Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20240714

Train were threatens the very existence of chinese factories. Our exclusive interview with the top supplier of consumer goods. Shery breaking news out of south korea. We just got the unemployment s, in line with estimates. The government continues to support job growth. We are seeing more job creation in the government sector, not to mention some green shoot in the private sector as well. In recent months, we have seen the Hospitality Industry showing some signs of recovery, so the Unemployment Rate Holding Steady at 4 . This after edging down to that level back in may. We have some pressure when it comes to manufacturing jobs given the trade tensions and uncertainty there. Lets get a quick check on how futures are trading at the moment. Lets start with south korea. Kospi futures gaining. 5 . Is coming up to the cost vfl to the weakest level the cost be fell to the week the kospi fell. The bank of korea easing bets, but still some uncertainty when it comes to samsung electronics. Nikkei futures unchanged at the moment, but this as we continue to see the japanese yen weaken. A fiveweek low against the u. S. Dollar. Paul some positivity in australian futures, higher by. 5 . Those numbers will be set. Kind of a weird hour in new zealand. Things turned briefly negative. Lets check in on the first word news now with the death. Ritika gupta. Work on itl petrochemical project. Some of the deals have been agreed to earlier but were assigned tuesday during a visit. The agreements include qatar buying u. S. Military equipment such as warplanes and a defense system. Qatar airplanes buying head of saudi intelligence says washingtons longawaited addition for middle east peace will fail unless it involves the palestinian state. The plan laidd out by Jared Kushner last month is up in the air and will not succeed without a viable palestinian nation. Boycotted the seminar. The British Parliament has voted to prevent the next Prime Minister pushing through a no deal brexit against the wishes of lawmakers. The house of commons backed the bill by one vote. The Opposition Labor Party has aanged strategy and now backs second referendum on brexit. Its leader says the party would stay in the e. U. Is a second vote were called. The Iranian Military vowing to retaliate. Said the tanker was in International Waters and not headed to syria and described the u. K. Action as retaliation threat highlights the growing threat to shipping in the gulf. Bp is keeping a carrier close to the saudi coast rather than risk having is used by iran seized by iran. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am ritika gupta. This is bloomberg. Shery jay powell is likely to face questions on everything from stubbornly low inflation to trumpconstant attacks. S he testified to congress on wednesday and thursday. Will he indicate a rate cut at the end of the month . Kathleen hays is here with a preview. So the markets ready for a cut. Is mr. Powell . Kathleen that is the question. We hope that will be answered when he prepares his testimony. The Monetary Policy report put out twice a year by the Federal Reserve to present to the House Financial Services committee on wednesday. The Senate Banking committee on thursday. After the june meeting, we saw the Market Committee was evenly split between those who were ready to cut rates in the second half of 2019 one. Twice, and just as many said we want a halt to hold rates steady. Jump into the bloomberg with me. Payrolls have contributed to this sense of uncertainty. If we look at the far righthand side, see what happens in may. Payrolls were up 70,000. They rebounded 224,000. This rebound will support the camp at the july meeting, saying we still do not see a need for rate cut. The data dependent. We have to get more clues. Lets move on. It is very important thing to watch. One of the things they are looking at is the yield curve because it is sending a very strong signal. Jump into the bloomberg library. You are going to look at one of the heads preferred gauge the feds preferred gauge is. Gauges. S a it has been a classic recession signal for the past several decades. We know for sure that the markets pricing in a 25 basis point cut. The need for an insurance rate cut as jim bullard president of the st. Louis fed, has described it. He said we do not need a 53 could point cut. 50 basis point cut. I think the challenge for jay powell is can he send a clear when the fomc may still be divided over what is the right thing to do in july . Paul jay powell will have to choose his words very carefully. What are we going to be watching out for in his testimony . Expect more gradual rate hikes. It is a type for patience. Now, one of the mantras seems to be the fed will do whatever is appropriate to sustain the economic expansion. To the extent we see jay powell repeating that again, explaining , heromoting asked about it could be reiterating he is ready to cut rates depending on the data and maybe because he is worried about the global economy. Lets look at things we will be listening for in the testimony and his answers to questions he is going to get. Those he upgrade the assessment of risk . Does he upgrade the assessment of risk . In the official report from the fed to be discussed on wednesday and thursday, but that was talking about global trade being weaker the fed was talking about global trade being weaker. Now of course, theres going to be questions from republicans and democrats about trump wash all caps on jay powell on the fed ahead of this. Harry Kudlow Larry Kudlow said jay powells job is safe at the present time. The fed really should take that december rate hike. Inflation is so low. They did not need to do it. We could use that rate cut now. You can be sure, paul, that republicans are going to have their pet these and democrats will have theirs. Is jay powell ready to push the fomc for a cut on the july meeting or not . A lot of people are betting he is. We will see what he says. Paul joining us now for more is the Brown Advisory head of fixed income, tom mcgrath. You will be watching jay powell testimony very closely. What will you be listening for . Tom i agree with a lot of what kathleen said. The fed is likely to cut at the end of this month. I think he will try to walk back expectations for additional cuts later in the year which are still priced into the bond market even after fridays jobs report in the u. S. I think he wants to give the fed a little bit more room to operate. I think he wants to build some flexibility in. So bond yields, we have seen negative yielding that becoming debt becoming popular. Why is this true getting so crowded . Wild. Retty even highyield junk rated bonds in europe often showing negative yields now. Hard to figure what is going on. I think the reality is that you mentioned earlier the fact that the dollar has been getting stronger against the yen. U. S. Dollar bonds back to europe, japan, or elsewhere in the world has gotten really expensive. There is nowhere to put fixed other than these negative yielding countries. It is tough to figure but it is also the only game in town. Shery is this a bearish breakout . Is this more consolidation . Tom i do not think so. I actually do not think the 10 year treasury in the u. S. Has a lot of room to move higher. Kathleen mentioned that the said said they want to do whatever it takes to continue the expansion. That does not, he will hike that doesime soon, not seem like you will hike rates anytime soon. To more rate cuts. I still think that skew is to the downside. We are telling clients got a fiveyear to 10 year part of the u. S. Treasury curve is still pretty unattractive. Prettywhere do you go attractive. Shery where do you go . If you have either a continued expansion or a mild slowdown, bonds can perform perfectly well. Often times, it flows into bond bond managers. It could very easily be that Corporate Bonds performed pretty well. We are looking at mid quality rated bonds or higher rated highyield bonds as good places to be, especially if you can do it on the short a part of the yield curve or fear less cyclically for less cyclically exposed companies. Paul i just want to return to my theme of negative yielding that. That is debt. That is true of bonds as well. 500 billion in the first few days of july. Is that a trend you expect to see continue . Went reverse. I think that in europe, where a lot of that negative yielding is coming from, the ecb will have to get creative to create new stimulus to combat a nascent slowdown there. If that is true, it will make even mildly negative yielding debt lookielding attractive. It is hard to figure but it is also hard to see what makes that trend reversed in the near term. Paul you mentioned europe. I want to talk about greece for a moment if i can. Lets check out this chart on the bloomberg terminal. 