vonnie: you are watching daybreak asia coming to you from new york, sydney and hong kong. haidi: we are counting down to the market opens in tokyo and seoul. annabelle: assure you has just come online. asia-pacific shares heading for the rest january in years. investors turning cautious ahead of big tech earnings in the fed decision. samsung's results are shortly expected to spotlight the glut of memory chips that led to the biggest profit plunge in a decade. the u.s. set to consider cutting while way off from all its suppliers, ramping up its crackdown on chinese tech. let's start with breaking news when it comes to south korea -- industrial production numbers just crossing the bloomberg and this is the picture when it comes to the industrial side of the economic recovery we see in korea. quite steep declines and much

worse than expectations. the seasonally adjusted month by month number coming in at a contraction of almost three percent. expectations were for a much larger contraction, that leads to a year on year weighting of seven point 3% contraction, slightly worse than expectations of just over 7%. all of this accelerating from the claims we saw in november, november seeing a decline of 3.7%. that decline coming in at 7.3%. annabelle: we have the open of the asx 200 and at the start of the day, we are trading flat. futures had been indicating for a drop but tech stocks are definitely going to be one of them, given the moves we had. we did see tech stocks leading the gains in the prior day.

the other key metric we are watching are the moves you can see -- bond yields ticking slightly higher. it does reflect the changing sentiment deciding to come through into markets because traders had been ignoring this fed mandate to keep rates higher for longer and brushing that off. we do see inflation does appear to be staying sticky. inflation surprising to the upside with spanish numbers overnight, so that is telling us the mandate to keep bringing down cpi could mean higher rates for longer. in terms of how that sets up for the trading day, it has been the best month so far in nearly three decades. the question is whether these gains will hold. but a rather auspicious 8.8% gain so far in january. if we do see a downside, we are looking at the best start to the year in more than a decade, so

it does reflect that exuberance. citibank says this is more of a technical rally than any underlying fundamental changes in the market. shery: even -- vonnie: even though there was a selloff today, so that could have been profit taking. looks like they might be in for a little relief tomorrow, having seen a drop today. early going but futures are pointing higher for both indices. same with bonds -- a bit of a selloff but there were warning voices all over the place today talking about the global economy of being a tinderbox timebomb because of the amount of debt the global economy is holding is weighing on it. there's a lot trying to dissuade investors from being optimistic. the one place we will probably not see a rebound is oil. earning it below $78 a barrel and the likelihood is that

continues because short positions are being put on as we speak according to traders who spoke with bloomberg. the biden administration is considering cutting off huawei from all of its american suppliers including intel and qualcomm. shares -- sales from u.s. firms had been limited since donald trump put the company on an anomie list. let's ring in our policy reporter in washington, d.c. does this impact things at the margins given there were 70 restrictions on supplying huawei? nick: huawei has been completely cut off by the biden administration and trump administration, so i don't think you are going to see much impact for huawei itself, but there is a bigger story and that is the administration is under a lot more scrutiny about how it grants licenses for companies to sell particular items to companies like huawei coming

from republicans on the hill who now control the house of representatives. part of what you are seeing is an administration recognizing it is going to need to tighten a lot of controls and provide more transparency as republicans start looking at how the commerce department issues licenses in the u.s. is looking to sell sensitive chip technology. haidi: this in addition to other chip controls -- a deal being struck with the netherlands and japan with the u.s.. what does this add to the picture of the relationship between the two superpowers and how that plays into the demand stick ambitions going into 2024? nick: that's a great question because the other thing you have is secretary of state tony blinken traveling to china in just about a week as part of the biden administration's effort to maintain this balance.

on the one hand, they say they want to put a floor under the relationship, they want to get back to normal procedure. at the same time, they are clamping down and doing things like controls and limits, seeking to limit the sales for some of these advanced chip production technologies to china. so it is a real question whether the administration is going to be able to do that, both clampdown on china and try to create some normalcy in the relationship. china will have a say in how that goes. haidi: bloomberg's senior foreign policy reporter there with the latest. let's get back to the markets -- our next guest is looking at china and sees china is the only region set for earnings growth. david long is the senior investment strategist at miles bernstein. i'm curious how you get that because the failure to reach market yesterday felt to me like

traders and market participants are looking for something new, a fresh catalyst. even though the data we had was positive, there was nothing really new compared to what we have seen over the past weeks and months. david: those are very good points and when we look at how the market has traded china this year, there has been almost unanimous consensus that china is an attractive market because of how far it fell last year and the fact this is the one market globally that has better earnings in prospect this year than it did last year. that is starting to become a little more contentious as there is more debate on not whether or not to buy china but which part of the chinese equity markets

are out. the knee-jerk reaction was to buy a lot of chinese tech and to own a variety of things that worked in the past, the old economy, if you will of china. we think both of those approaches are incomplete ways of addressing the opportunity. in the case of china, we absolutely believe this is going to be the year of the domestic chinese consumer, but that also means we need to think about in the context of reopening which companies are going to do better fundamentally from an earnings perspective. we have already seen how big tech in the u.s., for instance, has suffered the consequences of over hiring and simply some mean

reversion trends after reopening. we expect china could face something quite similar. haidi: two year point, take a look at this chart -- pe is back to normal. when you talk about outperformance, just gauging from last week's data as an example, clearly the consumer is roaring back but they don't seem to be roaring back into purchases like homes and cars. how much do you see the outperformer's being consumer-exposed names as opposed to investment-exposed names? david: that's a great question. there has always been this divide between the investment-led part of the chinese economy and that includes property, infrastructure, etc.

