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shery: "daybreak: asia," you live from new york, sydney, and hong kong. annabelle: -- [inaudible] haidi: australia has just come online so let's get you the top stories this hour. asia looks set for a mixed set of trading after the s&p 500 is its fifth straight day of losses. the yield curve is being pushed to a four decade extreme. the chinese government says it is inevitable that 80% 90% of the country's population may eventually get covid. peru gets a new head of state after president pedro castillo triggers a crisis by attempting to dissolve congress. shery: what a day to have a central bank decision as well. the peruvian central bank raised rates by 25 basis points to a 7.5%, the 17th consecutive rate

hike for the country. of course, they have inflation concerns, as many others across the region. but you said it, it's a day of political drama as we saw the ouster of pedro castillo, and the vice president taking the helm. the first female president in peru's history. really the political drama has sent the peruvian currency to a new low. but we have seen a pretty resilient currency for peru. and that is perhaps helping with the inflationary picture. they have their still raised rates by 25 basis went to 7.5%. you can see in that chart, it has been a race upwards. brazil held steady at the high-level of 14.75%. chile also holding steady this week. all of this really is being felt

across the markets. annabelle: that is certainly the question here because as you said, the bank of canada also signaling perhaps the end of their tightening program. and the r.b.i., india signaling that it is far from over. and that it should be interpreted as a dovish even though we got the small hike. we got the question of just where we are in the tightening cycle. we did not see the bounce in stocks on the expectation that the fed could nearing the end of its qt program. but the focus today is flipping it. we have recession, inflation, geopolitics, all of that playing into that picture. we see that reflected in the bond yields. also in the stocks outlook. australia just coming online in the red. of course it is a staggered start, it takes nine minutes before trading can get underway. let's look across the broader asia landscape. futures are weaker. new zealand is one of the

exceptions, rising, but it had seen two straight days of losses. china will be the big unknown here, very big signals coming through. you had that big headline a couple of hours ago that a top health official says most people will contract covid. it's an interesting one, because of course, you have markets or investors liking that idea, but china is changing its messaging around covid zero, downplaying the severity. it has helped market sentiment. at the same time, you could have scared investors, at least inside mainland china. china's gdp goal, it could be quite a high one. any have the underlying weakness in the economy also being felt around the asian region. shery: and the big question is what happens if china fully reopens and you have more inflationary pressures and demand coming from china, right? look at how u.s. futures are trading at the moment, not a lot of movement after u.s. stocks saw the longest losing streak

since mid-october. those economic fears continuing. we heard from the citi ceo, the latest to warn about the economic outlook. and of course, geopolitical tensions about helping. president putin calling for russia's nuclear arsenal as a deterrent in conflict. it could take years for countries to recover from the energy crisis. treasuries rose again. oil erased the 2022 gains, although we are seeing upside in the asian session. let's discuss with our across asset reporter, joining me now in the new york studio. and really, those recessionary concerns are hitting the markets. emily: it really does feel like the stock market is starting to price in that recessionary trade with the yield curve inverting for the most in four decades. when you look at the s&p 500, we are down 8 of the last nine sessions. we had the rally post-power. we have erased of those gains

since then, but even when you zoom out before powell, uyghur were lower than we. certainly a lot more sources talking about how even if the fed were to. -- if they were to pivot or cut rates, it would mean the economy is weak and that would not be good for corporate earnings, and that is really what drives equities. haidi: what sort of action will receive when it comes to u.s. casino stocks? emily: when you look at u.s. etfs, we have seen a big increase in inflows into u.s. bond etfs. two weeks ago we had 400 million net inflows into bond etfs. on the last week, 5 billion. there were some flows into corporate credits. but the overall theme last week and this year has been going into the long bones, the tlt,

blackrock's ishares 20-year a.t.f has seen 16 billion-dollar net inflows this year. and last week, it saw over one million. that recessionary trade is coming into play. and on the other hand, casino bonds, particularly for u.s. companies that had exposure to chinese casinos have been rallying over the last five weeks, about a 9.7% gain in some of those bonds. not what you would expect, but now that china is reopening, there is optimism that these companies will do well. haidi: bloomberg's asset reporter emily graffeo. our next guest says, when going into 2023, rather than looking at growth versus value, there is always opportunities in any market. joining us is anthony doyle. easy for you to say.

[laughter] how are you positioning going into the end-of-the-year and setting up for what everyone thinks will be a volatile year ahead? anthony: growth expectations for the global economy are the weakest since 1993 outside of covid and the gfc. so there are huge concerns for equity market investors intricate particular -- in particular. but for us it makes sense for investors to assess to what extent they are exposed to the consumer in particular, and also to what extent they are exposed to unprofitable businesses. for us we think it makes more sense to have a diversified portfolio, particularly given how uncertain the outlook is. haidi: we saw 2's and 10's flashing that recession signal, the most extreme settings we have seen in four decades. and take a look at this chart, where we see jay powell's preferred gauge of the yield curve, this also telling him perhaps that we need to see a fed pause, with the transitory

effect of that lag. it is below zero for just a time this century. the previous three times accurately proceeded a u.s. recession. do you look at these indicators and what, does the messaging totally in terms of how you need to set up for that? anthony: it is pretty clear that they are flashing amber at the moment. the fed, rather than being on a predetermined path as they have been on for most of this year, looks like they will be far more data dependent next year. the question for investors is, to what extent will inflation stop them from potentially pausing or even reversing policy towards the back end of next year? still, looking at how investors are set up her performance in the coming 12 months, they need to think about their exposures from an idiosyncratic or stock-specific perspective. it has been a very painful lesson to learn for most investors that central banks don't exist to backstop risk

assets, they in fact exist to anchor inflation expectations, and that is exactly what the fed is doing and other central banks around the world. shery: could china's swift reopening turn out to be an economic threat, than an economic opportunity? have seen huge demand hitting global markets. anthony: we would very much see it on the opportunity side of the equation rather than death threat. the reason being, a lot of the issues around supply chains have largely resolved. and again, we think that the consumer in the western world and the developed world would be significantly impacted by the high cost of capital, falling highest prices, and the more uncertain outlook, even potentially of the deteriorating labor markets as well. we very much welcome china's tentative steps to reversing the covid zero policy. but obviously, that suggests a more rosy outlook for

commodities in particular, and particularly for chinese authorities to start to stimulate the economy again and potentially refocus on growth, particularly via infrastructure spending. that is optimistic for those of us in australia. shery: global equities, especially emerging economies, how do you position? anthony: what we are looking for in the global sense is a number of areas where we are particularly optimistic. renewable sources of energy, in particular, renewable diesel, which particularly benefits from subsidies and these structural the medics of sustainable aviation fuel and sustainable energy sources. so a couple of stock picks we actually like our daniels midland, as well as others. semiconductors we think it is an opportune time to invest, tsmc

and also micron technologies. we expect the semi market to tighten up considerably next year as demand starts to reflect -- prices start to reflect their strong structural demand. on the consumer side of the equation, we are very cautious on consumer discretionary names. no exposure there. consumer apparel companies have been reporting close to 70% or 80% rise in inventories. no exposure there. and of course, the outlook on the u.s. housing market is quite poor as well, and i think that bodes a lot of caution for housing sector names. haidi: how much exposure we do want to have to the china market and how much are you adjusting also for a potential inflation wildcard, particularly when it comes to the bump in energy prices, and supply chain ramifications and the like?