10 year got a two handle again. One of these is Investment Grade and the other is not. What is happening here . Tom i think fact in euro denominated investing, there are a lot of investors that are looking at anything with a meaningfully positive yield and trying to get in while the getting is good. Whether that is true with a credit like greece which has obviously had a checkered but if, i am not sure, we think about what the broader trend is here, it is that there is not enough bonds to go around , and those that need bonds are desperate to find any that will pay them a positive number. Shery thank you so much for joining us today. Head of fixed income at Brown Advisory. Of course, you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. Still ahead, the gaining chairman and ceo joins us in hong kong to talk about the prospects for the fastgrowing esports industry in asia. Paul up next, watch our exclusive interview with spencer, the ceo of the World Largest supplier of consumer goods. Find out how the trade war is affecting the Global Supply chain. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Paul i am part out and in sydney. The u. S. And china have had more fun discussions ive they move closer as they move closer to resuming trade talks. Selina wang is following that in beijing. Our negotiations going . How our negotiations going . Selina kudlow said the discussions were constructive and he said there are more meetings planned, but the view from beijing is less than optimistic. Conversations that bloomberg has had with bureaucrats and officials shows the view is very pessimistic and they see trumps 2020 Election Strategy as being critical to whether or not a deal can be reached in the shortterm. A few different views have emerged. One is that trump will try to make a deal ahead of the 2020 based. Ns to a piece is the other view is that he is going to drag out these discussions because he needs to ism tough on china with me dealing with a whole swath of democrats that are also taking a very hardline view. Regardless of how the 2020 elections go, beijing is concerned that it whether it is trump or not. The two sides have really become even wider in their positions as they both face political pressures. President she cannot agree politically to a deal that does not remove tariffs. Tariffs are not removed until china make some serious changes. Shery huawei is another sticking point. It could be headed for its first major Debt Financing since the u. S. Blacklisted the comforting. What is the the company. What is this about . Selina one of them has been how they are going to be reaching financing amid all the uncertainties around the company. According to sources, while way is in the pot huawei is in the process of closing a loan from various chinese lenders. Did not have any international investors. Amid the geopolitical tensions, that is it could he foreign and could be that Foreign Investors are avoiding investing. It could be huawei is choosing not to tap foreign lenders given a heaven of supply domestically at home given they have enough supply domestically at home. There is damaged the trade war is doing to Global Supply chains. Supplies goods for the likes of walmart, nike, and says its u. S. Customers are increasingly looking to shift production away from china. Lets gloss to yvonne man, who lets cross over to yvonne man. They must be reeling from the ongoing trade war what has been the impact so far yvonne deposition so far . Yvonne there position their position has been the middle man. They see what is happening on the ground from the retail side all the way to the manufacturing side. With most of their sales and their clients coming from the he isnd europe, he says u. S. Customers in particular are getting very, very worried, and chinese factories may be forced to close. Months,e last 12 to 18 the world has been experiencing a lot of changes. Sometimes even on a weekly basis. As a result, that disrupt the trade flow. The Global Supply chains for a lot of our customers, especially the u. S. Based customers, because now, the trading corridor is being disrupted by whether there is a deal are not, whether theres paris or not tariffs or not. They are trying to diversify outside of china. Diversifying outside of china to put less eggs in one basket and spread out that risk. This has become a big opportunity for us because when you have to diversify out of china, you go, lets say, into Different Countries. We have the Biggest Network in the world, more than 50 countries, where we have deep knowledge in history, them. Onships, with it is a big opportunity for us now that the world is changing more and more. Why is that . Bestre saying this is the opportunity in 20 years. We have already seen Companies Shifting production outside of china in the past decade even before the trade war started. Might havear accelerated that, but why is now a more opportune time . Haveer even though things been shifting out of china, its not enough. There are some categories that and90 sourced out of china those things are harder to shift. Because of our Global Presence and network, we are able to help our customers and suppliers to shift out of china quickly and find factories that fit their price and quality level much quicker. Yvonne youre getting much more pressure to shift production out of china . Most of the u. S. Customers . What about european customers . Spencer theres the threat of tariffs and higher tariffs. Is a buying opportunity inside china. In china, many factories are not operating at full capacity, and they are more eager for business. When they are more eager, there is a pricing opportunity to lower the places. It is an opportunity for any nonus retailers. European, japanese, Southeast Asian, or even domestic. Fung talking about how they are adapting. They are trying to get Consumer Brands to come back to china and open a factory and take advantage of the mature Global Supply chains. The Seismic Shift out of china is not going away. They expect china to contribute to less than 50 this year. In terms every organizing Global Supply chains, does he see vietnam war Southeast Asian economies replacing china as a key supplier . Yvonne does he see vietnam or Southeast Asian economies replacing china as a key supplier . Shipe he says they cannot production out. He talked more about that and the lack of scale some countries like vietnam have in replacing china. Take a listen. Physically, china has 1. 3 billion people. There are a few hundred people in the manufacturing industry. When you look at any country outside of china, most countries do not even have that many people in that country. So short of an extreme automation, i would say, in the next five to 10 years, no single country can replace china. Vietnambasically saying is full. A lot of retailers have taken capacity in that country. As for the business itself, it a tough through five years. He expects operating profit to year but he definitely sees a bottom now. Back to you guys. Shery thank you so much. Yvonne man in hong kong. Plenty more to come on daybreak asia. This is bloomberg. Paul lets get a quick check of the latest business flash headlines. The likely biggest ipo of the year it said to price in the lower half of its range according to a poll with investors. The asian unit will price it just over 42 hong kong dollars a share, below the midpoint. Brewerrlds largest is expected to set the price. Shery levi strauss plunged in late trading. The Public Company tumbled from one year earlier. Slipped 25 rnings from the previous period to . 17 a share. 