00:00> > WELCOME TO THE CHINA OPEN. I AM DAVID INGLES WITH YVONNE MAN. YVONNE: PRESIDENT PUTIN RECOGNIZES SEPARATIST REPUBLICS IN THE UKRAINE AND ORDERS THE DEPLOYMENT OF HIS SO-CALLED PEACEKEEPING FORCES. OIL PRICES SOARING AND STOCKS SLIDING AS INVESTORS RUSHED TO THE HAVENS OF BONDS AND GOLD. CHINA'S TECH SECTOR HAS BIG BANKS ARE TOLD TO RUN CHECKS ON THEIR -- STEPHEN BOY -- STEVEN: YOU HAVE A LOOK AT GOLD JUST THERE. 1900. BACK ABOVE THAT LEVEL. DOWN 2% ON A LOT OF THESE FUTURES. AUSSIE=YEN. HAVE A LOOK AT THAT. LOOK AT WHERE WE ARE AS FAR AS OIL PRICES. WE ARE WITHIN 100 BUCKS. EVERYTHING ELSE WILL BE VERY MUCH IN FOCUS TODAY. FUTURES WERE OFF BY OVER 1%. ALL IN ALL PRETTY AS FAR AS THAT IS CONCERNED. THERE IS ALSO THE ADDED COMPLICATION OF DOWNWARD PRESSURES IN TECH SHARES. WE ARE UP 6/10 OF 1%. YVONNE: THAT DROP OF 10% REALLY SPEAKS TO THE REST OF THE BENCHMARK. IN AN HOUR'S TIME, THE U.S. SECURITY COUNCIL WILL HOLD AN EMERGENCY MEETING ON THE ESCALATING TENSIONS IN THE UKRAINE AS PRESIDENT PUTIN GIVES THE STRONGEST SINK -- SIGNAL YET THAT HE MAY BE PLAYING AN INVASION OF THE COUNTRY BY RECOGNIZING TWO SEPARATIST AREAS AND ORDERING PEACE TREATING -- PEACEKEEPING TROOPS TO MOVE IN. > > I CONSIDERATE NECESSARY TO TAKE THE LONG-OVERDUE DECISION OF IMMEDIATELY RECOGNIZING THE PEOPLE'S PUBLICS. I MASKING THE FEDERAL ASSEMBLY OF THE RUSSIAN FEDERATION TO SUPPORT THIS DECISION AND TO RECTIFY FRIENDSHIP. THE RESPONSIBILITY FOR CONTINUING WILL LAY ON THE SHOULDERS OF THE UKRAINIAN REGIME. KUMUTHA U.S. EU SAYS THAT THEY WILL BEGIN IMPOSING LIMITED SANCTIONS. BRUCE, WALK US THROUGH WHAT IT SUGGESTS AND DOES THIS DASH ANY SORT OF HOPES OF A DIPLOMATIC SOLUTION? > > IT DOESN'T CERTAINLY CALL INTO QUESTION THE POSSIBILITY OF THEIR BEING ANY DIPLOMACY. RUSSIA HAS A VETO ON THE UN SECURITY COUNCIL SO IT IS UNLIKELY THAT THE SECURITY COUNCIL WILL PASS ANYTHING THAT WILL BE CRITICAL OF RUSSIA. AS FAR AS THE SIGNIFICANCE, IT MEANS THAT RUSSIA CAN SEND FORCES TO THESE TWO REGIONS AS PEACEKEEPERS. IT COULD ALSO LEAD TO DEMANDS THAT UKRAINIAN FORCES WITHDRAW FROM THE REST OF THOSE TERRITORIES. THE RUSSIAN FORCES COMMAND PARTS OF THOSE TERRITORIES BUT NOT ALL OF THEM. THEY CAN DEMAND THAT THEY LEAVE. ON MONDAY RUSSIA SAID THAT HE KILLED FIVE UKRAINIAN SABOTEURS AND DESTROYED FIVE -- THE UKRAINE DISMISSED THE CLAIM AS FAKE. AS WE CAN SEE, MILITARY ACTION IS INCREASING. ALSO INCREASING IS THE POSSIBILITY THAT THERE COULD BE FURTHER RUSSIAN INCURSIONS INTO THE UKRAINE WHICH WOULD LEAD TO ADDITIONAL SANCTIONS FROM THE WEST. STEPHEN: DOING OTHER RUSSIAN TROOPS HAVE ACTUALLY MOVED IN? > > WE DON'T HAVE REPORT HAPPENED YET. WE KNOW HE HAS THE INTENTION TO SEND PEACE KEEPING TROOPS TO THOSE REGIONS. IT DOESN'T SEEM LIKE THERE HAS BEEN MOVEMENT. FROM THE WEST, THERE HAS BEEN SOME ACTION. THE WHITE HOUSE, PRESIDENT BIDEN HAS ISSUED AN EXECUTIVE ORDER TO BEEN TRADE AND FINANCING. PRESS SECRETARY JEN PSAKI SAID THAT THESE MEASURES ARE SEPARATE FROM AND WOULD BE IN ADDITION TO SANCTIONS THAT THE U.S. WOULD IMPOSE IF THERE WERE FURTHER RUSSIAN INCURSIONS. WE KNOW THAT SEVERAL OF THE EASTERN EUROPEAN COUNTRIES ARE ON THE BORDER WITH RUSSIA. POLAND, OR MANIA, THE CZECH REPUBLIC. THESE ALL CALLED FOR ACTION QUICKLY. THOSE COUNTRIES ARE SOUNDING THE ALARM. ABOUT WHAT THIS LATEST RUSSIAN RECOGNITION OF THE SEPARATIST AND THE UKRAINE MEANS FOR THE ORDER THROUGHOUT THE REGION. YVONNE: THANK YOU FOR THE UPDATE. RUSSIA HAS A VETO POWER SO IT COULD BE A LIVELY DEBATE HAPPENING. LET'S BRING IN THE HEAD OF ECONOMICS AND STRATEGY AT THE -- BANK. I'M SURE YOU HAVE BEEN