>> this is daybreak asia and we are counting down to a shows market opens. one key watch today is whether the nikkei can reach its peak. not likely to be the day. it feels like waiting for the record to be reached, whether the market has the momentum to get there, we will beyond watch. fed pricing in big earnings when it comes to commodities in australia, we had a disappointment from bhp, watching to see what the next catalyst will be for china. vonnie: that seems to be the

direction for equities this week. u.s. markets were shut for a public holiday and so there was not much to drive trade. seeing that play out this morning because you've got the nikkei two to five online flat as we await things like earnings from the u.s.. nvidia is a key name, telling us whether the trend is likely to persist. you've got the japanese yen week at the 150 mark, something that has been helping japanese exporters. earnings in japan, we are near the end of the reporting season. one company left to report and we saw over half of them reporting surprises. beating what analysts expected. let's change and look at how korea is coming online.

holding range bound. the cost be under pressure. green you want is flat and what is playing into that is the u.s. being shot on monday and as we said, it is directionless at this point in time. >> directionless is exactly how we are playing it at this point, but having said that, there is quite a bit when it comes to the australian session, bhp out with the numbers showing downside. nickel supply morning raising questions about the business. seeing a dividend base and positive remarks when it comes to china demand but really not seeing a -- a -- a great deal of momentum that. ozzie stocks are looking flat off the session lows.

the aussie dollar 65.31 and a mixed session for the greenback in the g10 space as we have muted moves across u.s. risk assets. we are seeing broader equities trading in sydney. a little outperformance when it comes to communication and financials, watching reaction for anz as we see progress when it comes to the deal that is still subject to government approval. that deal will progress after a legal win. eggs declines frustrating equities coming through from energy with oil holding close to the three-month high after a red sea attack. finally switching the boards to take a look at u.s. treasuries, uh, of course my comes to these expectations from the fed, we are seeing repricing and

expectations of rate cuts being reined in. we saw treasuries falling 6/10 of a percent and we are starting to see the lag when it comes to global sovereign bonds. underperformance from the u.s. treasury markets. annabelle: as we said, it is the focus on the nikkei 225 within reach of its peak that we saw in december, will we reach that today? seeing stocks holding steady. our next guest says japanese equities are in a sweet spot. joining us from singapore is truly along, global market strategist at j.p. morgan private bank. i'm interested in your views on whether you see anything unseating the rally in japanese equities? >> thank you for having me on the show.

1989 brings back memories of market volatility. people are worried about a pullback given talk from the u.s. equity markets after the inflation print. but saw planning for the u.s. economy, the japan market has a runaway ahead of it. the most important thing is looking ahead, this will be the year when wage growth turns positive in japan because we've seen inflation subsiding. wage growth is accelerating and that lends a cushion for domestic debt and will be a helpful component. they have the industrial side of

their economy which benefits from supply chain reallocation. many of them do come from japan, so they benefit from industrial policies. there is it weak yen trend which helps the export side of the economy. so if you put all these things together, we have pullback but don't forget they are differet.e 1989 is the benchmark but they have all gone up many times. japan has a lot of runway to catch up. you can see that through asset prices. it is still a good window for japan at this point. haidi: do you need to be selective in japanese equities given we have seen a rally since

the start of last year? are there sectors that you prefer? julie: investors are looking at more sectors in the japan is -- japanese economy. the big part is the exports. as pmi's have yet to turn a corner on the manufacturing side, investors are looking at domestic demand. as i talk about real wage growth for the first time since inflation after the pandemic, that could help domestic consumption stories and reinforced by tourist spending, bank of japan as they exit the negative interest rate policies, that could reinforce the positive yield curve in japan, which is good for banks in a

good signal for corporate confidence. at this point in time it is good for the financial sector. these are the sectors we are starting to look at aside from semi conductor and export stories. haidi: in the u.s. you are neutral on fixed income but i wonder in asia and you can talk about specific markets, what does asset allocation look like between stocks and bonds? julia: within a show we are more balanced. obviously in the developed market it is overweight, longer gdp growth remaining above trend in many markets. in asia that is less of the case. so we tend to be more selective in equities and we like the semi

conductor story, we like japan, some part of china, some parts of japan and india. we start with investment grade bonds which give us good returns and it is a good substitute for cash as reserve's decline. investors should look at those yields which are higher than they have been. we are more balanced in asia but staying cautious on high yield because of how extended the credit cycle is at this point. haidi: right and, uh, spreads being tighter in asia has been the theme. do you expect that to continue? julia: that question is on credit spread? haidi: that's right.