anthony: in terms of the chinese market, we don't have any direct exposure in our global equity portfolio today. but of -- a lot of international investors. that through the australian mining names. for us we are a commodity -producer -- the copper market is extremely tight. china reopening, that bodes well for commodities such as copper which also benefits from the structural decarbonization theme as well. haidi: anthony doyle, head of strategy at firetrail investments, always good to have you with us. let's get to vonnie quinn in new york. vonnie: the u.s. house is set to pass legislation revamping policy towards taiwan, even as president biden seeks to ease tensions with beijing. the annual defense bill authorizes $10 billion in weapon sales. it also restricts government use of chips made by certain chinese companies.

the senate will take the bill up next week. farrell sore in dino boulevard to as president, after police arrested -- through swore in --peru swore in dino boulevard -- dana boulevard to as president after pedro castillo was arrested. the bank of canada raised interest rates aggressively for a sixth street time while pausing its hiking cycle. policymakers increased the benchmark lending rate by 50%, to 4.25%, the highest since 2008. the central bank said it would consider whether more rate hikes are needed. the london metal exchange has alerted takeover interest from rivals as it wrestles with its future in the week of march's nickel crisis.

the intercontinentalexchange made an approach to purchase the enemy earlier this year. while the takeover offer was rebuffed, the company is said to be trying another again in the future. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: still ahead, the chinese government advisor says 80% to 90% of the country's population may eventually be infected with covid. we will get insight from the harvard school of public health. plus, we will be looking deeper into beijing's new pro-world stands after months of economic turmoil triggered by covid restrictions, next. this is bloomberg . ♪

haidi: china's u-turn when it comes to covid control measures

is being reflected a shift in narrative from government officials, advisors, and even state media. when advisor saying he believes that eventually 80% to 90% of the chinese will eventually get covid. let's bring in a la chief north asia correspondent, stephen engle in hong kong. this is a big departure from a few weeks ago, steve. stephen: absolutely. i find these comments coming from china's equivalent to the cdc's now advisor, senior advisor to the beijing government on covid controls. his comments are not anything extraordinary, but it is extraordinary that they were printed in state media on the same day essentially that the chinese government made a nationwide shift. u-turn, if you will, in its covid zero strategy. we are not even using that term "dynamic covid zero" anymore. so there is some major policy changes going on that just a week ago, perhaps comments from

that advisor would be a bit sacrilege. it would perhaps be perceived as it would undermine xi jinping's signature covid policy. this is what he said -- it will be inevitable for most of us to get infected at least once, regardless of how the covid measures are adjusted. he predicts probably in this current wave they are seeing in china we're seeing 20,000 new cases a day, that probably 50% to 60% of the population will be infected and that could go up to 90%. that is essentially living with the virus, which the rest of the world has already done. it is a dramatic u-turn in policy and in narrative, just to have that kind of comment to come out china media. it says a lot. now, it does not mean they will not do some control measures. let's bring up the national health commission's head of expert panel.

at a presser yesterday, he says -- this new optimization is not completely relinquish and control, but a proactive rather than reactive adjustment. we will have to see, going forward, just how reactive the people of china will be to this new relaxation. shery: steve, we do have breaking news at the moment, bloomberg has learned that dutch officials are planning new controls on exports of chipmaking equipment to china. this could potentially align their trade routes with u.s. efforts to restrict beijing's access to high-end technology. an agreement could be coming as soon as next month. this would essentially codify and potentially expand the unofficial ban on some technology sales to china. washington, of course, have been pushing allies to join efforts to cut off beijing, and bloomberg is learning that an agreement on the dutch restrictions could come as soon as next month.

so, steve, we can today to see the pressure on china on the geopolitical front, but also from the public as well, given those covid restrictions being rolled back after so many protests. stephen: i find that story you just broke fairly interesting, because we had been reporting on the chip equipment makers the u.s. government essentially mandating that the chip equipment makers do not sell their advanced equipment to china. to meet their ambitions for the next generation of chipmaking. one of the biggest equipment makers is asml. they had advised their u.s.-based employees not to necessarily engage with its chinese customers while they were trying to figure out these new directives. there was recognition perhaps that with the dutch side along with the u.s. on these export curbs to china or whether they would try to protect their share of the market in china. we will see how this story with

asml plays out. but as far as the protests in china, maybe this does embolden the people a little bit going forward the next time that they are feeling a bit and are the thumb from authorities, maybe perhaps they will not be as reluctant as they have been since 1989, to take to the streets. not saying this will necessarily spark an uprising, not at all. in fact, many of these protests we saw in cities in the run-up to the u-turn in policy or not gigantic. but it did reflect the overall dissatisfaction in china with the prologue covid curbs that really restricted their daily lives. this shift the narrative? yes, to a certain degree. again, the communist party and xi jinping with his standing committee stacked with loyalists, still control the

narrative. shery: our chief north asia correspondent stephen engle with covid zero and the story when it comes to tech experts from the netherlands to china. coming up next, credit suisse clearing the first hurdle towards kickstarting a $440 million lawsuit against softbank over the collapse of greensill. we will get you the details. this is bloomberg. ♪

shery: one of credit suisse's finds a so-called victim status?

su: it clears the way for credit suisse to file a lawsuit against softbank to blame it in part for losses in greensill. there was the collapse of greensill capital that further and battled the swiss bank. it felt to kickoff the lawsuit in the london court in august. sources say there are a lot of technicalities here, but technically the clients' money was not lent out by credit suisse, but by greensill. this was the first of two inclusions that caused credit suisse billions of dollars in losses. you see that big circle in the middle, that is greensill and archegos capital, which blew up shortly afterward. that one-two punch plagued credit suisse. there were additional scandals that the bank has been trying to turn itself around from ever since.

softbank has previously made some comments about this legal skirmish. they are not commenting about this latest decision, but directly at issue, greensill had restructured its relationship with the construction firm, according to sources, and it wrote off over $440 million in obligations that it was owed. credit suisse says softbank audits on money outcome and that it also knew that greensill would be in freefall and unable to pay credit suisse bank. softbank is contesting this. but credit suisse wants $440 million back. in this puts them on the way to that process. haidi: what is likely to happen next? su: the judge says softbank still has an opportunity to argue to the court in this pre-lawsuit phase that there is no basis for credit suisse to

come forward. it spoke very dismissively back in august, saying credit suisse was taking this procedural step because it was, quote, "desperate to shift blame to softbank for its own poor investment decisions." credit suisse is suing softbank both in the u.s. and in the u.k., to try to force the japanese firm to disclose documentation, and overall help it reclaim a lot of money that was lost. back to you. haidi: bloomberg's su keenan, there. coming up next, dina boluarte takes over as the peruvian president, after pedro castillo is removed and detained by police. who will get 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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♪ annabelle: here watching "daybreak: asia."

