in various developing countries and happening in emerging markets. >> taiwan has pledged to work closely with the u.s. and other allies to prevent china's military from acquiring state-of-the-art technology, putting it in line with washington's efforts to restrict high-tech exports to china. taiwan is home to the world's largest semiconductor foundry. industry heavyweight tsmc is building a new plant in the u.s. as china ramps up military threats.

spacex has launched a nasa mission to the international space station. the team includes a russian cosmonaut, a japanese astronaut, and the first native american woman to travel to space. the mission had been delayed several weeks. the crew is due to arrive thursday after a 29 hour journey and a schedule to spend six months in orbit. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. ♪ >> still ahead -- goldman sachs raises its fourth quarter forecasts for brent crude on the opec-plus cuts. the head of energy research, damien courvallin, joins us later. and liquid alternatives in an adverse environment for stocks and bonds. david could lead joins us to talk market strategy, next. this is bloomberg. ♪

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>> we are watching spacex falcon 9's rocket launch from the vanderburg air force base in california. it's been quite a day watching it. it is always so exciting. it is a crew of four. a nasa mission to the international space station, including a russian cosmonaut and the first native american woman to travel to space. this is the satellite we are watching here. the says the earlier launch -- this is the earlier launch. this is a big project. it is interesting to me and so many people to watch, as it lands now. i am always amazed at these

things going way out into space, you know, going at tremendous speeds, coming down so fast, look at this. are happening. how is that that human beings have been able to get this far? it is also inspiring that we have a russia- u.s. partnership here at a time when there is so much tension. it is nice that some parts of the world can get past the tension and conflict. >> kathleen, a lot of coverage of this, as we see the first stage landing, the drone ship in the middle of the pacific ocean. i'm going to drag us back down to earth and back to the fed and the markets. our next guest says policymakers have made it crystal clear they will stay aggressive to fight inflation. joining us now is david kudla. ceo at mainstay capital management.

they are pricing in either a pivot or a pivot because and expected policy era, suggesting that my -- that by may we are coming off the peak. what are you making of this? is it wishful thinking, in terms of what the market is positions for? >> i think it is wishful thinking. you've got to believe the rate cuts -- the rate hikes that are coming are going to be enough to bring down inflation. but we will see what we get here on the 13th for the september cpi. we have never had a period where the fed has been able to stop hiking. they have had to hike rates above the headline and core inflation rate to bring down inflation, have positive real rates, and we are a long way from that. so there's this narrative about

the fragility of the financial system. the fear of a recession. which would change the game, of course. but when it is about inflation, the fed just has a long way to go. >> how do you position, in the meantime? if you think it is a market yearning for any upside, going into our and earnings season that we know probably will be quite challenging, particularly when it comes to the dollar exposed companies -- what are you liking at the moment? >> for the most part, we are looking at defensive sectors, recession resistant, those sectors like utilities, health care, in our equities positioning. when you look at u.s. markets, we have stocks and bonds falling together. in an environment like that, we talk about the classic 60-60

portfolio -- 60-40 portfolio. it is down more than 20% this year. when you look at a traditional blend of stocks and bonds, they are just not doing that will. liquid alternatives, these are more complex strategies, long short funds, managed futures that offer opportunity for a positive return because of the strategies of shorting stocks, shorting currencies. look at asia. look at what's happening with the chinese yuan. it's all in 11% versus the u.s. dollar -- it has fallen 11% versus the u.s. dollar. so shorting foreign currencies against the dollar has been a very good trade this year. shorting bonds, a very good trade this year, whether it is u.s. debt, sovereign debt, or debt around the world. when you employ those types of strategies rather than the guest on in the last hour that is in cash, these are opportunities that actually generate positive returns for us and diversify our

stock and bond portfolios. >> is it time to do a much simpler trade than that? if you have a portfolio bonds, many people shifted over to short-term maturities, right? but are yields close enough to what is going to be a peak that people can start thinking about lengthening duration in their bonds portfolio? >> i think so. we are getting to that point. even if you were to buy a 2-year note, you are looking at around 4% right now. so you to have opportunities in bonds to hold to maturity get a decent return. when we look along the yield curve, some opportunities there. those are starting to develop. the concern is, though, where does the fed go from here? where does inflation go from here? the reaction function of the fed is to raise rates further so that while there is a more attractive yield within bonds, the unfortunate opportunity for

capital depreciation tends to go higher. >> quick question -- do you like energy stocks more after this opec-plus cut? >> absolutely. yes. the etf we own, up 14% in the last three days alone. i think we have very favorable fundamentals for energy stocks in the move by opec. just driving the sector higher. >> thanks so much for joining us as always, david kudla. ceo at mainstay capital management. you can get around above the stories you need to know to get your day going in today's edition of daybreak. go to dayb , also available on mobile and the bloomberg anywhere app. this is bloomberg. ♪

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australia, a half-hour into trading here in sydney, down about .3%. we are watching energy, oil, the sector one of two outperformer's, 1.6 percent tire is where we see energy stocks in sydney after that big move from opec-plus, amid concerns about downsizing growth and protecting oil revenue. generally, a down day across the markets. futures up with 3% on the nikkei , but pretty much primed for a lower opening. investors in the u.s. session, treating on concerns that

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♪ vonnie: this is daybreak asia.

