AI Optimism Boosts China Tech Stocks to 2021 High | The China Show 9/17/2025

“Bloomberg: The China Show” is your definitive source for news and analysis on the world’s second-biggest economy. From politics and policy to tech and trends, David Ingles and Yvonne Man give global investors unique insight, delivering in-depth discussions with the newsmakers who matter.

Chapters:
00:00:01 – Bloomberg: The China Show opens
00:03:36 – What to watch in Greater China today
00:04:52 – Fed meets with focus on future rate-cut path
00:09:03 – TikTok buyers group to include Oracle, Silver lake, Andreessen
00:12:01 – EU Chamber of Commerce in China on Beijing’s 5-year plan
00:27:30 – Alert: Baidu shares jump in Hong Kong to highest since Oct. 2023
00:28:06 – China’s new plan for service consumption boost
00:36:49 – Funds warn Asia’s record stock rally may unravel as tariffs bite
00:41:10 – Hong Kong leader’s policy speech to focus on economy
00:45:46 – Baidu volume surges: 13M shares traded in first half-hour of session
00:49:44 – Fed meets with focus on future rate-cut path
00:53:14 – Opinion: More dollar weakness ahead with Miran in Fed
00:57:09 – StashAway’s Stephanie Leung on Fed rates outlook, gold
01:11:06 – HK Chief Executive set to deliver policy address
01:21:01 – Baidu jumps on optimism over new in-house chip venture
01:27:02 – Indonesia mulls new central bank mandate
——–
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>> A HALF-HOUR UNTIL THE OPENS
IN MARKETS. YOU’RE WATCHING “THE CHINA
SHOW.” DAVID: FED FALLING TO ITS WEAKEST. >>
ORACLE AND SIGNATURE VERY LAKE SET TO TAKE OVER CHINA’S U.S.
OPERATIONS. DAVID: ALSO, CHINA ISSUES WIDE-RANGING
EFFORTS TO STIMULATE THE SERVICES ECONOMY, BUILDING ON EFFORTS TO BOOST CONSUMPTION. GOOD MORNING, IT’S THE APPROACH
TO THE FED DECISION. SOME THINGS HAVEN’T CHANGED,
SOME THINGS HAVE CHANGED. WORTH NOTING THAT WE ARE COMING
OFF THE LONGEST WIN STREAK IN TERMS OF ASIAN EQUITY MARKETS
GOING BACK TO FIVE OR SO YEARS. NINE STRAIGHT DAYS.
THAT COULD CHANGE GOING INTO THE REST OF THE TRADING SESSION.
WHAT HAS CHANGED IS REALLY AS IT PERTAINS TO THIS WEAKNESS IN
THE U.S. DOLLAR AND THE BREAK BLOW A
TEND, BREAK BELOW JULY LOW AND WE’RE PRETTY MUCH TRADING AT
THE WEAKEST OR LOWEST ON THIS MEASURE GOING BACK TO EARLY OF
2022. GOLD IS INCHING EVER SO SLOWLY BUT ALMOST SURELY TO THE 3700.
BOTTOM OF YOUR SCREENS. R.S.I. IN TERMS OF THE BREAKOUT OF THE
DOLLAR, IF YOU’RE CLOCK FOR EXCHANGE RATES AND THEY DON’T
LOOK FAMILIAR. THEY DON’T. THE AUSSIE DOLLAR, NOW 67 CENTS.
THE DOLLAR AGAIN HAS A 1.46. INFLATION COMING THROUGH LATER
TODAY OUT OF THE U. CONFERMENT PLUS THE BANK OF
ENGLAND DECISION TO CONTEND WITH TOO.
IN TERMS OF WHAT HAPPENS OVERNIGHT THE GOLDEN DRAGON
INDEX. SO YOU HAVE A COUPLE OF CHANGES
TO INDIVIDUAL RATINGS HERE. THE LATEST ONE TO COME THROUGH
WAS DOLEDMAN ON ALIBABA. BAIDU RAISED TO BUY BUT THEY
SKIPPED INTO THE UPSIDE AND NEO FOCUS THERE.
GOING INTO THE OPEN TODAY. THE FUTURES ARE LOOKING LIKE
THIS. WE HAVE, OF COURSE, 11:00 A.M.
LOCAL TIME, THE POLICY ADDRESS COMING THROUGH WITH THE CHIEF
EXECUTIVE. STEPHEN ENGEL IS COVERING THIS.
AND I BELIEVE THE 3:00 P.M. LOCAL IS THE SERVICES SECTOR
BRIEFING MAYBE TO EXPAND ON WHAT WAS ANNOUNCED
ALREADY-POINT IN TERMS OF FLOWS. IT TURNED NEGATIVE FOR THE
FIRST TIME YESTERDAY IN 12 DAYS. BY THE WAY, FOR THOSE WHO ARE
LOOKING AT THE WEATHER. THE TYPHOON SIGNAL COULD BE
RAISED ANYWHERE BETWEEN TONIGHT AND TOMORROW MORNING IN HONG
KONG. >> CERTAINLY INTERESTING WHAT
WE’RE GOING TO HEAR. WHETHER IT’S HIS POLICY ADDRESS
AND WHAT’S DRIVING THE MARKET SPACE.
WHETHER IT’S NEO OR ALIBABA ADDS MORE FUEL TO THE CHIP
STOCKS. NOW THAT WE HAVE DOLLAR CHINA
AT A 7.10 HANDLE. POLICY ADDRESS FROM JONG LEE AS
WELL. IT COULD BE A PRETTY LONG PEACH.
CONSUMPTION SECTOR AS WELL. IT’S TARGETING SPORTS,
ENTERTAINMENT. LOOK FOR THOSE SECTORS ON THE
BACK OF THESE 19 ANNOUNCED MEASURES. DAVID: NO NEW FUNDING.
>> NO NEW FUNDING. GOLD CONSUMPTION ARE THE ONES
TO WATCH. DAVID: REALLY ON THE BACK OF THAT TOO.
WE’RE GOING TO INTO THIS — WE’RE COMING OFF FAIRLY
DISAPPOINTING ECONOMIC NUMBERS SO ON TOP OF THE SERVICES OUTLINED WE’RE GETTING A FEW
KNEE. >> REPORTS.
THE SECURITIES COUNSELOR REPORTING THAT CHINA HAS ENOUGH
FISCAL POLICIES TO SUPPORT GROWTH AND ALSO COMING THROUGH,
THE SECURITIES JOURNAL ON THE PBOC FRONT EXPECTED TO HAVE AMPLE EQUITY GOING INTO
SEPTEMBER. YVONNE: OF COURSE WE’RE WATCHING
CLOSELY THE FED DECISION. I THINK THE VIBE GETTING INTO
THIS IS REALLY JUST SELL DOLLAR. YOU HAVE TO WONDER WHAT THE
DOTS ARE GOING TO LOOK LIKE. THE TWO-YEAR YIELD HAS BAKLEY
COLLAPSED IN TWO BASIS POINTS ALREADY.
HOW DOVEISH DOES IT HAVE TO BE TO SUSTAIN THESE GAINS RIGHT
NOW? DAVID: AND WHAT DOES THE GAIN OF MR.
MIRAN EFFECTIVELY MEAN? THE ONLY TIME THEY’VE BEEN ABLE
TO DELIVER 50 — THE FED HAS POINTED OUT THAT I THINK THE
FED HAS ONLY MOVED 50 IN EMERGENCY CASES.
IN THIS CASE IT’S BACK DATED 50. THE FRONT END OF THE CURVE AND
HOW MUCH MORE COLLAPSING CAN WE GET? PAUL DOBSON JOINS US OUT OF
SINGAPORE. PAUL, THIS TIME TOMORROW WE’LL
UNDERSTAND WHERE THE DOTS WILL BE.
SHOULD WE EXPECT TRADING TODAY TO BE VERY CAUTIOUS GIVEN HOW
FAR EQUITY MARKETS HAVE ALREADY MELTED UP? >> ONE THING YOU’LL WANT TO
WATCH OUT FOR AND ALL RIGHT CURRENCY MARKET AND WHETHER WE
GET A UNFORTUNATE N. FIX BELOW.1 GIVEN THE WEAKNESS
IN THE DOLLAR OVERNIGHT. THERE SEEMS TO BE A LITTLE BIT
OF RESISTANCE FOR PRICING THROUGH THAT LEVEL.
THAT COULD BE AN INTERESTING ONE OF WATCH OUT FOR.
NOT JUST FOR THE CHINESE CURRENCY BUT AS AN ANCHOR FOR
THE REST OF THE REASON AND THAT MAY GIVE US MORE EXCITEMENT IN
VOLATILITY. WE SAW THE EURO PUNCHING
THROUGH THAT TO FOUR-YEAR HIGH OVERNIGHT FOR US.
OTHERWISE, THAT PRE-FED LULL AND THERE IS SOME WEAKNESS IN
EQUITIES TODAY AND THAT MIGHT HAVE PARTLY TO DO WITH THE
STRENGTH OF LOCAL CURRENCIES BUT I ALSO WONDER IF, GIVEN
THAT HUGE RALLY WE’VE HAD, THAT VERY LONG RUN OF GAINS, THERE’S
A LITTLE BIT OF A PULLBACK. PEOPLE SITTING BACK AND TAKING
THEIR CHIPS OFF THE TABLE AS THEY SEE JUST HOW DOVEISH THE
FED IS GOING TO BE. YVONNE: WHAT ARE WE LOOKING AT THIS
TERMS OF HOW TO MURTHA AND WHAT COULD BE SOME OF THE DOWNSIZE
RISK TO THIS MARKET IF WE DO HERE MAYBE EVEN NOT AS DOVEISH
BUT A SORT OF HAWKISH POWELL LATER ON TODAY? PAUL:
POWELL HAS BEEN RELATIVELY HAWKISH IN CLINGING ON TO THE
IDEA THAT INFLATION IS KNOT COMPLETE.
WE’RE NOT COMPLETELY IN THE CLEAR AS FAR AS INFLATION IS
CONCERNED AND THE VIEW OF THE TARIFFS JUST YET.
THE EXPECTATION IS FOR A CUT OF 25 BASIS POINTS TODAY.
NO MORE, NO LESS. THERE MAY BE SOME DISSENT IN
EITHER DIRECTION BUT THAT SEEMS TO BE PRETTY MUCH PAR FOR THE
COURSE. PEOPLE LOOKING AT THE DOTS.
ARE WE GOING TO SEE ONE MORE CUT OR EVEN TWO MORE CUTS FOR
THE REST OF THIS YEAR AND HOW MUCH NEXT YEAR?
MARKET IS PRICING IS SIX CUTS MILLION THE END OF NEXT YEAR.
FED IS GOING TO HAVE TO GET KIND OF CLOSE TO THAT END OF
YEAR INDICATIONS. PEOPLE EVEN EXPECTING A 50
BASIS-POINT CUT AT SOME POINT BETWEEN NOW AND DECEMBER.
SO 100% OF CUTS. IT STRIKES ME AS LOTTERY CASES
IN CASE THE FED GOES HARDER THAN WE EXPECT.
ON THE OTHER HAND AS YOU SAID, THERE’S RESISTANCE TO WHAT THE
FED POLICYMAKERS HAVE BEEN SAYING. THE LIKES OF SCHMIDT IN
PARTICULAR HAVE BEEN NOT EXACTLY LEANING INTO THE IDEA
THAT THEY NEED TO HAVE A WHOLE SERIES OF CUTS.
IT’S QUITE POSSIBLY THAT POWELL IS GOING TO HAVE TO TREAD
CAREFULLY TO TRY TO TREAD THAT NEEDLE IN THE PRESS CONFERENCE.
YVONNE: THANK YOU, PAUL DOBSON JOINING
US OUT OF SINGAPORE. MEANWHILE, WE’VE BEEN TALKING
ABOUT THIS WHOLE TIKTOK DEAL. BLOOMBERG HAS BEEN TOLD THAT
U.S. OPERATIONS ARE SAID TO BE ACQUIRED BY A CON SORT YUM FROM
THE LIKES OF ORACLE, HOROWITZ AND SILVER LAKE.
WHAT MORE DO WE KNOW AT THIS POINT? >> I THINK A LOT OF THE
CONTOURS OF THE DEAL BEING REPORTED ARE SORT OF WHAT WAS
REPORTED EARLIER THIS YEAR. SHAPE WE WERE EXPECTING TO IT
TAKE BEFORE IT WAS DERAILED BY TRIP ANNOUNCEMENTS.
BUT YOU HAVE THREE DIFFERENT POSSIBLE PEOPLE, GROUPS TAKING
STAKES HERE. ORACLE, ANDRESSEN HOROWITZ AND
ALSO SILVER LAKE. HOW MUCH OF A STAKE IS
BYTEDANCE GOING TO HAVE? AND THAT’S BATTED TO FALL DOWN
TO 20% OR LESS SO THAT COULD BE THE THRESHOLD THAT IS ENOUGH TO
GET IT OVER THE LINE WITH LAWMAKERS.
BIG QUESTION IS THIS GOING TO BE ENOUGH TO AS MUCH BEIJING AS
WELL? DAVID: QUESTIONS DID ARISE IN TERMS OF
THE ALGORITHM, WHAT HAPPENS WITH THAT.
WE ALSO UNDERSTAND IN TERMS OF TIME RUNWAY, THEY’VE PUSHED IT
BACK TO DECEMBER 16, I BELIEVE. ANNABELLE:
GIVEN THAT THERE SEEMS TO BE ENOUGH PROGRESS FROM BOTH SIDES
AND WE HAD THAT IN THE TALKS IN MADRID.
IT’S BEEN ENOUGH TO OPEN THE DOOR TO THE CALL THIS WEEK
BETWEEN WITH THE XI AND TRUMP. THAT TELLS I IT’S MOVING IN THE
RIGHT DIRECTION. BUT IT NEEDS MORE TIME.
SO THAT DEADLINE UNTIL DECEMBER. THE FOURTH TIME WE’VE SEEN AN
EXTENSION. THE ALGORITHM HAS BEEN THE
QUESTION QUESTION AND KEY STICKING POINT.
WHAT CHINA WAS SAYING AFTER THE TALKS IN MADRID WAS THAT THAT
WOULD BE LOOKING TO LICENSE ALGORISM TO THE AMERICAN
OPERATIONS. KEEP IT IN CHINA’S HANDS BUT
LICENSING THAT INSTEAD. THAT COULD BE ENOUGH TO APIECE
CHINA AND GET THEIR SIGN-OFF AS WELL. DAVID:
THANK YOU SO MUCH, ANNABELLE. JUST AHEAD HERE, WE’RE SPEAKING
WITH THE HEAD OF THE EUROPEAN CHAMBER OF COMMERCE IN CHINA. A NEW POSITION PAPER OUTLINING
LONGER TERM STRUCTURAL REFORMS THAT THEY SEE AND HOPE WILL BE
CONSIDERED AS WE LOOK AHEAD TO THE 15 OF THE FIVE-YEAR LAND.
JENS JOINS US. ALSO IN 20-ODD SECONDS ALREADY
SO THE RELATIVELY MID POINT OF THE DAY WILL BE VERY MUCH IN
FOCUS FOLLOWING THE BREAKDOWN OF THE DOLLAR ON THE DOWNSIDE.
PLENTY MORE AHEAD. THIS IS “THE CHINA SHOW.”
GOOD MORNING. YVONNE: LET’S TALK ABOUT POLICY.
