tv Bloomberg Markets Asia Bloomberg December 2, 2021 9:00pm-11:00pm EST
a $40 billion armed group takeover. david: we also have developer kaisa warning it may not meet its obligations. we are also looking at the didi story we are talking about, beginning the process of delisting shares in new york. rishaad: mixed bag. japan down at the moment. currencies and also in the tech space certainly. was this a decision by opec or a deferment? david: it was a little bit of both. they kept the door open to adjusting, i guess, more fluidly moving forward. that is what is really leading to, you know, your third column
there. we are also looking at properties, i believe. looking at tech and really the sector. i need to check, but it should take us well below this trend line defined back to 2008. rishaad: what was the stat we had the other day that the market goes higher when it goes below book value of one? that is not coming troop thus far, is it? it has actually seen a big rally of -- what? 4%, 5%? david: price-to-book below one. i think we are still at that level now. rishaad: there's all sorts of shenanigans going on in the united states, delisting, also
this structure under threat -- lots of moving parts, lots of them, but let's have a look. alibaba -- oh, my god, this must be a record low or around that. david: record low valuations. i cannot remember the price being like this, too, so that would obviously be a record low. to help with the extent of all of this, stephen engle, our chief north asia correspondent is in our studio to put everything together for us. we are going to start with alibaba. stephen: we have to talk about didi. we've been talking about the valuation structure, and this morning's story was the sec saying they are finalizing rules as mandated by congress to set out the criteria for delisting of companies that do not comply
with accounting and transparency rules that the sec has, and even gary gensler had mentioned chinese and hong kong companies in particular are the ones that have not been complying, so you kind of connect the dots and ask if this will lead to an avalanche of chinese delisting in the united states -- well, lo and behold, we just got news that didi is filing for delisting in the united states while simultaneously also going to apply for a listing here in hong kong. this is what some would say is going to be the trend. if regulators in china do not want these data rich and data sensitive companies listing in the united states and if the sec does not want those companies who do not open up their books to stay listed in the united states, where did they go? potentially back here to hong kong. i was just going to give you instant reaction from bloomberg intelligence, the power of the bloomberg, as you guys know. just a couple of days ago,
bloomberg intelligence was talking about didi's long-term growth outlook clouded by the crackdown on data. they really said this is a bad set of conditions. fast forward to this morning, they are already out with their assessment and say plans to sell shares in hong kong and delisting in the u.s. reduces risk of a messy forced delisting and may signal that chinese authorities' crackdown on it has peaked. the company's statement bolsters our view that a hong kong ipo will come before a u.s. delisting with a seamless connection into hong kong shares. we had that statement essentially saying that had filed for delisting by march and that they would also ensure u.s. stock will be convertible into freely tradable shares on another internationally recognized stock exchange.
rishaad: the public accounting oversight board, and then we get pressure on the others from beijing, with stories emerging around these variable interest entities as well. they want to pull them back, too, so there you go. >> at the -- absolutely. that puts pressure on it company like alibaba. all the headwinds converging on this company in the last year, it has lost more market value than the entire market capitalization of jp morgan. it tells you, the carnage here, but didi as well, this is a company that went public in -- what? june or thereabouts. it has been absolutely pummeled because regulators did not want it to go public because of the security issues of the data.
they went ahead and did it anyway. the chinese government potentially cracking down on these variable interest entity structures that companies have been using to incorporate in the caymans or virgin islands and then lists in the united states which operates in a gray area to allow these companies to have foreign ownership. well, a lot has changed over these past few decades. rishaad: a lot has changed over the past two days. stephen: tell me about it. thank god it's friday. anyway, i'm rambling on. there is so much to digest here. the ultimate question is -- is this the first sign of the avalanche, of companies leaving the united states, chinese companies? rishaad: even more polarizing the world. david: just to clarify, didi's
statements on the bloomberg if you want to read that. the timing is in march, so that's about 3, 4 months away to begin that ipo process. rishaad: so many things moving around in the tech space and the property side of things. let's bring in our greater china and apac equity strategist. jessica, what do you make of this? david: information overload. jessica: i think these listing concerns are just coming out of the woods. it has been in the media the last two or three years, so none of it is a big surprise to us, but a number of companies have started to instigate these moves and we have seen that in a number of chinese names, announcing a secondary listing in hong kong.
it is actually going to be good for the market and equity market perspective. the liquidity for now compared to the u.s. markets in hong kong is probably extensively less, but that being said, it would probably inject more liquidity into the market going forward and i think the hong kong market is probably one of the largest in the world and we are also seeing a lot of movement with the new economic sectors growing in these markets, so it is going to be quite interesting. david: 2021 was almost a write off in chinese equities. what are you looking at next year? >> for us, the equity market in
asia, especially in hong kong and china, are actually quite interesting because we are seeing a lot of -- for example, energy related themes is one of our key focus. rishaad: it is a very crowded trade. >> we have to be extremely selective in this market. a number of investors are looking for the health care space to be at risk, but we believe that these names like in biotech, you know, lifestyles, would be in a better position, given that they are presenting very innovative businesses, and this is aligned with the long-term direction. david: stay put. we're just getting warmed up. if you have any questions for
her, by the way, just get those in for bnp paribas asset management. rishaad: we now turn to first word news from vonnie quinn. romney: the u.s. wants to rally allied countries to crackdown on -- vonnie: the u.s. wants to rally allied countries to crackdown on human rights abuses. officials declined to name which countries would join the initiative. u.s. antitrust officials have sued over nvidia's $40 million takeover of arm, saying the deal would harm targets. arm is owned by softbank group and licenses its technology through hundreds of companies while competing with none of them. opec-plus will proceed with a scheduled oil production hike.
