rishaad: 11:00 a.m. in tokyo, this is bloomberg markets. yvonne: our top stories this morning, a risk off mood with investors jittery item of the congressional testimony. the hang seng, a third straight day of losses. alibaba among the losers after its surprise leadership shakeup. city -- plus t -- soft ink going on the investment -- david: that is going on literally as we speak. we'll bring you the latest out of -- well that presentation, first one in some time, taking us into the japan art of the story. asia-pacific, weaker. this return, speaking of

offensive that were getting in the u.s. dollar, up a third day on that. u.s. futures are steady. we have a rate decision to contend, the important one is the bank of england. we will probably get more information, core inflation was 620%. -- 6.8%. yvonne: the minister of finance of china, if you're looking for any signs of stimulus. china took tax rates on ev purchases to the end of 2027. we have a timeframe, more tweaks as we have been talking about. the ev purchases are something they have touted, they continue to support this industry. hopefully that does something with consumption. rishaad: in a couple of weeks, a special promotion, building infrastructure in rural areas. so, that's another one of these

partial stimulus measures. it's one which you will facilitate more electric vehicles. let's have a look at what we have. the bank of england. we also have epi data out today out of the u.k. david: it's 10:00 local here, so it about four hours. 6.8% is the estimate for inflation, core inflation. again, it takes us into the part of the conversation, housing starts, hot inflation. it's appropriate for the fed to move by 50, whether that looks appropriate in hindsight, that is the sticking point. it is clear, the bank of england still needs to hike. rishaad: u.s. housing starts numbers. if you can see a policy not filtering through, that is one key data point which suggests this. we are surging to levels we have not seen 2016, applications

increasing, suggesting that this will be fueling economic growth. beginning home construction, jumping 21.7%. yvonne: most people thought powell delivered last week. ijn this press conference trying to rain back the expectations that expectations -- rate cuts could be happening this year. he was able to tread that line of two dots, signaling more rate hikes later this year. the market may not be completely convinced. they're calling his bluff that maybe they can deliver on it. it's maybe why he said that, to really look at financial conditions, given that they have loosened. rishaad: you mentioned financial conditions, the fed weighing whether to bring in conventional experts, behavioral scientists to look at another part of analyzing supervised banks. which are currently dominated by accountants, lawyers and economists. david: it comes down to market psychology and behavior.

you signal one thing in markets take another, and they will have to pull it back. the rally tells you, that is happened effectively anyway. the dollar is up. we talked about this already. what are we doing as far as asia is concerned? i want to highlight the two year yield and the repricing that is taking place on the short end of the bond market. you look at europe, that goes into the real yield story as far as the u.s. dollar is concerned. despite that, we have cable which is trading near 130. it's almost this week being toxic. yvonne: we have to show dollar china, 720. we just broke above that. that is the first time since november that we have seen it. we had that weaker than expected fix from the pboc. they're not pushing back against this. the more you hear about little stimulus tweaks, i think you

will see this trade continue on. david: there is no inflation. they really need, i guess, mathematically, if you want real lower interest rates it makes sense that you move more than 10. 7.2 looks like easy work from dollar china as well. this is the offshore. let's get the onshore rate as well. rishaad: effective devaluation for the yuan and stimulus. there you go. this is going to be one which affects the manufacturing side of the economy, given that it is going to be making exports more competitive. it is not working with the model they are trying to make which is more services oriented economy. david: to parts of the consumption. yvonne: that is the bright spot, ev exports. david: global macro movers. the general mood that we painted out is one where risk is not in favor as we speak.

it has been in favor for the three weeks going into today. we're looking at losses across the equity markets. jakarta is coming online, .5%, trading .3% to the downside up until this hour. one bucket to watch -- markets watch, is vietnam. that comes online this hour. if that is any indication of monetary policy in the region moving forward, vietnam has been cutting interest rates. let's bring in mark cranfield, joining us out of singapore. everything we talked about, what stands out? give us something new. >> it's pretty hard to see anything other than a hawkish delivery from mr. powell tonight. if you look at whether the two-year treasury yield is, it is not much different to where it was after last week's fomc meeting. jerome powell will probably be a bit surprised. the fed told the market that even though they pause, there is

still more hikes to come. if you look at the fed people who are speaking yesterday in their testimonies for the chance to be vice chairman and the other positions in the fed, they spoke about inflation. they are still enemy number one. there still more work to be done. when jerome powell speaks, he will have that in the back of his mind, he will probably be thinking, well traders have not gotten the message. rates need to go higher to beat inflation. he's going to have to deliver that again. the market is going to be surprised that he's reinforcing the message quite aggressively. some republicans will see higher dollar, higher yields and it will not be taken to well by the equity market. he's just going have to do it. for many times we have seen the market fails to price for higher fed rates. it was only recently that we had some people still expecting rate cuts, which were talking about

earlier. that has finally come out of the market. the fed still wants to see the market preparing itself for higher yields down the road. yvonne: we are certainly seeing the dollar strength lay through. 7.2 for dollar china. you're watching the options market, what do you think currency is headed for now? >> well, you have this big divergence. china is in easing mode. the fed is in hiking mode. that is reflected in the interest rate curves. the difference between the two is stark, especially on the short end. you look at the option pricing goes, if your portfolio -- if you expect the pboc will sit back probably until the dollar yuan is 7.25, if you look at the way options are priced you can see -- do zero option strategies which give you a chance to be slightly bullish on the yuan but on a much higher level.