CHINA EXPECTED TO ANNOUNCE ITS NEW FIVE-YEAR PLAN IN THE NEXT
FEW MINUTES OUTLINING HIS SOCIAL AND ECONOMIC DEVELOPMENT
GOES FOR THE NEXT HALF A DECADE. CHAIN IS CALLING ON BEIJING FOR
REFORMS TO CREATE EQUITABLE TRADE RELATIONSHIPS AND
INCREASE ACCESS TO GREEN FORTUNE. JOINING US NOW IS THE CHAMBER’S
PRESIDENT JENS EKELUND. IT’S YET TO HAVE YOU.
IT’S A LENGTHY PAPER. WALK US THROUGH WHAT EUROPEAN
BUSINESSES ARE HOPING FOR THIS TIME AROUND? >> THANKS FOR HAVING ME.
AS YOU MENTIONED, THERE ARE VARIOUS AREAS WE WON’T TO FOCUS
ON. WE THINK CHINA HAS BEEN SUCCESSFUL IN BOOSTING
SELF-RELIANCE AND FOCUSING ON MANUFACTURING AND CLIMBING AT
THE VALUE LEVEL BUT IT’S CLEAR THAT THIS HEAVY FOCUS ON
INDUSTRIAL POLICY, ON SUPPORTING MANUFACTURING HAS
LED TO OVERCOMPETITIVENESS WE HAVE IN CHINAEVOLUTION.
WE’VE SEEN MASSIVE WASTE WHETHER IT’S SOLAR PANELS, AND
SO ON. AND WE HAVE SEEN HOW THESE
IMBALANCES IN TRADE ARE CREATING TRADE FRICTION WITH
OTHER COUNTRIES, NOTABLY WITH THE UNITED STATES.
WE THINK IT’S TIME TO RECOGNIZE THAT SOME THINGS HAVE BEEN
WORKING PRETTY WELL BUT ALSO IT’S NOW TO CHANGE TRACK. YOU NEED TO PRODUCE SOME OF
THESE OUTCOMES THAT NO LONGER PRODUCE POSITIVE OUTCOMES FOR
BUSINESSES IN CHINA AND FRANKLY FOR THE REST OF THE WORLD.
THAT’S WHAT WE’RE TRYING TO DO IN A CONSTRUCTIVE WAY.
PUT FORWARD IDEAS IN WHAT REALLY NEEDS TO HAPPEN. DAVID:
JENS, WHAT’S THE — WE WERE TALKING ABOUT THIS DURING
BREAK, A BIT OF BANTER. OF COURSE, IT’S 300 PAGES AND
IT’S MEANT TO REALLY GET THE ATTENTION OF PEOPLE WHO ARE
DRAFTING THIS FIVE-YEAR PLAN. WHICH HAS CONSEQUENCES BEYOND
THE FIVE YEARS. SIDE EFFECTS, FOR EXAMPLE.
SO WHAT WOULD BE THE MOST URGENT STRUCTURAL STRUCTURE ASK
BASED ON HOW THE 14TH FIVE-YEAR PLAN WORKED OUT AND WHAT SHOULD
BE THE NEXT VERSION OF THAT? >> WE THINK IT’S URGELY NEEDED
THAT YOU BEGIN TO LOOK FOR DIFFERENT PLACES FOR GROWTH.
IN MANY INDUSTRIES THERE’S NO NEED FOR IT I.M.F.
ANYMORESO WE NEED TO LOOK FOR OTHER SOURS.
WE CAN SEE THAT SERVICES AS A PROPULSION OF THE ECONOMY IS
MUCH MORE IN CHINA THAN IN COMPARABLE COMPANIES.
WE’VE SEEN BOTH AT THE NATIONAL CONFERENCE THAT THERE’S A LOT
OF FOCUS ON THE MAIN SIDE. HOW DO YOU CREATE CONSUMPTION
GROWTH? BUT THAT IS NOT ENOUGH. YOU NEED TO LOOK AT THE SUPPLY
SIDE ALSO AND WHAT WE HAVE SEEN AND WHAT WE THINK IS ONE OF THE
ROOT CAUSES OF THESE THREE CONSECUTIVE YEARS OF PRODUCER
PRICE DEFLATION IS SUPPLY FROTH AND MANUFACTURING OUTPUT GROWTH
THAT CONSISTENTLY IS HIGHER THAN THE GROWTH.
WE SEE CONSUMPTION GROWING AT A HEALTHY CLIP.
I THINK RETAIL GROWTH WAS 4.67% FOR THE FIRST HALF.
THE PROBLEM IS OUTPUT, SUPPLY IS GROWING EVEN FASTER AND AS
LONG AS SUPPLY CONTINUES TO GROW FASTER THAN DEMAND WE’RE
NOT GOING TO GET OUT OF THIS DEFLATIONARY CYCLE SO SOMETHING
NEEDS TO HAPPEN. ONE IS BOTH AT THE LOW LEVEL OF
THE AS MUCHS OF THE ECONOMY AND MAYBE REDUCE THE NEED THAT
CHINESE FAMILIES FEEL TO HAVE PRECAUTIONARY SAVINGS AT LEVELS
THEY HAVE TODAY BECAUSE MONEY IS THERE.
PEOPLE ARE JUST NOT SPENDING. YVONNE:
YEAH, WHERE DOES TRADE IN TARIFFS FALL INTO THAT?
OBVIOUSLY THERE’S BEEN PRESSURE FROM PRESIDENT TRUMP TO URGE
EUROPE TO — SLAP 100% TARIFFS ON CHINA.
WHAT WOULD BE AN EQUITABLE TREAD RELATIONSHIP THEN? >> I THINK IT’S A VERY GOOD
QUESTION. I JOINED THE SHOW TWO YEARS AGO
AND WE TALKED AT THAT TIME THAT TRADE WAS MOVING LIKE A TRAFFIC
ACCIDENT. I THINK THE TRAFFIC ACCIDENT IS
HERE RIGHT NOW, AT LEAST WHEN YOU LOOK ACROSS AT THE PACIFIC.
IF WE GO BACK RIGHT BEFORE THE 14TH FIVE-YEAR PLAN, CHINA
ACCOUNTED FOR 389.9% OF ALL CONTAINERS IN THE WORLD.
ALREADY A VERY HIGH PROPORTION. THE LATEST DAT I-I HAVE
INDICATES THAT CHINA ACCOUNTED FOR 37% OF ALL CONTAINERS
EXPORTS IN THE WORLDS. I THINK COUNTRIES AROUND THE
WORLD WILL BEGIN TO ASK THEMSELVES HOW MUCH MORE CAN WE
ABSORB? AND WE THINK IT’S IMPORTANT
THAT CHINA REALIZES THERE ARE THESE CONCERNS AROUND THE WORLD
AND BEGIN TO ENGANG IN TRAILED TALKS WITH PARTNERS.
IT DOESN’T THESE TO BE EURO TO EURO TRADE.
WE DON’T NEED TO DO GARDENING FURNITURE AND APPAREL AND SOLAR
PANELS AND ALL THAT. BUT THERE IS A POINT WHERE ALL
THESE IMBALANCES BEGIN TO AFFECT ECONOMIC SECURITY AT THE
INDUSTRIAL BASE. THAT’S A CONCERN CHINA HAS HAS
FOR MANY YEARS AND I THINK THEY’LL UNDERSTAND IF EUROPE
AND OTHER COUNTRIES BEGIN TO HAVE THESE CONCERNS.
IT’S A MATTER OF EUROPE BEING A MASTER OF IT OWN DESTINY AND IT
CANNOT IF IT’S LOSING SOME STRUCTURALLY IMPORTANT
INDUSTRIES THAT ALLOW US TO MAKE OUR OWN DECISIONS. DAVID:
AGAIN, TO YOUR POINT, WE DON’T LIVE IN A VACUUM SO WHAT
HAPPENS ANYWHERE, WE FEEL IT SOMEWHERE ELSE.
AND I THINK RECENTLY WE’VE HEARD — OVERNIGHT WE HAD
OFFICIALS OUTLINING MEASURES TO BOOST SERVICES CONSUMPTION, FOR
EXAMPLE. SO THERE ARE REFORMS AND
MEASURES BEING PUT IN PLACE TO ADDRESS DEMANDS IN THE
EQUATION, WHICH MIGHT GO INTO ADDRESSING SOME OF THE MORE
GLOBAL ISSUES. WHAT ARE YOUR MEMBERS EXPECTING
TO COME OF THAT EXERCISE AND IN WHICH SECTORS SPECIFICALLY ARE
YOU STARTING TO SEE, IF ANY, PROFIT MARGINS START TO IMPROVE?
>> WHAT WE SEE IS THAT — WE DON’T REALLY SEE A GREAT
IMPROVEMENT AS A GENERAL OBSERVATION.
WHAT WE ARE SEEING ALSO ON THE BASIS OF SOME OF THESE DEMAND
SUPPORTING MEASURES IS THAT A NUMBER OF OUR MEMBERS HAVE BEEN
ABLE TO GROW THEIR TOP LINE. THAT HAS BEEN ARRESTED AND WE
DID OUR CONFIDENCE SURVEY IN MAY AND ALREADY THERE IT WAS
REFLECTED. WHEN YOU LOOK AT THE INTERIM,
THE COMING TWO YEARS THAT IN GENERAL OUR MEMBERS ARE MORE
POSITIVE IN REGARDS TO GROWING THEIR TOP LINE THAN THEIR
BOTTOM LINE. ONE OF THE COPING MECHANISMS
THAT WE SEE IS THAT A LOT OF EUROPEAN COMPANIES THAT CAME TO
CHINA TO BE IN CHINA FOR CHINA ARE BEGINNING TO EXPORT SOME OF
THEIR PRODUCTION BECAUSE RIGHT NOW IN MANY, MANY CASES, MANY
INDUSTRIES, THE MARKETS THAT YOU FINDS ARE BETTER INSIDE
CHINA THAN OUTSIDE CHINA. SO, AGAIN, EXPORTING, WHETHER
IT’S MACHINERY OR CHEMICALS, SPARE PARTS, YOU NAME IT.
EXPORTS IS A WAY THAT YOU CAN COPE.
THAT, OF COURSE, JUST ADDS TO TRADE TENSION AND THAT’S AGAIN
WHERE WE NEED TO SOLVE CHINA’S DEMAND TO PICK UP AND FOR CHINA
TO LOOK AT WHAT IT CAN DO ALSO TO CREATE MORE BALANCE. DAVID:
JENS, THANK YOU SO MUCH FOR TAKING THE TIME. GENESIC LEGEND.
PRESIDENT AT THE EUROPEAN UNION CHAMBER OF COMMERCE IN CHINA.
SEVEN MINUTES AWAY TO THE OPENING BELL AND WE’RE LOOKING
AT THESE NAMES ON YOUR SCREEN. WE’LL TELL YOU WHY.
THE WEDNESDAY SESSION 6:40 AWAY. DAVID: MARKETS RALLIED, SEAS SIDES
CATCHING UP. GOLDMAN SACHS RAISING THEIR
PRICE TARGETS. ALIBABA HAS CAUGHT UP TO THAT.
NOW 1.74. ON BACK OF MANY, MANY THINGS
INCLUDING T THE UNX AND THE RETHINKING OF
CLOUD BUSINESS ASK HOW MUCH IT’S WORTH OCCURRING THIS TIME.
YVONNE: THEY UPGRADEDDED STOCK FROM A
GUY BUY TO A SELL AND SAY THIS NEW IN-HOUSE CHIP EVENTUALTURE
HAS THE POTENTIAL TO MORE THAN OFFSET THE STRUGGLING ONLINE
BUSINESS. A.I. CHIPS STILL REMAIN QUITE UNDER
SUPPLY IN CHIN SO MAYBE SOME MORE UPSIDE FROM THERE. DAVID:
B.Y. EFFORT TO B.U.Y. WHEN YOU LOOK AT THE PRICE
STOCK. GOING INTO THE OPEN TODAY AND
IT LOOKS LIKE OPEN IN GREATER CHINA MIGHT DO A LOT IN TERMS
OF LIFTING THE OVERALL BENCHMARK.
UP .5% GOING INTO THE WEDNESDAY SESSION.
THE OPENING BELL IS COMING UP NEXT. DAVID: WELCOME BACK.
YOU’RE WATCHING “THE CHINA SHOW.”
WE’RE LOOKING AT JUST A VERY LONG LIST OF SECTORS TODAY.
SO FROM SERVICES GIVEN THE MEASURES THAT WERE ANNOUNCED
YESTERDAY AND OF COURSE EVEN FURTHER BRIEFING THIS AFTERNOON
WE’LL TALK MORE ABOUT THAT OUT OF BEIJING IN A MOMENT.
AND A LOT OF CHANGES IN TERMS OF ANALYST RATINGS IN TERMS OF
THE TECH SPACE, M.S. COMING OUT WITH ONE ON THE
HUMANOID STOCK ROBOT RALLY AND SEVERAL REPORTS OUT OF THE F.T.
AND CHIPS AND ADVANCED MAKING TOOLS AND I BARELY SCRATCHED
THE SURFACE HERE OF MANY, MANY PARTS OF THIS MARKET. YVONNE:
THERE’S A LOT OF A.I. RELATED NEWS. DAVID:
THAT’S A GOOD WAY TO PUT IT. YVONNE:
AND AS WE APPROACH THIS FED SORT OF DECISION AND WHEN
PEOPLE ARE SAYING THAT THE — TO BE BEARISH ON THE DOLLAR AND
BREAKOUTS THAT WE’RE SEEING ACROSS F.X.
DOES SHOW THAT MAYBE THAT ADDS A BIT MORE ON A REASON TO MAYBE
BUY UP THIS A.I. TRADE MAYBE UNTIL JAY POWELL
SPEAKS, RIGHT? WHAT IT COMES DOWN TO, SMIC-1
WHICH WE WILL IN YOUR OUT A BIT AND — A BIT OF A PAUSE HERE
BUT CERTAINLY THE FACT THAT WE DID SEE SOUTHBOUND FLOWS ALSO
SNAPPING OUT OF 12 DAYS OF NET BUYING DOES SUGGEST MAYBE THE
SENTIMENT IS MAYBE STABILIZING A LITTLE BIT HERE.
BUT WE’RE WATCHING VERY CLOSELY THOSE CHIP STOCKS LIKE
CAPRICORN DOWN 2% HERE. CATL. THAT CONTINUES TO BE A STORY
HERE TODAY. BUT CERTAINLY THERE’S LOTS OF
THINGS TO WATCH PARTICULARLY WHEN IT COMES TO THAT RENMINBI.
SO GIVEN THAT THE DROP THAT WE SAW IN THE DOLLAR OVERNIGHT AND
WE’RE TALKING ABOUT A 7-10 HANDLE FOR THE OFFSHORE RIGHT
SO MAYBE CONTINUED UPSIDE FOR EQUITIES.
WE TALKED ABOUT THIS VIRTUOUS CYCLE BETWEEN A STRONG RENMINBI
AND LEANING TOWARD AND THE INFLOWS INTO THIS EQUITY MARKET.
LET’S LOOK AT THE BOARDS NOW. WE TALK ABOUT THE TURNOVER THAT
WE SAW TOPPING SOME $2 TRILLION FOR THE FOURTH DAY AS WELL.
THERE YOU GO. AND THE TECH SPACE, THAT’S
WHERE ALL THE ACTION IS RIGHT NOW, RIGHT?
