Bloomberg Daybreak: Australia 02/19/2024

Welcome to DAYBREAK, Australia.I'm Heidi Stroud. What's in Sydney where markets have justcome online? I met a boat rollers in Hong Kong.We're counting down to Asia as major trading opens.And the top stories this hour. Chinese stocks look poised for a strongopen when onshore traders return from their lunar New Year break.Investors likely to be cheered by travel and tourism data exceeding pre-COVIDlevels. China Central Bank keeping the interestrate on the one year policy loans steady as it seeks to shield the yuan fromvolatility.

And Israel warns of a ground offensivein Gaza's Rafah area unless hostages are released by the Ramadan holiday.And of course, it is a holiday quiet and start to the week when it comes to nolead expected this week, really until later in the way for us.Markets are closed on account of a public holiday, but this is a picture aswe see trading open up across Sydney. We're looking like indicated upside ofabout 2/10 of 1% when we get properly into the side of cash trading here inAustralia. This is up by just about a 10th of 1% atthe moment and we are still on watch when it comes to earnings and it hasbeen a pretty robust season driving what.

We see in trading today.And we did see that sort of similar theme across the US session on Friday aswell. Rising quarterly profit reports seeingthe S&P 500 back towards those record levels.But of course a lot of repricing and repositioning going on given a strongerAPI as well, just sort of compounding some of those concerns over what the Feddoes next after the CPI numbers came in hotter than expected last week as well.The Aussie dollar holding pretty steady at 6533, the greenback the longestwinning streak since September. Treasury yields also rising after thatstrong PPR rating.

So again, it is back to the sort ofreining in of Fed rate cut wages. This is what we're seeing across thestart of trading in the next hour across other major markets, across across theregion. We are seeing on New Zealand wheretrading is already underway, a downside of about a half a per cent Chicagotraded NIKKEI futures are looking pretty flat at the moment.The big story, of course, we're looking ahead to the China Open after the LunarNew Year holidays. BOYeah, that's right. We'll have more too in just a moment.But just to let you know how US futures.

Are coming on line here, as you said,it's that holiday start to the week. So very much flat trading at this pointin time, but it is still around those expectations for profits at US companiesfor the next 12 months. Those are sitting at a record high.And so it tells us that that blue sky scenario that's really been priced in atthis moment and that's what's really going to be tested.Geopolitics, it's a word Middle East tensions.These phrases are being uttered a lot more on earnings call.So that's really another watch as well. Oil to track.We are seeing it trading in fuels Again,.

Pretty listless here.You've got Brent crude WTI just fractionally under pressure at the startof the week. But as you said, Heidi, it really isthat focus on Chinese stocks on Monday because we've got onshore marketsreopening after the lengthy lunar New Year break.And data tells us that it could be a pretty bullish start because we hadtravel spending during the holiday break that picked up more than expected.In fact, it actually surpassed pre-COVID levels.Let's get more now with our chief North Asia correspondent, Stephen Engle.And Steve, yet what happened exactly.

Catch us up over the past week?Well, obviously, authorities have been looking for some momentum for theeconomy for this year. We're already halfway through the firstquarter. And the numbers and the sentiment hasbeen really weak. So there was concern that the lunar NewYear holiday would kind of be muted again as far as travel and spending aswe've seen granted the last few years have been disrupted completely by COVIDand then a very weak recovery last year and kind of a hesitancy to travel backto their hometowns and the like. So we're still waiting to see thosenumbers.

And they came out much better thanexpected. Lower expectations, obviously.But still, like you said, back to pre-pandemic levels, which is a bigmomentum shift, if you want to call it that, because when the Chinese consumeris mobilized, literally and figuratively, it bodes well for thebroader economy. As the property slump continues, theoverseas FDI investment sentiment still very weak.I'll get to that in just a second. And there's just kind of a geopoliticalhaze, if you will, over the investment climate into China.And again, we'll talk about that in a.

Little bit.Let's get to the numbers data for the travel period over the last week fromabout what, February was, the date today, 19th, Right.So until through February 17th, which is the official travel period throughSaturday, 474 million trips during the spring festival, February 10th through17th is the actual dates. It's eight days, essentially one daymore than the previous year, but still up 19%, comparable period to 2019.Total tourism spending up nearly 8% to about 33 billion.In your ¥633 billion. That's 88.Very auspicious number.

