Between him and donald trump. The nikkei to 25 about. 5 higher than weve seen. And of rockets around the region really outperforming, including australia. Some intra incremental gains, the dollar yen has been interesting on thes expectations from the bank of japan. For impact when it comes to the japan equity rally, its been sort of a nonevent. Weve seen any attempts turning short on japanese stocks becoming increasingly risky. Shares of socalled lowquality companies have seen quite a lot of volatility on this Reform Program that has driven so much of the optimism toward equities. Watching on the back of that Political Risk aspect as well. Looking at korea, seeing a lot of foreign buying interest. Similar optimism that perhaps about your program can be successful and can elevate a deal with the korea discount in the same way weve seen it successfully done over the past few months in japan. A lot of chip stocks are in focus today. Chips in focus as we continue to see this too and fro from beijing and washington President Biden wanting to accelerate the curbs on advanced tech. Paul lets look at how we are doing in australia, Information Technology stocks doing pretty well, gains are broadbased for almost every sector. Financials doing well and the interior sector codified in the moment. Not a huge amount of movement for the aussie 10 year, just a whisker above 4 . Crude prices up as well, a segment of the Keystone Pipeline between canada and the u. S. Partially shut helping to support the oil price there. Also keep u. S. Treasuries, two major Central Banks sent signaling Interest Rate cuts are on the way. Policymakers getting close to having the confidence they need to start easing. We are waiting to become more confident that inflation is moving steadily to 2 . It will be appropriate to begin to dial back the level of restriction so we dont drive the economy into a recession rather than normalizing policy as the economy gets back to normal. Paul a golden age for fixed income. Joining us in the hong kong studio, jessica, we do have the 10year yield moving a little bit higher. How do you allocate for bonds in 2020 four . Jessica thank you so much for having me on the show today. By the way, happy International Womens day. You make a really good point. We believe 2024 is going to be a time for active investment across public and private markets. As we see asian investors look to allocate between what they see as market risk and challenging times, but also have a position for the recovery that we know is coming. We think we are now entering a golden age for fixed income. We see asian investors cautiously start moving into fixed income in the form of high quality Investment Grade securities. From a Global Equity perspective we are seeing tailwinds for Growth Stocks and as Investor Confidence improves later this year we think clients will want to keep allocating to these sectors that give exposure to some of the structural growth stories like ai, Global Consumer goods and other innovations in the health care sector. The biggest thing from an Asset Allocation point of view from asian investors is the big move to private markets and alternatives. Im happy to talk about that. Paul i want to get your views on japanese government bonds, weve got the boj looking at ending negative rates and the obvious following question from that is do they look to exit the bond market. Jessica its an interesting point. We do see clients looking at japan, there is a lot of interest in that space but weve seen there is more of a move across the assets and across fixed income. We are advocating for a much more diversified portfolio. Haidi i want to get your views on private alternatives and private investing options you see is gaining traction at the moment. Jessica this is a huge area for High Net Worth investors. A lot of Research Suggests its a 1. 5 trillion opportunity for investors who are under allocated to all terms and private markets. The global a um is Something Like 285 trillion. They are only allocated about 16 to alternative investments. When i speak to some of the big alternative gatekeepers of the product banks here in asia, they all reinforce that, that clients here may be allocated low Single Digits alternatives and private markets but they are really looking to grow that and the cios and house use of some of the banks are really suggesting 15 30 allocations depending on the risk tolerance of the client. So we are seeing a move in that direction. Some interesting ideas in the space is the Digital Infrastructure theme. A lot of interest from clients to allocate to Something Different like global data centers, for instance. Haidi how dramatic do you expect the Real Estate Market recovery our continued growth to be this year, given there are expectations for the rate environment to be pretty drastically different by the time we get to the end of the year. Jessica from real estate perspective, is a structural case to have real estate allocations in your portfolio. This is what we hear from investors in asia. Asia pacific real estate, given where we are in the Interest Rate cycle and the inflation ease, asiapacific bill estate has had a much better recovery and we see that after 2022 there has been a great reset and this may be the year that real estate comes back. Its also about different structural trends we see in real estate, specifically on the digitalization in terms of data centers. The idea of ai, digitalization is causing a huge amount of data creation and theres not enough storage for this data. This is simply a very interesting supply and demand and balance pieces of a scale and geographical breath and magnitude that are Portfolio