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>> welcome to daybreak asia. we are counting down to asia's major market opens. >> top stories, a risk on start. concerns are easing but markets could become overheated with cooling inflation raising hopes of a soft landing. haidi: traders await a decision dividing markets and economists. chinese stocks finished on a positive note but doubts are growing about the effectiveness of government support. we are just getting data crossing the bloomberg at the moment when it comes to pmi numbers out of australia. this coming on rba decision day whereas i just mentioned we have markets trading -- and traders split as to whether we will get another hold or a hike. the australia pmi manufacturing numbers final reading at 49.6,

so remaining the same as a preliminary number in contractionary territory. we saw data when it comes to property prices as well, where we are starting to see a turnaround when it comes to where prices are starting to settle. the aussie is holding steady but all indications are we may need a hawkish hold or a rate hike to sustain the gains that we have seen so far. shery: sideways trading happening across markets given the big decisions not to mention big tech earnings in the u.s. as well from apple and amazon. u.s. futures are not necessarily doing much early in the session. fluctuations throughout the session. we saw the s&p 500 managing to end in the green at a 16 month high in the longest streak of monthly gains since august of 2021 for the s&p. the nasdaq 100, the longest

since august of 2020. but as i said, optimism over potential earnings from big tech coming up. optimism about a potential soft landing in the u.s.. all of that being felt across markets. treasuries are stalling because we have treasuries quarterly refunding plan coming out on wednesday. the expectation is we are bracing for $100 billion wave of treasury bonds. there is ample supply coming to the market so not a lot of movement in today's session. wti prices holding steady after slight gains in the new york session. this if you put it into the monthly context, the biggest gain in over one year. haidi: take a look at how we are setting up on decision day. we face an unusual set up going into this. usually you see traders hawkish and expecting a move. at this time it is reversed. a majority of economists seeing a hike today. traders are pricing in a hold so

that will be key when it comes to a number of things not least of which is the aussie which has seen those gains. really mirroring the gains we saw in industrial metals as we see optimism out of the china stimulus picture and external demand picture for the australian economy. this is the set up as we get into cash trading in one hour or so, sydney futures up 3/10 of 1%. watch oil-related names in particular given that we've seen crude trading higher 20% over the past five weeks. continuing as we get to the end of the rate hike cycle for a number of central banks. we continue to see inflationary pressure from energy markets, agricultural markets and commodities pricing. nikkei futures are flat. we have boj watchers not expecting a further policy shift after the start from the boj on tweaking on friday. the forecast is favoring april

as the next likely timing for a policy change. watching the yen given that we have reverberations over the moves over the past few days on a lot of other currencies within the complex. g10 and beyond. shery: lots of tough decisions when it comes to central banks around the world. the reserve bank is facing one of their toughest yet. today inflation is decelerating but still twice the pace of the central bank target. global economics and policy editor kathleen hays is here. economists are pretty split. markets expect a hold. so it is all over the place. >> there are certainly two camps but traders tend to be looking for central banks who have high inflation that has peaked and is starting to come down after an aggressive series of rate hikes. you can say that about the reserve bank of australia, the fed, ecb as well.

traders expect them to say they're done. economists look closer at where inflation is, not just where it has gotten to where where you hope it is going. 18 say yes it is going to happen and then 12 is pause. that's not quite evenly's blade. there's more economist looking at inflation being high while traders are looking at the possibility that the rba has peaked in its rate hikes now and that they are a thing of the past. this is the penultimate meeting for phil lowe, you will be stepping down from the rba governorship in september. deputy governor taking over then and some people say maybe he wants to get this now so that she does not have it on her plate when she gets started, but there you can see it right there. cash rate of four point 1%. we take it to 4.35. it looks like traders are pointing in that direction, so what divides them? inflation.

look how much inflation has come down from the peak. the second-quarter number, 6% year-over-year, down from 7%, weaker than expected. monthly numbers paint a different picture but it's all in that direction. unemployment is at a record low. if you are someone saying no, they are going to hold. they have done aggressive rate hiking so far. retail sales are pulling back, the housing market under pressure, housing prices starting to, their peaks. if these are put together to say they can hold, it seems it's a difficult meeting for the rba. if you are sitting at that table, what do you say? do you go like the fed, like the ecb and say let's do one more and get this done or do you say maybe we are going to wait longer. a couple more meetings with phil lowe at the helm. a close call. haidi: lots of takes when it comes to the bank of japan. does it seem like they are

settling in, we will not see any more surprises? kathleen: that was a big enough one for six months when they decide to tweak the yield curve control band. it has been 0.5 on the side of zero. now it is still the target but the boj will be buying bonds daily at 1%, opening the door to the moves we saw yesterday when you can see the far right-hand side of the terminal screen, the 10 year jgb hit .6 momentarily. boj came in with unexpected -- what do i want to say? telegraphed bond purchases. the last couple of days our team in tokyo, our boj team has done a survey and here's what they found. right now the majority, more than 90% say this is it, the boj are not doing anything else. 26% see the next policy shift in

april and 78% see them getting rid of yield curve control. former boj officials, current officials insist that moving the band is not a policy change. the policy change will be not when we do that but when we raise the key rate. -.1 from flat to policy change. that's what they see. they think this will all end in a weaker yen. he thinks the boj has squandered a lot of credibility. he was quoted by bloomberg saying for a lot of nothing. a lot of murkiness around how this plays out, where it goes and what happens. but for now, the bottom line is it does not look like we will get anything else this year. i'm disappointed. aren't you? haidi: i feel like we can never get too comfortable when it comes to the boj under any governor. the governor show he has a capacity to shock. kathleen hays with what is going

on with central banks and potentially waiting for shock out of china. conversations about stimulus. we're waiting for key eco-data from china on tuesday. manufacturing pmi number expected at 9:40 five beijing time amid concerns over a weaker recovery. the top economic planning agency is looking to boost consumption and is stopping short of providing support to increase spending. take a listen. >> the momentum is not solid. some consumers lack confidence and has many concerns. the consumer experience in some areas is not good. this requires further policy stimulus. pausing decisions of the central committee and the state consulate. they are seeing together with other relevant departments have conducted in-depth analysis and plans to formulate a series of

policies to promote recovery. >> in addition china state has called on policies to ensure a healthy development of property markets. let's talk through all of this with managing editor malcolm scott. housing not for speculation has been notably removed. does that mean we could see speculative buying? is it going to be enough to support the property market or is this a floor as it restructures? >> the latter. this is the removal of breaks that have been on the property sector for several years. not outright stimulus that we think of in the western sense of cash checks to consumers or central bank cuts. china continues to refrain. it's overall fiscal stance is modest and disciplined. this is tweaking around the edges, whether it be the property front where they are removing restrictive language in restrictions or whether it is in

the consumer sector where they are trying to promote various types of consumption but they are not doing it in the form of welfare or stimulus. in the conventional sense. more in the form of targeted tweaks which is fleshing out what the politburo called for last week when it had countercyclical measures. shery: when can we expect this to be reflected on economic data? we did not see that in the official pmi that we got last night and we are expecting pmi's today as well. >> so whether this shows up is the big debate among china economists. some are saying the removal should help. if you think of china as for key economic drivers on the infrastructure side, plenty of support from the government. that continues. but maybe some of that is through the pipeline, so the future support may be not as