opec-plus members have agreed to cut total output by 2 million barrels a day starting in november to keep prices higher. it means actual supplies will fall by last. still the biggest cutting -- biggest cut since 2020. the white house slammed the decision as it released another 10 million barrels from the strategic oil reserve. >> the decision was made to balance the market out with these cuts. this is very important to head of the winter season, when we would also see seasonal decline demand by 2.5 million to 3 million barrels in this decision today helps the market balance out. it is a very weighted decision and a timely one. vonnie: the eu's backing new sanctions against russia including a price cap on russian oil sales. other measures target russian

individuals, including those involved in widely condemned referendums in ukraine. but some say the latest sections weakened earlier proposals. european commission president ursula von der leyen and -- has a plan on energy. the commission contends tgf no longer reflects the blocks energy priorities and shrinking russian gas. actor alec baldwin has settled a wrongful death lawsuit from a shooting on the death of rust. baldwin agreed to give her husband a role producing the picture as part of the agreement. 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. ♪

kathleen: the u.k. conservative party congress has ended with for mr. liz truss trying to rally your party and markets. tom mackenzie reports. tom: the speech by the u.k. prime minister was an attempt to regain the initiative. this leader has been weakened. we conducted the market turmoil that followed the many budget of the chancellor exchequer, weakened after a u-turn on a major tax cut proposal and weakened by divisions within her own cabinet around her policies. but she wanted to stress in this speech that she's sticking with what she describes as a progrowth set of policies. she says she wants to create a new britain for a new era. listen. >> i have three priorities for our economy. growth, growth, and growth. [applause] cutting taxes is the right thing to do morally and economically. high taxes been working that

extra hour, going for a better job or setting up your own business. that is why we are cutting taxes. tom: liz truss saying she wants to move the u.k. economy away from a high tax and low-growth cycle. she made a point of attempting to reassure markets, saying the bank of england independence is key, saying she is in lockstep with her chancellor and also suggesting she will have an iron grip on the country's finances. fiscal responsibility, she said, is at the center of her policy proposals. but there was no mention of the key question for many households in the u.k. -- what about mortgages? they have risen in some cases to as much as 6% for two-year mortgages, potentially putting households further under economic pain amid an already difficult cost-of-living crisis. and at that joke of the housing

market, and also, what to do about the debt level. she says she wants to be fiscally conservative and fiscally responsible. bloomberg economics estimated this government may have to cut 45 billion pounds a year to get debt to gdp down in the median chairman. she did not spell out details on where those cuts are going to land. so, implementation is now going to be key for a prime minister who is facing arguably unprecedented challenges and even rebellion from within her own ranks. at that is what the markets will be watching for in the days and weeks ahead. in birmingham, tom mackenzie, bloomberg news. haidi: taking a look at the market implications of the pivot from the u.k. government, the pound with a little bit of a reprieve. the bloomberg economics team is looking at the effect of the

pound and it is still at risk they focused on the current account deficit because it has been a long-standing risk for the u.k.. about in times of better economic fundamentals, it could be ignored. but now when you are seeing inflation in double digits and you have a strong dollar and slower growth, concerns around the fiscal credibility of the u.k. government. these are all factors that make it a lot more important. on this chart, you are looking at the u.k. current account allen's percentage of gdp. you can see 5.5% in previous readings, still narrower than the ones prior, about wide by historical standards. our bloomberg economics team looking at how much the team -- how much the bound -- on which the pound would need to drop and we need to see it weakened by a further 7% against the dollar to bring us more in line with historic norms. but in terms of the dollar or pound weakness, the flipside is dollar strength that we are seeing it down. that is setting us up in asian

trading for a weaker start. we have the asx 200 and kiwi stocks already underway and in the red. japan futures looking more positive. but yen weakness as been a big boost to the biggest exporting names in that market. the yen is approaching the 1.45 level once again. kathleen: don't miss our interview with new zealand finance minister grant robinson as the rbnz says more big hikes are ahead, he joins us at fun cook -- 10:30 a.m. hong kong time. up next, have opec-plus's huge supply cuts are affecting energy markets. this is bloomberg. ♪

♪ haidi: let's look at w we that wti trading early in the asian session. opec-plus output about half of what they said, meaningfully. to millions barrels a day. we are hearing that russia may reduce its own top -- its own output even after the biggest opec-plus supply cuts since 2020. oil futures selling around $88 a barrel left of that agreement announced on current output limits.

they say they may impose a temporary production cut in response to the efforts by u.s. and others to cap apprise of russian crude. the deputy energy ministers saying the nation will not sell oil to nations that cap oil prices. in terms of the opec-plus cut is concern from the markets that it is going to make the fight against inflation harder. we get more from the saudi oil minister, saying u.s.-led plans for a rise cap on russian imports are fanning uncertainty that drove opec-plus to its biggest production cut into years. the prince told us this group wants clarity in this market. >> we want to give the market clear direction, clear input. that is why we extended the agreement, and we have the same

tools in our kit. guidance in the market is crucial because without guidance, people would not invest. however, we still have the tools in our kit. we reduce the amount of overall expectations. we still have, every two months, we will have a gmac. the gmac is warranted to have the authority to meet more than every two months. it has also been given the authority to call for a conference meeting if necessity dictates that. >> part of the toolkit, and the kingdom has often led from the front and gone with voluntary cuts, or ads to do the right thing to ride the market.

