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haidi: you are watching daybreak asia from new york, sydney and hong kong. >> the county down to asia's major market -- we are counting down to asia's major market open. haidi: the fed is nearing the end of his hiking. chinese banks cutting interest rates on mortgages and deposits, trying to shore up growth. crypto gains across the board as an appeals court gives grayscale a green light for its u.s. etf. shery: futures muted in the asian session opera stocks and bonds gain ground in the new york session, the s&p 500 saying its best day since june we even had regional lenders gaining ground despite the fact that regulators came out with new debt requirements, we actually had tech stocks leading those

gains, yields falling for a third consecutive session, two years falling below, marcus repriced expectations of rate hikes for this year and that risk on mood really leaning to -- leading to prices rising under the gains extending in the asian session despite the fact that the russian flows sort to the two month high. really to do with what the fed will do next, we are getting more data later in the week. take a look at what happened with u.s. job openings declining towards the 8 million level which would be the lowest level since early 2021. falling to the 2.3% level, the lowest since 2021 as well and really, that souring outlook for the labor market also leading to confidence taking a bit of a hit, u.s. consumer confidence falling by the most in two years. we will not get more clarity on what is happening with the jobs market, they get that jobs data

later on friday, the expectation is for slower jobs growth and also cooling wage gains as well. >> why that is so significant is because it is forcing traders to rethink and recalibrate their expectations around the fed and where it goes next and that chance of a september rate hike being priced out by investors. in terms of the reaction we are continuing to monitor the front end of the curve in terms of yields, we are saying that retreat across activity. a temple in the two year treasury yield on wall street, that is planar in the currency space this morning where they are stating order against the dollar but we are seeing the japanese yen retreating. this is setting us up for a pretty positive session for equities, take a look at what futures are indicating to us and it is a across most markets, kiwi stocks have notable

airlines rating flat so far but broadly we are seeing gains ahead, china of course and focus , coming down to those chinese lenders, the moves underfoot, we are seeing the changes in the offshore yuan as well. haidi: bloomberg has learned's china's largest banks are cut interest rates on existing mortgages and deposits, this is the latest measure to shore up growth in the economy, let us bring our analyst in, gerard, on the one hand, you are delivering relief at a borrower level. i am wondering about the broader implications of doing this for the bank's profitability of the also across the board. the economic implications as well. >> that is why they had to cut on both sides, trying to provide some relief to mortgage holders, five point $3 trillion equivalent on mortgages in china

and looks like those mortgages will fall may be by 60 basis points around 4.2%, that does not start until next year. on the other end, they may cut the deposit rate to help prop up interest margins, as you said, not to press margins too much. shery: will it works and how much could help boost growth? -- will it work and how much could it help boost growth? >> around five to 10 basis point cuts to the main policy right, maybe adding .12 .2% to judy -- one to .2 percent to gdp growth. haidi: is there a view that it should be turned to direct payments to households? >> that is a key question.

that chinese government has been quite conservative in their use of fiscal policy. another announcement which is less remarkable is the finest ministry said they will be providing more fiscal support. basically just through frontloading of the bonds that are issued for infrastructure. what has not happened so far of the many economists have called for is providing direct support to households and consumers, the government is reluctant to do that through vouchers. i have not done any sort of direct stimulus for households in a way that many countries would try. shery: any improvements in the property sector with developer'' debt? >> evergrande and country garter in tough straits. the overall largest decline ever in china's history and possibly world history in volumes. we are waiting to see some green shoots but it is still as you say, a structural issue, the government is deliberately

trying to deflate what they saw as a speculative bubble. they have to go easy in terms of this because they do not want to reinflate it. haidi: a lot of these are structural issues, exacerbated by covid zero dragging on for so long. does that mean that we are needing to look at this as a slower growth for longer new normal for china? >> it is possible, i think to be one of the big questions is if they keep the real estate market, at its deflated level where new construction remains where it is now, slightly improved, but will offset the in terms of demand for investment? and for and manufacturing -- infrastructure and manufacturing are such a major part of the economy the chinese economy could be a structural downgrade as a result. haidi: that is our geoeconomics analyst. rasul investments have won a key legal fight in its push to watch a spot bitcoin etf. shery: bringing the industry

closer to tapping millions of dollars from investors. su keenan has the latest on this. how much of a game changer will this be or is this a move towards crypto becoming more mainstream? >> if you talk to the crypto universe they will say this is a monumental decision. many observers say it is a stinging defeat, if not rebuke for the sec's gary gensler who after two years of lawsuits had crypto reeling. this is the second after two major setbacks that are but a sweep of products at the safe and it was grayscale appealing the rejection of the sec application for spot bitcoin etf. the decision says the sec's denial of the proposal was arbitrary and capricious because

the commission failed to explain its different treatment of similar products. gensler has justified the stands saying that the agency has taken it to protect investors to protect the interest rate from front and the sec has approved futures etf but rejected grayscale's spot bitcoin etf, they just did not see the logic. there was an immediate response from grayscale which posted a response on x, formerly known as twitter, proclaiming victory, thinking supporters and calling it him in the middle -- thanking supporters and call it a monumental step forward. but surging as much as seven point 5% -- bitcoin surging as much as 7.5%. grayscale surged as much as 17%

as well as coinbase which is involved in litigation with the sec, they are related by the decision and expect to win their challenge with the sec. the biggest gain is in the penny stock, silver gate capital, which collapsed in march, one of the first regional banks to collapse because of its exposure to fdx. the failed crypto exchange and its mid majority crypto holdings. haidi: what happens now? >> nothing will happen soon if you look at the decade long fight that many financial firms have taken to try to get this far, it will be another long, hard slug according to observers. many in the industry are trying to get advancement or approval are now very much encouraged in terms of the sec, they may appeal the decision, they are already finding another lower court ruling over the sales of the ex rp token, that is a

decision that risks undercutting the jurisdiction over crypto and again, a representative for sec did not immediately respond to our comment. other to say we arguing the decision, you are looking at the huge spike in the grayscale coin trust as soon as the decision was announced. you can see the seismic response. the sec cannot appeal and they can do the opposite and change their -- can appeal and change their stance but on a different basis, the judge has taken apart their inconsistent basis and the third option some observers say is that they could actually rescind earlier decision on the bitcoin futures etf that now exist, that is the most unlikely path. that is what the judge has found to be inconsistent. to have the futures etf but not the spot.

