>> you are watching daybreak asia coming to you live. >> we are counting down to the

market opens in seoul. >> australia has just come online. asia risk assets are tracing -- facing headwinds. the latest five minutes signaling ongoing inflation worries. we will be hearing from adrian or in a few minutes. patient is urging state owned enterprises to phase out the big four accounting firms. >> we are pushing higher after s&p 500 lost ground. we are seeing a lot of volatility. we are still at the highest levels in about two months. the nasdaq composite managed to remain in positive territory. we are seeing that push higher in the asian session. it was about the fed narrative, higher for longer.

we saw treasuries rebounding a little bit but the 10 year yield still above the 390 level. and with hints that the fed might continue to tighten aggressively, we have seen oil losing ground. we are talking about the longest stretch of losses this year and extending those declines. >> not a great lead in from the wall street session. in australia, qantas among -- posted a record returned to profit in the first half. it is telling us about the intensity of aviation's recovery. in terms of what we are watching, it is down to the fed narrative. seeing repressing going on in

the bond space. adrian or sees inflation pressures are starting to ease in the global economy. >> the minutes of the fed's latest minutes confirming that more rate hikes are needed. most favored 25 basis point moves rather than 50. kathleen hays is here. what is the key message? >> yes, rate are needed. just because they downshifted from 50 225, they are still serious about getting inflation down. this is also showing the quote from the minutes on the unanimity that exists. they all agree on the

restrictive policy stance. the data must show they can be confident inflation is on a sustained downward path to 2%. key parts of the cpi have stalled out. it will take some time. almost all fed officials agree the 25 basis point rate hike was appropriate. there was some question and that maybe they downshifted. what we learned was that only some. it was more than jim bullard who said that they had argued in favor of 50 basis points at the last meeting. even so, investors are looking for 25 basis point hikes, three

in a row, march, may, june meetings. it makes them realize they will move rates higher than the market stop. >> we are getting video of john williams speak and at the moment. he says inflation will return to the target over the next few years. he's making remarks and moderated q&a session. the fed not the only thing in focus. the bank of korea is expected to hold. >> they are getting more worried about the economy. they were early rate hikers. but now they are getting the feeling they have to slow down more.

they will keep their key rate to 3.5%. one thing they have to watch of courses inflation because inflation is up 5.2% year-over-year. this is something they are watching, however the last meeting, there were two members of the board who dissented against the rate hike. now, the economy is showing were some signs. you have exports slumping, housing getting a lot weaker, slower spending. on that year-over-year, it was up 1.4. the bank of korea has sent a report to parliament where they said they are watching out for the need for rate increases.

>> kathleen hays there. reserve bank of new zealand governor adrian or sudsy he is company inflation will go down and stabilize. he told us in the less i word policymakers would need to revert what the policymakers would need to see. >> i would take a significant upside inflation shock from where we are. 4.7 5% for our official cash rate. we are comfortable with that. the economy has been unfolding.

we would need a significant surprise. >> you have talked about the impact that you can look through. there seems there is a risk that some of the temporary spice could become more permanent. would that mean you would need to keep rates higher for longer? >> that is correct. as always, there is upside and downside risks in any forecast. we are looking at about a 1% addition to gdp. that is manageable in the current monetary settings.

we saw early signs of pricing starting to ease my demand coming back. -- demand coming back. >> a drink or speaking to kathleen hays earlier. -- adrian or speaking to kathleen hays earlier. beijing has continued secures -- concerns about data security. this comes amid growing u.s. china tensions at the moment. what is the story about? >> what we understand is that the chinese government, including the ministry of finance, has urged state owned enterprises to stop using the big four.

that is pricewaterhousecoopers, kpmg, deloitte. they would be allowed to continue to use the big four with her up short subsidiaries. -- offshore subsidiaries. this is about data security. u.s.-china tensions is undermining everything. this is one of the more acute manifestations of that tension in the business world. we understand the government is not mandating or giving the state owned enterprises the date by which they have to drop the big four. they are urging them to switch to chinese or hong kong companies as soon as they can. >> there are some pretty big implications for this. what does that mean when it comes to the attractiveness to be able to get international capital? >> two lists in the united

states, companies do not necessarily have to use the big four. they just have to use a company registered with the pboc. on the other's the coin is that a lot of the big state enterprises have actually applied to delist themselves from u.s. exchanges. it is going to hurt these xo ease -- state owned enterprises. there is a cost to the section. there is a downside. the government is eager for state owned enterprises to do this primarily for data security issues. >> let's take a look at some of the movers we are watching

across the trading session. qantas air has had blockbuster results for the first half of the year. demand showing no signs of leaving. we saw some concerns about the path ahead and whether qantas has had capacity constraints. rio tinto also down by 2.5 percent, lowering bad dividend. it was a mixed earnings season for yet another commodity giant as they fled we bring demand and higher costs. >> russian president vladimir

putin is waiting for his chinese counterpart to visit moscow. xi jinping is preparing for a trip to push for peace talks. the russian leader hailed deepening ties with china, calling the relationship solid as the mountain. g20 host india is said to be resisting using the word war when it comes to russia's invasion of ukraine. the source says indian officials would prefer, get a crisis. -- prefer calling it a crisis. the bank for international settlements says fiat currencies has won the battle against crypto assets. they say traditional money still has great credibility.

the crypto sector is reeling from a selloff that wiped out to truly dollars in value. -- wiped out $2 trillion in value. >> i think the battle has been won. technology does not make for trusted money. >> global news, i am paul allen, this is bloomberg. >> korea's central bank is set to announce its key rate decision later today. post-pandemic travel takes up. we will break down the numbers shortly. this is bloomberg. ♪

>> take a look at the first hour of trading here in australia. quite a bit of downside for a third consecutive day when it comes to sydney stocks. we are not seen much of an uplift at quant test.

