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First Move with Julia Chatterley
Ukrainian Official: Russians Control 70 Percent of Severodonetsk; Biden to Send new Rockets, Munitions to Ukraine; Shanghai Eases COVID Restrictions after 2-Month Lockdown; U.S. Stocks Higher on First Trading Day of June; Winner to Play Wales on Sunday for a Place in the Finals; Ukraine to Play Scotland in Football Qualifier. Aired 9-10a ET
Aired June 01, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
ELENI GIOKOS, CNN HOST, FIRST MOVE: You're watching CNN; I'm Eleni Giokos in Dubai. And we begin in Ukraine where Russian forces now control about 70
percent of the key Eastern City of Severodonetsk. And that's according to one Ukrainian official, who said some of his troops have retreated.
He says evacuations have been suspended and it's become impossible to import humanitarian aid. A thick orange colored cloud was visible over the
city following an explosion involving a chemical tank Tuesday; local militia claimed the cloud contained nitric acid and blamed Ukrainian
forces.
Now the Kremlin is accusing the United States of adding fuel to the fire by supplying weaponry to Ukraine; President Biden has agreed to provide Kyiv
with more advanced missile systems. In a New York Times Op-Ed, the President wrote the goal is to see "A democratic, independent, sovereign
and prosperous Ukraine with the means to deter and defend itself against further aggression".
Now, President Zelenskyy says every day Ukraine is losing about 60 to 100 soldiers in combat. In an interview he said the situation in the east is
very difficult. And Russia's blockades of shipments in the Black Sea mean the country is facing a food crisis.
CNN Correspondent Melissa Bell is in Zaporizhzhia for us, Melissa, great to see you. I want to start off with what we see in Severodonetsk, and we know
the Ukrainians are saying that 70 percent of the city is not under Russian control. What do we know, at this minute about evacuations? And
importantly, what the Ukrainians are planning in terms of counter offensive?
MELISSA BELL, CNN CORRESPONDENT: Well, of course, it is the plight of those 15,000 civilians still believed to be inside the city that is utmost on the
minds of everyone as those Russian advances are made.
And just to give you an idea of that part of the region, the military advantage that the forces have at this stage is such that if Severodonestk
falls, the only town in Luhansk, that will remain sizable city that will remain in the hands of Ukraine will be listed shotgun that is important, of
course, strategically, if you look at a map of that region, and that is why the battle for Severodonetsk has been as fierce as it has these last few
days.
But to your question Eleni, it is because that battle is particularly fierce in the north that we believe Ukrainian forces are focusing now on
the counter offensive in the South of Ukraine. So here I'm speaking to you in Zaporizhzhia, which is roughly a half way down that line that separates
Russian controlled Ukraine today from the rest of the country.
And if you look at that map to Severodonetsk, it's that very northern tip Kherson, is that very southern tip and what's been happening over the
course of the last few days is Ukrainian Armed Forces really focusing on trying to get back that town of Kherson.
It matches strategically, because it is the only point West of the Dnieper River that is currently in Russian hands. And of course, by focusing their
firepower on those Ukrainian forces believes that they can make a difference to the overall battle that's being fought.
Now that, of course continues to be fought here, from where I'm standing - we've been hearing the sirens over the course of the night. It is the
villages that are 30 kilometers 60 kilometers southeast of here that have been being shelled, again overnight.
And I think that is one of the reasons that Ukrainians are very relieved to hear the news that President Biden is going to go down the route of
allowing some of those weapons that they've been calling for to be given a loss because it is towns like this Zaporizhzhia where you've been feeling
the pressure of that Russian advance.
And remember that the weapons that Russia has in its hands, which are not just the artillery that have allowed it to with such devastating effect to
take control of so much of southern and eastern Ukraine over the course of the last few weeks, but itself has those longer range rocket systems that
Ukrainian forces have been asking for, and that it believes will make a big difference to protecting towns exactly.
GIOKOS: Absolutely, and Melissa, look, the Ukrainians have been very vocal about the fact that there's a big possibility they'll lose the war,
particularly in the East if they don't get long range missiles. Now, the President a few days ago said no missiles that can actually reach Russia,
but now saying heavy weaponry that will assist the Ukrainians. Do we have any more detail about what this weaponry is and what these missiles can
actually do?
BELL: We do because of the opinion piece that President Biden has in "The New York Times" say and I think it's significant that Moscow had made plain
that a red line as far whereas it was concerned with a kind of weaponry those long range rocket systems that could reach up to 300 miles.
[09:05:00]
BELL: And that could threaten Russia. It had made clear that if those weapons found themselves in Ukrainian hands that would be a red line from
Moscow. So I think what we understand from the type of weaponry that Washington has now made plain.
It is willing to give Ukrainians that we're talking about, first of all, rocket systems that have a range of about 40 miles or so 50 miles or so no
more than so precisely the kind of range that would make a difference in towns like Zaporizhzhia, also the kind of munitions that would make a
difference.
