daybreak asia. were counting down to asia's major market opens. looking like a pretty good set up so far, data from japan has been interesting this morning and a drumbeat for the bank of japan, as the expectations continue. paul: it was a mixed bag, the backdrop to it all the stronger yen as well. >> the geopolitical risk keeps building and the focus will be back on the u.s. and the fed has given some comfort when it comes to investors this week. watching for some of the key themes coming out of president biden's address, a campaign state of the union in terms of being able to address the nation before the november election which is looking like a rerun

between him and donald trump. the nikkei to 25 about .5% higher than we've seen. and of rockets around the region really outperforming, including australia. some intra--- incremental gains, the dollar yen has been interesting on the's expectations from the bank of japan. for impact when it comes to the japan equity rally, it's been sort of a nonevent. we've seen any attempts turning short on japanese stocks becoming increasingly risky. shares of so-called low-quality companies have seen quite a lot of volatility on this reform program that has driven so much of the optimism toward equities.

watching on the back of that political risk aspect as well. looking at korea, seeing a lot of foreign buying interest. similar optimism that perhaps about your program can be successful and can elevate a deal with the korea discount in the same way we've seen it successfully done over the past few months in japan. a lot of chip stocks are in focus today. chips in focus as we continue to see this too and fro from beijing and washington president biden wanting to accelerate the curbs on advanced tech. paul: let's look at how we are doing in australia, information technology stocks doing pretty well, gains are broad-based for

almost every sector. financials doing well and the interior sector codified in the moment. not a huge amount of movement for the aussie 10 year, just a whisker above 4%. crude prices up as well, a segment of the keystone pipeline between canada and the u.s. partially shut helping to support the oil price there. also keep u.s. treasuries, two major central banks sent -- signaling interest rate cuts are on the way. policymakers getting close to having the confidence they need to start easing. >> we are waiting to become more confident that inflation is moving steadily to 2%. it will be appropriate to begin to dial back the level of restriction so we don't drive

the economy into a recession rather than normalizing policy as the economy gets back to normal. paul: a golden age for fixed income. joining us in the hong kong studio, jessica, we do have the 10-year yield moving a little bit higher. how do you allocate for bonds in 2020 four? jessica: thank you so much for having me on the show today. by the way, happy international women's day. you make a really good point. we believe 2024 is going to be a time for active investment across public and private markets. as we see asian investors look to allocate between what they see as market risk and challenging times, but also have a position for the recovery that we know is coming.

we think we are now entering a golden age for fixed income. we see asian investors cautiously start moving into fixed income in the form of high quality investment grade securities. from a global equity perspective we are seeing tailwinds for growth stocks and as investor confidence improves later this year we think clients will want to keep allocating to these sectors that give exposure to some of the structural growth stories like ai, global consumer goods and other innovations in the health care sector. the biggest thing from an asset allocation point of view from asian investors is the big move to private markets and alternatives. i'm happy to talk about that. paul: i want to get your views

on japanese government bonds, we've got the boj looking at ending negative rates and the obvious following question from that is do they look to exit the bond market. jessica: it's an interesting point. we do see clients looking at japan, there is a lot of interest in that space but we've seen there is more of a move across the assets and across fixed income. we are advocating for a much more diversified portfolio. haidi: i want to get your views on private alternatives and private investing options you see is gaining traction at the moment. jessica: this is a huge area for

high net worth investors. a lot of research suggests it's a $1.5 trillion opportunity for investors who are under allocated to all terms and private markets. the global a um is something like $285 trillion. they are only allocated about 16% to alternative investments. when i speak to some of the big alternative gatekeepers of the product banks here in asia, they all reinforce that, that clients here may be allocated low single digits alternatives and private markets but they are really looking to grow that and the cios and house use of some of the banks are really suggesting 15%-30% allocations depending on the risk tolerance of the client. so we are seeing a move in that

direction. some interesting ideas in the space is the digital infrastructure theme. a lot of interest from clients to allocate to something different like global data centers, for instance. haidi: how dramatic do you expect the real estate market recovery our continued growth to be this year, given there are expectations for the rate environment to be pretty drastically different by the time we get to the end of the year. jessica: from real estate perspective, is a structural case to have real estate allocations in your portfolio. this is what we hear from investors in asia. asia pacific real estate, given where we are in the interest rate cycle and the inflation ease, asia-pacific bill estate has had a much better recovery and we see that after 2022 there has been a great reset and this