29 million of ipo costs were factored in. This is bloomberg. This is daybreak asia. Administration have lost another attempt to insert a Citizenship Question into next years census. A judge rejected the request from the white house. The president said he may issue an executive order to enforce his wishes on the census. Week, he said that would be one of the many ways the question can still be inserted. President trump has again attacked india by imposing tariffs on u. S. Goods. He denounced the move as unacceptable just days before officials are due to meet in new delhi. It was his Second Attack on indian tariffs in weeks. Narendra modi agreed to restart trade talks after they met at the g20. India imposed tariffs after trump ended concessions on indian goods shipped to the u. S. The new greek cabinet has been sworn in, promising tax cut and a more business Friendly Administration after years of austerity. The lineup has several politicians who were in previous cabinet, but also technocrats who are considered experts in their field. Will be finance minister. He is an economist and engineer who served as deputy minister in a previous government. The Chinese Ambassador to the u. S. Joined twitter, raising his public presence ahead of revived trade talks. Twitter is blocked on chinas heavily censored internet. They want to promote beijings interests overseas. The ambassador is the new addition to the platform and says he is pleased to have the chance to engage with the american people. Global news, 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am at a good group to. I am ritika gupta. This is bloomberg. Shery thank you. Lets see how things are shaping up in the asian markets. We are seeing upside when it comes to futures. Nikkei futures unchanged, but coffee futures gaining cost ospi futures gaining. 5 . We are seeing the japanese yen weakening again at a fiveweek low so we will see how trading goes from there. We also have Inflation Numbers out of japan. A busy day today. Investors sydney futures up. 6 . Kiwi stocks reversing earlier losses. Paul. Paul thanks very much. Lets get more on what we should be watching on the Global Markets with our Global Markets editor, adam haigh. A comeback. Making what does that tell us about the search for yield . Adam it tells us how far people are prepared to go to find yield in this environment. , have ae tv look at this chart on your bloomberg terminal. It is pretty mama bubble some pretty remarkable some of the returns you are seeing. Bonds are outperforming the market. Certainly compared to some of the returns in this part of the world. Argentina was a very favored 100 year bond with a very favored 100 year bond as well. Of course what you are seeing compared to some of the developed markets of course, huge interest continues to build. This bond rally has propelled so much of the world into negative yields. Places like europe and japan, you are now seeing more than 13 trillion of debt below zero yield. The search for yield is continuing. I think one defining thing that may come out of this week of course with the testimony from the fed chair is just how the policy, after the markets, assuming we get the cut from the fed in july, policy continues to be very uncertain. There is a lot of that uncertainty prevailing. Peoplesee a lot of favoring some of these esoteric areas of emerging markets. Shery that is the macro environment, but we are also headed towards the earnings season. What are we seeing there and what can we expect about the stock rally we have been seeing in the last couple of weeks . Ofm one defining feature that stock rally really throughout the course of this year has been the expansion in the priceearnings multiple investors are prepared to pay homage global basis, but particularly in the u. S. As well. You have the earnings number not. Eally, you know, growing and people that patience for profits in many parts of the world actually coming down. As you can see in this chart in her gtb your gtb library, the gap of what youre getting in the evaluations side and the foreign projections side, the gap is growing significantly. Over the next weeks, investors will want to hear about the fundamentals that will allow them to keep paying up for stocks. Of course, the riskfree rate has been coming down. Trend lower. Ing to many in the market position for that to continue to come down. He would expect potentially evaluation expansion in the equity market to continue as the cycle gets older, but you know, at some point, there does have to be a little bit of a break. Whether or not we see that in the next few weeks with the way that Companies Tell Us about the fundamentals, that is going to be an interesting one to watch. Might want to keep an eye on that chart over the next few weeks. Paul adam haigh. You can check out the gtb library for some of the charts you just saw there. You can find that on gtd go in the bloomberg terminal. Singapores the Investment Fund is saying cautious. 1. 6 announced a modest gain in the portfolio over the past 12 months. He told us how he is positioning in an uncertain environment. Uncertainties have been there for some time. They manifested themselves in different ways. We have a very different environment. In a different world, we have a low inflation, low interestrate, lower growth, lower returns environment. I would say the challenges of the future are going to be quite different from the challenges of the past. I am not a futurist. Payingdefinitely attention to a number of things. In this low yield environment, the riskreward opportunities, where do you see the best opportunities . What is the best course of capital . We use a model that i just for capital. If you are looking at the lower inflation environment and low Interest Rate environment, your return requirements will be much get the riskg to adjusted capital framework which is associated with the risks associated with a company, a sector. The bulk of it, 37 , consist of financials, and we are seeing an increase over the last few years. Will you be tweaking that . Financial services counts to 25 . Centric. Y bank it is more balanced. You have a growing part in insurance payments amtech. It will grow against the Banking Services portion. Think that one of the ceo. Coming up next, the gaining chairman and ceo on hand, and the future of esports. She joins us from hong kong, next. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery and in new york. The esports market shery ahn in new york. The esports market is booming. Total revenue heading for 3 billion u. S. Dollars by 2022. Joining us now from hong kong is beginning chairman and ceo, ann hand. Great to have you with us. First of all, your company just ipod earlier this year. Tell me a little bit about your business model. Ann absolutely. If you look at a lot of the publicity around esports for the last few years, it has been mostly about investment at the professional level. Most of those have been private investments. Professionals, just a few thousand professional athletes around the world. We are focused on the fact that theres over 2 billion gamers on the planet and 50 of them identify as competitive so no different if you like to play tennis. At some point after taking lessons, you might want to join a team and to participate in some kind of competitive structure. When they talk about the 3 billion market for esports, that is mostly concentrated on the professional level. There is a much larger market space in defining the amateur category of competitive esports. Shery two investors see the potential in your industry . Your ipo has been rocky. Your share price has plunged 20 . Do you expect it to recover . Ann absolutely. A lot of this is about awareness. If you look at what is happening in esports, because almost all of the Investment Opportunities are private and a lot of those valuations are really getting inflated, so one of the reasons we made a decision to lift on nasdaq out of the gate early is we saw people wanted to participate in esports. There are a lot of ways to do that other than largecap investors with the games themselves. This is about awareness and helping people understand what the opportunity is and what the ways we is an all the can monetize this is a direct to consumer offering. Paul how do you monetize this . Where does your revenue come from . Ann historically, the same way you see in traditional sports. It comes from a lot of brands sponsor ship and partnerships. We have longstanding relationships with Companies Like logitech. That is why i am here. I will be on a panel later today with the ceo, who is a huge advocate for key sports. As one of the key trends driving the business at logitech. Someone needs to up