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shery: you are watching daybreak asia coming to you live from new york, sydney and hong kong. haidi: we are coming down to asia's major market opens. shery: first republic bank slashing its workforce, shrinking balance sheets and pursuing strategic action after deposits plummet. credit suisse revealing 69 million dollars in outflows underscoring the challenge for ubs in retaining clients and assets. in china's top leaders are expected to meet to shift policy from stimulus to economic forms. we are getting breaking news when it comes to korea gdp and of course we have been watching for relieve the weakness that we've seen in the south korean economy as it comes to vulnerability to demand and trade flows. this is what we are seeing when it comes to euro gdp, first quarter annual. the number coming in at 1/10 of

1%, shy of expectations of 9/10 of 1% but certainly seeing that weakness when it comes to the pullback that we saw from the previous reading of 1.3%. for a seasonally adjusted rate, that is a gain of 3/10 of 1%, slightly better than expectations and a bounce back from the contraction of 4/10 of 1% that we saw in the previous quarter. the yuan has been trading on weakness. a five month low when it comes to these changing expectations from the fed. but we have really seen the escape from recession when it comes to south korean economy advancing more than expected at the start of this year. we continue to of course watch the bok. this gives them breathing space but there will be an assessment of the impact of the tightening structure of and it comes to growth and inflation. let's get you to annabelle for a look at the markets.

annabelle: picking up on what you are discussing around the korean yuan, assets shut right now, no trading until next hour but we're seeing the south korean as the underperformer in the asian fx face against the greenback. you can see a drop of more than 5%, compare that to the japanese yen, the next biggest decliner. gap and as you say it does come down to expectations of what the fed will be doing that we will see a basis poit hike and a deterioration that we have seen in korea. it has been enough to keep the bok on hold since january. that's not expected to change soon, so we can expect weakness coming into the currency. already sitting around the five month low. let's change over and take a look around the rest of the region because the japanese len -- yen is in focus. we seen the weakening given expectations of the boj is likely to keep settings in place later this week. in terms of equities, we will be

looking range bound in the session. australia, new zealand, both on public holidays. also the golden dragon index, not good for chinese stocks given the drop of more than 2% on wall street. shery: we're watching eco-data out of china including industrial profits but we are focusing on what is happening in u.s. futures. not doing much after sideways training -- trading in the new york session. mixed picture with s&p 500 drifting. corporate earnings to digest not to mention eco-data. the gauge coming in weaker than expected. treasury yields falling. the 10 year yield below the 350 level. we had debt ceiling drama unfolding as well. data showing that hedge funds are betting on higher treasury yields. oil is below $80 a barrel. though we did manage to recoup some of last week's losses in the new york session. we are trying to gauge where we are going in the state of the

broader economy. after hours trading for first republic, really plunging after hours of course. you're talking about earnings but lower than expected deposits in investors are trying to make sense of the latest earnings. let's get more from bloomberg analyst hermann with the latest. how much clarity did we have about first republic's business and why are investors concerned? >> we are operating in uncertainty with deposits down 40%. if you exclude the deposit source from the largest u.s. banks collectively, deposits are down 58%. a large hole in the balance sheet. things are moderating. with deposits down 2% through friday, overall, a mixed picture. while earnings were strong, the outlook for future earnings remains challenged given the fact that deposits are down, funding costs will rise in margins will contract.

haidi: they have managed to stop the regional bank doom loop. was there is silver lining when you pass through the balance sheet? >> it's going to be a challenge for first republic. they have raised cash and borrowed from the fed. from that standpoint, they will have enough liquidity to manage through the remaining balance sheets, but really it is going to be a challenging earnings picture going forward. we talked about they are much more reliant on cd funding. higher cost deposit funding. and higher cost home sale borrowing as well. we are talking about their deposit cost rising but there loan yields are pretty fixed. you're going to see sharp margin contraction in the second quarter and beyond which has negative implications for the power on the bank. haidi: hermann chan, bloomberg

analyst joining us from first republic. credit suisse has reported $69 million of outflows in the first quarter, it is a large ride down. underscoring the magnitude of challenges or ubs as it tries to retain key clients and assets after the takeover of its biggest rival. let's bring in senior analyst allison williams. we talked a lot about the integration into the challenge ahead for ubs, but what have we learned from these latest numbers from credit suisse? >> we also saw disappointing deposit outflows from credit suisse. and i would say that there deposits shrunk by 29% of first quarter balances. while that is not as bad as some had feared, keep in mind that regulators said the outflows really drove them sort of coming

in and orchestrating this merger , it does show the challenge ahead for ubs, which is they need to send inflows, especially within the core wealth unit that is the business. that's what they're most interested in, especially in asia. the other negative we saw in the results was that him and a fees were down 63%. so they were down for the industry, but credit suisse underperforming. the industry -- and this is a business that ups is involved in with the merger. what we will want to hear from ubs is how they are going to stabilize and get a better idea in terms of combining and seeing how they're going to hang on to their clients. and the talents that are producing those results. shery: are we expecting some of their outflows to find their way to ubs and what will you be watching in terms of the

estimate for job cuts given of course what they have to work through this merger? >> so we want to hear more about not just job cuts but where the savings are coming from. we talked about that over a long time. no real detail about where those cuts are coming from. is it tech in terms of sourcing, job cuts, technology, and then what are the units? the swiss unit is really going to be a concentrated unit in terms of market share so we expect there will be overlap. we want to hear about that, we want to look at their flows and figure out is some of those outflows went to ubs or how much went to competitors. we will be looking at the core of their business in terms of equity trading. that business has not done well

relative to the fixed income trading. they have less exposure to the business. it may have helped them a little bit. but we want to look at their equities training and see that they are keeping pace with competitors in this tough environment. shery: bloomberg intelligence senior analyst allison williams. we will hear from the ceo at 2 p.m. hong kong time. now a meeting of top chinese leaders expected this week will be scrutinized for any shift in focus away from the stimulus as the economy picks up steam following the end of covid zero. let's bring in stephen engle. in hong kong. what can we expect from the bureau meeting? stephen: obviously, they have had four months since the last bureau meeting in december. times are different. back then, they were coming off the party congress in about to embark on dismantling covid zero

so they had four months to get the economy going. so the meeting this week most likely -- again, it is not on the official calendar, but it has to be completed by the end of april and this is the last week of april, so we are expecting the meeting of the top 24 government officials including this man, xi jinping at the top to meet in beijing and kind of come up with the economic priorities. that is what is usually the top of the agenda in the april meeting. now again, the economy seems to be doing a little bit better than previously in the previous month. so a 4% gdp growth in the first quarter is better than expected. economists are going to be reading the readout from this bureau meeting to see any signs of change in tone or language as far as stimulus. pboc has indicated it might pull back on some of the loans to small businesses that were made over the last new year's through the pandemic also, we surely

know that the local government does not have a good debt situation. record levels of debt. they do not have the capacity to offer tax breaks going forward and stimulus measures, so perhaps we will see stimulus taken off and then again rv emphasis upon areas of growth for the chinese economy. that would be the economy, private sector. perhaps any words on the property sector of course. and increased jobs is going to be key so we will have to wait and see with the readout will be from the april meeting. haidi: we were following this closely yesterday. i'm wondering if it was a reflection of beijing's views on controversial comments made by the ambassador to france? there has been some distancing here. stephen: one thing i asked repeatedly yesterday when i covered the story, where these comments by the chinese ambassador to france -- was he speaking out of turn?