may be the year that real estate comes back. it's also about different structural trends we see in real estate, specifically on the digitalization in terms of data centers. the idea of ai, digitalization is causing a huge amount of data creation and there's not enough storage for this data. this is simply a very interesting supply and demand and balance pieces of a scale and geographical breath and magnitude that are portfolio managers have never seen before. a very exciting area and it's why we are trying to think about more investor choices and options for clients in this space. paul: i want to know how you

approached china particularly around that fixed income space. yields have been slipping, is this a trend that you expect to continue? jessica: china is an interesting era. we've had a fascinating week this week with china. as we speak to clients about china, there's no doubt this is still a very important market. there is the near term, let's wait and see with china that we hear from clients. at the end of the day, china is the home market here and people are thinking more longer-term of how they allocate to china. we keep hearing when is the right time to come back and really looking at the market very carefully for china. paul: jessica jones, thanks so much for joining us. still, china's foreign minister blasting the u.s. for what

because a bewildering level of trade curves. we'll get analysis on the superpower struggle and china's latest price data, a 17th straight decline. we will have a preview, next. this is bloomberg. ♪ thanks to avalara, we can calculate

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haidi: china is releasing february inflation data on saturday. bloomberg economics thinking cpi will probably rise out of inflation for the first time in five months but may not signal a fundamental recovery in demand. there were a lot of concerns about her deflationary downward spiral and confidence around these data points taking on special significance given that ambitious growth target. what are the expectations here? >> i think the issue with this february data is that during the extended lunar new year holiday, the bloomberg economics argument there is that a lot of it will be elevated by the fact that

people are spending more in the holiday, we saw that with some of the earlier data, it probably contributed to an uptick in food prices so that's why you might see the cpi gauge creep out of negative territory for the first time in five months. even in doing that, they sang somewhere around 0.1%, you've got a broader economic consensus of 0.3%. these are still close to the deflationary line so i think it is safe to say that the inflationary pressures are continuing in china and we are not seeing much in the way of what it would mean to chart a meaningful turnaround for that. we need to see more in terms of erasing the concerns around deflation right now. paul: in terms of a policy response, do we anticipate that,

or at what point do we start staring down japan cell inflation? >> that's been in debate quite a bit last year, whether china is headed for a prolonged period of stagnation in the way japan has. we are still in the middle of the national people's congress, a political gathering in china. so far a lot of analysts and investors have not been incredibly -- they've been underwhelmed by a lot of the policies they have seen so far, a lot of things that have felt a bit vague. there has not been a lot in the way of incredibly specific targeted measures that have impacted consumption. we've got the gdp target of around 5%, that's pretty ambitious, all things considered. the base of comparison for 2023 is not as favorable as it was last year. a lot of analysts are still looking for additional fiscal

stimulus or other consumption like measures to get things going again and restoring confidence in this economy. haidi: were also looking at the idea of fiscal restraint when it comes to heavily indebted provinces or regions. we ran a story saying some of the local governments are trying to pay down debt or finding new revenue streams. what are these like at the local level? they have been a key part of generating numbers toward that gdp target. >> it is an interesting trends. a lot of local governments are looking at alternative revenue streams because a key revenue stream they relied on for many years is the idea of making money by selling land. it has struggled because of the property crisis that has impacted their ability to do that.

instead they're looking at selling some assets to pay down their debts. some promises look at selling, while that goes part of the way toward making up for some of the hole that has been left by the evaporation of these other revenue streams, it does not completely make up for it. the income that local governments were getting by selling land was really massive so there's probably more they need to do. that is part of that piecemeal effort to turn -- turn things around. we are also seeing the central government take a larger role in selling debt to alleviate some of those local debt burdens. we will see where that goes. paul: a key player in china's

energy transition says electric vehicles will replace 20 million tons of gasoline and diesel consumption this year. we were told exclusively how count -- china can balance its economic goals. >> 5% or more is a do no more condition in china. from the perspective of oil consumption, in the last year our country's oil consumption increased by 11%. that is after recovery from 2019

according to our research our prediction is about 1% increase because of the ev and the economy. >> that number, 1% growth, basically from when i look at your research, that would be the lowest increase from your research in at least a decade. is that a concern or is that just a reflection of that energy transition? does it represent that the economy does not have demand, or is it more because there is an energy transition, at least in the new energy vehicles? >> the transition to -- from fossil fuel, that is a huge