And bear in mind that it isn't that Ukrainians don't have any of these long range rocket systems. It's simply that the kinds they have are out of date.
So we're talking about range, but we're also talking about the ability of these systems to be - to have that modern capacity, not just of the rocket
systems themselves, but the munitions that Washington has been providing, it says it will continue to provide to guide themselves to their targets.
So it is about the range. It is about the modernity, the high tech quality of the weaponry that Washington says it is now willing to give.
GIOKOS: Melissa Bell, always good to speak to you. Thank you so much for that context. Now, two more European energy firms have been cut off from
Russia natural gas suppliers after refusing to pay for gas in Rubles. Denmark's Orsted says Gazprom will halt, Russian gas supplies - cut off.
Now Clare Sebastian is standing by for us. And she's going to be giving me more details on that. So we had a bit of technical issues there. But I just
can see you now Clare. The list of companies that are cut off from get Russian gas is growing. I want you to telling me about the latest and of
course, the reservations of not wanting to pay in Rubles.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes Eleni, that's what this all boils down to. There are now six energy companies in six different countries in
Europe that have said they are not going to comply with Moscow's request and pay for their gas using Rubles and using this complex mechanism that
Russia is now enforcing. And as a result, they have now oil been cut off.
Now we've been looking at some of the quantities at play here in terms of the individual companies, it's relatively small, you can see sort of one
cubic, 1 billion cubic meters a year, various different small amounts. But if you add them all together, it's not insignificant that taken together
it's about 19.56 billion cubic meters.
That's about 12 and a half percent of what the EU imported from Russia last year so you can see, that's not insignificant. I think the question is how
is this now affecting Russia? Well, we heard today, from Gazprom, they said that their exports in the first five months of this year dropped by 27.6
percent, that would suggest that the cuts are coming from both sides that Gazprom is cutting off these companies, and that there are European
countries and other customers who are also cutting back.
We know that the likes of Germany, for example, has reduced its imports of Russian gas from about 55 percent of its total down to 35 percent, since
the start of the conflict. So at the same time, while its exports are down 27.6 percent Gazprom is only producing 4.8 percent less.
So I think the question going forward as to how this is going to affect Russia, is can they find new customers fast enough? And especially can they
ramp up to existing customers like China and the rest of Asia? I think the answer to that is yes, they can ramp up slowly, but they're not going to be
able to fill the gap particularly quickly and there is going to be a shortfall.
GIOKOS: Yes, changing landscape on supply and demand. Thank you so much, Clare Sebastian. Alright, so now the war in Ukraine is just one of a number
of factors pushing global inflation to highs not seen in decades.
U.S. President, Joe Biden met with Fed Chair Jerome Powell on Tuesday, and offered his full support to the Feds' goal of raising rates to help cool
down prices. But there is growing criticism that U.S. leaders underestimated the inflation threat for too long. Treasury Secretary Janet
Yellen admitted as much to CNN yesterday listen.
(BEGIN VIDEO CLIP)
JANET YELLEN, U.S. TREASURY SECRETARY: Well look, I think I was wrong then about the path that inflation would take. As I mentioned, there have been
unanticipated and large shocks to the economy that have boosted our energy and food prices and supply bottlenecks that have affected our economy badly
that I didn't at the time, didn't fully understand.
(END VIDEO CLIP)
GIOKOS: Rahel Solomon joins me now. Rahel, always good to see you! Look, it's always difficult to forecast and over that time when Janet Yellen was
looking at what inflation would do there was major pushback on hiking rates. There was a big fear of derailing growth. And it was always a gamble
in terms of the inflation outlook where do we stand right now to try and pull that back?
[09:10:00]
RAHEL SOLOMON, CNN CORRESPONDENT: Well Eleni, as you know, there's always a bit of gamble when it comes to forecasting a monetary policy. But the
message from the White House that we had heard was very clear, and we heard it quite a bit over the last year that inflation should be transitory, take
a listen.
(BEGIN VIDEO CLIP)
YELLEN: I don't anticipate that inflation is going to be a problem. But it is something that we're watching very carefully.
JEROME POWELL, U.S. FEDERAL RESERVE CHAIR: I really do not expect that we'll be in a situation where inflation rises to troubling levels.
JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: Some folks have raised worries that this could be a sign of persistent inflation. But
that's not our view, our experts believe and the data shows that most of the prices increases we've seen are were expected and expected to be
temporary.
(END VIDEO CLIP)
SOLOMON: Now, to be fair, what we heard from those officials was the consensus of many economists at the time that said that there were pretty
vocal critics sounding the alarm that, hey, this might not actually be transitory; maybe you should take your foot off the accelerator.