did you consider a voluntary, additional cut? >> [indiscernible] i think amongst us, we saw out a good deal and certainly -- we sought out a good deal and certainly some countries are not able to produce their voluntary volumes and because of that, we elected to go for a bigger number. in the final analysis, it will be a smaller number, but certainly it is significant and therefore, we feel it is sufficient for now. again, our hope is that the world economy will become clearer and brighter. our hope is that people can have more certainty in many aspects, certainty in terms of interest

rates, costs, in terms of foreign-exchange end in terms of this issue of -- foreign exchange and in terms of this issue of embargo it covid zero policies, all these things combined, making the situation. it has been 35 years in this business and i have never yet to see a situation that can compare to this situation. kathleen: the saudi energy minister speaking to bloomberg's manus cranny in vienna. goldman sachs raising its fourth-quarter forecast for crude ahead of the opec-plus cut. let's bring in damien courvalin, head of energy research at goldman sachs. a positive call for you. in terms of anything that could get in the way of this, this bullishness, is it baked in the

cake with this got? damien: a significant economic hard landing remains with the barest risk -- the bearish risk of oil prices but the market is already pricing in week economic growth -- weak economic growth. all the development we have seen on the supply side sets the stage for what we believe will be higher prices into the end of this year. i would focus on that as one risk. it has to be a meaningful slowdown. kathleen: what does this mean for investors? that question has many angles because you might say, energy giants, it is going to mean macro economically, things look a little better for the oil exporters. how do you answer that?

damien: it is our view that oil prices are not high enough to balance the commodity market. demand has outstripped supplies pretty much continuously since may 2020. for winter seasonal demand, inventories will continue to fall. we need higher prices to stop the deficit. and the increasing tomato be prices for the years to come -- the answer to the increase of commodity prices for the years to come has to be more supply. we don't have enough investment in new, productive presidency. if the price is negative to the macro, it is an even bigger headwind to economic growth in the years to come and that means equities will also have to a shape. and they will be the driver of that. ventures will be allocating to

the sector. our strategists are overweight in the energy sector and bullish on the commodity itself. shery: when it comes to the china demand part of the equation, you are managing expectations. there is hope after the party congress that we could see a pathway away from covid zero, but there is an assumption we will see at least rolling rock rolling lockdowns and more. damien: our view is, rolling lockdowns next summer, it is hard to reopen during winter come eight is hard to reopen without a vaccination campaign. we cautiously consume that it takes longer. but i want to emphasize we already near record low inventory, demand will increase this winter because of lack of natural gas, that will drive more oil. and now we have a dropping supply from opec and also russia. but it does not require in

improvement and chinese demand for setting up this bullish outlook. haidi: this is a big-picture question. is it a crisis in conventional energy and also energy transition? in australia, coal is the most valuable mineral and energy export we have right now. damien: the difficulty in managing this transition has been moving away to renewables. we still consume today oil and gas and coil come at the -- oil, gas and coal, 30% of energy generation. global investment needs to be made. in the decades to come, in gas, oil and coal and renewables entire region. you can't sacrifice one for the other, or you will end up in today's situation where we are at a deficit every form of energy and there are record high prices in every country. su: david will pass --

kathleen: david mill pass -- david milpas, president of the world bank, has been criticized for saying you can stay on a green path on renewables well you put more money into producing, drilling, more crude oil out of the ground, is that the point you're making come, this has to be done for now? damien: energy consumption rises every year. investing in a solution for five years from now is great. that is your energy transition, lower-carbon source of energy. but you can't stop investing in what we will consume for the next five years. you need that investment. when you are asking about energy, energy has to be a much bigger share, whether it is market capitalization or broader assets because the world is facing this global challenge that is bigger than the 2000s in terms of energy cuts. haidi: great having you with us today. damien courvalin is the head of

energy research at goldman sachs . june in two bloomberg radio for in-depth analysis from the day's newsmakers. we are broadcasting live in our studio in hong kong. more ahead. this is bloomberg. ♪

♪

haidi: a quick check of business flash headlines. the judge overseeing the elon musk twitter casas's trial remains on track for now. she says the court has not yet received an agreement both artist to put the case on hold. twitter shares remain below musk 's $54.20 share offer as many questions remain around the offer. credit suisse stock resumed its decline, falling 4% at the firm announced needs to leverage its banking operations. hsbc said credit suisse had no immediate concerns around look aegean funding. according to reuters, the fifth national bank says it is monitoring the situation. shares down 54% this year. virgin atlantic pulling out of hong kong for good. the u.k. airline is canceling flights and closing offices in hong kong, ending a 30-year history in the city.

one key factor is the closed russian airspace, which extends the flight between heathrow and hong kong by at least one hour. kathleen: bloomberg is learned while quite may sidestep was sanctions through it chip startup owned by a former executive. let's bring in peter elstrom. peter: there is a lot to unpack in this story. i will give you a little background. while way is the -- hallway -- huawei is the telecom company that was blacklisted by the trump administration in 2019. not cut off its ability to buy advanced tips from the u.s. that it needs for many products including smartphones. so, what reporters found is that there is a chip startup, p x w, that is building the facet -- pxw, that is building the

facilities to make its own chips on they plan on supplying huawei. the companies based in syngenta, it is being financed by the syngenta government and has ambitions to make advanced chips that would help while way -- hu awei rebuild operations that were hurt by the u.s. blacklisting. haidi: could they be a real competitor? peter: chipmaking is a car become located business. the most advanced companies, taiwan semiconductor, samsung electronics, intel, this company is not going to have a chance to compete with those leaders for many years, if ever. however, they would be able to restore the supply of chips in some of these key areas if they are able to get advanced

equipment. they would be able to help huawei restore some operations they have not been able to continue due to the blacklisting from the u.s. haidi: bloomberg hstech executive editor peter elstrom. counting down to the start of trading in tokyo and seoul. bloomberg has learned softbank is considering selling its stake in a spanish-language tv broadcaster, tel aviv the unit vizio amid a prolonged tech slump. -- televisio, amid a prolonged tech slump. kyoto is reporting the japanese government is mulling whether to ask some households and businesses to lower energy. a second missile launch into days, to suspected short range ballistic missiles were fired toward waters off the north

