This is DAYBREAK.Asia. We're counting down to Asia's majormarket opens. And Paul, we actually already start ofthe week in Asia on abroad and know about those moves on Wall Streetovernight as well. I could inject a little bit moreoptimism into the session, even as we await some very, very key crucialearnings. Yeah, that's right.We had a pretty decent rally on Monday. It looks like that's set to continuetoday. But yeah, those big earningsannouncements from Tesla later in the.
Week, we'll have GM, Ford among theother automakers as well. And of course, there's going to be a lotof US deaths going to be auctioned this week also.We'll get to that in a moment. What are we keeping an eye on right now?Yeah, that's right. It's certainly going to be testingtraders appetite with yields hitting their highest for the year.But this is the open we've got for us, for Japan and South Korea, Australia aswell, coming online today. And at the start, as we said, we arewatching for any further gains that we see in Japanese equities here.That again, posting 1% to the upside for.
The Nikkei 2 to 5.It was that story of rebounding from last week's slump.And actually we've we've seen the Nikkei 2 to 5 very close to entering atechnical correction but it moved off those levels of course the Japanese yenin focus likewise we're close to that 155 mark so on on the lookout really forany sort of government action to support the local currency.But of course, given the BOJ expected to stay on hold later this week, this is astill hawkish Fed, likely to stay weak for now, but that's the state of playthere for Japan coming on line. Let's shift and take a look at Korea'smarket as well, because yesterday we did.
See that Crosbie rebound today a littlebit firmer as well. Full week slump.So we're coming off the back of that. But the focus turning to earnings inthis market is SK Hynix one of the key ones to watch this week, echo data tonote as well, because we saw PPE rising 1.6% on the year, point 2% on the month.But broadly, the takeaway from that is that domestic inflationary pressures arecooling in South Korea. And on Bloomberg intelligence team, moreeconomics team is saying that unless we see a further rise in oil pricesweakening domestic price pressures will probably keep CPI inflation on tracktoward the box goal to be okay not.
Seeing cutting until the second half ofthe year. PaulYeah, well, we've just opened for trade here in Australia as well.We do have a bit of that. We do have a staggered opening here ofcourse, but that notwithstanding we are better by about a third of 1% right now.We'll get a close to a better idea of how things are tracking a little bitlater on. The Aussie dollar showing a little bitmore strength now 64 and a half cents US, but crude is is an interesting oneto watch as well. We started off the day with Brent parkedexactly at $87 and it's moving a little.
Bit higher now.And this is despite some of those tensions in the Middle East just easingoff a little bit. We have, of course, just started tradein the US debt as well. So let's see how Treasury yields aretracking the two year backing off a little bit.It was knocking on the door of 5% yesterday.We've got a ten year in the Japanese session right now hovering around 4.6%.We are going to see, of course a lot of debt being sold this week, the USselling $183 billion and two, five and seven year notes.So it'll be fun watching the market.
Absorb all of that.Let's bring in Doreen Carroll now, head of Multi Asset Income at Schroders andDorian. I want to start with that point actuallyabout yields. We've got the Fed, of course, lookinghigher for longer. Are you tempted to buy the frontendhere, especially with that two year so close to 5%?Well, I think thank you very much for having me on the show.And I think, you know, we've been waiting for this to happen for sometime. So we've been expecting the yields tomove to back up and expectations going.
Forward to be the rates at these levelsin the states are actually not that restrictive.So I think a short answer to your question is no, we wouldn't be buyingthe front end at the moment, but we are relieved really to see that it startedto adjust to, we think, more rational expectations because the US economy isdoing extremely well at the moment. Employment is high,projected GDP growth is very strong. So right now we struggle to see therationale for significant rate cuts in the States.Yeah. What is your base case for easing nowwith inflation so sticky, the economy.
Looking pretty strong, cuts in the USbecoming more of a 2025 story. Nowwe are I mean, we don't want to be too contentious answering these kind ofquestions, but if you look out this year, you know it's moved from six cutsat the beginning of the year to June to July, potentially September, evenperhaps a symbolic cut. And then as we go into next year, we'vereally got to reassess because the US economy has been very strong, it hasbeen very resilient. When you look at financing conditionswhich are much more important for the corporate world, the yield curve isinverted, spreads are quite tight and.
It's very possible for companies to termout their debt. So what we've noticed most is that thecost of financing hasn't really gone up for corporates and we think that's a keydata point. So looking into next year, we would haveto see what happens in November in the US elections and some of the policies,frankly, on the fiscal front in terms of taxes, potentially even in terms ofimmigration, don't look too great from a sort of disinflationary perspective.Yes. So what you're watching that that reinflationary risk, I guess. But how does the the the Fed move andthat potential that we stay higher for.
