This is DAYBREAK.Asia. We're counting down to Asia's majormarket opens, and we do have Japanese markets rejoining after the longweekend. Investors after clinching that December1989, they'll be looking at the 40,000 level for the Nikkei to do five as thenext level that we'll be watching the next milestone.That would be the first time ever that it surpasses at that 40,000 level.So watching that pretty muted session, though, across Asia expected someconflicting leads there. We had U.S.stocks not making much progress in that.
Final Friday session of the week afterwhat was obviously a massive week for tech, large caps and all of those AI andtech related names after the Nvidia fervor, if you will.We're also seeing South Korean stocks with the value up program.It's a big day for South Korean stocks after what has been quite the turnaroundin terms of the underperformance to the outperformance that we've seen that forthat market in particular. Let's get you straight to the open,though. The Nikkei 2 to 5 bursting out of thegains by over 2% is what we did have earlier.And now we're seeing about 6/10 of 1% of.
Again there.So watching that market just coming online, but certainly extending thosegains, building on that 1989 high that was reached in the Thursday sessionbefore the emperor's birthday holiday. So a little bit of catch up expectedwhen it comes to tech, but also maybe a little bit of catch down given thepretty tepid session that we had on Friday.The topics is up by about 6/10 of 1% there.We're also watching the yen. That 150 zone is where we're firmly kindof entrenched in now. So watching out for the risk of moreverbal intervention from ministry of.
Finance officials to support the yen, aswe've had almost every day where we have been over that level, we are also sortof looking to see when it comes to the broader trading session, whether we seea pullback for the greenback. Of course, a big week for numbers out ofthe US, in particular, the Fed's preferred inflation gauge is one towatch. Whether that just adds to the overallnarrative that there will be more caution.Fed speakers over the past few days certainly seem to think so.Taking a look at how we're trading in South Korea, this is the picture when itcomes to the cost at the moment.
And this is the turnaround that we'reseeing for South Korean equities in the span of about a month or so.So much of that foreign buying has really supported what we've seen interms of demand for Korean risk assets. And we're seeing a little bit ofdownside today when it comes to the cost, down about half a percent, butalso really watching the stock still keeping its head just above water there.The plan, of course, to resolve the long time Korea discount in stocks by theKorean government. They're not seeing that belly upprogram, which refers to the lower valuation of Korean companies in themarket compared to global peers.
So we'll be watching out for kind of thegauges of effectiveness for that program.They're switching it out to Australia, where we are seeing pretty close toall time highs when it comes to Australian equities within about half apercent of all time highs. We had a peak in early February, but ofcourse not too much momentum when it comes to trading here on the ASX, we'reup about 4/10 of 1%. What has been a pretty quiet but solidsession so far and watching the Aussie dollar as well, 6564 is where we'resitting. And when it comes to energy markets, alittle bit of downside for trading in US.
Crude New York production.So just holding off to that decline, we did see prices more broadly were tradingbelow that key moving average as well. Crude falling below the 200 day movingaverage. The exacerbation of that selloffstarting to sort of take hold. We had the biggest drop in three weeksafter the breach of that average, but we are still seeing those prices prettytrading pretty tightly within that range that we've had for the past few weeksthere. And finally, taking a look at treasuriesbefore we move on to getting some some market analysis.So this is a picture when it comes to.
The Treasury market, it is a market thatis bracing for really potentially a bit of volatility this week.It's a barrage of echo data that we're expecting, as well as more Fed speakers,bond investors, just kind of coming into this new week with yields across thecurve just off their year to date highs, a lot of heavy treasury and corporateissuance amid the month end positioning as well as that heavy slide of the echodata PC data on Thursday will be heavily scrutinized.That's, of course, as I mentioned, the Fed's favorite inflation gauge.We're also expecting a number of Fed speakers to continue to lean into thatnarrative that there's really been.
Building of late is that they are not inany hurry or under any pressure to cut too soon.Let's bring in our next guest who says it's a new era when it comes to Asia.And am equities led by Japan and India? With us now is Jonathan Gardiner.A chief Asia and am strategist at Morgan Stanley.So you talk about this highly divergent start for Asia as we enter 2024.And obviously India and Japan were the market darlings last year, but they'restructural elements that tell you that the outperformance will continue forthose stocks. Yes, certainly if we actually look atwhat they have in common, Japan and.