number. >> is this going to be the long-term trend, very low single-digit oil demand growth? >> of course we have entered the era of low growth rates due to crude oil. because of the transportation usage, i'm sure it will be reproduced by electrical vehicles and other areas. >> can china have a shale revolution? >> is the coalbed methane to deep, are there structural problems that cannot happen? what do you think? >> of course there is a chance

but it is a very small one. we still have a dream of shale revolution. it symbolizes the technology and innovation, the business model, actually do -- we do our utmost for research and expiration for this yard. we call it the new shell revolution in china. paul: speaking exclusively to bloomberg stephen engle in beijing. plenty more to come on "daybreak: asia." this is bloomberg. ♪

paul: president bynum is expected to make his 2024 reelection pitch in just a few hours during his state of the union speech. it will offer clues to his priorities if he wins a second term in november. jodi schneider's with us now. this one will be particularly important for president biden, the last one before the 2024 general election. what are we expecting to hear today? >> we are expecting to hear more than a typical state of the union speech which is often a list of priorities and themes the president wants to accomplish, looking back on some achievements. tonight we expect to hear from president biden about why he should get another four years in this job after november. he won't do that as a campaign

speech per se, but it will have any elements of that. he will be casting himself as somebody who americans can trust , trying to really deflect the question of his age at 81, he is the oldest president and certainly 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 and excerpts we've seen of the speech he casts himself as someone who cares about fairness and decency and the american dream, saying other seem to want to be focus more on retribution and recriminations. he is clearly pointing to donald trump at that. the other thing he has to do tonight is to seem vigorous, to basically say to people, you can trust me to do this job even though i am the oldest sitting president, that there won't be

any flubs, that there is not any mental frailty at all. american polls increasingly say they are concerned about his age and they are concerned about donald trump and that he could be a danger to democratic institutions. haidi: he will be talking about some of his achievements, do we expect any big announcements? >> the one thing we know about already, people familiar have told us this, that he will talk about -- she will give support for israel, what he will also say that the u.s. is looking to set up essentially a port at the seaport at gaza to get emergency aid in to try to stem that growing humanitarian crisis where millions of people live and are having trouble getting food, water, and medicine.

this spirit essentially would be able to do that. -- this pier would be able to do that. he will talk about that as a way to quell criticism about the u.s. supporting the continued war even as that humanitarian crisis in gaza grows. so he will try to do that in the speech. he will talk about changing the tax code to tax corporations higher. haidi: we will bring that full address from president biden a little bit later on. our special coverage begins at 12:30

paul: let's look at how we are

tracking markets across the asia-pacific. looks like a positive day to close out the week. the nikkei and positive territory, reclaiming some of the losses we saw on thursday. australia performing pretty well , most sectors in the green. we are keeping an eye on industrial and energy stocks today, a couple of stories making news at the moment. chinese cranes posing a security risk, saying they are collecting data and information but doing something about it could be a problem. elsewhere reporting that china's oil demand reaching a lowering growth phase. so china's oil demand seen

entering a low growth phase. still seeing decent gains for industrial and energy stocks. haidi: the china foreign minister has blasted the u.s. for a bewildering measure of trade curbs. the response from beijing unsurprising, pretty much in line with what we see in terms of reaction to these announcements from the u.s.. how elevated our political risks between the two sides in this election year, given that throughout the biden presidency, the tone has been pretty well maintained as stable. >> we are at an interesting moment. as they are trying to not

trigger a major crisis that could jeopardize the election later this year. since the san francisco summit last november, at the same time we are also hearing some harsh rhetoric coming from senior officials on both sides. yesterday was one of those examples. haidi: it's interesting because we know china is battling its own domestic micro challenges. how much bandwidth does xi have when it comes to dealing with geopolitical ambitions that china has? we know that defense spending has gone up again and they are putting more r&d into high tech. is this as much a priority as they try to get some of the domestic and economic challenges under control? >> it's clear he wants to keep

those gains going. the growth rate last year, they were expecting so much more from 2020 three and simply did not deliver. in terms of priority has focused on the corruption issue and the reshuffling we've seen in the second half of 2023, which means that poking around in this foreign relations is probably not very high on the priority list for the chinese government this year. paul: in terms of some of the rhetoric we've been hearing from the foreign minister, because u.s. trade curbs bewildering levels of unfathomable absurdity. are these sort of statements

