This is DAYBREAK.Asia. We're counting down to Asia's majormarket opens looking like a pretty good set up so far this Friday.We're getting a pretty good lead from Wall Street.The data from Japan has been quite interesting this morning.And of course, a drum beat to the Bank of Japan and building these expectationscontinues. Yeah, that was a real mixed bag, wasn'tit? I mean, the balance of payments betterthan expected household spending was was a real letdown and the backdrop to itall, a stronger yen as well.
But I guess the big event we're countingdown to this half hour, State of the Union is always going to be India.That's right. The geopolitical risk keeps building andthe focus is going to be back on the US. And of course, the Fed has really givensome comfort when it comes to investors this way.But we're watching out for some of the key themes coming out of PresidentBiden's address, really being seen as a campaign State of the Union.Right. The last big chance in terms of beingable to address the nation before the November election, which is looking likebeing set up between him and Donald.
Trump, a rerun, if you will, Take a lookat the start of trading in Tokyo. Nikkei 2 to 5 off to a good start, abouthalf a percent higher that we have really seen a number of markets aroundthe region really outperforming, including Australia.Of course, we'll get to that in just a moment.The tropics is looking unchanged, but still seeing some incremental gainsthere. Again, that strength has been quiteinteresting, obviously, on the back of these expectations that perhaps aliftoff from the Bank of Japan will come sooner rather than later for the impact.When it comes to the Japan equity rally,.
It's been surprisingly sort of a nonevent. One 4789 is how we're trading when itcomes to dollar yen at the moment. And we've really seen kind of anyattempts at turning short on Japanese stocks becoming increasingly risky.These shares of these so-called low quality companies have really seen quitea lot of volatility on this sort of corporate governance reform program thathas driven so much of the optimism towards Japanese equities there.In terms of effects, we're not seeing too much of a move when it comes to thedollar. But watching that, of course, on theback of that sort of political risk.
Aspect as well.Taking a look at Korea, we have seen, of course, the cost being the caused reallykind of seeing a lot of foreign buy interest again on sort of similaroptimism that perhaps a value up program can be successful, One can kind ofelevate and deal with the Korea discount in the same way that we've seen itsuccessfully done over the past few months.Also in Japan, we're seeing a lot of the chip stocks are in focus today with theupside of about 1% own trading in Seoul. There the they're back up by 8/10 of 1%.But chips in focus, of course, as we continue to really see this to and frofrom Beijing and Washington on President.
Biden wanting to really accelerate thesecurbs, pull on advanced tech. Well, let's take a look at how we'redoing in Australia. Hour after the open here at informationtechnology. Stocks are doing pretty well here.We've got the broader index up by better than half of 1%.The gains are fairly broad based. We've got almost every sector pushinghigher, financials doing well. Also the materials sector kind of flatat the moment, although that said, we've got some of the lithium names among thebiggest gainers today, not a huge amount of movement for the Aussie ten year,they were just a whisker above 4%, the.
Aussie dollar has been showing a littlebit of strength recently and crude prices up as well.We do have a segment of the Keystone pipeline between Canada and the USpartially shut, which is helping to support the oil price there.Now we're also keeping an eye on the US treasuries, of course, two major centralbanks signaling that interest rate cuts are on the way.Fed Chair Jerome Powell telling the Senate Banking Committee the policymakers are getting close to the having the confidence that they need to starteasing. I think we're in the right place, whichis we're waiting to see.
We're waiting to become more confidentthat inflation is moving sustainably on 2%.And when we do get that confidence and we're not far from it, it'll beappropriate to begin to dial back the level of restriction so that we don't,you know, drive the economy into recession rather than normalizing policyas the economy gets back to normal. Well, our next guest favors bonds forinvestment, says we're entering a golden age for fixed income.Jessica Jones is head of Asia at Pigeon Investments, joining us in the Hong Kongstudio. And Jessica, as we get going for tradingin the US dip, we do have the ten year.
Yield moving a little bit higher.How do you allocate for bonds in 2024? Absolutely.Well, thank you so much for having me on the show today.And by the way, happy International Women's Day.Yes, you make a really good point. And we believe 2024 is absolutely goingto be a time for active investment across public and private markets as wesee Asian investors look to allocate between what they see as market risksand challenging times, but also how they position for the recovery that we knowis coming from a traditional as the point of view bond markets.Absolutely.