there's the consumer-led part which is a little less predictable but where there is very clearly been a positive growth trend over a long time. we would regard consumer discretionary as being a good place to be, but you would want to own some of the companies offering services or experiences over some of the goods people were able to purchase all along over the last two or three years. we are looking at businesses like travel agencies in the short-term as ones that will enjoy some outperformance, but as we frame how to invest, very clearly, there has been a lot of attention paid to first order

affect beneficiaries of reopening and we need to think about how one invests in china over the longer term and we would advocate more value approach to investing in the market and continue to learn lessons we should have learned over the last two or three years, which is we should try to focus if we want a long-term approach to chinese equity investing to be aligned with a national government policy. on that front, going back to the story at the top of the hour, you need to think about where does china have an edge in technology that is not determined by outside forces or geopolitics? on that front, we really like

some of the renewable energy names, whether it is relating to ev's or wind or solar. vonnie: are you concerned at all if the story goes as we foresee it that there might start to be an inflation problem with china? david: i think we are a little less concerned about this than other people. many people rewind to previous times where the chinese economy played a very big role in global demand right after the gfci, for instance. we really do think the resources demand from this current reopening will be less concentrated than it was in 2010 or 11. we think the consumer is really

quite literally in the driver seat this time around. vonnie: thank. that is david long. let's get over to su keenan. she's got first word headlines. su: we start with the malaysian prime minister. he has demanded goldman sachs honor its settlement for its role in the 1mdb scandal. the agreement called for goldman to paid 2.5 million dollars and return seized assets from the seized fund. in his first interview since becoming prime minister, he told us goldman needs to come clean. >> i think goldman sachs should come out clean and deal with malaysia and don't think you can dismiss this as something small that you can use your strength

to dictate your terms. su: to pakistan where a bomb attack on a mosque has killed more than 70 people in northwestern pakistan leaving more than 100 50 others wounded. the blast happened during afternoon prayers. close to a police headquarters and other government offices. it is pakistan's worst such attack in 11 months. the u.s. and israel say they are committed to making sure iran never gets access to nuclear weapons. antony blinken is visiting israel and the occupied west bank as tensions rise across that region. iran said one of its weapons depots was hit in a drone strike. iran has not officially laid claim but the wall street journal says it sources say israel was responsible. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan, this is bloomberg.

haidi: still ahead, the government of chile is looking at investment in clean hydrogen. first, the imf is urging more curb control. we will discuss that with their mission g4 japan next. this is bloomberg. ♪

haidi: two bank of japan veterans appeared to be leaving the field to replace kuroda who leaves. both see the deputy governor or his predecessor as the most likely successors. speculation is simmering whether a new government may move away

from the stillness of the past 10 years. vonnie: let's bring in our global economics and policy editor, kathleen hays. she is here with our next guest. kathleen: we are joined by japan mission chief at the imf. great to have you back on the show. i know you just returned from japan where you presented the article -- article four report on japan. a very important thing coming from the boj. one of the things that jumped out was saying the boj should consider more long-term yield flexibility. what's your biggest concern? what is going wrong in japan? what needs to go right when it comes to their yield control program and their desired to continue extra ordinary stimulus? >> good to speak with you again. first of all, what the boj has

made significant progress in terms of achieving its yield an inflation target. that's the most important thing. we also feel that at this stage, the boj should remain accommodative. what we see is inflation risks have increased both on the upside as well as the downside and that is the context for our recommendation of allowing more flexibility for longer-term yields. kathleen: on december 20, governor kuroda surprised the markets with what he called a tweak -- a step to maintain bond market functioning at a time when it has been very volatile. that spurred more volatility and the need to do record bond purchases. what kind of signal is that from the markets about what is going

to take for the boj to make fundamental, lasting changes that keep this program sustainable? ranil: even earlier we had recommended in the context of sustainability that the boj should consider targeting a shorter yield. we have expanded our options that we would suggest now to discussing potentially further the 10 year yield target, shortening or switching back towards more quantitative target with some flexibility in those targets. we think this could enhance further the bond market functionality. what i would position is the change in december is consistent with some of our recommendations although it was focused on market functionality.

haidi: how would you rate the communications we've had from the bank of japan and what are the risks going into new leadership, a seismic change in strategy and the dangers within that? kathleen: why cc is difficult in terms of munication -- ycc is difficult in terms of can negation. from our view, what the doj should focus -- the boj should focus on is on the shorter term policy rate and what are the conditions under which there could be changes in the shorter term policy rate, meaning some of the preconditions. we think that would help anchor forward guidance and potentially reduce pressure on longer rates. vonnie: what are the concerns surrounding timing? is there an urgency or can it wait till april or past april?

kathleen: we do think longer-term yields, more flexibility there would be helpful even in the near term. the question is for the boj what is the correct timing for that? i think our view versus theirs is we would say earlier. they remained -- my concern about the potential downside risk to inflation, they are concerned about a potential global slowdown and they also think they have more time to adjust because wage growth, something they are very focused on, adjusts relatively slowly in japan due to structural factors. kathleen: speaking of wage growth, it was interesting the imf said put some kind of number on what kind of wage growth was needed. 3% in the shinto spring wage negotiations.

how did you get that number and how ironclad is that? is there any chance it gets sustainable inflation with 2.5% increase in wages? kathleen: i don't think a precise number is what we wanted to signal. it's pretty much around 3% we would like to see wage growth to be. that's basically consistent with a 2% inflation target and 1% labor. kathleen: what is your concern about japan and the bank of japan? is it financial instability from markets not getting the kind of communication they need that could spillover be on japan? you do seem to be concerned here. kathleen: that is the -- ranil: that is the context for what we are recommending. shifting toward higher, allowing more flexibility of the 10 year and longer yields. essentially, we do not want the

boj to need to adjust quickly. that is the type of thing that could lead to financial market stability and we think potentially globally. kathleen: a former boj official that looks like a top of -- top contender for the seat, who would be the first woman to hold the deputy governor seat, she said at a panel yesterday she thinks the accord between the government and boj to achieve 2% inflation needs to be revised. the prime minister has been talking about the next boj governor. does it need to be changed? could the boj drop a 2% target, develop a range or aim for priced ability? ranil: currently, discussions seem to be more focused on the timing of achieving the 2% target. the earlier accord focused on reaching the 2% target as soon

as possible. most discussions today, and we would agree with those discussions, is to provide more flexible idiot when they reach the 2% target, which is consistent with this is a very long process. given 30 or 40 years of fairly long inflation. haidi: always great to chat with you. japan mission chief at the imf. more to come on daybreak asia. this is bloomberg. ♪

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shery: you can turn to

shery: we are just getting japan jobs data for december, coming

in as anticipated, two point 5% in december. the job to applicant ratio, 1.35. the same as november. economists were looking at that to come in 1.36%. all told as planned, the jobless rate at 2.5% for december in japan. we were talking with the mission chief to the imf about japan's wages. we are seeing the yen at 130. futures just coming if there highs of the session, but still pointing to an obsession. haidi: malaysia's prime minister says his government will work to gradually lower the nation's debt felt resorting to -- . he wants good governance to attract investors. >> the point -- good governance.

government accountability. if you have a system, clear policies to encourage investments, there is ease of doing business fast -- business. fast, efficient and not corrupt. investors will compared >> the previous government set a target of 5.5% fiscal deficit. are you likely to maintain that? >> we will have to gradually reduce deficit. it should not -- it should not be at the expense of public welfare. we have to navigate this very carefully. we are fortunate that the revenue from taxes has increased . petroleum gas has increased. our policy in terms of reducing this deficit continue.