88 billion U.S.dollars. That again, from 2019 numbers and 36%increase in railway trips, 99.5 million. So people were on the move, people werespending. But again, we have to throw that caveatout there. It doesn't necessarily offset weaknessthat we've seen in durable goods sales, whether it's car car sales dropped offthe cliff in January from December down double digits.So, again, you have to see whether this momentum continues.And I just have to add on the MLF rate investor still looking out for interestrate cuts for the investment community.

Is looking at that PBOC Saturday refrainfrom cutting the key MLF that the medium term lending facility rate which is nowtwo and a quarter percent. They did not cut that.They're trying to balance spurring the economy obviously against the theweakening yuan. Steve, the FDI numbers and certainly thedirection not particularly auspicious. Right?We also have the two sessions coming up as well.Are we expecting sort of policy signals? Well, we are expecting some policysignals, but so far, of course, they've they've refrained from doing any bigbank stimulus and they've refrained from.

Cutting, as I just mentioned, that MLFrate, the key one, there's still other rates that they could potentially tweak.We're hearing from the PBOC back. Let me let me just see this here.The PBOC back to financial news is saying that there could be a cutas early as this week in the five year loan prime rate.The LPR, that is the benchmark rate for mortgages.So when the PBOC backed news organization, like the Financial news,is reporting that there could be easing coming down the pike now that thegovernment organs are back to work and as rightfully said, two weeks to gountil the National People's Congress.

Meets in Beijing starting, what is it,March 5th or thereabouts, for roughly two weeks.So again, we'll be looking for the reading the tea leaves to see what kindof stimulus might be coming. But again, that FDI number reflectsforeign confidence in China and it is waning.FDI into China last year by foreign businesses doing business in Chinaincreased by just 33 billion USD, down 82% from 2020 to levels.It is the lowest increase since 1993. Bloomberg Stephen Engle there.And speaking of reading the tea leaves, investors are desperately looking forreasons to become constructive on.

Chinese risk assets.Right. Let's bring in Jim Baillieu.He's a portfolio manager at Tribeca Investment Partners and we've spoken toso many people in recent weeks over the Lunar New Year break who are along thelines of, you know, we're poised to act, we're looking for a reason to be morepositive. Can you see those reasons in thespending patterns, for example? Absolutely.Look, this is the first of many positive signals to come, and it's probably muchneeded because for so long, for the last 12 month, we've all been waiting forsome sort of green shoe for investors to.

Put money back into.Look, you know, I think this trouble data is very strong and that is verygreat sign because at the core of it, we need the Chinese consumer to stoptrouble, to become more confident because they're the ones that will stopbuying houses, buy cars, as well as buying the share market there in China.So, you know, it is incredibly, incredibly important that they buildconfidence. And then that also goes to show thenthey have the confidence in the government's stimulus, then it willwork. So, you know, I think it's verypositive, a good start.

But I guess, you know, when you talkabout in general, will you parlaying significant investment into a it mighttake some time because just in the last 12 months we have seen so many a startstop for the Chinese economy. But definitely this is a really goodstart for the year, you know, to build the confidence into that.You can't if you are selectively going into opportunities in China, would yoube looking at those consumer stocks that we've talked a lot about, TravelLeisure, you know, lots of trip.com already?Absolutely. Look, I think this is where you want togo.

You know, looking through the history ofall these other economies, when they going through reopening, it's theservices you have to go into durable goods.It's going to be tough because they did buy a lot of cars, many in the last fewyears. So, look, I think that is an area wherethere will be weaknesses. But services.Absolutely. You know, we talked about revengespending across the services while every other economy.I do think that China will experience that.But maybe in a slow away because.

Consumers a little bit cautious, butdefinitely they're rebuilding that confidence in those areas.Jim, I'm interested, though, and the other markets that you're continuing toprefer over China instead in the region, like Japan, for instance.Look, we do think Japan is definitely going through structural changes.But do remember, though, it has done incredibly well and has become thebeneficiary of the China weaknesses. Now, when we do see, you know, Chinaequity come back as well as China economy coming back, we do think that'sgoing to be the case that may will become the funding market for the China,you know, with the Chinese market.

We do like Australia market here aswell. You know, we kind of like a low betaway, a low risk way of playing the China reopening because we do have thecommodity exposure. We have some a lot of our companies havetrades with China. So, you know, so these are the markets alittle bit more defensive. But we you know, the Japan this iscertainly at a risk of if China start improving and of course as a Chinaproxy. But I suppose what's interesting is thatAustralia's economy has idiosyncratically held up quite well,even in the face of a weakening China or.