FOLLOWING THE HEADLINES. DO I BLAME THE UKRAINE FOR THIS MARKET VOLATILITY? > > IT DOES LOOK LIKE BY AND LARGE IT IS THE UKRAINE. AS WE SAW ALL THE ACTION IN THE MARKETS WAS PRICING IN THE RISK OF SANCTIONS RATHER THAN THE RISK OF WAR. IT REALLY POINTS TO MARKETS SPIKING IN WHAT SEEMS TO BE LIKELY AT THIS POINT IN TIME. YVONNE: YOU'RE STARTING TO SEE WHERE TRADERS ARE PRICING OUT THE 50 BASIS POINT HIKE FROM THE FEDERAL RESERVE. YOU THINK POLITICAL TENSIONS CAN DELAY TIGHTENING? KIM THE CRUEL IRONY HERE IS THAT IF THE GEOPOLITICAL TENSIONS GO UP, THEN INFLATION GOES UP FASTER. THERE IS NOTHING THEY CAN DO ABOUT SUCH OIL SHOCKS. THEY ARE CAUGHT BEHIND THE CURB EARLIER AND IT MEANS THAT THE CALCULUS CHANGES SOMEWHAT. THE BROADER VIEW OF 100 BASIS POINTS WOULD REMAIN ON THE TABLE SO LONG AS THE UKRAINE REPERCUSSIONS ARE IMMEDIATE TO SANCTIONS. DAVID: IT SEEMS LIKE REALLY BAD CHOICES. WHAT WILL HAPPEN WITH SAFE PAYS AND -- SAFE HAVENS OVER THE MEDIUM-TERM. WHERE TREASURIES GOING TO GO? > > THAT'S BETWEEN THE HAWKISH FED AND WHAT IS GOING ON. WE ARE PROBABLY GOING TO SEE IT SOMEWHERE IN 1.75 TO 1.95%, DEPENDING ON THE FLAVOR OF THE MOMENT. I THINK THAT ADDS A LOT MORE VOLATILITY. AS MUCH AS IT IS -- THE PROSPECT OF RISING RATES, THAT IS ALSO SOMETHING THAT WE BEAR IN MIND. BUT SEEING THE DOLLAR PLAYING SECOND FIDDLE TO THE YEN, THAT COULD VERY QUICKLY BE TURNED ON ITS HEAD, DEPENDING ON THE INTENSITY THAT COMES THROUGH. IT'S A VERY VOLATILE MARKET. DAVID: WHAT ARE YOU ADVISING CLIENTS? > > THE CLIENTS ARE WELL INFORMED ABOUT THE RISING RATES. THE ONE THING WE MAY BE MISSING AT THIS POINT IN TIME IS THE U.S. INFLATION DIFFERENTIALS. IT COULD LEND SOME SUPPORT. WE ARE WARNING OF MORE PROLONGED SHOCK THAN WHAT WE ARE TYPICALLY USED TOO. WE ARE SAYING NO COMPLACENCY GOING INTO THE FIRST FEW MONTHS. YVONNE: YOU'RE TALKING MORE ABOUT THE INVERSION OF THE U.S. INFLATION SPREAD. MAYBE YOU CAN FLESH IT OUT IN LAYMAN TERMS. DO YOU SEE THE INFLATION PICTURE CHANGING ANYTIME SOON? GIVEN THAT IS AN IMPORTANT POINT YOU HAVE MADE. SOMETHING WE HAVE NOT SEEN IN DECADES WHICH IS U.S. INFLATION BEING HYDER -- HIGHER THAN ASIAN INFLATION. TYPICALLY WHAT WE REALIZE WITH ASIA, THE IMPACT OF OIL TENDS TO LAG AND LAST FOR LONGER. WE ARE PROBABLY GOING TO SEE THE SPREAD BETWEEN U.S. AND ASIA'S INFLATION ERODING, CATCHING UP WITH THE U.S. OR EXCEEDING IT BY THE SECOND HALF OF THIS YEAR. WE WILL GET A REVERSION BACK TO THE NORMS OF ASIAN INFLATION BEING HIGHER. DAVID: WHETHER THAT IS ENERGY PRICES ARE BROADER INFLATION, IT HAS BECOME ALMOST A POLITICAL STORY. SHOULD WE EXPECT MORE PUSHBACK FROM POLICYMAKERS ON INFLATION IN THIS PART OF THE WORLD OR KEEPING IT OUT? > > HERE IT'S REALLY A CASE OF FACTORING IN THE FED AS WELL. KOREA'S MOVING AHEAD OF THE GAME. IT APPEARS TO ME THAT A LOT OF THE CENTRAL BANKERS DO THINK THAT THERE IS TIME BEFORE HIKING RATES. IF THEY ARE GOING TO HIKE BEFORE THE MIDDLE OF THE YEAR, IT'S MORE IN RESPONSE TO THE FED. CAPITAL RISK RATHER THAN INFLATION NOT BEING UNDER CONTROL. INFLATION IS LESS OF A TOP LINE CONCERN FOR CENTRAL BANKERS IN ASIA. YVONNE: THANK YOU FOR JOINING US. LOOKING AT THE FIRST WORD NEWS, WE HAVE PAUL ALLEN IN SYDNEY. PAUL: CHINA MAY BE RENEWING SCRUTINY OF JACK MA -- STARTING A FRESH ROUND OF CHECKS ON THEIR FINANCIAL EXPOSURE. THE PROCESS BEING DESCRIBED AS THE MOST WIDE-RANGING LOOK INTO DEALS WITH ANT. MICHELLE BOWMAN IS THE LATEST POLICYMAKER. SPEAKING AT A BANKING CONFERENCE IN CALIFORNIA ON MONDAY, B OWMAN SAID THAT SHE FAVORS FORCEFUL ACTION AND RAISING RATES IN MARCH. SHE SAID IT IS TOO SOON TO TELL HOW BIG OF