Speaker 1: This is Bloomberg Daybreak Asia for this Monday, March sixth
Speaker 1: in Hong Kong, Sunday March fifth in New York and
Speaker 1: coming up today. China sets a modest GDP growth target
Speaker 1: and leadership will target disorderly expansion in the property sector.
Speaker 1: Premiere Leka Sean calls for a whole nation strategy to
Speaker 1: edge out America in basic science and advanced technology and
Speaker 1: soft banks. Chip Unit arm Limited is reportedly seeking to
Speaker 1: raise at least eight billion dollars in a US highpo.
Speaker 1: China will boost defense budget by over seven percent. Also
Speaker 1: says reunification of Taiwan is still a priority. EU Commission
Speaker 1: president calls for a separate entity to investigate Russia war crimes.
Speaker 1: I'm at Baxter with Global News. That's all straight Ahead
Speaker 1: on Bloomberg Daybreak Asia, the business news you need to
Speaker 1: start your day in just one fifteen minute podcast available
Speaker 1: on Apple, Spotify, the Bloomberg Business App and everywhere you
Speaker 1: get podcasts. Good morning, I'm Brian Curtis and I'm Dog Prisoner.
Speaker 1: Here are the stories we're following today. China has set
Speaker 1: a modest economic growth target of around five percent for
Speaker 1: the year. Economists had expected a more ambitious target above
Speaker 1: five percent following a rebound in consumer and business spending
Speaker 1: of late. Premierly Kat Chang said that boosting domestic demand
Speaker 1: would be the government's top priority. He also talked about
Speaker 1: creating up to twelve million new urban jobs. China's new
Speaker 1: national budget also supports fiscal support to be somewhat restrained.
Speaker 1: The budget deficit goal was set at three percent of
Speaker 1: GDP for the year. That's up from last year's two
Speaker 1: point eight percent, and the higher target will mean more spending,
Speaker 1: but it is below some estimates. In the meantime, the
Speaker 1: CPI target was set around three percent for twenty twenty three,
Speaker 1: the same as last year, and Premierly said that inflation
Speaker 1: will remain a challenge. Didn't we have also a phase
Speaker 1: of global search of inflation. We strive to ensure market
Speaker 1: supply and staple prices, particularly those of food and energy,
Speaker 1: and last year global inflation rocket to a rapport high,
Speaker 1: and it's not easy for us to maintain a super
Speaker 1: price in terms of our CPI. On China's property market,
Speaker 1: Lee hinted that Beijing would continue to support housing while
Speaker 1: also regulating the sector more tightly. He said the Chinese
Speaker 1: government wants to prevent an unregulated expansion of the market.
Speaker 1: Well more news coming out of the NPC China is
Speaker 1: pledging massive resources in order to achieve self reliance in technology.
Speaker 1: More from Bloomberg's Evan Men. Chinese Premier Leka Chang said
Speaker 1: once again, it's a whole nation strategy. He spoke at
Speaker 1: the star of the Annual National People's Congress on Sunday.
Speaker 1: The strategy aims to edge out the US on basic
Speaker 1: scientific research and technologies. Those sectors range from advanced intelligence
Speaker 1: to space. His remarks come days after the Biden administration
Speaker 1: blacklisted more Chinese companies in the chip and genome industries. Now,
Speaker 1: the MPC pledge shows a fierce determination by China to
Speaker 1: fight back, an to get the upper hand and the
Speaker 1: tech war with United States in Hong Kong. I'm Ivan
Speaker 1: Mahn Bloomberg Daybreak Asia and with more on one of
Speaker 1: the lines in that story. The Biden administration is nearing
Speaker 1: completion of an executive order that would restrict investments by
Speaker 1: US companies in parts of the Chinese economy. Let's get
Speaker 1: the story from Bloomberg Susannah Palmer. We're hearing this would
Speaker 1: include advanced to technologies that could enhance China's military and
Speaker 1: intelligence capabilities. According to Congress reports obtained by Bloomberg, the
Speaker 1: effort is at an advanced stage, with President Joe Biden
Speaker 1: prepared to request funding for it in his March ninth
Speaker 1: fiscal twenty twenty four budget. The order would add to
Speaker 1: the administration's toolkit to address concerns about China's technological advances.
