Transcripts For BLOOMBERG Bloomberg 20240703

As to the longer rates narrative. Pets on a november fed hike rising to about 60 . Apple sliding the most in a month under reports of some government chinese agencies banning the use of iphones. We get japans travel outlook exclusively from the ana ceo who tells us that demand from china is soaring. If you look at u. S. Futures, it looks to be shaping up in a fourthdown day. The asia session could change that. We are early in the session. They are pointing lower. I just want to give that warning right now. It looks like we might see little bit more weight to bonds. Yields higher once again today after all of that data. Service is showing a lot of strength but also strengthen prices paid, which is perhaps the most troubling aspect of this whole thing. That adds to inflation. With oil prices assize they are at the moment, thats another troubling factor for those worried about inflation. Those include some fed Board Members and some fed president s including Susan Collins and jim bullard. Both of whom spoke today, both of whom left the door open, in fact, pushed the door open for a rate hike in november. Neither of them are voters this year. Theres obviously a lot more hawkishness in the market right now because markets have priced in a 60 chance of one more rate hike in november. Earlier on this year we had 150 basis points of great cuts priced in. Thats down to under 100 basis points next year. Crude continue sire, its a little bit off its highest for the future session, but it is still inching closer to 88 a barrel in new york. Haidi lets get more from our executive editor for asian markets. That number, some of that fed speak really kind of escalating expectations. Where do you make of how markets might trade from here . Theres so much backandforth as to what we could get in the next couple of meetings. Corrects a lot of trepidation out there on the market remains very data dependent, which is by we see these reactions and swings on an almost daily basis from the numbers. I think what was interesting is what we saw in the base book, which was a lot more cautious signs of moderation in the economy, signs that Companies Pricing power is fading. Also signs the wage growth is schooling. It trampled over when we got those services figured you can look at it to ways. In one way, the gdp number for this quarters going to look really good, the in the economy is looking good and sound. It could be good news on that side of the coin, but if youre worried about in inflation and its persistence in the idea that the fed will keep rates high long enough to get it back under control, then it creates more turbulence in the markets and more worries about the outlook for the economy as well. I think theres one more thing that is interesting try to tease out from everything going on at the moment, which is how much of the move that we are seeing Interest Rates is down to those fed bets and how much is down to supply and demand. Weve had huge amounts of additional surgery supply coming to the market. Big amount of Corporate Bond issuance this week. That also is distorting the picture, making it harder for traders to see what that path looks like at the moment. Vonnie its so interesting with rates this hive, we will i havent dissipated there would be so much is sequence, but there we are. Theres another data point that the fed is probably scratching its head about. Talk to us about z yen. We 14764. One well beyond the 145 mark that would flash warning signals. Three much mostly the dollar. Watch health what should the Administrator Finance do . Say thank the ministry of finance is more concerned about a paces move them an outright move. These levels with the yen looking increasingly weak, and that trend, which has been really in place since march for the weakening against the dollar because of the very wide Interest Rate differentials, doesnt seem to be showing any signs that it will turn around at the moment. They didnt really want yen to much weaker from here, it would seem. The argument is that the benefit from a weaker currency from the economy through the help that it gives export is that its starting to fade. The damage its causing on the flipside by increasing inflation makes it more of a concern. Thank probably they would prefer the boj to keep the Exchange Rate in mind as it thinks about its policy, rather than having to intervene in the market, which is a pretty strong tool. Likelihood is, if we do see further weakness, we are likely to hear continuing verbal warnings. Unless the pace of the move accelerates again, they will probably have to grit their teeth and bear it. Haidi theres no doubt we are seeing pressure coming down on tokyo and beijing when it comes to the currency weakness. For china, how much more aggressive do you expect these stabilization guidelines from beijing . Paul another good one, isnt it. I think with the chinese authorities may feel in some ways that theyve been pretty successful so far in slowing or stemming the weakness in the u. N. As well, the recent volatility has started to subside again in those one way bets that seem to have abated somewhat. On the other hand, what we saw yesterday was the fixing into different ways. One, it was a really big push back relative to where the expectations are the forecast were putting it. On the other hand, they were allowing for a weaker u. N. And allowing that trading then to take it for to a new low for this new cycle. There is go for steady and gradual weakness like the situation in japan, but at the same time, theres plenty more tools in the box. The pboc has shown its able to whip out, if it needs to or wants to turn the currency around again. Bloombergs executive editor for asia. Saying with china, taking a look at the Broader Markets while we see plenty of Downside Pressure despite a few upward blips that we have seen in sentiment. The move yesterday in the chinese property stocks were nothing short of stunning. Evergrande up more than 80 . The biggest oneday gain weve seen since its listing in 2009. I did want to put that in perspective because this chart, taking a look at china property stocks in our bloomberg age, we are down 70 for these properties names from the 20 twenty hwy, so there is still a long way to go. You were just discussing with paul the moves we see from the pboc to pop up the chinese currency, weve seen those moves coming through from government officials to try to prop up the property sector. One area we will be watching closely in this session, given that we did see the hoping to boost the sentiment yesterday in the session. Lets change on. Take a look more broadly across the region today because equity futures are pointing to a weaker day of trading. Thats a little bit unsurprising when you put it in the context of the wall street session because it really was that Stronger Services sector activity coming through that tells us that that fed narrative of higher for longer is still very much intact. Thats playing out in the currency space. We are watching bond yields closely at the front end of the curve. China futures pointing fairly flat. The other big story will be the apple suppliers. And thats on a different report. Vonnie exactly, we are getting to that just immediately. Thank you for that. Apple has suffered its worst stock decline in a month following a wall street journal report that some Government Agencies have banned staff from using the iphone at work. Lets get more details from mark gurman. We were talking a little bit earlier and its not the number of iphones that wont be allowed to be used, its more the idea that china might take a step like this and ban a Company Product being used. Mark the question is if this is the beginning of a domino effect. Apple is unique amongst Major Technology players based in the u. S. They basically have up billet Carte Blanche ability to operate aside from some oppression related to some services, video, music and games. Its obviously not a good thing, but apple is able to sell its products online, in retail stores, it has several different offices in the country and its basically able to operate whereas amazon, google, meta, the other big players based in the u. S. Really dont have that ability. The question is, does this government banned start there and expand, or