India, it's exceptionally strongearnings growth at the moment. Obviously, if they diverge in terms ofthe sector composition of the market, but in the most recent quarter for theprime section of topics, earnings are growing around 20% year on year.That's the fastest of the major markets, far faster than, say, S&P or Europe.And Indian earnings are growing even even more than that, around about 23%for our coverage of the Indian market. So it's a confluence of factors that'sdriving this. But essentially they're doing very wellon the earnings front. What about South Korea?Because that's in a lot of ways been the.
Surprise outperformer over the pastmonth or so. But a lot of the governance and sort ofpolicy optimism seem to fall in a similar vein that we've seen with Japan.Yes, that's what's known in the market as a sort of a value up strategy orapproach. There is a corporate governance thematicgetting going in Korea. And obviously in that market, you canalso play the thematic through the semiconductor stocks.But overall, in the Korean market, where broadly neutral here, you can't beoverweight everything. And the core overweight for us are Japanand India.
That takes me to, you know, the emergingmarket. That is perhaps the elephant in theroom. How do you feel about China at themoment, particularly with the recent rebound?Obviously, a lot of measures being taken by regulators and policymakers there totry and stem the downside of sentiment. Has it worked?Are you seeing compelling opportunities at these levels?In a nutshell, no. What we're seeing actually in China isthe complete opposite of what I mentioned at the beginning of thisinterview, which is that earnings are.
Not growing or scarcely growing.And the return on equity for the China market has been falling steadily foraround a decade now, whereas the opposite trend has taken place in Japanand India. Sustaining are we in the mid-teens.So Chinese are we 10% and still declining is just a sort of negativefundamentals. So there is a reason why this bearmarket has been going on in China for so long.And until that's addressed, which we think requires the consumer to come tothe fore basically through fiscal stimulus that targets the consumer, it'sunlikely that the earnings profile for.
China will will turn around.So it's less about the property sector is less perhaps about the structuralslowdown in China or more about, say, household payments to to consumers.Is that something that would look like a catalyst for you to change your mind onChina? Well, you're right to identify theproperty sector, though, because that's one of the key reasons why the consumeris is broadly retrenching. So actually, if you look at the propertysector at the peak in 2021, which is I guess three years ago now, it probablyaccounted for over 20% of GDP. And we know the housing starts and salesand activity level in that sector are.
Down materially anywhere between 50 and70% down from the peak. And that's really permeated throughoutthe economy and affected consumer sentiment in China.And the complete opposite is happening in India and Japan.Again, if you just assume in the property sector, in both of thosegeographies, the overall reflationary environment and positive domestic growthenvironment is producing a very different dynamic as it affects thehousehold sectors. So in Japan and in India, the householdsector is broadly in good shape and feeling happy about the balance sheets.But in China, the opposite is taking.
Place.Does that change if you see sudden moves in the yen, if the BOJ kind of finallycomes through with its timing for policy normalization, and if you see an evenwider policy divergence with the US. I do not think the currency, the levelof the currency is that important for the household sector and certainlymatters for corporate profit margins for the exporting parts of Japan.So we do think the yen is moderately undervalued here and will probablystrengthen somewhat through the year. But it's really second order compared toall of the other factors that are actually driving the bull market inJapan.
And in particular, we've dated thisreally back to 2012, the launch of Abenomics.So a much more appropriate monetary and fiscal mix and then a whole slew ofthird arrow reforms on the trade side, on the on the corporate side, such asthe corporate governance code or the institutional code for institutionalinvestors, the ITO code. I mean, all of those are actually what'sdelivered the better underlying environment for corporate earnings inJapan. It's not a sort of dollar yenphenomenon. What's the next big driver for thisJapan rally?.
Is it really on foreign buyers now?Well, Japan is our biggest overweight Morgan Stanley.And so certainly if you're diversifying outside of the US market, which isobviously also doing well, it's the first point that we would go to in termsof adding to to portfolio risk. And, you know, fortunately that'sworking out so far this year. Our fair value for top picks is aroundabout 2800 bull case of 3100. But actually, the earnings season that Ijust mentioned has actually beaten expectations in aggregate, and it'sessentially a secular bull market and one that we advise clients to beinvolved in.
Yeah, we did see record Japan profits inthe quarter, but more broadly around the region.Where did you I guess what was your assessment of this reporting season?Because there is a sense even globally that perhaps the outperformance ofJapanese companies, US companies, might be hiding the underperformance in othermarkets. Yes.Well, earnings season in Asia and I'm always precedes more slowly than that inin the US so Japan tends to finish and it first and that's now taken place so Ican tell you what's happened there and India kind of second we're starting toget some of the tech numbers which are.