Even in spite of if you take a look atcommodities prices, how's the earnings season we've been tracking for you herein Wales? Yeah, look, it's actually been verygood. So so far 30% of the company put it ormaybe a little bit more, including this morning.And so most of the company big expectations on the rate of 2 to 1.The company beat expectations that miss and you're in there.Consensus unless I have a really downgrade of earning that much.And and then most company talk to, you know, better margin than expectations,you know, revenue slowing as we expect,.

Consumer slowing down.But net net things are actually not too bad even with the guidance.So, you know, so that's tracking pretty good for us,June, where we can show graphic here, but it tells us just how many mentionswe've had of the Red Sea or geopolitics of earnings calls in the US and alsoEurope as well. And it tells us that there has been abig pick up. So by the halfway mark in the firstquarter, the number of references to the Red Sea or geopolitics, as I said, isalmost matched the total for the previous three months.How concerned are you about the.

Situation there?I mean, look, we're definitely monitoring it, but not significantlyconcerned, clearly for the company companies directly in sort of haveshipping rates across those routes and will be more skewed in terms of impactto net. And it's not as bad yet.I know there's a lot of company talk about in the right now.The reason it's not as bad as the you know, supply disruption a few years agois because the demand is not that strong at the moment.Maybe if China comes by very quickly selling, we see all these huge surge inthe e-commerce demand, then, you know,.

Then we might have more spike in theshipping rate. But so far, what we have spoken to orwhat we have heard from the companies we've spoken to, some of the some ofthem already saying some of the for rates is already falling somewhat.So, look, we continue to monitor the situation, but it's yet to be thatmaterial. I was joined by Lou, portfolio managerat Tribeca Investment Partners there and taking a look at what else are watchingin the week ahead will get fed and RBA meeting minutes as well as central bankdecisions out of Indonesia and South Korea.Bloomberg Intelligence expects both.

Central banks to stay on hold whileJapan will also release more economic data after slipping into recession.Other reports to note inflation numbers out of South Korea and Singapore andThailand's GDP print. It's also a busy week for earnings.We've got Nvidia reporting on Wednesday amid high expectations.Investors as well keeping an eye on how well it can keep capturing the growthfor AI. Revenue is expected to more than triplefor a second straight quarter. Earnings are watching of those fromAustralian miners as well as travel and banking giants.And that's your week ahead.

Coming up next, Israel warns of a groundoffensive in Gaza's Rafah area unless Hamas releases hostages by the Ramadanholiday in March. This is Bloomberg. Israel says it will launch a groundoffensive in the Rafah area of Gaza unless the hostages still held by Hamasare released by the Ramadan holiday in March.From both, Michael Weiss joins us now. So we've got sort of the outlines of ofthis deadline, I guess, as we see kind of sputtering cease fire talks andgrowing condemnation warning against an operations in this area.Yeah, I mean, look, it strikes me as a.

Fairly sensible move by Israel of ofsort of putting the pressure back on to Hamas in a way.I mean, and it's interesting, it came from Benny Gantz, who is actually anopposition leader in Israel when they were at war.Usually the opposition will join the government, you know, in the sort ofmilitary cabinet. And he's actually tipped toward thepolls show he's actually who Israel wants as its next prime minister.So the fact that he's come out and and perhaps has a bit more bipartisansupport and said this is quite telling and quite interesting.And,.

You know,Ramadan keeping the war going, going on then is going to create all sorts ofproblems. So I think, you know, giving them somesort of deadline, pledging to work with the US and other countries to getcivilians out of harm's way. I mean, I think it was it was it neededto be said by Israel, but it was always also quite tactically clever too.Well, what does it tell you, Michael, these comments about the progress ofnegotiations as well? Yeah, it looks like they've reallystalled at this stage. I mean, last week there was a meeting inCairo between the heads of intelligence.

Agencies and other senior officials fromQatar and Egypt and the US and Israel. And and Israel's Prime MinisterNetanyahu sent allowed his his representatives to go to listen becausehe was suspicious that basically there hadn't been much change in Hamas's view,which was that Israel needs to withdraw from Gaza and that Hamas is allowed tostay in power there, which he finds is unacceptable.Now, after the after they'd been there for that first day that the talks thencontinued and Israel didn't return, and if one of the parties is not there, it'skind of like, you know, a three, three world car or three legged dog orsomething.