We think that this we are now enteringa. Golden age for fixed income.We see Asian investors cautiously start moving into fixed income in the form ofhigh quality investment grade securities, as well as income focusedfixed income funds and from a growth equity perspective, from a global equityperspective. We're seeing real tailwinds for growthstocks, and we see that as investor confidence improves later on this year.We think that clients are going to want to keep allocating to these companies inthese sectors within equities that that will give you exposure to some of thesestructural growth stories like AI,.
Global consumer goods and otherinnovations in the healthcare sector. I think the biggest thing from an assetallocation point of view that we're seeing from Asian investors is this bigmove to private markets and alternatives.This is big in the space and happy to talk about that.Yeah, let's get on to that in a moment. I just want to get your views firstly onJapanese government bonds and how that fits into your thesis, because of coursewe've got the BOJ looking at ending negative rates.And I guess the obvious follow on question from that is do they look toexit the bond market?.
Right.Look, I think that that's an interesting point.And, you know, we just keep you know, we do see clients looking at Japan, bothfrom a fixed income and equity allocation.As you mentioned, there's a lot of interest in that space, but we reallysee that there's more of a move across the across the assets, across thegeographies and across fixed income. So.So we're seeing, you know, and we're advocating for a very a much more of adiversified portfolio. Jessica, I do want to get your views onprivate alternatives and private.
Investing options that you see asgaining traction at the moment. Yes.So this is, as I mentioned, a huge area for for high net worth investors.A lot of research. Research suggests that this is a $1.5trillion opportunity for high net worth investors who are really under allocatedto alternatives and private markets. You know, if you think about it, theglobal age, um, is something like $285 trillion and high net worth.Investors own about 50% of that globally.Um, but they only allocated about 16% to alternative investments.And when I speak to some of the big.
Private, the alternative gatekeepers ofthe private banks here in Asia, they all reinforce that that clients here may beallocated low single digits to alternatives and private markets thatthey really are looking to to grow that. And the CEOs and the the the House viewsof some of the banks out here is really suggesting 15 to 30%allocations depending on the risk tolerance of the client.So we're seeing a really move in that direction and some interesting ideas andand themes that we're seeing in the space especially is the digitalinfrastructure theme. A lot of interest from clients toallocate to something different like.
Like global data centers, for instance.How dramatic do you expect the real estate market recovery or continuedgrowth to be this year, given there are expectations for the right environmentto be pretty drastically different by the time we get to the end of the yearanyway? Yeah, you know, I think from a realestate perspective, there is a big structural case still to have realestate allocations in your portfolio. And this is being this is what we'rehearing from investors in Asia, I think particularly Asia Pacific real estate,given where we are and the interest rate cycle and the inflation is, you know,Asia Pacific real estate has had a much.
Better recovery.And we see that after 2022, there's been a great reset.And this may be the year that that real estate comes back.I think there's also about the different sectors and themes and global structuraltrends that we see within real estate, but specifically on this digitalisationtheme. And in terms of data centers, as asector that our real estate team, like all across the world in the US, Asia andparts of Asia, parts of Europe, I think this idea of AI of digitalization iscreating such a huge amount of data creation and there's not enough storagefor for this data.
So this is a simply a a very interestingsupply and demand imbalance thesis of a scale and geographical breadth and andmagnitude that our portfolio managers have never seen before.So a very exciting area, and it's why we're trying to think about moreinvestment choices and options for clients in the space.Jessica, I just want to know how you approach China as well, particularlyaround that fixed income space, because we've got a chart here on the Bloombergterminal that shows how yields have been slipping.Is this a trend that you expect to continue?So China is a very you know, China is an.
Interesting area.We've obviously had a very fascinating week this week with China.And, you know, as we speak to clients about China, there is no doubt that thisis still a very important market. I mean, there's a near-term you know,let's wait and see with with China when we hear from clients.But at the end of the day, China is a home market here and people are thinkingmore longer term of how they allocate to China.And so, you know, that that's that's you know, we keep hearing like when is theright time to come back and really looking at the market very carefully.And for China,.
It's notjust. All right.Jessica Jones, head of Asia at Pigeon Investments.Thanks so much for joining us. Still to come, China's foreign ministerblasting the US for imposing what he calls a bewildering level of tradecurbs. We get analysis with the Stimson Centeron the super power struggle to be top in tech.First, though, China's latest price data set to show an exit from consumerdeflation, but a 17th straight decline at the factory gate.We'll have a preview next.
