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tv   Bloomberg Daybreak Asia  Bloomberg  November 23, 2021 6:00pm-8:00pm EST

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>> a very good morning. i am haidi stroud-watts in sydney. >> i am shery ahn in new york. our top stories this hour. tapping reserves fails to curb oils plan. traders watching for reaction from opec-plus. >> investors weighing a potential rate hike.
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plus samsung is set to announce supply chain security. >> let's look at how we are shaping up. there is about a 10th of 1%. new zealand is off. the markets are pricing in more than a hike. the nikkei futures are looking like we will see a little bit of upside. s&p futures are pretty flat at the moment. as we continue to assess the inflation outlook, we are getting all of this.
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they are seeming continuing to drive. the bank of korea seemed to hike later on this week as well. >> with bond yields rising, we are seeing that pressure on those highly valued tech stocks. this as losses are picking up in these pricey tech stocks. there are long-term future cash flows really making them vulnerable. >> of course, when it comes to the crude market, it will be very interesting to see whether we see anymore reaction on pricing. president biden announcing the release of u.s. oil reserves. they could come out of japan later today. it is a coordinated effort with some other countries in asia.
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this is to really challenge the ability of opec to be able to swing this market. opec-plus said they would just cancel their plans to try to cancer any kind of impact on pricing in the market. we are expecting the texas governor, greg abbott to announce the expansion of a samsung chip plan. we are hearing that samsung will build a $17 million to plant in texas. they will begin construction of the u.s. plant in the forecast of 2022. they will begin mass production in the second half of 2024. the $17 billion chip plant was much awaited. we heard reports that this was happening. this would be the second chip factory in texas. this coming at a time where we continue to see this rate to
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extract -- expand chip manufacturing in the united states as we continue to see that pressure on the global chip shortage for every sector out there including automakers. samsung sees this just outside the existing austin base. this plant will help propel u.s. chipmaking and we are getting that confirmation that the outflow will begin in 20's when he four. we will be watching -- in 2024. we have seen gains for three consecutive sessions already. >> we are seeing oil futures rising by the most in two weeks after this landmark plan. the announcement from president biden about the release of auto reserves shortly after that announcement, the president called out gasoline supply for not passing on savings to consumers. >> the price of gasoline in the wholesale market has fallen by about 10% over the last few
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weeks. the price at the pump has not budged a penny. in other words, gas supply companies are paying last and making a lot more. they do not be -- they do not seem to be passing on to consumers at the pump. >> let's get more from mount washington. he spent a long time covering the oil market as well. when you look at the reaction to the press and the market, is this disappointment that the release was smaller than expected? >> at is twofold. i think on the first 10, it is smaller than what was expected but we have not had confirmation from the japanese government and korea. we know that china is looking at capping the reserves and consulting groups say could be to the soon -- tune of 17.5 million barrels. when those numbers are firmed
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up, we could have a little bit more reaction to the price. this was already baked in. it is clear that the prices are going to go up a little bit. to the second part of your question, we will get a response from opec. they will either stay the course and continue adding 400,000 barrels per day every month on or they will look at what consumers do and potentially use this as an opportunity to pull back some of their own production. the united states went ahead and came out with what the u.s. historically is. this is a big endeavor. course can we expect president biden to push for -- >> can we expect president biden to push forward with more releases? >> we are not sure what they would do next. no response on how they would react. we will likely see what the cartel does. the administration says they
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have a number of tools in their toolbox. we already know they are writing letters, looking at companies. we can see this price gauging when it comes to the gasoline and the finished product at the pump. they already went into the scr. they have been talking about this for two or three weeks but when the start talking about it, this was well below $85. they could curb exports. this would potentially drastically impact prices but it could backfire because the oil market is a global market. >> we actually have more coming from the biden administration. remember that samsung plant being built. we are getting a response from the secretary, gina raimondo. the u.s. is thrilled about this
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investment that semiconductor production is critical to conserving and growing u.s. leadership and innovation in this critical industry. that increasing domestic production of semiconductor chips is critical for the u.s. and economic security here. they look forward to that continued partnership with samsung. this as we saw the south korean giant invested $17 billion in that second ship plant in texas. second after the one they already have in austin. they will be advancing this down. not to mention they will begin construction of the u.s. plant in the first half of 2022. we are getting a response from the texas governor, greg abbott coming out and saying that texas is grateful that samsung has chosen to build within the state. we are looking at live pictures right now coming from the governors mansion in texas. we are seeing the south korean
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represented giving remarks. this after the governor said they were thrilled and grateful that samsung chose to build in texas. this after they said the u.s. was thrilled about symptoms investment in texas. we know that construction will begin in the first half of 2022. we are also awaiting a rate decision from new zealand later. kathleen hays is here with a preview. it seems to not be about if but how much they will hike this time around. >> everyone seems to be in agreement that the conditions are there. they have to make the second rate hike of 2021 but should it be even bigger than what people are expecting? let's look at the key drivers. inflation. every country is worried about surging inflation. when you look at where the key rate is and where the inflation
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rate is now on this chart, you can understand why everyone is saying get off the dime. you can see the key rate which was pushed down to 0.25%. wait until october to make the first rate hike since then. look at what inflation has been doing. it was well within the one to 3% target. the other part of this is something that a lot of countries are not seeing. that is what the labor market is doing. look at this, down to 3.2%. that is a record low in this next chart. the participation rate, 71.2%, a very high level. coming down, that is another thing they have to respond to.
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what about surging home prices? what about the argument for doing the full 50 basis points? one of the things these people are talking about, the next meeting or they could change the rate again is that they can't meet again until february of 2022. they are getting up to 90%. they are on top of this. a lot of people see this risk of the economy overheating. when you mentioned the pricing, basically what it boils down to is many traders are saying that when he five basis point hike, they are not sure if they will predict the 50 point basis hike today. that is indication that they are keeping that door open.