traders are being paid to enter those trades at a more preferable level. they expect the pboc to be there to defend the yuan some point. we're getting into this position. what may be different is in the past we have seen when dollar yuan gets to the 7.25 level it rebounds quickly. this time because of the big differential, we may sit for longer in that higher range. once we get to 7.25, we could be drifting for quite a while. the pboc is in no hurry to tighten policy, as we have been hearing many times. they may have more easing to do in the second half of the year. rishaad: mark, good stuff. mark cranfield. our next guest has a view on china, a view on korea where they have reduced their waiting to neutral and moved india to overweight. frank benzimra.

frank. if we are starting with that, let's take a look at why you have done it, made those two moves, and look at korea in particular where it will get developed market status. that is the hope. that can change the game for equities there. >> i don't think it will. we will see what is going to be decided. but, even if it is happening, it will not happen before 2025. even though, you have more chances to get some outflows than inflows. we're very skeptical about this story and the impact of it, if it is happening. the chance that we made on the allocation to move from overweight to neutral is the extreme dispersions we had in the equity market in the first half of the year is going to receive it.

basically, more than a percentage was coming from japan than korea. we understand why. but, now, let's look at the earnings cycle, let's look at what is happening in other markets. india is an interesting one in terms of the earnings cycle, the capex recovery. we want to make a bit of space on the markets which have been lagging in the first half of the year. the fundamental potential to recover. we think, the semiconductor has been a great story. but we need to take money off the table. yvonne: the third quarter outlook over shoots, which is ai, under shoots china. why are you skeptical about the ai trade? >> we are not. we think it's been great for the equity market. it has probably added earnings

per share. now, we need to look not only at the ai, but at the whole semiconductor. the inventory in korea is still at a high, in april and may. i think this story is going to remain. but maybe not the only engine for the growth of the market. there is a tendency of the market to exaggerate the importance of the events. so no doubt, that is something important. that is something big. should it be that big? that is where we are coming from. david: people tend to lump korea and taiwan into one basket, because of the nature of the companies in both exchanges. tell us why you kept taiwan up, but korea you have lowered it. >> well, the difference we are

making is when we look at the quality of the earnings, i mean how predictable are the earnings on the taiwanese market and on the korean market. the korean market is much more driven by the memory chips which is cyclical. the committees are driven by the supply and demand. the taiwanese market is more on the foundry, the logic types of chips. you have this massive demand coming from ai servers. traditionally, you can seeth -- you can see the predictability of the earnings being higher. we keep the overweight on taiwan and kept korea. yvonne: china, you are saying the correction has gone too far? people are still disappointed by the lack of stimulus from china. we are seeing trips and grabs of

it, but isn't enough that the second half will be a smoother path? >> from equity point of view what we see for sure is there is a need of stronger policy response. we have this relationship between the chinese government bond and the equity market. when the yield is rising, the equity market is rising, very different than what we have seen in the u.s.. it's first and foremost an economic story. the growth has been underwhelming. when we say the correction has gone too far there is a level of negativity, the sentiment is extremely negative. we see this in investor

positioning and also we see this on the offshore equity market. in some metrics where coming back to where we were in october. that means we keep a cautious view on the equity market but we are going to see some upturn in downturn with the flat market. while we may be in one of these cyclical terms. rishaad: japan, you could argue, is undervalued, under owned and delivers 3.7% as a yield and you've seen it, just go exponentially higher. three decades highs. can they sustain this? is there a seat change in mentality in terms of corporate governance and perhaps amongst the general population? >> in terms of the government? it's not a new one. you had the reform happening

almost 10 years ago. then then nothing. then we are seeing this initiative of japan exchange, which is very interesting. if you are looking, where are the share buybacks coming from, it's typically in the sector, while the price-to-book. it's only what part of the story, but it is an important part. 3.7 four shareholder yield. let's not forget it is the only country in the world where you have negative interest right now. you need to compare with the level of interest. the interesting element is we are hardly seeing the different category of the investor coming back onto the market. we had a lot of questions on the foreign investor having been quite active, the month of april. may be -- but let's compare this

to the huge outflows we have in the last five years. let's look at what insurance companies are doing. let's look at what domestic banks are doing. they have been the next seller. we start to see some stabilization here. rishaad: always a pleasure. frank benzimra, head of asia equity strategy. we got this news from the singapore central bank. they are proposing standards for digital money. that's a subject that's on the back corner -- burner, with this proposal. we have other news concerning china. david: this briefing taking place, you have the advice -- the vice finance minister talking about morse or -- more support, tax exemptions will be

reaching 520 billion rmb between 2024 and 2027. the latest news is they have extended some of these measures along these lines. we were expecting some announcement that this briefing was flagged. rishaad: a swelter of news. we have the cia not stepping down yet. david: did anybody ask him? yvonne: he started asking questions. david: you know those memes? absolutely nobody. lots of things coming through. alibaba down in the hong kong session, down 3%, happening that with adrs and how they could possibly deliver change amidst the restructuring plans. ♪ rishaad: there goes, sports

group, joining for a breakdown of japan's market and where they see tailwinds. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

