>> welcome to daybreak: asia. we are counting down to asia's major market opens. haidi: the yen has the highest

since june as markets kickoff trading for 2023. futures flanking a mixed start to the year. xi jinping warns of tough challenges ahead as the country enters the next phase of its covid fight with the economy in major slump. tesla's quarterly delivers full short of expectations despite rare year end discounting. we speak with the ceo of a battery tech company. yvonne: it will be interesting to see how this plays out for the year. happy. we are starting off the year on slightly better territory when it comes to where you are seeing -- when it comes to u.s. futures. it will be interesting to see how this plays out. we are talking about the worst year for global equities since 2008. when it comes to bonds, the bloomberg global bond index the worst we have seen since 1990.

haidi: when it comes to tumultuous it is hard to find an asset class that was not hit by that buzz word. take a look at aussie futures. there are so much optimism when it comes to the return of chinese spending. some of that being tempered by chinese travel restrictions expected to rollout once we see from -- once we see travelers from china returned to our shores. we are watching when it comes to the currency side of things moves in intentionally dollar-yen. we are looking at potentially strong levels when it comes to the yen. starting the year on the front foot. modest gains on the monday session. continuing the rally as we get into the trading on tuesday. it is the holiday muted start to the year. we have the aussie dollar holding steadily at 68 u.s.

cents. yvonne: at least you are seeing the u.s. futures punching a gain this morning. we are talking the eco-outlook. the imf managing director says they do expect one third of the world's economy to suffer a recession. for more, our chief asia correspondent joins us now. those recession concerns are still here. >> think this is the year the bill is expected to come due. last year we had all the rising interest rates around the world. that will flow through to the consumer side of the developed economies this year. then you have the idiosyncratic effect. the russian war in ukraine. that is impacting the price of energy in europe. you have china slow down. you have the u.s. where it is. it is not the angel of global growth it was. when you look at europe and the u.s. and china it points to a sluggish year for the economy. there is expected to be a lot of

pain in the months ahead. haidi:haidi: the official numbers out of china not great. the beige book on china looking like we ended the year in a deep slump. what are the expectations in terms of how quick the rebound could be given we know the covid spread. all these travel restrictions in place as well. i >> think it is a confusing picture. most analysts are basically saying december was worse than anticipated. that stands to reason given the developments. the big question is there is consensus around the coming months will be rough. there will not be a much of a lift from the lunar year. it is a big question of when their reopening dividends will start taking in. does china start to get a boost from march onwards as consumers get motoring again? at the moment it is a tough picture for the economy. all the focus remains on the

spread of the disease. at 30 is left but more public money into the system. a big question mark over now is when the dividend kicks in and whether the property market gets back on its feet and whether the external demand kicks in. a lot of unknowns i would say. haidi:haidi: a lot of variables. straightening it all out for us. we did hear from xi jinping saying that tough challenges remain in the fight against covid. he has broken weeks of silence on the virus policy pivot. >> with extraordinary efforts, china has prevailed over unprecedented difficulties and challenges. that has not been an easy journey for anyone. we have entered a new phase of covid response. tough challenges remain. haidi: let's bring in our greater china senior executive editor. he joins us out of beijing.

someone who has lived through the past few years of covid's here and the dismantling of covid zero. give us a gauge of how the reopening is being felt across beijing. i imagine there are a lot of people preparing to travel for the first time in three years. >> i think in the last couple of weeks the overwhelming feeling has been relief that the covid zero policies are ending but at the same time dealing with this wave of infections we have had to we have had millions of people sick across the nation. that has resulted in people not being able to go to work. factors not being able to run. we have seen a lot of deaths. we have seen activity picked up tremendously at a funeral homes. we have had reports of hospitals being inundated to doctors being asked to work even if they are testing positive.

this system is struggling to cope with the wave. a lot of people are having a difficult winter. looking forward there is a lot of optimism with the economy being reopened, with travel being real again. there is a lot of hope things are going to get at her. there is something for people to look forward to after three years. yvonne: they have to face some travel restrictions. you have to produce a pcr tests to enter some countries. are seeing a growing list of some countries imposing these testing requirements. do you think that is going to dampen the whole consumption recovery? >> there are a couple of reasons i think these travel restrictions will not have that of an impact. china also currently requires travelers from overseas to have a covid test to enter the country also. the other point is for the last three years people in china have largely not been able to travel

especially for tourism. seeing that opening after january 8 there will be no quarantine requirement for people coming into china, the authorities are issuing passports allowing people to exit the country for tourism. that will do a lot to ameliorate the concerns that have come about as a result of these testing requirements from places like italy and spain, the u.s., the united kingdom and others. haidi: our greater china senior executive editor with the latest. futures are painting a mixed picture when it comes to asian stocks. orchids in australia and china part of the reopening is underway. let's it's come -- let's get some of the reopening. the narrative seems to be it will be a better year because you would be hard-pressed to have a worse year when it comes to asian and risk assets than last year. >> yeah i think that is the

consensus. the market is pretty optimistic about the china story for the year ahead may be because it is less optimistic about the rest of the world. what we sow since november when we had the huge rally, the rebound was that people were getting excited about the possibility for reopening. we have seen further steps since then. as we have been hearing from john, the situation on the ground right now is the gram. as we have been hearing in the forecast for the economy is going to take a while to get going again. we are already starting to price that in. looking for the equity market to have the potential for further gains as things start to kick in from the second quarter onwards are that gives you some grounds for optimism. the chinese equities market and potentially for the rest of the region as it pulls everything

else along particularly in north asia. yvonne: it has been interesting seeing the imposing of travel restrictions. that seems to be weighing on the market. i'm just wondering -- the reopening story in china. you are having a slowing tightening cycle from the fed should are those enough of key drivers to spark a turnaround for markets this year or do we need to see more catalyst? >> if you're looking at a global picture there is a lot more people are worried about. the imf is giving us the forecast for a recession in two thirds of the world. it is pretty nasty looking outlook. the consensus globally and for the u.s. is the first half of the year is going to be very challenging for equity markets. once we get through with the hump of that slow down thanks could start to improve.

in the second half of the year the consensus is first lady positive markets by year end. we will have a dip before we have a recovery. well inflation finally be subdued? how much worse or better could the war that is taking place in ukraine get from here? how strong will the chinese recovery be? plenty of uncertainty. markets don't like uncertainty. the equities market outlook is pretty foggy at the moment. i guess the consensus is stamp yourselves in, respray rocky first half and we will see where we are in june and if we are getting closer to recovery. haidi: the global inflation recovery question remains the big one. even without china you have the likes of michael burry suggesting in the u.s. we will see inflation pick up again and the fed is maybe going to have to pivot again.