which again, not overnight, the sec has 45 days to ask a full slate of judges to hear their case or they get all the deeply -- or they can take it higher to the u.s. supreme court. haidi: the latest on grayscale and the ceo of grayscale will be joining bloomberg tv live to discuss etf plans in more detail. you can catch that on wednesday in hong kong and new york as early thursday morning, if you are watching in sydney. we are speaking with the chief research strategist at alpha simplex -- at alphasimplex. this is bloomberg. ♪

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are setting up in the sort of trading in asia, in the midweek session, we are looking like some pretty positive gains when it comes to these measures we see, in through beijing on the mortgage deposit rates as well as a repricing as investors speculate the fed is nearing the end of the tightening campaign. global bond yields really saying that pullback after really being in the driving seat for so many sessions. we are seeing some pretty strong

gains indicated for australia, sydney stocks up .7 percent, weakness in new zealand as we saw the reversal on the voting approval numbers. the overnight session climbing by the most since june on the back of the yield. falling by more than expected, given a little more evidence that labor demand is slowing, that takes the pressure off of the fed. our next guest says that as bond yields break out of the one euro to find the key question is if equity markets can withstand higher rates for longer, let us bring in catherine, she is a portfolio manager at alphasimplex. you see from that sentiment reaction overnight, one data point does not change the directory of -- the trajectory of the fed by this is the dynamic between equity investors

and what bond yields are doing that we are watching? today was interesting -- kathryn: today was interesting because we have bad news in terms of cooler data on jobs are also consumer sentiment. that is not good news but somehow the equity market just rallied because they thought now we have some evidence against the fed and the fed is going to have some pressure. i think why the market is excited because in the shorter term there is some evidence that this is actually working, this is a little bit restrictive, i think we need to be careful though but that we do not get too excited too quickly. haidi: where would you be positioning at the moment? you see the market leaders, even the likes of nvidia, the absolute ai darlings struggling to find traction, lawyer or evaluations not so stretched but you still see opportunities as we are in this holding space?

it is interesting --kathryn: it is interesting you say that because we have been short in bonds and calling for higher rates, today was a difficult day. in that particular position, we think that inflation is going to be stickier and this will take a little bit longer so it is actually going to take more time for this particular narrative to play out. it looks like equity investments might come back and we might have a relief rally for the short term. what is interesting is august has been so challenging, so many of our positions and signals started to turn short. these are short-term signals turning against many of the equity markets and coming up in september, hopefully we can see a pivot. the sentiment has been challenging, no question. shery: even if yields rise

further, how much does it matter for parts of the tech sector that are exposed as heidi just mentioned to the nvidia narrative with artificial intelligence being all the rage right now? kathryn: i think the biggest shock for us in the recent period has been that rates were going higher, most of the summer and despite this we have also seen a relatively strong mover ai, strong move in tech and that means that to some degree we can tolerate this level of rates. hopefully that means that we can at least be in a flatter curve and get through the inflation discussion and hold out so that we can have the soft landing a lot of investors are hoping for. i think in that sense, we are still seeing long signals in nasdaq and positive signs from tech and less of course, we see upside prince in inflation and we see that is not the case and rates have to go higher.

today it moved against that. shery: does that mean the dollar paused, what we are seeing right now is only temporary? kathryn: i think for the last month one of the biggest movers has been the u.s. dollar. is our risk off which has been pro dollar. you have seen the u.s. economy which has been pro dollar. you have also seen the effect being very steady in their commentary despite what we saw today which may change the narrative slightly. you have seen a positive environment for the dollar. going forward, i think that is something that you might consider continuing. shery: which makes the japaneseyen more difficult -- which makes the japanese yen, more difficult. kathryn: the japanese yen has been one of the best technical

trades for the last two years. what is the most interesting is it has been challenging from a fundamental perspective. it seems as if really, the frequency at which policy is been determined is out of sync with other economies. most people have been really constantly second-guessing that policy. on a technical side, they have been very clear. short, the yen versus the dollar, that is the only asset that is available to reflect the policy decision of the doj and you see massive movements in the yen. you have seen a lack of movement in the jgb, the yen has room to move, we are watching it as well, those who follow the technical signals, we think there is room to continue to move and there could be reticence to change direction

and i does not seem to be an indication of them change in policy yet -- it does not seem to be an indication of them changing the policy yet. haidi: that is kathryn kaminski of alphasimplex group. getting your day going, internal subscribers go to dayb also available on mobile in the bloomberg app, customize your settings so you only get the news on the industries and the assets that you care about. this is bloomberg. ♪

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unveiled their latest response to this year's second term went with proposals to boost oversight of mid size lenders and providing for potential failures, vonnie quinn is following this for us and i knew would be waiting for a while to

see these requirements. what are they? >> the first big part of this is extended, it had already been in place since the great financial crisis for the major banks, but now, the fed wants to put in place for banks that have $250 billion or more in assets under management, these are foreign banks and bank holding companies and the fdic wants it done for regional banks with $100 billion or more in assets under management. it is an extension of what we had a scene for living wills that would allow them to dissolve in times of crisis if they were about to collapse are under. the other big factor here is issuing long-term debt and this is in case the system gets taxed. i would happen in march happens again where we saw a very speedy collapse in signature bank and that is why this fool has gotten a little bit contentious in washington -- pool has gotten a

little bit contentious in washington. those banks, the regional banks will have to pay into that and according to some analysts this will have repercussions for the treasury market. bloomberg intelligence is estimating that these regional banks could issue up to $75 billion in new long-term debt. that may widen spreads. a lot to consider here. shery: at least the banks seem to like it or investors, we saw the market reaction being pretty positive? >> stocks went higher, treasury yields were lower and because we did not get the armageddon scenario. there is something called tlac, it is essentially total loss absorbing capacity requirements. armageddon, if the worst happens, the bank covers everything. that has not been invoked and that is not a mandate going

forward, that is a relief and investors are happy with that. particularly, some of the banks. the banks do not have to adhere to any of these new rules rallied the most today. there is going to be a six day public comment period and the banks have three years to phase this in. this will not have to be dealt with all at once, this will have an earnings impact. the positive flipside is that it gets rid of some regulatory uncertainty and sociologists were happy with that as well. shery: the latest on the u.s. banking sector as vonnie mentioned we actually saw those big banks rally the most. kbw bank index seeing the best day in about a month after our regulators proposed those that requirements -- debt requirements. we saw the risk on day for the new york session and we see those gains in the after our session, the s&p 500 saying its best day since early june, small caps with the russell 2000, since early july.

look at how currencies are trading because we saw two sessions of losses for the dollar. really fading a little bit and holding steady at the 12: 38 -- $12 .38 level. the aussie holding stable at the 64 u.s. cents level, a lot to do for the kiwi and the aussie on china relief measures when it comes to their economic growth rate you see a little bit of strength for the offshore yuan. this after falling to the nine-month low already and we are watching the japanese yen pretty closely, steady after falling to the weakest levels since november. we have more to come up on daybreak asia, this is bloomberg.

