>> you are watching "daybreak: asia." >> we are counting down to asia's major market opens. >> the top stories -- asian stocks looking to extend july's positive start after wall

street edges higher and preholiday trade bjerga tesla surging on that record sales result. you nobles facing a moment of truth. china, escalating its clash with the u.s. on tech. plus it is decision date for the rba purebred bond traders racing for turbulence. >> breaking news out of south korea, we are getting those inflation figures, easing for the month of june, from the month of may, we are talking about the year on your headline inflation coming in at 2.7% growth for the month of june. which is also below economist expectations and is easing from a 3% plus growth in the previous month. we are still talking about being above the bank of korea's 2% inflation target but we are seeing those price pressures easing, the month on month number remaining at 0% growth and coming in below expectations

, also easing from the previous month. for the bank of korea, what's important right now is core inflation. that's what's really been leading to the underlying price pressures, where the governor has been concerned about. with seen growth of 4.1% in the month of june year on year which is easing from the previous month but still remaining pretty elevated. let's see how we are setting up in the broader markets across asia. what are you seeing, annabelle? >> from the bok, so the rba in australia, we are a couple of hours out from the decision from the reserve bank of australia. this is essentially coming down to the wire. the decision, largely split -- economists, largely split. we have seen stronger inflation numbers coming through, stronger data points like retail sales surprising as well. that tells us there's a need to try and bring in those price pressures.

on the flipside, there's the other 50% of economists surveyed arguing the case for a pause today. that's largely coming through because we saw those more dovish reserve bank policies. i want to note the amount of subdued trading that we are seeing. futures, setting up flat. not seeing movement coming through in bond yields. they have been drifting lower to start the week. the aussie dollar as well holding very steady. it tells us how much traders are waiting and seeing ahead of this decision. there was a 52% chance of a pause later today. let's change on. we are a couple hours out from the opena here -- from the opens here. the yen, close to the 145 level. >> it is a pretty muted session. we saw from trading because of the fourth of july celebration.

it was a shortened trading session. not a lot happening at the moment. we did see u.s. stocks edging slightly higher. we had those auto stocks, battery suppliers pushing higher purebred treasury yields were also higher. we took a little bit of a hit given the u.s. factory activity numbers contracting for the consecutive eight months. we have been watching the treasuries, part of the trading session. the yield curve and version, at the most extreme in years, where that is headed. we are now seeing of course the dollar index also holding steady. we are just awaiting markets opening after the holidays. also not to mention the jobs numbers later in the week as well. >> a big week of data. for data dependent central banks. we are also watching the geopolitical tensions. further escalation in the tit-for-tat technology clash

between china and the west. beijing will impose export restrictions on two metals widely used in the telecoms and vehicle industry. for more, let's bring in our north asia correspondent, stephen engle, joining us from our beijing studio. beijing is dominant when it comes the supply of these niche metals, significant in the supply chain. >> absolutely. these are not necessarily rare metals. but china dominates, galium in particular, 94% -- with 94% of the world's supply. it is fairly pricey to extract these metals because they are byproducts from coal and boxite. you have to to extract that from the byproducts, from those other more plentiful resources. which china has. so they have an advantage right now. many of the world's tech companies and the like by from china, galium and germanium.

that is impacting the compounds semiconductor makers. compound semi conductors are the ones that are made from at least two elements, as opposed to silicon which is a simple element. also but on the communications industry, displays, this will tighten up the market. the big question is going forward, do these buyers have stockpiles? will other producers be able to ramp up to take over the supply that i would assume will be lost because of china's export controls? we are hearing from the commerce ministry in beijing is that they will implement the restrictions as of august 1. anyone exporting out of china will need to apply for an export license. it looks as though it is some sort of retaliation or tit-for-tat over the export controls the u.s. has imposed since last autumn on advanced chip equipment, chipmaking

equipment, as well as potentially this executive order that's coming down the pipe to limit advanced semiconductors and ai computing technology and the like and quantum computing to china. abigail: >> >> with all these geopolitical tensions in the tech side, we are learning about these obscure metals. but so significant in these industries. tell us a little bit more about galium and germanium. what that means for prices going forward, what products they go into. >> as i said, they go into a lot of these tech products. they are critical for that. but it's not a rare earth, if you will. we can bring up the prices. i think gallium did go up overnight, based on the data that we had from the metals exchange -- the shanghai metals exchange. there are other potential suppliers. so in some ways, analysts we have spoken to say this could be a goal by china, reducing

their advantage right now and the global market by making buyers go elsewhere eventually. so they have the advantage because the prices are low. not because it's rare. so bring up gallium. the other suppliers would be in japan as well as south korea. ukraine and russia. you can probably strike those off the list right now. at least russia for the global supply chain. then germanium, the other suppliers, they are just not ramped up yet because they were getting cheap supplies from china, the u.s., canada, belgium, there again is russia. you ask about prices, let's bring up a couple of the compound semiconductor makers and their reaction on the stock market in new york last night. wolf speed is one, it was up to percent overnight. it's been a 15% over the last six sessions. -- up 15% over the last six sessions. nxp, nxpi on the new york

exchanges, up 10% over the last six sessions. we will have to see what kind of impact of course going forward we will have -- it will have on these companies as well as the price of these metals given the fact that there could be some extensive stockpiles. and once they start wendling down, the prices will go. >> it is another exciting day on monetary -- i monetaryn -- it is another exciting day in monetary policy end is going to be a tough call. kathleen hays is here with us. economists are split. we are talking about 14 versus 13, hold, split, hike? >> we are down the middle, the risk of getting entrenched, the risk of doing too much.

13 see the hike, 14 see the hold. it was not as close as this. people were very uncertain even then. if you look at where rates have come and where the rba key rate has been, 400 basis points since may of 2022, 12 moves, that is a lot, is that enough to cool off inflation? traders are pricing and broadly -- in broadly to more hikes. do they do one of those hikes today or do they wait? let's listen to martin legos, the division director at mccoury wealth management. . he spoke to us yesterday. >> we think there's a possibility of a rise tomorrow. if not done tomorrow, we have penciled in a rise for august and again september. our peak rate in australia is 4.6%. then we figure out australia

just inflation is tamed. >> making sure inflation is tamed. the cpi hit 7.8% in december, down to 7%, now it is down in the latest month to 5.6%. the drop in the two months between april and may was eye-opening. isn't that a reason for the rba to say we've done enough? maybe not. at the same time even though inflation may be peaking and coming down, we are also seeing record low unemployment. 3.6%. wages still rising. how loose is the labor market if all of that is still happening? we just heard annabelle mention the more dovish view people thought they saw from the june meeting of the rba. they talked about this finely balanced move.

