Transcripts For BLOOMBERG Bloomberg 20240704

Ed you are watching daybreak asia live from new york sydney and hong kong. Haidi counting down to asias major market opens. Paul u. S. Inflation signals complicate the fed outlook. Penciling in a first rate cut by mid 2024. Sx traders are back on the yen intervention watch. Country garden to suspend trading for monday in almost a dozen onshore bonds. Softbank reportedly in talks to buy the rest of chip designer arm from its own vision fund. Shery u. S. Futures early in the Asian Session seeing upside after the s p 500 struggled for direction in the friday session. It finished at a onemonth low. Really after fluctuations between gains and losses, big tech led the declines. We had the nasdaq 100 seeing the longest losing streak on a weekly basis this year. Big tech pressured the markets, not to mention investors were really trying to digest Inflation Numbers, whether it is Consumer Inflation Expectations unexpectedly falling. Producer prices surprising to the upside pressured the treasury space. The 10 year yield finishing around 415. We had a poorly received for 30 year bond auction. Oil prices at the moment under a little pressure in the asian section after we saw the wti seeing seven weeks of games, the longest winning streak this year already. We had the iea coming out saying demand in china looks robust. We are also seeing upside in oil prices overall. At the same time in the Asian Session, that is not really being sustained. Annabelle when you look at what will impact trading sentiment in asia today it is the focus primarily around what we see from chinas economy, chinas property sector the focus, very much still on chinas Country Garden, the Major Property developer under pressure. A lot of bonds suspended in the session today. The focus is on what beijing will be doing, whether we see more stimulus officials are so far quite reluctant to issue widescale stimulus giving the given the ongoing debt even though we saw some issuance for local governments in the friday session. Today most futures point to a weaker start, the aussie dollar fairly flat and the japanese yen very close to the 145 level we have not touched since the end of june. It is more an expression of the moves in treasury yields. It is also playing out now across the bonds space. The key we bonded, the tenured 10 year yield of the highest since 2011. We have an rbnz meeting going for a hold. Still the focus is on the fed. Shery especially with Inflation Numbers its tough for investors, economists, and policymakers. The top two u. S. Inflation metrics moving in opposite directions ahead of the next Federal Reserve meeting. Our Global Economics and policy editor Kathleen Hayes is here with the latest. Walk through the Inflation Numbers and what it means for the fed. Kathleen this was an unusual day for inflation. We have the cpi, Consumer Prices for july coming in lower than expected. Maybe everybody start saying the fed can pause in september. They hiked in july. Then on friday, Consumer Prices, an important number. They are wholesale prices, not the same picture, one step below retail prices, the broader view of inflation in the economy. Consumer prices, number one, came in up more than expected, 0. 8 yearoveryear. They were up 0. 2 percent in june. Some of the key numbers in the ppi, Producer Price index, carryover to the pce deflator, the feds main gauge we got later in the months to do with services prices, more technical factors, Health Insurance costs. Those tell you things are hotter than you expect. Then something that is important is at the university of Michigan Consumer Sentiment Survey including a closely watched measure of Inflation Expectations. They suddenly weekend. Gasoline prices were going up last month. About inflation . The year and number went down to 3. 3 from 3. 4 . A little weaker there, isnt it . The five10 year outlook went down to 2. 9 from 3. 1. There has just been a bit of a move, enough to make investors say that cpi looked weaker, but now Producer Prices are telling us one thing. Expectations, what is an investor to do . Thats why the data is interesting. It sets us up for the fed fomc minutes this week. Showing us how divided, how many people want to pause again, how many people were ready to hike. Furthermore, jackson hole, the symposium, the kansas city fed. That is a week from this friday. It is where jay powell that everybody will give a big speech. Everybody is waiting to see the direction he gives on these issues. Paul lets talk about china. Concerns are rising over deflation there. What is the government proposing there . Kathleen lending numbers. Lending is not just how much banks are willing to put out there, it is how much people and businesses want to borrow. When lending falls you think the recovery is not much recovery. We could be in need of more aggressive help then we have gotten so far. Overall, the loans came in about 346 million you want yuan in july and were expected at 780 billion. We see the new loan figure missed by more than 50 the expected figure. The total aggregate financial shrink is it reflecting a big ball of debt and interest to do that is not being refinanced. Thats another critical negative factor for the economy. Mortgage lending, given what has happened in the property sector, the governments less than aggressive steps to do something to shore up days. Thats another thing we are seeing there. Of course, yes, chinas government came out. Now, saying they want to attract more Foreign Investment. They are talking about changing taxation for Foreign Investors, focusing on key areas like, i believe, biotechnology and communications. This thing, of course, all of the standards they are suggesting so far are very targeted. It is not a big blast of government spending, a big last of Interest Rate from the pboc. Some might say it targeted and smart. Others might say it is too little too late. But, these and committed these measures seem kind of halfhearted. At any rate, thats the latest. The loans against the proposal, really standing in contrast to each other. Paul . Paul kathleen, does this point to further declines in chinas big Economic Activity reports we will get tomorrow . Kathleen it makes you wonder if they can do anything but look weaker. We talk about the Economic Data dump, three big reports and retail sales yearoveryear expected, at this hard to a little bit to Something Like 3. 8 from 3. 1 percent yearoveryear, or excuse me, year to date. No, yearoveryear. I have a bunch of numbers in front of me. It is the numbers from the year to date expected to slow from 8. 2 to 7. 6 in our survey. Industrial production is expected to decline a little bit. But, maybe, if you look at the year to date being not a big change, you get the investment figures that are expected to be negative for the second month in a row. Bottom line, paul, the people think of china is at the median lending rate and they are supposed to keep it at 2. 5 percent again. Bloomberg economic index expects them to save up a rate cut until next month. There is a lot of focus on these numbers especially after pretty bad lending figures. Paul Kathleen Hayes in new york there. Lets get a preview of the trading week ahead. Our chief rates correspondent for asia and live correspondent Garfield Reynolds is with us. Garfield, no action from the db is a on their one year rate. How long can they continue with these piecemeal measures to do something . Garfield as kathleen mentioned, the lending crashed out. So, i do not think that if they were to lower the mls from 2. 65 to 2. 