was he going rogue? did he misspeak or is this a change in policy from beijing? beijing was quick to counter the speculation from the ambassador made to a french television station in french by the way on friday. you can read them. it says essentially dismissing the notion that the baltic states including ukraine, lithuania, latvia, estonia, or independent. so that obviously created a firestorm of controversy across the baltic states but across europe especially at a time when emmanuel macron and the french are trying to enlist beijing's help in brokering some sort of peace, some would say that the french kind of unilaterally went on their own prematurely to enlist beijing's help in the way that emmanuel macron did. beijing is backpedaling and saying that these were his personal views not a change in

policy toward the baltic states. they do recognize since 1991 the independence of those nations. haidi: chief north asian correspondent stephen engle in hong kong. let's get you to su keenan with the first word headlines. >> we start with u.s. secretary of state antony blinken who says that sudan's warring factions have agreed to a three day cease-fire. the leaders of the armed forces and the paramilitary group will stop fighting temporarily after intense negotiations over the last two days. residents have fled and governments have accelerated efforts to repatriate staff amid a full-blown battle for control of the north african nation. president biden and house speaker kevin mccarthy are set to enter the next stage of the debt ceiling standoff. treasury department will release an updated estimate of the default deadline by the end of next week based on fresh tax revenue data. biden is demanding concrete

proposals and has rejected the cuts as a condition of lifting the borrowing cap. shares in fox closed down almost 2% after the media company says it's parting ways with tucker carlsen. it's most popular primetime tv host. his departure comes after the networks $787 million settlement with dominion voting systems in a defamation suit. meanwhile cnn anchor don lemon says he was fired from cnn network. he was previously taken off the air for comments about republican presidential candidate nikki haley. and thailand's opposition party is on course to secure a 50% of votes in elections accorded to opinion polls. the prime minister candidates, they say that they expect to win enough seats to lead the next government. the fact that they remain open

means they failed to secure the majority. >> if we get the majority, to 60, 270, 280 out of 500, i think we will be the main party to lead the new government. and the prime minister will be from the party. i am confident of that, yes. however -- if you pack the upper house with 260, we may need to join with a few other parties. su: global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. shery: still ahead, chips, china and ukraine in focus as south korean president prepares to meet with president biden. we will discuss what to expect with tufts university. but first, there may be trouble for investors who see recent volatility as the all clear to buy stocks. analysis is next.

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haidi: kind of a drifting start to the tuesday session in asia. we have markets in australia and new zealand closed on account of

-- observations. s&p futures are looking flat. u.s. shares drifted in the previous session. we are seeing low volumes as investors are really passing through some mixed corporate earnings, eco-data and of course assessing what to make of the low volatility environment when it comes to equities. we do also have the bank of japan meeting to look ahead too. the governor's first decision at this point. no signs of fireworks but we are getting calls at the fringes that potentially the risk of a tweak is still there. let's bring in christopher smart. always great to have you with us. one of the warnings that we had was really talking about how we are perhaps becoming or investors are becoming too complacent in the face of low volatility. is it masking the risks when it comes to broader markets? >> i think the low volatility reflects the fact that we've had a lot of good data over the last few months. in spite of the turmoil around

some of the regional banks in the u.s., the failure of silicon valley bank and credit suisse and ubs which you have been covering, the general sense is that the underlying fundamentals in the global economy are not quite so bad in the sense that the world is slowing but at a slow pace. so i think that is why you've seen the decline in volatility and generally markets overall. a lot of that will be tested this week. and a lot of macro data from major economies and a continuing stream of equity earnings reports. haidi: and the overlay of geopolitics is always there. we've gotten a few indications that things are not going to get better. tip curbs, more of the bifurcation between washington and beijing. is that something investors are paying enough attention to? >> well, it is something that

they need to pay attention to. not just this week, but it looks like a long-term series of dynamics that are going to impact the tech sector or really anybody with big investments. in china and the united states at the same time. i would say however that there was a speech last week by secretary janet yellen that outlined a much clearer picture of how the administration views the economic relationship with china. and after many, many months of name-calling, this sets a framework. i'm sure it will not be greeted with warmth in beijing but it sets a framework for better tone of conversation and may be concrete discussions of certain issues going forward. shery: christopher, looking at

market dynamics of this sector when you look at tech giants how extreme our valuations and wire investors so committed to this sector? >> it's it's a sector that has suffered a lot. there was a big selloff. there is now i think some sort of adjustment in that and the picture continues to be strong on a secular basis. it's not just vying for people being locked down with pandemics. it is a sense of technology moving into business models that were still under investing compared to longer-term trends. since before the pandemic. we think there will be a lot of catching up that will continue. on top of that, new talk of artificial intelligence and the ways in which that will

transform our business models, that depends on a lot of hardware and software. i think that underpins a lot of valuations right now. shery: christopher, we had moves in the treasury market with yields falling across the curve given that we have the debt drama. the x state estimate will be released when extraordinary measures are exhausted. how are you expecting this to play out? >> this is one of those dramas that is always hard to foresee because i think the market expects a deal to get done. that is my best case. both sides seem dug in and there is no -- neither side gets points for compromising early. because their side will feel like they gave away too much. what is i think hopeful is we will get a vote by republicans this week. we will see whether speaker mccarthy can get his caucus around her proposal.

-- a proposal. it's a starting point that we have so far and will get word from the treasury about when the date falls. the fear is the date is moving up. not august or september, maybe even june. i think that will put a lot of pressure on folks to focus on this issue and come up with a series -- a path forward that can deliver a debt limit increase. shery: in the meantime, we're going down to the wire. christopher smart, good to have you with this. chief global strategist at barings. we have more to come on daybreak asia. this is bloomberg. ♪

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haidi: a quick check of business flash headlines. evergrande will sell shares of

two companies engaging in health and living projects for around $.30 in order to focus on its energy vehicle segment and deploy resources toward existing and future projects. evergrande auto has halted manufacturing of their electric vehicle due to insufficient funding. it's aiming to resume in may. disney began letting go of thousands of employees on monday and a push to cut 7000 jobs this year. the company says this is the second of what is expected to be three rounds of cuts that will bring the total positions to 4000. disney is seeking to save five and a half billion dollars annually by reducing its commitment to general entertainment. up next, a closer look at tensions across the global as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network, with no line activation fees or term contracts...