You can point to Mohamed El-Erian, a very prominent economist; you can point to Larry Summers, a very prominent economist who have warned
repeatedly that inflation might be a persistent problem. And as we have seen, it has played out. So look, we spoke to Larry Summers, this morning
on CNN New Day Program, about Yellen's admission and also what to do now?
(BEGIN VIDEO CLIP)
LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: I think we need to be very careful to make sure that if we have a few good months on inflation that
are better, and a few months when the economy looks a little bit weaker, that we don't ease monetary policy or stop tightening it too rapidly.
(END VIDEO CLIP)
SOLOMON: He also used the example Eleni, that you know when you're sick and you start taking an antibiotic, the temptation may be is to stop taking it
as soon as you feel better because you think you know I'm all good. He said look that would be a mistake in this situation. The Fed has said that they
are going to act swiftly and so stay the course here continue to raise rates until inflation is reined in and under control.
GIOKOS: Absolutely, you got to be proactive with monetary policy. But it's a tough one when everyone's addicted to the stimulus. Rahel Solomon really
good to see you, thank you so much!
All right, let's move on to Shanghai where millions of residents are celebrating the easing of COVID restrictions. After a two month lockdown,
most people are once again allowed outside shops have reopened and transportation services are up and running. But the city says it will still
enforce some restrictions.
CNN's Selina Wang is in Beijing with more and I have to say seeing some of the videos Selina of people bursting out of lockdown are pretty phenomenal.
I guess the question is this really back to normal now? Does it come with some caveats?
SELINA WANG, CNN CORRESPONDENT: Well, most of Shanghai's 25 million residents, they can for the first time, now walk outside drive their cars
go into shops and stores the ones that are open. But still there are more than half a million people that are still stuck under lockdown because
there have been COVID cases in their community.
And for some people this freedom is going to be short lived because if another new COVID case is found it is going to be back into lockdown. So
that feeling and Shanghai it's a mixture of both anxiety, joy relief of course.
You saw those celebrations in the streets but also disbelief because the direction from the government has been so hazard, that they're actually
surprised that they're actually able to move around so freely because as we'll see in this upcoming story, the days leading up to this bigger
reopening have been chaotic.
(BEGIN VIDEOTAPE)
WANG (voice over): Sprinting with shopping bags, residents racing to get out. After more than two months of a brutal city wide lockdown Shanghai is
finally cracking open the seal. The city's main train station packed with people trying to escape, but actually getting out of here is a treacherous
journey.
The city says it will fully resume transportation today. But earlier, people have been seeing trekking miles across highways, dragging their
luggage or strapping it to bikes, even journeys of dozens of miles or more not swing their determination.
The train station parking lot has become a campsite some leaving days earlier than their departure time. Terrified they could be locked down
again if they stay at home. The masses outside the train station, a stark contrast to the rest of Shanghai hundreds of thousands still remain locked
in. But even the lucky ones allowed out face a laundry list of restrictions. There are checkpoints everywhere.
[09:15:00]
UNIDENTIFIED FEMALE: No, this is definitely not Freedom.
WANG (voice over): This Shanghai resident and her son who wished to remain anonymous for fear of persecution from authorities were finally allowed out
after more than 80 days. Her only solace is seeing her son outside and smiling for the first time, in a long time.
UNIDENTIFIED FEMALE: My child now has depression because of the lockdown, he started waking up at night and crying and shouting and saying there were
people wearing masks in his bedroom. And he stopped eating.
WANG (voice over): those harsh reality miles away from what the government wants to show. Watch this state TV reporter pulled a microphone and camera
away and during a live interview when the resident starts to complain about the lockdown. She says I've never lived through anything like this being
locked inside your home and not allowed to go out. What a big joke? Official say the city will start returning to normal in June but residents
are doubtful.
UNIDENTIFIED FEMALE: So this does feel like endless, endless nightmare.
WANG (voice over): Her freedom lasted less than a week. One COVID case was found near her so she's back to lockdown. For over two months, Shanghai has
had its freedom taken away. Residents imprisoned at home were forced into quarantine centers like these. No one knows when this nightmare will fully
end.
(END VIDEO CLIP)
WANG: Eleni, I've got a TV right next to me here in Beijing and the entirety of that report. And actually what I'm saying currently right now
is being censored here in China, worth pointing out that after the Wuhan, lockdown was lifted after the initial outbreak and 2020 the government
hailed it as this heroic victory in response to Shanghai exiting this two month lockdown, well, it's been a lot more subdued.
In fact, the government is even refusing to admit that this was a lockdown at all. In fact, they're calling it "Static Management" in a widely
circulated notice online that was reportedly sent to media organizations in China the government asked these media organizations here not to use the
words lifting locked down.
And that is fueling frustration among many residents who are saying well, we shouldn't exactly be joyous here because the authorities they are not
recognizing our suffering. They're not apologizing to us, that everything they went through the loss of their freedom, the threat of being sent to
quarantine facilities in poor conditions.
