tom: good morning, this is "daybreak: europe." china's rally fizzles as traders

question beijing's resolve to add more stimulus. chinese stocks seeing the worst selloff since 2008. you still see gains in mainland stocks. samsung apologizes after admitting it has fallen behind in ai memory chips. we will speak to the chairman of hon hai as it is trying to diversify. and hamas and hezbollah fire a barrage of rockets towards israel as fighting escalates on multiple fronts with the conflict entering its second year.

futures flat. nasdaq futures also pointing just marginally higher, up a 10th of a percent after the sell off across tech yesterday. let's flip the board and look cross-asset before there is a focus on the asset classes linked to the china story given some disappointment at the outline of plans for the economy from officials. close to a 4% level and yields moving four basis points. iron ore taking a big hit, down 2%. you can tie it to china. a split story when it comes to the selloff in hong kong. a rotation theme. selling off hong kong and moving to mainland china but a

concerned about the lack of additional measures coming through from the ndrc. across the msci asia-pacific pacific, down. hsi in hong kong down 5% and the nikkei in japan losing 1%. let's get more on the china story and the dramatic market reaction and bring in our china correspondent, minmin low. the first trading session, talk us through the reaction and what we are hearing from chinese officials this morning. minmin: it was quite a volatile session. we opened the csi 300 with 11% gains. we have paired half of the gains because of disappointment around the ndrc press briefing. perhaps market expectations were misplaced. the title of the briefing was about the implementation of

incremental economic policies. the ndrc does not have the mandate to increase fiscal budget deficit without having the state council put that through to the legislature in for approval first. perhaps the big bang fiscal stimulus -- the more appropriate time for the government to announce that would be in october. today at the press briefing we heard more measures around boosting consumption and increasing the income of lower and middle income groups and increasing subsidies for new graduates and extending loans to midsized enterprises. and officials urged local governments to complete the issuance of special bonds by the end of october. are the end of september, 90% of the bonds have been issued. this could open up more space for the government to announce new bond issuance at the end of the year if authorities are inclined. the officials also announced it would bring forward investments

that were budgeted for next year but they are bringing it forward to this year. they will also continue to issue ultra long sovereign bonds though there are no details about the size. markets disappointed. the hong kong markets started out in the red. perhaps a bit of profit taking after a rally of 11% when china markets were closed. we have seen declines on the housing extend throughout the day perhaps because of the disappointment around the ndrc as well as sentiment being overshot because valuations are already above the five-year when it comes to forward earnings. tom: valuations to some looking stretched on some metrics. when it comes to the holiday as a gauge or touch point on the health of the chinese consumer and the really -- and the real estate story, there is some

information suggesting there are green shoots. minmin: during the golden week people were not just busy traveling and spending. they were also home shopping. cctv reported they were seeing visits by prospective homebuyers increased by 50% during the golden week holiday. in shenzhen new sales -- new-home sales were up 10%. and in beijing expressions of intent doubled in the first three days of the holiday. immediate impact from the measures announced before the holidays by the pboc to cut down mortgage rates as well as down payments but how long-lived will this rebound be. some analysts say the current set of measures is still not enough for a sustainable turnaround. we still have to see the broader

economy and confidence in income growth recover. for the housing sector do turnaround. tom: minmin low on the details around the golden week on the market reaction which is head spinning in terms of the split. the csi 300 on mainland china is up but the hsi is down. the macro policy languishes. new york fed president said the central bank is well-positioned to pull off a soft landing. the soft landing is still a metric. in an interview john williams said his goal was to move interest rates to a neutral setting. valerie, there is a lot of fed speak. what are we hearing from williams and how have the markets been readjusting? >> so far there is not too much disagreement coming out about the 50 basis point cut that the

fed did. we have minutes coming out tomorrow so there may be more obvious disagreement. it is relieving to see some green when it comes to the u.s. treasury market. the 2 year yields backing off from the 4% level down five basis points to 3.95. let's delve deeper into what john williams said. he said the current state of monetary policy is well-positioned to both hopefully maintain the strength in the economy and the labor market. and continue to see the inflation coming back to 2%. he repeated the line from powell that his goal was to move interest rates to a neutral setting over time. agreement coming from john williams to what powell said yesterday. but it has kick started some chatter about the fed leaning to leaving rates unchanged. we saw a bit of weakness in the