Speaker 1: Susanna Palmer Bloomberg Daybreak Asia SoftBank semiconductor unit ARM Limited
Speaker 1: is reportedly seeking to raise at least eight billion dollars
Speaker 1: through a US base IPO. We have that story from Bloomberg.
Speaker 1: Sanabelle Jewelers, the British chip designer, is expected to confidentially
Speaker 1: submit paperwork for its IPO in late April. That's according
Speaker 1: to Reuters. The reported listing size would make ARM one
Speaker 1: of the biggest IPOs in the US in years. We
Speaker 1: reported last week the Bankers had pitched evaluation of between
Speaker 1: thirty to seventy billion dollars for the company. Last week,
Speaker 1: ARM confirmed plans to debut solely in the US, rejecting
Speaker 1: calls from the UK government for a duel listing in
Speaker 1: its home market. Routers says Goldman Sachs, JB. Morgan Chase, Barclays,
Speaker 1: and Mizooho Financial are expected to be the lead underwriters
Speaker 1: for the IPO in Hong Kong. I'm Annabel Rulers, Bloomberg
Speaker 1: Daybreak Asia. Well. Over the week in San Francisco, FED
Speaker 1: President Mary Daly said more rate hikes will be needed
Speaker 1: to cool inflation. Daily said that inflation remains high in
Speaker 1: each sector, in goods, in housing, and in other services.
Speaker 1: Here's Daily speaking Saturday at Princeton University in New Jersey.
Speaker 1: In order to put this episode of inflation high inflation
Speaker 1: behind us, further policy tightening maintained for a longer period
Speaker 1: will likely be necessary, But I can't say this strongly enough.
Speaker 1: Restoring price stability is our mandate and it's actually what
Speaker 1: American people expect us to do, so we remain as
Speaker 1: an FOMC resolute in achieving this goal. Daily added that
Speaker 1: the bumping nature of the incoming data paints an unclear
Speaker 1: picture for disinflation momentum. In a call with reporters, Daily
Speaker 1: repeated that she supports raising rates to somewhere between five
Speaker 1: and five and a half percent. Back to the NPC
Speaker 1: dug the narrative it really has really bounced around a bit.
Speaker 1: About a month or two ago, we were waiting on
Speaker 1: the NPC to hear about stimulus for getting the economy going.
Speaker 1: Then when President She spoke about this reorganization that would
Speaker 1: be intense, the narrative kind of switched to, well, it's
Speaker 1: going to be party operatives running all the institutions and
Speaker 1: big companies, and that seemed a negative. Then analysts started
Speaker 1: pouring cold water on that as too negative an angle,
Speaker 1: saying it's simplistic. It'll actually be advantageous to have people
Speaker 1: close to She managing these big institutions. And you mentioned
Speaker 1: Shuley's angle that's back to the low target means more
Speaker 1: regulation is coming, and that kind of fits that, that
Speaker 1: assertion that the party is taking more power here, and
Speaker 1: it kind of goes to the latter point. Maybe the
Speaker 1: low target and regulation either one would mean lower equity
Speaker 1: prices today. I think we'll see a little sell off.
Speaker 1: One of the things that I thought was interesting is
Speaker 1: the quota for issuance of local government special bonds. These
Speaker 1: are used to largely finance the big infrastructure projects that increased.
Speaker 1: Now that may suggest that authorities or leadership is acknowledging
Speaker 1: the recovery is still very fragile. The other point that
Speaker 1: I think is very interesting premierly placing a high priority
Speaker 1: on attracting some foreign investment. In previous years, we talk
Speaker 1: a lot about the tension between the US and China.