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>> this is a big interview with the new zealand central bank. kristen joining us live from wellington on friday. let's get you to vonnie quinn who has the first word headlines. >> thank you. >> a european parliament committee ready the new tech rules that could affect major u.s. companies. competing messaging apps they have to be interoperable to defend people from using one or another. copy would have to stop targeting some ads to children. chinese authorities have warned alibaba and baidu to drink and oversight of their services to telecom scans. there are a lot of companies suspected of being fraudulent that have access to alibaba. china has called on people to stop the malicious hype about
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the tennis star. her disappears earlier this month after alleging an affair with a top come at his party official pundit outcry. a foreign minister spokesman said that the case should not be politicized. she was seen in images over the weekend by chinese state media and the international and fix committee. -- a limbic -- international o lympic committee. the fund has repeatedly criticized the policies, including the adoption of bitcoin is legal tender. global news, -- global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> joining to discuss the direction of crude as asia is prepared to release oil from
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their reserve. up next, we will look at what a flattening bond yield curve could mean for markets with main stain cap or management. this is bloomberg. ♪
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>> traders in the u.s. are preparing for a longer federal reserve. this as there is concern that there could be able market in the u.s. to continue through the years and. david joins us now from detroit. great to have you. the question is about what happens next year given expectations that the cycle will start tightening by the middle of the year. david: i think it is an easy
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call through the end of the year. we get into 2022 and we look at what the u.s. talks and global stocks have as key underpinnings. in the u.s., we still have accommodative auditory policy and tapering. we have liquidity coming into the financial system. we have the accommodative fiscal policy. earnings are strong. they will be slowing. still strong. the gdp growth looks very strong. we are looking for about 4% next year from the u.s.. we still have low interest rates with all the commotion over jerome powell's reappointment. we still have a 10 year treasury training round 1.65%. this is very low by historical standards. we're still constructive on stocks, bullish on stocks into 2022. >> given the valuations, where
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do you see the pockets of real opportunity? do you see more of a rotation taking place? >> we have seen rotation at a rotation from with a value, vector growth, active value. we have seen some strength over some of the news and the markets. as we look forward, we think a secular growth story is what is important. we look at nasdaq type stocks, the hydro stocks. and then stocks that have very good cash flow, very good earnings, stable earnings. not the nonprofitable tech company's which are more at risk. the real high fires. we think that growth is the place to be and specifically information technology. >> what about small caps?
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they are trading at a discount right now. >> small caps, that is right. they are now trading at the second largest discount to large cabs in the past two decades. we think that small caps offer opportunity as well. specifically growth. small value as well. as the economy continues to recovery -- we think that continues into 2022. >> i know that you also talked about how the road needs energy right now. i find it very interesting that we have seen present button on the world stage, look at climate change, more environmental, renewable energy. is this a dichotomy that will play out?
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you see high for renewables. fossil fuels will continue to thrive? david: i think that is exactly it. i think our energy policy in the u.s. is a little bit hypocritical. we are beating up opec and other countries around the world to produce more oil, more fossil fuels to ship to the u.s. when just a year ago, we had reached energy independence in this country. there is the component, a strong push, societal, social, government to remove renewables. the transition plan is not a very good one. renewables only make up about 50% of energy. as you said, the world needs energy right now and renewables
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are not ready to meet that demand. we have a significant natural gas across going on in europe. we have more core -- more coal and oil being used because of the high price of natural gas. it is important that we have a better energy transition but in the meantime, it is bullish for oil stocks and we saw recently that this was almost a cell the rumor, by the new on energy stocks today. >> i know. we continue to see a rise in oil prices. it is always great to have you joining us from detroit. we are counting down to the start of trading. some stories we are watching today. we are told japanese government, the largest shareholder is planning not to support this proposed stake increase. japanese semiconductor equipment
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maker there tech is looking to raise $135 million in -- f errotec is looking to raise up to $195 million. in economic news, we are expecting pmi's for november 4 the next hour. this is bloomberg. ♪
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>> a quick check of the latest business flash headlines. u.s. fashion retailer norstrom tumbled in late trade after earnings missed estimates. expect revenue growth above 35%. sales growth slowed notably
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after supply chain challenges took hold. ship shortages are persisting well into 2022. export games -- gains in new york. revenue beat expectations. about 26,000 suv's were delivered. that is of 14% from the august outlook. >> let's turn to samsung. a marquee project that is expected to fortify the u.s. semiconductor industry. tom, sam some that they will be tapping $3 billion in incentives. tell us how much sense this makes for the company.
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>> samsung is locked in a cutthroat battle with companies like tsmc and taiwan and intel in the united states for being the preeminent manufacturer of the most advanced chips that we all need in our laptops, phones, cars, you name it. this gives samsung a real leg up in that race. this will be a big $70 million manufacturing plant in a state that has given lots of incentives, financial breaks and tax breaks to make it happen. it does help them in this global revelry. it is not just about gaining market share. it is not just about winning customers from intel, it is making sure that globally we have a sufficient supply of chips so that the next time we are faced with a supply chain crisis and that we have all been talking about -- if we have the
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capacity we need in order to sustain that. >> this is not about addressing short-term shortages. how much of this is about bringing the chip supply eco-center back to america? >> the biden administration really wants the u.s. to get its chip mojo back. for a long time, we were at the forefront of that but in recent years, intel has had stumble after stumble in terms of manufacturing the most advanced ship, the smallest and most powerful chip. ideally, that would be a u.s.-based company but nevertheless, having the availability here is really important, having the expertise here is really important. and making sure that manufacturers have access to it close by.
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that is where texas comes in. >> we do have lots more to come, this is bloomberg. ♪
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>> it is a good signal from the authorities that they are concerned about the higher oil prices. is it a diplomatic choice? >> it is a temporary move. i think it is the only thing that is within policy control at the moment. >> what we need is aggregate supply to rise further. >> they have a bit of a fight here because clearly that is not something opec plus wanted to see happen.