It just isn't going to work.So I don't think we're seeing much progress there.In the comments from the Qatar official on the weekend suggested just as muchthat we're really stalled at the moment. They're talking about humanitarianissues, but I just think that we're at an impasse there.It feels almost like we're getting to a point of with serious discussions andwargaming is occurring on what happens if there is another Trump presidency.What does it mean for us, you know, international diplomacyand security. And it seems like a lot of these worldleaders are maybe kind of gaming out.

Situations where the US retreats fromits usual protector status. Yeah.We've actually got a really good story out on that from the Munich conference.And the sense is among European officials that they're really gettingnervous about the US and it's not just the Trump, you know, the possibility ofTrump, it's just his influence on the Republican Party.I mean, the fact that they couldn't release the $60 billion for Ukraine.Ukraine is now having to, you know, decide when it uses ammunition and whenit doesn't use ammunition. And it just lost this the city of Deakinon the weekend.

And you know that the portents there arereally not good. I mean if they can't get if the US can'tget this aid through, it raises questions about its reliability as apartner in a Trump administration. Obviously a lot of these Republicans areinfluenced by by Mr. Trump.It raises all sorts of questions about whether Europe can rely on them, on onUS support. Now, on one hand, that's that'simportant because Europe does need to step up.Countries like Germany do need to spend more on their defence.But on the other hand, you know, the US.

Is the arsenal of democracy.It's so important for global stability. And I notice even the German Germanofficials were saying, you know, there's a lot of economic importance to this,this relationship and this alliance as well that perhaps the the Republicansaren't aware of. So, yeah, look, I think they're sort ofworrying about what's coming. Much has been said about the bravery ofthe Russian activist Alexei Navalny and the news of his death.Over the weekend. We saw President Biden putting the blameon Putin. What does his death tell you aboutwhat's going on within Russia?.

Yeah, I mean, what Russia's always underPutin, it's been authoritarian and gradually over the you know, it's 25years now nearly he's been in power. It's gradually tightened and tightenedand tightened. And once this war with Ukraine began,they basically used it as a as a, you know,an inflection point where they weren't going to allow any protest whatsoever.Now that there was an attempt on Navalny's life a couple of years agowhere he was poisoned and he was saved by an airline pilot who whoundertook an emergency landing and they got him to hospital.And then he was flown to Germany and he.

Survived.Now, he was warned that if he came back to Russia, he'd be arrested.And these Russian dissidents, they're a unique breed, really.He despite having a wife and children, etcetera, he took the risk.He went back. He went straight out to Siberia.And he's been complaining about, you know, mistreatment and these sort ofthings. I mean, these are the terribleconditions you live in there. And the idea of, you know, the Russianssaid that he died of sudden death syndrome or something absurd like that.So, yes, I mean, it's a it's a tragic,.

Tragic situation.Unfortunately, it was probably always going to be the likely conclusion.Yeah, certainly a crushing blow to many Russians.That was Bloomberg's Michael Heath there and returning back to the MunichSecurity Conference that Michael was just discussing, because Beijing at thatevent has called on Washington to lift sanctions on Chinese businesses andnationals. Chinese Foreign Minister Wang Yi madethe appeal to the US Secretary of State, Antony Blinken, on the sidelines.She should tell you today. Indeed, Kipling is becoming aninternational consensus.

Those who tend to turn out in the nameof de-risking will make a historical mistake.The ocean of the world economy cannot be cut back into isolated lakes.The trend towards economic globalization cannot be reversed.For more, our Greater China senior executive editor John Liu joins us nowin Hong Kong. And John, yet more talks perhaps betweenthe US and China, but it still seems to be the same sort of sticking points.So I think it's I think it's kind of a reiteration of China's position.Earlier in the show, you were talking about how there's a pessimistic moodlooming over China.

The relationship with the United Statesis a big part of that. You have the Trump tariffs that arestill in place. You have now Trump threatening even moretariffs. You have all the sanctions on technologythat have come in place under the Biden administration.Over the weekend, we got FDI data or one measure of it that was a 30 year low.So I think there is a real concern that there is a decoupling.It's happening for real and there's no going back.And I think this is Wang Yi trying to push back against that, trying tofurther the ultimate objective of.

Chinese diplomacy at this point is toget back to a better place with the United States.How in doing so, how I guess uncertain is that path, John, given the prospectsof a potential another Trump presidency. I think it's extremely uncertain.And I and to a certain point, China doesn't really have one candidatethat it likes better than the other. I think either would be would spell moretough policies aimed at China, more limitations on Chinese access totechnology. I think a Trump administration wouldentail more uncertainty because there is some continuity if Biden continues tostay in the White House.