>> interesting argument about that kind of trade-off between government stimulus and monetary stimulus from the central banks. if the central banks young restrictive and the government has put too much in to replace that may be fuels more inflation. that is definitely something people are concerned about. what we can say with more certainty is that area of the last decade or so have very low and controlled inflation. it seems to be over at least. we are thinking the consensus seems to be looking for a new paradigm where we have higher overall inflation, higher overall bond yields which may be attractive and healthy for some parts the investing community. more work for central banks to do. and more uncertainty and more of a risk we see that kind of up-and-down path for inflation like we saw in the 1970's if

central bank the lessee makers are not able to get it shackled in again right away. yvonne: paul dobson, bloomberg executive editor for asia. let's get to paul allen in sydney. paul: south korea's president has ordered his government to divide stronger incentives to drive its chip industry as other country spent billion's semi conductor policy support. he blasted a bill passed late last month that included a smaller than expected tax cut for corp. rations and independent lawmaker has told bloomberg south korea needs to step up and support for domestic production of chips. >> i believe holding technological supremacy as a weight on our country can take the lead on any security related agendas such as diplomatic and defense issues without being swayed by other nations. that is our legacy we should hand down to for the

generations. paul: the president says his government is in talks with the u.s. about taking a more active role on managing nuclear weapons on the peninsula tear this would mark a significant shift in the decades old policy to deter north korea. pyongyang has ratcheted up tensions testing scores of missiles and preparing for another nuclear test. moscow's defense ministry says a ukrainian strike on a russian military facility has killed 63 troops stationed. ukraine warned russian may launch more attacks over the orthodox christmas holiday. ukrainian president volodymyr zelenskyy says russia has a right to be afraid because they are losing. australia's housing market suffered its biggest the kleins since 2008 last year. corelogic says the national home value index fell 5.3% in 2022. the first decline since 2018.

it says home values could fall further before stabilizing after interest rate speak. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. haidi: still ahead will be joined by the ceo of nova next. coming up next, a research president outlines what he sees as a narrow path to victory for the stock market this year as inflation pressures ease. this is bloomberg. ♪

yvonne: it is still about inflation how this plays out for 2023. our higher of problems? what is the view on inflation for the aipac in 2023? let's bring in david crunching the numbers looking at how this people. david: the forecasts are inflation will remain elevated. they will come down at a high pace. there is not a high degree of confidence. some of the forecasts i put out there and we are going to show a graphic of say you have japan,

australia, new zealand. australia, 5.1% is the median. the range is 3.8 to 8.1%. anywhere that could accelerate, mainland china, economy is expected to recover. hong kong is a very good example. when you look at southeast asia, vietnam is one to watch. that is where we are expecting inflation to accelerate. philippines and indonesia standout because we are on the inflation fight. the philippine central bank came out a couple days back before we went into the new year and they expect for december 7 .8 to 8.6. not as big of a problem but still a challenge for policymakers before they can unwind. it goes into where inflation matters for investors. in the u.s. we have the jobs report coming out on friday. there is also the question in

china of whether or not a reopening will lead to inflation transmission globally. we have yet to see that break even. i will end on this next one. the jobs report is on friday. there is very little sign as far as wages go month and month that we are getting any moderation. we are still averaging double pre-pandemic norms. that goes into the inflation story. we will get an update come friday haidi:. looking forward to it. we are -- a narrow path to victory if the u.s. inflation comes down faster than expected. we were told the good news of the consumer and the financial sectors. >> the financial system is a lot more resilient. the banking system is in very good shape.

a lot of these bank executives have been saying a recession is coming. their loan portfolio continues to grow. they are not sitting that much aside for loan losses. looking at their balance sheets, there is a contradiction between what they are doing which is lending money and provisioning for losses and what they are saying. i think the banking system is in good shape. the consumer is in good shape with some concerns about credit quality issues in the auto market. all and all wages are likely to rise faster than prices in 2023. i think purchasing power is going to be there for consumers. the labor market remains strong. >> to that point if you have the consumer who is going to be able to keep up consuming and spending and in theory fueling inflation, are all these things good because they raise the prospect or the probability of a

soft landing or are they bad because if the economy holds up to well, the federal reserve is not going to be able to do its job? >> that is the problem the bulls are having is they almost cannot win. if you get an economy that is too strong and belies the idea of a recession, the fed is going to have to raise interest rates more. the key is the narrow path where inflation comes down a bit more than is expected. that is the camp i am in. there are seeing used car prices continue to plunge. we are seeing actual rent inflation coming down dramatically. we have seen energy prices moderate quite a bit. i think we are going to see three to 4% headline inflation on the consumption deflator this year. i think it is going to happen early in the year and ease some of the concern about inflation. all these price indexes coming from the regional business

surveys are continuing to show moderation. >> if we are talking about some of those inflationary pressures coming down there for cost pressures coming down for companies and consumer demand holding up fairly well, is there too much doom and gloom about the earnings story next year? >> we are debating soft landing versus hard landing. i think -- i am realistic here. i'm not going to tell you there is no risk of a recession. i think there is a 40% risk of a hard landing and a 60% likelihood of a soft landing. the markets seem to be flipped the other way where they are more concerned about a higher probability of a recession. nobody is talking about no landing. the reality is the second half of the year after some weakness in the first half has shown oath rates of two to 3% in real gdp with the consumer spending, capital spending holding up pretty well.