>> a quick look at the political

stories making headlines. russian president vladimir putin has agreed to visit china in what could be his first foreign trip since the war crimes warrant was issued. the court and the hague issued a warrant in march, accusing putin of war crimes in the ukraine conflict. a pakistani appeals court had suspended the jail sentence given to the former prime minister imran khan, a court found him guilty of selling state gifts. he is expected to remain in jail until wednesday as he faces a separate case for allegedly disclosing a tipple medic cable and still disqualified from taking part in november's elections. a new poll suggests eight in 10 indians have a favorable view of narendra modi, only 1/5 had a negative view. he has been in power since 2014 and is seeking a third term next

year. the majority of respondents say they have seen their nations global influence grow in recent years. shery: the u.k. foreign secretary is due to arrive in china wednesday, the most senior diplomatic british visit in six years, as relations have been strained from the crackdown on democracy activists in hong kong, the pandemic, in the u.s.-led curbs on china's tech ambitions. earning is now is the vice chairman the british chamber of commerce -- joining us now is the vice chairman of the british chamber of commerce with 400 member companies across the country. following the visit to china by the u.s. commerce secretary, what are your expectations for this visit from the u.k.? >> well, thanks for having me on. we are quite positive, quite optimistic, because british

investor sentiment in china has been muted since the lifting of the zero covid policy. there were a lot of expectations foreign investment would float back into china but that has not happened, so the views of our members were articulated in our position paper in may, talking about conditional optimism, so optimistic about the broad fundamentals around china and operating in china but conditional on the chinese government delivering on key things, and up until now, we have had warm words of welcome but not so much in terms of actual action, so having the u.k. foreign secretary visit is a good step in the right direction, we feel, and brings the u.k. on part with european leaders who have been visiting this year, and as you said, something like four senior u.s. governor officials, gina raimondo wrapping up her trip today, so we feel everything is

going in the right direction and hopefully we can move that dial from that wait and see approach foreign investors have had so far this year. >> let's talk about the warmer tone you are sensing from beijing, what has china promised businesses so far and what do you think are the priorities that the first measures they should take? >> well, one of the big challenges that british and indeed all multinational companies have been facing over the last 12 months or so has been around cross-border data compliance and data security uncertainty recently, we were pleased to see some clarification of that. there are other issues around individual income tax for example, which again, recently there was a holiday or at least some positive measures on individual income tax being extended, which makes lives easier for a lot of organizations that have to bring

large numbers of foreigners in, for instance international schools with hundreds of teachers here. that is something we feel is a step in the right direction and we feel now the guardrails around national security have been set by qs, u.k., and chinese governments -- u.s., u.k., and chinese governments, but now we have more space for moving commercial engagement forward, so we hope the visit will help to advance that by the foreign secretary. >> we spoke to michael hart from the american chamber of commerce yesterday. his interpretation of a gets the atmosphere around how chinese policymakers are dealing with foreign investors and foreign companies to take a listen. michael: it does make policy makers more receptive to talk to u.s. business and makes them troubleshoot to look for ways that are hurdles stopping additional foreign direct

investment, so we have had positive discussions and two meetings last week with financial regulators, so i felt the tone had improved. >> has that been your experience with chinese economic growth, really struggling, has it been more receptive, more incentives to work a little bit more with foreign businesses to attract foreign investment? chris: yes. i would agree with those comments. since april, certainly since mid june, the visits by the four senior u.s. government officials we have seen, a change in u.s. attitudes, or perhaps a clear articulation of with the u.s. is trying to do via commercial engagement as opposed to national security and i think beijing is responding positively to that. i don't abide the notion that the chinese economy is in serious systemic trouble, which we had seen reported in the media in some areas.

we are now seeing obviously slow economic recovery and a lot of international hope and expectation that the chinese economy would bounce back after the zero covid policy was lifted, not least because china contribute something like 30% to 40% of global gdp growth, but we are seeing the chinese economy move in the right direction. we are year one post-covid on the russell crowe does your two your treats so we are seeing services going up in beijing and around china, more consumers spend so we feel these are going in the right direction so i do not think it is just the chinese government worrying that the economy is not working for some reason, but they do bite into the idea pay have to separate commercial engagement in the trading relationship, which is vital for china's economic growth. they need that foreign investment but have to separate that from the legitimate issues they have around safeguarding national security, which are

priorities for the u.k. and u.s. governments. >> what does business confidence feel like to you given these geopolitical crosscurrents, given the recovery has been troubling in so many different aspects as well as a number of policies that were not necessarily beneficial to foreign business, the auditing and accounting rules, and such. has the risk reward calculation change for foreign investors? chris: i think it is changing now. there has been a lot of frustration amongst our members obviously over the last seven months or eight months as we started the year, because we have had meetings with the government officials as well, and all we hear our words of welcome and we feel positive about that and welcome bet and reciprocate that, but we have 170 recommendations in our position paper we feel can be delivered on by chinese

government, and it is only recently that had started to happen with things like the cross-border data transfer at the individual income tax, and some other things happening, so we feel business confidence is growing and that conditional optimism we articulated in may is beginning to bear fruit. i think the other point to mention and one of the things we were increasingly nervous about until mr. cleverley's visit was announced is that there is a window of opportunity here, the same with the u.s. government obviously, when you have elections next year, and inevitably the rhetoric will harden again as candidates seek to win support amongst domestic voter bases, so there is a window of engagement in 2023 before u.k. alexion sometime next year or possibly january 2025 or probably earlier next year, and then obviously the u.s. election in november, so we are really keen some

clarification and communication bonds are opened up again before that happen so we can move forward with a stronger trading elation ship. >> really great to have you with us. let's get you to one of the other big china stories, which is looking ahead to the profit impact right, of these proposed mortgage rate cuts. >> yeah, because it will be showing in the bank margins, the big concern here, and something playing out across several months now, concerns around net interest margins impacted by this measure coming through from beijing asking lenders to share the burden of boosting the economy,, but the largest vendor inside china is reporting earnings later today and we are expecting slower earnings growth hit really by this week margins, and also fee and comes, of this chart looking at the