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i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you. haidi: we do have some breaking

news in the comes to first republic. we are learning that kpmg has been sued as first republic's auditor over admissions of information. first republic republic in kpmg being accused of misleading investors. bloomberg news has obtained a copy of the lawsuit in california. we were getting more details soon but we know a few weeks prior that kpmg gave first republic bank a clean audit weeks before it needed the bailout. first republic bank which was brought back from the brink thanks to a $30 billion emergency bailout from other lenders. really that we had this link between two other banks that have floundered during that time of the banking crisis. three of them had used kpmg and each of them including first republic had received a clean bill of health from the firm. we're hearing that there's been a lawsuit in california over alleged admissions. let's get you to annabelle for a look at the markets.

annabelle: first republic also in focus for other moves including because we have those numbers from the company after the bell. the big focus on deposits shrank even more than analysts had been expecting so the stock, you can see the slump, down more than 20% in late trading. the focus is on earnings and we have the likes of meta, microsoft, alphabet coming up in the days ahead so investors are cautious. still sitting on the sidelines, u.s. futures trading flat as nasdaq futures are in turn. over looking for in asia, key markets. austria and new zealand. but we do have tokyo opening at the top of the next hour and nikkei futures, you can see them pointing to fractional gains as our chinese ones. we saw a big drop in the golden dragon overnight in the u.s.. below its 200 day average,

geopolitics are in focus. let's take a look at what we are seeing in the currency space. we've seen dollar weakness coming back in. concerns around the debt ceiling standoff in the u.s. between the house speaker and u.s. president, that could be escalated. in turn today we will be watching the korean yuan given that it has been sitting around a five month low against the dollar. we saw those gdp figures, the company avoided a technical recession but still unlikely to force bok to shift. as well, a big focus on what is expected from the boj. nothing in particular at this particular meeting but the policy tweaks could appear by midyear that's what td securities is saying and they're expecting upside for the yen. in the meantime, soft agenda is saying go along on the euro versus the yen. expecting to shift their key rate higher. shery: this week it looks like

ueda avoids policy fireworks as he leads his first meeting of the bank of japan. bloomberg's global economics and policy editor kathleen hays us from tokyo. bets on the boj's decision has gone from backing a change in yield curve control to know shock at all. >> know shock and all. do not expect the governor to point, a person who came into this job that he had for years, a time when deflation was the big problem in japan when the prime minister said we've got to get someone who can do shock and all and not to they got. governor ueda is taking over one inflation is running three or 4% year-over-year. they are concerned about structural strength in the economy. he has got a different set of challenges. let's start by saying this

friday in japan, no one is ruling out a surprise on yield curve control but it's not the baseline, what people are betting on. in parliament on monday the governor said it's too early to normalize the y sisi framework. in the past when the boj is talked about normalization they say it starts when you get off the negative rate in the short and and raise that to positive. normalizing the yield curve control, what would that mean? that is raise some questions here. they're expecting an early general call. they don't want to move ahead of that. bets are going definitely that the move when it comes to start normalizing will be june or july. we want to hear what the governor has to say at his first meeting and what groundwork he may lay for these moves in the future. >> global economics and policy editor kathleen hays in tokyo.

for the bank of japan, let's get to su keenan with the first word headlines. su: china's bureau meeting is likely to take place this week with investors awaking signals around monetary support. with the government on track leaders are expected to focus on boosting business confidence, increasing jobs and strengthening the poverty market without stimulus. the meeting will be watched for any changes in tone or language. u.n. secretary general antonio guterres has confronted russian minister sergei lavrov over the invasion of ukraine. sitting next to him during a security council meeting, gutierrez called moscow's military operation a violation of law. russia's top to lemat is in new york to lead sessions of the security council as part of russia's month-long rotating presidency. china is looking to distance itself from remarks by its ambassador to france who question the independence of former soviet states.

the chinese embassy in paris says the comments on french tv where a personal view, not a declaration. a ministry spokesman said beijing respects the status of x soviet republics as sovereign countries. global news, 24 hours a day. on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm su keenan. this is bloomberg. haidi: president biden is preparing to host his south korean counterpart for a state visit on tuesday. more than 100 executives from south korea will be joining the president's trip including some of the country's biggest company. let's get more from bloomberg's --. so what are we expecting to come out of this trip and some of the achievable elements? sangmi: that's true, it's been a while since they arrived in the u.s. and it seems like we are seeing some of the deliverables. he met with the netflix ceo in

the company said it will be investing 2.5 billion dollars over the next 4 years and making the korean tv series and movies. so he will be pretty busy, busy over the next week or so in the u.s.. and during his trip as he visits the nasa space center. he will be speaking in the congress and harvard as well as you know, hosting a business roundtable with multiple conglomerate heads, including the battery makers and chipmakers that are the major players in south korea. honestly, the most important would be his meeting with joe biden and a lot of the things will be discussed at there, including especially the extent of deterrence on jake sullivan. that will be because of the two countries that are marking and commemorating the 70th anniversary of their alliance. especially on the mutual defense

treaty, so they will be talking a lot about north korea shery: very big week but there was some friction ahead of the statement as that. we had comments made by the president about ukraine. what can you tell us? sangmi: in an interview, he did mention, he hinted at and open doors for more aides to ukraine, other than the humanitarian aid, hinting that there could be military aid. that south korea would provide it, which south korea has been. they've been refraining from that. that has had a little bit of friction there. he does face some of the issues here, one year into his office, with especially the u.s. when the u.s. announced the inflation reduction act as well as the chips act, that would directly impact south korean manufacturers. he will have to lay the groundwork to and discuss the

right direction with the u.s. on those. he also has multiple of the topics that he will be discussing, but looking back for the last one year, he has done a lot by improving relations with japan and also trying to be a liaison between the relations with the u.s. and in terms of chips and the major businesses. shery: bloomberg's sangmi cha. let's discuss the broader implications to the visit to the u.s.. especially when it comes to supply chains less dependent on china. joining us is christopher miller, associate professor of international history at tufts university. great to have you with us. sangmi was telling us about what we can expect from this summit. what are you expecting in terms of the semi conductor industry and especially when it comes to the allies stance against china? >> well, i think the u.s. and