A HIKE WOULD BE WARRANTED. THE FORMER U.S. SECRETARY OF STATE MIKE POMPEO IS SCHEDULED -- THAT WOULD MAKE HIM AMONG THE MOST SENIOR U.S. DIGNITARIES TO VISIT THE ISLAND IN RECENT YEARS. HE IS SAID TO HAVE ACCEPTED AN INVITATION FROM THE PROSPECT FOUNDATION. LOCAL MEDIA REPORTS HE WILL MEET WITH THE PRESIDENT. DURING THE TRUMP ADMINISTRATION, POMPEO WAS A VOCAL ADVOCATE FOR THE -- POLICY. COVID RULES WILL COME TO AN END IN ENGLAND IN A MOVE THAT DRAWS CRITICISM FROM LAWMAKERS AND HEALTH EXPERTS. ON THR URSDAY, THOSE INFECTED WITH THE VIRUS WILL NO LONGER BE LEGALLY REQUIRED TO INFORM THEIR EMPLOYERS OR SELF-ISOLATE. GLOBAL NEWS, 24 HOURS A DAY, ON THE AIR ON BLOOMBERG AND ON QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. DAVID: DOLLAR-RUSSIA. IT EXPLODED HIGHER YESTERDAY. AS WE APPROACH DEALS, KEEP IN MIND WE ARE LOOKING AT A SUBSTANTIAL DOWNSIDE. FUTURES ARE POINTING DOWN. THE OPEN 15 MINUTES IS AWAY. THIS IS BLOOMBERG. ♪ YVONNE: YOU ARE WATCHING THE CHINA OPEN. 634.87. JUST SLIGHTLY STRONGER THAN WHAT ANALYSTS WERE EXPECTING. NOT MUCH OF A MOVER THERE. WE ARE WAITING TO SEE ANOTHER HEADLINE RISK. CHINESE TECH SHARES SUFFERING MORE LOSSES AFTER NEW -- RUMORS OF A NEW CRACKDOWN SPARKED THE WORST SELLOFF SINCE JULY. WHEN WE ARE WATCHING THE HANG SENG TECH INDEX, THERE ARE A LOT OF MOVING PARTS. ONE SOURCE TELLING US THAT CHINA HAS TOLD STATE OWNED FIRMS AND BANKS TO CHECK THEIR EXPOSURE WHEN IT COMES TO AMPED GROUP -- ANT GROUP. FOR THOSE SAYING THAT WE HAVE SEEN THE WORST OF THIS CRACKDOWN, WE ARE SEEING THE OTHER SIDE OF THIS DISCUSSION. WHERE ARE WE IN THIS CRACKDOWN? > > IN RECENT DAYS THERE HAS BEEN A LOT THAT HAPPENED. THAT SUGGESTS THE CRACKDOWN NOT HAVE HAPPENED YET BUT THERE MIGHT BE MORE COMING DOWN THE ROAD. WITH ANT, WE UNDERSTAND THE GOVERNMENT HAS TOLD STATE OWNED COMPANIES TO DO AN EXAMINATION OF ANY LINKS BETWEEN THEM AND ANT. TO TO REPORT WHAT THEY FIND AS SOON AS POSSIBLE. WE DON'T UNDERSTAND WHAT THE CATALYST FOR THE EXAMINATION WAS. WE DON'T KNOW IF IT WILL RESULT IN ANY REGULATORY OR LEGAL ACTION. EVERYONE WE HAVE SPOKEN TO SAYS THAT THIS IS THE FARTHEST REACHING, WIDEST RANGING INVESTIGATION BETWEEN THEM AND STATE OWNED ENTERPRISES. THAT IS WHY THE MARKET IS SO JITTERY. DAVID: TO YOUR POINT, TENCENT IS 3% LOWER. THAT IS CONFUSING TO ME. TENCENT IS A COMPANY THAT WE TALK ABOUT A LOT. YOU RARELY HEAR FROM THEM BUT WE DID YESTERDAY. WHAT IS GOING ON? > > IT'S > > THERE WERE SOME RUMORS SPREADING ONLINE YESTERDAY ABOUT SOME FURTHER SCRUTINY OF TENCENT'S BUSINESS. THE COMPANY DID COME OUT AND STAUNCHLY DENIED THOSE RUMORS. THAT HAS NOT STOPPED THE MARKET FROM GENERALLY WORRYING ABOUT BIG TECH. THAT COMES AFTER WE HAD THE ACTION AFFECTING MACRON, THE GOVERNMENT ASKING FOOD DELIVERY SERVICES TO REDUCE THE FEES THEY CHARGED RESTAURANTS, THE SCAM ABOUT THE METAVERSE, AND ANT. JUST THE GENERAL SENSE THAT MORE MIGHT BE COMING. THAT WILL WEIGH ON ALL TECH SHARES EVEN IF TENCENT DENIES THE RUMORS. YVONNE: THANK YOU FOR THE UPDATE. A LOT OF STORIES TO LOOK AT. WE ARE SEEING ALIBABA BY 5% AS THE COMPANY RENEWS SCRUTINY. AFTER THAT, A BIG DROP WITH TENCENT. THIS IS WHAT WE ARE SEEING SO FAR. THIS STARTED ON FRIDAY WHEN IT CAME TO THE NEW FEE POLICY. WE CONTINUE TO SEE FALLOUT TODAY. ALIBABA DOWN 5%. MAYTWAN DOWN 5%. WE ARE WATCHING THE UKRAINE-RUSSIA RELATED STOCKS. QUITE A DEEP DROP HERE AT THE FREE MARKET AS WELL. THEY HAVE A QUARTER OF THE REVENUE. PETRO CHINA IS ONE TOO. I THINK ABOUT 20% OF THE REVENUE COMES FROM THE RUSSIAN MARKET. WE ARE WATCHING THE PROPERTIES SPACE. A LOT GOING ON WITH GENERAL FITCH. THEY