The heartbreaking stories that people some of them who died because they were turned away from hospitals who were emergency patients because of
COVID protocols the countless, countless heartbreaking stories that there has not actually been acknowledgment of it from officials Eleni, so there
is joy anxiety heartbreak relief, a really big mix of emotions here as the city finally starts to exit that lockdown.
GIOKOS: Yes, Selina thank you so very much for that update, good to see you! Now straight ahead, it's a brand new trading month but the same
problems are still rattling investors around the world a look at markets is up next, stay with CNN.
(COMMERCIAL BREAK)
[09:20:00]
GIOKOS: Welcome back! U.S. stock futures are moving higher after soft start to the trading week in Tuesday. European shares are mostly higher as well
you can see the DOW Jones six cents of a percent and over in Europe, in the green as well.
Investors are kicking off a brand new trading month filled with the same old concerns, including the ongoing war in Ukraine and how it is helping
fuel inflation worldwide. Both Brent and U.S. Crude are currently up about 1.5 percent as investors react not only to Europe's partial oil ban on
Russia, but also the easing of COVID lockdowns in China and what that would mean for demand.
Now, oils gain may continue to be consumer's pain, U.S. gas prices jumping to fresh record highs once again today. All this is a prime concern for the
U.S. Federal Reserve as it gets to raise interest rates again, later this month.
We've got Jeffrey Kleintop joining us. He is the Chief Global Investment Strategist at Charles Schwab. Thank you so much for joining us, Jeff,
really good to see you! I mean, look, maybe the Federal Reserve's like late to the party in terms of hiking rates. The question is can they rein it in
when you see what that oil price is doing right now supply demand dynamics still very much in flux, and the U.S. consumer already feeling the pain?
JEFFREY KLEINTOP, CHIEF GLOBAL INVESTMENT STRATEGIST, CHARLES SCHWAB: Well, that's the key is how much pain is the consumer feeling demand still
remains pretty solid. But what we're seeing is, retailers are dealing with excess inventories right?
That was a recent problem here with companies like Walmart and Kohl's and Target and others talking about unwanted inventory levels. We've gone
fairly rapidly from shortages to gluts in a number of categories. And that's an indication that businesses may soon need to cut prices in order
to attract buyers.
And that can lead to a more rapid decline in inflation than many are expecting that might leave the Fed to maybe not be as aggressive as we look
out not to the summer, but maybe beyond maybe beyond the September rate hike into the latter part of this year, perhaps the Fed has the opportunity
to slow or pause their pace of rate hikes in the face of weakening consumer demand at that point and price cuts by retailers.
GIOKOS: OK, so you've said that stocks, bonds and cash are either in a bear market or teetering on bear market territory, an event that we don't
normally see we haven't seen for decades. What do you do this type of scenario? Are you seeing opportunities? Or do you think it's pointing
towards a very deep recessionary environment one that's very difficult to get out of?
KLEINTOP: These periods of the three bears meaning a bear in the stock market, the bond market, and even on an inflation adjusted basis, the cash
market are very rare. They only happen a couple other times in the 1970s. And they were usually right around the peak in inflation pressure.
So right as inflation was at its worst, and that suggests that maybe they're somewhat limited here in duration, and there may be some
opportunities emerging. One of the areas that we're interested in are our financials, particularly those in Europe an area of opportunity here
they've relatively attractive on a valuation basis.
But importantly, here, as the European Central Bank begins to embrace rate hikes, actually a positive for European financials as it improves their
profitability. And these stocks are beginning to lead the market along with the energy sector this is in contrast to what we're seeing in the U.S.
where rate hikes are being viewed with caution and concern.
In Europe they might be welcome news for the earnings of financial stocks, making up the bulk of European equities, the biggest sector over there. And
that's one of the reasons why European stocks are outperforming U.S. stocks, something that could continue in the latter part of this year.
GIOKOS: Yes, it's an interesting play there. You know, I have to say that we do see this type of inflationary scenario coming through and you
mentioned the early 1970s. That's when we saw, you know, complete commodity price shock.
And that was followed by a recovery you know, a couple of years after that. If you're in the commodities business right now, just smiling all the way
to the bank do you think that we'll see sharp demand destruction and then a quick reversion back to good times?
KLEINTOP: I think they're - not necessarily we're in an environment where we've got different parts of the world economy out of sync with each other
which are maybe somewhat rare relative to what we've seen recently.
[09:25:00]
KLEINTOP: But China is now trying to stimulate its economy and might beginning to emerge from these recent lock downs. If that's true, then
commodity demand may pick up remember copper inventories in China are very low?
So as they begin to pick up perhaps we see commodity prices begin to find their footing here soon as concerns about global economic slowdown are
offset by an optimistic take perhaps that China begins to re accelerate growth.
So I think we're in this environment where it's very difficult to foresee what the demand picture might even out to be in the latter part of this
year for commodities. We believe those prices may remain elevated to the latter part of this year.