the deputy governor of the rba said the last couple of weeks she things unemployment may have to get up to about 4.5% in australia before they can help get inflation down. that is why so many, not just because of what the deputy governor of the rba said, but because inflation is still high on coming down, but maybe not enough, and thus the rba want to make sure it's going in the right direction, key private -- keep hiking, or take a pause and wait to see how things evolve over the next couple of months? we will find out when we get that decision later today. >> they are saying the recession risk is significant, at 50% or higher. is this about vulnerability when it comes to the housing market mortgage rates and the consumer? >> that is certainly what people are focused on now. this is the issue. this is the challenge for somebody central banks fighting inflation. it got way higher than many

people thought it could. definitely higher than it should. we are showing you how much the white line, the rba key rate, has gone up. the turquoise line, mortgage rates, even with that, housing market has held up pretty well. home prices in fact are still rising. this is hurting homeowners. people are talking about a mortgage cliff. that if the rba keeps hiking rates, and mortgage rates keep rising, it is going to hit some 900,000 or so fixed-rate mortgage loans. and that means that when you go off of your fixed rate mortgage, and it turns into a variable rate mortgage, you're going to have to pay a lot more per month. people are already seeing signs retail sales have weakened a bit, maybe that is starting to take hold, does it cause a recession? that is a concern. it is may be a risk we have to take. that is what we will see from phil lowe and his team today.

>> you can get more on the bloomberg when it comes to the rba decision later, to get that commentary and analysis from our team of expert editors. still ahead, we take a look into indonesia's fast-growing ev sector. coming up next, equities can still rally in the face of holding liquidity and rising bond yields. this is bloomberg. ♪

>> my view is you end up with inflation disappointing on the high side a bit. ending up probably bad for bonds and a little bit bad for

equities and generally week -- weak growth. >> greg jensen, on market sentiment, as we continue to see signals of recession risk. we are talking about the yield curve inversion. at this point this is the to year yield topping the 10 year yield by 109 basis points. today it went up to 110 basis points. there's been a lot of volatility in the to atencio curve, the inversion going as much as 111 basis points since march, two is little less 27 basis points. the fact remains that traders are trying to gauge where the fed is taking its tightening path and what that means for the broader u.s. economy. are we falling into a recession? today for example the inversion, easing a little bit, after we got the u.s. manufacturing data fall into that three year low. but questions remain about what this means for the broader economy. >> less than one basis point

away from being the most converted on record, as we near the one year anniversary to going subzero. let's get more on this in terms of how this affects risk appetite across asset classes with chris weston. you say, continue to go long risk, but that depends on inflation, and growth still holding up. is it starting to look a little worrisome? >> not for the moment. in the last week, we had this view reinforced. manufacturing numbers overnight were weak. let's not want to shock us. we've seen manufacturing contraction for a while. disappointing relative to consensus. this isn't a big shock. if you look at the prices paid, some component of the many factoring numbers, related to commodities, that's pushed lower. reinforcing the inflation ary dynamics we are seeing

are somewhat compelling for risk-taking. last week obviously durable goods numbers were good. the labor market, jobs claims better, consumer numbers were better. home sale numbers were better. the growth elements that we like on the services side are expanding, and reasonably strong. the inflation numbers are grinding lower. we expect core pce to get below the fed's own sep production up 3.9%. there's probably downside risk to that and the risk appetite following that very closely at the moment. >> when you take a look at the rba decision that's really kind of -- a could go either way today, there are concerns about over tightening and over contraction monetary policy leading to policy risk. are there segments of the equity market that you would say are pretty ambivalent to what the outcome is? >> where watching the banks

closely. we've had a bit of a rebound recently. we go into august and start looking at reporting again. looking at margins closely. the consumer is starting to find some fragility. in australia, we have seen it in consumer confidence numbers. that is something we are watching closely. trading -- trade in the rba meeting is pretty much impossible today. looking to stay out and looking to sell extreme strength. an terms of equity reaction, a lot of that re-determines what's been priced in. the terminal peak pricing is another 50'-- another 50 basis points by december. if anything suggests the 50 basis points of additional hikes is mispriced, than the narrow path the rba needs to kind of thread policy through will be called into question. i think that's where equities

and bank equity can come under pressure. something we are watching closely today. >> what does it mean for rate sensitive stocks? especially when we have the australian tech stocks seeing the best quarter since 2020? given that here in the u.s. we also saw $5 trillion tech bounce in the first half. >> it was detected well the last quarter. it's just been a momentum based thing. the trade continues. i think the tech trade, the ai trade has been insensitive to the discount rate. whether you are looking at nominal treasuries or nominal bonds or even on a real basis, the discount rates really don't matter too much to be honest in these long-duration assets. i know you continue to believe that will be the case. i think the market is saying it is probably late cycle. and we are getting to an end point. even with rate cuts coming

in the u.s. in australia. for next year, it has not been too concerned. we don't have the options trade in australia that you do when the u.s. -- that you do in the u.s.. we don't have that a nest earlier to the same extent -- don't have that in australia to the same extent. it is something we will be watching very closely. >> when we are talking about potential rate cuts to come from these economies, and japan, we are expecting the opposite. the boj's expected to tighten at some point. what will that do to the japanese yen and also to their broader markets, given that we know those exporters for japan have benefited from a weaker currency? >> i think the bank of japan, if they were to tweak policy, that could be a game changer.

genuinely so. everyone's been parting into the carry trade. taking the question away a little bit from was happening in the export side of things. everyone's been piling into carrie. -- into carry. whether in latam currency r the japanese yen -- or the japanese yen. everyone is asking the same question. what derails the yen funded carry trade? we will see what happens in terms of offsetting measures in jgb's. trying to calm the volatility in that space. that is the biggest issue for me. what the bank of japan does -- is this the circuit breaker that ends this trade bill: that's -- some people are suggesting that could come as early as the meeting earlier

this month. i still think at the moment in this dynamic that carry trade continues to work. both nominal and real rates suggest you continue to buy dollars. you continue to sell yen. it would have bigger ramifications for the trade. >> had cameron crise talking about how the weak japanese yen could be fundamentally an issue for stability in northeast asia. even more than the weakness in the chinese yuan. does that make sense given we have seen the correlation between the yuan and broader emerging markets sort of break given the disappointing growth in china? >> absolutely. i think the chinese probably have more control over that situation. when we japan the unilateral intervention has limited

effects so to speak. everyone's focus on the trade-weighted japanese yen. trading nicely lower than what we signed september. they came out with ¥3 trillion. yen buying in that situation. we have seen that tokyo inflation number last week coming out slowly below expectations. if we were to see further declines in the carry trade, obviously that's going to have big implications for market. japanese inflation as well. >> always good to talk to you, first westin. you can get around them up all the stories we've been talking about -- a roundup of all the stories we've been talking about on global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. -- on tv. -- you can get a round up of all these stories to get your day going in today's edition of

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>> this is the picture across fx trading. we didget a flat session when it comes to the bloomberg dollar index. activity contracting for an eighth month in june. strength in the aussie dollar going into this our be a decision that could go either way.