julia: spreads are tight. they are in the tightest percentile so we think it tends to be more investment grade. not as compelling as the u.s. market, new opportunities for clients. we do have investment grade we like. you mentioned how tight spreads are and also look at china those slowly unfold and it is a tight spread.

haidi: feels like the tide of sentiment has changed. what is the risk and reward given valuations are compelling? julia: chinese policymakers have to do something unconventional to boost confidence, bring back investor confidence in terms of profitability. that is what we need to see sustainable markers in risk assets. as you mentioned, everyone noted how rapidly the global backdrop

and easing from the fed, i think it is not impossible that we see it bounce on the back of policy hopes but we do want to see the type of policy that brings back corporate confidence. that is the critical component. annabelle: playing into that are the geopolitical tensions based on earnings calls we've had, we are -- is that something that really concerns you? >> there are so many elections globally, it reinforces the

heightened uncertainty. for asia, it is relatively early to price in the market impact of geopolitics but it makes investor feel more cautious, more conservative and that is the market sentiment today already. haidi: julia wong, executive director at j.p. morgan private bank. look at movers we are watching in the early part of the session in tokyo. material stocks are the focus after the early declines that we saw across big cheerios names. bhp reporting flat profit, feeling the impact of nickel asset impairment and other key

markets in core commodities. the stock price is bouncing between gains and losses but the net income was 86% lower. as well as a tuna half billion dollar impairment that was announced on australian assets. we are watching names when it comes to auto parts stocks. flag to move on these results, we are seeing a mixed bag. toyota, lg energy solution a little bit softer. roughly 13% of the european workforce will be cut and they are tapping ai to compete with asian rivals.

annabelle: still ahead, talking about red sea tensions because we had strikes forcing a commercial crew to look into that region and the international air transport association live from the singapore air show next, this is bloomberg. ♪

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i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. haidi: the singapore air show is underway. april hong is at the event with

our next guest. >> we are here at the singapore air show. great conversations underway this year. safety after major incidents. we are seeing after a scandal, a collision at the airport, safety is in the spotlight. what is your take on these lapses and what do you think whether the aviation industry has dropped the ball? >> i do not believe we have. the industry remains focused on safety. it is the number one priority of every airline. our track record is excellent. we are very open and honest about the problems that we face because we believe the best way

to deal with these issues is investigate them and share the learning so that we do not see a reoccurrence. boeing is going about it in the right way, taking ownership of the problem from the beginning. the changes they are putting in place, the investigation is right given the importance of the incident. >> given that, do you think there is a link between the pressure to ramp-up production and safety? >> that is something investigators will look at two make sure that investigators are not feeling under pressure. if that is the case, safety takes priority and production

will be what is safe to produce. no hesitation in saying that will addressed. >> let's talk about something close to your heart. you have been a proponent and talked about how travelers will have to foot the bill when it comes to sustainability drive. we are seeing how in singapore we had an announcement. what will this provide in terms of cost clarity? >> it is important that we make clear that the cost of transition will be expensive and will fall to the consumer. there is little evidence that taxes have a benefit. the positive is that the levy will go toward production and

supply of sustainable aviation fuel because sustainable fuel is critical to the industry and our pathway to net zero in 2050. we remain committed to the goal and confident. >> it is also about ramping up production and this will be a game changer. what is your sense of one we will get the green premium travelers will have to consider. what is going to look like? >> difficult to assess it because there really is not a price for sustainable fuel. you get comments about things that work two to five times the price. we get greater clarity in ramped up production in the coming years without question.