korean governments are going to try to resolve some discussions that they have about semi conductor regulations. if there's a couple of key issues outstanding. one is the licenses that korean firms need to apply for when they tried to ship u.s.-made machinery into their plants that are in china. the second is the fact that the chips act has the so-called guardrails provisions which prevent firms that acquire funding from expanding new provisions in china. both of these have been controversial in korean media and the applicable landscape. there will be discussion between the presidents. shery: it comes at a time when we are seeing improvements in south korea and japan relationship. how healthy is this to align the allies? >> it's a big change in south

korea and japanese relations which have been in a state of turmoil the past several years for a variety of reasons. it is impacted chip sector because japan imposed export control restrictions on the sale of certain types of chipmaking chemicals. the issue has been resolved. the controls in question are lifted. there is more alignment between japanese, korean and u.s. leaders on semi issues and their stances toward china than we have seen in some time. haidi: how difficult does this get when it comes to the chipmakers? is it possible to continue with the historic cycles that we have seen from the industry while sidestepping political indications? >> i think chipmakers would like to sidestep the politics but the reality is it is getting harder and harder to do because every major government is intruding

with political demands. localization of production, export controls. in particular, korean firms are concerned that because they are from a medium-sized country, they are more at risk of retaliation then firms from larger economies. given china's track record of economic firms that cross beijing politically, korean chipmakers and firms in korea do not want to get caught up in any punishment from beijing. haidi: you talk about a rock and a hard place situation for these companies. how much leverage does beijing have then? >> beijing has some leverage in threatening retaliation against chipmakers. we've seen over the past couple of days, headlines about potential retaliation via cybersecurity investigation. that is a u.s. chipmaker and it highlights the fact that china is a major market for most of the world's chipmakers.

as a result they need to tread carefully and be responsive to home governments but also meet the needs of customers, many of whom are in china. shery: christopher miller, good to have you back. associate professor of international history at tufts university of course as we preview that. president yoon and biden summit. coming up next, we will get the outlook for oil as traders look to china's golden week holiday for clues on demand. this is bloomberg. ♪

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shery: bloomberg is bringing technology experts, economists and policymakers together to collaborate on a path to the cleaner future. the ceo of air products told us why hydrogen is key in transitioning to clean power. >> hydrogen is always been the only source of energy that revamp for the future. what is new is people now are saying i want clean hydrogen. rather than burning the hydrocarbon hydrogen gives you the energy you, but then putting the junk into the atmosphere, we

cannot afford to do that is that affect the climate. therefore what is new is the focus on clean energy and then you're focusing on clean energy on you find a way of producing hydrogen in a clean way. there are several ways of doing that. one of the best ways is serious hydrocarbons. but then capture the co2 and sequester it. that is blue hydrogen. the other is to make hydrogen from wind and solar energy which is electricity and then use it to break down the water and make hydrogen with zero carbon footprint. that is what we called green energy. other people talk about electrification. the electricity that we see is generated by burning hydrogen. or when wind and solar. then we can use it for like in

this room, heating the building, cooking and all of that. but you cannot use electricity for decarbonizing or making chemicals or running ships. so hydrogen is going to be and has always been and will always be the energy of the future. now the challenge is how do we produce that in a clean form? i would like to say that all of these discussions about the fact that we need our nd, we do not have the technologies, that is nonsense. it is economical if you put the right cost on burning hydrocarbons. it is -- everything is here, it is just going to be a matter of policy. shery: air products ceo at bloomberg and es summit which continues this week in new york.

we'll prices have been under pressure amid a gloomy demand outlook. traders awaiting china's golden week holiday to gauge the state of economic recovery. let's get more from nef analyst wayne. so we have seen oil prices trade sideways despite the fact that we saw opec-plus announce surprise production cuts. what will be driving prices in the next few months? >> thank you. so since oh look -- opec-plus announce cuts, oil prices have eased due to global demand. that is normal given that we are in a demand low season from people do not drive much. china's oil demand and opec-plus. we are seeing signs that oil demand is strengthening, road

traffic levels in the largest cities are consistently higher than the same time last year. while jet fuel demand would only see more service recovery in the second half of the year, advocates are suggesting there is pent up travel demand in the country. asia as a whole will make up for a large majorel demand growth and so far things are looking very positive. to opec-plus, there are production cuts coming into effect next month and we expect unlike the previous rounds, we expect it to translate into actual supply cuts because this time the quarter cuts are only dedicated to member countries which are able to deliver those cuts. and importantly opec-plus is showing a strong sign of unity. they were able to discreetly organize themselves and agree on the production cut details.

they are significant cuts. without any leak to the media. so this shows that opec-plus could exercise or have a strong resolve in keeping oil prices supported in the months ahead if opec-plus cuts and china's strengthening demand, we expect to see the global oil market balance fit into a supply deficit as early as may if not definitely by june. and --every remaining amount of the year. >> right. and we've also got a new report when it comes to oil and gas trends. can you tell us how we have seen the higher oil price environment and how that's played out when it comes to divestments? >> sure, so in this report we look at the ioc is based in europe and north america. typically in a year where oil prices are low, it would be followed by higher divestments

in a year after, so there is a one lag and vice versa. that is the same trend. another trend we are seeing is oil companies are divesting more in-home countries, namely north america and europe. that because they face regulatory pressures in those regions which translates to do cost of operation. another interesting trend is that all oil companies, major ioc's have 2015 at zero emissions target which covers global omissions. and they are still channeling both of the divestment processes into fossil fuel projects. we are seeing a steady increase in to low carbon projects. annually since 2019. we expect again between the process and energy transition to narrow so that oil companies are able to meet those emissions targets.

an interesting trend that we have come across is that oil companies, particularly european ioc's are actually looking more into selling equity and renewing projects that are past the development phase. >> bloomberg oil analyst wayne tan. more to come on daybreak asia. this is bloomberg.

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♪ shery: a quick check of the latest business flash headlines. lvmh market value has surpassed 500 billion dollars becoming the first european company to reach the milestone. the achievement as a result of sales of luxury goods in china. in the strengthening euro. they join the ranks of the world send biggest companies less than two weeks ago. at least for managing directors are said to have resigned from the firm. sources say those include the head of u.s. trading. mike and joseph, a string of bankers have stepped down in recent weeks. amid uncertainty. tesla -- sorry, go ahead. those are some of the stocks are watching. [laughter] haidi: when it comes to the

market opens in korea in japan that's about four minutes away. we are watching the stocks at the moment. energy producers could be on the move. oil is regaining its footing following last leaks slump. we are watching mitsubishi saying it will spin off its automotive businesses as it tries to boost efficiency. watching adrs jump on those better-than-expected for your operating income forecast so that could see a move in the asian session. j.p. morgan tells us why inflation remains the primary driver for developing markets and investors are misunderstanding its invocations. will be getting a premium of the bank of japan. ueda's first policy meeting. market opens our next. this is bloomberg. ♪ go find leaks. go fix-em. emerson technology detects compressed air leaks to save manufacturers, like colgate, over 20% in energy costs. go brush your teeth. go boldly. emerson.