-- qantas. three more moves from the fed, john williams talking about how we could take a few more years to get back to the 2% target. joining us now is lucy from evans and partners. it is all about whether we miscalculate. what are the risks when it comes to the australian market? >> the key risk at the moment is we are not seeing any impact of the rate hikes we have had so far. retail sales still holding up particularly well. we had a survey that showed even in the most highly sensitive sectors to interest rates, business conditions are as good

as they have ever been. the risk is that the rba continues to hike and then we see the cumulative impact of although those hikes in the second half. >> how do you build a portfolio that withstands the laf effect? >> diversification is one-on-one to portfolio construction. it is about pouring that new money to work at the moment while new valuations are as high as they are and they are back above historical averages. we will look for more opportunistic spots in the equity markets before putting the cash to work. >> how many of -- how much of better opportunities found in small caps? >> small caps is an area where we are seeing a lot of opportunity at the moment. it is about setting up investors now for the eventual rebound in

the sector takes place. there is a huge divergence between valuations between small caps and the rest of the market. if we look at the grenada states the small-cap index is trading at a 20% discount. we can say that there is a big disparity between valuations there and you can see why. interest rate hikes took a lot of liquid to be out of the market. -- liquidity out of the market. that provides a buffer to make it an attractive opportunity. often small caps have upside to the market. it is about setting our positions now.

>> much of this year's optimism in markets has come from china's reopening. how much of it has been reflected in higher valuations? >> valuations in china were still distressed. even if we look at the 50% rally that we have seen in hong kong. they are still trading below six times for mpe. -- foreign pe. we still see a lot of upside and opportunity this year in china on about a 12 month view. we can see the economy is open up faster than anticipated there. we know that there is around $1 trillion of accumulated savings

ready to be spent in china. if we compare that to what was in australia, that was around $300 billion of fiscal stimulus. it is more than three times that and we saw the impact it had on australia. through rebound spending their is a lot of opportunity there in china. also on the travel stocks. domestically in australia, we stopped qantas -- we saw qantas. we think they could be a good beneficiary from the increase in china's travel. >> great to have you with us. you can get more investment insights and our bloomberg intelligence webinar with cathie wood. she will discuss the outlook for

2023. david ingles will be part of that conversation starting at 11:00 a.m. hong kong. this is bloomberg. ♪ ( 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. godaddy. tools and support for every small business first. >> take a look at qantas shares

at the moment.

billion aussie is the expectation for costs for the full year. the wages bill also expected to be around $4 billion, but alan joyce saying that those costs are expected to come down over the next few months. of the of the rest of the financial year affairs also seem moderating which is good news for anyone who's tried to buy a plane ticket recently. alan joyce saying those will be coming back to normal as competition and capacity start to return to pre-pandemic levels. yeah. tell us a little bit about that outlook, about capacity.

yeah, in terms of domestic capacity, we're almost back to where we were before that whole covid thing and capacity expected to be at about 103% of pre-pandemic levels by the second half. international capacity is going to take a little bit longer. that's seen that 81% in the second half. qantas, like many airlines, continuing to grapple with all sorts of shortages from spare parts to staff as well. new planes will also be on the way for qantas as exercising its rights for another nine a220 300 aircraft now has firm orders for 29 planes which will arrive in the fiscal year 2627. lounge upgrades as well for hong kong and heathrow as that qantas looks ahead to the much anticipated project sunrise. those london to sydney nonstop flights due to start 2025. i call on them they're joining us from sydney with the latest on qantas. and here's a quick check of the latest business flash headlines.

air new zealand has swung back to profit after three years of pandemic related losses and will consider resuming dividends. it sees a full year pretax profit of up to 329 million u.s. dollars, reflecting sustained domestic and international demand. jp morgan has curbed its staff's use of the charge up track, but a source says the artificial intelligence software is currently restricted. the move impacts employees across the firm. we're told it was not triggered by any specific incident, but reflects normal controls around third party software. we have more on baidu and alibaba coming up. this is i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity.

those smiles. that's why i do what i do. that and the paycheck.

your global business authority. president biden is looking to not only prevent russia from occupying ukraine, but also expanding nato's support. wrapping up his trip to poland. biden reassured the bucharest nine that they will defend every

inch of the alliance's territories. bloomberg's washington correspondent anne-marie hordern reports from warsaw. president biden reiterated his commitment to nato's. he sat down with members of the bucharest nine, the nato's alliances key countries on the eastern flank. he reiterated again that putin wanted a finland as asian of nato's, but instead got to nato's asian of finland and sweden under president biden's watch, something that he's going to want to tout as a major foreign policy achievement is not just the united ness of naito, but the fact that nato's expanded under his watch. but the key for this trip and the highlight was really when the president arrived in kiev, the surprise visit that was shrouded in secrecy. and i spoke to the president's senior director of europe at the national security council. she gave some context of why this trip, particularly was much different than prior presidents visits in the past. we've obviously seen presents in

the past go to places like iraq and afghanistan, where you had a large military footprint. and so there was a significant security risk. and the president made the calculation in that it was worth the risk to be able to deliver the message both to the ukrainians as as well as to the rest of the world. back in washington, d.c., as we approach the one year mark of russia's invasion of ukraine, president biden is expected to announce fresh penalties and sanctions on moscow. anne marie jordan, bloomberg news, warsaw. all right. let's get you to poland with the first word headlines, paul. thanks, heidi. federal reserve officials anticipate more rate hikes to curb inflation, though most support slowing down the pace. minutes from the fed's meeting, three weeks ago say almost all officials agreed to increase of 25 basis points. only a few were said to have supported a 50 point hike. a number of officials said insufficiently restrictive policy stance could stall progress on moderating inflation. reserve bank of new zealand governor adrian orr says price pressures are starting to ease,

but the impacts of the recent cyclone may require the central bank to extend its monetary tightening or is confident of a return to low and stable inflation -- continue to challenge the economy. >> chinese authorities phasing out using the four biggest international accounting firms. singles continue concerns about data security even after beijing reached a deal to allow u.s. inspections on.