TALKED ABOUT EXTENDING THE BOND PAYMENT AS WELL. MORE AHEAD. THIS IS BLOOMBERG. YVONNE: A QUICK CHECK OF THE LATEST BUSINESS FLASH. BOOSTING THAT DAILY REVERSE INJECTION TO 100 BILLION. ALSO 90 BILLION REM AND BE IN -- REMINBI AND OPEN MARKET OPERATIONS. FUTURES ARE DOWN ABOUT 1% THIS MORNING. THE BANK HAS WARNED THEM NOT TO DELETE WHATSAPP MESSAGES. THE BANK ALREADY SENT A MEMO TO STAFF WARNING THEM THAT DELETING MESSAGES AND PRIVATE CHANNELS COULD BE -- RELIANCE INDUSTRIES COULD START A BIDDING WAR WHICH COULD BE WORTH $5 BILLION OR MORE. AND COMCAST AND COMCAST IN A CONSORTIUM TO OUTBID THE COMPETITION. DAVID: WE ARE MINUTES FROM THE OPENING BELL. NOT LOOKING GOOD. OIL PRICES INCHING TOWARD $100. GOLD, $1900. ALUMINUM BACK TO LEVELS LAST SEEN IN 2000. RUSSIA ACCOUNTS FOR A SIZABLE PORTION OF THE EXPORT MARKET SHARE OF THE WORLD. LOOK AT WHERE WE ARE AS FAR AS THE AGENDA IS CONCERNED. IN 24 MINUTES, THERE IS A SCH EDULED BRIEFING FROM THE CHINESE FINANCE MINISTER. STAY TUNED FOR THAT AND WHAT HE MIGHT SAY. ENERGY, OIL PRICES, GOLD PRICES. FUTURES ARE POINTING DOWN. DAVID: WELCOME BACK. YOU ARE WATCHING THE CHINA OPEN. NOT LOOKING GOOD. BULLS BACK IN THEIR CAVES. NOT A LOT OF REASON TO BE OUT AND ABOUT. UKRAINE, THE UN SECURITY COUNCIL MEETING IN THE NEXT HOUR, AND WE WILL SEE WHAT HAPPENS. RUSSIA DOES HAVE VETO POWER, BUT LET'S SEE HOW FAR THE NEEDLE MOVES HERE. RISK OFF OBVIOUSLY AS WE APPROACH THE OPEN. YVONNE: YEAH. I THINK THE KEY FOCUS IS WHETHER VLADIMIR PUTIN DOES PULL THROUGH WITH THIS ORDER OF SENDING TROOPS TO THESE AREAS NOW. ALSO WHEN IT COMES TO ANY KIND OF WESTERN RESPONSE, HOW FAR WILL THEY GO WHEN IT COMES TO ECONOMIC SANCTIONS. LOOKS LIKE MARKETS ARE PRICING IN THE POSSIBILITY OF SANCTIONS, NOT SO MUCH WHEN IT COMES TO A FULL OUT WAR. THIS IS WHAT WE ARE SEEING WHEN IT COMES TO THE OPEN IN CHINA. CSI 300 DOWN ABOUT .3%. DOESN'T DO MUCH TO CHANE -- CHANGE THINGS. 8284 FOR HSHARES. THE TECH STORY IS WEIGHING DOWN THINGS. WE ARE SEEING A PRETTY RESILIENT RENMINBI. NO SIGNS OF ANY COOLING WHEN IT COMES TO THE STRENGTH OF THE CURRENCY AND LOOK AT THE BOARD. SEEING A LITTLE BIT OF WEAKNESS HERE FOR YOUR ONSHORE RATE. STILL AROUND THE FOYER HIGHS FOR YOUR OFFSHORE RATE AS WELL. THE UKRAINE AND RUSSIA EXPOSED COMPANIES, 16% LOWER AT THE OPEN. PETRO CHINA FALLING. GENERAL PROPERTIES, A LOT GOING ON. THEY PROPOSED AN EXTENSION OF SOME BOND PAYMENTS. CUTTING IT FURTHER INTO JUNK. 1.3% LOWER. HSTECH, RECORD LOWS WE HAVE REACHED. THIS BENCHMARK IS NOW AT THE LEVELS WE HAVE SEEN SINCE ITS INCEPTION. JUST GOES TO SHOW THAT WE ARE NOT QUITE AT THE END OF THIS REGULATORY CRACKDOWN. DAVID: ABSOLUTELY. FOR MORE ON THIS, OUR CHIEF CHINA MARKETS CORRESPONDENT. REMIND US, WHEN WAS THE INCEPTION OF THIS INDEX? > > JULY 2020, DAVE. IT'S REALLY BEEN A DIFFICULT STORY SENSE. ANT IPO WAS CANNED IN NOVEMBER OF THAT YEAR AND CHINA HAS ACCELERATED THE REGULATORY CRACKDOWN SENSE. WE KNOW AUTHORITIES ARE ASKING SOE'S AND BANK TO LOOK AGAIN AT THEIR EXPOSURE TO ANT GROUP WHICH IS OWNED BY ALIBABA. I WAS TALKING TO REBECCA CHOONG WILKINS EARLIER ABOUT THIS, BUT THIS IS REALLY A SOBERING MARKET. GOING INTO THE YEAR EVERYONE WAS LOOKING AT WHEN IT WOULD BE THE RIGHT TIME TO BUY CHINA TECH SHARES AND WHAT HAS HAPPENED TO MEITUAN AND ALIBABA AND RUMORS AROUND THE TENCENT REALLY REMINDING INVESTORS WHY CHINA TECH IS A VERY RISKY SPACE TO BE IN RIGHT NOW. YVONNE: WHAT ARE THE ANALYSTS YOU ARE TALKING TO SAYING? THERE WAS A LOT OF OPTIMISM AT THE START OF THE YEAR. HAS THERE BEEN ANY KIND OF CHANGE ON THEIR VIEWS OF CHINA TECH SINCE THE LAST 48 HOURS OR