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counting down asia's major market opens as japan and south korea expect it's open although australia and new zealand are away on holidays. this is investors in the new york session are digesting all of the corporate earnings. not to mention new eco-data as well. haidi: the lack of volatility or low volatility flagging emerging risks. certainly a little bit of good news when it comes to the economy. avoiding recession but we know the global headwinds when it comes to the shakiness of demand that is still at play. annabelle: absolutely, something we will be focusing on very closely with the open of japan and korea. also the start of trading for cash treasuries. watching that to your yield given we had seen that drop of nearly 10 basis points in the price session. investors are starting to trim their bets on further rate

hikes. fed rate hikes market pricing indicating that rates will end the year at 4.5 percent. that was after peaking in june. overall we are seeing small sentiment shifts coming through. as you said, it is that lower conviction, still more u.s. eco-data to come. around the u.s. data -- u.s. debt ceiling on earnings and focus. first republic, the stock we are watching and after hours. down more than 22% at this point after reporting numbers showed deposit shrinking more than expected in the past quarter. a top regulatory official in japan saying you can take a lot of lessons from what happened there, the likes of credit suisse. certainly something that capitalize banks can face. it has been cited as one of the reasons that the boj is likely to keep yields policy settings in place for that today meeting concluding on friday. we have seen the japanese yen looking a little bit weaker off that.

nikkei 225 coming on line 6/10 of a percent to the upside in the early moments of trade. let's take a look at the session and korea today. given the next moves to the be ok they are in focus, given we had that gdp data out of the last hour. we do see the country avoiding a technical recession with the first quarter gdp rising .3 of a percent on the quarter, slightly more than economists had been expecting. but still, that broader week as we have seen and that broader deterioration has kept the be ok keeping its policy settings unchanged since january. the korean won is looking a little bit stronger here against the greenback, but still trading around a five month low against the dollar with the fed, as we said, broadly still expected to raise rates. quite a portion ahead of the trading session today in asia's key markets that are shut in new zealand and australia. shery: let's bring in our next guest who sees earnings outside potential in korea and taiwan.

he thinks investors are running out of reasons to avoid chinese equities. with us now is the asia equity strategist. great to have you back. is the china story also and earnings potential story? >> i think very much so. what has happened in china is that it has gone through a four-year down cycle and earnings. so if you look at mci china, that peaked in july 2018. it went sideways for a bit and then at bottom end october of last year. a has been picking up since then. it's not a very sharp acceleration, but what we see is that investors are starting to change their mindsets from what was a very easy market value market to potentially entertaining the idea that they need to be buying in bibs as earnings continue to recover. if you think back to october and november of last year, the whole

narrative is that reopening would never happen, then it did, then international reopening will happen, then it did. international reopens happen, but consumption will never recover because consumer sentiment is very poor and savings are depleted. we saw very strong numbers for q1, now investors are just running out of reasons to kind of avoid holding chinese equities. like you said, very much so, it's their earnings recovery that will drive most of the upside. shery: the domestic nature of reopening and china needs to be disappointing investors, especially expecting countries dependent on the reopening of the chinese economy like korea and taiwan to get more support. why are you seeing the earnings potentially in those two economies when, for example, this semiconductor pressure continues. >> korea and taiwan is more of a tech story. the chinese recovery in tech demand has been slightly slower

than we expected. i thicket still on track to happen, it's just happening at a slightly slower pace. if you look at earnings and taiwan, they are right now at cyclical bottom levels. we are in this formation process that might take longer than we previously had, but it's very difficult to be a further downside from earnings at current levels. we are starting to see prices with product categories and if that continues to happen, we would expect a significant rebound in earnings estimates and korea and taiwan. so if you look at 20242023, the recovery is quite visible. if you focus on the quarters of 2023, it can get a bit mixed, yes. haidi: you said investors are running out of reasons not to invest in china, it is geopolitics and that risk a good reason because you look at the reaction of a threat of more curbs from the u.s. when it comes to the chip sector.

we had the biggest one-day drop in just about six months from the csi 300 on friday. we've seen the nasdaq golden dragon china index widening out its gains for the year. does this tell you that these domestically facing stocks are still vulnerable to this kind of news flow and you are better off getting that exposure to the china rebound story externally? >> this is indeed what investors have been doing, buying european stocks and luxury stocks on the back of a recovery in china, even buying material stocks on the back of a return -- on the back of a recovery in china. if you look at the geo pill -- geopolitics like you mentioned, has been a large driver of the multi-person in chinese equities and it is not taking away from that, but my point being that given the starting point is in terms of geopolitical issues in between u.s. and china, it doesn't look very likely that we

will get a significant deterioration this year. if anything there is renewed talk of senior officials from the u.s. ministry and visiting china in the coming months, and if those things materialize, nothing really significant happens in terms of china-u.s. frictions. you can see those things being priced out but this is a cyclical pricing up and down. but on the whole, chinese multiples don't need to do a lot of hard work because the earnings recoveries are coming through, and that is what i think is the rias during challenge this year. haidi: talking about the risks that have been hidden at the moment in equity markets from investors as a result of the low volatility environment, are we being too complacent when it comes to the reasonable run of data that we've seen lately, and do you think when that volatility comes, is asia better sheltered restaurant -- better sheltered? >> -- mixo: absolutely right

that volatility levels are too low. that having been said, it if you realize it, it will be lower. it makes the movie little bit lower, but given the starting point, it is probably reasonable to expect a bit of a pullback in dm equities. the asia be better protected in that scenario, i think so. we see the correlation between asia and u.s. equities move away. so unlike previous six months or really second half of last year and early part of this year, asian equities are simply following u.s. equities. that is no longer the case. you can see asia having its own driver to look at the business cycle monitor in asia a has been recovering since the end of september. where as in the u.s. and europe, he continues to fall at this point. there is a reasonable expectation that asia could hold up better or even do well if u.s. equities see a little bit of pullback.