>> saudi arabia will prolong its unilateral oil production cut by one month keeping a lid on supply fears. let's get more with david stringer. what are the details we heard

out of these decisions from saudi arabia and russia? and the fact that we have seen these market reactions more and more muted every time. >> that's right. in terms of the details, we heard from saudi arabia overnight it will extend their one million barrel a day production cut on top of already existing opec plus curbs. it will extend that through august. not long heard from the russian deputy prime minister saying russia would reduce exports by about half a million barrels a day. he clarified they will cut production by about the same amount. we heard from algeria, it will cut production by about 20,000 barrels a day. we are not seeing a huge response. this is really designed by saudi arabia to sort of give away a bit of market share in return for a stronger pricing. what they are finding i that weak -- is that weak demand from china is a barrier to any meaningful gains.

we have seen very muted reaction again. that suggests we are likely to see saudi arabia maintain this current action in a month's time. >> is china the main driver for prices at this point? we are coming off the back of ordered supporter losses for the first time since 2019 for wti brent, the longest run of quarterly losses ever, what analysts saying about what the price level will be towards the year end then? >> i think it's pretty hard to look past china. it's the biggest oil consumer. demand there continues to be for many the biggest driver in this market. there's still that uncertainty over the pace of growth in china. potentially the kind of stimulus we might see as we get deeper into this quarter. there are a lot of questions definitely constraining any gains for oil. that said, plenty of

expectations that this sort of market balance will begin to tighten and the second half -- in the second half. there's an expectation of positive momentum over the next couple of months. people will be looking at the china demand question. >> are we also looking at the end you demand question? take a look at these record imports. is there a feeling this is a market could be nearing peak -- that could be nearing peak? >> it is something people are watching closely. particularly the rate of imports of russian oil into india. but again, it is a question analysts will be wrestling with in terms of the demand picture. hands really what we are looking at in terms of growth in the indian economy. everything appears to be right now under demand -- on the demand side. what we are seeing from the producers is that attempt to shift the focus to the supply side with the kind of cuts that

we saw announced overnight. >> david stringer>> there. we continue to see oil rebounding and the asian session after pressure in the new york session. let's see what else is moving in the markets ahead of the major market opens. belle, what are you watching? >> that's really capturing the sentiment with david, sort of about the second have. it's been such a big run-up over the past couple of months. driven by enthusiasm around the state of the u.s. economy a little bit stronger than it had been predicted coming into the year when we had discussion around this prospect for a hard landing. also the expectations china would start to deliver some sort of concrete stimulus. the head of the opens today, where half an hour out from trading for sydney, soul, and tokyo -- sydney, soul, and tokyo. not a whole lot driving the session today. looking for any sort of reaction from investors to china

restricting the key to semiconductor equipment materials. also anything that comes to do with the rba decision coming up later this morning -- having to do with the rba decision coming up later this morning. it's looking like a muted trading over the course of the session. >> perhaps we could get a little bit of information coming from the rba meeting later, one of the highlights of the day. let's take a look at headlines from around the world we are monitoring. france has seen relative calm on the sixth night of protests over the fatal police shooting of a teenage boy. arrests are down sharply from the day before beer would authorities have kept 45,000 police and special forces deployed to quell the riots. president macron will meet mayors on tuesday of about 220 towns affected by the unrest. china has issued emergency flood

alerts in at least seven provinces that have been hit by heavy rain. severe downpours have been reported in southern areas and areas in the east. floods in 2021 killed more than 200 people. israel has launched its most intense military operation in the occupied west bank in nearly two decades. it's carried out a series of drone strikes and sent hundreds of troops on an open-ended mission and to it calls a militant stronghold in the jenin refugee camp. nine palestinians at least were killed and dozens wounded. hong kong police, offering around 127,000 u.s. dollars as reward for information leading to the arrest of eight pro-democracy activists. the first bounties to be offered in relation to the beijing draft and national security law imposed three years ago. the wanted people are all currently living in self-imposed exile including countries like the u.s., u.k., canada, and australia. >> ocbc wants to boost

revenue from business flows between greater china and southeast asia, as trade increases. we askedthe ceo -- we asked the ceo whether the bank has met a target to generate $740 million of pretax profit from the greater bay area including hong kong and macau. >> the progress is fine. we are generating the revenue. after the pandemic, it was not helpful. -- across the pandemic, it was not helpful. people were moving up from china into hong kong and macau in that sense. i think we are making good progress but we are unfolding this whole exercise of putting the greater bay area together as a whole as a part of our strategy. >> do you have an idea when you achieved the target?

no clearer than that? if you have a 22% revenue from here, how do you grow them? >> you grow it by linking it with the auto bots of the group and having more customers. a lot of greater china customers are either doing their strategy in southeast asia or looking at opportunities in different countries as well. we talk about the electric vehicle industry. they also going to build their own plans. to capture and secure resources as well. this is just part of it. >> you have a stake in lingo of about 20%. are you planning to increase the state? >> we are very happy with our

investments. we are working with them really fine. they contribute well and contribute more profits to the group. if indeed you talk about inorganic, it is always a key consideration. we look at when opportunities arise. whatever we look at is to complement what we have. to add on incremental revenue. >> you are not seeing anything yet? >> we are not seeing anything very serious yet. >> it lends itself to how the reopening story and china has played out for you. we seen money of course -- singapore, let's hope to contribute -- that's helped to contribute to record profits. how are the flows behaving? >> the flows are not just from british china. there's a flight to quality.

we do attract quite a bit of new money. for example, we have a strong hug -- a strong hub in dubai. from other parts of the world as well. i think greater china is important because it's been growing very fast and we continue to see momentum. across asia. not necessarily staying in singapore but it could be in hong kong or could actually go into other private capital alternatives. >> we have seen a reopening happening in china. you had all these revenues coming from that. how are they now? >> as a bank that is very diversified, i love the fact

[indiscernible] net worth. again if the equity market is not working to everybody's liking, if investment sentiment is still a bit low because of uncertainty, the benefit to us is because we are diversified. we could have higher insurance income. we have higher net interest margin. leading to higher net interest income. we are quite balanced as we grow. linking up is important to acquire more customers. you still have more customers to focus on. >> the private bank in singapore, has that been doing -- how's that been doing? >> we have been adding on customers. >> the number of family offices also helps? >> it does help.

it is a good source of new net money is coming in. >> you can watch us live and see our past interviews on tv. you can join in on the conversation as well by sending us instant messages during our shows. this is for bloomberg subscribers only. do check it out at tv. ♪

