haidi: we are counting down to asia's market opens. the day after the boj in the day before the fed. a widely dovish mood from the bank of japan. bigger move for japanese assets. paul: japanese markets are closed, will have futures trading. it is all down to the fed and other central bank decisions. haidi: full steam ahead and japan equity rally. another market hoping for the same narrative is korea. a down day in trading for south

korean equities. down 1.1%, weakness in the previous session, tech and chip stocks showing vulnerability. watching the finance sector. institutions pledging to provide $313 billion to the end of the decade for climate related funds. we are watching the impact of the finance ministers saying their easing taxes for firms boosting shareholder returns. trying to cool the value gap.

paul: mixed picture, financials performing well, materials is one of the best-performing sectors and energy. brent crude opening soft. we heard from the carlyle group and they see will rising if the fed cuts in june. support in the aussie 10-year above 4% with the rba on hold and cash trade at 4.35%. treasury futures, no traded in japan. it got treasury futures looking

like this, moving iron as we count down to the fed decision. we will get a new dot plot and that will give us an idea of where we are heading. haidi: let's get a better idear of where the markets are heading. audrey joins us now. the bank of japan decision and the repricing of expectations, has that changed your view of japanese risk assets? >> not really. they strike a balanced tone. at the same time, another potential rate hike.

if you look back again, reaction has been muted. the end beat modestly after announcements. if we assume that the low hanging fruit with the rally has been taken up, what are the next opportunities you see in japan? corporate funds are ongoing and we are seeing flows and domestic perspective. longer term we have a constructive few on equities. emergence will allow corporate's to have more pricing power, revenue and profitability. something we are tracking

closely with the revision and japanese corporate's. we expect to support japanese equities. consolidation is possible. paul: the boj is stepping away from etf's. and holding 7% of japan's stock market. how does this get unwound? >> the boj have signaled the intend to cause. more importantly it is something the boj will have to manage in

terms of messaging. if they were to do that we should expect domestic and foreign investors picking up slack. ongoing growth recovering in japan will be positive and investors will have greater confidence. if you look at developed markets , fundamentals are improving. paul: do we break higher or

lower? >> for the time being because of the chinese authorities, the backdrop from an economic perspective will be stability and a bit more to entice investors over the last three years. in asia will be relative in

valuations. we see more interest coming back to asia. haidi: this valuable proposition , are you convinced this will take hold? >> we are exposed to momentum in ai so we will seek positive earnings revision and exposure to tech in asian markets. haidi: audrey goh.

let's take a look at movers in korea. defense stocks are in focus. kim jong-un supervised a test of a missile engine, a solid engine . in that reporting suggests that the reporting was successful. we're watching the moves on the oil front. the upside is significant. if the fed cuts interest rates according to jeff curry of goldman sachs. he wants to be long will in this

environment speaking to bloomberg. iron or has been a roller coaster ride. extending above a hundred dollars. for the minute we are seeing iron ore seeing some upside. fortescue up by almost 2%. paul: we will be talking about the bank of japan. first we will hear from the philippine president about growth goals and why he thinks the country is not ready for a rate cut. ♪

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♪ haidi: ferdinand marcos, jr. is not seeking confrontation with china as mattila works harder -- manila works harder to

establish the borders. haslinda joins us. >> the south china sea is one of the biggest challenges for the philippines. increasing tensions from china, the aggressive nature we have seen. chinese ships have rammed into philippine ships causing damage and injuries. that is the reason that it had to respond. it is about defending sovereignty, not provoking china. he wants relations to go back to an even keel, he does not want to poke the bear. he wants temperatures dialed down. he is keeping communications open with china to do that, he wants a peaceful way of dealing with the situation.

i asked what it would take to get the u.s. involved encountering countering pressure from china needs said an extensional threat, so a lot. the bar is high for the philippines to get the u.s. involved and he said you cannot turn to big brother for help, so there you go. he does not want to get the u.s. involved. paul: in terms of domestic policy, the economy is galloping. looks like they will hit the growth rate target with the highest interest rates in the region. haslinda: great news. this is one of the strongest growing economies in asia and expected to continue. talk about seven and half

percent growth for the year, that is the higher end of the target. between six and a half and set half percent. lots of investment is coming in, a lot of growth drivers. listen to what he had to say. >> much of the policies we've taken on our to spur growth, that is the most important part. only growth will pull us out of the more assets left after the pandemic. debt ratios, unemployment, inflation, growth seems to be the key. it is sustainable if we defend the things we are doing.