does it really stay with the ban on devices for certain sections of the market . Haidi this comes ahead of the big holiday sales season, ahead of the new unveiling of the new iphone. How much does apple depend on the Chinese Market . Mark apple depends tremendously on the Chinese Market. A fifth of their overall sales come from there. The iphone obviously generates more than half of apple sales. So certainly, if this expands, its quite a dramatic issue for apple. Theres also the nationalism component. That something we sought the end of it 2018, the beginning of 2019 where in the middle of the trade war and discussions between the u. S. And china, people did not want to buy iphones and the amount that they wanted to buy them before in china. People were springing for the huawei, shall made devices. But now, it seems that has petered out and people are happy to buy iphones in china. That was a bright spot in their Fourth Quarter earnings. But or the Third Quarter earnings i should say. But certainly they do have momentum there, and this could really put a pin in that. We have to see how this shakes out if theres something broader than just these government bands that these could impact consumers are sparking local nationalism. Vonnie the stock down just fractionally, most market drop 3. 5 percent. Our chief Technology Correspondent mark gurman. Anas ceo tells us why he thinks the release of treated water from the fukushima plant will not deter tourists, especially from china. Our exclusive interview is just ahead. This is bloomberg. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. It is probably why, from a Risk Management perspective, and probably necessary based on the data that we are able to keep that extra great rate in there. Susan this is the data assessment as we stay the course. I expect there will be certain levels for some time. And while we may be nearer at the peak for policy rates, further tightening will be there. Vonnie former st. Louis president and Susan Collins on further rate hikes. Joining us now to discuss is cio at nuveen. I know you thought that the fed was already done, but that based on the data that weve had from jackson hole in the comments, are you changing your mind a little bit . Good news for the economy, bad news for the markets and is causing yields to go higher. I still think there will be no more rate hikes in september, but where we differ for the markets is we dont see great cuts in 2024. I think the economy remains strong. Generally if you look at history, equities and fixed income outperform when the fed pauses. I think theres upside for the market. We need to keep in mind there are headwinds for the consumer, auto delinquencies and credit card delinquencies have been significantly rising. Markets are showing signs of cracking. I do think the economy is slowing a bit, but for this week its higher yields and all about Economic Data beating consensus. Vonnie you set uncertainty remains around the degree of damage already done to the economy. How much damage do you think has been done and what would it make you do investment wise . We havent seen a lot of damage to the u. S. Economy at this point, but two areas have been holding up the economy, consumer unemployment markets, that is where we see cracks. I think the fed will watch that closely, which would lead to a pause on ray kyte rate hikes until we could see what is the impact of all this monetary tightening. Just because we havent seen it, doesnt mean its not coming. We are nowhere near recession and thats wife equities and fixed income can continue to outperform as the fed pauses and holds on rate hikes for a while. Haidi to see more opportunity when it comes to stretch valuations in the u. S. Looking outside that market . Within the u. S. We think yields will roll over as the fed pauses. We are fans of technology stocks. The king outside the u. S. , emerging markets are at a multiyear discount to the history. There are three reasons why the emerging markets have headwinds. First is the issue in china, second is the strong dollar. We need to overcome them. Areas of emerging markets that we like have stronger fundamentals. We like japan, indonesia, mexico and brazil. Those are areas we think can continue to perform well even with the issues we are seeing in china. Haidi we are watching futures trading for japan at the moment, looking like we will and that streak. In the longer term or even in the mediumterm, do you see more longevity for this rally . I think many people will say, can we say this time is different for japan . This stronger governance in the economy is better, but theres one over you touched on a little, which is the dollar, the Dollar Strength getting ahead. And that also hinders their ability to pay Interest Rates because markets have to be concerned about their currencies that would weaken as they cut rates. That could be an issue thats overall for nonus. As the fed pauses in the market, i do expect the dollar to start to level up and even declined. I think that could be turned into a positive for nonus market. I think japan has economic legs from here and it can continue to do well. Haidi it this double whammy of a stronger dollar as a weaker china even though it is less of an earmark it acre than it used to be. Are these two and nothing you would want to stay away from developing markets . I think you just need to be more selective in developing markets, look for the ones that have strong fundamentals. Indonesia, brazil and mexico are outside the geographic reason of region of asia. We arent counting china out. Theres areas of china like electric vehicles. Thats a positive. Cal gaming, we see better traffic as china reopens. A lot is in the valuation for china at this point. I think if they can focus on the property sector and recovering there and look for ways to look at the economy, its a very under region by portfolio managers. We see more strategies come out for emerging markets that are x china as it gets more underway and continues to move out. If they can put the proper stimulus in place, china can recover. Also make sure that you balance your portfolio outside of the u. S. Areas where we already have the fundamentals in place. These are areas like japan, indonesia, sicko and brazil. Vonnie the fundamentals look just a little fragile, so im not sure what you mean by fundamentals, some of these countries have a lot to deal with. You mention the dollar, but then theres also these volatile Commodity Prices and many of them, brazil and someone has leadership difficulties. Geopolitical issues are always overhanging in many of these countries. They are starting to settle down. Mexico is strong because of its relationship with the u. S. Indonesia is a country where its cheated gdp has continued to grow quite strongly. Its one of the larger economies with any emerging markets. The other is an area that i think will continue to perform well outside of china as we wait for china to recover. Haidi cio at nuveen. Always great to chat with you. You can get around up of the stories to get your day going in todays edition of daybreak. Terminal subscribers can get that at dayb. Its available on the mobile in the bloomberg anywhere app. You can customize your settings to just get the news on the industries and assets that matter to you. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. The Japanese Carrier says tensions over the release of treated wastewater from the Fukushima Nuclear plant have now affected travel demand for china. We spoke exclusively to the ceo. We are closely watching current demand, but i dont think the treated water from fukushima is having a big impact on demand from china. If you look at the movement of chinese customers over the past six months, for example, from january to july, is a tenfold increase from 30,000 to over 300,000. I think this will continue steadily in the future. In line with this growth and demand will also increase the number of flights with that capacity. Before the pandemic there were 175 roundtrip flights per week. So currently, not even half of that number is actually in the operation. We would like to increase the number of flights as demand grows and recovers. How do you see the demand over the next year playing out . Will you see what we call Revenge Travel continue longer, past the summer in japan, given it was late to reopen from the covid pandemic . Is there an issue with the slowing economy in china that is going to affect the outlook for Chinese Tourists . Compared to our initial expectations, the travel demand is showing very solid growth. This can be said for both international and domestic flights. Before domestic flights, the number has already returned to around 90 compared to prepandemic levels. It would be nice if Business Travel, which is a bit slow to recover, returns. By the end of the fiscal year, say by march next year, i believe that domestic flights will return to roughly the prepandemic level. Overall, International Flights are still back at just under 70 , but its unlike domestic flights, business demand is firmly driving our business. There are differences depending on the destination. But, for example, excluding china and europe, the demand for International Flights is extremely strong. I think the growth will continue. I think the demand demand for connecting flights from asia to north america and from china to north america fire japan via japan is extremely strong. We are expecting it to return to nearly 80 overall. Haidi that was ana earning ceo speaking with Bloomberg News editor in chief. Take a look at some of the corporate headlines we are following this morning and blackstones private credit fund has attracted the most capital in over the year. An investor letter says inflows rose 30 in the Third Quarter to date to 2. 4 billion dollars. Most of the capital came from asia and the u. S. And it follows a secondquarter rebound in private credit in which dozens of new funds raised over 70 billion. Singapore police have seized and 92 million from a suspected money launderers account with Bank Julius Baer and credit suisse. The money was held by 10 foreigners arrested last month accused of forgery and laundering criminal proceeds. The scandal has enrolled some of singapores largest banks and raise questions about illegal money flowing into the city state. This is the picture as we head into the side of cash trading across major markets in asia. Asian markets are looking like they will come under pressure with the strength of the dollar still front and center. Intervention watch when it comes to japan. Further you on guidance from the pboc expected today as well. U. S. Stocks falling following that ism data, the Services Data that exceeded all Bloomberg Economist estimates, bolstering that case for the fed to keep each space elevated for longer. He saw that repricing when it came to expectations for that november fed meeting. We do see futures meetings for benchmarks across the region. Dropping sydney off by. 5 . Japan after 12 days of gains for trading on the nikkei we see futures singling japanese stocks will end that win streak. Chicago nikkei futures are looking flat. Snp futures are just marginally lower. We saw that retreat in treasuries. We see that across australia and new zealand bonds. Else tracking higher. Two year yield for treasuries rising about six basis points above 5 . The effect situation is the one we are keenly watching with that continued strength that we see in the dollar. I jennifer ar. 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Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . Annabelle youre watching daybreak asia. A check on markets. 30 minutes out from the open for seoul, sydney and tokyo. Nikkei futures coming online. According to a weaker start at the open, aussie futures looking for a drop of half percent at the open, a little bit unsurprising giving the moves of the wall street session yesterday, that strengthen the Services Sector continuing to shine through and telling us the fed is likely to keep rates higher. Then that thats the narrative they are reacting to and the bond space, we saw a little bit of a mixed reaction the front end of the curve. Lets change on and take a look at what we are seeing in terms of volatility, what traders expect ahead. Here its a different story because when you take a look at this chart showing Interest Rate volatility, we actually have a gauge for that that is at multimonth lows. The lowest point since february. That just tells us that even if bond yields do continue to drift up in anticipation of that fed narrative higher for longer, thats one more hike to come toward the end of the year. The impact is going to be a lot more subdued than when the fed started its Aggressive Tightening Campaign last year. Haidi, those moves in the treasury space being really fell in effects and asia in the yuan in the yen particular. Haidi a bit of alarm for authorities in china and japan defending their and the dollar. Inflationary pressure creates problems across the trade futures as well. Lets bring in our next guest who says the outperformance and yield differentials will block the return to the dollar downtrend, which we saw really stolen with july. Joining us now is the global head of fx strategy. Always great to chat with you, things are getting exciting and youre part of the world. And it makes sense. Talk about the growth differentials. The Monetary Policy differentials. You can see why you would see that being expressed in the yen and the yuan. How far cannot Dollar Strength go . We are still well below the highs but we were up almost 5 from what we saw in july. So we are going up against the levels that could be reasonably significant. I think what we need to see is not just the evident strength of the u. S. , but the weakness coming through in the euro zone, id like to think there is pessimism there. But we see signs of improvement and growth in china so far. While their relative growth outperformance is there, while u. S. Yields and particularly in real terms are looking at real yield differentials from inflation expectations. Its very hard to find a reason to be distant from disinvesting from u. S. Dollar assets. The fed is done tightening and obviously last night ism numbers have given that thought a little bit of a kick in the stomach. We do think that that narrative will emerge probably before the end of the year. But until its on display, i think the dollar will remain dominant. How effective will measures be whether you talk about japan or the guidance on japan . The pbocs guidances, i dont believe for one minute they are intent on reversing the outward trend that weve seen in the dollar. One of the reasons i say that is the japanese yen remains as weak as it is because it remains more resistant to see it strengthening against the japanese yen because that implies they loss of export competitiveness, visavis japan. For all of the jawboning on the setting of the fixes so far beneath, where bloombergs consensus is saying the market implied rate will be every day, i think it might check the rise in dollar one. It wont reverse it and it will be reducing the japan intervention. They are making similar comments to those which we saw prior to the intervention for september and october. While the moves are pretty controlled. I think we will have to be more closer to 150 on dollaryen. That might not be too far away of the dollar keep strengthening and we have higher Interest Rates and the strengthening dollar and strong Economic Data. The staff pricing out of recession and doubling their growth forecast. That surely will strengthen the dollar even further. The big driver of dollaryen, as far as the levels at which intervention alarm bells are likely to be ringing, is probably closer to 150 and its worth reminding ourselves 10 year treasury yields, which have been the main arbiter of the volatility in all things yen, while the boj while it sits studiously on its hands, we probably need to see 10 year treasury setting backup to the recent highs above 430, may be heading up towards 450. You will see dollaryen at the levels where it dollaryen becomes realistic. We have to remember dollaryen is here because of Interest Rate differentials. It will work temporarily but its not going to arrest the underlying weakness of the japanese yen while the deep boj stands packed. Vonnie do you look at things like open interest in the end futures are u. S. Yen futures in order to tell you whether the bank of Japan Ministry or somebody will do something about this or will they ignore it . They are important. Ive always looked up