>> what rate is more acceptable? >> [indiscernible] [laughter] >> there is a gdp target of 4% to 5%. >> i am realistic. to me, a budget is not a political statement. economics are about facts, data and confidence. we are quite comfortable for -- after the fourth quarter. projections are more negative next year. i have seen more positive changes in the last few months and i hope we can sustain that. what will be projected will be announced at that time. >> 4% to 5% is achievable? >> i would say somewhere around there. >> you talked about how you need to refill the government coffers. would you consider gst that -- has been against and

consistently said is not necessary? as long as you are prime minister, is it off the table? >> i have never suggested that. i said that gst remains the most transparent and efficient taxation system. the issue is when you have abject poverty -- minimum pay, how do you have a transparent system? if you have enough funds, liquidity in the system, then you can say all right. you can then pass on to the poor. but, we do not have that. i think any responsible leader should not delve into issues of taxation until this basic issues affecting the poor, the general people are being dealt with.

i cannot discount the possibility -- once you raise the income level of the people, $3000 a year, and then deal with it. otherwise, you are taxing everybody. or you can give some compensation in return to the poor. >> the malaysian prime minister. let's get to su keenan with first world headlines. sukkoth -- >> the biden administration is said to be considering cutting huawei off from all of its american flyers. sources tell bloomberg some officials are pushing to ban all sales through huawei over suspected ties to the beijing government and trainees military. sales were restricted four years ago under the trump administration, but u.s. suppliers including intel and qualcomm still do business with huawei. a panel of experts has recommended the japanese government and central bank

revise a joint policy statement to make their inflation target a long-term goal. market players are interpreting remarks as further evidence that policy adjustment is likely after new leaders take over the boj. the government's set to announce the new governor and deputies in february. the ceo of tiktok will testify before a u.s. house committee on the company's privacy policies and relationship with china's communist party. the hearing, which is set for march 23, will be their first appearance on capitol hill. the republican committee chair says tiktok has knowingly allowed the chinese communist party to access american user data. chile's government looking at new ways to encourage investment in green hydrogen by expanding grants and loans to developers. their energy missed minister spoke exclusively with bloomberg, saying the government wants to create new

opportunities, but says some policies of the previous administration will remain to keep promises to investors. >> we are keeping the promises made by the previous government. the first law we will publish is the one that provides incentives for storage. that was initiated by the previous government and in the ceremony which we celebrated the approval of the law. 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 su keenan. this is bloomberg. -- scheduled to wrap up later. the group has lost almost 70 alien dollars in market following a report from a u.s. reseller. is this going to be the real test in terms of investor confidence? what sort of interest are we seeing in this offering >> it is

interesting when you compare what we have been hearing from the company publicly versus what we have seen from investors out there. adani has been very clear about this. they're planning to wrap up this share sale today in india. it is worth $2.5 billion. they are not going to be offering any discounts. that is what they are saying publicly, but when you take a look at what we are seeing in terms of investor interest, lots of speculation is building. we have not seen great demand as yet. investors in indian ipos do usually wait until the last day of the share sale to place their bids. that in mind, we have still only seen 2% on the overall subscription rate. this chart taking a look at the huge run-up we have seen in stock price. that is the big concern for investors. are these valuations justified? we have seen shares now falling

below the bottom of the target band for this share sale. it is difficult for anyone to justify whether they would best. some analysts saying we are going to need to see some sort of extension, even if the stock does manage to climb above the sale price. >> a phenomenal story. it was supposed to be the idea that it would open them up to a bigger pool of investors. is that working? >> not really. most of the support is coming from their longer-term investors. most of that we have from the uae. the international holding is backed by one of the key royals. they are planning to invest 40 million dollars. . that takes us to 16% of the offering. only 2% of this has been described so far. that was monday afternoon in mumbai. they are a company that has

already invested more than $2 billion alone in the last year. about half of that coming last april. haidi: what are we seeing when it comes to the stock moves? particularly as early analysis seems to suggest that relative to what could have been the impact was fairly muted. annabelle: definitely it has been a significant plunge. the hindenburg research report last week, we saw that stock selloff accelerate yesterday in the session. we are now looking at losses around $70 billion cost the. some of those lines started to take up higher. one of them actually managed to gain around 9% per broadly, we are seeing huge losses particularly in green energy, gas, transmission. the rebuttal we have heard from hindenburg to that research report has fallen flat, basic a.

we did not see any sort of optimism come back into the session because been we did get the republic -- when ready -- hindenburg came out with its own reply to the rebuttal and basic they said they had a nord most of the questions and that it was very lacking what they had put out in response. >> thank you for that. annabelle doolittle in hong kong. we are watching for samsung's full fourth-quarter results after it already disclosed its biggest profit drop in more than a decade. stephen engle joins us with more. we are watching this quarter because we heard so much bad news from other chip stocks and have already heard bad news from samsung. what are we looking forward to? >> we got the preliminary numbers january 6. they were not good. a big drop in operating profit. down 69%. sales were way down. samsung is the biggest memory

chipmaker along with micron. this bigger than expected drop in memory chip price is exacerbating the outlook this year for memory chipmakers. semiconductors it is the biggest industry in south korea, so this will have a ripple effect. if samsung comes up with final numbers for their fourth-quarter , it will obviously signal that the industry is going to see a significant slump, at least in the first half of this year. any kind of recovery already is not expected until the second half of this year. they have been adamant, samsung, about having no plans to cut capital expenditures or supply. any kind of outlook that samsung gives today will be watched closely. obviously, the crisis in the memory chip market we have been reporting on has been further exacerbated no doubt a u.s.