the group agreed to 400,000 barrels a day of crude to global markets, which should please nations, including the u.s., worried about high prices, but that also left the door open to changing the plan at short notice. that unusual step underscores risks from the pandemic. the u.s. has reported more cases of the omicron virus variant in new york and colorado. five cases have been confirmed in new york city and mayor bill de blasio says people should assume the new strain is spreading. the u.s. state, meanwhile, reported more than 11,000 infections, the most six -- the most since january. global news 24 hours a day on air and bloomberg quicktake powered by more than 2700 journalists and analysts in more
>> i certainly would be supportive of a committee decision to move the end of the taper forward from where people had been expecting it in june. >> if inflation is still over 4% next spring and we have ended our taper and that is where we are, i think the fed -- i will not be on the committee at that time, but i think the fed will
have to say seriously, this has run too high for too long and we need to start using other tools. rishaad: we look at these jobs numbers coming out later on today. it will be closely watched by the federal reserve, but again, this is backward looking. we will not see the effects of this new variant of the coronavirus, looking at the 550,000 jobs being created. how many people are returning to the jobs market? the participation rate remains stubbornly low, doesn't it? average earnings compared to cpi, that is also stubbornly low. david: the second point you just made is really what people are pointing to right now. people are not really back into the workforce, so you are getting a squeeze as far as labor is concerned. when you look at the forecast, high, medium, and low, the range
has actually been narrowed back to fairly normal levels from levels where it was anyone's guess what the jobs number was going to come out as. here is where we are as far as fed expectations are concerned. i will try to make this quick. from where we are to where the market thinks we will be, 2023, 2024, it is that greenline looking at your screen, about 125 basis points. certainly nowhere near where the fed thinks it is going to get rates when you look at the terminal rate from current levels. things are getting pulled forward. that also means markets are looking forward. we are now in fact looking at the next rate cut. we have not even gotten out of the pandemic. this next chart, get that up if we can -- the euro-dollar futures curve has now inverted.
in other words, the market is looking at perhaps the fed ending its tightening cycle around 2024 and maybe even taking rates down come 2025. rishaad: absolutely. jessica, this is going to be very closely watched. what other takeaway do you really want to see from this jobs report in particular? >> i think the fed tightening is happening slower than expected, so it is adding pressure to a number of central banks. that said, i think we are seeing something different from the 2013 type of control. i think economies are showing stronger fundamentals, stronger economic balances, so it should help mitigate some impact. obviously, we are monitoring this very closely. rishaad: i imagine the fed is
looking at it even closer. >> the concern is not much about the fed, really more about the tightening, the property slowdown, the growth normalization, so it is more like what we are watching very closely. david: next year, some people have told us em manages to outperform slightly and china outperform slightly em. do you subscribe to that view? there are many factors obviously that can affect this. >> after this tremendous year marked by new regulations in china, we believe -- rishaad: we had a guest talk about this earlier, focusing on
getting back to business, as it were. would you agree or subscribe to that? >> i think inflationary pressure is something we are watching closely. that said, we believe this new inflationary pressure in asia compared to other em are developed markets is probably more moderate, so this will give more flexibility for central banks to support the economy. and number of economies like india and indonesia probably feel more impact, but overall, it is believed this normalization should be really supportive, and once again, the healthier balance in asia adds to the tailwinds. david: it is certainly what they call that buffer when real rates are negative and the dollar is
stronger, which takes us, i guess, into the other parts of em, right? you mentioned indonesia and india. both markets have done very well this year. do we then start looking at other candidates that have not performed as well? say, philippines, malaysia, and some of these other markets. >> i think it is key for us to be selective. for example, thailand, which is a very touristic place could be at risk. that being said, there's a number of mitigating factors. the vaccination rate today is completely different than earlier this year. it has been much higher for a number of asian economies and should negate the impact from
these strenuous lockdowns. also, i think if we are going to see more lockdowns going forward in asia, it probably would be more selective. those are some mitigating effects that could help actually improve, i would say, our outlook for asia. rishaad: thank you so much. let's quickly have a look at what is going on in the senate right now. we are looking at the stopgap will to keep the government funded through to the middle of february. it is an ongoing vote. it seems like this comes up every three or four months. we've got at the moment this short-term government funding bill on the house floor or should i say the senate floor, and this coming after they were able to throw out a federal vaccine mandate bill which paved the way for this funding bill to
david: let's talk about this deal between nvidia and arm. u.s. regulators claim the deal would stifle innovation. peter, why don't you take us through. where do we start here? >> this is a pretty dramatic development in this deal where nvidia is trying to get control over arm. there has been opposition in
other countries in the past. we have seen it in the u.k.. we have seen it in the european union. china certainly had hesitations about this deal and now you have u.s. antitrust officials suing in order to block the deal, so it looks like the chances of this deal going through are pretty low at this point. softbank had hoped to offload the company arm to nvidia, but arm holds a special place where it is a neutral company within the chip market that many companies use including qualcomm, intel, and advanced micro, so it's neutrality was very important to its success, and antitrust officials say the acquisition by nvidia, which competes with many of those customers, would jeopardize it's neutrality. rishaad: it is bringing also security concerns that this is another place where we could see
a blockage. arm is hugely important in the security industry. >> that's exec we're right. u.k. officials have had concerns over security as well. i think arm's customers had raised concerns about their ability to use arm's technology going forward if it was effectively controlled by one of their competitors, and they have and very vocal about those concerns in the united states and europe in particular, so it looks like the chances are decreasing, and the question is -- what will happen with softbank, and what will they do with this company going forward? david: that is the next chapter to this. a very brief look across these markets as we approach the tokyo lunch break. everything is actually quite good and stable ahead of the jobs report with the exception of what we see across these equity markets here in hong kong
rishaad: 9:29 p.m. there on the senate floor. the senate just voting to pass a short-term stopgap government funding bill, which means the government will avert a shutdown and will be funded through february 18. the next step is sending the legislation to president biden for his signature and for a change, it has not come down absolutely to the wire.