Managers have never seen before. A very exciting area and its why we are trying to think about more investor choices and options for clients in this space. Paul i want to know how you approached china particularly around that fixed income space. Yields have been slipping, is this a trend that you expect to continue . Jessica china is an interesting era. Weve had a fascinating week this week with china. As we speak to clients about china, theres no doubt this is still a very important market. There is the near term, lets wait and see with china that we hear from clients. At the end of the day, china is the home market here and people are thinking more longerterm of how they allocate to china. We keep hearing when is the right time to come back and really looking at the market very carefully for china. Paul jessica jones, thanks so much for joining us. Still, chinas foreign minister blasting the u. S. For what because a bewildering level of trade curves. Well get analysis on the superpower struggle and chinas latest price data, a 17th straight decline. We will have a preview, next. This is bloomberg. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh haidi china is releasing february inflation data on saturday. Bloomberg economics thinking cpi will probably rise out of inflation for the first time in five months but may not signal a fundamental recovery in demand. There were a lot of concerns about her deflationary downward spiral and confidence around these data points taking on special significance given that ambitious growth target. What are the expectations here . I think the issue with this february data is that during the extended Lunar New Year holiday, the Bloomberg Economics argument there is that a lot of it will be elevated by the fact that people are spending more in the holiday, we saw that with some of the earlier data, it probably contributed to an uptick in food prices so thats why you might see the cpi gauge creep out of negative territory for the first time in five months. Even in doing that, they sang somewhere around 0. 1 , youve got a broader economic consensus of 0. 3 . These are still close to the deflationary line so i think it is safe to say that the inflationary pressures are continuing in china and we are not seeing much in the way of what it would mean to chart a meaningful turnaround for that. We need to see more in terms of erasing the concerns around deflation right now. Paul in terms of a policy response, do we anticipate that, or at what point do we start staring down japan cell inflation . Thats been in debate quite a bit last year, whether china is headed for a prolonged period of stagnation in the way japan has. We are still in the middle of the National Peoples congress, a political gathering in china. So far a lot of analysts and investors have not been incredibly theyve been underwhelmed by a lot of the policies they have seen so far, a lot of things that have felt a bit vague. There has not been a lot in the way of incredibly specific targeted measures that have impacted consumption. Weve got the gdp target of around 5 , thats pretty ambitious, all things considered. The base of comparison for 2023 is not as favorable as it was last year. A lot of analysts are still looking for additional fiscal stimulus or other consumption like measures to get things going again and restoring confidence in this economy. Haidi were also looking at the idea of fiscal restraint when it comes to heavily indebted provinces or regions. We ran a story saying some of the local governments are trying to pay down debt or finding new Revenue Streams. What are these like at the local level . They have been a key part of generating numbers toward that gdp target. It is an interesting trends. A lot of local governments are looking at alternative Revenue Streams because a key revenue stream they relied on for many years is the idea of making money by selling land. It has struggled because of the property crisis that has impacted their ability to do that. Instead theyre looking at selling some assets to pay down their debts. Some promises look at selling, while that goes part of the way toward making up for some of the hole that has been left by the evaporation of these other Revenue Streams, it does not completely make up for it. The income that local governments were getting by selling land was really massive so theres probably more they need to do. That is part of that piecemeal effort to turn turn things around. We are also seeing the Central Government take a larger role in selling debt to alleviate some of those local debt burdens. We will see where that goes. Paul a key player in chinas Energy Transition says electric vehicles will replace 20 million tons of gasoline and diesel consumption this year. We were told exclusively how count china can balance its economic goals. 