it has been a rolling recession. it is rolling through the housing market. it has rolled through retailers. it may rolled through some of the other sectors of the economy but altogether, the economy is holding up. there is no landing so far in the economy. yvonne: speaking with kailey leinz there. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. termed all subscribers can go to dayb . -- terminal subscribers can go to dayb . this is bloomberg. ♪

haidi: a quick check of the latest headlines. tesla deliveries fell short of

estimates in the latest corner despite offering discounts in the u.s. and china. the automaker handed over just over 405 thousand vehicles to customers. that is short of the consensus bloomberg forecast for 420,000. the total was a record, the firm came up short of its goal to grow deliveries by 50% last year. the ceo of ne-yo says he expects supply chains to return to normal by april as the country adjusts to its post-pandemic reopening. deliveries are expected to fall short of the target of 150,000 cars. the company was hit hard by the shanghai lockdown last may and june. >> it has indeed had impact on us this year. with the process of china's reopening it is inevitable to be impacted in the region where we are based. the good thing is we can see the impact will be gone soon. i am very confident in the near future china's supply chain and

auto industry will return to normal. haidi: still ahead, the yen starting 2023 on the front foot. the boj continuing efforts to repress yields on government debt. the effects side of things next. this is bloomberg. ♪

paul: this is daybreak: asia. the imf managing director says a third of the global economy will face recession this year. in an interview, she said 2023 will be a tougher year than the

one would leave behind. she says the u.s., e.u. and china are slowing at the same time leading to negative trends globally with the outlook for emerging markets even worse. israel has raised rates to the highest level since 2008 and signaled they will remain elevated for some time. the bank of israel lifted its benchmark to 3.7 5% from 3.25 percent in line with the most forecasts. monetary committee suggested it sees signs of a moderation in inflation pressures with an economic slowdown ahead. wishing says new chinese foreign minister says he once better ties with the u.s. in a new year's day phone conversation with secretary of state antony blinken. he previously served as china's u.s. ambassador. he said he was looking to maintain a close working relationship with his american counterpart. antony blinken tweeted the two discussed maintaining open lines of communication. hong kong is planning to resume

quarantine free travel with china as soon january 8. the chief secretary wrote in a facebook post cross-border travelers will be initially subject to quotas. he says the frequency of sea, land and air transport to the mainland will rise to meet demand. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. haidi:haidi: let's take a look at the yen strengthening to its highest level since june. our markets fx and rates reporter joins us. what is the value level right now to enter long yen over the dollar? >> if you've not already sold dollar-yen, i probably would not start now. the last evidence we sell of the bank of japan was at 141 area and i do think we have a couple weeks to run between now and the first fed meeting and the bank

of japan meeting. if we could see some sort of recovery over 135, between 135 and 140, i think that might be a better value than trying to stay at the break of 140, 131. haidi: if you had to choose, long yen against the euro or against the greenback? >> good question but the dollar-yen has come down about 15% from its peak. the euro-yen has come down about 6%, maybe 6.5%. you would think maybe the euro-yen, selling your yen might be a better price proposition but there are a couple factors. you have putin still misbehaving and the ecb is -- they have started pushing off on their normalization process of their policy.

until they get some sort -- they become clearer in their communication, it might be more choppy. i still would prefer patience and try to sell dollar-yen. a lot more people are on the trade already. but it is dollars straight line and there will be recovery rallies. yvonne: what are you looking for for the next trigger? when is boj's next change in posture? >> everyone is expecting something to have in april when there is a change at the top. currently mme eight is the favorite for that. if he was to get the gig, he has been the deputy for years and years. he understands the value of waiting it out.

he will not be rushed. that would be a dollar-yen positive. in terms of policy outlook, the outlook for japan's economy is still pretty weak. the most you can expect at all from any change in posture -- i think the word pivot -- to use the word pivot again would probably be strong. maybe just a posture where they remove -- from the forward guidance words like further reasoning or something like that. something to say they are not willing to ease further or something like that. that would elicit a result and people would grab onto that and trade from that. yvonne: michael wilson, thank you. our markets affects and rates reporter joining us from sydney.

the move to white and tenure government bond move trade ban not only shout markets but might also signal a turning point when it comes to life insurers and asset allocations. let's bring in stephen lam. we certainly saw the market pop. it was the banks or the insurers on the back of the pivot from the boj. is this a big game changer for them? >> it is. the japanese life insurance industry holds about $3 trillion. about a third of that is in government bonds. not only that, if you think about over the years because of low bond yields in japan, a lot of them have shifted to overseas assets. 26% of their holdings were overseas bonds or securities. it is very likely at least a few percentage points change. that is billions of dollars, hundreds of billions of dollars that is going to move.

haidi: when it comes to specific geographies, are we looking for points of difference in terms of how quickly we are going to see that reallocation? >> a lot has changed since the beginning of last year but what we have noticed is number one they are going to shut a lot of the u.s. treasury yields. the reason being is the currency hedging costs have shot up dramatically in 2022. it is likely continuing for the time being. if you think about holding a three and a half or a four cent overseas treasuries but your currency cost is already 4%, you're basically getting nothing or even negative which is what is happening now. if you're already earning 1.5% in terms of jgb yields, why do they have to go outside? the catch is they will still invest in overseas but they need

to invest in something -- they need to take more risk. like corporate bonds or stocks and things like that. yvonne: when you have higher jgb yields, you will have a stronger yen as well. what does that meet for shell holder returns and profits? >> it is a mixed bag but the most important point is domestic yields. if you think about it from an economic solvency ratio perspective or a life insurers jargon, the value perspective, they are more sensitive to higher domestic yields. we crunch the numbers. if you think about it from a capital release standpoint, from every 50 basis points in domestic yields shift upwards. we can let the insurance companies release the lien's of dollars in terms of capital so that is definitely positive for shareholders return. on the profit side, in the long run, the interest income is going to release.

you can offer higher returns to policyholders you sell policies in the future. haidi: so what is the broader outlook when it comes to profitability and shareholder returns if you assume the broader picture we are going to get weaker equities, a stronger yen and high-yield? >> with the improvement in investment income, definitely it is a positive for the profit outlook in the long term. any the medium term there will be some sort of a impact but mind you, a lot of these holdings are in maturity. they are not impacted too much by the swings in the bond prices because when the yield was up, bond price goes down. again picture is into play in here. compared to the pnc insurers, life insurance invest a lot in terms of overseas.

in an translation impact, some of that overseas holdings, the translation impact would negative for the time being. as we see the yen stabilize, a lot of these insurance companies have already hedged their bets before. some 60% or so they are already hedged. there will be some impact but it will not be huge. yvonne: out of the insurers you look at, which is going to benefit the most? >> there are the main listed companies. a lot of overseas not only investments but in terms of business operations. because this is a domestic game changer. tnt would probably benefit more. yvonne: coming up next, the ceo of battery tech company the

phonic joins us for the outlook for ev's and the energy transition this year. this is bloomberg. ♪ oding the new sleep number climate360 smart bed. only smart bed in the world that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

yvonne: william lee on the recovery of china's supply chains. asian ev makers are ramping up sales. byd reported sales for the same period more than doubled compared with a year ago. tesla came out with its own theories as well. still missing what the street was expecting short of its own goal to expand deliveries by 50%. the miss came despite the unusual step of offering hefty incentives in two of its biggest markets. haidi:haidi: battery superior -- material supplier novoni is ramping up in the u.s.. the company is listed in new york and sydney.