Speaker 1: I wonder where that new foreign investment may come from. Yeah,
Speaker 1: particularly with the notion that you're going to have more
Speaker 1: party operatives in there. And maybe it won't be growth
Speaker 1: at any cost. It may not even be where there's
Speaker 1: an emphasis on growth. It's more like on the sharing
Speaker 1: for the rest of the people. So it's a difficult
Speaker 1: one to call. Just briefly, I want to get your
Speaker 1: reaction on Mary Daily. Anything new there, Well, I think
Speaker 1: not really. A market is still expecting terminal rate at
Speaker 1: five and a half percent. The interesting comments may have
Speaker 1: come from former FED Vice chair Alan Blinder. He was
Speaker 1: speaking to some of our colleagues over the weekend and
Speaker 1: he doubts very much that the FED is going to
Speaker 1: get that FED funds rate all the way up to
Speaker 1: six percent. Yeah, all right, it's time for global needs.
Speaker 1: China is announcing a significant increase in the military budget
Speaker 1: as global tensions rise. Let's get the story from Ed
Speaker 1: Baxter in the nine sixty newsroom in San Francisco, ed Yeah,
Speaker 1: this follows along with what you guys are talking at.
Speaker 1: The annual report released by the NPC says an increase
Speaker 1: of seven point two percent this year. It is expected,
Speaker 1: it says, to rise to two hundred twenty five billion
Speaker 1: dollars this year. With a focus on increasing tensions with
Speaker 1: the US on a range of issues, including Taiwan. Bloomberg
Speaker 1: Stephen Engel says the signal is military commitment. Likazan says
Speaker 1: we in government at all levels should give strong support
Speaker 1: to the development of national defense and of the arms
Speaker 1: armed forces. Meanwhile, spending on the PLA is increased by
Speaker 1: at least six point six percent each year for the
Speaker 1: past three decades. The report says the intent that China
Speaker 1: has a world class force in place by twenty twenty seven.
Speaker 1: Also in the report, China kept its language regarding Taiwan's stable,
Speaker 1: saying China seeks a peaceful reunification with Taiwan, basically the
Speaker 1: same word from last year. Even though tensions have increased,
Speaker 1: There's been no definitive public statement about the origins of
Speaker 1: COVID from the US government. Recording the labs in Wuhan,
Speaker 1: of course, and former FDA director Scott Gottlieb on CBS
Speaker 1: has heard here on Bloomberg Today, says classified information is
Speaker 1: being held and the only statement that seems is that
Speaker 1: it is likely. He says, though it's time to act.
Speaker 1: We know that Chinese military was operating in that lab simultaneously,
Speaker 1: so we need to look at all those things. I
Speaker 1: would be focusing on the activities in and around that
Speaker 1: lab and deriving from that what steps we need to
Speaker 1: take going forward to make sure that we get better
Speaker 1: security around high risk research that if this did come
Speaker 1: out of a lab, it's not going to happen again. Yeah,
Speaker 1: he says. Waiting is not the right path or good option.
Speaker 1: Masako Mori, advisor to Japan's Prime Minister Fumi Okisha, is
Speaker 1: saying Japan will disappear without action on births. He says
Speaker 1: the falling birth rate threatens to wreck the society, safety
Speaker 1: net and economy. European Commission President Ursula vander Layan has
Speaker 1: calling for a separate justice tribunal to prosecute war crimes
Speaker 1: committed by Russia in Ukraine. The European Union is supportive
Speaker 1: of the role of the International Criminal Court We also
Speaker 1: believe that there needs to be a dedicated tribunal to
Speaker 1: prosecute Russia's crime of aggression. She says there's increasing evidence
Speaker 1: of summary executions, assault torture, and that not even children
Speaker 1: are being spared. Russia must be held accountable for these
Speaker 1: horrific crimes, and Putin must be held accountable. We must
Speaker 1: do everything in our power to bring the perpetrators to justice. Yeah.
Speaker 1: Vonderland says it is now time to start the movement. Meanwhile,
Speaker 1: former Maryland Governor Larry Hogan here in the US says
Speaker 1: he will not run for president on CBS has heard
Speaker 1: here on Bloomberg. He says a crowded field could get
Speaker 1: Donald Trump nominated again. I think I can make a
Speaker 1: continue to contribute toward getting the Republican Party back to
Speaker 1: a more traditional, big tent party that can win elections
Speaker 1: again without causing being part of a train wreck that
Speaker 1: might repeat history, and just allow us to nominate Donald
Speaker 1: Trump as our nominee, because I think that would be
Speaker 1: bad for the party and bad for the country. Yeah.