GIOKOS: When you heard Janet Yellen saying, look, she was wrong in terms of her inflation outlook, which camp were you and at the time, don't pull back
on stimulus? Because we're, you know, we're really enjoying the cheap money here, or do we need to worry about inflation?
KLEINTOP: Well, I think inflation - the degree to which inflation rebounded caught us all by surprise, it certainly surprised to the upside, quite
surprised to the downside, over the next 12 months, if we're lucky.
But I think that it, you know, the combination of factors, the war in Ukraine, breaking out the additional supply chain challenges that we faced
earlier this year, all of them because of the COVID lock downs that took place not entirely foreseeable. So I think we've had a combination of
unfortunate events that have prompted a further price increase. But now I think it's safe to say that prices are likely to be peaking barring an
additional major global shock.
And we're likely to see them recede a little bit, again, moving this from this shortage to glut environment we're in and that raises risks for some
companies. I know we all like to see inflation come down a little bit. But there are a number of companies that have written these pricing power gains
that may be still vulnerable, like the semiconductor sector, we're starting to see gluts begin to emerge in some segments of semiconductors could be
more downside there.
GIOKOS: Jeff, really good to see you. Thank you so very much for that analysis. That was Jeffrey Kleintop, Chief Global Investment Strategist at
Charles Schwab.
KLEINTOP: Thank you.
GIOKOS: Alright, so coming up after the break with no end in sight for the war, how a Ukrainian pet product company is helping the country in the
difficult battle against Russia. That story is coming up next.
(COMMERCIAL BREAK)
[09:30:00]
GIOKOS: Welcome back! U.S. stocks are now up and running on this first trading day of the month and as expected. We've got to higher open across
the board the DOW Jones up seven tenths of a percent investors hoping for a bit of less volatility this month after a May that saw the S&P 500 briefly
dip into bear market territory. Market tests will be coming fast and furious over the next few days.
The U.S. released its latest reading on U.S. Jobs Friday. Crucial new inflation numbers will also be released next week. Now back to our top
story. The war in Ukraine in the Russian occupied city of Melitopol ordinary Ukrainians are finding their own ways to express their defiance to
Moscow. Melissa Bell has the story.
(BEGIN VIDEOTAPE)
BELL (voice over): An explosion in the Southern Ukrainian City of Melitopol blamed by Moscow on Ukrainian resistors. And on Sunday, Melitopol is
Ukraine, chanted in the heart of a town that's been in Russian hands for nearly three months.
Yellow ribbons more defiantly displayed than elsewhere in Russian held Southern Ukraine. From Crimea to Kherson symbols of silent resistance, that
Melitopol' noisily resisted from the start. After the early chance of its people were silenced and when the town's mayor was kidnapped by Russian
forces in early March, some locals turned to armed resistance.
IVAN FEDOROV, EXILED METIPOL MAYOR: It was very dangerous--
BELL (voice over): Now in Ukrainian government held Zaporizhia, Ivan Fedorov says the Melitopol will never give up.
IVAN FEDOROV, EXILED METIPOL MAYOR: They can't kidnap, they can't kill they can't make some torchers. But we can't give support because our citizens
don't want to live in Russia. I know it. Melitopol will return to Ukraine.
BELL (voice over): Melitopol fell quickly and even as Russian forces pulled back to the south and east of the country remained on the wrong side of a
line that has hardened.
MYKOLA KRASNY, UKRAINIAN MILITARY INTELLIGENCE: Russia is using hybrid methods of occupation. That means the Russian Federation is trying to
identify and destroy centers of resistance, Ukrainian partisans, such people are often uncovered and will sometimes disappear in Russian prisons.
BELL (voice over): Which is why the yellow ribbon movement has become key according to its spokesman in Kyiv? He tells me the ribbons allow people to
pass on the message that Ukraine is present here, that there is no other south than under the Ukrainian flag.
Here in Zaporizhzhia aperture there's also a sense that that line between Russian controlled Ukraine and the rest of the country is hardening even as
it continues to move forward. We can hear here the regular sound of outgoing artillery fire, but we could also see an emerging refugee crisis.
Hundreds of families living in their cars as they tried to get back to their homes now in Russian controlled cities. Melissa Bell, CNN,
Zaporizhzhia.
(END VIDEOTAPE)
GIOKOS: And speaking of resistance one of the Ukrainian businesses supporting the war efforts is Petcube, a company that makes products
connecting owners to their pets remotely. Many of the employees are helping the government including some joining the army taking directions from the
Ministry of Information to fight Russia.
Joining us now is Yaroslav Azhnyuk he's the CEO and Co-Founder of Petcube. Yaroslav, great to have you on thank you so much for taking the time! It is
incredible because I know your story right you it's a - you're this incredible company that has you know, operations and selling products in
various parts of the world but you Ukrainian made which is really special.
I know that you have a team there. Tell me about their experiences and how you've been able to get to places of safety.