great to have you with us. broadly give me your expectations when it comes to market demand in the ev space this year. yvonne: chris, we cannot hear you. maybe you unmute it we will have to sort out the audio issues with chris burns. will be talking with him more about overall ev supply chains, overall demand. chris, do you have us now? >> yes. can you hear me? yvonne: sorry about that. outlook for 2023? >> starting off the year well here. i think this is going to be a great year in north america especially for the supply chain vehicle sector. we are seeing more and more offerings come to the consumers from the vehicle brands in north america. what is so critical is the

reshore inc. of their supply chain from what is predominately asian now especially in light of the inflation reduction act and incentives in north america. we have built the accompany to be a death the company to be a key supplier of raw materials to help bring local content into these batteries. haidi: the $2.8 billion battery projects from the biden administration is seen as a positive thing but is also seen as a first step. how difficult will it be for projects including yours to get to completion in smooth way given we know there is a backdrop of rising costs to contend with? >> the $2.8 billion is a huge investment from the government. there is more coming through the infrastructure laws announced to be about $7 billion. this is just the beginning of investments that need to be made

not just from the government. but from the investor markets and as well from the customers investing in securing their supply chain. we are looking at a time where we will have significant shortages especially in the local markets of many key materials. when you look at the incentives being put in place to have the local content in the vehicles and the battery cells within the vehicles, it is becoming more important for the automakers who plan on bringing factories online in 2024, 5, 6 to ensure they will have supply chains for those factories. for companies like ourselves it takes a few years to build these factories in north america to have that supply ready. this first round of funding we were selected for $150 million under is critical. it is the first step in significant investment that needs to continue to happen from different stakeholders across this industry to build the supply chain. yvonne: i'm wondering because

you work with synthetic graphite and we know graphite is basically mostly produced in china whether it is the real stuff or synthetic production as well. how far you think what you are seeing efforts from the u.s., how far does ago in terms of catching up with china or is the industry going to continue to rely on the mainland? >> i think we certainly are behind the rest of the world. the chinese market for battery materials, graphite specifically has surpassed everywhere else and become the dominant place to source these materials because it has been the lowest cost market to produce these materials. they have secured supply of many of the raw materials especially for the natural graphite markets. it is simply where the industry has grown. the technology is also quite advanced. it is going to be challenging for the western world to catch up. synthetic graphite specifically is an area where with less

strict environmental controls and concerns in some manufacturing regions in china they have been able to maintain a low cost structure in ways that cannot operate in many of the western world countries. this is where our focus has been on more sustainable process technology that is environmentally friendly that we can scale in north america without concerns that would exist with some of the existing manufacturing. we are certainly playing catch-up. that is why we need to be making steps early both in technology development. we started in this area in 2017. and now in investment manufacturing. yvonne: i was going to ask you about solid-state batteries. this is seen as the holy grail of -- in the industry and maybe can serve as an alternative to lithium-ion batteries. . they use less graphite i believe, chris. what does that mean for your business moving forward? >> many of the solid-state batteries use lithium metal which replaces the graphite. i think what we will continue to

see is technology developed in that space. for specialty markets and that really need high-energy density. about 10 years ago that was the concern of the industry. can electric vehicles drive far enough? now that is not really the concern as much. the concern is around cost and a key part of cost is longevity. we need these batteries to last. the thousands of cycles that are going to be put on them in these vehicle or integrated vehicle applications. that is the area where synthetic graphite is the only technology that can have that type of multi thousand cycle life performance. i think we are going to continue to see of their technologies and to market and play a role but the market is going to continue to grow and have huge demand for graphite materials as they are the back phone of the landscape -- the backbone of the landscape. haidi: when we spoke to last year, you spoke about scaling battery capacity or plant capacity being one of the biggest challenges.

is the game changer going to be if you can get that partnership with a major u.s. or otherwise some other ev maker and how close are you to that kind of deal this year? >> that is certainly the primary focus right now. as we look at building up the next plant that we have the $150 million grant from the biden administration for. we need to understand the partners we are going to be working with, the products we are going to produce for the vehicles. and so we are working closely with a number of oems on material qualification programs, supply agreement, potential supply agreements and how the customers may play a role in financing these facilities. as we look at that as a big obstacle we have $150 million from the grant toward funding but we are looking to leverage other sources of funding such as federal debt through the lung

program office and support from customers to help ensure we can make the investments in timely manner to build the plant. >> thank you for joining us. we have plenty more to come on daybreak asia. this is bloomberg. ♪

yvonne: president biden says there are no current discussions about joint nuclear exercises with south korea after his korean counterpart called for a more active role in managing atomic weapons on the korean peninsula. let's bring in our seoul bureau reporter. tell us more about what is to come here. we did hear from kim jong-un. what were some of the key takeaways in terms of what we could expect geopolitically this year? >> the end of year meetings are very important for an oath korea especially at this time when north korea is raising tensions on the korean peninsula. they have been raising tensions to the levels unseen for the past few months and it fired off more than 70 ballistic missiles in 2022 alone. that is more than three times the usual they would conduct under the kim jong-un regime the past 10 years. the meeting has stressed that

kim jong-un has pledged he will exponentially increase the nuclear arsenal in his state and that will be against the hostile act of the south korea and u.s. and buy that he means the joint military drills against north korea. we are expecting to see more tensions to come on our way from north korea. yvonne: how is south korea reacting to this? what has the president called for against north korea's provocations and their plans to beef up the nuclear force? >> the president has always taken a stern approach against north korea. last week we have seen five drones come our way from north korea. south korea for the first time sent drones to the north korean side again for the first time in a tit-for-tat action against the

north korean move. he has always been having that stern approach against worth korea. he went further to ask the u.s. to have a bigger role in managing the nuclear assets on the korean peninsula. he has said while the nuclear arsenal kit belongs to the u.s., the planning, intel sharing and exercise has to be done together. biden has said there is still no discussion about -- so we will find out what happens next. haidi: let's take a look at some of the stocks we are watching when trade opens in korea shortly. president biden says the u.s. is not discussing a joint exercise with south korea following exercises -- following calls from south korea. we'll be watching some of these defense stocks.