This is Bloomberg. China is releasing February inflationdata on Saturday. Bloomberg Economics thinking that CPIwill probably rise out of deflation for the first time in five months, but thatmay not signal yet a fundamental recovery in demand.Let's bring our China economy at its edge.Odysseus, who joins us in Hong Kong, said there were a lot of concerns abouta deflationary downward spiral in confidence from these data points takeon special significance given that ambitious growth target.What are the expectations here?.
Yes, they do, Heidi.And look, I think that the issue with this February data, of course, is thatit captures this period during this extended lunar New Year holiday.So I think Bloomberg economics argument there is that a lot of this is going tobe, you know, sort of elevated by the fact that people are spending a bit moreover the holiday. We saw that in some of that earlierdata. Even if they weren't spending more on anindividual basis, that probably contributed to an uptick in food prices.So that's why you might see that CPI gauge creep out of negative territoryfor the first time in five months.
Of course, even in doing that, I think,you know, a B is saying somewhere around 0.1%.So you've got a broader economic consensus of maybe 0.3%.I mean, these are really, really, really still close to that deflationary line.So I think it's safe to say here that these deflationary pressures arecontinuing in China and we're not really seeing too much in the way of what itwould mean to chart a meaningful turn around for that.Yet we still need to see a lot more in terms of, you know, measures to sort ofboost help boost consumption before you actually see something that, you know,sort of a raises a lot of those concerns.
Are on deflation right now.Yes. So in terms of a policy response, do weanticipate any and at what point do we stop staring down Japan style deflation?Yeah, well, I think that's a big question.That's, you know, obviously been in debate quite a bit over the last yearwhether China's headed for this prolonged period of stagnation in theway that Japan has Japan ification. Look, right now, we're still in themiddle of this National People's Congress, massive political gathering inChina. And so far, I think a lot of analysts,investors haven't been incredibly you.
Know, they've been a bit underwhelmed bya lot of the policies that they've seen so far, a lot of things that have felt abit vague. You know, there hasn't been a whole lotof the way in the way of incredibly specific targeted measures that have,you know, impacted consumption. As we've been talking about.We've got this GDP target of around 5% set for 2024.That's pretty ambitious, all things considered, just because, you know, thepace of comparison for 2023 isn't as favorable as it was last year.So I think, you know, we're still a lot of analysts are still looking for isthere going to be additional fiscal.
Stimulus, are there going to be othersort of consumption led measures to really kind of get things going againand restoring confidence in this economy?And we're also looking at the idea of fiscal restraint, particularly when itcomes to some of these heavily indebted provinces and regions.We ran a story this morning saying that some of these local governments haveramped up asset sales to try and pay down debt and find new revenue streams.Do we know what things are like at that local level?Because they have typically kind of been a pretty key part in be able to generatenumbers towards that GDP target?.
Yes, Heidi, I think that this is areally interesting trend. So essentially what we're reporting isthat a lot of these local governments, they're looking at, yes, alternativerevenue streams, because a key revenue stream that they've really relied on formany years is this idea of, you know, making money by selling land, becauseobviously, you know, really, really, really struggled over the past couple ofyears because of the property crisis. It's really impacted their ability to dothat. So instead what they're doing is they'relooking at selling some of their assets in order to pay down their debts.We've seen some provinces look at.
Selling like, you know, former Olympiccenters or arts and cultural centers, that kind of thing.I will say that, you know, while you know, that does go part of the waytowards making up for some of this hole that's been left by the evaporation ofthese other once reliable revenue streams, it's still not it doesn'tcompletely make up for it. I mean, the income that localgovernments were getting by selling land was really, really massive.And so there's probably more that they need to do.But yes, I think that that is, you know, sort of part of that piecemeal effort totry to turn things around.
We're also seeing, I would just pointout, the central government take a larger role in selling debt to sort ofhelp alleviate some of those local debt burdens.That is probably one of the bigger stimulus announcements we got out of theNPC so far was this announcement that there were going to be, you know,selling like sovereign debt and everything like that.Well, we'll see where that goes. All right.China, our economy editor at your desk in Hong Kong.Now, a key player in China's energy transitions is electric vehicles and LNGand trucking will replace about 20.
