shery: you are watching daybreak: asia coming to you live from new york, sydney and hong kong. >> we are coming down to asia's major market opens. paul: asian stocks poised for a positive start to the week. investors divided over the rba's call tuesday. saudi arabia makes a old move to stabilize oil markets. a major defense forum in singapore ends with few signs of optimism over u.s. china tensions. the start of another trading week in asia should all see futures looking to jump 1% at the open. what is driving that are a few direct factors. u.s. stocks on the cusp of able market. on top of that you have this expectation the fed is going to be pausing at its meeting next

month as well as the opec plus cut. it does come down to the jobs report out friday. we did see yields jumping at treasuries particularly at the short end of the curve peered australian real yield reflecting that even though the rba decision due tomorrow is a live decision. there are going to be a lot of different data points the rba is assessing including the stronger inflation numbers that came in from april last week. we had other factors like residential process continuing to climb. then you have what is happening in the pmi gauge. we have the composite and the services. this is the private reading but coming in an expansionary territory. services, 52.1. certainly economists are split on that decision. the aussie dollar jumping again. it is down to those moves we are getting from china around support for its property sector.

expectations for the fed and we have seen dollar weakness coming in at $.66. take a look at what else we are seeing for equity futures because both japan and china are looking to open to the upside. still watching the yen around the 140 levels. something that can help japanese stocks. certainly going to be watching any follow-through from the bloomberg exclusive report around further support for china's property sector. whether that will have bounce for equities on monday. shery: take a look at how u.s. futures are trading early in the asian session. slightly in the green after the s&p 500 neared full market territory. talking about gaining almost 20% from its october low. talk about the rally in tech continuing. small caps including some regional banks gained ground so the vicks fear gauge retreated

falling toward the level we have not seen since 2020. we now have legislation averting a u.s. debt default. we had a mixed jones reports of you're figure out what the fed this month and next the gain in crude prices continues. brent above $78 a barrel in the asian session. as we heard from saudi arabia announcing extra cuts of production. take a listen to what the energy minister had to say. >> the saudi lollipop which is a million barrel of reduction for the -- that starts the first of july. that million is also extendable. shery: let's bring in su keenan for the latest on opec-plus. saudi arabia shouldering most of the burden with the rest of the group not doing much. >> it was a contentious meeting.

saudi arabia surprising the market with both the deeper cut and the mention they are going to extend. essentially doubling down on the production cuts the imposed two months ago which initiated a rally that did not last. the goal is to protect the price of oil. saudi arabia saying they will do whatever is needed to stabilize the markets. seeing an additional $1 million -- one million barrels a day peered takes production to the highest since 2021. there was some horsetrading here if you will in that russia not having to cut deeper at all. the uae securing the right to boost production in 2024. it appears a lot of the african nations lost out and they will undergo an audit on the limits for their production. we are told they are not that

happy about that. this meeting also very different in that three news organizations, bloomberg, the wall street journal and reuters were not allowed to enter opec headquarters in vienna. no explanation given so there will likely be more on that front. saudi arabia clearly the most important member to the opec plus alliance. we are told there was a lot of haggling that delayed the decision coming out later on sunday than expected. what we are seeing is the reason that saudi arabia is doubling down year to date prices for oil down almost and a digits. paul: an indication this rally in oil prices might last longer than the april rally opec caused? >> that is clearly the goal for saudi arabia and behind them mentioning they plan to extend the cut. we have seen a big jump in

prices. as soon as the news hit the tape and we saw oil start trading in the asian market. west texas intermediate soared above 75. it has pared back to the $73 level. brent above 78. one analyst says the near term price is going to depend on a test of wills between stability seeking saudi arabia and the bearish paper traders. he might remember on may 23 saudi arabia foreshadowing this decision perhaps put out a warning to a lot of the traders who were short the market saying they are going to be in for a big ouch and irish speculators have reined in those bets. we have seen a reduction in bets oil goes lower by a significant margin in the last two months. paul: bloomberg su keenan. the u.s. said china have used a meeting of defense ministers to

accuse each other. let's go to our chief north asian correspondent in hong kong. we have a handshake but apart from that not a great deal of warmth at the shangri-la dialogue. >> a lot of the members were there -- 600 defense chiefs as well as analysts and a number of different tanks on the military side gathering at the shangri-la in singapore over the weekend. it was an opera to should -- it was an opportunity to open up lines of communication. you had the two defense counterparts in china and the united states. they had what would austin described as a cordial handshake friday at the beginning not much after that. essentially both sides digging in their boots and getting dare i say a bit defensive. let's first hear from li qiang fu and lloyd austin.

>> the right time to talk is anytime. the right time to talk is every time. the right time to talk is now. dialogue is not a reward. it is a necessity. and a cordial handshake over dinner is no substitute for a substantive engagement. >> the true design of the attempts to promote nato like military alliances in the asia-pacific is to connect no countries plant the conflicts of confrontation which will only draw the region into a whirlpool of division, dispute and conflicts. >> this also coincided with what happened in the taiwan strait over the weekend. we have video where the u.s. says a chinese pla military boat

essentially crossed the bow of a u.s. ship passing through the taiwan strait within 150 yards of the bowel of the u.s. vessel. that sort of inflamed tensions. the united states saying they have freedom of navigation rights in international waters to go through the taiwan strait and a canadian vessel also went through the taiwan strait. to pick up on what li qiang fu said, he got a little more poetic if you will. he said in reference to a chinese song about welcoming friends with fine wine, he said when jackals or wolves come, we will face them with shotguns. he mentioned again about the security alliances and the nato like alliance in this part of the world in reference to the common complaints russia and china have about this happening in ukraine creating needlelike alliances whether it is five

eyes or the quad essentially, that was a focal point of many of the conversations this weekend. that was whether the united states is leading a charge to created a like alliance in the asia-pacific which the united states says it is not. shery: bloomberg's chief north asian correspondent joining us from hong kong with the latest geopolitical tensions and the u.s. china relationship. all of the weighing on investors minds. let's get a preview of the trading week ahead with saudi arabia further cutting oil production while the u.s. labor market is giving the fed mixed signals. executive editor for asia joins us. it seems the markets are pretty sanguine to everything going on. risk assets gaining ground. >> absolutely. another big day for u.s. stocks on friday despite the fact that was will blow over the jobs data. you might think the fed is going

to carry on hiking. what is happening here feels like maybe there is a capitulation at the moment. people looking at equities rallying despite the fact a lot of the market is under position for that thinking if this is going to carry on going better get in there as well. i know it is being led by a narrow part of the market by the tech companies. now it seems maybe there is a little more interest coming in to the rest of the market as well and propelling those gains. it is a risky game. we know there is a lot going on on the other side of this. there is a great deal of bill supply coming which is going to tighten liquidity in the short end of the market. we know the fed may hike again and the market is pricing for that and the market is priced out, fed cuts for later in the year and yet the equity rally goes on. kind of a health for a how far it can go before it runs out of fuel will be the big question investors are asking themselves.