necessarily correct, and he also says the u.s. will eventually harden some of these policies. >> whether it is correct or true , in beijing they certainly believe it is true. from the u.s. perspective, there is a need to maintain a certain edge over china in terms of technology investment. the policy is not without debate. basically saying the policy is helping china -- you can highlight china, you come back at chips forever, a corsair going to develop their own technology and you're not going

to be able to choke him forever. so you are facilitating it. both arguments have their own merits. it depends on which one you prioritize. paul: in terms of not being able to choke them forever, we are staring down the barrel of a potential second trump presidency at the end of the year. how would that change the picture? >> people are expecting a lot of volatility. eventually he will want to go to xi on trade, but before that happens, president trump will try to exercise maximum pressure on china. we will see china trying to retaliate, so a lot of volatility is expected.

haidi: if we see a retreat of u.s. support for ukraine, do you think that emboldens beijing on how it deals with taiwan? >> i think what we are seeing today is an elevation of the ukraine more in the fact that ukraine is not going to get eastern ukraine back. russia is going to get away with it. what would be the consequences, yes, it will be a lot of financial trade costs, but is china going to get away with it in the end? it is taking lesson from the ukraine playbook, yes, it will. haidi: were not expecting any

personnel announcements this week. do you think he will stay in place and when to expect a little more transparency on what the foreign ministry might look like on a permanent basis. >> there is so many rumors and speculation right now. we will find out when they are ready to tell us. he will be 75 by the time the current term of the chinese government completes, which means he will have to retire. it also means the chinese government has to start cultivating his successor. there is the director of the foreign affairs commission, the more senior figure.

those two positions have basically become virtual. the chinese in the past have established a pattern that there is a senior person and a junior person. it is not necessarily a sustainable thing, and they are not. haidi: he is a steady hand. a senior fellow, great to have you with us. let's take a quick look at japanese bonds. building expectations on normalization of policy for bank of japan. we are also seeing the yen maintained near its one month high against the dollar.

building hopes that the bank of japan will end what is the world's last subzero interest rate as early as this month. we are awaiting those bond purchase programs being in particular focus as well. the rally in the yen is an interesting one. given how much is been trading at the moment, the confirmation is coming that the momentum has really shifted, potentially will clear the way for it to rally, and a lot of it depends on what happens with the u.s. dollar. we have a lot of u.s. political news to get through. paul: the u.s. congress moving closer to forcing tiktok's parent company bytedance to sell the platform over national security concerns.

the company is calling on u.s. users to protest directly to the makers. and a temporary ports on the gaza coast to ramp up the delivery of aid and ease to humanitarian crisis in the territory. senior administration officials say the president will announce the steps in his state of the union address which is happening in about an hour now. sweden has officially become the 32nd member of nato after completing the -- sweden's addition comes 21 months after bid for membership following russia's invasion of ukraine. it was met with objections from both turkey and hungary.

she needs it backing a major european nations and the u.s. to ensure the success of any potential bid. sources say it would come with the understanding she has the support of france and germany. we have plenty more to come on "daybreak: asia." this is bloomberg. ♪ a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside - and the other goals along the way. wealth plan can help get you there. ♪ j.p. morgan wealth management.

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paul: more businesses are using generative at products to help screen and rank candidates for jobs. the best-known generative ai tool, chatgtp systematically produces biases based on names. can you tell us what the inspiration for the story was? >> definitely. ever since the advent of chatgtp in late 2022, there has been so much excitement for generative ai, which is artificial intelligence software that can create new text, images, or even video based on what you ask for. there has also been a long-held and significant concern for these tools bias. at the same time there has been a long tradition for automated

screening systems to help hiring managers find job candidates. we wanted to ask the question, is there risk for racial bias if generative ai reused in hiring or recruiting for jobs? haidi: how did you conduct this analysis? >> what we did was conduct an experiment. we came up with a list of demographically distinct names using public records. we ask them to rank candidates for a few different job openings. each time we asked gpt who the best candidate was for the job using the demographically distinct names, names associated with being either male or female and either black, white, asian or hispanic. each candidate had an equal

