Bloomberg Dawn: Asia 04/19/2024

This is DAYBREAK, Asia.We're counting down to Asia's major market opens.And Heidi, there's quite a lot to be pouring cold water on Asian equities inthe session today, especially when you take a look at some of the hawkish Fedspeak that's been coming through. Yeah, and of course, a mixed picturewhen it comes to earnings mix, even when the numbers are strong, the likes ofNetflix. Right.You see just how high investor expectations are.Be interesting to see how that plays through to some of the entertainmentrelated stocks.

But also watching those chip stocks inthe open as well with the sort of muted commentary, the pullback from TSMC,we're likely to see a bit of a reaction from the likes of Hynix in this part ofthe world. Yeah, that's right.TSMC and ASML as well earlier this week not great outlooks there but Japan,South Korea, Australia just coming on line here at the start of the day.What we're tracking is the Japanese yen very closely, continuing of course, toto watch any levels or or signals of intervention that we get from Japanesegovernment officials, many of those in Washington this week for the IMF springmeetings.

But the headlines that have really beencrossing from that is that they are concerned.But also what are the areas or parameters that they have to act ininflation tonight as well, because we just had some numbers coming out in thelast half hour. It did show a general trend of cooling,a little bit weaker than what economists had been predicting ahead of the BOJmeeting. But still, Tokyo inflation, another oneto watch and that's coming up in a week's time.So we'll track that. But equities, the picture today, we areunder pressure so far the Nikkei 2 to 5.

Down 1% at this point in time.As you said, really a lot for investors to be tracking today, given, as we said,that hawkish Fed speak that stronger US echo data earnings as well.To note, let's take a look at Korea coming on line here to start the dayagain. It is that picture of weakness that wesee the cost be down 1.2%. You mentioned Netflix.You can see that they're in after hours dropping 5%.It's that concern around that weaker forecast for the current quarter.Also, they're going to be stopping to report subscription fee is that isspooking investors somewhat Korean one.

That you are seeing some weaknessagainst the greenback. Again we know Korean currency officialshave been in Washington and they are seeking stable ethics at this point intime. Take a look at how I set out for thisFriday session here in Sydney. BELL And in the first minute or so ofthat staggered open, we're seeing a little bit of weakness there acrosstrading for the ASX 200. We see in particular this kind of dragthat has played out when it comes to Australian mining stocks.Despite the rally that we've seen across the commodities more broadly and evensome resilience returning to iron ore,.

We have really seen the Aussie minersunderperforming their global peers by the most in almost a year.The likes of Rio Tinto, BHP have been falling in tandem with iron ore pricesthat continue to come really under under pressure despite the rallies that we'veseen gold and copper that hasn't really had too much of an impact there.Watching Australian bonds as well. We saw treasuries really gaining aheadof the Fed's big and Aussie bonds in that reaction to the unexpected fall inemployment numbers as well. We also had some commentary from ourconversation with the Australian Treasurer saying that the economy, theTreasury is on track for a second.

Surplus despite these elevated concernsover Chinese growth and how it affects Australian demand.And finally, look at crude oil. We are seeing Brent a little bit softer.They're set for that weekly drop that week of tone offsetting the continuedrisk that we see across the Middle East and of course they continue to releasethem up. But take a look at what we're watchingwhen it comes to the US Treasury, stumbling on really just more Fed speak,really. The mention of a Fed rate hike from theNew York Fed president did its work across pricing across the Treasuries.Take a listen.

It's not my baseline.My expectation right now is that, you know, interest rates are in a good placeand eventually at some point would want to lower interest rates as the economyreally gets to the 2% inflation that we're headed towards.If the data are telling us that we would need higher interest rates to achieveour goals, then we would obviously want to do that.So it's not my base case. All right.Let's bring in our next guest, Harold Van Allen.He's head of Asia equity strategy at HSBC.And Howard, I'm interested let's start.

With what we just heard that fromWilliams, not saying that a rate hike is the basecase, but still it is a chance or there's a risk of it happening.Is that something that you're also looking at as a scenario that's verymuch in play? No, we were not looking for rate hikesthis year, still rate cuts, but clearly the risk is shifting.Right. And this is the story.The risk is shifting that the inflation numbers, they've ticked up a little bitover the last last reading. Maybe something happens, but oil has sofar stayed.