it will be more expensive because production will have to be spread over smaller volumes. we are optimistic we will see uptake of fuel in the years ahead. >> what do you make of the extent which potentially this will help the production side of things and do you see other regulators following? singapore is a model when it comes to levees. >> i think that's a great question and everyone will be interested to see what happens. singapore is clear about the measures they're putting in place so they will keep under review what is happening. the intended consequences that

it will drive sustainable fuel, there is the risk that it will increase the price. >> here at the singapore air show, china is keen to make its presence felt. what are you hearing among carriers about how seriously they are considering it as an alternative given struggles with deliveries?

>> it is something airlines are looking at. many airlines including previous airlines were in discussions to better understand what plans for the future far. it's been great to see chinese strength. their feedback has been encouraging and it is exciting to see them 919 on display. there is significant ambition on the part of china and it will be interesting to watch. it will be a long-term issue. were not going to see short-term rates and people will be watching how the aircraft operates within china. >> how quickly do you see

china's international travel demand going back to the pre-pandemic level given that the consumption backdrop in the country? >> we are encouraged by domestic flying in china, which has been significant, well ahead of 2019. there is evidence that aircraft are operating and are ready to be switched into long-haul flying. it's only a matter of time. the stuff we witnessed in 2023 was encouraging. a significant drop, well behind 2019. i think it is encouraging to see the direction of travel and i expect us to get back in 2024. and may extend into 2025. >> things look promising.

thank you so much for sharing your insights and time with us. director general at the international air transport association, back to you. annabelle: that was april hong. more coverage coming up. we will hear from business leaders including aerospace industries association president and ceo eric later in the hour. more ahead, this is bloomberg. ♪

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♪ haidi: we are watching out for lines crossing from the rba meeting. they considered raising interest rates but decided against it as risks had eased and inflation returned within a reasonable timeframe. in the first meeting, leaving the benchmark rate at 3.5%. core inflation is weaker than expected. signaling more tightening, not opening the door but not shutting it. they saw the labor market using to sustain levels and is important to make it clear a rate hike had not been ruled out. the rba saying they risk the

balance between inflation and demand slowdown and there were concerns during the meeting that it would take time for inflation to return to target. they considered whether to hike or hold the last meanings so clearly they are finding balance when it comes to the rba. annabelle: something we are tracking given the rba looking to cut toward the end of this year or stay on hold. to the outlook for equities in asia so far, we are seeing range bound trading. a little weakness. watching japan and tracking the nikkei 225 which reached a peak that it last saw in december of 1989. a little way away from that.

you can see pretty much flat, but there are movers were keeping a note on so far. one is star entertainment, a casino operator in australia that faced issues in the past but now it is the subject of a new investigation from a regulator trying to understand cultural problems at the business. the staff welcomes the investigation but has delayed earnings. bhp, the other name we are tracking given what we have in terms of earnings, those lines, first half profit is fairly steady. taking a toll. demand for iron and other commodities looks resilient and we are tracking them quite closely given tensions in the middle east.

haidi: let's get more details because the crew of a commercial ship has abandoned their vessel following a who the attack. as the first time since the group escalated attacks last year. let's bring in bloomberg's derek with more details. we've seen the nature and frequency of these attacks build up from november last year. >> that is exactly right and this would mark a real escalation. the crew of the ruby more which is a british owned bulk container ship had to abandon the ship according to the u.s.. the crew is safe and taken to a nearby porch and the vessel is at risk of sinking. there is conflicting information about how bad of a shape it is in.