it is quite a lot of moving parts with regards to this. david: let's bring in kathleen hays, our global economics and policy editor. kathleen, well, happy holidays. we are done with it. worry about it for days after valentines. kathleen: we can probably expect it will go again right up until that wire. what is holding this up ultimately is that the republicans in the senate want democrats to pass the final bill to ok the money that needs to be oked to increase the debt limit. they want them to do that on reconciliation. that is when they can pass that with just 51 votes, so if all democrats in the senate vote for it, plus vice president kamala harris, it could get done easily, and that is what republicans keep saying. they keep saying, you are on
this wild spending spree. of course, democrats come back and say it has always passed by majority vote. that is really the standoff so far. what happens in the interim may be just a lot of back-and-forth. had they prolonged this, friday night at midnight, the government really would not have run out of money. technically they would on paper, but there's always ways they can adjust certain kinds of things, called one thing a different thing and make it work until the summer 15. that would have been the end of it. perhaps they just all wanted to have it done, put it behind them, and they could get ready for the holidays. it is also interesting that chuck schumer, the senate majority leader, was able to agree to let the republican senators get the vote they wanted, blocking any funding for vaccine mandates that president
biden has put in place, with the absence of two republicans, john boone home for his father's funeral, bill had to -- bill haggerty, his son in a state championship football match. the vote did not pass. this paved the way for this vote. now the temporary debt limit boost is in. as you said, we go from christmas, we go to the valentine's day, and then it heats up again because it is hard to see how republicans are going to back away from their demands beyond a reconciliation vote so they can put this figure debt limit in the democrats' lap. it is hard to believe democrats are going to back down either. we will see what the next compromise and tales, if any. david: four months seems to be the period of stopgap measures,
government shutdowns. kathleen, policy editor. have a look at where we are in oil prices. we are a little higher. brent trading just below 70 bucks and below $67 for west texas here. we were up 1% early on, but really on the back of the story in opec of what they did do and what they are expected not to do moving forward. rishaad: let's bring in the founder and chairman of sge. give us a sense of what they are going to do and what they need to do.
>> they always have two options, at one point, to pause production for one to three months, and the second was to continue the path of adding 400,000 barrels a day. they figured the drop in the price of oil was oversold, that there was news about the virus and that was enough to bring the price down by $10. then they knew that if they paused, the price then would jump maybe $10, about. it goes back to where it was. they decided that the downside risks are almost zero because their balances are so tight. they decided to go ahead and add 400,000 barrels per day and wait until next month to decide what to do.
david: what do you think they will do? >> i think we have a very interesting situation because inventories are very tight at the moment, but when we get to first quarter, inventories have become long. seasonal demand changes very dramatically, so they might pause in january or february for a month or two, but i think what they did was the right thing to do. they read the market correctly. people were saying that if you add the production, then prices would fall, but they did not. in fact, they went up. in fact, i expect prices to continue to go up because balances are so, so tight. rishaad: there is a known unknown -- it is a known unknown, actually, and that is this new variant. that could really upset the apple cart.
it could seem to be more virulent than it is currently being thought of. >> absolutely. there are two factors with omicron. one of them is the real demand impact. second is the fear. fear was enough to bring the price down to $10 a barrel. now we have to find out if there is any impact on that. if news comes out that this is not so bad, this is a storm in a teapot, then the prices will rise much faster. the market direction is really waiting for the virus, not so much from opec today. david: how large -- i know there are many moving parts to this -- how large you think the surplus will be in the first quarter? not long ago, we were talking about strategic reserves also being released to the market, and they were pushed back because they were pointing to that inexact timeline that we
are going to get to the surplus before anyone knows it. >> if they add 400,000 barrels a day today, they would have extra oil in january, so opec would have to pause production. i don't think they have a choice. i don't think they need to cut production, but if the virus is a storm in a teapot, than they would just pause for a month or two and balance the market. this system of checking it every month is really effective because they can stay on top of the market, and they read it much better than any of the banks which are forever bullish, and they read it correctly, and they have done a very good job so far. david: just your thoughts on price pressure for the day. rishaad: will oil be 50 bucks or
90 bucks, looking at, say, the next three months? >> i think 50 bucks is almost impossible. if the virus is not serious and there's some kind of outage someplace and some kind of major disaster on the iran nuclear negotiations, the price can go up to $90, but to go down to $50, that would require a very severe reaction for the virus. the downside is driven by the virus. the upside is driven by political conflict. david: let's hope you are correct on that one. i don't think we want to imagine a world where we are back at $50 on oil prices. rishaad: unless you drive. david: that's true.
that's true. or places like india. rishaad: moving to a bit of a power crisis in a certain lion city -- what a coincidence. >> singapore facing dramatic volatility in wholesale power plight -- prices as the nation grapples with power prices. traders say a drop in indonesian gas supply, of course, tripping up some singapore power plants. germany is imposing nationwide restrictions on people who are not vaccinated against covid-19, paving the way to making shots compulsory. in one of her final acts as chancellor, angela merkel agreed . the parliament will vote soon on a plan to make covert shots
mandatory. the u.s. is moving ahead with efforts to remove chinese companies to american stock exchange's who are not complying with washington's disclosure requirements. the sec has announced its final plan for mandating foreign companies open their books to u.s. scrutiny. china and hong kong are the only jurisdictions refusing to open their books to inspection. bloomberg 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. rishaad: global investors return to these offshore properties. david: let's bring in our kind of credit editor to talk us through. what happens now? >> tuesday is the big day. that's when this bond matures.