Okay.But now that it's there's more inflation rates than we initially anticipated.So that story that we have got was at the beginning of the year, five ratecuts in these seven was a little bit. Yeah, right.So from seven we've now gone to maybe it's it's going to be a rate cut andI've heard somebody saying that some banks have gone out already said that itwill be a rate hike this this year. Right.So a very big shift and you see that the bond market is pricing that in.So higher bond yields coming through. The ten year is now trading at about 4.6and that's a dramatic increase, right,.

For equities, think about equities.That means that your discount rate for us is analyst money.That's a very important number that that takes that shapes off.Quite some some yeah some some so valuation so ten year is up equities nowcurrencies weaker U.S. dollar stronger it's all being priced inthat might continue a bit. And I'm curious because I know youequities but just if you can react to this in in the question of the daybecause we're taking a look at when will treasuries hit that five, 5% mark theten year that is is that something as well that you're seeing and what wouldbe the flow on effects from that, do you.

Think?No, I don't know if we really going to get this is difficult to say.Right, because it's sometimes the markets are kind of on a train.We were on a train of several rate cuts, as you said, in the early part of theyear. Now we're moving in a completelydifferent direction. So sometimes it's got its own momentum,right? I don't look at the treasuries as much,so I don't really think we're going to get that much.But if I look at equities, for example, we're now getting to the 100 day movingaverages.

You you starting to to get to importantlevels because if that happens, we breaking through, then you're going tosee another maybe step down or so. So if we go to five, then the equitieswill have another good step lower across the world.What do you make then of what we're seeing in earnings so far?Is that going to be something that is another catalyst to drive marketshigher, even against that backdrop of higher yields, firmer commodity prices?Yeah. Now this is interesting because we'retalking about the global macro and that's just not helping Asian equitiesat the moment.

So be it.But actually the earnings numbers that have come through out of the region isnot so bad. So Chinese earnings, we've gone througha reporting season. We've all tell you the map looked likelast year. So we're still rearview mirror here.Last year, most people thought it was no growth at all.But if you take the property sector out, it was about, say, close to 15% earningsgrowth. Not too bad actually, across the region.No China this year, the expectations are for a slight acceleration.That's probably that needs to come down.

There's some technicalities involved,but we're going to have decent growth across the region, particularly in NorthAsia. So that in itself is not enough tosupport Asian markets, but it provides us with a bit of grounding that if thesebond yields go to 5%, yeah, we'll step down one at some point in time and say,listen, this, this doesn't make sense for the equities to sell off becausethere is some good growth. Then you see money starting to comeback, but we're not there yet. How is the currency picture in thevolatility that we continue to see playing out when it comes to equityvaluations and interest write,.

Particularly for the likes of Japan?Yeah, no, I mean, at the beginning of the year we were thinking, hey, the yencould weaken, I'm sorry, could strengthen from here.The dollar strength is over and that will lead to all sorts of interestingchanges in inflow dynamics across the region because money would come out ofJapan and then go somewhere else. Now, that story clearly has been movedbackwards further into the future by at least a couple of months or so.So the yen has weakened. That typically supports the Japanesemarket. But now we're seeing a sell off inglobal equities.

So that's why Japanese equities arecoming coming off as well. But that kind of flow that we wereinitially anticipating from Japan into the rest of the region, yeah, that isnot going to happen anytime soon. So I know those will be and of course,some of the other if you go first.No, no, no. Continue.What are the global implications? No, it means that we thought there wouldbe money going from Japan into the rest of the region.But now it's really global money that needsto come in.

By the moment, global money goes backinto money market instruments because the rates are moving higher.That looks a little bit more interesting.So if we see a sort of peak in the ten year bond yield,maybe it's close to the 5% that we were talking about earlier on.But if we see a peak somewhere there, then maybe that money starts to comeback into the region. So it needs to be kind of global moneyto come back in the region because it's not that Japanese money that's going todrive the markets such as China or India or elsewhere across Asia.Herald You've switched preference from.

Taiwan to Korea, which I find reallyquite compelling. Is that because with the value upprogram, the governance efforts, do you expect Korea to get to where Japan hasfinally gotten to because that most people are saying that's a pretty sortof long term view? Yeah.No, I think there's a lot of you. Actually, there are two reasons why weswitched a preference for Korea and Japan and Taiwan.First of all, we liked Taiwan because there was good growth in some of theleading companies there. So one foundry, for example, now that ismaterializing and those stocks are up.