at this positioning data from the market or the imm. I think they only provide useful signals that are really hard at extremes. Theres nothing in the imm futures complex to suggest the extremities were Something Like interventions would be leaning into short positioning and would have more chance of meaningful success. Haidi its hard to see much upward momentum when it comes to the aussie dollar. What if we see a meaningful recovery in china . If we do, things will change. We also need to see dollaryen reversing course because there still a limit to how much china will allow it to strengthen while the yens as weak as it is. Theres no doubt that the correlation between the Australian Dollar and the dollar renminbi rate is extremely tight at the moment. One precondition for a recovery in the aussie dollar as well as a broadbased downturn in the u. S. Dollar will be a recovery in china and a strengthening in the one that probably needs to be accompanied by stronger japanese yen. Haidi do you think markets at this point our underpricing a hike risk . We certainly believe him. We think on balance that probably after pretty fierce debate the ecb will raise its deposit rate one more time next week and thats currently priced at a one third probability. I think the reason eurodollar didnt suffer in the hands of that upside imm surprise was precisely because we saw european Interest Rates moving as much as we saw u. S. Rates in the markets be put on notice that it may be underestimating those rate high risk. For the time being eurodollar will struggle to rally, but i think that does protect the downside this side of next weeks ecb meeting. Vonnie thank you for all of that. Global head of fx strategy at knab. Lets get you up today on geopolitical stories were tracking. U. S. Lawmakers as smic appears to have violated u. S. Sanctions by supplying components to huawei technologies. The representative says the chinese chipmaker warrants an investigation. Huawei users in advance to send a millimeter processor built by them to power the latest smartphone. That indicates china is pushing to produce cutting Edge Semiconductors despite u. S. Sanctions. President biden is expected to travel to new delhi on thursday for the g20 summit saying he continues to test negative for covid. Administration says biden is taking steps to protect himself. First Lady Jill Biden had tested positive for the virus raising questions about whether the president would be able to travel to india. Ozzie on leaders have expressed disappointment over bidens absence from their summit in jakarta. In a statement the group says it hopes biden would turn up as he did in cambodia last year. Vice president , harris met with the indonesian president on the sideline saying she sees strong and growing ties between their countries. Up next, the Japanese Aerospace Exploration Agency is attempting to launch its h2 a rocket again after multiple cancellations due to bad weather. We will be following that very shortly. This is bloomberg. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. You dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh vonnie we are watching live pictures in japan and attempt till rock launch the h2 a. Has been canceled a couple of times due to increment weather. But again, trying, in a few moments to launch this rocket. So far its going to be carrying a Plasma Energy satellite and a lunar lander which were touched down at the moon and around four to six months. Lets get more details from bloombergs Bruce Einhorn. We have seen these rocket launchers around the world from various different countries. What is japan attempting to do . Japan is attempting to send a robotic lander to the moon, no people aboard. Japan has had this project in the works for a wild. It was supposed to launch late last month. They had to put it off several times because of bad weather. This mission is called the smart lander for investigating the moon. It would be a breakthrough because it would be landing in a much more precise area, so if successful, it would enable japan and nasa and other work with the Japanese Space Agency to do much more defined landings on the moon with a better sense of exactly what they where they are going to head. Haidi we are just going to watch this as japan becomes the latest country to aim for the the moon. We have the launch. Japan, after a number of setbacks, now successfully launching that rocket this morning. This is a large payload rocket that was scheduled to launch on august 26, but it had been delayed three times on concerns of bad weather. It carries advanced satellite and the lunar lander that is slated to reach the moon as early as january. This is really, scientifically and symbolically important. We have spoken about the reignition, if you will, interest in Lunar Mission with the spacecraft not successful. Indias efforts as well. We have also seen a lot more energy and momentum in private Space Enterprises and technology. How does the Broader Organization and investment play into that . Bruce you are right, there was a japanese company, i space that made an attempt to land on the moon earlier this year. Had they succeeded, they wouldve been the first private Sector Company to successfully land on the moon. Unfortunately for them, it didnt work. That is part of a series of setbacks that Japanese Companies or this space agencies have had over the past year. Its especially important important. Haidi they are making Good Progress after those multiple delays. We see that rocket bound for the moon taking off successfully in clearing that launch tower. It carries a small lander for investigating the moon as well as xray imagery and other technology. Hugely important for japan both scientifically and symbolically. Bloombergs Bruce Einhorn joining us with the details. To south korea now, the first en bond in japan. This is a move that highlights relations between the two countries. Its bring in our asia credit editor. Was the significance of the samurai bonds and why now . Good morning. This is a hugely historic and symbolic deal. And we are watching it closely. It comes as the two nations are transforming the relations and we are seeing it in politics, we see it in security and we see it in the financial markets. We see it as a part of the president and the Prime Minister reciprocal visits to each others capital this year. This is just the latest step in bringing their relations to a more normal front. Vonnie what will the appetite be . How does the expected pricing look . South korea is very highly rated. Actually has higher ratings than japan itself. This premium over the benchmark are quite tight. The tightest weve seen in years. So we are looking at 20 basis points. So for your average investor, i suppose you could look at this instead of buying a japanese Government Security you are basically buying a south korean Government Security that is higherrated and you get that small bit of extra spread. Haidi are we going to see more Korean Companies selling this as a result . That is part of the reason behind this. There have been some from Korean Companies in the past, like the under banks. Its very good and is very useful for the sovereign of that country to have a benchmark. The finance minister of south korea, when he was here, he said that was part of the reason Korean Companies come here and sell this in the market. Vonnie will this open the floodgates question mark we are looking at relations between the two countries on a sound footing note and the historical baggage that they have. There is some opposition from the main opposition part in korea, they are not hugely welcome with a lot of these moves. Although everything is going well now, there are worries that this could be overturned and the new administration after the president. We expect to see more deals this year already, but i think markets are just looking at this with a little bit of caution. Vonnie that is bloombergs asia credit editor. Plenty more to come here on daybreak asia. This is bloomberg. I need it cool at night. You trying to ice me out of the bed . Baby, only on game nights. You know you are retired right . Am i . Ya the queen sleep number c2 smart bed is now only 999. Plus free Home Delivery when you add an adjustable base. Shop now only at sleep number. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. When it comes to getting your flu shot, cvs is pretty. Flex. Wanna schedule one online while prepping dinner . Gravy. Avoid the wait by scheduling for you. Or the whole crew. Or if you prefer to just pop in . Do you. And if you wanna even tack on a covid19 vaccine to your flu shot, feel free and speaking of free . Our flu shots are. Well. Free. Really . Yes, really. Healthier is getting a flu shot on your schedule. Cvs. Healthier happens together. Vonnie indias china move away from its reputation as World Leaders prepare to get out of there for the g20. Multinational giants including apple and some slowing look to diversify their manufacturing away from china. Bloomberg looks at whether india can become the worlds next factory powerhouse. India is the worlds second largest foreign market. Over 200 million sold last year. A decade of though most of them were imported. Now the country is a net exporter with samsung and apple leading the charge. The Prime Minister wants to repeat this success across electronic goods, electric vehicles, green energy, chemicals, textiles. The goal is to diverse reverse the goal, targeting 1 trillion in goods exports and most importantly, creating jobs for the largest working age population in the world. Standing in the way of this manufacturing ambition are challenges. Land acquisition problems, high logistic costs and new ones. Automation, lack of skills labor. Take phones. The government has implemented a mix of high input tariffs and production incentives to boost local manufacture. But supply chain is a long way off. According to one report, indian factories at 18 in value to the Electronic Devices they assemble for export compared to 38 in china in 24 in vietnam. Manufacturing in vietnam is cheaper by at least a 10. The campaign will benefit from record investments in infrastructure. Theres also the lure of a potentially large domestic market. And now theres the china plus one as large Global Corporations seek to mitigate geopolitical risks and the slowing a China Economy by diversifying the supply chains. Since the liberalization of its economy in the 1990s, india has come to be known as the back office to the world. After becoming a developed economy, the government also needs it to become the factory to the world. Haidi the outgoing rba governor is due to make his final public appearance at a charity launch later on thursday. It has been quite a ride for phil low. The pain point was really his Forward Guidance on when rates go higher. What are we expecting . He has closing remarks, so he will probably reflect on his sevenyear term. It was the ride for him, especially the last couple of years from the time the pandemic happened in the inflation breakout and all the media the criticism he received. So he will probably reflect on that and maybe he will throw it forward for his expectations around what he sees the economy out. Vonnie he was kind of proven right. He went much more cautiously than his peers on rate hikes when you talk about the international community, and inflation is coming down in the economy seems to be doing ok. Is that going to help in securing his legacy . Yes, it will raise Interest Rates, that compares with the u. S. Federal reserve 5. 25 in the rbn adds 5. 25 is well. So there was a source of go slow strategy on Interest Rates and a big reason was a desire was for the soft landing. Something that other Central Banks were not talking about at all. So the fed kept talking about a singleminded focus on inflation. Philip lowe kept saying he wanted to preserve the jobs made during the pandemic, and he also wanted to make sure that the economy kept growing. We are seeing that happening so the job market is still tied, the economy is still growing. We had gdp. The quarterly rate was 0. 4 percent, which was higher than the rbas forecast. Inflation is coming down as well. So yes, he has the last laugh. Haidi what is he going to be doing . He has kept everything close to his chest. He hasnt spoken about what he wants to do. He was asked if he would become a public commentator, and he said no, and all he has said is that he would play golf and he wants to bring his skull found down to single digits. Vonnie in the basis points, right. What is his handicap . Haidi he doesnt want to give guidance on that either. Our economics reported there, here in sydney. We have the market open, thats one of the things that australian markets are looking ahead to. But much more influential it is these reassessments where we see the fed going out those november great pricing with that decision moving significantly after the ism Service Numbers upended expectations again. Just the latest in a stream of data to come in stronger than previously anticipated. We do see asian stocks are coming under pressure. Japan looking like a we snapped that 12 day winning streak. This is bloomberg. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. So. I know you and george were struggling with the possibility of having to move. Hows that going . We found a way to make bathing safer with a kohler walkin bath. A kohler walkin bath provides a secure, spalike bathing experience in the comfort of your own home. A kohler walkin bath has one of the lowest stepins of any walkin bath for easy entry and exit. It features textured surfaces, convenient handrails for more stability, and a wide door for easier mobility. 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Vonnie a japanese rocket bound for the moon taking off successfully. Japan, south korea, and australia open are upon us. We saw yields move higher in the price session. What drove that was the Services Sector showing more strength in the u. S. Another data point to watch. We are told the fed likely to hike toward the end of the year and keep rates higher for longer in the months ahead. That is the narrative investors are reacting to today and playing out across currencies. The japanese yen getting close to that 148 label. Jp morgan saying the yen weakness is not over yet. We could reach above 150 by the end of the year. The japanese rocket has taken off and it cleared the launch tower, the focus is on whether it will reach the moon, the intended target. In korea, relations between japan and korea are in focus because south korea is poised to price the first yen bond in japan and that highlights the warming ties between them, and the relations are scarred by historical events. Leaders in south korea and japan have held some its already this year. The korean won under a little pressure but the story is Dollar Strength. That will play out across markets in asia today. Another focus is the report that chinese agencies could consider borrowing the iphone. Barring the iphone. In australia, we are focusing on Central Bank Action and we will hear what is being called the governors swansong as he gives his final speech as governor. He has kept his cards close to his chest but we will watch closely for clues of what is next. Aussie stocks coming online to the downside. A few minutes until we get fully underway. Brent crude moving a little higher above the key 90 per barrel level. The supply demand effects coming into the market given saudi arabia and russia pushing through supply cuts through the end of the year. Haidi one element that is causing a shaky start to september. Lets get more from our guest. Japanese equities are taking a breather. The nikkei has had 12 out of 13 days with gains. You are still positive on japan. Absolutely. Japanese equities have performed stoutly since the start of the year but we think there is more upside in the next 24 months. If you think about the recent corporate reforms that have happened, we think it will lead to further share buybacks from japanese corporates. And markets might be underestimating the earnings potential for japanese equities. Last year we saw gdp growth in japan around 6 and when you add inflation, 9 nominal growth in japan so we think there is more earnings upside for japanese corporates and that should drive equities higher. Haidi you have a couple of contrary and markup use. Its not easy to find anyone more positive on the broader outlook in china. On a 12 month horizon, would you at this point be adding to that portfolio in terms of value you see in chinese stocks right now . That is the