Broadly as strong as what we're seeingin the hardware space in the US. So, for example, a name like TokyoElectron are very, very strong, but it's too soon to say when we get into thesmaller markets or indeed for China itself, just how this this quarter'sgone. I'm going to ask you about tech.The Nvidia fervor of last week, because a lot of people are asking if this isagain and we sound like a bit of a broken record whether this is the peak,but do you continue to see a strong narrative when it comes to some of theadjacent beneficiaries in markets like Japan, Taiwan, South Korea?Yes, we do.
Through names like Samsung Electronics,TSMC, SK, Hynix, and I would contrast that with the euphoria in early 2021around the metaverse. So working with our tech colleaguesthen, we were not enthusiastic about that, broadly speaking, but we are aboutthe AI thematic that just the quantum of the spending that's ongoing now and Iguess the use case and applications that people are developing.What has been highlighted around data centers?I mean, all of this is is kind of the sort of phenomenon that comes aroundonly, you know, every every couple of decades.And so it is quite transformational.
And we remain overweight the sector inAsia. Jonathan, always great to have yourinsights with us. Jonathan Gardner, chief Asia and AMMstrategist at Morgan Stanley. Coming up on DAYBREAK, a deep dive intotrade ties between China and Australia as the trade chiefs prepare to meet onthe sidelines of the World Trade Organization's ministerial meeting.We get some analysis from the Heinrich Foundation just ahead.But first, Ukraine ramps up calls for US aid as casualties pile up amid Russia'syearslong invasion. The details next.This is Bloomberg.
Take a look at some that we're watchingwhen it comes to Korea with the trading that we're seeing.We are getting some news slow when it comes to a potential development, whenit comes to the labor action that we've seen from South Koreandoctors. The doctor walkout is nearing its secondweek with really kind of both sides becoming quite entrenched in theirpositions. And we're now seeing just hearing fromthe interior and safety minister in a meeting saying that they've askedtrainee doctors to return to work by February 29th.And this is a widespread woke up by.
South Korean trainee doctors headed intoits second week. There has been no sign so far that thegovernment, which says the country urgently needs to boost the number ofphysicians, will back down from its plan to add an additional 2000 slots formedical schools. That has been seen as a necessity whenit comes to policy makers in South Korea as part of an effort to alleviate whatis a broader doctor shortage, it puts South Korea near the bottom of OECDnations when it comes to that part of its health care system operating.But labor groups have really supported these doctors, saying that the planultimately won't fix the fundamental.
Problems in the health care system, alack of specialist working conditions and the geography of where these doctorsare being allocated as well. We've seen attempted resignations bytrainee doctors not being accepted. Remember last week the health ministryactually ordered over 6000 trainee doctors to go back to work.We're seeing that deadline being set now, but we'll continue to monitor thatstory as the developments play out. The other South Korean story that we'rewatching and take a look at, financial stocks are all dropping by the tune ofabout five or close to 6%. This as we hear the bit more detailswhen it comes to the corporate value up.
Program, the compulsory nature of itwill be key for its success, according to a number of analysts that we'vespoken to. But these comments that we're hearingfrom South Korea at the moment on this valley, up on this valley up program, Ishould say, causing a number of these financial stocks to to drop at themoment. These comments, of course, coming aspart of a long term plan to try and boost valuations for some of this Koreanstocks. A guideline was really planning to beissued to ensure the expansion of these listed companies and their voluntaryparticipation.
That's according to the finance ministerin a meeting aiming to minimize the burden on these companies.But not a great reaction so far from South Korean financials.Let's turn to geopolitics now and the Ukrainian president, VolodymyrZelenskiy, says a country has lost 31,000 soldiers since Russia's invasion.He says a US Congress decision on $60 billion of aid will be needed within amonth. Bloomberg's managing editor for breakingnews, Derek Wallbank, joins us now. So, Derek, this is, of course, prospectsof further aid remain entrenched in the realm of US politics.And it's been a big difference in terms.
Of how the outlook is looking forUkrainian fighters versus where we were just a year ago.That's exactly right, Heidi. And, you know, we've got a situationhere where the US has been trying to figure out that the US Congressparticularly has been trying to figure out how to get aid across the line.An aid package that also would include some money for Israel, maybe some moneyfor Taiwan across the line for the better part of months now, and theyhaven't been able to do it yet. Now, this this past weekend marked thetwo year anniversary of of the start of Russia's sort of all out invasion of ofUkraine.