i am annabelle droulers. 30 minutes from the opens in korea and japan. we are pointing to the weaker start or tokyo at the open, in line with most of the board with the exception of new zealand. australia in the red 30 minutes into the session. losses on the asx 200 are being led by industrial and energy sectors, an indication of how permanent recession fears will be in. the session today. we also have geopolitics. we just hired the breaking headline that the netherlands is learning to restrict tech exports to china. that is also telling us that we should be watching chip stocks at the open of korea and japan as well. those obstacles facing chinese for broader asian stocks today, it is not just something that is on a one-day basis, weird on a longer-term basis as well.

the msci asia pacific index hitting the 200-day moving average, and then retreating. it is also a story of what is going on inside china, not just the macro level factors. there are a lot of concerns around the growth outlook for china. still, though, asian stocks are highly correlated with what is going on in the u.s. this chart here is looking at the s&p 500 which has also broken below the key trend it reached off the lows in october. haidi, that tells me that equities are facing further obstacles there. we need further confirmation until we see that downtrend broken. not great for risk assets, like bitcoin. haidi: we are going to get more when it comes to the crypto outlook. coinbase ceo brian armstrong's revenue will be cut by half this year. declining prices, and the collapse of rival ftx is battling investor confidence.

speaking to david rubenstein, armstrong said coinbase is working with policymakers to improve regulation. >> i do think the ftx downfall is a black mark for the industry. . it's not representative of the whole industry. in traditional financial services, occasionally you see bad actors like bernie made off her enron -- bernie madoff, for what happened with enron. . we have actually been calling for clear regulation and trying to work with policymakers. we made progress on that across various g20 countries. i think it will serve as a wake-up call and as a catalyst to where we will get more clear regulation in the united states. that will be a good thing for both coinbase and the whole industry. >> sam bankman-fried was supposedly interested in having the c.f.t.c., which regulates commodities, as a regular for the industry, rather than the ftc, which tends to regulate securities. do you have a view of what is

better for the industry, and what you would prefer as regulator? >> crypto is many different things. there are several crypto commodities that should be regulated at the c.f.t.c.. in the future they may even want to regulate spot trading of commodities. the sec should be regulating crypto securities. i think that could be a very big business in terms of how people raise capital for their businesses and investments and things like that in the united states and elsewhere. crypto is also many other things, it has stablecoins which are more like currencies. it has artwork like nfts. in the future, it will have other things, decentralized identity systems, new ways to build applications, so unfortunately, it's like when the internet first came out. people wanted to think about it as one type of thing, but it empowered many different types of use cases. so there will be different regulators for different aspects of the crypto economy. >> for people who of coinbase,

you reassure them regularly or they can find out for sure if their account is managed where it is supposed to, it's not being used for some additional purpose? >> that's right. we are different from what happened with ftx. for one thing, coinbase is based here in the u.s. we did not incorporate in an offshore jurisdiction. we are also a public company, which means we need to meet the audit requirements of a public company. we show our publicly audited financial statements, our corporate cash is separate from customer funds. you don't have to take our word for it, a big four accounting firm has proven that. there are other differences as well. we operate and exchange but we never created an exchange token the way ftx did, we never operated a report market maker or hedge fund. we believe that would be a conflict of interest. the difference between the two firms can't be overstated. it's really a validation of the approach we have taken that coinbase to build this business in a trusted and compliant way,

as opposed to what happened with ftx. >> so, how do you respond to the idea that many people don't know what they are doing when they are buying crypto-currencies, they are very young and they will wind up losing money because they are not experienced? how do you respond to that concern? >> that is a very valid concern across any type of investment people might make, not just in crypto, but in stocks and everything. there is a lot of legislation being put through congress now, coinbase has been very active in d.c. working with policymakers there. there is strong bipartisan support to actually get clear regulation. the ftx situation created a bit of a delay in the legislation i was hoping was getting passed in the next quarter, but i think within the next year, we can probably get something in the u.s. and then go for the rest of the g20 as well. shery: you can watch more of this conversation with coinbase ceo brian armstrong on "the david rubenstein show: peer-to-peer conversations,"

generate 11 -- 11:00. vonnie: european executives have proposed sanctioning russian access to drones. bloomberg sources say 136 individuals and 42 entities are on the list, including the russian armed forces and several government officials. the new set of sanctions needs the backing of all you members and officials aim to get that before next week's meeting in brussels. the former theranos president and coo remission balwani has been sentenced to 13 years in prison for defrauding investors and patients. the judge will decide how much restitution he must pay. the sentence is 20 months longer than the joe time added to the x ceo elizabeth holmes. they were tried separately for lying about the accuracy of theranos' blood testing product. as china loosens covid

restrictions, a top government advisor says most of the population will eventually get infected. according to the deputy chief of china's health commission, it is inevitable. he recommends reducing people's movements, while wrapping up vaccinations for the elderly, and preparing the health care system. german authorities carried out the biggest ever raid targeting right-wing extremists. officials say in nationwide operation forded a domestic terrorist group plotting to overthrow the government. more than 3000 german law enforcement officers participated in searches across 11 states. 25 people were taken into custody, including enablement ringleader, a former lawmaker, and a member of an elite military unit. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: peru's vice president has become the country's first female head of state, following

the impeachment of her predecessor pedro castillo. he has now been detained by police after he tried to dissolve congress. let's bring in bloomberg's latin america managing editor. we are seeing so much political turmoil in peru already since castillo took over, a couple of the impeachment attempts and allegations of irregularity. do the events today bring some political stability to that country, or more instability? jaun: i have to say, in the last 18 months, we saw a volatile, strange things happening in politics in peru. what happened this morning, i did not expect this because even castillo had been made in the last few days that he was thinking of closing congress. some analysts have told us anything is better than castillo at this point, given that rocky

and unworkable relationship he had with congress. dina boluarte is taking over. she has been his vice president and she was part of his administration. but just for the fact that she did not the attempt -- denounced the attempt and said she would try to seek reconciliation, that adds a bit of stability to a very shaky situation. we will have to see in the next few days what her cabinet is, what are her economic ideas, and basically the relationship with these lawmakers. peru only has one chamber of congress and that makes the relationship between the president and these lawmakers very special. that is why we saw so many episodes of tensions in the past three years. haidi: we know that political instability, as you said, is not

a new thing for peru, but has increasingly been an economic and sentiment drag. what are you watching for in terms of cabinet appointments, and could this be more market-friendly? juan pablo: totally. peru, in the early 1990's and early this century has always been the case where investors would see politics as very volatile, but the economy very stable. they have a very orthodox framework and things work in economic terms. that had been the case until probably turning 18, 2019 before the pandemic. since then, we see a severe deterioration from the institutional side. clashes with the president. dina is the six president

peru has since 2018. it is officially taking a toll on economic conditions and on the business environment. she is not particularly very pro-business person. but we will have to see. she certainly needs to improve her relationship with congress and she needs to appoint a credible cabinet to be able to stabilize the situation. shery: how well has the peruvian central governor really tried to manage the economy? i mean, they raised rates. but this is the 17th consecutive hike already. juan pablo: things could be much worse if it wasn't for him at the central bank. he is one of the most senior central bankers in the world, has been serving for two decades, close to two decades. and is seen as a safe pair of hands for the economy and further monetary policy in these times.