Longer it constrain central banks herein Asia. But you know,I mean we tend to look at it quite differently.So we wrote a piece recently called The Powerof Gravity, and it's referring to the idea that the Fed stays higher forlonger, and that obviously affects all markets.I think most obviously, the ECB, Christine Lagarde, it's been very, veryclear that she wants to cut in short order, but we would say the scope, theextent of those cuts will be limited by the Fed.And similarly in Asia, obviously,.
Monetary policy from the Fed affectslocal debt markets across the world. So if the Fed stays higher, there needsto be a reassessment. And I think, you know, perhaps a littlebit more sort of from a longer term perspective, all rates really high atthese levels is a question that we've been asking ourselves on the desk.And what about what about the market in China?Because, of course, that's that's a very different environment for rates and avery different economic outlook right now.Yeah, I mean, China's got a very different problem.It's definitely got a sort of.
Deflationary pulse going through ratecuts and an easing of conditions have been kind of the order of the day forsome time now in China. But we are seeing, you know, from a sortof perspective of looking back a few months when there was extreme pessimism,a bit more of an opportunity perhaps for a slight cyclical pick up in China.The long term growth rates do look like they're coming down.But from a rate perspective, yes, it's a very different story there.But we do see a bit of a cyclical or a tactical window.And it's very important from a global growth perspective.The IMF have come out with upgraded.
Forecasts for the US and elsewhere, andit's all looking a little bit better, a little bit better than it was before.But China is absolutely central to that. It's going to be a big week for techearnings. Of course, we did see a bit of apullback last week. When you see those dips.Do you buy or do you think some of these names are looking a bit keenly priced atthe moment? Yeah, that's the real sort of topicthat's occupying a lot of us at the moment.I mean, I think, you know, we're income investors say, you know, that's thefirst point to make.
So typically we use growth to blend on akind of barbell strategy. And I think where we've been a littlebit more radical is incorporating a kind of benchmark weight to a lot of thesemega-cap tech names. You've got the earnings, as you say,coming through this week. The only comment we'd really make isthat, yes, the multiples are high, but we do think that projected growth ratesare realistic and that you can see them critically coming through.So, I mean, a lot of people have looked at Megacap Tech as both a growth andlittle bit defensive. And it's that transparency on theearnings.
And also, you know, if you look at AIand you look at technology, the kind of budgets that they have to spend in theseareas really put them in a very strong position going forward.So, I mean, we don't trade day to day. We don't have a strong opinion aboutwho's going to hit and who's going to miss this week.But we do think these companies growth rates justify a significant premium tothe market. The expectations are pretty sky high interms of the earnings growth, earnings growth that we can expect here.If we don't meet that or even if we come in line with it, where do you think themarket goes next?.
Yeah.I mean, I think you have to split the market up a little bit here.So, you know, if you look at semiconductors, the the expectations arestellar and you have to split that the kind of driver and also the more sort ofmundane part of semiconductors, which is doing less well.And you've seen that in some of the results that have come through onMegacap Tech. You know, they all very differentcompanies and it is strange that they've been bracketed together.So we we think that selective names can do quite well, but generally that growthrates are not, you know, too optimistic.
Relative to their prospects.We think. What's it mean for the markets ifthere's a big mess? Clearly, the markets have been a bitjittery over the last few weeks, combined with the fact that rates arehigher than people many people expected. So a big miss wouldn't be good.But, you know, we think we're in an environment of broadening out here.So we've really been looking at Europe. We've been in Japan for some time.We've been looking at global energy, for example.So, you know, if there's a miss, it could be an opportunity for thisbroadening out to carry on, which we.
Think would be healthy.And we think finally, that the health, the pullback recently it's been ahealthy kind of pullback and reassessment for the market.So that was Dorian Carroll, the head ofmulti asset income at Schroders. And we're just pretty much 10 minutesinto the session so far for Sydney, Seoul and Tokyo.And taking a look at some of the drop that we've got coming through for goldminers, in particular gold linked stocks.We did, of course, see bullion taking a little bit of a tumble overnight andthat's as investors sort of back away.
From some of the Haven assets like gold.Given that the risks in the Middle East of an all out war in the region seemcontained for now. So that's to say to play, as we said,gold very much in focus and trading below that 2350 level an ounce.But the other group of stocks we're tracking, all stock in particular we'rewatching is Woodside. That stock today, also a watch for us inthe Sydney session given the some moves at the top of the business but actuallyWoodside and not trading as yet. But Paul, of course the focus actuallywe do see Woodside online and it's just a little bit weaker so far, but PortMacquarie Group as well coming up.