paul: this time a week ago we were tying ourselves in knots over the u.s. debt limit. that has quietly gone away. now we are anticipating the treasury in the u.s. issuing a very large amount of bonds. what is the impact on liquidity going to be and following that would is the impact on equity prices going to be if that tries up? >> to dig into it a little more we are expecting this big supply of treasury bills into the market. the u.s. government needs to restock its depleted cash piles. that means raising a lot of money short-term, borrowing over those three and six month tenors in particular. consequences that is going to stop up cash from other parts of the market either it is going to cause people to come over from bank departments -- make deposits or it is going to encourage people to stop using one of the fed's facilities to

by the bills or does going to require funding from somewhere else. it is going to take some money out of the system somewhere along the and the consequence is it should raise search of interest rate, it should make it more expensive to borrow in the short term which all things being equal is going to tighten the liquidity and be one more barrier for the equities market to continue rising. paul: bloomberg's executive editor for asian markets. let's get over to vonnie quinn for a check of the first word headlines. vonnie: india saying a full t electronic signaling system was the cause of its worst real disaster in three decades. the railways ministry says an investigation into the three train collision continues adding the current focus is restoring services. the search for survivors from the train derailment has ended. the state government says 275 people were killed with more than 800 injured. resident biden have signed

legislation averting a u.s. debt default avoiding a catastrophic blow to the economy. the u.s. treasury department is said to unleash a wave of new nonsales pair the supply surge could drain liquidity from the banking sector raising short-term funding rates and tightening the screws on an economy many economists see heading for a recession. bloomberg has been told cia director william burns made a secret visit to beijing. the spy chief maintained the importance of maintaining open ties of communication. a source says the trip was purely about intelligence and not diplomacy. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm vonnie quinn and this is bloomberg. shery: still ahead, activist investors poised to make record shareholder proposals in japan this year. emboldened by a campaign to

boost valuations. we will discuss with oasis management. up next, economists and money market split over which way australia's central bank move tuesday. we will discuss the balancing act with anz's chief economist. this is bloomberg. ♪

shery: this is daybreak: asia. take a look at key events. central bank decisions on the way in coming days. the rba is expected to hold rates on tuesday in the span of 13 months to has lifted rates of 375 basis points including may surprised 25 basis point hike. we will get decisions from the rbi and the bank of canada peered on friday china's may consumer inflation numbers are likely to reflect a weakness in

the economic recovery. will watch for cpi prints coming from eat nietzsche and the philippines. and his producer price index expected to fall with lower commodity prices likely weighing on the measure. other economic data, china's may trade figures will also see first quarter gdp figures from australia and japan and australia's april trade balance. that is your week ahead. paul: economists and money markets are divided over which wales trillion central bank is going to move tuesday but our next guest sees a higher peak rate any australia and that probably means a further hike this month. joining us as the chief economist at anz. thanks for coming in. you could easily make a case for a pause or an increase at the next meeting. what do you think is going to happen? >> the bank has been challenging to read meeting to meeting. when i am asked whether i think they will hike tomorrow my answer is probably does not sound definitive but that is all

we can do at this point. it is not just one more hike. there is enough evidence the bank has to go another occasion after the. paul: there have been 11 rate increases in 12 meetings. what lagging impact have we not seen yet and what are the implications for growth and the possibility of a recession? >> there always is some locking impact. maybe it is made worse this time because of the high fixed rate mortgages coming into this period. that is perhaps some dampening effect. beyond that it does not look like the rba has had as much impact on the economy as they might have helped. they need to do a bit more. paul: there is a little discussion in local media about the misery index. inflation, unemployment all rising. in terms of where we are in the

inflation battle, are we closer to the beginning or the end? >> i hope we are a lot closer to the end. paul: so far out of the target window. >> i keep emphasizing there's a little more work to and even went so it's a peak interest rates which hopefully is not too far away i think hope some people have interest rates will start declining quickly is likely to be misplaced. i think this is an interest rate cycle where if we get the soft landing we expect or the no recession we expect interest rates will have to stay at peak levels for quite a time. shery: how much is this because of economic uncertainty in the economy itself and the rba not sure how to read the data or how much of it is communication because we know the rba has been criticized in the past because of this? >> we can always criticize central banks.

we are always trying to work out the right policy approach given the macro set up. i think the bank like the fed has been surprised by the resilience in the economy. has been surprised by the persistence in price pressures and is being surprised by not just the pickup in house prices but the fact productivity has been following the last two years. that productivity story i think emphasizes there is quite a lot of work to do to get inflation back to target. shery: is that a purely domestic story? we have seen the chinese economy faltering. we know china and australia are so closely related when it comes to economic growth. >> it is not a purely domestic story. it is not even an anglo-saxon story. those economies, all look very similar from a macro set up perspective. even if you take the ecb in europe here we are talking about the ecb with rates may be at

four, 5%. that seems surreal relative to expectations of a couple years ago of europe being a permanently moribund economy. in the advanced economic space, it is a common story of much stronger economic resilience. much consistent price pressure and central banks having to work really hard. paul: in terms of china we are going to get more data this week that we have wraps a deflationary environment. some weak pmi's. weak demand for private credit. at what point do you have to accept things like rrr cuts are not getting the job done and it is time to dust off the bazooka. >> i don't think we will get a bazooka. the idea of a big bang policy stimulus i don't we will go back to that. there are much more focused on generating sustained and consistent growth rather than getting the big ounce. i've been surprised by the lack of resilience and the china

upswing. they may still get something for china gdp growth. does not have the vigor i thought it would. housing is not the right vehicle for stimulus anymore when population is declining. the economic transition has come thick and fast. china needs to work hard to find the growth drivers. paul: thanks so much. chief economist at anz. you can get a round up the stories you need to know to get your day going in today's edition of daybreak. you can get that on dayb on your terminals and customize your settings so you only getting news on the industries and assets you care about. this is bloomberg. ♪

paul: a quick check of the latest business headlines. to set up a factory for

manufacturing lithium ion sales. the estimated initial investment is $1.6 billion for an ev battery plant that will have a production capacity of 20 google what hours. the state government says it will generate 13,000 jobs. apple is set to announce its mixed reality headset later on monday at its worldwide developers conference. likely to be named either the reality pro or ex are pro the headset will be an ultra premium device made of glass, carbon fiber and aluminum. the product blends augmented virtual reality and is set to cost $3000 per ubs may reportedly delay releasing second-quarter results until the end of august. the bank is due to report earnings on july 25 about the financial times says complexities need to be resolved after its emergency takeover of credit suisse. said to include details about government support.

shery: take a look at how currencies are trading. seeing a little more strength in the u.s. dollar. we had treasury yields gaining ground last week leading to pressure on the others to of the trade. the japanese yen past the 140 level. a second session of the clients against the u.s. dollar. seeing more speculation of the growing divergence between what the fed might do next and what the boj might do next. watching the pressure on the aussie dollar. the kiwi dollar under pressure. new zealand markets early on holidays. we are seeing reaction to the weak china data. 20 more china data coming up this week. this is bloomberg. ♪