sanctions on some chip-related exports to china. many companies awaiting the risks and rewards of complying with the united states demands and to see how they will go forward with sales into china. samsung and its rivals are losing money right now on every single chip they produce. that is highlighting the concern that we are waiting for these final numbers for the calendar fourth-quarter from samsung imminently. shery: it has been a swift -- all of the big demands, work from home gadgets. i thought these chipmakers had changed their ways, changed their strategy. they were supposed to be more streamlined, but we find ourselves in this position. stephen: any kind of guidance we get is going to be critical. it is not just memory chips seeing a dramatic drop, obviously in price and demand.

with samsung, we have seen them make a whole swath of different devices. smartphone demand has dropped. -- screens have dropped considerably, more than anticipated. pent-up demand -- i don't even want to call it pent-up demand, there was demand through the pandemic for building out homes and home offices as well as staying at home devices like led screens, however it is not carried through. haidi: we've got samsung fourth-quarter operating profit and sales numbers out and it is amiss. even on lowered expectations. 4.3 one trillion. the estimate was for 5.8 trillion. sales for the fourth quarter, just about 70.5 trillion yuan. estimate missing the 70 -- fourth-quarter consecutive net, 23 5 trillion yuan. missing expectations.

that was slightly better than expectations of 4.7 trillion yuan there. we know that this is the biggest profit drop in more than a decade. we also know that with the cyclical nature of memory chips in particular that this is kind of the leading indicator of how bad things could get for the industry. stephen: these operating profit numbers of 4.1 trillion yuan, way off estimates we had of 5.8 2,000,000,000,001. preliminary numbers we got were for 4.3 trillion yuan. this is reconfirming preliminary numbers. we are still waiting to break out net income and divisional profits among the three main divisions at samsung electronics. essentially, operating profit accommodation of what we did see in the preliminary number where we saw that operating profit

dropping by the most in more than a decade. the global economic slowdown is hurting electronics demand even more than anticipated. sales coming in at the fourth quarter, that also, as expected, let's face it, it is expected because of preliminary numbers. worse than expected. it is not going to be a good number today. it is going to be the guidance of how we read the numbers moving forward and see what kind of, if any, capital expenditure or supply cuts we could see. haidi: that snatch number that came as a left of field surprise, the net profits significantly above estimates but we do think that it was to some kind of one-time gain. operating profit is down 69%. all in all, not a huge surprise but certainly continuing to paint the picture of a dire profit outlook for samsung in

the broader chip industry. of course, that conference call in just about an hour and a half. steve engle in hong kong. you can turn to your bloomberg for more. we have commentary and analysis from our expert editors. this is bloomberg. ♪

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>> reports that 2022 saw more than $1 trillion injected into the sector. up by more than one third from the previous year. -- joins us to discuss the latest. how did countries in asia care compared to the rest of the world? >> the region as a whole was again a standout. they counted for just under 60% of the 1.1 trillion dollar investment number you mentioned. their success story is primarily a china story. china's $546 billion of investment is by far the largest in the world. almost four times that of the u.s. it is also over nine times if you look at the next three asian countries combined.

the rest of apac are underperforming, but china has done well. we saw investment in china more than double over the past two years. >> we hear a lot about grain hydrogen. your portfolio points out hydrogen investment was just $1.1 billion. what is the reason behind that? what sort of big advances to we need to meet targets? >> that 1.1 billion dollar investment is the investment that went into deployment of things like electrolyzers for deployment of clean hydrogen. pipelines dedicated to the transfer of clean hydrogen and its storage be a the number seems small -- storage. it is triple the investment in 2021. it represents the fastest growing sector in energy transition. a lot of announcements we hear

our announcements on investments that will happen within this decades. we will see that number significantly increase. haidi: allie is naughty. -- chile needs last investments. -- asks if the new lattice government will maintain market friendly policies. >> the promises made -- so far. the first law we will publish is the law that provides investments for storage. initiated by the previous government and in the ceremony in which we celebrated the approval of the law was present the last five ministers,

including not only the last governor, but the one before that one. we are keeping those policies but we need to also provide a shift. when you talk with people in chile, there are people that need to be taken care more seriously. you have to start talking about jobs, local jobs, industrial jobs, and also find ways in which communities create local bodies and also be able to transfer technology and create local knowledge working with chilean universities. and those handles, the previous policies were not very successful. we will keep the policies made to companies that had invested in chile, but we want to create new opportunities for the transfer of technology. >> how do you give that clarity

when it comes to regulations and permits? when it comes to having those conversations with local communities, but do it in a way that is efficient? >> all of our processes are open and stable. the last regulation we are pushing -- regulation that was initiated by the previous government, but we just finished it. the public consultant of that policy had we are aiming to -- that relation by the middle of this year. in the regulatory part commit everything is stable. and it will be still stable. the other policies, we are pushing for these kind of policies related to provide local deployment and find ways of create transfer and technology. those policies will come on top. we are not going to replace the

promises made by the previous government, but we are going to open space for new policies that bring this other issues. haidi: chile's energy minister. stay tuned for more coverage on the future of energy and the technology is driving the move to a low carbon economy. that is on energy transition every to stay. this is bloomberg. ♪ the first time you connected your website and your store was also the first time you realized...

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haidi: getting more details from samsung as they released earnings. fourth quarter profits missing estimates. the average estimates. this is giving more color to the biggest profit drop in more than a decade. samsung saying they see -- market contract. first quarter demand on the back of an economic slowdown. their foundry demand is going to be key, expected to recover the second half but -- slow on the first half on the back of the economic slowdown. this as the broader chip sector is grappling with this industrywide glut. the market open in seoul is next. the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel that can be used in existing diesel tanks.