And it was a somber moment.It was marked by a lot of officials, top officials from countries in thatEuropean allies going to Ukraine. Several Senator Chuck Schumer of NewYork went to Ukraine as well. And so there's a big effort at showingsolidarity. But there has been this difficulty infiguring out a path forward. Part of the difficulty is HouseRepublicans, who are very much allied with Donald Trump, trying to sort ofnavigate this and really sort of impeding on the idea that they don'twant to send any more. Is this going in the right direction?Things of that nature.
Now,there has been some some question that maybe there could be a deal worked outbetween President Joe Biden and House Speaker Mike Johnson.Biden has called all four top congressional leaders to a meeting atthe White House on Tuesday US time, where they're going to try and hash thisout, as well as try and figure out a way to prevent a partial government shutdownat the end of the week. But there's certainly a lot to do andthere's not that much time in which to do it.And Derrick, we saw just the overwhelming support for Donald Trump inthe South Carolina primary.
So almost no home ground advantage forNikki Haley there. If we are sort of wargaming scenarioswhere Trump does become the Republican candidate, presidential candidate andpotentially is successful in the election, how does that play out for aidfor the war in Gaza, for the war between Ukraine and Russia?Well, I think the South Carolina primary was Nikki Haley's last, maybelast and best shot at throwing Donald Trump.It's her home state. She was governor there and she lost by20 plus points. And so that's pretty much that's themath of how it goes.
Haley has said she's going to continueon to Super Tuesday at the start of March, but we have already seen at leastone major donor group, the Charles Koch backed Americans for Prosperity Action.This is a this is a group that had spent some $32 million in support of Haleysaying that they were going to cut that off.She's still got money to continue here. But it looks for the world like DonaldTrump is going to be the Republican presidential nominee.Now, Trump has has, as I say, been been skeptical about sending additional aidto Ukraine. He did, though, float the idea of doingit as a possible loan.
So there are some potential outletsthere. But look, let's be really clear.I think that the general geopolitical consensus is that if Trump wins, thingsare going to get a lot harder for Ukraine.Trump has said he wants people to get to the negotiating table, and that's that.On Israel, Trump is probably a little bit closer of an ally to BenjaminNetanyahu there. And so you wouldn't necessarily see,even though people in the U.S. who are who are more supportive ofPalestinians have been frustrated with Biden and aren't happy with what theBiden administration has been doing.
You certainly would think that a Trumpadministration would be a little bit closer to the incumbent Israeliadministration and a little bit maybe even more forgiving or even celebratorytowards how Israel has conducted the operations in Gaza so far.Bloomberg's managing editor for breaking news, Derek Wallbank there.You can get a roundup of the stories you need to know to get your day going.In today's edition of DAYBREAK, Bloomberg subscribers can find that atJP go in their terminals. It's also there on the mobile in theBloomberg Anywhere app. You can also customize those settings soyou just get the news on the industries.
And assets that matter to you.This is Bloomberg. A decades old global consensus hasallowed e-commerce to grow without customs charges, will be in thespotlight as the World Trade Organization gathers in Abu Dhabi thisweek, Bloomberg's Tom Mackenzie takes a look at what's at stake.Streaming a Netflix movie in South Africa, an international zoom call witha doctor in India downloading an e-book on a beach in Bali.There just a few of the online transactions that could face new taxes.That's if a 26 year old e-commerce deal falls apart.The agreement blocks tariffs on digital.
Transactions wherever they occur in theworld. It obviously benefits major US techcompanies like Amazon Matter and Netflix.But it's also good news for smaller firms that collect data and do businessin international markets. And it's big money.The US exported more than $600 billion of digital services in 2022 alone, withthe UK at over 300 billion. When the World Trade Organisation meetsthis week, it'll have a lot on its agenda.But perhaps the most pressing is renewing this deal, which expires onMarch 31st.
They've re-upped it every two yearssince 1998 and some countries want to make it permanent.But experts think Indonesia, India and South Africa could oppose it entirely,and it would only take one to scupper the deal.The tariff revenues that governments could generate without the truce mightnot be massive, but the move would be hugely symbolic and could represent abig win for the global South. It may also be the biggest protectionistthreat the Internet has ever faced. Bloomberg's Tom Mackenzie theirreporting. So the corporate stories that we'retracking this moment on Disney and.
Reliance Industries are said to havesigned a binding pact to merge their media operations in India.Sources say the media unit or Reliance and its affiliates are expected to ownat least 61% of the merged entity with Disney holding the rest.They say details of the deal are likely to be announced this week.Berkshire Hathaway says its cash pile jumped to a record $167 billion in thefourth quarter as the firm struggles to find meaningful deals.Chairman and CEO Warren Buffett warned an eye popping performance was unlikelyas a conglomerate tries to find deals at attractive valuations.The firm's fourth quarter earnings came.