chance of being ranked as a top candidate and we did this 1000 times for each job that we tested for. and we came up with some very interesting findings that gpt did indeed display racial bias against candidates based on their names. paul: so the category of news you can use, what were some of your findings in terms of names to avoid? >> we found that resumes with names typically associated with black americans were rarely ranked as a top candidate for -- for front national -- financial analysts and software engineering goals. and for hr and retail positions which have historically been

dominated by women. those findings show that gpt stereotypes and it actually fails adverse impact benchmarks for several groups across the test. that means if the company made hiring decisions based solely on gpt's rankings, u.s. federal agencies would find the automated system is biased against protected groups and treated them unfairly. so for me the big takeaway here is that using generative ai part recruiting and hiring poses a serious risk of automated discrimination on that skill and companies should think twice before using ai in hiring. haidi: a reporter in new york with that big take. more diversity across global financial hubs in the spotlight this international women's day.

the city stocky change aiming to end all-male boards this year. i wonder if this is a case of not enough eligible candidates, or is there cultural resistance at some of these companies? >> we are seeing nearly 500 listed firms in hong kong are not yet compliant with this rule of removing single gender boards by the end of this year. now we have only about nine months to the deadline and when we approach the ongoing change, they couldn't give us an answer on what happens or companies if they just don't do it. now it's what is the incentive for them to meet the deadline. we found out the top 10 companies having all-male boards, nine of them are chinese

state owned companies or affiliated companies. with that, we are seeing perhaps a power struggle between these big companies, are they willing to take a chance and make a change, or with a stay with these boards because the company's diversity are already biased towards men. paul: have we seen any improvements over the last few years? >> actually, if we are looking at improvement, we definitely need to acknowledge that. back in 2020, the number of female directors on male boards were still like 32%. now it has fallen to below 20%. however, that is still a big gap , were talking about comparing global financial hubs in london and new york.

so it's not a big ask we talked to analyst looking at more diversity in corporate governance, they're really trying to see whether the exchange is willing to give a definite answer by the end of this year. paul: more ahead on "daybreak: asia." this is bloomberg. ♪ malless... a... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall.

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haidi: hong kong has published a draft of his new security article, the proposal is set to be introduced to the legislative council in the next couple of hours. here is more from hong kong. what do we know about this draft and its significance? >> right now we are still going through the draft, it was just published very shortly ago. we want to be careful as we continue to go through the legislation but it ultimately lays out in the draft proposal, it will go before the legislature at 11:00 a.m. hong kong time, so just a couple of hours from now. so far it looks like the security law draft includes the potential for anything to be

defended in the public interest. that being said, there is additional details talking about how violations of article 23 proposal could carry a maximum penalty potentially life in prison, depending on the severity of the offense. to back up a little bit, a reminder to our viewers, this is a fast-track piece of legislation that was exposed to about a months worth of public consultation. the government of hong kong is required under its constitution that it has to create some kind of national security law. especially over the last few years, with the introduced -- introduction of that national security law couple of years ago, there are concerns about what it means for free speech, so there's a lot we need to unpack here but we will have

more details within the next couple of hours as it develops today. paul: article 23 does relate to free speech. what has the public reaction been and what are the concerns about this? >> at this point, the public consultation period lasted about a month. there are some initial concerns that it might not -- might not have been eight long enough period. it seems like the government got quite a lot of public opinion and published some details earlier this week, exploring different ideas the public had for how it could go down and saying in a briefing a bit about some in the public were concerned about whether they needed it. the city feels a need to sort of expand and protect interest of national security.

we've been talking to some people who say the big concern is whether there would be that chilling effect, the idea that it's a global financial center within asia that attracts a lot of international businesses. with that beijing law a couple of years ago, there is that concern about what the implications of this ultimately are for free speech in the city. so we just want to take some time to go through exactly what this all is telling us and then we will see later today what the ultimate implications are. haidi: our china economy editor there with the latest. looking at how markets are trading at the moment, when it comes to the future session. futures looking flat, key jobs numbers coming in the friday session and president biden

state of the union address in the next hour or so. the asian stock rally playing very nicely in this session, heading for a bit of upside when it comes to trading in taiwan. positive for china futures, .4% higher. looking to follow along with the equity rally gaining across australia as well as futures in hong kong the king positive there as well. the broader msci asia-pacific is up by just about .5%. that's about it for "daybreak: asia." we look ahead to the start of trading in hong kong, stay with us. china show is next. this is bloomberg. ♪