>> this is daybreak asia, with a check on markets here we are 30

minutes away from the open in sydney, seoul and tokyo. you can see behind me this is a picture of optimism across the board and there are a couple different factors we have been watching play into this. firstly u.s. stocks on the cusp of a bull market, the s&p 500 futures fairly flat. adding to that is this expectation around the fed because that mixed jobs report coming through on friday tells us that the fed is likely to be pausing at its upcoming meetings. we are seeing equity futures looking higher for sydney and japan in particular, new zealand shot for public holiday. watching what is happening with china, we did see a big rally in china property developers on friday. there was some reporting coming out that we could expect further stimulus or property support measures coming through. we got a bloomberg exclusive, it told us that china's officials could be mulling support packages for the real estate sector. some of these include lowering

down payments for properties in certain areas, also cutting agent commission fees. really trying to bring up people back into the market. this chart showing why exactly. you can see property investment has been declining. he did see a slight acceleration with the reopening from covid that has dropped off. take a look at another factor playing into this, it comes down to home related new lending. that is now at its lowest level. if you go all the way back to the first quarter of 2013, it is an indication that china is taking these issues and the property sector very seriously, it has been a big drag on the economy there and also asset classes. we tracked the moves we saw in property length stocks, but there were also ramifications for the chinese yuan and then another factor that played into the commodity prices including oil. >> thank you, speaking of oil saudi arabia is going to make an extra one million a day oil supply cut in july that will

take its production to the lowest level for several years. after a slide in crude prices, the bold move by the most important member of the opec-plus coalition, came with the cost of seating ground to key allies. russia which made no commitment to cut output deeper and the united arab emirates which secured a higher production quota for 2024. >> some saying that you i.e. was the biggest winner out of all of this meeting and conversations. you can see brent and wti at the moment trading above that $70 a barrel level gaining about two and a half percent. the uae oil administer spoke to bloomberg about the deal, take a listen. >> i think it was a good deal. a historic deal. and we look forward to monitor the market and that deal is bringing clarity to the market and giving the market visibility on next year. and also it addresses the fact

that the referendums and all of these things that we have been talking about is going to be addressed in 2025 with a very clear process as we explained. >> 3.2 million for 20, why does the uae deserve that raised target? >> as you know we discussed this before, to adjust the production level of the uae and for that, and the fact that our actual production versus the capacity that we have approved has been significantly different than what we are. that adjustment is the least we can get. >> did you receive that adjustment at the expense of the african nations? >> no. i don't think that is a good assessment. the adjustment to some of the

nations whose production was in decline, has been given a very long time. those countries have all accepted a level of production that is representative and also they are being given, like the minister from congo mentioned, they are being given the chance until the end of november to administrate another level of production they can demonstrate. >> the administer their, let's not get to vonnie quinn with the first word headlines. >> u.s. officials saying dilatory aircraft caused a sonic boom that rattled parts of the washington area of maryland and virginia. the fighter jets were scrambling to chase down a private plane that was unresponsive when radioed by authorities and subsequently crashed. the faa says the jet was bound for new york but came down in virginia. it is not clear yet how many people were on board.

israeli prime minister netanyahu is accused of -- iran of lying, this comes after the un's nuclear watchdog close to investigations into iran's nuclear enrichment program following an agreement of or installation of cameras. netanyahu called the decision to accept iran's explanations earlier concerns a stain on the agency's conduct. pakistan's former prime minister imran khan it says the military establishment wants to stop his party from winning the next election. in an interview with bloomberg he cites the arrest of his supporters as evidence of generals being against him. he also accuses the current government of bending to the military's wishes. >> the government is a puppet government, they are now latching onto the establishment because they know in the elections they will be wiped out. >> australia's defense minister says allies of the united states can have a productive relationship with china, putting

bloomberg television on the sidelines at the defense summit. he said australia wants to manage its significant economic relationship with china while expressing concern over beijing's continuing literary expansion in asia. >> we can be an ally of the united states and build a productive relationship with china. we firmly believe that is possible. and that is the line we seek to pursue. >> global news powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. >> thanks, we've got more from the shangri-la dialogue. canada's defense minister saying the government has its eyes wide open on china. anita spoke to our coanchor in singapore. >> our indo pacific strategy focuses on the indo pacific region as a whole. we are eyes wide open on china but we make sure to enhance the peace and stability of the region in four ways.

first, we are adding a third forget to the area. second we are increasing our military exercises with partner countries, malaysia, indonesia, vietnam. third, we are increasing our women peace and security initiatives and forth, in the area of cyber. making sure we are partnering with countries to ensure the integrity of cyber and technological networks. it is a broad-based approach. >> you talked about adding a third frigate but yours are pretty old and you are short about 1300 sailors, do you have the capacity to help contain china in this part of the world? >> in the indo pacific strategy, i was very clear and intentional to put forward initiatives that we could from a defense perspective tangibly provide.

and what i mean by that is we are making sure the frigate is in the area and in fact it is. we are making sure these are initiatives we can execute in the short term. so the defense perspective of the indo pacific strategy is one of what can we accomplish in the short-term, and those initiatives that i mentioned our first and foremost. you mentioned the shortage in personnel, this is an issue that armies and navies and air forces across the world are addressing is the world is confronted with a labor shortage crisis generally after covid-19. but what we are doing in canada to address it is to implement a recruitment strategy, a retention strategy and in the

area of navy which you mentioned in your question, we have something called the new experience program. where individuals can join the navy for a year, to see if they like it and if they do they can stay. >> you have the capacity to fulfill your -- >> yes we have the capacity and we are building for the future in terms of personnel. >> i want to talk about the spy balloon's, found in canada, the u.s.. are such activities new? how concerned are you about china's activities now? >> we are certainly cognizant that they have been occurring in the air and we are seeing some surface activities in northern waters as well in terms of the buoys we were able to retrieve earlier this year. again we are wise -- eyes wide open on china whether it relates to activity in and around our continent or in the indo pacific region. and that is another reason for

our indo pacific strategy in increasing our strategy overall. >> specifically how do you counter that, do you have to take tougher actions against china? >> we need to continue to build up our multinational -- multilateral alliances as well as our continental security and that is my last year we contributed in committed almost $40 billion to norad and continental defense. that is to build up our infrastructure in aerospace surveillance. we are also making sure to contribute resources to the indo pacific and also undertaking a defense policy update. we are looking at her current capabilities to make sure we have what we need to respond to the changing threat environment that we are faced with ever since russia's further invasion of ukraine. >> the administer of national

defense speaking with bloomberg on the sidelines of the shangri-la dialogue. coming up next, oasis management talks about opportunities in the japanese market as the tokyo stock exchange launches a campaign to boost valuations. this is bloomberg. ♪ u tryinme out of the bed? baby, only on game nights. you know you are retired right? am i? ya! save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base. only at sleep number. was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