SO? SOFIA: THERE IS A LITTLE BIT OF A DEBATE OVER WHETHER THIS IS SENTIMENT DRIVEN AND THE UPCOMING EARNINGS SEASON WILL SHOW TO THE MARKET THAT BUSINESSES CAN SURVIVE, EVEN IF CHINA IS CLAMPING DOWN ON THE MOST PROFITABLE PARTS OF ALIBABA, TENCENT, MEITUAN. BUT THE OTHER SIDE OF THAT ARGUMENT IS, IS THE VALUATIONS WE SAW OVER THE PAST FIVE TO 10 YEARS SINCE TENCENT FIRST IPO'D IN 2004, ARE THEY NO LONGER SUSTAINABLE? THAT IS NO LONGER A FUTURE FOR CHINA TECH, WHICH IS NOT A HIGH-GROWTH STORY. SO WHEN WE TALK ABOUT VALUATIONS BEING LOW IN TECH SHARES, YES THEY ARE, BUT IS THAT REVERTING TO A NEW NORMAL, OR ARE WE EVER GOING TO GET THE KIND OF VALUATIONS WE SAW BEFORE? AND WHERE WE ARE SEEING IN THE U.S., WHERE TECH SHARES ARE A FROTHY PART OF THE MARKET. I KNOW DAVID LOVES IT WHEN I USE THAT WORD. DAVID: I REALLY DO. WELL, TO YOUR POINT, ARE WE LOOKING NOW -- THE QUESTION IS ARE THESE THE SAME COMPANIES WERE LOOKING AT THREE YEARS AGO? THERE WERE A LOT OF RUMORS OVER THE WEEKEND CONCERNING THE METAVERSE AND ALSO YESTERDAY THAT ACTUALLY PROMPTED TENCENT TO COME OUT, WHICH IS QUITE RARE. SOFIA: YEAH, IN A VERY STRONG WORDED STATEMENT FROM THAT TENCENT EXECUTIVE SAYING THAT THESE RUMORS IN THE MARKET ARE NOT FOUNDED ON ANYTHING. HE WAS NOT SPECIFIC ABOUT WHICH RUMORS. EVEN THOUGH HE DID SAY THERE WAS NOT GOING TO BE MORE REGULATORY MOVES ON TENCENT'S BUSINESSES, HE DID NOT SPECIFY WHICH ONES. SO JUST A LOT OF NERVOUSNESS IN THE MARKET, NOT JUST CHINA TECH WOULD ALSO PROPERTY. THE HEADLINE RISK IS IMMENSE. AND WHEN YOU ARE DEALING WITH AN EXTREMELY RISK-OFF MARKET ANYWAY GIVEN WHAT HAS HAPPENED IN THAT GEOPOLITICAL SPACE WITH RUSSIA AND UKRAINE, YOU KNOW, YOU ARE JUST ADDING TO THE NERVOUSNESS. IT IS NOT A VERY EASY TIME TO BE BUYING THESE SHARES, EVEN IF THEY ARE HISTORICALLY CHEAP. YVONNE: YOU MENTIONED A LITTLE BIT ABOUT CHINA TECH. PROPERTY AS WELL. I AM WONDERING, IN TERMS OF WHAT ELSE YOU ARE FOCUSING ON, IT IS JUST SUCH A BUSY DAY. IS THERE ANYTHING THAT CAN TURN SENTIMENT HERE AT THE MOMENT? SOFIA: WE WERE COUNTING HOW MANY DEVELOPERS HAVE DEFAULTED AND'S THE THREE RED LINES REALLY KICKED IN. THEY ARE TRYING TO DO THIS EXTREMELY DISTRESSED BUT RAISING AGENCIES HAVE CALLED A DISTRESSED RATE EXCHANGE. IF IT FAILS TO DO SO AND IT DOES DEFAULT, IT WILL BE THE 12TH DEVELOPER TO FAILED TO REPAY DOLLAR DEBT. THAT IS A BIG NUMBER, ESPECIALLY WHEN YOU CONSIDER A LOT OF THOSE COMPANIES WERE BIG ISSUERS OF DOLLAR DEBT LIKE EVERGRANDE AND KAISER. WE DID HAVE INVESTORS SAYING AT THE END OF LAST YEAR THAT THIS WAS KIND OF A TIME TO GET BACK INTO THE SPACE AND THAT PRICES HAD FALLEN TOO FAR. WE ARE SEEING SOME SIGNALS OF SUPPORT FROM AUTHORITIES IN CITIES IN CHINA, POTENTIALLY SHANGHAI, LOOKING TO REDUCE MORTGAGE RATES. BUT THIS IS VERY MUCH A MACRO SUPPORT. ON THE MICRO LEVEL SUPPORTING THE COMPANIES, WE ARE GETTING NO INDICATION OF M & A, BAILOUTS. THAT IS VERY MUCH NOT IN THE PICTURE. WE ALSO SAW A LIQUIDITY INJECTION TODAY FROM THE PBOC. THE FIRST TIME IT BOOSTED TO 100 BILLION YUAN. JON IS LOOKING TO SUPPORT THE ECONOMY AND KIND OF REDUCE THE RISK OF THE PROPERTY LIQUIDITY CRISIS SPILLING OVER MORE BROADLY. BUT IT DOES NOT LOOK LIKE IT IS GOING TO HELP THESE COMPANIES SURVIVE. YVONNE: SOFIA HORTA E COSTA, THANKS FOR ALL THOSE INSIGHTS. ONE THING TO LOOK AHEAD TO, EARNINGS FROM HSBC COME EXPECTED TO BUILD ON MOMENTUM'S FROM THE POSITIVE THIRD-QUARTER RESULTS WHEN IT REPORTS FULL YEAR AND FOURTH-QUARTER EARNINGS MIDDAY ON TUESDAY HERE IN HONG KONG. RISING INTEREST RATES, COVID IMPACTING ASIA, ARE LIKELY GOING TO DOMINATE IN THE BANK'S