There would have to be a lot of moretalks restarted, more discussions restarted under a new administrationwith Mr. Trump in the White House.Our Greater China Senior executive editor Jon know that taking a look atanother political story that we're tracking today in the former Thai primeminister Thaksin Shinawatra has been freed from detention after being grantedspecial parole due to his old age and illness.The 74 year old was released six months before the end of his short and jailterm. Thaksin was sentenced to eight years injail on corruption charges after his.

Return from a 15 year self-exile inAugust. We do have much more to come here onDAYBREAK, Australia. This is Bloomberg. You're watching DAYBREAK.Australia. Taking a look at how it affects istrading. And you can see here fairly flat, too.To start the week, we do have you as markets that has shot Monday for publicholiday. So perhaps contributing a little bit tothat thinner trading coming through. But the dynamics very much in focus aswe kick off the week is really around.

Synchronization among developed worldcentral banks because that is really starting to perhaps weaken given thatdomestic trends are starting to overtake global trends in determining priceoutlook. So New Zealand, for instance, could beone of the first to continue hiking instead of cutting elsewhere.There's also the US really traders starting to understand that the Fed hasclearly pushed back on those expectations for cuts as well.The offshore you want to notice, given it has weakened over the past few daysof the Lunar New Year break. So we're tracking the onshore yuan oncethat starts trading in about 2 hours.

Time.But still ahead, we're going to be hearing from the Fortescue executivechair. That's Andrew Forrest joining us in thehours ahead. This is Bloomberg. To finish the job will take fortitude.We will need to resist the temptation to act quickly when patience is needed andbe prepared to respond agility as the economy evolves.That was the San Francisco Fed president, Mary Daly, indicating anopenness to three rate cuts this year. Should the inflation progress continue?But certainly what we've seen those.

Dynamics in markets over the past fewweeks has been that understanding that the the Fed is really going to beperhaps in no rush to reduce their the key benchmark.So we had inflation reports still showing us that there is a certain levelof stickiness, and that has been something that's been weighing on movingstocks and bond markets in turn. But here, the outlook for the day'strading session still come down to two. Yes, those expectations for centralbanks also earnings, a key one to note as well.And you've got the ASX 200 just moving a little bit higher here as we getunderway.

Of course, US markets are shut Mondayfor a public holiday, so some thinner trading coming through, Japan setting upfor losses. But again, Heidi, it is down to thosereporting and the big numbers that are due in the days ahead.Yeah, huge wake up call when it comes to Aussie miners, in particular BHP, RioTinto, Santos. Among those reporting those latestnumbers is Bloomberg intelligence analyst Mike Lancaster and Sydney weretalking about in particular, Thursday's going to be a very busy day.What are the highlights that you're kind of looking out for?Yeah, absolutely.

So.First half of the week, we've got BHP, Rio and Fortescue reporting over thenext few days. The iron ore space is reallyinteresting. We've had obviously a much higher pricethan a lot of people expected, particularly that's going to benefit RioTinto, who has about 75% of their earnings from from iron ore and has hadpretty strong production numbers despite a slightly lower grade.BHP may find things a bit more challenging due to their met coalassets. So they did have much higher costs andweaker production later in the week.

Thursday as you mentioned in particular,we are looking at the three the three lithium miners soago Pilbara minerals and mineral resources.They are all going to be struggling slightly from the much lower lithiumprice. And then we've got a couple of the goldproducers as well. So yeah, as you mentioned, very busyweek and then there's iron ore because thathas been doing very well. So what does it mean for the majorproducers? Yeah, absolutely.So.

The we're expecting our global team isexpecting about a 2% uplift in Epitaph for BHP.As I mentioned, the higher iron ore prices offset slightly by the Met CoalWeek production numbers. They are also going to have the majorwrite downs, so they're nickel assets. So we're looking about $5.4 billion inwrite downs as a result of that much lower nickel price.And we're yet to see the impact on the decision making from relief from theAustralian Government. Rio Tinto, we're saying a 1.5 to 2.5, abit uplift to 27 billion, even though, as we mentioned, they theydidn't get the same level of grade, they.

Didhave a much higher shipment numbers. So overall we think that should morethan offset that and end up with a pretty good results.You mentioned how challenging lithium pricing has been in the likes ofAlbemarle. Is that unsustainably low?How much of a shakeup do we expect to see or shake out, I should say, when itcomes to some of these assets? Yeah, and it is an interesting question.I mean, we are already starting to see many of these global lithium producersnow not being able to meet their costs. The good news for the Australianproducers, particularly Argo and Pilbara.