strong as it has been recently. then the consumer confidence there, if you look at retail numbers, looks modest. so you really need a revival in consumer confidence to take place, so that targeted measures that remove restrictions and promote certain types of consumption can kick in. no point having these measures of people are going to refuse to spend. on the property side, key driver, 20% of china's economy, again, removal of breaks has to be followed by a revival in animal spirits in that sector. in the export sector, we saw last week measures aimed at smaller manufacturers. you know, international demand remains complicated as all these continued restrictions impinge on china's tech sector. so there are some complications across china's main growth engines. they are not insurmountable. they are not getting big

stimulus, they're getting targeted measures. that is the real debate. when will it show up in the data? so far, it is balanced. economy is teetering along at a sort of 5% rate in the growth target looks like it should be fairly sustainable. even with these recent wobbles. it does seem authorities are convinced now that there is a need to underpin growth with these targeted measures we have seen. shery: bloomberg's asia economist joining us from sydney. with these latest efforts that we mention from the beijing government, we will be discussing winthrop capital management. their outlook on chinese markets. this is bloomberg. ♪

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♪ shery: welcome back. looking ahead to market opens in asia, stocks expected to start august trading higher extending the bullish mood. this from our team showing the pacific index on the verge of a bullish breakout, new exuberance in china seen as a major driver as announcements of stimulus measures trickling. let's bring in adam, chief portfolio manager at winthrop capital management. great to have you in new york city. we've seen a massive rally in china. hs cia in bull market territory. do we have room to run higher? >> it's going to be very

difficult to see markets continue this move. what we are seeing is headwinds coming from the consumer confidence sentiment. just continues to fall off and as we continue to see the real estate market in prices of real estate come down, that is going to be the big driver for consumers. they will have a difficult time putting -- buying anything. when 60% of assets in china are real estate, that is really going to be a bigger hit then you would see in the u.s.. shery: you don't buy into the announcements coming from beijing trying to boost consumption, trying to boost demand? >> in the short-term, yes. i think you could see some lift. the overall problem is that the global economy is headed toward some slowdown. how significant that is is difficult to know yet, but i think we can assure that it is coming.

so if we continue to see consumers globally reducing their spending, that will have a negative impact obviously on export driven countries like china, where most of the spending is outside of that country. so i think if you see the global economy, the u.s., europe, start to roll over, that will have a negative impact on the chinese economy. at the same time that you are seeing the internal impact from the real estate market kind of beginning to rollover at the same time. haidi: for u.s. markets at the moment we are seeing a refusal to look at the downside. we heard mark saying the market expectations of this narrative continuing is wishful thinking. do you think there is a bit of that going on? >> yes, when you are looking in the u.s. there is fear of missing out trade. people chasing narratives instead of looking at valuations. you need to see investors start

to take a defensive stance, pay attention to valuations. you look at companies like tesla , it is hard to justify the price that they are trading at right now when you look at the growth prospects. i do think that we've got a bit of hysteria in the u.s. markets. we've seen value stocks start to pick up but overall investors seem to be ignoring valuations. so i think that is something to look at, to have some caution around how you are investing in the u.s. right now. haidi: if you are fading exposure to ai that drove the rally what are you looking at? we had a previous guest who was pointing to whether consumers of the technology in the companies that might utilize it, so you might be able to sidestep the high expense side of investing. >> for us, we are focused on the

boring side. what we look at is what ai can do to make the business model efficient. when you're looking at alphabet it's not necessarily about the fact that people are going to start to use ai in an explosion of usage. it's about the fact that search will become efficient, effective and that can mean to -- related to monetization. in the next five years, if you are stretching for some narrative that ai spend is going to be more than just small tweaks for business models, i think you are investing in a fools errand. shery: going back to how we started this conversation, consumption and the u.s.. we were very optimistic that there is cash on the sidelines. especially after the pandemic, people had lots of savings. in terms of what we are seeing now, credit card spending, students having to pay their loans again, what our

expectations now of how much will be left to put back in the markets? >> cuts leading to our case that we will see a recession in the fourth quarter of 2023, leading into 2024 because when you look at the holiday season coming up, yes, savings rates have begun to go back down, credit cards are basically maxed out. not as many levers to pull. heading into a holiday season and you do not have extra spending in your piggy bank, what are you going to do? cut back on how much. if that is met at the same time with employment beginning to roll over, which is what we are modeling right now, that is obviously going to amplify that scenario. shery: adam, great to have you with us in the new york studio. portfolio manager at winthrop capital management. more to come on daybreak asia. this is bloomberg. ♪

♪ shery: bloomberg has learned ubs is planning to dispose of billions of dollars in loans to credit suisse clients in the asia-pacific region as the bank works to reduce risks from the lender. su keenan joins us with the latest. what kind of high-risk loans are we talking about? su: these were complex structured loans and a quarter to wealthy individuals that credit suisse would make would be structured loans and now ubs has inherited all of these. it is doing what it can to quote neutralize risk to its profitability and reputation according to those close to the matter. they've been scrutinizing close to $86 billion worth of loans globally. the bank intends to wind down or

selloff most of the credit suisse complex loans in the asia-pacific region. sources say riskier assets are placed in a so-called non-core unit for business that ubs according to those sources does not want anymore. it is important to realize that prior to the takeover credit squeeze had pursued a decade-long push into southeast asia where it lent to billionaire business families and often woodland not just to individuals but to the individuals business. all of this helped credit suisse become a go to foreign bank for entrepreneurs and that is a plus for ubs in the merger but we are also told by the people close to the matter that the credit suisse client list in the aipac region has some individuals or structures of loans that ubs may no longer wants. we are expected to get more details on the wind down unit at

the bank's earnings call which will be at the end of august. haidi: in the meantime ubs has seen a next this of top wealth managers in hong kong. su: the sources tell us that six high-level and veteran wealth managers on the credit suisse side have left. from hong kong. this round of exodus is less than two months after the merger was completed. at least two of those individuals were rather prominent. either a group head for the china group or a 16 year veteran for the greater china private bank. earlier this month credit suisse wealth unit was told to dust off the resumes ahead of what was going to be the selection of new wealth managers in the region. at last week ubs announced the new heads and the departures

come in tandem with that. noticing not a big change in shares both in the u.s. and europe on the news. but again, very interesting developments as the bank works through and navigates this reducing risk post merger. haidi: bloomberg's with the latest. much more to come on daybreak asia. this is bloomberg. ♪

♪ shery: breaking news out of japan.

were getting the jobless rate for japan in june coming in at 2.5%, lower than economists had expected. lower than the previous month. we had expected the labor market in japan to continue tightening, reflecting the strong hiring demand in the services sector, not to mention the need for automakers. supply chain disruptions have started to ease but the job to applicant ratio is coming down to 130 from 132 which was the expectation and also 131, which was the previous month. the number of jobs per applicant in japan seems to be easing but overall the labor market remaining firm. we continue to see that return of overseas tourists continuing to spur demand for workers. the jobless rate at 2.5% for the month of june. haidi: yes, let's take a look at what we are seeing when it comes to trading.