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david: we are 15 minutes into the session. alibaba down leading the losses across the tech space. new management in place. stephen engle, our chief north asia correspondent is with us. stephen: it looks like this is a demotion for daniel zhang. i agree with bloomberg intelligence, it is simply shifting daniel's emphasis to the cloud division, the second-biggest division after e-commerce, taobao and t mall,

and one of the divisions with the greatest potential. they need to become profitable. daniel zhang, instead of being the overarching chairman and ceo of the newly structured six unit alibaba, he is not going to focus specifically on cloud -- now going to focus specifically on cloud. we're bringing in joe tsai and eddie wu, 67% of revenue comes from taobao. that tells me the emphasis is going to be on two of those six new divisions. i have a list of the six divisions that alibaba is going to be restructured into, announced in february or march. the emphasis, as we have had three consecutive quarters of single digit revenue growth at a once behemoth e-commerce and technology. we only have five lines.

we had to combine local services. digital media is probably the biggest laggard. digital media will probably go ipo. the emphasis is going to be on taobao and tmall. and also cloud intelligence. daniel zhang will run that. and eddie wu, the new ceo of the group will spearhead taobao and tmall and the face will be joe tsai. rishaad: you alluded to this, but is it going back to basics? what are the roots that they are focused on, the consumer and the cloud? stephen: so, alibaba has been a proxy for the chinese economy. the chinese economy has changed as has the regulatory environment. alibaba has to navigate a new

framework as well as a new shift in the chinese economy, coming out of covid zero. covid zero on the regulatory environment hammered companies like alibaba, particularly the regulatory environment. there is a new normal for alibaba. break it into six divisions, try to unlock shareholder value, try to raise money separately, but at the same time try to capture the past glory. yvonne: in a way it is bringing in these confidants of jack ma. is his influence still in this company? stephen: alibaba was a proxy for the chinese economy. but also the face of -- jack ma was an easy person to invest into for foreign investors. yvonne: stephen engle our chief north asia correspondent. walking through the big moves in this markets. ev's are on the back of more stimulus. this is bloomberg. ♪

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rishaad: just checking markets, baidu on the way down. morgan stanley upgrading to overweight, saying it is the best proxy to own. artificial intelligence help china shifted to economy. look at the ev's. yvonne: talks of them extending the tax breaks when it comes to ev purchases has been extended to 2027. nio added that within abu dhabi investment, that is lifting the stock. david: it is lifting the u.s. dollar. it is on the way up. a big move down in em fx.

>> ai is about to grow

explosively and we are prepared for such an arrow to come. rishaad: masayoshi son says he has no plans to step down from softbank. he says he is in position to win the race to master ai. his first public appearance in seven months. yvonne: softbank shares up two .5%. -- 2.5%. japanese markets was bucking the trend. it looks like we are continuing the risk off day into lunch. dollar yen 141.

it goes to show when it comes to softbank he has a lot of convincing to do. when it comes to some of these bets on ai, he is talking about going on the offensive. rishaad: he says he uses chatgpt almost every day. he shows his commitment. they have had a lot of setbacks. they do nothing to be deterred by it. this quote, we will rule the world in the end. david: he is also talking about, saying that sam altman has a beautiful heart. he is also talking about generative ai. the sector he says need some form of regulation, but he is not in favor of regulating that

would hinder innovation. him talking about what their plans are. yvonne: i feel ashamed he said. i have made a lot of mistakes. softbank is invested in 500 companies involved in artificial intelligence. there is a lot more going on in japan. the rally seems to be resuming today against the macro headwinds that are playing out. let's dig deeper into japan with masakazu takeda from sparx asia investment advisors. great to talk with you. there has been so much interest where you are on this equity

rally. what has really changed? how did japan move from a value trap to a value play in a few months? >> this time i think the continued progress in corporate governance reforms is what is driving the market. today i think there is more awareness around returns on investments. that is a big change compared to 10 or 20 years ago. some world class companies in japan will benefit from

long-term growth. david: your japan strategy, tell us about that. what changes have you made to your exposure and what changes do you expect to make given how far the market has already come. >> the investment strategy is simple. we try to identify great business with exceptional management and we try to purchase stock at an attractive price. we look for long-term capital compounder's, world class with international operations. we have been focused on growth stocks in disguise, where companies that have above average earnings growth with significant ability to buy back shares and increased dividends. rishaad: we talked about corporate governance. our previous guest was talking about the japanese market being

undervalued. but it is over balked. -- bought. >> from a short-term perspective i can understand people sense and the market is getting overheated. corporate management did not really have a strong focus on liquidity in the past and that is changing in a big way. corporate earnings roughly tripled. going forward it is a structural trend. yvonne: what about the