AND ONCE AGAIN, GIVING HONG KONG A LITTLE BIT MOYER AFTER
KAPP FROM THE A SHARE MARKET AND WHEN IT COMES TO ALIBABA UP
2.5% AND ON THE BACK OF THAT GOLDMAN UPGRADE TALKING ABOUT
A.I. CLOUD IS WHERE IT’S AT RIGHT
NOW. BAIDU AS WELL. 9% UPSIDE. AFTER WHAT WE HEARD FOR LIKE
SEAN YANG. THEY BASICALLY WENT FROM A SELL
OPERATED STRAIGHT TO A BUY. SO UP TWO NOTCHES THERE WHEN IT
COMES TO RECOMMENDATIONS. SAYING THAT LOOK, WHAT WE’RE
SEEING IN THIS IN-HOUSE CHIP THAT THEY SEEMINGLY REPORTEDLY
ARE DEVELOPING, MIGHT OFFSET WHAT WE’RE SEEING IN THE CORE
BUSINESS. WHICH REMAINS THE AD BUSINESS
THAT CONTINUES TO STRUGGLE, RIGHT? AND THAT HAS BEEN WHAT’S
WEIGHING ON THIS STOCK IN PARTICULAR.
NOT TO MENTION ALSO WHEN IT COMES TO BAIDU AND HAS — A
LAGGARD IN THE WHOLE A.I. RACE AS WELL.
SO MAYBE THIS IN-HOUSE CHIP NARROWS THAT GAP A LITTLE BIT
AS WELL. AND UP 1.6% THIS MORNING AND
WE’RE TALKING ABOUT DOLLAR RENMINBI. 7-10 LEVELS.
THE PROPERTY HAYES AND HANG SENG THAT’S A KEY ONE TO WATCH.
WE ARE SEEING RED IN THESE DEVELOPER NAMES HERE AND
LOOKING AT THIS HONG KONG POLICY ADDRESS LATER ON.
EVERYTHING FROM MAYBE PROPERTY MEASURES, SO-CALLED PROPERTY
CONNECT, MAYBE MORE CROSS-BORDER TURN OF BUYING OF
PROPERTY THAT CERTAINLY IS ONE KEY THING TO WATCH.
AND MAYBE CREATE A WHOLE A.I. TECH HUB HERE AS — ARE SOME
FINDS OF WHAT PEOPLE ARE ANTICIPATING AT LEAST FROM THAT
POLICY ADDRESS AS WELL. SO CERTAINLY THAT’S ONE TO
WATCH. CHIP MAKERS, SO WE TALK ABOUT
SMIC. ACCORDING TO THE F.T., THEY ARE
TRYING ADVANCE TOOLS FOR A.I. CHIP MAKING HERE.
SO THIS IS WHAT WE’RE HEARING IN TERMS OF DEEP ULTRAVIOLET
LYGHT 0TH GRAF MACHINES. — LYGHT 0TH RAEF MACHINES.
AND MIXED PICTURE BUT MOSTLY HIGHER, AND WE TALK ABOUT OF
COURSE CONSUMPTION. STIMULUS. AND THE SERVICES SECTOR, RIGHT?
SO WHAT WE HEARD A LITTLE BIT IN THIS SORT OF ANNOUNCEMENT
WAS THERE’S NO FUNDING, THERE’S NO ADDITIONAL SORT OF SUBSIDIES
PER SE. BUT REALLY IT’S MORE ABOUT
BUILDING THE INFRASTRUCTURE OR AT LEAST HELPING IN TERMS OF
THE BUDGET FOR INFRASTRUCTURE FOR THE LIKE OF SPORTING AND
ENTERTAINMENT AS WELL. AND MAYBE HELPING SOME OF THESE
BANKS IN TERMS OF LOANING TO SOME OF THESE COMPANIES.
SO YOU ARE SEEING A LITTLE BIT OF UPSIDE FROM ANTA. DAVID:
EXTENDING THE OPERATING MOWERS OF MUSEUMS AND TOURIST SITES
AND HOSTING SOME SPORTING EVENTS, WHICH IS REALLY
SOMETHING THAT WAS FLAGGED ALREADY AS SOME KEY SECTORS TO
HELP BOLSTER. AND WE’LL HAVE MORE ON THAT IN
A MOMENT. BUT BEFORE THAT TO TO GO BACK
TO THE BAIDU STORY, CAN WE GET THAT UP, PLEASE F. WE CAN?
THANK YOU. SO LOOKING AT VOLUMES.
FIRST, BARELY FIVE MINUTES INTO THE CASH MARKET SESSION, WE’RE
NOW — WE’VE NOW TOPPED 6.5 MILLION SHARES TRADED.
WE’RE — IT WAS UP AS MUCH AS 10%.
WE’RE NOW AT THE HIGHEST SINCE LET’S CALL IT TWO YEARS NOW IN
SHARES OF BAIDU. WE’RE UP OVER 65%.
I’LL BE GENEROUS HERE FROM THE BOTTOM THAT WE HIT LATE LAST
YEAR, I BELIEVE, IS THE BOTTOM. WAS THE MOST RECENT BOTTOM ON
THAT. OK. LET’S — I CORRECT MYSELF.
THE BOTTOM WAS IN APRIL OF THIS YEAR.
SIMILAR TO THE ONE WE HAD IN JANUARY AND IN NOVEMBER OF LAST
YEAR. OK. SERVICES FRONT, SO 3:00 P.M.
TODAY, MARK YOUR ALARM RIGHT NOW.
THAT’S THE BRIEFING — THAT’S THE TIME THE BRIEFING WILL BE
STARTING ON THIS — THESE MEASURES TO BOOST CONSUMPTION.
WIDE RANGING MEASURES TO AID, OF COURSE, SERVICES
SPECIFICALLY. LET’S BRING IN OUR SENIOR
EXECUTIVE EDITOR TO HELP US UNDERSTAND WHAT WAS ANNOUNCED
AND REALLY THE CONTEXT OF ALL THIS.
GOOD MORNING AND THANKS FOR COMING ON THE SHOW.
TAKE US THROUGH THE KEY MEASURES THERE. >> THE WAY I’VE DESCRIBED THESE
MEASURES IS YOU HAVE A SUPPLY SIDE OF SERVICES, AND YOU HAVE
THE DEMAND SIDE OF SERVICES. AND WHAT WE GOT WERE MEASURES
TO HELP THE SUPPLY SIDE, RIGHT? BANK LENDING TO COMPANIES,
PROVIDING SERVICES. HELPING — HELPING VARIOUS
COMPANIES TO EXPAND THEIR SERVICES. YOU WERE TALKING ABOUT
EXTENDING THE TIME THAT MUSEUMS ARE OPEN. THINGS OF THAT NATURE.
WHAT WE DID NOT GET, WE DIDN’T GET ANY ADDITIONAL SUBSIDIES,
WE DIDN’T GET MORE FISCAL SPENDING TO — TO FUEL THE
CONSUMPTION OF THESE SERVICES. AND I THINK THAT IS WHAT
EVERYBODY IS WAITING FOR. AS YOU MENTIONED, WE HAVE THIS
PRESS CONFERENCE THIS AFTERNOON. I WOULD SAY — OBVIOUSLY A LOT
OF EXCITEMENT AND A LOT OF ANTICIPATION FOR WHAT NEW
STIMULUS MEASURES BEIJING MAY ANNOUNCE.
I WOULD STRIKE A NOTE OF CAUTION ABOUT THIS 3:00 P.M.
BRIEFING THIS AFTERNOON. THE MOST SENIOR OFFICIAL THAT
WE UNDERSTAND WILL BE AT THE BRIEFING IS A DEPUTY CONGRESS
MINISTER. YOU’LL REMEMBER, DAVID AND
YVONNEE, THAT BIG PRESS CONFERENCE THAT WE HAD AT THE
END OF SEPTEMBER LAST YEAR, THAT WAS HEADLINED BY THE
CENTRAL BANK GOVERNOR, THE HEAD OF THE CSRC AND MUCH MORE
SENIOR BUREAUCRATS AND OFFICIALDOM.
AND THAT I WOULD ALSO NOTE, THAT PRESS CONFERENCE WAS AT
9:00 IN THE MORNING. SO AHEAD OF THE MARKET OPEN.
THIS PRESS CONFERENCE TODAY WILL BE HAPPENING AFTER MARKETS
HAVE CLOSED. YVONNE: YEAH. THE TIMING IS INTERESTING.
AND A GOOD POINT. CAN YOU TELL A LITTLE BIT MORE
WHY SUBSIDIES THIS TIME AROUND? WE CERTAINLY SAW THAT — IN THE
TRADING PROGRAMS. AND REALLY WHEN IT COMES TO GOODS
PURCHASED. BUT WHY DO YOU THINK THEY’RE
HESITANT TO REALLY UNLEASH THESE SUBSIDIES IN THE SERVICES
SECTOR? >> SO TO BE ABLE TO PUSH OUT
NEW SUBSIDIES, TO DO THINGS ON THE DEMAND SIDE, IT’S A LOT
MORE COMPLICATED BECAUSE THEN YOU HAVE VARIOUS MINISTRIES.
YOU ALSO HAVE TO FIGURE OUT WHERE THE MONEY IS GOING TO
COME FROM. AND SO THAT MEANS THE FINANCE
MINISTRY TO BE A PART OF THAT PROCESS, IT ALSO NEEDS SUPPORT
AT THE LOCAL LEVEL. SO YOU HAVE ALL OF THIEVES
PROVINCES ACROSS CHINA, EACH OF WHICH ARE IN VASTLY DIFFERENT
SITUATIONS. YOU HAVE PLACES LIKE GAUNDONG
AND SHAI AND JUJONG THAT ARE RELATIVELY WEALTHY AND OTHER
PLACES THAT ARE RELATIVELY STRAPPED WHEN IT COMES TO
FINANCIAL RESOURCES. AND SO IT GETS TO BE REALLY
COMPLICATED WHEN YOU WANT TO ANNOUNCE SOMETHING NATIONWIDE
IN TERMS OF SUBSIDIES, VOUCHERS, THAT SORT OF THING.
DAVID: JOHN, JUST A QUICK NOTE ON
PROPERTY AND WE UNDERSTAND REGULATORS HAVE LIFTED THESE
CURBS ON FOREIGN FIRM INVESTING INTO — INTO THE REAL ESTATE
MARKET. WHAT DO WE KNOW ABOUT IT AND
HOW BIG OF A DEAL IS IT AT THIS POINT? JOHN:
SO THE ADMINISTRATION OF FOREIGN EXCHANGE MADE THIS
ANNOUNCEMENT LATE ON MONDAY. AND THERE WAS A BAN PUT IN
PLACE MANY YEARS AGO WHEN THE PROPERTY MARKET IN CHINA WAS
VERY HOT THAT BANNED FOREIGN EXCHANGE, INCOME THROUGH THE
CAPITAL ACCOUNT BEING USED TO BUY NON-PROPERTIES THAT WERE
NOT MEANT TO BE LIVED IN. AND SURF THEY’VE REMOVED THAT
BAN. — AND SO THEY’VE REMOVED THAT
BAN. AND THERE’S ALSO SOME — THERE’S SOME DETAILS HERE THAT
ARE NOT VERY CLEAR. THE BAN WAS FOR FOREIGN
EXCHANGE INCOME UNDER THE CAPITAL — IT’S NOT CLEAR
WHETHER THIS MEANS PEOPLE CAN BRING IN FOREIGN EXCHANGE
SPECIFICALLY FOR THE PURPOSE OF BUYING PROPERTIES.
AND SO THERE’S A BIT MORE NUANCE THERE THAT’S NOT CLEAR
AT THE MOMENT. BUT I THINK OVERALL, THE
MESSAGE IS CLEAR. WHICH IS THE CENTRAL GOVERNMENT
IS TRYING TO FIND WAYS TO HELP CREATE DEMAND FOR PROPERTIES.
YVONNE: JOHN, THANK YOU. JOHN LIU OUT OF BEIJING THERE.
WE’VE BEEN TALKING ABOUT THE CONSUMPTION SPACE AND WHEN IT
COMES TO THESE FOOD DELIVERY WARS A GREAT PIECE ON THE
TERMINAL THAT TALKS ABOUT THE COST OF REALLY ENGAGING IN THIS
BATTLE. BECAUSE WHEN YOU TAKE A LOOK AT
THE EARNINGS REPORTS FROM EITHER THE SECOND QUARTER OR
THE FIRST HALF, YOU ARE STARTING TO SEE WHEN IT COMES
TO THE TRADE-OFF THAT A LOT OF THESE RESTAURANTS HAVE.
ON THE ONE SIDE THEY HAVE TO DO — AND FULFILL ALL THESE ONLINE
ORDERS. BUT THEN AGAIN, WHAT GETS
OFFERED? THE DINE IN SORT OF EXPERIENCE.
AND IT REALLY DOES IMPACT FOOT TRAFFIC.
SO YOU FOCUS ON SOME OF THESE DINE-IN RESTAURANTS.
AND DINE-IN FOCUSED RESTAURANTS LIKE H.
I-LAO AND YOU ALMOST WILL HAVE HOT BOTS IN THE RESTAURANT,
RIGHT? HOW SALES IS FARED FOR THE
FIRST HALF. IT’S BEEN SINGLE DIGIT TO EVEN
DOUBLE DIGIT DECLINES WHEN IT COMES TO THOSE SAME STORE SALES
GROWTH HERE AS WELL. IF YOU LOOK AT THINGS LIKE
TABLE TURNOVER RATES, FOR EXAMPLE, THAT’S A KEY MEASURE
OF FOOT TRAFFIC AS WELL. THAT ALSO — EITHER DROPPED OR
REMAINED FLAT. SO IT’S LIKE THEY’RE SPENDING
SO MUCH TIME ON FULL FILING THESE ORDERS AND USING THEIR
SUBSIDIES, USING ALL THESE SUBSIDIES TO ORDER ON THESE
APPS, BUT THEN AGAIN, THE RESTAURANT DOES SUFFER.
YOU LOOK AT LUKIN WHICH HAS BEEN BENEFITING, THE FIRST HALF
THEY POSTED DOUBLE DIGIT SALES GROWTH, THANKS TO THESE ONLINE
ORDERS. BUT WHEN YOU TAKE A LOOK AT
WHAT THE EARNINGS SUGGESTED WHEN IT COMES TO DELIVERY
COSTS, THAT SURGE BY 175%. RIGHT?
AND IT MAKES UP I THINK A FIFTH OF THEIR TOTAL REVENUE HERE
RIGHT NOW. WHICH HAS BEEN A SUBSTANTIAL
RISE FROM JUST A YEAR AGO. SO CERTAINLY THEY’RE PUTTING A
LOT OF MONEY INTO ACTUALLY CONTINUING ON THESE FOOD
DELIVERY SORT OF WARS, RIGHT? BUT WHAT HAPPENS IF YOU DON’T
TAKE PART IN IT AT ALL? WELL, CASE IN POINT, LOOK AT
CHAGE, THE STARBUCKS — WANT TO BE THE STARBUCKS OF TEA, RIGHT?
LISTED IN THE U.S., JUST RECENTLY, BUT WHAT THEY DID WAS
THEY SAID WE’RE NOT TAKING PART IN THESE FOOD WARS.
WE HAVE A PREMIUM PRODUCT, RIGHT?
BUT WHAT HAPPENED TO THE STOCK? YOU TAKE A LOOK AT THAT.
BASICALLY ONCE THEY ANNOUNCED THE SECOND QUARTER EARNINGS,
WHERE WE ACTUALLY SAW WHERE — THERE’S PROFITABILITY ACTUALLY
TAKE A HIT FROM NOT TAKING PART. RIGHT?
WE SAW SECOND QUARTER SALES SLOW TO 10%.