yen holding steady. exporters on the previous section on the back of a weaker yen, no expectations of further upside in the yen as a result of policy shifts. boj watches further policy shift after the shocking tweak on friday. 41 economists surveyed do not anticipate further moves in 2023. when it comes to equities, nikkei futures are starting to gain, too tense of a percent higher. strategists at morgan stanley and see the tweak as providing extra clarity that will support further gains in the equity markets. morgan stanley saying opportunities are even clearer. the central bank has added policy flex ability without signaling a tightening cycle. goldman, we are hearing that they think that boj overhang appears to be removed. a couple of comments on the bowl camp for further gains when it

comes to japan stocks. let's bring in a senior fx rates reporter ruth carson. what are we hearing from biggest market voices about what they are doing with their japan portfolios in the wake of the y cc move to try to make money? ruth: look, it has been incredible to watch markets right now. the shock came but it is interesting to note investors have been planning this for months. ever since september and the first shock came, investors from sydney to london to new york have been wondering what this means for japanese assets. to put things into perspective, schroeder's in sydney, they have been short on jgb's. pemco has been underrate on japan but had been buying the yen. in singapore you got blue and jet, the hedge, looking to long

positions. it is a two-pronged approach for investors in japanese markets and when you consider where the yen is at the moment, 142, these are cheap levels for many people to come in. ubs, the value for the yen over the next 12 months is around 124 mark. shery: is the fate of the yen depending on what the boj will do in the next few months? economists surveyed by bloomberg do not expect boj to do anything for the rest of the year. ruth: absolutely. it's a tug-of-war for the yen, between the yen bears and bulls, who is right. we think about it it's been interesting to watch the yen's moves in the last few trading sessions. normally when the central bank tightens monetary policy the currency tends to strengthen as we have seen in the dollar reaching a record high last year for example.

the yen has been different. we saw it on friday and at 142, it's trading weaker than this time last week before the weekend. this just goes to show how investors are really trying to digest a lot of what the boj is doing it is going to do. are they really tightening? how higher they willing to go when it comes to intervening in markets and until the uncertainty abets you could see weakness before potentially strengthening. shery: senior fx and rates reporter ruth carson with the latest on the boj and where the yen is headed as investors tried to digest the direction of policy. investors are also trying to figure out where the chinese economy is going. showing signs of significant slowdown after decades of supercharged growth. much anticipated post-pandemic recovery appears to have flopped with data flashing warning signs across the economy. greater china senior executive

editor john takes a deep dive in this bloomberg originals report. >> this was supposed to be the year that china's economy came roaring back. what we have had our signs that this economy is struggling. when we talk about why the economy is slow, there's three things i would .2. one, a problem with the real estate market here. the government identified that there was a bubble in property two or three years ago and started to take steps to try to deflate the bubble. now in 2023, you see the very dramatic in some places drop in home prices. that leads to the second point i would make, which is about confidence. when the home prices fall, even if people are not earning less in terms of salary, they are feeling poorer. the third thing i would .2 is debt. there is way too much debt at

the local level already, so the government is looking for new ways to get the economy going again. shery: bloomberg's john the joining us from beijing. let's bring in managing director at china beige book international. what are the numbers telling you? what is being shown on the ground is this slowdown in consumption. people really not wanting to spend. >> the numbers are telling us it is a year of middling recovery which is not what the markets at all expected or wanted to see of course. on the consumer side, you are still seeing the spending basket, travel and dining out, those are remaining strong for the summer. when it comes to goods, luxury goods, autos, furniture, appliances etc., etc., were seen a sharp pull down in july by the consumers. shery: what's happening because we thought retail sales were starting to improve or june.

will the latest measures -- i'm really starting to lose count of how many measures we've seen from beijing, are those actually going to help in ensuring of confidence in china? >> day may help along the margins. they are targeted. the ideas of this year has been we are not going to do big stimulus. no bazooka being shot at the economy. you may see improvement into the fall and so forth but consumers will remain cautious. they will spend on one thing or the other, not across the board. haidi: 5% growth, if they managed to get there with support mechanisms is not horrible. it is this a case of kind of having to shift expectations into the longer of what the chinese economy looks like after decades of super growth? >> absolutely. at the first thing, investors have to reorient how they think about china. the era of 6%, 8% growth is gone and gone forever. we are looking at sub at 5% for

sure looking forward, maybe even two or 3% very soon. by that standard, beijing does not have a lot of pressure on it to do big stimulus. i think a lot of the market expectations in the beginning of the year were just vastly overshot. and what you have seen as a massive overreaction to do all of that for the rest of the year. haidi: you know, capital for households and broadly is interesting because we know there is a capital account, very few avenues how households can invest excess savings, hence why they are sitting on a lot of it. that does not square with what we saw in the previous package, the overall sentiment of ordinary people saying that they do not feel wealthy or that they feel poor at this point. >> there has been the deflating of the property bubble which was a policy choice that was made, it has led to wealth destruction. and what it means today is that consumer confidence is being directly hurt. one of the few avenues of

investment in creating wealth in the country has been essentially destroyed. shery: we saw the politburo changing its tune then perhaps signaling the easing of those policies in the property sector. when can we expect that to make a difference? >> look, it's going to take a while for that to make folks go out there to get a house again or perhaps even think about getting a second home. in our numbers we are seeing mortgage rates going down. we are seeing housing sales improve in certain quarters but it is not an economy wide trend at all and i expect it to remain choppy moving forward. haidi: what are the takeaways for investors? in the recent data, you have seen selective parts of the chinese consumer still strong. some parts of her spend -- revenge spending. will that extend to further strength in luxury? how would investors be wanting to get exposure to the strength that is there? >> when we look at what the

bullish signals are in the data, you're seeing a pickup in physical activity. it is small but an improvement which tells you that you are going to get targeted stimulus including on the fiscal side. that is positive. on the whole markets should prepare for the fact that this will be a year of modest growth. and that includes much more modest stimulus then they thought would happen in january and february. haidi: always great to chat with you. managing director at china beige book international. let's get to other stories when it comes to china or in the country has issued a rare alert for flooding. enforced until 8 p.m. on tuesday evening. orange alert, the second-highest warning has been issued for northern districts of the capital. northern china has suffered two days of extremely heavy rainfall and state meteor is warning that

the risk of flooding has increased. post-pandemic boom is running out of steam suggesting that the return to growth may not be as strong as hoped. initial figures show gdp expanded into the second quarter from a year ago slowing from the first quarter's two and a half percent growth. the city will release its final figures next week. bloomberg has learned u.s. commerce secretary gina raimondo is planning on visiting china. her trip is part of the biden administration's efforts to reduce tensions between the world's two biggest economies. sources say they are aiming to travel to beijing the week of august 21. unclear what she could expect to deliver for u.s. businesses. of next, as we emerge from the world's hottest month on record we take a closer look at what needs to happen in terms of climate policy to battle what the u.n. chief is now calling not global warming but global boiling. we get more from bloomberg

energy finance, next. this is bloomberg. ♪ the chase ink business premier card is made for people like sam, who make- everyday products, designed smarter. like a smart coffee grinder, that orders fresh beans for you. oh, genius! for more breakthroughs like that- i need a breakthrough card. like ours! with 2.5% cash back on purchases of $5,000 or more. plus unlimited 2% cash back on all other purchases. and with greater spending potential, sam can keep making smart ideas- a brilliant reality! the ink business premier card from chase for business. make more of what's yours. 76% of 23andme health customers surveyed threported taking healthierrd from chactions.business. because they know health isn't just a future state. health happens now. start your dna-powered health journey today with personalized insights from 23andme.