Well, they were up 35% at one point intime. So we thought that story has been pricedin while on the margin. You have that news story emerging overthe last couple of months in Korea on value.What did they want to do similar to what the Japanese have done, make changes tocorporate governance. Now, that is that there is a hopefullyinteresting sort of story unfolding in Korea, but it's we're really early days.The Japanese have been on this for almost a decade now.So they've introduced a new index, the Nikkei 400, to the so-called shameindex.

And all kinds of changes were madealmost a decade now. So they've been working on this forquite some time and figured out what works best for them.The Koreans have just started. And of course, we don't have to wait tenyears because they say, hey, this works in other places.We can implement that as well. You see.Exactly. That's what they do.But it will probably take quite some time for this thing to slowly change.But we see a bit better dividend payments coming through here in the US,some share buybacks in Korea.

So it starts moving in the rightdirection, but slowly. Harold, always great to have you withus. Harold Van der Linden, the head of Asiaequity strategy at HSBC. Take a look at some of the movers thatwe're seeing. Just about 10 minutes or so into thestart of trading across Japan, Korea and here in Australia as well.As I mentioned, chipmakers in Focus after the muted commentary from TSMC.Also some of the other companies that reported across that space are not superpositive either. So we are seeing quite a bit ofdownside.

The likes of ESCO hunting's down by over3% advanced test as well. Tokyo Electron probably the worstperformer out of the lot. TSMC scaling back its outlook for chipmarket expansion. Really the caution when it comes tosmartphone and PC markets remaining pretty weak despite posting its firstprofit increase in a year and actually beating its estimates in the secondquarter. Sales guidance also beatingexpectations, but that semi market growth expectation being cut there.Taking a look at some of the streaming names, of course, on the back ofNetflix, as we saw really some very.

Robust numbers.And in fact, 9.3, 3 million customers best start to the year since 2020 forNetflix, but also saying that gains will slow.We saw shares dropping in late trade in some of these streaming andentertainment related names in Asia also following suit bell.Yes, certainly a lot of weakness across the screen so far in the early part oftrade. But still to come, we will talk aboutthe world's biggest exercise in democracy getting underway.That's, of course, the Indian election. It's the first of nearly 1 billionIndian voters heading to the polls.

We'll have a live report from the cityof Chennai later this hour. But first, the IMF managing directoradds to voices urging China to address overcapacity issues.We hear from Kristalina Georgieva next. This is Bloomberg. The International Monetary Fund saysChina should get serious about economic reforms and addressing issues ofovercapacity. Managing director Kristalina Georgievaspoke with us as the fund hosts its annual spring meetings in Washington.China needs to continue to seriously address the problems of the propertysector.

That has been handled somewhat but notresolved. They need it for domestic consumerconfidence because many Chinese people think of their apartment as their savingfor old age. They also need it because a sector ofthat significance cannot be put on hold. The second thing I told him is that weare now starting our Article four consultation.This is our annual taking the pulse of the economy with China and that it maybe very useful for China. If we do more analysis on how they canboost domestic demand, how they can exercise their own decision for the dualcirculation economy.

And I was I was delighted that he seesvalue from the fund to get deeper in these issues and provide China withappropriate advice. Is that coming under pressure in otherpolitically, not just from this administration, Secretary Allen, butpotentially another Trump administration as well?Do you have any concerns about lean towards the market and just seek out aweaker currency? Well, I that we we haven't seen signs ofthat. But what I do believe is that,yes, if China builds overcapacity and pushes export, that creates reciprocityof action.

And then we are in a world of morefragmentation, not less. That ultimately is not good for China.China wants an integrated global economy.Therefore, what they want to see China doing is to get serious about reforms,get serious about demand and domestic consumption.That was the IMF managing director Chris Lane and Georgieva in Washington withBloomberg's Jonathan Ferro. Let's get the latest in geopolitics now,because the US Congress looks set to approve some $95 billion in long stalledout aid to Ukraine, Israel and Taiwan. House Democrats have lined up to backSpeaker Mike Johnson's proposal and.

Overcome a planned blockade attempt byRepublican conservatives. The House is expected to vote onSaturday, with the Senate taking it up as soon as next week.The plan largely mirrors a package that already passed the Upper House inFebruary. The US has imposed fresh sanctions onIran over this month's strike on Israel, targeting 16 people and entities.That includes a company that helped make engines for the type of drones used inthe barrage. President Biden said in a statement thatthe US is committed to Israel's security.At the same time, allied nations have.