coming up in the next hour, ubp equities research explains why asian earnings may not regain their ability to get back on track until 2024 but china's reopening could bring this forward. china beige book international talking about china's likely economic contraction the last quarter and what they see as an increasing unrealistic outlook on a first quarter recovery. the market opens in seoul. this is bloomberg. ♪

yvonne: this is "bloomberg daybreak: asia," we are counting down to asia's major market

opens. >> the sole market open after yesterday, quite a down day after the china covid concerns. the reopening stories, giving fed requirements with more testing playing out. all these countries try to isolate china in some way. that does put a bit of a dampener and the consumption recovery story. the pmi numbers were sent -- were certainly pretty horrid. haidi: backward looking, i know, but forward-looking it is filled with so much uncertainty. shirley 2023 is better than 2022. let's take a look at singapore. fourth quarter gdp as well as the 4 year 2022 gdp as well. seasonally adjusted we see a gain of .2%, more in line with expectations. year on year 2.2% in the fourth

quarter of 2022. that moderated with the previous quarter, a little better than expectations. the full year on year gp coming through on the .8% for the -- 3. 8% for the whole of the year. we heard from the prime minister reflecting on the year in his new year's message. even as the world leaves the worst of the inflation fight behind -- fight behind, there should be expectations of more pain from slowing economic growth. they expect 3.5% for 2022. singapore is a canary in the coal mine. yvonne: 3.8% was beating government ejections come i was there for christmas. it was -- projections, i was there for christmas, it was

still happening. what is the growth story? does the reopening story of china, does the slowing of bed tightening cap -- fed tightening. is that enough to turn it around? here is the reopening on the tuesday, pretty flat on the kospi. travel, cosmetics, luxury stocks, retailers were all hit by this covid spread in china. we see a little bit of the upside on the kosdaq. take a look at how the yen is performing, as michael, our colleague was telling us, there will be some rallies here and there. 13090 for the dollar yen that is the june high. some strength for the japanese currency. three boj bond purchases last week as a try to cap the yields and tried to be down the speculation. that they are needing a big

pivot when it comes to the accommodative policy. haidi: take a look at what we are seeing in australia. this will clearly be one of the outside beneficiaries from the china reopening. the next few days we get the return of travelers from china. all the restrictions, including those that were put in australia including the negative covid test could dampen the flow. trading in sydney down .6%, we are watching the aussie dollar. the big risk on beneficiary. a little bit of a lower quote after the official pmi number from china came in lower than expected. we are expecting it to show the continued downside. yvonne: let's bring in karen, head of equity research for asia. we talked about how brutal last year was. do you think things could be better in 2023 and house of? -- how so?

guest: we hope things will be better this year. if we look at the main issues driving markets last year, interest rates and covid zero in china. these will be very important factors this year. we are at a much different state. obviously -- much different stage. obviously as he mentioned earlier, interest rates are likely to reach a terminal rate in the u.s. around five this year. we have had most of the gain already. inflation seems to have peaked. it does not seem to be a straight line down. that is not in the rearview mirror. let's see if we can manage the fine line between recession and a soft landing. that is of they will develop over the next year. obviously the situation with covid zero has done a complete 180. china is opening. if we look six was from now, it

will be where the rest of the world is, likely. it will be a very, very rough weeks and months in this exit wave. of which we probably never see the actual numbers. yvonne: i was asking a previous guest. at given the virus spread in china, more countries adding testing requirements from china. how big of a recovery boost are we expecting from the mainland? how will it help markets, you think? guest: i would look at it like a normalization. the rest of the world has gone back to normal. the short-term impact, the next week's, next to her three months, it could be pretty rocky. once we have china back as a contributing factor to the global economic growth, we will see normalization of supply

chains, that has been a big problem coming out of covid, especially in china. overall, getting china back into the global economic mix can be very very positive. certainly into the second half of the year. haidi: china tech in particular you see a bit of a refocus. what in particular and how do you see that playing out? guest: china tech obviously has been a little bit of self-inflicted pain. it has gone on for a long time. not only do we see the end of, the romaine: --regulatory regime change, we see companies focus on shareholders. tencent redistributing investments to shareholders. this has an impact on roe.

there is probably some entrepreneur --regulatory nudging behind-the-scenes. overall if we see a bottoming or the end of -- coupling with returns on shareholder returns and roe. we think possibly you could see global institution of investors edge back into those large tech platform names in china. which we think could be pretty supportive. haidi: when you talk about trading high and falling inflation as a tactical opportunity, can you give us an example? are these trades that will stay resilient even if we do see another u-turn on inflation? michael says inflation will continue to go up this year, potentially another change of monetary policy. guest: certainly if inflation

reverses course and goes back up again, all bets are off. that is what you're referring to. if you look back at previous bouts of high inflation, when we come down from the high-level to let's say halfway of where we were, it has been a structural tactical opportunity. let's say in sbx in general. looking more in-depth, if you look at past aggressive rate hike, the period around 12 months of when they start. the middle of march this year or the equivalent, has been important for one sector in particular. one style. financials has tended to perform best of all the sectors in the 12 to 24 month. after an aggressive rate hike cycle starts. dividend aristocrats, certainly as a style quality, and dividends has performed well in the 12-18 month period as well.

these are the opportunities we see ahead. caution, if your case of inflation reversing becomes true we need to reevaluate pressure. yvonne: what is the scorecard when it comes to asia stocks? last year was about southeast asia, india, benefiting from this reopening story. you are trying seymour the sell side say, i am -- see more of the sell side, china's reopening story has some legs. how do you lean geographically for 2023? guest: we would agree as well, if the china reopening story plays out, then we should see leadership from north asia take over from the support we got year. from azn and india as well.

if you look at atx earnings that peaked in 2013, look like we were about to rebound from their. then we got covid. current expectation will get back to the mid to 2018 next year. depending on how things go, swing factor, how you complete ford would be recovery of economic -- how you can pull it forward, would be the covering of economic growth in china. haidi: head of economic research for asia for upb. >> south korea's president has ordered his government to devise stronger incentives to drive the chip industry. the last of the bill passed late last month that included a smaller than expected tax cut

for corporations. they told bloomberg that south korea has to step up and support for drastic reduction of chips. >> i believe holding technological supremacy, is away our country can take the lead in any security agendas such as diplomatic or security issues without being persuaded by other nations. that is what we should hand down to further generations. >> president biden says he is not currently discussing joint nuclear exercises with south korea. after his south korean counterpart called for a more active role in managing weapons in the peninsula. that would mark a shift in decades-old policy size -- policies to deter north korea. they have tested scores of missiles and preparing for another nuclear test. moscow's defensive ministry -- 63 troops killed there, ukraine

warned that russia may launch more attacks over the orthodox christmas holiday next week. zelenskyy said new year's day the russians are right to be afraid because they are losing. 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 am paul allen, this bloomberg. haidi: still ahead, china beige book international says the abrupt lifting of covid restrictions has added fresh uncertainty to the economic outlook. president xi says tough challenges remain in the fight against the pandemic as the country's doubles out of the covid zero strategy. this is bloomberg. ♪