THE STOCK BASICALLY DECLINED ABOUT 25%.
SO IT ALMOST SHOWS THAT THERE IS NO CHOICE BUT TO ACTUALLY
TAKE PART. BUT IN WHAT DEGREE? DAVID: YEAH.
THE LESSER EVIL IS DIG INTO THAT CASH PILE THAT INVESTORS
HAVE THROWN YOUR WAY. PROTECT YOUR MARKET SHARE.
OTHERWISE, THAT HAPPENS TO YOUR STOCK PRICE THERE, RIGHT?
FANTASTIC PIECE THAT IS — HAS BEEN OUTLINED FOR US HERE BY
OUR TEAM AND FOR SUBSCRIBERS YOU CAN GET MORE DETAILS ON THE
STORY AND ALL THE MOVING PARTS AND ALL THE GRAPHICS AND REALLY
INTERESTING DATA POINTS, RIGHT? FOR EMPTY TABLES, LOWER
MARGINS, AND WHAT YOU REALLY GIVE UP IN TERMS OF ACTUAL REAL
ESTATE IN YOUR PHYSICAL STORES IN FAVOR OF WHAT, THINNER
MARGINS? IT’S — LIKE A CHOICE BETWEEN
LESSER EICHEL HERE. YVONNE: AND FORCED THEM TO EVOLVE.
HEIDI LOWE I HAVE TO DO MORE SINGLE SOLO SORT OF PACKAGES
WHEN YOU’RE ORDERING ONLINE. YOU CAN HAVE KITCHENS DELIVERED
TO YOUR HOUSE. AND — IN SOME WAYS TO OFFSET
WHAT YOU’RE SEEING WITH LESS FOOT TRAFFIC. DAVID:
I NEVER GOT THE POINT OF HAVE BEEN HOT BOT DELIVERED. YVONNE:
I APPRECIATED IT DURING COVID. YOU MISSED SOME — YOU’RE
CRAVING SOME — EVERYTHING. DAVID:
I THOUGHT THEY JUST BROUGHT LIKE RAW MATERIALS FROM THE
GROCERY AND — YVONNE: COOK IT YOURSELF. DAVID:
COOK IT YOURSELF. WHICH IS KIND OF THE SAME THING.
ANYWAY, I’M — I’M A BIG FAN OF HEIDI LOWE. OK. EQUITY MARKETS.
ALL RIGHT. WE GOT SLIGHTLY OFF-TRACK THERE.
NOT OFF-TRACK ARE EQUITY MARKETS AND FULLLY REVERSED
FOUR YEARS OF LOSSES NOW IN THE ASIA PACIFIC.
THE NEWS THIS WEEK, THE ASIA PACIFIC, HERE AT THE — AND
SOME OF THE BIG FUNDS WITH NIECE EXUBERANCE THAT’S IN
PLACE ARE NOW LOOKING AT SOME OF THE RISKS, RECORD-BREAKING
RALLY IN THE MARKETS IS SET TO COME UNDER PRESSURE BECAUSE OF
WHAT’S HAPPENING ACROSS THE TARIFF FRONT AND YOU LOOK AT
THE RISKS AND LET’S BRING IN OUR STOCKS REPORTER TO HELP US
UNDERSTAND THE CONNECTION BETWEEN THE RECORD RALLY, THE
TARIFF FRONT, AND WHAT THE EARNINGS RISK THAT ISN’T QUITE
VISIBLE I SHOULD NOTORIETY NOW. PUT IT ALL TOGETHER FOR US. >> YEAH, SURE.
SO WITH MY COLLEAGUE, WE ASKED THE MAJOR FUNDS IN ASIA
INCLUDING THE FRANKLIN TEMPLETON WHAT ARE THE RISKS OF
MARKETS MIGHT BE UNDERESTIMATING.
AND THEY SAID THE TARIFFS’ POTENTIAL IMPACT ON THE
EARNINGS ARE ACTUALLY THE ONES THAT THE MARKET IS IGNORING
RIGHT NOW. AND HE IS SEEN THAT YESTERDAY,
WE SAW THIS MS. ASIA PACIFIC — MSCI ASIA PACIFIC CLOSING AT A
HIGH AND INDEX HAS ROSE 30% FROM ITS APRIL LOW.
SO IT MIGHT BE TO INVESTORS WHO BELIEVE THAT THE RISKS FROM
TARIFFS ARE GONE. BUT ACTUALLY IT ISN’T.
AND THEY — EARNINGS CONSENSUS IN THE MSCI EMERGING MARKET
INDEX THEY’VE BEEN GOING DOWN ONLY ABOUT 3% SO FAR FROM THE
EARLIER THIS YEAR. SO EARLIEST CONSENSUS DON’T
REALLY REFLECT WHAT POTENTIAL TARIFFS’ IMPACT COULD BE.
AND THERE ARE SEVERAL REASONS FOR THIS.
ONE IS THAT HOW MUCH EARNINGS WILL GET HURT BY THE ACTUAL
TARIFFS IMPACT ISFULLY A COMPLEX MATH THAT SOME
COMPANIES MIGHT TRY TO PUT IT ON THE SUPPLY CHAIN.
MAYBE LIKE PASS IT THROUGH TO THE PRICES.
SO THAT MAYBE IT COULD BE REFLECTED TO THE INFLATION.
BUT IT’S JUST REALLY TOO COMPLICATED TO REFLECT ON THEIR
EARNINGS ESTIMATES. SO THE STRICT CONSENSUS AT THE
MOMENT PRETTY MUCH DON’T REFLECT ANY POTENTIAL RISKS
THAT TARIFFS COULD HAVE IN THE EARNINGS — CORPORATE EARNINGS
IN ASIA IN COMING MONTHS WHICH COULD ONLY BECOME VISIBLE AFTER
SEVERAL QUARTERS. SO WE ARE EXPECTING COMPANIES
TO ACTUALLY ISSUE SOME GUIDANCE AND MAYBE EARLY NEXT YEAR AND
THEN UNTIL THEN, THE EARNINGS CONSENSUS WILL NOT REFLECT
WHICH MEANS THAT THEY HAVE MORE DOWNSIDE RISK AS THE TARIFFS
BECOME MORE AND MATERIALIZE. YVONNE: OK.
SO YOU’RE FOCUSING ON THESE EXPORT-ORIENTED SORT OF
COMPANIES. WHICH MARKETS AND SECTORS DO
YOU THINK ARE MOST VULNERABLE WHEN THOSE TARIFFS START TO
BITE? >> YEAH. SURE.
SO WE — SO LAST YEAR, ASIA ALTOGETHER EXPORTED MORE THAN
ONE TRILLION TO GOODS IN THE UNITED STATES AND THE MAJORITY
OF THAT COMES FROM CHINA MARKETS LIKE TAIWAN AND SOUTH
KOREA. AND IF YOU ALSO LOOK AT THE
SEMICONDUCTOR TECH HARDWARE — A LARGE PART.
ASIA IMPORTS TO THE UNITED STATES.
AND IF YOU THINK ABOUT ASIA, THE CENTER OF THE GLOBAL SUPPLY
CHAIN FOR THE SEMICONDUCTORS. SO A LOT OF THE FUNDS THAT WE
SPOKE TO POINTED OUT THAT SOUTH KOREA AND TAIWAN ARE THE CENTER
OF THE GLOBAL SEMICONDUCTOR SUPPLY CHAIN.
ARE THE ONES THAT COULD BE MOST VULNERABLE TO THE POTENTIAL
TARIFFS. WE ALSO HAVE PRESIDENT DONALD
TRUMP SAYING EARLIER IN SEPTEMBER THAT HE WILL ANNOUNCE
THE EXACT RATE FOR THE SEMICONDUCTOR — TARIFFS RATE
FROM THE SEMICONDUCTORS WHICH COULD GO AS MUCH AS LIKE 100%
UNLESS THESE COMPANIES BRING THE MANUFACTURING BACK TO THE
UNITED STATES. SO — I THINK THERE’S STILL THE
HEADLINE RISK ON THIS HEADLINE TARIFFS RISK TO THE
SEMICONDUCTOR COMPANIES IN ADDITION TO HOW THE INVESTORS
AND ANALYSTS ARE GOING TO REFLECT THAT TO THEIR EARNINGS.
YVONNE: THANK YOU. WE GOT PLENTY MORE AHEAD.
THIS IS BLOOMBERG. DAVID: WELCOME BACK.
LOOKING AT CHINESE MARKETS RIGHT NOW, EVERYTHING FROM
ONSHORE MARKETS TO MSCI HONG KONG, THIS IS A BIG POLICY
ADDRESS TODAY. BUT THE STORY IS REALLY A LOT
ABOUT TECH. 2.2%. LET’S TAKE YOU PACK TO HONG
KONG. WE COULD GET A CATALYST TODAY
HERE. YVONNE: JOHN LI, THE CHIEF EXECUTIVE OF
THE CITY TO DELIVERY HIS ANNUAL POLICY ADDRESS IN A FEW HOURS.
AND REVIVING THE CITY’S ECONOMY INCLUDING FAST TRACKING A
CROSS-BORDER TECH HUB WITH MAINLAND CHINA.
LET’S BRING IN OUR CHIEF ASIA CORRESPONDENT WHO JOINS US FROM
HONG KONG. STEVE, WE’RE EXPECTING A PRETTY
LONG SPEECH FROM THE CHIEF EXECUTIVE.
BUT IT SEEMS LIKE IT’S GOING TO BE A MULTIFACETED APPROACH.
TO HELPING THE LIKES OF PROPERTY, FOR EXAMPLE. AND MAYBE EVEN THE FINANCIAL
MARKETS. >> YEAH.
IT’S MULTIFOLD BUT THE TWO AREAS I WANT TO CONCENTRATE ON
THE DIVERSIFICATION. SOUTH CHINA MORNING POST WITH
THE HEADLINE, LEE’S BLUEPRINT AIMS TO FAST TRACK NEW
INDUSTRIES. HONG KONG HAS BUILT ITS
REPUTATION AND ITS STRENGTH ON THE PROPERTY SECTOR AS WELL AS
OF COURSE THE FINANCIAL SECTOR. THEY WANT TO DIVERSIFY AND THAT
GOES PART AND PARCEL TO THE NORTHERN METROPOLIS THAT
THEY’RE PROPOSING UP ON THE BORDER WITH SHENZHEN TO GET
POLICY AND THE ECONOMY MORE IN LINE WITH THE MAINLAND.
THAT’S NOT A DEROGATORY STATEMENT.
THAT IS THE REALITY OF HONG KONG’S SITUATION. RIGHT NOW.
POLICY IS BEING MORE DIRECTED TO BE IN LINE WITH THE GROWTH
ENGINES ACROSS THE BORDER. BUT AGAIN, GROWTH ENGINES BUT
THERE’S ALSO LAGGARDS. IN THE PROPERTY SECTOR, CLEARLY
HAS BEEN A LAGGARD IN THE MAINLAND BUT ALSO HERE IN HONG
KONG. RESIDENTIAL PROPERTY DOWN —
FOR FOUR CONSECUTIVE YEARS. IN FACT, THERE WAS A PROPERTY
ASSOCIATION THAT’S RECOMMENDING THAT JOHN LEE AND THE
GOVERNMENT HERE COME UP WITH A FUND TO HELP DISTRESSED
PROPERTIES TO THE TUNE OF $2.6 BILLION.
20 BILLION HONG KONG DOLLARS. JON IF JOHN LEE WILL GO THAT
FAR TODAY. BUT SERIOUSLY, THE ISSUES HERE
ARE MULTIFOLD. THE COMMERCIAL PROPERTY SECTOR
HAS BEEN IN THE DOLDRUMS. PROPERTY DEVELOPERS AS WELL AS
INVESTORS HAVE SEEN NONPERFORMING LONNIE GO UP,
DISTRESSED ASSETS. SO THERE WILL BE SOME SORT OF
MEASURES TO HELP PUT A FLOOR PERHAPS ON THE PROPERTY MARKET
INCLUDING INCREASING THE CAP ON STUDENTS, NON-LESS RESIDENT
STUDENTS TO COME INTO HONG KONG. IT’S GONE FROM 20% TO 40%.
IT COULD GO UP TO 50%. YOU SAY WHY DOES THAT HELP
PROPERTY? WELL, FAMILIES AND PEOPLE COME
IN. MORE UNDERGRADUATES AND MORE PEOPLE INTO HONG KONG.
AND THEY COULD ALSO BROADEN THE SO-CALLED PROPERTY CONNECT TO
GET MORE MAINLAND INVESTORS TO INVEST. ALREADY, 30% OF THE
RESIDENTIAL PROPERTIES HERE IN HONG KONG ARE PITCHED BY
MAINLANDERS. THAT COULD GO UP UNDER ANY KIND
OF NEW SCHEME. DAVID: THANK YOU. STEPHEN ENGEL OUR NORTH ASIAN
CORRESPONDENT AND WHAT’S TO CO COME.
JUST AHEAD HERE ON SHOWS, JUST ON ONE OF THE POINTS STEVE WAS
POINTING OUT, IMPLICATIONS ON THE PROPERTY SECTOR,
RESIDENTIAL, COMMERCIAL, INDUSTRIAL.
AND EVERYTHING IN BETWEEN. KATHIE LEE JOINS US.
AND PLENTY MORE AHEAD. THIS IS BLOOMBERG. DAVID:
WE’RE ABOUT 25 MINUTES INTO THE SESSION HERE.
ROBOTICS STOCKS IN FOCUS. MORGAN STANLEY OUT WITH A NOTE.
LET ME JUST COMPLETE THAT. ON THE UP, REALLY ON THE BACK
OF THIS — WELL, THE PLOT LINE REVOLVES AROUND TESLA AND
OPTIMIST GEN-3. NOT SURPRISING. AND REALLY WAS A TRADE THAT WAS
WAITING FOR MORE ANALYSTS TO GET BEHIND. WE ARE GETTING THAT.
WE’RE — MANY PARTS OF THE A.I. TRADE. YVONNE:
ACCORDING TO MORGAN STANLEY, CATALYSTS ARE STILL COMING.
THAT’S WHAT THEY SAY, RIGHT? NOT JUST THE TESLA NEWS.
THE I.P.O. PROGRESS AND THAT CERTAINLY IS
ONE THING THAT THEY’RE FLAGGING AS WHY THEY’RE SEEING MORE ROOM
FOR SOME OF THESE STOCKS TO GO HIGHER. BUT YEAH.
CERTAINLY THERE’S A LOT MORE NEW ORDER ANNOUNCEMENTS AHEAD.
IN THIS SPACE. THERE YOU GO. HANG SENG STANDING OUT IN A
GOOD WAY ACROSS THESE MARKETS HERE TODAY AHEAD OF THE FED.
THIS IS BLOOMBERG. YVONNE:
WELCOME BACK TO “THE CHINA SHOW.”
A LOOK AT THE HANG SENG WITH A HALF-HOUR IN THE SESSION AND
YEAH, LOOKING PRETTY GOOD MERE RIGHT NOW.
WE’RE SEEING GAINS OF 1% ON — AURORA THREE QUARTERS OF THE
PERCENT ON THE HAN SENG AND BUCKING WHAT WE’RE SEEING
ACROSS THE REGION WHERE YOU ARE SEEING A PULLBACK IN MARKETS
LIKE JAPAN, LIKE THE KOSPI WHICH IS DOWN MORE THAN 1% HERE
RIGHT NOW, AHEAD OF THE FED. SO WHAT STANDS OUT?
I THINK TECH ONCE AGAIN IN CHINA. DAVID: NON-FED RELATED.
