Transcripts For BLOOMBERG Bloomberg 20240703

Welcome to daybreak asia, to you live from new york, sydney, and cutting down to the major market opens in asia. The top stories issue sops up ahead of the u. S. Holiday, traders looking at jobs reports and putting bets that the fed is near the end of the tightening cycle. Country garden said to have made a payment on a bond with a separate you on no. And softbank lining up biggest customers as Strategic Investors for their multibilliondollar chipmaker ipo. We are seeing some Downside Pressure today, but muted after the s p 500 saw its best week since june. We are in the Labor Day Holiday weekend in the u. S. , heading towards thin trading. What akin to friday it was interesting because u. S. Stocks rose but they faded after an initial rally as bond yields started climbing. We have a Strong Manufacturing number offsetting that optimism from the jobs data which showed more than of a controlled cooling which could perhaps lead to the fed pausing on its tightening again in september. We are watching wti prices, extending those gains about that a five dollars per barrel level. This after seven sessions of gains in the new york session, finishing at the highest level since november, really to do with those supplies and opecplus efforts to really tighten those global flows, but at the same time we have stimulus measures from china leading to more optimism about demand. That broadbased future is really talking about this managed opening up and highquality growth, which we have heard before and im not sure whether it adds much to the optimism over that recovery. This is a picture being set up across the opening here in asia where we see at the start of rba decision week and numbers out of australia, aussie stocks higher. 4 to the upside, not expecting any the rba to hold for their Third Straight meeting. Borrowing costs sitting at an 11 year high, and when it comes to the data we have had recently, including Inflation Numbers suggesting that we might have hit terminal rate, we are watching kiwi stocks with a bit of the downs a downside with major parties beginning their Campaign Going into the election over the weekend. Nikkei futures looking modest at this point, and china futures have. 1 of optimism as we get that piecemeal supportive measure from the government. But it really comes down to what we see with the developments in the property sector. We continue to watch a distressed Country Garden, natalie the the creditors that they have wired a payment for the ringgit denominated bond. They also won approval to extend the separate maturing you on bond, helping it avoid a firsttime default. Lets bring in our Shanghai Bureau chief. There barely keeping their heads above water after being the biggest developer just a few months ago. Where are we at . The ringgit pond bond that you just mentioned is significant, in terms of dollar amounts its small. As an investor or creditor, they should be looking beyond the headline. Bear in mind that this Company Posted record losses last year. At the same time, they warned that you may have problems meeting its financial applications if the performance continues to deteriorate. Also, they said that the company is facing material uncertainties that may raises concerns over its ability to continue assets. Pretty serious. The country has a total of 35 billion in debt on its books. Including 15 billion in the next 12 months. The company also said that it will be meet its financial application if its sales recover and its talks with creditors continue. Whatever in the Capital Market is happening, its stocks have fallen nearly 70 , and the dollar bond of Companies Trading over . 10 on the dollar. Because of that, the overall bond market jumped offshore, which is usually issued by Chinese Developers trading at distressed level, the lowest since this year. Is there any idea of what kind of policy or risk the endgame might look like not just for Country Garden but the broader sector, there is this view that it is too big to fail but perhaps too big for the government be to be able to say. Save. They have realized that the problem in the brought bond market is threatening to drag down the economy. That is why you have seen a series of measures from Lower Borrowing costs for homebuyers and a threshold for purchases. The sales have not picked up yet because investors confidence remain low after three years of covert restrictions, and theyre not confident about future income. Also in the shop market also in the job market, the Unemployment Rate for youth is about 20 . Thats scary. Last week, a policy announced by the Chinese Government to lower Interest Rates of existing mortgages is a big move and over the weekend, state media reported that there was renewed interest in home purchases. However, it takes some time to show whether there is a genuine buying interest, traditionally in september or october thats a strong month for property sales. Lets wait and see. Are shocked Shanghai Bureau chief there. The president has plaintiff to continue opening up the worlds secondlargest economy while pursuing into moment on the countrys own terms. Lets bring in our managing editor here. This is sort of a rehashing of the same sentiment that we have often heard from the leadership. At a time like this, are these sweeping statements helping . They can help. Its far better we get this then no, we are closing up shop. We would not expect those comments and we do not get them. Whether there is anything new in these comments is to be debated. There were maybe specifics around the services sector, around opening up in telecommunications, legal services, tourism, though sort of areas. Maybe this is some specifics to follow here, not too sure. The overall sentiment is very much echoed by xi jinping, where he will talk about chinese modernization, opening up, high quality develop my, all of those catchphrases. The problem is that as the European Chamber of commerce has said, there is a bit of promise 50 going on, especially among international investors. They want specifics. And we are starting to see specifics on the policy front in terms of policy, and maybe more on the opening up front as well. Better Economic Data would not hurt. What are we expecting from trade numbers this week . Things should not get any worse, if not better. The export import numbers are going to be in the red, maybe the decline is going to moderate somewhat. The same can be set for the price data on saturday. Consumer prices, we dont have many economists back with their forecast yet, but they are predicting positive prices, a shortlived timing deflation there, and on the producer front looks like those negatives should moderate a little bit. That certainly would help restore so sort of confidence where as charlie said on the property front they have done a lot. If we can get better news on the export front, the other big drag on the economy, then put together, those two things might start to underpin confidence more than what we have seen recently. Our asia economy managing editor joining us from sydney. I had, agricole joins us to explain why the weaker yen has acted as a reverse plasma accord for japan. Helping revive the economys attractiveness to investors. This is bloomberg. Welcome to daybreak asia. His a look at key events we will be watching this week. Chinas fragile recovery remains front and center. With trade and inflation data likely to keep pressure on policymakers for more stimulus. Thursdays trade report is expected to show exports and imports contracting again in august. Cpi numbers out next weekend may show continuing deflation. Elsewhere, south koreas gdp for the Second Quarter and and inflation print for august are due tuesday. The rba is set to keep Interest Rates unchanged. Southeast asian leaders will be gathering in jakarta for the summit haidi. And australia set to release its gdp numbers, beige book also offering anecdotes on u. S. Ecoactivity. In the north, the bank of canada is expected to hold rates steady on thursday and we will see release from australia on trade numbers. We will see jobless claims out of the u. S. Giving us color on the labor market on that same day as well. To wrap up the week, japan will announce their final secondquarter growth figures and we will be watching the g20 summit in new delhi. And those chinese and russian president s are set to be notable noshows. That is your week ahead. Our next guest says china will reach its growth target of around 5 this year but structural pressure will continue in 2024 and beyond. Hes the senior economist for cap, joining us from our hong kong studio. If i take a step back, does that mean you see the more were some issues with the chinese economy at this point to be the structural slowdown as opposed to cyclical slowdown . Is it more the former than the latter . I think that if we look at what happened in the chinese economy, there is clearly pressure from the cyclical side from manufacturing and