no deadline has been set for the changes. a vast winter storm in the central united states dumping lacquer -- record levels of snow. blizzard warnings in place in minnesota. more than hundred flights have been canceled. this is bloomberg. >> baidu posted better than expected revenue despite a pullback in advertising. alibaba posting earnings later on thursday. i buyback plan. >> $5 billion buyback plan which investors seeming to appreciate. this will flex how its cloud computing unit really offset that downturn in advertising.

very much the result of the covid zero policies that caused a disruption in the fourth quarter. the company sees a return to advertising strength. it says it's core ad revenue held up and ad revenue was improving from the trough. revenue came in at just over 33 billion u.s.. a lot of excitement by sharing details about its artificial intelligence business. for instance, it plans to integrate earnings into its automotive or autonomous driving platform and many other platforms. chinese market for artificial intelligence poised for an explosive growth. that said, there's been volatility in the stock. adrs were is not -- were up by as much at 7%.

baidu stock is nearly double the november bottom. china has reopened after covid but there are still a lot of pressures on chinese tech stocks on the conference call. baidu saying they expect their recovery trend to continue. >> what are we expecting next? >> alibaba reports laid around thursday. the alibaba bulls are expecting a very positive outlook. that will be up -- a key area of focus. analysts will be looking at the cloud unit which has been an area of growth for the company. for instance, 2021, it was up. let's talk about the fourth quarter is what analysts want to know. they want to see if there are signs of slowing growth. a key issue is the transfer for profitability for the company in this unit.

>> we've seen a lot of pressure on chinese apis. jd.com reports it will be launching a subsidy program. are there concerns about a price war? >> that's the big concern. as you've seen in the covid zero policies, the company is reopening. all of these major tech firms are revving up for a real knock on competition. the media report that jd.com, which took a big hit earlier in the week, down 8.5% in hong kong after this media report of the subsidy campaign to compete against pdd holding, that set off the concern. the beleaguered tech stocks starting to recover. now this concern that they may take out each other. it's on the radar now.

jd.com is a by at these reduced levels. it doesn't see the reaction as indicating the underscore story. they believe it was an overreaction at best. back to you. >> coming up next, rates for the first time in a year. bfa securities joins us next with their outlook when it comes to the economic drivers. that potentially has the bok holding today. this is bloomberg. ♪

>> you're watching daybreak asia. a check on markets now. japan's shout for a public holiday but the aussie session is underway. earnings is the big focus for us today because they've had those numbers out. we are seeing the company sleep. it reporting it -- reported a disappointing set of earnings. slashing its interim dividend. unsurprising given we've seen a string of disappointments. china was still under lockdown so weaker demand coming through for metals. movement away from lockdown, post-pandemic recovery. qantas seeing a huge rebound in tourism and record first-half profits.

that stock under pressure 40 minutes into the session. quanta says it's not seeing any inflationary pressure starting to building to its customer base but that's the big focus of the day. the fed meeting minutes reiterating that resolved to bring inflation back under control. the asx 200 lower by one third of 1%. inflation was the big focus in our interview with the rbnz governor earlier. he told us that globally, inflation pressures are starting to ease. the rbnz has fallen through with a very aggressive tightening cycle. the question today will be what happens when the bank of korea, will they hike again or perhaps be the first to stand pat? >> the expectation seems to be that they will actually stand pat. our next guest expects the bank of korea to be the first mention -- major central bank deposit on rakes -- rates.

kathleen, always great to have you. the expectation right now seems to be that the bok will downgrade growth forecasts given the challenges that the economy faces. how tricky will the messages be for the bok not to tell markets that they are going to cut immediately? >> you are exactly right. we are expecting a hawkish hold this morning. we do see a no change decision at 3.5%. at the same time, we see one or two dissenters who were still call for a hike. that is likely to be diluted down because of the growth forecast that's likely to be revised downward towards 1.6 or even 1.5. that should message to the market that the bok is unlikely to continue hiking from here.

haidi: you are pointing at leveraging. so far, we've been talking about household debt being high and korea. now it seems like it's a private sector. what's going on here? kathleen:: during covid, not only hostile debt accumulated but also the corporate sector business debt growth has been accelerating. especially that size in services, manufacturing, and even more recently the construction sector has been accumulating that. we've seen that growth going 15% year-over-year and the third quarter last year. it is likely to have even more accelerated by the first quarter of this year. the bok wants that growth to slow down. that's likely to keep the bok on hold higher for longer until the end of the year. what do you -- haidi: what do you say when it comes to more

potential weakness for the currency? kathleen: it's been a surprise that the fed has been more hawkish. our u.s. team has raise their terminal rate expectation for the fed for 5.5 now. that should signal that there could be a short-term strengthening of the dollar and korean won has been very sensitive to reacting to the dollar direction in the past few weeks. even more recent days. this currency is likely to be an issue for the fx pastor impact on inflation. we only see .06 percentage points per 1% weakness. that means unless we see the spot going above 1350, it wouldn't be a huge stress onto inflation for the bok to consider. haidi: i'm wondering the demographics driving this lower