price-to-book ratio trading near a record low valuation, .38 times book value, a slight improvement for the recent .35, but stands in contrast for the msci world banks index around .95. in terms of what is driving that, you have the stock slumping 11% this year, but it is,, and what you have been referencing as well, this pressure beijing is putting on blenders to stimulate the economy, not resorting to that u.s. style stimulus where officials resort their unbound sheet to prop up consumers sentiment. when you look at the comparison between net interest margins for chinese lenders, you can see the line in white, you can see them shrink. a line in blue is continuing to expand, so it points to why this this group of stocks financials are still on love -- un-blood by

investors and as we have seen gains for the csi 300 with market reforms is financials have continue to underperform. >> we will look forward to those earnings later this week as well. 20 more to come on "daybreak: asia." this is bloomberg. ♪ get help reaching your goals with j.p. morgan wealth plan, a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside - and the other goals along the way. wealth plan can help get you there. ♪ j.p. morgan wealth management.

>> as there travel gradually returns to pretend dimmick -- pre-pandemic levels, air china will revamp its fleet and fly more sustainably. the carriers president told us exclusively how they plan to navigate an increasingly competitive market. >> different area, different demand, and especially for the -- flights. i think the step is slower. the other area, and moreover, some of the region need overcome their manpower issue. some of the region, especially the japan area or europe area, they faced the problem of the ground handling manpower, so i believe they were put extra

manpower for the airline service, then we can coming back to the pre-covid quickly. >> we are learning seeing that type will be a long tourists from china to indirectly come and visit. uh, you also habtoor groups could come back to visit taiwan with the daily quota of 2000 people. what do you make of this development? how does that change if anything how you look at the china business? >> according to the governor policy that we need to strictly follow that, so right now they are only open 10 destinations and their team charter -- 13 charter destinations, that we were on the see where is the demand, so right now relaunch

the flight out that basically four destination, which is the beijing, shanghai, and two others. next month, we will launch the other flight. >> how does that help you figure out how to manage your passenger flow, flight flows, if you can't get theirs china flows, are there other markets that make up for it? >> if i can't get that, then i can manage it to southeast asia, something like chang mai and others, so we will still make the dynamic evaluation. >> you also have dynamic competition with a new entrance into the market. how do you view them, are they making inroads? >> they are the competition for

us and we are focused on it all over the world, not only the airline in taiwan only, so welcome to join the market. >> they said they want to create the emirates of asia. what is china airlines doing about that effort and can it be achieved? >> may be they can achieve as emirates and taiwan, but how many emirate do we have in the world? i think we will go just go our path, our own way, so we welcome them, and as a very, very meyer -- admire competitor, so it is ok. >> china airlines president there with yvonne man. well, getting back to

central-bank policy, we will find out whether australia's inflation may have eaten july as it will be released in a couple of hours. it is well outside the target band. >> that is the encouraging part but still outside the rba target band. the july reading expected 5.2% in the target band to present a 3% is about 5.4% for june was the lows since 2021. there are a few competing factors, government childcare subsidies increasing at the same time and fuel prices went up as well so some competing factors here but worth noting as well, we don't get another one of these until october but these monthly reads have taken on more importance as inflation continues to persist. what does it mean for the rba? we heard from the incoming governor yesterday in brisbane talking about climate change but of course inevitably, the questions on inflation, the path

of rates ahead. here is what she had to say. >> i can say we might have to raise interest rates again but we are watching the data carefully and we will be taking decisions for the time being until next year, going month by month. >> so this will be the last meeting with phil lowe in charge on tuesday and we have discussed no change expected but the hawkish tightening bias, we are expecting to hear more about that. >> paul allen there and sydney. lots more to come on "daybreak: asia." 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.

they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. >> the first active exchange traded fund will be launched in september by nomura, but the boj unlikely to participate as they reduce etf purchases. we now have the latest. rebecca, what is this about? rebecca: japan launched the first ever actively managed etf fund the seventh so there will

be six new etf's across three issuers. and so, in terms of actively managing them, this is the first time japan has had an actively managed etf. japan ranks first in asia pacific with more than $500 billion of assets under management but they have been active in the etf space thanks to boj, so how this will do, it will be interesting to see what happens but since the boj governor kazuo ueda has been in office there has not been much etf's purchase. be on the etf purchase was in february earlier this year so these etf's will have to grow organically to be successful. >> what are some examples of successful active etf's we have seen in recent times? >> so active etf's have done work globally and have taken in more than $90 billion of net new

assets globally. in the u.s. active etf's are 30% of active flows so there has been a lot of interest in active etf this year. if we look at active equity etf is the first time active equity etf has surpassed passive, so 60% of the flows have gone into active equity, the most success with this you're probably the jp morgan equity premium. the income etf is $30 billion in assets in the past year, more than $20 billion has come into actively managed etf. the reason it has been so successful is it is relatively cheap, only 35 basis points, 10% yield, and beat the s&p 500 last year. in terms of actively managed etf, this is the perfect year where we are seeing more mantras than ever. for instance, they had the largest etf luncheon mate in japan which was the ishares climate etf but a lot of mutual

funds or converting etf's into actively managed etf's, so another has converted a lot of their mutual funds into etf's and have seen $20 billion of net new infosys year, so if we -- inflows this year, so if we look at new launches 60% have been active, and more than 60% of the etf/year have beat the s&p 500. this year is lower, only 30% of the etf have beaten the s&p 500, but i think it is a good year to be launching. a lot of people are interested in active etf's right now. >> our bloomberg intelligence etf analyst. some corporate stories we are attracting, the largest shareholder of a chinese trust firm is planning to delist its shares due to significant uncertainty. it is citing market changes to protect the interest of smaller

shareholders, while it made no reference to the international trust, at ranks as a top shareholder of the embattled shutter bank with a 37.5% stake. goldman sachs will pay 5.5 million dollars to settle allegations it failed to fully record and retain thousands of phone calls. the commodities futures trading commission says the bank lied on two separate external systems that failed occasionally in 2020 and at least one failed during due to increased usage of services used to record mobile phone calls during the pandemic. >> ubs is gearing up to unveil its latest quarterly earnings thursday, expecting to report one of the biggest windfall profits that are reported by a bank. this is five months after the takeover of credit suisse. ubs is expected to unveil what could be billions of dollars in write-downs on assets and potentially thousands of job cuts. shery: coming up in the next hour,, why fidelity international is to betting on

chinese equities despite gloomy sentiments around the economic recovery. tha ♪ -- then we will talk about china as we get the outlook for the banking sector with ratings as well. >> the market opens in sydney, seoul, and tokyo are next. this is bloomberg. ♪