inflation, as in other countries, is through the roof, 8%. what he has been doing since last year is increasing steadily the rate first with 25 and 50 basis points, and in a few minutes ago, 25 basis points. we are close to the end of the cycle, but we'll see a few increases given that the rate is still below the expected inflation. haidi: bloomberg's latin american managing editor juan pablo spinetto there. coming up next, china is moving away from its long-held covid zero approach, allowing some infected people to quarantine at home. we will discuss next with a public health professor. this is bloomberg. ♪

shery: china is continuing its debit from covid zero -- it's -- china is continuing its pivot from covid zero. an easing of restrictions with home quarantine and that is leading to concerns of an infection spike. winnie yip is professor of public health at harvard school of public health. thank you for joining us today. what do you make of this

prediction and how the judgment will this be for china's public health system? guest: there is no question that infections will go up when restrictions relax as we have seen in many countries. the key is not to reduce infection, it is to reduce the consequences of infection including mortality and also severity of cases that require hospitalization. and the key to that is hospitalization. china is aware of that and is mounting a strategy to prioritize older people and also people who have underlying chronic conditions to be vaccinated and also to have a full course of vaccination. shery: what about vaccine skepticism? there is a reason why such a small part of the population has been fully vaccinated. guest: i think in the beginning, the elderly were not vaccinated. not purely skepticism, it is

part of a policy. in the very beginning when china still working on a vaccination, it tried to vaccinate young people first, thinking that the elderly people might be more risky. but now that it has more evidence that the effects on elderly people, that it is safe, it needs to mount a public education campaign to tell people the importance of vaccine, and also that it is safe to vaccine. in addition to public education, i think china could use a combination of carrot and stick. carrot could include incentives, which has been tried in many other countries and within china, as well. stick may not be a steak but could be instituting something like a vaccine passport, so that people can only get into public spaces if they are vaccinated.

i think that needs to be a combination of strategies to get the rate up. haidi: professor, how easy is it from a health policy communication perspective to be able to do that you turn? to go from saying this is a virus that is fatal, that we have zero tolerance for, that vaccines while we are not quite sure of yet, to saying that you need to deliver this virus and get affected, because -- and get vaccinated because it is effective in preventing serious death? dr. yip: of course as with other countries, it will take a bit of time. but i am confident that it can be done. by understanding with the chinese congregation who i have worked with, they are very conscious about health and they want to be healthy. young people are very conscious about their parents' there elderly health. that will work for china. also, if you pay attention to

the needs in just the last week or so, even the most senior officials from the government have come out and said that we are now dealing with a different virus. so i think that explanation to the population that this strategy of -- the zero corporate strategy was effective for the old variant. but this new variant, omicron, required a change, i think people will listen to it, because people are also tired of being restricted and not being able to resume normal life. that is a big attraction for people. haidi: when it comes to vaccination targets that we are seeing, do you expect china to follow? would you recommend china follow the targets we have seen elsewhere? for example, we had a full

reopening in other states in australia that were 90% vaccinated. dr. yip: yes, i would. we talk about china as if it is one big country and we talk about china as if it is one situation. that is where i want to caution. china is very big and the condition is very heterogeneous. i would strongly like to see china open up in a gradual way. based on the condition of vaccination and also the local health system capacity to deal with any surges. so if the opening can be based on those conditions, i think that the situation can lead managed. -- can be managed. shery: winnie yip is professor of global health policy and economics at harvard t.h. chan school of public health. thank you for your perspective

of the covid zero strategy. thank you. we are getting gdp numbers of japan. a contraction of 0.8% on an analyzed basis. this coming after the preliminary numbers showed a contraction of more than 1%. this has been revised to the upside. the contraction of 0.8% on an annualized basis is quarter-on-quarter. we are also seeing that net exports have been cut 0.6% off the quarter-on-quarter gdp numbers. third-quarter inventory added 0.1%. business spending rose 1.5% quarter-on-quarter, slightly lower than expected. suffice it to say, this was a larger increase in private capital expenditure that is leading to that vision upwards when it comes to the third-quarter gdp numbers. we also have the october current account deficits, ¥64 billion at the moment.

this is for the month of october. we were expecting a surplus, because we had seen the surplus widen in the month of october, but now, we are seeing a current account deficit, this on the back of high inflation, weaker external demand, really not surprising that we are seeing some of those numbers under pressure. we have plenty. this is bloomberg. ♪

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haidi: the former theranos president and coo rum ash one he has been sentenced to 13 years in prison for defrauding investors of the startup. this is pretty close to what prosecutors had been asking for. do we consider this to be a harsh result? peter: we don't have a lot of benchmarks to go by because there hasn't been a lot of high-profile fraud cases prosecuted in silicon valley. but if you consider that this case involved allegations that investors were defrauded of several hundred million dollars that they poured into theranos, and also that thousands of patients were allegedly

defrauded because they were relying on the technology to provide accurate blood test results, but it really did not do that, then it gives some perspective on this. the maximum sentence but one he could have gotten was 20 years. prosecutors were asking for 15 years. so the end result is that it is pretty close to what persecutors wanted. of course, he was asking to get home confinement, which was not really realistic. shery: why did he get a longer sentence than the founder and ceo, and what happens next? peter: they were co-conspirators, the two of them and they were really the only high-ranking executives who ran the entire company. the difference between them came down to the fact that she was

convicted of defrauding investors, and acquitted of defrauding patients. but he was found guilty of both. so, he was ultimately convicted of more charges than she was. prosecutors made the point that in the division of labor between them, sort of who ran what aspects of company operations, he was running the laboratory, which was chiefly responsible. -- shery: peter, legal news editor at bloomberg, thank you. this is bloomberg.