In at $8.4 billion versus 6.6 billionfor the same period a year before. We do have more to come here onDAYBREAK. Asia.This is Bloomberg. For ages.Earnings remaining in the spotlight. But shifting to China's Internet giantsthis week, Baidu and NetEase will be reporting their latest results just asChina tightens its grip on tech companies.For more, let's bring our breaking news earnings specialist Rachel Yao who joinsus in Hong Kong. And Rachel, China may be looking intoother ways to steer its vast tech.
Industries or faces a stock rout.But how do we see these two companies faring under these new policies?Yes, we are saying, Cox, that Beijing may introduce more moves to steer thetech industry, and that move could potentially mean diverting moreresources to priority sectors, including semiconductors, and also, I think, alsofaces tensions with the US. So this comes as Beijing is facingpressure to restore confidence amidst a major stock rout.But the move could be a double edged sword as Chinese stocks are stillstruggling to gain traction. While investors may also be concernedabout more control from the state.
Itself.So under this backdrop, Baidu and NetEase will be reporting their earningsso far by two, expecting to see its development to spur higher revenue.So it didn't launch new AI style products, including a cellphone you bought last year. And it also shows strength in its corebusinesses, ad revenue and overall net ease.We are expecting to see strong earnings for this quarter as well, but governmentoversight may also impact its earnings in the long run.So weakening demand in the global video game console market may also weigh in onoverseas sales for NetEase.
We're also watching autos as well.Lee, Autos will be reporting what we're expecting there.For the auto. We are expecting to see operating profitto remain sequentially steady, even as they are spending more on promotions tofend off rivals, cheaper batteries and greater scale meals, or help to reduceproduction calls into product to protect its margins.But in terms of a longer term growth, the automaker is susceptible to moreincreasing competition from it all, which is under Hawi.Children. Breaking news earnings specialist.Rachel, you know that in Hong Kong.
Let's take a look at how we're faringwhen it comes to the broader markets trading at the moment.The Nikkei, you divide Japan, really investors are playing a little bit ofcatch up after being closed for the Friday session after that December 1989high has been breached. 40,000 is the level that we're watchingnext for the decade 2 to 5. That would be an all time high crossingthat threshold. But taking a look at what we're seeing,pretty muted session there, about 4/10 of 1% higher there.We are also watching South Korea in particular.We're seeing downside of about 4/10 of.
1%.They will get a little bit more when it comes to the value up program.We're getting a bit more details about that.Australia stocks we're watching as a result of these levels, we're about halfa percent away from all time highs. It has been sort of a lot of sidewaystraining trading when it comes to the ASX, but a pretty solid earnings season.They're propelling a bit more optimism when it comes to Australian equities.Financials across South Korea really falling at the moment, extending lossesclose to some by over 7% when it comes to HANA Financial, but on average about6% losses there.
We had really the sort of reaction fromthe Financial Services Commission's statement talking about tax incentivesto push listed companies to enhance their value.The commission saying in that statement talking about the fact that they'replanning the Korea value up index in the third quarter, similar to the model ofthe Jrpgs Prime 150, and that stewardship, a stewardship code revisionwill be included in these value up efforts as well.A lot of analyst that we've spoken to kind of have talked about the success,depending on participation and compulsory participation, will be key togauging that success.
Korea has been planning support throughthe voluntary value up participation thereand taking a look at some of those stocks we're watching when it comes toJapan as well, the auto sector has really been in focus there.Toyota up about a 10th of 1% there. We're getting a little bit of weaknessthere when it comes to Toyota Industries has been, of course, a number ofscandals when it comes to its plants. We had earlier reporting that March 1stis when we will see potentially two of its plants in Japan coming back online.There's been engine certification issues.These Toyota units continuing to see.
That reaction.A bit of downside there for Honda as well amidst these demands for an autoindustry investigation. But, of course, let's get a preview ofthe market opening on the mainland in Hong Kong.Our Asia equities reporter Charlotte Yang joins us.So this stock reversal for Chinese equities is creating quite a bit ofoptimism among money managers when it comes to the further gains.It's interesting, we spoke to Jonathan Gong earlier in this hour and he'sunconvinced until there's a meaningful catalyst when it comes to the return ofthe Chinese consumer.