their level of gaming, and they invest in a logitech gaming mouse or keyboard. We are moving into Consumer Digital subscription offers, too. People who want to participate in our leagues pay tournament fees. We are moving into other types of exciting Revenue Streams where we allow people to capture their highlight reels and celebrate things all around their gaming lifestyle. We are providing the infrastructure for these competitive amateur recreational. Eagues also, we are capturing all of the gameplay content, and that content can live on twitch and youtube and other Digital Channels. Over time, there is a big content monetization upside as well. We are creating a significant audience for gamers. A have 5 million plus views month. That shows that people have to watch their winning clips and to celebrate in their own competitive leagues just like the professionals. Paul you did point out there are a lot of amateur gamers in the world. About 2 billion by your own estimate. You mentioned in some of your literature that they are the hardest market to reach. How do you get them on board . Ann it is interesting. If you look at the explosion of Digital Channels like twitch, 70 of what is being consumed on twitch, which is a live stream video gaming channel, in everyday gameplay. Those audiences are already established. They are established with the game titles themselves. We announced a pretty Significant Partnership with capcom. They make a game that is multi generational and has been a rough a long time. Street fighter five. They have come to super league and engaged with us. They are building their title in that audience. Really, by partnering with toptier game titles, you can reach as game audience is pretty directly. Another example is we have a Great Partnership with super cell, that makes loreal c lash royale. Shery do you plan to operate in an asset like fashion . What are your plans . Ann the infrastructure that is ue structuree leag of the tournament but also the field space. When you bring gamers physically together, it not only heightens the level of competition, teamwork, and collaboration, but it falls for a missing solves for a missing thing happening today. We are a bit of a local match. Com for gamers. When game is physically come together, they come for the competition and leave saying they made new friends. They are missing connection with think we can amplify. When i talk about field space, it is the fact that super league is a great solution for existing brickandmortar out there. We partner with Companies Like cinemark theaters. We held events in beijing. We see that there is a lot of brickandmortar out there that are looking for new ways to attract the gym the millennia gez Millennial Gen z millennial foot traffic. Paul how much uptake has there been on the brickandmortar side of it . Of my careermost in largecap retail prior to jumping into the esports space. That is probably one of the easiest conversations to have. You look at it. Not only do mall operators, theater chains, all those types of companies have challengers today, but every retailer. Everyone has a night of the week they are trying to solve for. Every retailer has that pressure. When we sit down with those large companies, we are a new solution, a new way for them to be relevant to an audience that right now is not really wanting to come into those physicals faces as much. I think one of the things that validate super leaguess miss model more than anything is the number of Brand Partners that started out as having a commercial relationship with us, and then they became direct investors in the company. Logitech made a direct investment in the company. Viacom did. That just validates the thirst for esports content. Cinemark theaters made a direct investment as well. And things are hand, think very much for joining us. Tv. And catchtch us live up on past interviews as well as dive into any of the securities and bloomberg functions. You can become part of the conversation. You can send us instant messages during our show. This is for bloomberg subscribers only. Check it out at tv. Shery lets get a quick check of the japanese markets. We are seeing nikkei futures down. 1 despite the fact that we are seeing the japanese yen under a little bit of pressure against the u. S. Dollar again. This of course trading now at a fiveweek low. We have the japan june ppi coming up, next. This is bloomberg. Plungedeing shipments 54 in the last quarter compared to one year earlier after the bestselling 737 max was grounded around the world. Lets look at the implications of this with the Bloomberg Business reporter. What do those shipment numbers tell us . Of therect reflection 737 max. 9 aircraft for the quarter that is less than half of its usual quarterly tally, which is around about 200. It is mainly in the fact that they cannot deliver this max which has been grounded after the two tragedies. It is a reflection of the kind of malaise of economic trade as well that is weighing on airline , particularly the u. S. China does you and we have seen that sort of creep into sentiment around the world with airlines. We have had a lot of collapses in europe, particularly with lowcost airlines. They are less likely to order aircraft. Seeingboeing could be some relief soon. President trump talking about a deal with qatar. Lets listen in first. Are buying they commercial planes. Very large numbers of commercial planes from boeing. And we very much appreciate it. We will be signing a document today. A very large transaction. You will be invited to the signing. It is a transaction that will be purchasing a lot of boeing jets and a lot of money spent in our country, and that means a lot of jobs. Shery is this part of that deal announced in paris last month . Is this something separate . Do we have any idea at this point . Angus that is a good question. We are not exactly sure. It is not uncommon for market to andwhen wind of deals broad commitments made towards aircraft purchases without actually signing a document. It is not clear whether trump is talking about the 1. 8 alien u. S. Order 1. 8 billion u. S. Order qatar committed to. Something it is larger. You heard him talk about a lot of money, a lot of boeing jets, a lot of jobs. It is difficult to see through trumps words. In any case, we should know pretty soon. Paul thanks very much for joining us. A bit of breaking data out of japan. It broke a bit late. Good. Not particularly ppi numbers for the month of june coming in much weaker than expected. 5 percent. Of the survey had been for a contraction of. 1 . It gives us a year on year to year for a contraction of. 1 as well. There was expected to be an expansion of. 4 . The figure for the previous month also revised downward. Quite a significant miss for japan ppi in june. Further weakening of the yen as a result. Narrowed a fiveweek low. Shery lots of Inflation Numbers today. We are expecting numbers out of china later this morning as well. Lets get a quick check of the latest business flash headlines. Denied the jet Airway Founder permission to fly overseas amid a government investigation into fraud up an airline. The judge said there was fraud at the airline. His lawyer says the ruling is illegal and the need to travel to explore funding for the carrier. They owe more than 1 billion to creditors after he defaulted on loans. Paul saudi arabia and energy giant aramco awarded contracts with 18 billion to boost up two oil fields. They extend production curves. The projects will add 550 Barrels Per Day at the margin. And otheroleum corp. , companies, are a man of global list of companies to win contracts. A chinese contract drugmaker is that to be planning a share sale in hong kong six months after listing in shenzhen. They are working with advisors to offer shares in hong kong before the end of the year. Sources say the listing could raise. 5 billion u. S. Dollars based on the current market value. Shares have soared in january. Facebook is seeking to mitigate some of the concerns raised on capitol hill about his proposed that the currency, libra. Its proposed cryptocurrency, libra. They said the purpose of the currency is to create a secure way of moving money around the world. Facebook says it wants governments, Central Banks, regulators, and other interested parties, to join the discussion. Paul shares of the largest Budget Airline in the philippines taiwan by a record, wiping out more than 400 Million Dollars in market value after a local broker made a trading air were. They ever. They slumped and error. They admitted making the mistake during the philippine stock exchanges no caps on period at the end of the day. Have themcourse, we coming online at the top of the hour. Lets check how futures are trading. Nikkei futures down. 1 despite the fact that the japanese yen is continuing to weaken against the u. S. Dollar, now trading at a fiveweek low. Upare seeing kospi futures. 