for longer normal for growth. we've had data showing that the fertility rate, the world's lowest for years, has fallen again. south korea breaking their own record when it comes to how low the fertility rate is. will the demographic story dominate in the years to come? kathleen: i believe so. it's really unimportant reform issue for korea to tackle. that the fertility rate rebounds from here. actually, the fertility rate for soul itself has touched .59. that's a shocking number indeed. the government and local authorities have been very focused on improving this number in the past few decades and now it really has to be the priority for the government and even the overall economic participants to focus on improving this number and bringing it back to closer to what it was before the

development era to above .0. haidi: that's -- shery: that's a challenge long-term for korea. we know that a weaker currency does help the exports of a country. we know what a big exporter south korea is. when you have slowing external demand globally, how are you expecting these two factors to really work out in the next year? kathleen: you're right. we are expecting external demand slow down this year, especially the first half of the year. the weakness of the currency should be beneficiary to the exporters. at the same time, with the overall demand contracting, the offsetting factor should be very minimal. we especially need to see the semiconductor sector pick up. that sector is unlikely to

benefit hugely from the currency weakness. it may be more of the autos and more industrials rather than the tech sector that would benefit from the currency weakness. for now, we think the demand comeback is more important than the price competitiveness that can be gained from the fx movement. haidi: always great to have you with us. we will be speaking to the bank of korea governor himself to go over today's decision and talk about what comes next. that conversation at 2:40 p.m. hong kong time. quick check of the latest business flash headlines for you. intel has slashed its dividend payout to the lowest level in 16 years. the biggest maker of computer processors says the decision is designed to create long-term value. intel has been eliminating jobs and slowing spending on new plants to save $10 billion by

the end of 2025. the washington post says meda is preparing for a fresh round of job cuts which could affect thousands of workers. the report says some leaders could be pushed into lower level roles in a bid to flatten layers of management. a meta-spokesman tweeted that the post got this one wrong. apple has it a major milestone in creating noninvasive blood glucose monitoring. the project dates back to the steve jobs era. this could up and a multibillion dollar industry and cement apple as a powerhouse in health care. shery: rio ceo is optimistic. he spoke to us. lower than expected full-year profit and slashing the dividend on weak demand from china. >> if you look at our results last year compared to the

previous year, then there was a significant increase in cost. it was basically in three areas. one area is energy. second area is inflation. the third area is hike in crisis to our aluminum business. i think that we've seen lately that energy prices have been following -- falling so we will not see that increase this year. that doesn't mean that there's not inflation in the system. you don't have inflation on such a ride -- wide range as you have now. i'm cautiously optimistic of lower inflation but there are some inflation that stays. unfortunately, we have very significant business in areas where there's a tight labor market. that being said, there will be some pressure on wages. for example, in western australia where we have our big iron ore minds, it's very difficult to get sufficient

labor at this point in time. there are bottlenecks in the system. i don't see as much inflation as last year. shery: the ceo speaking earlier to bloomberg tv. tune into bloomberg radio to hear more from today's big newsmakers and get analysis from the daybreak team. broadcasting live from our studio in hong kong. lots more ahead. this is bloomberg. ♪ introducing 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.

haidi: mercedes-benz has enlisted google to assist with a reboot of features that will generate $10 billion in extra revenue this decade. the ceo told us more about the need for carmakers to find partners in silicon valley. >> we've always been here in the valley, working with innovative tech partners. we thought it was a fitting place to actually describe what the future of software and the corresponding hardware look like in mercedes. >> i want to start by asking you, how high does software rank as a priority for mercedes in all of the things you are trying to achieve broadly in electrification but also an economist driving? >> software is a core competence

for the car of the future. we've been building up our software competence gradually over the past years. this is a space that is so broad that even if you make yourself the architect of your own operating system, you don't have to do everything yourself. >> let's jump into that. you've announced a deeper relationship with google. it's a license agreement. you pay google for help in building out your operating system. why did you do that instead of taking advantage of open source software or just doing it yourself? >> the core of the relationship with google that we formed is our joint vision of taking technology to the next level. everybody knows google maps, youtube. what do our customers want? it's all about delivering superior customer experience. we said, what can we do together?

how can we make navigation in the car go to the next level? that sparked a deeper conversation and here we are announcing a partnership today. >> your cto set out the ultimate goal which is to have no screen mirroring. no need to plug in the phone. the operating system is all you ever need. you can't get away from the fact that google, through andrade auto or car play, they are making their own moves into this market. how do you reconcile that? google's ambitions with your partnerships. and your want to take control of the software architecture. >> if you take a look at the mercedes now, what will be in the future, you have this mind-boggling widescreen in the car and you can present anything and everything on that screen. we shouldn't make the mistake of just looking at the entertainment alone. think about a crossed domains.

the assistant system and automated driving so you can marry navigation with driving assistance and automated driving and create whole new use cases. only a vehicle manufacturer is in the position to integrate all the different pieces of the vehicle, down to immersive experiences of music and entertainment where you use climate control, the scent of the car, the sub offers to create 4g sound. all of those things make it a compelling argument to go for an integrated approach. we don't have an antagonistic relationship with any of these players. we work with them to take their valuable assets and put it into our system so this is really a win-win. shery: that was the ceo of mercedes-benz speaking. japan is away on holidays today but we have the opening in korea. wb electronics landing 155

million deal to deliver command and communication components. also, watching korean entertainment stocks. sm entertainment boosted its dividend's sixfold. nc soft signing a global publishing deal for its new game thrown in liberty. coming up, morningstar joins us to preview alabama's earnings and explain why they have lowered their forecast for the chinese giants revenue growth. the market open is next. this is bloomberg. ♪