OUTLOOK FOR THE. FREE PREVIEW, LET'S BRING IN STEPHEN ENGLE. WHAT MORE CAN WE EXPECT TODAY? STEPHEN: JUST LISTENING TO SOFIA THERE, YOU DRAW THE PARALLELS TO THE BANKING SECTOR IN WHICH POTENTIAL RISKS COULD BE UNCOVERED. THE LAST TIME WE HEARD FROM THE CFO WAS IN LATE OCTOBER AT WHEN THEY REPORTED THIRD-QUARTER RESULTS. THEY WERE VERY GOOD RESULTS AND A GOOD OUTLOOK AS WELL CONSIDERING THEY WERE ANTICIPATING INTEREST RATE HIKE ENVIRONMENT THAT HAPPENED IN THE U.K. WITH A COUPLE RATE HIKES AND WITH THE FED EXPECTED TO LIFT OFF VERY SOON IN 2022. SO THAT IS THE OVERARCHING STORY FOR HSBC, NET INTEREST INCOME AND MARGINS SHOULD IMPROVE THROUGH 2022, AND THE FOURTH QUARTER SHOULD BID -- BUILD ON REVENUE MOMENTUM FROM THE THIRD QUARTER. THE STOCK HAS BEEN FAIRLY GOOD. HSBC UP ABOUT 42% SINCE SEPTEMBER 30, UP 24% YEAR-TO-DATE. BUT THERE ARE SOME RISKS AND BLOOMBERG INTELLIGENCE SAYS NET INCOME INTEREST GROWTH AT 6% THIS YEAR, 5% LOAN GROWTH. THOSE COSTS ARE BAKED INTO THE CONSENSUS THEY SAY. BUT THE TRAVAILS AND CHINA WILL BE A DRAG ON ASIAN GROWTH AS U.K. TAKES CENTER STAGE AFTER THE TWO INTEREST RATE HIKES. THOSE TRAVAILS ARE THE PROBLEMS IN THE PROPERTY SECTOR THAT SOFIA JUST TALKED ABOUT. POTENTIALLY 12 DIFFERENT PROPERTY DEVELOPERS DEFAULTING. A LOT OF THIS COMES BUBBLING TO THE SURFACE IN THAT FOURTH QUARTER, WHICH HSBC WILL BE REPORTING. THERE IS ALSO THE ISSUES WITH COVID, OF POTENTIAL IMPACTS ON THE RETAIL AND RESTAURANT INDUSTRIES AND WHETHER THERE IS GOING TO BE PAIRED LOANS. ALSO DECLINING HOME SALES POTENTIALLY COULD BE A WE -- A WEIGH ON THEIR DOMESTIC HONG KONG IMPACT. A LOT TO IMPACT LATER TODAY. -- A LOT TO UNPACK LATER TODAY. DAVID: JUST AN UPDATE ON THE CONTINUING FALLOUT AS FAR AS UKRAINE IS CONCERNED. NOW DOWN ABOUT 22% IN HONG KONG. NICKEL, ALUMINUM, THERE WE GO, DOWN ABOUT 15%. WE WERE DOWN AS MUCH AS 22%. STEVE, LET'S PIVOT BACK TO HSBC. I'M WONDERING WHAT THEY WOULD SAY TO YOUR LAST POINT ABOUT THEIR EXPOSURE TO HONG KONG, PARTICULARLY BECAUSE WHILE THE ECONOMY IS NOT DOING VERY WELL, AND THE FED TO RAISE INTEREST RATES THEY DO NOT NECESSARILY HAVE TO FOLLOW AS A BANK TO LOWER THEIR OWN MORTGAGE RATES, IS WHAT I'M TRYING TO GET TO. STEPHEN: YEAH. PRIME PLUS DISCOUNT ON LOCAL HOME LENDING TRADITIONALLY. YES, THE DOLLAR IS -- THE HONG KONG DOLLAR IS PEGGED TO THE U.S. DOLLAR AND ESSENTIALLY HAS TO FOLLOW FED POLICY BUT THERE IS ROOM FOR COMPETITIVENESS IN THE HIGHLY COMPETITIVE MARKET IN HONG KONG. ONE OF THE MORE INTERESTING PIECES I SAW IN READING SOME NOTES FROM THE LIKES OF MORGAN STANLEY AND OTHER ANALYSTS WHO COVER HSBC IS THE BATTLE FOR TALENT IN THE CITY THAT IS ESSENTIALLY CLOSED OFF TO THE REST OF THE WORLD AND RECRUITING AND KEEPING TALENT WHEN WALL STREET BANKS ARE PAYING BIGGER BONUSES TO ATTRACT AND TO KEEP THEIR TALENTS. HSBC IN THE LAST YEAR OR SO HAS BEEN ON RECORD AS ESSENTIALLY SAYING THEY HAVE NOT BEEN ABLE TO RAISE BONUSES AND RAISED SALARIES. BUT THAT MIGHT BE SOMETHING THAT DEFINITELY NEED TO DO, ESPECIALLY AFTER WE HEARD THEM SAY THEY ARE NOT MOVING PEOPLE OUT OF HONG KONG. WHAT WOULD HSBC HAVE TO SAY ABOUT THAT? THEY ARE IN THE MIDST OF THIS PIVOT TO ASIA, OBVIOUSLY MOVING A LOT MORE SENIOR EXECUTIVES TO HONG KONG. HOW IS THAT GOING TO BE IMPACTED BY HONG KONG ESSENTIALLY BEING CLOSED? DAVID: OK. HSBC EARNINGS DUE OUT WITHIN THE NEXT THREE HOURS OR SO. STEPHEN ENGLE WITH US. WE WILL BE SPEAKING TO THE CFO OF THE BANK HERE. STAY TUNED FOR THAT INTERVIEW AS WE GET THOSE RESULTS IN A COUPLE HOURS. DO NOT MISS THAT CONVERSATION COMING UP. YVONNE: TIME FOR THE FIRST WORD NEWS NOW. RUSSIAN PRESIDENT