>> electrification efforts hinge on the supply of key metals to be used in production. geopolitics is turning into one of the major risks here with china now announcing curbs on experts of tunisia metals, gallium and germanium. we are watching how this will impact not just the prices of those commodities but also the supply chains of industries, ranging from semi conductors to solar panels and ev's. >> as we know, lithium is another key base metal when it comes to the ev industry. prices saw a massive correction earlier this year on speculation oversupply shortages. they have been steadily recovering since april. bloomberg nef thinks it reflects the real conditions of the market rather than speculation.

supply risks do still persist. new technologies are allowing battery makers to diversify the materials they use. let's bring in our bloomberg nef metals and money analyst, joining us to talk about the latest developments in producing ev batteries. is that altering the demand picture? >> yes. that is what we have clearly seen in the more recent developments. the metals and materials demand for electric vehicles and batteries have changed over the past year with the development and improvements in technology as well as the changes in the underlying chemistries used in various models for both ev's and batteries. what we have seen over the past few cycles of development is

that improvements in technology allowed for better management of materials within the battery itself, allowing for reduced sizes and much fewer demand for materials in order to achieve desired performance. but the other development really is the changes in the market share of different chemistries utilized in the batteries. we have seen a much larger share than initially expected. using supply -- easing supply pressures on other materials needed for batteries. >> over the last year, we've been hearing more about these new types of power packs for e v's. click sodium ion batteries -- like sodium ion batteries. how will those impact demand? >> the -- apart from improvements in current technologies, we've also seen additional technologies for

batteries will make an entry even before the end of this decade. that adds to the various choices available for the market. in order to achieve the adoption rates and ultimately meet demand from the industry. the impact on metals and materials ultimately is on easing supply pressures, where there are no supply risks. especially with the entry of sodium ion batteries which have different material usage, compared to existing technology such as nickel, manganese, and cobalt. for anyone who follows the industry, it is one of the few critical minerals in danger of not meeting demand in a few decades' time. >> your outlook suggests the lithium-ion batteries will be a key part of the tech mix when it comes to ev makers.

there are concerns over child labor issues, the scarcity of the material, can you talk us through all these risks? >> sure. overall, cobalt will remain an important and integral part of lithium-ion batteries since it provides the stability for lithium-ion batteries that require high-energy density. as such, given there is a known concentration of cobalt, or within certain regions and countries, there are inherent risks when much of the material is confined to one or a few countries. but given manufacturers are looking more at what other materials enter supply chains, there's been more hope in diversifying sources. especially with indonesia for example really leapfrogging and overtaking australia last year in order to become the second largest cobalt producer. as a byproduct of their growing battery.

as more sources of cobalt become available, this inherently decreases the risk associated with cobalt for use in batteries and electric vehicles. >> our bloomberg mining and minerals analysts there. next is the president and director of the indonesia battery corporation. with an initiative to build an ev ecosystem for indonesia focusing on end-to-end ev battery production. he joins us live from jakarta. thank you so much for your time. we are hearing about these metals being restricted by china when it comes to exports, given this tit for tat in the geopolitical battle between the u.s. and china. when you have these important materials weaponized, how does indonesia fit into this broader

global tech race? when you are trying to build the supply chain and to end ev battery production ecosystem? >> thank you for having us. first of all, in terms of the indonesian strategy, we are going to be able to fit the indonesian resources into the global supply chain. that is why we are developing our projects to serve three main regions in the work -- and the world. one is china. the other was the u.s. the other is europe of course. that's why we are developing this into an ecosystem -- this end to end ecosystem. it is good for recycling, good for the environment. for all three major markets. that is why indonesia will be there as a major supplier of the

global supply chain of the battery materials. >> what are you seeing in terms of demand for those batteries? when it comes to indonesia providing that end-to-end service, how advanced are you in that initiative? >> i will just update you, in terms of the developments -- we are having this end-to-end development of battery ecosystem, from mining, to the battery cell production, the recycling. we are partnering with the battery ev producers in the world. the largest in the world. one in china and one in south korea. we aim to have the production of the first 10? what -- 10 gigawatt battery cell and asia.

the largest investment in southeast asia by 2034. and we will have the end-to-end production of batteries from our mining site in 2036. we are looking at additional numbers. 25 to 30 gigawatt hours in 2036. working with partners and with integrated mining all the way through to the battery cells. >> we heard just this week that australia and indonesia are getting closer to signing an agreement. how important would these sorts of deals be given that you have these varied strengths? indonesia, having the biggest nickel reserve in the world. >> that's very important, for the current batteries.

currently we have the largest deposit and production of nickel. we are lacking lithium. australia works nicely with us, in terms of its geographical position. it is close to indonesia. they are one of the biggest producers in the world, 30% to 40% of the production of lithium. we have these materials coming from australia. we have all the other components, the nickel, the global -- the cobalt, to some extent. we don't have lithium much. currently it is a tiny amount. but supply from australia would be strategic and a complementary effort to creating ev's here and indonesia.

>> really great to have you with us. we appreciate your time. the president and director of the indonesian battery corporation. we will continue our focus on the global push to go green later today. we will have an in-depth look at india's shift towards clean energy and speak exclusively to the think tank niti vice chairperson, suman bery, about the country's climate policies. this is bloomberg. ♪ you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

>> take a look at how futures are trading at the moment. kiwi stocks under pressure after five sessions of gains already. nikkei futures now pointing downwards about half a percent. the japanese yen, holding at that 144-ish level. we do have the market opens and sydney, seoul, and tokyo, next. this is bloomberg. ♪

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shery: this is daybreak asia. we are counting down. after a shorter trading session ahead of the july 4 session. is this a liquidity given that it's an exciting day in terms of

monetary policy in yrthe woods? haidi: it is, as we get into the central endgame, each takes on a special significance. we are on a nice edge for the rba, it could be either way. a bunch of comments we are expecting them to go today as these recession risks continue to build let's have a look at how markets are setting up for this day. annabelle: a lot for investors to be weighing up as we approach a public holiday u.s., we could expect no cash treasuries trading. the session today, japan, korea and australia coming online, we are looking at how the nikkei starts to perform because we saw a big game higher in the friday of 1.7% at the close. as weas we get trading underwaye

are looking weaker. he did see black rock joining the investor optimism. essentially the outlook for japanese stocks to neutral. what else we are watching in the session will be those ai linked names because we had a report out from reuters essentially saying japan, the government is starting to calibrate and think carefully about its ai policies and essentially they could go with an approach that's closer to what shaping up from their washington, biden administration rather than the strict rules being muted by the eu. we also have korea trading coming online and we are going to watch tech stocks there in particular. we are seeing the cause? little bit further than the kospi, which will be flat in the session so far. what else we are watching is that reaction that we see from traders to economic data because we saw inflation cooling more than expected in the latest reaching -- region and that ulcers the case the be ok, the central bank to extend its cause underway for months. changing on and speaking of