it is going to be a wild weekend of talks and offers and counter offers, presumably. the bondholders involved, and they are probably going to see if they can kick the can down the road. they also have two other interest payments that are due next weekend, about 85 million dollars combined, so this is far from the only debt they have to worry about near term. david: in terms of market reaction or the lack thereof, does that send any message then to the broader space? we have heard from a lot more banks coming in saying some of the prices we are seeing in markets right now have more than enough buffer for all the bad news out there. >> there's no big surprise that bonds are not moving for kaiser today because everyone expected there to be bond and debt
payment issues. the market has already priced in this heavy risk of default or potential default. david: it is almost binary. thank you for bringing us all the latest there on kaisa. just ahead, grab failing to deliver -- good one there, huh? crashing more than 20% on its first day at school. more straight ahead. this is bloomberg. ♪
david: welcome back to the show. didi global, the beginning of the end and the beginning of a new beginning here in hong kong. the company has begun preparations to delist shares from new york and start looking at a hong kong listing perhaps early to mid next year. your initial reaction when you heard the news? >> not incredibly surprised, but it is big news. we are talking about a $37 billion market cap company. it is considered to be one of the darlings in terms of the home-grown tech startup in china. i think you have had some
breadcrumbs. the cac is essentially the regulatory body that is pulling the strings here, and it goes back to earlier in the year when evidently the director held off on doing the ipo. it may be that they have run the gauntlet and what you see now is the regulators saying you are going to have to delist, but it is big, breaking news. rishaad: tell me how much of it is also down to the pressure from beijing to come home, as it were? two geopolitical tensions play a role in all this? >> i think it does. one of those ones you would kind of like to keep the politics aside, but you cannot, and xi jinping wants to bring capital home, but i think it goes with confidence, and if you continue to put a cloud of uncertainty
around the regulatory environment, people will not be going after these stocks. david: talk to us about how you would approach and if the market is correct in using the old lenses to value these companies. alibaba is down. the valuations crushed. it is almost as if it is not the same company anymore. how would you be approaching these valuations on a buy side perspective? >> we think it is undervalued. if you look at its core businesses, you look at the some of the parts, but what people are confusing here is the didi thing is about national security
data protection and the administration has made that very clear. on the other of the coin, i would argue you have had tencent, alibaba, baidu, etc. comply. you've got to divorce the is just divorce the issues and look at it through a very clear lens, so it is an interesting day for chinese tech. people are not finding many reasons to buy them, but i would be looking at the ones which are being sold off who have already done their listing in hong kong. remember, it is fundable, so that is a very important thing to remember, so it is going to be a pretty rocky day. i don't think we have heard the last of this. rishaad: this was an industry grouping, if you will, which many people thought was underinvested, but long term, well, who knows? the point i'm trying to get at is we've got this structure of the chinese economy evolving, and we've got things such as
deal circulation and common prosperity -- these things are going to have an impact, especially when they limit companies like baba and tencent to start buying all the little minnows they can to try to grow. >> i see 4 clear things -- you have fair competition, antitrust regulations, social being reforms, and then you've got the stuff that -- at didi, national security and privacy, and you've also got the middle-class income inequality issue. you got to divorce each of them and look at them through an income equality lens. i think most of it has been addressed by the federal of ministration, so you have already seen the issues with baba and tencent, most of that come through. david: thank you so much.
enjoy your friday, by the way. we talked about this already with sam. he said you are not getting a lot across these big tech names in hong kong, even throwing in some of the ev names. longer-term, we are about 2% away from what many consider to be a critical support level. you can take it all the way back to the crisis. watch out for this. it has really diverged from the rest of the world, the rest of asia, the rest of the s&p 500. there's plenty more ahead. this is bloomberg. ♪
david: investors remain uncertain about the profitability. that is one of the concerns. we spoke with the cofounder, and she actually laughed off those concerns, citing the resilience and longer-term story. have a look. >> we chose the path that enables us to get the best investors for our table and with that, based on our investors that were attracted to the long-term growth opportunities we have seen and very low redemption rates, we are actually extremely happy with the outcomes we have achieved as well. emily: you have turned grab into a super app including delivery, payments, and ride-hailing. how worried about that how worried are you about a resurgence of covid and omicron
right now? >> a critical part of growth trajectory has been our strategy that has enabled us to be very resilient to the covid challenges. to share a bit more about what it is, think about grab as uber, doordash, and venmo all in one. from when the day starts when you wake up all the way until you go to bed, you're able to get your breakfast, pay for meals, buy groceries, and more. that enables us to have shared strategies with our largest driver partners in the region, which enables our drivers in their super app to decide if they want to transport people, deliver food or groceries seamlessly in the app and therefore enables us to quickly pivot from mobility to mobility. with this strategy, we are
confident we can continue to serve the needs of southeast asia's users and our partners, despite whatever challenges covid continues to throw at us. rishaad: grab's co-founder with emily chang. this is what we have right now -- it is not the first time he has done this, is also on the record as saying at the end of last month that he is selling almost all physical possessions and will open house. there we go. david: also moving from california to texas. take a look at trade futures right now as we approach the midmorning session. of course, we are moving into the hour with india opening up.