Yeah, that's right.Woodside does catch this out too, starting with a does seem to starttrading towards the end of the morning. But Macquarie Group, as you mention, isgoing to be sharing their outlook with us on the X markets in a moment and alsowhy they're seeing further vulnerability for Asian currencies.First though, buybacks. Well, it's digging in for a legal battleover US moves to force a Tik Tok sale. We're going to have more on theimplications for Chinese and American businesses next.This is Bloomberg. Tiktok's Chinese parent companyBytedance, has made it clear that it has.
No intention of selling the short videoapp. And this is as the US government movesahead with its threat to shut down the platform if it's not divested.For more executive editor for Asia Technology, Peter Ahlstrom joins us.So Peter. Bytedance looks ready to play the longgame here in terms of the legal battle. How does this play out and is it waitingaround, stalling for time for maybe a more favorable administration afterNovember? Yeah, that's exactly right.Things are moving pretty quickly in Washington right now.The House has gone ahead with.
Legislation that would give Bytedancethis ultimatum to either sell the TikTok operations in the United States or itwould be banned in the country. The Senate is expected to pick up thatlegislation this week and also pass it. And then Joe Biden has said that hewould sign it into law. So that is going to give Bytedance, theparent company of TikTok, this ultimatum that either they need to sell theoperation to another buyer and non-Chinese buyer, or it would face thisshut down in the United States, you will call it.Four years ago, it faced a similar kind of ultimatum and negotiated apreliminary deal to sell the US.
Operations to a very complicated dealthat involved Microsoft and also Oracle. In this case, it's exactly the opposite.The company is not considering a sale. It's not working anything out.It's really not contemplating that option very seriously.And there are a few reasons for that. One, you're exactly right.They see that the elections in the United States for November, they knowthe changes, that the administration can change their fate and what the politicaloutlook is for something like this. And also the business in the UnitedStates now is much, much bigger than it was four years ago.They've got 170 million users in the.
United States that are also generating alot of revenue from those users, primarily through advertising at thispoint. And they feel like they can probablytake this to the courts, they can sue to stop the legislation, they can probablyget a temporary stay, and then they can, as you say, they can play the long gameand see whether they can wait this out. And the long game perhaps, perhaps couldinvolve exiting the US market for a period.But it can take talk, survive, given as you said, the US is such a key marketnow. Yeah.Annabelle.
That's a very good question.Bytedance I think they look at it this way that if they sell the US operationsto somebody else, they lose that forever.Whereas if they shutter the operations or they try to fight it in court, theyhave an opportunity to be able to regain their position in the US market where,as you said, they become quite successful, they can continue to run allof their other operations within the world outside of China.Tik Tok is very, very popular.The United States is the biggest market, but they'd be able to continue in thoseother markets.
Many US users may figure out ways aroundthe ban to try to use AirPods or other devices to be able to use that option.Could they come back into the market? It's very unclear whether that would bea viable strategy over the long term. Of course, the tech industry moves very,very quickly. You're also talking about a combinationof influencers who create content for the platform and advertisers whoadvertise alongside those influencers. If that contingent of those two sides ofthat business begin to shift to other platforms, that would create long termproblems for them. So they are taking a fair number ofrisks here.
That was our our executive editor forAsia Technology, Peter Els from there. And let's keep on the tick tock ticktock story bringing out Greater China Senior executive editor John Lu, stillin Hong Kong for us. And and John, Beijing.It's a really big hurdle here as well. I mean, we know that Beijing wants tosee homegrown tech giants succeed overseas.So how likely are they to block any sort of divestment of tick talk, given itdoes need the approval of regulators in China?I think the likelihood of Beijing stepping in to block a sale of blockTikTok from selling its America business.
I think is relatively high.And I think the rationale is I mean, there's a lot of politics in the US.There are also a lot of politics in China, slightly different.But I think the government is going to be keen to not look like it's beingpushed around. It's going to be keen to look like it'sdefending Chinese companies. And so I think some of thatconsideration will will push Beijing to act.Whether or not they will, I think we have to wait.But there was a law passed that any, you know, any high end technologyexported outside China, including the.
Algorithms used by tech Tiger has toseek approval from the Chinese government.So I think they will have an opportunity to block it if they want.And I think the likelihood that they would decide to do that is relativelyhigh. John, I want to talk about anotherpolicy in China as well to do with stimulating demand and particularlyencouraging consumers to upgrade old equipment that.Includes electric vehicles. What's the plan here?What's it going to cost? So the plan is that the government isgoing to offer subsidies, incentives to.