equity market. grab some readjustment to the fact that the cuts have come out of the front end of the u.s. treasury curve and we could see a fed on hold in 2025. tom: valerie tytel, thank you. some lines crossing from an ecb member. this is the dutch saying the ecb makes decisions meeting by meeting. the economic growth risks are already materializing. it is arguably more interesting. economic growth rates are already materializing. we must carefully assess inflation implications. some lines crossing from the ecb official. back to the corporate space. disappointment from samsung with shares slipping after its pre-lim third-quarter earnings missed expectations. the company issued a rare

apology for the week results. an unusual admission that it is grappling with a potential crisis. the world's largest memory maker is playing catch-up with sk hynix which has taken the lead in producing chips in ai applications. the read across to the broader asian chimp space on the back of this unusual apology coming through from samsung and the head of its chip division newly appointed talking about the potential crisis and the disappointing results. sk hynix has taken a march in terms of the high-bandwidth memory paired with nvidia's gpu chips. you need them to work together to have training capabilities around the ai model and samsung is not properly in the mix. not showing improvement.

on two angles, samsung is facing a challenge. samsung is down 1.2%. sk hynix has also taken a hit. currently down 3% and the session. and the broader reader cross. sn ic down 9%. tsmc is eking out gains of .5%. the world's biggest iphone assembler is holding its tech day and later this hour we will speak exclusively with hon hai's chairman on his plans to diversify. we will speak also exclusively to jamie dimon at the banks tech stars conference to discuss ai investment, the u.s. election and more. that conversation is at 2:30 p.m. london time.

7:00 a.m., we have germany industrial production, a gauge on the health of the euro zone's economy -- eurozone's largest economy. we will listen into adriana kugler in terms of anymore views posted to that blowout jobs number. coming up, sirens sound in tel aviv as fighting escalates on multiple fronts a year into the conflict. we have the latest from the middle east. that is next. this is bloomberg. ♪

tom: welcome back to bloomberg "daybreak: europe." hamas fired a barrage of rockets towards tel aviv yesterday a year after it launched its attacks on israel. sirens sounded across central israel but the military said it intercepted most of the rockets. hezbollah fired 130 five rockets at northern israel while israeli jets carried out heavy bombardment of lebanon. joumanna bercetche joins us.

it has been once again a busy 24 hours for this region and more challenges for the people on the ground across this space. what do we know about what has unfolded in the last 24 hours working the one euro since the devastating attacks on seven october? >> october 7 is a day of great significance. what you saw were multiple ceremonies taking place around the world including at the white house. president biden held a candle lighting ceremony with one of the rabbis that was close to the hostage family, one of the families whose son lost his life during captivity. a solemn day for many around the world. but it is also a day of increased militant activity. during the course of october

later towards the evening yesterday, the israeli military sent out a note warning lebanese citizens in the southern part of the country to stay away from the coast because they are looking to start launching a coast because they are looking to start launching a maritime exercise around the lebanese coast as well which effectively means that about one third of the lebanese coast is a no go zone for residents in that part of the country. the escalation continues. the military conflict is being

seen on all angles. this is a situation that has evolved from a single front conflict to the multi-front conflict we are talking about. tom: that.

when it comes to the situation in iran,there were some remarkse cia director at a panel that said misjudgments could get in the way of efforts to dampen rising tensions. we face a real danger of a further regional escalation of conflict. it appears as though the u.s. is trying to apply diplomatic pressure on israel to keep the response contained. israel does have to respond because of the extent of the attack. the question is is is going to be another manifestation of this mantra that we have been talking about wages -- escalate to de-escalate or will it be a question of escalating to escalate? this is a question we won't know the answers to for a couple of

days. tom: bloomberg's joumanna bercetche with the latest out of the region. checking in on the oil markets and the reaction -- brent is above $80 a barrel yesterday. the china story is a larger factor for the oil markets at least for now. the dynamic could change and significantly if there is further escalation in the middle east. right now the oil markets are eyeing the alliance from ndrc with no additional significant stimulus being announced. a little disappointment weighing on the commodities market. hurricane milton has exploded into the atlantic strongest storm this year bearing down on florida as a category five hurricane. the governor declared an emergency and millions have been ordered to evacuate. the storm will probably make

landfall tomorrow with one estimating it could cost up to $80 billion in damages and losses. we will continue to follow that story for you and the impacts. back to china. and a remarkable day as china -- mainland china returns after the holiday. significant moves in mainland stocks. they rallied about 11%. that has paired the gains across the csi 300. and selling pressure in hong kong. the hsi, the benchmark in hong kong is down 7%. the redhead on china, their turnover in terms of stock turnover surging to a record of 2.6 trillion yuan. that is now at a record level in terms of the turnover that is unfolding in these chinese markets.