5 or more is a do no more condition in china. From the perspective of Oil Consumption, in the last year our countrys Oil Consumption increased by 11 . That is after recovery from 2019 according to our research our prediction is about 1 increase because of the ev and the economy. That number, 1 growth, basically from when i look at your research, that would be the lowest increase from your research in at least a decade. Is that a concern or is that just a reflection of that Energy Transition . Does it represent that the economy does not have demand, or is it more because there is an Energy Transition, at least in the new Energy Vehicles . The transition to from fossil fuel, that is a huge number. Is this going to be the longterm trend, very low singledigit Oil Demand Growth . Of course we have entered the era of low growth rates due to crude oil. Because of the transportation usage, im sure it will be reproduced by electrical vehicles and other areas. Can china have a shale revolution . Is the coalbed methane to deep, are there structural problems that cannot happen . What do you think . Of course there is a chance but it is a very small one. We still have a dream of shale revolution. It symbolizes the technology and innovation, the business model, actually do we do our utmost for research and expiration for this yard. We call it the new shell revolution in china. Paul speaking exclusively to Bloomberg Stephen engle in beijing. Plenty more to come on daybreak asia. This is bloomberg. Paul president bynum is expected to make his 2024 reelection pitch in just a few hours during his state of the union speech. It will offer clues to his priorities if he wins a second term in november. Jodi schneiders with us now. This one will be particularly important for President Biden, the last one before the 2024 general election. What are we expecting to hear today . We are expecting to hear more than a typical state of the union speech which is often a list of priorities and themes the president wants to accomplish, looking back on some achievements. Tonight we expect to hear from President Biden about why he should get another four years in this job after november. He wont do that as a Campaign Speech per se, but it will have any elements of that. He will be casting himself as somebody who americans can trust , trying to really deflect the question of his age at 81, he is the oldest president and certainly will be for a second term, obviously. But he wants to deflect that issue by pointing to donald trump as a danger. He may not mention Donald Trumps name much, but and excerpts weve seen of the speech he casts himself as someone who cares about fairness and decency and the american dream, saying other seem to want to be focus more on retribution and recriminations. He is clearly pointing to donald trump at that. The other thing he has to do tonight is to seem vigorous, to basically say to people, you can trust me to do this job even though i am the oldest sitting president , that there wont be any flubs, that there is not any mental frailty at all. American polls increasingly say they are concerned about his age and they are concerned about donald trump and that he could be a danger to democratic institutions. Haidi he will be talking about some of his achievements, do we expect any big announcements . The one thing we know about already, people familiar have told us this, that he will talk about she will give support for israel, what he will also say that the u. S. Is looking to set up essentially a port at the seaport at gaza to get emergency aid in to try to stem that growing humanitarian crisis where millions of people live and are having trouble getting food, water, and medicine. This spirit essentially would be able to do that. This pier would be able to do that. He will talk about that as a way to quell criticism about the u. S. Supporting the continued war even as that humanitarian crisis in gaza grows. So he will try to do that in the speech. He will talk about changing the tax code to tax corporations higher. Haidi we will bring that full address from President Biden a little bit later on. Our special coverage begins at 12 30 paul lets look at how we are tracking markets across the asiapacific. Looks like a positive day to close out the week. The nikkei and positive territory, reclaiming some of the losses we saw on thursday. Australia performing pretty well , most sectors in the green. We are keeping an eye on industrial and Energy Stocks today, a couple of stories making news at the moment. Chinese cranes posing a security risk, saying they are collecting data and information but doing something about it could be a problem. Elsewhere reporting that chinas oil demand reaching a lowering growth phase. So chinas oil demand seen entering a low growth phase. Still seeing decent gains for industrial and Energy Stocks. Haidi the China Foreign minister has blasted the u. S. For a bewildering measure of trade curbs. The response from beijing unsurprising, pretty much in line with what we see in terms of reaction to these announcements from the u. S. How elevated our Political Risks between the two sides in this election year, given that throughout the biden presidency, the tone has been pretty well maintained as stable. We are at an interesting moment. As they are trying to not trigger a major crisis that could jeopardize the election later this year. Since the San Francisco summit last november, at the same time we are also hearing some harsh rhetoric coming from senior officials on both sides. Yesterday was one of those examples. Haidi its interesting because we know china is battling its own domestic micro challenges. How much bandwidth does xi have when it comes to dealing with geopolitical ambitions that china has . We know that defense spending has gone up again and they are putting more r d into high tech. Is this as much a priority as they try to get some of the domestic and economic challenges under control . Its clear he wants to keep those gains going. The growth rate last year, they were expecting so much more from 2020 three and simply did not deliver. In terms of priority has focused on the corruption issue and the reshuffling weve seen in the second half of 2023, which means that poking around in this Foreign Relations is probably not very high on the priority list for the Chinese Government this year. Paul in terms of some of the rhetoric weve been hearing from the foreign minister, because u. S. Trade curbs bewildering levels of unfathomable