also consumption. This is something that can improve a bit. However, we have also seen structural trends in terms of the weaker consumption confidence which is not something that can be reversed easily, especially on goods pressure. And also signs of recession in the property sector, even though the there is more policy support from the government, we have not seen a stronger rebound in the home sells. I think the week confidence in both properties is probably something that is more structural that is calling for more government support, because otherwise this will take a sickly be basically costly through 2024 and beyond. At this point, what do you think the most effective policy measures would be from the government . Do you think that Something Like direct payments to households is required . I think if you look at the different types of government policies, we have already seen the rate cuts and also issuing more liquidity from the monetary side. From the fiscal and regulatory side we have not seen too much in the way that we have been able to revert market sentiment. Because of the concern on debt, this is unlikely to change in the near future. The majority of the action will be focusing on the regulatory easing perspective. It means for households definitely lower down payments and lowering and weakening the general Regulatory Environment to provide more room for the private sector. This is something that is useful in the longer term. Beyond that, i think china needs to provide a more private sector from the environment and i think ultimately its got an income outlook we need an income outlook on households and carpets before receive see the pressure lingers. Lets talk about that cyclical rebound that we were seeing in japan, there was a lot of optimism over the japanese economy and yet last week we saw how firms were cutting capital expenditures. Is this a concern . I think that if you look at the japanese economy, as in many other places, its on the one hand we have seen weaker sentiment in the Manufacturing Sector sector, but we see more firms tried to move back to japan and build their factories, especially semiconductors, because of the supportive government policies. Even though there is a second headwind from that front, i dont think this will change optimism from that and. On the other hand we continue to see this weaker yen failing to export, and also the tourism. This is something that is positive from a cyclical perspective because japan is still tried to recover from covid and is lacking too many economies. Compared to many economies. The yen is not too bad for the japanese economy and this is where we see cyclical optimism for now. Is japans when south koreas loss . They compete when it comes to exports, as Electronics Manufacturers really on par when it comes to try to target the global markets, and im wondering if japan is doing so well does that mean headwinds for south korean exports . When you look at japan, they have changed in the last 1020 years. We have seen a lot of pieces of korean firms trying to expand investment and sell at a cheaper cost to get a better share of the market from japan. We see this more diverse export structure in korea focusing on different products versus japan, because if you look at what japan exports, especially in tech, its focusing on upstream materials, different equipment. This is not something korea would produce because its about downstream products. Nowadays, its more likely about the general downturn in the tech cycle which may have affected affects. Japan has already focused on upstream products, which is different from korea so they can be more complement to Going Forward with competition. How strong is south koreas economy . Those Inflationary Pressures seem to have abated but could come back again. If that is the case, the be ok will have to remain hawkish. If we look at how korean economists are protecting, if we look at the cycle, they are in a terrible position with other competitors and taiwan like japan and taiwan because of their focus on chips. What worries me beyond the export side in korea is also slowly decelerating Consumer Sentiment driven by ongoing high Interest Rate environments and a spillover from as export. This is something that will continue to pressure the korean economy and it is very hard for the be ok to actually hike rates further given the amount of Household Debt and the week Consumer Sentiment. Compared to many other countries in asia, koreans and japan seem to have higher tolerance to inflation and they need to consider this external risk which. Them from hiking unless there is really strong Inflationary Pressure coming back. The senior economist for aipac Somatic Research having a busy week for asia. You can get a runup of all of these stories that we have discussed in todays issue daybreak. Go to dayb and available in the bloomberg anywhere app, you can customize your settings so you only get news on the industries and assets that you care about. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Softbank is said to have lined up some of arm biggest customers as Strategic Investors for the chip designer ipo. They include apple, nvidia and intel. Lets bring in the executive editor for Issue Technology peter elstrom. Where are we at in terms of arms ipo . Its finally happening. They had been a company before they were acquired for 32 billion, they have looked at a number of Strategic Options like tried to sell to nvidia, and now arm is hitting its road for the roadshow and talking to investors. The news we had today is that we have Strategic Investors jumping into put money into the offering that is apple, intel, nvidia, samsung, a few others. They are putting in this money as customers at the company, supporting the offering, which will give them a bit of momentum as they go and they Start Talking to investors about raising the money. This is likely going to be the largest ipo of the year. They are looking to raise 57,000,000,000 dollars at this point, they were looking to add 810,000,000,000 dollars. Its probably going to be the biggest ipo of the year but now they have to go out and talk to investors and see what kind of feedback they get beyond these customers that know the business quite well. This goahead haidi. I just wanted to jump in im curious what this means for backers in the broader Tech Industry, are there implications there . Ask its a broader support for on far arm. Chipmakers buy designs and license them and put them in products. Qualcomm, nvidia. And Tech Companies that make their own chips like apple are using these design. Designs. Arm has been strong in the iphone Smartphone Market, its not growing like it used to, they are trying to expand beyond that its a key new areas, including artificial intelligence, cloud computing, servers, where they think there is more potential. The key for them is to be able to move into that territory and benefit from it and reap the profits that they hope they can in the future. What does it mean for softbank broadly . This was one of the big bets by softbank founder Masayoshi Son, where he hoped that arm would be his window into growth areas like artificial intelligence, the internet of things. It has not worked out quite like that. The company has not grown as much as he anticipated, it has not been that window. He tried to sell it to nvidia before. The ipo is a bit of a backup option. He has been very involved in the operations of the company and trying to help with this expansion beyond smartphones into new growth areas for the Tech Industry. At this point, we have seen modest growth at the company, in terms of revenue and profits, but it has to invest quite heavily beyond that. It also has a big risk factor in the ipo perspective where it talks about what is happening in china. Arm china is the biggest revenue generator for the company, but it faces all sorts of geopolitical issues in the market, where they are trying to grow and sell to the customers in china but there are a lot of tensions between the u. S. And beijing that create difficulties for that unit. Cracks are executive editor for asian technologies, softbank one to watch as we get into the start of trading. Lets get other corporate stories we are following. Indias richest banker has resigned as managing director and ceo of the letter that he found it. His resignation came earlier than expected and in a letter, he cited personal reasons for the decision. The joint managing director will not take over as interim ceo until the end of the year. Now take over as ceo until the end of their. Aramco is considering selling 50 billion in shares in the largest offering in history. The offer will go up on the Saudi Exchange to avoid any risks associated with an attached listing. The timing of the deal has not been confirmed but it could happen by the end of the year. Mercedes is intensifying its bid to challenge elon musk tesla. The automaker has unveiled an easy concept car with a longer range