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shery: we are counting down to asia's major market opens.

more conversation from the fomc that the federal reserve might continue to move higher. today, we might see the first major central banks to pause on rate hikes. we are talking about south korea. haidi: growth fears from the bank of korea right as those demographics continue to plunge. we are again worried about this u.s. china decoupling narrative. china is encouraging state owned enterprises not to work with the big four auditing firms. these key areas on data security , on advanced tech is very much where we are seeing the two-part plays. what are you watching? >> we have the open of south korea here today. south korea is one hour into the day. let's take a few minutes to see that live pricing start to appear.

it comes down to that bank of korea decision that could be posted as soon this hour. the expectation for a vast majority of economists is for the bank to hold rates at 3.5%. that would be the first unchanged decision of the year but it would reflect those two dissenters in the previous to session who had argued that there was growing economic malaise building in the economy. we will have those updated gdp and cpi forecasts as well later today. we are seeing the kospi gaining 6/10 of a percent, being led by tech stocks. we did see nvidia posting a brighter sales forecast. the decision could come as soon as this hour. the concern amongst policymakers does appear to be on those growth worries over inflation. inflation came through in those fed meeting minutes. officials very much underscoring their fight to bring down that cpi rate. their resolve as well that's

playing out into the asx 200 being led lower by energy, material stocks and focus. we are seeing wti just fractionally higher here. definitely in its longest losing streak of the year. again, really down to that hawkish message that's come out on inflation. shery: oil hasn't lived up to all those expectations from china's reopening. let's get more on the early market moves with mark cranfield. if we have more confirmation on this narrative that is higher for longer, at least in the u.s. with the federal reserve, but the bok potentially pausing, what does that do to the markets? especially the korean won. mark: in korea and in asia in general, we've gotten used to the idea that central banks are often doing their moves in a slightly smaller way than what we get in the g10 complex. it's clear that there's a court native message among the g10

central banks. we saw from new zealand yesterday. we saw it in the fed minutes. they have a lot more work to do and they keep on talking about inflation as their main battle. in asia, on the rate cutting cycles and rate hiking cycles, they tend to be more moderate then you see in the g10. it wouldn't be a huge surprise if the bank of korea takes a pause now. they were one of the early movers in asia. they were ahead of the curve in many respects. obviously, their local conditions are somewhat different to what you are seeing in europe and the united states. certainly there's good reasons for the bank of korea to take a pause. if they are worried about inflation coming from china's reopening, is a close run thing here. they are coming towards the end of their cycle even though g10 central bankers have made it very clear that there are several more hikes to come in that respect. the difference between rates in the major countries and in asia

is going to widen even further from here. haidi: does that mean more currency pain ahead, particularly for the likes of the one? mark: it will be an area where it stays relatively weak compared to the u.s. dollar. certainly to the euro. it's also very dependent upon what happens with the chinese currency. the chinese currency has been relatively stable. the korean won will take comfort from that. you can tell from the bank of korea messaging this week, they are watching it closely. they are prepared to intervene if they see excessive weakness. they wouldn't mind it staying on the softer side. that will help korean exports which will need it as the global economy starts to get back on its feet. they won't be too unhappy if it stays within a range which is on the soft side. no central bank wants to see the market ganging up on its

currency. they are prepared to step in when needed. shery: we are seeing the pboc in a completely different path when it comes to easing. at the same time, geopolitical tensions continue to mount. whether it's with the u.s. or in the private sector with china telling some of the state owned firms to phase out using the four biggest international accounting firms. mark: it is not helping sentiment, particularly among foreign investors. the training market is still in -- chinese market is still a huge domestic market. if the reopening really does gain traction, if consumer spending stays high within china and they start to make inroads, there's a lot of momentum on the domestic front to still be able to do reasonably well. if they really want to outperform on a global basis,

they will need to attract foreign flows. it's becoming much more difficult. when you do things like making changing's -- changes, international investors will not be happy about that. you will have a push and pull situation. chinese stocks can probably still do reasonably well this year based on economics. for them to really fly, they need to convince the international world that china is open and willing to see foreign capital coming in. they can see that fiscal stimulus is not going to affect monetary policy that much. there's a lot of things for international people to digest. it is still a big domestic economy. shery: if you take a look at the valuation gap, do you think that we are going to see significant repricing after earnings season as the central bank and fed

reality come home to roost? mark: i think that the valuation story can stay distorted for a long. of time. we've seen it many times in the historical evidence. look at japan for example. the japanese market stayed relatively well valued for a very long time. still couldn't attract many foreign investors. there is a risk that china falls into the same category were valuations look good and they stay looking compelling for a very long time before people start to put money back into it. it really -- people need to get -- be convinced that authorities are pulling in the same direction, that they are doing their best to help private enterprises. there's quite a few doubts about that. you could have attractive valuations lasting for a very long time in china. shery: mark cranfield there with the latest. you can follow more on the story on our markets live blog.

you can get a market run down in one click and there's commentary and analysis from our team of expert editors. you can find out what's exactly affecting your investments right now. you can get more of those investment insights in our bloomberg intelligence webinar with the ark investments ceo. she will be discussing the outlook for 2023. david on glass will be part of that conversation that begins at 11:00 hong kong time. let's get you to sydney with paul allen in the first word headlines. paul: the reserve bank of new zealand governor says price pressures are starting to ease but the impacts of the recent cyclone may require the central bank to extend its monetary tightening. he is confident of her return to a low and stable inflation environment. rbnz raised its key interest rate by half a percentage point and maintained expectations for peak rate of 5.5%.