you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh ♪ haidi: july has become the world's hottest month as keep waves and wildfires menaced europe, asia and north america. scientists think the last several years have been warmer than any point in more than 120

5000 years, a visceral reminder that global heat is rising faster than climate policy and attempts to counteract it. let's bring in bloomberg nef head of research. allie, this story hit home. the planet is warming much faster than the policy that we are seeing to transition, so what can be done at this? >> so as climate scientists have been telling us for years, we have to make sure that we reach peak greenhouse gas in missions as soon as possible. and then when we reach the peak, we would have to reduce emissions to net zero by sometime around mid century. a quicker reach in emissions, the more time it would have to get to net zero. the slower we reach peak, the less time we would have. this is the challenge we are dealing with an absorption of a

something they've been telling us for years -- unfortunately something we have not been able to get it handle on. shery: what are the biggest challenge is to fulfill the goals of the paris agreement? >> so as a first step, what they need to make sure they have done is their 2030 omission target, the nationally determined contributions should be aligned with the carbon budget that would meet the paris agreements goal of keeping the average surface temperature rise by below three degrees by the end of the century. it essentially means countries have to be reducing emissions by 2030, roughly about 40% relative to 2019 levels. good news is many countries particularly have already set compliant targets and even those that have not set targets, large economies like india and asia or

china, given how much improvement we have seen in technologies such as renewables, we still have a lot of room to set more ambitious targets. targets are one thing. countries have to make sure they are achieving their targets, which even for members with good targets, they are not all on track with hitting their emission reduction targets. haidi: you are in tokyo. the city has been experiencing record temperatures. your team has published the latest japan net zero scenario report. what are the key takeaways? ali: so what we have tried to do with our net zero scenario modeling, make sure that not only we try to hit our goal, but we do it in an economically sustainable manner. in the case of japan, the country has been heavily dependent on fossil fuel imports. in our scenarios, the difference with for example the government

and energy company is considering is that we are focusing on mature technologies that can help depend get to net zero while also strengthening its energy security and economy. this means that when it comes to the power sector we do not see any role for technology such as retrofitting existing plans for clean ammonia combustion for clean hydrogen usage. the reason for this is that beyond sort of the out front capital expenditure required, if japan were to pursue such technologies, not only the cost would go up significantly, it would lock in the country into continuous imports of clean hydrogen or its derivative. the government right now is projecting that by 2050, japan would need 20 million tons of clean hydrogen annually. this is over six times the current hydrogen consumption in japan. in our scenario, we see the number going up.

and a lot more sustainable and a lot more economic. shery: bloomberg nef head of research. we have more to come on daybreak asia. this is bloomberg. ♪

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in deals. bloomberg has learned exxon is in talks with automakers about supplying lithium needed in electric vehicle batteries. the companies involved include tesla, ford and volkswagen. it is having discussions with samsung. there are one of several companies looking to expand into lithium production to take advantage of surging demand. bloomberg has learned that -- is set to launch a public offering of birkenstock as soon as possible. the listing could value the german sandal maker at more than $8 billion. bloomberg reported that the private fund on birkenstocks potential listing. shery: two of japan's largest lenders posted quarterly profits that beat forecast. this is a solid start to a year projected to deliver results. let's get details from breaking news editor garrett allen.

this is before we are seeing the boj tweaking the y cc path even more. so what did we see from these megabanks that reported? >> you are exactly right. they have had a strong opening quarter and that factors in the gift that the boj gave them on friday. so it's looking really strong. they are 40% already to the full year target. a little deceiving looking at the bottom line because they did have a large reversed credit cost. ¥30 billion on credit costs. lending profit was not superstrong. it was down year on year about 14%. mizuho is about 30% of their target. profit slipped two and a half percent down, so it reflects that the current japanese

lending environment is difficult but it remains to see what the boj tweak will do going forward. we've seen they have announced their august home lending rates. their rates increased so going forward we could see margins strengthening further and you know, they're already high profit targets are well on track so down the road the implication there of courses that expectations for a shareholder return later in the year maybe through a buyback. when that will come will remain to be seen but this is what we are watching for going forward. haidi: what else are you watching for in terms of earnings set to report today? >> yeah, it's another huge day. we have japan's third megabanks, the biggest one. about 4:00, they have forecast a whopping 1.3 trillion yen for this year, that will be a record

if they achieve that. so will be keeping our eyes on how they progress toward that target. they've given us an indication that it's probably going to be good. first quarter figures are going to look skewed because the union bank in the first quarter last year, to not rely on the year on year percentage too much when looking at them. other than that, japan financials reporting today. they had a good quarter last year, third consecutive year of declines in profit under the current ceo. in a list are bullish on the first quarter. our survey showed they are expecting a fairly strong turn this quarter. so again, do not forget hsbc is also reporting today. they are coming in on the second quarter and analysts are relatively bullish on their outlook.

we have had the highball rate adjustments which should have given them more meat on their margins. analysts are chattering about a potential buyer from hsbc so were watching that. away from financials in japan today we've got toyota. japan's biggest carmaker. their initial report for a japanese company coming in at 125, so we will have media reaction from how that looks. there is potential that there could be a tweak to their outlook on the positive side and also the interesting thing with toyota is share price is a smidgen away from an all-time record, so were watching that through the day and as they report through the afternoon to see if they can hit that new high. haidi: bloomberg's gareth allen ahead of a busy day. when it comes to country garden, the property developer according to the international financing review will, canceling a 2.3

billion dollar hong kong primary placement plan. they earlier reported country garden is offering 1.8 billion shares at a fixed price of one dollar 30 hong kong a piece in a primary placement. those proceeds would be used for repaying debt with jp morgan. we're hearing country garden has canceled that placement. this is one of china's largest private property developers. it's expecting a net loss, underscoring the continued pressure that developers are under in china. the market opens in sydney and tokyo are next. this is bloomberg. ♪