3 or something, which would be outrageous, with that help . People are not interested in borrowing and banks are not interested in lending, partly because of the property sector. Partly because we have had this china going way back to the pandemic era expected to lead the world economically out of it because they had done such a good job with the exception of keeping death down, keeping control. That did not happen. Then they went to covid zero, that they decided was necessary for health reasons. But the economy took a hit and everybody was like, that is ok. They will end to covid zero and at some stage we will get a big bounce back the same as we have had everywhere else and that has not happened. So, peoples expectations about the chinese economy keep on being disappointed. The difficulty is, it is still probably in the back of everyones minds, after the Global Financial crisis china led the world out. Thats not happening now. There are a range of issues about that. To some extent, you know, the way that chinas authorities try and micromanage the economy back to health, that raises concerns, especially among investors that have been burned by the discouragement from things like education. But by the same token, there is an obvious easy fix. Where if they just slashed Interest Rates that would somehow bring the economy back around. That is why you now have chinese stocks 40 or so off 2020. The s p 500 is up about 20 , 30 , or something. Shery in the u. S. There seems to be more optimism about what the Federal Reserve will do. We could potentially see the end of tightening with Goldman Sachs been in a rate cut second order 2024. Quarter 2024. Does that mean we can expect more calm in the markets, particularly, the bond space . Garfield i am not sure but it would not surprise me is a year ago Goldman Sachs was forecasting a rate cut for Second Quarter 2023. Certainly the market was picking one that stage. If not Second Quarter 2023, second half was definitely the expectation. The story was for the bond market, not so much the equity market. It is doing very well this year. But the story of the bond market has been serial disappointment that the fed was expected to stop hiking and rapidly turn to cutting rates, that famous pivot that has just not happened. In fact, especially with Jerome Powell coming up at the end of the month with some of the very mixed data pictures we are getting not only from inflation figures themselves, but the jobs market, it is hard to see how the fed relaxes this hawkish posture. If it doesnt stop rate hikes, then, it will face this immediate battle. Then i think it will have to fight with the bond market to say, though, just because we have stopped does not mean we will turn around and cut rate in six months. We may have to say, i know that we have that is what we have done in previous instances, but in previous instances we did not have inflation that was this high and had been this high as of just last year outside of the early 1980s. And in that time is precisely why they are looking to fight the bond market because in that time period the perception was the fed cut rates too soon out of fear of inflation and revived inflation instead of taming it. They want to make sure that this time is much smoother that they hike, hike, hike, hold, hold, hold and only cut when they are sure they are absolutely needing to. Shery bloombergs chief rates correspondent for asia Garfield Reynolds with his take on what to expect this week and what is happening with the fed. Coming up, blackstone tells us why they are shifting back to buying mode for japanese real estate. Our exclusive interview with their japan real estate head later in the hour. And, why Oxford Economics is not expecting any fireworks from chinas upcoming activity data. More on their insights on the broader asian economy next. This is bloomberg. Paul a look at the week ahead. Chinas sliding into deflation. Another look at the state of its economy with a day lose of data, july industrial production, retail sales, fixed Asset Investment and jobless rates do tuesday. The pboc said its benchmark oneyear lending rate and most economists expect no change. On inflation, watching cpi numbers from india expected to show a sustained increase in food inflation. From the u. K. , price pressures as well. And we get inflation data from japan friday. Wednesday the fed minutes will give us more insight into the Central Banks recent rate hike decision. And, shed light on its datadependent future rate strategy. At the rbnz and philippine central bank, they are expected to keep rates on hold this week. We will get japans preliminary Second Quarter gdp numbers, a big week for data sharing. Shery lets start with where china is headed. Their banks extended the smallest amount of monthly loans since 2009 in the months of july. Our next guest says this year is proving to be a tenuous policy test for china. Luis lou is at Oxford Economics and joins us from singapore. This chart on bloomberg shows how loans and aggregate financing missed expectations. It seems that demand is weak despite targeted measures from policymakers that have been brought into. What are you expecting in terms of the demand picture in the country . Louise it is great to be on. The problem with china, really, is it is pretty much a demand side story. The recent policies we have seen from the government, a lot of analysts talk about how there is not enough detail in them to mentation. Really, i think a lot of them i think a lot of the problem is these problems are on the demand side. We have seen this in the credit space. We will not see very much meaningfully Going Forward. The credit data was disappointing. Look at the household loan stated. It is a good measure of the kind of consumption. The demand of the economy. It has been quite low. Part of that represents the fact that in july, part of that is that the property sector is very much in correction. It means the risk aversion is high. Shery we have the pboc setting the one year rate today, not expected to do much besides keep it steady. What can i do with Monetary Policy when demand is that week weston mark louise when demand is that week . Louise even if you increase credit supply, if there is no demand to meet that, its somewhat muted. I think that at the pboc now the goal is to ensure that liquidity conditions remain to facilitate fiscal measures that perhaps the government is looking to put in place. I do not necessarily think there is much of an impact in the mlf. And that is why much of the street this week is not expecting a drop in the mlf or benchmark rate this month. I think it does signal a very strong easing policy for the pboc. That is why we do expect there will be some kind of decrease in the mlf perhaps next month or next quarter. Paul you mentioned the lack of demand for lending in china. Theres not a huge amount of demand coming from offshore either. Foreign direct investment is declining. How long do you see that trend enduring for . Can Foreign Investors continue to ignore a market of chinas size for too long . Louise i would not say aversion, but much of the slowdown we have seen investors going into china comes to two things. One, the Regulatory Environment on shore. Even though authority has been focused on attracting investment it has not worked. There is a u. S. New outbound investment. These factors, i do not think this is a temporary phenomenon. I think this could happen a while. That is why i think over time you would see chinas balance of payments get smaller overtime. I think that it does not necessarily mean there is nothing the government can do. I think that they continued push for investors coming into china, especially, when using about the new Technology Sectors, the manufacturing, you have sectors china does have a very strong presence in, then i think that these other sectors, that authorities should turn their focus to attracting that. Paul i want to talk about japan. There is a lot of data coming out of that country this week including towards the end of the week. Cpi numbers have been outside, above the target range for Something Like 14 months now. Do you think the doj has it right when they talk about bojs right when they talk about inflation in japan not injuring . Because we have been burned by the word transitory before. Louise exactly. I think in the case of japan you are right. We have seen pretty animated inflation by japanese spenders for a while. We see it as sectors that drive more of the upside to inflation and it really is transitory. Think about what is driving even though recent trends. Higherthanexpected core cost cpi, reaching an absolute threshold of energy in japan. This reflects the fact that some travel subsidy programs put in place during covid have started to fall away. So you are really transitory. I think that would fold down inflation Going Forward. To the extent that we believe this will create a meaningful drag on inflation for a sustainable time, i think that is still a huge uncertainty. Thats why is think the b will continue to be quite patientoj in assessing whether it needs to move in a monetary sense to combat this inflation. Paul louise, we have to leave it there. Thank you for joining us, louise loo, lead economist at Oxford Economics. We have much more to come on daybreak asia. This is bloomberg. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com lets look at the bonds space in australian and new zealand. A little earlier we reported a sharp rise in the yields on the new zealand 10 year. 484 4884 at the moment, level we have not seen since 2011. We are expecting the are not expecting the rbnz to change the cash rate this week but inflation is an issue in new zealand read we saw a bit of a move up on aussie bond yields but the move on the 10 year is easing back now. Shery oil at the moment, wti and brent under a little pressure after oil saw seven weeks of gains already. The longest streak of gains since mid 2022. We saw wti gaining about 20 . We heard from the iea that demand in china has been robust. World oil demand surged to a record in june supporting prices. It has not been sustained in the Asian Session. We have more to come on daybreak asia. This is bloomberg. So. I know you and george were struggling with the possibility of having to move. Hows that going . We found a way to make bathing safer with a kohler walkin bath. A kohler walkin bath provides a secure, spalike bathing experience in the comfort of your own home. A kohler walkin bath has one of the lowest stepins of any walkin bath for easy entry and exit. 