THAT’S A COMPONENT AND DRIVING HERE TODAY. A.I.
STORIES, BAIDU IS ONE THAT’S REALLY LEADING THESE GAINS
TODAY ON THE BACK OF THAT. AND CAME OUT AND THEY JUMPED A
FEW PLACES AND WENT FROM SELL DIRECTLY TO BUY. YVONNE:
DIRECTLY TO BUY. DAVID: SO IF YOU’RE NOT BUSY, YOU’RE
LISTENING HERE — YVONNE: COME ON THE SHOW, PLEASE. DAVID:
PICK UP THE PHONE, SIR. YVONNE: YEAH. DAVID:
MIGHT BE TRYING TO CALL YOU. ALIBABA, THIS WAS — AND
UPGRADING THE PRICE TARGET ON THE STOCK TO NEYER 170.
— TO HIGHER 170. AND BAIDU OF COURSE, UP 11%,
WE’RE NOW LOOKING AT HOW MUCH VOLUME IS COMING.
MY PRODUCERS TO HELP ME OUT WITH A NUMBER AND I’M LOOKING
AT MY SCREEN. WE’RE NOW APPROACHING 14
MILLION IN THE FIRST 30 MINUTES OF TRADE WHICH IS — THANK YOU
SO MUCH. 13 IN ABOUT 28 MINUTES OR SO.
AND THE CALL OUT OF U.B.S. YVONNE: AN INTERESTING ONE.
THE A.D.R.ARIES GAINED SOME 8% ON THE BACK OF THIS U.V.S.
[HAS SAID. SO THEY’RE SAYING CONSUMER
CONFIDENCE IS LOOKING A BIT BETTER.
SO RESTORE THEY SAY THIS RECENT BILLION DOLLAR SHARE SALE THAT
STRENGTHENED THE BALANCE SHEET. ALSO WHEN IT COMES TO NARROWING
THAT GAP WHEN IT COMES TO THAT VALUATION DISCOUNT WITH EXPUNG.
THAT COULD HAPPEN GIVEN THE IMPROVEMENTS.
THAT’S WHY WE’RE SEEING THE STOCK UP 8%. >> IN CASE YOU MISSED IT NOT TO
BE A BUMMER HERE. THERE’S — A SMALL STORY IN
EX–PONG ONE. CARS CAUGHT FIRE AND LOOK AT
MORE DETAILS ON THAT IN A MOMENT.
THE OTHER BIG STORY — A FED CONVERSATION, RIGHT?
THEY’RE COMING UP. ALMOST FORGOT ABOUT THAT.
BECAUSE “THE CHINA SHOW”A GIVING US MORE TO TALK ABOUT
THAN POWELL AND FRIENDS. HERE YOU GO.
THE DOLLAR INDEX BROKE THROUGH THE LOW IN JULY.
AND WE’RE NOT TRADING AT — TAKES YOU BACK TO 2022.
AND IMPLIED UP EVER SO SLIGHTLY. AND THAT’S OVERNIGHT SO IT
REFLECTS POTENTIAL FOR THE DOLLAR.
SIMILAR MOVE THAT WE’RE GETTING IN DOLLAR-YEN.
AND OF COURSE AS YOU CAN SEE NOW, WE’RE PRICED ALMOST 17
BASIS POINTS BY THE END OF THIS YEAR.
IT TAKES YOU INTO 1.5 — 150 BASIS POINTS OF EASING.
GOING INTO — BEFORE THE MARKET PRICES BY THE EARLY OF 2027.
YVONNE: YEAH. I LOVE “THE WALL STREET JOURNAL”
HAS A GREAT PREVIEW PIECE ON THIS.
THEY’RE BASICALLY SAYING IT’S GOING TO BE ONE OF THE
STRANGEST FED MEETINGS IN YEARS. NOT — THE CUTS ARE GOING TO BE
PRETTY STRAIGHT FORWARD AND JUST THE DIVISIONS THAT WE’RE
SEEING. WITHIN THE FED. AND LISA COOK THAT’S GOING TO
BE THERE. YOU HAVE THE LIKES OF STEVEN
MEYER IN THERE THAT ARE GOING TO BE THERE AS WELL.
THEY REALLY TALK ABOUT THE WEIRDNESS, RIGHT?
BECAUSE FOR ONE THING, JAY POWELL DOESN’T EVEN KNOW WHAT’S
GOING TO HAPPEN TO HIM AFTER HIS TERM IS UP AS WELL.
AND WHO WILL SUCCEED HIM? GOING TO BE A WEIRD ONE. DAVID:
IT SOUNDS LIKE A REALITY SHOW THAT I WOULD LOVE TO BE THERE.
YVONNE: I THINK — WROTE A WHOLE COLUMN.
TO BE A FLY ON THE WALL THIS FED MEETING. DAVID: YEAH.
REALLY HELP WITH UNDERSTAND. IT’S ALMOST AS IF NOT ABOUT THE
RATE CUT ITSELF. YVONNE: NO. DAVID:
I WANT TO UNDERSTAND WHAT THE — ALMOST A THE SINGLE INFERNO
— WHAT’S IN THERE AS FAR AS THE TENSION THAT BUILDS UP IN
THE ROOM. AS FAR AS THAT’S CONCERNED.
THE TENSION HAS BEEN BUILDING THESE CHARTS.
WE’VE BEEN RANGE BOUND IN MANY — THE G-10, F.X.
UP TO 40 HOURS BACK AND SEEN NEW HIGHS AND MANY.
CURRENCIES, THE AUSSIE, EURO, YEN, AND DOLLAR INDEX WE JUST
TALKED ABOUT. AND DAVID FINERTY TO HELP US
UNDERSTAND. THIS BREAK BELOW THIS KEY LEVEL
IN THE DOLLAR, DOES THAT OPEN UP FURTHER DOWNSIDE HERE ON THE
GREENBACK? >> CERTAINLY TRADERS ARE
BETTING FOR IT. AND IT’S QUITE INTERESTING
YESTERDAY. WE NORMALLY DON’T SEE A LOT OF
ACTIVITY AHEAD OF FED DECISIONS. WE’LL WAIT TO SEE WHAT HAPPENS.
BUT CERTAINLY IN EUROPE YESTERDAY, HEDGE FUNDS WERE
VERY HAPPY TO BUY DOLLAR PUT OPTIONS.
AND FACING OPTIONS THAT FOR THE DOLLAR WILL WEAKEN AND
INCLUDING THE EURO, YEN, AUSSIE DOLLAR, ALL THREE, VERY POPULAR.
SO THOSE — WERE THREE MONTHS AND BASICALLY INTO YEAR END
SHALL WE SAY. THE MARKET IS EXPECTING OR
LOOKING FOR — OR BETTING ON HOW ARE WE GOING TO PUT IT ON
THE DOLLAR WEAKENING FURTHER. OBVIOUSLY WHAT HAPPENS TODAY,
LATER TODAY, WITH THE FED DECISION, WILL HAVE A KEY
IMPACT AND LOOKING AT NOT THE — NOT ONLY THE RATE CUT BUT
THAT FED DOT PLOT AND HOW MANY RATE CUTS FOR THE REST OF THIS
YEAR AND ALSO START LOOKING AT NEXT YEAR AS WELL.
HOW MANY NEXT YEAR. I SAY INDICATING BECAUSE THESE
DOT PLOTS CAN SHIFT BETWEEN EVERY QUARTER.
SO DECEMBER WANT TO BE VERY — AND HUGE INTEREST BUT THIS YEAR
LOOKING AT THIS YEAR AND NEXT YEAR’S PROJECTIONS OR ESTIMATES
FOR RATE CUTS. YVONNE: YEAH. TALK US THROUGH THE DISSENTS,
RIGHT? IT SEEMS LIKE POWELL IS GOING
TO PROBABLY HAVE TO DEAL WITH A LOT FROM THE ONE HAND.
AND SOME OF THE MORE — ONES THAT ARE LOYAL TO TRUMP THAT
MIGHT SAY LOOK, THE LAKE MARKET IS SHOWING REAL CRACKS AND
REGIONAL PRESIDENTS THAT MIGHT SAY LOOK, I’M SCARED OF TARIFF
PASS-THROUGH WHEN IT COMES TO INFLATION WHICH STILL REMAINS
ALL BOTCH THE FED’S TARGET. >> YEAH.
I THINK THERE’S — GOING TO BE VERY INTERESTING.
IF YOU GO BACK TO THE MOST RECENT DOT PLOT BACK IN JUNE,
THERE WAS QUITE A FEW FED GOTCHS AND FED PRESIDENTS WHO
ARE SAYING ZERO CUTS THIS YEAR. SO OBVIOUSLY YOU HAD TO GET A
BASE-SETTING EXCHANGE OR MORE DOVISH.
THE QUESTION IS HOW MUCH? AND HOW MUCH THIS DOT PLOT IS
SHIFTING LOWER IN TERMS OF MORE RATE CUTS.
AND I THINK IT’S GOING TO BE QUITE TELLING.
WE KNOW — AND THE PRESSURE FROM PRESIDENT TRUMP TO CUT
RATES. WE KNOW STEVEN MIRAN IS COMING
IN AND ON THE DOVISH SIDE AND CHRISTOPHER WALLER IS ALREADY
DOVISH. BUT THERE ARE SOME OTHER PEOPLE
OUT THERE, MOST OF THEM AND SAY BOSTIC WHO STILL LIKE — WE MAY
DO CUTS. BUT WE’RE NOT GOING TO BE TOO
AGGRESSIVE HERE. WE DON’T QUITE SEE THE DATA YET
TO WARRANT SEVERAL CUTS. BUT, YOU KNOW, THOSE CAN CHANGE.
I THINK THAT DOT PLOT, PARTICULARLY THE UPPER BOUNDARY
OF WHAT’S THE FEWEST AMOUNT OF RATE CUTS WILL BE VERY
INTERESTING TO SEE IN THE MARKET LOOKING AT THAT.
IF A LOT OF PEOPLE WERE GOING NO, AND ZERO, AND GO TO TWO,
THEN YOU GO, WELL, THAT’S A SHIFT IN THREE MONTHS AND THE
QUESTION IS TWO CAN GO TO THREE AND FOUR VERY QUICKLY AS WELL.
SO THE IDEA WILL BE THAT THE FED’S STANCE, AND EVEN ONES
PUSH BACK ON TRUMP CUTS, THEY’RE COMING AROUND TO HIS
WAY OF THINKING. FOR WHATEVER THE REASON,
WHETHER IT BE THE DATA, WHETHER IT MAY BE PEER PRESSURE, MAYBE
A COMBINATION OF BOTH, THE QUESTION WOULD BE THE FED HAS
BECOME — HAS BECOME A LOT MORE DOVISH OVERALL.
AND IF IT HAS, THE MARKET IS VERY HAPPY TO — TWO RATE CUTS
IF GIVEN A CHANCE AND CERTAINLY JUDY KNOWS THAT, IF THE HAWKS
HAVE BECOME A LOT MORE DOVISH, THEN THE FED OVERALL HAS
CERTAINLY BECOME MORE DOVISH MOVING FORWARD. YVONNE:
DAVID, THANK YOU, DAVID FINNERTY OUR BLOOMBERG F.X.
RATE STRATEGIST JOINING US OUT OF SINGAPORE.
AND OUR BLOOMBERG OPINION COLUMNIST THINKS THE DOLLAR
WILL GET A LOT WEAKER WITH STEPHEN MIRAN JOINING THE FED
AND JOINS US NOW. YOU SAID IN YOUR COLUMN TODAY
THAT THIS IS THE DECADE FOR E.M.’S. E.M.
HAS BASICALLY BEEN IN LOVE FOR THE PAST DECADE.
WHAT DO YOU THINK IS REALLY CHANGING THAT LANDSCAPE AND WHY
STEVEN MIRAN WILL CHANGE THAT? >> THE ASSET CLASSES, VERY MUCH
TIED TO THE DOLLAR, RIGHT? IF THE DOLLAR IS VERY STRONG,
THE DOLLAR-BASED INVESTORS WILL DEMAND ACCESS RETURNS TO OFFSET
THEIR F.X. LOSSES. AND THEN — AND INTERESTINGLY
ENOUGH THE DOLLAR GOES THROUGH A — GOES THROUGH MAJOR CYCLES
WITH THE BOOM PHASE AND THE BUST PHASE GOING THROUGH LIKE A
DECADE. THE LATEST ONE WAS BASICALLY
ROUGHLY FROM 2010 TO 2022. AND IT SEEMS LIKE WITH STEVEN
MIRAN, AND NOT KNOWING WHO WILL HEAD THE FED LIKE — BY NEXT
YEAR, IT DOES SEEM LIKE A — TRUMP IS HAVING MORE INFLUENCE
ON THE FED. AND WHAT THEY WANT. THE TRUMP ECONOMICS WANT IS A
MUCH WEAKER DOLLAR. IT DOES SEEM LIKE WE ARE
SETTING THE STAGE FOR A DECADE-LONG BEAR RUN IN THE
DOLLAR. WHICH BODES WELL FOR EMERGING
MARKETS. DAVID: IS THAT AN EQUITY PLAY OR A
PLAY ON THE CARRY, FOR EXAMPLE? TO LOOK BACK AT — THE U.S.
DOLLAR IS HIGH YIELD AND WHAT DOES IT MEAN FOR E.M.
HIGH YIELDS? >> YES.
THERE IS DEFINITELY AN EQUITY PLAY.
AND WHAT WE’VE SEEN THE HONG KONG STOCK MARKET, RIGHT?
THE CHINESE TECH NAMES ARE PLAYING MAJOR CATCH-UP.
BECAUSE FIRST OF ALL, THE DOLLAR HEADWIND IS GONE.
AND ALSO LIKE THE SO-CALLED GOOD QUALITY CARRY TRADE E.M.
CURRENCIIES. LIKE THE CURRENCIIES FROM
MEXICO, BRAZIL, AND SOUTH AFRICA.
THEY HAVE BEEN DOING PRETTY WELL LATELY IN THE LAST THREE
MONTHS BECAUSE OF THE CARRY. YVONNE: YOU TALK ABOUT MIRAN.
AND HE’S A CONTROVERSIAL SORT OF FIGURE HERE.
HE HAD ONLY ONE OF SEVEN MEMBERS ON THIS BOARD.
SO HE HAS MADE COMMENTS ABOUT INTEREST RATES AND SUCH.
OTHER THAN SAYING THAT THE PRESIDENT HAS A REALLY GOOD
TRACK RECORD OF BEING RIGHT ON MONETARY POLICY, WILL HE REALLY
BE ABLE TO RESHAPE MONETARY POLICY, DO YOU THINK? >> PERHAPS LIMITED.
BUT TRUMP HAS OTHER CHANCES. AND I THINK IT’S THE MARKET
NAIR ACTIVE THAT MATTERS, RIGHT? AND PEOPLE ARE DEFINITELY
PAYING ATTENTION TO WHAT HE IS SAYING.
LIKE HE EVEN TALKED ABOUT CONTROL, THE YIELD CURVE ON THE
LONG END. THAT’S A FORM OF YIELD CURVE
CONTROL. AND LIKE A GLOBAL — GLOBAL
ASSET MANAGERS HAVE BEEN DIVERSIFYING LIKE THE FACT THAT
GOLD IS UP 40% THIS YEAR SAYS SOMETHING, RIGHT?
AND LIKE GOLD IS — IS ON TRACK TO BECOME THE BIGGEST ASSET
RESERVE FOR CENTRAL BANKS, RIGHT?