absurdity. Are these sort of statements necessarily correct, and he also says the u. S. Will eventually harden some of these policies. Whether it is correct or true , in beijing they certainly believe it is true. From the u. S. Perspective, there is a need to maintain a certain edge over china in terms of technology investment. The policy is not without debate. Basically saying the policy is helping china you can highlight china, you come back at chips forever, a corsair going to develop their own technology and youre not going to be able to choke him forever. So you are facilitating it. Both arguments have their own merits. It depends on which one you prioritize. Paul in terms of not being able to choke them forever, we are staring down the barrel of a potential second Trump Presidency at the end of the year. How would that change the picture . People are expecting a lot of volatility. Eventually he will want to go to xi on trade, but before that happens, President Trump will try to exercise maximum pressure on china. We will see china trying to retaliate, so a lot of volatility is expected. Haidi if we see a retreat of u. S. Support for ukraine, do you think that emboldens beijing on how it deals with taiwan . I think what we are seeing today is an elevation of the ukraine more in the fact that ukraine is not going to get Eastern Ukraine back. Russia is going to get away with it. What would be the consequences, yes, it will be a lot of financial trade costs, but is china going to get away with it in the end . It is taking lesson from the ukraine playbook, yes, it will. Haidi were not expecting any Personnel Announcements this week. Do you think he will stay in place and when to expect a little more transparency on what the Foreign Ministry might look like on a permanent basis. There is so many rumors and speculation right now. We will find out when they are ready to tell us. He will be 75 by the time the current term of the Chinese Government completes, which means he will have to retire. It also means the Chinese Government has to start cultivating his successor. There is the director of the Foreign Affairs commission, the more senior figure. Those two positions have basically become virtual. The chinese in the past have established a pattern that there is a senior person and a junior person. It is not necessarily a sustainable thing, and they are not. Haidi he is a steady hand. A senior fellow, great to have you with us. Lets take a quick look at japanese bonds. Building expectations on normalization of policy for bank of japan. We are also seeing the yen maintained near its one month high against the dollar. Building hopes that the bank of japan will end what is the worlds last subzero Interest Rate as early as this month. We are awaiting those bond purchase programs being in particular focus as well. The rally in the yen is an interesting one. Given how much is been trading at the moment, the confirmation is coming that the momentum has really shifted, potentially will clear the way for it to rally, and a lot of it depends on what happens with the u. S. Dollar. We have a lot of u. S. Political news to get through. Paul the u. S. Congress moving closer to forcing tiktoks Parent Company bytedance to sell the platform over National Security concerns. The company is calling on u. S. Users to protest directly to the makers. And a temporary ports on the gaza coast to ramp up the delivery of aid and ease to humanitarian crisis in the territory. Senior Administration Officials say the president will announce the steps in his state of the Union Address which is happening in about an hour now. Sweden has officially become the 32nd member of nato after completing the swedens addition comes 21 months after bid for membership following russias invasion of ukraine. It was met with objections from both turkey and hungary. She needs it backing a major european nations and the u. S. To ensure the success of any potential bid. Sources say it would come with the understanding she has the support of france and germany. We have plenty more to come on daybreak asia. This is bloomberg. A digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan wealth management. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh paul more businesses are using generative at products to help screen and rank candidates for jobs. The bestknown generative ai tool, chatgtp systematically produces biases based on names. Can you tell us what the inspiration for the story was . Definitely. Ever since the advent of chatgtp in late 2022, there has been so much excitement for generative ai, which is Artificial Intelligence software that can create new text, images, or even video based on what you ask for. There has also been a longheld and significant concern for these tools bias. At the same time there has been a long tradition for automated screening systems to help hiring managers find job candidates. We wanted to ask the question, is there risk for racial bias if generative ai reused in hiring or recruiting for jobs . Haidi how did you conduct this analysis . What we did was conduct an experiment. We came up with a list of demographically distinct names using public records. We ask them to rank candidates for a few different job openings. Each time we asked gpt who the best candidate was for the job using the demographically distinct names, names associated with being either male or female and either black, white, asian or hispanic. Each candidate had an equal chance of being ranked as a top candidate and we did this 1000 times for each job that we tested for. And we came up with some very interesting findings that gpt did indeed display racial bias against