haidi: asia equity strategist at j.p. morgan. let's get you back to annabel for a look at the movers. why are you watching korean media stocks today? annabelle: this is an interesting local media report that has come out. essentially we hear that netflix will be investing $2.5 billion into korean content over the next four years. this was an investment plan that was announced this week when the ceo of netflix met with the south korean president, who is in the u.s. the size of that investment is twice the amount that netflix has invested in south korea since it started there in 2016, and we are seeing these stocks, these are some of the production companies in curry rising sharply at the open for soul, which is the board of kospi still gaining around half of a percent at this point in the session. this change now because the other market that has come

online this morning is the energy ones, and we do see brent crude holding steady. it did start to recoup some of its losses in the last session, again we saw the biggest drop last week since the start of the banking sector issues. in terms of the outlook, the energy players are moving into the upside this morning, though it is a little bit of low-volume trading, given some traders in the market are still looking for more certainty around the outlook. haidi: let's get you to su keenan for a look at the first word headlines. su: we start with china's politburo meeting, it's likely to take place this week with economists and investors awaiting monetary and fiscal support. with the recovery well on track, top leaders are expected to focus on boosting business confidence, increasing jobs and strengthening the property market. the meeting will be closely watched for any changes in tone or language. meanwhile, china is looking to distance itself from remarks by

its ambassador to france who question the independence of former soviet states. the chinese embassy in paris at the comments on french tv were a personal point of view, not a political declaration. the foreign ministry spokesperson added that beijing respects the status of x soviet republics and sovereign countries. u.s. secretary or state antony blinken said saddam's two warring factions have agreed to a three day cease-fire. he says the leaders of the sudanese armed forces and the paramilitary group will stop fighting temporarily after an intense negotiation over the past two days. residents have fled and foreign governments has accelerated after they repatriated their staff amid a full-blown battle before -- for control of the north african nation. shares in clocks -- fox closed down 3% after the big media companies that it's parting ways with dr. carlsen, the most popular primetime tv host.

the departure comes after the $787 million settlement with dominion voting systems and -- in a defamation case. cnn anchor don lemons said he was fired from that network. he was previously taken off the air for comments about republican presidential candidate nikki haley. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. i'm su keenan and this is very. shery: the bank of japan reportedly planning to reveal and inspect its policies of the past decades. new zealand security shares their outlook for monetary policy later in the hour. plus, first republic bank is cutting its workforce and shrinking its balance sheet after the deposits plummeted more than expected. more on that next, this is bloomberg. ♪

>> we are pursuing strategic options to expedite our progress while reinforcing our capital position. i also want to underscore the key aspects of our business that will remain unchanged. these include operating a simple and straightforward business model focused on delivering

exceptional client service. working collaboratively to meet the banking and wealth management needs of our clients. maintaining consistently high credit quality and serving and creating opportunity within our communities. >> ceo mike on the banks business strategies actually moving to cut its workforce and says it's pursuing strategic options after biggest outflows than analysts expected. customer deposits plunged 41% last quarter to just over $104 billion, that drop came even as the country's largest lenders part $30 billion of their own cash with the bank. credit suisse reporting 59 billion dollars of outflows in the first quarter and taking a large write down its wealth management unit, the results underscore the challenge for ubs after the emergency takeover of its biggest rival.

bloomberg's manus cranny reports from zurich. manus: the numbers are in for credit suisse for the first quarter and it was brutal, in exit is of over 61 billion swiss francs, which was less then the market had anticipated at around 100 billion, but context of the past six months, 170 billion swiss franc seven assets that you -- that yield for the bank have exited. the question now is what can ubs do to stop that route when the deal closes. what can they offer clients, how can they make them stay, how can they make their rainmakers within the institution of credit suisse remain? the message was clear, we will make more substantial losses from credit suisse. we have to tap the swiss national bank for 100 million and more from liquidity. this is far from dumb, the challenges are significant. and sergio, the ceo of ubs on getting this flow show tuesday

and generate income. in zurich for bloomberg tv, i manus cranny. >> we will be hearing from the ubs clos the swiss bank reports its earnings later on tuesday, that's coming up at 2:00 p.m. hong kong time. these are the big tech earnings we will be watching for this week, citing the two big players, microsoft and alphabet on tuesday. shery: over in japan, -- is expected to avoid setting off policy fireworks this week as he leads his first meeting as governor of the boj. bloomberg's global economics and policy editor kathleen hays joins us from tokyo. no shock expected? kathleen: apparently no shock needed as it was 10 years ago when corrado was taking over the bank of japan and prime minister abe wanted someone to do just that, get the economy growing again. but avoiding policy fireworks, he does not want to rock the

boat at this point, he says it's too early to move, it's too early to normalize yield curve control framework. we are not sure exactly what that means, normalization of policy is considered by the boj to start when you get going from the negative rate of the shorter end something positive, so has he open the door to something? he says, no, not yet because is still too early, but, nevertheless, people are saying something could happen but probably now the likelihood is that something happens in the june or july meeting for a couple of reasons, the banking crisis is so recent, maybe a little too soon to do anything that would rock the financial stability boat, there is a possibility now of early general elections being called by the prime minister, not a good time to be making any kind of big move as the new boj governor, and what if you raise rates when there's a lot of people who would be affected very quickly, a lot of people who own homes

and would see their monthly payments going up, another reason is sit tight, 62% of the economist we surveyed at bloomberg news do see the first move when it happens to be just a shift in forward guidance. that's also not seem very likely today. we sit back, we will wait to see the governor who is testifying against parliament. when he spoke on monday he indicated that it was too early to normalize, it's not something he's looking to do, so we will see how he follows up on that today. shery: our global economics and policy editor in tokyo. you can get around up to get your day going. bloomberg subscribers can find that at dayb on your terminals and it's available on the now ball the bloomberg anywhere app. you can customize setting so you just get the news on the industries and assets that matter most to you. this is bloomberg. ♪

haidi: thailand's top opposition party is having goals. opinion polls are suggesting that they are on course to get around 50% of votes in the may 14 general election. one of its prime minister ariel candidates tells bloomberg that the party is also open to a tie up with like-minded groups. >> if you get the majority to 60 to 70 to 80 out of 500, i think we will be the main party to lead the new government, and the prime minister positioned will be from the party. i am confident of that, yes. however, we may need to join

with few other parties. david: what must be your top priority in your first -- stephen: what might be your top priority if you are chosen to lead the party and are chosen to lead the country? >> there are many issues facing thailand at the moment, the costs of energy has gone up, the income level has been stagnant for a while, so we have many, many economic policies to get the country going again. this also welfare whether the health issue, plus policies that will make life better for people . the right to choose whether you want to enroll in the military or not, and also, lgbtq rights for married license and all those people who have not been granted the right that they should be granted.

we will select members to draft a new constitution that we believe will be for the people. stephen: what is necessary now to get thailand's economy out of its funk, get tourism back, get the property market back going, and why should voters pick your business acumen as their blueprint? >> we aren't -- they are not actually picking me, the strength of the party is, for the past 20 years, the party is under a different name and they have consistently won the election every time. so i think the strength of the parties, the policies that we give to the people, the policies that hit people right where they

want, i think that is the strength of the party. stephen: how badly has the thai economy been hurt over the last nine years since that may 2014 coup d'etat? >> i think it's evident every time after the coup d'etat, the country as a whole has gone backward in every aspect when you compare to the nation. the gdp growth have left behind those of indonesia, malaysia, and the philippines as well. it's clearly evidence that we are not doing as well, especially in terms of fca negotiations that have not progressed at all. stephen: i want to get your take on some social moves that have been made in thailand, obviously

we know that cannabis was legalized, i know there's moves afoot to potentially legalize same-sex marriage is, there's also been a call, and i know they have talked about in the past for a change to the log regarding gambling and casinos. do you support the possibility of having casinos? now that japan has approved it for their first casino, is thailand next to open a casino in one of 22 possible designated areas like bucha? >> those are two questions, the first when i would like to address is -- i do not support free use of it, it should be only for medical purposes, as for legalized gambling, i think it's known that illegal gambling has been widespread in thailand.