Been imploring Israel not to retaliateagainst Iran, fearing a wider regional war,and the US has vetoed a bid to make Palestine a full fledged member of theUnited Nations. 12 of 15 Security Council members votedin favour, while the UK and Switzerland abstained.Although the Palestinian Authority received enough support to have its bidreferred to the General Assembly. The negative vote from the US, whichwields veto power, was enough to block it.We'll have more ahead on DAYBREAK. Asia.This is Bloomberg.

But take a look at how Sony is tradingso far in the early part of the session, about 20 minutes into the start oftrading, we are seeing a downside of about 7/10 of 1%, in contrast to thegains of almost 11% that we saw for Paramount, Sony and Apollo GlobalManagement considering teaming up in a bid for the film and TV giant.That's according to Bloomberg Reporting, speaking to a person familiar with thematter. So Bloomberg Intelligence believes thata joint bid could assuage financing concerns that Paramount may have hadwith Apollo senior media analyst key to going out and joins us now for more.So give us your analysis in terms of the.

Benefits of this potential tie up.Yes, I think it's really good news for for Paramount.So Paramount right now is in exclusive negotiations with Skydance media.So they're in a due diligence process for for about a 30 day period.But there was a lot of investor concern there because there was concern that thenonvoting shareholders would actually be diluted and somehow the controllingshareholder, which is the Redstone family, would kind of benefit at theexpense of the non-voting shareholders. So I think this is a this is this willbe a much cleaner deal and one that would be cheered by all the investorsand the fact that Sony is kind of coming.

In with Apollo, I think definitely putsto ease any concerns that both the management team at Paramount or anyother investor might have had, you know, in terms of financing concerns with withApollo just kind of given of sort of Sony's deep pockets.Yangon. Another stock we're tracking in afterhours is Netflix, of course, following its earnings.And so many positives to take away from this report.But investors really do seem to be focusing on the negatives.Yeah, it was absolutely a blockbuster report card.And about I mean, you had a subscriber.

Blowout.They came in, you know, the revenue numbers were really good operatingmargin. They upped their guidance.So everything that, you know, we were looking for, they delivered, of course,a one could one could argue that, you know, the revenue guidance for thesecond quarter as well as for the full year maybe came in in line to slightlybelow consensus estimates, which is kind of what is spooking investors right now.I think also embedded in that guidance was the fact that maybe subscribergrowth through the rest of the year, especially in the second half, is goingto face some very tough comparisons and.

Is going to be a little bit more mutedversus the first half. But I think what kind of really rankledinvestors is the fact that Netflix is going to stop disclosing any subscribermetrics starting the first quarter of 2025.And that really kind of makes it very hard to map out the growth story forNetflix going forward. That was Bloomberg Intelligence seniormedia analyst Getrag announcing that. Thanks very much for your time.And taking a look now, what's happening with Asian chipmakers.We're just under 25 minutes into the session in the sell off that we'reseeing for tech stocks today is.

Accelerating.This is the biggest laggard so far for Asia trading.We had TSMC, of course, scaling back its outlook for a chip market expansion.It's also cautioning that the smartphone PC sectors, those remain weak as well.So let's get more on this now and bring in our managing editor for AsiaTechnology, Edwin Chan. And Edwin, at a stack up, TSMC, you putthat against ASML earlier this week. It doesn't look too great right now.I think the picture is looking a little murky.Yes. So TSMC on the surface produce of areally solid set of numbers.

But I think excuse me, I think themarket is zero in on commentary during the earnings call.I think they're looking at especially TSMC scaling back its expectations formarket growth. And what we're seeing is a bit of adichotomy right now between demand growth which will underpin longerterm business for TSMC and in the short term as smartphone and PC market weakensit when take a moment to clear throat there because we can take a look at howthose stocks are faring. Again, as we said, really big lossesbuilding in so far for for some of the Asian chip makers.A lot of weakness coming through given.

What you said around TSMC and perhapssome concerns around the outlook, even though the numbers looking a little bitbetter. But what's the read through on this forthe other big tech names like Apple, NVIDIA, for instance?So in terms of the warning on smartphones, I think the news does notlook that good for Apple still by far. I think its biggest customer previouslyabout a quarter of revenue. I think the smartphone market remainsdepressed. But within video, you know there's twothings at work here. Yes, TSMC was very upbeat about demandgoing forward, but at the same time,.