So I guess there are some that believethat this could be the start of a meaningful turnaround and others thatsee this as temporary. Yeah, morning, Heidi.So overall, the sentiment in Chinese equities market has really improved overthe past week. You know, last month, if you remember,we're still talking about nanostructure products blow up and liquidity crises,margin calls. But just last week when trading ended,the CSI 300 actually scored the longest winning streak since 2018.Was nice consecutive sessions in Hong Kong and hence in China.Enterprise Index is also already up more.
Than 10% this month.So all money managers we've been speaking to, largely the sense is thatthey still see more tactical upside from the current levels given earlier, youknow, the positioning as well as the big theme play at play here as Beijingauthorities, Chinese authorities, strong resolve to pull off falling this marketwith almost 80 measures we see coming out policy wise to support the market,as well as Chinese national teams in buying some ETFs.But so the is a trading opportunity. A lot of traders felt that we need morein terms of support for the real economy as well as, you know, earning as well assome investors say they need to see more.
Signs of earnings estimates downgradebottoming out for them to is a real turnaround for the battered market thathas been falling for the past three years.So at the moment, it's more looking like a window for trade, for technicaltraining. What are the next catalysts that they'rewatching for when it comes to this market?Yeah, so there are several things they're watching.One is earnings. And so for this week, for example, we'reseeing in Chinese automaker the auto reporting op to market today and alsowith some Internet giants like Baidu and.
That is investors will use theirearnings results as well as their guidance to assess how the broadersector is looking like. And we also have a manufacturing factoryactivity data coming out on Friday. I think that will give a sense for howon the manufacturing side as well as server side, Chinese economies arelooking. And more importantly, in the comingweek, we have the National People's Congress coming up, which that is a keyvenue for policy signals. And I think the key thing investors arewatching, one is economic growth target for this year, what kind of budget Chinawill set up, as well as if we will see.
More support for the property sector,which is a key of everything investors are watching now.Yes, key to everything. I think that that sums it up pretty wellwhen it comes to that turnaround for the Chinese consumer.Bloomberg's Asia equities reporter Charlotte Yang setting up for the startof trading in Hong Kong and mainland China.We do have much more to come here on DAYBREAK.Asia, though, this is Bloomberg. Australia is seeking an end to China'swine tariffs, which were imposed after Canberra sought an investigation intothe origins of COVID.
Australian Trade Minister Don Farrell isexpected to discuss the matter with his Chinese counterpart at the upcoming WTOmeeting in Abu Dhabi. Alan explains what's at stake.It's been a challenging few years for Australian winemakers.When China slapped tariffs of up to 200% on Aussie wines in 2020 and left theindustry scrambling to find new markets. We lost everything overnight.We had built a business in China. When Australia called for aninternational investigation into the origins of COVID 19.China responded with a range of trade strikes against Australian products.The relationship has since soared.
Barriers against barley, coal and otherexports are now gone and wine is expected to be next.Australia suspended its appeal at the World Trade Organisation over the winetariffs when China announced a five month review.That review ends on March 31st. Australia's Trade Minister will meet hisChinese counterpart on the sidelines of the WTO meeting in Abu Dhabi.We want the tariffs on Australian wine removed and if we don't get that then wewill resume the WTO application a.s.a.p. Our agreement to suspend the WTO processwas based on the successful removal of all of the tariffs.Shares in Australia's largest listed.
Winemaker Treasury wine Estates haveslowly recovered since China imposed the tariffs in November 2020.In this month's earnings announcement, Treasury also signalled it is expectingsomething to celebrate soon. The review of tariffs on Australian wineremains ongoing, with the determination anticipated in late March.We are prepared and we are well placed to re-establish ourselves and ourAustralian portfolio in China. Should the review result in the removalof these tariffs? But there's a question about whatAustralia's exporters have learned from the whole experience when it comes toreliance on China.
Take barley for example.China went from buying almost all of Australia's barley to buying none at allduring the diplomatic deep freeze, forcing exporters to diversify and findnew markets. Since tariffs were lifted, Australia'sbarley producers have gone straight back to their most lucrative buyer, withChina accounting for 90% of exports in December.And of course, when wine begins to flow, memories can become hazy.Paul Allen Bloomberg. Well, Alan, there we do have somebreaking news when it comes to the bid for Credit Suisse's China business.And we are reporting that and financial.
And group, I should say, our bidding atCitadel Securities for Credit Suisse's investment bank venture in China.This is really coming as something of a surprise move that will be subjectsubject to close regulatory scrutiny. That's according to people familiar withthe matter. This is the bid by the Jack Ma backedfintech giant to build a securities business using Credit Suisse'soperations. This will certainly face a thoroughreview because China, on its part, is favoring a foreign buyer.The IP and brokerage license was originally awarded to Credit Suisse tohelp open up the financial sector to.