korean east coast. south korean foreign reserves shrank by the most in 14 years in september is the central bank want them to shore up the yuan as part of a global trend of global reserves being drawn down. we are watching the south korean trade ministry meeting with exporters today. kathleen: this is the stock we will be watching when trade opens in korea and japan. defense shares under close watch as south korea says this morning that north korea fired an unintended ballistic missile. energy shares may gain as oil rallies for a third day after opec-plus agreed to the largest supply cut since 2020. coming up in the next hour, bnp paribas asset managers move from neutral to underweight on sovereign bonds. knight frank says there is fear

of overpaying. more on that later. and as the market opens, we will see the impact of pop -- impact of hawkish commentary from top federal officials debt -- hawkish commentary from top fed officials of the last couple days. the comments have made it clear the fed is heading nowhere right now except towards higher interest rates. these of the things we are watching. in australia right now, stocks are lower as in new zealand. nikkei futures, japan looking a little brighter, s&p 500 futures also pointing up after we had a weak day on wall street. keep it here, market opens are just ahead ♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor

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kathleen: this is "daybreak: asia," we are counting down to asia's major market opens. how will moves today impact korea, japan and more. this cut by opec-plus as the energy world balled up. haidi: we saw the reaction from the u.s. president. this is part of the core concerned that this is going to make the fight against inflation and energy prices harder. let's see how we are processing all of this going into the start of trading. >> energy is one major sector we are watching at the start of trading. we have cash treasuries coming online at the open. did see yields mostly moving higher in the previous session.

the dollar also seeing one of its biggest jumps in a week. a lot of fears around the opec-plus cut in production, but it means for inflation, and more talk from fed officials about this idea that we are not really and were close to the peak rates. let's see how that is playing out in the session in asia. the yen trading very close to the 1.4 five level. bloomberg intelligence saying it could reach one point fifo by the end of the fourth quarter. japanese stocks, the nikkei online looking farmer, -- firmer, perhaps a signal of how the weaker yen has been stink the biggest importer. overall, a more risk off session. a look at the opening korea this morning, we are seeing the kospi higher at the start of trade. outpacing gains despite the fact we did see the nasdaq selling off in the previous session, closing a quarter percent lower. futures looking higher. the korean yuan, also we are

watching, further weakness built into the currency this morning. and more data on how much officials have been battling to stem that the client in this currency, because we saw foreign reserves in korea shrinking by the most in nearly 14 years in september. turning to the open for the brent crude market, it is just coming online now. look at where it is trading at the moment, a little bit higher. goldman sachs come among those saying this production cut from opec-plus is bullish and they are raising their forecast for brent crude by $10 to $110 a barrel. in terms of the other direction, the asx 200 trading weaker. kathleen: investors around the world are watching for moves on the federal -- moves by the federal reserve and may -- and it may slow the pace of tightening. we look with our next s at how is main driver is affecting asian economies. chi lo is the senior investment

strategist at bnp paribas. hawkish comments and a more dovish view of the fed by the markets, but this opec less cut pushing prices higher is the of the big story today. what is the big story right now for china? chi: the big story is the biggest risk for the chinese market and in our view, it is china's zero-covid policy and property market problems in addition to the secondary risk from the rate hikes and so on. and global tightening. these are about to affect the chinese markets in the short-term to the downside. but within china, the covid policy is very uncertain. the property market problem is within manageable limits and authorities are going to be addressing that now, and we are seeing more forceful policy

easing to stabilize the property market which in turn will stabilize the economy, which in turn will stabilize investor sentiment in the chinese asset market. kathleen: let's look at covid zero because that is something everyone, whether investing in china or not, is watching. it is now a political question. president xi, when he gets his third term, is going to be able to sidestep and vested and that is going to move a big risk to china's economic recovery. chi: indeed. but then, the question is not whether, but when, because the chinese government understands clearly the cost of the covid zero policy on the economy and the people. so, they want to get out. it is a timing issue and timing is complicated because it depends on when the unquantifiable factors including the willingness of the population to take more vaccinations, especially the third jab, which affects the

vaccination rates. it also depends on the government and the people's attitudes toward the virus, whether it is another virus or something very serious. that affects covid policy and so on. and it also depends on the development of local mrna vaccines and if the locally developed mrna vaccines are effective, that will greatly increase beijing's confidence to open up the economy. this is very uncertain timing. and we hope we see significant easing of the covid zero policy in the second half of next year. haidi: tell us how that informs your long-short position when it comes to chinese and japanese equities, i guess it is a typical policy diversion splay versus developed equities like european stocks. chi: we like japanese and chinese stocks for two factors.

what is valuation. after the market correction over the past year. both equity markets are quite cheap and more importantly, there is diversions between china, japan and the developed world's central bank policies. while the rest of the world is tightening, china and japan are still quite relaxed, especially china. so, that makes us more positive on em asia, but in particular japanese and chinese equities. our long position in these markets will be offset by short decision on market equities, especially european equities. because europe is a much bigger problem with exposure to russian energy. haidi: one number we keep crunching is the cost of the various currency interventions around the world. we have seen a record drawdown. and a lot of that has happened when it comes to currency

reserves within asia. you look at the cost to south korea and japan. when you look at emerging asia, where do you see the opportunities and the vulnerabilities if we continue to get fed aggression in its tightening trajectory? chi: when you look at the region overall, the economic fundamentals in the region have improved significantly over the past five to seven years. that is what we like emerging asia better than many other markets in this cycle. but within asia, there are differences, countries that have weaker fundamentals than others. so, what we look to avoid are those markets that have weaker fundamentals, for example, whether a country has a fiscal deficit that a current account deficit, how high inflation is and so on. looking at the numbers, we can