Million Dollar question. At the moment it makes sense to right size the Sector Allocation in china. Allocating more to sectors who would benefit from government stimulus like Communication Services makes sense but on a 12 month horizon we would look to add more to chinese equities. Valuations are cheap. Earning growth in double digits. If government stimulus improves investor sentiment, we could see more investor flows come in an International Investors are underweight chinese equities so it might take time to see a turnaround but we think within 18 months chinese equities have a high probability of outperforming. Vonnie when they jump in, they do not stay long. They do not seem to be willing to live with that sort of risk. That shows in the foreign investor positioning we have seen a substantial amount of outflows from chinese equities. From our perspective come up once the sentiment turns around, there is room for International Investors to cover some underweight stomach even if the cover goes underweight it could lead to substantial inflows into the market and a bounce higher. Vonnie how much if any of the positioning has to do with weaker currencies . Through centralbank policy or other means if the dollar got weaker or the fed cuts rates next year, would you still hold the same positions . Dollar bearishness is [indiscernible] we think the recent strength is starting to look overdone and on the back of u. S. Exceptionalism but that does not last long so if you look at signs of job market weakness, they are coming through. The report that came in overnight Shows Companies are expecting wage growth to eat to ease. So allocating more to asian equities and bonds makes sense for investors at the moment. Haidi we also have the issuance of summer i bonds. Do you anticipate this will be a Significant Development . Symbolically it is quite important. Its the first time south korea is issuing sovereign bonds and that market and that highlights the Warming Trends between south korea. The issuance from self korea in the asian bond market declines further so for the markets as a whole it is [indiscernible] because we expect a negative supply this year and next and if we see further drop in issuance it adds to the positive [indiscernible] so being overweight asian bonds at the moment is attractive. Vonnie and you think that will edged out the share we see from dollar and euro denominated issuance . Yes. The supply this year is low and the incremental supply matters so if we see further issuance, it is a positive. Vonnie thank you so much. We look forward to our next conversation. Annabelle, you have new numbers for us. What is going on with apple . Annabelle we are looking at apple supplies in asia given the report that Chinese Government officials have barred staff from using iphone and other foreign branded devices in the works place workplace according to the wall street journal. Apple down 3. 6 . Some supplies in the wall street session likely in the red. Some are taking a lot of revenue from the u. S. Tech giant. Another story in focus, the asian luxury good the stocks, the chairman of richemont says there is waiting demand in europe in particular, given the Interest Rates they are continuing to buy and having an impact on consumer purchasing power and so off the back of that we saw a luxury stocks declining. That is the state of play as we get underway in asia. In the asian solar space, solar stocks sliding overnight. A mixed reaction. We are starting to see constraints building in the Chinese Market in particular. The biggest one for solar and installations, we understand chinas solar market is growing at a faster pace than the power system can handle and that leads to concerns. Haidi still ahead we build we discussed the stress building up and a government taking targeted steps to boost recovery in china. Stay with us throughout the hour. This is bloomberg. Strong Services Data out of the u. S. Has pulled her the case for the fed to keep rates higher for longer which put bolstered the case for the fed to keep rates higher for longer. David, we are watching the yen and many suggest 150 might be the market which the boj will really think about intervening. Do you agree . We are not far away from their. 150 is a psychological level. I do not think that will be a specific line in the sand. 150 is a nice round number so if you do draw a line it defeats the other line. So i would not be surprised if it was just before or just after 150. At the end of the day, they are looking for some element of surprise. That is what the market is looking for permit something around that area. We have had a pickup in rhetoric from the currency official yesterday saying all options are on the board. The catch is if they keep pushing higher, they will say it is based on the differential and so a weaker yen is warranted to so one way or the other, the market is happy to test his resolve and were for the line is, the market will try to find it. Haidi it has been argued that one week get weakness is not warranted. It is hard to see beijing wanting a stronger yuan given the yen remaining week. I think it is psychological. The onshore yuan is in danger going to the lowest level since 2007, does china really want that . I dont think they do but it will happen inevitably. So there is some competitiveness and the weaker yuan will help stimulate the economy but the image of weakness, it does not want that so it is playing both hands at the same time. When it comes to the yuan, the pressure is [indiscernible] and the trade data today will be important and there will be pressure on the yuan no matter what the fix is. The pboc saying the key thing is a gradual decline is important. The speed is the key thing. It is doing its best at the moment to keep the yuan around 731 around 7. 31. We expect more weakness when it comes to exports specifically. David looking at some key points in the wake of the Dollar Strength story. Chinese developer stocks surged as much as 60 following speculation beijing will widen support for the property sector there. The question is if the rally was a penny stock party in nature. Does it have fundamental support and more room to run . The wild moves we saw wednesdays trading from countries garden and posting crazy double digit growth, we got the sense that this rally is speculative in nature. The top gainers yesterday are concentrated on the countries private and weaker developmental struggling versus the developers remaining in negative territory and that suggests we also hear from market watchers that it is hedge funds thinking there could be more measures to come because the stocks are trading around the penny stock [indiscernible] vonnie given the sectors so we valuations on authorities taking stronger steps to boost property sales, could they still be good investing opportunities in the space . This sector is a hotspot for investors but for those willing to take a chance because some stocks are traded at really depressed valuations so a larger exposure to Development Projects in top tier cities with stronger demand and also the demand are seeing more elastic so they are putting the money in the stronger standing ones and recent earnings are solid so the opportunities are concentrated on the bigger, stronger ones. Vonnie you can get a roundabout the stories you need to know in todays edition of daybreak. Go to dayb on the terminal. It is also on mobile and the bloomberg anywhere happen you can customize your settings so you only get news you care about. This is bloomberg. Possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. 