Minerals, is these are among the lowestcost producers globally. So even though we are expecting, yes,lower margins because of the lower nickel, lower lithium pricespodumene now around the $850 per tonne mark, we think with their expansion ofproduction and they are still going to be delivering pretty strong cash flows,mineral resources, slightly more challenging position because they are ataround that marginal cost. So they will probably have to look atmaking some decisions at some point in the future as to how much they want toproduce at these prices. Gold miners, pretty tough run, but themetal price does seem to be improving.

So where do they stand then?Yeah, absolutely. And anyone invest in that gold miningspaces has had a pretty challenging couple of years,even even as we've seen the gold price rise over the past few months, theminers have not necessarily followed suit.So going forward, things look pretty interesting.The margins are starting to look a bit better, We think with high realisedprices. What is going to be critical for theminers is that they can show their ability to meet production targets.So both Newmont, which took over.

Newcrest's assets and Evolution mining,have really been struggling a little bit to meet those expected numbers andNorthern start doing a little bit better.But we do think there's an opportunity now for them to have got their costsunder control and therefore to really benefit from the higher gold price atgold prices is really a question mark there.Obviously, if we do see a situation where the Fed follows through with theirwith a cutting cycle and we don't get another major reversal of that, thatcould be a very positive sign for the gold market.And therefore and we might be able to.

See some and stay staying sustainedimprovement in the epitaph for these gold minersby exposing costs there ahead of a very busy week when it comes to miningearnings. We'll be covering those numbers comingout of Australia this week. We'll also be hearing from the BHP CEO,Mark Henry, on Tuesday, staying with the Aussie miners.Fortescue's founder Andrew Forrest says a leadership exodus at the company is anatural progression. Fortescue has been hit by a number ofsenior departures over the past six months, highlighting concerns aroundForest's leadership style.

Of really great people in place to greatchief exec. Metals and energy.They are making those decisions, by the way, they employ 22,000 people.You talk about six. I mean, we have up and coming people,younger people across gender who really, really deserve to be given thosepositions of responsibility. Good people, such as the person you justmentioned out of Europe, recognize that and decide to step aside, move on aftermentoring those people. So I look at is, as I've been told, anatural and very healthy progression of a very large company.I think it's a complete storm in a.

Teacup.You look at the board of directors, you look at the people who have built thiscompany. We've been there for 15 or 20 years.So Twiggy, is it fair to say then? Nothing to see here.You don't need to change anything at this moment that you're comfortable withthe way the leadership is structured, even if you have seen those departures?Yeah. Look, if we didn't have this dynamismwhere we are changing the company for what it must be to meet all the futurechallenges of our world, to be the green energy, green metals, green technologycalled Solutions Company, Green.

Electricity Solutions company.Then we must continue upskilling. We must can continue changing.We must continue maximising the jump in because we're running out oftime here that people are stepping up. And I want to ask about China becauseobviously this is a big issue for the metals market.There's a concern about a glut. Construction season begins in March.Do you think the fiscal stimulus we've seen is enough to counteract some of theweakness in the economy? An apology is only a minute here,Twiggy. Okay.If you're asking me.

Should we be worried about criticalminerals when there's a glut of critical minerals, the price is right down.I would say what we need to be worried about is diversifying your markets.And you'll do that if you insist on high standard of human rights right here inEurope with the Corporate Responsibility Directive.If you insist on environmental practices which are up there with the best in theworld. Even deep sea mining is a complete jokeif you don't do the longitudinal, environmental and ecological studies,which we do on land. And of course, going green, these arethe three parameters which, if you.

Insist on in Europe, North America,Australia, you'll have a much more diversified supply chain and you won'thave a glut of one supplier swapping out and swamping everyone else.That was the Fortescue executive chairman and founder Andrew Forrestspeaking with Bloomberg's Dani Burger. And up next, we'll hear from the CEO ofany change as Japan's biggest provider of electric car charges.On the country's transition to EVs, which is still in the pretty earlystages. We'll have more next.This is Bloomberg. Well, it's time for Japan.Ahead on DAYBREAK in Australia and cool.

Machine orders for December are due inthe next few minutes. Economists expect the figures to rise to2.7% month on month. That's after falling 4.9% in November.You can also keep an eye on shares of Mitsubishi Heavy when market opens injust a few minutes time at 20 minutes following the successful launch ofJapan's flagship rocket. That's after a failed attempt last year.Plus, we're still watching the benchmark Nikkei 2 to 5 index, which is withinsight of a historic high reached in December 1989.Japanese markets opened at the top of the next hour.And of course, pretty quiet in terms of.