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shery: this is "daybreak: asia." we are counting down to asia market opens. big central bank decision day. canada hiked, peru held. beijing recording 3948 new cases wednesday, as we continue to see the exit from covid zero. haidi: and that switch to pro-growth being the priority. we are hearing reports that ashley of considering a 5% gdp target for next year. huge implications for the reopening when it comes to the global inflation picture as well. bloomberg economics expecting a 20% bump up when it comes to energy prices, an upside for u.s. cpi. let's get to the market open. annabelle: we have the opens of japan and korea and the start of trading for cash treasuries. we are watching the 2's and 10's curve closely because we had seen the inversion deepening. we are back at 84-decade

extreme. analysts say we could prepare for it to go even wider. 10-year yield is that to hover at 3.5% level, two's could be one to watch given that we have the fed preparing to hike rates to 4.5% in the week ahead. that is casting a shadow over sentiment. focus on recession risks, and also weakness in the japanese economy. given we had the third-quarter gdp numbers out, a bit better than expected, but still in contractionary territory. still in the outlook, japanese stocks are coming online to the downside. geopolitics also in focus. let's look at the open for career today. we will be watching the kosdaq. it is flat. chip stocks are certainly the one to watch. what we are hearing from our sources is that dutch officials are preparing new controls on exports of chipmaking equipment to china. that would align their policies

with those of the u.s. and it could be something that could weigh on chip stocks in this region. in terms of what else watching, korean won is still in focus. we continue to see weakness in the currency. it has been a bit stronger today. it had been one of the worst performers in asia. we have reporting out essentially, the steps the government is taking inside career to try to stabilize the korean won. what we are hearing from local reporting is basically that the government is asking four fx hedging on 10% of its investment to study the inflation they are seeing. the asx two australia is in two days of losses. industrials, energy. it is just a sign of how significant recession fears are today. it is reflected in oil. a bit higher today, but still it has erased its year-to-date gains.

shery: our next guest expects a better environment for a balanced portfolio in 2023. prashanti bhayani, great to have you with us. annabelle mentioned the inflationary concerns. but inflationary concerns are in the picture for 2023 also. the dutch tech export restrictions, for example, that sounds more inflationary, if you have supply chain bifurcations continuing. you have the big reopening in china, more demand from the second-biggest economy in the world. how key will prices be on where markets go from here? prashanti: it will be key. we are moving from peak inflation this year. what is the pace of the inflation declined that we will see next year? i think the key is what are the economic costs to peak inflation? obviously we have higher interest rates around the world. headline inflation is improving

because petrol prices are down, lumber prices are down 7%, containment shipping is back but below pre-pandemic levels. we are seeing correction in headline. but the core inflation will take longer. i think it will be 2024 before we get below 3%. but the market reacts to the rate of change and that will start to improve going forward. shery: where do you invest until we get there? prashant: beginning of october, we upgraded u.s. trade bonds and u.s. treasuries. we saw in october a peak in u.s. treasuries at least in the short term. the cpi figure last month was a big boost. and we have seen since then a very large treasury running. near-term we need to digest those gains when you can get yields in investment grade paper, that is attractive. you can wait and handle that

volatility and still earn good income. high-yield paper, default rates could pick up with the impending recession. so we are more cautious. we have been in zero rates for so long. for the first time, investors have that option, so it is a gift. haidi: i need to get your view when it comes to mainland assets. all of these very fast-paced developments when it comes to the exit out of covid zero. is it making you bullish? look at this chart when it comes to the snapback in the shanghai comp, one example of the big move we have seen back into positive sentiment. the peak of the summer rally, that could be the next target that we see. prashant: yes, and i think after the party congress there was deep pessimism because the market was pricing no pivot

from china covid restrictions through the end of the year. since then, we have seen the loosening a more targeted covid restrictions. we still have to get through the winter in china. we know the virus is more transmissible and vaccination rates need to pick up, however, the market is starting to look through to next year, perhaps second or third quarter when we get more gradual loosening of policies. the risk-reward was attractive because it was not pricing in anything just a few months ago. property market also is not near bottom. however, we have seen more measures since the party congress -- we have seen reserve rate cuts, more financing for local property developers. hence, we also think that could bottom in the coming months. we know property is for living and not for speculation so we don't expect a huge rebound. all the market needs to see is a little stabilization. haidi: if we see the focus being

shifted back into pro-growth, that percent gdp target being thrown about, and we do see that shift as beginning to potentially a full reopening by, say, the middle of next year for china, how do you accumulate positioning ahead of that? prashant: i think they reopening will be gradual and incremental. but gradual is possible. consumption is key. we know that consumption has been depressed for a number of reasons. local brands will benefit. also, you want to be aligned with the government in terms of policy. the ev space and other related spaces will benefit. but consumption will be the first port of call because that is also depressed. haidi: always great to have you with us, pressured by an, chief investment officer for asia at bnp paribas.

let's get to vonnie quinn in new york with the first word headlines. vonnie: the u.s. house is set to pass legislation revamping policy towards taiwan, even as president joe biden seeks to ease tensions with beijing. the annual defense bill authorizes up to 10 billion dollars in weapons sales and seeks to boost ties with type a. it also restricts government use of certain chips made by chinese companies. dutch officials are planning new controls on chipmaking equipment to china. it would align the netherlands' trade moves with u.s. efforts to restrict beijing's access to high-end technology. an agreement could be coming as soon as next month. negotiations are ongoing, and no final decision has been made. vladimir putin has called moscow's nuclear arsenal a deterrent factor, during televised comments from russia. he stopped short of pledging not to be the first to use them, where warning that the risk of war in the world is rising. the russian president also reiterated that he will defend

russia and its allies with all the means it has if necessary. former theranos president and coo sunny balwani has been sentenced to 13 years in prison for defrauding investors and patients of the blood testing startup. the judge will decide later how much restitution he must pay. . the sentence is 20 months longer than the jail term handed to the ex-theranos ceo elizabeth holmes. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. shery: let's go to check on what is moving the markets right now. annabelle: taking a look at some of the biggest chip stocks in asia, we are seeing the nikon still and traded at this stage. we understand the netherlands is potentially planning to block exports of chipmaking technology

to china. that would align its policy with those of the u.s.. in terms of stocks we are focusing on, sk hynix is one of them, it gets 37% of its revenue from china. also, tokyo electron gets 28% of its revenue from china. these will be in focus. nikon actually does compete with the netherlands asml in the space. there is another story we are checking on today, the south korean online games company wemade. the big drop at the open, the story revolves around a crypto token which was used on its platforms. trading of that digital token halted today on its exchanges because the peak crypto body in korea recently found the company had breached the number of coins in circulation and also had given erroneous information to

key investors. local media reports that the request to block this is been dismissed. haidi: still ahead, this company does not expect a good recovery of the chinese property market next year, but the reopening from covid zero might help. and a chinese government advisor says eventually, 80% to 90% of the country's population could be infected with covid. . we will get more on that. this is bloomberg. ♪

>> each around the organization has been people-centered with a view to safeguarding the normal life and protection order of the society with a particular focus on the production of the elderly, infant, and young children.