AND ALSO LIKE WHAT YOU SEE IS IN CONNECTION OF
DIVERSIFICATION INTO EUROPEAN STOCKS.
AND TO A LESSER EXTENT CHINESE STOCKS.
SO IT’S LESS ABOUT HOW MUCH CHANGE HE CAN REALLY MAKE.
MORE ABOUT THE MARKET NARRATIVE. >> MORE ABOUT THAT THIRD
MANDATE. MODERATE INTEREST RATES ON THE
LONG END. DAVID: YIELD CURVE CONTROL FROM THE
FED. I THOUGHT WE WERE DONE WITH THAT. WITH THE B.O.J. OK.
I THINK WHERE JUST GETTING STARTED HERE. SHULI REN.
AND YOU CAN READ HER COLUMN IN FULL HERE ON THE TERMINAL.
ALSO ON BLOOMBERG.COM. THERE IT IS.
AND CONTINUE THIS CONVERSATION AROUND THE IMPLICATIONS ON
BROAD ASSET CLASSES AND WHY GOLD SEEMS TO BE — SUCH SEEMS
TO BE DIVORCING FROM EVERY SINGLE THEME OUT THERE AND
EMBRACING EVERY OTHER SINGLE THEME OUT THERE.
A CHAMELEON IN THE FORM OF LONG TRADE. PLENTY MORE AHEAD.
THIS IS BLOOMBERG. DAVID: WELCOME BACK.
YOU LOOK AT THIS CHART ON YOUR SCREEN, YOU DON’T THINK THERE’S
A LOT OF ILLS IN THE WORLD. EERASED FOUR YEARS OF LOSSES ON
THE MSCI ASIA PACIFIC AND NOT JUST THIS, RIGHT?
EVERYTHING BUT THE DOLLAR IS UP THIS YEAR.
AND I THINK THAT’S THROUGH THE CONUNDRUM.
WHEN EVERYTHING IS UP WHAT DO YOU THINK?
LET’S BRING IN STEPHANIE LEUNG, CHIEF INVESTMENT OFFICER AND —
TO HELP US GUIDE HOW WE SHOULD BE THINKING ABOUT THIS
EVERYTHING RALLY AT THIS POINT. STEPHANIE:
EVERYTHING IS RALLIED. THE MOST HATED ASSET CLASS
BONDS HAVE STARTED RALLYING. SO I THINK — AND WE’LL HAVE
THE FED DECISION QUITE SOON. THE MARKET IS LOOKING FOR 25
BASIS POINTS. AND ANOTHER 25 BASIS POINTS
INTO YEAR END. BUT I THINK WHAT THE MARKET IS
REALLY IS PERHAPS LOOKING BEYOND THE IMMEDIATE FED CUT.
IF YOU LOOK AT KIND OF NEXT YEAR, I THINK THE MARKET IS
SAYING THAT, OK, WE’RE GOING TO GET A REPLACEMENT OF POWELL AND
THE DOLLAR — DONALD TRUMP MR. GET WHOEVER HE WANTS TO TAKE
AND THE FED WILL BE DOVISH. THAT’S A VERY GOOD SCENARIO FOR
REVVINGY ASSETS. AND I THINK THAT’S WHY YOU’RE
SEEING THIS EVERYTHING RALLY. YVONNE: YEAH.
THE BOND MARKET AS YOU SAY HAS ALSO TURNED POSITIVE.
I THINK THE TWO-YEAR YIELD IN THE U.S.
HAS FALLEN SOME 20 BASIS POINTS LAST YEAR.
AND WE HAD — THAT’S THE PERFECT CASE TO GO LONG
DURATION. IS THERE ANYTHING WRONG WITH
THAT SORT OF TRADE? >> WELL, I THINK — IF YOU
COMPARE ALL THE ASSET CLASSES THAT WE CAN INVEST IN, AND
DURATION IS SOMETHING THAT STILL THAT WE LEAST PREFER.
AND LONG DURATION WHEN THE ECONOMY IS WEAKER, WHEN THE U.S.
ECONOMY PARTICULARLY IS GETTING INTO RECESSION, THAT’S WHEN
DURATION ACTUALLY OUTPERFORMS ALL THE OTHER OPTIONS THAT YOU
CAN HAVE. BUT I THINK IF YOU LOOK AT THE
U.S. ECONOMY, IT’S BEEN SORT OF LIKE
— SO ON THE ONE HAND, THE CYCLICAL, NOT TOO BAD.
BUT IT’S NOT BEEN DOING GREAT. BUT ON THE OTHER HAND, IF YOU
LOOK AT TECHNOLOGY, YOU LOOK AT FINANCIAL SERVICES, AND THESE
HAVE BEEN DOING VERY, VERY WELL. SO THE SERVICES SIDE OF THINGS
IS ACTUALLY HELPING TO HOLD UP THE U.S. ECONOMY.
AND I THINK THERE’S BEEN A BIT OF WEAKNESS IN THE LABOR MARKET
IF YOU LOOK AT THE MOST RECENT KIND OF PAYROLL NUMBERS.
BUT STILL, I THINK ON THE WHOLE, UNEMPLOYMENT IS STILL AT
4.2%, 4.3% WHICH IS STILL VERY LOW. SO I THINK ON AVERAGE,
PARTICULARLY IF WE GO INTO A FED INTEREST RATE CUT CYCLE,
NEXT 12 MONTHS, I THINK VERY LITTLE RISK OF A RECESSION.
AND THAT’S NOT A SCENARIO WHERE YOU WANT TO BE OVERAGENT
DURATION. — OVERWEIGHT DURATION.
THERE ARE BETTER OPTIONS OUT THERE.
AND WE’VE BEEN TALKING A LOT ABOUT GOLD. VERSUS BONDS.
IN THE PAST YEAR AND A HALF OR SO. AND OUR VIEW IS THAT — YOU
WANT TO BE OVERWEIGHT GOLD VERSUS DURATION.
AND SO FAR, THAT VIEW HAS PLAYED OUT.
AND I THINK GOING FORWARD, I THINK THAT TREND IS GOING TO
CONTINUE. DAVID: LOOKING AT HOW THE GOLD PRICES
IS BEHAVING. WHAT KIND OF ASSET DO YOU THINK
IT IS RIGHT NOW? ABOUT HOW THE MARKET IS LOOKING
AT THE ROLE OF GOLD? STEPHANIE: THAT’S A VERY GOOD QUESTION.
GOLD AT DIFFERENT PERIODS OR DIFFERENT DIFFERENT RIPS PEOPLE
LOOK AT GOLD DIFFERENTLY. DAVID: AND ALSO A BIAS — STEPHANIE:
SOMETIMES AN INFLATION HEDGE AND SOMETIMES U.S.
DOLLAR REPLACEMENT. I THINK — IF YOU LOOK AT THIS
YEAR, SO OF COURSE THE BEGINNING OF THE YEAR, UNTIL
APRIL, GOLD RALLIED ABOUT 30% UP TO KIND OF 35%.
ON THE BACK OF THE FEAR OF U.S. DOLLAR WEAKNESS.
SO IF YOU LOOK AT GOLD FROM THAT ANGLE, IT SOUNDS LIKE A
U.S. DOLLAR REPLACEMENT. AND TODAY U.S.
DOLLAR IS QUITE STABLE. STILL, GOLD MANAGED TO BREAK
OUT TO ALL-TIME HIGHS IN RECENT WEEKS.
I THINK THAT NARRATIVE HAS PROBABLY SHIFTED TO OK, GOLD IS
ALSO A REPLACEMENT FOR BONDS. SO IF YOU’RE NOT GETTING — SO
THE TRADE-OFF IS THAT YOU’RE INVESTED IN BONDS AND STAY IN
CASH, YOU GET INTEREST RATES. YOU GET LIKE 40% PAYOUT EVERY
YEAR. IN GOLD, YOU DON’T GET THAT.
SO THAT’S ANOTHER TRADE-OFF. BUT WITH THE FED DUE TO START
TO CUT INTEREST RATES AGAIN, THE ATTRACTIVENESS OF STAYING
IN CASH OR IN RESCH RISS BECOME LOWER — COMPARED TO GOLD.
THE INTEREST RATE THAT YOU’RE GIVING UP IS LOWER AND LOWER.
SO I THINK THAT CREATES ANOTHER KIND OF TAILWIND FOR GOLD.
AND OF COURSE, I THINK UNDERLYING ALL THIS IS WHERE
THE DEMAND IS COMING FROM. AND — WE’VE SEEN PERSISTENT
DEMAND COMING FROM CENTRAL BANKS.
CENTRAL BANKS HAVE JUST BEEN — KEEP BUYING GOLD FOR THE LAST
TWO YEARS. DUE TO A VARIETY OF REASONS.
AND I DON’T THINK THESE REASONS HAVE CHANGED.
OF COURSE, THIS YEAR, WHAT’S ADDED IS WE — WE’RE SEEING
MORE EXTENDED POTENTIAL IN TERMS OF FUTURES AND OPTIONS.
THAT POTENTIALLY CREATING VOLATILITY.
BUT I THINK OVER TIME, THE KEY REASON FOR BUYING GOLD WAS JUST
BASICALLY FISCAL DOMINANCE GLOBALLY.
I THINK THAT HASN’T CHANGED. DAVID:
IT WAS ALWAYS NICE JUST TO NICE HAVE, RIGHT?
THERE WAS ALWAYS AT THE FRINGE. ALTERNATIVES TO GOLD WAS LIKE
5% OR 10%. YVONNE: NOW IT’S MUST HAVE. DAVID:
MUST HAVE. AND DOES THIS — DOES IT
NECESSITATE A HIGHER ALLOCATION FOR REGULAR PORTFOLIOS?
STEPHANIE: A MUST HAVE FOR US BUT YOU MAY
BE SURPRISED HOW MANY DON’T HAVE GOLD IN THE PORTFOLIO.
SO I GOT A LOT OF PEOPLE THINK THAT — GOLD IS FOR A NICHEE
INVESTOR. THAT’S STARTED TO CHANGE.
I KNOW SOME BIG FAMILY OFFICES HAVING SIZABLE ALLOCATIONS TO
GOLD IN MANY DIFFERENT WAYS. DAVID:
RISK THEY BUT — STEPHANIE: EXACTLY. FOR A LOT OF — EVEN
INSTITUTIONAL INVESTORS THAT DON’T — REQUIRE ALLOCATION.
BUT I THINK — AS YOU SAID, THAT’S GOING TO CHANGE AND I
THINK THAT DRIVES FURTHER UPSIDE FOR GOLD IN THE COMING
YEARS. YVONNE: CHINA STOCKS CONTINUE TO ALSO
RALLY. AND ALMOST EVERYTHING IN SOME
WAYS. WHAT CAN I STILL CHASE IN THIS
MARKET? STEPHANIE: I THINK PERHAPS IF YOU THINK
ABOUT THE GLOBALLY, WHAT — WE’RE SLIGHTLY WORRIED ABOUT
GOLD MARKETS KIND OF ABOUT A MONTH AGO.
BECAUSE THE TREASURY ACCOUNT AT P.G.A. HAS TO BE REFILLED.
AND TYPICALLY THAT HAS KIND OF LED TO LOWER LIQUIDITY.
AND NOW ACTUALLY FAST FORWARD TWO MONTHS TO NOW, THAT’S BEEN
HATCH FILLED. BUT WE’VE SEEN SOME
CONSOLIDATION IN MARKETS. BUT THAT’S STILL GOING WRONG.
ONE THING IS POTENTIALLY GOING TO HAPPEN WITH THE FED CUTTING
INTEREST RATES IS THAT THE ROTATION FROM U.S.
— TO OTHER MARKETS WILL CONTINUE.
BECAUSE THERE IS AN EXPECTATION THAT RATE CUTS WILL BENEFIT
SMALLER — SMALL CAPS, FOR EXAMPLE, BROADER PARTS OF THE
ECONOMY. EVEN EMERGING MARKETS AND CHINA
BEING A VERY IMPORTANT PART OF EMERGING MARKETS AND WE BENEFIT
FROM THAT. AND WITH CHINA, THE ADDED A.I.
STORY. WE’VE HAD THE DEEP SEEK MOMENT.
AND RIGHT NOW, WE SORT OF HAVE AN ALIBABA, A.I. MOMENT.
BY THEM SAYING THAT THEY’RE DEVELOPING THEIR OWN A.I. CHIPS.
AND I THINK MOST NOTABLE, IF YOU LOOK AT THE DETAILS, WHAT
THEY’RE SAYING IS THAT THE A.I. CHIPS WILL BE ABLE TO RUN ON
CUDA WHICH IS NVIDIA’S SOFTWARE PLATFORM.
AND WHAT THAT MEANS IS FOR COMPANIES THAT WANT TO SHIFT
FROM NVIDIA INTO ALIBABA A.I. CHIPS, IT’S VERY, VERY EASY.
BECAUSE THEY DON’T HAVE TO REWRITE THE CODE.
WHATEVER CODE THAT’S WRITTEN FOR NVIDIA STOCK, ACTUALLY ALSO
WORKS ON ALIBABA. THAT WAS NOT TRUE FOR HUGHWAY.
— HUWAI. AND QUITE IMPORTANT INFLECTION
POINT. AND THAT’S — I GUESS THAT’S
WHY THE MARKET IS SORT OF GETTING EXCITED ABOUT THE CHINA
A.I. STORY. DAVID: YEAH. AND THE BAR SEEMS KIND OF LOW
TO IMPRESS MARKETS. ANYTHING ON A.I. ANY GOOD NEWS?
NOT TO DIE LUTE THE GOOD NEWS OUT THERE.
BUT ISN’T THAT A SIGN, AN EARLY SIGN OF OVER EXUBERANCE AND
ANYTHING THAT IMPRESSES PEOPLE? >> SAM ALTMAN HIMSELF SAID WE
MAY BE IN A BUBBLE. BUT HE IS PART OF — I GUESS
HE’S PART OF WHY THAT BUBBLE EXISTS.
BECAUSE HE’S SAYING THAT OPENAI WILL INVEST $115 BILLION OVER
THE NEXT FEW YEARS IN A.I. INFRASTRUCTURE.
AND THAT BENEFITS LIKE THE WHOLE O’CONNORIO SYSTEM.
THE WHOLE ECO SYSTEM. AND YOU THINK ABOUT THE
COMPANIES IN THE U.S. AND EVEN NATIONS LIKE CHINA,
EUROPE, U.S., I MEAN, THAT’S ADDING TO LIKE SORT OF THE
G.D.P. AND YOU LOOK AT THIS YEAR, AND
THE U.S. G.D.P. HAS BEEN DRIVEN BY A.I.
INVESTMENTS. SO WHERE DOES THAT MONEY COME
FROM? THAT’S THE BIG QUESTION. AS LONG AS THE FED KEEPS
LIQUIDITY KIND OF LOOSE, AND, I MEAN, THE MONEY ENGINE KEEPS
WORKING, THAT LIQUIDITY IS GOING TO CONTINUE TO FUEL THE
BUBBLE. SO GOING BACK TO OUR THIRD
QUESTION OF WHERE THE FED IS GOING AND WHY THE MARKET IS
RALLYING I THINK THAT’S GOING BACK TO THAT FIRST PRINCIPLE OF
LIQUIDITY IN THE SYSTEM. YVONNE: STEPHANIE LEUNG. THANK YOU.
JOINING US ON THIS EVERYTHING RALLY.
WE HAVE PLENTY MORE AHEAD. THIS IS BLOOMBERG. YVONNE:
THE STORY THAT WE’RE TRACKING FOR YOU TODAY. U.S.