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>> this is daybreak asia. counting down to major -- asia's major market opens one of the first socks we are going to look at his samsung. just out with final earnings. a disastrous picture all told. almost every unit is -- unit did not meet estimates. it was barely a beat. samsung coming up with some very downbeat remarks. haidi: this is not going to add much to an overall market that is feeling risk off going into a key week for the fed decision at ecb. d.o.e. among stead. bell is going to take a look at the market open. the samsung heavyweight effect and also suppliers. annabelle: that's right. we have the open of japan and korea upon us. samsung we will check when it starts trading, but at the at -- at the outset we did see it

moving just a little higher. inflation fears are coming back into the center focus among investors. spanish inflation beating estimates. australia as well. central banks are going to need to keep rates higher for longer. watching what we do have more eco-indicators coming out. in japan, signals of more resilience coming back into the economy. the jobless rate staying at 2.5 percent. retail sales rising 1.1%. higher than the estimate of 0.7%. industrial -- contracting slightly. the estimate for a drop of 1%. market outlook today, we are range bound. we are going to be watching how stocks come online after big earnings. japan banks kicking off the season and a monday session. the around 130. let's change because you did mention moves for samsung. at the outset of the day, the stock is rising marginally,

around .3%. fourth-quarter quarter operating profit missing estimates. weak sales for chips, displays as well. we will be watching suppliers as they come online. gains for samsung probably one of the standouts. the broader tech gauge is lower unsurprising when you put it into the context of what happened in wall street the nasdaq suffering its biggest drop in more than a month. the korean yuan weakening slightly. the signal of risk aversion that is coming back into the market. in australia, risk off tone permeating across the session. asx 200 looking fractionally higher. tech stocks are the big laggard. declining around 2%. oil as well trading flat. vonnie: we will be back with dell in a moment.

reported fourth-quarter chip sales fell well short of analyst estimates as it that'll is a worldwide blood. let's look closer at its detailed earnings reports with sk kim, analyst at die while -- apart from the change and a little bit of a benefit from a weaker yuan, there really was not much good to report here. >> actually cover the credit environment, the strong korea u.s. dollar was weaker than expected. most of the tech companies and korea, they recorded lower than expected earnings in the first quarter. we can say the impact was lower than expected. vonnie: is that all of the bad news out of the way, or can we expect continued porters like this one?

>> from q1, we see more the negative flow. i mean, the korean yuan is more higher than q4. that is also relative impact under the tech companies in korea. haidi: aside from that commit a pretty miserable set of conditions for chipmakers. how have we gotten back in this position? we know it is a boom-bust cycle historically, but have they made progress? do we expect to pick up the slack? >> the foundry, by the end of last year was ok. relatively. demand and utilization was maintained. however, we expect even the

lower -- for foundry from q1 and the first half of this year. as you mentioned, gradual recovery in demand in second half. however, for samsung we see a severe downturn in inventory. in just memory. there is a sharp decline in price and shipment. that is the main weaker earning. q4 last year and q1 this year. haidi: what do you want to hear when we get to the conference call about capacity management, given we have already seen use of cutbacks about cutbacks as well when it comes to cap next cutbacks from some of their rivals? >> as we see some such a sharp

drive in demand and personally i think i never seen this kind of sharp decline in the inventory adjustment. this is the related with the covid-19. they are doing covid-19. global semiconductor industry, we see the higher industry lever, which was normal during covid-19 situation. but now, everything is shifting back to normal. even it is lower than the previous levers. -- levels. the mismatch in supply-demand. we need to see meaningful cut. that is something we are anticipating. but probably i think it will take some time. i guess from such a meaningful production cut is maybe we will see an end of this quarter.

>> you also cover micron among competitors. who emerges better off after this cyclical downturn? >> as the micron, they are pure memory players. normally we see some -- when markets rebound in the cycle. but when the market's downturn, no miley it is -- -- normally it is stashed number one market share. it was highlighted on a strong balance sheet amid the downturn. so, we see at this juncture -- micron and in terms of the stock performance. perhaps some near-term m&a opportunities for the boundary regions.

as i mentioned, if we see meaningful adjustment in their production and -- it is not material yet. i think the samsung, the micron will show -- from the end of the quarter. haidi: executive director at daiwa securities. you can turn to your bloomberg for more on those samsung earnings. get commentary and analysis from our team of expert editors. we are watching suppliers keenly. annabelle: we saw sam stop -- sampson getting at the moment, but now down .8% per the big question of course is what we are going to hear that analyst call that will kick off later this morning. we are watching suppliers here again, mostly tracking the drop we are seeing so far in this stock at the open. the big question around that

centrally important chips business and a dismal outlook for the company on that as well. let's change now and look at other movers in japan. we are very earnings focused in the session here. kicking off what we had with canon. that stock is slumping at the start of trading. its full-year operating income did miss estimates. operating income at ¥360 billion. the estimate was for more than ¥380 billion. banks and focus. japan's second busy -- second-biggest bank kicking off yesterday its profit rose more than analysts estimated and it did keep its annual forecast unchanged. daiwa looking higher. it did just come out fractionally into the close of yesterday's trading. it is the second-biggest brokerage in japan and its net income fell 43% on the year. keeping an eye on jr central, third quarter operating profits came at ¥134 million.

-- ¥134 billion. missing estimates for of around 95 billion yen. vonnie: we will continue this conversation. asian shares poised for their best january. kicking off a dizzy week of economic data. more on the market moves with richard henderson. obviously we have the fed meeting. we will get the powell speech afterwards. but we had a raft of economic data already today with japan retail sales and so on. what are investors most watching ahead of the meeting? >> great question. we have seen a bit of a risk off in the nasdaq. that tells you investors are getting skittish about what could occur from the fed. there's obviously 25 basis points baked into expectations in terms of what the central bank will do. but really, with the communication, that is what is going to take up a lot of focus year.

how does powell try to temper some of those animal spirits we are seeing in january? we have also got ecb and b.o.e. this week. overall, that does increase the level of risk not just from potential policy, but from communication era. the market could respond to. i think that is a critical question because we've got so much in terms of central bank moves this weekend economic data. it heightens the risk. we should anticipate volatility there. one area i think investors will be keenly looking at is the jobs data from the u.s., which is due later this week as well. we are expecting in terms of economist forecasts, that number to hit about 190,000. that would be the lowest since the end of 2020. if the u.s. labor market starts to slow, that gives the fed some breathing room and that calm investors.