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shery: this is "daybreak asia", counting down to asia's major market opened after stocks and bonds rose on the wall street session. investors trying to infest cooler economic data in the u.s. as well as measures by china to boost growth. haidi: we will get into the start of trade. on that china point, watching the chinese banks as that profit outlook is really coming under pressure with this proposed mortgage cut. if the big lenders being hauled into help with the international team to support the broader economy. annabelle: the chinese way of boosting growth versus the u.s., which is really going into its own balance sheets to try to give money to consumers. the open is upon us for japan, south korea and australia. the focus very much on what we see with yields. we did see that big pullback at the front end of the curve in the two-year yesterday, now

coming online fairly steady, but it's those bets of a u.s. rate hike that are continuing to drop for 2023 after, as you mentioned, that weaker than expected data coming through. job openings falling in july to 8.83 million, that's more than a two-year low. consumer confidence weekend in august. that's really boosting its hopes now that the fed is going to be able to pause in september. in terms of the reaction for what we saw in yields, he saw that retreating throughout the session. we continue to monitor the reaction in the japanese currency because yesterday it fell to its weakest level since november, but it is now reversing, trading at the 146 level. nikkei 225 coming online to the upside, it really does reflect that more risk on tone from the wall street session because we had almost 90% of the s&p 500 companies rising with a gauge closing just shy of 4500. let's take a look at what's

happening in korea at the start of the day as well, because the focus is not just on the wall street session, bets around the fed, it also could be boosted by sentiment from changes in china. we reported throughout the morning that scoop from bloomberg saying that the country's largest banks are comparing -- preparing to cut rates on existing mortgages and deposits. it really is about asking chinese lenders to boost sentiment within the economy or help turn around the world second-biggest economy. something that could hurt the net interest margin of lenders but investors are really deciding whether that will be a positive for equities. have the kospi coming online 1% to the upside. continuing to monitor those moves to the korean won. we will be monitoring those crypto link stocks in korea. there are some listed, given what came through with the grayscale investments winning a key legal fight in its push to launch a bitcoin etf.

we did see bitcoin flying throughout the session and we will monitor the reaction of some of those stocks that are listed. let's change on, we have australia coming online. the focus really revolves around eco-data because we have inflation data dropping in the next hour. we are expecting that tes in the latest reading to 5.2% on the year for july down from 5.4%. but it could be down to childcare, subsidies that could be dampening price gauges in the service industry. brent crude online a little bit higher. really a reflection of that more risk on tone that we are going to be seeing. perhaps rout the market session today. shery: we have seen the risk on tone, especially with the relief measures and announcements coming from beijing recently. let's bring in our next guest to says chinese equities remain a top call despite all of the economic concerns.

with us now is the investment director of fidelity international. good to have you with us. lots of concerns about the chinese economy, but also, lots of announcements coming from beijing on how to shore up growth. our people just being to perish on chinese markets right now? >> i think it feels that way in terms of the bears sentiment. i think we have to be mindful that the recovery we see this time around is different to the recoveries we've seen in china. even the policy response on the focus on long-term growth and sustainable growth is different. i think it's just the resetting of expectations. you are beginning to get the sense that investors are taking this into consideration now. shery: how big is the valuation gap between china, the rest of asia, asia and the u.s.? >> i was looking at the other weekend it's staggering, over a 20 year timeframe chinese

equities traded at their largest discount. the discount between asia and the s&p 500 is also huge. even from a valuations perspective, all the bad news seems to be priced in. i'm not saying there will be a catalyst that we should be mindful of, but if we see this emergence of confidence with the consumers, this animal spirit coming back with companies, it should set a base for the market to continue to recover or recover even more, i should say. haidi: that's kind of the uncertainty, is this a cyclical slowdown or a structural slowdown? is there a chance at this deflation reminds of the confidence has already been embedded? is that a concern? is there a way to navigate some of the stocks with the earnings that might be more exposed to that than others? >> from a fundamental perspective or a stock perspective, it's about ensuring you have exposure to the

companies that have a large margin of safety. that means cross-section of companies with the earnings, we've seen fairly good results or ok results in areas like industrials, e-commerce. whereas we've seen pressure in the areas that are favored like ev and solar and wind. it's about really establishing a position or positions in companies there for the long term. even if you have the cyclical times of up and down, these companies continue to survive. it's about ensuring they are well-run businesses, good quality managements. and have the ability to grow. haidi: we've seen investors looking for alternatives within the e.m. space. it has been a popular alternative for redirected flows out of china. there are sectors you still find appealing. catherine: some of the indian banks deposit -- driven by

deposit rates, and they are not too complicated in terms of the bank struck her -- structure. we are mindful that indian valuations are looking very expensive. you tend to see this between china and india and india has seen a lot of positive inflows over the year. but we need to take into consideration how much is factored in terms of potential negative news. got the election coming up. it just feels a little bit tough at this point in time. with chinese valuations contracted, that's where we are really finding the opportunities. shery: we've heard positive calls on japanese banks, especially on the expectations that the boj will move drastically later this year. where do you stand? catherine: again, when we look at japan, we've seen a lot of favorable information flow. minority shareholders have been rewarded. this shift in mindset has really come to fruition. but for us, when we look at japan, a lot of the

opportunities is in terms of the small caps space with a lot of innovative names coming through pure large-cap names, especially exporters are losing market share to chinese companies. so tend to focus on small cap on the market. shery: is that because we expect the japanese yen to get stronger if the boj moves? catherine: there are a lot of inflows that have gone through japan. if we see concerns about japan, you can see that flight to quality move out. again, across asia, what is becoming more and more apparent over the years is domestic trabant -- domestic demand and makeup is increasing so you don't see such abrupt movement should we see any global concerns arise. shery: when we look at japan, we look at china we think of korea and perhaps that competition between these northeast asian economies. where does korea stand in all of this, especially if you have a weakness?

the yuan weakness for the japanese yen? catherine: korea is a fascinating market in the smaller tech space. a lot of korean companies have huge market positions in nietzsche industries. again, that's where we tend to be positioned versus your well-known, large mega cap companies in korea. from our perspective, it's about valuation. korea, taiwan were looking cheap last year. we saw inflows coming through. it's all about the quality of the companies. i go back to the fundamentals of the companies and whether they can withstand any sort of global volatility. haidi: when you take a look at broader policymaking and where we are at in this policy side, do you expect on yields will continue to retreat or is this going to be a key tension between equity investors and what the on markets continue to do in terms of wrestling control?