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>> i think that opec-plus holds the upper hand here. they are probably going to be on hold. >> the reality that opec has to grapple with is that we're are likely to be in a surplus market next year versus the deficit we had. i think that they will calibrate the response carefully to that. >> that is our guest talking about the battle for control. we spoke with david turk. he added that the administration has gone toward energy costs. >> in collaboration and in parallel fashion with some other countries around the world. that is has baked in the impact of this release. what we have seen over the last several weeks is the bti going from $85 a barrel to about 78 or 79 today. that is a significant decrease
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in the price of global oil and something that has been baked in because of the market anticipating the action today. as the white house statement has made clear and all of us who have been speaking today, the president has other tools in the tool belt as we need them over the coming case and months. this is an administration incredibly focused at what the middle class, but working people around this country are facing. whether it is high gas prices at the pump or any other number of challenges. >> i with up to hear more about what those tools are specifically to bring down those prices. >> we designed this release to take place over a several month. of time. the first component is the exchange. this is where oil companies take
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some of the oil out of our strategic petroleum reserve now. then they repay that oil at a premium a year from now, two years from now, three years from now when prices will be lower. taxpayers increase the amount of oil overall in the ncr, we just get that price by taking advantage of prices lower into the future. we also have a congressionally mandated sale that we will time appropriately over these coming months. that is what was announced today. we are doing all sorts of other things including what you saw last week. the president sending a letter to make sure that any price reduction we see in oil plays down to the retail gas market and making sure the consumers get the benefit of the southern oil market price reduction. >> doesn't this release go against some of your climate
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initiatives? >> not at all. we need more clean energy investment. if we had more energy storage, more offshore, consumers would not be as susceptible to the price of the single commodity around there. we actually need to move faster. that is where congress is currently discussing the bipartisan infrastructure. those are historic levels of investment in the clean economy of the future. we need more of that, not less of that. >> for more on the crude relief and outlook for prices, let's bring in the founder and ceo. always great having you with us. what do make of the deputy secretary's,? that it actually did its part given that we have had all of this rhetoric so far and that
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the anticipation has already been made into oil prices? >> good morning. to some extent, i would agree with what he was saying. yes, prices have fallen considerably from the highs that we saw. it was partly because of expectations of over these. probably a larger part was covid in europe. >> what is the message these low consumers are sending to opec-plus? what are you expecting next week? ? >> it is complete the uncharted territory. i think coming from the u.s. after so many weeks of talks and negotiations, 50 million barrels , 32 million barrels is the
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first release. the remaining 18 were going to be released anyway and brought forward a little bit. it does raise fresh questions for international oil diplomacy. how are countries going to manage this relationship with opec and opec-plus going forward? until now, it has been trying to find win-win solutions. what is the ideal price of producers? how does opec-plus respond to this? i think of lectureship between consumers and producers will be big going forward. >> if we continue to see limited downside in that reaction from opec-plus, does it really cement the cartel as being the real swing producer? >> at think there is no doubt --
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i think there is no doubt about that. opec-plus holds 40% of global oil production in its control. it has been so -- it has been determined to keep the market a bit undersupplied throughout this year, i fully expect them to stay on that course. i do believe they could go ahead with it. basically this has opened a face-off between consumer nations and producer nations. if opec-plus get into that mode of trying to offset any releases in the future, it does not really bode well for a cooperative relationship. >> how much downside do you see
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on the demand side of the story? how much does a denton demand move the market as well? >> if you look at the roadmap, right now, covid is really only a major concern in europe. western european countries are the major consumers. it is flaring up in parts of the u.s.. i am cautiously optimistic that european governments will be able to manage this wave with much less restriction than last winter. vaccination rates are up pretty high. oil demand growth has been quite healthy across europe through the summer months. they may not grow at the same
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pace but i don't expect a major downturn or major deceleration in oil demand. i am constructive overall tour the winter months. quite that was the founder and ceo of vendor insights. let's turn to vonnie quinn for the first word headlines. >> china has issued a plan to ensure stable food production this winter as they threaten to bring extreme weather. cold and drought could hit production on vegetables for some reason. jp morgan ceo, jamie dimon says his back is likely to outlast china's communist party. adding the he would not be able to joke about it if he were in china. he says jp morgan cannot enter and exit the country every time
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it has concern about its priorities. the next base tour for blue origin will include a former nfl star and the daughter of the first passenger in space. michael strahan and the daughter of alan shepard. global news -- global news, 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn, this is bloomberg. >> let's look at the state of affairs when it comes to training in australia. this is what we are seeing as we saw pretty muted moves in the organization. not too much of a leap. this is just off by a tent of 1%. the kiwi is still hovering near
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that six-week low. expectations are up at least 25 basis point. the market also prices in more than one hike today. singapore and nikkei futures are looking good at the moment. s&p futures up by .1%. we have to talk all things fx. the 11 day lose in street is here on top of the pressure to decrease interest rates. that is not the chart that i was looking for. this chart shows the rsi at 97. it shows that upside momentum has essentially disappeared. the momentum measure is nearing
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the maximum limit. we know this was held between the central bank and the government. the central bank saying the moves in the currency seem to detach from economic fundamentals. it has not committed to a level that it is comfortable with for either. quite this coming at a time when we could be seeing stabilization on the lira. we had some rate hikes as well in the beginning. we thought we could tame inflation. president erdogan had the very unorthodox of you about the cause of inflation rather than a break on price gains. this is being thrown out the window. we have not seen this level of weakness from the lira. the longest losing streak since 2001. that is when turkey was suffering from a spiral of hyperinflation. they are really optimistic about
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the lira and the turkish economy right now. >> an interesting scenario where the influence on the central bank runs so deep. we will watch out for the big moves. coming up next, we will see what helps them defy the global chip shortage when so many of the automaker peers have been suffering from the supply chain crunch. how it managed to come at regular -- relatively unscathed. this is bloomberg. ♪
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>> these are our top stories today. his investing $10 million in a new shipment in texas. construction will start in the first half of next year. to production will begin in the second half of 2024. -- the production will begin in the second half of 2024. the retail supply jim could stretch through --jam could stretch through. it could go to 2024. president biden said the administration costs
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improvements will bear fruit and promised that americans will have no trouble buying food and gifts in the holiday season that begins this week. >> the latest data from the busiest u.s. port shows that every step of the global supply chain is going wrong all at once. we are reflect in the shortage of truck drivers here. the number of ships waiting to enter the port of l.a. has peaked recently with about 80 ships off the coast. in the open ocean, l.a. has more than doubled this since early 2020. shipping costs have likewise risen more than five times the pre-pandemic rate. >> bloomberg terminal users can read more about this. chip shortages were a major focus on the latest earnings
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reports from the big names on the chinese tech space. they defied the component shortages seen around the world. david joins us from hong kong. we continue to see some kind of pocket of resilience. >> a diversion past if you will. this is from two of china's biggest tech companies. it is an automaker but a tech company as well. those part shortages and supply chain impacts show me -- xiaomi. they surpassed apple at one point to become the number two smartphone vendor. but because of chip constraints, we are seeing a fallback visibly.