There is a debate going on in themarket, as you know, about whether CHIP shares, air chip shares have run aheadof themselves. And I think some of that is also playinginto the sell off we're seeing. Edwin, when you take a look at, I guessa longer and longer term demand dynamic is generative and the demand that wecontinue to see from that, even as we see that kind of downside reactionacross markets today, is that still ultimately the bigger tailwind?I think so. I mean, there's a general consensus thatthis is a once in a generation kind of technology that is going torevolutionize the way we essentially.

Interact with technology and the way welive. The question is, is the current trainingboom, the current development boom, the current creation boom,again running ahead of itself? And how many of these launch languagemodels we're seeing built with these expensive NVIDIA chips are going to beviable and or extensive platforms in the longer term.But I think there's no question that when you talk about generative A.I., youknow, about a year or two ago, it took a lot of us by surprise, you know, itscapabilities and potential. And it continues to surprise.And I believe over the long term,.

Companies like TSMC and NVIDIA willbenefit. Managing editor for Asia Technology,Edwin Chen there in Hong Kong. And more to come here on DAYBREAK, Asia.This is Bloomberg. Inflation is high is too high, and weneed to get it to our 2% target. The pathway to 2% is going to be slowerthan people expect and it'll be bumpy. I'm of the view that things are going tobe slow enough this year that we won't be in a position to reduce our ratestoward until toward the end of the year. I think the Fed will get some datathat's positive, give them some room, but I do think they'll be patient anddeliberate.

So an expectation of fewer cuts, alittle more delayed make sense. But ultimately, I think for investors,what matters is rates will at some point be coming down and that's a positive.That was the Atlanta Fed president Rafael Bostic, and Blackstone presidentand CEO Jonathan Gray on the Fed's rate policy and certainly one of the keydrivers of the market direction so far this morning, just this generalcontinued chorus, hawkish Fed speak coming through and telling us the Fed isnot likely to cut rates any time soon. There's always that chance outside, ofcourse, but chance that we do see a hike as well if inflationary continues to bepresent.

Those price pressures, a bit ofresurgence that we're seeing as well. How that's playing out impacts growthstocks in particular. We're seeing tech under pressure alsoafter some weaker earnings or actually some more solid earnings.But investors looking at more of the weaker aspects and you seeing tech therereally leading the drop so far for equities.But Japan feeling the brunt of that. The Nikkei 2 to 5 down 2% at this point.What else we're tracking, of course, is the currency reaction to what's beenvery much a strong dollar dynamic. And that's really playing out.And what we see for the yen here,.

Japanese yen versus the greenback,you're still overbought at these levels on a 14 day RSI basis, but trading above75, that is the longest level of overbought territory we've seen sinceJuly last year. And that really plays into to the storyof EU divergence that you see bit between the Fed and the BOJ.And the question of course is is what is the path ahead for the for the Bank ofJapan? Are we looking for any sort ofnormalization? But inflation figures play into that andwe actually had CPI in Japan easing more than expected in March, but it stillstayed about the central bank's.

Inflation target that comes ahead of theBOJ meeting. Of course, those numbers next week.And let's get more with our Asia economy in government.Senior editor Brian Fallon in Tokyo. And Brian, what's what's your takeawayfrom the numbers that came out earlier? Yeah, well, I think the key word, as yousaid, is divergence. So in Japan, we've actually hadinflation come in a little bit slower than expected, and yet we don't thinkit's going to derail the BOJ from hiking rates later this year.Next week, the BOJ day meets and economists widely expect policymakers tostand pat.

At the same time, they're going torevise their forecast for CPI for this year, next year, and introduce newforecast for the year from 2026. And everyone expects most most expectCPI to be revised higher to 2.6% for this year.That reflects optimism about wages, which came in, as you know, much higherthan expected. The wage hikes for this year were muchhigher than expected. There's some sense that that willprobably encourage workers to spend more money as real incomes rise for the firsttime in a long time. That could spur demand, led inflationand keep in price growth at a pretty.

Steady pace.Again well above the BOJ's 2% target. Brian, you talk about standing pat inthe next meeting. October is a consensus.July is being flagged as a risk. Is an earlier move from the bridge apossibility. If they're really concerned about thelevels of the yen. We did hear from Finance Minister Suzukitalking in Washington saying that, look, yes, it is the right divergence, butthat's just one of the factors driving the moves in the currency.Yeah, it's absolutely a big risk. The weekend, of course, ends at a 34year low against the dollar, and that's.