5 . We just have the jobless rate coming in at 4 in line with estimates. Sydney futures up. 6 . Kiwi stocks up. 3 . Reversing losses that we saw earlier in the week, paul. Paul thanks, sherry. , societecome generales michelle lamb joins us to look at the inflation figures due out later. Another guest will tell us how the Football Club plan to turn barcelona into the Silicon Valley for sports. The market open, up next. This is bloomberg. Paul good morning. Asias major market are about to open for trade. Shery welcome to daybreak asia. Paul our top stories this wednesday, treading water. Asia asian markets on paz ahead of the fed chiefs testimony. Desperate, the trade war threatens the existence of chinese factories. We hear from the worlds top supplier for consumer goods. Shery more than a club, fc barcelona plans to create the Silicon Valley of sports. We will look at conditions off the pitch. Lets get to a check of the markets. And japan are coming online. The nikkei is down. 2 of 1 . This is by the fact that we are seeing the japanese yen under more pressure against the u. S. Dollar. Now trading at a fiveweek low. We have some ppi numbers, disappointing earlier today. We are an eye on the japanese yen and equity markets. Ahead of the fed chair Jerome Powell speaking and congress this week. Ise a look at how the kospi trading, up. 6 of 1 . The kospi up. 5 of 1 despite the fact futures were under pressure. Tworeversing two this sessions of gains. The korean won at 1182. Paul lets check in on things in this part of the world. E have the asx running currently higher very modestly but we do have the staggered open in australia. Inare down to about the cs terms of trading. The aussie dollar continuing tease back below . 70. 69. 23 and a look at the 10 year yields, firmly in that low yield club right now. Lets check in on new zealand. , to the index, higher by. 5 of 1 . The currency joining the aussie in weakening against the greenback. Lets get the first word news. The British Parliament have voted to convince the next premised are. The house of commons back to the bill by one vote. The Opposition Labor Party has changed strategy and now backs the second referendum on brexit. Its leaders Jeremy Corbyn said the party would campaign to stay in the eu if a second vote were called. The Iranian Military is vowing to retaliate against the seizure of a tanker accused of taking oil to syria. Iran said the tanker was in International Waters and not theed to syria describing capture is piracy. They are keeping an empty coastr close to the saudi rather than risk having it seized by iran. The worlds top supplier of consumer goods is sounding the alarm on the damage the trade war is doing to Global Supply chains. Goods for the likes of walmart and nike and said u. S. Customers are looking to shift production away from china. Ceo told us it is hard to replicate chinas manufacturing power. Physically, china has 1. 3 billion people and there are a few hundred Million People in the manufacturing industry. You look at any country outside of china, most countries dont even have that many people in that country. An extreme automation, i would say in the next five or 10 years, no single country can replace china. Qatar has agreed to spend billions on planes and jet engines and to work on a petrochemical project. Thatof the deal was agreed the agreements include qatar buying u. S. Military equipments such as the Patriot Defense Missile System and Qatar Airways jets. G by gulfstreams global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Jay powell will answer a brush of questions wednesday when he delivers the first of his twoday testimonies to congress. On the only one will matter to the markets, is he ready to push the fed toward its first Interest Rate cut since 2008 . Kathleen hays is here with the preview. The markets have been ready for a cut for a while. Is the fed there . Kathleen if they do go ahead with his cut it will be the first time the fed is an acquisition to think about cutting rates since it was going and to the depth of the Great Recession of the financial crisis. As jay powell gets ready i am sure they are thinking about these questions as well. To set the stage, lets remember the june meeting, the fomc split evenly between Holding Rates Steady where they are or cutting them by 25 basis point of not 50. The question is now as we look at thisevenly between holding rs steady where they chart, dots easier. This is something the fed is looking at. The camp that wants to cut is looking at things like not only the trade war but how about the yield curves that are inverted as we move toy another chart, i will show you what the rate cut odds are. They are the markets pricing in 25 basis points. Before jim bullard spoke to me on june 25 and ruled out a 50 point basis cuts, he wanted to therates, markets hold expectation back and with the june payrolls being stronger, that is another reason that has happened. The challenge for powell is how does he convey the sense if this is what he thinks should happen that the fed is getting ready to cut at a time when he knows that could still be a debate at that july 30 and 31 meeting. Well have to wait and see. Markets are betting that powell will keep the rate cut hope alive. I am starting to think having a history as a lawyer is better than a history and economics. He will have to walk a pretty fine line. What are we watching out for . One of the things people are looking at is he has said the fed will do whatever they have to, whatever is appropriate to sustain the economic expansion. If we need to cut rates, we will. What are some of the things we will listen to . The jay powell upgrade economic risk assessment. It is getting worse even since what the fed was seeing in midjune. Rising risk, that assessment could be flying the rationale for a rate cut. In their prepared report that is going to be presented officially on wednesday, released this past friday, the fed is looking at weaker global trade, weaker manufacturing, uncertainty, these are the kinds of things that would perhaps justify that kind of insurance rate cut that jim den others have talked about. Question, i big dont know how important it is to the outcome but it will have some headlines per you will be asked questions about the constant attacks on jay powell and on the fed. You should be raising rates now, etc. Larry kudlow said jay powells job is safe at the time. The fed should take back to december rate hike. Inflation is still low. Republicans may take donald trump side area democrats may be looking more things like breaking up big banks and income inequality and trying to get jay powell to say that donald trump is on the wrong track. It is always interesting this part of q a. With 60 members of the House Financial Services committee we could be looking at three hours when you look at the testimony and q a so whoever is watching, pull up a chair and put up your feet and get a coffee and get ready to hear what he has to say. Paul that will fly by. Thanks for joining us. Be pouring over data as they wait for Jerome Powell. Highlighting a full slate. Lets bring in garfield reynolds. Garfield the china numbers are going to be front and center. A lot of words out there about chinas economy. All the arsenal indicators that have been there for june and before have signals we could get a pretty ugly gdp print that is coming next week and if you think about the story that was highlighted earlier, talking about chinas factories, so many foreigners want to get production out of china. I think the particulars, we have a chart here that brings that starker focus. The ppi is going to be very much in everybodys mind. That has been trending down sta. The ppi is going to be very and what is more, it has been breaking away from cpi. Has partly been inflated by the swine flu epidemic and a couple of other factors that