that is a critical one to watch. >> best january in 29 years. i do not know if that is going to hold asian stocks off. but, there's a lot of other headwinds going on. we had miserable numbers out of samsung. broader chip band tech sector woes as well as the fact that even chinese markets failed to consult -- the bull market. what are the biggest risks out there? >> earnings is always going to be a massive risk. the overall question i think is top of mind for equity investors in particular is this shift we are seeing in terms of what policymakers are focusing on from inflation to growth. when does that change occur? that is what is really being priced in. corporate earnings is one signal. you could point to labor markets, particularly in the

u.s., but it is those corporate earnings. bender they start to come in the little bit and undershooting expectations? when do we start to see equity investors start to think, ok, the recession question is a big one. >> we need to get clarity on some of these questions. richard henderson, joining us, thank you. su keenan has first world headlines. su: we start with the biden administration, which is said to be considering cutting while way off from all of its american suppliers. sources tell bloomberg some officials are pushing to ban sales over suspected ties to the beijing government and chinese military. sales were restricted watch for years ago under the trump administration, but u.s. suppliers including intel and qualcomm still do business with huawei. the malaysian prime minister has demanded that goldman sachs honor its settlement for its

role in the 1mdb scandal. the agreement called for goldman to pay 2.5 billion dollars and guarantee the return of $1.4 billion in seized assets. in his first international interview, anwar told us that goldman needs to come clean. >> i think goldman sachs should come out clean. deal with malaysia. don't think you can dismiss this as something small that you can just use your strength to dictate your terms. su: in pakistan, a bomb attack on a mosque has killed more than 70 people in northwestern pakistan, leaving more than 150 wounded. a blast happened during afternoon prayers close to a police headquarters and other government offices.

it is pakistan's worst such attack in almost 11 months. the u.s. and israel say they are committed to making sure iran never gets access to nuclear weapons. washington's top diplomat antony blinken is visiting israel as tensions rise across the region. saturday, iran said one of its weapons depots was hit in a drone strike. iran has not lay claim, but the washington journal says israel was responsible. 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 su keenan. this is bloomberg. ♪ haidi: still ahead, we dig deeper into japan's retail and inflation numbers amid the tourism revival and the reopening of chinese borders.

looking ahead to key data and hints on how china toss economy recovering. this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent. when you automate sales tax with avalara,

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heidi --

vonnie: expected to paint the first broad picture of how china's recovery is ferrying after the end of covid zero. kathleen hays is here. what is expected? >> i love how bloomberg intelligence was putting it, an economy unshackled. it could be a seaman a movie. manufacturing taking longer let's start with the pmi's for january. this is going to show us what is happening most recently as covid zero ends and this economy opens. as for manufacturing, the numbers expected at 49.9. it was a 47 point zero, and even weaker. it is not quite at 50. the dividing line between a contracting manufacturing sector and earth. but look out those that is. in fact, the production is getting better. it is catching up it is getting slower. particularly when you look at steel production. average daily production still 1.5 below december's daily average.

but definitely progress. nonmanufacturing, that's what we are talking about what the number is going to look like there. very positive. 51.5 from 41.6. 40 1.6 was dismal. remember what it looked like when reopening was going to happen, then it wasn't. now they can get out and spend and that is what they are doing. we are expecting the -- all of the spending, as one guest on bloomberg radio said, fun. people are spending on fun. entertainment, travel, all kinds of things. that is the good news for december. i want to briefly show you industrial earnings. recession continues. profits declined overall in 2022. in 2021, the big green thing that looks like the back of a shark, that is before the covid rebound and people got locked up again.

we can forget about that because the pmi's important that shows where the economy is and where potentially it is going to go. >> they are not spending on things like houses, cars, big ticket investments, right? we are looking at specific places where there is optimism. it is -- is it going to be abroad recovery? >> little by little. think about how much skepticism there was early on. i think optimism is growing. part of it is the fact that all signs are that covid is behind us. the opening is happening and is little -- the lunar new year holiday. it looked like it was a real lunar new year holiday again for the first time since 2019 p or that is positive. the spirit is still there with the chinese people to spend money. activity gauges show that actually it is stabilizing. the losses are no longer

snowballing. that is a positive thing. tech, regulatory tightening seems to have peaked. priorities now are more towards growth. all of these suggest that, give it time. the seeds are planted. i do not with the equivalent's of rain. maybe it is more help from the government. that remains in question, but definitely it is a good start to the new year so far. haidi: kathleen hays. more to come on daybreak asia. this is bloomberg. ♪

haidi: malaysia's prime minister says his government will gradually lower the nationstate -- nations that -- debt without raising taxes. and were told us he wants good governance. >> i reiterate, the first thing

any government should do, take an early mine, is good governance. democratic accountability. if you have a system, clear policies to encourage investment, there is ease of doing business. fast, efficient, not corrupt. investors will come. >> the previous government set a target of 5.5% for the fiscal deficit. are you likely to maintain that? >> we will have to gradually reduce deficit. it should not be at the expense of the poor, education, health. we have to navigate this very carefully. we are fortunate that the revenue from taxes has increased . and of course, petroleum gas, also increased.

but our policy in terms of reducing this deficit must continue. >> what rate is more acceptable? i announced it on the 24th. [laughter] >> there is a gdp target as well of 4% to 5%. >> i a more realistic. to me, a budget is not a political statement. economics is about data and confidence. we are quite comfortable from the fourth quarter. and to the projections are a bit more negative next year. i have seen more positive changes in the last few months and i hope we can sustain that. what is to be projected will be announced at that time. >> 4% to 5% is achievable? >> i would say somewhere around there. >> you talked about how you need to refill the government coffers.

would you consider gst, which -- has been against from day one and has consistently said it is not necessary? as long as you are prime minister, is it off the table? >> i never said that. i said that gst remains the most transparent and efficient taxation system. the issue is when you have abject poverty, where people do not even get a minimum pay, how do you have a transparent system? if you have enough funds, liquidity in the system, you can say all right, you can then pass on to the poor. but we do not have that. i think any responsible leader should not delve into issues of taxation until these basic

issues affecting the poor, the general people, are being dealt with. for example, once you raise the income level of the people, $3000 a year, then you can deal with it. otherwise you are taxing everybody. although, you can give some compensation and return to the poor. haidi: and where abraham speaking exclusively with bloomberg. boeing is set to roll out its final 747 jumbo jet. ending more than 50 years of production. to mark the occasion, an exclusive interview with their president and ceo. that is at 2:00 tuesday in