>> with extraordinary efforts, china has prevailed over unprecedented difficulties and challenges. it is not been an easy journey for anyone. we have entered a new phase of covid response were tough challenges remain. yvonne: bloomberg opinion call must clara says that china's move away from covid zero, could follow singapore but has instead emulated hong kong's disaster of

2022. what has been so shocking of the exit from covid zero it has happened in one fell swoop. no preparation when it comes to the health care system or vaccination levels. and somebody ways this feels like the start of the pandemic all over again. guest: that is exactly right. looking at some of these pictures is not only the start of the pandemic. december 2019, january 2020 it takes us back to the indian covid wave of 2021. hong kong of 2022, there was so many warnings. we see a lack of preparation terms of bets, vaccinations, stockpiling medications. it tells us about a system that is only able to operate with one aim at a time. we have seen xi's first comprehensive statement on covid since the big opening. it is significant how he has

circumvented the key issues here. yvonne: the response we have heard from nations is that, we need to step up testing requirements. you need a pcr tests or antigen test if you are traveling from china. what are the lessons to be learned, from people outside of china on this? guest: i think what we are seeing again, we are repeating some of the past mistakes, the first thing we do is put up barriers. a lot of that has to do with trust barriers. china created the self and between 19, 2020, it is not reporting daily figures. there is a trust deficit. it is not unexpected that countries with -- would want to do its own sequencing. china is uploading its own sequencing and variant test results. in the long run the restrictions do very little. it only does stimulate

discrimination, there is one lesson we do not seem to have learned. >> what about the lesson of this kind of governance and a trauma inflicted on the chinese people? i'm reading a story about how this is a party that never apologizes for its mistakes. is this something that will wear thin or will the relief and joy of reopening and being able to leave the country outweigh any dissatisfaction with the way the party has handled this? >> that is an interesting question. one we may not know the answer to for some time. what happens with his big and traumatic events is that they play out over time. i think it is interesting to hear him referring to divisions. a reference to the protest at the end of last year. completely unprecedented, and his time in office taking us back to 1989. much of this will depend on the economic recovery. for the moment this is all uncharted territory.

we will see how they do. a lot of goodwill loss, the make this huge sacrifice over three years, only to reopen anyway. yvonne: make sure to check out her column, china condemns its people to relive 2020. the service sector is hit or tickly hard we expect the many factor numbers to come out -- particularly hard weeks manufacturer numbers to come out. the backward looking december pmi data. it tells the number why they were forced to switch away so quickly from covid zero. guest: that is why they think the economy is part of why they made a pivot from covid zero. the hit from the initial move away has. been worse than expected. pmi an additional territory,

deep into negative territory -- into negative territory. this move away from covid zero that was always inevitable is having a bigger hit to the economy than was expected. coming a time when the economy was in dire straits because of the property sector, because of the weakening external demand. is a question of when it will get back up to speed. yvonne: we have 10 nations, including here in asia, australia, malaysia, south korea, putting in place travel restrictions. when the border reopening happens. does that mean we should temper our expectations about how much that outflow of tourism is going to help the rebound in asia? guest: the region is new to somebody restricted for so long we will have to see if the requirement for a pcr tests is enough to put people off of traveling. i think the product staycation is that there is a base for

tourism from china to get going. it will have to get over the initial wave. chinese new year coming up in a few weeks they'll probably exacerbate the spread in regional and rural china. let's say we get through this initial wave, china will get motoring again. not just tourist, but also students, you see executives traveling into and out of china. broad services spend will take over and assist asia to some extent. there is a lot going on. china will have to deal with its own properties, that is part of the slowdown. globally we have the european slowdown. the u.s. slowdown with the hit from rising interest rates. yes, china reopening is a breakthrough for some's areas of the service accounting -- economy. yvonne: the imf talks about a third of the world being in a recession, u.s., eu, china in a significant slowdown.

which areas can avoid a hard landing or sharp slowdown? guest: there is a view that the u.s. could pull it off. the -- europe is in a bad position because of the energy prices, several industries in the economy are in recession or expected to go into recession. china as i talked about is not just covid zero. the property sector remains in a slump. business demand and consumer demand is slowed. china is a bit of a slow spot. u.s. might pull it off with consumer resilience. jobs report on friday will give us the biggest indication of how the labor market residency remains. haidi: with a look at the economic snapshot as we get this new year underway. you can get a roundup of the stories to get your day underway. this edition of daybreak has all that, bloomberg subscribers can get that. you can customize the settings

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yvonne: a quick check of the latest business headlines, tesla fell below as look -- estimates despite offering rare discounts. they handed over just over 405 thousand vehicles to customers, short of the consensus forecast 420 thousand. the firm came up short of growing deliveries from lester. -- last year. the country adjust to the post-pandemic reopening come up full-year deliveries are

expected to fall short of the company target of 115,000 cars. they were hit hard by the lockdown last may and june. >> it indeed has had impact on us this year. with china's reopening is inevitable to be impacted in the region you are based. and also our supply chain partners. the good thing is we can see the impact will be gone soon. i am very confident in the near future china's supply chain and the auto industry will return to normal. yvonne: binance is reportedly to enter the south korean crypto market, according to the soul economic data -- daily. they completed due diligence for the deal and is slated to buy at 41% stake owned by the largest shareholder.

haidi: let's take a look at how futures in europe are opening up as we can to the two-year's -- new year's trading session this week. this is the picture, we have been holiday trade. futures little bit softer by 1%. msci europe up by .20%, -- by 1.8%. we did see modest gains for the first trading day, after the monumental slump of last year. most of u.k. market is remaining shut for the holiday, we have concerns about the bumping this of the china reopening, forcing sentiment at low bit more on the downside. yvonne: we will see how the luxury stocks to hear. there is a lot of cpi releases this year -- week as well. germany and france.