find two or three countries that want to avoid in short-term and focus more on countries with stronger fundamentals and standing up is china and japan. that is why we like them. kathleen: you just say that you don't see any significant easing in china's covid zero policy until the second half of next year? people in the u.s. are saying -- you know, vaccines don't prevent transmission. maybe people are less likely to die. but do you think the chinese people will embrace the experiences of other countries that are moving on, and it will stay in place for that long? chi: i think they will. for example, if there is a more effective vaccine that makes people less symptoms, even when they get infected, that will

help increase beijing's confidence in opening up the economy. because right now, if you look at the infection rate of the population in china, the vaccination rate for the third jab is 38%. way too low. if they opened right now, a lot of people are going to die. that is a risk beijing doesn't want to take. but if they have a better vaccination rate or higher vaccination rate that will help people at least not die, it will give them more confidence to open up. haidi: senior investment strategist in asia at bnp paribas, chi lo. we are getting the announcement that haicor is under covid lockdown 7:00 a.m. until 10:00 p.m.. it has been home to a number of lockdowns in the past month or so with covid clusters detected there.

it is a major hub and comes to travel tourism. more breaking news when it comes to the subject of a search in south korea and also interpol arrest warrants. south korean interior ministry telling quan to turn into his passport according to the foreign minister. we have heard from quan talking about how this is a crypto case that is highly politicized, with south korea seeking interpol help to find him. a project he headed collapsed in may, exacerbating the broader crypto rout. today, we are watching energy stocks on account of this big move by opec-plus. annabelle: cutting production by a 2 million barrels a day and we are seeing thought reflected. the s&p 500 index at we can see

that reflected in japanese green names at the start of trade. in australia, look at will side and santos, both of those stocks moving higher at the start of trading. look at the broader energy complex. it is also outpacing gains that we see for the aipac index, the asia-pacific index. what is also interesting is that this opec production cut is also being seen as something that could fuel inflation. so, it would be a headwind for asian stocks, but we are still seeing that index trading higher today. kathleen: let's get the vonnie quinn with headlines. vonnie: the european union has backed new sanctions against russia, saying putting a price that saying it is putting a price cap on russian oil to third countries, targeting russian individuals, including those involved in condemned referendums in ukraine. some say the latest draft weakens earlier proposal.

u.k. prime ministers liz truss has sought to rally members of her party in birmingham, an annual gathering overshadowed by trusts' plan cut taxes on british high earners. this follows a bruising few days after her members of her own cabinet openly questioned her plans. >> these are stormy days. in tough times, we need to step up. i am determined to get britain moving, to get us through the attempt to stand put us on a stronger setting as a nation. vonnie: space x has launched a crew of four people to the international space station including a cosmonaut, japanese astronaut and the first native american woman to travel to a spirit the mission was delayed several weeks. -- travel to space. the mission was delayed for several weeks. 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: still ahead, how rate hikes are affecting asia's biggest housing markets. but first, defending a massive supply cut after driving a rebuke from the u.s.. this is bloomberg. ♪

♪ kathleen: oil futures extend a three-day rally in asia trading after an action packed 24 hours in the oil market, opec plus agreeing to cuts. of the most in two years, earning a rebuke from the biden white house. and the eu approving new sanction on russian oil, drawing a veiled threat from russia. bloomberg's su keenan joins us. start with the rally in prices. su: all this has oil moving higher and analysts to catch up and revise forecasts. oil rising for the fourth session in asia after jumping percent over the is recessions after opec-plus agreed to a bigger than expected cut oil output than anybody envisioned. and the move was telegraphed in advance of the formal decision -- a 2 million barrel a cut --

two men barrels -- 2 million barrels a day cat could be enacted. this through a strong rebuke from president biden. this meeting of opec ministers was the first meeting where they showed up in person since the pandemic. all eyes were on the russian deputy prime minister, alexander novak, furious about eu rights cap listen. >> a tax creates a very bad procedure. [indiscernible] they know that history and a number of examples of market interference, especially with that mechanism. [indiscernible] and if it is implemented, we are

not going to supply countries which join this mechanism. su: a not-so-veiled threat if the price cut is enacted. the russian deputy prime minister, as you herd, -- as you heard, says those behind it, including the u.s., will get oil cut off. haidi: i saudi arabian oil official meanwhile says u.s. plans to cap a price on russian oil exports only su: as to price uncertainty. su:a lot of criticism flying around in the oil ministers showing up in person, we haven't seen that for a couple of years now. they have open on zoom eating. we caught up with a saudi oil official. he wanted us to know that the u.s.-led plan for that price cap is fanning the flames of uncertainty and the lack of detail and practicality that

lacks precision is going to create the very conditions that led to the cut. u.s. officials meanwhile were to criticize both saudis and opec officials. listen. >> we are disappointed that opec made this decision. the president mentioned it is unnecessary, if you look at the global environment where supply continues to be the predominant challenge, we have been working for some time to take action and encourage action globally to make sure supply matches demand. su: that is a top economic adviser to the white house saying that scott is shortsighted -- that this cat is -- cut is shortsighted. the president swallowed his pride a and flew to saudi arabia in july to ensure there would be more oil on the market in the u.s..