than any tesla model on the market. The sedan, which is near production, can go for over 750 kilometers on ecig charge. Mercedes is under pressure to bolster the lineup following the power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. If you average the last three months, 150,000 jobs being created per month, the transition from the breakneck speed of the fast recovery that we saw initially. The Unemployment Rate finally ticked up a bit. I think thats good news but you have to be careful, the labor market can be a slippery slope. The fed should be done. Headed think they should change unless they get something significant on the cpi. Youre seeing the goldilocks area the fed wants and it would be unlikely that they would move in the next meeting. This is the report that the market was looking for. This economy is chugging along, and it does not look like a recession is likely. Are guests reacting to august job numbers out of the u. S. That Gary Shilling u. S. Hiring picked up in august as wage growth slowed, offering a mixed picture from the fed including resilience and moderation in the labor market, lets get more from vonnie quinn. Some people have called this a controlled cooling of the labor market. Quites thats what the fed is looking for, thats what they hope is happening, but there is a question over long and variable lags, and some of the fed would have a different opinion on what variable lag is, and thats the bifurcation, and also the fact that we are waiting on more data. That job support did show a good picture, depending on who you are and who is looking at it. More jobs greater than expected. Some other little tiny cracks, which may also be good news for the fed in terms of the fact that the Participation Rate was up, which meant more people were looking for jobs, and we had hourly wage growth slowing. And that was a notable slowing in that growth. We also had revision to past prints, revised down once again. And you have the bond market, which reacted, and we are actually down about 20 basis points, even more in some cases, but across the curve its been a 20 point move, but they think that this is the last something blocked the fed and finished with its hiking cycle. If you think about it, it was the resilient labor market that at every scratching their heads as the fed was trying to slow the economy so much, why was the Market Holding up so well. As bluebird economic puts it economics puts it, the dual mandate is more inline line with itself, the balance of risks to either maximum stable employment and stable prices, pretty sort of in the even area right now. That has the bond market thinking that we are absolutely done. Not everybody on the fed believes this, we are a little bit wary that perhaps disinflation is not here to stay and we could see in acceleration of inflation again, or other data that would indicate that the fed should not be done. Take for instance, a guest who spoke after the job support on friday, listen to this, she talked about managing the risks, especially the intertemporal costs of over tightening versus undertaking Monetary Policy. Although there has been progress, inflation remains too high and the fomc is committed to moving inflation down to 2 . The Monetary Policy questions are right that the current level of the fed funds rate is sufficiently restrictive and how long policy will need to remain restricted to keep inflation moving down in a sustainable and timely way to our goal of 2 . As she has repeatedly suggested, she still has her doubts that inflation will remain benign. We will continue watching the data and there is more data before the next meeting, and if you had into bloomberg, the market has pretty much priced out another rate hike. Theres less than eight 50 chance for the rest of the year. If it were to come it would probably be in november after more data. They have fully priced in Bond Investors, a quarterpoint cut by next june. What you nancy is there in the introduction, some of the major Bond Investors advising who the trains will be. Stay for the most part. Her and Jeff Rosenberg talked about leading up to restrictive policy for longer, not hire for longer. Going to stay where we are. We also have mufg saying this will favor the front entrance the backend. He thinks twoyear yields will ground down to 4. 5 . The head of rates strategy says that statement is pricing more fed cuts, or the fed stays on hold and either way, its a bullish trade. Whats next for the markets as they try to leak read the tea leaves . The fed goes into blackout again before the following meeting and we dont expect anything at the meeting in two weeks, but they have to abide by the blackout. Were going to hear from seven fed speakers, and we will be interviewing john williams, the new york fed president on thursday. Thats one to watch out for. We also hear from lori logan of dallas, patrick harker, austan goolsbee, and rafael bostick. They will tell us what they thought of this job report and what they are anticipating and we get a raft of Economic Data from july for things like mortgages and applications, which have been an interesting indicator of the strength of the Housing Market and telling us which pockets of the economy are doing well and how we might avoid a recession. We will get the trade balance and be watching the bond market with eagle eyes from tuesday, dont forget monday in the United States is a holiday. Are vonnie quinn there. The acting u. S. Labor secretary says that the latest job support posted the case for a soft landing scenario. She also told us how the Biden Administration trust the process when it comes to managing negotiations with unions in a tight labor market. This is what you want to see if youre looking for a soft landing. This is if you average the last three months, its a hundred 80,000 jobs each month being created. This is a transition from the breakneck speed of the fast recovery we saw initially when President Biden first came into office to the consistent steady stable growth that you want to seem in a strong economy. The one really big ask is what is happening with unions. Your of the hollywood strike still ongoing, the actors strike, and autoworkers strike that could hit the big three. You have trains, dockworkers, there is a lot of union action right now. Is the white house in active conversations with the unions . Where continue to see the effects of a tight labor market. We continue to have unemployment at less than 4 , the longest stretch since the 1960s. In a tight labor market, workers have more power, workers come back to the labor market and make choices on what it means to have a good family sustaining job where they can make demands to improve their lives and working conditions. Unions are part of that. You saw unions who resolved issues, raised wages, and addressed conditions. Imagine ports, one area where we saw with the teamsters and ups last month. We continue to see workers making these demands and these are not just an accident that supports working people, this is part and parcel of workers being able to demand their fair share. When you take a look at the autoworkers, how does the ministration avoid the head of the united are Workers Union or playing his hand, the increases in demands the union is asking are tremendous. 45 wage increase, 32 hour workweek. Thanks that many people say are unrealistic, and if those workers strike, we could be looking at a recession. That is what some are saying. How does President Biden handle that . Were definitely seeing wage increases in contracts, we have seen wage increases over sixyear stretches, multiple years. I think that for a president who believes, as i do, in the collective bargaining process, we trust a. We allow the parties to say the table and they are staying at the table. That is a good sign. But secretary, if they stay at the table and they strike, they dont get what they want, more than 150,000 people out of work, thats going to have determined this drag. I mean, thats right. And that is why we remain hopeful that the parties will resolve the issues, we trust the process to do that. Strike is part of that too, and everybody would love to see a path hardware the union and the employers do the right thing. This is a moment in which Union Members are seeing historic profits coming from pandemics. To that point, they have to remain talking. That was the acting u. S. Labor secretary speaking there with alix steel. This is a picture as we set up for the opening of trade this week here in asia, the number of Central Bank Decisions a number of centralbank inclusions, including australia. This will be the new governors the governors last decision before he hands over the reins to michelle bolick. Existing futures up. 4 higher, tracking gains that we saw in the u. S. , it is that long weekend for u. S. Markets, and we did see that recalibration of expectations and ecosoft landing expectations on friday with numbers suggesting the fed could be near the end of the tightening cycle. The Labor Day Holiday is not going to give much of a lead for labor markets at the start of this week. Modest gains are being seen at this point. Kiwi stocks to the downside and other futures heading to the game to the start of the game as we look forward to the opening of tokyo with s p futures coming under pressure. Much more to come here as we continue to look towards the biggest story for this region and perhaps globally, the chinese slowdown. We had comments from president xi jinping talking about the managed opening up of china as well as incremental support measures for the property sector and broader economy. Much more to come, this is bloomberg. Demand has outstripped sublime economy for the first time in nearly 40 years, and they might have almost achieved the inflation they want. The output gap is what pressure of supply and demand, rising. 