certainly to watch as we get of europe. in the markets in asia, japan has closed, markets are slow the first trading day of 2023. we do see on the kospi a downside, of almost 1%. asx 200 seeing 1% loss as well, futures and the u.s. slightly higher. starting the year with a negative note. more to come. this is bloomberg. ♪ these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app or upgrade to the speed that's right for you today.

yvonne: the south korean government is implementing a steep increase in electricity races year after the state run utility faces a record loss from record fuel costs.

what we talking about in terms of the increase in rates? why they be forced to do so? guest: south korea has increased the price by 9.5% for the first quarter. the biggest quarterly jump in company data going back to 1982. the rates come from the state run utility. facing a record annual loss for 2022 after largely keeping rates unchanged in order to protect consumers from inflation despite soaring fuel prices. haidi: are we likely to see further price rises this year? guest: we are likely to see further increase this year. the government is determined to normalize management. energy minister said a further hike will be considered for the second quarter after reviewing the local economy, financial status of state run companies and global energy prices.

the government will look into a gas price hike after keeping rates flows -- frozen in the first quarter during the peak winter heating month. haidi: we have to leave it there. obviously the market was not too thrilled yesterday with a price increasing was insufficient meet the market expectations. our energy reporter, we want to break this data we are getting out of asia. we talked about the asia pmi's coming out when it comes to the region today. this is after what we saw when it came to china. those numbers in december were pretty disappointing here as well. when it comes to pmi numbers, i am looking for them right now, do you have them open right now? i'm sorry. there you go. haidi: we have pretty mixed bag. take a look at southeast asia in

particular. seeing pretty dismal ratings. vietnam, the picture is worsening. malaysia is worse, both under the 50 level that demarcate contraction from growth. taiwan seeing improvement from 41 to 44. philippine going from strength to strength, that reading coming up for 23.1 at the moment -- 53 .1. this after the official china pmi ratings over the weekend, the china economy ended 2022. in pretty dire straits. we expected that will reflect the same when it comes the smaller and private companies in china as well. the question is whether we will actually see a meaningful recovery in the first quarter given the chaotic nature of the covid the opening and the different ways the economy is expected to take a hit. from the fact that we are seeing surging infections, 37 million

infections in one single day in december. so much uncertainty out there. >> it is interesting to see improvement when it comes to taiwan and the philippines as well. taiwan, everyone is expecting, like north asia they will start looking little better in terms of the chip cycle. they have reached that. there is a lot of uncertainty. you see the contraction come a lot of it hangs on this global macro backdrop as well. we expect recession in the u.s. and europe. the export picture not only for china, but a lot of economies will be bleak. questions if the domestic economies itself can sustain the recovery here. haidi: this get to paul allen with the first word headlines. >> singapore's economic recovery held up in between 22 beating the government projection.

gdp grew 3.8% during the year following a 2.2% expansion in the fourth quarter. risks remain for singapore's trade reliant economy. beijing says chinese foreign minister says he wants better ties with the u.s.. in a you new year's day phone conversation with secretary of state antony blinken. he safe -- previously served as china's u.s. ambassador wanted to maintain a close working leadership with the american counterpoint dashcam part. 18 -- counterpoint. resuming china travel as soon as january 8 with hong kong, they will be initially subject to quotas. they say the frequency of sea, land, air transport will rise to meet demand.

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 am paul allen. this is bloomberg. haidi: abrupt lifting of covid or sections has fueled a surge of infections across the country. china's beige book international managing director, joins us now, great to have you with us. such a critical time for the chinese economy and by extension the global economy. my question is, i understand they probably did not have a choice but to exit covid zero. to exit in such a category and haphazard manner, will this in the short-term potentially do even more economic damage? guest: absolute will and absolutely has. when you look at the q4 numbers it is an absolute bloodbath out there. every sector is struggling. every headline growth metric,

profitability, sales, production, everything is struggling. the picture is grim. we know why this is. two months with restrictions that restrict -- constricted economic activity. you went from zero kobe the total covid and it unleashes -- zero covid to total covid and it unleashes problems to damage the economy. i do not think the bottom is insight yet. haidi: one of the wildcards for the global inflation outlook, certainly, potentially throwing a spanner and what the fed does is if we see this great inflationary wave from china. do you see it that way? some of the bloomberg estimates when it comes to energy prices or even u.s. cpi impacted by this is significant. guest: right now the core problem in china this year has been deflation. prices falling, price weakness. that is a real challenge we are doing with. that is probably the long-term trajectory of the economy as it

continues to slow. as we enter next year and you see economic activity finally rebound, you see those prices rising. you see some levels of inflation pickup and china. it has serious ramifications for global inflation and what the fed does. the long-term trajectory at this point does not look like china being an inflation exporter that people thought it would be. yvonne: i am taking a look at high-frequency data, like mobility for example. there are some cities like beijing that say they have reached their covid peak already. is it better to focus on that data than some of the sentiment data we get out here as well? are we underestimating how big a recovery boost and how soon it can happen? guest: we have to talk about the country as a whole, you can see certain cities reach a covid peak. china, is a massive country

comey have over a billion people elsewhere you have to think about -- the has repercussions from the compunction -- consumption side and the property market. even if you are focused on richer coastal provinces that tend to get a lot more and sometimes disproportionate attention in the economic conversation in china. yvonne: is it safe to say we could see, when it comes to forecasts, downgrades for 2022 and more upside risk when it comes to 2023 in terms of growth? guest: i think, yes, the next month or so will be tough. the bottom is around february, maybe january then you talk about the recovery story in china. you get into q to and you see the real recovery. the case markets are waiting for, gain some traction, that is very much still a q2 story not a

q1 story in our view. haidi: what is the longer term debt picture look like? we know is not pretty when it comes to local governments and funding due to covid zero. do we run into a problem of productivity of debt in china? guest: that is a real question. what is the nature of physical activity you get? it has oftentimes been redefined in china? we are used to think of highways and bridges being fiscal activity. it has increasingly been talked about in terms of developing technological sector, r&d, and that type of thing. there is room for fiscal stimulus this year. there is room for clearly more monetary policies and no question about that, i think we have to see what warm it takes while keeping in mind the returns are not going to be like years past. the growth levels will not be there, including in property. haidi: the long-term picture

comey have alluded the drags. property, image -- infrastructure, demographics. the geopolitical overlay, the decoupling in tech we talk about chips. how much of that will curtail not just the ambitions, but the ability to move the industry to the next level? guest: in the short-term it is a pretty major setback. if u.s. policy contains to evolve in that direction and you see more and more technological decoupling it will most certainly and up -- up and beijing's plans and leadership plans of where they thought technology would evolve to because of the access to u.s. high and technology and parts -- end technology and parts. it will be a precursor to the communist party looking for other measures to obtain those technologies.