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we have seen shipments of smartphones in this calendar third quarter fall 4.6%. this is what the president said on the earnings call. we face fairly big pressure in the third quarter from chip shortages. this will ease in 2022. they clarified not in the first half of 2022 but likely into the second half. the previous quarter had 64%, a rise in sales. net income plummeting as well. alibaba and tencent had a big write down on soured investments because of the slowing economy. xiaomi seen greater competition from honor. that is the offshoot of huawei.
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samsung is not shipping cars. that was an increase of 14% in the third quarter. the president saying they achieved strong growth momentum despite challenges of semiconductor shortages, revenues beat forecasts and deliveries were 14% higher. they defied the chip shortages. >> what about the regulatory crackdown? >> yes. they are spending a lot to diversify offerings. there is a broad on bella overhang of regulatory issues. usually against the bigger one. but also, the video sharing platforms have felt the pressure.
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also, when the tide goes out, those shares have sunk considerably since the february peak lost nearly 70%. it was also a narrower net loss. they are on a spending spree. >> stephen engle there. not toward bitcoin, the 100 day here. the s&p 500 is close to the highs this year. bitcoin is likely to do the same. let's get more from emily. tell us a little bit more about this relationship between bitcoin and other assets. >> we have been cora -- tracking
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the correlation. we found that the s&p 500 and going are currently trading and correlation at the highest levels in a year. a lot of crypto fans touted bitcoin as inflation. strategists have said that trading patterns are really taking that into question and yes. >> what was behind the drawdown? >> we saw him drawdown in high find tech stocks. he sees those trading in tandem. bitcoin is almost also at a record high. it is still up nearly 100% year-to-date. >> what are some of the technical levels analysts are watching right now? >> 50,000 is really
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psychological level for a lot of investors. a lot of major bitcoin fans have a 100,000 price target. that speaks to the volatile nature of the crypto community. quite we do have lots more to come on daybreak: asia. this is bloomberg. ♪
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>> here is a quick check of the latest business flash headlines. jp morgan has been named the most systematically important bank. it is the only bank on the left facing a capital buffer of 2.5%. this is based on data from 2020 and largely reflects changes in the bank's underlying activity. >> they are considering boosting this after $12.2 billion bids were too low. they have received a primary bid of 50.5 zero cents percent -- per share. they own about 24% of telecom.
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long for his considering an ipo and hong kong which good raise as much as a billion dollars. it could list as soon as the firth -- first half of 2022. they are weighing the new listing at a time when chinese developers are facing an unprecedented liquidity prices and home prices and sales have begun to slide. best buy shares tumbled after the company warned its profit margin was being hit by a spike in the organized robberies. burglaries by large groups of people running into still items had also been traumatizing to workers. slowing sales and promotional discounts were also weighing on the bottom line. let's get a look at the market. we are not seeing much movement when it comes to trading in australia. we see that battle between how equity traders and bond traders
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feel that this will proceed. overall, the asx is trading in a very tight range. it has been over the past few weeks. at 25 basis point hike is inspected by 21 out of 23 economists. if you look at pricing, we're looking at more than one hike. more hawkish and is expected in the guidance. we see japan returning to this today. kospi futures also trading lower. they are watching for samsung with that announcement about semiconductor investment in the state of texas. coming up, we get more market analysis with tim murray expecting moderate equities next year. quite the market opens in tokyo. we will be back.
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this is bloomberg. ♪
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shery: welcome to daybreak: asia. i'm shery ahn. haidi: and i'm haidi stroud-watts. asia's major markets have just open for trade. the landmark plan to tap reserves from u.s. to china underwhelmed oil markets. traders are watching for reaction from opec-plus. investors waiting that rate hike expected at a new zealand. the central bank may signal more and aggressive tightening cycle
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to control inflation. samsung announces more plans for its $17 billion chip plant in texas and a win for the u.s. supply chain. shery: breaking news out of singapore, we are getting the reading for third-quarter gdp. coming up on the upside, growth of 7.1% year on year. the estimate was for growth in the third quarter. quarter on quarter is a surprise to the upside, 1.3%, a much faster acceleration than previously thought. we saw manufacturing still contracting by 0.1% quarter on quarter, though construction remains strong. services also gaining more than 1%. singapore sees 2022 gdp growth at 3.25%. the final rating for singapore's third-quarter gdp growth surprising to the upside with year on year acceleration at
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7.1%. japan and south korea coming online. take a look at what markets are doing. we are seeing a bit of pressure for the nikkei, down 4/10 of 1%. it is back from a holiday. the japanese yen is holding at the 115 level, well past 115 per dollar for the first time since 2017. treasury yields weighing on the japanese currency. we are going to get very soon the chicken pmi numbers -- the japan pmi numbers. we are following one stock planning not to support lenders against a proposed stake increase, this according to the japanese government. we will be watching that company as well. take a look at the kospi. we are seeing gains of 4/10 of 1%. we have seen the korean won and korean bond falling given these
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bets of a faster fed rate hike. at the moment we are seeing the korean won unchanged at the 11.89 level. one company we are following, samsung electronics, they just announced a $17 billion investment in texas to announce a new chip plant there. they will begin construction in the first half of 2022. right now samsung electronics gaining ground for a fourth consecutive session, already at the highest level in more than two months. haidi: in australia, new zealand, we are looking at the fx space. we see the aussie trading pretty tightly at the moment. still spot prices trending below the ascending trade lines. potentially more downside. in the equity session, a tight range we have seen the asx trade in in the last month or so. we are seeing outperforming in the energy sector.