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>> this is daybreak: asia counting down the asia's major market open after u.s. stocks managed to finish in the green. the s&p 500 at the 16 month high. we are talking about the longest monthly winning streak for the s&p 500 since august of 2021. but of course we will continue to watch the central-bank decisions in the monetary policy going forward to see how that kid impact investor sentiment. haidi: it is rba decision day and we really seen this fascinating split between what traders are expecting and what the markets are pricing and what the majority of economists are saying, which is another 25 basis point hike. either way, we are getting to the end of the hike -- hiking cycle. shery: that is the key question for these big economies and their central banks. advanced economies, how much longer will we tighten as we

continue to see these developing economies now, their economic growth starting to be under pressure. take a look at south korea, export numbers falling in the double digits for the month of july, a contraction of 16.5%, which is bigger than expected. we are also seeing imports year on year in south korea declining 25.4%. the yen much bigger, that was expected for the month of july and. that is actually leaving a trade deficit of $1.63 billion for south korea. this coming at a time we have see a gauge words headed. the weakening demand for semiconductors and of course the weak recovery in china as well. take a look at the kospi, which is now gaining ground for a fourth consecutive session that could be under pressure against

the u.s. dollar. 12 77 level. we had actually seen a little bit of upside for that korean won in the past couple of sessions, given global investors have been buying local equities. we are also watching the open in japan. take a look at the nikkei coming online, higher by 4/10 of 1%. it's right now it the highest level in about three weeks. the japanese yen felt -- fell to a bout a three week low. we see the downside pressure against the dollar after the bank of japan announced those unscheduled bond purchases, perhaps an indication that isn't necessarily ready to let yield sore. invest is trying to gauge where it's headed as the 10 year yield in the treasury spaces holding at that 396 level, a little bit of upside when treasuries have been unchanged given that we are bracing for that $100 billion wave of treasury bond sales this year.

haidi: also bracing going into the rba decision today, given that we had these unusual dynamics. usually you see markets a little more keen to moves from central banks, this time it's the reverse, you see traders passing and no change at today's meeting but economists, the majority of them said they see a 25 basis point move. either way, whether we get a hawkish colt or potentially that 25 basis points, consensus seem that a lot of central banks are really getting towards the end of their hiking cycle. take a look at what we see when it comes to the open, about of 10th of 1% high when it comes to trading in sydney. watching the oil names, given that we have seen a 20% upside when it comes to trading in crude prices for the past five weeks. we see quite a bit of optimism when it comes to minors on the back of more elaboration on chinese stimulus measures.

that's where we saw the balance in the aussie dollar 1%. really narrowing the gains we saw in the bloomberg industrial metals. the aussie dollar just sitting over 67 u.s. cents. the question is when we see bond yields -- where we see bond yields go from here. we see them going higher. could be a knee-jerk reaction to the downside. but the path does seem to be higher. the question for the aussie is will it be able to hold on to the recent run of gains if we see that closing of the premium against treasuries. just like 10 basis points at the moment when it comes to the 10-year. not a lot to be working for a period watching the aussie sensitive to any further news we get out of china. take a look at brent crude as i mentioned, we did see quite a strong rally over the past few weeks that we see a little bit of softness there, about a quarter of 1% lower. shery: when it comes to the bank of japan, boj watchers are not expecting any change from the

central-bank this year on the back of last week's tweet of the program. this talk about the broader market impact. the cio of head of discretionary portfolio management at nomura. great to have you with us. the consensus seems to be the yc see, the queen -- tweet, yes it was a stunner. no expectation for the survey going into at least 2024, does this remove an element of uncertainty for the investors that allows the next leg up when it comes to the japan stock rally? >> yes, not just for japan but the other big markets, this was their event where the idea that the yield curve control for the boj. i think this is straightforward japan equity story. you still have a stronger yen. you have a measured control policy change, controlled growth inflation at the moment, and these are all things that investors like when they are looking for equity. particularly when you see that

aggressive move up, and now you are looking for a stable move forward so you can do long-term tactical asset locations. haidi: a lot of that aggressive move up was really centered on certain stocks, the ai chip related names, the trading houses. in this more nuanced part of the rally, where do you see opportunities? >> a lot of the other markets, the nuances even more. in japan, a lot of investors were still sending the low asset allocation. two percent, 3% asset allocation in japan even if it's a 3 -- g3 economy. we think it's a structural shift even though japan is saying i need to be invested in. i think it still going to be pretty broad across the space, but when it comes to where we going to get the next big push, you highlighted ai, we do believe ai and asia still has a

lot to go. where you can still see support there is in the nations that are ready for ai. japan is one of them. japan is ready for that. how this plays into other sectors like robotics, systems for the elderly, medicine. properties become have really -- heavily important in japan. and i think the biggest thing for japan is now locals buying local again. you have cash coming out of the positives and going into the markets. and that's really good for the long-term ability of the market. shery: will investors be more optimistic about the chinese markets? will they brave going into the uncertainty of china, given all of the measures announced for economic growth? quake say think china in asia is something that reflect over the last few months, but in the medium-term i think there's headwinds. yes, it's attractive. many market participants are

saying throw the towel and in this stimulus comes very timely moments. when you go into the stimulus and look at how much you can actually gain, you still have to see the growth angle change. for us, once the tactical trader has been great for a more longer-term initiative in china, we need to focus on the aspects of the locker that will speed -- will be supported by the locker. we're looking at security around the friends, around food, around energy, these are spaces we think have longer-term legs with a short-term space around tech is quite high. we still see some links from here, we want to be very nimble when it comes to china waltzed the stimulus will place it. shery: if you are liking tech and the potential of ai, how do you feel about those northeastern tech care -- hardware companies like samsung or tsmc? >> they are very solid and they will remain solid. in the ai space, we are like

coca-cola. a lot of people made money on the fridge raider, that's with a ice at the moment but the real money was came from coca-cola using the refrigerator. the people in the companies that will use ai will benefit. looking for the next coca-cola equivalent in ai. the manufacturers like you highlighted, the next stage is the new and upcoming who can take advantage of that. we are looking at the next level, the users of ai and where the advances will come through. shery: great to have you with us, cio at nomura. this of course as we continue to watch japanese banks at the market open in tokyo. we are seeing downside being led by mitsubishi ufj. we of course had seem two of japan's largest lenders posting quarterly profits. the beat forecast, we are talking about -- as well as the financial group.

these positive numbers coming even before we actually saw japan coming out of negative interest rates as of yet. thanks in the u.s. and elsewhere, japanese has yet to see rate hikes at home, but we have seen those positive numbers, we are expecting results out of japan today, including from namor, and we will be watching other earnings as hsbc and we will also keep an ion those lenders. still ahead on "daybreak asia", china state council calling on cities to start introducing property policies to boost the recovery. we look at the chances of success for stephen this measures next. this is bloomberg. ♪