Buyers to.To compel people if they have an older gas car to trade that in for an electricvehicle. The government is also going to do thatwhen it comes to home appliances. They're going to do similar things whenit comes to equipment used in factories. This is all part and parcel of an effortto try to get consumption up, up and moving again.That has been the big question for this economy.Where's the in the man going to come from?There's also been a lot of concern expressed by people like Secretary JanetYellen when she visited China, the.
German chancellor, when he visited lastweek, that China what China will do to seek that in demand will be to exportgreat amounts to other markets. And so if China can get its ownconsumers out in spending, that that would help to alleviate some of thatconcern and pressure. Yeah.Do you think it's going to be enough to alleviate these tensions that we'reseeing around China exporting its supply glut to the places like Europe and theUS in those key sectors like EVs or renewable energy, for instance?I think it'll all come down to how much the government is willing to spend, andthat's a detail that we do not have yet.
I think there were some Goldman Sachsestimates that for electric cars it'd be somewhere in the neighborhood, ¥380billion. That's about 50 billion USD.Something of that scale potentially could do a lot in terms of alleviating alack of demand. But whether or not the government hasthe financial capacity to step up. That's another question we have to waitand answer. Right.All right, great. Of China senior executive editor JohnLee there. All right.Thanks, John.
We've got plenty more to come onDAYBREAK Asia. This is Glenn Beck. DOJ or other authorities could face abigger challenge because it was going to keep rain.While this is a threat, as the economic picture shows, the intersection is afunny way to. Could you see a future for Monumental asa public company? Yeah, I think so.I think what we found is the leagues have opened up two new pools of capitalover the last year or two. Both NBA and NHL have allowedprofessional investors to come in, not.
As individual owners, but as fans.So that's a whole new pool of capital that didn't exist before.Sort of shows a whole new asset class opening up for professional sports.Not just kids, but professional sports enterprises.I think the sophisticated analysts will be looking at this industry in thishour. Revenue start to get in the billions ofdollars. I think that you'll see a wave ofcompanies go public whether we will or not.There's a big responsibility when you're a public company.And I tell people we're a public company.
Already, the scrutiny that you're underin running a sports team is, I think, much higher than a public company CEOhas to live with. We'd be prepared to do it.Just the market would have to be right. We'd have to emotionally be ready to dosomething like that. But I think monumental will be one ofthe three, four or five best in class organizations that if that time wasthere, sure, we could go public. Okay, Let's check in on shares inWoodside at the moment. Having a pretty good morning, actuallyup by 4/10 of 1%. The stock has been off by about 7.4%year to date, but it's up today.
We've seen a modest uptick in the oilprices as well today, of course, But this is on signs that there might be abit of investor discontent around Woodside Energy at the moment.One of Australia's largest pension funds has voted against the company's climateplan and the re-election of its chair, Richard Goyder.So for more superannuation and pension funds, Correspondent Amy Bainbridgejoins us now from Melbourne. So I mean what's going on ahead ofWoodside's AGM as is happening on Wednesday?Well, certainly polls sometimes the superannuation funds, as we call themhere in Australia, don't like to talk.
Too much about how they're going to voteahead of a major meeting such as the one tomorrow.But in this case there's been quite a bit of noise leading up to the annualgeneral meeting where super, which has 170 billion AUD under management,yesterday said tell Bloomberg that they had voted against the re-election of Mr.Goyder and also against the company's climate transition plan.They said that they just hadn't been sufficient progress made on climatechange in the company for it to support both of those motions being put to themeeting going forward and those votes are put through electronically ahead ofthe meeting.
There's already a deadline passed forthose votes. Also yesterday, AustralianSuper, whichis the nation's largest pension fund with more than 330 billion AUD undermanagement, said that they had also voted against the climate plan ofWoodside but had supported Richard Goyder, his re-election.And there's been various other funds that have been making comments in thelead up to this event, including HESTA, another large fund which has confirmedthat it has been putting to Woodside some alternative board member proposalsto see whether the company can do more through its leadership to transition andreduce its emissions.
So, Amy, how much power do pension fundshave here? It's a great question, Annabel, becauseit seems that I have quite a lot, but it's not always obvious when you lookthrough the data. But what we do know is that a lot ofthese funds have holdings through index providers as well.AustralianSuper, for example, holds about 3% of Woodside.They said yesterday at a greenwashing hearing at Parliament in Canberra thatthat was largely inherited through the merger with BHP.So now they are really trying to advocate for better climate transitionfor that company where super they hold.
Just over 1% of the company as well.But collectively there's been a national body called the Australian Council ofSuperannuation Investors, which represents investors of around $2trillion worth, and they had also put forward a proposal to its membersrecommending that they vote against Woodside's climate transition plan,although they did stop short of saying that Mr.Goyder should not be re-elected to his position as chair.So it would seem now also worth mentioning that the funds here, thepension funds, are under enormous pressure to back up their climatestatements, that they're making their.