there is a national agenda there. it will not be abandoned, even if it is in the short run delay. yvonne: i was can say the export picture does not look too good. can china rely on its domestic growth to sustain where gdp will grow? we would hit that 5% quite easily? >> 2023 easy, with 2022 being as poor as it was, we are thinking 2% growth. you can juice the numbers. we can look at a chinese economy that is recovering, admit state global slowdown. the export numbers are falling. it will absolutely put a ceiling on how much of a recovery you can get. exports drive a lot, it has not been a sustainable driver of chinese economic growth years. yvonne: thank you for coming in

on a holiday. we have more ahead on the economic and health implications for china's reopening. amid the fears of covid-19 search. -- surge. plenty more to come. this is bloomberg. ♪ the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first.

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yvonne: just talking about the property sector with facebook. evergrande -- with beige book, evergrande has delayed releasing restructuring plan. creditors seeking to salvage their investments. we will bring in bloomberg's asia investment and real estate coverage. they have missed it again. what does this mean now? guest: this is the second time they delayed announcements. they were supposed to release the structure plans by the end of the year, evergrande sits at the heart of the property crisis that has implications for the banking sector, trusts of millions of homeowners. what this means that evergrande now needs to target its second target deadline which they said during a court hearing in hong kong. that they want to target at least and of february or early

march to announce some kind of proposal and achieve an agreement with creditors. yvonne: what do we know of the status as of now? guest: he sent a letter to his employees over the new year's. he said basically evergrande should prioritize focusing on finishing construction projects in china. that is worthy company is focusing all its ammunition and money on. delivering much-needed projects to ensure that the government is happy with the performance. haidi: is the market still waiting for the restructuring plan? it looks like the market has went ahead and looked at the reopening process and the housing recovery sales later on this year. how closely watched is this among investors? guest: it is still huge because the amount of money involved, as 1.87 trillion in liabilities.

it is supposed to be more coordinated governments and then there is offshore creditors that are basically left out there. everyone and every man for themselves. they are trying to salvage everything they can at this point. >> asia investing in real estate coverage there. tune into bloomberg radio, you can hear from today's newsmakers, hear from the bloomberg team broadcasting live in hong kong. more ahead. this is bloomberg. ♪

haidi: inflation caused all sorts of major problem for policymakers and investors in 2022. what is the view for inflation it comes to apac in 2023. once we hit peak inflation is good news berhow price -- how quickly can prices fall? guest: to what extent is it an equal trajectory? you have china reopening that might complicate matters as follows ppi is consumed -- concert. at the forecasts, most economists see inflation coming

down. it will remain elevated across most parts if not all of the asia-pacific. bible 1% in australia -- 5.1% in australia as an example of a coming down from a very high base. in asia, comp -- economies that are expected to recover from covid this year will see inflation accelerate. in southeast asia it is a vietnam story. where inflation growth is expected to remain robust like indonesia and the philippines, on that note there inflation is expected to remain well above trend. and might have implications on how quickly policymakers can remove and reverse some of the tightening they put in place. especially in the philippines where the forecast is 8.6% high in december. this is where things might get tricky.

the ranges on many of these things is quite wide. australia for example, 3.8 to 2.8%. in a lot of ways this will be volatile and this is where traders will make their money here. haidi: a look at the big ticker on inflation. [laughter] investors in asia betting on some of the biggest bugbears of last year into the tailwinds of 2023. let's take a look at what we are watching. we keep joking that things we better this year. it will be hard for things to get worse. we donot want attempt the market's spirits. what is driving the apple performance expectations for asia versus the u.s. -- the markets performance for asia versus the u.s.? guest: the ideas that asia will

outperform because of the reversal of property -- policies that have weighed on 2022. with the full reopening of china and the federal reserve easing on rate hikes, you will see some of the equities in the region get supercharged. there are 5 things investors are watching very closely. there is china's revival. a weaker dollar. a downturn in the chip cycle easing and bottoming out. there is the bank of japan's policy stance that is very important to asian markets this year. last but not least his geopolitical tensions with china, taiwan, u.s. all in the next. -- mix. yvonne: the reopening story, everyone thinks the next few weeks and months will be rocky as well. this reopening trade seems to be a gated as well -- faded as well

in china. what is next? guest: the idea that you will see, you see a surge in infections, see the pressure on hospitals. you see that way on the economy for the first half of this year. it is what investors are seeing. you are going to watch how the spread, spreads to other countries as well with china reopening next week. the property markets slump continues. home sales in hong kong slumped to the lowest levels since 2008. all of this continues to weigh on china. it will definitely be a bumpy first half. things are expected to get better in the second. haidi: we had that surprised and out 2022 with the outlook of the boj. guest: absolutely, the boj was a big surprise as we wound down

for the year. the idea is that the bank of japan, if it decides to tighten a little bit more, tighten policy more, that will strengthen the yen further. it is bad for exporters, especially the tech and automakers in japan. they rely heavily on a weaker currency. the other thing that will maybe help, is that a lot of japanese firms tend to hold overseas assets. stronger currencies could bring some of that back. that could help regional shares were japan highest weight above 32% of the index. haidi: thank you, bloomberg's asia stocks reporter. a check of the latest headlines. tesla fell short despite offering rare discounts in the u.s. and china. they handed over 405 thousand

vehicles to customers, short of consensus uber forecast for 42 0. -- 420,000. it was a record but came up short. >> he expects supply chains to normal by able as the country adjust to the post-pandemic opening. deliveries are expected to fall short of the company's target of cars. they were particular hard-hit by the two-month lockdown in may and in june. >> my preliminary estimate, with a factor of the upcoming lunar new year, i believe the overall supply chain should be stabilized by next month or april. haidi: watching ahead of markets opening in hong kong and china in the next hour, tesla with a reaction to those delivery numbers.

polly develop his has a proto-plan to raise 1.8 billion dollars in private placements. china evergrande front and center again delaying the release of a much-anticipated restructuring plan. that is it from "bloomberg daybreak: asia." markets coverage continues. we look at the start of trading. with markets -- bloomberg markets, china open is next. this is bloomberg. ♪

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>> it's 9:00 a.m. here in hong kong. in beijing and also in shanghai. welcome to bloomberg china