AUTO SAFETY REGULATORS ARE INVESTIGATING WHETHER TESLA’S
ELECTRIC DOOR HANDLES ARE DEFECTIVE.
IT COMES DAYS AFTER A BLOOMBERG INVESTIGATION ON A SERIES OF
INCIDENTS IN WHICH PEOPLE WERE INJURED OR DIED BECAUSE THEY
COULDN’T OPEN DOORS WHEN TESLA LOST POWER ESPECIALLY AFTER
CRASHES. NOW, REGULATORS HAVE RECEIVED
MORE THAN 140 COMPLAINTS FROM 2018 RELATED TO TESLA DOORS
GETTING STUCK OR MALFUNCTIONING. UNIVERSAL AND WARNER BROTHERS
ARE SUING CHINESE A.I. STARTUP MINI MAX FOR ALLEGEDLY
PIRATING FLAIR INTELLECTUAL PROPERTY.
THE COMPLAINT TARGETS A VIDEO AND IMAGE EDITOR MILO A.I.
THAT FEATURE COPYRIGHTED CHARACTERS INCLUDING SPIDER-MAN
AND DARTH VADER. MINI MAX IS A SO-CALLED A.I.
DRAGON AND IS AIMING FOR A PUBLIC LISTING AS SOON AS THIS
YEAR. AND THYSSENKRUPP SHARES ROSE IN
FRANKFURT AFTER IT REVEALED A TAKEOVER OFF FOR ITS STRUGGLING
YEOL UNIT FROM INDIA’S JINDAL STEEL.
IT WILL ASSESS THE NONBINDING OFFER WITHOUT DISCLOSING ITS
SIZE. IT’S THE LATEST CHAPTER IN THE
COMPANY’S DRAWN OUT SEARCH FOR A BEYER OF ITS STEEL DIVISION.
DAVID: LET’S HAVE A LOOK AT THESE
MARKETS RIGHT NOW. AND YEAH. WE’RE LOOKING AT A LOT OF
THINGS. SO YOU MENTIONED TESLA. WE WILL LOOK AT — I MENTIONED
THIS AT THE TOP THAT ONE OF — AND CAUGHT FIRE AT A REHEARSAL
FOR AN AIR SHOW. AND AS FAR AS THAT’S CONCERNED,
SPEAKING OF WHAT IS MOVING, AND OF COURSE THIS IS REALLY ON THE
BAG OF THIS PLAN AND WE’LL GET INTO THIS LATER IS THIS PLAN TO
BUFFETT — TRAVEL SERVICES, AND CHANGE THE PLEASE, MINERALS,
MINERS, AND ALSO IN CHINA, THIS IS REALLY — WE’LL GET TO THAT
LATER. F.T. REPORTS. CAN WE CHANGE IT BACK, LEASE?
SMIC, MY APOLOGIES FOR THAT. AND TO BRUSH THROUGH THE PAGE
QUITE QUICKLY. THIS IS GOING TO BE INTERESTING
TO SEE HOW THIS ACTUALLY EVOLVES.
AND WHETHER OR NOT THEY’RE ABLE TO DO THIS.
ADVANCED TOOLS FOR A.I. CHIP MAKING.
SO LITHOGRAPHY, A BIG MISSING PIECE HE HAVE WHERE.
AUSSIE AND CHINA ON YOUR SCREEN, THE BOTTOM OF THE
SCREEN. THIS IS BLOOMBERG. >> JAPANESE MARKETS GOING ON A
LUNCH BREAK IN A MOMENT HEARING IN — MOMENT. WE ALSO HAVE TO BRACE FOR
ANOTHER BOND AUCTION. 20 YEAR YIELD.
WE ALWAYS SAY IT’S GOING TO BE A TOUGH ONE BUT WHAT’S
INTERESTING THIS TIME IS THAT IS THE FIRST TEST OF DEMAND ON
THE LONG END AFTER THE PRIME MINISTER ANNOUNCED HIS
RESIGNATION. SOME OF THE SUCCESSORS VYING
FOR THE JOB HAVE BEEN MORE IN FAVOR OF EXPANSIONARY FISCAL
POLICY. IT COULD BE TOUGHER THAN USUAL.
DAVID: HERE WE GO. WE SAY IT AGAIN.
WE WORK IN NEWS. OUR INCLINATION IS TOWARDS BAD
NEWS. I’M KIDDING. COME ON. INTERESTING BECAUSE THIS TIME
YESTERDAY WE WERE TRYING TO FIGURE OUT WHAT THE JGB IS ON
THE DOWNSIDE. WE NOW UNDERSTAND, GIVEN WHAT
WE’VE SEEN, THERE’S DOWNWARD RUSHER ON FIXED INCOME.
WE ARE LOOKING AT SHIP STOCKS. THIS GOES BACK TO THE MORGAN
STANLEY NOTE. APART FROM THIS, ASIA-PACIFIC.
VOLUMES ARE PICKING UP IN HONG KONG. THREE THINGS AT PLAY. ONE IS THIS AI PLAY ON BAIDU
AND ALIBABA AND EVERYTHING THAT’S GOING ON WITH MORGAN
STANLEY. NUMBER TWO IS THE CONSUMPTION.
THIS BRIEFING THAT’S TAKING PLACE TODAY AND HERE IN HONG
KONG. TYPHOON SIGNAL IS PROBABLY SET
TO BE WASTED LATER TODAY. WE WILL SEE.
THAT’S WEATHER DEPENDENT. POLICY ADDRESS IN ABOUT 29
MINUTES FROM NOW IF THEY START ON TIME. YVONNE:
COULD POTENTIALLY BE A MAJOR EVENT TO WATCH IN THE CITY
TODAY. STEPHEN ENGLE AT THE CHAMBER
RIGHT NOW. THERE’S A LOT OF CHATTER ABOUT
WHAT THIS POLICY STATEMENT IS GOING TO SAY.
MULTIFACETED APPROACH TO HELP THE PROPERTY SECTOR, FINANCIAL
MARKETS. THERE’S TALK OF TRYING TO BUILD
THE AI TECH CUP HERE IN THE CITY AS WELL.
THERE’S A LOT TO UNPACK ON WHAT WE COULD SEE AS THE ECONOMY
SHOWS TENTATIVE SIGNS OF RECOVERY.
LET’S GET TO OUR NEXT GUEST HERE. NORTHERN METROPOLIS DEVELOPMENT.
WE WILL TALK ABOUT THAT IN A BIT.
WHAT ARE YOU EXPECTING OUT OF THIS POLICY ADDRESS? >> I THINK WE WOULD LIKE TO SEE
THE GOVERNMENT HAVE MORE INSIGHTS OR MORE POLICY HELPING
THE INDUSTRY TO GROW. ESPECIALLY WHEN WE HAVE THE
METROPOLIS LIKE ARE PLANNED AT THE MOMENT.
WE NEED SOMETHING SO THAT THAT PLAN HAPPENS. I MOVE FORWARD.
A LOT OF NOISES AND CONCERN IN THE MARKET.
HOW WILL WE HELP THE INDUSTRY? MOVING INTO THAT LAND OF HONG
KONG. MAX WHAT ARE THE STICKING POINTS?
WHY HAVE WE HAD TO SEE A LOT OF MOMENTUM. IT’S QUITE A LONG TIME.
SIX SYLLABLES. NORTHERN METROPOLIS.
WHAT WOULD YOU LIKE TO HEAR? YOU ARE PART OF THESE
CONVERSATIONS. MAX THE INFRASTRUCTURE, GETTING
INTO THAT AREA IS ONE OF THE MAJOR CONCERNS FROM THE MARKET
AREA THE GOVERNMENT ALREADY TRIED TO MAKE IT FASTER OR EVEN
INTRODUCING NEW INFRASTRUCTURE, BUILDERS ARE PARTNERS IN TO
HELP TO FACILITATE THE INFRASTRUCTURE DEVELOPMENT IN
THAT PART OF HONG KONG. THE OTHER POINT WILL BE THE
PRICE. AT THE MOMENT, INTEREST RATES
ARE STILL HIGH. A LOT OF THE DEVELOPERS MAY
STILL HAVE A SITUATION ON THEIR FINANCIAL BOOKS.
THE GOVERNMENT IS GOING TO HAVE TO DISPOSE OF IT.
METROPOLIS WILL BE ONE MAJOR AREA TO INCREASE.
IF THE GOVERNMENT REALLY WANTS TO DEVELOP THE INDUSTRY OR THE
EDUCATION SECTOR, THEY HAVE TO THINK ABOUT USING THE INDUSTRY
DEVELOPMENT MODE. THEY NEED SOME INDUSTRY
PLAYERS, INDUSTRY COOPERATION TO HELP THE INDUSTRY TO BUILD
IN THAT METROPOLIS. WHAT ARE YOU — YVONNE:
WHAT ARE YOU HEARING? THE GOVERNMENT WANTS TO EASE
THE FLOW OF CAPITAL. YOU CAN BUY A PROPERTIES HERE.
IT UNLEASHES CHINESE DEMAND. WOULD IT WORK IN TURNING AROUND
THE PROPERTY MARKET? >> IT IS DIFFERENT FROM THE
STOCK MARKET. THE STOCK MARKET IS A CLOSED
SYSTEM. CLOSED-LOOP. YOU CAN CONTROL THE CAPITAL
INFLOWS AND OUTFLOWS LIKE WITHIN A GOVERNMENT SYSTEM.
IN THE PROPERTY SECTOR, HOW ABOUT THE RENTAL INCOME? PROPERTY INVESTMENTS AND THE
VENDORS. SELL THE LAND, SELL THE PROPERTIES.
HOW DO THEY CONTROL THE CAPITAL GOING BACK TO THE MAINLAND?
THERE’S ONE MAJOR CONCERN FROM THE MAINLAND GOVERNMENT.
MAY BE DIFFICULT TO ACTUALLY IMPLEMENT. DAVID: NOT FOR NOW. >> THEY NEED MORE TIME TO
INVESTIGATE AND EXPLORE WHAT WILL BE A WORKABLE SITUATION OR
SYSTEM TO CONTROL CAPITAL INFLOW AND OUTFLOW. DAVID:
YOU HAVE OUTLINED PART OF YOUR WISH LIST, GIVE US MORE OF
NORTHERN MONTH — METROPOLIS. WHAT DO YOU THINK IS REALISTIC
TO EXPECT? >> IF WE WANT TO ATTACK MORE
MAINLAND INTEREST INTO THE MARKET, THE CAPITAL INVESTMENT
ENTRY SCHEME MAY BE ONE WAY TO HELP. PREVIOUSLY, THE GOVERNMENT
ALREADY INCREASED THE CAPITAL TO $10 MILLION.
INSIDERS THINK THAT MAY BE POSSIBLE.
SOME OF THAT WILL HELP. NOT JUST THE RESIDENTIAL MARKET.
THERE WILL BE OTHER COMMERCIAL PROPERTIES THAT WILL ARISE AND
OTHER LEVELS OF INVESTMENT INTEREST INTO THE PROPERTY
MARKET OF HONG KONG. YVONNE: HOW BIG OF A FORCE MAINLAND
CHINESE BUYERS NOW? >> QUITE A LOT.
THE TOP 10 DEALS IN THE PAST MONTHS, AT LEAST THREE TO FIVE
OF THEM COME FROM THE MAINLAND CAPITAL. THE FOUNDER INVEST IN RETAIL
PROPERTIES IN HONG KONG. ALSO WE HAVE SEEN A LOT OF
INTEREST AND INQUIRIES EVEN LUXURY MARKET AS WELL.
SO WE SEE MAINLAND CAPITAL TURNING BACK INTO HONG KONG.
YVONNE: IS THAT A BIT OF A RISK? RELYING TOO MUCH ON CHINESE
CONSUMERS TO SAVE THIS PROPERTY MARKET IN SOME WAY.
WE TRIED OTHER TOOLS. YET THAT HASN’T BEEN ENOUGH TO
REALLY TURN AROUND THE MARKET. >> WE ARE NOT JUST FOCUSING ON
THE MAINLAND. FOR THE CAPITAL INVESTMENT
SCHEMES, IT IS OPEN. ANYONE WITH INTEREST FOR COMING
INTO HONG KONG, THEY CAN APPLY. THE GOVERNMENT WILL HAVE A NEW
POLICY ANNOUNCEMENT IN JULY OVER STUDENT ACCOMMODATIONS.
CONVERTING COMMERCIAL PROPERTY INTO STUDENT HOSTELS TO PROVIDE
MORE SUPPLY. ALMOST TWO MONTHS OF THE
GOVERNMENT ANNOUNCEMENTS OF THE NEW POLICY.
THERE IS STILL INTEREST, NOT JUST MAINLAND CAPITAL. YOU KNOW THIS IS VERY WELL
ADAPTED AND THE U.K. AND AUSTRALIA. SO INVESTORS AND OPERATORS IN
THOSE MARKETS ARE SEEING OPPORTUNITIES HERE. DAVID: IN THE DORMS. MORE STUDENTS.
YOU HAD A LOT OF EXPERIENCE IN PLANNING RETAIL PROJECTS.
I SAY THAT NOW BECAUSE THERE’S THIS NEW TREND, GOING NORTH.
DOES THE GOVERNMENT NEED TO BE MORE ACTIVE IN BEING ABLE TO
STRATEGIZE THE USE OF RETAIL PROJECTS, COMMERCIAL PROJECTS
IN THE CITY? HOW DOES HONG KONG FIT
STRATEGICALLY? DO WE NEED TO HEAR THAT FROM
THE GOVERNMENT? >> THEY NEED TO PROVIDE SOME
SENTIMENT OR INCENTIVE FOR VISITORS TO BE SPENDING IN HONG
KONG. SPENDING IS ONE WAY TO GO. THE INTEREST OF LOCAL PEOPLE TO
CAP LOCAL CONSUMPTION. THEY HAVE DONE A LOT. THOSE MEGA EVENTS, SPORTS, A
LOT OF THOSE RECENTLY. I THINK KEEP GOING IN THAT WAY,
THAT WILL HELP. THE YOUNG IS A NEW ECONOMY
DRIVER. THAT WILL HELP TO ATTRACT NEW
VISITORS COMING INTO HONG KONG. WE ARE ON THE RIGHT TRACK.
JUST KEEP DOING WHAT WE ARE DOING NOW. >> RESIDENTIAL OFFICE RETAIL.
WHERE ARE YOU MOST OPTIMISTIC ABOUT?
WHAT IS THE OUTLOOK FOR ALL THREE? >> I THINK RETAIL WILL BE AMONG
OTHER SECTORS RECOVERING FASTER. OFFICE MARKET, WE ARE STILL
FACING THE CHALLENGES OF A LOT OF SUPPLY.
IT SHOULD SLOW DOWN AFTER NEXT YEAR. THAT WILL HELP THE MARKETS TO
DIGEST OUR EXISTING STOCK. THAT WILL HELP TO STABILIZE
RENTALS. IT WILL TAKE TIME. I THINK THERE’S ALSO A NEW
DEMAND DRIVER IN THE OFFICE MARKET.
WE’VE BEEN SEEING AT THE PAST YEAR OR TWO.
THE EDUCATION SECTOR. UNIVERSITIES NOW HAVE A LOT OF
STOOL — NONLOCAL STUDENTS. THEY NEED MORE TEACHING
FACILITIES AS WELL AS STUDENT ACCOMMODATIONS.