if we are agile in responding to shocks that come from the outside to put it that way, shocks we cannot control or have little influence over. that will be the key. >> can you get to 8% in the six years you are in office? >> sure. why not? we always plan for the ideal, not a mediocre result. we plan for a good result and we have to adjust along the way as we -- as we continue to transform the economy. i think it is doable. >> several banks are in focus.

in the philippines banks are at 17 year highs. how much room is there to cut rates? >> inflation is our biggest problem. when you separate core inflation , core inflation, we are doing well. shocks keep coming in. >> not the time to cut rates because inflation is sticky? >> we look at it almost every week to see if it is time to bring down the rate. >> the peso at a three-month high. are you comfortable? >> it is an indication of the strength of the economy. our overseas workers, the

dollar's worth a little less than normal. but i see it as affirmation that the economy has grown stronger. it is one of those obvious tests. the dollar is a relative measure. it has not depreciated, so if the value of the peso is increasing, that is a good indication the economy has gained strength. haidi: optimism in the economy. part of the growth drivers could be the transition. the sovereign fund has been getting investments for green energy into the country, projects which could span years and drive growth.

paul: thank you very much. the philippines also right in the thick of it when it comes to disputes in the south china sea. something that will come up when penny wong and the chinese foreign minister meet today to discuss. this is the sixth time they have met. i'm looking at the translated statement. very positive for the increasing trust, dispelling doubts. issues remain. the south china sea problem has not gone anywhere. still plenty of thorny issues. haidi: the last remaining tariffs on australian goods, wine will be one of them. and after the trade minister wraps up, he will not be partaking. there will be a meeting with

paul keating to the buyer of the current government. paul keating has been critical of the way the albanese government approach beijing, questioning decisions and where the best interest for australia should apply. paul. it will be an interesting meeting. we await the rhetoric coming out of that. something were looking at on the terminal, japanese yen weakening. 151.25, so the yen falling to its lowest level on future policy bets. normalization of rates came as no so prize. plenty more to come on daybreak asia. this is bloomberg.

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♪ haidi: bank of america's brian moynihan says it will take time to work issues with real estate loan. he told us how the sector is in a slow burn. >> the industry has good liquidity. people short of liquidity in commercial real estate is a slow burn, a classic burn. there will be difficulties, but the attitude that these assets have to move is not how the banking system works.

you figure out what the end state will provide, you refinance. the top 30 banks go through a stress test which says if you are underwriting and audit way, you have to put up the capital. capital requirements reflect underwriting. in a scenario where commercial real estate drops instantaneously, there is an effect on the industry which is slowing down capital provision. it's not a bad thing. banks might fail, thousands of banks have failed. is this model change.

the quality of the system is strong. paul: that was bank of america ceo brian moynihan speaking with bloomberg. blackstone responded to concerns by shortselling. blackstone increase liquidity to record levels and reduced leverage while maintaining strong earnings. they reveal the short position in the trust and property market woes have gotten worse. >> we are more bearish than we were when we announced the short in december. initially we were only focused on office, but a lot of multi family real estate is troubled. paul: here are the latest corporate stories. maritime says saudi arabia is

leading a push into ai and considering a fund of $40 billion, making it among the biggest players. representatives of the fund have discussed a potential partnership with jason horowitz and others. chevy wants it's a new car to become one of the best selling models. the company is going to begin sales next week. xiami's move will test it against a price war. haidi: shares in europe, a holiday themed session. japan is off. we've seen european futures softer as we get into the start of trading. the previous session snapped the

losing streak. not a great deal with the fed, bets compiling when it comes to the pound rallying to the highest since 2007. this is the third consecutive week of that positioning according to data for the pound. we could see a risk in pullback if cuts are flagged by the boe. dax futures looking flat. watching key energy stocks as we see a climb in oil and flattering commentary on commodities from jeff curry. thi