but because a lot of producers are undercutting the quotas, the cut is more likely to be closer to one million barrels a day. goldman has revised its outlook, pushing oil up by $10 a barrel from $100 to 110 dollars a barrel. back to you. haidi: let's get more from our exclusive interview with the russian deputy foreign minister. listen. >> two important decisions were taken today. one was the decision on cuts" is by all countries present dental countries in the group. but the second decision, which is as important as the first, is an extension of the agreement of cooperation because was scheduled to expire at the end of 2022. it has been agreed that will be extended until the end of 2023, which gives the markets were certainty and flexibility.

that's why the decision was taking to balance the market out by these cuts, and especially this is very important to head of the winter season when we would also see seasonal decline by 2.5 million to 3 million barrels. the decision today helps the market balance it out. i think it is a very way to decision, and a timely one. >> was look towards pepper broker 2023. he will have more sanctions, you will have potentially a price cap. can you tell me with assurance what your production in february 2023 will be? >> the price cut creates a very bad precedent.

we will primarily hit the ones who are doing it and implementing it. throughout history, there is a number of examples of market interference, especially with a mechanism of price controls. this mechanism is unacceptable to russia. and if it is implemented, we are not going to supply countries which join this mechanism. su: that is russia's deputy prime minister alexander novak speaking to bloomberg's manus cranny -- manus cranny in vienna. coming up, the u.k. prime minister promises to get the country back on track. details just ahead. this is bloomberg. ♪

♪ >> the u.k. conservative party

conference has ended with prime minister liz truss trying to rally her party and the markets. tom mackenzie reports from birmingham. tom: this speech by the u.k. prime minister was an attempt to regain the initiative. this leader has been weakened. weakened aftermarket turmoil that followed the many budget of her chancellor of the exchequer. we conductor a u-turn on a major tax cut proposal and also weakened by divisions within her own cabinet around her policies. but she stressed in the speech that she is sticking with what she describes as a progrowth center performs on policies. she said she wants to create a new britain. listen. >> i have three priorities for our economy -- growth, growth and growth. [laughter] cutting taxes is -- [applause] cutting taxes is the right thing

to do morally and economically. cutting taxes means going for a better job or opening your own business. that is why we are cutting taxes. tom: liz truss, saying she wants to move the u.k. economy from a high tax and low-growth cycle. she made a point of attempting to reassure the markets, saying bank of end -- bank of england independence whiskey and she is in lockstep with her chancellor. and also suggesting that she will have an iron grip on her country's finances. this will responsibility, she said, with at the center of her policies. but there was no mention of the key question for many household in the u.k. -- mortgages. they have risen in some cases to as much as 6% for two-year mortgages, potentially putting households for under economic pain amid an already difficult cost-of-living crisis. and after a 50 or possibly 20%

correction of the housing market here. ed also, what to do about the debt level. she said she was to be fiscally responsible. bloomberg economics estimated this government may have to cut up to 45 billion pounds a year just to get debt to gdp down in the median term. -- medium term. she didn't spell out details on where the cuts are going to land, so implementation is now going to be a key for a prime minister facing arguably unprecedented challenges and even rebellion from within her own ranks. and that is what the markets will be watching for in the days and weeks ahead. in birmingham, tom mackenzie, bloomberg news. haidi: let's look at the pound trading right now. we saw pushback against the u.k. currency largely because of the bounceback with the u.s. dollar, snapping six days of gains. that was the best streak since

april 2021. we are seeing a move at the moment when it comes to trading in the u.k. we are also seeing the euro-dollar pair at .99 level at the moment. also watching pound-yen and pound-china, given that this is not just to do with issues the u.k. economy is having come a but also the strength of the dollar. kathleen: let's look at european stock futures. stocks in europe had rallied for three days, the best pre-day gain since november 20. but hawkish fed talk today wiped all that out. futures as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts.

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haidi: a rainy day in sydney and

also in melbourne at the moment, looking much nicer. we are getting numbers when it comes to australia's trade positioning, exports month to month in august beating expectations of 2% and bouncing back from a contraction of 10% in the previous month. imports month-to-month saw a gain of 4% against expectations of 1%. we see inflation rate fears playing up there in a pullback from the 5% gain in imports that we saw in the previous month. that does leave the trade surplus at 8.3 billion dollars, shive expectations unless of a surplus in that rating. energy exports are on track for a high of $289 billion u.s.

through the middle of the year to june 30. we have seen the australian economy benefit from rising fuel prices as well as a tight supply of key materials including lithium, and record prices when it comes to coal exports. kathleen: as for hong kong, the purchasing managers index came in significantly weaker. 48 was the number. anything below 50 in these managing -- manufacturing purchasing managers indexes around the world means things are contracting for the previous number was 51.2. remember, hong kong is one of the most export-intensive countries. manufacturing is very important. we can only imagine that one reason we are seeing this decline in the hong kong pmi is that there is about as much demand for their exports as there is for their manufacturing goods, so this is filtering through to their pmi.