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We will continue to keep our eye on apple suppliers and how apple trades in coming sessions and monitor the story as apple and samsung have been looking to diversify manufacturing away from china and india is looking at a chance to become the worlds next powerhouse for manufacturing. India is the worlds second largest foreign market. Over 200 million sold last year. A decade ago, most of them were imported and now they are the net exporter with samsung and apple leading the charge. The Prime Minister wants to repeat the former success across green energy, textiles, chemicals. The near term goal is to reverse the declining gdp, targeting 1 trillion in goods exports and creating jobs for the largest working age population in the world. In the way of this vision are challenges, Land Acquisition problems, automation, lack of skills labor. The government has implemented a mix of high import tariffs on finished phones and production incentives to boost local manufacture. But supply chain and digitization is a long way off. Indian compared with 38 in china and 24 in vietnam. Manufacturing is cheaper in vietnam. There is the lawyer of a potentially large domestic market. And now there is the china plus one ways as large corporations seek to mitigate geopolitical risks and a slowing China Economy by diversifying supply chains. Since the 1990s, india has been known as the back office of the world. The government needs it to become the factory to the world. Vonnie President Biden is expected to travel to new delhi thursday for the g20 summit. He continues to test negative for covid. The Administration Says he is taking steps to protect himself and keeping with health guidelines. Dr. Biden tested positive for the virus which raise questions about if the president would be able to travel to india. Aussie god leaders have expressed disappointment asean leaders have expressed disappointment about biden not being at their summit. Justin trudeau speaks in our new economy series thursday. That interview at 6 40 5 p. M. In singapore and 6 45 a. M. In new york. You can watch it on bloomberg tv or live go on the terminal. Futures in europe, stocks pointing tiny bit higher but dax futures down a little and euro futures lower. The ecp president spoke in jackson hole about a looming recession. Germany is faring poorly. Not Much Movement in the frank. Some weakness in the past couple of sessions. Plenty more to come on daybreak asia. This is bloomberg. So, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Like speed . Its the Fastest Mobile Service around. With the best price for two lines of unlimited. Only 30 bucks a line per month. Thats hundreds in savings a year when you wave bye to the other guys. All on the most reliable 5g network nationwide. You really shouldnt walk out the front door without it. Switch today at xfinitymobile. Com. International Money Managers are wary of investing in china as Property Companies continue to struggle to stave off default. Bond buyers are off china longterm. Lets get more from our china credit reporter. This has been an ongoing issue even as we see a rally for property developers. Yes. Investors are telling us there is a tendency to disclose information via informal channels. [indiscernible] investors are complaining about preferential treatment. One chinese developer last year [indiscernible] there is a question about why some investors are being treated treated better than others. There is a clear deterioration of standards in the last few years. The july bond repayment, a couple weeks before, the companies told investors everything would be fine but five days before the deadline the Companies Reached out to a select group of investors and told them everything was not fine and the Company Still had a shortfall and that caused a 37 drop on the dollar for the bond. Then the company reversed course again and said they got money to make that repayment so all this happened within days. China was never a shining example of governance but when investors are getting a 90 return on investments, they were more than happy to look the other way but now with the property crisis and slowing economy in china, investors are starting to get worried and think about alternatives. And this is a time when Foreign Investment is being welcomed more than ever. What do these disclosures mean for the chinese economy and blurted rocket Broader Market . There are implications Going Forward. International investors are taking account the sources of information on ask how reliable it is and when they consider the relation the information as unreliable, the cost of Funding Companies would be higher and that would further undermine profitability and lead to layoffs. Our offices would way on wait on the chinese economy. Vonnie lets bring in the senior credit analyst at curtis sykes and her current coverage focuses on how much of the debt burden can local governments take on according to your Current Research . Thank you for having me here. It is interesting for us to observe. The founding conditions for the local government financing vehicles has improved for a couple of reasons. The Central Government stance toward the sector has softened. The sector is needed to boost the economy. The second reason is the local government willingness to pay has been high so they have been helping negotiate with banks and the Central Government extended support measures to the sector so so far it seems like the sector has been doing ok despite the macro slowdown. We do not see elevated risk but it is a different story when it comes too loans or Wealth Management product related to the sector. Vonnie is there a compromise that can be reached . Can some local governments take on some private debt for some kind of compensation . I think shortterm the central and local Government Strategy is kicking the can down the road so shortterm the priority is ensuring there is liquidity for the local government financing vehicles to repay public bond so they would contain any reputation risk but longterm the governments do not have a concrete solution for the sector. I think to some extent the Banking Sector will need to take some cuts. It is unclear if the bond holders at some point will need to take a cut as well. The endgame of what this looks like is interesting. Homeowners have to low except lower prices . Do we see a point where we could see government assistance . We keep talking about this being too big to fail but maybe the sector is too big for government rescue. Definitely. If you look at the onshore Corporate Bond market it accounts for more than 50 so this is a Systematic Risk for the Central Government and that is why they the stance towards the sector is softening amongst the bond defaults and the sector is extending the support for the broader property sector. Looking at past sales there has been government related entities participating in land options for incomplete Home Construction projects and playing a role in terms of construction and some are contributing to the founding of local industrial funds so the sector is still important policy and that is why shortterm there is ongoing liquidity support going towards the sector. When do you see a broader improvement when it comes towards when it comes to sentiment in china . Right now if we look at august the china credit market is a tugofwar between weak Economic Data and market anticipation for more stimulus measures. Last week there was a slew of support measures towards property and monetary measures so sentiment turns but quickly reversed tuesday and we saw investors are taking profit or covering short position so Going Forward i think sentiments will still be fragile. It will depend on the trajectory and scale ad effectiveness as the timing of a lot of the support measures. I think economic front will improve in september and october because of the support measures and that will translate to better economic growth. Vonnie will it be a vicious cycle . Every time you see something happen with mortgage rates, it looks like the appetite picks up among homebuyers but if that does not continue, surely they will be a quick turnaround in sentiment. I think investors need to be aware that the aim of a lot of Government Support measures is to contain the risk in the economy and systematic ripped risk to the Banking Sector but that does not mean government is tolerating property speculation or supporting the bondholders of property bonds so i do not think the conditions for privately owned developers will improve in the next six months because contracted sales in the physical Property Market is still weak so investors need to be aware of the ongoing font default and not be too confident on other effects of Government Support measures. Haidi selena, always great to chat with you. Some alerts regarding the situation in texas, declaring a great emergency for power. This is the first power emergencies since the deadly winter storm there two years ago. The soaring temperatures