Million tons of gasoline and dieselconsumption this year. Lou Rajan heads the.Economics and Technology Research Institute of the China NationalPetroleum Corporation. And he told us exclusively how China canbalance its economic growth goals with a green agenda.5% of the economic growth is a is a new normal condition situation in Chinain recent in a couple of years that that we think is still our normal speed forChina's growth. However only on a sector and for thefrom perspective of oil consumption. In the last year our country's oilconsumption increased by 11%.
That day is very high.So that is, of course, of the recovery from the COVID 19.And this year, because of the energy transition, the bombing of theelectrical vehicles, and especially for the gasoline transportation, accordingto our research and study, we our protection is about a 1% increase toabout the case increase because of the TV and thatbecause of the the economy, the transition.Yes. But that number 1% growthbasically from my what I look at your research, that would be the lowestincrease from your research in at least.
A decade.Is that a concern or is that just a a reflection of that energy transition?Does it represent that the economy does not have end demand, or is it morebecause there is a energy transition, at least in the new energy vehicles?I think because of more of the energy transition from the, let's say, fromtraditional fossil fuel to EV, that is that we reduce and it needs to 20million tons of crude oil at a needs to every year, year by year.So that is a huge number. So through this energy transition, isthis going to be the long term trend of very low single digit oil demand growthin the long run?.
Of course.So we are we have entered the era of low growth rate of the crude oil andespecially the gasoline. Because of the transportationusage, volumes should be replaced by the electrical vehicles and other areas.Can China have a shale revolution? Some have called it an oriental shalerevolution. Or is the coal bed methane too deep?Are there are there structural problems that that cannot happen?What do you think? You know, China now is a the largestshale production behind the United States.Of course, from the perspective of.
Volume, we still have very small one.We China, we still have a dream of shale revolution, just like the United States,similar as the United States, because it's symbolized the the technologyinnovation, the business model innovation and the actually youngsources, the China in China, you can sit on province no matter Sinopec on a samePC. Actually we do our utmost to protect andexport its power exploration for this year.I mean the coal based or the mass thing or.Yeah, we still have these kind of do we call it our new shale revolution inChina?.
CNPC Economics and Technology ResearchInstitute present rich on there speaking exclusively to Bloomberg Stephen Englein Beijing. Plenty more to come on DAYBREAK.Asia. This is Bloomberg. President Biden is expected to make his2024 re-election pitch during his State of the Union address in just a fewhours. The speech will also offer clues toBiden's legislative priorities if he wins a second term in November.Bloomberg's political news director, Jodi Schneider, is with us now.So, Jodi, this one is going to be.
Particularly important for PresidentBiden. Last one before the 2024 generalelection, of course. What are we expecting to hear today?Yeah, so, Paul, we're expecting to hear more than a typical State of the Unionspeech, which is often a list of priorities and themes that the presidentwants to accomplish. Looking back on some achievementstonight, we expect to hear from President Biden about why he should getanother four years in this job after November.And he won't do that in a campaign speech per say, but it will have manyelements of that.
He will be casting himself as somebodywho Americans can trust. He will be trying to really deflect thequestion of his age. At 81, he is the oldest president andcertainly will be for a second term, obviously.But he wants to deflect that issue by pointing to Donald Trump as a danger.He may not mention Donald Trump's name much, but in excerpts we've seen of thespeech, he's cast himself as someone who cares about fairness and decency and theAmerican dream, posing that, saying others seem to want more to be focused,more on retribution and recriminations. He is clearly pointing to Donald Trumpwith that.
The other thing he has to do tonight isto seem vigorous to basically say to people, you can trust me, you can trustme to do this job, even though I am the oldest sitting president, that I that hecan be, that there won't be any flubs, that there is not any mental frailty atall. Americans in polls increasingly say theyare concerned about his age. Then they also say they're concernedabout Donald Trump and that he could be a danger to democratic institutions.We know that he'll be talking about some of his achievements, but do we expectany new announcements? Yeah, we will.So the one thing that we know about.
Already and we have people familiar havetold us is that he will talk about he will give support for Israel, but hewill also say that the US is looking to set up essentially a pier, a port on theat the seaport at Gaza to get emergency aid in to try to stem that growinghumanitarian crisis where millions of people live and are having troublegetting food, water and medicine. This pier essentially would be able todo that. They wouldn't be able to erect itovernight. It will take some weeks.But he will talk about that as a way to try to quell criticism about the U.S.supporting the continued war, the.