central banks, it is the focus on australia. we have the rate decision to from governor phil lowe, economists are really split here, roughly 50-50, seeing either a 25 basis point hike today, otherwise we will see a pause and there's different cases including economic data, what we see there versus what came through in the rba meeting minutes. they were a little more dovish. we are watching oil because we have brent crude coming online. we saw saudi arabia pledging to extend its cuts. that's something they are doing unilaterally already agreed to the coalition. brent crude is one to watch out the session today. haidi: our next guest has upgraded equities view to a core holding. balances overweight when it came to high-quality. i was seeing cross asset strategist at standard chartered wealth management as we get even

further when it comes to the yield curve inversion, recession risks are building. it seems like risks more broadly as we get to the tightening cycle are really elevated. how are you balancing the way that you invest now? >> korver recession is intact, just that the timing of when the recession will occur we have which -- percent back to quarters or so. the key reason for this is very resilient coming up from the u.s. is really the consumer sector among the labor markets because, if we look at the manufacturing sector is a lead the recession for consumer session has one of their key drivers for that has really been a buildup of excess savings we have seen during the pandemic that have resulted in the consumers in the labor market. just is why from our perspective, recession has been

postponed and as a result we have upgraded our equity to radical holding. haidi: it's the keep calm and carry on, how does that approach difficult markets at the moment still waiting on stimulus like china? >> one of our key recommendations is to keep calm and carry on. that's really thick. the thing about the actions we have taken over is upgraded. against the back stock we have balanced that to a develop market because of our new debt and the rate hiking cycle by major central banks, but that's probably towards the tail end have seen from the fomc minutes

that the federal reserve expects another two-week heights. that the federal reserve expects another two-week heights. the market is about one rate hike from now until the end of the year. but the rate hike cycle is likely behind us we make it one or two rate from now to december. against the backdrop our view is that the develop market investment rate sovereign bonds are actually quite interesting candidates to look out for investors to be locking in the yield. it will eventually move to an easing cycle. that means is that the cash you will will begin that. quick bonds as well as maturity and is actually looking quite track this for the tightening cycle to occur. shery: we are expecting major banks to report earnings next week and that would start their earnings season in earnest in the u.s. what are you factoring in terms of the next catalyst in terms of level equities as we head towards the next earnings season?

>> mixed earnings season will be a key validation orchard point for orchard point for markets. if we look at how the overall expectation has been stacking up , they have been advising down the earnings estimates of q2. if we look at the current estimates, it's about 6.8%. it's one of the lowest quarterly rate since the second quarter of 2020. given that it has already been lowered and the economic data, you look at the u.s. economic supplies, is probably the busted territory. it's probably a sense that it will be better than a next six to 8% expect by consensus and there is probably room for the equity rally that we have seen so far. we look at a short-term positioning and we will pick up and sentiment of positioning by

-- if you look at the data, it's still quite natural. shery: when it comes to visit sentiment across japan you have seen the latest boj survey. could things change for this corporation of the boj moves? >> i think japan is one area where we have high conviction over the next 12 months in terms of equity. the key thing for japan with inflation above 2% 3%, what this means is that it will lift nominal growth expectation for japan's economy and corporate earnings. our expectation is that in a corporate earnings perspective, given that it is in the right direction, also see buybacks

from improved expectations -- it's also because investment by warren buffett supporting jeff branick -- japanese equities we have seen so hour. we don't expect much of a change until the for the fifth quarter of this year. the near-term, some of what we havethe near-term, some of whate have seen is probably a little overdone, so we would approve it from here, but the boj is in the fifth quarter this year. shery: this of positivity for these japanese businesses given the weakness of the japanese yen. how does that vote for other economies and corporations in china? we do have a weaker chinese yuan, but perhaps not as weak as the japanese yen, and there's competition there. >> yes, so certainly there is

quite a bit of competition for it comes to currency devaluation. it is probably a little bit broader be on the currency. this some weakening in the u.n. in the exports -- in the yuan and in the exports. the way we look at china is there are three things in china. consensus is searching for more stimulus. it's not kicking up to a higher degree as we expected. as result, investors from a market perspective have been diversifying away from china to other supply chain producers. that has been the one that holds up the economy that's 1/5 of the

overall economy in china. so it's insufficient against the week economic basis we see coming from china. we see it will help support the economy. shery: good to have you with us, seeing cross asset charges standard chartered wealth management, let's get to one of our top stories today, which is the rate decision by the rba. that call, very tough at the moment, it needs to balance the risk of inflation's versus recessions in so many other central banks have two at this point. kathleen hays is here with the latest, again, it difficult decision. kathleen: you risk doing too little with inflation getting entrenched.

doing too little with inflation getting entrenched. it's pushing the economy into a recession to some who say it doesn't happen. this challenges being made to so many central banks. what do we see right now, for market expectations we will get that expectation in for a half years from now. 14 out of 27 say whole. 13 say they are going to hike, and what they are looking at this the number of rate hikes at the rba has done versus the amount inflation has come down from high peaks. 400 basis points, 12 moves since may of 2022, markets are pricing in tumor hikes this year. the rba's close to being. they see a peak of inflation and a peak in rates. if you look at inflation, what you see is about as high on a quarterly basis to 7.8%, nearly eight percent in december came down to 7% in the first quarter. on a monthly basis there monthla

very big drop, 5.6%. the court didn't come down much. you can say, do you really need to hike again at this meeting? can you wait and get more data or can you say, you just haven't had enough progress where you need it. another thing that is great, record low unemployment at 3.6% but michelle bullock thinks unemployment will have to get up to 4.5% to bring inflation down, to bring final demand down. both sides of the coin are there right now. even the surprise 25 basis point hike we got at the last meeting. again, very divided views and most people figure, if they don't do something now, they will do it in august, but this is another very close call, as you know. haidi: how resilient is the housing market and mortgage rates and how that plays into the recession risk?

kathleen: the housing market is important. and we heard from -- earlier today and she is with amp financial services and she is concerned that the risk is rising. look at the housing market. let's look at the white line. that's all those rba rate hikes. that's how much mortgage rates have gone up. home prices are rising. people are concerned about home lending, mortgage lending may cool off. they are concerned about the mortgage clip that that 900,000 australian homeowners made race because they are facing rolling off of a fixed mortgage rate onto a variable mortgage rate and when they do, those rates will be higher. she thinks the recession odds are of two 50%, she thinks this will hit the consumer and will hit consumer spending. at the same time, she is in the camp that thinks they will do the rate hike because inflation is still so high and they want

to make sure they do enough to make sure it continues to come down.