VLADIMIR PUTIN ON THE LATEST WITH UKRAINE HAS RECOGNIZED SEPARATIST REPUBLICS IN THE EASTERN PART OF THE COUNTRY AND ESCALATING MOSCOW'S STANDOFF WITH THE WEST. PUTIN SIGNED AID AND COOPERATION PACKS AT THE KREMLIN. HE ALSO ORDERED THE DEPLOYMENT OF WHAT HE CALLS PEACEKEEPING FORCES TO THE BREAKAWAY REGIONS. THE U.S. SECURITY COUNCIL WILL HOLD AN EMERGENCY MEETING ON UKRAINE SHORTLY. SEVERAL OF THE BIGGEST OPEC-PLUS PRODUCERS ARE SAID TO BE PUSHING FOR ANOTHER OUTPUT HIKE NEXT MONTH. SOURCES SAY THEY ARE LOOKING TO CONTINUE THEIR CURRENT STRATEGY AND WANT TO ADD ANOTHER 400,000 BARRELS A DAY OF CRUDE TO THE MARKET. THE ALLIANCE HAS BEEN GRADUALLY INCREASING SUPPLY SINCE THE START OF THE PANDEMIC. OPEC-PLUS HAS UNTIL MARCH 2 TO MAKE A DECISION AND ALL MEMBERS NEED TO REACH CONSENSUS. HONG KONG IS EXCITED TO UNVEIL A BUDGET HEADED FURTHER INTO THE RED AS A COVID SPIKE PUSHED AUTHORITIES TO IMPLEMENT TOUGH SOCIAL DISTANCING AND TRAVEL MEASURES WHICH ECONOMISTS PREDICT WILL LEAVE A HEAVY TOLL ON GROWTH. THEY ARE EXPECTED TO DRIVE THE GOVERNMENT BUDGET TO ITS FOURTH FISCAL DEFICIT IN A ROW IN THE COMING YEARS. THOSE ARE YOUR FIRST WORD HEADLINES. WE HAVE PLENTY MORE AHEAD. WE ARE WATCHING HSTECH AS WE MENTIONED. NOW WE ARE HITTING RECORD LOWS FOR THIS INDEX, SINCE JULY 2020 WHEN IT WAS FIRST LAUNCHED. TALKING ABOUT TENCENT, A LOT OF ONLINE SPECULATION ABOUT WHERE WE ARE WITH THIS CRACKDOWN, AS WELL AS THE BLOOMBERG SCOOP WHEN IT COMES TO BANKS LEADING TO UNVEIL EXPOSURE WHEN IT COMES TO ANT FINANCIAL. PLENTY MORE TO COME. THIS IS BLOOMBERG. YVONNE: YOU ARE WATCHING THE CHINA OPEN. IT IS A RISK OFF DAY, CLASSIC HAVEN PLACE GIVEN THE GEOPOLITICAL TENSIONS SURROUNDING UKRAINE AT THE MOMENT. TAKING A LOOK AT BRENT CRUDE WE ARE HOVERING CLOSE TO $100 RIGHT NOW. S & P FUTURES LOWER BY 1.5%. WE CONTINUE TO WATCH HSTECH. BUT IT'S CERTAINLY SENTIMENT LOOKING PRETTY FRAGILE AT THE MOMENT. THAT U.S. SECURITY COUNCIL MEETING, HOPEFULLY WILL GET MORE CLARITY THERE. DAVID: YEAH. WE WILL SEE WHAT HAPPENS WITH THAT. IF THE UKRAINE SITUATION GOES AWAY THAN THE FED STORY COMES BACK AND THIS GRAPHIC HIGHLIGHTS THIS FOR YOU. THE TWO INTERCHANGING ALMOST USUALLY EXCLUSIVE WALLS OF WORRY. LET'S BRING IN OUR CROSS ASSETS ASIA EDITOR TALK US THROUGH WHAT WE ARE SEEING. ANDREA, THE SUSPECT RIGHT NOW IS OBVIOUS, UKRAINE AND THE TENSIONS SURROUNDING IT. WHAT ARE YOUR FEELINGS RIGHT NOW AS PEOPLE START TO FIGURE OUT HOW TO TRADE THIS? ANDREA: THAT IS EXACTLY WHAT PEOPLE ARE TRYING TO DO, TRYING TO FIGURE OUT HOW TO TRADE THESE. AND IT'S INCREDIBLY DIFFICULT. WE HAVE HEARD FROM A HOST OF INVESTORS SAYING THEY REALLY DO NOT KNOW. THIS IS SUCH A FAST-CHANGING SITUATION. THINK ABOUT IT. 24 HOURS AGO WE HAD HEADLINES ABOUT A POTENTIAL SUMMIT AND THERE WAS A LITTLE BIT OF EASING IN THE RISK OFF. THAT DID NOT LAST VERY LONG AND WE ARE SEEING MARKETS AGAIN TUMBLING. WE ARE SEEING INVESTORS FLEEING INTO SAFE HAVENS AND TREASURIES RALLYING. WE ARE LOOKING AT AS A POSSIBLE SCENARIO, THERE COULD BE SO MANY OF THEM AT THIS STAGE. COULD CENTRAL BANKS AT THE EXTREME DELAY TIGHTENING? WHAT ARE THE ECONOMIC CONSEQUENCES OF THIS? YOU HAVE FALLING STOCKS, WIDENING CREDIT SPREADS, A DROP IN CONSUMER CONFIDENCE. THIS COULD TIGHTEN FINANCIAL CONDITIONS. ON THE OTHER HAND YOU HAVE OIL FLIRTING WITH $100, FOOD PRICES UNDER PRESSURE, SUPPLY SIDE THREAT. -- AND OTHER COMMODITY SUPPLIES FROM ONGOING TENSION. PEOPLE ARE ALSO SAYING THE FED WILL ONLY GO 25, NOT 50. A 50 POINT INCREASE MIGHT BE AT THE NEXT MEETING. THERE'S JUST DIFFERENT SCENARIOS INVESTORS ARE TRYING TO GRAPPLE WITH AS THIS