Israel-Hamas war, even as thathumanitarian crisis in Gaza grows. So he's going to try to do that in thespeech. He will talk about some things.He will talk about changing the tax code to tax corporations higher.One very straight shot there ahead of the State of the Union.Will we bring you that full address from President Biden a little bit later on?Our special coverage begins at 12:30 p.m.here in Sydney. 930 if you're watching in Hong Kong, 830in the evening in New York. All right.Let's take a look at how we're tracking.
On markets across the Asia Pacific.Looks like we're going to have a positive day to close out the week.The Nikkei only just in positive territory, but reclaiming some of thelosses that we saw on Thursday here in Australia were performing pretty wellbetter by three quarters of 1%, and that's really pretty broad based aswell. Most sectors in the green at the cost bebetter by 1.3% at the moment. We are keeping an eye on industrial andenergy stocks today. A couple of stories making news at themoment. The head of the Los Angeles port issaying that Chinese cranes are posing a.
Security risk, saying Gina Sorokinsaying they're collecting data, they're looking at information.Doing something about it could be a problem, though not too many countriesbuild giant cranes suitable for container terminals elsewhere.We're also reporting that China's oil demand is set to enter a low growthphase. This is according to Rohit Sharma, thehead of the CNPC Economics and Technology Research Institute that we'vebeen reporting on this morning. So China's oil demand seen entering alow growth phase. Never mind that we're still seeingpretty decent gains for some of those.
Industrial and energy stocks, Heidi.And of course, staying on China Pole, the foreign minister has blasted the USfor imposing what he calls a bewildering level of trade curbs as Washington triesto block Beijing from advanced tech. Let's take a better look at this withyou and son, who's the senior fellow and director of the China program at theStimson Center. The response from Beijing unsurprising,pretty much in line with what we kind of see in terms of a reaction to today'sannouncements from the US. How elevated are political risks betweenthe two sides in this election year, given that throughout the Bidenpresidency, the tone at least has been.
Pretty well maintained is stable?Well, I see where the interesting moment we're having a domestic electionhearings the United States later this year, which means as the administrationis trying to maintain a certain posture on China or is either triggering anymajor crisis that could jeopardize the election later this year.So we have seen some stabilization and a lot of offers from both capitals tostabilize this relationship. Since the San Francisco summit lastNovember. I would say the momentum is still going.But at the same time, we're also hearing some tough talks and harsh rhetoriccoming from senior officials on both.
Sides.And among his comment yesterday is one of those examples.It's interesting because we know that China is battling its own domestic macrochallenges. Right.How much bandwidth does she have when it comes to dealing with some of thegeopolitical ambitions that China has? We know that defense spending has goneup again. We know that they're pouring more R&Dinto into high tech and AI and ships. Is this as much of a priority as theytry and get some of the domestic economic challenges under control?If you look at Xi Jinping's elaboration.
On the relationship between security anddevelopment, it's very clear that he wants to keep both games going.But with China's economic slowdown, especially the growth rate last year wasmuch under the expectations, starting from the beginning of the year thatwe're expecting so much more from 2023. And it simply did not deliver.So I would say that in terms of the priority, a sense of prioritization inBeijing is certainly focused on domestic economy, the corruption issue, thepersonnel reshuffling that we have seen in the second half of 2023, which meansthat joking around in his foreign relations and be particularlybelligerent and poking as neighbors and.
The United States is probably not veryhigh on the power to lose the war. The Chinese government this year,just in terms of some of the rhetoric we've been hearing from the formerforeign minister, Wang Yi, he calls the US trade curbs as bewildering levels ofunfathomable absurdity, which sounds a bit like the title of a Dave Eggersnovel. Are these sorts of statementsnecessarily correct? And he also says the US is going toeventually harm itself with these policies.Does he have a point there with that?Well, whether is.
Well, whether it is correct or whetherit is true depends on where you sit. So if you're in Beijing, you certainlybelieve it is true. But I think from the US perspective,there is a layer of concentration to maintain a certain advantage or sort ofan edge over China in terms of technological development.So I think ceding from Washington is policy also has a has a has a has agreat point and has a lot of merits. This policy is not without debate asthings are criticisms even domestically here in the US about this policy,basically saying that what this policy is helping China to devalue itsunaccountability, that you cannot.