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I think there was a case where 3 inflation Going Forward , and i think if we got to that point, then the fed would consider stopping in may even lowering rates over the next year or so, but i do think that 10 year at 415 now is probably overvalued and has been overvalued for a long time in terms of a lower yield and too high a price. The fed funds actually came down to 2. 5 or 3 , the 10 year term premium is the spread between 10 years of fed funds, typically 135 basis points over a long period of time, so if you had 135 basis points two 2. 5 or 3 on fed funds, you get to a point where we are now, and that suggests all of the bulls on treasuries and on the 10 year and on the long run, i think their arguments are a little misplaced. I think it has been overvalued for a long time, and we are going back to proper evaluation on the longerterm bonds. You understand better than anybody that relationship between inflation and the fed and how that factors into some of these bowlers bullish calls, and those calls have increased not just because of the two reports without this week. If they have it wrong, give us a sense of why specifically. Well, i think they got it wrong first of all because rates were so low because of quantitative easing and the fact that in some cases the fiveyear real yield was 200 basis points, which sounds incredible, but it was 1. 5 years ago and now is 200 basis points, so a 400 basis points which in terms of real rates. Investors got overwhelmed by the fact that the fed would stay low for a long time and inflation would not pop its head out of the rabbit hole. It has, and so now we are moving back into an old age world in which i suppose Interest Rates really are a sign of a healthy economy, and the way we have it now, the negative yield curve we have had that for 12 to 18 months. A thriving finance based economy cannot do well. It does not mean it goes down in the dust, but it cannot do well if low risk investments yields more than highrisk investments, and as you march out from the 30 day bill to the 30 year bond, you can see that you are better off yield wise in terms of the 30 day bill, and so that is just a perverted yield curve, and it will not do well for the economy Going Forward. Paul that is the pimco cofounder speaking with bloomberg earlier. We are a little less than half an hour away from the open in sydney, also tokyo and seoul. Annabelle is here with a look at what to expect. Annabelle nikkei futures in japan just the latest was to come on pointing to a drop of. 4 of 1 at the opening. Important because japanese markets were separated for a Public Holiday, but broadly that is a picture of weakness heading into the open in just under half an hour from now, and it is unsurprising. We had the trouble trading in the wall street session even though he was futures a little bit firmer as we get trading underway in early asian hours, but also because of the real story of china is economic weakness continuing to weigh on sediment sentiment. We saw the biggest outflows on fridays. Since the start of their opening trade back in november of last year, so that tells you how many investors are cautious in this market, and adding to that of the concerns around Country Garden. We will have multiple bonds that will be suspended from trading on monday, so not a great set up or lead into the session on monday, but also other factors we are discussing include the currency markets, because it also has been that story of rising treasury yields, it firmer dollar, something that can weigh on equity sentiment. Take a look at the japanese yen this morning, because we are seeing it very close to the 145 mark, essentially we are watching the japanese yen given the moves of their, really a picture of how much that boj is still saying that it wants to be a very gradual exit from its negative rates, its yield curve control program. There is that expectation continuing to build that we will see the fed pausing later this month but still signaling that the worst of the inflation fight pool is not over just yet. Paul lets get you the latest political stories around the world. The party of the assassinated ecuadorian president ial candidate has named a replacement candidate for the Upcoming Elections and is tapping an investigative reporter, a friend and close associate. He says he will campaign on an anticrime agenda. The georgia District Attorney is reportedly expected to present a 2020 election interference case this week against former president donald trump. A fourth indictment would add a potentially drawn out legal battle for trump in a state has taken a hardline approach to is suspected 2020 election fraud. The former president denied wrongdoing in georgia and pleaded not guilty in other cases. Chinas Foreign Ministry has criticized the u. S. For allowing taiwans Vice President to sen. Burr as he travels to and from paraguay. The Ministry Says it opposes any official interaction between the u. S. And taiwan and the visits seriously violate the one china principle and undermine china a sovereignty and territorial integrity. The Biden Administration described the visit as lowprofile. And tomorrow, you can hear our exclusive interview with taiwans Vice President. The president ial candidate talks about managing relations with the u. S. And china in the future of the islands democracy. That is to stay on bloomberg. Shery argentinians now have cast ballots for crucial primary elections that will provide a barometer of expectations for the general vote in october. The elections are taking place in south americas second largest economy facing hyperinflation in a likely recession. Lets bring in Patrick Gillespie. How important is this election for the economy . This is a crucial election for argentinas economy as we are already over 100 inflation. The economy is expected to enter recession, and right now around the country everyone is holding their breath to wait for the official results to come in. We expect official results to start arriving about one hour from now, but a solidified concrete image of the Election Results probably will not arrive until midnight in argentina as the votes get counted, especially in the largest province, which tends to have an official its coming late, but this is a crucial election with the country already in a very fragile economic and financial state, and right now you have some local media saying that the outsider candidate is performing well. We should be clear to our listeners that is not all of official data but what they are hearing from sources locally, so we have to take everything with a pinch of salt. It is a country of very unreliable opinion polls, so we are waiting for official dated to come in later tonight in about one hour. Paul tell us more about some of the candidates we are seeing on screen at the moment. In terms of economic policy, they range from the orthodox to the distinctly unorthodox. Absolutely, a huge range of economic policies on the ballot. You have the current incumbent government, who have mostly governed with a series of shortterm patchwork lessees that have failed to contain inflation over 100 . Then you have the Main Business friendly, wall street Friendly Coalition that has two candidates running, and this vote will determine which of the two goes forward to the october general vote, and then this outsider candidate who is often been compared at times to donald trump and Jerry Bolsonaro jair bolsonaro. He has the most dramatic proposal, which is to change currency from the peso to the u. S. Dollar. That is something a lot of economists have said would trigger financial chaos and date mega devaluation of the currency, but we are waiting to see the votes. We have everything from very interventionist populist approach to the most extreme, which would be replacing the currency altogether. Shery vote turnout and voter apathy has been a problem for argentina. What are we expecting it is about, and what would that mean for the october elections . Low voter turnout a lot of pollsters will say will benefit Javier Millei as voters who are the more Traditional Center did not show up to vote. 66 