YAROSLAV AZHNYUK, CEO AND COFOUNDER, PETCUBE: Absolutely, Eleni. Thanks for having me. So yes, Petcube is designed by Ukrainians and men in Ukraine,
and we've sold over a half a million devices to American families, and the team is still here and I am personally now in Lviv in Western Ukraine.
[09:35:00]
AZHNYUK: And obviously, many people had to evacuate from their homes to safer places in the country. But as much as everyone continues to do their
best job for the company, everyone is also volunteering.
So the volunteering movement inside of our company, but also in hundreds of other Ukrainian companies that are shipping goods and services, to the U.S.
and to the world is just incredible. Some examples of what people do outside of just donations.
You know, people are working with different business counterparts around the world, to explain the situation to - people stop doing business with
Russia impose sanctions; even outside of government impose sanctions.
And obviously, since those are engineers, and IT people, many of them are involved with more sophisticated things, like attacking some of the Russian
infrastructure through IT means or producing drones and other services. So I wouldn't say any particular people on our team are doing this. But I know
many teams that are working on similar things.
GIOKOS: Yes. You know, you've also described the experience of some of your employees that have had to leave very delicate situations. Tell me how your
team is doing right now? And whether they're all in places of safety at the moment, or are you concerned?
AZHNYUK: Absolutely, thank you. Well, majority of the team, pre-war were in Kyiv, and some in Odessa and some Central Ukrainian cities. So basically,
the first day of war, we had evacuation plans that were individual and most people have followed them, some chose to stay, but they were in relative
safety.
But again, this is all relative what is sort of safe for Ukrainian. And you know, people live in cities where they can hear air siren once or twice a
week, and they need to go to a bomb shelter. And that is considered to be fine and safe.
You know, that would be unthinkable for any city in the U.S. right? I live in San Francisco for six years, it's really hard to imagine. But safe
people in Israel, they sort of also used to such situation.
So people are more or less safe within our company, which cannot be told, obviously about people in the Eastern Ukrainian cities and people who did
not have a chance to evacuate and they're really in a dire situation. And that's why, you know, the whole free world is scrambling for weapons and so
on.
GIOKOS: Yaroslav, I want to also get a sense because we haven't really spoken about sort of the impact real impact on Ukrainian businesses. Are
you guys still operational? Can you give me a sense of what's going on in terms of industry and what it's like right now?
AZHNYUK: Yes, that's a great question. Actually, many Ukrainian businesses remain operational, especially those that were targeting kind of Western
markets. And in Petcube, we actually put together a website that is called "spendwithukraine.com". And that lists over hundreds of different Ukrainian
businesses, services products that are available for global consumers.
And that's yet another way to support Ukraine and people of Ukraine just go to that website and choose whatever you like and buy from Ukrainian
businesses and help create jobs. You know, it's not only about donations, or kind of public advocacy.
And those are some amazing businesses I can tell you, especially in things like lifestyle kind of furniture, and fashion and obviously technology
products like Petcubes, or we also have this company called "Delphos Bay Bikes", that makes world's fastest electric bikes and they're also have an
office in LA.
So a number of companies you would be surprised, and some of them I'm sure our listeners are using every day brought product like Grammar that
corrects your grammar when you're typing on your computer. So many of those companies have Ukrainian roots and have large Ukrainian offices. They have
relocating they're just fine and creating workplace in Ukraine.
GIOKOS: Yaroslav, thank you so very much! We forget life must go on even during times of war. Thank you so much. I wish you and your team all the
best. Much appreciate it.
AZHNYUK: Alright, thanks for having me.
GIOKOS: Now many football fans around the world are waiting an emotional match; today Ukraine will face off against Scotland in Glasgow in a delayed
Men's' World Cup qualifier. The winner will go on to play against Wales on Sunday with a spot in Qatar on the line. Alex Thomas. Welcome, you're in
Glasgow give us a preview.
[09:40:00]
ALEX THOMAS, CNN WORLD SPORT: Yes, Ukraine's players have been in Slovenia for the last month training for this World Cup qualifier delayed from
earlier in the year because of the breakout of war in their home country.
And it was clear to the football is that trying to focus on your occupation when it's just the game. While there's so much death and destruction going
on your home country is very difficult. And we saw a perfect illustration of that when star player Manchester City's Oleksandr Zinchenko broke down
in tears during the pre-match press conference, take a look.
(BEGIN VIDEO CLIP)
OLEKSANDR ZINCHENKO, UKRAINE DEFENDER: Every Ukrainian wants one thing, to stop this war. I spoke with people from all around the world from different
countries and also spoke to some Ukrainian kids who just don't understand what's happening back in Ukraine.
(END VIDEO CLIP)
THOMAS: He was actually applauded out of the press conference on Tuesday by journalists who never normally do that because we're all human. We
understand what they're going through so do the Scotland players as well.