candidates based on their names. Paul so the category of news you can use, what were some of your findings in terms of names to avoid . We found that resumes with names typically associated with black americans were rarely ranked as a top candidate for for Front National financial analysts and Software Engineering goals. And for hr and retail positions which have historically been dominated by women. Those findings show that gpt stereotypes and it actually fails adverse impact benchmarks for several groups across the test. That means if the company made hiring decisions based solely on gpts rankings, u. S. Federal agencies would find the Automated System is biased against protected groups and treated them unfairly. So for me the big takeaway here is that using generative ai part recruiting and hiring poses a serious risk of automated discrimination on that skill and companies should think twice before using ai in hiring. Haidi a reporter in new york with that big take. More diversity across Global Financial hubs in the spotlight this International Womens day. The city stocky change aiming to end allmale boards this year. I wonder if this is a case of not enough eligible candidates, or is there cultural resistance at some of these companies . We are seeing nearly 500 listed firms in hong kong are not yet compliant with this rule of removing single gender boards by the end of this year. Now we have only about nine months to the deadline and when we approach the ongoing change, they couldnt give us an answer on what happens or companies if they just dont do it. Now its what is the incentive for them to meet the deadline. We found out the top 10 companies having allmale boards, nine of them are Chinese State owned companies or affiliated companies. With that, we are seeing perhaps a power struggle between these big companies, are they willing to take a chance and make a change, or with a stay with these boards because the companys diversity are already biased towards men. Paul have we seen any improvements over the last few years . Actually, if we are looking at improvement, we definitely need to acknowledge that. Back in 2020, the number of female directors on male boards were still like 32 . Now it has fallen to below 20 . However, that is still a big gap , were talking about comparing Global Financial hubs in london and new york. So its not a big ask we talked to analyst looking at more diversity in corporate governance, theyre really trying to see whether the exchange is willing to give a definite answer by the end of this year. Paul more ahead on daybreak asia. This is bloomberg. Malless. A. 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We want to be careful as we continue to go through the legislation but it ultimately lays out in the draft proposal, it will go before the legislature at 11 00 a. M. Hong kong time, so just a couple of hours from now. So far it looks like the security law draft includes the potential for anything to be defended in the public interest. That being said, there is Additional Details talking about how violations of article 23 proposal could carry a maximum penalty potentially life in prison, depending on the severity of the offense. To back up a little bit, a reminder to our viewers, this is a fasttrack piece of legislation that was exposed to about a months worth of Public Consultation. The government of hong kong is required under its constitution that it has to create some kind of National Security law. Especially over the last few years, with the introduced introduction of that National Security law couple of years ago, there are concerns about what it means for free speech, so theres a lot we need to unpack here but we will have more details within the next couple of hours as it develops today. Paul article 23 does relate to free speech. What has the public reaction been and what are the concerns about this . At this point, the Public Consultation period lasted about a month. There are some initial concerns that it might not might not have been eight long enough period. It seems like the government got quite a lot of Public Opinion and published some details earlier this week, exploring different ideas the public had for how it could go down and saying in a briefing a bit about some in the public were concerned about whether they needed it. The city feels a need to sort of expand and protect interest of National Security. Weve been talking to some people who say the big concern is whether there would be that chilling effect, the idea that its a Global Financial center within asia that attracts a lot of international businesses. With that beijing law a couple of years ago, there is that concern about what the implications of this ultimately are for free speech in the city. So we just want to take some time to go through exactly what this all is telling us and then we will see later today what the ultimate implications are. Haidi our China Economy editor there with the latest. Looking at how markets are trading at the moment, when it comes to the future session. Futures looking flat, key jobs numbers coming in the friday session and President Biden state of the Union Address in the next hour or so. The asian stock rally playing very nicely in this session, heading for a bit of upside when it comes to trading in taiwan. Positive for china futures,. 4 higher. Looking to follow along with the equity rally gaining across australia as well as futures in hong kong the king positive there as well. The broader msci asiapacific is up by just about. 5 . Thats about it for daybreak asia. We look ahead to the start of trading in hong kong, stay with us. China show is next. This is bloomberg