structural issues surrounding japan? this is still an aging population. i think you are seeing early signs of an economy that is emerging out of deflation. those things do not change in a matter of months. do think the corporate governance offsets some of these structural issues? >> 100% i agree with what you just said. a lot of of structural headwinds for sure. in order to make money in japan you can invest in international headquarters -- companies that are headquartered in japan. that is one way to do it. from a short-term perspective, i think the japanese economy is in better shape because of no signs of inflation and inbound

tourists. tourism is coming back strongly. the purchasing power of tourists is 30% higher than before. that is a nice tailwind. david: we were talking about what is happening in tokyo with masayoshi son. you have cut your exposure to softbank to zero. have you changed? have you heard anything from today from this presentation that makes you change your mind? >> i am always watching the company and the founder. he is doing some interesting stuff.

i am always interested to see what he is doing and at today's shareholders meeting i am also watching that as well. rishaad: mitsubishi stock is up 17%. you have been involved with it for 16 years. make the investment case. >> it is very unique to japan as a trading -- business model. they used to make commissions on trading operations. they now turned into investment

companies. they are globally expanding. that is what makes these companies very unique and also shareholder return policies have also returned significantly -- improved significantly. that is what makes these companies attractive in japan. david: i think we heard from berkshire hathaway on monday that they increase their exposure. we are showing at this current price, do you think there is much value in these names? >> i would rather not comment on the short-term outlook about how i feel. there is a strong underlying

earnings to support the current valuations. growth is scarce in japan in general but these companies are very global and they have a lot of growth ahead too. david: there has been some paradigm shift going when you look at these stocks. how does someone like yourself value companies like this? do you look more towards return in equity? how do we change our view on trying to figure out how much of these companies are worth? >> given that these companies investment companies are actually looking at growth in massive value, using book value

per share as a proxy, because you used net income, [indiscernible] everything actually boils down to basically asset value. i look at changes in asset value . rishaad: still basically an export driven economy. where the yen goes is where the market should be going. >> as long as depreciation remains benign i think it is a nice tailwind.

however there is rapid depreciation, low income households may suffer because of rising import prices. yvonne: maybe talk a little bit more about where you were seeing more room for re-rating. >> interestingly enough, half of japanese companies are trading at less than one time. we are looking at bottom half of the market moving upward and i think that is a strong driver of

the stock market overall. david: 10-11 weeks into this current rally. are you still getting increase from foreign investors? give us a sense of sentiment. >> thankfully, we are getting inquiries from overseas investors and it is good for our business. when i talk about these points, it has been pretty well received. i think japan is definitely changing for the better. rishaad: where will the nikkei be at the end of the year? >> i cannot comment on that. rishaad: thank you so much for joining us. masakazu takeda from sparx asia investment advisors.

still to come, the search for the submersible vessel has less than 35 hours of air left for those on board. this is bloomberg. ♪ w can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. the queen sleep number 360 c2 smart bed is now only $899. plus, 48-month financing on all smart beds. shop now only at sleep number

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and big unified team is working around the clock in an effort to solve this complex problem. to date, those search efforts have not yielded any results. rishaad: the u.s. coast guard on the search and rescue effort on the missing submersible vessel. i has less than 35 hours of oxygen left. what do we know? >> we know that as we just heard the u.s. coast guard is working on the rescue efforts. the canadian coast guard is working as well. the french government has sent a vessel that has a robot capable going 4000 meters under the sea, so that would be around the area where the submersible vessel is. the big issue now is about how much time is left. it has the capacity of up to 96 hours of oxygen.

we are now at about 30 hours at most remaining. yvonne: what do we know about the people on board? >> there is the founder of the company, oceangate expeditions. there is also a 58-year-old from the united kingdom, the founder of an investment group. he is also a well-known adventurer has several guinness world records. there is a father and son from pakistan. they are from a family owned business that is a well-known conglomerate in pakistan. there is also the pilot, a french pilot, he is -- he was

asked about a situation like this and what would happen. he said then that most likely everyone would get cold, people would fall asleep and then that would be the end of it. david: thank you for getting us up to speed. lots of stories going on. we will get you updated on everything that has been taken place. these job cuts out of jp morgan is one. there are been a lot of announcements in the ev space. that is two. in the next hour, a couple of markets coming online. we will get you warmed up for

her trading day ahead. this is bloomberg. ♪

when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh david: welcome back. we are still looking at pressure coming across the region here.

we are in the lunch break in japan right now. in china, the vice minister of the miit says they will let the market mechanism phase out uncompetitive carmakers. -- on competitive carmakers. they will be pushing with the mining. -- lithium mining. this is to bolster car sales. rishaad: they are really trying to get ev's into rural areas.

yvonne: you see these markets especially when it comes to the ev space that are still quite tight in terms of supply, that is certainly encouraging news that there drafting plans to bolster mining of lithium in china. that helps when it comes to the ev space. still one of the key bright spots when it comes to china right now. a lot of ev stocks surging in light of this news. we are watching not just when it comes to ev's. david: this goes into the dollar story. the repricing for more hikes has taken up.