The lead from the U.S., A public holidaythere, of course, for this weekend. But we did have a little bit more of anattempt, if you will, to get back to those record highs, although eventuallythis would be 500 and closing. Just shy of that.We had the stronger than expected paper reading, just consolidating thisrepricing of the reining in of Fed rate cut expectations.Dollar yen is holding pretty steady. But again, above that 150 level, we areon alert for intervention ask I guess, or adjacent comments from policymakersat these levels. Singapore Nikkei futures trading alittle bit softer, about 6/10 of a.

Percent lower there.A bit of a mixed start for Asia more broadly after that slump on Wall Street.And of course, the big news is really Chinese stocks poised for a strong open.But of course, Japan has had a pretty strong start and equity strategists arerushing to raise the year end forecast for the Nikkei 2 to 5.It's edging closer to that 1989 high for.Well, let's bring in our Asia equities reporter Wendy Sue, who joins us inTokyo. So where are these analysts seeing themarket end by the end of this year? And of course, we have been sort oftracking this steady drumbeat towards.

That December 1989 high.Not quite there yet, though. Yeah, exactly.I think the recent rally really caught a lot of strategists by surprise.And we saw, you know, just in the couple past couple of weeks that Wall Streetbanks from Jp morgan, Morgan Stanley, Citi and also Bank of America raisingtheir targets for both the Nikkei and other topics, and even recently domesticinvestors, we saw Nomura and also Taiwan raising their targets.And some now say that by the end of 2024, the Nikkei is likely to rise toover 40,000. So that is quite a milestone forJapanese stocks, really saying something.

About how strategists believe or thinkthat this rally is very likely to continue with the momentum.And they are actually citing all different types of catalysts, which issomething quite interesting. Some say that it's really driven by, youknow, some more improvements that we're going to see in the earnings.But others say that, you know, it might be the strong US market demand, but andalso how the Bank of Japan maintaining that easing monetary policy is going tohelp the yen to stay weak and hence helpful for the Japanese market.Is there anything that could really test thisoptimism around Japanese equities?.

Right.So I think speaking of that risk, I guess from a from a technicalperspective, people are seeing some overheat in the market.And also, like you mentioned, the US CPI numbers came out stronger than expected.So people's concern around how the US market, how the Fed's cut might come alater than expected that my weigh on sentiment.But at the same time, when it comes to the Bank of Japan that the change oftheir monetary policy might be slightly negative for the Japanese stocks at thebeginning if we expect rising rates to weigh on equities.But overall, if you think that if we.

Think that the Bank of Japan's change isgoing to be gradual, the yen, even if it appreciates, it's still probably goingto stay at a weak enough level to support Japanese equities going forward.And when we look at the flow perspective, we've seen foreigninvestors buying Japanese stocks for six weeks straight already.So you would think that people would start taking profits after a strongrally. But that continuous flow also is quitesupportive for the market's sentiment. And we see that a lot of the globalfunds are still maintaining that underweight around Japanese equities.So when that flows flips, we can.

Probably expect more funds to to flowinto the market going forward. That was our Asia equities reporterWinnie Sou there in Tokyo. And let's stick in Japan becausecarmakers are keeping their foot on the pedal when it comes to investing inelectric vehicles. And that's despite a slowdown in sales.Nissan says the shift won't happen in a straight line, but long term growth isstill expected. Subaru also says the company factored inthe possibility that the EV market will reach a growth plateau when formulatingits $10 billion investment plan for electrification.Well, our next guest runs Japan's.

Biggest provider of electric car chargesand they're urging the government to mandate priority parking spaces for EVs.Let's discuss now with the CEO of any change.That's your guy Gucci joining us this morning.And Joe, hey, just talk us through this, this request that you're making to thegovernment. It does seem to at least stem from a lowlevel of EV ownership in Japan. Thank you for having me.It's a great pleasure to be here with you.Yes. The charging infrastructure in Japan isstill small and slow.

Only 4% of the market share for EV andplug in hybrids in Japan, which is the lowest among the G7 nations.The Europe for 25% in America for 10%. In every charging infrastructure, thereare 40,000 EV charging station in Japan with average speed of three kilowatt fornormal charging and a 40 kilowatt for fast charging, which is also very slowand small. The Japanese government set a plan toinstall 300,000 charging port with a triple the charging speed by 2030 and toachieve the 1 trillion U.S. stimulus plan in private and publicfunding is also announced. There are three key players in everycharging market in Japan.