catherine: it feels that way, it really investors trying to gauge the movements of various policymakers. the concern is policymakers are still behind the curve, so we will have this continued volatility going into the rest of the year or for the second half. again, when i look at the pboc, they are really looking at the long-term issues. that's why investors probably feel there is a mismatch between what they are implementing now, the incremental movements. which are very important. as august we continue to see them in china, i think the chinese market, talking about valuations of the company, so much negative news has been priced in that if we see these, from a top-down perspective it could actually really see a floor for the markets. haidi: always great to chat with you. catherine young. let's have a look at some of the movers. the grayscale news overnight, you are watching crypto-linked stocks in asia very closely.

annabelle: this has really been considered a watershed moment. really, a big win for the border industry. u.s. is overturned -- has overturned a decision by the sec to block an etf that invest directly in bitcoin. the sec is thus far only allowed crip so based on futures because it said things are safer. the sec said it's reviewing the position of the agency could've continued to choose to fight the ruling and is a stinging rebuke for the sec chair who has so far really wages war against the crypto industry. but the etf comes from grayscale and a has been pushing for this sort of thing for years. grayscale bitcoin trust is 21% with bitcoin surging in the session. in asia today we are seeing some stocks looking a little bit higher although not quite the magnitude of the moves we have seen in the wall street session.

let's change on and take a look at what else we are watching. we are seeing asian makers of personal computers, printers, quite mixed for us. but essentially we had hp coming out overnight reducing its for your cash flow and profit outlook. you can see they are down more than 10% in after-hours. but it saying a rebound in the market for pcs will take longer than expected. and on the pc makers here in asia, sherry. shery: still ahead, we get the outlook on china's banking sector from fixed ratings. we will see some lenders as more vulnerable than others. we have more ahead on daybreak asia. this is bloomberg. ♪

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haidi: bloomberg has learned that china's largest banks are preparing to cut interest rates on existing mortgages and departures. the latest state so sure of growth in the economy. let's bring our shanghai bureau chief. what's behind this question mark i guess i'm wondering how the

banks are going to feel about it, not that they have a choice, they are really being pulled into help with the national effort to support the economy. >> yes, chinese state banks are being driven to lower their mortgage rates as part of measures to help shore up the economy. that's a make it happen, banks have to lower their funding costs a little bit. so they are preparing to cut the deposit rates for us to presume then net interest margin, which is already thinning under a slowing economy. the cut of interest rates of existing mortgages is not totally surprising to the market because the central bank, the pboc has signaled a move back in july. at that time the bank said that they would try to push forward this cut in an orderly manner. the economy is not doing well, the banks will have to contribute from their end. in the tricky thing is, if the

deposit rate is not cut while monetary is cut, banks profit -- thanks profitability will be a question mark. we're hearing that they are trying it cut the profitability rate. the bank shares are not doing strongly these days because of concerns of a slowing economy. shery: i guess the question then comes down to, how much will it truly healthy economy, especially the property sector. >> at the very good question. the existing mortgage loans, the size is about 38 trillion yuan. so if the rate of this part of assets is cut, it means a lot of money back into the pockets of consumers, borrowers. and to every household, that means a few hundred or a few thousand yuan in extra money

depending on the amount of money they borrowed. so that's going to help the economy. but, it's nothing like the bazooka stimulus we saw back in 2008 when the government rolled out for trillion yuan. the impact based on what we heard from some analysts is just going to be increment for the start of property market, we don't know how much it will help the market because investor confidence in -- is key if you are not expecting your income to grow. if you are not expecting that housing prices to rise, they are not likely to spend -- by a new home. the confidence won't recover overnight. it takes some time. shery: we will be discussing the chinese banking sector in more detail in about 15 minutes.

grace that will join the conversation at 8:30 am in hong kong. let's see how all of this will actually play out in the financial markets. our asia equity reporters charlie ng joins us now. charlie was just telling you us how it really hasn't been great for a banking shares, given the concerns about the overall economy if we are expecting the cuts on rates to come, margins even more for these banks, but it could potentially help the economy. so, what are we expecting the investor reaction to be? >> there are a few things to look at. one thing is about banking shares. shares have been facing some high winds because investors are really worried about their margins being faint again for the weaker economy. on the others, these measures about banks -- about lowering mortgage rates that could be increment -- incrementally helping the economy. the thing is, investors happening spec -- expecting

support of measures to come. i think the key thing really is when the report is confirmed, how much rate cut that is. and also, a bigger thing is, the longer you wait, the more difficult it gets to actually boost investor confidence. a lot of the measures, for example, if you announced late last year, that would be a big boost in investor confidence. at has become harder and harder to boost investor sentiment. and even with the market boosting measures we saw over the weekend, the previous two sessions and the gains were quick to move. so it's interesting we have the chinese state leader commentaries coming on tuesday, which is calling for the masses to be more patient, saying to hang on, don't be skeptical of the fact of these measures, and there could be more market policies to calm down the line. but i think the key thing for investors is the real effect.

what is there more than words and how much affect that could actually boost the fundamentals in the economy. haidi: we are releasing some breaking news at the moment as we are watching country garden. now seeing 270 million hong kong dollars in a new share issue. we are seeing this announcement meaning the subscription agreement means that the subscriber will subscribe -- hong kong $.70 per share is the number that we are seeing, so 270 million dollars in this new share issues, that's about 1.27% issue share capital of the company. in looking at whether that is going to be make meaningful impact as we see that distress continuing to mount. country garden is this developer that has tried, over the recent days, to dodge that default. they have requested adding 40

calendar days grace time. that debt manager that also there being involved with the bonds falling by the most this year. this overall picture of distress is what we go into as we continue to look at earnings expectations. charlotte: there are a few earnings we are watching today. it's one of the biggest -- busiest earnings weeks we had today. investors will be assessing. it seems if we look at the top line, it seems to be a bit big. we also have it coming from overnight. investors might be getting a sense of how the consumer recovery is happening in the country. a lot of earnings in today's market. haidi: our asia reporter in hong