Putting a lot of upward pressure onimports. And there are other risk factors.Let's talk about food. So in the latest month, processed foodprice growth actually slowed a little bit and that pulled the overall indexdown. We know from technical data bank thatthe number of companies announcing way price hikes for food was quiterelatively low for March. That number is going to shoot up inApril. We already know it's going to be aboutthree times the number of price increases that we saw in the previousmonth.

So food will probably pick up.It's also why commodity prices are shooting up around the world.Look at cocoa at a record high. Japan's a big market for chocolate, sowe're going to see a lot of risk factors, factors pushing up inflation.And that could prompt the BOJ to move a little bit faster than the marketconsensus says. Our Asia government and economy andgovernment. Senior editor Chris O'Brien followed itin Tokyo, where China's Ministry of Commerce has slammed a US threat toimpose new restrictions on its steel and aluminium products.It says Washington is politicizing.

Economic issues and undermining thesecurity of the global supply chain. President Biden is proposing 25% levieson some of the products as part of an ongoing review.Analysts say the steps would have minimal economic impact, whileintellectual property protection is also a key focus for American and Chineseofficials. Trade and tech Tensions.The US undersecretary for intellectual property, Kathy Vidal, met this weekwith a top Chinese official. We asked her what message she delivered.So the message was that we need strong intellectual property protection here inChina.

We spoke a lot about innovation.He communicated the importance of innovation to China, and I spoke aboutUS companies interest in being here in China but being successful.And they really need a strong IP ecosystem in order to be successful.Now, I've been covering China for more than 30 years and every year IP threatand the threat of IP theft has always been a big issue.It seems to be not at the fore right now in US-China relations, but I'm guessingfrom your remit, as you know, in the Commerce Department as head of IPprotection, that it is front and center of your attention.Where are the biggest sticking points.

Right now?So what are the big issues that we're seeing right now is transparency.So as you mentioned, it's always been somewhat at the fore in terms ofinterests of US companies. Right now, there have been someimprovements made in China when it comes to legislation, when it comes to some ofthe counterfeiting issues. But we're still seeing major issues withregard to transparency. We're also seeing new issues emergingwhen it comes to counterfeit products and then some trade secret and trademarkissues as well. Now, this was at the forefront of thephase one trade deal under the previous.

Administration, the Trumpadministration. It was also addressed by Xi and Biden inNovember on the sidelines of APEC in San Francisco.But again, the problem always seems to be is enforcement on the Chinese side?Is that what you're seeing? It's not getting from discussion to realpractices in China. That's correct.There have been a lot of legislative moves within China.I know that since 2020 we have actually commented on over 45 measures in China.So we're starting to see some positive progress.But it really comes down to the.

Implementation.And as you mentioned, enforcement is always an issue.We are seeing some improvements in enforcement when it comes to counterfeitproducts, but we have a lot of issues still with the US company when it comesto online sales and also some protectionism that we're seeing in localcommunities. Where are we seeing the biggestinfringements that you can see? Obviously, it's much more sophisticatednow than it was 20 years ago when DVDs were being pirated and sold on thestreet corners of Beijing. It's much more sophisticated andprobably higher value items now.

It is.And I will say one of the places we're seeing a lot of infringements is throughlive streaming. So for e-commerce, some of the issuesbefore were more platform related. We still have those issues here inChina, but we're seeing new modalities coming out included like live streamingwhere a product will be offered for sale and then it'll disappear.So it's really hard to find out who the actual infringer is.Have you moved the needle? It's going to be a process, as youmentioned, and I think it's just continued dialogue and making sure thatwe're heard on the key issues and that.

Our counterparts and governmentofficials understand the impact of some of what's happening in China.I believe they do. It's just a matter of continuing to workforward and push for progress, which we're going to continue to do.That was the US undersecretary for intellectual property, Kathy Vidal,speaking with our colleague Stephen Engle.And coming up. The first of India's almost 1 billionvoters start heading to the polls today beginning a six week election process.We're live to the city of Chennai next. This is Bloomberg.

Well, India's six week nationalelections begin on Friday with the first of nearly 1 million eligible voters tobegin casting their votes. Bloomberg's Haslinda Amin breaks downthose numbers. It's the largest electoral exercise inthe world. 968 million adult Indians are eligibleto cast a vote on five and a half million voting machines.18 million of those would be first time voters in their teens with a further 197million. In that, 25 million polling agents willbe deployed across a million polling stations in 543 constituencies.Some of these constituencies hold as.