-- taken it up. rishaad: it is going to give the authorities the ability to curb parish bets -- bearish bets. coming up we have end of quarter. we have to raise dividend money. yvonne: it does not quite look like when it seems like is this going to come down. i do not think so. the fed is still looking at me be hiking one or two more times. despite what the market is defying here right now. but astutely you are seeing the liquidity being strained. we may have to wait another

month. david: our guys at bloomberg economics put up the note previewing the testimony that will come through. while the bar to hold for july might be quite low as what they are saying because they paused in june to give the data more time to simmer. market pricing seems to indicate a probability of a hike. yvonne: we will see how jay powell tops through that in his testimony. i think that is still the bigger driver of these markets right now versus what you are seeing for the rest of the world. rishaad: is it working, that is the thing? they need to see some empirical data to see how the economy is responding.

it is sticky, but housing starts amazing numbers. yvonne: i think people underestimated how resilient the u.s. economy has been and may be overestimated how quickly china would recover. is the second half going to look better for china is still the key question. david: we will see. it looks like we are headed for a sweet spot. equity markets doing this. this is bloomberg. ♪

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haslinda: welcome to bloomberg markets: asia. rishaad: let's have a look at our top stories. investors getting jittery over jay powell's congressional testimony. a third straight day of losses. alibaba among the big losers after the surprise leadership shakeup. we have india's prime minister beginning has first u.s. state visit, looking to leverage his country's strength in geopolitics and tech. haslinda: broad risk off sentiment here in asia as we await jay powell's testimony. some say he has to sound really hawkish if he wants to convince traders.

also sentiment to driven by china, investors underwhelmed by the string of rate cuts we have seen. take a look at where we are in terms of the benchmarks. under pressure, but we have seen weeks of massive gains and this could just be consolidation. chinese tech in particular under pressure. alibaba leading the pack on the back of the surprise leadership change that we saw. the kospi also down by half a percent. perhaps the brokerages that have been the darling of the likes of warren buffett, they are getting really hot.

in the fx market we are seeing dollar strength up. the yuan down by .02% 1%. -- of 1%. the bond market, we are yields trending lower. rishaad: over in bangkok, looking at tech stocks. perhaps some clarity when it comes to the politics with the coalition of pro-democracy parties that did sweep that general election last month.

looking at india. we have the visit of prime minister modi into the united states. we had the meeting of tesla bear. -- there. tesla is considering a indian investment. repeat unchanged -- the repeat futures unchanged. yvonne: -- haslinda: let's bring in our first guest. it is about the fed. they are still not convinced there will be more than one rate hike. what are you expecting to hear today? >> with the data we had seen, specifically on the construction activity and the united states there seems to have been an acceleration of activity.

that is not really putting the fed and a comfortable position. so the bar not to hike in july is very high. we do expect some weakness to come in which would actually possibly take them out for the running after july, but it really depends on the data. haslinda: need to get higher? >> unemployment rate, they also think it is not going to reach around 4.5, but there forecast is already 4.1. even then, inflation still quite high. you really need to keep the policy rates high and convince the market of that. the fed has not been communicating something different. it is just the market is not believing them. rishaad: i was doing a panel with nobel prize winner michael spence.

i asked what he would do if he was jay powell. his reply was resign. joking aside, what do you think he should be doing? >> he definitely needs to sound hawkish at the testimony later today at capitol hill. last week, the market thought of it as a dovish cause even though the dot plots would suggest otherwise. so he needs to stay as hawkish as possible and everybody needs to wait for the market to capitulate. thus far it has been the case that the fed has been standing by on their stance of keeping the rates quite high. rishaad: absolutely. we can have a look at the other side of the coin. we find ourselves with the pboc and what they are grappling with as well. disinflation, an economy which

is perhaps stuttering after the pandemic restrictions lifted. are they doing enough? >> i would say the policy rate cuts thus far, only at 10 basis points across the curve, as more of a signal rather that very little cuts because at the end of the day the pboc can ease financial conditions even further even without a cut in the policy rate just by raising the liquidity injections they would provide to the market. yet the market is clearly looking for more details on the policy support because the problem in china is the lack of confidence. and you need to introduce animal spirits back into the market for the households and the corporations to spend more. haslinda: it is all playing out in yuan weakness.

do you think the pboc is comfortable with the weakness or is it a reflection of the economy? >> i would say they are quite comfortable with the weakness. just looking at the deviation from market estimates. overall the average deviation has been zero. the signal is they are quite comfortable. if you look at the deviation between the offshore and the onshore yuan it is not really much. even the onshore market is prepared for further weakness. the problem is tomorrow and friday china is on public holiday which means that there will be no daily fixing and the offshore market would be left on its own. haslinda: how much more weakness can we expect for it to reflect properly the weakness in the economy? >> the rise in the dollar yuan

is risen by two factors. first of all, the dollar, if it were to continue to rise, then the dollar could actually raise dollar yuan. however, if the market were not to change the market pricing of fed expectations than the dollar leg will not. haslinda: in terms of investment opportunities, where would you be putting your money in china? >> when i was there, it was quite clear that the electrification of the automobile sector is going in very fast. so right now, the market share of eb's is that 26%. the expectation is it will rise