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♪ >> at today's meeting, we took a

thorough look at the recent economic, financial and price developments particularly in wages and prices. the board members determined that recent data and information from hearings including the current results of spring wage negotiations have confirmed the strengthening of the virtuous cycle tweens wages and prices. therefore the bank has decided to review the large scale monetarily easing program this time. >> that was the governor after raising interest rates for the first time for the first time since 2007 and perhaps after all that anticipation a well-deserved public holiday when it comes to trading in tokyo. we're continuing to watch the moves to we see in the yen. 1.4%. as we continue to see just extended moves in the yen falling to the lowest since 2008

against the euro after we taussig untiling that the path is being seen as gradual tightening anticipation going into the end of the year. so that really solved what was the reversal of the fees for the currency take out the kospi, .9 of 1%. reversing some of the weak thanks we saw earlier. we had a number of announcements from the government including the announcement that it would seize shareholders returns. following up on that valuations an boost in local equity market so the government set to reduce it. we've seen some broad based reactions to that. also watching the latest when it comes to the allocations being announced today as well as some pledges when it comes to green stocks.

the finance sector promising $313 billion in green fundingful we're seeing a little bit of outside when it comes to trading in sydney. but paul was still very friendly-focused on how the yen potentially reacts. we would need to get a super doveish note out of the fed to see any kind of reversal. >> slumped to the lowest levels in 2024 so far after the bank of japan and at the world's last negative interest rate regime. focus and on the gap that remains between japanese equities to continue their advance. of course, they're not advancing today. it's a holiday let's talk to ed rodgers at rogers investment adviser. when you look at the yen movements, does that suggest that the market thinks it's one and done from the b. -- d.o.j.

and if so when and how much? >> yes. clearly the market is telling us what they think with the -- with the yen move. a little bit surprising frankly. i think this is also very much a reflection of what people are enter present breathing as far as the fed move -- interpreting as far as the fed move at the end of this week. >> in terms of japan. the b.o.j. seems very confident in japan's recovery that the fight against inflation is going well. how confident are you feeling about those things? >> look, i think this is a very positive development for japan. it is certainly a sign that the b.o.j. and many other actors feel that we're getting a return to normalcy, if you will. so less need for the hand to government by way of the b.o.j. be providing free capital.

and it's a very positive sign. this is a very, very good sign i think overall for the japanese equities market and the japanese economy in general. that they're comfortable to make this move. >> so you've got really that standout performance when it comes to wage negotiations. but if you continue to have such a weak local currency does that not negate some of the effect when it comes to household confidence and domestic valuations? >> good question. i think we're all a little bit surprised at the dollar yen move at 1.51. so yes, i do agree with your comments. but i'll stand by what i started off saying this is a positive as far as where japan is. look, they've started the move. they now have much more flexibility in a way to -- to sort of put -- you know, put the foot on the pedal on the brakes or the accelerator.

which one are you going do? it's a good thing that the market gets to wonder about that a little bit and wonder how the japanese interest rates policies -- will there be a little bit more volatility and i think that's a good thing, frankly and we'll play out over time and really the situation in the united states and china to runs will the yen and the japanese currency is going. >> and that factor is not just economic. we're talking about the geo political realities of the region. and that may very well change after november this year. >> in the short-term what you would say is if you're getting back to a true cost of capital model for the japanese economy, you'll have small and medium sized enterprise and some large companies and wee we'll see how they perform but in a very, very broad sense, the overall

japanese economy, chi it's chinese are the largest trading partner since 2004 but the reality is we live in a tough neighborhood here. north korea, china. the geo political economy indicate that the japanese economy will respond differently than they did previous le when china has ups an downs and when the united states has ups and downs with china. >> it's still a lot of work for the bank of japan. there's the enormous balance sheets. there's the question of what it does with the great big pile of e.t.f.'s. how do you unwind both of these positions without destabilizing markets? >> another fantastic question that we've all been pondering for the last 10 years. my view is bonds are a little bit easier to deal with. you can hold bonds until they

expire and so be it. unwinding the e.t.f. positions which have been -- which are substantial and have provide significant market support to japanese equities that's a little bit more challenging. at the end of the day they're going to find some form of government giveaway. maybe this becomes part of your social welfare program or your pension and have a distribution in kind at some point to all of japanese citizens and say you're all part of the japanese economy and you're all going to benefit. so that would be more than likely the least disruptive way to solve the problem. >> there's an interesting question about the japanese citizens respond to this as well because there's a huge pull of savings and a very, very weak yen. will mrs. watanabe be tempted to keep some of that money at home? >> which is what she's been doing for the last 10 years.