of voters have come in. If that number does not jump significantly higher, it would be one of the lowest participation rates in argentinas history since the return of democracy in 1983. Lower Voter Participation will likely impact the centrist candidates such as the buenos aires mayor or the incumbent candidate, whereas it will benefit them or far left and far right candidates. Dissipation will be a key issue, and it looks to be considering Economic Conditions voters are firstrate of the economic situation, and with the Political Class. We are expecting historically low participation, which could have a huge impact on the results. Shery Patrick Gillespie joining us from buenos aires. Turn to tliv to get commentary and analysis, and interesting tidbits about the election, about argentina. One of our markets reporter writing that the shortage of dollars in argentina has led to the country taking the extraordinary step of paying part of an imf maturity with chinese yuan, so really consequential when it comes to the chinese relationship with the south american nation. Paul lets get the latest corporate stories we are tracking today. Self too purportedly in discussions to purchase a 25 stake in arm that it does not directly own from vision fund one. The investors in the funds including saudi arabia will be position for an immediate windfall. Arm is targeting an ipo with a valuation as high as 70 billion as soon as september. Eft says ubs is facing a new legal challenge to with takeover of credit suisse. The report says hundreds of Retail Investors plan to file a claim on monday. The former credits start acquire the shares. Ubs declined to comment on the case. Mark zuckerberg says it is time to move on from speculation about a cage fight between him and elon musk. And opposed zuckerberg says if muska ever get serious he knows how to reach them, but until then he is going to focus on competing with people who take the sport seriously. Muscat talked about it before complaining about back problems that may require surgery. Coming up, blackstone says it is shifting back to buying japanese property. You can hear exclusively from the companys head of japanese real estate. That is next. This is bloomberg. Shery take a look at how nikkei futures are trending, we are seeing downside of 14 of 1 . This of course after we had u. S. Stocks falling on the friday session. We are seeing the japanese yen hovering around the 145 level, is psychologically important of all, although right now we are seeing upside against the back. The japanese yen, the worstperforming g10 currency to date has fallen more than 9 versus the u. S. Dollar this year, so that gap between japanese and u. S. Weakening the Interest Rate gap, though wide gap pressuring the japanese currency. You can see japanese bonds really, the 10 year yield just below that 0. 6 percent, and we continue to watch japanese assets ahead of cpi data later this week. Paul blackstone is shifting back to buying mode for japanese real estate after shedding . 5 billion worth last year. We spoke exclusively with the head of japan real estate about why they are turning bullish on the sector. So basically we continue to see the japanese Real Estate Market to be very attractive, and it is not only this year but it will continue to be that. If you look at the fundamental of the japanese economy, we are probably the last country to open its quarter after covid, so recovery is really just happening. If you look at consumer spending, it is definitely recovering back to by the strongest wage growth since 1994. Corporate investment is increasing. The fundamentals are strong. We are paying attention to what the boj will do next, but at this particular moment the Real Estate Market in japan is very resilient. We did see the initial selloff will be the boj news, but the runway to policy normalization is quite long, so is this more of a medium to longerterm worry for you when it comes to this particular asset class. It is hard to predict what the bank of japan is going to do. What is very important is being prepared for any scenarios, so the way we construct the global portfolio, 80 of our portfolio is concentrated in strong sectors like it just takes, data center, hotels, rental housing, very stable cash flow with a strong growth trajectory. In a similar way, we do the same. We focus on data center, hotels, rental housing, and one difference for the rest of the world is probably office. I think the office in japan continues to be very resilient, and if you look at work from home, the latest government study shows it is decreasing, so people are coming back to the office. Even though the last few months we have seen downward pressure when it comes to Office Vacancies as well as rent as well, do you think that is the start of a more nascent recovery . If you look at our portfolio, we continue to see a very healthy spread to, and if you look at the transaction, japanese investors have been very focused on attractive office assets, but here it is very important that we are human invest matters, so we are not really investing in any Office Buildings or cities. We are focused on cities like tokyo, osaka. Blackstone has been such an active player in this field and in the 10 years through 2022. There were so many deals on the buying side, right . Since then, you have been disposing of a lot of these assets. What is in the pipeline . Is there a certain amount you want to hit in terms of sales . We are very opportunistic investors, so where we see growth opportunities, we advise very heavily. If you look since 2020, we have acquired over 7. 5 billion of real estate in japan. Also as you pointed out, since 2023, 42022 and 2023 we have sold 4 billion in assets to capitalize on strong fundamentals. If you look at the japanese Real Estate Market, it is interesting. Banks are in very good shape, so they are aggressive with lending money not only to domestic investors, but also international investors, so we are definitely seeing investors from the u. S. , asian investors, also some european investors are definitely coming back. So obviously the market is very competitive. It creates a an opportunity for dollar based investors like ourselves, but it is just one piece of the puzzle. We obviously need to stay disciplined and only invest when we elect a sectors with strong tailwinds, so we do not make an investment judgment based on the currency. What sectors are you most bullish on . Hotels are at the top of the list. If you look at inbound, it is only 70 free covid level, but if you look at the revenue in our portfolio, it is exceeding 50,019 level. We are expecting inbound to recover further, so we should benefit from that stronger recovery in the sector. What sort of trends are you seeing . Clearly there is so much inbound travel for japan, so what sort of trends are you seeing in the types of hospitality and Leisure Properties in addition to residential as well . There is pentup demand from domestic travelers. We are seeing that trend across the country, so we think that trend will continue. With inbound coming back, the hospitality market will benefit from the recovery the most. What do stock levels look like . What is interesting in japan now, because of the Corporate Governance and structuring, a lot of Companies Use own a lot of real estate, but these days because they are focused on return on equity, a lot of Companies Start looking at their Balance Sheet and start selling noncore real estate as said, we are definitely seeing that trend in the last couple of years and we are seeing that trend Going Forward as well. Working with private equity folks, that will be one differentiated way to actually invest in japan. Shery the blackstone head of dependent real estate speaking to haidi stroudwatts. See our past conversations on our interactive tv function tv. You can dive into any of the securities or bloomberg functions that we talk about and become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only. Check it out at tv. This is bloomberg. 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Home insurance premiums have jumped the most in two decades, that is 20 to almost 2000 aussie, and last year about one million australian households were what the institute refers to as affordability stress households, and this year that number as jumped to 1. 4 million, which means an increasing number of households are either in distress or just not taking out insurance. Shery any indication on the Economic Cost to australia overall . The reserve bank is doing some studies into this, and they are expected to come out with the paper later this year, because australia does experience a lot of extreme weather events. Extreme bushfires in 2020, so we do not have a good idea of that number, but we should have that next year. Shery our economics reporter. We have the market opens in sydney and seoul next. This is bloomberg. How can you sleep on such a firm setting . Gab, mine is almost the same as yours. Almost is just another word for not as good as mine. 