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down. and let yourself be here. on. you have your bum and people out with that riff. i have to cancel my tour because i couldn't get through all the employee retention credit paperwork. in time, you could sell the guitar. no, can't sell maximus guys. that custom. mr. wonderful isn't going anywhere. the employee retention credit money is still available. no, wait. yes, wait. if you have a business with employees, you need to look into this program. go to one to trust. now, to see if you're eligible for this cash. let's get to bill for a look at some of the movers. and we're watching this story

not just for the exuberance and the rally, but also where to next when it comes to regulation. yeah, that's absolutely right. and really, the eu has been at the forefront of ai regulation and we do understand that they're looking to push something through possibly in the northern hemisphere summer and be totally inactive by the end of the year. but it really is up for each jurisdiction like any sort of new technology to decide how they want to govern it. and it does appear, at least from a reuters report, that japan is going to be shunning the approach of the eu with its stricter regulations on ai and perhaps following that of the us. so this is a state of play for some of the big ai names in japan. we do understand, as i said, japan really looking to get its rules around ai, perhaps sorted by by the end of the year. let's change on because the other big story that we're focusing in on the session today is china imposing restrictions on exporting two metals that are crucial. as we know, to the semiconductor telecom, ev industries? what's interesting as well is to chart the reaction that we're

seeing in some of these stocks today, because linus, rare earths, for instance, this is one of the top performers on the asx 200 nearly 20 minutes into the session there. but linus, it says, is the world's only significant producer of separated rare earth materials outside sherry of china. yeah, let's talk a little bit more about that sort of escalation that we've seen in that tick and -- and tat when it comes to the tech race between china and the us. let's bring in our chief north asia correspondent, stephen engel, who joins us from our beijing studio. and of course, we're talking about gallium and germanium, really two metals that we don't necessarily talk about, but they are pretty significant, aren't they're significant, but not necessarily in volume, but significant because of the different products they go into strategic products, obviously that are at the focal point of, you know, battered relations between china and the united states as well as europe and their supplier and their producers. of course, you know, they call

it germanium and gallium minor metals. but again, they are critical for those products. and what we're seeing is the commerce ministry of china announcing last night that essentially they're going to require, as of august 1st, those producers here in china to seek export licenses as well as details of the destination if they want to export these two so-called minor metals and, you know, essentially china is the dominant player, not because these are rare metals, because china simply has driven the price down. they dominate 94% of the world's gallium production comes from china, 83%. an estimated of production of germanium. they've been able to keep the prices cheap. now, what's going to happen likely is obviously from august 1st, the producers of things like compound semiconductors, which are semiconductors, not silicon.

silicon is made from a single element, but compound semiconductors are made from at least two metals, two elements and there's a few producers out there as well. of compound semiconductors, but also telecom equipment and displays electric vehicles, as annabelle said, will these producers work off how how long will it take for them to work down their stockpiles from august 1st and then seek other suppliers? where are those other suppliers? well, you just mentioned annabelle. did some of those in australia, but essentially gallium is also produced in japan and south korea as well as russia and ukraine. germanium is also found in the united states, canada, belgium and again, russia. there you're seeing it. and you know, sherry, you mentioned what you asked me last hour, what products do these go into? well, there you see there's a lot of strategic products there, including space exploration. the majority of satellites are powered by germanium solar

cells. so it's strategic on the part of china to ban this. steve, as we're talking about these barbs being exchanged in this tech trade war, we're also hearing that there are some efforts being made on the diplomatic front. right? we're hearing that the us treasury secretary, janet yellen, has met with the us ambassador, i should say, the chinese ambassador to the us, discuss maintaining open lines of communication. we know that this comes just as she's about to depart in the later part of this week for her visit to beijing. the second member of biden's cabinet ahead to beijing in recent weeks. as we try and kind of look for some some of these efforts to mend ties after these ongoing bilateral tensions. and, of course, these tensions are ongoing. i am curious, though, practically, for an investor, what does it mean for prices of these metals? and as you mentioned, just that list of some of the products that they actually go into? yeah.

well, there's two ways to look at this. obviously, prices will go up if the the sourcing from the cheapest supplier of these raw materials will be essentially cut off. so you have to take into account what is the lag time between ramping up exploration and production in those other countries that i mentioned, as well as the stockpiles of those elements keep in mind it's a pricey process to extract germanium and gallium. it's readily available, but it's basically a byproduct of basically of coal and bauxite. or in japan and south korea, it's a byproduct of zinc in ukraine as well as russia. it's a byproduct of alumina. so it's an extraction process to get those raw materials, those those metals, germanium and gallium. so it's a matter of whether these other countries and these other producers can ramp up. so prices, obviously, if you're cutting off the cheapest source, are going to go up.

but again, it could end up being what one analyst told us, an own goal on china. china could by putting up that barrier and those export controls could essentially cut itself off from two metals that it dominates. right now. so we have to see i hate the term, but time will tell on this one. chief north asia correspondent stephen engle, they're in beijing. you can get a round up of the stories you need to know to get your day going. in today's edition of daybreak, bloomberg subscribers can get that adp go on their terminals. it's also right there in the mobile in the bloomberg anywhere app. you can customize those settings as well. so you just get the news on the industries and assets that you care about. this is bloomberg. welcome back to earth. thanks. was pretty life changing dude. it was 8.5 minutes. didn't even get to finish my burrito technology lets you vacation in space, but to get work done on earth, you need more than technology you need.

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trust, a power and of action from the heart of the for all of humanity. masdar pioneering energy. some things are better left to a professional. in hindsight. probably shouldn't have tried to remove my own appendix, like when it comes to finding financial advisors. what was i thinking? so leave it to smartasset to find them for you. take the free quiz at smartasset. then you'll be matched with up to three vetted fiduciary financial advisors. to get started, take the advisor match quiz now at smartasset. com. how was this close? this close. well, two of wall street's largest lenders are challenging the fed's projections for the

future income. bank of america and citigroup say they're in talks with the fed after their own estimates differed from those of the central bank. let's get the details now from our finance reporter, nabila ahmed. so what are these discrepancies in the projections? so all 23 banks, as you know, passed the results past the stress tests. pretty easily. but there are these discrepancies that bank of america and citi are saying between their own projections of future income and what the fed has projected. so in bank of america's case, the fed's projections are actually rosier than what the bank has said that they will lose. and capital requirements in city's case, some of the numbers are worse than, you know what the bank had thought it would be. and of course, these results are very closely watched because this is what allows the banks to decide how much money they can give away in dividends and buybacks. and you saw most of the american banks last week come out. goldman sachs, wells fargo, jp morgan and even citi have lifted their dividends. but bank of america has been conspicuous quiet on the topic.

and, you know, we were expecting something on friday, but given that they are trying to understand these discrepancies, that's been delayed and the stress test, this is this is not the end of the regulatory scrutiny haidi there is more stress to come for the banks. that's exactly right. so we've got the basel three updates to come later this year. and also in in the wake of those regional lender collapses, you know, we're expected greater scrutiny from the fed as well and they will probably step up their efforts in how they supervise banks. bloomberg finance reporter novella ahmed there with the latest. and we do have plenty more to come here on daybreak. asia, as we count down to this very contested decision of course, really markets expecting this one could go either way. most of the economists that we've spoken to calling for another hike today, even as those recession risks continue to build. bloomberg intelligence is looking at the vulnerabilities when it comes to mortgage lending and the housing market, which of course, in australia is so closely tied to consumer

confidence as well. we are seeing asian markets more broadly just about half an hour into the side of the trading session, facing some of those pressures as the equities rally really starts to wane, we are seeing that inversion of the yield curve continuing to flag broader recession risk there. we're seeing japanese stocks pulling back a little from the recent highs, about just shy of 1% lower. this is bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small, and once-in-a-lifetime.