haidi: that is a chinese national health commission vice chief, on china's corporate strategy. let's bring in chief north asia correspondent stephen engle, as well as our chief asian economist chang shu for the latest out of china. what a difference a few weeks makes. we continue to see the dismantling of a lot of these restrictions, as well as seemingly in focus back to growth for next year. stephen: that's right, chang shu and i were just talking about how quickly the narrative changed in china. two weeks ago it would be sacrilege to say some of the things that we got from the former deputy head of china's equivalent to the cdc, now a senior advisor to beijing's covid response. he is telling the china state media, a newspaper, essentially that we will have to live with the virus. this is not something you could necessarily say before, because

it would be perceived as undermining xi jinping's covid zero, or dynamic covid zero policy which basically says covid zero would stand the test of history. well, that is being rewritten pretty quickly. when you get feng zijian saying it is going to be inevitable for most of the country to get infected at least once regardless of how the covid fighting measures are adjusted. he said between 80% to 90% of china's opposition could eventually be infected. he says in this current wave of infections, we are seeing in excess of 20,000 new cases a day. that could be 60% of the nation of 1.4 billion people infected. it dramatic shift in narrative as well as in policy. of course we got that directive yesterday, a nationwide policy to reduce pcr test in requirements, and also offering home quarantine for the less risky positive cases.

it is astonishing in many ways, because we had been talking about this from the very beginning, what will be the biggest signals to indicate this is a true shift in policy and not a false dawn. and number one on top of my list was a change in narrative. shery: chang shu, is the exit from covid zero a straight path higher for china's economy? chang: i am not sure that will be that straightforward. certainly, as stephen talked about, the signs are very positive but we are still seeing a cautious approach to it. in some sense. we project a gradual, if anything, a bumpy ride. the determination is there on the part of the government to make the transition to living with the virus.

but if you look at the expresses elsewhere when the economy opens up, covid cases tend to surge. and at this point, the population is still under protected, especially for some vulnerable groups like the elderly. the government is working on that front as well, stating quite ambitious timetable for vaccinating the elderly. but even if that is the case, there could be surges in cases. therefore, the government will calibrate its pace very carefully. open up quickly, it is good on the economic front. but it comes at a very heavy public-health cost. that could have political ramifications as well. so we think the government is going to calibrate quite carefully the pace. we do see the resetting of the

timetable earlier of six months or so for opening up, we do see a risk of acceleration. but a gradual opening in the coming months. haidi: and of course, removing covid zero removes a major impediment to chinese growth. but there are other impediments, too, structural growth issues that we are dealing with. investment. the property sector. not to mention, weak external demand as well, if we have a global recession. chang: certainly, we had been hearing that the government has started its annual exercise of talking about growth targets, the 5% number has been mentioned . obviously very early-stage discussion. not sure if that is what the government had settled down. assuming that it will be 5%, we think, yes, perhaps it is

achievable. we have seen the bloomberg economics projection of 5%, but a lot of things would have to go right. the transition, we talked about the covid easing transition, that needs to be smooth. and the subsequent recovery in the economy, particularly on the consumption side could generate sufficient momentum to offset the headwinds you just talked about -- the weakening of the external sector, exports, as well as adjustments in the property sector. so, lots going on. covid easing being the single biggest positive factor, but it will have to offset the headwinds. stephen: it begs the question as well as the rest of the world is battling inflation, will they reopening stoke inflation in china? chang: yes, that is a big

question. we do see china with -- the weak demand in china in the past few months held back inflationary pressures. but once the china growth story changes, potentially there could be quite strong inflationary impulse to their global economy. bloomberg economics did an analysis looking at the price jumps in oil prices and it was all down to demand weakening, and certainly, china contributed to that demand weakening. but now we could see potentially an upswing in prices. shery: bloomberg's chang shu, and stephen engle, both joining us from hong kong. you can get caught up in all the stories you need to know to get your day going on today's edition of "daybreak." bloomberg subscribers can go to dayb , and also the bloomberg anywhere app.

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haidi: the coinbase ceo brian armstrong sees revenue cut at least half this year as the collapse of rifle ftx radel investor confidence. speaking term david rubenstein, armstrong said coinbase is working with policymakers to improve regulation. >> i do think the ftx downfall is a black mark for the industry. it's not representative of the whole industry. in traditional financial services, occasionally you see bad actors as well, like bernie madoff, or what happened with enron. in terms of regulation, i don't think it will be a bad thing. coinbase has been calling for clear regulation and trying to

work with policymakers. we made progress on that across various g20 countries. but i think it will serve as a wake-up call and sort of as a moment of catalyst to where we will get more clear regulation in the united states. that will be a good thing for both coinbase and the whole industry. david sam bankman-fried was : supposedly interested in having the c.f.t.c., which regulates commodities, be the regulator for the industry, rather than the sec which tends to regulate securities. do you have a view of what is better for the industry, and what you would prefer as regulator? brian: so, crypto is actually many different things. there are some crypto commodities that should be regulated by the c.f.t.c.. in the future they may even want , to regulate spot trading of commodities. the sec should be regulating crypto securities. i actually think that could be a very important and big business in terms of how people raise capital for their businesses and investments and things like that in the united states and elsewhere. and then, crypto is also many other things. it has stablecoins which are

more like currencies. it has artwork like nfts. in the future, it is going to have even other things -- decentralized identity systems, new ways to build applications, so unfortunately, it's like when the internet first came out. people wanted to think about it as one type of thing, but it turned out to empower many different types of use cases. so there will be different regulators for different aspects of the crypto economy. david: so, for your company and people who are clients of coinbase, you reassure them regularly or they can find out for sure if their account is managed the way it is supposed to it's not being used for some , additional purpose? >> that's right. we actually are very different than what happened with ftx. for one thing, coinbase is based here in the u.s. we didn't incorporate in an offshore jurisdiction like the bahamas. we are also a public company, which means we need to meet the audit requirements of a public company. so, we show in our publicly audited financial statements that corporate cash is separate from customer funds. you don't have to take our word for it, a big four accounting firm has proven that.

so, there are other differences as well, you know, we operate an exchange but we never created an exchange token the way ftx did, we never operated our own market maker or hedge fund. we believe that would be a conflict of interest. the difference between the two firms i think cannot be overstated. it's really a validation of the approach we have taken that -- at coinbase the last 10 years, which is to build this business in a trusted and compliant way, as opposed to what happened with ftx. david so, how do you respond to : the idea that many people don't know what they are doing when they are buying cryptocurrencies, they are not that well-informed, they are very young, and they will wind up losing money because they are not experienced? how do you respond to that concern? brian: i think that is a very valid concern across any type of investment people might make, not just in crypto, but in stocks and everything. there is a lot of legislation being put through congress now, and coinbase has been very active in d.c. working with policymakers there. there is strong bipartisan support to actually get clear

regulation. the ftx situation created a bit of a delay in the legislation i was hoping was getting passed in the next quarter, but i think within the next year, we can hopefully get something there in the u.s., and then go for the rest of the g20 as well. shery: and breaking now, we are hearing that federal prosecutors are investigating whether sam bankman-fried and his hedge fund orchestrated trades in a way that led to the collapse of two crypto-currencies. he is facing market-manipulation inquiries. the federal prosecutor is investigating whether the ftx founder many plated the market for two crypto-currencies this past during, according to the new york times, leading to their collapse and creating a domino effect that eventually caused the implosion of his own crypto exchange last month. this, according to people speaking to bloomberg. -- speaking to the new york times. this latest headline crossing

the bloomberg. just more drama around the ftx implosion and what this means for sam bankman-fried, and also for the broader crypto industry. we continue to see the range-bound movement on bitcoin and other crypto-currencies. haidi: we have also seen even here in asia, widespread fallout of the allure of ftx. people in the asian region had been flocking to the ftx, drawn by celebrity endorsements, and we are now seeing the consequences from china to japan, the spectacular collapse being played out. we continue to monitor the