Strangle China or starve China out ofthe hashtag, for example, certain dimensions of the semiconductor chipsforever. When you cut them off of their supply,we are choking them. Of course, they're going to developtheir own technology and you are not going to be able to choke them forever.So you're actually facilitating and expediting the Chinese own developmentof technologies. So I think both arguments have their ownhave their own merits. It depends on whether which way youprioritize climate change as well in terms of not being able to choke themforever.
We are staring down the barrel of apotential second Trump presidency at the end of the year.How would that change the picture? I think people are expecting a lot ofvolatility if there is a second Trump term.I think the sense is that eventually Trump will want to negotiate, especiallyon trade. He is all about the art of the deal.But before that happens, as in, Trump will try to exercise his maximumpressure on China to use certain leverage well, basically to createleverage for U.S. negotiation position.Who's turning a corner?.
And we are going to see China trying toretaliate. So a lot of volatility is expected ifthat is indeed what the November election Trump.If if we see a retreat of US support for Ukraine, for example, do you think thatemboldens Beijing on how it deals with Taiwan?Well, I think what we're seeing today was the evolution of the Ukraine war andthe fact that Ukraine is not going to get eastern Ukraine back.And no matter how much sanctions we have put on Russia, Russia is going to getaway with it. I think that reality itself has alreadybeen sending a lot of signals to China.
And when I think about Taiwan, well,what would be the consequences? Yes, it will be a very costly war.It will involve a lot of casualties and a lot of financial trade costs, economiccosts. But it's trying to go to get away withit in the end, if it is taking the lessons from the Ukraine playbook.Yes, it will. Just before we let you go, we weretalking about Wang Yi, and he's been sort of around for longer than perhapsexpected. We are not expecting any personnelannouncements this week. Do you think he'll stay in place andwhen do we expect a little bit more.
Transparency on what that foreignministry might look like on a permanent basis?There have been so many rumors and speculations.Right. We're going to find out when they'reready to tell us. But I think the general direction isleading to a conclusion that Wang Yi will have to step down by the end of histerm. He he's already 71.He will be 75, 74, 75 by the time that this current administration, thiscurrent term of the Chinese government, completes, which means that he will haveto retire.
And it also means that the Chinesegovernment has to start cultivating his successor.And the when we look at the deeds, the succession plan is usually the junior.So in the Chinese system, there is the director of the Foreign AffairsCommission, which is the more senior figure.And then we're also going to have the foreign minister and state councilor.Those two positions are being basically converted to only to one person.The foreign minister is going to carry the role of state councilor.So the Chinese in the past have established a pattern, but there is asenior person and a junior person.
But now we're seeing Wang Yi carryingboth roles as senior person and a junior person, which means that this is notnecessarily sustainable. They will have to find and announce asuccessor. A Wang Yi relative isn't real.He's he's in a steady hand. Right?Clearly. Which is why he's back in this role.Young son, who's a senior fellow at the Stimson Center, really great to have youwith us. Let's take a quick look at Japanesebonds. We have seen that move when it comes toJGBs, again, building expectations of.
The Bank of Japan, normalization ofpolicy that JE bond yield rises to 0.2% for the first time since 2011.We're also seeing the yen may maintain near its one month high against thedollar. We are just seeing this sort of buildinghopes, I guess, by parts of the market that the Bank of Japan will end what isthe world's last sub zero interest rate as early as this month.We're awaiting those bond purchase programs as being a particular focusthere as well. But the rally in the yen is aninteresting one because we've left that technical of the market cloud close toconfirming what is a bullish breakout.
For the yen.Perhaps we already know that given how much she's been trading at the moment.But the confirmation, I guess, is coming that the momentum has really shiftedpotentially, we cleared that way for it to rally into that 145 per dollar areapoll. A lot of that depends on, of course,what happens with the US dollar. And we know that we've got a lot of uspolitical news to get through. Yeah, we're tracking a few geopoliticalstories today on the terminal. The US Congress moving closer to forcingtiktok's Chinese parent bytedance to sell the social media platform overnational security concerns.
The House Energy and Commerce Committeevoted unanimously to advance a bill blocking app stores and Internet serviceproviders from offering Tik Tok. The company is calling on US users toprotest directly to their lawmakers. President Biden plans to direct the USmilitary to establish a temporary port on the Gaza coast to ramp up thedelivery of aid and ease the humanitarian crisis in the territory.Senior administration officials say the president will announce the steps in hisState of the Union address, which is happening in less than an hour now.We're told the port is going to take weeks to build and involve US militarypersonnel on ships off shore, but not on.