a little bit of confusion has there always is. but the idea that a crew has to abandon their ship is a big escalation in terms of what they are able to do. i think there had been some thought that obviously there's been a lot of traffic going around the southern tip of africa. it has added time and expense to shipping but those who try to make it up have been able to do that, sometimes with military escort. however, this is suggesting continued escalation and you are quite right. the consequences are profound. i will give you for one egypt takes revenue from the suez. it's one of their bigger sources of foreign revenue and that has come down by almost half in january. a30 6% drop in ships using the

suez and you can see that continuing until this crisis abates. this is not just and issue for shippers, but you will see a lot of countries that rely on this having to deal with the economic uncertainties that this creates. we talked about this, we keep talking about trying to avoid up wider conflagration, things escalating. you put countries in powers in the position where they think they have to respond and you have conditions that are possible for escalation. so yes, this attack is something that is a new marker but for me i look at this as a problematic chance of continued escalation. annabelle: what you think it

says about the effectiveness of the coalition to deter attacks? do they need to change strategy or tactics? >> i think that's a great question. military officials from the british and american side would say they are degrading operational capacity. in a short-term, it is clear that the rebels are able to launch attacks, able to launch attacks with consequences. how sophisticated those are is a matter of debate but you launch enough attacks and you're are bound to hit something. so at that point you are going to make people make different decisions. it is clear they have the ability to do something that disrupts the global flow of trade and the attacks have not been able to stop that. long-term, that is a different

story but in the short-term, it's clear it has not had the effect. does that mean there will be an escalation? the chance that things that are there become severe and worse is in play right now. haidi: watching closely, that was derek wallbank in singapore. let's stay in singapore. things were seized in the biggest seizure. the appeal to a niche real estate market. >> yes, firstly, to describe

what they are they were good bars and restaurants and upstairs was residential. these buildings have been around since the colonial era. they were relics of a bygone age. in recent years they have been seen as prestige properties worth millions of dollars. in the last few years the market is solid, sales have been booming and prices reached a record. unfortunately since the money laundering case revelations in august, the market has slowed dramatically. that is partly because people are worried that money laundering, um, uh, was behind a lot of the bubble and the frothing of the markets. dbs was one of the banks that issued loans with collateral

being these houses and they want their money back. that will be a big test of the market to see whether those valuations will stick. haidi: these are coveted properties. six and a half thousand in singapore. how does this in a broadway reflect what we are seeing across the property market? >> they are a niche part of the market and there is a finite number of them, so they will always be in demand because of scarcity. quite a different market to the rest of the singapore real estate market. the broader market is starting to slow. it was resilient during the pandemic but now cooling off.

so this could be another sign of the cooling off of the broader market in singapore. haidi: asia investing editor russia award from singapore. we are back at the singapore air show next, where we'll be hearing from aerospace president eric fanning about how geopolitical conflict and risk impacts the center. this is bloomberg. ♪

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♪ annabelle: you're watching daybreak asia. looking at currencies, one standing out is that japanese yen at the 150 mark. something officials are watching closely. suzuki is watching fx moves with a high sense of urgency. verbal jawboning that we tend to hear from japanese officials. something that's been pointed out is investors making bearish bets on the yen has been building a higher point then october 2022 when we saw japan

intervene to halt the yen weakness. the aussie dollar to note because we had her rba minutes coming out earlier essentially saying risks are balance between high inflation and the demand slowdown. a rate hike would cut if the economy weakens. it's important to make it clear that rate hikes are not ruled out. the rba was one of the slower ones, so this is seen as one of the later ones to reduce rates in the region. let's head to singapore because the singapore air show is in progress and april hong is at the event for us. >> i am here live in the lion city with the singapore air show underway. defense is part of the conversation amid geopolitical

uncertainties and in light of recent conflicts. i have with me the president and ceo of the aerospace association. we see tensions in the taiwan strait, korea. what are you hearing and seeing in terms of military interests and stockpiling underway? >> this is a hotbed, but the whole world has issues more so than i've seen in 30 years. this is a showcase for us. what i'm seeing is not just the need for increased investment in defense around the world, but the partnership and hardware that cements partnerships. >> what about shifting alliances? you talk about the asia-pacific,

china had a presence at a weapon show. what do you think the message is and how should the u.s. view this? >> first is the important partnerships and alliances. anyone looking at the u.s. as an adversary has to see that as an advantage. global alliances that set it apart. it is no wonder other countries want that but aerospace and defense for countries that have this, the industry recognizes how important it is and you see other countries showing a more. we welcome the conversation. >> u.s. defense contractors face strains from supply chains. is that impeding what you can delay -- deliver? >> it took us years to get to a lean supply chain, but capacity