So there will certainly be some mixed emotions amongst players and fans who want to see the Scottish team get through to the next stage of the playoffs
possibly beat Wales and reach the World Cup later this year.
But someone like Graham - Scottish legend he used to play for the national team and for Liverpool said he almost wants Ukraine to win. Such is the tug
of emotions over a football game that certainly wider than just the sport itself Eleni. And it'll be interesting to see what happens later a sellout
crowd here. Maybe around 2000 Ukrainians over for this game as well. And it'll be interesting to see how it pans out back to you.
GIOKOS: Yes, definitely an emotional game. Alex Thomas, really good to see you thank you so much! And that's it for the show. And thank you for
joining us today. Marketplace Asia is up next from Eleni Giokos, take care.
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice over): Lock downs, travel bans and an unprecedented health crisis. COVID-19 has left no corner of the
world untouched since it was officially declared a global pandemic in March of 2020.
[09:45:00]
STOUT (voice over): Two years into the pandemic, China experienced its worst outbreak since the early days of the virus. Major cities across the
country entered lockdowns, including some of its biggest financial and international hubs.
STOUT (on camera): We look at China it's a zero tolerance approach to COVID-19 and how it's affecting its economy and the global supply chain.
Plus Bollywood is big business in India but has the pandemic pushed audiences online? We take a closer look at the country's emerging streaming
giants, all that and more right here on "Marketplace Asia".
STOUT (voice over): It's China's biggest and most affluent city, but its streets were empty for almost two months. In the spring of 2022 Shanghai
battled its worst ever COVID 19 outbreak determined to crush it with a zero COVID strategy. It comes at a steep cost to its economy and has
implications for the world.
MATTIE BENINK, CHINA DIRECTOR ECONOMIST INTELLIGENCE UNIT: Shanghai is an economic powerhouse for China. It holds one of the two stock exchanges.
STOUT (voice over): Shanghai is home to the world's biggest container port. It's been up and running but the lockdowns have triggered a bottleneck.
According to logistics platform project 44 by the end of April shipment delays between China and major ports in the U.S. and Europe quadrupled.
Truck drivers have also struggled to reach ports for pickup due to travel restrictions and testing requirements. China's zero COVID strategy forced
many factories in Shanghai to suspend operations.
In late April production resumed at Tesla whose CEO Elon Musk saying Tesla Shanghai is coming back with a vengeance. But the company warned it too is
not immune from supply chain problems, which limits its factories from running at full capacity.
According to data from the China Passenger Car Association, in April, Tesla's production in China slid 81 percent compared to march and Tesla did
not export a single Shanghai made vehicle in April. Factories have been struggling to reopen as pandemic rules require the isolation of workers
inside a closed loop, which includes living facilities at the factory.
And some have had enough. All out chaos in this viral video showing workers at Apple supplier Quanta clashing with guards in hazmat suits. And it's not
just Shanghai the pain of China's punishing lockdowns has been filled across the country including the Chinese Capital Beijing.
At least 32 Chinese cities are under full or partial lockdown, affecting up to 220 million residents that's according to CNN's calculations of
government data unmade the 12th. Chinese Premier Li Keqiang pledged measures to boost jobs and maintain stability after warning of a complex
and grave employment situation.
STOUT (on camera): That warning came after China's official jobless rate hit a near two year high of 5.8 percent in March. Meanwhile, China's export
growth hit a two year low in April. And yet despite the costs, China is refusing to let go of zero COVID policy.
STOUT (voice over): In a strongly worded speech, Chinese President Xi Jinping doubled down on China's pandemic strategy seeing at present the
COVID control work is at a critical stage of selling upstream. If we do not advance we will fall back. We should test everyone who should be tested
quarantine everyone who should be quarantined, and treat everyone who should be treated.
International Business is losing patience. Both the American and EU Chambers of Commerce in China warn of a mass exodus of foreign talent in
the months ahead.
JOERG WUTTKE, PRESIDENT, EU CHAMBER OF COMMERCE IN CHINA: The moment is not good, obviously. And you can see from chamber survey to chamber survey and
70 percent also say that they are withholding investment into China. We are not moving out of China. But definitely the inability of traveling into
China and out again at the same time. This kind of uncertainty just puts everything on pause.
STOUT (on camera): You've called China's leadership prisoners of their own narrative. What do you mean by that?
WUTTKE: Well, I mean, the narrative is East is rising, the West is dropping down. Look at the mess in America. We would love to have China with an off
ramp in order to show that actually you can live with Omicron. We would all accept this, but this uncertainty about basically sticking to zero
tolerance is not a solution for us.
STOUT (voice over): A strict zero COVID policy has also hammered Hong Kong, both its economy and status as an international business hub. Incoming
Leader John Lee has pledged to solidify the city's international rule.
[09:50:00]
STOUT (on camera): What can you say right now to reassure the international community that Hong Kong is back open for business?