let's check asian markets. a lot going on. annabelle: major benchmarking asia trading positive, japan and korea 30 minutes into the session, looking like this. arts trail you -- australia also green. what is driving that is the energy complex, brent crude to the upside, energy stocks dragging the broader index higher. the flipside is that if we do see higher oil prices, that could further entrench inflation which would be negative for asian equities. moves in energy we are seeing are unlikely to last. this chart looking at wti, the u.s. five-your breakeven and breakeven has been in a downtrend as you can see come over the past few months. what is driving that is this expectation that consumer prices will moderate significantly. and to get back, you are also going to need a sharp economic

slowdown. perhaps a sign the world economy is going to be weakening sufficiently to bring oil prices down. what has also been a major drag on energy prices has been dollar strength and that has been also weighing on world currency reserves. india, the czech republic and more intervening to prop up there currencies. south korea, that is been a major issue there, the yuan weakness. it is the worst-performing currency in asia and the third quarter and following the most in the financial crisis. the question is how much i a stronger the dollar can go given the bounds we saw in the previous session. haidi: hopefully, for some answers to these questions, i bring in our senior reporter for fx, ruth carson. what are we seeing, given we are

seeing overstretched longs against the greenback? ruth: the dollar definitely had a great overnight session. it was interesting to see trade in asia. it is a tale that is repeating itself because of the picker picture when it comes to the dollar -- bigger picture when it comes to the dollar. inflation is still incredibly high and commentary from fed officials who see interest rates at 4%, four point 5% by the end of this year. as long as the fed is going full threshold on raising rates, the dollars likely to go to overstretched long positions. kathleen: how are investors trading the yen right now? are there tailwinds to help them

gain ground? ruth: pick a day and depending on what day it is, it is either the yen or the pound that is the worst. it comes down to policy diversions. -- policy divergence. as long as the fed goes full throttle in the bank of japan stays dovish, some people see an opportunity to buy, fidelity is one of them saying it is a great recession hedge. when tailwind economists are floating is the idea of reducing taxes to repatriate funds which would you will a rally and put things in perspective. if 30% of the cash in these overseas funds went back to the japan -- went back to japan, it will be huge and could help the yen slide if it occurs. kathleen: senior reporter for foreign-exchange and rates ruth carson. one of the big stories today,

san francisco fed president mary daly says market anticipation on interest rates next year is misplaced. she told us the central bank will set a high bar for slowing the pace of monetary policy tightening. >> we are resolute at raising interest rates into restricted territory so that we can bring inflation down, which is causing millions of americans to suffer real pain, never having experienced it. it is also very damaging to the economy tapas level and lesion -- this level of inflation, so we are committed to staying the course until we are well and truly done. >> you said the futures market is hump shaped, the idea that you go up and come back down next year, is wrong? >> yeah, i don't see that happening. i see us raising to a level that we believe is respective enough to bring inflation down and then come holding it there until we see inflation really get close to 2% and demonstrate that price

stability is restored. >> what level is restrictive enough? mary: right now, we have the rate up to where it is a little bit restrictive potentially, or at neutral. i would see more policy adjustments are required to restrain the economy sufficiently. this is all about bringing strong demand back into line with supply and bringing inflation down. so, i see new rate increases as necessary, but we are consistently data-dependent that will continue to be that. >> because you are data dependent, you haven't made a decision on what you want to do november 2, but what is more important right now, the speed at which you get to the restrictive level or the length of? ? time you leave it there mary ellen the length of time we leave it there is increasingly important. because that is really going to be the thing -- mary: the length of time we leave it there is increasingly important because that is really

going to be think that not only brings it down, but manages the inflation threat. >> are we close to anything breaking? mary: we don't raise rates until something breaks. we are very forward-looking. you have to be. that is one of the things about independence. you can look at the data, don't be backward looking, but a lot of time i spend is actually out talking to business leaders, community members, small businesses, workers, and asking where we are. and you put that together and you are constantly calibrating two risks, not doing enough and having inflation expectations because inflation won't die off, or doing too much and over steering and causing an unnecessary downtrend that is not relevant for the economy and the conditions we are trying to achieve. we are constantly monitoring both those risks. the main thing i want your listeners to know is that it is not a backward-thing enterprise,

it is forward-looking. we don't we did we get there and say oh, no we, want to get there as soon as possible. >> what is the danger that you run into some sort of financial derivative that you weren't watching over to where of suddenly blowing up? -- weren't watching or weren't aware of suddenly blowing up? mary: it is a synchronized but not coordinated tightening. central banks make policy for their own country but we are all happening to face the same i inflation for the same reasons as in the united dates. that includes global tightening and that means firms and sectors are repositioning. we have to be on the lookout for that. the fed always has several roles that it is managing at once. the principal when we are hearing about now is monetary policy combating high inflation. but we always have the lender of

last resort responsibilities, and if market dislocation to come about, then we would be prepared to use it. but that is not what i am seeing right now. i am seeing an economy that is working well, but cap i inflation that we have got to get down so we can have sustained growth going forward. haidi: mary daly, san francisco fed president speaking with bloomberg's michael mckee. vonnie quinn has first word headlines. vonnie: opec-plus members agreed to cut total output by 2 million barrels a day in november to keep isis higher. outdated baselines mean actual cost will be lower. the white house slammed the decision and will release another 10 million barrels from the strategic oil reserves in november. the eu commission president says the market is intervening in the russian gas market on capital -- on capping -- intervening on gas

prices. north korea fired two suspected short-range ballistic is on thursday, making a total of 10 lodges in fewer than two weeks, one of the biggest test barrages under leader kim jong on. it came after pyongyang condemned the biden administration for escalating tensions as the u.s. ronald reagan your cap carrier you turned in waters east of the korean peninsula. 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. ♪ kathleen: thank you, vonnie. up next, we have knight frank on how rising interest rates are hitting age's biggest market. this is bloomberg. ♪ don't like surprises? [ watch vibrates ] proactive notifications from fidelity

keep you tuned in all day long. so when something happens that could affect your portfolio, you can act quickly. that's decision tech, only from fidelity.