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it's an amazing thing when you've showed generosity of spirit to someone and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected and at risk of hiv. the rocket fund takes all of the work that we're doing all over the world and looks at the most effective ways to get resources to them, to get services to them. the idea that we have saved 5 million people's lives, it's overwhelming. it's everything. this is daybreak, asia. i'm annabel. here we have a red headline just crossing the terminal now in the past minute or so, essentially daiichi sankyo, which is a japanese pharma company, is falling by the most. now, since 2008. what's really driving that are the results that came through from a lung cancer drug trial overnight. now, this is a drug that's being

developed in partnership with astrazeneca. and what investors are really looking to is the press release that came out from astrazeneca and it lacked a key phrase clinically meaningful. now, why investors are focusing on that so much is because it tells them perhaps that the drug trial hasn't really fed as well as could have been expected. there was a lot of anticipation that this lung cancer drug trial would perhaps fare a little bit better. what else is really weighing in on sentiment this morning are some deaths as well that were linked to this trial. at least five people passed away during the period. so david sancho here, as i say, now tumbling 15% at the start of trading. we had not seen the bid ask spread matching until just a couple of minutes ago. let's change on because otherwise we have markets online half an hour into trading here and it's looking a little bit mixed in the session. you can see the nikkei down around 9/10 of percent. but put it in perspective, of course, because it did rise as much as 1.7% in the day prior. so perhaps a little bit of

profit taking going on. otherwise we are fairly flat in the session. asx 200 just gaining a little bit, but we're watching of course, that rba decision that is coming up in a couple of hours from now. what else are watching if you change on is essentially the this chart here and a lot of focus on these china export curbs that came out overnight on these two materials that are used for chips evs, other high tech equipment. and essentially it tells you that broadly export restrictions on industrial raw materials, china is not alone. now we're past or near abouts. the 18,000 mark globally. sherry and bell. we're also watching the latest when it comes to bank of korea right now. they have just released a statement when it comes to the inflation numbers that we got earlier. of course, remember, consumer prices rose 2.7% in june from the previous year, the least since september 2021. the coming out with a statement saying that they forecast cpi inflation to slow through july

but then accelerate to 3% by year end to that 3% level. when it comes to the core inflation number, the bank of korea expects it to exceed forecasts. and this, of course, as we saw those numbers, excluding oil and agricultural prices rising 4.1%, the least since may 2022, third straight month of deceleration. so it seems the bank of korea policymakers are still pretty careful about the inflation outlook as inflation has eased for a fifth month in june. but that has bolster the case for the to hold policy rates steady again when they meet next week. but at the same time, they're being careful saying that inflation will accelerate to that 3% level by year end. right. let's take a look at some other headlines from around the world. france has seen that relative calm on the sixth night of protests over the fatal police shooting of a teenage boy. police made fewer than 160

arrests on monday, down sharply from over 700 the day before. authorities have kept 45,000 police and special forces deployed to quell the riots. president emmanuel macron will meet mayors later tuesday of about 220 towns affected by the unrest. china has issued the emergency flood alerts in at least seven provinces that have been hit by heavy rain. severe downpours have been reported in southern areas, including chongqing and sichuan, as well as in anhui and henan in the east. floods in 2021 killed more than 300 people in hainan province, thailand is preparing contingency plans to deal with a potential drought that could squeeze global supplies of sugar and rice. rainfall may be 10% below average. this monsoon season. and the weather pattern could

lower it even further over the next two years. it's prompted thai officials to ask farmers to restrict rice planting to a single crop to conserve water. hong kong police are offering around. 127,000 usd as rewards for information leading to the arrest of eight pro-democracy activists. there. the first bounties to be offered in relation to the beijing drafted national security law imposed three years ago. the wanted people are all currently living in self-imposed exile in countries including the us, uk, canada and australia. now competition is heating up in china's e-commerce space. bloomberg genomics sees challenges for online retail giants in the second half. let's get the mid-year outlook from senior consumer and tech analyst catherine lim. catherine, what are you seeing

right. well, indeed, i think the e-commerce landscape is still evolving. and particularly if you actually look at one of the biggest market out there right now, china, there is a lot of competition that's ongoing whereby, you know, you get social commerce companies now trying to take a part in the e-commerce or the retailing side of things. so lots of activities that i do expect to actually continue through second half of the year. and essentially that actually poses risk for incumbents like alibaba and jd.com. what happens in 2024? right now, that's a good question because as we step into the second half of the year, a couple of things that will be happening which obviously we are looking forward to alibaba executing on, you know, the ipo spin off the, you know, spin off of their cloud operations itself. so there may be some strategic changes that we will be seeing from alibaba into 2024. but notwithstanding, of course,

that's also take a look at some of the cross-border stuff that companies such as jd.com, they are executing, particularly for in us. it seems like, you know, that is actually creating lots of buzz in the us, both from a litigation side as well as from the consumers. so we'll have to actually see how that impacts the company's financials in 2024. what are some of the areas which alibaba can >> we have heard the company talk about making historical investments into its core bread-and-butter e-commerce business. i thought what was interesting in the recent months was how the company is tying up and working more on tencent's wechat

platform to reach out to the users on that platform itself. notwithstanding, we have seen how international payments are now permitted on alipay and wechat pay. there's still room for them to get more users as well as increase the spending of users that will be a key into 2024. >> what to look out for ali baba. we're also watching commodity markets, the energy. take a look at what we are seeing with wti and brent after the saudi arabia and russia curbing of supplies. we are starting to see a modest rise across wti, trading just shy of $25 a barrel. clawing back some of that 1% plus loss we saw and the previous session even as those

cuts were announced. saudi arabia saying it will prolong the supply cut for one month through august that was largely expected by oil traders and we heard from russia announcing a fresh production. algeria announcing plans to make more modest curbs. let's bring in andrew jane. we heard these announcements from saudi arabia, russia and algeria but what is interesting is it seems like with every time we get these announcements, it seems like the supply side is having less of an impact on how the markets are reacting. andrew: they did say they would extend this past august. they announced a 500,000 barrel per day cap and that was surprising.