to 40%. there are clearly a front runner in comparison to the world. rishaad: we have not talked about japan. has this rally got legs long-term? >> i would say the structural story behind the japanese equities is definitely positive for now. for the longest time corporate governance has been the main dampener to japanese equities. but since then there has been a lot of improvement as far as dividend payments or even change in the valuation of japanese equities. we have seen the adage shined that the warren buffett effect is having to the market. we are still expecting further gains in the japanese equity market from here. rishaad: overall, where are you

seeing real value in the countries that you cover? which are the ones with the biggest potential for the second half? >> the indonesian market is very favorable at this point. first of all, even though the fed is still biased for keeping financial conditions tight, in a shut the central banks are more experience in handling inflation. that has allowed the central banks in the region to be neutral at this point. in comparison to the rest of the world, where central bankers have been wrongfooted on their assessment of inflation. meanwhile, indonesia is also benefiting from the rise in commodity prices. i have already mentioned that tear in the chinese ev market is

really going on and that would only put upside risk to the indonesian market. haslinda: more investors are buying bonds from developed markets which they think will start cutting rates. is that a good strategy? we are talking about markets like canada, new zealand, australia. >> a central banks in the g10, which had signaled they were willing to pause have been caught off guard by how sticky the inflation is. they have definitely changed their view. in the rest of the world, they are more focused or disciplined in their inflation. so they are not likely to keep hiking from here because they have already done it. unlikely to cut unless you have a deterioration.

haslinda: thank you so much for your time. still ahead, prime minister modi visiting the white house. india's former foreign secretary will be joining us. rishaad: masayoshi son says softbank is going on the offensive in regards to ai.

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>> the new management is definitely a surprise to the market. this change needs time for the market to see whether it can bring a new growth driver to alibaba. >> they are providing background support, financial and strategic. i think this is probably going to be the new style. rishaad: some of our guests

views on alibaba's surprise management change. it is down 3.7% today. alibaba me lean on its new ceo's acumen. when we look at this, what takeaway is there? >> it was a little bit of a surprise but it makes some sense. the two main takeaways that i see is that daniel zhang who was overseeing the restructuring of those six divisions as chairman and ceo as an umbrella group and those six divisions would then seek their own fundraising. now i am seeing this as not

necessarily as a demotion for daniel zhang, but i think he is being shifted into the cloud division, which is the second biggest division at alibaba. and one with great potential. but it is still not profitable and has intense competition with baidu. daniel zhang good stead of being the umbrella overarching chairman will now focus on cloud intelligence, which includes artificial intelligence. on the other hand, when you bring in eddie wu, who has been in charge of e-commerce, he will be the ceo. that tells me they are going to concentrate right now in trying to get its refunding and try to recapture some of its past glory . they are going to lean on

e-commerce and eddie wu. joseph tsai is flamboyant, but she is a connection to jack ma. he cofounded the company in 1999. he is well-liked on wall street. when i interviewed him in 2017, very personable. born in taiwan, raised in the united states as a teenager. went to yale and owns the brooklyn nets, owns the brooklyn liberty, owns a professional lacrosse team, invested in blockchain. haslinda: a very charming man. we know that alibaba is looking to the past to drive the future.

what drove the change? should investors be concerned? >> stephen has highlighted that it is part of the general strategy bat alibaba -- that alibaba has articulated to us. daniel zhang was wearing two hats. he took on on the president of the club, and it showed his inclination to the cloud side of the business. i think the cloud business is a dynamic process that needs great focus and it is good to see daniel concentrating his efforts on that business. rishaad: what does it mean for the outlook? >> that is a good question. there is so much going on for alibaba.

as we wait for the fundraising, the ipo's, as well as the international digital side of things. one step at a time. let's look at how the new ceos of the six units deliver. what is the strategy before we assess whether the new ceo is in a position to revive growth. haslinda: this is one company that has been under great scrutiny by the authorities. you have to wonder the relationship of the new leadership with the administration. >> the last three and a half years have been difficult for alibaba. they have made the changes that

were mandated by regulators because of their concerns of the monopolistic behaviors the government claim on alibaba. it is a different company right now so it has to strategize on where the core competencies are and where they will unlock shareholder value in these individual units. when they announced this restructuring, they had three consecutive quarters of single digit revenue growth. that is not good enough for those who invested a long time ago. where are they going to find the growth? 67% of revenue is coming from e-commerce. but when and how are you going to get that profitability and the growth from those other divisions? logistics is a solid company and

will probably be one of the first to go public, but what about cloud? when will that profitable? and some of the other laggards would be digital entertainment and media. there is a lot of divisions that need to perform. rishaad: shou chew changes at alibaba. is that -- huge changes at the alibaba. >> i think as the internet company gets bigger and they have their hands in other parts of the businesses, such as fundtech. jd.com is into that too.

these are all units that could be competing with alibaba's units as well. definitely more to come. let's see what they have for us over the next one-to years. -- 1-2 years. rishaad: thank you. the one month rate climb to the highest level since 2007 in hong kong. there we go. plenty more to come. this is bloomberg. ♪