>> inflation expectations continue with core inflation more persistent. being tighter for longer is certainly an outcome. we saw early signs of demand coming back. but this additional demand because of the cyclone will continue to challenge the economy. paul: bloomberg has learned the chinese authorities want state owned enterprises to phase out using the four biggest international accounting firms. the signals continue concerns about data security even after beijing reached a landmark deal to allow the u.s. audit inspection on hundreds of u.s. listed chinese companies. no deadline has been set for the changes which may happen gradually as contracts expire. the bank for international settlements says forget currencies have won the battle against crypto assets. the ceo says traditional money still has great credibility.

crypto is still reeling from a selloff that wiped out $2 trillion in value. >> a few years ago, crypto assets and currencies gave us an alternative to fiat money. i think that battle has been one. technology doesn't make for trusted money. paul: global news, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. shery: still early in the session. anything big? annabelle: the korean session at 10 minutes into the bays -- today's trading. at the start of the day, we are seeing basically every single sector in the green. i.t. stocks standing out in particular.

it expects sales to be rep -- around $6.5 billion. nvidia is a company that's making a big push into ai chips. that's really helping to offset that broader slump that we see for chips instead. haidi: what's moving not in the right direction here in australia? annabelle: that's right. the us trillion session is looking different today. we are being influenced by those more macro factors, particularly those fed meeting minutes that underscore that result from the fed to keep up its fight against inflation. in terms of the session today, earnings are dominating the move . rio tinto reporting results after the bell yesterday. we already had that lead in from the session there. essentially, lower-than-expected profits. week outlook. this was a reporting time when

the lockdown in china was still underway so we saw weaker demand for those metals. materials, energy stocks are leading the losses on the asx 200. one other stock really standing out to us so far is qantas. we saw that company really benefiting from that post-pandemic return to travel. huge demand for aviation. losses of up to 5%. haidi: still ahead, alibaba earnings. how the company has handled covid restrictions. coming up next, more from the rbnz governor talking to us about the impact of inflation expectations. this is bloomberg. ♪

shery: the bank of korea is expected to hold rates steady for the first time in a year. our global economics and policy at esther -- editor is here with another exciting bok d -- day. kathleen: one of the early rate hikers back in 2022 when the fed was still waiting to taper and not knowing what they can do next. the bank of korea started hiking rates and they've had some

success with all of these rate hikes but they are ready to pause. that's what's expected. the inflation rate tells a lot of the story. it was expected to come in at 5%. a little bit higher at 5.2%. supposed to be around 2%, that's where they would like it. why are they pausing? they are getting worried about their economy. they see that exports have slumped. that might start turning around as china continues to reopen as the economy picks up. maybe that will help them. you've got weak housing, slower spending. the gdp contracted in the fourth quarter on a quarterly basis, not a year-over-year basis. it was only down marginally on the quarterly basis. nevertheless, it seems like this is a prudent time to pause. that's what we are expecting to hear from the bok this hour. this report said that they are still watching if the need for rate hikes -- again, messaging,

press conference. big deal for the bok today. haidi: the minutes of the fomc really clearly flagging more rate hikes ahead. what scale are we talking about the? ? kathleen: 25 or 50. all fed officials agree that more rate hikes will be needed. look at this. the restrictive policy stance would have to be maintained until the numbers coming in give us confidence inflation is coming down on its way to 2% and that's going to take a while. meanwhile, there are only two of the fed officials who want to go back to 50 basis point rate kites. everyone else wanted to stick with the 2% reading. john williams speaking in the last couple of hours, saying that it's going to take time. it's their number one commitment. they are going to get there. but just pointing out that this is something that doesn't happen overnight. mark is more says they are

looking for three 25 basis point rate hikes at the next three meetings and that will get them up to 5.25%. so i think the market is in step with the fed. to fed officials are still hoping for 50 and certainly didn't get it at the last meeting. haidi: kathleen hays with a look ahead to the bok. you can get more on your bloomberg. commentary and analysis from bloomberg's expert editors as that decision breaks. the reserve bank of new zealand governor says he's confident inflation will go down and stabilize as he keeps his options open on rates. he told us what policymakers would need to receive to revert to jumbo rate hikes. >> it would take a significant upside inflation shock from where we are. back at 4.7 5% for our official cash rate. we are still projecting the ocr

to be around 5.5% by mid next year. we are comfortable with that the economy has been unfolding broadly as expected since our november statement. so we would need a significant surprise. >> eve talked about the fact that the impact that you can look through, like temporary spikes and prices. it seems there's a risk that some of those temporary spikes put -- could become more permanent. would that mean that you may have to keep rates higher for longer? >> that is correct. as always, there's upside and downside risks and downside risks in any forecast. the cyclone. we expect output to be disrupted. it will definitely be disrupted. some price pressures over the medium term. we are looking at about a 1% addition to gdp.

that's well manageable within the current monetary settings. but if inflation expectations continue, if corrine place in is more persistent, being tighter for longer is certainly an outcome. we saw her signs of pricing starting to ease, demand coming back. but this additional dependent -- demand because of the cyclone will continue to challenge the economy. >> when you take a look at the global uncertainty, china's recovery is on foot in the reopening and there's a lot of questions over how it plays out. are you confident that central banks globally will be able to tame inflation? do you envision returning to subdued price pressures? do you think the outlook is a lot more volatile? >> i don't think the outlook is more volatile. we always look ahead and think it's more uncertain than usual.