The ground in Gaza.Sweden has officially become the 32nd member of NATO after completing thealliance's historic enlargement into the Nordic region.The Swedish flag will be raised on Monday over the organization'sheadquarters in Brussels. Sweden's edition comes 21 months after abid for membership following Russia's invasion of Ukraine.The hold up was due to objections from both Turkey and Hungary.Bloomberg has learned that Kristalina Georgieva is poised to secure sufficientsupport for a second five year term as IMF managing director.She needs the backing of major European.
Nations and the US to ensure the successof any potential bid. Sources say Georgieva is pursuit of asecond term would come with the understanding that she has the supportof France and Germany. We have plenty more to come on DAYBREAK.Asia, This is Bloomberg. More businesses are using generative AIproducts to help screen and rank candidates for jobs.But a Bloomberg analysis has found that the best known generative A.I.at all chat GPT systematically produces biases that disadvantaged groups basedon their names. For more on today's big tech, let'sbring in technology reporter Davey Alba.
So, Davey, can you tell us what theinspiration for this story was? Yeah, definitely.So, you know, ever since the advent of chat graffiti in late 2022, there's beenso much excitement for generative AI, which is artificial intelligencesoftware that can create new text images or even video based on what you ask for.But there's also been a long held and significant concern for these toolsbias. And at the same time, there's been along tradition from companies to rely on automated screening systems to helphiring managers that job candidates. We wanted to combine those two ideas toask the question, Is there a risk for.
Racial bias if generative AI were to beused in hiring and recruiting for jobs? How did you conduct this analysis?So what we did was conduct an experiment.We came up with a list of demographically distinct names usingpublic records. Then we fed Djibouti a set of eightresumes with those demographically distinct names, asking it to rankcandidates for a few different job openings.And then each time we asked Djibouti who the best candidate was.The job using these demographically distinct names.Names associated with being either male.
Or female and either black, white,Asian, or Hispanic. Each candidate had an equal chance ofbeing ranked as the top candidate. Then we did this a thousand times foreach job that we we tested for, and we came up with some veryinteresting findings that Djibouti did indeeddisplay racial bias against against candidates based on their names.That's total. Okay.So in the category of news you can use. What should we be telling expectantparents here? What were some of your findings in termsof names to avoid or maybe employed?.
Yeah, You know, we found that resumeswith names statistically associated with black Americans were rarely ranked as atop candidate for financial analyst and software engineering roles.We also found that djibouti seldom ranked names associated with men as thetop candidates for h.r. And retail positions which have beenhistorically dominated by women. So those findings showed that garbagehere that at least stereotypes and that it actually fails adverse impactbenchmarks for some for several groups across the test.So that means if a company made hiring decisions based solely on its rankings,U.S.
Federal agencies would find that thisautomated system was biased against protected groups and treated themunfairly. So for me, the big takeaway here is thatusing generative AI for recruiting and hiring poses a serious risk of automateddiscrimination at scale. And companies should really think twicebefore using generative A.I. in hiring.Bloomberg Technology reporter David Oliver in New York.With that big take definitely worth of read or biodiversity across globalfinancial hubs is in the spotlight. This International Women's Day in HongKong, one in five listed companies still.
Has male directors only.That's just not the city's stock exchange aiming to end all male boardsthis year. Let's bring in our global businessreporter john whole. So, you know, frustration at the lack ofprogress despite this mandate. And I do wonder, is this a case of notenough eligible candidates or is there cultural resistance that some of thesecompanies. Yeah, exactly.We are seeing nearly 500 listed firms in Hong Kong are not yet complying withthis role of removing single gender boards by end of this year.So now we are only about nine months to.
The deadline.And when we approached Hong Kong Exchange, they couldn't give us an exactanswer of what will happen if companies just don't do it.So now the question is really whether these hundreds of companies can catchthe deadline and what's the incentive for them to actually do so.So when we ranked the companies by their market capitalisation, we find out thatthe top ten companies having all male boards right now, nine of them areChinese state owned companies or they're affiliated to companies.So with that, we are also seeing this perhaps a power struggle with these bigcompanies with a state background in.
China.They really willing to take a chance and make a change or they stay on and clingon to these all male boards because the companies diversity within the firms aswell as external with candidate pools are already biased towards men.Have we seen any improvements over the past few years?Yeah, yeah. Actually, if we are looking at theimprovement, we definitely need to acknowledge that as well.Back in 2020, the number of female directors, like all male boards, wasstill like 32%, but right now it's fallen to below 20%.However, that's still a big a big gap.