Net zero targets with actions.So many of them have been a little more forward in their commentary in the leadup to this meeting, and that was how superannuation andpension funds correspondent Amy Bainbridge there will get the latestcorporate stories we're tracking as well.And the US Federal Trade Commission is seeking to stop an $8.5 billion mergerbetween two fashion giants. The agency filed complaints allegingthat the deal between coach parent company Tapestry and Michael Kors, ownerCapri would harm the luxury goods market.This is the first time that the Biden.
Administration use its aggressiveantitrust enforcement to try to stop a deal in the sector.Reliance Industries disappointed on profit for the fourth straight quarter,hampered by continued weakness in its petrochemicals, business and highertaxes. India's largest company by market valuereported a dip in profit to $2.3 billion from year ago levels.While revenue did top expectations in an earnings call, the Reliance CFO CFO saidthe business faces a multi-decade low in petrochemicals.Coming up here, why Macquarie Group is anticipating further vulnerability forAsian currencies.
Its macro and ethics strategist joins usnext. This is Bloomberg. This is DAYBREAK, Asia just taking alook at some data points coming out. This is the Japan Bank, Japan, PMIfigures. Manufacturing, we're seeing it animprovement from the prior rating coming in at 49.9.So very close to that 50 threshold that's seen as expansionary.Composite rating as well, an improvement here.So 52.6 the prior reading, 51.7 and services.Little change from the month.
Private 54.6.It was 54.1 in the March rating. These are the preliminary figures forApril, of course, but it does tell us that story, that manufacturing sentimentis improving or continuing to improve in Japan.And what you're seeing there in terms of the the dollar yen trade, it's fairlysteady right now. We have seen that Japanese yen holdingvery close to that 155 mark. It's really that story of the yielddifferential between the BOJ and the Fed and likely to be improved this weekgiven the BOJ very much expected to stay on hold.But let's shift now.
Take a look at Asian affects morebroadly in the session today. So far what we're seeing is littlemovement. The dollar gauge fairly flat right now,but the story of this year so far for the dollar is that it's just a forcethat we really didn't bet on. A strong dollar is back and it very muchlooks set to stay. So let's discuss with our next guest whosays vulnerability for Asian currencies is increasing.With us now is trying to look macro in effect strategist at Macquarie Group andand trying yeah perhaps something we didn't expect coming into this year wasjust the greenback being so, so strong.
Yes, exactly.And thanks for having me on the show. I think for this year, the strength ofthe US economy continues to beat expectations.And so at the start of the year, when the market was able to price anaggressive Fed cuts, we've now down to more than one and a half cuts only.And our view is that we would only have one cut this year in December.And that means that, you know, US yields, as you said, going to be higherfor longer. And that means for Dollar Asia, whichcontinues to be in a very challenging environment.And is that a trend that you think will.
Will worse and perhaps going into thesecond half, what's your outlook? Well, I think for right now where we arein second quarter, it is very it's a very vulnerable period.And the reason I said that is because the second quarter typically see verynegative effects flow. So quite a number of Asia countries,including India, Indonesia and Thailand, have negative current accountseasonality this quarter. And when you throw in the backdrop ofhawkish Fed a geopolitical risk and potentially another increase in thedollar CNY fixing over the coming period, I think that really means thatyou may not have seen the worst and.
Things may get worse before we getbetter. Yeah, let's talk a little bit more aboutthat fixing. How far do you think the PBOC might bewilling to let the yuan depreciate? And what could be the knock on effectsof that like that? Yeah, so it's been a key question thisyear. I think really the R&B hose, the key tohow bad Asia sentiment would get if we have the PBOC holding the fixed largelysteady around current level at 710, I think that would help Asia centralbanks. But unfortunately we think a move higherin the fix is more likely.
And the reason for it is that if youlook at the China basket, the Fed's it has gone up about 3.4% year to date.So I think that provides a policy room for the PBOC to raise dollar CNY withoutcompromising is stability mandate in the sense that they could always measure itagainst a broader basket. So my view is we get the dollar CNYfixed to about 714 in second quarter and with that move then NH could touch 730.So so that's the level that I think, you know, once it filtered through the restof Asia, it could cost another leg of Asia.Big sell off. Yeah, that's an interesting point youmake because so much of the focus is.