the parties believe that by bringing the illegal activities of businesses make it legalized is the way to go so that we can control the tax collection. shery: the party candidates speaking to bloomberg stephen engle. coming up, president biden is preparing to host a south korean counterpart along with more than 100 corporate executives. the latest on that state visit next. this is bloomberg. ♪ everything's changing so quickly. before the xfinity 10g network, we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me.

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annabelle: we are 30 minutes now

into the session for japan and korea and you can see stocks looking a little mixed in the session. there is a lot for investors to consider. in japan you have a boj meeting later this week. investors not expecting any big policy tweaks just yet. in korea you have the gdp figures out earlier in the session and that showed the country avoiding a technical recession but not something that is likely to fail -- force to be to rethink. in the u.s. it is very much down to earnings coming through. first republic down more than 20% after hours but we have meta and amazon among those reporting in the days ahead. china in focus, given we had seen the golden dragon index slumping more than 2%. watching the vix sticking still below the key 17 level which is the lowest since early last year. in asia today also taking a look at this chart which looks at the trading ranges on a monthly basis and that has dropped to a

nine-year low over the course of april. that does also support that low volatility narrative. is it a signal of complacency that is coming through in the markets? well, that is still to be seen. certainly we have some stocks that are moving quite strongly in the session. in korea, now taking a look at some korean gas distributors, they are falling by the daily limit for a second straight session. unclear exactly what is prompting this but local media reporting it could be a massive sell order coming through from a local branch of socgen. so far, no response from them. changing on another group of stocks focusing on this morning, those korean production companies. this is after local media reported that netflix is set to invest $2.5 billion into korean content for the next four years, around twice what it has invested so far since netflix

entered korea in 2016. buit taht -- but that is down to the netflix ceo meeting with the south korean president who is in the u.s. this week. haidi: and we are of course watching this meeting very closely. president biden preparing to post his sound -- south korean counterpart tuesday. seeing more than 100 executives will also be joining the trip, including some of the country's biggest companies. let's get more on this. if you take a look at deliverables, what do we know? sangmi: just like annabelle said, we are seeing deliverables already from his trip to d.c. just a few hours from his arrival. we are seeing the $2.5 billion investment from the netflix cdo -- ceo. in january he came back with a

$30 billion investment in his uae trip. so we will be anticipating what is to come from this trip. but he will be busy during this weeklong trip as he has plans to visit the nasa space center and also speeches at u.s. congress and harvard. most importantly, he will be hosting a business roundtable with more than 100 south korean green -- south korean conglomerate heads. the major chipmakers and battery makers in korea. but of course the importance will be the summit with biden where they will be discussing north korean issues including extended deterrence and cybersecurity cooperation. as the two countries marked the 70th anniversary of their alliance. shery: a very significant week, but there was some friction, some comments made by president yoon about ukraine. what do we know?

sangmi: that's right. yoon came into office about a year ago. he was a former prosecutor general and he has had his ups and downs over the past year. he mentioned ahead of the trips in a reuters interview that he may be considering something more beyond the humanitarian aid to ukraine, hinting at military aid support, which the country has been refraining from. he has multiple frictions that will be discussed with biden's summit regarding the inflation reduction act and the chips act, that would directly have an effect on the south korean companies. but he has done some good things in the pear year -- in the past year. improving ties with japan, as well as resuming the halted suspended military drills with the u.s. against north korea which has been escalating

provocations. shery: we are also watching china meeting of top leaders expected this week. will they be scrutinized for any focus away from stimulus as the economy picks up steam? for more let's bring in stephen engle in hong kong. so what can you expect from the bureau meeting? stephen: we're expecting it this week because it is the final week of april and that april meeting happens in april. so we do not have an exact date, but it has been four months since the last meeting in december and things have changed a bit. they were coming out of that december meeting with the priority of centrally dismantling covid zero. now that xi jinping has secured a president busting third consecutive term. also the economy picking up better-than-expected. and that is giving reason to

perhaps pause on some stimulus. we are going to get the readout of the meeting, whenever it does happen likely this week. economists will be scrutinizing it for any change in tone or language from a shift from stimulus, to perhaps reform, or priorities in the economy. whether it is going to be boosting business confidence, increasing jobs is always a priority, and the property market, any kind of support for the property market. also support for the private sector and advanced technology, given the pressure from the united states. we are not likely to get many specifics. these meetings are usually just to kind of set the policy direction. and it will be chaired most likely, most indefinitely by the top two individuals, xi jinping and the premier in the 24 member bureau as they meet this week. haidi: china was pretty quick to distance itself from some

controversial comments made by its ambassador to france. we were just talking about this yesterday. stephen: that's right. the ambassador to france essentially said that some of these baltic states, the former soviet nations, we are talking with a when you, estonia, -- we are talking lithuania, estonia, latvia. you can see what he said. i paraphrase, essentially, that these former soviet bloc nations are not necessarily recognized as being independent. that obviously started a firestorm of controversy and anger. protests as well as seeking clarification by those baltic states as well as other eu members about china's position at this. china has a lot at stake. has put together a 12 point plan to help rocher peace between ukraine and russia. at -- to help broker peace

between russia and ukraine. but there has been a lot of skepticism about that plan. they have not yet reached out to ukraine. so there is skepticism that has only been added to buy those comments from the ambassador. again, it sort of discredits emmanuel macron's, essentially unilateral attempt to try and enlist beijing's support for brokering peace. so it caused a firestorm of controversy over the weekend. the minister of foreign affairs in beijing quickly dismissed the ambassador's comments as being his personal views, and essentially says they do recognize those former soviet bloc states around the baltic sea as being independent. so yes, they were quick to clarify. shery: stephen engle there joining us from hong kong.