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Think i might look into one myself. Stay in the home and life youve built for years to come. Call. And take advantage of its an amazing thing our no interest when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. Shery this is bloomberg daybreak asia. We see a little more upside on u. S. Futures really after the s p 500 finished that i one month low. We are seeing optimism in the markets, but we will see if that gets translated into the broader asian markets. We are watching the psychologically important one for five level for the japanese yen. Paul that yen hovering around levels we have not seen since november. The nikkei coming back from a long weekend, a Public Holiday on friday, trading underway. What are we watching, annabelle . Annabelle that is right, perhaps down for the japanese session as we get trading underway alongside korea, australia, and the start of trading for cash treasuries. We are watching the 10year yield in particular at the moment, given we saw the move higher in the prior session, but amongst the event for traders to be focusing on this week is those fomc minutes that will give us more insight into the fed, because so far it has been pretty united, not much dissenters among them, but more details as to whether we have more work to do in terms of the inflation five. As you get holding about the 2 target. 10 year yields pushing back toward last years highs. The yen hovering very close to the 145 level as a result. It is the yield gap between the u. S. And japan at that is in focus and within reach of its weakest level over the course of this year. Any depreciation past the 145 point market will take us to where the boj officials last intervened in the market very japanese stocks coming online a little bit under pressure as we get trading underway, and it is that story not of Dollar Strength, higher bond yields negative for asian equities, but lets change on, because you have got other factors at play, particularly concerning china up as guess economic outlook. It just a couple of headlines dropping, relating to the developers, also tesla cutting its car prices for some of its models in china, just tells us how much weakness there is amongst chinese consumers generally and something that could really come out later this week when we get the monthly activity data dump on tuesday. Also watching ahead of the session, we have the pboc said to make it in the left decision, no changes expected therefore rates for august. Lets change on, because of the session the kospi a little weaker as we have trading come online, asx 200 under pressure directed by what is happening in china futures, looking weaker there, but australia, i Major Trading partner to china, so traders really listening, are we going to get anymore signals of further policy or stimulus coming through from officials . Not transiting as much of the oil market over the past of it or so. We have seen a sustained move higher, demand from china according to the iea is robust and something taking her demand to a record 103 Million Barrels a day, but a lot for investors to be parsing through this morning as we get underway in asia. Paul thanks, annabelle. Lets bring in the head of apply in research at contico. I want to get us started in japan, playing a bit of cash down, slightly weaker, but the nikkei more broadly up about 24 year to date. Do you still add to japan, or is that wrong getting long in the tooth now . Japan has benefited from a couple of things. The weak yen is one of them. It has always been a story. You have a move from a lot of Global Technology supply chains moving away from china in the past couple of years and more so even this year, so that is benefited Technology Sectors and japan as well as the industrial part of the Technology Supply chain in japan, but it has been very concentrated. These two sectors and really the index leaders is what has been driving the rally. If you start going to the sidelines and looking at midcap, smallcap, they have not done as much. It has been more of a value play. It value has always had a well in japan, so we are not seeing anything different here. We are not seeing growth place, average blaze come up volatility place. We are just seeing the headwind from the yen, the Global Supply chain reallocation and let stick to index, and that is all we are seeing right now. Paul you mentioned the yen. Lets take a look at it, 144. 85, it pulled back a little bit fermenting that psychological 145 level but flitting around the area where you start thinking about intervention. Historically we have seen it above 145. Politico way too fast, too high, around the 16 level before they did, so they are under pressure also with inflation figures coming out on friday. Our model shows sentiment has weekend in japan, so really it investors are looking to the boj to take some kind of action on inflation. I would say the vets are probably that intervention will happen after 145. Shery hold on a second, because we have an alert on the bloomberg right now. We are hearing sinoocean are signing default. At they are talking about the suspension of notes due 2024 because of an event of default under the notes arising from the nonpayment of interest of 20 million u. S. Dollars on notes one form Interest Period including 30th of january 2023 to the 30th of july, 2023. Just to summarize, we are talking about these structural problems in chinas housing markets. Sino ocean is stunning occurrence of default and suspension of notes due 2024. This follows on the heels of problems with Country Garden and other big property developers. Lets go back to olivier. What if this means in terms of Market Opportunities when you have more trouble for some of these big property developers. Could we expect upside coming from the beijing government and more optimism because of that in the markets based on chinese assets . This is a good question, because we have seen the government coming in and bailing out or really nationalize some of these defaulting firms, so that did not benefit the broader economy. That is what disappointed investors before, but we have seen this, and investors are aware of this, and the bond market is very aware of this. If we look at emerging market bonds, latin american great, emerging europe, ok. Emerging asian know, and 90 of that is china and 90 of that is Real Estate Developers who bollard borrowed in u. S. Dollars and are getting squeezed by the feds hawkish policy. Most of these bonds maturing in the next 16 to 18 months. They are going to latin america instead that has done really well this year, even better than the u. S. Market. Asia continues to be weighted down by this one sector in china that has over borrowed, and it looks like the bailouts are coming more for nationalization than former foreign stimulus. Shery not to mention we are expecting easing when it comes to the Regulatory Framework in china, right . We have tech earnings this week. Are there opportunities in other sectors across the country . It seems like it investors are punting on this, because they were bearish two weeks ago and they are almost bullish now according to our models, and that is way too fast for our models. They are hoping this pressure means regulators will come up with the big guns in terms of stimulus and they are doing a shortterm bond fund that, still they are betting on large cap, largecap tech but not smallcap tech, so they are still betting on index leaders in helping to ride a big optimism wave, but if it does not come they will be quick to sell that back. Shery great to have you with us. We are early in the asian trading session in japan, korea, and australia. Lets turn to annabelle. Annabelle taking a look at major tesla suppliers, given those headlines that just crossed of the top of the hour, essentially tesla is cutting prices for two of its models in china, so the model y being cut to just under 350,000 yuan and the model y longrange cut as well. This is not the first time we are seeing, tesla cutting price tags on some of its models inside china, and this is been that bid to try to lure more customers, trying to get more adoption of its vehicles inside the country. It is part concern around ev makers generally inside china, because of the concerns around oversupply, so some saying that we are going to see some sort of sector consolidation over the months ahead. In terms of the outlook, looking mixed at the start of the day, but generally here for the most part to the downside. One sector