Global competition.The people that we spoke to in this story asked not to be identifieddiscussing these private matters. That preference, therefore, comes as adilemma for UBS Group, which now owns Credit Suisse.Of course, the bank will have to choose between the higher local bid coming fromand or the lower bid coming from Citadel that's more likely to win governmentapproval. These negotiations, we understand, areongoing. Other bidders may still joined the fray,but there has been really some difficulty for UBS to attract interestin the unit from global firms because,.
Of course, of geopolitical tensions, thecrackdown on the banking sector flows and of course, China'sflagging economy as well. Well, speaking of China, Australia TradeMinister John Friar will also be meeting with his Chinese counterpart while inthe hall on the sidelines of the event in Abu Dhabi that we spoke about the WTOevent. Let's get more analysis with DeborahElms ahead of trade policy at the Henry Foundation, who joins us now fromSingapore. So, Deborah, when you take a look atthis relationship, which of course, has been frayed recently with some of themore people to people issues, of course,.
Detainment of Australian citizens.Do you see progress being made when it comes to the trade side of diplomacy?And how how sustainable is this detente for you?I think it is fairly sustainable. I think the Chinese would argue theymade their point and certainly those Australian agricultural producers wouldagree. The point was made quite clearly and nowthe effort has been on trying to get back to more sustainable long termrelationships and as you just saw in your own story on Bali.Once the Chinese market reopens, that's the most lucrative customer for mostAustralian producers and that's likely.
To happen in other sectors like wine aswell. So yes, I think when you take a look atthe broader WTO, M.C. 13, what are your expectations, I guess,how you setting these expectations? It feels like 2024 as we head into theUS presidential election, as geo political tensions, wars continue totake place, it's a pretty tenuous time for global trade.Basically, it's like a cycle. It's a challenging time and particularlya challenging time for the World Trade Organisation, which has struggled toproduce results. And I suspect that we will have anotherministerial that goes by with the media.
Declaring it at least not great ordisappointing, if not an outright failure.And the problem is that it's very hard to get the members 164 soon to become166 to agree on much of anything. And so you get you get hamstrung overissues large and small. And one of the issues that is causingparticular problems again this year is a small issue that affects one member.But since one member can block consensus, you end up hamstrung overrelatively small problems and you can never get to the really big challenges.One of those members that you know, has in the past played that role has beenIndia, right?.
Is this a problem to do with with howcomplicated domestic policies and politics such as I am?Posturing tends to be not just for the likes of India, but for every singlerepresentative coming to the WTO meeting?Well, I think one of the challenges is it's a member driven organisation and soevery member has their own domestic politics, their domestic constituents,and trying to get a consensus across 164 members is always difficult.But there are some members who are more willing than others to simply blockprogress for everyone. And India is the most notable user ofthe consensus objection to stop progress.
In its tracks.And India has a number of complaints heading into this week's meeting and wewill have to see whether or not they can once again back down at the 11th hour.But it's so challenging and it's so challenging because many of these issuesmatter a lot. I think earlier today you werementioning the electronic commerce moratorium, which is a very big deal forall of us that is being held hostage over both that issue but also otherchallenges. And I think it's a problem when we can'tget consensus and we have limited leadership in the WTO itself, amongother members.
And the net result is either poor,disappointing or outright failure at these multilateral ministerial meetings.So there's there's a real kind of gap between on the one hand, obviously, inthe wake of COVID, in the wake of the global supply chain breakdown, So manyof the issues that the WTO looks at a critical right like supply chains orfighting climate change in a year of really difficultgeopolitics, How do you kind of address these issues if, as critics say, the WTOis a pretty broken relic of limited usefulness?Well, I think it is still useful because it sets the benchmark or the foundationfor an awful lot of trade and economic.
Activities.So we need it to exist. We need it to continue, and we reallyneed it to be stronger. But if it continues to be hamstrung bythese issues, then what happens? Either you work with smaller groupswithin the WTO, which has been happening, but even that is difficult.Or you work outside of the WTO and that is easier.And governments particularly seem to like that in Asia because you can getthings done very quickly. But the net result is that we end upwith more fragmentation. And so if you're a company andespecially a small company, for you to.