is a capability for the military. covid really strained the supply chain because it is global. the market is global and so is the supply chain. a lot is being done to accelerate, but it will take us a while. >> we have two hot wars, a red sea attack. what are you hearing from defense committees? >> global impacts of supply chain and perturbations causing problems are focused on ramping up faster because there is so much activity and then for the united states, focus is on political dysfunction. still operating on a 2023 budget. not getting the increase in spending from 23, 24 and there

are movements to focus on this region. that is the main focus is trying to get congress to pass the budget. >> part of that is the ukraine bill that is taken a long time to get over the line. german defense minister talks about how this would affect economic interests. how do you see this affecting defense contractors? >> there is bipartisan support, the political system is shutting us down with small margins. very frustrating but independent of supporting ukraine, most of the bill goes to american firms. it helps the pentagon to modernize by replacing what they have given away with modern equipment. that shores up the industrial base which has been stressed with all the demand on it. >> what are some of the

interesting trends in technology and weapons? you hear a lot about how unmanned systems could tip the balance to break the stalemate. what are you hearing? >> new technology and how you get it into the hands of those soldiers sooner so they figure out how to get more out of the equipment. that is a lesson we keep learning that we should get technology into the hands of people so they can experiment and innovate. >> what will the geopolitical backdrop look like in the next couple of years amidst shifting alliances? >> uncertain for a long time. we've been focused on the invasion of ukraine at a time when we were trying to make sure we had adequate forces to deter activity.

we know these problems have existed for a long time and they surface at different times. >> this is something defense contractors will keep their eyes on. thank you for sharing. >> president and ceo at the aerospace industries association. back to you. annabelle: april hong at the singapore air show and our live coverage continues. more conversations lined up including with the aircraft firm avalon in a few hours. this is bloomberg. ♪

♪ >> taking a look at corporate headlines, bhp roush shares -- bhp shares are down slightly. it is in at 6.5 billion dollars, just missing estimates. they will pay a dividend of 72 shares, down from $.92 a share. they are on track to make output without the demand from china. hsbc is introducing a bonus plan for junior employees to improve transparency. staff will be given on target variable pay and internal pay

data. the new system will apply in korea. large companies facing losses from overseas real estate losses according to data from opposition party lawmakers. the financial has the largest exposure, a branch of one of korea's biggest credit unions after losses on real estate loans. annabelle: chinese ev maker horizons has suspended operations for at least six months which adds to signs of a squeeze as growth slows. asia transfer reporter linda lew joins us now. we've seen players in china hit by intense competition. >> yes and it speaks to how intense the electric vehicle

market has become in china given that growth was slowing. sales growth is projected to slow for a second year and that is great news for the smaller players. i-5 is a premium brand so their customer base is small. they have not had great sales, sold fewer than 8000 units and that is not a skill that will support them. they decided to suspend production for six months. haidi: is this sort of one case study that tells us about the chinese ev market? linda: i think so. the brand is a small one, but there are other smaller players

in the past few years that have been struggling. one filed for restructuring. units of china evergrande, the real estate developer, are languishing. so with the competition getting more fierce, we are definitely going to see small players struggling if they cannot turn things around fast enough. annabelle: when you read about what is happening in terms of the production and workers being barred from the factory, it does not sound great. could they turn things around? linda: yes, they have strong local government backing and we have seen where other makers such as neo have come very close to the brink. and local governments have stepped up to help out neo, to

get them out of trouble, even though they are very much not in the clear. so people are waiting to see if governments will lend a hand to horizons. they have a deal worth $5.6 billion worth of saudi arabia ministry of investments. it is not clear at this stage of the deal will go ahead, but that amount of money will be helpful to them right now. haidi: linda lew with us. and still to come, speaking about china's loan prime rate decision in a few minutes time. the bhp ceo will be with us to talk through those profit numbers in impairment concerns. this is bloomberg. ♪