that is in focus given all of these concerns mounting this morning around chinas economy. Paul still to come, jeffries tells us why they see things getting worse for chinas banks ahead of their earnings with weak loan demand and property related credit under pressure. A new flashpoint for tensions between beijing and washington as taiwans Vice President visits the u. S. This is bloomberg. Shery Chinas State Council has released a plan to attract Foreign Investment and improved the business environment, including tax and be set it seeks to bolster the flagging economy. Lets bring in our china Senior Executive editor. I was this different from all of the other measures and plans we have heard about from beijing . I think this is important because of the timing of this announcement. We had more data in terms of fti. Foreign investment in china is the lowest it is been in 25 years. It just weeks after that, the government coming out with a number of measures promising to treat Foreign Investors the same that they would treat Chinese Companies, promising to make it easier for the employees of foreign Investor Companies to get visas to work in china. Trying to make it as easy as possible to encourage Foreign Companies, something the company desperately wants to move the economy up the value chain. I think it also speaks to the state of economy being as weak as it is it that the government is trying to do all it can. Paul china has got a history of regulators acting weekly, very unpredictably, very strictly. Is this perhaps what is making Foreign Investors nervous . That is a good point, paul, because what you have is sometimes the actions regulators take do not match the words, and so well you will the regulators coming out and encouraging verbally promises about treating Chinese Companies sorry, Foreign Companies the way that they would treat Chinese Companies, you have investigations into state secrets, a greater clampdown on the way that data is shared across borders, all of which makes it not only harder for Foreign Companies to do business in china and also more jittery about what rules are being imposed and executed here in china. Shery what are economists and analysts saying about when we could see a turnaround for the chinese economy . I think it is obvious the economy is not going to grow with the pace many expected at the beginning of this year when there was this widely held thought that it would come roaring back from the end of covid zero. The target for your is still about 5 economic growth. I think there is still bradley an expectation that china will meet that. It will get close to 5 . I think the drop off will be substantial. I do not think there is anything on the horizon that looks like that will change the trajectory of growth anytime soon. Paul bloombergs Greater China Senior Executive editor. It turned up as you guess Foreign Ministry has criticized the u. S. For allowing taiwans Vice President to stop over as he travels to and from paraguay. Lets bring an hour deputy chief sidney wang. It is just a stopover, but what else is he doing there . Good morning, paul. The Vice President at a stopover in new york over the past weekend, so his plane arrived in new york late saturday. On sunday, he had a breakfast meeting and lunch meeting with the local time in his community and received a huge welcomed by his supporters in new york. At the lunch banquet he stressed when he was giving a speech that the safer taiwan is, the safer the world is. As long as there is peace across the taiwan strait, there is peace in the world. And he received a huge welcome from supporters who joined the banquet, about 700 people, so this is not the first time that he transited to the u. S. , and because the u. S. Cut ties about four decades ago it is out of the question for the president to visit the u. S. , so usually they have to transit through the u. S. , but this time the visit is lowprofile. He is not bringing any journalist from foreign media traveling with him, and his visiting paraguay for 70 days, he only stayed one night in new york. On his way back after he visited paraguay this week, he made a stopover in San Francisco, but he is not even spending a night in San Francisco. It will be just a couple of hours there before heading back to taiwan, so this is a very low profile trip. What is more interesting to see is about the level of u. S. Officials lai will be able to meet during his trip. When is plane arrived in new york on saturday, he was greeted by the managing director of the American Institute of taiwan, which is the de Facto Embassy of taiwan in the u. S. The last time the president traveled in transit to new york, she was greeted by the chairwoman of ait, who said this time that she had to attend her sisters wedding, so she could not meet lai in new york, but she is expected to meet with lai when he made a stopover in San Francisco on his way back. Also in paraguay when lai attended the inauguration ceremony of paraguays president. People are interested to see who he is going to meet with from the u. S. Side, right now we have seen the Biden Administration already announce the delegation will be led by the ministry of the interior. In january 2022, lai was able to meet with kamala harris, the Vice President of the United States when both of them joined the inauguration ceremony of the honduras president. We will be interesting to see who lai will be able to meet during his trip to the u. S. In paraguay. Shery tomorrow you can hear our exclusive interview with taiwans Vice President , the president ial candidate talking about managing relations with the u. S. And china and the future of the islands democracy. That is tuesday only here on bloomberg. Shery argentinians have cast ballots for crucial primary election that will provide a barometer of expectations for the general vote in october. The elections taking place in south america but to be a second largest economy facing high inflation and a likely recession. Lets bring in Patrick Gillespie. How important is this election for the economy . It is a crucial election for the economy which is already suffering from inflation. The economy is expected to enter a recession this year, its six recession in the past 10 years and a very fragile Financial System right now. We are expecting official results. They continue to be delayed with a very complex Voting System here, but we are expecting results, and you have local media saying the outsider Third Party Candidate Javier Millei is having an impressive election. We have not received official numbers, but the outsider Third Party Candidate appears to be doing very well tonight. Paul javier has been suggesting rather interesting economic policies. That is indicative of the rather desperate place a lot of argentinian citizens find themselves in. Finding it out against at the moment. Tell us about what he is suggesting and what some of the other candidates are putting forward. Sure, absolutely. Millei is channeling frustration with the established Political Class that has not been able to resolve Constant Currency debt crises and economic instability. Milleis chief economic proposal is to dollarize the country, meaning replacing the patient with the United States dollar. It is a complicated process that could take several months, and a lot of local economists say that such a process could create hyperinflation where you would need to have an extreme devaluation of the currency, of the peso before you could switch to the dollars from pesos. People are turning to millei because they believe the established Political Class has not been able to resolve argentinas problems, and they want a dramatic change, and millei has a fiery rhetoric, a unique delivery style, and he has economic proposals that people want to turn to know when times. Shery aside from the economy, we have seen other issues come to the forefront. For example, the violence in the country as well lend that issue. What are we seeing in terms of social issues that have come to the forefront during this Election Campaign . Absolutely, after inflation which is by far the largest issue, you have crime and insecurity has been a difficult issue, a top campaign issue. Earlier this week sadly an 11yearold girl was murdered as other teenagers stole a cell phone from her. In another town, a 52yearold dr. Was killed during a robbery outside of his mothers house, so you have rising crime integrator when osiris buenos aires area and you have more than 50 of the Country Living in poverty. Poverty is at its highest level in decades, so you have an extremely fragile Financial System, social fabric being torn apart right now, and the country people are paying more and more attention to candidates who have hardline approaches to crime, and heavier Javier