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rishaad: let's check in with some of these moving parts of the market. the tech side of things we gained. -- week. we have the ev space. let's have a look at this. some of the commodities in play. copper and oil was while recovering from losses and suffered in recent days. let's quickly look at the alibaba.

ev tax breaks affecting things. haslinda: chinext than any tax breaks's -- china extending tax breaks on ev's. the hang seng under a lot of pressure. it is trading currently below its 200 dma. coming up, narendra modi heading to the white house on his first u.s. state visit. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news

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>> ai is about to grow

explosively and we are prepared for such an arrow to come. rishaad: softbank ceo masayoshi son speaking there. softbank very much in the crosshairs. masayoshi son's first appearance in public in seven months. he has admitted to mistakes in the past. right now going on the offensive, talking about ruling the world, which might be going a little bit too far. taking a look at the share price, 21% up. on top of that, talking about the ai revolution and saying softbank is in a position to win the race to master artificial intelligence.

also looking ahead to what could be the biggest listing for the year and that could be arm holdings. haslinda: that is right. masayoshi son has been under a lot of pressure given the fact that s&p cut its credit rating. he did say that he has invested in seven startups and quite a number of them [indiscernible] this is one man who has been under the spotlight. he was away for seven months. he has been focusing on the ipo of arm. that is expected to come. he is pretty optimistic about it. given up some of the games as he spoke. take a look at where we are in terms of japan. the nikkei in positive

territory. it continues to gain. it has been the darling of investors, bearing in mind that those brokerage stocks are in favorable territory and some said they are getting pretty hot. we could see some consolidation. nobody is talking about intervention at the moment at this level. time for india. a look ahead as some key stories investors are watching today. prime minister modi is in the united states on his first state visit with india's geopolitical cloud higher than at any point since he took power. the rbi will auction t-bills.

rishaad: prime minister modi to meet with president biden in washington. this is his first state visit to the united states. one of the objectives -- what are the objectives to this trip? >> we can expect regulatory barriers to be more friendly. which in effect will encourage more investments and more companies to talk to each other. we can also expect big-ticket announcements in defense, in particular a memo of understanding between ge and india's defense public sector.

we can also expect big announcements in semiconductors. haslinda: u.s.-india relations have been growing since the mid to thousands. what is the different this time? >> it is different because we see a huge amount of urgency from both sides to deepen the relationship. the reason is more or less the same. it is china. the united states is looking for a partner in the indo pacific.

india has woken up after a while we saw in 2020, the clashes between indian and chinese troops. that is a wake-up call for india. there is a sense of urgency on both sides and the reason seems to be china. rishaad: always a pleasure. let's get more on what is at stake. nirupama rao, the former ambassador of india. thank you for joining us. it is an amazing difference in terms of the security and diplomatic dynamics since you left the foreign service. >> as you said at the beginning of the program, there is the whole issue of india's geopolitical cloud, which has never been higher.

i think prime minister modi arrives in the united states at a very important and crucial moment, an inflection point in the relationship between these two large democracies. the two most important democracies in the world. and the promise and the potential that india has shown in terms of economic growth and in terms of its ability to increasingly articulate its power and influence in the region. so this is a very resilient and sustainable relationship. it is a trusted partnership, which has an increasingly strategic geopolitical and geo-economic dimensions over the last few years. so prime minister modi comes to washington at a very interesting

moment in this relationship. rishaad: how far is china's assertiveness been responsible for drunk the two together? -- drawing the two together? >> that definitely cannot be ignored. she spoke about creating a new balance freedom in the asia-pacific and the indo pacific region. that is exactly what to india and the united states have set out to create. i think the rise of china has been accompanied by increasing muscularity and assertiveness by

the chinese. and that has created immense reverberations in our region. we understand what the rise in china has meant for us. china has grown phenomenally and the standards of living of the chinese people have improved tremendously and bat is a very good and positive development. but we have to look also at the impact of china on the external environment which affects us in terms of the maritime domain that we are surrounded by. in terms of china's assertiveness on its land border with china. you have seen the implications of that. it is marked by a complete absence of mutual trust, which has been the fallout of what happened in the northernmost region of india in june 2020.

these are the various factors that create this geopolitical issue in our region. i think india and the united states understand that very well. haslinda: india appears to be the leader of the global south, which is pushing back on the global order as we know it. how might that play out as the u.s. pushes the global south to isolate russia, to move away from the dependence on china? >> as you know, india is chairing the g20 this year and we have a summit coming up in september. india has varied legitimately positioned itself as the heartland of the global south. india's outreach to countries in

the global south has been successful. it involves development finance. it involves financial inclusion. india digital plate -- payment platform has been adopted by countries in the global south, which is a measure of the trust these countries believe when it comes to india. when it comes to russia, india has clearly stated that russia is an important country in the global order. even as we do not support the violation of ukraine's territorial sovereignty, there is also the need for russia and ukraine to sit down and sort out this conflict. countries in the west have an obligation to be a part of this and to make sure this is