4 in the three months through june. Thats bring in our next guest, who says japanese policymakers could use the weekend to their dentist about the economy completely out of deflation. This is the chief economist act Credit Agricole for japan, good to have you with us. You are calling this a reverse plaza accord, explain this to us. 1985, the yen strengthened to 140. This time, the frb is tightening Monetary Policy and the boj is keeping. The yen weakened up to 150. We expect this to keep up with exports and the government of bank of japan likely accepted this week yen level as per. Demand is also an important part of the inflation picture. If you have a weekend, what that a road purchasing power for the japanese and domestic demand would get hit . Corporate investment will increase rapidly because Japan Corporate gains have exploded. Production in japan will increase. This corporate domestic investment is very important to deal with aggregate demand. One reason why japan has a longterm deflation is a week corporate investment. We need corporate strong investor to push everything to meet demand. When you take a look at reform measures we have seen, what do you think is most needed at this point as we see this turning point for the japanese economy . s fiscal policy expansion to push up domestic investment. We expect to have another economic measure in this fall to push up the mystic investment, including the dx gx. Domestic investment, including the dx gx. We expect them to move into normal negative territory. And then weak domestic demand will be god, and we can deal with structural Inflationary Pressures. This is the idea of trying to create this virtuous cycle, do you think that the investment environment is becoming more attractive in a sustainable way, is there a risk that we dont see . Not only at a weekend level, but also u. S. China tensions. Japanese production is coming back from overseas, especially from china, to japan. That would push japan to investment. This is a chance for them to get rid of deflationary pressure. Are you worried about figures where we saw japan firms investing less than expected . Corporate is very strong. They have to put the capitol on the economy, to either to deflate. We expect cap x will keep Going Forward. We have talked a little bit about geopolitical tensions, right. What is the biggest risk when you take a look at the chinese slowdown, does that have a meaningful impact when it comes to the sort of exports right to the economies like japan . Two main risks, one, the oversee economy, if the u. S. Economy is also week, and the chinese economy cannot get out of these conditions, export demand will go down. The Japan Economic cycle will go down and temporary japanese will be weekend. And then i think the secret to recovery will be delay. I think they will be tightening fiscal policy. If the administration tightens fiscal policy, we expect japan to go back up with inflation with weak domestic demand. How week is boj risk if the japan weekends policy in a way that strengthens the japanese yen, would everything we talk about the at risk after boj risk is at a minimalism is at a minimum. I think we do not expect monetary tightening next year. I think the boj will tighten fiscal policy into 2025 when japans economy will make cyclical economic recovery with Global Economic recovery. Great to have you with us, that she japan economist at Credit Agricole there. The chief japanese economist at Credit Agricole there. You can dive into any of the securities and bloomberg functions that we talk about. Joining in the conversation, you can send us instant messages during the show. It is for bloomberg some scrubbers only. Check it out at tv. This is bloomberg. With everything you have on your plate, earning your degree online seems. Impossible. But at grand Canyon University, we specialize in helping you fit a masters degree in education into your busy day. Your Graduation Team led by your own gcu counselor provides you with the personal support you need to succeed achieve your goals with a plan and team behind you find your purpose at grand Canyon University. Visit gcu. Edu new zealands two main Political Parties have lost their Election Campaigns this weekend, each promising to ease costofliving. And they want to dire consequences if the other side wins. Lets bring in Tracy Withers in wellington. Leprosy, costofliving is the key issue for these voters as we had to the polls on october 14. Its Economic Management and the costofliving pressures with inflation at 6 , and both parties have watched for campaigns six weeks away from the vote, with different ways of tackling that. The details from national came out last week and the Opposition Party and labor announced cuts to sales tax on fruits and vegetables, is one way of taking the pressure off. What is the mood in the electric heading towards this election . We have had quite a prolonged. Stretch of campaigning as you often do. Then national the national Opposition Party is ahead, and the labour party has dropped below 30 . If those polls are to be believed, the opposition has got a fair chance of winning. As is always the case in new zealand, there will be a coalition arrangement, and national is closer to getting that arrangement number. But there is a lot of talk and debate to come before that is decided. Obviously, spending has created a sense of necessity given it since sensitive inflationary environments, is there a political willingness to do that . There is willingness, but there is not much money. The economy is slowing and could face recession before the end of the year, with revenues being hit. The government announced that it wants to cut a billion dollars per year from spending within Government Agencies and departments if it wants to get back to the surplus it has promise. As i mentioned, the government is promising to take sales tax offered and vegetables. Nationals got an aggressive taxcut policy, which it says that it can self fund by adding levies on things like gaming. The opposition needs to show those numbers stack up and there are quite a few questions about that. Joining us from wellington, Tracy Withers. We will likely be speaking to the needle premise new zealand as the Election Campaign gets into full swing. That is 1 40 pm sydney time, 11 40 a. M. In hong kong. Here are the stocks we are watching as the market opens in korea, japan and south of australia. The lithium china is set to get a takeover of four point 3 billion, and lion town recommends the bid at a premium to todays close, and has granted them due diligence. Intrinsic focus in japan, especially the Parent Companies of tokio marine and a Fire Insurance company has reported that the major firms implicated in fixing premiums for businesses are suspected to have done the same for contracts with the tokyo metropolitan government. We have the market opens in sydney, seoul, and tokyo as we see the japanese yen with a little bit of strength against the u. S. Dollar at that 146 level. This is member. Bloomberg. I need it cool at night. You trying to ice me out of the bed . Baby, only on game nights. You know you are retired right . Am i . Ya the queen sleep number c2 smart bed is now only 999. Plus free Home Delivery when you add a base shop now only at sleep number. This is daybreak asia counting down to the major market opens in asia as we are in a long Holiday Weekend here in the u. S. And we saw the s p 500 seeing its best week since june. An interesting session on friday because we saw markets reacting to more optimism about the job support, showing potentially a controlled cooling in the labor market, but Strong Manufacturing numbers, we have yet bond yields rising and stopping pressure. It was an interesting mix of data, but certainly reigniting a soft landing scenario debate and whether we are close to the end of the cycle for the fed and certainly questions are whether we are close to the end of the cycle with the terminal rate, on that is what we are focusing on this week. Lets get you to the start of training here in asia, in the absence of that long weekend, we are seeing tokyo markets coming online looking like this. Among other things we have been watching this week are any further policy measures we get out of china. These have huge indications when it comes to trading partners like japan. We see update upside there with the nikkei coming up 2 10 of 1 . 