Speaker 1: Trump prevailed in twenty sixteen with about thirty percent of
Speaker 1: the vote. Global News powered by more than twenty seven
Speaker 1: hundred journalists and analysts and over one hundred twenty countries
Speaker 1: in San Francisco. I'm Ed Baxter, and this is Bloomberg.
Speaker 1: This is Bloomberg Daybreak Asia. Brian Curtis here along with
Speaker 1: Rishad Salamat, and we've got Doug Chrissern Markets and ed
Speaker 1: On News. Let's get to our guest, Christina Hooper, chief
Speaker 1: Global market strategist at Invesco. Christina, investors are somewhat torn
Speaker 1: between worrying about sticky inflation versus cheering growth. Where's your
Speaker 1: mindset at the moment? Well, my view is that they're
Speaker 1: still going to be a lot of nervousness and apprehension.
Speaker 1: In the shorter term. We just don't know what the
Speaker 1: FED is going to do, or at least markets don't
Speaker 1: feel as though they have a grasp of what the
Speaker 1: Fed's going to do, and they're spooked. However, I do
Speaker 1: believe that the FED will air on the side of
Speaker 1: only hiking rates about two more times at the most,
Speaker 1: probably three, and so I ultimately think that we'll work
Speaker 1: through the current uncertainty, will work through that volatility, and
Speaker 1: the back half of this year will be a more
Speaker 1: positive one for equities. Surely, the federal reserveles just have
Speaker 1: to have more solid evidence as what they're doing before
Speaker 1: they make a pulse. They will do a pause and
Speaker 1: just to see how things are playing out before they
Speaker 1: decide what to do next. Well, absolutely right they are.
Speaker 1: They are ultimately very very data dependent. But what they
Speaker 1: are seeing is inflation moderating, perhaps not as quickly as
Speaker 1: they would like to see, especially when it comes to
Speaker 1: services inflation. However, another piece of the puzzle is inflation expectations,
Speaker 1: and longer term inflation expectations remain rather well anchored, and
Speaker 1: I think that should help tip the scales in favor
Speaker 1: of fewer rate hikes as opposed to getting to the
Speaker 1: six percent or higher some fear. So it really seems
Speaker 1: like the next set of data is just crucially important, right,
Speaker 1: I mean, if you get another hot one, then well
Speaker 1: there goes the disinflation trend. But if you kind of
Speaker 1: swing back, then you can say, well we're on track.
Speaker 1: I think so. Certainly what we've seen is a picture
Speaker 1: of inflation moderating, and there can be some hiccups in
Speaker 1: that picture as long as the FED is comfortable with
Speaker 1: the trend. So yes, upcoming data will be important. But
Speaker 1: keep in mind that they're going to continue to look
Speaker 1: at the data, and so we really have until May
Speaker 1: or June for the FED to make a decision without
Speaker 1: having too many rate hikes. And of course they can
Speaker 1: rip a page from the Bank of Canada's playbook in
Speaker 1: terms of implementing a conditional pause, which I think is helpful,
Speaker 1: especially for those concerned about inflation becoming persistent entrenched, because
Speaker 1: that enables them to invoke data to get right back
Speaker 1: in if they need to. I don't think they'll need to,
Speaker 1: but it's good to have that hanging over the inflation picture. Christina,
Speaker 1: do you think in six months time people may look back,
Speaker 1: if they haven't got into it, go why did I
Speaker 1: not invest in short duration treasuries? Well, I think there
Speaker 1: are going to be people that look back and say,
Speaker 1: why didn't I invest in fixed income? In general? In
Speaker 1: investment grade fixed income, especially US looks really attractive right now.
Speaker 1: All the pain that we as investors went through last
Speaker 1: year has taken to us to a place where fixed
Speaker 1: income is a lot more attractive than it's been in years.
Speaker 1: And Christina, you say that, You say that, but I
Speaker 1: mean if you're locked up in one, two and three
Speaker 1: year bonds and we get a change in the markets,
Speaker 1: inflation does come down quickly, saying the next month or two,
Speaker 1: if people just we're all in on that, you know
Speaker 1: they'll be regretting it, won't they. Well, hopefully they're well
Speaker 1: diversified with their fixed income exposure, and so I think
Speaker 1: they're they're likely to be very comfortable with the moves
Speaker 1: we could see in incoming months. And again, part of
Speaker 1: that is being well diversified in terms of duration. Yeah,
Speaker 1: so where is the beef? Is it? Well? Would you recommend?