the account programs have not done what the government has wanted them to do. it's not provided similar to the 401k vehicle where is you provide tax-free friction less trading and all of a sudden people buy moreer quities. it hasn't happened in japan. it's 63 cents of every dollar deposited remains in cash. they're going to continue to experiment, i believe to find ways to hope mrs. watanabe get more market exposure. they have not found the right cocktail or the party juice as it were to store make that an appealing drink for mrs. watt me that nah be. not yet, anyway. [laughter] >> ed rodgers, always great to have you with us. coming up, we'll be talking about the biggs opportunities for investors in china's credit markets as is interest head of finance shares, the insights

next. this is bloomberg.

>> jeff currie speaking exclusively with bloomberg on the commodity rally if we take a look at some of those commodities we have the brent at 19 a barrel. jeff currie says he says oil rising to 70 to 90 a barrel if the fed cuts rates in june. continuing its slide that we've seen so far in 2024. just above $105 at the moment. no with standing that, we're seeing some of australia's iron

ore names. haidi: some of the winners there in what has been a pretty volatile session. take a look at what's been performing quite well in the korea session. 4% when it comes to the k.b. financial. we've had a flurry of announcements to what could contribute to this belly up program. and they're telling investors and bankers that the tax burden for companies will be eased. this is part of the broader pledge to boost the local stock market to reduce the korea discount is being a key priority for financial and market regulations in south korea. the government set to reduce it for a portion of shareholder returns according to the finance ministry. a lot of these incentives are coming through the corporate

value up program. we've seep some. that -- some of that in seoul today. with china's debt crisis has entered a new stage as tensions increasing new developers caught battles over debt restructure plans and the unthinkable consequence of liquidation orders. let's get some insight on what happens next. bloomberg is hosting a china credit forum. anabel is standing by with our guest who is a speaker at the event. annabelle: really excited for this event that will be kicking off in 15 minutes. you can stay glued to your screen. let's bring in one of those speakers. that's john corrin. you're going to be speaking about the future landscape for what's happening in china's credit market. you know a lot about this market so let's just kick it off with the

present day. what are we seeing? and where are we at in the credit cycle? >> it's been a relatively quiet couple of years in china. mostly because the interest rates in u.s. dollars have been much higher than the interest rates. as a result of that, their focus has been recently on rememby loans. that will change as the rates come down this year. one of the developments that i think we're going to see a lot of is the off-shore rememby market. that's going to take off later on the year. and a lot of hong kong borrowing will take to that market. >> i want to get into the details of that one. who are the sort of issuers and who will take up those loans? >> at the moment there's about $240 billion of issue wants in the loan market in china, which just under $40 billion of that

was off-shore. most of it was in u.s. dollars. 65% of that and about another 25% in hong kong dollars. the off-shore market the c.n.h. market as we call it represented about 1 1/2%. it has a lot of room to grow. we've seen an interesting deal come to the market in respect for a tissue manufacturing called vindor here in hong kong. that's a $15 billion rememby attached to it. the first time we've seen this financial use for off-shore companies. this is a take private by an indonesian company. very interesting to see people with no direct connection borrowing off-shore. >> i think there's certain yeso political overhangs in the hong kong market. would that be something that

would sort of dent the appeal perhaps to? or what are you expecting? >> it's a bit of a mixed message i think the loan market in china is coming off a fairly low base. of course, geo political developments will be influenced. that's going to rebound bit. a lot of borrowers will delay accessing the market because they feel that interest rates will come down in the third and fourth quarter. business confidence is still a little bit shaky. and i think many people feel that it's a good idea to defer kap ex as much as they can. if you look specifically at china, i think the market was about 20% down last year which was coming from extremely low base. and this year it's been extremely quiet in the first couple of months. >> that points to credit demand because we haven't seen -- it's

been so weak among corporates and households alike. so when are you expecting that credit exfans to pick up? >> i think it will be the third and fourth quarter. perhaps fourth quarter more likely you because it takes while for the interest rates reductions whenever they happen to flow through. but we are seeing some bright spots. there's a lot more activity from chinese borrowers in south and southeast asia. we're seeing many chinese borrowers very active in renewables and wind and solar. we're seeing a lot of activity from the electric vehicle manufactures. so those are definitely bright spots in the market. >> yeah, that's -- the role here really thattors can play. -- that creditors can play, how much is that going to be on the new growth drives in china? >> i think pretty much every investor wants to get a share of the sustainable finance business. that's a great opportunity for