2 , the bk Holding Steady at 146 new the u. S. Dollar. They are looking to see that positive upward gap as well as options coming out there. China trade, we want to focus when it comes to the ecodata for the chinese economy this week. And sherry if you take a look at one of the stocks are watching, softbank will be in focus given we are getting some momentum when it comes to that ipo. They are watching that shipshape sector across asia, the cost base coming up. 2 and extending gains that we saw in the previous session, and we are watching the korean won closely as well because we had strength last week given south korean exports in august. Not as much a drop is expected, perhaps lower demand from china not hurting south korea as much as before. We see signs of a resilient economy and we have Inflation Numbers out of korea that we are watching. Right now we see pressure on the korean won, not surprising given the dollar hit that three month high. And the currencies are once to watch as well. Its a look at how the start of trading is shaping up in australia. We see a muted upside when it comes to trading and equities, these stocks are still coming online, but the bond market is something we are focusing on. A noticeable outperformer during what has been a disappointing year across much of fixed income. But we have seen one of these aspects, the rbas approach to tighten inflation. We are affecting no move in the meeting this week as well. Some of these concerns about chinas lackluster Economic Performance as potentially more of a risk for australias economy. That would depend on about a third of its trade on china, and we could see something missed given the announcement of these highlevel talks between beijing and canberra. Lets bring in our next guest, who said he is spending more time looking at smaller market for his asia portfolio monthly allocations. Here is the senior equities strategist at alliancebernstein. Good to have you with us, david. The worlds focus on what is happening in china, the ecodata and the stimulus and the market is not responding. Are we missing any opportunity is out there and swallow markets . In smaller markets . We are certainly going through a more difficult time than in asia than other parts of the world. When we look at equity markets, it tends to really be driven by earning and earnings revisions fruition have been disappointing compared to most developed markets. And what we would advise investors to be doing right now is as you think about how to allocate ones portfolio in asian contacts, you have to look at opportunities that are not all completely signalized and correlated. That is why, from our perspective, some of the smaller asian markets that often dont get that much attention, be at the philippines or vietnam, are perhaps worth a second look at this time. Youre also trying to avoid correlation, the reason why you suggest investors also keep two thirds of their equity exposure in the u. S. , according to your notes . We do find that is in investors in particular, they systematically have this home market bias where they want to own asian equities first. That has been something that has not been great for their financial health. Especially when we look at the 10 or 15 year sharp ratio, which has been far higher than for u. S. Equities at 0. 5. Compared to about 0. 1 for asian markets. And we do think that, especially at a time when earnings continue to be very resilient in the u. S. And where, arguably, you have tech coming out of an earnings recession, over the past 18 months, this is a time where the u. S. Equity market is perhaps almost in something of a recovery mode. Even as a nominal gdp is dropping. On the other hand, when we look at markets in asia, be it china or others, the double digit Earnings Growth that we have seen forecasted is probably more likely to be in this euro5 range for this year. How do you page the risk reward constant for investing in china now . I guess when you think about what drives equity markets, it is generally some combination of earnings and valuation and on the valuation front, china offers the benefit of not being very expensive at all. Especially if we compare chinese equities to its own home bond market. As we often do. Say, with u. S. Equities and other treasuries. I do think that while earnings are continuing to slide and decelerate, this is an environment where you have to be selective and find companies that are unlikely to be affected by some of the macro headwinds that we see in china, and on a bottom up basis we can find companies that are reasonably well managed and that offer revenue and Earnings Growth. This year, going through next year as well. We find some of these opportunities in select consumer names, be it in some of the consumer Electronics Manufacturers, and brands, and china, and also find that performance is going to be dictated by what you dont own in the china context. Avoiding some of the rougher parts of the old economy, we think, is probably advisable at this time. But when we look at the pmi data out of china, which is more focused on exporters compared to domestic economy, the manufacturing pmi actually poked its head above 50, which is a sign that as some of the inventory drawdowns are coming to an end, for various types of manufacturing goods being exported, that is potentially an area of opportunity for investors in china as well. We have seen some of the popular we directional flows away from china into markets like india and japan. Given how extended those popular markets are, are there are the other opportunities even within an emerging market that might play in asia . There are always opportunities on a bottom up basis. When we look at japan, we understand why people might feel like it, how it might feel extended given how it has performed well to its relative make its asian neighbors. From a valuation and earnings perspective, especially earnings momentum, we are finding quite a lot of opportunities in japan right now. Given the abundance of Earnings Growth that you would expect in a weaker yen environment, was also the added tailwind of corporate reform, that is, i think, making japan perhaps the most attractive opportunity of all in the region. Always good to chat with you, the senior equities investment strategist at alliancebernstein. I had we will be speaking to the university of the Philippine Asian Center about the biggest source of frustration between the block and china. This is bloomberg. Among has learned that Country Garden has told creditors that its made it has made a coupon for avery ringgit denominated bond. Country garden also won approval to extend a separate maturing you want bond, helping avoid a firsttime default, our property analysts joins us now from hong kong. Christie, it looks like they are barely managing to stay above water. What is next . Country garden is not out of the woods yet, the ringgit bond is still relatively small in size. And we are wondering if they are going to be able to repay the dollar bond in the next two days, at the end of the grace. To avoid a default. I think that even if they do, there is a sizable bond maturity coming up in december and january, and that this is a taste offshore restructuring, if there are any signs of repayment stress, its a downward spiral on the quiddity the deteriorating sales and financing. One about the fresh wave of policy stimulus. Is that to meaningfully help at all . For the central bank, they introduced the minimum down payment requirement that is uniform across the country. That is good news for chinas t1 and t2 cities, but that is just 31 of the market. I think what matters more is for the smallest cities that are accounting of two thirds of the Housing Market. A lot of the down payment ratios have already raised to 20 , writes down to 20 for second homes and 30 . There is limited room for extra easing in those cities. If we look at Developers Like Country Garden, it suggests that sales will not benefit from these kinds of policy stimulus is. How have sales done not just for Country Garden but other developers . For auto august, we expect a decline to persist for the rest of the year. It might help arrest the decline but not turnaround sentiment. I think it does not matter how much the government is trying to make it easier for people to buy homes, that does not overcome a lack of confidence from the household perspective because the low confidence on the economy and household and the property sector in general. Kristi hung there. They have the president of china has vowed to continue opening up china while pursuant to element on its own term. Terms. Let three in our next guest. We have heard this narrative