>> we are getting the latest numbers when it comes to

australia trade. coming in at $12.2 billion. that is more or less in line with expectations, or slightly bigger than the 12 million that was expected. the import number of october seeing a decline of 1% month on month. and a gain of 2% that was widely expected. when it comes to exports, they pulled back month on month by 1%. the estimate had been for a 1% gain as we continue to watch that. take a look at the aussie dollar. we are seeing a little softness as we come to the dollar. lots of concerns when it comes to the ability of the rba to be able to orchestrate a soft landing, given these concerns about global demand potentially softening with a recession. not just europe but also the into next year. the reopening in china, thought

progrowth focus potentially means we would seeing fact inflationary demand in particular benefiting a lot of exports including the likes of copper and iron from this country as well. some signs of moderating inflation in australia. that is boating a little bit more positive when it comes to australian equities. trade numbers missing the mark. let's get you to vonnie quinn. vonnie: as china listens covid restrictions, a top government advisor says that most will eventually get infected. according to a chief, it is inevitable -- inevitable that 90% of the population gets exposed regardless of how restrictions are eased. peru sworn in the number our day as president form i need to dissolve congress in an action that they called a coup.

the vice president will be the sixth head of state since 2018. and first woman to hold the post. because's attempt to power grab triggered an immediate backlash. german authorities carried out the biggest ever rate targeting right-wing extremists. a nationwide operation thwarted a domestic terrorist group mining to violently overthrow the government. more than 3000 german law enforcement officers participated in searches across 11 of the countries eckstein states. 25 people were taken into custody, including a so-called nobleman ringleader, a former lawmaker, and a member of an elite military unit. european union executives have been at sanctioning russia's access to drones. numerous sources say that 136 individuals and 42 entities are on the list, including the russian armed forces and several government officials. the new set of sanctions need to banking up all eu members before

next week's meeting in brussels. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn, this is bloomberg. haidi: dutch officials are set to be putting new controls on chipmaking equipment to china, potentially aligning the trade rules with u.s. restricting beijing's access to high-tech. a business report joins us now. we know that might be planned at this stage? bruce: the u.s. imposed more restrictions on sales of semiconductors and semiconductor making equipment to try to -- earlier this year. the question has been, what will the dutch do? because the netherlands and japan are the other two major countries that sell advanced semiconductor manufacturing equipment to china.

according to people familiar, the u.s. and dutch officials have been talking, there may be an agreement as early as next month. what is likely to happen is not the dutch will be codifying and perhaps expanding restrictions that are already in place. that will go a long way toward putting them in line with what the americans have already done. so, yes, this would be something that would no doubt make china unhappy, given the -- that the chinese have been trying to find ways to find some distance between the americans and the europeans. haidi: how much progress has china made so far in terms of trying to build its own industry? bruce: if china has struggled for many years in trying to build the semiconductor industry. they are making progress, but, they are still highly reliant on

equipment. for instance, asml, the big dutch company, they get about 15% of their revenue from china. this would be a hit to them as well. however, they may have no choice. shery: bruce there with the latest on those potential restrictions to china. there could be a clear divide in 2023 between the regions north and south. let's bring in your equity strategist marvin. marvin, what will make the difference in performance across asia? marvin: we are more constructive on asian equities in the head, because 2023 will be a year of turning points with the end of the fed rate hike cycle. this could help reverse some of the dollar strength we have seen over the past year and stabilize local currencies. at the same time, develop markets wait -- might be facing

potential recession. global markets might look to asia for growth next year. we think these two factors combined can bring flows back to the region which would be supportive of stocks. haidi: being on the back foot when it comes to developments of china. with the reopening, are we seeing actual fundamentals to support that rally? marvin: i think growth in the region is going to be ok next year. in the pockets of china, india, and south asia. the quality of the growth varies across the markets. in china and south asia, we have structural growth trends driven by domestic demand stories, where in china the growth is more of a rebound from this year is looking at the valuations, we think china is compelling if the

reopening can be made on track. shery: how much more upside is there, when although we are expecting that reopening to happen, chinese equities have rallied so much. also, you talk about valuation, but that is about market pricing and asset, not surprising that the chinese economy is doing any better. marvin: even after the november surge, chinese indices are just back at september levels. the earnings are up 11 times well below the pandemic average. at these levels, the reopening and the 14% earnings growth expected next year are not really pricing at these levels. what we are really getting is a china growth at a discount, if we compare to the rest of the region where the growth is more fully priced in. haidi: there is a lot we don't know about how this growth plays out.

one step forward and two steps back. are we expecting some volatility and what is the broad consensus for a timeline? middle of next year? does the timing matter for positioning at the moment? marvin: i think the middle of next year makes sense. that this would come after the two sessions policy congress in march, and also gives china time to work through the current winter wave. currently with cases at elevated levels, we think in the near term the news flow on that will kind of be just local governments catching up and implementing the recently announced measures over the past several weeks, as well as hitting the nation's rates up. that will take some time. haidi: we have marvin chen. speaking of emerging markets, we have been watching the story out of south korea very closely. south korea has ordered its petrochemical truckers back to

work. the -- we know that the government has held that cabinet meeting at 9:45 this morning to talk about the return to work order for more truckers. we heard that really being reported earlier. it really seems to be widening that back to work order for truckers that was expected today, as well, as we expected that the south korean president will be holding that cabinet meeting to order them to return to work. we know they feel truckers may not be added to that order as more of them have already voluntarily returned to the workplace, as well. we have seen the unionized truckers strikes causing a total of 3.5 trillion yuan of treatment -- shipment disruptions as well as the automobile industry is, as well, according to the latest update from south korea's industry ministry in terms of what has

really been affected. let's take a look. at the broader markets as we get into this training day. shery: just picking up on what martin was saying, certainly we are getting a lot of mixed signals coming through on the timeline for this. also about the shift that we are seeing back into progrowth over covid zero strategy. in terms of what we are seeing in the reaction with markets today, what we are seeing in particular for hong kong stocks and futures are pointing to a high start. we did see them selling off in the u.s. session. you also have wti now turning positive, possibly down to that positivity on china's prospects for reopening. we are seeing japan, australia, leading the losses there. also in the bond space as well, given that we do have those yields just boldly retreating here as we do see that twos and tens curve now at its most extreme in four decades. we will look at sectors here

across the board, we are seeing these declines, out broad base. we are focusing more closely on what is leading those losses, discretionary, material stocks, all of this planning to how much investors are focusing on the economic contraction, because those are the ones that are leading the selloff today. we also have that lead in from wall street, we have seen asian stocks heavily influenced by what happened in the u.s. session. we say the s&p 500 closing lower for five straight days. the longest stretch of down days cheering for u.s. stocks since 2011. >> the reopening from covid might help. we talked to senior credit analyst next. this is bloomberg. ♪

haidi: our next ghost -- guest -- china's property woes will likely continue into next year. we have seen your china credit analyst here. there is a great hope that reopening will result in this revival of demand across the property sector. do you see that playing out when it comes to top cities?