Millei fits the bill. Shery you can get more from patrick on tliv as wirp function. Get commentary and analysis from bloombergs expert editors on this argentina primary election. Paul lets take a look at other political stories we are tracking this hour. The party of the assassinated ecuadorian president ial candidate has named a replacement candidate for the Upcoming Elections. It is tapping lambda investigative reporter, a friend and close associate. He says he will campaign on an anticrime agenda. He is running with gonzalez who was initially named as the replacement candidate. Malaysias Ruling Coalition has held onto three of six states contested in saturdays provincial elections. The opposition will run the other states. Elections mark biggest popularity test so far for Prime Minister abraham. I georgia District Attorney is reportedly expected to present 2020 election interference case against former president donald trump. The fourth indictment would add to potentially drawn out legal battle for trump. The state has taken a hardline approach to 2020 election fraud. Former president has denied wrongdoing in georgia and has pleaded not guilty in other cases. Shery take a look at how currencies are trading at the moment. We are seeing the japanese yen unchanged, but we are keeping a close eye, because it is close to the 145 level, is psychologically important level against the u. S. Dollar. The japanese yen the worstperforming g10 currencies year to date, more than 9 against the greenback. We have the wide rate cap with the u. S. Weakening the japanese currency, so we are on watch for the 145 level. When it comes to the korean won, 1331 is were level. It already weekend last week weakened last week. Not a lot of movement on the aussie dollar or kiwi dollar at the moment. Plenty more to come. This shery annabelle this is bloomberg daybreak asia. The big move is what is happening of the japanese yen and has just crossed past the was the watch one or five per dollar level. In terms of what is driving that , it is the yield gap between the u. S. And japan that is very much in focus. 145. 07 will be this years high, and we are looking around the 146 level before we start to see any formal intervention coming through if history is a god from japanese authorities. We are continuing to see the japanese yen inch higher at the start of asian trading. Japanese markets shut for a Public Holiday on friday, but we do know boj government officials to like the element of surprise when it comes to intervention as well. So that is the currency of we are watching at the start of the day up as we are trading. Broadly, it is the story of Dollar Strength coming through. We are coming off four straight weeks of firmness also playing out across the board. The korean won trading at a three month low against the dollar. In terms of what else we are seeing, also higher treasury yields we are seeing in the early part of asian trading today. Likewise we are seeing across the pond space in asia bond space in asia moving higher. Elsewhere the story of equities, the nikkei flipping into positive territory as we get trading underway. Markets shut for a Public Holiday on friday, so that is helping to lift the broader msci asiapacific index just into positive territory. Changing on and taking a look at what is moving the most is the imf function, it is the story of weaker tech stocks coming through following the wall street session on friday. Higher yields, firm or dollar, something that can pressure the sector and materials under pressure as well. Another one standing up to us this morning, and that is more a reflection of what is going on in the chinese economy, concerns of what will come through in the data dump on tuesday. We just had this hour tesla, price cuts coming through for its china models. Sino ocean flagging a default risk and then of course, there is Country Garden. Paul plenty to digest their. Morgan stanley has cut Country Garden shares to underway. I started now of 75 hong kong cents. The embattled developer is suspending trading as well in nearly a dozen onshore bonds that will start today. Lets bring in bloombergs bond and loan reporter. Country garden suspending trade in onshore bonds. What does the future hold for Country Garden and its bondholders . Unfortunately, i do not think there was a lot of hope for bondholders. The latest news bloomberg learned on friday was that Country Garden is exploring a dead option for its onshore bonds coming due in the next month or so for its 10 onshore notes, and some of the options include an extension, so it will delay the payment on these bonds. Country garden is facing a massive maturity wall in september, and the bulk of that comes from the onshore bond market. Shery what does this tell us about the broader property space in china, given that just a while ago we heard about sino ocean signing the occurrence of an event of default . The situation with sino ocean is perhaps a precursor to what my come for Country Garden. Sino ocean has been negotiating with some of its bondholders on george of extent debt payments. It has been getting part of the agreement coming through, so there is a 2024 bond for sino ocean that has received investor approval, and bloomberg has reported sino ocean has been going through this backandforth process with bondholders. On some of the notes, it has yet to get bondholder consent. The event of default is more of a technical issue, so once against the approval that it needs that is the voting threshold, that could be waived. This is what the company has said in its exchange filing. I think investors are more watching closely what is going on with this state backed sino ocean, whether the state support is going to step in at any point. Shery exactly, because we have heard from policymakers that they want to ease restrictions in the property sector. When could we expect that to actually kick in . Easing measures have always been in it for the property sector. We have been talking a lot about that since the end of november last year, but the problem is there has not been a whole set of support measure for property, so we are seeing not enough credit support. That is why Country Garden and the likes of Country Garden ive been falling into a liquidity crisis. Even in terms of the demand side, you are not seeing a massive easing that is happening in the key cities. Shery loretta chen with the latest on the property sector in china, and of course, we have seen property related loans under pressure. It has been an ugly july for mortgage lending. It bank loans plunging more than 90 compared to the same period a year ago. Lets discuss Broader Market prospects with our next guest. Great to have you with us. Start us off with what we are seeing in the property sector and lending in that space. First is that as you just mentioned in july, we do see that residents loans largely declined. For example, mortgages actually declined. And also for credit card loans and consumption loans, everything seems to be quite weak. Regarding property loans, we also see because there is not too much, therefore the new starts have been quite weak, and banks went to have a lot of loans to support property development. Basically it is quite weak. Shery what does that mean for the lenders themselves, because we are expecting the results soon . Regarding banks themselves, firstly slower loan growth does not necessarily mean it will largely hurt thanks, but on the other hand lower loan yield [indiscernible] we see the loan yield decline quite a lot in the past year. We already see regulators cut apr in june, and banks will be asked to lower the loan yield for existing mortgages, which will largely hurt thanks, especially larger banks. Lower yields especially for property related sectors would be bad news for china banks. Paul you mentioned a moment ago the collapse in mortgage lending. We have a chart that illustrates that rather poignantly. It has dropped to almost nothing in july. What is most urgently needed from the government to boost household confidence in the property market, and are we seeing it . Regarding the supply side, they had quite a lot of meetings with developers. The problem is we have not seen significant to financing like policy banks. If there are no policy banks or other government related departments to inject liquidity, it will be very hard for commercial banks to follow, so firstly regarding the supply side, we do need more support. The second is that regarding the demand side, we do need if there could be more loosening in the area of tl one city tiawan city. Large cities and small cities, it could also help, but at this moment we see the overall process is low. Paul we were hearing a moment ago from loretta talking about the wall of maturity that is