>> when it comes to australia retail sales numbers, worse than expected. this is not going to add to the risk off mood we are seeing across asian equities. seeing a contraction of 3.9% in december up a particularly bad given december leading up to the holiday season, really a highlight in the retail sales calendar. a decline of almost 4%, missing expectations of a shallower decline of .2%. reversing those gains of 1.4% we saw in november. also getting numbers when it comes to private-sector credit. month on month, .3% gain. weaker than expected. year on year, 8.3%. more or less in line with a little bit of weakness compared to the prior period. >> pretty phenomenal miss. inflation may definitely be taking a bite hundred -- a bite out of the australian meet -- australian retail market.

the group has lost almost $70 billion in market value following a report from u.s. short seller hindenburg. annabelle is tracking the latest. what are we seeing for the offering echo annabelle: so far, it does not seem to be great. we understand the exchange in india and at this stage as of monday afternoon, it has only been subscribed overall by around 2%. you compare that of course, the share sale is closing tuesday. typically investors wait until the last day of an ipo in india. you compare that to a another recent offering we saw which was for local lender yes bank. by this stage in the subscription process, they were around 53%. there is a big gap. it speaks to the timing of the share sale, given it has coincided with the hindenburg research report that has alleged stock manipulation and accounting fraud. donnie fritz says this is on

track and it is going to close today. they are not going to be offering discounts or extensions. does around 2.5 billion dollars, but there is speculation around the weak demand. analysts saying we will need to see some sort of prolonging of this time period. even if the stock does manage to climb above share price because at this stage that is another key issue. shares trading below the target band of that share sale. >> this was a share sale that was intended to open to a bigger pool of investors. it has not worked that way. >> that's right. this was all about opening donnie group to mom-and-pop investors in india. also, more international ambitions they had as well. it so far has had to rely on existing investors to show so -- to show their support.

a big part is coming from the uae. we have international holding co. investing about $400 million into the company. that is about 16% of the overall offering and we are already seeing investment from ihc into the company so far. around $2 billion last year alone. but of course, it does speak to the concerns of the company that so much investment is coming from one investor, given there are lots of concerns. we are now looking around 70 billion dollars of losses on the stock in just the last few days. haidi: india is set to unveil its budget wednesday. testing prime minister narendra modi fiscal resolve ahead of their elections. >> as india's finance minister presents for government's

finances on february 1, she will be grappling with a global recessionary chill on economic activity and the heat of an impending general election. economists expect the government to stay the course on reducing the budget deficit. directing expenditure to its infrastructure, welfare schemes and manufacturing. >> make a mistake, probably more infrastructure spending is a good thing in india. and -- has really turned a corner. there is something going on in india in terms of industrialization. >> india will seek to build on the early success of drawing more apple supplies. to replicate that in other industries, it has been urged to cut import duties or value chains. from chemicals to solar power. boosting consumption, private sector investment and jobs will be priorities for narendra modi

se pursues a third term as prime minister of what is now the world's most populous nation. haidi: let's get to su keenan with headlines. su: china's budget deficit jumped to a record $1.3 trillion. showing the strain put on local government finances to offset covid zero policy. the overall deficit puts local governments in an increasingly poor fiscal position and could make beijing more reluctant to support the economy through spending. a panel of experts has recommended the japanese government and central bank revise a joint policy statement to make their inflation target a long-term goal. market players are interpreting remarks as further evidence that policy adjustment is likely after new leaders take over the boj. the government is set to announce the new governor and two deputies in february.

the ceo of tiktok will testify before a u.s. house committee on the company's privacy policies and his relationship with the communist party. the hearing is set for march 23, it will be the ceo's first appearance on capitol hill. the republican committee chair says tiktok has knowingly allowed the chinese communist party to access american user data. in chile, the government says it is looking at new ways to encourage investment in hydrogen by expanding grants and loans to investors. their energy minister spoke exclusively with bloomberg, saying the government wants to create new opportunities. but he says some policies of the previous administration will remain in order to keep promises made by investors. >> we are keeping their promises made by the previous government. we have done that so far. the first law we will publish is

a law that provides incentives for storage. that was initiated by the previous government and in the ceremony in which we celebrated the approval of the law. 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 su keenan. this is bloomberg. ♪ heidi -- my haidi: after the big miss on retail sales for the critical month of december. interesting to see the cost of living crisis that has been affecting quite a large part of the population start to feed through to the headline retail sales number and what was supposed to be the lead up going into the christmas holidays. the australian bureau of head of retail statistics saying we are seeing potential retail spending slowing due to the inflationary impact of high cost of living

pressures. businesses have reported many customers have responded to pressures by doing more christmas shopping in november to try to take advantage of sales, discounting for black friday as well. we did see the big difference between retail sales numbers from month-to-month. let's get back to one of our other top stories. the biden administration said to be considering cutting while way off from all of its american suppliers, including the likes of intel and qualcomm. sales to huawei have been limited since former president trump but the company on the so-called entity list. let's get more from rebecca. this coming on the back of the deal struck by the netherlands and japan to further curtail chinese access to chip aching ability. what do we make of this? >> as you say, certainly an escalation after the expansion of sweeping chip restrictions on exports.

the japanese and the netherlands joining support interest those. sort of moving on an escalation from there. huawei has been on the entity list. u.s. supplies to huawei have been relatively restricted over the last four years. effectively, sources telling us that under this proposal, all licenses by all u.s. firms pitching to supply huawei would effectively be denied. >> to be expect retaliation on the part of china? vonnie: that is the thing that most people really have continued to be watching. it has been remarkable, i think. the beijing government has taken quite a muted stance on not just this type of escalation, but all of those chip sanctions as well. the foreign minister has been on a spree, phone calling many of his counterparts including his

dutch counterpart. a statement coming from the ministry of foreign affairs overnight emphasizing that china is still seeking to firm up and shore up global supply chains. so, there is some attempt we are seeing on the chinese side to build bridges. so far commit has been a relatively calm response. >> taiwanese chipmakers took up the slack in little bit. how will this change the relationship between china and taiwan? >> certainly i think there is increased pressure, particularly on taiwan's chipmakers. but for all of those countries looking at taiwan, wondering just how secure that supply chain is going to be. it does renew pressure for many other governments to try to diversify away from taiwan to look at potential production in south korea. of course, we see the u.s.

making their big push into building out their own domestic industry. as is beijing. both for the u.s. and china, these things take time. they take years to develop. there will be continued focus on just how taiwan continues to navigate that quite delicate tightrope. >> a policy that is going to take a long time to play out. rebecca wilkins, thank you. next, as inflation heats up in japan, we get the outlook for the retail sector. this is bloomberg. ♪ the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first.