>> it's time for japan ahead on daybreak asia, data is set to be released in the next hour. local media reports that western digital are in talks of a merger and that is as japan's government is set to be looking to take steps to stimulate investment in the nation's semi conductor industry. that is according to jan buri. >> that is the chip sector we will be watching at the japan open at the top of the next hour. we have a positive set up, we got u.s. stocks nearing a bull market last week and on top of that we have a weak japanese yen the u.s. dollar past that 140 level. perhaps a boost for exporters, not to mention the japanese stocks did get that boost from prime minister's comments about spending billions of dollars on policies meant to bolster their sliding birth. so relating to child care, education, those can be getting a boost higher. nikkei futures pointing to upside more than 1%. now of course we have seen the

japanese markets and investors pretty optimistic about equities with the nikkei at that 1990 hi, investors posting record shareholder proposals in japan this week as well given that we do have a campaign to boost valuations. our next guest sees the exchanges latest campaign serving as a tailwind for their own efforts. let's discuss opportunities with seth fisher, ceo at oasis management. always great to have you with us. as i mentioned the nikkei is at a 1990 hi, one of the strongest markets in the world this year. do we still have room to run higher? >> i think we do. i think we have had an enormous amount of change in japan and yes, the market is finally reflecting that. there has been an enormous amount of change in voting by shareholders, an increase by japanese companies and increase buyback in dividends. >> how much of that optimism

comes domestically and from foreign investors because we have seen this sort of optimism in the past under prime minister actions to abe and that did not necessarily last. >> that is true, foreigners have been a net seller, a hundred $40 billion of equity since 2014. most of that has been coming from domestic shareholders, foreigners have just started to buy. so the last eight weeks foreigners have been net buyers as opposed to being net sellers, last year the year before and they are before that. i think there is a massive amount of underweight of japan by foreigners and foreigners are just waking up to hearing you know what there is a town that has gone on in japan and a lot of work done there and it is interesting again. >> sherry mentioned abe and i think of the three arrows policy

and that third arrow never quite got away about corporate governance and reform. where do you think we are placed in terms of that in japan companies at the moment? >> i think that arrow has not gotten away i think it is going to take a long time to head home. i think it has been 10 years of changes since the shot of that arrow and that arrow has actually accelerated on its way home. we have seen dramatic changes in corporate behavior as i mentioned in buybacks and dividends, dramatic changes in the engagement by shareholders. a record number of shareholders this year, both engaged but also because they have a larger chance of being successful with domestic votes increasing against management. you see it in larger can't -- companies like -- the ceo with only 59.9%. in an enormous amount of changes but that arrow took like 10 years to get home. i think it's there now though.

>> the tokyo stock exchange has got a new ceo and he is urging companies to engage more actively with investors such as yourself. have you noticed any change more recently in terms of getting a bit more traction? >> sure everyone is looking for that magic bullet. i don't think it is just that i think everyone of these changes is incremental and have been helpful. you see the tac go ahead and say one company can trade above and if not they can explain why they are not but really we would like to put additional pressure on them to increase their share prices. you have lots of foreigners saying is booked even important because you have a lot of companies, most companies abroad trade 5, 6, 8, 10 times price-to-book. only in japan is it a meaningful metric. those most recent changes are important. there have been a whole host of other increased voting changes by domestic asset managers and

you have met these guys -- guidelines and m&a which is helpful because companies have to open themselves up. >> is that than all about valuations and how cheap the broader japanese markets are or are we also talking about potential boj action where you are still seeing an ultra dovish monetary policy setting when the rest of the world is going the other direction? >> i think it's both. i think you have a combination of the fact that japan remains cheap, it has been cheap for a long time. we call it a value trap and the fact that there voting against management and management is vulnerable means it is a value trap no more. and also it is a great market for private equity because you can still borrow money cheaply with zero leverage and everybody is worried about the recent inflation, the recent small amount of inflation relative to the rest of the world. at the fact of the matter is

over 50% of the companies and topics have net cash, over 40% have 20% net cash. the fact is if there are going to be higher rates that is value increasing for these japanese companies, it means they make more money. i think japan is interesting across the board. >> are there any sectors in particular that you like because we mentioned earlier how the government is focusing on specific sectors to boost investments in the likes of semi conductors not to mention education given their low childbirth. >> yes we are seeing opportunities across the board. we are very engaged in domestic businesses. i think those are the companies that in many cases have sweated less and have more to do. so we are very busy and it is like the mid-cap court manufacturing businesses in japan and construction businesses. >> we have the back below 140 at the moment, is that informing your investment decisions at all at the moment?

>> as long as the end stays within this range i think that creates clarity for japanese companies to plan going forward, so the weaker the yen is and in many cases that's very helpful for a lot of japanese corporate's and so many of these domestic economies, it is not as important if it's 137 or 142, the important part is it is generally stable. >> how much of your enthusiasm for japan is the result of not only you but whether investors are looking for alternatives to china? >> yes japan has outperformed every other market for the first time since 1989, so it is like all of a sudden markets are up and performing better than any other market in the world that people pay attention. yes it is an alternative in asia for people but this is very different, as you know we have

been extraordinary in japan for over 10 years. i have been investing in japan for 28 years. yes you have had phone calls from people and i get a lot of phone calls from a lot of people who had luck in japan in a decade or more and all of a sudden are looking at japan. >> over the decades when you look at how china is performing have you seen a correlation with how well japan performs with how well china does, we have plenty of economic data coming out of china this week. >> there are a lot of investors investing in japan to get access to china. so there are a fair number of japanese corporate's -- real manufacturing hubs in china and or sell to china and its perceived by some to be a safer and more understandable framework from an investor point of view but also to get access to chinese markets. >> good to have you back, thank you founder and cio at oasis management.

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>> let's get a quick check of the latest business flash headlines, thai airways is looking to expand its fleet as demand for travel sores. it's launching proposals to order 30 new jets which it expects to receive by 2026. the new order along with least jets would push its fleets to more than 113 compared to 103 pre-pandemic, thai airways is rebuilding its operations as it goes through a re-debt -- restructuring. klm is seeking to replace a set of aging wide-body aircraft with more fuel efficient ones from airbus and boeing. in an interview to bloomberg ceo dan smith said fleet replacements would happen in or after 2025. considerations for the new jets include needing to circumnavigate airspace which adds several hours to a flight. the wide-body aircraft market is set to experience lengthy wait times similar to the single aisle segment, because airlines

are rapidly stocking up on long-haul jets while supply disruptions on equipment like seats limits output. the world's airline leaders will be gathering at an international airline transport in instant bowl on monday and we will speak to quantum ceo there. he is stepping down in november after leading the australian airline for 15 years, that is coming up later on bloomberg surveillance. >> coming up in the next hour morningstar tells us where they are seen buying opportunities in choppy equity markets, plus more on whether saudi arabia's deeper supply cuts can boost oil prices in the second half. the market opens in sydney, seoul and tokyo are next. this is bloomberg. ♪