Many as 3 million voters.That's equivalent to the population of Jamaica.To keep the process safe. 2 million security personnel weredeployed in the 2019 polls. That was also the world's most expensiveelection year. With $8.7 billion spent by candidatesand political parties in India. 2024 was seven Phase six election runfrom April 19th to June 1st, with the outcome known on June 4th.Haslinda Amin The Lebanese. Let's get more on India's elections andbring in Bloomberg News editor Domenico Joshi, who's outside a polling stationin the southern city of Chennai, the.

Capital of Tamil Nadu Say.Great to have you with us. And of course, this is just thebeginning of a marathon process in terms of this demonstration of democracy inIndia. What are we expecting?What's at stake here? And and I guess what's the sort ofatmosphere that you're hearing you're feeling there?Oh, good morning, Heidi. The atmosphere right now is quiet, butin a few minutes from now or maybe 30 or 40 minutes from now, you will seeactivity pick up at this polling booth. Now, as that video showed, this is notjust the world's largest, you know,.

Democratic electoral exercise, but it'salso taking place in the world's fifth largest and fastest growing economy.And that gives it both domestic and international implications.Now, this in Chennai is one I could go also called iPhone land.Many of Apple's vendors have facilities or are likely to build facilities inthis state of Tamil Nadu. But this is also the state that willhost one of the fiercest battles this election.As incumbent Prime Minister Modi seeks to make inroads into southern India, aregion that has so far resisted his charm.He is hoping that seats in this part of.

India will help him go into the historybooks with a third term. And more than 400 of 543 seats at stake.And many. The significance of India's electionclearly has major global implications as well.I mean, you've got more than 50 countries around the world that arevoting this year, but India's outcome is going to be one of the most closelywatched, perhaps. Yes, it is.And let me tell you why. In a few days from now, we're going tohave Elon Musk in the country. India has been courting Musk forinvestment.

And some of that investment might, infact, even come to Tamil Nadu. Now, many stories I'd play in thiselection. There is the national story of Indiaseeking its rightful place in the international world order.And by rightful, I mean, you know, proportionate to the size of its economyand its population. India also seeking to grab some sharethat's moving away from China, a very, very competitive space at this point intime. So there are many economicconsiderations at stake internationally. And of course, domestically, whoevercomes to power next will determine the.

Policies that will shape how competitiveIndia is to take advantage of all those opportunities.That was Bloomberg News editor Manisha Doshi there on the ground as India'svoting gets underway. But let's shift now to Indonesia,because the finance minister says her government is working with the centralbank to cushion the country's economy from the impact of a strong US dollar.She spoke exclusively to Bloomberg at the IMF and World Bank meetings inWashington. Certainly the movement of the vaccinesrate, it will affect many of the Indonesian economy and financial.On the export side, of course, the.

Revenue is going to be much betterbecause they are going to receive a local currency.But we also in this is dependent on some import and that will then translate intohigher rupiah to the dollar and imported inflation.It can also affect the inflation in Indonesia.So we have to be very careful at this very moment, especially because of themovement coming from the policy, coming from the advanced countries, especiallythe United States. Then the emerging countries have to bevery, very vigilant with this development.But what we have already done since the.

Asian financial crisis, global financialcrisis, a lot of exercises have been done in order to improve the resiliencyof the financial sector and the economy in general.In Indonesia, same thing. So on the economic point of view, we areactually having a very good structure and resilience to that point.What else can you do? Because this speed of upside for thedollar as well as the absolute level is quite intense.What are some of the tools at your disposal to help the strong dollar, tohelp the sovereign and fiscal market also?Well, we have to make sure that the.

Macro stability will continue to bemaintained. And in this case, on the monetary andfiscal side, we work very closely with Governor Perry in order for us to beable to adjust the macro spend in order to adapt with this new level ofpressure. In this case, for the central bank, theydefinitely have their interest rate policy rate.And in terms of responding, the current situation for us in the fiscal side, wehave to make sure that the budget can play an effective and credible shockabsorber. And the one hand, we have to make surethat the deficit is going to be within.

Or below the 2%.This is what the Indonesia fiscal prudence, which is going to be continuedto be implemented. On the other hand, we have to make sureand be more selective in actually expenditure side and making sure thatthe revenue that will also increase due to this strong dollar because some ofour revenue is actually in the forex denomination that can also be used inthe most optimal way. So a combination of monetary, fiscal, inorder for us to be able to maintain the macro stability and prudence will bevery important. On the corporate side, I think they needto be really look at how their exposure.