many times before. We have, but its good to hear it again. We assurance that the chinese economy remains open for western business, there is a lot of skepticism about that, especially with the regular tray crack down tech, and the slump of foreign investor money into china. Those are welcoming words, they cant go astray. Whether theres anything new here is hard to say. There are specifics about the Service Sector opening in areas like telecommuting asians and tourism, many people see followup details coming up in weeks and months to come, that is unsure as the European Chamber of commerce said, there is promise fatigue going on amongst the western Business Community in china. What are we going to see from chinas august trade numbers this week . The going to be miserable, negative for imports and exports, the consensus among economists that we surveyed showed that those declines may moderate. Our own economists are bearish on the outlook, the export situation is miserable, we have this big china driver of Growth Property that is working, and we also have this big expert engine spluttering. If we do see some sort of baseline, some easing in decline after we saw that cash and report on manufacturing come back positive on friday, maybe this will start to at least engender some hope that perhaps the worst is over and maybe even on both fronts. Are managing a shade economy editor there. You can get a roundup of this story and many others on dayb and bloomberg daybreak, available on mobile and the bloomberg anywhere app. You can customize your settings to get news on the industries and assets that you care about. This is bloomberg. Welcome back, here are corporate about them as we are tracking, indias mercury richest banker has resigned as the managing director and ceo of the letter that we found it he found it. His resignation came under the next decade, and he cited personal reasons for the decision. The joint managing director of the company will take over as interim ceo. Saudi aramco is considering selling 1 50 million in shares of what is the largest offering in Capital Markets history. According to the wall street journal, the new offer will go up on the Saudi Exchange to avoid risks associated with an international listing. The reports cite sources saying the timing of the deal has not been confirmed, but it could happen by the end of the year. Mercedes is intensifying its bid to challenge tesla. The automaker has unveiled a concept car with a longer range than any tesla model on the market. The sedan, which is near production, can go over 750 kilometers on a single charge at mercedes is under pressure to bolster its lineup following disappointing sales in china, which forced the firm to cut prices on some models. Germanys biggest car show is getting underway in munich, where carmakers are showing off their next Generation Models and the increase in the increasingly competitive tv space. Tv space. We are here at the battle of the electric vehicle, multiple new concept cars launched for the first time for these legacy automakers really proving that they can say ahead in an industry in full evolution. For the chinese, if the europeans are on the defense, they are on offense. All of these chinese guppies are trying to show the European Market what they have to offer to break into the international stage. Lets not forget about tesla. A revamped model three cutting prices again, that price war turning up pressure for legacy automakers that dont necessarily know how to make that kind of money on electric vehicles. We will be speaking to the european ceos on how they stay relevant and ahead, and how the chinese breakin. Oliver crook there at the auto show in munich. This is what we are watching when it comes to softbank stock, in focus at the moment. We see a bit of downside, softbank has lined up pretty big box, and some of the biggest customers are being positioned as Strategic Investors for this highly anticipated ipo from the chief designer. Intel is another name being mentioned. Here is another harrison details with our editor. We have been watching and waiting for details of this for so long now. Yes, its finally here, we are finally on the verge of our beginning, this roadshow that will kick off this week and softbank has looked at a number of different options for this business. The chip designer that it bought for 32 billion has been a high priority for Masayoshi Son for a while. He dried tried to sell it to nvidia and that deal and it up not proceeding because they could not get pregnant tory approval. Customers were unhappy with that. He is not proceeding with this backup plan, taken the company public. It has been a while. He is taking a public in a market that has been quite strong chip stocks, especially like nvidia. As you pointed out, now is customers are putting some money into this deal, you have Strategic Investors, including nvidia like arent, intel, samsung and others, voting for confidence in the offering as some people take it public. They had been looking at as high a 6070,000,000,000 dollars, and its come down to 50 50 or 60 million. Billion dollars. Theyre going to see what kind of feedback they can get and whether they can price it in at the top or lower end of that range. Doesnt help that they have such highprofile backers, and what does this mean for arm and what does it signal about the rest of the Tech Industry . Its a vote of confidence to have people like nvidia and apple put money into this business. Softbank will not sell a lot of the equity here. They are to sell 10 based on what some people have told us. They will be very much the Controlling Shareholder as they go public. The real challenge ahead is that it has been the dominant provider of these chip designs for smartphones. Its designs are very low power, they have worked well for Companies Like qualcomm making chips that cannot make that much power on a mobile device. Now they are trying to move up the value stack to do more with cloud computing, artificial intelligence, and data centers that provide services. That has been market challenge, really the home of Companies Like intel and nvidia, which are very powerful chip players, and they use a lot of power in the power saving characteristics that arms designs are less critical in those areas. Softbank is trying to expand into those areas. And they need to show that they can get the kind of Revenue Growth they would get if they were able to expand beyond that Smartphone Market that they have dominated for so long. How much does this help for the broader existential crisis that we have seen it softbank . How much does that help the turnaround . There have been a lot of challenges at softbank. The challenges have stemmed from Masayoshi Son setting up this vision fund, originally 100 billion investing in startups that went to more than 140 believe dollars. He made a number of bets that have not paid off. We work put in had more than 10 billion invested, they had other problematic investments and startups. Armies a chance for him to recalibrate a little bit to get cash and be able to go up and make new investments. The company has been a key leaving cash in recent quarters, it has been doing a bit better recently. It also paid down some of its debt. Its Balance Sheet is looking strong at this point, and if we can raise some money from arm and get this in a market at a decent valuation, that will give them dry powder to be able to go out and cut more deals. The executive editor for Asian Technology with the latest on the arm ipo. Take a look at how european trade futures are trading. We saw european stocks rally rally last week. They were taking hits from where the u. S. Headed with that data suggesting that the fed might be able to pause rate hikes and tightening. This sentiment has been subdued this week, given data showing dropping in manufacturing activity, and there euro Inflation Numbers. Slowing in august. We have more to come on daybreak. This is bloomberg. 