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>> this is daybreak asia we are counting down to asia's major market opens, as we are seeing oil prices gaining ground in the asian session. wti and brent above $70 a barrel level this of course after saudi arabia announced a new production cut. >> we have got a stronger dollar and potentially a lot of bond issuance coming from the u.s. treasury after that debt limit deal got signed by president biden. that could have some interesting impact on liquidity. annabelle is here to look at markets. >> thank you, we are counting down to the opens here for japan, korea and australia and also the start of trading for cash treasuries. at the open we will be watching that two year yield very closely given that spike that came through in the session on friday, that was after we had a mixed jobs report in the u.s.. that tells us that the fed is likely to pause, take stock at its next meeting before hiking

again, the expectation is for july and some including larry summers saying that 50 basis points could be in order. those expectations for the fed versus the boj, that is leading to some dollar strength coming in yen weakness in turn we are seeing back at that 140 level. that could be a supportive factor for japanese stocks throughout the session, we see the nikkei two to five coming online 1% to the upside here. we also see u.s. stocks on course for a bull market. what is interesting when you take a look at the boj is there is actually a split forming between economists and traders. it is economists who see the boj starting to tweak its policy settings as soon as july. in our latest survey about two thirds of them seeing that happening by that point in time. in terms of what else we are watching, we do have the open of korea. we are watching tech stocks given that we continue to see those gains coming through for the nasdaq on friday. a second straight session of moves to the upside, we had

broad call amount with those numbers sing a lot of their sales would be driven by ai themes over the next few months. we see futures now trading a little weaker for the nasdaq but the cause deck also gaining as is the broader kospi. watching what is happening with the korean won in particular. it is a little weaker this morning against the greenback but it is more a story of dollar strength coming through. very close to that 1300 level, a key psychological level to watch . in terms of what else we are watching, sk security saying we can expect someone normalization after what they say haves and and excessive depreciation. dollar strength, it is weighing in on other currencies. the aussie dollar, we have been watching throughout the session. it is a little under pressure. we are looking ahead to that rba meeting on tuesday. this one is a very live decision because economists, money markets are really split over which way the governor and his colleagues are going to be moving because we have lingering issues around in elation,

recovering home prices, that suggests may be a hike is needed . on the flipside we have weaker activity and rising unemployment and that is arguing the case for a pause. sherry did mention crude part -- crude prices which are to percent higher, it is that cut which came through from saudi arabia pledging to make an extra one million barrel a day supply reduction in the course of july so that takes its production to the lowest level for several years. >> again shouldering the burden when it comes to stabilizing oil prices according to the saudi energy minister. our next guest says despite the recent rally in some asian markets they are not expensive and they are still buying opportunities. joining us now is director of asia equity research at morningstar, always great to have you with us. we are talking about japanese stocks, a multi-decade hi. kospi entering bull markets. where can you still find value? >> basically we look

collectively at our 15 to 20% discount and estimates, a lot of the discounts notably would be in the hong kong china area. basically those shares have been up and down and pretty flat so when we look at those opportunities, yes there are some risks involved. but when we look at the growth factors down the road we are still pretty optimistic that there is value there. even with some of the japanese names i think some of the migrants are worth having a look at, among the cyclical stocks chip companies for example who are still going through having to absorb some of the excess inventory are looking better. >> we had seen semi conductor makers under pressure across the north east asia, is this the turning point for a lot of these chipmakers especially if you are factoring in more investments coming from governments?

>> i think overall will may look at things normalizing and looking through the cycle, because obviously they went through a period where they really have a lot of excess and that needs to be absorbed but if we look down the road and where that demand comes from, we expect that to be strong. tsmc for example is still buying up opportunity and some of the memory chipmakers are also attractive still. >> we have of course seen a big ai inspired tech rally but not every tech company has been able to get on board at that and china tech in particular has been underperforming. what is your approach to chinese tech companies at the moment? >> we still think it's going to be challenging for let's say the chinese chip companies to narrow that gap in terms of technology. yes there is a lot of money in grants being provided to build this up and i think it will eventually lead to some

narrowing but it's going to be very choppy for the time being. at this time were going to favor the leaders and what we would call the company's with strong competitive advantages like tsmc. >> we have had some disappointing data out of china recently, that reopening trade has been a bit of a fizzle. do you anticipate the risk of more downside surprises when we get more data this week and the possibility of some stimulus coming from policymakers? >> what we saw initially post lockdown in terms of activity, we are still expect pretty strong share while it for the services side. so the restaurants, etc., in terms of travel that will still do well. we are still seeing the same pattern we saw elsewhere, some shift in money away from goods. but i think china also needs to

get an improvement in consumer confidence to lift that into do that we need to see more confidence in terms of wealth effects in the real estate prices. we need to see real estate sort of stabilize. there is a lot of excess capacity in the lower tiered cities that needs to be absorbed somehow. i think we had been hearing science or news of more targeted measures and i think that will ultimately help consumer confidence but we don't anticipate a lot of stronger signs of that until the second half of the year. >> how does a stronger u.s. dollar which we are now seeing again in today's session factor into your asia's portfolio calculations, because we do tend to think a strong dollar is not necessarily great for developing nations but at the same time it might help some exporters if you

have a weaker local currency. >> yes and no. nowadays so many exporters have hedged their currency exposures so that when it comes to just narrowing down the dollar impact on their bottom lines, is not as impactful as some would think it would be, and the cost may also be denominate -- denominated in those dollars as well. there are issues on that in terms of how they absorb that to the margins. or we do think obviously, they are commodity country and that helps in terms of the income that you receive and u.s. dollars. that may have some positive impact but generally speaking on the equity front a stronger dollar is not necessarily favorable to get global investors into asian stocks for

example. >> the hang seng has taken a beating at 2023 but we had a big pop on friday up almost 4%. are you a buyer of the hang seng at these levels? >> as i mentioned i think there is still a discount of about 15 to 20%, especially for a lot of the hong kong china names. we would say because news is still going to be choppy it is good to by the industry leaders, we are probably looking at better upsides to very cyclical stocks. where you have to hold to the cycle, hold to the potential in the global economy so we are looking at a longer holding period of about a year or so for some of these but that is really where we see most of the upside. we also like real estate exposure to china, we think it's

got a strong portfolio in terms of the tier one and they will continue probably to be in terms of sales. >> director of asia equity research at morningstar there, thank you for joining us. i'll is here for a look at what is moving on markets. >> thank you we've been tracking those moves in oil this morning after it opened a couple hours ago to the upside. we have that opec-plus meeting in vienna over the weekend and the big news coming out is that saudi arabia is pledging a further output cut to the tune of an extra one million barrels a day in july. something that came at the cost of ceding ground to two of its key allies because russia made no commitment to cut output and the uae which secured a higher production quota for 2024, but in terms of the outlook today you can see brent crude holding onto gains of 2% and these big energy names. woodside, santos and sydney and