JOHN LEE, HONG KONG EXECUTIVE DESIGNATE: COVID is not going to live with us forever. At some stage, it will be under control. It is important that we
will do a good partisan act so that on the one hand, we will keep the disease under control. But at the same time, we will allow business to go
about as much as possible.
STOUT (voice over): With restrictions, easing and tours permitted for the first time since 2020 Hong Kong is slowly moving towards opening up to the
rest of the world. But the territory and its officials are still tethered to China, where punishing lockdowns have no end in sight. The bottom line
for the global business community; brace you for further fall out.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
STOUT (voice over): India home to the colorful world of Bollywood. Pre- pandemic this industry was booming. But more than two years of COVID-19 have directly impacted this once flourishing sector.
STOUT (on camera): And that has prompted Indian fans to turn to online streaming platforms including names may not recognize. CNN's Vedika Sud has
more.
VEDIKA SUD, CNN CORRESPONDENT (voice over): Bollywood India's Hindi language movie industry, where the fate and fortune of films is determined
by in theater audiences are protracted pandemic fractured this more than a century old industry.
SUD (on camera): Bollywood's earning blitz slow to a crawl from $2.6 billion in 2019 to just $1 billion in 2020. Pre-pandemic cinemas here in
India played an integral role in launching new Bollywood hits to their dedicated audience, but numbers have dwindled.
SUD (voice over): Local media reports major losses for some of the country's biggest cinema chains, INOX a multiplex operator reported losses
of more than $11 million in 2020 while PVR another cinema chain reported losses of over $39 million in March 2021. Analysts say India is still
watching Bollywood at a record rate they simply doing so online.
ASHISH PHERWANI, PARTNER, ENTERTAINMENT AND MEDIA, ERNST & YOUNG: What we've seen is that the top 30 to 40 million the premium audiences they have
taken extensively to OTT streaming. And that's really the growth that we're seeing in the market.
SUD (voice over): Streaming giant Netflix entered the Indian market in 2016 while Disney Plus Hotstar was launched here in 2020. Here in India, local
homegrown players continue to thrive in the market, like MX Player, a popular Indian streaming app. And Alt Balaji, a subscription based platform
with original content, but streaming giant Zee 5 five claims to have the most offerings in South Asia, with over 8.9 million daily active users as
of 2020.
The service is owned by Zee Entertainment Enterprises, India's major media conglomerate that has produced Bollywood movies and content for three
decades.
ARCHANA ANAND, CHIEF BUSINESS OFFICER, ZEE 5 GLOBAL: Our intent for going digital was on the back of wanting to really connect directly with the
consumer with COVID and you know theaters not being a possibility people were just coming onto the platform.
SUD (voice over): Analysts say India's rapidly growing mobile internet population is behind much of this growth.
PHERWANI: India today has 795 million internet subscriptions.
SUD (voice over): Local platforms haven't added competitive edge by tapping into the country's various regional languages. India has 22 official
languages and many more unofficial ones.
PHERWANI: Any kind of Concrete has to have a language play.
[09:55:00]
SUD (voice over): Some industry players here say that with streaming platforms the origins has never been more powerful. Ram Madhwani is one of
the directors behind the major Bollywood cinematic hit, Thare Zamein Paar. In 2020, he made a streaming debut directing Disney Plus Hotstar Series
Aarya followed by Netflix Dhoom Dhamaka in 2021.
RAM MADHVANI, DIRECTOR DHAMAKA: I think that the power of the remote control for the audience to throw me out of the living room with just one
button is a huge learning about how to keep them engaged?
SUD (voice over): Bollywood Actor Raveena Tandon made her streaming debut on Netflix in 2021, starring in the Thriller Series Aranyak.
RAVEENA TANDON, BOLLYWOD ACTOR: I think our industry has faced new challenges every time with every new leap of technology. OTT kept you know
industrial life support. And I think that is what worked.
SUD (voice over): For some of India's streaming platforms global expansion is the end goal. In June 2021, Zee 5 launched in the U.S. and plans to
break into new markets soon too.
ANAND: It's exciting to be where we are today. But we've got a long way to go.
SUD (voice over): Globally, the video streaming market has shown signs of slowing down. Industry Leader Netflix made headlines in April when its
stock market price plunged 35 percent. The company lost subscribers for the first time in a decade, citing shared passwords and increased competition
as factors. As more contenders enter the streaming wars we are yet to see how India's homegrown players will fit on a global scale?
STOUT (on camera): While global expansion may be the end goal for many of these companies, they continue to evolve for local audiences as well. In
fact, as recently as April this year, Zee 5 announced plans to increase investment in Indian regional language content. For more on these stories
and others, check out our website just go to cnn.com/marketplaceasia. I'm Kristie Lu Stout in Hong Kong thank you for watching. I'll see you next
time.
(COMMERCIAL BREAK)
END