affected foot prices. The ppi has been trending down. It is expected to drop back down close to zero. If it goes down there and keeps going down, it is hard to see how the pboc does not get pushed into a rate cut and we might focus on what the pboc is doing as far as rates go create at least as far as the asian space goes. We are focusing on what the fed will do as well. We have chair powell giving his testimony on wednesday and thursday. How difficult will it be for him to walk that fine line when he has to leave a rate cut on the table but not overdo it and also not sound hawkish at the same time . Garfield it will be a tough one. There are a couple of tightropes and to some extent, the near term focused one is easy, whether or not there will be a cut in july. I think they will stress the data pendant dependent side of things and talk about what is term on over the longer view when it comes to payrolls to take some of the sting out of what came out the other week. As long as rates markets are pricing term view, Something Like a 100 chance of a cut at the end of to cut. Will have otherwise the Market Reaction would be so extreme that it would force him to cut soon after. He is a little bit trapped on that front. The trickier part is what does he do when it comes to expectations for to cut. Otherwise the Market Reaction would be so extreme that it the rest of the feds actions this year . How well can he sell the insurance cut idea as being what the economy needs . It is not just the pricing for the current month. If you look further ahead, the chart we are bringing up now, that is the fed futures contract for december delivery and that has been rising. It rises when the yield falls and when rate cuts are getting priced in and as it spiked up so have stocks. We have this decline because he as well as the concern that kathleen was highlighting, you might not get a cut or you will not get a 50 basis point cut. There is the concern you might of to bank cuts instead three that were being priced in for december. Pricing in the bond market and stock market has been predicated on the idea that once the fed starts cutting it will keep cutting. That is going to be a strong focus as well as whether or not they will cut this month. For that. Nk you you can follow our markets live ivog on the bloomberg at mm. You can find out what is affecting your investments right now. Still ahead, fc barcelona is one of the biggest Football Clubs in the world. We will talk with the Team Executive about how they are using innovation and technology to expand its fan base. Paul we will have more on chinas inflation data and we. Ill speak with michelle lamb this is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. All i am paul allen in sydney. The first item to check will be inflation data that is due out in the next hour. The consensus view there is for Consumer Prices to have risen 2. 7 from a year ago. Prices are seen rising. 2 of 1 which would be the first year on year decline since the Fourth Quarter of 2016. Let this lets discuss this with michelle lamb. Lets start off with the cpi numbers. I want to jump straight to the terminal and take a look at this chart. Outsize impact that swine flu has been having on Consumer Prices in china. Have port rises rising pork prices rising. To what extent is this skewing what we are seeing in chinese inflation data . Michelle the reason why we are is of pork inflation prices and they will not go away into the first half of next or. Supply has continued to decline and we have that will continue to push up cpi inflation and that could reach as high as 3 in the second half of this year. Inflation will be the hurdle. The pboc to ease given the weakening economy. Ppi what about the Inflation Numbers, will that be the hurdle because we have another chart here that shows , easinging as well expected for the month of june and the ppi. Is this part of a trend, is that going to be the trigger to start using . Michelle possibly. Consensusightly below forecast for inflation for june. Metale seen pretty soft prices over the month. Not to mention that trade tensions could increase downward pressure. Face a producers have to the 200rom 10 on million goods. Whenis downward pressure they export their products to the u. S. We saw some green shoots in the chinese economy. When it came to the First Quarter we were saying perhaps because of the measures taken by the government that the economy was making a turnaround and then we are seeing it slump again trade when can we expect some stabilization to come through . Expecte we continued to the stabilization to come through. Fourth quarter are the turn of the year. I think the next gdp data will give us a lot of clues and we gdp growth to be 6. 2 . Down from 6. 4 in the First Quarter. The unfortunate event is trade tensions escalated in may and june and that derailed confidence significantly. The government has announced the measure as much as 3 trillion renminbi at the beginning of this year. Berequires people to confident about the economy. Given the renewed trade tensions cut package may not stimulate growth. What the policymakers should do is to help confidence and we think the pboc will deliver more easing very soon. Especially until we have some disappointing data for the Second Quarter humbly next week. Arey what form of easing we expecting . We have not seen all out measures we saw in the past. They have been more targeted. Michelle certainly. The greatest worry for policymakers is housing. If you follow closely the government has announced a lot of measures targeting the propertyector on the thestment front and on lowering rates by the banks. Some news that we have been parsing over the last couple of weeks. I think the most important concern is the economy. In terms of easing, now that the cut by 25 or 50 basis points in the First Quarter, very likely that the pboc could follow. And the past if you look at what the pboc has done, when the fed increased rates by 25 basis abo see followed. They could do even more based on this ratio. If they cut by 50 basis points the pboc could do 10 to 20 basis more liquidity operations to support the credit growth is pretty much there. Michelle lam, thanks for joining us. You can get around up in todays edition of daybreak. And onailable on mobile the app. You can customize settings so youre getting news on the assets you care about. This is bloomberg. Shery the ceo telling us how he is positioned in an uncertain environment. They manifest themselves in different ways. We have a different environment. Addition in the investment world we have low inflation, low Interest Rate, lower growth, lower return. I would say that the challenge of the future are going to be different. How they turn out, i am not a futurist. We are paying attention to a number of things. You talked about a low everything environment and this low yield environment. Risk reward opportunities, where do you see the best risk reward opportunities . It is the right cost of capital. We use the model that looks at risk. It is higher. If youre looking at the low inflation environment and low Interest Rate environment, your requirements would be much lower than someone like us, and equity avestor looking to get capital framework which is based on the risk associated with a country, a sector, and a particular country. On you look at the portfolio the bulk of it, 37 consists of financials and we have seen an increase over the last three years. Will you be tweaking that, how will it look like . Accountsial services for 25 . A used to be very bankcentric. It is more balanced. You have a significant part in insurance, payments, and tech. Bankpart will grow as the itself. So if you think about how we are building the portfolio, Financial Services remains one component but Technology Takes up as much capital. 