people. at the moment, i think it's only about 10% of chinese loans are either sustainable or green. that clearly has a huge way to grow. there's a massive opportunity there. and every investor is looking for those opportunities, that's going to be something that will only grow and continue to grow very strongly over the next couple of years. >> so much of china's credit crisis is down to the weos and the property sector. there's more than 20 companies that have received winding up petitions in hong kong. does that tell you that we're entering a new phase in the property cycle? >> , yeah i think mostly the the -- if you take away the property sector. it's reasonably benign. there haven't been too many defaults are borrowers have accessed the public market off-shore. and a lot of that real estate has already sort of filtered

through the system. banks have provide for those loans where borrowers have got into difficulty. we're going into perhaps new phase. many of the investors were not exposed in the loan market to those loans. i mean, there's been a lot of causing for a number of years from many loan investors. so sometimes i think in the loan market some of those real estate issues may be overexaggerated a little bit. but is it something that it does impact on the confidence of investors. >> that was john corrine. really look forward to your panel because paul, as we said it is first bloomberg china credit forum taking place in hong kong and the fits one that we will be broadcasting live on bloomberg detelevision. >> thank you very much, belle. we're going to be live in just a few minutes at tin augural credit forum. is it hosted by bloomberg news. the focus is going to be the future of chinese -- of china's

$13 trillion credit market. we've got more on "daybreak asia." this is bloomberg.

♪ >> hong kong's fast track domestic security is prompting new warnings that it could muzzle open discussion in the global finance hub.

for more, let's bring in our economy correspondent rebecca. the broader concern is not to do with this one article. but the broad sort of direction of travel that we've seen. rebecca: yes, that's right. we've seen quite critical statements coming from the u.s. and the uk and the e.u. the empty u. is pointed particularly to the harsher penalties but it's partial retroactive ability. but the u.s. points to this sort of general potential that we could see fundamental freedoms eroded in the city too. and the uk has echoed similarly some of those worries. and as you say, though, comes part of a sort of broader criticism that the hong kong sort of openness, a free willy bastion of free speech and so on is shifting and changing underway. it is worth saying that some of

the lower business institutions like the hong kong chamber of commerce have come out saying this will ultimately help improve the business environment. >> ok. so rebecca, there have been criticisms on both sides as haidi mentioned. there's been criticism that the wording is vague. let's hear a little bit more about how it could improve things in hong kong? rebecca: this presents an opportunity and a challenge for john lee, the passing of this legislation which had to be required and mandated under the basic law after the handover and in fact, is actual actually sort of the last piece of major national security legislation that has to be passed after we saw the government move to crack down on those pro democracy

protests back in 2019. i think there is this desire among the business community and the foreign business community too in hong kong for the government no move beyond national security, to start focusing on hong kong's status in international, financial focused more on trying to boost the economy particularly as we face the so of ripple through effect of that slow down in china's economy too. i think this designed -- desire to move with the agenda when reuniens be seen how precise le -- precisely we see that happen. >> let's take a look at some of the stocks when markets open in hong kong and mainland china. the company declared the ambitions for the s.u.7 to become one of china's three

luxury models. a bumpy outlook despite better than expected quarterly earnings. haidi? haidi: we're taking a look at u.s. futures after pretty convincing gains. quite a lot of causing now. a lot of investors on the sidelines until we get the updated data from the feds. and the feds path forward. we are seeing ty futures optimistically up 1%. we are seeing the numbers from here in australia saying that they hope they will have a fair environment when it comes to firms. he'll be meeting with members of the business community going forward. this is bloomberg

[sfx: wind, rain and rolling thunder] nobody's born with grit. british announcer: rose is really struggling. it's something you build over time. american announcer: that's 21 missed cuts in a row. [car trunk slammed shut] for 88 years, morgan stanley has offered clients determination to create the future... crowd: stop it! ...only you can see. american announcer: rose, back in the winner's circle. [crowd cheers] [music out] her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we got him under a new plan. but then they unexpectedly unraveled their "price lock" guarantee. which has made him, a bit... unruly. you called yourself the "un-carrier". you sing about "price lock" on those commercials. "the price lock, the price lock..." so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

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