>> we also feel that at this stage, the boj should remain accommodative. but, what we see is that inflation risks have increased both on the upside as well as the downside. haidi: imf chief of japan speaking to us earlier. with covid restrictions fully lifted in japan, china also headed in that direction. bloomberg intelligence estimating the number of mainland chinese visitors to japan could reach 50% of 2019 levels. let's discuss this with more detail.

nobuko kobayashi, great to have you with us. how much of a boost to you expect to see when it comes to domestic japan demand and consumption as a result of open borders the echo -- borders? the retail outlook. especially in the department store sector. haidi: in terms of domestic demand, even putting aside tourism demand, we have had a weak yen. a lot of that is benefiting the external side. but internally, is it a problem we have not seen meaningful wage increases? is that putting the lid on

domestic demand? >> a little bit for sure. 2023 outlook is a little uncertain. that said, japanese retail sector rebounded nicely in 2022. continuing to recover. the stats show the december retail number is three point 8% up year-over-year, continuing the trend from 2.6% in november. most of the 12 months in 2022 showed a positive year on year growth. going forward, it will be tougher for supermarkets and discount stores whose margins are already low to begin with. although they fared fairly well during covid because of people staying home and cooking for themselves. growth going forward will be more challenging for them. it was -- because of the daily spend going up. just utility costs, and as you mentioned slower wage growth.

haidi: that retail sales data, while perhaps normally it might be encouraging, it is actually a little worrying. 3.8 percent in december year-over-year. that is quite the rise. does excerpt just inflation is -- does it suggest inflation is not under control in japan? >> inflation and japan is not at the level of other western economies. the household consumption is not really d -- feeling the heat as intensively as western consumers. the unemployment rate is still very low, below 3%. inflation is there and people are starting to feel it, but the real effect is to be seen going forward. haidi: what happens with the? it has been part of the problem for japan and the stronger dollar has not been helping. the dollar has been weakening. at the same time, we are looking at very difficult dynamics

between the two currencies. what is your outlook for the yen? >> the currency had a very volatile 2022. but right now, towards the end of 2022 and the first quarter of 2023, we are seeing moderation into the correction of a super depreciation of yen. i think before taking a little bit of a breather from the roller coaster ride that we had in 2022. >> thank you. we are going to leave it there. we appreciate your time. nobuko kobayashi at you i. tune into bloomberg radio to hear more from today's big newsmakers and get in-depth analysis from the daybreak team

broadcasting live from our studio in hong kong. this in via the app or bloombergradio.com. this is bloomberg. ♪

♪ >> getting a check on some movers. samsung finally reported full earnings today.

mostly a dark picture for samsung. stock down 1.1%. a little contained. perhaps this is the worst quarter. samsung did not hold back in an essay a did publish with its earnings. a dire picture a competitor which may benefit is also down .2%. nissan is moving after reynolds agreed to cut their stake to 15%. nissan is benefiting, up almost 2% per haidi: -- 2%. haidi: a chinese electric vehicle maker has pushed back its profit goal until 2025 following a horror year in which shares plunged 80% the company delivered half of its annual sales target of 2022. the ceo told us exclusively he is now betting on. strive technology to help the company turn an operating profit. >> in the next five years, we

may still be a company with only a certain market share, but we hope to hold 40% of market share of cars equipped with full autonomous driving technologies. haidi: a u.s. federal appeals court has ruled johnson & johnson cannot use bankruptcy to resolve more than 40,000 lawsuits over the baby powder. the company had put its specifically created unit to block juries around the country from hearing lawsuits. the new hearing means j&j will likely need to defend itself against the claims. -- securities lost money for a third consecutive quarter, underscoring the continued damage from a trading scandal. the securities arm of the financial group posted $115 million in net losses, exceeding the previous quarter record. the company's cfo says the suspicion of illegal market nip relation caused a loss of around

$61 million. phillips shares jumped after a valid to improve top and bottom line figures. they expect to deliver low --. slashing 6000 jobs or 8% of the workforce to counter inflation and potential recall expansions. >> 2022 commit was still a difficult year. we have announced indeed that we are going to reduce the workforce by another 6000 people. that is a sizable and impactful measure. but we see it necessary to indeed address the rising costs across the company on the world, but also to make us more agile because we change the way we work. haidi: counting you down to china's market open. traders await the country's latest pmi data. we are expecting pmi out of china. are we expecting a good one?

>> every day, we have been reporting a surge in chinese spending, chinese travel. visitors over the chinese new year period. that is going to drive a sharp rebound in the services economy. the consensus is looking for a big jump in the nonmanufacturing pmi. we are looking at 52 for january from 42 in december. in terms of a factory gauge, which is pmi data, economists are looking for 50.1, which is just an expansionary territory from 47 earlier. the market is pretty much priced all the positive information in already. we are unlikely to see much of a market4 impact on that positive data. haidi: traders are really looking for a new catalyst. we saw a big drop in overseas chinese stocks.

this transition further risk rally, the failure to get to a bull market, is there a pause or reassessment of fundamentals? >> we are seeing a bit of a convergence trade going on. that basically means a huge rally that we saw in the offshore listed chinese shares is going to converge with a bit more muted rally we saw in onshore chinese shares. since october, we have seen a 55 jump. the china index versus a 19% jump in the csi 300. historical data has shown the kind of such a big gap in performance will inevitably lead to a convergence in the next few weeks or months. in terms of fund flow data, we did see that play out yesterday. mainland stock investors saw nearly $1 billion worth of hong

kong-based shares. that is the most since july, 2020 one. a lot of hong kong investors and overseas investors are buying mainland shares. january is set to be a record flow months. haidi: the latest. these are just some of the stocks we will be watching ahead of markets opening in hong kong and china. chip stocks remaining in focus. we had news the biden administration is considering cutting off huawei from all of its american suppliers. also still digesting a horrible set of numbers out of samsung. tsm is deborah barbara in focus. asian energy focus after wti falling to the lowest in three weeks. this is bloomberg. ♪

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