Deal with a patchwork of rules is harderand harder. And the more that the WTO remains stuck,the more we have limited consensus on global rules.The default becomes regional rules or bilateral rules, and that gets more andmore complicated for business. Deborah always great having with usseparate ohms head of trade policy at the Heinrich Foundation.Let's get back to that breaking story, breaking news, I should say that we hadjust a few minutes ago. Bloomberg has learnt that Jack Ma's antgroup has outbid Citadel for Credit Suisse's investment banking venture inChina.
Let's get more from Lily Chen, who leadsBloomberg's Asia investing teams. And Lulu we know that pre the crackdownpre everything and wanted to build a securities business is this where it'scoming from. It's quite a surprise.Yeah, that's right, Heidi. Bloomberg has learned from peoplefamiliar that Jack Ma backed ant ant group has outbid Citadel Securities andbidding for the Credit Suisse investment banking venture in China.This really creates a dilemma for UBS, currently the owner of that unit becauseregulators are preferring a foreign buyer of that unit.When that license was created for Credit.
Suisse, it was intended to attract moreglobal players. Yeah.Right now Citadel Securities is the only global player that has actuallysubmitted a bid and is betting in the lower range of 1.5 to ¥2 billion, waylower than the valuation that Credit Suisse previously put on the on theunit. And so it's possible that their localpartner, founder securities might reject the offer, further delaying the process.Know, and has obviously had a really difficult few years with authorities.The probe has been wrapped up, that the penalty has been imposed.But is there a sense that authorities.
May not be so favourable in terms ofgiving an approval for and so far and the approval might bechallenging because the regulator is due for and favor a foreign buyer for, andtheir own regulatory crackdown has been wrapped up.The regulator slapped a $7 billion fine on the company in July last year andthen the company right now is working towards reorganizing their businessstructure and also operations. The company previously did have aaspiration to build a securities business, but that was halted when theregulatory clampdowns happened. So the Chan, who leads Bloomberg's Asiainvesting team there with the details on.
That story.Global technology supply chains are set to shift and diversify in response togeopolitical tensions and the pandemic. Bloomberg intelligence says the nextdecade could be uncomfortable for semiconductor companies and electronicsmanufacturing. For more on the latest report, our Asiatechnology analyst Charles Schumer joins us now.So, Charles, given the projected shift in leading edge chip making to the USand Europe, how do you foresee this transition impacting the globalcompetitive landscape right now? Hi, Heidi.Actually, in the last two months that we.
Do a full study on the what is theproject is going to launch in the US and in Europe and in every prepared report.And then in the report, our conclusion is that although right now Taiwan hasabout 60% of our market share in terms of capacity in the leading edge, that'sabout five and ten or below. And if we actually look at this projecton the pipeline, we believe that actually by the end of the 2032,actually us and Europe, actually they have a very good chance that to catch upand then they have a very pretty high chance to get you to share the marketshare the leading edge nodes which are Taiwan.In that case, actually we believe that.
Actually US Europe together, we mightactually take about 43 to 45 percentage of market share.That's actually almost equivalent to that.I was a share. What are the biggest challenges for youwhen it comes to the US and Europe in reaching the projected market share?All right. I think that most people actually thinkthat actually you could beat that demand.Actually, we think that that's not totally that's not necessarily the case.Actually, we are actually seeing that most of the actually at this new projectare more driven by the government.
Incentives.I give you an example. If the government can provide 25percentage of cash subsidy on construction costs, actually that canreduce the payback period at least by one year for one fab.So in this case, they give them an incentive for delivery as this isactually a very critical factors. And another thing that people have tobear in mind that actually we are talking about building not just abouttwo feet. We are talking about more than 59 fabsin these two regions. That means actually each FET wouldrequire about 5000 engineers.
So the talent acquisition could be a bigchallenge. We think.Then the extortion there with that report.Some of the other corporate stories that we're tracking this hour, the Japanesegovernment will give an additional $4.8 billion in subsidies for TSMC to expandits plant in the country. TSMC plans to start shipping chips fromits facility in Kumamoto by the end of this year.The new aid will go toward construction of a new fabrication building next toits existing one. Economy Minister Soto says TSMC is themost important partner for Japan in.
Realizing digital transformation.This just willreally improve the resiliencyof the chip. So how?For Japan and for the world. KKR is said to be nearing a deal worthabout $4 billion to buy a software business from Broadcom, sources say.The deal could be announced as soon as Monday.Broadcom is selling its end user computer unit, which it inheritedthrough its acquisition of VMware. That is it for DAYBREAK.Asia markets coverage continues.
Looking ahead to the start of trading inHong Kong, Shanghai and Shenzhen. This is Bloomberg.