75 of your investments are outside the country. How talk to me about the volatility in the currency market. You are right. But the Singapore Dollar currency is much higher because of the fact that the companies exposure. N, 35 have that is part of the 75 . As volatility accounts revenue. We can hedge currency volatility because we have no duration limits. This is daybreak asia. President trump has attacked india for imposing tariffs on u. S. Goods. He announced the move as unacceptable this before trade officials are due to meet in new delhi. It was the president second twitter attack in three weeks. He and the premise to agree to restart trade talks after they met at the g20. India imposed tariffs after trump ended concessions on indian goods shipped to the u. S. The Trump Administration has lost another attempt to insert a Citizenship Question into next year sentence. A federal judge has requested a request to assign a new legal team to a lesser that blocks the plan. The president said he may issue an executive order to enforce his wishes on the senses. He said that would be one of the many ways the question could still be inserted. The new great cabinet has been sworn in promising tax cuts and a more business Friendly Administration after years of austerity. The lineup has several politicians who were in previous cabinets and technocrats who were considered experts. The finance minister is an economist and engineer. Former head of saudi intelligence says washingtons longawaited vision of middle east peace will fail unless it involves the palestinian state in its capital. In jerusalem. About not succeed without a viable palestinian nation, they said. He presented his plan last month. The Chinese Ambassador to the u. S. Has joined twitter raising his public presence ahead of trade talks. Twitter is blocked that many state outlets and diplomats run accounts to promote beijings interest overseas. He is a new addition to the platform and says he is pleased to have the chance to engage with the american people. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. We are following an alert on the bloomberg, hearing confirmation from Chinas Ministry of commerce that the vice paris are has spoken on the ande with Robert Lighthizer secretary mnuchin. They exchanged views on the results of the g20 meeting between President Trump and president xi. At nikkei is Holding Steady 21,005 hundred 45. The japanese yen still under pressure against the u. S. Dollar which has risen to a level we have not seen since midjune. The japanese yen now trading at a fiveweek low. Lower by. 51 . Coming among declines after they fell to the lowest level since may 31. Take a look at this chart on the bloomberg. We are seeing korea being very cheapest market after hong kong. When you take a look at the earnings per share estimate, they have plunged by 31 . Analysts cutting the earnings outlook. This would be the most since the Global Financial crisis. Earnings will continue to suffer from the global macro uncertainties. Paul another trade war might be coming to a boil, citing a long standing and unresolved tensions, restricting three types of critical components used in smartphone screens. Tokyo said the talks depends on souls response. Tim kopin. In the dispute has its roots dating back to before world war ii. How difficult is it going to be to come to some sort of resolution . Tim as you said, 70 years in the making, this dispute has gone on and on and it dies away and people forget and it flares up again and it flared up again right now. The real issue here for both sides as they need to ask themselves what they will get out of it. There is a lot of pride and patriotism involved and old ones are being opened up again. At the end of the day, they have bigger things to worry about and that is the global trade and macroeconomic environment we have been talking about. And the fact that both sides, south korean and japanese have companies that are under threat from china because they are in areas that the Chinese Companies want to get into. Thatese two will squabble opens up the opportunity for beijing and companies in china to get in there and get part of the hardware supply chain. Shery that is the point, right . Get thoseorea cannot components from japan, they have to turn to someone else. If they turn to beijing, how will this play out in this tech cold war we are seeing between the u. S. And china . , the japanese when it comes to certain types of materials used in semiconductors and parts of electronics, they are the world leaders. There is not Many Companies outside that can do as well. They are coming long, theyre working hard. In china, china wants to be independent technologically and that means the supply chain from that materials through and products. See this aswould being an opportunity to get in there to work harder much be able to develop those Materials Sciences and deliver those kinds of products to some a conductor makers around the world, certainly in china. On,his dispute continues that would be the opportunity for the chinese. We need to remember that many Companies Want to move away from china, we are moving to Southeast Asia and elsewhere into taiwan, that is another area. Workis an area that would against the chinese. They are close to the factories and close to the supply chain. This could have been an opportunity for them to get a stronger foot in the door. This wobble diminishes that opportunity. We have been talking whethere winners here, it is micron or taiwan semiconductors. If you look at how much market they have, can they filled a gap that is less than the industry . It would be a struggle. They are skilled Major Companies so when it comes to supply chain they would have priority in getting access to products. They would have to look elsewhere outside of japan. So you can imagine that supplies would be wanting to prioritize them. They have Companies Like tsmc that they want to supply. The suppliers will have to choose, do we go with samsung companies say, and taiwan. That is a decision they have to make and it does not work out well for the south koreans. Shery thank you for that. Now the Worlds Largest supplier of consumer goods is the latest to sound the alarm on the damage the trade war is doing to Global Supply chains. Goodsupply and transports for walmart and nike. Of its revenue comes from the u. S. The supply chain extends across asia but it sources most goods from china at a time when it has to resent pushing for production to be shifted elsewhere. Theceo told us he sees disruption underway regardless of whether a trade deal is reached. Months,e last 12 to 18 the world has been experiencing a lot of changes. Sometimes even on a weekly basis. As a result, that disrupts the trade flow, the Global Supply chains for our customers especially the u. S. Based customers. The u. S. Trade, the trading corridor is being disrupted whether there is a deal or not, whether there is tariffs or not. A lot of our customers are u. S. Based customers, they are trying to diversify outside of china. Not leaving but diversifying outside of china. Less eggs in one basket and to spread out the risk. This has become a big opportunity for us because when you have to diversify out of china, you go into Different Countries and we have the Biggest Network in the world in more than 50 countries where we have deep knowledge and history and relationships with local vendors and local governments, where we can help customers quickly. It is a big opportunity for us now that things, the world is changing more. Why is that, youre saying this is the best opportunity in 20 years. You have seen Companies Shifting production outside of china in the past decade, even before the trade war started. The trade war may have elerated that it why is but why is more an opportune time . Things have been shifting out of china but not enough. There are categories that are 80 , 90 sourced out of china to those are much harder shift. Because of the Global Presence and network we are able to help customers and supplies to shift get thehina and to price level and quality level quicker. Youre getting pressure to shift production of china, is it more for the u. S. Customers question mark what about the european customers . It is the u. S. Because of tariffs, the threat of tariffs and higher customers. They see it is a buying opportunity inside china. In china, many factories are not operating at full capacity and there are more they are more iser for business and there a pricing opportunity to lower the prices. It is an opportunity for any nonu. S. Retailers. Europeans, japanese, Southeast Asian, or even domestic. Paul that was spencer fung exclusive speaking to yvonne man. The likely biggest ipo of the year is set to price in the lower half of its range according to a poll of investors. The survey suggests the asian unit will price at 42 hong kong dollars a share, 2 below the midpoint. Our deals now is editor. What are the main takeaways . Are 74 investors, most of them from europe and are investors. Of 47 honge range kong dollars per share. 