When we are talking about comparing to aglobal financial hub, say, London and New York.So what Hong Kong's change is putting ahead is really not a big ask when wetalk to analysts looking at board diversity and corporate governance, theyare really trying to see whether the exchange is willing to really give adefinite, definite answer by the end of this year.All right. Global business reporter Jin Shen Hong,that more ahead on DAYBREAK. Asia.This is Bloomberg. Well, Hong Kong has published a draft ofits new security law, kicking off a fast.
Tracked process to complete legislation.The proposal is set to be introduced to the Legislative Council in the nextcouple of hours as bring back our China economy editor Jill de CES, who has morefrom Hong Kong. So what do we know about this draft andthe significance? So, Heidi, right now we're actuallystill going through this draft. It was just published very shortly ago.So, you know, I think we want to be a bit careful with, you know, as wecontinue to go through the legislation. What it ultimately lays out in this inthis draft proposal, of course, as you said, it's going to go before thelegislature at 11 a.m.
Hong Kong time.So just a couple of hours from now, So far, it looks like this security lawdraft includes some the potential for anything to be defended in the publicinterest. So there's a public interest defensethat's sort of written into this draft. That being said, there's additionaldetails in here talking about how, you know, violations of this under Article23 proposal could carry a maximum penalty of potentially life in prisondepending on the severity of the offense.Just to kind of back up a little bit, Heidi.So a reminder to our viewers, this is a.
Fast tracked piece of legislation that'sreally you know, it was exposed to about a month's worth of public, you know,sort of, you know, consultation. The government of Hong Kong is actuallyrequired under some of its basic law constitution from from, you know, quitea bit ago that it has to create some kind of a national security law.But I think, you know, obviously, especially over the last few years, theimposition of that Beijing national security law a few years ago, there's alot of concerns about what exactly this ultimately means, what it means for freespeech and chilling effects and that kind of thing in the city.So there's a lot that we still need to.
Ultimately sort of unpack here.But, yes, I think we'll have more details for you within the next coupleof hours as this develops today. Article 23, as you mentioned, there,does relate to free speech. What is the public reaction been?What what are the concerns about this? So at this point, you know, look, Ithink that the public consultation period, as we saw it, would last about amonth, though there were some initial concerns that that might not have been along enough period. It does seem like the government gotquite a lot of public, you know, sort of consultation with opinion.They published some details earlier this.
Week, kind of exploring different, youknow, ideas that the public had for how this could go down.I'd also say, you know, there was a briefing yesterday from John Lee talkingabout this, you know, saying a bit about how, you know, like some some within thepublic were actually concerned about whether they needed it.Obviously, as we've discussed, you know, the city feels they need to sort ofexpand and protect interests of national security.I think at this point, you know, we've we've been talking to some people whosay the big concern here is whether there would be, again, that chillingeffect, that idea that this is a global.
Financial center, this is a, you know, amajor financial center within Asia that attracts a lot of, you know,international businesses, as I think with that Beijing law a couple of yearsago, you know, there is that concern about what the implications of thisultimately are for free speech in the city that sort of, you know, free, youknow, sort of commerce. So again, I think that we just kind ofwant to take some time to go through exactly what this law is telling us, youknow, and then we'll see, I think, later today what the ultimate implications arehere. China's economy takes us there with thelatest.
Take a look at how markets are tradingat the moment, particularly when it comes to the feature session in the US,which is looking pretty flat at the moment.To a little bit of caution, of course, we have some key jobs numbers coming inin the Friday session. We're also coming in to in the next houror so. President Biden's State of the Unionaddress. We are seeing that Asian stock rallyplay through pretty nicely in this Friday session, though.That is setting up for a bit of upside when it comes to trading in Taiwan.Taiex futures popping by one and a half.
Percent there.We're also seeing positivity for A50. China futures there, about 4/10 of 1%higher. Looking to follow along with this equityrally that we see really gaining across Australia as well as futures in HongKong looking positive there as well. The broader MSCI Asia Pacific is up byjust about half a percent. That is just about a four day break.Asia markets coverage continues. We look ahead to the start of trading inHong Kong, Shanghai and Shenzhen to stay with us.The chat show is next. This is Bloomberg.