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Shery take a look at how asian markets are trading at the moment we are seeing upside for most markets with the nikkei being led higher by real estate and energy stocks. This as it continues to extend its longest winning streak since may, we are up for a sixth consecutive session. The kospi is also gaining ground, we are expecting south koreas Inflation Numbers later in the week but we might see a slowdown in cpi in august being broken. The korean won Holding Steady at the moment, maybe a little pressure against the u. S. Dollar. We are watching the asx 200 heading towards that iba rate decision, the expectation is for the final rate meeting to be a hold. Kiwi stocks still seeing a little bit of pressure as u. S. Futures remain muted at the moment. We are on a long Holiday Weekend here in the u. S. Bloombergs latest poll survey has found that the u. S. Stock market rally could be Strong Enough to withstand another leg higher for bond yields, market cranfield has more on the survey results. We had the best week since june for the s p 500 and fridays Training Session was pretty interesting because treasury yields were down first after the jobs report than they were up because the manufacturing data and that really pressured the stock targets but what are we hearing from the survey . Mark probably the friday before a long weekend at some of the moves have been exaggerated so i think you cannot take too much from what happened there but the survey generally shows that investors are pretty sanguine about rising treasury yields. They dont see it having a huge impact on the stock market so people were asked if treasury yields in the 10 year rose to four and a half percent what sort of impact with that have on the s p 500. People generally thought the losses would be contained to less than 10 in the s p 500 if that was the case. Of course if there is some weakness starting to appear in the equity market because of higher yields it would probably be in the tech sector and in some of the real estate sector where the losses would be a little more pronounced. On the flipside the Banking Sector would probably do pretty well so overall there will be rotation but the general view is that treasury yields are generally mostly priced in and from here we will not see too much concern to the equity market Going Forward. Haidi is the bond market still going to be a source of pressure or are we starting to see a little more resilience when it comes to the stocks bond correlation . Mark people are still pretty happy with the 6040 portfolio set up. People were questioning at last year whether there was still a future for this familiar way of setting up a portfolio when bonds and equities were falling at the same time. It certainly seemed to jeopardize whether they still had a good place in general portfolios but if you look at the way things have progressed, the equity market has been much more resilient. Even with the fed raising rates to the highest in a couple decades it has not done extreme damage to the market. There have been positive stories like a i which keeps everybody very interested in certain parts of stocks as well. Overall the survey also confirms people still generally are in favor of the 60 40 portfolio although maybe not as strongly as they were 10 years ago. It still looks as though it has a big place at the center of most people strategy. Haidi market cranfield there with the latest commentary, you can get more on this story or the days trading analysis on our markets live log on mliv. You can get market run downs with one click there is commentary and analysis from our team of expert editors so you can get exactly what is affecting your investments at any given stage. This is bloomberg. Haidi welcome back lets get you some top geopolitical news from around the world. Italys foreign minister is on a three day china. Discussing the possibility of his country leaving the belton boat initiative, before leaving beijing he told us the investment pact has fallen short of expectations. The message is very clear. We want to work with china. They are a close competitor for us. We want to work in the chinese market, we are invested in our country but we need an even playing field. Shery italys membership has turned into a dilemma after making it an outlier among the g7. It must decide by the end of the year whether to renew its involvement in the program that was once the backbone of president xi jinpings effort to deepen chinas economic ties around the world. Ukrainian president Volodymyr Zelenskyy will replace defense minister resnick off after allegations that the department bought military supplies for inflated prices. He has denied the allegations and will be replaced with someone who has been involved with wart related talks. The reshuffle comes as kyiv gears up for its counteroffensive against russia. Take a look at how u. S. Futures are trading at the moment. Not a lot of movement on this Holiday Weekend. We saw the u. S. Stock rally in the new york session on friday but the rally sort of faded towards the end of the session as we saw bond yields climbing. We had a Strong Manufacturing report offsetting jobs data optimism. We had that jobs report showing a labor market undergoing a controlled cooling. Solid hiring slower Earnings Growth and more people returning to the workforce. We are seeing russell 2000 futures unchanged but perhaps under a little pressure, this of course after we continue to see the dollar stronger hitting a three month high. Haidi chinas outrage over japans release of wastewater from the fukushima waste plant is over casting a shadow over prospects of improved relations. Lets get details now from our we will get more details on that. It is really one of the issues casting a shadow over this weeks summit in jakarta. That Leadership Meeting is to get underway tomorrow. It comes in a very interesting time where it comes to more expectations of accelerated growth we know these economies are doing a bit better at the same time. A lot of them also have heavy exposure to the chinese slowdown in the new overlay, some of these geopolitical tensions. It is a pretty difficult time for leaders to be meeting. Lets get some of these details when it comes to these ongoing tensions between took go in beijing. Isabel reynolds joining us now out of tokyo. Japanese Prime Minister, chinese premier both attending the asean summit this week. Are we going to get a one on one . Isabel that seems highly unlikely at this point i think the nearest we will get to that is the asean 3 summit where we you have all the leaders plus japan, china and south korea. Normally this would be a formality but i think one of the concerns this time Going Forward is that china may use this opportunity to prorate the Prime Minister over the water release in front of all these regional dignitaries which would be another unfortunate and embarrassing situation for japan. Japan will try to rebut these claims and they have been campaigning for months and even years to show that this move is something that is Standard Practice in the Nuclear Industry and that it wont pose any significant harm to anybody or the environment. China does not accept that. Is going to be a long battle to try to restore ties between these two asian economic giants. Shery and also the summit coming just days after china released that new map indicating the areas that it sees as its own territory. What are we expecting from the summit . Isabel it seems rather extraordinary timing for china. Going into this summit there could have been an opportunity for china to look more involved with Southeast Asia given that President Joe Biden of the u. S. Is not coming this time which has been seen as a disappointment for some. It could have been an opportunity to improve ties with Southeast Asia but instead china has chosen this timing to issue this new map to reassert its claims over parts of the South China Sea that a lot of other Southeast Asian countries also claim. We saw an outcry last week from the philippines, from vietnam and so on. Saying we dont accept of this. We can accept cash expect those issues to be raised which would mean his first attempt at the summit may not be particularly auspicious. Haidi yes President Joe Biden will not be present at the summit, how is that likely to be received . Isabel we have all seen a widespread issue of complaints in the media about this. Instead of joe biden we have Kamala Harris who will be in place. She does have a very full agenda while she is there. She is definitely going to reach out to people as much as she can but the Vice President is not the president. Jakarta would have wanted the glamour and prestige of hosting the president as the chair of the asean summit. There have been rumors about whether this means something about poor ties between indonesia and the u. S. That is not really clear but i think it will at least show that the u. S. Is not as fully engaged in the region as it might be even though the u. S. Side has made it clear it is reaching out on a bilateral basis to a lot of countries including the philippines and with President Biden going to vietnam shortly. Haidi our politics reporter in tokyo, isabel reynolds. Lets bring in for more analysis , the senior lecturer at the university of the philippines joining us now from jakarta. Richard great to have you with us. We just talked about President Bidens abscess absence. Of course disappointing. And we have the situation where it xi jinping will be absent from that as well, going into the g20 as well. What is the dynamic that is most interesting to you and the issues that top the agenda for you for asean . Interestingly biden will be visiting vietnam which is an emerging strategy partner for the United States in the region. You have two former nemesis burying the hatchet and trying to build a partnership, especially over china. But also shared economic concerns so i think some people were slighted here