THE INVESTMENT ISN’T NEW. PURCHASING OFFICE SPACE,
LEASING SPACES, PICKING UP HOTELS. THAT WILL HELP TO DIGEST SOME
OF THE STOCKS IN THE MARKET AS WELL. DAVID:
ISN’T THERE A RESTAURANT HERE THAT JUST GOT BOUGHT BY HONG
KONG UST? YES. THERE WE GO. MORE SPACE.
HOPEFULLY A SPACE FOR LEARNING AND NOT JUST PRETENDING TO READ
LIKE WE USED TO DO BACK IN THE DAY.
DEMAND FOR A BIGGER LIBRARY BUT JUST TO HANG OUT.
THANK YOU SO MUCH. >> YOU ARE WELCOME. DAVID: BIG ONE COMING UP IN 20 MINUTES.
THE POLICY ADDRESS FROM JOHN LEE.
SUBSCRIBERS ON THE TERMINAL CAN CHECK IT OUT.
TLIV IS THE FUNCTION THAT YOU RUN. NOT YET. CHECK THAT OUT. GEARING UP.
THERE WE GO. THAT’S THE WORD. PLENTY MORE HERE — AHEAD HERE
ON THE CHINA SHOW. ♪ YVONNE: BAIDU SHARES. WEALTH.
12% UPSIDE HERE RIGHT NOW. SO THIS IS ON THE BACK OF WHAT
WE HEARD FROM THE RESEARCH TEAM THERE.
SEAN YANG UPGRADING THE STOCK TO GET STRAIGHT FROM CELL TO A
BUY ON THE BACK OF THIS. DAVID: I GOT RE-RATED. YVONNE:
WE DON’T LIKE TO BE NEUTRAL. THAT’S THE ONE CATALYST THERE.
TALKING ABOUT THE OPTIMISM ON THAT.
COULD IT OFFSET WHAT HAS BEEN A DRAG ON THE STOCK?
STRUGGLING ONLINE AD BUSINESS. DAVID: OK.
SHOULD WE KEEP OURSELVES GROUNDED? YVONNE:
ROBERT LEE ALWAYS KEEPS US GROUNDED. DAVID:
LET’S HEAR OUR GUEST TAKE RIGHT NOW. WHAT WE TALK ABOUT? THIS RECENT RUN OUT THAT WE’VE
SEEN. BAIDU. >> I THINK WE NEED TO SPLIT
THIS CONVERSATION INTO TWO HALVES. MARKET SENTIMENT.
I DON’T NEED TO TELL YOU THE ANSWER. IT’S PRETTY BULLISH.
THE SHARE PRICE IS TELLING YOU THAT. AND THEN BACK TO REALITY.
BACK TO THE FUNDAMENTALS. JUST A COUPLE OF QUICK STATS.
BAIDU’S PS IS PREDICTED BY CONSENSUS TO DECLINE BY 30%
YEAR-OVER-YEAR THIS YEAR. SO IT’S GOING TO BE A TOUGH
YEAR. THEIR EARNINGS ESTIMATE FOR
THIS YEAR AND NEXT HAVE BEEN DOWNGRADED MORE THAN 20%.
THE PROFIT OUTLOOK THAT ANALYSTS HAD HAS BEEN
SUBSTANTIALLY DOWNGRADED. A BULLISH PERSON WOULD SAY,
THAT’S FINE. IT WILL BE BETTER NEXT YEAR.
AS WE BRITISH SAY, JAM TOMORROW. IS THIS NEW CHIP GOING TO
DELIVER A NEW WAVE OF EARNINGS UPGRADES? I DON’T THINK SO. REALLY WHAT BAIDU IS DOING
ALONGSIDE WITH ALIBABA IS MIRRORING WHAT THEIR U.S.
PEERS ARE DOING BECAUSE THERE’S A SHORTAGE OF AI ACCELERATORS
IN THE MARKET. NATURALLY THEY NEED TO DEVELOP
THEIR OWN. THE NEWS THAT WE’VE SEEN WHICH
IS PROMPTING THE RALLY IS NEWS THAT BAIDU IS MAY BE DEVELOPING
A NEW CHIP. WE DON’T KNOW THE DETAILS ON
THAT. WE DON’T HAVE VISIBILITY ON
THAT. THERE’S A SECOND PIECE OF NEWS
WHICH IS DRIVING SENTIMENT IN THE SEMICONDUCTOR SECTOR FOR
CHINA. I HAVE TALKED TO LONG. YVONNE: KEEP GOING. >> THERE’S A PRIVATELY ON MAKER
OF EQUIPMENT, A CHINESE EQUIVALENT OF AN ASML WHO IS
SUPPOSED TO BE TESTING THEIR EQUIPMENT WITH SMIC.
THAT’S THE ONE TODAY. THE MAIN FOUNDRY.
I THINK THAT HAS DRIVEN SENTIMENT IN THE SECTOR.
AGAIN, IF CONFIRMED, IT HIGHLIGHTS THAT CHINA IS MAKING
FROM HER GRASP TO BECOME SELF-SUFFICIENT ON SHIPS AND
CHIP TECHNOLOGY AND PRODUCE ITS RELIANCE ON EXTERNAL, WESTERN
SUPPLIERS. YVONNE: IT COULD BE THE FIRST DOMESTIC
PRODUCED ADVANCED CHIPMAKING EQUIPMENT, RIGHT?
REALLY SIMILAR TO WHAT WE SAW WITH ASML.
SO HOW SHOULD WE LOOK AT THAT? HOW SIGNIFICANT IS THAT FOR YOU?
DAVID: HOW LIKELY IS THAT? YOU HAVE TO THINGS.
HYPERSCALERS. PLAINLY NOT FULLY ACCESSIBLE TO
THE CHINESE MARKET. HENCE THEY HAVE TO LOOK INWARD.
WHAT’S A LOWER HANGING FRUIT BETWEEN THOSE TWO THINGS?
AS WE TRY TO FIGURE OUT WHICH ONE OF THESE POSITIVE
NARRATIVES MIGHT COME TO FRUITION. >> AT THE MOMENT, EVERYTHING IS
DRIVEN BY CHIPS. IT’S ELECTRONIC WORLD.
DEVELOPING NATIVE TECHNOLOGY AND BECOMING SELF-SUFFICIENT
HAS TO BE NUMBER ONE. IT DRIVES EVERYTHING.
ULTIMATELY, CHINA WILL DO IT. IT’S A QUESTION OF TIME.
THEY’VE GOT FANTASTIC ENGINEERS. THE FULL WEIGHT OF STATE BEHIND
THEM. A LOT OF STATE INVESTMENT. WHETHER THIS STORY TODAY IS
CONFIRMED BRO NOT, REGARDLESS OF THAT, I THINK IN THE LONG
RUN CHINA IS MAKING STRONG PROGRESS TO DEVELOP ITS OWN
NATIVE CHIPMAKING TECHNOLOGY. SO I THINK THIS IS ANOTHER WAY
POINTU IN THE ONGOING DIRECTION OF TRAVEL IF YOU LIKE.
A VERY CONVOLUTED WAY OF SAYING IT.
THEY ARE MAKING GOOD PROGRESS. THE KEY QUESTION IS, WHEN WILL
THEY BECOME SELF-SUFFICIENT? MAINSTREAM SHIPS ARE ON THE WAY
OF DOING THAT. IT IS SOMETHING THEY COULD
ACHIEVE IN THE NEXT FEW YEARS. WE WILL HAVE TO WAIT AND SEE
HOW THINGS DEVELOP. THESE MACHINES ARE VERY HIGH-END WHICH REALLY THEY HAVE
A MONOPOLY ON THAT. THAT’S INCREDIBLY HARD TO DO.
MAY TAKE MULTIPLE YEARS IN FACT, A DECADE PLUS TO MAKE A
BREAKTHROUGH ON THAT. WITH THE HUGE RESOURCES THAT
CHINA CAN DEPLOY, ULTIMATELY A BREAKTHROUGH WILL BE MADE.
COULD BE 10 YEARS AWAY. YVONNE: THANK YOU.
WE ARE TALKING MORE GLOBAL NEWS HERE. ISRAEL STARTED ALONG, THREATENING PUSH INTO GAZA CITY
AFTER WEEKS OF AIRSTRIKES AND INCURSIONS INTO THE OUTSKIRTS.
A SPOKESMAN SAYS OPERATIONS WILL CONTINUE UNTIL HAMAS IS
DEFEATED AND HOSTAGES FREE. THE OFFENSIVE COMES AS A HUMAN
COMMISSION REPORT CONCLUDES ISRAEL IS COMMITTING GENOCIDE
AGAINST PALESTINIANS IN GAZA. THE REPORT CALLS ON THE
INTERNATIONAL COMMUNITY TO PUSH TO END THE WAR.
HOUSE REPUBLICANS UNVEILED A STOPGAP SPENDING BILL TO KEEP
U.S. GOVERNMENT OPEN PASSED IN OCTOBER — OCTOBER 1 SHUTDOWN
DEADLINE. IT WOULD KEEP AGENCIES OPERATING THROUGH NOVEMBER 21
AND PROVIDE NEW FUNDING FOR SECURITY.
IT NEEDS SOME IT — SEVEN VOTES TO OVERCOME PROCEDURAL HURDLES.
DAVID: TURNING OUR ATTENTION TO SOUTHEAST ASIA.
THE FED CONVERSATION. THE CURRENCY COMING UP HERE GET
EQUITY MARKET. 1/10 OF 1% TO THE UPSIDE.
WITHIN THE INDONESIAN STORY IS, WHAT DOES THE CENTRAL BANK LOOK
LIKE? LAWMAKERS WEIGHING POTENTIAL
CHANGES TO THE MANDATE OF THE CENTRAL BACK.
HEIGHTENING CONCERNS ABOUT THE CENTRAL BANKS AND DEPENDENTS.
LAWMAKERS SAYING THE AMENDMENTS COULD ALSO INCLUDE SETTING A
LOWER BAR IN TERMS OF BEING ABLE TO REMOVE MONETARY POLICY
OFFICIALS. LET’S BRING IN OUR DEPUTY
BUREAU CHIEF IN JAKARTA, HELP US UNDERSTAND.
I GUESS MARKETS SHOULD CARE ABOUT THIS.
WHAT SHOULD INVESTORS MAKE OF THESE PROPOSALS SPECIFICALLY? >> A LOT OF ALARMING HEADLINES
LAST NIGHT WITH LAWMAKERS SINGING THEY COULD CONSIDER
EXPANDING BANK INDONESIA’S MANDATE TO INCLUDE JOB CREATION
BUT ALSO ALLOW THE PARLIAMENT TO EFFECTIVELY DO — DISMISS
BANK INDONESIA OFFICIALS BASED ON AN EVALUATION OF THEIR
PERFORMANCE. THE REASON WHY THIS IS RAISING
CONCERNS IS BECAUSE IT FOLLOWS A FEW WEEKS AFTER BANK
INDONESIA REVAMPED WHAT IT CALLED BURDEN SHARING PROGRAMS.
ESSENTIALLY IT WILL SHOULDER SOME PART OF THE DEBT COSTS OF
THE PRESIDENTS PRIORITY ECONOMIC PROGRAMS. IF YOU ARE A
LONG-TERM INVESTOR AND INDONESIA, YOU ARE ASKING TO
SEE THE PRESIDENT TIGHTEN HIS REINS ON POWER, PURSUING A MORE
AGGRESSIVE PUSH ON GROWING THE ECONOMY.
WHAT ROLE WILL THE CENTRAL BANK HAVE TO PLAY THERE?
WILL IT HAVE TO DO HEAVY LIFTING?
WE HAVE SEEN THIS TREND IN THE U.S. AND THAILAND.
THIS HAS BEEN A SLOW AND STEADY CREEP AND INDONESIA.
THE FIGURES AGO THEY ADDED ECONOMIC GROWTH TO ITS MANDATE.
THIS IS THE LATEST ATTEMPT TO EXPAND IT EVEN FURTHER.
IF YOU WANT TO TAKE ANOTHER STEP BACK, YOU’RE ALSO SEEING
THE CABINET RESHUFFLE HAS REMOVED ALONG SERVING FINANCE
MINISTER, REVIEWING A BUDGET DEFICIT CAP.
FOR AN INVESTOR, YOU HAVE BANK INDONESIA INDEPENDENCE
COMPROMISED, A NEW APPROACH TO FISCAL POLICY.
WHAT DOES THIS MEAN FOR INDONESIA’S FUNDAMENTALS AND
ITS INSTITUTIONS? YVONNE:
CERTAINLY RAMBLING INVESTORS THERE.
THERE IS STILL GOING TO BE A BANKING INDONESIA DECISION
LATER TODAY. WHAT’S EXPECTED? A LOT OF UNCERTAINTY IN THE
POLITICAL SITUATION THERE. >> EXACTLY.
THEY ARE EXPECTING BANK INDONESIA TO HOLD ITS KEY RATE
FOR TODAY, ESSENTIALLY TO GIVE A SENSE OF CALM AND TAKE STOCK
OF EVERYTHING THAT HAPPENED OVER THE TUMULTUOUS FEW WEEKS.
VIOLENT PROTESTS IN INDONESIA. I CABINET RESHUFFLE REMOVING A
WELL RENOWNED FINANCE MINISTER. THE INDONESIAN RUPEE HAS BEEN
THE WORST PERFORMER IN ASIA DURING THAT TIME.
ANOTHER THING THAT WILL COMPLICATE THE DECISION-MAKING
IS THIS NEW PROGRAM BY THE FINANCE MINISTER WHICH IS TO
FLOOD THE ECONOMY WITH $12 BILLION.
THEY’VE EXPLICITLY ORDERED NOT TO OBSERVE ANY OF THE LIQUIDITY.
THE GOAL HAS BEEN TO JUMPSTART LENDING INTO BOOST ECONOMIC
GROWTH BUT THIS HAS RAMIFICATIONS FOR INFLATION
DOWN THE LINE. ECONOMISTS ARE EXPECTING THIS
COULD PUSH INFLATION UP HIGHER. THAT MEANS OLD FOR TODAY BUT
EVEN LONGER TERM THE FED NEEDS AN EARLIER AND TO THE EASING
CYCLE. YVONNE: THANK YOU THERE. JOINING US OUT OF JAKARTA THIS
MORNING. A LOT TO UNPACK LATER ON TODAY.
PLENTY MORE AHEAD. THIS IS BLOOMBERG. ♪ DAVID:
IF WE HAVEN’T WOKEN OUR VIEWERS UP ALREADY, HERE IS SOMETHING
THAT WILL GET YOU OUT OF BED. BOND OPTION COMING OUT OF JAPAN.
DO YOU THINK THEY WILL HAVE DIFFICULTY GETTING THIS ONE
THROUGH? YVONNE: THEY MIGHT. DEMAND BEING TESTED.
THIS IS THE FIRST ONE SINCE THE PRIME MINISTER RESIGNED.
MAYBE THAT LEADS TO MORE CONCERNS ON THE PHYSICAL SIDE
OF THINGS AS WELL. THERE’S ALSO A BOND SALE IN
CHINA. DAVID: A RECENT MELT UP AND YIELDS.
ALL THAT BEING SAID, THE REASON OPTIONS IN JAPAN HAVE GONE
WITHOUT FURTHER COMPLICATIONS COMPARED TO THE ONES BEFORE. THEN AGAIN, THERE’S A NEW
COMPLICATION THIS WEEK. THERE’S A BOJ MEETING.
I GUESS WE CAN OVER OBSESS TOMORROW ONCE WE TALK ABOUT THE
FED AND LOOK AHEAD TO THE BANK OF ENGLAND.
WE CAN TALK ABOUT THE BOJ ON FRIDAY. ♪