facilitated. with russia, india has a legacy relationship. it cast a shadow on our foreign policy today. it is something we are not going to invest ourselves love quickly. -- ourselves of quickly. it is a relationship we continue to foster and nurture. haslinda: the united states seems ready to share critical technology. how are you reading that? >> that is a very valid question. technology is at the heart of our relationship today. as i mentioned, the definition of what a trusted partnership means. both countries have concluded

that both countries attached importance to the issue of technological development and the question of how india, the ecosystem within india, can be strengthened and diversified and project itself as that presence in our region that can be of technological presence, technological enabler for countries in the global south. rishaad: looking at recent u.s. government reports highlighting growing religious intolerance and erosion of the freedom of the press, can this be an impediment for washington and new delhi have been closer ties? >> this may figure into the

conversations between the two leaders. but even if the matter is raised, i believe whatever differences of opinion the two countries may have are going to be discussed with the great deal of frankness and with confidence about the enduring nature of this relationship. democracies always have their challenges as they move forward. the management of diversity engages both the united states and india. neither of us is exempt from being talked about in this regard. as i said, the resilient nature of this partnership is what we need to focus on. and creating that balance of freedom in the indo pacific. haslinda: nirupama rao, the

former ambassador of india. thank you for your insights. still to come, indian officials talk about heat and humidity. details just the head. keep it here with us. this is bloomberg. ♪

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rishaad: let's get to the open for indian equities. we are marching to the upside. if the nifty has a rise of 30 points it would be a record to the highest we had a few days ago. thanks -- all of these having a modest game at the start of the session. the rupee remaining stable. let's have a look at airbus and confirmation coming from an order. air india first announced in february. >> for indigo, this is 500

airplanes order, the biggest order ever. that is for the long term. indigo is very successful and in india. i think there is a lot of substance behind those orders. these are long-term orders. it reflects the fact that airplanes are scarce resources, but it also reflects growth and it reflects long-term planning of airlines. i think this is a healthy perspective on the long topic sure. -- pick sure. when we saw the order, one of the questions that was asked was wise airbus selling so many airplanes to indigo? you are tying up huge amounts of your capacity with one big order.

an order that you could have sold and broken up into component parts and even sold for more money. why one big order? >> i do not think it is either or. we have taken an order for indigo for deliveries between 2030-2035. this is long-term perspective. it provides room for other orders to come later. indigo has been a reliable partner for airbus and vice versa so we want to continue to stick to each other and continued that successful story in the future. haslinda: heat waves in india have killed around 100 people this year. rain fall so far 33% normal

levels. let's go to our indian reporter. the government says no link between the heat waves and the deaths. >> that is right. we are seeing one of the worst heat waves in that part of the country. initially, one doctors said all of these deaths were linked to heat waves, but then it was swiftly denied officially. and it is easy to do because he wave victims -- heatwave victims , when these deaths happen you can link them to any other cause rather than the heatwave. people are actually questioning

the certain spike in the number of patients and in casualties in hospitals. hospitals are flooded in many parts of eastern india. when i spoke to many of them, several people actually said that this triggers memories of covid in them. rishaad: we have federal help on the way. how does this affect the monsoon? >> so far, the monsoon has been below normal. that is actually a problem. if it continues like that, it means it would create more pressure on nicole -- coal, which will translate into power supplies. that is bad news for heat waves.

if he waves persist, that worsens the problem. we are already seeing this in the eastern part of the country where we are seeing frequent blackouts and having no electricity and no respite from the heat. haslinda: are we seeing public outcry? it is likely to be a political issue for the election? >> there is certainly a public outcry. i do not know whether this is going to sustain until the next year when elections are supposed to happen. but there is certainly a public outcry. i have spoken to villages where there are people dying every single day and people are really angry. people are asking the government to provide data. if the government is denying

these deaths are not attributable to sheets waves, people are asking for the government to provide data. rishaad: thank you so much for joining us from new delhi. our energy reporter. we have hong kong heading for a lunch break in eight minutes. an indian market looking flat right now. this is bloomberg. ♪

>> this is a very complex church and the unified team is working around the clock in an effort to solve this complex problem. to date, these search efforts have not yielded results. haslinda: the u.s. coast guard on the rescue efforts for the missing titanic submersible vessel. five crew were on board and it has less than two days of oxygen remaining. rescuers around the scene 900 nautical miles east of cape cod. an underwater robot can reach as deep as 4000 meters, enough to reach the site of the sunken passenger ship.

rishaad: let's have a look at markets. taking a look at what has been going on with softbank. 2.2 percent up. i had a flat start essentially. masayoshi son declaring he will get back on the offensive in tech investing soon in the burgeoning field of artificial intelligence. looking at nio, five point 1% up. -- 5.1% up. perhaps also stimulate the economy there. we have the likes of byd on the way up. we also have some of these oil

companies in the frame too. a move to the downside there as we see recent weakness playing out. here is the asia-pacific index. don about half of 1%. -- down about half of 1%. currently it is currently indian markets in the green. the yuan having a 7.2 handle. this is bloomberg. ♪ different... because it's powered by the most potent source of energy there is ... you.

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