Speaker 1: So this is a really interesting time, and again I
Speaker 1: would say in the very short term, the next several months,
Speaker 1: I expect a fair amount of volatility, a good amount actually,
Speaker 1: because we have that uncertainty around the FED. We also
Speaker 1: have uncertainty around the resolution of the debt ceiling crisis,
Speaker 1: and that's a big one. However, I think in the
Speaker 1: back half of the year we're likely to see equities
Speaker 1: perform better. Right now, equities look attractive in Asia em
Speaker 1: including China. Yes, I do think we're likely to see
Speaker 1: a down day because of disappointment around the GDP target,
Speaker 1: but I'm not very concerned about that. It could be
Speaker 1: just a different approach in terms of managing expectations, setting
Speaker 1: a low bar and then exceeding it well, and especially
Speaker 1: since missing the target so dramatically last year, you can
Speaker 1: kind of understand why they might put a cautious target up.
Speaker 1: But there is that sort of pending more regulation story
Speaker 1: that is sort of there at the edges. Are you
Speaker 1: concerned about that or is it easy to kind of
Speaker 1: write that down as well? So I'm not reading into
Speaker 1: this more regulation. What I am reading into this is
Speaker 1: that there could be a little less in the way
Speaker 1: of stimulus, but I'm not even sure of that. Again,
Speaker 1: I think this is more a story about reacting to
Speaker 1: last year and having a low bar that China could
Speaker 1: easily exceed this year. The tub is at what price?
Speaker 1: I mean, just looking at the amount of debt that
Speaker 1: the companies and in detail local authorities and local governments
Speaker 1: have right now, and how they're being bailed out, and
Speaker 1: they don't have any sources of any income, particularly because
Speaker 1: they're major. One's gone and that was land sales. You know,
Speaker 1: that's going to be a big, big headwind perhaps in
Speaker 1: the medium to longer term. How do you deal with
Speaker 1: that and what's your view of it? Well, certainly, you're
Speaker 1: right that can be a significant headwind over the longer term.
Speaker 1: But I think what we're seeing right now, the story
Speaker 1: that we don't want to overlook, is the reopening. What
Speaker 1: we're seeing is, in my opinion, not just revenge travel,
Speaker 1: but revenge living. I think we're getting some real glimmers
Speaker 1: of that, for example, the most recent PMI print for services,
Speaker 1: and I think that we're likely to see that accelerate
Speaker 1: this year. So, yes, there are long term concerns. I
Speaker 1: think we can say there are longer term concerns and
Speaker 1: headwinds for a variety of different economies and markets. But
Speaker 1: there's a really compelling story right now. So what do
Speaker 1: you buy there? I mean, there's the technology companies that
Speaker 1: are down maybe you know, sixty percent still from earlier highs,
Speaker 1: but would they ever get back to those highs? What
Speaker 1: are you looking at? Well, do they have to get
Speaker 1: back to those highs immediately? I think what we want
Speaker 1: to do, yeah, right, yeah, Well we want to look
Speaker 1: for are those areas where we could see some nice
Speaker 1: capital appreciation in the next one to three years. And
Speaker 1: I think certainly some of the tech names within China
Speaker 1: fit the bill as well as just if you take
Speaker 1: a step back more broadly, Asia em equities look to
Speaker 1: benefit from this reopening, and then of course also I
Speaker 1: think a great opportunity as US investment grade fixed income.
Speaker 1: I would look also beyond that for those with longer
Speaker 1: time horizons, and say, US tech might not come back
Speaker 1: right away, and certainly you know it's not likely to
Speaker 1: have the kind of bounce back that we could see
Speaker 1: in cyclicals later this year, but it looks attractive for
Speaker 1: the longer term. This is Bloomberg Daybreak Asia, your morning
Speaker 1: brief on the stories making news from Hong Kong to
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