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juliette: it is almost 11:00 a.m. in singapore and shanghai. welcome to "bloomberg markets: asia." i am juliette saly. rishaad: and i am rishaad salamat. chinese tech falling towards a record low as didi confirms it is planning to exit the u.s. stock exchange and. work towards a hong kong listing. juliette: kaisa warns it not
-- warns that it may not make a bond payment obligation. rishaad: plus oil extended gains after opec+ sticks with a supply increase, but with strings attached. we just got this from the chinese aviation regulator, 737 max will resume commercial operations by early '22, after an almost three-year grounding. no doubt we will see shares reacting to this. we are seeing this on the website of the civil aviation administration of china's website. this is essentially a return of this aircraft to the world's second busiest aviation market. there we go, many more implications. it would pave the way for a ramp-up in the 737 max production to 37 aircraft in month early next year. juliette: and a few concerns for
traders, not only the omicron strain, but nfp coming through in the u.s. and the reduction in stimulus from the fed. you have a weaker benchmark index. and chinese ride-hailing jayant didi says it has begun preparations to least from the new york stock exchange. kaisa is now the biggest threats to the chinese property market overtaking evergrande. and a pickup in crude, after we had opec+ proceeding with a supply increase. hard to believe a week ago we saw the eggs swings coming through in crude, when omicron first came to light. rishaad: just going to pick up with you and didi global, and the delisting from the nyse.
and a listing in hong kong in march. i should bring in stephen engle, our chief north asia correspondent, he is with us. stephen: you just said, the top line is that didi is announcing it will begin the process of delisting from the u.s. stock exchange, a highly controversial listing in june when they sort of defied chinese regulators. regulators at the time urging didi not to go public on the nyse, they expressed their need to conduct cybersecurity reviews of their data. this is a ridesharing behemoth that dominates and has lots and lots of data. so didi was under pressure to do it, they did not do it. they went public and then shortly after that, regulators, we have learned, started encouraging -- that is a euphemism for ordering -- didi to begin the process of delisting, and that is what they
are announcing now. they will delist from the new york stock exchange. no timeframe. simultaneously, they will start the process of listing here in hong kong. we have sources saying that the filing for a listing here could be as early as march, so the next three and a half months or so could be very interesting. it raises the question, when we had that pressure raised yesterday with the reports by bloomberg's scoop that chinese regulators were looking at the ie structures that allow chinese companies to list overseas and have foreign investors, it is what just about every single company listed in the u.s., even hong kong, it allows them to have foreign investors. if that is going to be banned, will that also accelerate other companies to come back here or to de-list and potentially come back here? and another story, the sec with
its announcement that it has formalized the new rules that were mandated by a law in congress in december of 20 20 that essentially says that if foreign companies list on american exchanges and do not have the necessary required transparency, they could then start the process of delisting over a three-year process. right? there is all this convergence of pressure. will we see an avalanche of chinese companies, perhaps the ones only listed in the u.s. -- because we have already seen dual listings back here in hong kongm like alibaba,, meituan. but he toward will is not. at -- but pinduoduo is not. on this chart we can see the five companies, if this is an avalanche, it could potentially be the next to come back.
there you go. not saying they are. didi is weird but there is ke holdings, there is lufax and pinduoduo, about $187 billion market cap? juliette: our asian? jul correspondent stephen engle in hong kong. let's get more with vikas pershad, portfolio manager at mng investments. this took us all by surprise this morning. how investable is china tech at the moment? vikas: the question comes up, is china investable? the answer is yes. we have been underweight and less active all year long starting in q4 of 2020. our focus is on companies that are harnessing technology to change agriculture, e-commerce, arotech, health delivery, financial services.
megacap china tech, we are less active in. this is highlighting the difference between a risk and volatility in this sector. there is risk here, whereas in the other sectors i just listed, there is volatility? juliette: we have seen the hang seng index continued to fall to the record low. what happens next? how many companies delist in the u.s., too, how are you playing this? vikas: the sectors that are harnessing technology, so these megacap chinese technologies, despite the erosion of market caps, the fall in the equity prices relative to the start of this year, we don't see value in these names. still looking elsewhere. rishaad: this is rishaad in hong kong. where are you looking now? if we look at the hang seng tech index, down 2.6% at the moment, and is on track to fall to a record low, that says it all.
you say you say you're looking elsewhere. where? vikas: so, the question is where are we spending time? where are we looking? within these megacap companies, there are certain business verticals. you had a guest earlier on today highlighting the value of those verticals, but in aggregate, we don't see value emerging there yet. investors are showing you there is value to be found elsewhere, and we agree with that. rishaad: i do like -- you do mention your notes, there are some myths worth dispelling -- india is to expensive, china is not investable, and japan's market is not appealing. vikas: so i think all three of those are myths. china we just talked about, there is a myth that china is not investable, neither the public or private markets. we disagree. there is a myth that overall, the indian market is too
expensive. we disagree. we think time is our friend. we have a long time investment horizon, we are not just looking until the end or the beginning of 2022. it is worth reminding, we don't invest in the market, we invest in companies, and the companies that we are evaluating, where we have evaluated, where we have allocated capital, we think they are promising asymmetric returns over the next few years? juliette: all right, we want to get your thoughts on the fed and the omicron variant. vikas pershad will be staying with us. let's go to singapore for the first word news with vonnie quinn. vonnie: good morning and thank you. opec+ will proceed with its scheduled oil production hike. the group agreed to add 400,000 barrels a day to global markets in january. that should please nations including the u.s., worried about high prices. however, the cartel also left the door open to changing the plan on short notice. that underscores risks from the
pandemic, in the u.s.-led release of emergency fuel stockpiles. the u.s. senate averted a government shutdown, passing a stopgap funding measure that goes to president biden's for his signature. this followed a day of negotiations. democrats agreed to vote on an amendment to block the biden administration's covid-19 testing and vaccination mandate for large employers. that amendment ultimately failed. the u.s. has reported more cases of the omicron virus variant in new york and colorado. five cases have been confirmed in new york city, and mayor bill de blasio, should -- said people should assume that new strain is spreading their. more than 56 hospitals in the state are reporting a bed capacity of 10% or less. germany is imposing nationwide restrictions on people who are not vaccinated against covid-19, paving the way to making that's