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that group of companies up by 1.6%, one of the few green spots on the asx today. not too worried about the announce of strategic reserves released by the u.s. and other countries. new zealand is counting down to the rbnz decision, the 25 point basis hike is baked in, but there are market participants that could be expecting a more hawkish overture by the rbnz between now and when they next meet in february. when it comes to the kiwi dollar, that is hovering pretty close to that six week low. with growth looking set to slow, let's talk about the implications for asian equities. joining us from singapore is tim moe, the chief asia-pacific equity strategist at goldman-s -- engelman sex. could we be setting up -- goldman sachs. valuations are still high and therefore how much are you
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rebalancing your allocations at the moment to prepare for that? tim: you hit the nail on the head. that is the macro environment we will be in, one of slowing growth and rising rates. any time have those conditions, they tend to be less stable for equities than you have growth rising and rates falling. it is obvious that is important to note. we think there is a couple supporting and counterbalancing factors. one, at least for asia, valuations have come down significantly. they peaked in february this year. we are now about 14.5 times forward valuation. based on our forward-looking models, we think 14.8 times is fair value for the market into next year. we think we had the valuation correction. we have light positioning. the intersection of these two forces suggests to trade at
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about 9%. against that much more subdued beta outlook compared to the robust gains we enjoyed last year, we think the key thing will have active alpha tilts on top of that. the key changes we made from a market perspective have been to upgrade china. to pay for that, we downgraded india and korea. that is our view in a nutshell. haidi: that regional rotation, taking profits on india and getting back into china, seems getting -- seems to be getting increasingly popular. does that mean you see the regulatory risk as having receded adequately and china? tim: that is a critical question. the way we would characterize it is we think the regulatory tightening, the pace of that, is
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moderating. we have a proprietary tool we developed that looks at over 1.5 billion different articles in mandarin and english. we can calibrate the degree of regulatory tightening in nine different industries. the most recent reading suggests we have a moderation in the pace of regulatory tightening. it is still high, but it has come off somewhat. we think that is the second derivative that rate of change, if that continues to moderate, that will support a market that is already priced in negative outlook. haidi: what about bond yields continuing to rise? we have seen the pressure on global tech stocks. could this be a double whammy given the chinese regulatory crackdown as well? tim: it could be. what we are looking at is the duration of equities. in simple terms, that is the more growth that one is expecting, the longer the
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horizon in which you get your cash flows returned. that mathematically makes those sorts of stocks more susceptible to changes in interest rates. we see higher u.s. bond yields. we just moved up yesterday to the high 160 level. that starts to exert pressure on markets. we bake that into our expectations. our macro models give us the 14.8 overall expect evaluation, but if there is a sudden increase in bond yields or if bond yields exceed that to percent level that i mentioned, that would be -- 2% level that i mentioned, that would be putting pressure on the longer duration stocks in asia. haidi: we are seeing samsung rally for a fourth session. they are investing again in texas. how much of your downgrade of korea has to do with the semi conductor story? tim: it is about half-half.
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the two obvious aspects to korea are that the equity market is susceptible to growth in the region. when you are looking at a global cyclical upturn, korea is the first place you go to on the long side. when you're looking at a slowdown, korea tends to be the not most favored market to a global cyclical slowdown. number two is that the korean equity market is susceptible to the cycle. we are looking for the semi conductor cycle to turn down, as indeed it has started to do. we think it will upward and sometime in the third quarter of next year. it is not that we are super bearish, because we think the stock priced in concerning news already, but we think it is too early to get aggressive on them. we are hanging at the sidelines with a neutral rating and look
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to more positively engage sometime into the first quarter of 2022. haidi: tim, always great to have you with us. tim moe, goldman sachs chief asia-pacific equity strategist. we have breaking news when it comes to a gradual reopening of the new zealand border. it had some of the strictest border controls throughout the course of the pandemic. we are hearing from the covid response minister, saying new zealand will begin easing border restrictions from january, in particular vaccinated kiwis can enter from australia on january 17. some of the most restricted border limits will ease from the start of next year. we did also hear from the prime minister jacinda arden, saying just this week that i temporary border around auckland -- a temporary border around auckland will lift december 15. really putting an end to 3.5 months lockdown in auckland next month, saying from the start of december that new zealand will
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be adopting a new covid-19 response that aims to contain the virus rather than a elimination or suppression completely. she said the hard truth is delta is not going away and no country has managed to achieve complete elimination, and that new zealand is coming around to that ethos as well. we are hearing some announcements as to the most restrictive border limits when it comes to new zealand beginning to ease from january next year. shery: we are watching this japanese stock in trading in tokyo, now rising more than 2% at the moment. this as bloomberg learned the japanese government, the largest shareholder in the bank, is planning to withhold support for the lender's poison pill in a vote today. we have seen that takeover fight erecting for shinsei bank when holdings were lifted to 40%.
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the japanese government is planning to reject it. we will be watching what happens to the lender then. for now let's get to vonnie quinn with the first word headlines. vonnie: the turkish lira is continuing its freefall against the dollar. the latest selloff coming as president erdogan offended his demands for lowered interest rates. the country's central bank says fx markets are showing unhealthy price formations, which they call unrealistic and detached from economic fundamentals. china has issued a plan to ensure stable food production and supplies this winter, as the occurrence of a la nina climate pattern plans to bring extreme weather. the agriculture ministry warns cold could curb vegetables in some regions.
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chinese authorities have ordered alibaba and baidu to strengthen oversight of their cloud services over linked to telecoms gams. a government statement says a number of companies that are fraudulent have access to alibaba and baidu services. they were told to address the problem or face severe punishment. a european parliament committee passed measures that could affect major u.s. and european committees. competing messaging apps may have to be interoperable to prevent users from using one or the other. the new tech rules are expected to become enforced next year. global news 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: still ahead, bets are
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rising for a 50 basis point hike from the new zealand central bank. we will be talking to the prospects and the outlook, we will be talking to the prospects and the outlook. the expectations for a hawkish fed as well. more with ubs asset management later. this is bloomberg. ♪
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shery: oil markets in focus as wti is under pressure in asian trading, but only after seeing the best day in two weeks in the new york session. investors are awaiting a response from opec-plus on coordinated moves by the u.s. and other countries to tap their stockpiles. david, this release of crude into the markets not having the planned or hoped-for response.
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david: that is absolutely right. oil had a big jump on tuesday. we have seen and give up some of those gains in early trading in asia this morning, but in general we are seeing a pretty underwhelmed response to those plans from the u.s. and plans from other consuming nations will be looked at later. even though that headline figure was quite large, a big chunk of that crude will have to be returned. that has traders expecting tighter balances in the market further down the line. that should at least keep some of the upward pressure on prices. haidi: opec clearly has a lot of leverage for this market. what are we expecting for a response? david: we discussed that in recent days. what will opec-plus do? consumers want them to up the pace of production.