in jakarta because they were expecting biden to also visit indonesia not only for meetings but for some highlevel discussions with president s, i think the overall understanding in the region is that the United States is in a catchup mode. It is true president xi jinping is also not attending but people are expecting the United States to put something constructive on the table. It is true that Chinas Initiative has not been meeting its targets over the past few years in countries like the philippines we have more of a pledge the reality is the United States does not have any kind of counterproposal and its indo Pacific Economic framework to be honest is very asean like. Not a lot of substance. We are hoping that top american officials will give more concrete details on how the indo pacific framework will move forward. As far as asean is concerned it has a number of crises in its own backyard from the festering civil war in bmr miamar to new members like which is a big issue for the philippines, malaysia and vietnam. And the president is going to be in town and push hard for the centrality of that issue in the region. Shery how do you expect that to be played out . I think indonesia is responding to this on two levels. On one hand it is at least claiming that there has been some sort of breakthrough in the negotiations of the code of conduct, a legally binding code of conduct in the South China Sea. But as long as ive been observing this in writing on this, this was something that was raised a year after i was born in the late 1980s. Im not very optimistic on the code of conduct front. Nevertheless interesting things are happening because indonesia right now is pushing for the first ever all asean naval drills. It was supposed to be cambodia and south china friendly countries push back against that. Nevertheless that is a move in the right direction because they have to show a common front and show more operational ability. On the sidelines expect philippines, vietnam, malaysia and indonesia to also discuss their borders. And how to resolve those. Shery how much is the fact that the leaders of the two largest economies are not attending the summit, how much is it from them lacking the strategy towards Southeast Asia or just the relevance of the summit itself . Richard i think as far as the summit is concerned, asean centrality is more of an aspiration if not some sort of pretentious selfproclaimed it is something we have to gain and something we have to earn in the reality is that what you are seeing nowadays is more trilateral. U. S. , korea, japan. India United States australia. But also philippines australia United States. In japan. I think the emergence of this multilateral security new cold war not to mention expansion of brics, that should tell you something about diminishing confidence in asean in terms of playing its role. In indonesia i think they realize that they have to make some big moves if they want to put the regional body on an even keel in the coming months. Haidi do you expect that to happen, what is next for the group . Richard this is legacy months for their present president he had a very successful year last year as a rotating president of the g20 summit i think they defied a lot of expectations. I would not be surprised if there were meaningful breakthroughs here and there but increasingly the reality is that the summit with 10 members, you cannot get much out of that if they are going to continue to operate based on unanimity. Not really consensus but unanimity. That is how they operate on sensitive issues. But i think more and more multilateral coordination between key, summit countries i think the indonesia weight would be to spin this as a more economic oriented summit and meeting because the theme is actually that they are an epicenter of growth growing faster than china. They are trying to put a spin on this by overemphasizing the economic front by more multilaterally dealing with geopolitical issues. Shery good to have you with the senior lecturer at the university of the philippines. We have more to come on daybreak asia, this is bloomberg. Grand Canyon University specializes in helping you fit a masters degree in education into your busy day. Your Graduation Team led by your own gcu counselor provides you with the personal support you need to succeed find your purpose. Visit gcu. Edu 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 haidi tens of thousands of homes temporarily lost power in taiwan as a typhoon at made landfall on sunday afternoon. The storms radius enveloped much of taiwan bringing heavy rain and wind to the island and disrupting power to more than 40,000 households. Authorities had earlier shuttered offices and schools and canceled more than 200 flights, it was the first typhoon to hit taiwan directly since 2019. Also the cleanup continues in hong kong and along the coast as a super typhoon had swept through over the weekend. A Bloomberg Intelligence estimates the total damage built from the two storms could top 1 billion. Lets get more from insurance analyst stephen lam. How destructive were these typhoons compared with other storms in recent years . Stephen good morning. The losses could be less than what we had anticipated. The key here is that even those closer, and the wind was stronger than the typhoon in 2018, we noticed that the flood damage is actually much less. That is why we will bring down the estimate. I think that the current observation right now we are thinking about tens of millions of u. S. Dollars in terms of losses. That would be comparable to what we had in 2021 in lion rock. Most of the damage we have observed was mostly broken glass, some scaffolding, solar panels that were blown off roofs. 1500 fallen trees across the city. So far. Haidi our insurance sing above average typhoons this year . Stephen absolutely so in china right now the fourth one is already way above the annual average of 3. 2. Mind you we are only in the middle of the season right now, just early september. Typically the typhoon season can last of the end of october, sometimes into november as well. Closer to hong kong here, we notice that the signal 10 is actually the fourth one in the past 15 years. Compared to the prior 15 years hong kong only needed to hoist typhoon signal 10 one time in the prior 15 years. Signal 10 basically means Hurricane Force with a wind speed above 118 Kilometers Per Hour and above. Haidi how prepared are insurers for the spike in typhoons . Stephen i think that is another key point to note. The city, hong kong, macau and Southern China are way more prepared due to Lessons Learned due to haiti in 2017. A lot of the businesses and small shops with early signal would block up their shop and put up boards to avoid a flood situation. However with the higher frequency and these large losses in the last few years, insurance Price Premium have actually gone up as well. Insurers are charging direct insurers more during the current season. We can see that some of the direct insurers actually have lower protection than prior years. They are more exposed in simple terms during the current typhoon season. Haidi we know that extreme weather is likely to probably get more common, heat certainly for this year as well. We have seen in the u. S. How major insurers are ending certain coverage for climaterelated risks. Is this something that will become more common . Stephen i think in this part of the world we should see quite the contrary because asia, the insurance penetration, the Insurance Protection is actually much lower than in north america. Based on our study on average any storm or large natural catastrophe, only 15 of the economic losses covered by insurance. First is about 50 in the United States. The key here is about Public Education which the city and hong kong and china has been pushing hard in terms of increasing the insurance penetration. Haidi Bloomberg Intelligence in certain insurance analyst they with us, taking a look at how markets are trading. We are seeing broad upside, after that long weekend scenario in the u. S. But here in asia on this monday morning we are seeing a sea of modest gains, up just about 4 10 of 1 . We are seeing upside here in australia as well going into the rba decision, expecting a third consecutive hold from the central bank and broadly we are seeing regional sentiment lifted as traders are considering that u. S. Jobs number on friday. Really supporting that optimism about a soft landing scenario more possible than before and the fed it be nearing the end of that tightening cycle. Thats it for daybreak asia our markets coverage continues ahead of the start of trading in greater china. This is bloomberg. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. aidyl hi, im aidyl, and i lost 90 pounds on golo. Styles and textures. I struggled with weight loss and weight gain my entire life. With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. 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