yes, there are challenges everywhere. but some of the risk you just mentioned are downside on inflation pressures. central banks no their game. we are doing our job. economies are evolving broadly as anticipated, excluding these ongoing shocks. so i'm very confident that low instable inflation will return. shery: we are it's -- seeing inflation moderating faster than it is in new zealand. with hindsight, do you feel you should have been more aggressive in the beginning as the fed has been? if you are telling us that inflation remains elevated, why did you slow the pace of tightening? >> so on the first one, we've been incredibly aggressive with our tightening, we started from .25 and we are at 4.75. we were first in the world by a couple of quarters and we kept going quickly. i don't think being any faster would make much difference to

what were looking at. shery: that's our conversation with adrian or. plenty more to come on daybreak: asia including the bank of korea rate decision any time now. ♪

haidi: ahead of the bank for international settlements says the battle for cryptocurrencies has been one. he expects a strong statement supporting regulation of digital assets at this week's meeting of g20 finance ministers central bankers. >> what we want is to leave the ground infrastructure for a modern financial system. technology is moving very fast. we have a very solid foundation. so the idea is basically to use that foundation, incorporate the new technologies, and facilitate

the development of future financial systems. >> what gaps in particular are you trying to fill? >> one is a financial system as it efficient as it is today, still full of transaction costs. compliance costs. so one very important motivation is to reduce those frictions as much as possible. the other thing is to support more people more easily. one of the main issues related to lack of sufficient inclusion is transaction costs are very high. therefore to manage small payments or give access to small firms, small and medium prized enterprises, services to people in remote areas is still a major problem. >> what are private -- one of the priorities is to focus on stablecoins.

in terms of regulation, what additional regulation to you foresee that is needed? >> in terms of cryptocurrencies, they need to be regulated. it's obvious that it's necessary. aspects of consumer investment protection is very important. of course also, focusing on the exchanges. the exchanges are key. some of these activities interact with the traditional financial system. some should be tolerated. those are the ones we should regulate. >> what do you think is impacting the views of central bankers the most right now when it comes to the crypto ecosystem? how much of it has to do with the ftx incident? >> a few years ago, cryptocurrencies gave us an alternative to fiat money.

i think that battle has been one. technology doesn't make for trusted money. the most important aspect is for these activities not to have a systemic impact. at the end of the day, if this grows dramatically and we have events like ftx, that at some point could have a systemic impact. that is something we certainly want to prevent. >> india is pushing for greater regulation on cryptocurrencies. what conversations are you expecting at the g20 and where are they in those conversations? >> i would say the most important body of the g20 that has to do with financial activities is the financial stability board. the financial stability board where ministers of finance, regulators, central banks get together and they decide the main rules of the game for the

international financial system. i anticipate a strong statement in favor of regulation. it will be up to each country to decide which particular approach they will follow in terms of the alternatives that are out there. haidi: the bank for international settlements speaking to haslinda amin. coming up next, why china is urging state owned enterprises to back away from using the world's big four accounting firms. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere.

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countdown to the bank of korea decision which could come within the end of the hour.

the expectation is for officials to keep the key rate on hold, that would be the first unchanged decision in a year. the korean won is slightly stronger against the u.s. dollar. you can see, it is the biggest lagarde against the greenback. this stands in stark contrast that there is the resolve to fight inflation, expecting perhaps another 75 basis points. if you change how that is playing out, we're focused on the fed meeting minutes dragging down the index.

japan shut for a public holiday. big losses in the material sector, off around 1%. in earnings, rio tinto is sliding. that is more of a question of the demand outlook from china. are we going to see the rebound coming through? this company is feeling the impact of macro forces at play. shery: let's stay with china. authorities are urging state owned enterprises to phase out the four biggest accounting firms, signaling concerns about data security. let's bring in our greater china -- window this is coming amid heightened tensions. what is beijing telling the state owned enterprises? >> understand china has been

asking firms to replace the big four with local firms. haidi: they just reached the landmark last year after decades , it saved hundreds of chinese phones from being kicked off american exchanges. does that have an implication for those companies? it was successful. beijing was worried about data security and financials. on the other hand, another layers between the u.s. and china. shery: what are the implications from companies being potentially

delisted? >> at depends. companies must comply, they should be safe. >> some of these companies are applying to voluntarily delist. >> it does not mean they are free from inspection. the agency could do the inspection to make sure they were compliant during the listing year. shery: what does it mean for international investors? there is great opportunity in china, but at the same time concerns continue. >> it would be difficult for staying on companies to tap into

instead of sticking with the big four. the impact is early and we have to wait and see that. haidi: sigma china, investors are watching alibaba results. joining us with a preview is a senior equity analyst at morningstar. we are watching for how alibaba managed to weather the covid disruptions as well as the strength of demand as we get the first couple of months after the reopening. >> in terms of delivery capacity , it has normalized. now, what we are looking forward to through the earnings announcement and management guidance is whether they will

start to give guidance again for full-year revenue and dimensions of how the consumption is been. delivery has normalized, cancellation has decreased. another thing we need to watch is we see the program, potentially it will drag alibaba to more subsidies as well. >> what is the renewed worry when it comes to china? for a while, it felt like things were improving. the crackdown seemed mostly over. >> the e-commerce space will

deal with the margins of these companies. they will see some increase in the top line because you are subsidizing to mearns to buy more audits. it will be at the expense of the margin. we see good cost-cutting measures across tech and e-commerce companies, but there is a concern we're going backwards to a lower-than-expected margin. shery: where are the right spots? >> bright spots is management sorting out for investors, how