names in japan and south korea. there are other stocks in focus this morning and these are some of the chipmakers in japan. we are watching a few different reasons for this, while we are watching this chip names it is because we have the lines coming through that -- which is owned by -- and emerging as well. japan possibly mowing further support for its chipmaking industry. >> let's not get to vonnie quinn here in new york with the first word headlines. >> india says a faulty electronic signaling system was the cause of its worst derailed disaster in decades, the railway ministry says an investigation into the three train collision continues adding that the current focus is restoring services. the search for survivors has ended, the state government says at least 275 people were killed with more than 800 injured. bloomberg has told the cia

director that he made a secret visit to beijing last month where he met with chinese intelligence officials. a u.s. official says the spy chief emphasizes the importance of maintaining open lines of communication between beijing and washington. the biden administration is trying to reset bilateral ties but a source says the trip was purely about intelligence not diplomacy. u.s. officials say military aircraft caused a sonic boom that rattled parts of the washington area, maryland and virginia. the fighter jets were scrambling to chase down a private plane that was unresponsive when radioed by authorities and subsequently crashed. the faa says the cessna citation jet was bound for new york but came down in virginia. it is not yet clear how many people were on board. philippine finance secretary has rolled out returning to his previous post as central bank head as he expects to stay on in his current role. he says the president continuing to consider many candidates to become the next philippine central bank chief and will make its choice known in a few days.

he also noted that governor felipe can be reappointed after his term ends in july. global news powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. >> still to come the meeting meant to foster military cooperation fails to dial down fears the u.s. and china may be on a collision course. we will have the latest on the shangri-la dialogue coming up, plus the world's top crude exporter agrees to a deeper out put cut to keep their pumps running at full speed. we've got the latest on the latest -- opec moves next this is bloomberg. ♪

>> oil is rising in asian trading after saudi arabia agreed to an extra one million barrels a day supply cut in july. let's bring in bloomberg's su keenan for more. again saudi arabia shouldering the burden and vowing to do what it takes to stabilize the market. >> this made for what we are hearing is one of the most contentious meetings for opec-plus in a while. the saudi's we are told went into the meeting trying to pressure the african nations to

lower their outputs. they do not want to do that. saudi arabia voluntarily agreed to cut its production by an additional one million barrels and are saying we could expand that. russia got away with not doing anything different in the uae coming away with a bit of a victory. they got the right to produce more in 2024. so a very different kind of meeting. not only because of some of the agreements, and we are told that the actual announcement on sunday of this latest deal was delayed several hours because of the haggling. we are told, delegates were holding out and ultimately they gave into this deal. saudi arabia is the most important member of the cartel and they're really saying they are willing to do whatever it takes to defend the price of oil. if you take a look at how oil has performed year to date, both

brent and wes house intermediate down close to 10% year to date. a huge drop from a year ago at this time when prices were soaring above a hundred -- shortly after russia had invaded ukraine. that is the deal here, they want to defend the price of oil. two weeks ago saudi arabia warned anyone at short on oil, there is going to be a big ouch. you sought the price of oil jumped immediately, almost 5% upon the announcement of this deal. it has pulled back a bit but a strong bid in the asian trading. >> su keenan there, china is said to be working on a new basket of measures to support the property market and that is boosting hopes of further policy stimulus to reinvigorate a faltering economy. the details now from china executive act -- editor. tell us about what might be on the table here.

>> what we understand is that chinese authorities here in beijing are considering taking additional steps, loosening down payment requirements for some buyers in certain parts of china, removing some of the restrictions on who can purchase homes, and how many properties each person can purchase. even putting a further cap on how much real estate agents can charge their clients. this coming of course after we have gotten data showing that what was a recovery in the property market has really weakened in the month of may. the property industry and things such as construction, furniture, appliances, when you add that altogether that is somewhere close to a quarter of china's gdp. when that industry is ailing the entire economy is. >> which is why there was so much optimism in the markets, we saw the yuan reacting with stocks relating to property developers gaining ground. in the u.s. training session.

but i wonder how much this will actually help given that we have seen this sort of speculation in the past. given that economists are saying this sector is still pretty sick. >> i think that is a fair thought and a reasonable worry because chinese authorities did push out similar measures in the end of 2022 should try and boost the property market. we had a slight rebound and now that is weakening again, i think the other thing that people will be concerned about is the fact that prices have fallen tremendously over the last year or two and still we have not gotten buyers coming into the markets. there is worry that no matter what the government does, we are not going to see this industry react or rebound noticeably right away. >> bloomberg's china senior executive editor with that reporting from bloomberg on what to expect in the chinese property markets.

you can get more on the story and other stories that you need to know to get your day going in today's edition of daybreak, bloomberg subscribers go to dayb . this is bloomberg. ♪

>> australia's defense minister says u.s. allies can have a productive relationship with china. he spoke with us on the sidelines of the shangri-la dialogue in singapore and began by discussing the u.s. vessel of transiting through the taiwan strait. >> obviously we want to see more dialogue. and dialogue matters which is why the shangri-la dialogue is so important and enduring over the course of its history. i would say the common waters,

international waters, international airspace are there for everyone. the united states is operating in accordance with its race within those waters. and it is important that those be maintained as open borders because it is important that order be maintained in this region, certainly from an australian perspective when we think about where our interests lies our interest lies in the rules of the road and that means freedom of navigation and freedom of overflight and it means that in a place like the south china sea where most of our trade transit is, i don't think there is any other message than a need for the rules to be applied. to every country. >> we have heard about urging countries in the region to avoid being caught between the u.s. and china. until recently, one would be forgiven for thinking that australia is firmly on the side

of the u.s. strategically. it is australia trying to get to the middle in terms of u.s. china relations? >> we have an alliance with the united states which has been in place since the end of the second world war informally since the 1950's. it is central to our national security and our worldview and we are very committed to the alliance and none of that changes. we are obviously a country of the region and our largest trading partner is china. we value a productive relationship with china and we seek to deal with china on our own terms and i think it is complex. that relationship. because there are security anxieties we have in respect to china, we are seeing a significant buildup of its military and that is happening without a sense of strategic reassurance to us but to the region and its world about its purpose. so we have our issues.

that said we do have a significant economic relationship with china and we want to manage that as well. ultimately this is the reason why dialogue matters. how you navigate those two things is complex, it is not obvious, it requires discussion and that is why we want to have it. >> the question is whether or not australia can be seen as a neutral party when defense ministers before you have said that it is inconceivable that australia will not defend taiwan should china attack it. >> first of all in terms of taiwan, our position is that we do not want to see any change to the status quo. across the taiwan straits. that is our firm position and that is in the context of having a long-standing one china policy which has been the bipartisan policy in australian politics going back to the mid-1970's. that is where we stand in relation to taiwan. and that issue.