compulsory. in one of her final acts as chancellor, angela merkel agreed on the curbs with her successor, olaf scholz and 16 regional premiers the. parliament will vote on a plan to make vaccinations mandatory as the nation battles a surge in infections. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am vonnie quinn. this is bloomberg. juliette: still ahead, we will get the outlook for india's oil sector after it agreed to a joint release from national stockpiles. we will be joined by the indian strategic petroleum reserves ceo, hps ahuja. last china green lights the return of the 737 max to commercial operations by early next year. more on that i had. plus we continue to watch the hang seng tech index heading towards a record low. here are some of the big falls. jd.com. significant pressure as we continue to see the fallout of didi announcing that it will
rayshard: you are with bloomberg markets. the federal reserve vice chair has joined the cars of top officials opening the door to a faster purchase taper and accelerated rate hikes. the global economics and policy editor kathleen hays has more. what did he have to say, and why ? kathleen: he is stepping down as base chair of bank supervision at the end of the month. he was not reappointed by joe biden. so he is going to be gone. but he has been at the fed for several years now, gone through all the steps after the financial crisis, dealing with
the pandemic last year. when you see another top fed official saying it really is time to beat up the taper, you have to listen. one of the points he made was above supply chains and how they are affecting prices. originally this big surge in inflation had to do with that, those constraints, chip shortages, that kind of thing. but now we are seeing strong demand, another thing that is pushing inflation higher. . the fed has to be aware of it. he is joining jay powell. before him, even refiled bostic from the atlanta fed -- refiled bostic from the atlanta fed -- before him, rapahel bostick from the atlanta fed. >> i certainly would be supportive of a community decision to move the taper forward from where people had been expecting it, in june. kathleen: but you see, he also is throwing this in, the speed
of the rate hikes. that is how randal quarles is moving the ball down the road. others are open to it. laverna master said she can see the possibility of two rate hikes. that is why jobs are so important. that is very important for the fed, to see strong jobs and say, we will speed up the taper in three weeks. juliette: not long until we look at those payroll numbers. global economics and policy editor kathleen hays with us in new york. that's get more with our guest, vikas pershad, portfolio manager at maga investments. a faster reduction of stimulus from the fed as kathleen is looking into the jobs aspect, too,, and then last week, the new omicron variant. vikas: so i have two things to say about that. number one, there is not a place in our portfolio where the thesis is contingent upon a particular level of interest rates. there are certain parts of the portfolio, like banks across the region, that will benefit from that, but we interest the
managers -- we trust the managers we back grow over time. that is number one. number two, on omicron, if we look back two years ago and how companies have evolved, how quickly they have collectively managed during the pandemic, i think they will get through this. for us, we are focused on what we can control, and how we can control is how we allocate capital, which heading into 2022, we welcome the dislocations? juliette:? juliette: in terms of the omicron variant and its disruption on risk assets, you look at the wild swings in crude last week, what happens if next week there is another variant? it is incredibly hard to play. and the reopening team, you are telling me during the break that it has even thrown your personal plans into disarray.
vikas: yes, it is now guaranteed that i will be working until the end of the year. but i think companies are adjusting. markets are trying to adjust with these new risks. we should assume as a base case that there is no expiration date for when the world moves beyond covid, beyond this constant up and down, back and forth with every new variant. and we are seeing it with the supply chain. it has moved far beyond semiconductors and commodities, into very obscure parts of the market. that will continue next year. rishaad: get his art, isn't it, how gold -- it is odd, how gold isn't benefiting. from this. it is not seen as the h aven that it used to be. we have seen at the same time, cryptos really lift off. is this the safe haven trade? or is it just speculation? vikas: my answer for now is that it is neither. we are still learning.
more broadly, beyond crypto and tokens and beyond that organization of various ip around the world, it is broadly a search for alternative sources of value. eighth that is what is going on. is it blank speculation? i don't think so. is it a safe haven yet? i don't know, but i do think there is something here. the property market in india is moving beyond retail trading and retail volumes driving these business models, to enterprise adoption, and i think we will start to see that next year. rishaad: i just want to get back to your investment thesis here. you said at the start of the year that you would be surprised if north asia actually outperformed southeast asia, and it did. do you see convergence? give us a sense of why you see convergence for these markets in
2022. vikas: i think from both sides of that trade. at the outset of this year, that is one thing i would have been surprised by, and i am surprised by the relative over performance of north asia to southeast asia. that underperformance in southeast asia sets us up well for 2022. as you see larger and larger tech companies becoming part of the constituents in southeast asia, i think those companies still haven't figured out exactly what they will be in 3, 5, 7 years. there is a deeper market in north asia, and that is where we are focusing. juliette: their is a huge underperformance from asian stocks versus global fears this year -- global peers this year. does that continue into 2022. vikas: this is something i would be surprised by, if i year from now we are still talking about the same thing.
juliette: let's hope we are still not talking about covid in a years' time. all right, vikas pershad, m&g investments portfolio manager. we will continue to watch chinese stocks as we see the hang seng tech index test these lows following the story that didi is following ahead with its u.s. delisting to focus on a hong kong listing. more ahead. this is bloomberg. ♪
it is a big used for boeing not just to get the plane back in the air, but also in terms of what it can do with production. patrina: that's very true. --katrina: it is very true, that is a big deal. it basically is one of the last steps to bringing the max back to the skies in china. they held a press conference this morning, saying that they will resume commercial operations of the max early next year. the next step will be the approval for airlines to start flying the max again. your hearing that could come within days or within a few weeks. once that comes, you can expect the big chinese airlines to quickly move those jets into regular service. juliette: this is huge for boeing. what kind of reaction are we
expecting in markets and from other participants that went boeing asset as well? katrina: we expect it to be positive for boeing shares. they were up yesterday. also there's another french company that makes a lot of engines for planes. we mentioned china was one of the first countries to ground the max. it has in approved to fly in most other markets around the world. new york followed, india took a little longer but eventually give them the green light. so boeing, this will pave the way for a ramp-up in production to at least 31 planes a month early next year, from 19 currently. we know that chinese carriers desperately need these planes. so it is a really positive move for boeing. china accounts for about 20% of
max deliveries, and a significant amount of those earmarked for china, so this is very positive for boeing. juliette: bloombergs katrina nicholas in singapore, giving us up today. that's get the latest headlines. southeast asia's ride-hailing giant grab plunged in its u.s. debut after going public, shares closed at eight dollars 75 cents, after opening at $13 apiece. grab has yet to prove. it can reach profitability. the company says it's apple, offers a broad range of services which will help its bottom line. this company is set to be in talks to purchase a swiss drugmaker. bloomberg understands the deal could have a market value of $8.6 billion. csl declined to comment on the speculation saying it regularly assesses opportunities, and there is no answer as to whether a transaction will result.
vifor shares jumped 18% in cervarix. rishaad: looking at the hong kong market, tech is taking an absolute eating. we have the -- taking an absolute beating. 1.5 trillion dollars has been wiped off these markets since february week. the fallback is partly down to the u.s. delisting and raising scrutiny on mainland firms trading there, all dealing a further blow to a sector which has been soured by sentiment. hang seng is just over 1% declining currently. chinese markets, seemingly at the moment just shrugging this off. the chinext is down 0.5%. there we go. it is about didi and the message it is sending. juliette: it is indeed. but also we have the jobs data coming through tonight as well,
>> it is 11: play nine in hong kong -- 11:29 in hong kong. here is your first word is. dd is withdrawing from u.s. stock exchanges and will start work on a hong kong share sale. bloomberg reported that we that chinese regulators had asked did's top executive -- didi's top executive to do this. it aims to file for a hunt -- hong kong listing around march. the u.s. is moving ahead with widespread efforts to remove chinese copies from american
stock exchange is for not complying with covert acquirements. they mandate foreign cup open their books to -- china and hong kong are the only two jurisdictions that refuse to allow the inspections despite washington requiring them in 2002. u.s. antitrust officials say this deal would harm competition in the semiconductor market. the ftc says it is cycling the innovation pipeline for the next -- 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 blo omberg. >> let's have a look at asian markets. they are under other bit of pressure. we are watching this all down
you're seeing in the hang seng tech index. stocks opposing this record low in hong kong. this after rising scrutiny on mainland firms. the hang seng index is coming under pressure. that is no surprise. we have the property play sector in play as well. a little bit of upside coming here in south korean stocks which earlier in the week had quite a big sell down as we saw the kospi erased 2021 gains. let's look more broadly at what we are seeing in the hang seng tech index. the drawdown approaching half of the moves we have seen. hong kong had large distance. this family tracks these big tech giants in china. it is at the lowest levels since the gauge was launched last year. on the index, seeing about $1.5 trillion of combined market value evaporate since that
february peak. quite extraordinary when you look at that chart on the gdp. rishaad: breaking news coming in. the thai index is a little hotter than expected today. looking also at the november core cpi up about .3%. essentially in line with forecasts there. >> let's bring you up-to-date with the latest covid-19 news. five cases of the omicron variant have been detected in new york state as other cases pop up around the united states. a new south african study has said the risk of infection for a macron is three times higher than any previous variant but it is not clear if it is more harmful. south korea has recorded a record number of daily critical covid-19 patients. auckland has exited locked down 107 days. >> britain tested seven
different covid-19 vaccines as booster shots found that six of them increased antibodies. michelle cortez, tell us about this. >> we are finding out that the boosters do work. they increase your antibody level, they neutralize the antibody level. that is what will protect you should you get exposed to the virus again. you will remember that we learned earlier in the outbreak that your antibody levels do wayne. -- wane. this omicron variant is circulating a people are worrying about what that will mean for the future. this study suggests that all the western approved vaccines are effective at increasing your antibody levels and protecting you. rishaad: what about the infection study? that is a bit alarming. we don't know how variant -- vera -- virulent this mutation
is. >> the infection risk is increased threefold. if you already have been infected or vaccinated, however risk are you from seeing this infection again -- how at risk are you from seeing this infection again? significant higher. we don't know what that -- significantly higher. we don't know what those infections woke like. we are -- will look like. we are learning details all the time. it is worrisome to indicate that the vaccines we have will not fully protect you against omicron but it will offer some type of protection with these boosters. >> that was michelle cortez keeping us up-to-date on all the latest. let's check in on oil after opec and its allies agreed to add a hundred thousand bottles -- barrels per day to the global market but leaving the door open to change the plan if needed. let's bring in elizabeth.
tell us about the latest opec-plus edition to go -- addition to go on with this rate hike. what does it all mean for where oil trades? >> that is pre-much contrary to market expectations. -- pretty much contrary to market expectations. it is quite interesting. this is pretty early still. the markets are looking at the new variants. the group is not all that worried about the impact of omicron on oil demand. this could be a signal that it is at least confident enough that there will be enough demand for its stress supply still --
extra supply still. >> in terms of demand, where exactly are we for actual oil demand? elizabeth: slowly recovering. just remembering a few months back, oil was so bullish. omicron concerns are on the horizon. major regions such as the u.s. are returning. eventually, prices are really high right now. that might trigger some incremental demand for oil. it is still looking pretty bullish overall.
>> looking ahead now to stories that investors are watching in india. we hear the government is planning an incentive package to attract chipmakers. these food delivery platforms -- this food delivery platform is spending $7 million. it operates in 18 cities. india is the world's second biggest producer of the commodity. rishaad: india planning to sell some 5 million barrels of oil with strategic petroleum stockpiles all part of the corrugated move with the u.s.
and other allies to pressure prices. it does show oil consumers are willing to band together against opec's reign over markets. let's bring in our guest. tell me, have you already started selling this on the market? >> good morning, thank you for having me over. it has been decided that the government will release about 5 million barrels in a corded effort with other countries like china, japan, korea and united states, of course. once i hear from the government on the locations to be released, i will release it from those locations. rishaad: this brings us to the central point. with this coordinated sale in
india, the u.k. and the united states, surely it will only move the needle for the oil price in the short-term. >> i believe it should have little impact in the short-term. we will increase production from january by about 4-10,000 barrells. it is a lot of fluctuation in the market at present. >> when we look at the government rules in terms of commercializing as much as 50% of the strategic reserves, how soon do you think you will be out with the likes of 30%? >> we are in the process of
evacuating some from the storages. as soon as we cleared the space to be taking on leads, we will bring out the storages. that could happen by january of next year. january of 2022. >> can you tell us about the interest and what other -- what kind of companies you have had interested? >> we have interest from the companies i just mentioned. the sides that, we have an expression of interest from any international company who stores . >> let's talk about how many days of india's oil needs are going to be stored and to the extent of what kind of capacity we will see here. >> in phase one, we have about
39 million barrels of storage. we have the refiners, the stock, that is about six for days. as of today, we have roughly 74 days of storage in the kind -- country. rishaad: will you perhaps consider foreign purchases? >> the government has already planned to move ahead and expand the storages to phase 2. we will release about 48 million barrels of storage. this is to be done with public participation. whether it is a form to met --
investor or domestic investor. we plan to release enough for phase two by january of 2022. rishaad: looking at the oil complex in india, we have this new variant of the coronavirus. a couple of cases at the moment in india. should it get worse, how does that play into your forecast? >> i don't see the demand moving down. the variant is not very infectious at present. this will not affect product demand in the country. >> get into the virus strain. our guest yesterday said it will be if not when it comes to india. we have since seen that.
how worried about that argument general? what does it mean for another way in india and more broadly, what does it mean for demand? >> the second wave back in march of last year -- india bounced back very nicely. i believe the impact will not be much on the industry. >> let's check in on the indian markets which are opening up for the final -- the friday trading session. we are seeing some gains coming through on the key indices. we had a 1.4% gain on the centex yesterday. we saw some support coming through on banking stocks as
>> after completing the largest spac deal ever. investors remain uncertain about profitability in the southeast asian ride-hailing delivery giant. the cofounder lopped off those concerns. >> we chose the path that enabled us to get to the most important objective first. that is to get these best investors for our day one cap table. based on our investors that were attracted to the long-term growth opportunity that we see and the very low redemption rates that happened, we are actually extremely happy with the outcomes we achieved as well. >> you turn to grab into a super app. deliveries and ride-hailing.
how worried are you about the resurgence of omicron? >> i think a critical part of grab's growth trajectory has been our strategy that has allowed us to be very resilient to the covid challenges. to share a bit more about what it is, take about grab as uber, doordash and venmo all in one. from the day when it starts, when you wake up, all the way to when you go to bed, you're able to get your breakfast, they for meals, buy groceries and more. it enabled us to have things like strategies with our largest driving partners in the region which enables drivers to decide whether they want to transport people, food or groceries seamlessly in the app and that allowed us to very quickly pivot
to a variety of abilities over the last year. we are very confit we can continue to serve the needs of southeast asia's users and our partners despite whatever colleges -- challenges covid throws at us. >> revenue declined slightly in the third quarter. when do you expect grab to become profitable? >> a bit of context, a large portion of the last quarter's results were because of non-cash expenses. there were more than $700 million of it. much of it will not be required anymore. for us, the other important thing is that growth and buffet ability are not mutually exclusive. you have seen that consistently over the past few years where we consistently developed very high
topline growth while nicking very significant progress on our bottom-line often ability -- making very certificate progress on our bottom-line profitability. our deliveries business which is a very young business, it is only three years old. it has been a net positive for the various markets we have. what matters in our portfolio, our patient strategy is that we will continue to invest in areas where we see tremendous opportunities and strong momentum behind. rishaad: that was the grab cofounder with emily chang. breaking news in from malaysia. they detected their first case of omicron in the region -- in the country. they will continue to see -- we have the first detection of
omicron in malaysia. juliette: let's switch to india. they are finalizing an incentive package of more than $10 billion to attract countries to start chip manufacturing factories in the country. what do we know about the program? >> india has -- they plan to offer these incentives for about six years for manufacturing semiconductors. the government plans to provide c -- capital support. it is thinking of providing designing incentives. the government is planning to push global manufacturing of semiconductors in india. rishaad: why is the government
actually doing this? i guess they are reliant entirely on the outside world. >> yes. the ongoing global chip shortage -- the government wants to cut down on imports. this is to help reduce economic slowdown. these incentives are likely to be above the incentives allowed last year. rishaad: there was our economy reporter. let's check in with the business flash headlines.
we had the executive vice chair of black -- blackstone retiring. tony james said he watched the firm grow. he watched her develop into one of the worlds -- world's finest financial institutes. the u.s. is all for increasing and scrutinizing listed chinese companies. >> let's have a look at the excel off we are seeing in hang seng tech index stocks. jd.com, alibaba all coming out of significant pressure. the index fallen a record low. about $1.5 trillion from this index since the february peak.
we have been watching quite a big move coming through. the index has been dropping to a new low in suite launched the gauge back in july. there are a number of members under the 14 day rsi. rishaad: absolute, security concerns as well. regulatory overhang is making this all a bit difficult. just taking a look at didi. the big story of the day. it will begin delisting as it transitions toward a listing in hong kong. overall sentiment, let's have a look at that. we are looking at a mixed bag for equities in this part of the world.
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>> from the heart of where innovation, money and power collide, in silicon valley and beyond, this is bloomberg technology. emily: i am emily chang in san francisco and this is bloomer technology. the apple falls. why demand is slowing for apple's most popular device. omicron keeps popping up around the world but there is a new treatment