putting pressure on the second largest u. S. State. This comes in response to shrinking supplies of untapped power. The electrical liability council of texas will move to reserves and push texans to curb uses usage. They are being asked to save electricity after fossil fuel plants went offline. The heat is starting to ebb a little. Electricity use is a little lower but outages jumped 72 in one afternoon. This is just in texas but it highlights the test of power grids across the country. We have Renewables Still relatively low and demand getting higher with this hot weather. Vonnie a concern, especially with more extreme weather events on the way. Florida is bracing for a major hurricane. Lets look at stocks in focus, apple supplies with a slump for some of them. A wall street journal report said the Chinese Government is borrowing staff from using the iphone and other foreign devices at work so we saw the biggest slump for apple since august and china a critical market for apple and if you change on now and put it in perspective when you look at the chinese region, Greater China accounting for one in five of the dollars apple takes in so apple iphones are among the bestsellers for china and are common in the private and government sector so foreign devices are being discouraged by beijing in sensitive sectors, especially as the government steps up the campaign to reduce reliance on imported technology. But decoupling goes both ways. American companies are reorganizing supply chains in recent years because chinas share of u. S. Goods has dropped to the lowest level since 2006 according to a new report from the u. S. Census bureau. The peak was in 2018 when more than 20 of goods were coming from the u. S. , right before trump ramped up the trade war so another focus point for us of course, the big winners appear to be mexico and vietnam but the trade relationship between the u. S. And china is always in focus for us. Its phenomenal how instant the reactions are. Plenty more to come on daybreak asia. This is bloomberg. Japanese carrier ana Holdings Says the treatment of released wastewater has not affected travel demand from china. We spoke exclusively to the ceo. We are closely watching current demand. I do not think the treated water from fukushima is having a big impact on demand from china. If you look at the movement of chinese customers in the last six months, from january to july is a tenfold increase from 30,000 to over 300,000. I think that will continue steadily in the future. We will also increase the number of flights with that capacity. Before the pandemic there were 175 roundtrip flights per week. Currently not even half that number is in operation. We want to increase the number of flights as demand grows and recovers. How do you see the demand over the next year playing out . Will Revenge Travel continue past the summer in japan, given it was late to reopen from the pandemic . Is there an issue with the slowing economy in china that will affect the outlook for Chinese Tourists . Compared to the initial expectations, the travel demand shows a very solid growth. This can be said for international and domestic flights. For domestic flights, the number has already returned to around 90 compared to prepandemic levels. It would be nice of Business Travel, a bit slow to recover, it returns. By the end of the fiscal year, by march next year, i believe the domestic flights will return to roughly prepandemic levels. Overall, International Flights are still back at just under 70 but unlike domestic flights, business demand is driving up business. There are differences depending on the destination, but for example, excluding china and europe, the demand for other International Flights is extremely strong. I think growth will continue. I think the demand for connecting flights from asia to north america and from china to north america via japan is extremely strong. That is to say, we are expecting it will return to nearly 80 overall. What is the outlook overall for International Business travel . Do you see it coming back to pretend prepandemic levels . Will leisure offset the loss of Business Travel . As for International Business passengers, we showed a faster return than originally expected. Business traffic drives our International Route now. In addition, the growth and number of businesses to japan has exceeded our initial forecast and we are currently receiving a very high yield. As for growth, outbound leisure trips from japan and overseas are still less than half of numbers before the pandemic. So if we return, i think profitability of the International Flight business will increase even further. For most of us, the pandemic is over. What has changed, if anything, today . I did a lot of thinking during the pandemic. What we were really grateful for is that we were able to reaffirm the significance of aviation. It is human nature, wanting to go out, meet people, talk to them facetoface. I get the feeling the demand will not change and i can say one thing. I feel the need of demand has diversified. Before the pandemic, transit passengers traveling from japan to overseas and from overseas to japan were about 15 . Japan going overseas were 50 and customers coming to japan from overseas were 35 . During the pandemic, the number of transit passengers increased to 50 from 50 15 and has now decreased to about 35 . The type of demand changes. What is required of us from now on is to respond to the change in demand in a timely manner and keep working to improve yield management. Vonnie plenty more to come. How can you sleep on such a firm setting . Gab, mine is almost the same as yours. Almost is just another word for not as good as mine. Save 50 on the sleep Number Limited Edition smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number. Haidi breaking news when it comes to samurai bond sales. Issuance in korea. This is something we have been watching very closely in terms of it being important and substantial important when it comes to the bond market. Price talks for the first ever samurai bond has raised via the debut samurai bond and that comes at a time when we see this is potentially a sign of warming relations between japan and south korea. Historically there have been some scars in that relationship but korea with Credit Ratings are higher than japan and that is significant selling samurai bonds today so this is a bellwether deal as we potentially see other yen bond sales from south korean entities. Hong kong Life Insurance is set to double this year thanks to a surge in sales demand lynn for shores. Sales in mainland visitors. Stephen lam is here with the run rate we have seen so far. Good morning. Early this week i was talking about hong kong but the outlook is robust. In the first half you are already seeing the new ap up 77 in the first half and by the end of the year we are looking at 1. 2 times. A lot of people want to compare it to what it were in 2019. It could go back to 92 but that is still an increase. There are still a lot of mainland customers coming across the border and they have deep pockets. And we are talking about full capacity resuming for the second half of the year. The key turning point will be around september through november where data shows full capacity could come back to 95 . Vonnie which ensures are the key beneficiaries for these dynamics . Aia and prudential. They have tens of thousands of agents in the city and they are ready for the return of the mainland customers. One thing to note, at the companies that have ties like bank of china also benefit because the first step for the claimants clients is opening up a Bank Accounts of the banks will get a first step in the savings as well. Vonnie fascinating. That is it from daybreak asia. Markets coverage continues as we look ahead to the start of trade in hong kong, shanghai and shenzhen. Standby for Bloomberg Markets china open. This is bloomberg. Morgan Stanley is partnering with the Womens Tennis Association to remove boundaries. because this game is for everyone. 76 of 23andme Health Customers surveyed reported taking healthier actions. because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. That first time you take a step back. I made that. With your very own online store. I sold that. 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