some remarkable moves transpiring in hong kong and mainland china today as investors adjust to the stimulus policy response. flagship tax raising plans could cost the u.k. government. we have more on the make or break budget. details coming through. that is next. this is bloomberg. ♪

tom: welcome back to bloomberg "daybreak: europe." bloomberg has learned that two of the new tax raising plans are under review already. internal treasury analysis suggests the policies could end up costing the exchequer money rather than raising it. lizzie, which of the tax policies are now being put under this added scrutiny? >> this october 30 budget is make or break for keir starmer. we haven't had a lot of detail out of labor. including up to now. it is crucial they can show their sums add up. and some of their most

eye-catching measures to raise revenue including hiking taxes on private equity -- it might cost the treasury money. rich people are the most mobile. and if they leave, you lose revenue. she has a 22 billion pound hole to fill -- tom: did she mentioned that a few times? >> she needs every penny she can got. money has already been earmarked. over the weekend there was speculation that the idea of charging vat on private school fees may have to be delayed because of administrative issues. but a spokesperson denies that will happen. tom: what about tax plans for the super wealthy? how are they rethinking that? >> one of the ways she could get money if these wealth creators are going to leave is to tax them on their way out the back door.

if you drive them away, charge them and it could raise 500 million pounds according to some of the research. at the moment, rich investors can move overseas for tax purposes. three quarters re domicile in places where they don't pay taxes at all. this would cut the incentives to the rich to emigrate but will they come here at all in the first place? the answer is that this would still be better then over tax changes like the liberal democrats were proposing. tom: they want to bring in 500 million. a tiny drop in the ocean. finesse and tax policy is difficult as it turns out. i can't understand why it is make or break.

they have a massive majority in parliament. >> it is a thin and widely spread. tom: they don't have an election for four and a half years. let's get back to the china story. what a picture we are seeing. the diversions in terms of the selloff in hong kong versus at the gains. there is a bit of a rotation play, selling in hong kong and putting your money to play on the mainland. you had an 11% stock jump at the start of the session and then you had a marked lack of assistance from the ndrc. commodities taking

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tom: good morning, this is bloomberg and i tom mackenzie. these are the stories that set your agenda. traders question resolved to add stimulus. chinese stocks seeing their worst selloff since 2008. samsung says sorry, apologizing after admitting it has fallen behind in ai memory chips. we will speak to the chairman on how a company is trying to diversify. plus, hezbollah and hamas fire rockets toward israel as fighting escalates. with the conflict entering its second year. tensions continue to be key,

let's check in on how futures are lining up after a challenged session in asia. divergence pronounced as china came back from golden week. ftse futures off by 51 points, ftse hit on basic resources. ftse futures are lower. s&p are flat. tech saw some heavy selling, let's put the board and have a look. we continue to adjust around the federal reserve's next steps. fewer than 50 basis points priced in, treasuries seeing a bid, relief for those exposed to the bond market, 394 on the

front and with yields down but trajectory higher in last few days as markets adjust to slightly less done this reserve. brent 79, part of the china story and iron ore falling, let's flip the board and the focus on the split between mainland chinese shares and hong kong. up 4.5%, big pop has eased. msci pacific dragged lower by a selloff in hong kong. nikkei off by 1.2%. foxconn holding its tech day in taipei.

the largest electronics contract maker in the world, pushing to build future proof streams. annabelle joins us from the event. >> this is a big day, the 50th anniversary and focus on future growth. focus on dvds but ai is grabbing attention and i'm pleased that we are joined by the chairman, thank you for joining us. so much attention on market share. sales are better, can you share more details? >> demand is very strong, it is

crazy. capacity is bigger than we thought, the shipping day will be by the end of the new year. annabelle: demand is better than expected. what are you seeing? >> there were a lot of things about you doing, the need may be saturated soon but demand is still growing beyond expectations. >> what was your expectation?

how many are you shipping? >> yeah, if you talk about our shipping plan i would say we planned to ship the beginning of quarter four, but is moving later and later to q4 and worse than what we expected but demand is much better. >> to you expected has been delayed but demand is better. how much of the demand are you trying to capture?