Ourself.Any change is a dominant player in destination and apartment charging withthe 60% of the market share. The one large electric company isspecializing in the fast charging and the large petrol station company is alsoexpanding a fast charging network. So you go, Hey, when it comes todesigning charging infrastructure, though, what sort ofmeasures need to be taken to to really capture Japan's unique situation in thisin this perspective. Yeah, it's a tough question, butit's a great opportunity for Japan to regain the momentum, to catch up with acatch up with the international.

Counterparts in the race.The Japan Japanese automaker said to install introduce a wide range ofelectric vehicles from 2026 onwards. The recent downturn in the salesinternationally provides then a great opportunity to bridge the gap with theinternational counterparts. Therefore, I think the Japanese autoindustry will be well-positioned to flourish in the race in by 2030. If you take a look at other marketsaround the world, is there one that you see as something that Japan shouldemulate and what sort of government policy would be required?So the the Japanese the government can o.

Like 1 trillion stimulus plan for greentransformation transformation. It's very competitive against thesimilar plans by the USA IRA and like European plants.So Japan's government is already decided to decided to match up with America andEurope for the green transformation. So the plan is there.And actually the next thing is execution, like all the companies andpartners needs to needs to realize the green push the green transformations inJapan. I wanted to ask a question.Obviously, Japanese markets are very much back in favor now.What are the aspirations for any change.

From here in terms of fundraising andprogress for its market listing? And how do you see, I guess, the broadermacroeconomic environment impacting you? Great.Thank you for asking me. So we actually call it Project and ICAN.The drive to make any change over $1 billion is a $1 billion market cap.Last week engineers announced a 30 million USD fundraising from JICSovereign Wealth Fund, which these fund engines should be able to capture evenlarger market share in a charging network.The government is envisioning to generate more unicorns from Japan.There are over 500 listed startup below.

1 billion U.S.market cap auto, total stock exchange and interchange is one of them.So the recent 30 media investment from the government fund two engines is aclear illustration of the government commitment to make us $1,000,000,000market a project to enable. That's your hey Gucci the CEO at anychange joining us and just drawing your attention as well to some lines that arecrossing the terminal, which is Japan core machine orders.And we're getting those readings for the December period here, month on month.We actually saw an increase of 2.7%. So that does reverse the trend prior ofa contraction of 4.9% year on year as.

Well.The number coming in a bit better than what had been expected because thesurvey was for a contraction of 1.3%. The actual rating came in at -0.7%.And again, it is that trend of of improvement because in the month priorit was a contraction of 5% here. So again, those numbers for four forcore machine orders, it's an indication of the health of Japan's economy andtelling us that they're coming in a bit better than what had been expected, atleast on the year on year rating. You can catch Japan ahead every week.That's every Monday at 8:40 a.m. if you're watching in Tokyo, 7:40 p.m.Sunday in New York.

And Bloomberg subscribers can watch uslive on the terminal using the TV go function.This is Bloomberg. Take a look at the latest corporatestories that we're following this hour. And Apple is set to face an EU fine ofover $530 million over allegations it silenced music streaming rivals likeSpotify on its platforms. Sources say the penalty will be setafter the EU watchdog found it fell foul of competition rules in thwarting rivalmusic services from informing users that cheaper alternatives existed outside ofits app store. Beyond is launching more high end luxurymodels this year in order to achieve a.

Leading position in the market.The automaker plans come after authorities urged listed companies toimprove their quality and investment value, but it is also formulating ashare repurchase plan based on market conditions.Bloomberg has learnt that Nintendo is delaying the release of its next consoleto early 2025. The successor to the popular switch wastargeted for release this year. Our sources say Nintendo expects thedevice to come out in March 2025 at the earliest.Missing that key holiday shopping period.The switch is now seven years old with.

Nintendo selling over 139 million units.Nintendo, one of the companies they're going to be watching at the start oftrade here. But we do have Japanese equitiesactually setting up for a weaker day of trading here.Futures down around half a percent. That's the Osaka contract, one of themost liquid ones. Still, though, broadly, we have seenequity strategist rushing to raise their forecasts of the Nikkei 2 to 5.And we are getting closer to that record high that was set in 1989.But we'll have the market opens in Tokyo.And so those are next.

This is Bloomberg.

Sharing is caring!