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before biden's announcement, we heard from the uae saying it had no reason to do that. we are seeing a slightly less aggressive move from the producers. can opec-plus meet them halfway? is there any room for any more response from those producing nations? all eyes will be on their meeting. shery: we have heard reporting in japan that the government will now support 1.2 barrel reserves released today. what are we expecting from some of the other nations that could be participating in this in asia? david: we are expecting 4 million to 5 million barrels released by japan. south korea expecting around 3.5 million barrels. india plans to release 5 million barrels within as soon as a week. we are getting a good sense of those nations.
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the big one everyone is waiting for is to see what china will do. china has already indicated in the xi-biden talks that it will take coordinated action, but how big? one report suggesting that could be -- china's release can be between 7 and 15 million barrels. that is the key piece in the story we are watching for now. haidi: our energy and commodities energy david stringer. we are awaiting a rate decision from new zealand in under an hour. our editor kathleen hays is here. you take a look at some of the moves we are seeing even this morning and the swaps market. there are some people who think that 50 basis points makes sense. kathleen: what is easiest to say so far is some people are expecting 50 basis points. everyone is expecting the 25
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basis point hike. let's start by looking at inflation in new zealand. cpi year over year in the third quarter is as high as 4.9%. that is the turquoise line. what a surge. we have seen this around the world, supply chain constraints. the white line is the official cash rate, which was dropped in march of last year as the pandemic started hitting hard. in october, the 25 basis point hike that was supposed to start in august, until those lockdowns suddenly started again in new zealand. the other thing i want to talk about is the labor market. a lot of countries are having high inflation with weaker numbers in the labor market than we are seeing in new zealand. in new zealand, that white line, 3.2%, that is a record low in the third quarter. yes, those purple bars, covid cases, have come up. this is in spite of lockdowns.
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one more thing to throw in is those surging home prices, one more reason why the rbnz might feel like let's get that 25 basis point hike in the pot and maybe we will feel like 50. what could drive them to a 50 basis point hike? one of them is practical. it is timing if you look at the list. they are meeting today in november, 24. they will not meet until february 22. with auckland getting ready to emerge from lockdowns, national vaccination coverage, nearing 90%. they are getting on top of this. getting ready to open the borders in january. some people say this economy will overheat. one interesting possibility is if they decide not to do the 50 basis point hike, they could just look at their ocr, the official cash rate track, and push out the peak rate higher,
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they could move the pace of hikes up. they wanted -- they were going to do three 25 basis point hikes by the end of this year. they had to skip the august hike. they got the october hike in. they will get to that 75 basis point total they were aiming for. there is a lot of drama in this decision. shery: it will be interesting to watch. we don't get that excited about central-bank decisions. i think it is getting exciting now. kathleen: i do. [laughter] haidi: kathleen hays really enjoys those central-bank decisions. don't miss an interview with the new zealand central bank later this week. the assistant governor joins us live from wellington on friday. next, samsung's plans for a $17 billion chip plant in texas. we have the details. this is bloomberg. ♪
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shery: samsung has unveiled plans to invest $17 billion in a new chip plant in texas, a marquee project that is expected to fortify the u.s. some conductor industry. so tell us more about this factory. we know it is not the first one in texas. it is the second one. what are we expecting to be the differentiating factor with this plan? >> sims is planning to spend $17 billion to build a new advanced chip plant in texas, which will mark the largest ever investment made in the u.s.. samsung will begin construction in the first half of next year and start mass production in the second half of 2024. the new chip plant will adopt the new foundry chip making technology and produce various applications such as mobile, 5g,
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high-performance computing, and ai. the decisions to pick taylor make sense because it can maximize the system in texas where tech giants including tesla have massive plants. in addition to incentives, the stability of power and water supply might have been a key factor, as it suffered from a power outage in austin earlier this year. what differentiates from the first chip plant is it is adopting the most advanced chip technology and will make the most advanced system chips. haidi: what are its biggest ambitions for its foundry business? sohee: samsung has been speeding up its development for the advanced chip technology called gate all around technology. they could be the first
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chipmaker to produce three nanometer chips next year. although samsung did not mention the process in statements, it will make chips of five nanometers or less. that is a critical mission for samsung, which has to strike major chip orders from big tech clients such as amd, amazon, google, and possibly from tsmc's clans and improve its profitability. with support from the u.s. government, federal and state level incentives and resources apply. the new u.s. chip plant will be helpful for lowering new american clients and partnering with them for complicated chip designs. haidi: our asia tech reporter in seoul. next, we get insight on asian bond markets. this is bloomberg. ♪
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haidi: we are getting the bank of japan pmi for november. this is the preliminary reading, but we are seeing when it comes to the manufacturing number the preliminary number being 50.4.2. the services component coming in at 52.1. perhaps unsurprising given we have seen large parts of japan and tokyo emerging from that extended lockdown. the pmi for the composite rating
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for november, the preliminary number at 52.5, picking up pace from the 50.7, just above the demarcation between expansion and contraction in the previous month. shery: ship shortages play the big role in those numbers. we continue to focus on this as we have the latest earning reports from big names in chinese tech. xiaomi seeing a drop in sales growth, while one maker defied the component shortages seen around the world. chief north asia correspondent stephen engle joins us from hong kong. what are we expecting? stephen: we have companies gaining and of those who are feeling the pain. let's start with the pain and xiaomi. this is a company that had a bit of a torturous year. early on we saw briefly they have become the world's number two smartphone maker, even surpassing apple.
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they have come on hard times with the overall regulatory environment on big tech suppressing advertising spending and other areas. it is the chip shortage and the component shortages because of supply chain constraints globally that are really hitting show me. this -- xiaomi. until this completed third quarter, where they saw a fall. they are not getting enough components to meet the demand that is there in the smartphone market. they have increased competition from a smartphone maker offshoot of huawei. this is what the president of xiaomi said on the conference call. -- xiaomi said on the conference call. this will continue in the fourth quarter, but willy's in -- will
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ease in 2022. essentially their earnings sales growth slowed considerably to just 8% growth. it was 64% in the previous quarter growth. significant markdown. also, net income plummeted 84%, big investment losses because of the slowing economy and other headwinds against big tech. alibaba and other companies had big write-downs on their investments. let's switch to the gain, an ev maker. there has been huge pain for chip shortages across the automobile sector and technology sector. this is a company that bridges both of those worlds. the president of xpeng said we achieved strong growth momentum despite challenges of semi conductor shortages. revenue beat forecast. he detailed plans to double down on self-driving car's.