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>> the moment is still not solid. some consumers lack confidence in have many concerns, and the consumer experience in some areas is not good. all this requires further stimulus. the decisions of the central committee together with other relevant dependence have conducted in-depth analysis and plans to formulate a series of policies to promote consumption recovery. haidi: the vice chairman of

china's top economic planning agency whereas beijing sinks to boost consumption. it's also called on cities to start introducing policies to ensure the healthy development of the property markets. it's good to our chinese property editor. how significant are these support measures. we've had so many cumulatively. >> good morning, heidi. what you are seeing is this continued incremental rollout of policies that beijing said would help growth and help the economy, sasol on the back of this politburo meeting that was held last week where the government that say that they needed to put out more targeted policies. i don't know we will see the massive stimulus that investors have been thinking a few weeks ago that would come into play, but a lot is the marginal things that still signals that there is some support on the way. so the vice chair was just

talking about some consumption related measures. they talked about removing restrictions on car purchases, encouraging people to spend more money on goods. there were some other home good related policies in the last couple of days. we also heard from the state council last night talking about more property policies that should be in development and how cities need to tailor policies to their own cities, which is something we've heard in recent weeks on the property sector in particular. ultimately, this all does feel very incremental, but it signals to the rest of the world, the economy that there are policies on the way to help in some way. shery: you are almost running out of breath trying to explain and lay out all the things i have been announced. let's not forget they cut rates in june. what more can they do to help the economy? jill: that's a great question. in some ways, beijing's ability

to help is somewhat limiting. one of the reasons why they can't rollout a bunch of big demand-side massive stimulus measures, they can't cut checks for everybody, first of all, that's not really part of china's policies towards handling economic stimulus. but they also have a lot of burdens on hand that they have to look at, local governments have wrapped up a lot of debt. ultimately, it does seem like their strategy right now is he's very targeted, limited measures that they think are helping specific sectors second piece confidence, but their household confidence or business confidence. maybe it's that would see additional interest rate cuts in the coming months. limited in nature. ultimately, again, it's probably not going to be some kind of massive stimulus program, it's about these targeted measures in these announcements that we are likely to see in the coming weeks and months. shery: bloomberg china economy

editor. the reserve bank about show you may be facing one of its toughest great decisions yet with the inflation rate declining, but still twice the central banks target. our global economic and policy editor kathleen hays this year with the latest. and it's a close call. kathleen: it's a tough decision added tough time to be is central banker. it's a tough time to be a central bank at any time when your inflation rate is still high, it's getting better, but it's far from its target and you have a lot of people worrying about you doing too much and causing a recession that many say isn't needed although some would say you want to slow the inflation down, you have facility economy down. 12, look for the pause, 18, look for the hike. it's a big margin, although still split. if you look at what traders are looking for, they are convinced inflation has peaked in australia, it's starting to come down, they have done enough, so we don't see anymore rate hikes

at all. look at the inflation because you talk about retail and you talk about so many things. second quarter, year-over-year inflation rate came down to 6%, more than expected from 7% but 2% to 3% is the target range. therefore inflation numbers cave out a monthly basis, showing there is stickiness not coming down as quickly as they should. i mentioned that their central banks, this is another reason why people figure, if the fed had to hike rates will more time and today, if the ecb at the hike rates and did it, and both of them said, we aren't sure what will happen our next meeting, like at the rba do the same kind of thing and in a sense they are saying it would make sense. retail sales have been on a nice solid gain month after month, but it looks like 400 basis points of rate hikes are taking their toll. you have consumer spending retail sales down 0.8% on the latest reading. home prices have are starting to decelerate. there's a lot of things that are

moving of the direction where i would say, maybe that great pause is ok. quickly i went to say out westpac, one of the best-known economists in australia, things that they will do a 25 basis point rate hike. he thinks they may pause in september and wait for more data then but he think there's a lot of stickiness and services inflation at macquarie, they see no change because of the softening and inflation. at the same time they realize that more tightening could be possible. this may not be enough inflation improvement as we looked on the road, maybe after the third quarter report, that's been the rba may have to be reevaluated. everybody is in the same place, they know the rba could do either thing. at the end of the day no inflation is under control but you know it's making an improvement. you have to get on one side or the other. it's a decision from the rba where no one will be surprised that i the decision and everybody is waiting to see just what it is. of course. haidi: when it comes to the bank

of japan, can we relax? kathleen: yes, according to our bloomberg survey. after that surprised week in yield curve control, still tied to zero, that .5 on the other side of the zero range is now in question because the boj said we are going to, not target it so closely and come in and buy bonds that 1% every day so the markets have been testing them overnight. the 10-year jgb getting up the .6% or over. here's our bloomberg survey, 41 economist, 90 1%, no more policy shifts, sit back and relax. 26% see the next policy shift in april, and in fact, nearly 80% of people seeing that next move see whenever it comes, it's going to be completely getting rid of yield curve control and then, 60% say that they will do something more dramatic in their next move, and that low, taking

the key rate off of -.120 or something even positive, that's what most boj officials, former boj officials and former economists say, yield curve control is just adjustments in a technical manner. you could see the move that they made. you can see how the 10 year jgb behaved overnight. here in new york, broad brothers things they can't control everything. he thinks they are trying to control capital flows, ultimately it will lead to a weaker yen and he is concerned that this has squandered boj credibility, potentially credibility of the new governor for a whole law of nothing. he doesn't think this is a move that will buy them as much as they think. we know that everyone is expecting them to move again, not this year but next at the same time, there's a lot of

potential volatility against jgb volatility and that's what we are waiting to see. shery: kathleen hays with the latest power top monetary policy stories. you can get around up about of the stories you need to know to get your day going of the additional daybreak. bloomberg subscribers go to dayb . you can customize your settings audio link at the news on the industries in the assets that you care about. this is bloomberg. ♪

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what kind of high-risk loans are we talking about? su: these are structure complex loans that credit suisse made to wealthy individuals. a quarter of their portfolio, to wealthy individuals the voc wants to neutralize risk, both with profitability and reputation, scrutinizing 86 billion dollars in its global loan portfolio including those loans inherited from credit suisse. he their wine downers selloff the riskier apac loans in the so-called non-core unit. as according to the sources and it's important to call out prior to the takeover, credit suisse had a decade-long portion to southeast asia where lead to

billion our focus families and some of these loans were both to the billionaires themselves, and there was a connectedness to their businesses, all of this help make if the foreign bank for entrepreneurs, and that was viewed as a plus for ubs, but were also told by the sources that the credit suisse client list in the apac region may have some individuals were some structures of loans that ubs may no longer want to deal with. we also told a ubs is likely to keep the standard lumbar loans, the manila type loans to the wealthy asian clients that credit suisse had made. will get more details and we will expected at the earnings call at the end about euros. shery: the exodus on because ubs and credit suisse continues in hong kong. >> six highly ranked veteran wealth managers on the credit

suisse side based out of hong kong have now left, and this is coming less after the merger was completed. it's coming a week after ubs announced a lot of new wealth management heads, you have to recall that earlier this month that credit suisse wealth unit was pretty much told by ups to dust off the resume and they were told that new leadership changes would be coming by mid july and that this would kick off a single floor ranking appointments which has occurred. you're not seeing a big change in the stock either in the u.s. or europe. barker group petrochina and joseph lau and the team leader at the greater china private banking team. again, when you see these mergers, these kinds of departures are expected, although ups had vowed to keep

many of the top managers, as many as it could. haidi: bloomberg su keenan, european futures are opening. stoxx 50 futures are looking pretty flat. we are nearing the lack of direction that we see in the dax futures. we did see marginal gains in the previous session. really the outlook when it comes to a precept tutor earnings season where two of the key factors, we also see jp morgan warning that any kind of strength or balance in the euro that we see is really an outlier that the usual parish factors we will look at over the past few months are still relevant going forward for the common currency. more to come on "daybreak asia". this is bloomberg. ♪ back in the day, sneaker drops meant getting online to wait in line. now with xfinity mobile... ...we get the fastest mobile service and can get the freshest kicks asap. i got this. save hundreds a year over t-mobile, at&t and verizon