approaching for a number of chinese property developers. In terms of Country Garden, there is a 2024 Bond Building Something Like 2500 percent. Do we fully appreciate the drama of what could unravel . Definitely we need some help to support Country Garden. Different from evergrande, which failed a year ago. Country garden has been a good boy and the past several years. They started to deleverage other developers and they have been prudent and always follow the guidance of the regulator, so if they also fail in multiple bonds, it could largely make the investor lose confidence on all of those private developers. Meanwhile, it will have significant difficulty in completing those projects which identify Country Garden. Country garden has a lot of projects going on in lower tier cities. So actually, we do expect the regulator to step up to provide some support to Country Garden in order to solve the issue. Shery last week, we heard that china will allow provincial level governments to raise one trillion yuan through bond seals. What are the implications of shifting this debt, and who could be the biggest beneficiaries . So first, i do think it will take more fraternity to help local governmental financial conditions, which are very difficult this year, but for chinas local governments, we think if we include all of those loans by local governments, and of course the local government financial vehicles, it could be more than 80 trillion rmb for local Government Debt. The one trillion yuan is realized. It could help Interest Payments for overall debts. On the one hand, we think it is a good move, and on the secondhand we do think it will help the liquidity for some regions with more difficulty and some provinces in the west. The second is we do think that they need to provide more support for local governments in order to help their financing rather than one trillion Government Debt support. Paul our china economists at jefferies, thank you for joining us. More signs of turmoil and chinas Financial Sector did two clients of a chinese Trust Company say the firm delayed payment of maturing both products amid reports of liquidity concerns. They first announced news of the delayed payments on friday evening, unsubstantiated online rumors linked to the payments to a liquidity crisis at the asset manager, which has a stake in the company. Coming up, more chinese tech giants reporting to earnings this week as beijing ramped up its crackdown. We will have a preview of those numbers next. This is bloomberg. Shery take a look at how asian markets are trading at the moment. We are seeing the nikkei unchanged, energy and Information Tech the only two sectors in the red right now. Consumer staples and financials leading the gains as we have a very weak japanese yen, the weakest against the greenback since november. Watching that 145 level, psychologically important japan. The kospi down for a third consecutive session. At the korean won continues to be under pressure against the u. S. Dollar. Australian assets under pressure, kiwi assets as well falling. We are watching the rbnz cash rate to be decided later this week. It is likely the rbnz will stand pat. We are setting up for the china market opens and earnings season coming into full swing this week with the end of beijings tech crackdown setting the tone. Felix joins us now from hong kong for a preview. What can we expect from tech earnings in china this week . Yes, of course, tencent is a big focus this week. Last week we saw alibaba signaling a comeback, and for tencent we may see a 20 jump in advertisement businesses. For other businesses we may see a 10 jump, so the chinese tech sector, the sentiment is improving, and now we have heard that china is ramping up their crackdown and they are supporting private enterprise in order to support the company the economy. Paul so we have a company reporting today. What are we watching their . We just mentioned the chinese tech sector, but it may not be the same for the semiconductor industry. Just like samsung reported the worst decline since 2009 and tsmc saying the downturn after the pandemic may be longer than expected, so from hon hai we may see 20 in this quarter. We may see some support from ai businesses in the second half of the year. So overall, any focus or updates about the shifting from china in order to expand in india is something we are watching. Shery we continued to talk about the pressure on the chinese property sector. Are we expecting any good news this week . So for this friday at longfor will report earnings. Most of its projects is an top tier one and two cities. In terms of contractor sales, it already reportedly rebounded, so we see good signs, but overall sentiments and the property sector is extremely weak after the news of Country Garden. So basically, the credit crisis is escalating for the moment. Paul breaking news editor felix tam there. 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Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com shery Foreign Investors are losing interest in china as the number of hedge funds actively focused on chinese assets it slips for the First Time Since 2012. Lets bring in lulu chen. What is the current state of chinese hedge funds especially offshore ones . Investors are promoting that it is the end of an era for chinese hedge funds. It is the first time chinese focused hedge funds have dropped in figures in terms of active funds since 2012. As of this year for the first half, only five new funds were launched, and a do you have been liquidated. The contraction marks a historic shift in trend for this group of investors who at one point accounted for at least half of the new funds raised out of asia, so a lot of them are shifting gear and shifting strategy as of this point. Paul what is the motivation for this . I think it is a combination of the fact that a lot of them are struggling to raise new funds, and also bad returns. At that is caused by the combination of escalating tensions between the u. S. And china, which have caused them to struggle new fundraising, but also because of the crackdowns we saw coming out of china and the last few years. This group was focused on investing in ecommerce, education, and also platform companies, Technology Companies in china, which have led to bruising returns in the past few years. Shery what is the strategy then for some of these funds . What we are seeing is some of them are shifting gear in terms of where the money is coming from. For backers, there is a shift to raise capital out of middle east or africa. Also, in terms of strategy, a lot are shifting from china focused hedge funds into pan asian strategy or global stock pickers, so it will be. 0 shuffling for this industry that was once quite highflying. Paul lulu chen there in hong kong. Some stocks we are watching ahead of markets opening in hong kong and china. No surprise we are keeping an eye on the property space. Country garden saying it will suspend trading on nearly a dozen onshore bonds. Sino ocean suspending trading of its 6 notes due in 2024. Keep an eye on a Materials Company and Semiconductor Company and, though stocks reporting earnings on monday. Shery take a look at futures trading, u. S. Futures paring back gains, almost unchanged after the s p 500 finished at a one month low. We had a choppy session on friday for the s p 500, not to mention the nasdaq 100 launched its longest weekly losing streak this year, hovering around the 15,000 level. This of course as investors are trying to digest where inflation goes from here and where the u. S. Federal reserve goes concerning Inflation Expectations unexpectedly falling. Consumers surprising to the upside. Taiex futures looking like this. We are watching the visit by the Vice President to the u. S. , which of the chinese Foreign Ministry has criticized, and of course chinese a50 futures down as well. We have plenty of data from china, activity data and the pboc said to keep its oneyear rate steady as well. You were looking at the offshore yuan holding at the 726 level, but broadly speaking when it comes to the currency space, it is weakness at the moment. Japanese yen surpassing the 145 level, psychologically important , against the u. S. Dollar. The growing white Interest Rate cap weakening and pressuring the japanese currency. Second quarter numbers out of japan on tuesday, cpi numbers on friday as well. Korean won extending losses at that five week against the u. S. Dollar. Coming up in the next hour, here white mmg investments is staying long on japanese and indian stocks. Plus alpine macro telling us why they have become more concerned about chinas outlook. This is bloomberg. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. 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