kong. more to come here on "daybreak asia". this is bloomberg. ♪

shery: grayscale investments has won a key legal battle and has pushed to a stop bitcoin etf bringing the bitcoin industry closer to tapping billions of dollars from everyday investors. bloomberg su keenan joins us now with the latest. how big of a change or is this? su: bitcoin supporters say it's monumental. you also have to consider that it's a stinging defeat for the sec german gary gensler, who has had the crypto universe reeling with manger enforcements, two years of fines, threats and lawsuits. so this was a case of grayscale appealing the rejection by the sec for its application for a

spot. bitcoin etf handed one in a three-judge unanimous decision from this appellate court. the sec's denial of grayscale's proposal for a spot in bitcoin etf was called arbitrary and capricious. it was called this because the commission failed to explain its similar products. what the judges referring to is the fact that the sec has approved bitcoin future etf's, but not grayscale spot. bitcoin etf and the judges point about it being a huge inconsistency. the sec's gary gensler has consistently justified the agency stance is necessary to protect investors. the response from grayscale was immediate. they viewed this as in an enormous victory. they thanked their supporters. the ceo immediately ended his vacation and is flying back to new york and will be on bloomberg tomorrow. in terms of crypto, it went on a spectacular rally with bitcoin

surging as much as 7.7% to reach the highest price since august 17. you see a lot of green on the screen there. again, we got rolled over into a new session. bitcoin holding most of those gains, but let's talk about the crypto related stocks. of course grayscale so much a 17%, but coinbase, which is involved in litigation with the sec, had a huge rally as well. >> so what happens now? su: there will be a lot more litigation. with this being the second legal rejection, if you will, of the sec's decision, it doesn't determine easily, for a decade now, there have been multiple actions to try to get the sec to approve these bitcoin etf's. for the sec, they could appeal the decision, they are already finding another lower court ruling over sales, ripple,

tokens, and that decision risks under the jurisdiction. again, a lot of people staying tuned as they have 45 days to ask for a full slate of judges to review and reconsider or they could appeal to the u.s. supreme court. that's find out. haidi: bloomberg su keenan. we could find out in this conversation. click -- grayscale ceo will discuss their etf plans in more detail. he could discuss -- you could catch that on wednesday early thursday morning if you are watching in sydney. more to come here on "daybreak asia". this is bloomberg. ♪ i may be known for my legendary football career, but truth is, i love a bunch of sports. the only trouble is knowing where to find them. that's why i got xfinity. so, i can easily find and watch whatever sport i'm into all in one place without missing a thing. even if it's football, australian football, or football football.

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to raise over 34 million u.s. dollars in a new share sale, that's us the chinese property giant braces to avoid default amidst its liquidity issues. china's property analyst joins us now from hong kong. we know that the developers also seeking another 40 days grace time for his debt, so how much could this help the liquidity picture in the meantime? >> i think with the share sale that just announced, is too little too late. it doesn't help that it's liquidity is going down a downward spiral. buyers are ready to buy and lenders are ready to roll over debt. and even with this shares, you see that it's ironic that the developer can share so reportedly at the beginning of focus and share prices near 40%.

haidi: it doesn't help the liquidity outlook what about the unfinished home situation? >> it has 660 8 billion yuan of homes that are pending delivery. and if you look at possibly the earnings that it will come out today or tomorrow, investors will focus on the cash at hand, and the construction bills that has to pay and how insufficient the funding would be and what potential gap as. i think with the sheer amount of projects that country garden has, over 3000 just across china, four times evergrande, that will be a big confidence if there are issues of lingering or unfinished homes in china. haidi: what are your expectations when it comes to earnings? >> 45 to 55 billion yuan off the

loss of what's expected is the biggest loss for the developer to the 407 listing. with sales going downhill, and it not having a significant turnaround, and with earnings, is just going to suffer in the longer term because of the exposure in china. because that is where closing market sentiment is the weakest. and it's also just really hard to sell. haidi: china property analyst. chinese bank earnings are also in focus today. but tuesday is a big one. profit rose 3.5% as credit impairment declined, putting pressure on earnings. in the effort for just fell 1.2% in the first half.

his banking operations widened during the economic slowdown. this is what we are watching in terms of these new mortgage cut requirements being mold for the chinese banks. and they have, even before this latest headwind, profitability. benchmarks, csi 300 and msi china as this graphic really pretty for bit.ly shows the underperformance for that week today return as for august 29. pretty stark difference there. this take a look at the way forward for chinese banks. let's bring in the head of greater china bank rating. let me get your initial reaction. this is something that that banks won't have much of a choice being groped in as part of the florida effort to support broader economic growth. how much of a hurdle is this to profit margins and future profitability? >> we did highlight at the beginning of the year that

margin pressure was probably the biggest challenge for banks this year. asset quality risks assigned. the fact that housing has still bank by week, that is hurting demand in addition to prepayments. but compensating for national banks have been growing in areas such as inclusive finance. overall, there is growth for the profitability. sure enough we have seen declines with the margins. haidi: the government is not tapping into its own balance sheets but this issue, the fact that it is still one way or another, with the banks in china eventually have to be recapitalize? >> the fact that they are still positive, even in this very difficult environment, i think

part of that is attributable to the risk reduction effort as part of the regulatory tightening that has undergone in the past five years. so, as a result, while there's still a lot of headwinds ahead, but the banks credit profile has improved over the years because of these regulatory tightening and reduction in off-balance-sheet financing. so, this when i think is too early to talk about recapitalization, especially for the largest banks. although pressures don't exist in some of the smaller lenders. shery: how many systemically important financial institutions does china have and could one place spark a contagion? although you say it is too early to talk about recapitalization. but the point until we might start to see there could be a systemic problem.

>> there are 19 domestic important banks in china and they roughly make up about 60% of assistant assets. it is the remaining's of 30%, 40% of the system that we all should be more concerned about because these are typically smaller regional lenders that operate in weaker profits. surprisingly, more of the credit issues receive for the sector right now, whether it's deposit competition or exposure to a property and local governments the news, those problems are making the smaller lenders most vulnerable. shery: if we do get this announcement on rates in existing mortgages being cut, what would be the impact in terms of margins, pressure and how much of a cut we see?