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shery: take a look at how commodities are trading. oil prices are stabilizing a little bit after we saw gains in the wall street session. this is the largest monthly increase in more than a year. we are seeing indications of the rally, it could be due for a pause after this huge run-up that we've seen in both wti and brent prices. piercing wti still above that $81 a barrel level. we continue to follow base metals expectations of more chinese stimulus to come and how that will really improve the economy has been felt across metal space. copper already hitting that three-month high and iron ore prices also rising more than a percent in the previous session. the coffee, take a look at that search, we still have more than 4%. haidi, we are seeing those stockpiles of high-end beings coming under pressure.

haidi: that's a subject close to both of our hearts. we don't want more expensive coffee. asia pmi causing the bloomberg. a bigger one we are watching out for is the pmi for china, that's expected really to mirror the weakness piece on the official pmi numbers we saw yesterday. take a look at the ratings across. it is a mixed bag. we are seeing contractions really persist when it comes to japan, south korea, that really picking up from 47.8. potentially we are seeing forward-looking confidence, looking a little bit better, taiwan really falling further into contractionary territory of 44 point one. receive weakness out of malaysia, the philippine starting to show a little bit more strength, the 1.9 from 50.9. indonesia continues to be to stand out when it comes to broader economic activity and expectations. we are seeing the weaker dollar giving southeast asia more broadly, a little bit of that

strength back as well. vietnam is stealing contractionary territory. shery: we are waiting china pmi numbers as well, for future of the property market there, perhaps coming into clear focus, government officials needing more support to prop up the sector, the real estate crisis shifting, stifling the economy, fueling expectations for the government to take further steps, for more lives bring in bloomberg opinion columnists, so where's the property sector in china going in the long term as we see these measures now being implemented right now? >> they don't think we should hope for a rebound, the best we can hope for is basically stabilization of china's housing market. i think six months from now, one concept that people are going to start talking about is housing downgrade. we hear a lot about consumption downgrade, households with

extended products. their commoditized products. i think that's going to be the same thing with the housing market. china's homeownership is already at 90% and it has always been cheaper to rent instead of buying apartment in big cities. and then with the chinese now seeing their capital gain with their property, they are just going to say, forget it, i'm not going to upgrade, i might even sell my apartment and moved to a people -- cheaper rental. that is basically coming to the forefront aim about six months to one year from now. haidi: loosing a renewed wave of developer default. do they deal with these potential defaults? >> i think beijing probably thinks the worst financial crisis related to developers is over. after the evergrande collapse and nothing happened.

i do feel that a lot of the developers that we are still seeing are not going to exist in two or three years. and i'm not even convinced country guarding can survive. the reason is that all these chinese developers have gone building project across the country. and what will happen is there will be very few national developers left and instead, we will see regional developers. when things go tough, if you are a national developer from the province, you are building things in shanghai. the government is not going to come to your house when things go bad. i think what will happen is you will have shanghai developers but you will not have china developers. and a lot of them will not survive. haidi: a significant amount of household and personal wealth has been built over the past couple of decades on investments

into asset classes like the property sector. without that, what is the outlook. it comes to household wealth, the consumer. b had a story where we heard her ordinary chinese people are feeling poor these days and so much of that has to do with the property market. >> absolutely. a lot of chinese people are pennypinching, it's not just housing on the job stability in china because china is in japan and there is no job stability and security. so going back to the housing market, the plaything households will say, instead of paying all this mortgage, i'm going to downgrade and move to a cheaper apartment so that i can pay for my kids education, etc. i think this mentality is going to stay for a while and there's not much the government can do at this point.

haidi: foreign investors, despite all this uncertainties are coming back to chinese stock markets. singling your shift in sentiment after months of skepticism. bloomberg's vicious dog reporter joins us in hong kong. the data in the recovery prospects may not back this up, but we are seeing a sudden jump in foreign inflows. >> exactly. i think we are saying it, especially in the past five or six sessions in the inflowing july think is the biggest since january. so you are seeing that investors are really petting china's economy is approaching and the inflection point. and that at the data are not helping, but people have very high hopes of the government stimulus in the meeting last week. in terms of what they are buying, we are saying a lot that

is related and byd. it seems like investors, especially foreign investors are really optimistic, at least they are hopeful that all of the measures that have been announced in the past few days will really take effect in the flagging economy. shery: does the fact that foreign investors are buying this narrative report stimulus coming from china and that the foreign many info is really leading to that rally, does that imply that we could see more gains? frexit think it's very interesting. i don't think foreign investors have a lot of patience waiting for the data and we realize they won't give up that much like a window to see the data really pick up. i think the time is very limited for those policies to take effect and then translate into earnings recovery.

and once that doesn't deliver in the second half, i think there would be accelerator outflow following. it is now surprised to see that. we are saying the farm lenny is the smart money, a lot of local managers would follow foreign money has been buying in the asian markets. all of buying his and those big names, so it's yet to be seen whether it can spread into more names like in the asian market. shery: bloomberg's asia stocks reporter trying us from hong kong ahead of the market opens in china. we are seeing this set up across asia right now as we await giants also join the open. we are seeing kospi now gaining 9/10 of 1%. we are talking about the highest level since the beginning of june. the nikkei also gaining 2/10 of

a percent, extending those gains that already tickets to the highest level in more than three weeks as the japanese yen now hold steady at 142 level, and around the three week low against the u.s. dollar as we continue to see speculation about what the bank of japan will do next, but of course all eyes on with the rba will do today. we have that rate decision later this morning and we are seeing the asx 200 gaining 2/10 of 1%. the aussie dollar was already the biggest gainer on g10 currencies ahead of the rba rate decision, which is pretty split. kiwi stocks declining about half a percent. this is bloomberg. ♪

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haidi: the japanese megabanks results are in the spotlight after bank of japan loosened its grip on bond yields. beating estimates. we are expecting second-quarter numbers out of hsbc today, unless focused on the potential for a first multibillion-dollar buyback. joining us now is the senior equity analyst at morningstar. michael, given that the boj's tweets are top of mind, volatility in that market, give us your reaction to the japanese bank earnings and what jumped out to you. >> this is the first fiscal

quarter, june quarter earnings, wait too early to see any impact if there's impact from the bank of japan change. this fiscal year might be early. i've been saying that since the first quarter earnings that we've had from the bank so far. basically, it's no different than if the bank of japan have them nothing. it's basically recovery trends from slightly elevated credit costs and the pandemic, but that recovery is just back to where we were in 2018 or so, saying sector around 7%. nothing higher than that. there's not a lot to see, there are some details from the individual banks, thank -- but i think we are waiting on another year or two to see if the bank of japan moves with the change. haidi: do you think the rally that has propelled bancshares to the highest at about eight years, does that help?