but we can be an ally of the united states and build a productive relationship with china, we firmly believe that is possible and that is the line we seek to pursue. >> australian defense minister speaking to bloomberg on the sidelines of the shangri-la dialogue. here is a quick check of the latest business flash headlines, apple is set to announce its mixed reality headset later monday. at its worldwide developers conference, likely to be named either at reality pro or ex are pro. the headset will be an ultra premium device made of glass, carbon fiber and aluminum. the product blends augmented and virtual reality and is likely to cost around $3000. ubs reportedly may be delaying second-quarter results until the end of august, the bank is due to report earnings on july 25 at the financial times is

complexities need to be resolved after its emergency takeover of credit suisse. they are set to include un-finalize details about government support the banks different accounting systems. tata signed an agreement with the argent -- state government to set up a factory for manufacturing lithium ion cells. the estimated initial investment is around $1.6 billion were in ev battery plant that will havoc -- production capacity of 20 gigawatts hours. coming up next we state in india and the latest on the investigation into the countries deadliest train disaster in nearly three decades. this is bloomberg. ♪

>> we have the pmi numbers out of japan, the g bloom bank pmi

final number for the month of may, the composite number downgraded to 50 four point three from 54.9, still in expansion territory for a fifth consecutive month. services numbers still pretty strong although downgraded a little bit to 55.9 as well from over 56. this is the final may number, we have seen some pretty mixed picture across pmi numbers in asia. we are gearing up for the china number later this morning as well, for now g bloom bank composite coming in at 54.3. both readings now downgraded a little bit for the final number. >> we got some pmi's coming out of hong kong and indonesia as well, both of those also slowing. let's start with indonesia. s&p global pmi manufacturing for the month of may, 50.3. a pretty dramatic slowdown from the 52.7 we saw back in april.

taking a look at s&p global hong kong pmi, also a pretty steep slowdown 50.6 down from the 52.4 that was on april. let's get to annabelle for a look at markets. >> we are just about half an hour into the session for japan, korea and australia. you can see we are looking fairly risk on for the session moving to the upside. all major benchmarks they are a little unsurprising given we've got an index of mobile shares trading at a one-year high, also the s&p 500 flirting with bull market territory. we did get those job numbers coming through in the session on friday. a mixed report that tells us that perhaps the fed is going to need to stay data dependent and pause at this upcoming meeting in june. then look to hike instead in july. off of that we are seeing yields moving higher and as well that dollar strength coming back into the session. we are seeing the korean won down 4/10 of a percent against the greenback. other major stories we are

tracking, oil is one of them because we had saudi arabia pushing through a production cut in extra reduction of one million barrels a day. that takes it back to its lowest levels in several years, we are seeing oil pushing higher. other commodities gaining but that could be down to china given the bloomberg scoop we had on friday in the session and that is essentially that officials are really taking note of the economic weakness coming through property, it generally has been a major drag so we are hearing they are considering further support measures for the real estate sector. we are already seeing chinese property stocks jumping with speculation on this on friday. certainly another story we are going to be continuing to track given how important real estate is to the chinese economy. >> we have so many more clues this week coming from trade inflation and credit data out of china. let's not get to vonnie quinn a here in new york with the first word headlines. >> turkish president has named

the treasury and secretary finance minister, the most prominent appointment in a rebound cabinet that will face the challenge of rebounding confidence. he hands the economic reins to an advocate of conventional policies signaling a shift from erdogan's unorthodox measures. israeli prime minister netanyahu is accusing iran of lying to the international atomic energy agency, this comes after the un's nuclear watchdog closed two investigations into the iran's nuclear enrichment program following tehran agreeing to the reinstallation of cameras. raku -- called -- exceptions to earlier concerns a stain on the industry's conduct. north korea says giving advance notice of its satellite launches is no longer necessary, this follows international the schism of last week's veiled attempt to put by satellite in orbit, kim jong-un sister says the military reconnaissance satellite is no

different from the thousands put into orbit by other nations and a legitimate act of self-defense. pakistan's former prime minister imran khan's as the military establishment wants to stop his party from winning the next election, in an interview with bloomberg he cites the arrest of his supporters as evidence of generals being against him. he also accuses the current government of bending to the military's wishes to stay in power. >> the government is just a puppet government. they are now latching onto the establishment because they know that if there are elections they will be wiped out. >> global news powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. >> we take you to live pictures out of india right now. this of course after the first -- worst rail disaster in three decades in that country. you are seeing live pictures of the crash site. india now saying that a faulty

electronic signaling system was the cause of this disaster. the biggest in three decades. it has led to almost 300 fatalities in more than 800 passengers injured, we are talking about eastern india where you are looking at live pictures from that train crash site. let's bring in our government reporter in new delhi. we know that the prime minister has been to the crash site, he visited this weekend, he met with injured in the hospital. what do we know at this point about what caused all of this? >> there is a little bit of clarity that they are getting from the railway and the government. it seems like there was a faulty signal leading to the crash with three trains. and leading to the death of 275

people was the total the government came out with yesterday. we saw the minister yesterday coming out statements quite clearly saying the root cause has been identified and also we have seen the government ordering inquiries by the federal criminal investigative agency of india and while we know a little bit about caused it with the faulty signal system, the details of it are still not yet out. hopefully the government in the next coming days there will be clarity with what caused this horrific accident. >> you mentioned there that india's federal criminal investigation agency is taking a look at this, why has the government ordered a probe by them? is there some suggestion of potential criminal wrongdoing? >> there could be, we have not

seen any indication of that from the statement but politically it makes a lot of sense because the government is under a lot of pressure from the opposition. an order a criminal investigation by the federal agency gives some breathing space to ward off the opposition if i may use that word. and also at the same point in time this is an investigation by the federal criminal investigation is not new, we have seen this in the past. which is why, with social media we have seen several people coming out and questioning what is the meaning if we already know the cause, so on the ground it's the government trying to get itself out of a tricky

situation. and also having another agency make its finding so that's what we understand. >> will that strategy by the government work, what does this mean for the prime minister? >> it is a huge setback, the federal election just a couple months ago, it will be next year sometime around this time. the prime minister is seeking a third term, and unprecedented third term which we have not seen a long time. and he is under tremendous pressure, there are issues with unemployment, issues with inflation, and recently prime minister modi's party has lost one of the critical state elections mounting more pressure on him. so in a way this gets -- joins

the opposition of india together to put more pressure on the government. >> bloomberg government recorder -- reporter there in new delhi. it still to come saudi arabia makes a bold move to stabilize oil markets, unveiling an extra million barrels per day cut to output. we will discuss the weekend's opec-plus meeting and get analysis on the broader oil market, coming up. this is bloomberg. ♪ ♪ the first time your sales reached 100k with godaddy

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>> oil is trading higher early in the asian session with wti and brent above $70 a barrel. this after saudi arabia announced it will make an extra one million barrel a day supply cut in july. at the same time though the united arab emirates got a boost to its output quota for next year, to's oil minister spoke to bloomberg following the deal. >> i think it was a good deal, a historical deal, and we look forward to monitor the market. but that deal is giving clarity to the market, giving the market visibility on next year and also in addresses the fact that the

referendums in all of these things that we've been talking about is going to be addressed in 2025 with a very clear process as we explained. >> why do you deserve a new target of 3.2 million for 2024, why does the uae deserve that raise target? >> we discussed this before, to adjust the production level of the uae. and for that and for the fact that our actual production versus the capacity that we have approved by the independent has been significantly different than where we are so that adjustment is the least we can get. >> did you receive an adjustment at the expense of the african nations? >> no. i don't think that is a good assessment.