42. 6 hong kong would be a reasonable and attractive level. That would be 2 below the midpoint of that market. Onwill find out later thursday when the company is expected to price the offering. One thing to note is even if it is going to price at 42. 6 hong kong dollars per share, the fundraising is 8. 9 billion u. S. Dollars. The worlds biggest ipo this whichy bigger than uber, raised 3. 1 u. S. Dollars. It is a spin off. So they see most of the proceeds will go to the parent abm best for the for the company itself, they have said that they would look for m a opportunities in japan and Southeast Asia. Thank you. Coming up next, we will look at the future of Sports Technology with the head of the barcelona Football Club Innovation Hub. This is bloomberg. Paul this is daybreak asia. I am paul allen in sydney. Shery i am shery ahn in new york. An indian court has denied the jet Airway Founder permission to fly overseas amid a government investigation into fraud at the airline. The judge said there was concern you might not return to the country. He travels said that to secure funding. They owe more than a billion dollars after the defaulted on loans. Awardedamco has contracts with 18 billion to boost output of two offshore oilfields even as opec and its allies extend production curbs. The projects will add a combined 550,000 barrels a day. China petroleum group, Hyundai Engineering and two other companies are among a global list of companies to win contracts. A share sale planned in hong kong six months after listing. The company is working with advisors to offer shares in hong kong before the end of the year. Sources say the listing could raise half a billion u. S. Dollars. Based on their current market value. Shares have soured soared since the ipo in january. Is seeking to mitigate the concerns raised on capitol hill about its proposed drip go, libra. A week before, it has written to lawmakers saying the purpose of the currency is to create a secure way of moving money around the world. Facebook ads once governments and Central Banks and other interested parties to join. Facebook ads it wants governments, Central Banks, regulators and other parties to join the discussion. Great to have you with us. Start explaining to us what a Silicon Valley for sports would look like, martha thank you. Football club arsenal and i want silken valley of sport. We want to be able to be the number one force, knowledge, and innovation center. Athletes and2000 we want to make sure they perform their very best and we give society in general a better Football Club. We are more than a club and that is one way to show it. Shery how would the strategy help your bottom line . To perform are able better. , theye startups now collect data from players and we are able to prevent whether they are going to be injured or not. Players, they played over six different disciplines. Games so we amateur are able to improve their performance, pass them better data analysts analytics and make sure they perform so that is one of the examples of one of our startups that we are working on. Is a fantastic thing. We are the first class to ever have an Innovation Hub for our players and our funds and [inaudible] as well. Paul you described injury prevention as one of the innovations youre looking at. Could you describe others for us . Partnership with gatorade. It will be customized for one of the in each player and that will help them to recover a lot faster. We also have one that helps players sleep better and emotions are more positive and your performance is better on the field. I very much believe that any start up that is related to health, nutrition, or sports in general is going to be able to help us do our work much better. Not only are doctors but sports analytics will be able to improve the game as an overall. We try to share our technology with other clubs and we try to improve on an everyday basis. That is why were here, we want to ask when what we do and we want to be able to show the world that Football Club arsenal in doing this because the whole team and the players need to be ahead, need to be on the next step when it comes to sports, technology, research, and scientific projects. And definitely it is helping us doing that. This is a great example for us as well. Club are istball also a business. To earn revenue off some of these innovations by selling them to other clubs and elsewhere . I am sure that we are going otherable to work with players and to work with other teams and society in general. We deftly want to become a referral to all of them. And were going to partnership with anyone who is interested and we are already doing so. Asia we are we want to explain to everybody what we do and it is one of our biggest markets and referrals, 40 of our funds are here and 40 of our business is here. We have an agreement with mission hill and we are trying to furnish it with anyone who wants to improve our club to its best. We will partnership and share our knowledge and we will be able to become the Silicon Valley of the sports by doing that. When it comes to improving sports performance, you mentioned tracking data players and how they are doing, injury prevention, is there any risk of this information becoming an issue . The ownership of layer data . That is something we are working to, we are concerned. We have great lawyers that are working on it and we have players that are willing to improve themselves and share data with us. But definitely, i believe it is concern an issue of worldwide and that is what we are going to do, we are working with legislators and the near future to be able to, we do this the way it should be done, definitely. Paul thank you. Dont forget our interactive tv function, tv. You can watch us live and catch up on past interviews as well as dive into any of the securities or functions we talk about. You can become part of the conversation by sending us instant messages during our shows. Bloombergr subscribers only. You can check it out at tv. This is bloomberg. Shery this is daybreak asia. I am shery ahn and new york. Paul i am paul allen in sydney. Subscriptions for Nine Companies open on wednesday, testing investor appetite for stocks. The first batch will begin trading on july 20 2, 8 months xi announced the project. Whys it turning out to be such a busy day . This is about two weeks off. Star board asthis it is called. And there is great excitement for getting it going. And so we are starting to see subscriptions rollout and today is the big day. We saw the shanghai composite getting battered earlier in the week. What is the sentiment like in shares of moment . We are down from any for high and were having a hard time punching through the 3000 level. Been tensions have limiting the stoxx from too many more gains. There is a bit of concern. Liquidity will be drained away as these toy five stocks start trading july 22. Investors are a little bit cautious right now. But which caution companies are looking like the standouts . There is one big one that would be the biggest ipo in china this year. China Railway Signal would be seeking 10. 5 billion yuan. That is the one big stack stock that jumps out. Thanks for joining us. Just before we hand over to blumberg markets asia. Lets check in on how the markets are trading right now. We have japans nikkei looking flat at the moment. We have some rather disappointing ppi numbers out of japan earlier, slipping into deflationary territory. Kospi performing stronger. 6 of 1 . Gher by into chairre heading powells testimony in congress. You are seeing chinese futures up. 3 of 1 , watch out for chinas cpi and ppi numbers. We still dont have the trade data and credit expansion data. A lot of data to watch out for. 689 ese yuan at 6. 89. The china open is next. This is bloomberg. It is not 00 a. M. In beijing. Welcome to Bloomberg Markets china open. Im tom mackenzie. Yvonne and i am yvonne man. David and im david ingalls. Equities across the region are mixed ahead of the fed chief testimony to congress. Investors await a wave of headlines. Yvonne the worlds top consumer Goods Supplier says the trade or threatens the existence of chinese factories. Short of an extreme automation, i would say in the next five to 10 years no single country can replace china. Tom