the strategies going to be. is it possible subsidies are not as large as they expect? the strength and consumption recovery is very important. or if local governments are willing to rollout more's words, it will be helpful. we're looking forward to large government meetings to see if there will be more so the -- more specific measures. shery: who is looking for more support? >> when it comes to government support, if the economy accelerates faster,

discretionary goods, items like beauty products. if there is a consumption upgrade story, it will benefit. it's interesting so far we are seeing a viable strategy. for example, high-quality brands you can buy a cheaper rise compared to some other platforms

off-line. this is at least partly due to subsidy. these two companies are doing quite well, even if the economy is improving. you want to buy the cheapest stocks. shery: you have the byproduct target at 171. what are you seeing in terms of byproducts in china? >> now with the news of renewed subsidies, there will be some pressure ahead of earnings. we are waiting for the management to give more guidance on whether alibaba will follow the subsidies or things like

that. there will be some concern that way on multiples. for multiples to expand, i think we need a more positive guidance on management, especially on cancellation rates. [no audio] haidi: we seem to have lost her at the end. previewing alibaba and talking through the new risk. shery: we will have more analysis on china tech. we are joined later for a closer look and by those earnings as

well. haidi: let's get to paul allen. >> federal reserve officials anticipate more rate hikes to curb inflation's. minutes from the fed meeting three weeks ago said almost all officials agreed to 25 basis points. only a few supported 50 points. a number of official said and the restrictive stance could saw progress. vladimir putin says he is waiting for his chinese counterpart to visit moscow. xi jinping is preparing for a trip. china's top diplomat met with putin in moscow. the relationship is solid as a mountain. india is said to be resisting using the word war in any joint statement.

that would diverge from a consensus reached last november. indian officials would prefer calling it a racist. we are told the plans for additional sanctions will draw attention away from other priorities. a storm is dumping record levels of snow. more than 1500 flights were reportedly canceled and thousands more delayed. blizzard warnings are in place, at the same time some regions are feeling record for this time of year. 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 paul allen. this is bloomberg. haidi: dissecting juan tosoh earnings. the stock has been falling in the session. this is bloomberg.

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the latest business flash headlines. air new zealand has swung back to profit and will consider resuming dividends. it seems a pretax profit reflecting sustained domestic

and international demand. the ceo says a recovery is underway. an australian casino operator has raised 545 million u.s. dollars. the windfall and potentially higher taxes. the market value tumbled. baidu shares reversed early gains after it reported better-than-expected revenue. the company is leading a race to create china's answer to czechia bt. plans to embed the ai tool in search services. jp morgan curved use of the chat she bt chatbots.

the move impacts employees across the firm. we're are told it was not triggered by any specific incident. haidi: the airline announcing a record first-half profit. we had the general narrative after the pandemic. we expected strong numbers, investors are not liking that area a lot of concern about capex. >> nine new planes on order. contests exercising rights to take those. costs are rising, dealing with

the short-term. the overall result is very strong. very narrow miss. $2.4 billion. on top of the buyback announced in august. domestic capacity is higher than pre-pandemic levels. international capacities taking a bit longer to come back. airlines are struggling to get parts, staff. shery: paul allen with the latest on quan thoughts. plenty more to come, including the bank of korea rate decision coming anytime. this is bloomberg. ♪

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waiting for the bank decision, the expectation it will pause at 3.5%. the first unchanged decision in a year. exciting times. it has come out. unchanged. 3.5%.

17 of 18 economists forecasted this at a time we are expecting a growth forecast. the expectation is they will lower the forecast, the pressure on consumption. kathleen hays is here to break all of this down. it's more exciting. kathleen: it's interesting. the rbnz would raise rates company downshifted. booooook-- bok is messing around. it's an important move. gdp growth, 2.4% versus 2.3%.

they actually raised it a little bit. one thing that is interesting is his central banks are keeping the forecast in line with reality. the inflation rate, as you point out, after having done several rate hikes in a row, figuring out whether they can pause and the press conference is crucial to see what kind of pause it is.

if they are done or maybe they figure they have done enough to sit back and gradually bring it down. those are the questions they will be asked. >> we are seeing some lines coming through, 2.4%. revising the forecast, little bit higher when it comes to inflation and growth. what are some other concerns? we talk about korea, it's usually household debt. it's a good thing. it also ties in what we see in the housing market. kathleen: housing markets have cooled off across the region in korea, new zealand. happening in all these places.

i was at that meeting. one of the things was, are you going to stop hiking rates? no, we're going to keep them high. it's one thing to stop hiking rates, if they stop hiking and they are moving in the right direction, well they pause? three months ago, he was adamant that rates would go high, we heard the governor tell us the same kind of thing and we heard john williams say the same thing. that is the message. it will be good to get inflation down, but most want to see the move away from tightening, lack of liquidity, and put some back.

for now, i think it will be an important issue to raise. shery: this is something we talked about with bank of america early today. household debt is no longer such a big problem, it's more about corporate debt. although corporate debt -- they were expecting a hawkish hold. the upgrade for cpi, is that hawkishness? kathleen: it is saying inflation will come down will not be was enough to our target. that's important part. -- that is the important part. haidi: kathleen hays. you can turn to bloomberg for much more, the live reaction decision. get commentary and analysis from

bloomberg's expert editors as we continue to watch for more signs of guidance in the revised outlook. so to come, blackrock tells us why they are cautiously optimistic when it comes to the asia credit market. blue lotus capital advisors joins us for a look at those results. markets coverage is next. ♪

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