SITUATION CHANGES SO RAPIDLY. YVONNE: WHAT ARE WE WATCHING IN TERMS OF HAVENS? IT IS INTERESTING THAT GOLD IS ABOVE $1900. MUCH OF THE YEAR IT DID NOT MOVE WHEN THE REAL RATES WERE MOVING OR WHEN THE DOLLAR WAS MOVING AS WELL. WHAT IS YOUR TEAM FOCUSING MOST ON? ANDREEA: GOLD IS INTERESTING. THE FACT GOLD IS PUSHING UP AND COMING CLOSE TO ITS HIGHEST IN MORE THAN A YEAR. THAT IS A CLASSIC HAVEN PLAY AND IT GOES TO SHOW YOU HOW NERVOUS THE MARKET IS. THAT IS DEFINITELY ONE TO WATCH OUT FOR. AND OF COURSE OIL, WHICH IS INCHING EVER CLOSER TO THE $100 LEVEL. TREASURY YIELDS AS WELL, THEY HAVE COME DOWN SIGNIFICANTLY. THEY ARE DOWN UNDER THAT 1.9. SO THESE ARE THE ONES THAT INVESTORS ARE PARTICULARLY LOOKING AT. THE DOLLAR HAS BEEN RELATIVELY STABLE. BUT DEFINITELY GOLD AND TREASURIES ARE THE ONES TO WATCH OUT FOR. YVONNE: ALL RIGHT. ANDREEA, THANK YOU. ALL THINGS GOING ON WHEN IT COMES TO THE MARKETS. PLENTY MORE AHEAD. THIS IS BLOOMBERG. ♪ YVONNE: WATCHING CHINESE TECH. WE ARE CONTINUING TO SEE QUITE A BIT OF RED. LOWER BY CLOSE TO 2%. TENCENT, ALIBABA. WE HAVE SEEN ALIBABA DOWN 4%. THERE'S A LOT OF SPECULATION ABOUT BANKS CLOSING THEIR EXPOSURE TO ANT FINANCIAL. JUST ANOTHER CHAPTER IN THIS TEXT CRACKDOWN. -- TECH CRACKDOWN. LAST NIGHT TRYING TO PLAY DOWN ALL THIS ONLINE SPECULATION ABOUT THE NEXT CHAPTER OF THIS CRACKDOWN. MEITUAN CONTINUES TO SEE FALLOUT. IT IS LIKE CATCHING A FALLING KNIFE AT THIS MOMENT. YOU HAVE THE RATE STORY GOING ON AND YOU ADD ALL THE GEOPOLITICAL TENSIONS. IT REALLY IS KIND OF A DOUBLE WHAMMY RIGHT NOW. THE MARKETS DO NOT KNOW HOW TO PRICE THIS ALL IN. DAVID: YEAH, I MEAN THOSE TWO STORES ALONE BY THEMSELVES ARE ENOUGH TO DRAG MARKET LOWER. COMBINE THEM RIGHT NOW AND WE ARE JUST TRYING TO FIGURE OUT WHERE THE FLOOR IS. I AM SURE MANY PEOPLE ARE TRYING TO FIGURE THAT OUT. AS FAR AS UKRAINE IS CONCERNED, HEADLINES DROPPING MINUTE BY MINUTE. REALLY SHOWS YOU IT IS A VERY FLUID SITUATION. THE LATEST RIGHT NOW OUT OF ANTONY BLINKEN TALKING ABOUT THE -- IT GOES INTO WHAT WE ARE LOOKING TO SEE IN THE NEXT EIGHT MINUTES, THE COMMENCEMENT OF THE UN SECURITY COUNCIL MEETING WHICH WE UNDERSTAND WILL START IN A COUPLE MINUTES. ALSO THAT POINT HERE, WHEN YOU LOOK AT, SAY, THE RUBLE, IT'S MOVED WITH OIL. THEY ARE THE MOST BEARISH NOW ON THE RUSSIAN CURRENCY GOING BACK TO WHEN OIL WAS BACK AT THESE LEVELS. NORMALLY HIGH OIL PRICES TAKE THE STING OUT OF THAT AND PROVIDE SOME SORT OF FLOOR FOR THE RUBLE, BUT YOU ARE SEEING THAT COME OFF. CROSS ASSETS, ALL REALLY POINTING TO THIS BEING A WORRY. AND TRADERS ARE JUMPING ON THIS STORY. YVONNE: YEAH. AND IT DOES NOT SEEM LIKE VLADIMIR PUTIN CARES WHERE RUSSIAN MARKETS AGO, WITH THE RUBLE AT 80 NOW. THE VOLATILITY STILL QUITE ELEVATED. THERE IS STILL A LOT OF QUESTIONS ABOUT WHAT NEEDS TO TAKE PLACE, THE NEXT STEPS PERHAPS. THE UN SECURITY COUNCIL WILL BE QUITE TELLING ON WHERE THE WEST FEELS RIGHT NOW. AS YOU MENTIONED BEFORE, RUSSIA DOES HAVE VETO POWER. WE ARE NOT GOING TO GET THAT MUCH CONSENSUS IN THIS MEETING, BUT PERHAPS A LITTLE BIT OF COLOR ON HOW THE WEST IS GOING TO TRY AND RESPOND TO THE LATEST DEVELOPMENTS OF THIS RECOGNITION OF THESE TWO SEPARATIST REGIONS AND ALSO THAT ORDER FROM VLADIMIR PUTIN. RIGHT NOW WHEN IT COMES TO MARKETS, SELL NOW, QUESTION THE REST LATER. STILL AHEAD IN THE NEXT HOUR, ABU DHABI SOVEREIGN FUND INVESTMENT HAS LED THAT $500 MILLION FUNDING FOR A DATA CENTER OPERATOR. WE ARE GOING TO SPEAK TO THE GROUP CHAIRMAN AND CEO. ALSO, INDIAN BONDS RALLY THE MOST IN 16 MONTHS AS THE CENTRAL BANK HELD BACK ON A HIKE ON A KEY RATE. THIS IS BLOOMBERG.