putin's under a lot of pressure at the moment and wants to keep funds flowing for his war machine and other things. another interesting thing is these announcements are outside the normal opec+ schedule which has some urgency. there are also flying in the face of their own projections. the oil market tightened in the second half and it also suggests the saudis or russians may be more skeptical. shery: what is going to drive prices in the second half? andrew: that is right, china is the big factor. over the beginning of the year, people were anticipating the

sharp rebound. analysts are saying they are waiting for the china rebound, what is going to happen? it seems to be turning a bit recently. at the same time, a higher pace of interest rate rises. the demand backdrop is not looking great. the saudis need to balance their budget, hence the action from them and the likelihood they are able to maintain. the price reaction we have seen since the cuts shows they have been pretty effective and possibly they will have to do more. shery: andrew janes. we continue to watch oil prices right now. be sure to tune into bloomberg radio for the big newsmakers,

getting analysis from the daybreak team broadcasting live from hong kong. listen through the app or bloombergradio.com. plenty more ahead. stay with us. ♪

oh booking.com, ♪ i'm going to somewhere, anywhere. ♪ ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking. yeah. shery: money managers from goldman sachs and citigroup are touting interest rate cuts in

emerging markets as a major investment theme for the second half of this year. em local currency bonds are already outperforming u.s. treasuries with her average risk premium following to a decade low. let's see where the opportunities are with -- who says the macro environment is better than he expected. thank you for both of you for joining us today. marcus, let me start with you with the broader picture. what exactly do these money managers like? >> i think quite a few trades by fund managers out there. for example, with goldman sachs calling for receivers in israel, indonesia, and africa. citigroup is calling receivers in south korea. receiver rates profit when market rates are falling. other ways that investors profit

on this whole view of easing inflation, easing rates moving forward, we see the long-duration calls. bonds for mexico, brazil, czechoslovakia, as well as south korea. shery: when it comes to southeast asia, you think they are doing better than expected and things are not as fragile. what does that mean in terms of the rate trajectory for some of the central banks? >> in line with our forecast, southeast asia equity markets have, you could say, gone down by 4% in the first half, marginally underperforming the global equity markets. in terms of asean or asian central banks, they never hike as much as there em counterparts, even more benign. there are also fewer cuts.

fed has taken a pause in the june meeting. based on that, we are seeing a pause from the majority of the asean and asia central banks. in case there is a comeback, there could be a risk. right now, asean central bank remains towards the end of the second half. haidi: rajiv, what do you see as the impact of china? traditionally and historically, it has been a driving force for the performance of em's. you look at the stock market, the broader economy, trade ties. is that influence waning now? >> china still remains the important part of the emerging markets, close to one third of the market cap. the trade relationship, china

remains a key partner. any kind of an impact in terms of a china growth slowdown will impact asean or em exporters. where there is some kind of a cushion, because of a supply chain shift happening and the market share of the developed markets imports moving from china to south asia, and there is coming from the china side. it does not have an impact on em or asean. i think china remains critical for emerging-market countries and asean countries. haidi: when you take a look at the underperformance of southeast asia and the prospects for a turnaround, how much does the sectoral makeup of most of the southeast asian markets

actually matter given that we have seen the bulk of higher valuations and the rally being really driven by chips, by a.i.? >> i think there is definitely still some -- the question out there in terms of currencies is basically the interplay between at what point we expect the fed to actually pause at this point in time, and with china. the big question, will we see -- what is the extent of a boost in china? we are expecting growth in china to be challenged in the second half of this year. similarly for currencies and asia -- in asia, it will be a key headwind especially if you look at -- it was supercharged last month by the whole a.i. rally. the question is whether exports

will see a turnaround, as well as many key asian markets. shery: let's talk more about those sectors that haidi mentioned because we were talking earlier to indonesia and the ev supply chain ecosystem that they want to build. we have had a similar picture in thailand when it comes to auto supplies. how does that industry build up in these asean economies bode for the future of their markets as well? >> definitely, we are in the early stage of investing into the renewables, ev, lean economy, and in terms of salvage. most of the developed markets and even china has progressed a lot. definitely, a lot of investment and capex will need to go into that. that will be the further growth. investing into that will also mean government increasing their

spending overall. that will have an increase in employment which could lead to a better domestic consumption trend. despite the slow down or the consensus people have on the macro headwinds, like ongoing reform we have seen in indonesia. thailand has been investing a lot into the ev side, giving subsidies and similar for the ev supply chain to shift over. that will start reaping benefits for the countries, the other asean countries also as we go year after year. so, it will not only benefit your manufacturing, logistics, metal and mining on the long-term basis, but it will also support indirectly your financial sector by the higher loan demand and the consumption side because of rising gdp per

capita based on the transition that the economies are going towards manufacturing ev's and renewals. shery: at this point, which are the most promising markets in southeast asia? because as we started this conversation, you also noted how they have really underperformed global markets. >> we are all with indonesia, thailand. we are neutral on singapore. we are underweight on malaysia and philippines. in malaysia -- asian, vietnam has been the poster child for the last couple of years. and being in the news for supply chain shifts or financial shorting. they are the ones that will benefit on the longer-term basis, but i will also highlight markets like thailand, malaysia, even the philippines, and

singapore. there are pockets like the electronics industry, even semiconductors, that will continue to benefit. now, overweight and underweight or neutral is on the equity index. but, looking from a long-term perspective, southeast asia remains in a sweet spot because of the supply chain shift we are seeing. i believe it will lift up the entire ecosystem as well as gdp of the southeast asia countries compared to the past two decades where the gdp growth was less compared to other asia peers. shery: rajiv, great to have if you with us. and marcus wong. you can also watch this conversation and also watch us

live. and dive into any of the securities or bloomberg functions we talk about and become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv. this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony.

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haidi: corporate headlines we are tracking today. rivian shares climbed after they posted better than expected quarterly production figures. it built almost 14,000 vehicles in the three months ending june 30. analysts expect about 12,500. the company reaffirm previous guidance that it will try to make 50,000 ev's this year. cosco is planning to invest $92 billion through 2030 in batteries and hydrogen. the group says it will spent over 60% of that amount locally, creating more than 300,000 jobs. cosco owns the biggest dealmaker in seoul but has been taking steps to diversify beyond steel. shery: take a look at how markets are trading across asia right now. we are still expecting the rba decision, a very tough call there as we head towards that monetary policy decision. we are seeing the nikkei down about 1%. at the weakest level since june 30.

we are also seeing pressure on the kospi. i.s. x 200 up .1% as we head towards that decision. the aussie holding at that 66.80 level. peewee stocks rebounding from -- kiwi stocks rebounding from earlier sessions. our market coverage continues as we look at the start of trading in hong kong, shanghai. this is bloomberg. ♪

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>> not a clock a.m. in beijing and hong kong, welcome to bloomberg markets run open. our top stops -- stories this morning trip -- chipmakers and focus as china escalates its clash with the u.s. on tech.