what is the vulnerability when it comes to smaller peripheral cities? >> i think the covid reopening in the second half of the year is definitely going to use these sentiment, especially the first tier cities. even though the november is still quite depressing across china, i think they are probably building up some of the system. however, in the second tier and even some of the lower tier cities, demand has been very weak. there is a structural outflow of population, the industrial base and economic base has been very weak. we are still seeing a lot of difficulties and challenges in the lower tier cities. haidi: even with the aggressive property easing measures, you don't see that having the intended full impact? liquidity will be key when it comes to developers and being able to restore confidence create what would be the catalyst for that?

is there further consolidation and pain to go ahead for the broader sector before we get there? >> you are right. i think the easing measures has been very aggressive, i think there has been a framework for support coming from the central governments read we are definitely seeing this as a wide positive signal. we are seeing the liquidity is only directed towards the higher developers or those home projects. we are seeing all of the lower tiers not receiving a lot of liquidity support and the implementation on the banking side is still also a problem because we know that they are not equivalent to the actual loans. right now, we are not seeing a visible recovery out across china, but hopefully when we moved to the second half next year, when covid is reopening and accelerating, when the macro economy picks up, we are going to see a better picture there. shery: which perhaps means

higher inflation, a tighter monetary base? what does that mean for china entre bonds? >> i think a lot of the people are already betting on higher rates in the offshore markets. as you might have seen in the past few weeks, the offshore rates are going up. a lot of the money market rates are going up as well. so definitely moving into the second half of next year, we are going to see some inflation pressure. i think the monetary policy sense is probably going to pivot to a less dovish stance. investors in a domestic market are already getting very cautious. next year is likely not going to be as bullish as this year. haidi: china tech dollar bonds have done pretty well. what is happening there? what are the expectations for next year? >> i think in the past few weeks, china bonds have been doing very well. that is triggered by the optimism around the china covid

reopening as well as some of the macro support measures. we are seeing this rotation from the varied defense of chinese energy and utility dollar bonds to the china tech sector. we think this trend will likely continue over the next few months as china is gradually reopening and investors are still betting on this reopening macro low -- macro inflationary trend. and is definitely positive for retail sales outspending and a lot of different angles of the e-commerce sector. shery: antimonopoly measures, any about a risk? >> yeah, definitely. i think the regulators are still standing very firm in terms of a few key areas. data security, personal information protection, as well as antimonopoly related rules and regulations. we think the government is turning from rapid crackdown of

the tax sector into a normalization of regulation. so, we are going to see more refinement and implementation of these previously established laws, we don't expect another round of very severe crackdown on the technology sector. shery: so good to happy with us. coming up, china's path to reopening, a preview of the market open on the mainland and in hong kong, next. this is bloomberg. ♪

haidi: a quick check of the latest business flash headlines. frontera has raised its earnings for the second time in three months. the world's biggest dairy exporter now sees earnings at 50 to 70 new zealand cents a share. that is up from the previous projection of 35 to $.60. milk supply is though a global -- demand for products used in medicinal nutrition have driven strong earnings. china fortune is set to get a london court's approval. encz -- an offshore creditor meeting. nearly $5 billion is scheduled on january 12. china fortune land was the first

developers to default on the beijing's effort to curtail that growth in the sector last year. chinese ev maker byd is considering building a battery plant in the u.s., but doesn't plan on selling its vehicles there yet. byd says the inflation reduction act is threatening its ev uptake in the u.s. and would like the language modified to allow chinese vendors to quote, participate in a certain processes. that limits america's reliance on the chinese economy sharing. shery: traders have uncertain prospects for economic recovery. let's bring in our chief china markets correspondent. the market reaction from more easing covid restrictions was a little bit surprising. what are we expecting today? >> i think the buzz word right now is bumpy. a bumpy reopening, a bumpy and to the year for markets, and a bumpy start likely for 2023 rate what we are expecting today,

just see what the hang seng index did. it went from a loss of as much as 3.3% and then 1.5% gain. that is a huge reversal. we are talking about volatility, we are talking about greater swings. the market has already kind of baked in a china reopening. questions over how much is baked and, how much was discounted in the price when we have those record low valuations. we are expecting a little bit of a softer open this session in the u.s., it was obviously quite negative. a lot of recession fears there. come on the theme is, china reopening, will it be stop and start? what are the signals? what will the pboc do to support going into next year? the message was about restoring market confidence and getting the growth rate up to at least better than this year. haidi: there are so many

uncertainties. will removing covid zero give that growth bump? knowing that the trade numbers were so low from yesterday? as well as expectations for more volatility going ahead with the uncertainty over the reopening. >> it really is that kind of story. obviously, the data we are having now is backward looking and really shows what a bleak future we have for the economy in november. it will be interesting to see really when we do see the start of a recovery. also, housing. the property market is a very important indicator of what confidence is like on the ground. our people really buying in to these support measures for the property market? a lot of cuts at play. volatility is the name of the game. it will also be important to see mid-december, december 15 is when we get the pboc's next liquidity operation. are they going to inject more liquidity? any low -- indication of lower

interest rates? a lot of questions, and a lot of potential cuts. if you are trading this market in december, it will be very difficult. haidi: sophia, thank you. just going through some of the risks. some of the stocks we are watching in hong kong and china this morning. dutch officials are planning new controls on exports of chipmaking equipment to china. looking for the impact when it comes -- and he a link as well. we are also continuing to watch the latest rollback on covid zero policies in china. nietzsche -- we will watch the impact on the is reopening and tourism stocks. shery: we are not seeing that positive sentiment from the reopening with the cost be under

pressure. this after we saw on wall street, the longest losing streak since mid october, we do still continue to have those economic fears. geopolitical tensions, around russia, treasuries rose again. oil was under pressure. at the moment, everything is rebounding a little bit, but it is all about to do with that central-bank decision this week. we are talking canada hiking, peru holcombe -- hiking. really a lot to think about for investors. close, morgan shares there for morgan -- chinese equity markets. this is bloomberg. ♪

>> good morning, it is