To the Forex and many of them is alreadyplaying, or in this case doing the hedging policy at the corporate level.I think Indonesia will be continue resilient in this kind of situation, butyes, need to be very vigilant. Was the Indonesian finance Minister, SriMulyani, introverted there, speaking exclusively with Bloomberg's Alix Steel.You can watch us live and see our past interviews on our interactive TVfunction. That's at TV GO.You can also dive into any of the securities or the Bloomberg functions wetalk about. Join in on the conversation as well.You can send us instant messages during.

Our shows.This is for Bloomberg subscribers only to check it out.It is at TV. Go.This is Bloomberg. Well, China is seeking to end years ofspeculative driven boom and bust trading by pivoting toward value investment.Its latest nine point guideline includes measures to encourage dividend paymentsand improve the quality of new stock offerings.For more, let's bring in asia stocks reporter John Chang.And John, just tell us more about this so-called nine point guideline and howis it different as well from the.

Previous rhetoric that we've had?So this is a once in a decade set of guidelines thrown out by Chineseauthorities that has been launched twice before in 2014 and 24.It's a set of sweeping measures, including everything from improving thequality of stock listings, high higher threshold for the listing to improvingdividends for shareholders, etc.. So I think while some of the measuresaren't completely new, for example, we had this whole state owned enterprisereform talks last year and also a higher threshold for stock delisting has beenin the works for many, many years, although there's a lack of actualprogress.

But I think this time there's moreenthusiasm and this new set of guidelines rolled out by authoritiesbecause it comes at a time when the Chinese economy and the Chinese marketare facing a lot of challenges, both internally.Externally, we have the property crisis. We also have like a higher US-Chinatensions. But at the same time, we see sentimentin the markets slowly improving and the stock market rebounding a little bit.So this is really adding more confidence for people who are betting on the stockrebound in China. And a lot of people are saying thiscould be a mid to long term catalyst for.

A sustainable rally in Chinese stocks.There are investors comparing this campaign to what we're seen with Japan,with Korea. Obviously, both of those are longer termcampaigns where Japan is kind of just starting to come to fruition.Is this a fair comparison? I would say it's definitely drawing someinvestor attention. It seems to be a common theme across thefree markets. The corporate governance reform theme,of course, like Japan and Korea, have moved faster than China.We have the puppy campaign in Tokyo launched last year by the Tokyo StockExchange and then more recently followed.

By the valuable program in Korea.Although that progress is sort of has seen some uncertainty given the recentparliamentary election results. But more recently, China is alsofollowing up on that, although is not solely relying on just improvingcorporate governance, but also improving the quality of the capital markets.So I think there's some similarities, but also some differences.But I think the sense is that there's certainly a lot of room for China tocatch up with Japan and Korea on that front in terms of improving shareholderreturn and also boosting dividend, etc.. And if so, then following the pathwaysof Japan and Korea, there's certainly.

More long term upside.And the Chinese stock market, as we've seen in the Japan and Korea stock marketrecently. So now Asia stocks are part of.John Chang there with a look at these renewed efforts from Chinesepolicymakers to boost the stock market. Take a look at how futures are shapingup at the moment. US futures are looking like this.It is a down day, really kind of across the board as we see a lot of this Fedspeak. The consistently strong echo data in theUS starting to really compound sentiment in this market with the S&P futures sortof about 4/10 of 1% looking like we'll.

See an extension of that selloff that wehad overnight. Taiwan futures down pretty steeply, 2.2%lower, expecting a lot of the semiconductor names and potentially eventhe entertainment names to see some weakness there Bell.Yeah, that's right. Actually, when you take a look at theI'm function, I think it sort of tells the story of what we can expect to seefor the rest of the session. Is that big drop you're seeing for itcoming through so far of around one and a half percent at this point in time.Leading the decline. TSMC, of course, is playing into it somepositives to draw from the earnings, but.

Investors are looking toward thenegatives and they're doing the exact same thing today with Netflix numbers.Best start to the year since 2020, but still it's that focus on the currentquarter guidance and as well that they're removing subscription figuresfrom 2025. But broadly today it's a lot of readacross the screen. You can see that every single sector inthe red and that also comes down to that hawkish Fed speak that's been comingthrough in the outside risk, but still a chance that we see a rate hike that wasreferenced by the Fed's Williams as well.That's it from DAYBREAK.

Asia.Our markets coverage continues as we look ahead to the start of trade inmainland China and Hong Kong.

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