Usually on the yuan, the US dollar.But to your point, we have a chart on the Bloomberg terminal that illustratesthis the yuan versus the basket of peers.It's the highest it's been in about 17 months.There's pretty much all of Asia weakens against the US dollar.So going forward. How do you see the yuan performingagainst its regional peers? Yes.So I think there would be some downside to the Fed's basket when the PBOC startto raise dollar, CNY fixed more meaningfully in the direction wepredict.
However, it will not see aggressivedownside to see facts because at the end of the day, in a strong dollarenvironment, dollar R&B tends to inch in the same direction as well.Having said that, I think the fact that China economy recovery is still slow,they still rely a lot on exports. So I think that means that they wouldprefer a somewhat weaker currency level from here, definitely against a basket.What about the moves that we're seeing in the oil space?Because, of course, it's been that story of research in oil in the back of MiddleEast research is do appear contained for now, but there's still a chance that oildoes move higher.
So how is that going to also affect thedynamic? Yes.So I think it's quite interesting because across Asia, we have some netenergy exporter, energy and gas exporter, like, for example, Malaysiaringgit. However, when you see oil move higher onthe on the back of supply shock like what we are seeing recently then acrossAsia and Asia just move a lot higher. And I think it reflects the concernsaround inflation filtered through to our region, but more importantly also areflection of the fact that the dollar itself is an important petro currency.And so when oil prices strengthen on the.
Back of supply shock like this, themarket feels that Fed can get more hawkish.And on the back of that US yields rise and that filter to and move dollar Asiabroadly higher regardless of whether you are net oil importers or exporters.Yeah we do have the ringgit starting to approach that 26 year low.But I want to talk about Malaysia's neighbor Indonesia as well.We've got a Bank of Indonesia decision comingup on Wednesday. Intervention hasn't really done much tohalt the slide in the rupiah. This big bank, Indonesia, is going to dosomething to put a floor under the.
Currency.Well, I think they definitely would try. I guess, you know, at the start, when Isay it's hard for us to say with confidence that the worst is over forDollar Asia. However, at the same time, I would saywhen it comes to the rupiah, what we can say is that the pace of the sell offfrom here will probably slow because of increased bank Indonesia resistance.I think this week meeting is definitely live and not only will they decidewhether to hike or not, I think they would go a step further to discuss, youknow, whether 25 basis points would be enough or they would have to do more.My base case is that they settle with a.
25 basis point hike to the policy rate.However, at the same time, they are likely to jack up the RBI yields aswell. So de facto tightening liquidity on thatfront. So I think the combinations ofinterventions, interest rate hikes would help to slow the rupiah decline.But as you said, you know, the deciding factor for us is really the direction ofthe dollar and commodity prices. And right now, I think we still need toto be in that wait and see mode. All right.Trying to leave for a macro and effects strategist at Macquarie Group.Thanks so much for joining us.
Okay.Let's take a look at how markets are tracking here in the Asia-Pacific.It's looking like another reasonable day for equities at the moment here inAustralia were better by about 6/10 of 1%.And if we take a look at how the market is performing by sector, the rally for asecond day, pretty broad based. It's really only utilities andindustrials that are suffering here. Elsewhere, we've got the Nikkei havinganother good day, better by a half of 1% because be following on from yesterday'sgains as well with another modest rise. And of course this follows on from apretty decent day for US stocks as well.
Let's take a look at how we're doing inthe commodities space. Also, even though we've seen tensionseasing in the Middle East, we do have Brent rising.It started off the day at $87 even, and now we're up at 8741.A New York crude rising as well. But a focus on gold today as well.That rally you're holding on by its fingernails at the moment.But that is our Bloomberg Question of the Day, in fact, whether or not gold isin a correction and we're done or or whether or not there's another leghigher to go. Some of I guess that I think that maybegold could pull back below that 20 $300.
An ounce level fell, I think yet, Paul,it's really just perhaps it comes down to what we see in the Middle East andwhether those risks of an all out war are contained.They do appear to be for now. And that's really playing out the thedynamic as well. But certainly the the geopoliticalstories we're tracking this morning, the Israeli military intelligence chief hasquit for failing to prevent the October seven invasion by Hamas.A Now, how, however, is the first senior Israeli official to step down over theassault that killed around 1200 people? He accepted blame shortly after theHamas attacks, but stayed in his role as.
Israel launched its war in Gaza.The EU has agreed to impose new sanctions on Iran over its attack onIsrael. The deal will further expandrestrictions already imposed for supplying Russia with drones.The measures also target weapons transfers to Iranian proxies in theMiddle East, including Hezbollah. Countries, including Germany and Sweden,are pushing to add Iran's Islamic Revolutionary Guard Corps to the EU'sterrorism list. President Biden has told his Ukrainiancounterpart that the US will move quickly to deliver weapons if the Senatevotes this week to approve an aid.