the adjustment to some of the nations their production has been in decline and the production has been given a very long times of those countries have all accepted a level of production that is representative. and also they are be giving -- given like the minister from congo mentioned, the chance until the end of november to administrate another level of production that they can demonstrate. >> that is the uae's oil minister speaking to us there after the opec-plus meeting in vienna. let's bring in founder of energy market intelligence provider vande insights. thanks as always for joining us, an interesting meeting. saudi arabia cut, no one else did, uae got more. african nations might have their quotas cut as well. do you think disagreement is going to be a theme for opec-plus meetings? >> morning.

for sure. i think opec has a lot of challenges ahead of it. i think what we saw happen yesterday with regard to saudi arabia going it alone in addition of a one million barrels a day, quite a bit of difficult conversations behind the doors with regards to adjusting various countries. especially the african producers , their targets to bring them in line with their actual production capacity. i think some of those difficult conversations were had over the weekend but a lot of those tough decisions have actually been pushed back to next year. i think those will remain a challenge going ahead. i think overall for saudi arabia what has effectively happened is this essentially a saudi put in the market. how far is saudi arabia willing to go it alone to maintain a

floor on the prices and prop them up the next time they are in a downward spiral. that remains to be seen. >> as you were speaking we were watching a chart of new york crude prices, a decent rally in oil off the back of this meeting. as you say, they are casting a shadow over this with the saudi oil ministers warning to ministers to watch out. at what level do you think the saudi arabians might take action against short-sellers? >> saudi arabia officially says it is not targeting prices, it just wants to keep the markets balanced. but the received wisdom in the market is that saudi arabia, to balance its budget, to be able to get the revenues it needs, for all the mega infrastructure projects that it has underway, would ideally want prices to be above $80 and it now trading around 77.

saudi arabia, to what extent they will continue this battle of will with these speculators also remains to be seen. it has already taken another one million barrel a day cut for july and how much further it is willing to continue cutting on its own because it is clear from the weekend's discussions that the rest of the opec is not in a position to start cutting. at least not until next year until all of the quotas aligned with the production capacities. i think the saudi energy minister is in a difficult situation and having repeated that warning to short-sellers. the short-sellers are going to be following the market qs, if the economy -- global economy, u.s. economy, especially your us and europe are not looking good, if china is not performing with

the most optimistic expectations that were set out at the start of the year of the short-sellers will be back. >> how much confidence can one continue to have in the chinese economic recovery, of course all of that optimism you talk about that we saw earlier in the year -- if we see some economic recovery in china how much would it actually help? >> as of now the concern is china is recovering. it will potentially do better than last year, i think that goes without saying. with all the covid controls removed. it is not expected to gain the momentum of five or even 6% of your on your growth. i think what remains to be seen, as of now the market in terms of oil demand for china, is a very moderate expectation. i would not go over the 800,001 million barrels per day of most

optimistic expectations for chinese demand growth. i think probably less than half a million barrels a day, i think all eyes are on what the chinese government and the chinese central bank does in terms of is it able to put enough stimulus, fiscal and monetary stimulus in place to get the economic momentum going. it is a wait-and-see in china but as of now the oil markets remain in moderate expectations as far as china is concerned. >> so what are you seeing in the physical markets right now, are there any signs of tightening in the global inventories? around the world right now across countries? >> we have seen that through may, add the 1.2 to one point 6 million barrels in additional cuts that were announced by opec members set aside, did it the markets. there has been quite a drop in inventories, especially floating crude inventories through may.

we noticed a lot of significant drop in crude exports from the middle east. rates crashed quite a bit through the months so all of that is evidence that at least the middle east opec producers did live up to their voluntary cuts that they had pledged. markets have started to tighten, the current expectations are through the second half of the year that they will remain in a supply deficit but of course that is based on the current expectations of global economic growth in demand growth for the second half. a lot of those things are still up in the air. >> always good to see you, founder of van to insights with her views on the oil markets. be sure to tune into bloomberg radio to hear more on the big news makers get in-depth analysis from the debris team broadcasting live from our studio in hong kong, listen to the app radio plus or bloombergradio.com. plenty more ahead, stay with us.

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>> let's get a quick check of the latest business flash headlines, thai airways is looking to expand its fleet as demand for travel sores. it is launching proposals to order 30 new wide-body jets which it expects to receive by

2026, the new orders along with its fleet jets will push it to 113 compared to 103 pre-pandemic. it thai airways is rebuilding its operations as it goes through a court monitored debt restructuring. air france is seeking to replace a set of aging aircraft with more fuel efficient ones from airbus and boeing. in an interview to bloomberg ceo ben smith he said fleet replacements will have -- happen in or after 2025. considerations for the new jets require the need to circumvent airspace which adds several hours to a flight, sources tell bloomberg they are looking to retain more than 100 credit suisse anchors across asia. ubs is in talks to keep dozens of senior credit suisse dealmakers in korea, thailand, vietnam and india. the retention target does not include china where the final number will depend on discussions with regulators. >> we will be watching property stocks when trading starts in mainland china and hong kong.

with official said to be working on new measures to support the sector, our chief china market correspondence joins us now, we already saw the jump in the chinese yuan against you on dollar in chinese adrs as well from our exclusive reporting could we expect a bump in china trading as well? >> yes, exactly. the news broke after the close of trade in hong kong and mainland china. we did see up until the close property stocks rallying on friday so we could see a continuation of that today. the news is really that beijing is basically listening and looking at the data, aware of the fact that all of the measures -- those 16 point measures introduced late last year to put a floor on the housing market, are not working or are not as effective as expected. we are looking at reducing downpayments.

it is a demand side stimulus package. we don't know when this is coming, there are still a lot of questions around this, it is about tinkering the existing support policies but it is a strong signal that beijing is looking at this. this is exactly what the market needed. >> we did see a big run-up in luxury stocks and china got a lot of credit for that. but now that that opening is running out of steam what is happening in luxury play? >> for me this was an interesting story because people were essentially looking for an alternative to play the china reopening story. because they did not want to own chinese shares and if you look at the msci china index and compare it with the chinese exposure index you would have gotten the same returns since the market bottomed in late october. what is happening now is in unraveling of what was a crowded trade. you look at these valuations, hermes probably one of the most

expensive stocks at 50 times forward earnings even now after the market has come down a bit. it is unraveling a very consensus traded to play at the china reopening story which is luxury. >> chief china markets correspondent there, still to come quadratic capital management is going to join us to discuss the u.s. mixed jobs report and whether it makes a fed pause more or less likely next week. plus goldman sachs will be sharing fresh views on china's markets after a series of investor conversations in the u.s. and in canada. that is it from daybreak asia and markets coverage continues as we look ahead to the start of trade in hong kong and shanghai and shenzhen, standby for bloomberg markets china owned -- open this is bloomberg. ♪

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