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-- cars. the auto industry lost a combined $210 billion in production. ev sales in 2021 in line to more than double 2020 levels to 3 million total units. not -- not for xpeng, but total in china. the stock represented that overnight. adr's up 8.25%. haidi: one of the worst performers of the new ipo's this year, but in terms of the regulatory impact, what was it for those numbers? stephen: as far as the stock performance, it must $170 billion in market value this year. caught up in the whole dragnet, even though it has not specifically been targeted. we are seeing xiaomi. revenue up 33%.
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net loss was narrower than the consensus. it is defined those regulatory headwinds as well. it is going on a spending spree and relying heavily on these influence peddlers, celebrities doing video streaming of products. that has benefited them as well. the backdrop and the big question investors want to know, when will we see a turning point for big tech? whether it is alibaba, tencent, whether it is meituan. a lot of -- a painful year on the stock market for this company because of the regulatory issues. shery: our chief north asia correspondent with the latest on those chinese tech earnings. let's turn to vonnie quinn for the first word headlines. vonnie: the u.s. is set to release 50 million barrels of crude oil from its strategic reserves in concert with china,
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south korea, japan, and united kingdom. it is to coordinated attempt by the world's largest oil consumers to tank prices. it comes after weeks of lobbying from president biden. opec-plus nations warned in response they could cancel plans to boost their own oil output when the cartel meets next week. pres. biden: today i am announcing the largest ever release from the u.s. strategic petroleum reserve to help provide the supply we need as we recover from this pandemic. in addition, i brought together other nations to contribute to the solution, india, japan, the republic of korea, the united kingdom agreed to release additional oil from their reserves. china may do more as well. vonnie: jp morgan ceo jamie dimon says his bank is likely to last china -- to outlast china's communist party. he reiterated his commitment to
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the country. he said the business community should have taken issues related to china more seriously a decade ago. >> i made a joke that the communist party celebrated its 100th year. so has jp morgan. i will make a bet we last longer. [laughter] i can't say that in china. they are probably listening anyway. vonnie: china has called on people to stop malicious hikes over a -- hype over a missing person. a spokesperson said the case should not be politicized. global news 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg.
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haidi: next, we get an update on the covid resilience rankings, take a look at the best and worst performers throughout the past year. a year makes a lot of difference in terms of these rankings. this is bloomberg. ♪
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shery: bond traders reduced u.s. inflation expectations for a fifth straight day after jay powell's renomination as fed chief boosted expectations. let's bring in head of asia-pacific fixed income at ubs asset management. always great having you with us. what will markets be focused on next? hayden: we probably should be drawing from new zealand market. bonds across the board have generally gone up in the u.s., u.k., australia, canada, around 100 basis points year to date. the new zealand market has gone up about 200 basis points. it is about the front end of the yield curve. we are expecting shorter end rates to push higher and curves to flatten. same thing what you are talking about just then, markets are expecting these rate hikes and will start to dull inflation expectations, so we get a curve
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flattening. that is the big shift right now, it is a law -- ti is -- it is all about the curve. haidi: what is your base case for the size of the hike today? hayden: in new zealand? probably around 25 basis points. haidi: what implications with that have to the markets? some factored in even 50 basis points. hayden: they need to be steady. we have seen other central banks like the u.k. balk at it initially. i think new zealand will take it slowly. their inflation is not as high as what we see in other parts of the world. we expect slow 25 basis point hikes coming through. they don't need to rush just yet. haidi: is there a broader risk of asia being ahead of the curve into next year, given the slowdown in growth, faster inflation now hitting this part of the world in the coming months, and you add to it a
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tightening cycle for a lot of major central banks? hayden: you are spot on there. we have seen a huge uplift in inflation in emerging markets, much earlier than developing markets. we saw emerging-market countries respond with aggressive rate hikes. you can see the effects that has had just on countries like turkey and the currency overnight. within asia, i think there is a big slowdown because china is continuing to decelerate. that will be the story. higher inflation around the world and a slowdown from china which reverberates throughout the other parts of the world. that one hasn't been. seen yet the slowdowns -- hasn't been se en yet. haidi: the popular narrative seems to be the property market risks in china have been ring f enced. does that impact your assessment when it comes to high-yield in asia? hayden: i think the thing we are worried about with property is
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the effects to the provinces, particularly as you get further west. they need that for the utility like activity. they also need that to pay for the infrastructure spending. when you add the info structure spending, -- the infrastructure spending, it is another crucial sector that will slow down. in terms of the property, it does feel like it is ring fenced at the moment. the government started to free up at the margin. m&a loans are not included in the red lines in those three years. opening up the bond market on the domestic side, all of those things are starting to free up the liquidity that these high-yield bonds absolutely need and are necessary in the short-term. haidi: authorities have seemed fairly comfortable with the levels in the yuan. are you starting to see signs that there is a tilt toward possible easing? you are expecting a rate cut by the pboc. hayden: i think that definitely
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would take away some of the carry people are attracted to with the yuan at the moment. the u.s. dollar had a big breakup. this is the breakout. the renminbi has stayed relatively -- stayed strong relative to the u.s. dollar. the correlations have changed. we start to get those rate cuts, then people start thinking it will be another 25 to 50 basis points. some of that carrie might come -- carry might come away. at the moment that is keeping the currency very strong. shery: we have seen a lot of tension with the u.s. on that point exactly, the trade surplus by china. you've mentioned the bond connect allowing more liquidity into the chinese markets. what are you expecting in terms of financial decoupling we are
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seeing with the u.s. now that we had this summit between biden and xi jinping? hayden: i think china is going down his own path. it has made some substantial changes with these common prosperity across the various sectors. what it is trying to do is kickstart the demographics here. they start -- they need to start having more babies. this will be a huge change in the economy. if you have decades of behavior to reverse this demographic trend, you need a safety net. they are now trying to put a safety net around households so they can start expanding families and reverse the demographic trend. china will have to have a more internal focus on this to kickstart the overall new development. haidi: hayden briscoe from ubs asset management. we appreciate your time.