>> that i really cannot give you the quantity because we just started to build it. demand is over what we can ship. >> if you cannot meet demand what sort of sales do you have books? >> d.c. the somewhere around 20,000, that kind of number. >> 20000 and over the course of next year? >> right. >> any quarter for that? per quarter you expecting able

go does to go in one quarter or spread evenly? guest: it really depends on the demand, whether demand will change. if it changes then maybe it will be even higher than expected. we will not know. >> how many of these services could you provide? >> for that i really cannot give you the number because the facility is there, equipment is prepared and also the power for the servers, they require a lot

of power so we are always prepared. the capacity of that i cannot give you that number. i have to check it out. idle want to give you the wrong expectation. >> there has been a big question over ai, concerns fading, do you see any hyper scalars looking like they need to pause investments? guest: we have not seen any of that, we have not seen any of that concern. you probably heard analysts

talking about concern but we have not heard any concern. >> nvidia has tight control over designs. how closely do you work with a company to add your own value to designs? energy is one area. guest: in the past foxconn is most integrated supplier of the server industry. if you don't count cpu and minor components the percentage that we covered by ourselves is

between 80 and 90 percent, that tells you what we are capable of. annabelle: when you add that how much value do you extract and how do you differentiate yourself? >> terms of vertical capability we are one of the best but added value overall, the server i think it really depends on how much nvidia is pricing cpus and

gp used to impact profit margin. annabelle: what i understand it can be the low teens. do you see a way to expand and increase? guess: in the low teens, probably right. but that will be based on how much components you are able to provide. it varies. but because the cpu and gpu is very high-priced, so the rest of the server, unlimited impact of costs. >> stay with us and i will hand it back for this portion of the interview.

these are questions around smartphone space. i want to talk -- tom: thank you indeed. lines crossing from the chairman of foxconn in terms of the outlook for demand. we will talk to the deep key data intelligence platform founder helping companies achieve net zero. that is up next, this is bloomberg. ♪

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>> welcome back. real estate sector facing rising energy prices and a preference for green buildings. joining me is a fincen, and esg data platform that supports the real estate sectors transition toward net zero, they've raised 180 million u.s. dollars. broad exposure in the all-star event puts a spotlight on interesting companies. talk about commercial real estate, how much pain than an environment of high rates and

the need to transition to sustainable building structures. guest: many reasons why real estate companies improve, one is growing demand and capital, another is avoiding discounting and dickie undertook a survey and it revealed all organizations face stranded assets with high level of risk and three in five are currently stranded. tom: stranded asset time bond. -- timebomb.

what is the timing between assets? what is the gap? >> interesting to see that. who is facing the greatest risk is retail and insurance and then offices. improving energy sustainability is effective to prevent stranded assets. there are 10 types of sanctions, retrofitting can include renewable energy amongst several things but by improving credentials all else can preserve asset value in this

market. tom: that is interesting. there has been a pushback to the esg theme. are you feeling that? guest: you have people with deep pockets to invest and other companies asking money from lenders and they stop investing due to less money in the market but both comply with regulation and data to comply with regulations.

tom: how important is the u.s. market? vincent: it shows a growing concern. it is led by financial efficient see and profit and two categories of companies. you have a lot of companies that are anti-esg but other parts of the market tend to be in favor and retrofit to get interesting assets and when you look at our company we see 20% of revenue because there is more willing to

implement right away. >> what are your ipo plans? vincent: free fundraising, raising 200 million euros but after investments dickie broke even because it is important to have healthy business model to grow the business. tom: ok, ceo and cofounder thank you very much. the valuation gap opened up a taking timebomb.

this week on daybreak europe we will feature start ups, it's an investment bank backing these companies and faculty ai, that coming up later this week, across the show. stay with us. the summit where energy and finance and technology converge kicks up with guests using the qr code, you can scan it now and tune in for that virtually or in person. stay with us, this is bloomberg.

♪ tom: happy tuesday. soft right now in a just tech stocks in hong kong. rotation into mainland markets after golden week. benchmark close to 11% of, the last time i checked you were up 4% and you had been up for nine days prior to the holiday and now you are back. in drc did not deliver in the fiscal support. we look to the state council, worth noting dater came through

in mainland china in terms of travel and shopping and consumption, a bit of a lift to sales but the gays we saw have come off. more trepidation when it comes to the chinese market. disappointment around measures from china, iron ore, middle east politics and focus and that is part of the rationale of a bullish move around oil. down last time i checked, pressure on oil but there is a buildout, most bullish in two

years since russia invaded ukraine, down to expectations of conflict. the warning against israel retaliation. terminal users can access these charts on the terminal. speaking with jamie dimon at the tech stars conference in london to discuss ai, u.s. election and more at 2:30 p.m. london time. opening trade next, this is bloomberg. ♪

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anna: good morning from london, i'm ann