Package.In a phone call, Biden told Vladimir Zelensky the US aims to swiftly ship thebattlefield in air defence equipment. Meanwhile, the UK is sending moremissiles to Ukraine, including long range guided weapons in a package worth$620 million. And remember that Bloomberg users caninteract with the charts shown using GTV go.You can browse recent charts featured on Bloomberg TV to catch up on key analysisand as well save charts for future reference.This is Bloomberg. Bloomberg learned that over a dozenJapan rates traders have left banks for.
Hedge funds.That's amid bets that the BOJ's move to unwind stimulus will create a volatilityfueled boom. For more, let's bring in our asiainvesting reporter lisa do in tokyo. And this is one of the reallyinteresting sort of knock on effects of Japan moving toward policynormalization. But certainly this is something thatcould really reshape the market as well. Yes, certainly if you are a race traderin Japan these days, you're probably very busy with both work and takingcalls from headhunters or recruiters that want to hire you away.Like you mentioned, identify more than a.
Dozen traders that in the past year orso have shifted from Wall Street banks like Morgan Stanley and Citigroup, aswell as Japanese mega-banks, and moved on to work at hedge funds that are alltrying to get a piece of the action in Japan.Like you said, you know, the Bank of Japan for years had this yield curvecontrol policy as part of its stimulus that really put a lid on government bondyields. Now that they've done away with thatpolicy earlier this year, it's created this volatility that funds can trade andmake money off of. Some of the funds identify being veryactive in hiring our millennium blue.
Crested capital here in Japan.So anecdotally, I mean, what are we hearing from people who are trying tohire traders? Is there a shortage of staff and what'sthe meaning for salaries? Yes, the competitive landscape here isit's most very competitive here because the talent pool is very, very limitedbecause of the BOJ yield curve control. This had really been a very sleepycorner of the financial markets here in Tokyo, in Japan, and it was verybasically that the talent pipeline is very limited.So some headhunters and recruiters estimate that there's probably less than100 of these traders at big banks that.
Firms can hire and probably an evensmaller portion would have that risk appetite to want to shift from a verystable job at a mega bank or a big bank to work at a hedge fund.Of course, because this is a financial industry we're talking about, they arenot being shy about dangling incentives. We've heard that many banks are reallyboosting bonuses for their traders, even though it's not been a great year forthem. But at the same time, on the hedge fundside, they do guarantee a much bigger payout of the profits you make for them.So basically, this is going to be a very active hiring space going forward forfor people to watch.
Yeah, just crunch the numbers for us.How much more can you get from a hedge fund in terms of profit sharing, forinstance? I mean, the numbers really vary, butkind of the headline number that I had to reference is that basically you're atrader at a bank, you're usually taking home about 3% the profits you make.But I'll tell you, compared to a hedge fund, you're probably taking 20% or moreof the profits you make. So the difference in salary issubstantial. All right.Asia investing reporter Lisa do there in Tokyo.Here are some of the latest corporate.
Stories that we're following.Chinese wealth manager Noah Holdings is planning to beef up the number ofmanagers it has in Hong Kong and Singapore.The company's chief financial officer says it wants to have about 150 to 200managers in the financial hubs by the end of the year.And that is up from the current 100. The private bank is expanding overseasas China's rich look to diversify their wealth.Japan's Fair Trade Commission says Google used tactics that limited Yahoo!Japan's ability to compete in targeted search ads.The antitrust regulator says the company.
Blocked Yahoo!Japan from accessing technology needed to receive targeted ad revenue fromsearches on mobile devices between the years of 2015 and 2022.The FTC says Google changed its conduct as soon as they flagged the practice andhas promised to give Yahoo! Japan access to the tech.Saudi Aramco has started talks to buy a 10% stake in China's AngliaPetrochemical. The state owned company has signed aninitial agreement to explore a potential transaction.No financial details or a timeline were provided.Aramco is seeking more deals in Asia to.
Expand its business and secure long termbuyers for its crude. The Singapore exchange is proposing aroll out while proposing a rule change to make it easier for some shareholdersto call special general meetings. Under the proposal, companies must takesteps within three weeks to hold a meeting If shareholders with at least10% of paid up stock call for one. This is the latest move in an ongoingpush to improve corporate governance in Singapore in response to risingshareholder activism. Still to come, bubble tea maker Cha Dayis Hong Kong's biggest IPO offering this year.We're going to preview their debut up.