>> based upon the near term's earning momentum, i think the move is already -- the share price move is probably looking forward more to what the market thinks might happen several years out. i think it really depends on what the inflation outlook is going to be like in japan, whether we will have services prices inflation and weather -- most importantly, whether wages in japan will go up. if that happens, there's a lot of upside. but whether that will happen or not i think it's a bit skeptical at in a bit taking a cautious stance on it. shery: we have nomura coming off a quarter that was very challenging for them. what are we expecting? >> for nomura, we've got a lot of -- a lot of other the japanese brokerages results. a lot of are pretty strong from two sources. one is with the increase in

japanese share prices, with a bit of a lack, i think japanese retail investors came back to the market. when i say bit of a lag, share prices in japan went up a little while ago but i think it was driven by foreign investors. the most recent war we did have them come back, which should be coded, and also, some of the japanese brokerages did well in u.s. bond trading. for nomura, i think it will benefit from the local market, but whether they will benefit from their u.s. business or fixed income is really the question. it has been a bit spotty for them. shery: we're watching hsbc and we have this recent rebound, given hong kong's importance for hsbc, what are we expecting? >> the rebound is catching up, i think definitely that's encouraging for hong kong banks. one thing i would say for the net interest is long growth in

asia has been premed absent recently you know china's recovery has been delayed, and also, maybe at the beginning of the year we were hoping for a strong rebound in fee income after china pandemic closing last year. and that basically has that happened yet. that being said, definitely, hsbc is benefiting from widening net interest margins, and i think it appears to be a recovery trends. what management is trying to do is, it deals with criticism as an activist investors saying, this is a fundamental turnaround. the question for hsbc is whether this is a cyclical turnaround or whether a fundamental turnaround that would bring up returns for many years. haidi: when it comes of the broader micro headwinds facing greater china as a whole, because we are also starting to

see the growth momentum for hong kong we get a little as well, how does that particularly plain to the business going forward? >> in the last couple of days i think we've seen stronger market momentum in the hong kong shares and where there's more optimism in china, i think certainly that would be a nice tailwind for hsbc, but the management of hsbc, this kind of turnaround, are they bringing their sustainability back to where was prior to 2010 or 2015 or so, some of their issues with low profitability predated the pandemic so it's really to see how they achieve the fundamental change of really focusing and cutting back the underperforming businesses of what happens with china and delivering strong

results from their business. shery: great to have you with us, senior equity analyst and morningstar with those big bank earnings. but aside from those, we are waiting for toyota's first quarter results in this expecting a profit beat, we have supply chain improvements at global rebound and vehicle demand. reed stevenson joins us now, read, of course we already saw toyota making and selling a record number of cars last month. >> the focus this time around is whether they're going to raise their operating profit outlook for the current fiscal year to march 2024. at the moment, what toyota is saying is they are expecting ¥3 trillion in operating profit off the back of 38 trillion yen in sales for the current fiscal time, but as you just mentioned, their numbers are already looking pretty good, so analysts

are already pricing in an operating profit of roughly 3.6 trillion on top of more than 40 trillion yen in revenue, so really the pressure is on to see if they are going to have to raise their own net guidance for the year in line with market expectations. of course one of the key elements of that is going to be the quarterly profit result, which at the moment, the estimates are calling for about 880 billion yen. so those are really the numbers to watch this time around. haidi: what about some of the peers we are watching? >> toyota is in a class of its own. it's already japan's largest company, largest employer, and it's also the world's top-selling automaker. so what they really do is set

the tone for the rest of the global automotive industry in terms of their peers, honda, nissan, suzuki, they don't have the same scale and to a certain extent are still coming up with a more comprehensive ev strategy whereas toyota has made some progress on that this year as well. also worth noting is that toyota earnings numbers will come out during tokyo trading hours. so we will also see an immediate reaction in the markets of those numbers. shery: bloomberg senior editor reed stevenson joining us from tokyo with a preview of toyota. this is what we are watching when it comes to markets trading here in asia at the moment. lots more to come without rba decision as well as the trading in greater china in the next hour. but this is the picture we are seeing a modest upside when it comes to the asian rally really

picking on the back of what was a pretty strong session wall street overnight. the glass half-full outlook when it comes to the u.s. economy continues to play out. we had weakness across those asia pmi numbers more broadly earlier, so that potentially weighs on sentiment given that that is forward-looking data. take a look at the breakdown of sect hers. we are seeing pretty good gains when it comes to technology up at quarter of 1%. weakness and financials talking about a big table and it comes to hsbc as well as those numbers out of the big japanese lenders. the rates uncertainty as to where central banks are headed from here, not to mention the big shocking decision from the bank of japan towards the end of last week is still percolating through. we're also watching significant strength when it comes to materials and oil as well. this is bloomberg. ♪ this is bloomberg. ♪ mortar, "daybreak asia". -- more to come on "daybreak asia". this is bloomberg. ♪

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haidi: and she says many policymakers and corporate executives are being willfully anger and warming. they spoke exclusively about how china is shaping up as a leader in the greener energy transition despite the economic worries. brexit chinese government is facing really serious headwinds that have excellent climate scientist. we know the ball personally, we

work with them personally, they are predicting likely are that the world is in global warming now. and that everyone must move. that their own government must take solid steps, really measurable fiscal steps to keep their economy going because the negative view on the climate is happening hard to the chinese economy. i think they can recover and they will go through. the rest of the world though, francine, where our directors and policymakers aren't acknowledging the same in media an actual threat to our economy from climate change. they're the ones who could be in trouble. francine: what is going on? i don't know whether there is a change of heart on climate change policies because we also see saudi arabia promising to mind more. i think the u.k. is about an ounce 100 more license according to the bbc for things in the northeast. do you see a seachange about

energy security there for a use of fossil feeling of mining? rex i think we've got policymakers and executive germans, she said test chief executives all over the world and this time warp, this soft interest willful ignorance of what is happening around them in the climate. anyone can know that if your oceans are warming added is 99% of the world's livable space in those oceans are warming, and the land is just the whip on the advocator, then if you aren't taking notice of that, you shouldn't be a director. you should be holding their executives to account, for not informing you that you are going out of scented and massive change, and if you are keeping on going as though you are not an global warming, then you are in dereliction of duty as a director, no matter if your insurance company, funds management, huge oil gas company and most importantly, banks. thanks keep funding fossil fuel.

when they hear now from people like me, i'm just another scientist, but i'm also warning people of this freight train is coming at you. change policy click. -- click. -- period. shery: here headed towards the china market open, we are going to see if that rally continues on the chinese market on stimulus hopes. this as we get the manufacturing pmi's out of china as well. the market opens in hong kong, shanghai and shenzhen are next. standby for bloomberg markets, china open. this is bloomberg. ♪

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