also, are we expecting most of the loan book to be refinanced, or is it just a few people that would go ahead and do that? >> in the event that there is a uniform reduction in mortgage rates, it will be the larger banks that there are a part of because they have to watch us ready to expose herself to something else. 2230% of the local compared to general, less than 20% for midsized thanks. a mortgage rate production will impact the largest banks more. we do expect there would be potential mitigating practice to help mitigate that pressure. in to 2024, because he would have the right impacts from the previous long-term rate reductions that would flow into

next year cycle. shery: when you see all of the measures announced by beijing, what do you make of it? do you see this boosting and supporting growth when it's targeted as we've seen so far? >> i think there is an emphasis on growth but more importantly, sustainable growth. that's why even though the earnings thanks may not be a very big earnings improvement. but the fact that they are still able to deliver paul -- positive earnings and momentum, i think speaks to the fact that the regulators came to create healthy developments long-term. haidi: this existing between them with the need to supported

the broader economy, maintaining financial stability, how does it get for chinese lenders? at the end of the day, these are businesses pulled into national service. is that a contradiction investors need to be more aware of now? >> i think it hasn't been easy for chinese banks. it hasn't been for banks in general in this environment, but the chinese banks, even though they have this bigger role to step up in terms of fulfilling somebody, they are still reporting profit growth. shery: really good to have you with us. of course as we do sick the latest measures in the chinese economy by chinese policymakers to boost growth. let's get a check of the markets.

annabelle: that china boost is really playing out in markets, as is the session from wall street. i would just point out something standing out because a lot of moves reflected in what came through the treasury space free in yields after we saw the u.s. fall more than a two-year low. consumer confidence is weakening. that tells us that the need to rate hike this year is turning to be priced down and we see traders move away from expectations for any hike. we see that retreat in yields across the curve. the dollar is steady but we had seen it trading somewhat. that's supportive, factors are priced in u.s. dollars. we see broad-based gains throughout the session. given what you have been discussing, chinese banks could be required to cut mortgage

rates and deposit rates. this china boost sentiment in the country amongst them. let's just change, i want to take you look at those in particular. some names across japan indonesia and korea. it is really the reflection of some investors liking the sound of the investors. haidi: watch on that for what happens with the chinese economy. still to come, our exclusive interview. we will get more on the company's flicking -- fleeting travel demand outlook. that's next. this is bloomberg. ♪

shery: boosting the fleet with more fuel-efficient aircraft as part of the sustainability push. it's get more details from yvonne man, who spoke exclusively to the president in taiwan. yvonne: apart from the fleet that they are looking for, there is so much to talk about. you mention he has seen a doll.

he started out 37 years ago, first as a flight attendant and then he trained commercial pilot and president of this airline. the travel industry seems to be booming, i spoke with him about what state are the airlines in post-covid? >> we are coming back. the customer is 15% compared to 2019. right now, we are looking for significant increasing second half. we will have 70% to 80% coming back. >> windy think you will get back to pre-pandemic level?

>> probably we need to wait until 2025. yvonne: cargo demand was boosted and in some weights did savior airline during the pandemic. you need record revenue during 2021. that trend is reversing now and cargo demand is stabilizing. where will this settle? i would say the demand of the cargo is not a size before. we will try to find new plan. the new parents between the cargo in the passenger. we will try to find out how many percentage we needed focused on the capital. yvonne: what is the right mix?

>> we are still looking for it because we need to have it did not make evaluation before 2019. it's about a 60% to 70% ratio. yvonne: making new -- or for the airbus a320 when neo's, that will help you replace a large part of your passenger fleet. his china airlines looking for new fleets? >> maybe we look for a new fleet to replace the triple seven. maybe we were looking for it over. we have a 24/7-a dreamliner.

we have the option to decide how many can she take. once we decided the numbers, that we might be thinking can it be real priced, the root? maybe, during that time we were not much better of what we need for the price triple seven. yvonne: you talked about them net zero carbon emissions of target for that for the company as well. how do you look at in terms of a cost perspective? how will it cost you, this decarbonization? who will pay for it, will it be passed through to consumers? >> there is no chip ticket in the airline because it's going

skyhigh. especially for ground agent. also, how to reduce the emission of carbon excited. spatial for that with sustainable fuel aviation than the fuel we are using. we are doing our best to make a profit to try to compensate this kind of increasing cost. but i think the passenger needs to pay some part of it and tries to make it first more healthy.

yvonne: higher fares are here to stay. what's missing in this recovery, as was said was, tourism and taiwan. we just learning this weekend taiwan will allow the tourist coming outside from china and some will come in with a daily quota of 2000, so there's a bit of relaxation on these restrictions. a lot of questions about there's a new kid in town. it wants to make taiwan the next emirates of asia. he said, in some ways can they be in it. he says he welcomes the competition. shery: you made to -- you need to make it easy. haidi: i'm going to call you

captain man because you have hidden talents i wasn't aware of. i want to see this, tell us about what have you got to do? yvonne: that's a bit of a stretch, but take a look at this because i have great access. i get to go sit in one of their simulators. this is what these to train the pilots and really try the land the play. -- plane. it's hard. i'm not going to say i will be a pilot in the next life. and you can feel it. you get airsick from this. i definitely came back out of this a bit woozy. but to have a trained commercial pilot and the president of an airline teach you how to land a plane is something that's for the books. this is bloomberg. ♪ haidi: -- haidi: that's pretty

cool. bloomberg markets: asia of many talents. you could catch the rest of the conversation and some of the interviews we have missed on tv . dive into any of the securities or bloomberg functions. check it out. it's at tv . this is bloomberg. ♪ how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. save 50% on the sleep number limited edition smart bed.

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haidi: australian prime minister is about to name the referendum seeking to add an indigenous voice to parliament for the country's constitution. it's bring an are surely government reporter. we are expecting this announcement in the next hour. for our international viewers, was the significance of this referendum? >> the voice of parliament is an advisory parliament that will give up -- give feedback to the government on policies affecting islanders. the idea behind this body, as proposed by the government is that it would be through giving more advice on policy. that would lead to better outcomes, which would have some of the worst health education,

law enforcement outcomes in the country. shery: what are the poles showing so far? >> so far they are showing a rise in the no vote. people pushing back against the proposal. the no vote has overtaken the yes vote. but it's been a few weeks since we had any major solid polling. it's hopeful of a positive result. the big question is going to be, if the prime mr. launches the campaign, what will we see as the new poll comes out. haidi: we see high profile corporate's in the likes of qantas behind the yes vote. if there is a no, what's the risk for the country? >> there are two signs to that question. certain businesses have been

clear to come out in support of the voice of parliament, given the fact that there was a yes, but a big w. they pulled their ad in recent weeks. on the others, will the reputation suffer if they vote down the proposal. there is an opinion that might be the case. shery: that's it from "daybreak asia". markets coverage continues as we look ahead to the start of trading in hong kong, shanghai and shenzhen. standby for bloomberg markets china open. 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. they want to adopt a child and build a new home.

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