let's now get to su keenan with the first word headlines here in new york. su: we start with indian and chinese military commanders. they have met along their disputed himalayan border ahead of a plan to summit of their defense ministers later this week. 17 rounds of military-led talks yielded only incremental progress, but sources say the escalation, sending troops to their home bases, were discussed. u.s. secretary general antonio gutierrez has -- sitting next to sergey lavrov, he called moscow's military operation a violation of international law. russia's top diplomat is in new york to plead sessions as -- in the u.s., president biden and house speaker kevin mccarthy are set to be entering the next

stage of the debt ceiling standoff. the treasury department will release an estimate -- this is based on fresh tax revenue data. biden is demanding more concrete proposals and has rejected the spending cuts mccarthy seeks as a condition of lifting the borrowing cap. u.s. secretary of state antony blinken says sudan's two warring factions have agreed to a three-day cease-fire. he says the leaders of the sudanese armed forces and apparent merit tilly group will stop fighting interior -- 2311 sofia: this amid a full-blown battle for control. i'm su keenan. this is bloomberg. haidi: next, analyzing japanese bond and fx markets counting down to the boj governor's first

policy meeting. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh ahhh ahhh

shery: a little bit of a mixed picture although most sections are in the green. industrials and health care are leading the nikkei is up about .4%.

the kospi at the moment has recouped some earlier losses and is gaining about .1%. it is really thin trading this morning not only because it is early in the morning in asia but australia and new zealand are away on holidays. haidi: and of course a big news item for this week is the bank of japan decision. the new boj governor is widely expected to avoid making a big splash at his first meeting this week as he waits for a further settling in of markets following the recent financial sector jitters. let's cross over to tokyo with kathleen hays with our next guest. kathleen: a very perfect guest as we wait for a decision on friday, but even as we wait to hear governor way to -- governor rueda -- we are talking to chief japan

strategist. welcome to bloomberg here at tokyo. you're looking at this so much from the investor standpoint but i want to step back. what is the main issue that ueda is going to address friday that the bond market not just in japan but globally is looking for? >> the important point is how ueda is going to deliver his forward guidance. he is known as a time access policy guy which translates to for guidance. if he is going to guide the markets that the boj will not move for a long time, that will change the minds of investors.

he sees now june or july. so banks are cautious in moving until then. if he sends out a strong message that he will keep this policy for a long time, i think banks and other investors will have to move after that. kathleen: so you are saying banks and life insurance companies, everyone has been waiting for this tweak or something dramatic. and now potentially everyone is saying because ueda has talked about a policy review that is not just for 10 years. it is 25 years. that not -- that is now seen as a key element of what would allow the boj to start normalizing or not. >> i think there are two

thoughts on that. on the one hand i think people can -- the boj can use that as an excuse to change policy. for him, it might be a good chance to look back and say look, it didn't work, so now they have to move. but i think that's unlikely, because it will deny the history of the boj, which i do not think is a good thing for the boj particularly. i think the review itself is going to be a rather positive thing for the boj. i think they are going to send out the message that the boj has been supporting the economy as well as inflation in japan. in that sense it depends how

long the review will take. i think it will be a chance for the boj if they declare victory on inflation as well as the economy, it might be a good chance. kathleen: in terms of where banks and life companies are now, what will that mean for the bond market if they say this is going to happen for a long time? what kind of moves are be going to see along the yield curve and various securities? >> banks especially, if they see the boj will not move they will buy long-term bonds. as your people already wrote, life insurance companies will buy long in jgb's.

i think the 5/10 is going to flatten. along and, 30 years bond rally. kathleen: another big picture issue is there is a big threat looming in japan, and that is all the overseas bond investments occurred over the last years in the sense that if there is some sense of eventually tilting or making a move or already among the bond purchases have been sold come of that money is moving back into japan. what do you think that means for the bond market over the next exit months and over the next year? >> for banks, they still have a lot of positions but it is really small because they already sold a lot. they still have quite a lot of

position because of the hedging cost. i think that will come out. i do not think that will be, how do you say, distort the u.s. treasury market. i do not think it will be a big mess. kathleen: quick final question. when do you think the boj is going to move? >> 4q this year. kathleen: fourth quarter? >> yes. kathleen: ok. well, we will see. a lot of time to pass between then. taking a look at this -- it's a big conversation i think here in the markets, and certainly this policy review is something we could see friday that who waited talks about and we get ford and -- and we talk about forward guidance. haidi: kathleen hays there. tune int o bloomberg radio.

get in-depth analysis from the daybreak team, broadcasting live from hong kong. you can listen in via the app, radio plus, or bloombergradio.com. this is bloomberg. ♪

shery: we are looking ahead to

the start of trading in china with investors weighing a key meeting of the communist party's top decision-making body this week. bloomberg's sofia horta e costa joins us from hong kong. as we await the politburo meeting, what is on your radar? sofia: the politburo meeting, any kind of language change from december could be quite significant. we are looking at how policymakers are reading the economic recovery. especially the march data has been a lot data -- better than economists had expected, a lot better than policymakers had expected, but that is still quite uneven. any kind of indications beijing is looking to boost consumption and how they plan to do this, we know it is a priority for growth this year. that is being keenly watched. also, the narrative around supporting the private sector, what kind of specific measures are being considered around there.

we also know the key messaging from beijing in the past few months was, again, reviving confidence in the private sector and getting the private sector to invest again in the economy, and to hire again. let's not forget, unemployment, especially youth unemployment remains a key hurdle. any kind of language around that, especially important, any concrete plans around that, will be keenly watched. haidi: how are the markets pricing in these reforms? sofia: it is really interesting because there is a kind of broken link between with the economy is doing and what markets are doing. the economy is doing far better than expected and markets are actually falling. why is this? if you want to play the china reopening story, it is actually better to do it outside china. european companies that have exposure to chinese sales are actually doing particularly well, especially luxury companies. if you look at what is happening in chinese markets there is still a geopolitical cloud

suppressing valuations. markets are falling. the hscei, the hang seng china enterprises index of chinese stocks listed in hong kong, is one of the worst-performing indexes in recent weeks. the yuan is also weakening. really, we need an indication either the economy is going to do a lot better, or that beijing is serious about reviving consumption, because there is that geopolitical risk that is ramping up ahead of the u.s. election cycle. shery: earlier he was telling us investors are running out of excuses to avoid chinese equities. he was seeing potential in earnings. what are we expecting from other analysts? sofia: i think that is really important. again, it's the fundamental reasons to own chinese equities are very much there. you have improving earnings picture that is likely to be solidified in the second quarter, especially on the

consumer side. you have improving property markets, you have improving confidence, and the economy is doing better than expected. but none of that is being translated into what actually prices are doing, and that is very much sentiment-driven. i agree j.p. morgan saying investors are running out of reasons. yes they are, but it is not the fundamental reasons driving markets, it is how china is viewed outside of asia. haidi: sofia horta e costa in hong kong there. still to come, hang seng bank joining us to analyze the chinese economic recovery. kingston securities as well giving us a preview of earnings. that is it for daybreak asia. the china open is next. ♪

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david: