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tv   Bloomberg Markets Asia  Bloomberg  December 6, 2021 9:00pm-11:00pm EST

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15,000 as traders climb through the wreckage of the flash crash. we will get the outlook. rishaad: breaking news, we have carrie lam and her weekly news conference saying hong kong and china travel will start off with the business groups. this against the background of the territory launching a health code in december that puts the tracking capability on par with the mainland preparing to resume quarantine free travel. all of that against a backdrop of a lot of consideration. we have the property space forbearance in repayments. don't forget the new variant, china cutting its rrr against a hawkish fed. last but not least, geopolitics in the form of the u.s. versus russia on the ukraine. david: some data coming through
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as well, i might talk more about that, a right decision out of australia. a global macro move on your bloomberg, stocks with a sentiment boost. there might be a technical balance giving how battered stocks have been. commodities rallying as well, bond yields are ultimately up. we will get to tech in a moment. we will talk more about the evergrande story. a property company down 2.4%. we talked about tag, alibaba, baidu, tencent trading at record low valuations. a big bounce following what we saw overnight. yvonne: a 10% rise we sell, it's interesting how much good news has turned around things. as we get the next set of data
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out of china, the trade figures out any hour now. for november, we are likely to see a rise to a record high for that month, given how external demand remains strong, also a rebound in industrial production. some leading indicators like korea exports also ramped up and accelerated, and pmi numbers we got a few weeks ago as well. still in contraction but better than before. rishaad: an hour and a half away, the bank of australia out with a rate decision. we have the first hike for july next year, against a backdrop of rising inflation. the ultra easy monetary policy has been instrumental in the economy. the imf agreeing that inflation will rise. they might have to tighten in australia earlier than what has been priced in.
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we go from tightening to easing. david: and how much more do we get of the easing out of the pboc? after the rrr cut, december 15 believe is when that takes effect, do we get an lpr cut? ing says this is where it stops for now. we have the two meetings in march and then we might see something a little more. as it stands, it is a policy signal more than being able to shift this massive ship around. yvonne: let's get more on the rrr cut. messages this morning about easing as property hits the downslope. what can we expect next? we have our correspondence.
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david, what can we see from the pboc? david: people are talking about the pboc easing, but i think the signal is already there. i want to say that we cannot expect aggressive easing from the pboc. the central bank has been cautious the past several quarters, as we have seen. we expect more easing from the pboc in the next year, including a rate cut. but again, it's going to be cautious easing. it reflects many of the fundamental and technical reasons behind the move, including we have seen the economy slowing, and in our view, the pboc is trying to offset the dollar hike, which means when the fed is tapering,
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there could be potential tightening in dollar liquidity. it could spill over to the hong kong market so that the pboc is trying to move the dollar cycle. rishaad: you see the spreads getting wider here having an effect that well -- as well. they would want to get cheaper money, wouldn't they? stephen: stocks are up on news of the greater policy support. country garden is up 5%, even kaiser up 4.5%. evergrande was up over 6% last i checked. all of the units of evergrande yesterday, new energy vehicle and property services, all significantly lower. bloomberg intelligence had some takes on that overnight, essentially saying as they are setting up this risk management committee, they are also getting quite a bit of input from the
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government and they may be prompted to dispose of uncompleted projects, they have quite a few of them, as well as listed subsidies. those subsidies they tried to sell stake in property services and they try to sell a new energy vehicle and were not able to do that. bloomberg intelligence is saying this could be pressure on the stock going forward if it hasn't already been under extreme pressure, because they could be forced to sell them at significantly distressed vices, but today, the sentiment is positive for the property sector. they had a missed coupon payment yesterday, by the way. yvonne: kaiser with more can kicking down the road? stephen: can kicking. an offer of forbearance to buy some time. they have a $400 million bond maturing today. this was the first big property
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developer a few years ago that defaulted, trying to avoid default again, seeing if they can buy time. rishaad: ultimately we have a government trying to keep the property side of things from hurting the broader economy, but there's no escaping that, is there? david: we've been talking about the government will want to influence the risk in the sector and avoid any wider spillover to the whole economy. so far i think the strategy works. i don't tie a lot of connection between the rrr cuts and what happens in the market, but i think what the pboc has done would benefit the whole market and could give good insulation
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between the other part of the economy from the real estate sector and evergrande. yvonne: david, thank you, and also i want to thank stephen engle. david, the market has really reacted to the positive sentiment in the last 24 hours or so and in commodities too. david: let's see how long this lasts and whether it is simply an advil on something that is longer-lasting. it might just last a couple of hours. as you can see, a big slide across metals. iron not just today, we are up about 10% the last two days or so. what you don't see on your screens them i can tell you about contracts, like rebar is up about 1% in shanghai. when you look at the lne contracts, software.
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aluminum in shanghai down about 150. i think it is more pronounced when you look at iron ore. the thinking there might be now that you have more financing options open for the property sector, you might get more building coming through, but again, some of the commentary we've seen earlier doesn't seem to suggest that one rrr cut will be enough to plug not just the funding gap but turn sentiment around. rishaad: you've got oil as well and it does seem as though the oil complex at the moment is returning, prices going back up. the thinking there is maybe omicron is overdone. what is the view? david? david: what is the view on omicron? [laughter] who knows, really? since we are talking about this, i was off yesterday and had some reflecting to do on this, the
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fact that the early data suggests it is affecting younger people and it is still a small sample sizing, that naturally brings the rate of hospitalizations down anyway. you are moving into the younger part of the population. just food for thought, compared to deltek, it's also hard to compare apples to apples because the world is more vaccinated. if you look at the rate of hospitalizations, it's not as definitive as you want it to be comparing delta. rishaad: ok, let's look all of these falls and market impacts. sean, always a pleasure. let's get a sense of how things are going to change. we were discussing a few weeks ago how this year has seen stellar earnings and that is unlikely to be repeated. how does the risk reward ratio alter next year? >> the irony at the moment is you have divergent policy
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between the two biggest economies and both markets, the u.s. and china, have credit spreads widening. the paradox now is that changes risk premium for equities, and you've seen volatility in the u.s. picking up, and in china as well. for two of the biggest markets in the world, you have to look at returns per unit of risk. rishaad: per unit of risk? sean: sharpe ratio, and the last 12 months, all one way. good gdp numbers and economic surprises, but this time around it will be volatility. i think the 12 months going forward will be one of the most difficult periods the last two decades. credit spreads widening so quickly after recovery, we have never seen this before. yvonne: you mentioned diversions from the fed and pboc, and that is our question of the day, how will that impact assets next year? sean: i think in this part of
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the world, we are in a slow, grinding decline in china's gdp numbers and i think the paradox now is with property and china accounting for around 23%-29% of gdp, you can only hope the actual slowdown is a gradual one. in this part of the world, i'm afraid to say earnings numbers will still be heading down, and it has been best-performing in china the last 12 months. in the united states, i think it is all about the market reaction or testing of the fed to how far they can raise rates. looking at the flat yield curve we have in the u.s. already in the credit spreads widening, it looks like it could only be two or three at the most and at that point the fed gives in. at some point in 2022, you will have both central banks perhaps going on to an easing or halt cycle both in china and the united states. a quick cycle already,
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tightening policy and loosening it rapidly as well. david: what does it mean for chinese equities next year? they have been chained most of this year and we were waiting for a trigger and that might have been a rrr cut or a sign from authorities. do you think this serves as a catalyst for 2022? sean: i think we will stick very close to the quality, the consumer stocks in china, and also in the productivity plays. i don't see any divergence in that sort of strategy for the next 12 months. i think perhaps the best thing that may happen for equity investors in china is the inflation rate starts to decline, already seeing a peaking in ppi and thermal coal. that will be nice for the h-share market. the good news is balance sheets for corporate and the csi 300 in the mainstream hong kong markets are actually really good outside of the property sector, so
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playing that theme of balance sheet's will probably be the best rewarding strategy in the hong kong/china space. yvonne: you mentioned a-shares might enjoy a boost, what about hong kong? sean: here, the irony is the two major risk factors that drive hong kong is the rate cycle in the u.s., which might be a bit of a damp squib, and strength. the irony is when you have savings in china, currencies tend to be strong and that's what you are getting in china. paradoxically, they want to strengthen. is good for the risk premium. rishaad: sean is staying with us. let's look at the first word news. the united states and european
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allies weighing financial sanctions on russia. president putin ordered an invasion of ukraine. they could target some of russia's biggest banks and the country's direct investment fund and we are told president biden may spell out direct sanctions when he speaks to putin on thursday. u.s. officials will boycott the beijing winter olympics in february, opening a new flashpoint between the two. the white house saying the decision is over what she calls china's ongoing genocide and crimes against humanity and other human rights abuses. athletes will be free to complete -- compete. beijing said they would not be inviting politicians anyway. bloomberg's editor in chief is saying 12 months is a long time in detention and the company is worried about her well-being. she was to attained on national
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secured a violations. that's a look at first word headlines. yvonne: still ahead, bitcoin recovering as traders reel from last week's crash. why investors are not been deterred. david: plus, initial data from south africa fueling hopes that the latest variant does not cause severe illness. is it too early? more on that story later this hour. this is bloomberg. ♪
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david: green across your screens, although some standing out to the downside.
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nick a 225 just closing for the lunch break -- nick a two to five just closing for the lunch break. still with us, sean darby. we talked about indonesia, i think 12 days ago we were at a record high. you are still optimistic. sean: it is a story that has not been hurt by investors, i think innocence you have the best over -- best over balance of payments in indonesia, record trade surpluses, fx reserves close to record highs. you mid -- you remember amid the taper, this market and the financial system under incredible stress. i think at the moment it is very insulated. the normal achilles' heel for indonesia has been high inflation, and that has been relatively subdued good the factors that would normally cause indonesia to underperform are actually reversing and you have this big boost from the
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commodities cycle occurring at the same time, and a decent vaccination rollout as well. yvonne: you think indonesia stands out amid asean? sean: yes, vaccine rollout have delayed some recoveries. but indonesia has economic momentum and they are really opening and can unleash a lot of pent-up demand as we've seen in the u.s. and europe in the last nine months. rishaad: how interested are you in the digitization? we see ideas coming through, we were doing interviews, the first unicorn yesterday, it is quite something. are we missing the boat? sean: there are two stories, one is that asean has a lot of ability to scale. for digital models, it is perfect to enhance returns.
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the second is, what we've learned from china is digitization brings about disinflation. you get a long-term secular drop in the inflation rate. you essentially get large productivity gains being built into the economy from digitalization. five years from now, these economies will not have any inflation problem at all, but will be having low inflation. i'll come back in five years. [laughter] david: some of the plays one would have thought would benefit from that have seen a massive collapse. grab for example, initial ipo in the u.s. yes, the trend is there, but does the market seem too richly valued? sean: initially they were priced for perfection, they could not really looking to beat a lot of the numbers, particularly as we have these serial lockdowns and
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restrictions. i think the issue perhaps is in the background, people are looking 12-18 months out, where credit conditions may be tight and these companies may find themselves facing risks of refinancing. that will probably be the issue for some of these ipo's and the more venture capital linked companies, credit conditions might not necessarily be as amenable as they are the moment. rishaad: thank you so much, sean darby. if you are a bloomberg subscriber, you can catch up with all of our interviews by the interactive function tv . you can also send messages to our team and guests during the program. ♪
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yvonne: we are tracking the fallout of the global supply chain crunch. these are your top stories today.
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u.s. international ocean shipping regulations could undergo their first major update since 1998 under a bill the house is scheduled to vote on this week as lawmakers look to address backlogs in the supply chain. meanwhile, a new report says the virus and brexit have created a perfect storm for shortages in drivers. and the demand for chips has turned deadly in malaysia, at least 20 workers in a facility have died from covid this year after they kept their plant running. authorities in the country had granted exemptions despite lockdowns. rishaad: little understood human cost of keeping supply chains running in the pandemic might and a lot of implications for other chipmakers as the omicron variant emerges. many companies have facilities in malaysia and more facilities will be as the situation worsens
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in southeast asia with the region being key to the semiconductor supply chain. you can read more about this in our newsletter, supply lanes -- supply lines. david: looking at your markets, starting on with property, up 110 points on the shanghai property index, evergrande coming off highs, though still up doug -- double digits. in the asia-pacific, with hong kong shares about an hour into the session, 8.5%. just to get a sense of your sector movers, most are up, not all, led by your consumer related names. there we go. logan group. do we have the sector boost?
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we don't. we are headed into the tokyo lunch break. plenty more ahead, and rba rate decision. we will talk about that. tokyo, 1.3% into the break. this is bloomberg. ♪
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>> welcome back, it is midmorning here in hong kong and in shanghai, just 9:29 p.m. if you are watching on the east coast. up 7/10 of 1%, essentially snapping two days of losses so that means we have not fully reversed the losses yesterday. rishaad: let's move to first word news. china looking to expand support for the nation's economy. a monday paul upon the meeting
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led by president xi jinping concluded that with signals and easing on curbs on real estate, that follows the pboc's move to observe by half a percentage point next week, releasing $188 billion worth of liquidity. bloomberg has been told that china evergrande group is planning to include all of its offshore public bonds and private debt obligations in a restructuring that may rank among the country's biggest. sources say the plan would allow public bonds sold by evergrande plus notes issued by jumbo fortune enterprise, and the formal structure and process is yet to begin. . . details could still change myanmar's military regime has reduced former leader aung san suu kyi to 10 years in a guilty verdict since her february 2. she was initially sentenced to four years jail, but now she will serve her sentence at a current location thus avoiding
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prison time. the conviction for inciting defense has been rightly criticized -- has been criticized by western governments. the new york stock exchange president is stepping down. meanwhile, sharon berwyn has been named as the next chair of nyse, replacing jeff sprecher. j.p. morgan chase executive director patrick mccue has told ghislaine maxwell sex trafficking trial that jeffrey epstein wired tens of millions of dollars to the british socialite. mccue testified epstein sold millions of dollars in stocks on several occasions and transferred the money to maxwell. that's a look at some of the first word headlines. david: let's check in on some cryptocurrencies. not all, obviously.
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otherwise we would be here until the future of yesteryear. bitcoin back above $51,000. an attempt to everything together, but of course that means it is up and we are at the midpoint of today's session. yvonne: it went back to $50,000, going to how sustainable this is, given the crash saturday, but there's a lot of questions lingering on whether the bull run is over now that we are seeing the market measure and there is liquidity. let's get to our next test, holding onto his position when it comes to bitcoin, taking advantage of the dip and buying some more. bobby lee cofounded some of china's biggest exchanges and now has crypto start up ballet. always good to talk to you. have you found a floor when it comes to bitcoin? >> we are still in the big bull cycle, so i think every few
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years, we have a bull cycle. within that, we do have corrections every so often. we saw a pretty meaningful correction on saturday, but we bounced back above $50,000. in terms of this bull market, we will not go below $40,000 until we really peaked out later in the bull market. david: just to poke on that, $40,000, based on what? >> just based on my gut. [laughter] no one can predict the future, obviously. but the way i see it is in order for us to see a real peak, the question is, have we seen the peak and is the bull market over? i can firmly and confidently say i don't think so. the reason is for the bull market to peek out, you really want to see the price double in
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a matter of a few days or a week or maybe 15 days at most. so far, we have not seen that. we've seen the different price rises steadily since about a year ago when it crossed $20,000 at the previously, that was the all-time high set four years ago. after that, it's old up to $40,000, $50,000, $60,000 and topped out near $69,000 a year ago. we have not seen that sharp rise that has been standard for showing the height of the bull market so i think that is still coming in a few weeks or months. david: since it's the first time we are talking to you after the event over the weekend, what do you think caused the crash? >> a lot of things. market corrections happen every so often. it could be based on news or rumors. there are two insights i want to share. the reason it corrects sharply is because people in bitcoin, a lot of traders are greedy. they go on long positions and
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short positions using high leverage on margins or futures contracts. when that happens, any sort of correction will force a liquidation and it is a panic selling situation. that's why the market dropped so. much it dropped like 10%, 20% in 24 hours. we heard yesterday in exchange that bit mark -- that it was hacked. maybe the hackers found the hole in itmark a few days ago and then decided the feeling of the currency and it sold short the market to cause it down word spiral -- downward spiral. this is my speculation, by the way. rishaad: it is interesting. you say that bitcoin has to become legal tender as it is in some countries like el salvador.
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you say it's not a question of whether you believe in it or you don't, it is just basically then a speculative asset? >> to me, it is not a speculative asset. whether it is a speculative or investment, it is all investments. what you consider good investment in real estate and some frothy city, i may consider that to be speculative. for bitcoin, legal tender is not important. in my opinion, bitcoin has already succeeded on its way to becoming the global reserve asset class. it's a digital asset class used globally. i think it is the true form of moral -- money going forward for society. like gold, gold is not legal tender for many countries. you can't use gold, to buy something like coffee however it is valuable. at the same time, bitcoin does not need to be legal tender for it to be valuable. the investment thesis does not
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rely on bitcoin being a currency for daily use. yvonne: what about digital currencies from central banks? we have the bahamas coming out with their first digital currency, china is making waves. how could that threaten bitcoin in the future? >> those are called central bank digital currencies that the acronym's cd bc, sometimes called digital currency electronic payment. these are actually very different from what we called the decentralized crypto such as bitcoin and ethereum. the central versions are a different form of the existing fiat money. people might think there's only one u.s. dollar, but i would like to say there's three different ones. there's the paper, the famous benjamin franklin on hundred dollar note. there's the coin version,
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quarters and nichols, and the electronic money you see in your bank account balance. you can eat -- interchange them freely. they are also attached to the same u.s. dollar value. when there's a central bank digital currency, let's say the central bank issues that, it is the fourth variation. these are four variations of the same money so it is not competitive to bitcoin. rishaad: what could be competitive though is what the international bank talks about, an international type of digital currency backed by several countries. what is your take on that? >> the fundamental thing about fiat money and the existing policies, money today, the central banks like to say it is backed by faith in the government and so on. that is why you hear like the special rights, all of the countries buying into it. but bitcoin and cryptocurrency challenges the market. the whole idea of bitcoin is you don't have to be backed by anything.
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it is backed by nothing in terms of people and power. it is not backed by government, not a promise to pay. there's nothing backing it. that's why it's a true asset. only debt is backed by something. debt is backed by stuff but assets are not. that's why people get confused. the money we use today in our pockets, those are debt instruments. the reality is it is backed by the fed and it is on the balance sheet as a liability of the fed, whereas bitcoin itself is not on a balance sheet. it is a true asset class like gold. gold is not a liability. we know economists know this, but i think a lot of the general public are a little confused about the topic, so i'm not too worried about it myself. david: so let's get them into the fundamentals. people point to technology as being behind the reasons why you should get into some of these
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altcoins. apart from bitcoin's your, what other coins would you look at? >> to be honest, i'm not a big fan of most coins. i know there's a lot of market valuation. i'm very much a core bitcoin proponent. i see all coins backed by their projects and respective business models and so on. for me, that is why, because bitcoin is not backed by any promise where it can fail but bitcoin is truly the idea of the limited issuance, the 21 million, and decentralized so anyone in the world can participate with no part -- permission needed from an authority. the concept of the limited amount of bitcoins and being permission list, no one needs to give you permission to operate and join. thirdly, decentralized, there's no one in charge.
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for that reason, i am much more of a fan of bitcoin and all the altcoins themselves, we will see how they fare in the market in the coming months. david: bobby lee, thank you so much and have a happy new year if we don't see you before that. ballet ceo and crypto founder, bob ely. -- bobby lee. bloomberg's cryptocurrency monitor for clients, that is c r y p go on your terminal. for plenty more ahead, this is bloomberg. ♪
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rishaad: hong kong saying it is prepared to start limited travel with the mainland after weeks of negotiations and inspections. let's get to rachel chang, helps lead our coverage in asia. chief executive is talking about it is what she has been saying, and what do we know as to the timeline and groupings here? >> they have talked a lot about it and i think they are saying that they were hopeful it would
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stop for 2022, probably not before christmas. they will start with business groups and they are already reaching out regarding the quota. they have not publicly committed to an exact timeline or quota, which i think speaks to the lack of certainty and the fact that they can't really get china to really sign on the line yet. they are still working hard to make that happen. david: they emphasized that omicron will not sort of pose a threat to the initiative, but will it in the future? >> i think we can't rule it out. what happened in the last few years is china is so reluctant to take any risks. opening to hong kong represents a risk. hong kong has really decided that the china border is the only thing that matters. i think they have really harmed their reputation as a global business hub.
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western business is having a hard time negotiating at all because they say china is the only thing that matters. right now if they don't get the chinese border open by the end of the year, hong kong has not much to show for its incredibly aggressive strategy and that is something they are very aware of to get done. yvonne: what more does beijing want to see though? >> that's exactly what is unclear because hong kong has had no cases for so long. so the question really is opening hong kong that important to beijing? from what we see, it is clearly not as important in beijing as it is the other way around. yvonne: just the latest when it comes to the data in south africa, they are saying there is more optimism about what you are hearing so far about yes, it is transmissible, but the symptoms seem quite mild. we heard from joshua sharfstein at johns hopkins earlier. >> one of the earlier indications is you are not seeing so many people going to
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the hospital very sick, which would be bad. on the other hand, we are seeing information that it is very transmissible, even among people who are vaccinated. hopefully, we will know more within a week or two and it may be a situation where there is increased risk, particularly for people who are not vaccinated and will reinforce the need to get vaccinated and eventually perhaps update vaccines. yvonne: what more do we know about the data and what does it tell us? >> the lack of severe illness and hospitalization out of south africa is positive. we are not seeing tons of people get seriously sick. at the same time, transmissibility is an open question. it's important to look at, it is not the degree of illness, but how quickly it transmits. there will be more immuno compromised people who are affected and more elderly. that is the question we have not been able to answer and that's
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what the people are watching for. can it outcompete delta globally? yvonne: in other news, we have talked about the tech space and softbank shares seeing a rally on the back of what we saw with alibaba, snapping a seven-day losing streak, rising close to about 8%. then didi rallied, softbank lost nearly a quarter of its value, the u.s. ftc also suing to block softbank's sale of arms to nvidia. rishaad: a quick clarification from earlier, bloomberg said the cofounder of the chipmaker but in fact he's the cofounder of acorn computer group. breaking news coming from a report for the pboc. david: the report is from the securities times citing their own sources, saying that the pboc will be reducing the
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relenting rate to support the rural sector, and the timing is that cuts will be affected from december 7. we are looking at a quarter of a percentage point cut to the relenting rate for the pboc according to the securities times. yvonne: and they were saying that the rrr cut may not have passed through to some of these smes, so they are having additional measures to pass through to that part of the economy. certainly more signs of easing. rishaad: what do we have coming up? david: welab tells us why they announced the big deal and why the fintech firm is buying a bank in indonesia. that is next. this is bloomberg. ♪
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yvonne: hong kong fintech company welab is buying a controlling spit -- stake in bank of jakarta. they are funding the acquisition of other investments. we spoke to the founder and group ceo, simon loong. >> this is a very exciting opportunity for us. indonesia, we feel it is one of the most important markets of
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the next decade. very large population, and at the same time, 118 million of them are tech savvy young adults who are already buying everything online. there's a lot of opportunities writing on the success of our first bank launch in hong kong. it's a long-term strategy to extend to indonesia. >> yet, the hong kong market is pretty different, especially talking about scale. what gives you an edge in indonesia? >> i think hong kong's international financial center is fortunate that hong kong made international banking licenses ahead of most of their southeast asia counterparts. when we got our license, with technology know-how, it is actually quite different running a traditional bank and building an additional bank. we can extend these know-how was and economies of scale as we enter into multiple market opportunities. in particular, in addition to having a head start, we already
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have indonesia business, a joint venture with indonesia since 2019 with 3 million users already. we can leverage on existing and new partners to expand. if you look at the market, there are some digital banks and existing banks that are traditional come up but most of them have a few hundred million users. if you look at the whole population of 217 million, there are still a lot of opportunities. reporter: where next, regionally or southeast asia specifically? >> i think the whole southeast asia has a lot of opportunity for digital banking. if you look at multiple jurisdictions from singapore, malaysia and indonesia, these markets are just talking about international banking licenses and many of them have not even opened for business yet. if we can leverage on the hong
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kong opportunity and extend it to southeast asia, the aspiration is to build a digital bank in the next couple years where we can cover multiple markets and move faster than everyone else. reporter: anything you can tell us about a potential ipo? what kind of numbers would you be -- you be looking at? >> we were planning to do something this year, but with this acquisition, we want to complete it first. it is part of our long-term story, building a digital bank and combining it with our profitable online landing platform with 50 million users. reporter: would it be in hong kong? >> we are keeping an open mind. there are a lot of options right now in the market is very dynamic. right now, the important thing is to launch a digital bank and we hope to do so in the second half of next year. david: that was simon loong,
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welab founder and ceo. let's get a picture of chinese trade numbers which have not been released just yet and could come out any minute. here's the forecast. 20% plus gains for imports and exports and trade balance at $85 billion u.s. yvonne: we will see if that lasts. we can see if that will help buffer the economy for next year and possibly keep the renminbi stronger as well. we are talking about the rba as well. it will be interesting. they will not do anything, but the market still seems that everything is too hyped by the end of next year. phil said the end of next year. rishaad: the imf will be prepared and inflation will be a little more vigorous. maybe they will have to do something earlier than expected. it is this conundrum about house prices, quite something. there we have it.
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rba decision is about 35 minutes away before we get no move, probably, i think. i think david says two more rate hikes next year. this is bloomberg. ♪
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>> almost 11:00 a.m. in hong kong and shanghai. welcome to bloomberg markets: asia. rishaad: let's have a look at our top stories. beijing signaling a shift in the policy sector hampers road -- growth. intercepting something like $188 billion in liquidity. yvonne: that's how they list the benchmark for the first day and three. we will get the outlook for morningstar ceo. rishaad: speaking live with the
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nissan ceo, about their plans to the shift to electric vehicles. yvonne: seeing some calm coming back to the markets as we finally got that indication from the pboc that perhaps they will start easing. that rrr cut was what helped. also talking about they might actually start relaxing curbs in the property market. nevertheless, any kind is shift is helping sentiment today with the hang seng. we are up 270 points. asia tech is doing well. by the likes of alibaba after what we saw during the u.s. session. the csi 300 as marginally higher. the nikkei 225, seeing regional benchmarks -- i mean, asian benchmarks doing quite well on this shift. the fed and the pboc soon's -- seems to be diverging. it's a countdown to the rba decision to the bottom of the
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hour. yield is one basis point higher at 89 basis points for your three year yield. you see the chinese two year yield a re-stabilize after one of the biggest move since july on the prospects of the rrr cut. 285 for your china tenure yield right now. we are tracking some of the big movers in greater china as well. talk about the property sector. certainly getting good vibes when it comes to the signs of easing. that's up 1%, evergrande is down from 4%. it's more detailed according to our sources with the risk structuring. breaking news when it comes to trade data. rishaad: november exports rising 22% year on year. it will be of 20%. we have a beat in imports in dollar terms once more. 21 and a half more. yvonne: 31.7.
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exports at 16.6%. 26%. brings the trade balance and remember you. 71.7 2 billion dollars. rishaad: that's currently any impact on the currency. the check on that with very little movement for the cnh or cny. 6.37 for the both on the bond markets. not much going on. perhaps we will get a reaction in terms of the trade numbers later on, as we still see that csi at one third of 1% to the upside. yuan terms, a trade balance of 60 billion yuan a as opposed to 584 billion. the estimate again because the import side of things. yvonne: let's get the take on
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the numbers. your initial thoughts. >> i think our expectation has been strong create -- strong trade growth in the next few months. somewhat stronger than market. today's rate hikes are stronger than what we were expecting. that's less than 20% of export and import growth. the picture is encouraging. you look at all of these demands, consumption is recovering based on the european and u.s. economy. and also, corporate capex is flowing quite strongly. i think that is going to be a very supportive factor for chinese trade. so far this year, early in the year, people were doubtful whether china's trade could hold out. i think trade has proven to be quite resilient. despite the supply chain disruption, despite all the
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different variant's of covid, and the world economy, as i mentioned, another very important trend is the broad diversification of chinese trade itself. for instance, this year chinese auto exports doubled from one year ago. a lot of those have been driven by electric vehicle exports. that is a new thing. china has had a very important play in the auto market globally. but i think that shows the underlying dynamics of the manufacturing. rishaad: they have a role to play here, but to be on the import side by over 10 percentage points, that is absolutely massive. and perhaps all these rumors of the chinese slow down and being a bit misplaced given the number and sharing the domestic demand, must be strong. but how i've said that, how much
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of this is down to high commodities prices as well? >> commodities prices play a big role for sure. you have ppi in their teens. and that is similar to the year on year. rishaad: it feels that would've been dealt with in the estimates. . >> i think the underlying demand, if you look at the demand indicators, credits are incrementally stabilizing. and i think the growth rate in the next few months you will see more stabilizing ahead. and we see relaxation, some relaxation in the energy space, industrial production is likely to pick up as well. and also, we had more imports on the commodity front, also yuan to meet the energy need. so i think that all plays into the stronger-than-expected import. yvonne: the rrr cut we got
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yesterday is lifting sentiment in markets. when it comes to the economy, how much gets passed on to the economy? >> i think rrr cuts is a supportive measure to support the sentiment in the liquidity. it's essentially lowers the funding cost for the bank, so the bank can have more money to lend. whether the banks lend, depending on the demand and other factors. so what i would say is, it depends on a range of other policies and the meeting signaled this easing policy. so what we are looking for is in the fiscal space. because, this year, fiscal policy has been quite tight. whether going forward, we are going to have more easing on the fiscal front. in another area is credit policy and housing market. and that is going to help the
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liquidity measures to pass through the economy better. rishaad: this is it, isn't it? how much fiscal support is needed when we have been quiet with the monetary policy easing? monetary side has a lot of was oh -- rigell -- wiggle room, does it not? >> monetary policy does have wiggle room, but in terms of support and demand, easing liquidity does not push it. there is a certain limit to that. so you need the end demand to be strong. and this year, what we have seen is that demand has recovered, industry sector is strong, but some of the services sectors are still lagging behind. drop -- job growth is still lagging behind. that calls for more harder hit policy support. that, in my view, calls for those supporting fiscal stance, for sure. yvonne: how far do you think
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authorities will go with putting this in the property market? we saw signs of easing, but what curbs will remain in what will not? >> i think the broad direction of shifting resources away from property has not changed. so, we are probably still going to see some slowdown in the sector in the next few quarter years. but what the policy easing signals is that they don't want this to be a broad sector. they don't want the broader sector, liquidity to be affected. so, i think what's likely to happen is, mortgages are going to ease, and we already have seen some easing in this space. in the developers access to financing will be eased somewhat more. we will see some easing. but that is going to help the sector as a whole, but the
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factor will be quite differentiated. the marginal players will probably still be at risk. because, over the last few years, this sector continued to jump. so there are players out there that leveraged, that have liquidity stress, and they rely on offshore borrowing, and a lot of the issues still need to be resolved. yvonne: we have been talking about the divergence between the pboc, which is a shift to easing versus the fed, urges even considering quickening the tapering. how that affects assets, i would ask how that affects roman be -- renminbi. >> i would say renminbi is still supported by the trade data net -- trade dynamics because the fed is high getting the context of strong growth so that helps chinese trade. and there is a lot of global allocation into chinese assets. including for reserve
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diversification purposes. so that still supports renminbi. i think pboc is also wary of the risks of uber evaluation, because a lot of capital inflows trying to place comic that can push up the currency too much. so you see that the pboc is sending more guarded messages on this front. so our judgment is up and is still supported, but the upside of renminbi against dollar is quite limited. we are expecting about 1% for next year. >> always a pleasure, thank you for joining us, from ccb international. that's gets our mliv strategist mark cranfield and singapore. it got beat by a huge amount here. we have a 31.7% increase compared to 21.5, which is expected. exports with slight demand. given a sense of how the market
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digests as usual, we don't see that much movement on the chinese market just yet. mark: i think the margin is slightly weaker for the yuan. you might see dollar yuan start to creep by in the next couple of days. these are still very big numbers. if you look at the trade balance and came in at 71 billion u.s. dollars, which is in a norma's surplus. it was not that long ago that we were getting surplus in the 20 to 30% range. it has been in extorting a year for china trade, even though these particular numbers are slightly weaker than expected, but one of the things that have been supporting the yuan so consistently is because the chinese exports have been so strong. chinese companies have had a lot of boring currency to convert back into yuan. that's why it's one of the biggest factors the seer -- factors this year. if we are seeing slightly less money coming in for chinese
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export companies, it's a little bit less to support the yuan in the foreign exchange market. yes, it helps the dollar yuan a little bit. then you have the divergence policy, which you have been discussing between the pboc in the fed. it won't go up dramatically, but it is all slightly in favor of the weaker yuan. yvonne: and you have been watching just everything when it comes to evergrande, the debt restructuring. we are getting more details of what it might entail and it may include offshore bonds. but how do you think that plays out for asia credit? can we breathe a sigh of relief now? mark: it's way too early. this evergrande situation is extremely complex. it's a huge amount of debt. there hasn't been -- in asia we haven't had an example of a company with this much total amount of debt with diverse entities, the different kinds of loans and bonds and all the different borrowing aspects. it will take a very, very long
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time to unwind this. it will be hanging over asian markets for a long time. and then because of that long, drawn out process, it will put people's enthusiasm or other chinese companies. there are a huge amount of bonds to be repriced or people need to refinance. a huge amount of bonds in the first part of next year. all in all, this is a big factor overhanging the credit markets in asia and beyond that. it would affect equity markets to some extent. so we really, at the beginning of the cleanup process, but it will be a long way before we get really any hard evidence of how much it's going to cost, who is going to lose what, it's going to be a painful, long drawn out process. rishaad: mark cranfield joining us from singapore. of course, long drawn out process, other long drawn out process in the field of geopolitics. moscow and washington are due for an important call.
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let's get some more and join su keenan for the first word news. >> we start with the u.s. and european allies, they are said to be weighing financial sanctions on russia if president vladimir putin will resume -- with ukraine. bloomberg sources say they could target some of russia's biggest banks in the direct investment fund. they told president biden this bailout of potential sanctions when he speaks with putin on tuesday. u.s. government officials will boycott the beijing winter olympics in february. this is the new flashpoint between the world's two biggest economies. white house press secretary jen psaki says that the decision is over what she calls china's ongoing genocide and crimes against humanity and other human rights abusers. athletes will be free to compete even as administration officials stay on. bloomberg news says it will continue to do all it can to
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help stop -- and her family one year after she was detained in china. bloomberg editor in chief john micklethwait said, 12 months of detention is a long time for anyone to endure, and that the company remains very worried about her well-being. china was detained on suspicion of national security violations and the legitimate rights and interests are fully guaranteed. hong kong is reportedly planning to require restaurant diners to have had one dose of the covid-19 vaccine in the morning post said only children under 12 will be exempt. the city has listed more than 30 countries. the omicron variant has higher risk, forcing -- 21 days and mandatory quarantine. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries.
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i'm su keenan, this is bloomberg. yvonne: the reading on the strength of india's equity market rally with morningstar ceo. rishaad: nissan's chief operating officer is joining us to discuss the carmakers regional plans and the alliances role in the moves to electricity. we have the ceo joining us live. this is bloomberg. ♪
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yvonne: evergrande shares up close to 4.5%. that is up about 15% on better prospects when it comes to easing in the sector. that was the signal that we got from policymakers yesterday. we are getting a sense when it
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comes to evergrande, what's the debt restructuring going to look like? bloomberg has been told that china is planning to include all offshore obligations and that restructuring among the nations biggest. rishaad: they are trying to make sense of it. chief north asian correspondent stephen engle. we don't know everything, but what do we know? stephen: i'm trying to make sense of it and how long this is going to be going on in protracted, as mark cranfield just said in the interview and the block before from bloomberg markets mliv. he essentially said this would be an overhang on asian markets for some time. don't know the time frame, but we don't know the true extent of the 300 billion plus and liabilities because of the various joint ventures and guarantees of loans like the jumbo fortune enterprises that were off balance sheets. things have to be unwound and seen what the true extent is,
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but this appears to be the beginning of this restructuring plan as yvonne just said. bloomberg news reporting has found out, because on friday, we didn't know the nuts and bolts of it, we did not know the size and scope of debt restructuring. we knew it was likely to be big, but what did it entail? bloomberg news is reporting it will include all of its offer public bonds and private debt offering. we know that according to bloomberg data, evergrande has $19.2 billion in outstanding offshore public bonds and 8.4 billion bonds and local notes according to bloomberg data. essentially, this is going to be, if not, the biggest, one of the biggest debt restructurings, definitely seen in china. so, let it begin. yvonne: this is going to be a drawn out process that could take some time to really hammer out. we are getting a bit of a relief today. stephen: we are getting a relief
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because of the relief measure, whether it is from the bureau for the relaxation of the property market, in addition to what we learn from a group of offshore bondholders advised by lazard, have sense -- sent a proposal, a reprieve, a formal forbearance proposal designed to give the beleaguered developer kaiser more time. perhaps at the time when things are loosening up, to find and to avoid the default on the blonde -- bond that matures today, the $400 million bond. just buying time to see if they can get through this without defaulting. but, they were the first ones to default a few things ago -- a few years ago. rishaad: we have sunshine 100 on sunday, what has become of them, i'm not too sure. yvonne: i want safe -- stephen: i once a bankruptcy. they have defaulted multiple times. stock price is at $.37 or whatever, down considerably. rishaad: chief north asia
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correspondent stephen engle. looking at these trust firms. $5 billion in high-yield products linked to china evergrande and bracing for a cascade of losses. i don't know much about this, but we've got them unable to meet their financial obligations and where they are left. yvonne: it goes to show how tangled this web is, beyond onshore/offshore creditors, we have some of them that have hidden debt. the trust firm is still in the question mark of what to do. they are holding these emergency meetings about calculating what the risk is at this point. but that is still the next thing to watch, on top of all the other things. rishaad: smoke-filled rooms and back offices, i suppose. yvonne: if you are a bloomberg subscriber you can use our interactive function tv . you can join the conversation by
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sending instant messages or questions to biggest throughout the live show. check it out. this is bloomberg. ♪
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yvonne: a quick check of the business flash headlines. toyobo will build its factory in the u.s. and greensboro, north carolina and joins an industrywide push to electrify the fleet. the japanese carmaker will invest $1.3 million in the facility, which is set to start production in 2025. a company called prime planet energy and solution will join the partnership. -- is said to be considering several key executives for air india as it works to finalize a
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turnaround plan for the carrier. the group is looking at internal and external candidates for roles including ceo and cfo. it is in the process of taking over air india from the government after winning a bid in october to regain control of the airline. rishaad: let's check in with that trade data that we just got a half hour ago -- actually, about 25 minutes ago to be precise. this tells it all. it was the imports. 31.7% increase and we were looking for a 20.6% gain. we also saw the export have things moving better than anticipated. but, ultimately, but we do have is a trade balance, it did narrow. $71.7 billion there. in yuan terms, 26% up, those imports are way ahead of the estimates. seeing a little bit of a sudden move. when we did see the numbers come out for the csi, one third of 1%
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up with nearly half of 1%. yvonne: we are minutes away from the rba decision, the aussie dollar is slightly higher. we will bring the details once the news comes out. this is bloomberg. ♪ ♪ so, i started listening to audible about two years ago. a friend of mine recommended a book to me, and i got hooked really fast. and then it kind of just became a lifestyle after that. i've found new authors. i've found new interests. i've found all of these wonderful things. audible has all the entertainment you love. text listen4 to 500500 to get thirty days free. i like thrillers, true crime podcasts, news podcasts... science fiction, space dramas... a lot of classics. i listen almost exclusively to the audible originals. i also think it's pretty special that they get audiobooks that aren't released anywhere else. my friends listen to audible as well. i'll recommend a lot of things to them, especially the new sandman series. you can find things that will take you to new worlds.
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rishaad: we are talking about it being 2:29 there at the moment in the sydney. we are, what, 42 minutes away from a decision from the reserve bank expecting no change in interest rates but here we go. let's look at what the possibilities are. there's no meeting in january so they've got a lot of time to digest the new variant of the coronavirus. yvonne: they have to weigh in on the risk for omicron, if it
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impacts reopening plans and if they're going to telegraph when to tighten. that's what the market is looking for, pricing in two rate hikes by the end of next year. phil lowe says, i don't think i want to do anything until 2024. will he have to walk back comments in the face of the new variant and inflationary pressures. we talked about the housing market, unchanged, record lows, 0.1%. we'll see how this comes out in the statement. they say they won't lift rates until inflation sustainably within target so the key focus is bringing down the jbles s rate, as well. they'll continue to buy bonds at 400 aussie dollars a week until mid february. rishaad: they're buying these bonds, snapping them up faster than they can print them at the moment. we've got this lack of movement.
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let's see if there's been reaction with the aussie dollar, looking at it .4% higher but pretty much at that level so not much changed. intraday, little or no movement there, as well. talking about the emergence of this new variant as being a new source of uncertainty. that's the obvious. they're also talking about global yields declining due to the variant, as well, and likely to take time to meet conditions for a rate rise. i'm p suggesting they should raise rates before july 2022. seeing two rate hikes in the pipeline for the r.b.a. during the course of next year. yvonne: how long can the r.b.a. hold on with rates at this point. some more alliance classing. the board is prepared to be patient so i think it is dovish in the tone of comments. inflation pressures less in australia than other countries.
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they've talked about dynamics of inflation a little bit different down under and say that by mid february they will hold 350 billion aussie dollars of bonds issued by governments here so those are the latest lines. economy returning, capri delta path in the first half of 2022 but likely to take time to meet those conditions for rate rise. rishaad: they are looking for further pickup in wages. another thing expected. they're prepared to be patient. that's well worth knowing. yvonne: aussie dollar edging higher so there may be hawkishness but we're seeing a touch higher by .2%. rishaad: things stand lowest on course to be the first r.b.a. governor not to lift the benchmark rate during his term,
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according to one analyst. yvonne: looking at the rest of markets today, the risk on session continues on the back of what we heard from the pboc. shift in the size of easing as they try to assess the risk in the market, evergrande roiling the stock but risk sentiment improving and snapping out of two days of losses in the region. nikkei 225, up 1.4%, hang seng up 314 points. tech, alibaba recovering after quite a rally in the u.s. session. the kospi flat and a.s.x. 200 up .5%.
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rishaad: and nissan looking to turn more than 50% of sales into hybrid or electric vehicles by 2030. our colleague is in dubai. >> i'm joined by the nissan motor company chief operating officer, arbwani computerra. computer -- gupta. big ambitions by the whole of the middle east. where is the biggest portion of growth going to come from? good morning? >> good morning, thank you for this opportunity. it's great to be here in dubai and i'm here for the great exports and last evening we revealed the anniversary of petrol and that's the reason i'm here and so excited to be in this region. you know why, because we are here for more than five tickets and we provided mobility to the region even before the
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infrastructure existed so mobility for us is in the deep roots of the culture of this region. >> driven pactically by every expert you see up and down the row but what proportion of electric vehicles will we drive by 2023? we are consumers of gas here. >> for us, we are going to have a natural shift towards electrification which means customers should be driving the natural choice towards electrification. we have to be the right enabler to make that natural choice. how we are going to do that, driving excitement, e.v. adoption. for this region, we're now going to be part of the vision 2021 which is about global excellence, sustainability. >> give me a sense of boom? people here aren't necessarily
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able to get the nissan into their doors so what boom are you seeing? >> for us, the s.u.v. boom will drive the growth in this region. electric cars are also going to drive our growth. what we really want to do is not to do electrification in any region for the sake of electrification. we want electrification pulled by the customer, not pushed by us. that's why we announced our petrol last night, 70th anniversary. it is v-8 which gives the driving excitement to the customer to go to any terrain. >> you'll have to get an infrastructure change to deliver that e.v., aren't you? and that's the essence of driving e.v. strategy? >> absolutely. there are three things which are very important. let's take an example, if you want to electrify petrol, which means driving excitement to drive in the desert should be
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better than today's v-6 or v-8 engine. the second is about the infrastructure and third is about the ecosystem. yes, i think we need all three to go hands in hands. >> you're the chief operating officer with a global perspective. the c.e.o. said there's a ship and chips program. where are you in the supply chain crisis? how bad is your supply chain interruption and where is it most present? >> the pandemic has taught us many lessons and i think the supply chain which is the one which was most impacted. post-pandemic, also, we are continuing with a supply chain crisis. the reasons are many but there are three, number one, during pandemic plants were closed. number two, regulations and customer behavior, they're asking more and more electronics. and number three, technological disruption which is the electronics we put in the car is the same as in electronic appliances. we have to adjust our supply
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chain in line with the new normal. >> what's the biggest adjustment? >> for us, car is commodity so we have to manage the last part of the supply chain by ourselves. >> are you seeing any signs that your supply chain is improving or is the chip flow getting any better? >> how we define is what we did yesterday. whether it is there where we say confidently we are 100%, i don't think so, and i think it will continue next year, also. >> you've lived through delta. you've lived through covid and we're entering omicron. what changes if at all have you made as a global c.o.o.? are you ready a worst-case scenario, changing direction in any way? >> for us in the new normal the biggest takeaway for us is how we should run the operations
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without people at the actual place and i think this is the biggest takeaway and accordingly we have adjusted our operational system in line with. >> therein lies the point. you had to cut production in october to weather the supply storm. are you going to have to cut back production any further? and if so, where and by how much to weather the storm? >> what we are trying to do, we are locating our production to profitable markets and markets where customers are waiting and that's how we are locating our semiconductors. we cut 22% production in october and we are going to continue production in the following months also. however, we are -- >> down by 22%? >> i'm not sure 22 but it should be double digit. >> let's talk about planning for the future because it is about electrification. i know america is where you hope
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to build your battery plant. when will that be? and i suppose the question is, what will -- what place will renault be in electrification plans? >> nissan in 2010 we launched the first mass electric car. since then, we have gone through this e.v. journey. we announced our e.v. plant in u.k., in japan, in china and next is united states so what we announce our two trillion yen of investment, roughly $18 billion, including electrification in united states which is factory and charging infrastructure. >> what about the middle east? would you consider building battery facilities in the middle east to serve as hub in middle east and africa? >> middle east is a great location as regional and global hub. for us, middle east has got an advantage because it is surrounded by our all comparable
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locations so we get customers here from united states and europe and asia and we want to expand our global footprint. moving forward, we want to be part of global excellence and sustainability visionary road map and this is how nissan wants to align with the region. >> this morning i'm sure you've read the piece, nissan to the ft and he says you as an organization, there is no vision at nissan, they've had pitiful results and they're proud of it. how do you respond to that comment? >> we are talking to our customers. we are talking to our employees, to our shareholders. the first half of 2021, we did more than more than 4.5. we are talking about
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electrification which is meaningful driven by the customer and doing two trillion yen of investment to launch 23 products with 15 battery electric cars, i think is good enough sustainable growth for nissan moving into the future. >> the other outstanding issue in our region is the dubai court has told nissan to pay 354 million in a lawsuit. your response to the aldaha lawsuit is that you're resolving the matter through dubai courts. you have settled before. isn't the most expedient thing here to settle and hold good the reputation? >> nissan is working in more than 150 countries. we respect the local rule and the local legal system and dubai has been known for it in terms of fair legal system and
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friendly arbitration system so we are following the process and let the decision come by itself. >> are you likely to go the arbitration route and settle and move on? >> it's very difficult to share the details but we'll follow the process. >> great to have you with us in the region. congratulations on the launch at expo last night and may the supply chain burden ease for you. that's the nissan motor company chief operating officer with me this morning in dubai, ashwani gupta. yvonne: we have plenty more ahead. this is bloomberg.
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yvonne: the asia rally on the back of sentiment looking better, in china. we have fading concerns when it comes to the omicron variant. rishaad: we have all these concerns at the moment.
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let's bring in morningstar c.e.o. let's focus on india, broaden to the rest of the world. there's a stunning rally taking place in india for equity markets, more than doubling since the depths of the pandemic, march 2020 or thereabouts. seeing a few jitters now. give us a sense of whether there's momentum and appetite given a few companies where valuations are looking rather rich. >> i think it's really important -- first of all, good morning to all of you. great to be here. obviously you referenced march 2020 and if we could go back to march 2020 and predict what would happen, -- i think the gd news in india and other parts of the world is that economically you're certainly starting to see continued momentum and support
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from local governments to ensure that countries emerge strongly from the pandemic. having said that, it's our view, when you look at it from a bottom-up perspective, looking at individual equity prices, that a lot of the recovery and a lot of the good news in the future has been priced into the market. so i'm not one to ever say markets are over, under values or call a top or bottom but when i look at returns in the future for india and other parts of the world, it's highly unlikely that the trends of the past 18 months will be what we'll experience in the next 18 months. they may not be down but i don't think they'll come anywhere near matching what we've experienced. yvonne: we've certainly seen a structural change in the india equity market after two pandemic years with more retail
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individual investors making up half of cash trading volumes. you see when it comes to flows in mutual funds, as well. quite robust. do you see a significant shift? and how supportive is that for the market? kunal: i think it's a good thing when more people are involved in local markets. sometimes there's a misnomer, people assume that retail money is dumb money and that's not true. investors around the world have increasingly shown that they're informed, they come to the table with valuable insights and can collectively impact the market and they're taking control of their financial future so i think that's a good thing. of course, from a behavioral perspective and i'm a university of chicago person so from a behavioral perspective, the thing that's concerning is people tend to chase performance and i think this is probably a cohort of investors in india, as well, who are chasing performance and have come in after good returns and i think there's a danger they'll be disappointed so the key is for
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people to have the right expectations and be sure that even if we go through a leaner period, they remain participants because the key even in markets like india is the money you can make over long-term periods being an investor as opposed to what you can experience over short-term periods and sometimes people get excited or overwhelmed by what happened in short-term periods and it really doesn't matter in the long-term cycle of what it means to be an investor so i think it's a good sign. in india, more retail investors are getting involved. i think the time horizon is something some will have to adjust to. rishaad: further on yvonne's point about the retail investors coming in, also going into mutual funds. what about the mutual funds themselves? it's probably been great to be passive but does next year mark a move more towards active? kunal: that's the million dollar question. i think the way i would describe it is we get really hung up on whether it's active or passive.
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i think the debate on mutual funds is really about expensive. morningstar's research has shown that whether you're buying active funds or passive funds, the driver tends to be your fee and so all i would say is there are plenty of successful active strategies and they will remain plenty of active strategies. there are low-cost active strategies and plenty of good ones that fit the bill. rishaad: come on, kunal, you're dodging the question. kunal: i think you can build a great portfolio but predicting an annual income is not the way most investors should look at it. you should be in the market three, five, 10 years. and using expenses as a guide is important.
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yvonne: e.r.g. is a big focus globally and they're talking about looking to go green and curb carbon emissions but also warning about green washing, as well. how do you look into this issue? kunal: i think it's one of the most major issues around the world. in china it's more of a dominant issue. i think it's a good thing overall because fundamentally what e.s.g. has the potential to do, all the folks becoming investors, you referenced, and one thing worth thinking about is what sustains people's interest in investing because markets go up and down and when markets go down, people of interest opened to fall. i think e.s.g. will change that because it personalizes the way people think of investing and attaches them to investments in a way that has not always been the case. it's too early to say but i think the potential is real and
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it's true there is green washing taking place but beyond that there's also a rising demand from investors for clear information, standardization, more transparency and firms like morningstar are doing more to bring more data and accountability to what's being published and we're introducing ratings and risk measures and i think these things have the potential to transform the long-term ability of e.s.g. to have staying power and i think truly if you're a long-term investor, this is a great way to engage with your investments and build portfolios and the data will only improve so i think there's a lot to look forward to. rishaad: we have -- we talk about evidence that e.s.g. funds or e.s.g. funds with a high rating, you have your own ratings, of course, for e.s.g -- that they do better than less e.s.g. oriented companies or funds even. what have you found when you've
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drilled into the data on performance? kunal: it's certainly been the case that if you look over the last five years, even going back the last 10 years, although the data set is not as robust, that performance funds that have had e.s.g. links have been better than the broader market and one could say that part of the reason that has happened is that they have had a growth oriented tilt to them. they've had higher exposure to sectors like technology which tend to score better on e.s.g. metrics than, say, the energy industry, which until recent years had a poor decade in terms of shareholder returns. so from that perspective, returns have been better. the question is what happens going forward and i think the key thing is really starting to think about how e.s.g. can continue to sustain that and i think you do that by really trying to pick strategies that you think have the power to succeed in the future so for
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example if you believe we're transitioning to a green carbon economy in many parts of the world including in india, china, and parts of asia, what are the companies best positioned to benefit from that as opposed to the old way of looking which was exclusion or avoidance of strategies or companies feeling the brunt of that strategy so the new word is inclusion and what do you include in a portfolio to help you benefit from the view that you have. yvonne: kunal, before we let you know, your overall outlook for 2022? the last two years, i guess, last couple of months, have been volatile. it seems like this omicron variant and covid, a big overhang for markets and we have the prospect of tighter liquidity. how are you looking at next year? and what does this mean for the business? kunal: i'm going to disappoint you with my answer because the
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most important thing for everyone is to stay the course. it's really important, regardless of where you are, to have a strategy and stick to it because at the end of the day it's hard to predict markets over short-term periods and i think you want to have a portfolio that is positioned for long-term success and that's right for you and i think if you do that it won't matter what happens in 2021 or 2022. what matters is what happens over the next two 1/2 years and i think from that perspective, most folks should be in a good spot. rishaad: kunal, thank you so much for joining us. that's the chief executive officer at morningstar, kunal. equity-wise, a lot of moving parts, balls in the air. we had a reserve bank of australia decision, no change expected and we got no change. on top of that, chinese imports, blackout number, exports also beating and underpinning this, the triple-r cut coming through
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for banks out of authorities and regulators in china itself. yvonne: and signs of maybe more easing in property markets. we're seeing a risk on session snapping two days of losses. this is bloomberg.
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