Next.This is Bloomberg. Taking a quick look at futures here.You've got US stocks fairly steady right now, but the open in Taiwan just about10 minutes away in pointing to some gains there.China futures also looking a little bit firmer here.Something to note as we actually just had UBS pushing through an upgrade forChina and Hong Kong equities to overweight.They've actually downgraded Taiwan and Korea stocks to neutral.So a bit of a shift in sentiment here. We are just starting to see greenshoots.
Investors are coming back into mainlandstocks. But let's take a look at what's going tobe a pretty big test as well for Hong Kong today because it's been a very thinIPO market. Not a great timeline oroutlook, really, But the bubble tea maker known as tri band Dow has declinedin gray market trading ahead of its debut on the Hong Kong Stock Exchange.For more, let's bring in equity capital markets reporter Philippe Pacheco.Philippe, just walk us through the background for this IPO, but also whatwe're going to expected, the open, because as we said, gray market trading,it's not looking too pretty.
That's right.Well, it should be a very interesting start today.This is the biggest IPO in Hong Kong since November, but we are still talkingabout 330 million U.S. dollars.As you mentioned, this is a very thin IPO market at this moment.This IPO was quite peculiar because it was flagged for a while.The company decided to come to market with a deal that's actually smaller thaninitially expected back in time. But it went through and it actually theymanaged to to go all the way through closing the books, but there was not aprice range.
So there was always with a fixed priceof 1750. That's the level that this stock isstarting today. But as you mentioned, Gray marketyesterday was a great indication of what we should see as soon as this stockstarts trading. And the performance was not good.It was down just. Shares were down over 13%.So it wouldn't be surprising to see some pressure as soon as this stock startstrading in half an hour or so. Philippe, even though there seems to bea bit of a lack of enthusiasm among gray market traders, is it possible we'll seesome more bubble tea companies coming to.
The market?How's the pipeline looking as well? Paul, It's very fair to say that a lotof companies will be looking at this IPO, not just because of the size.It's quite meaningful considering the context in Hong Kong right now.It wouldn't be the case two years ago, but nowadays 350 300 million U.S.dollars is quite a significant amount. And of course, you have competitors, youhave other tea bubble companies that are looking at the Hong Kong market thathave started the process to actually sell their shares.We are talking about makes a a group that's been out there talking to banksfor a while now.
There's another company called Sexy Tea,which is actually expecting to list their shares here in Hong Kong as well.So we do have competitors and we have the broaderpotential Chinese companies that are expecting to list in Hong Kong that willbe checking the performance. As of now, it's very hard to say that ifwhether we will have a positive day or not.Yeah, and I'm very curious about selling shares at 1750 apiece, Hong Kongdollars, Is that something we typically see where we don't get a marketed range?And what would be the lesson from that for other companies that are looking tolist here possibly?.
That's a very good point, Bill, becauseusually we do have a range and sometimes when the market is not good, if theprice at the bottom of the range are even below, which is rare, but it canhappen, it's a very negative indication of sentiment and appetite overall.When you come with a fixed price, it's easier for you to actually crave What'sthe valuation that the company is seeking and then what what bankersshould be quite confident that they would be able to get to that point,probably after having a lot of conversation, a lot of chats withinvestors and with the company willing to come at that market value.When you have the range, if you actually.
Sell at the top and then you have a popafter the debut, that's a very good indication there is appetite, there isdemand. Well, the opposite when you come at avery confident price level and then you have a very sharp decline, it's anindication of of pessimism for sure. All right.All about the price discovery that was out.Equity capital markets reporter Felipe Pacheco there ahead of what is going tobe a key test for Hong Kong's IPO market later this morning.But time to check on some of the stocks to watch and of course, the markets toopen in Hong Kong and mainland China.
Kate.We're going to be keeping an eye on Asian Tesla supplies, of course, the amaker set to report its first quarter results.That's after cutting the price of its cars in key markets, including China.We have seen that slide for Tesla down more than 40% this year.Asian miners as well, they may move as gold takes a tumble.Haven demand easing with tensions in the Middle East also appearing to be alittle bit contained for now. What we're seeing in the broader marketsso far, just about an hour into the session, and it's looking fairly mixedat this point in time, not really seeing.
Outsized moves that does perhaps pointto the number of tests have got ahead of a number of key bond auctions that arecoming up, set to test investor appetite and also key earnings that are on thedocket as well. We mentioned Tesla, but there's a numberof so-called Magnificent seven names that are due to report.So we'll get more on that. Of course, these different themes comingup in the next hour. Saxo China chief China strategist tellsus how the upcoming US election is shaping up mainland equities and theyuan, of course. That is it from daybreak.Asia.
Our markets coverage continues as welook ahead to the start of trade in Hong Kong, Shanghai and Shenzhen.The China show is next. This is Bloomberg.
That’s coaching from Marvel group. Thanks.