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new zealand will begin to ease border restrictions from january. fully vaccinated citizens and other eligible travelers will be able to enter from the start of 2022. tourists will be able to return from the end of april. let's discuss with our bloomberg managing editor emma o'brien. we talked at length about how new zealand has been so resolute in sticking to its covid elimination policy. this opening up is part of the reality check that the government is having? emma: new zealand was a very top performer for a lot of our covid resilience making, which -- resilience ranking, which had been going on for a year now. in 2020, it was all about containment. they were able to wall out the virus, like a number of countries in the asia-pacific did. singapore and china. where they did get caught out is in that pivot toward reopening, toward vaccination. they were slow on vaccines and slow in reopening as well.
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shery: when it comes to the covid resilience rankings, a year makes an enormous amount of difference. there is nothing consistent about where we see the top performers and the laggards. emma: past success and failure, as we note, is no guarantee of winning in the covid resilience ranking over the past year. haidi: when it comes to the developments of a treatment from china, this homegrown bill could potentially be -- pill could potentially be the next development in therapeutics. emma: we have one from pfizer and now china. as it has done throughout the pandemic with its own homegrown offering. haidi: this of course comes at a time where we will continue to see more highs being set with covid cases across europe.
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where are we at in terms of a reassessment by governments on how this could be contained? emma: you are seeing some places revert to lockdowns again. what is different this time around is it is quite targeted in a lot of places to the unvaccinated. you will get these dual societies in a lot of places where life for vaccinated people is relatively normal, whereas those who don't want to get vaccinated or are hesitant are seeing more restrictions going forward. shery: our managing editor emma o'brien joining us. the world health organization is warning that the death toll from europe's latest covid wave could hit more than 2 million people by march, and is advising countries to improve vaccination rates to avoid further lockdowns. despite the potential hit to regional growth, the nudging are -- the netherlands central bank says tighter attractions will not affect the ecb's decision to wind down endemic related
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stimulus. -- pandemic related stimulus. >> when it comes to the impact, i would say while it will surely have a moderating impact on economic activity, the impact on inflation will be more ambiguous because it might also reinforce some of the concerns we have around supply bottlenecks, which at the end of the day is one of the primary drivers of the current bout of unexpected inflation we are going through. in a way, the impact on inflation is much more ambiguous. i don't think myself that it will have an impact on our intention to wind down the pandemic emergency purchase program. its dual objectives have already been accomplished, both in terms of countering financial fragmentation and the damage done to the inflation outlook
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due to the pandemic. if we look at today's inflation outlook, it is clearly more favorable than it was pre-corona in the sense that it is closer to our target. haidi: the netherlands central bank governor there. more to come on "daybreak: a sia." this is bloomberg. ♪
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>> it is a good signal from the authorities that they are concerned about high oil prices. >> it is a diplomatic choice. you are not -- the u.s. is not just doing it alone. >> it is a temporary move. i think it is the only thing within our policy control at the moment. >> we need aggregate supply to rise further. >> clearly that is not something opec-plus wanted to happen, is to have this coordinated strategic release. >> i think opec-plus holds the upper hand here, especially going into the next meeting, where they will probably be on hold. >> the reality opec has to grapple with is we are likely to be in a surplus market next year versus the deficit that we had. i think they will calibrate their response carefully to that . haidi: some of our guests speaking about the battle for
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control over the glial -- the global oil market. we are hearing some confirmation from the japanese government on intentions of releasing its oil reserves in part of this coordinated effort. the japanese prime minister speaking in tokyo at the moment, saying japan will release part of its oil from its reserve. we are waiting for more details. earlier reports had been around for .2 million barrels, according -- 4.2 million barrels, according to the nikkei. fair to say there wasn't much of an impressed reaction when it comes to the oil market. brent crude trading higher by 3.3%. new york crude much trading water -- treading water. excavations -- expectations are that opec-plus has the leverage. they say they can simply cut back on their planned output boost. we are hearing at the moment
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from the japanese prime minister speaking in tokyo, saying the amount and the timing of the strategic reserve will be coming from the trade ministry, so keeping us waiting still at this point. shery: we will be watching, especially given the price action we saw lately in oil. let's get a quick check of the latest business headlines. sources tell us kkr is considering boosting telecom italia after an investor said the $12.2 billion bid was too low. telecom italia said on sunday it perceived -- it received a preliminary bid by kkr. kkr is debating whether $72.80 a share would seal the deal. a chinese real estate developer is considering an ipo for its property management business in hong kong, which could raise as much as $1 billion. sources tell us a could list as soon as the first half of 2022.
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jp morgan has been named the world's most systematically important bank. the lender rose one level on the rankings is the only bank on the list facing an additional capital buffer of 2.5%. hsbc and bnp paribas were ranked in the tier just below, with additional buffers of 2%. haidi: i don't think i have ever been as excited about an rbnz monetary policy meeting as i have as the second half of this year in multiple instances. this chart shows how market expectations are changing. this is their last meeting before february. given how fast inflation expectations have risen and how fast the labor market recovered, it is suggested participants in these markets that think they could go 50 basis points, not 25 that is overly baked in. 21 out of the 23 economists we
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surveyed expect the 25 basis point move to come in today. this is inflation expectations. in this part of the world, prices have not been quite as dramatic as we have seen in u.s. data. inflation expectations are also at this decade high in new zealand as well. that is driving some of these expectations. haidi: given what you said about how exciting this decision is, we will see movement in the kiwi dollar. already we have seen pressure underperforming all of these g10 piers. now analysts think the kiwi would surge if the rbnz opts for a 50 basis point hike. don't miss a big interview with the new zealand's central bank leader on friday. also coming up, reaction to the rate decision from the rbc
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markets capital director, joining shortly. haidi: that decision is just a few minutes away. stay with us on bloomberg tv. our markets coverage continues. we have the rbnz decision coming up next. this is bloomberg. ♪ every day in business brings something new.
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>> it is not :00 a.m. in beijing and shanghai. welcome to bloomberg markets china open. >> we are counting down to the open of trade. let's get to the top stories. >> the biggest gain in two weeks as china joins the u.s. and other nations in a coordinated release of reserves. >> investors awaiting a likely rate hike. we will get tha


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