♪ haidi: the knight frank index tracks 56 regions and shows markets were wrong put it in the second order. the number of countries seeing annual declines did not actually materialize. when you look, there are

exceptions. joining us from singapore is christie li, knight frank asia-pacific head of research. new zealand stands out like a sore thumb there, and we are seeing a pullback when it comes to prices in australia, from high levels oddly speaking come out the results been surprising? christie: eight is not surprising because if you look at the markets that we track at knight frank, only 12 markets showed weakness in the last quarter. and this is on an annual basis. which means the lagging indicator is still capturing data last year, which was the peak of the market. it is safe to say that in some markets like new zealand, because the price run-up has been very strong over the past year, 44% during the pandemic come that is why we see the

pullback, because of interest rate hikes. people are also feeling the pinch of inflation. when inflation is in the high single digits like in the case of new york, or 20% in the case of some european countries, people feel poorer because they are worried about grocery bills, utility bills. and when it comes to mortgage payments, it will make them think twice about committing to something that is a big ticket. haidi: where do you see resilience of the most vulnerability -- where do you see resilience and the most vulnerability? christie: on resilience, a couple asia-pacific markets are holding up well. for example, hong kong and singapore. and global gateway markets like new york and london. because those are the safe haven markets at these markets are typically not back by income

growth, they are backed by wealth. and where you have such markets, a lot of buyers in the market take very little loan or no loan. [indiscernible] an apartment sold in new york just this month, $50 million to an asian buyer -- $15 million to an asian buyer, all cash. on the lower end of the market, people are feeling the pinch because it is eating into their disposable income. and some of the resilience in the u.s. dollar, if you look at the hong kong market, even those prices are still correcting. but i think next year, when markets are fully reopened, [indiscernible] kathleen: what about the kinds of mortgages people are looking for? in hong kong, people have

overweight mortgages and have been hit very hard. australia, same thing come a lot of overweight mortgages. is there going to be a trend now for people trying to get fixed rate mortgages? christie: yeah. i think mortgage availability is questionable daily, from country to country. in australia, but another rates -- in other places like singapore and hong kong, mortgage rates are palatable, 3%-5% range, which is that bad. homebuyers really don't get used to that kind of mortgage rate, but in the 1990's or the 1980's, people have been paying 7%-10% on average for their mortgage rates. the pace of normalization is just too quick for people to get used to. but i think in terms of them and demand, probably we are not

seeing the type of correction that we experienced in the last downturn. haidi: have we seen the bottom for china's property market? christie: china is an interesting story because they have the covid zero strategy. we have seen some cities going into lockdowns. and that has affected buyer sentiment and also sentiment on the ground. and because of the border closures, you are not getting any investors from overseas looking at chinese markets. but overall, i think it could still have some downside because we are still not clear on the policy front. but overall, i think chinese markets, they are like the wealth-backed markets i mentioned earlier, so they are not actually overleveraged. that, people have been improving in terms of buying in those

markets actually have the potential for further wrote, even -- for further growth, even though currently, there is a double when he on the economic front and from rates. kathleen: christie li, thank you so much, knight frank asia-pacific head of research. a chinese chipmaker is set to start trading in hong kong. coming up next. this is bloomberg. ♪

♪ kathleen: credit suisse its a client thursday, dropping 4% at the firm said it would deleverage investment bank operations. hsbc says credit suisse has no immediate concerns around liquidity and funding. according to reuters, the swiss national bank said it is monitoring the situation. shares are down 54% this year. the judge overseeing the elon musk torture case says the october 17 trial remains on track for now. she says the court is not you received an agreement for both parties to put the case on hold. twitter shares remain below elon musk's $54.20 a share price and analysts point out many unknowns

around the transaction. haidi: chinese battery maker ca lb makes its market debut in hong kong in the next hour. let's bring in our markets reporter. when you look at the offering price, it is implying lock evaluations. >> that is correct. i think there is a lot of attention on this ipo right now. we are talking $1.3 billion. it is the third-largest ipo in hong kong so far this year. and the debut happens one week after the disastrous ev maker ipo. when we talk about the price it self, shares were priced at $38 hong kong each. that was the bottom of the offered range. we have seen several ipo's in

hong kong having the same patterns, most prized at the bottom. and there was very few interest by retail investors and individuals investors in hong kong. 20% or so off the trench that was offered to them. we have a much more interesting and appealing demand institutionally from investors. and 50% off the entire offer ended up in the hands of cornerstone investors. we are talking about 15 big investors that are going to keep those shares for a wild. kathleen: what is the indication from bray market trading yesterday? >> it was a very good indication that we should not expect a repeat of what we saw with leif mold the tar a week ago -- of what we saw a week ago. trades were trading 3% below the

ipo price. that is ok. it is common to see such performance. if we look at mid to large ipo's here in hong kong so far this year, we have had the best few months. when you talk to people who are tracking this ipo, their fee -- they think that there could be a decline in open, but not as bad as what we had seen last week in the could actually try throughout the session today. kathleen: bloomberg equity capital markets reporter capitol reporter filipe pacheco. just over 30 minutes, plans to become a top-three battery maker for ev's later on bloomberg markets: china open. haidi: watching the market open, airline shares in hong kong, hong kong reportedly giving away

airline tickets next year as part of efforts to wouters specter the city. and also, a bout to keep advanced chips from the chinese military. energy names continue to rally, oil up for third day after the opec-plus supply cap. kathleen: a quick look at major market benchmarks. the nikkei is up three quarters of a point. the kospi is up over a point. stocks were troubled on wall street today. maybe there is a sense that the fed may be hawkish, but there is still hope for energy stocks to make people some of these indices higher. that is it "daybreak: asia." for "daybreak: asia." -- that is it for "daybreak: asia." this is bloomberg. ♪

♪ david: this is my kitchen table and also my filing system.