1 00:00:00,160 --> 00:00:10,639 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:10,680 --> 00:00:13,880 Speaker 1: Daybreak Asia podcast. I'm Doug Prisner. You can join Brian 3 00:00:13,960 --> 00:00:16,840 Speaker 1: Curtis and myself for the stories, making news and moving 4 00:00:16,880 --> 00:00:19,720 Speaker 1: markets in the APAC region. You can subscribe to the 5 00:00:19,760 --> 00:00:23,280 Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio, 6 00:00:23,480 --> 00:00:26,280 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:27,400 --> 00:00:30,400 Speaker 2: We are looking at the Chinese economy here in detail. 8 00:00:30,480 --> 00:00:33,640 Speaker 2: We understand that the PBOC is likely to keep cash 9 00:00:33,680 --> 00:00:38,479 Speaker 2: conditions and monetary policy broadly stable as policymakers focus on 10 00:00:38,520 --> 00:00:42,080 Speaker 2: the currency. That's the results from a Bloomberg survey that 11 00:00:42,159 --> 00:00:45,720 Speaker 2: we did of economists, and we're also seeing some encouraging 12 00:00:45,800 --> 00:00:48,839 Speaker 2: numbers on spending over the Chinese New Year. Joining us 13 00:00:48,880 --> 00:00:52,720 Speaker 2: now is Jill Deesis Bloomberg's China Eco GUV editor with 14 00:00:52,880 --> 00:00:56,840 Speaker 2: his live in our studios. So I reported earlier from 15 00:00:56,880 --> 00:00:59,800 Speaker 2: the Shanghai Security News that and they had a look 16 00:00:59,800 --> 00:01:03,800 Speaker 2: at the May Twan online platform and said that consumer 17 00:01:03,840 --> 00:01:07,080 Speaker 2: spending daily consumer spending jump more than one hundred and 18 00:01:07,080 --> 00:01:10,319 Speaker 2: fifty five percent from the same period in twenty nineteen. 19 00:01:10,400 --> 00:01:13,679 Speaker 2: So that's important because it's pre pandemic and then we 20 00:01:13,720 --> 00:01:16,039 Speaker 2: have a story out that talks about that as well 21 00:01:16,080 --> 00:01:19,679 Speaker 2: as some of the official Chinese data saying that sixty 22 00:01:19,720 --> 00:01:21,840 Speaker 2: one million rail trips were made in the first six 23 00:01:21,920 --> 00:01:24,800 Speaker 2: days of the Spring festival. So it sort of gets 24 00:01:24,840 --> 00:01:27,280 Speaker 2: us to a position, Jill Well, we're trying to figure 25 00:01:27,319 --> 00:01:29,720 Speaker 2: out whether or not you know, these are the opening 26 00:01:29,840 --> 00:01:32,959 Speaker 2: numbers here and don't wait too long, but maybe, just 27 00:01:33,000 --> 00:01:35,400 Speaker 2: maybe the Chinese economy is recovering. Do you buy it? 28 00:01:36,080 --> 00:01:38,600 Speaker 3: Yes, Brian, Well, I think at this point. Look, as 29 00:01:38,640 --> 00:01:40,720 Speaker 3: you mentioned, a lot of this data is coming out 30 00:01:40,760 --> 00:01:43,839 Speaker 3: still in drips and drabs, but it is fairly encouraging, 31 00:01:43,959 --> 00:01:46,760 Speaker 3: particularly on that travel front. So those rail trips that 32 00:01:46,840 --> 00:01:50,560 Speaker 3: you mentioned up compared to a similar period in twenty 33 00:01:50,600 --> 00:01:53,360 Speaker 3: twenty three. We've also seen a bit of encouragement out 34 00:01:53,360 --> 00:01:56,840 Speaker 3: of some initial data on road trips, trips by plane 35 00:01:56,920 --> 00:01:59,520 Speaker 3: during the holiday. All of that tells us that people 36 00:01:59,520 --> 00:02:02,800 Speaker 3: are definitely traveling more over this lunar New Year's season 37 00:02:02,840 --> 00:02:06,520 Speaker 3: than they were in twenty twenty three. Now, one caveat 38 00:02:06,600 --> 00:02:08,960 Speaker 3: to that is that even though all of the pandemic 39 00:02:09,000 --> 00:02:11,480 Speaker 3: curbs in China were pretty much gone by this point 40 00:02:11,480 --> 00:02:14,320 Speaker 3: in twenty twenty three, there was still a really really 41 00:02:14,400 --> 00:02:17,240 Speaker 3: big outbreak of coronavirus infections at that time, so that 42 00:02:17,320 --> 00:02:19,440 Speaker 3: might have hampered travel just a little bit. But that 43 00:02:19,520 --> 00:02:23,040 Speaker 3: does give us some encouragement there. You mentioned the Mayitwon data. 44 00:02:23,120 --> 00:02:27,200 Speaker 3: I will say that there's spending broadly does seem to 45 00:02:27,200 --> 00:02:30,360 Speaker 3: be up this year, though we've seen them middling data 46 00:02:30,400 --> 00:02:32,840 Speaker 3: when it comes to box office ticket sales, for example. 47 00:02:32,880 --> 00:02:36,320 Speaker 3: So we calculated just looking at some data from Mayan Entertainment, 48 00:02:36,320 --> 00:02:39,680 Speaker 3: which they released some ticket sales data showing us that 49 00:02:39,760 --> 00:02:42,600 Speaker 3: spending was kind of on par with twenty twenty three 50 00:02:42,680 --> 00:02:45,720 Speaker 3: through the first few days of this year's box office 51 00:02:45,720 --> 00:02:47,640 Speaker 3: ticket sales. It's a big thing, you know, as people 52 00:02:47,639 --> 00:02:50,720 Speaker 3: are kind of traveling around, see moods, their family. That 53 00:02:50,880 --> 00:02:54,560 Speaker 3: indicates to us that maybe it might be that spending 54 00:02:54,960 --> 00:02:59,639 Speaker 3: per trip from the Chinese consumers actually not necessarily keeping 55 00:02:59,680 --> 00:03:02,359 Speaker 3: trade paced with the rate of travel that they're doing. 56 00:03:02,360 --> 00:03:04,840 Speaker 3: That's a phenomenon that we saw last year where people 57 00:03:04,840 --> 00:03:06,840 Speaker 3: are still traveling, they're just not spending as much money. 58 00:03:06,840 --> 00:03:09,080 Speaker 3: So I think we've still got more to see. But 59 00:03:09,240 --> 00:03:11,200 Speaker 3: it's a bit of a mixed bag, but I'd say 60 00:03:11,240 --> 00:03:12,240 Speaker 3: overall kind of encouraging. 61 00:03:12,400 --> 00:03:14,720 Speaker 1: I'm wondering about prices. We talk a lot about the 62 00:03:14,760 --> 00:03:17,919 Speaker 1: deflationary pressure building in the Chinese economy. I mean, it's 63 00:03:17,919 --> 00:03:20,119 Speaker 1: something that's been happening on the wholesale level for quite 64 00:03:20,160 --> 00:03:22,600 Speaker 1: some time, more than a year. It's been showing up 65 00:03:22,600 --> 00:03:26,320 Speaker 1: for the last many months. On the retail side. Are 66 00:03:26,400 --> 00:03:29,600 Speaker 1: consumers paying less now, Yes, they're active, they're spending, but 67 00:03:29,880 --> 00:03:32,040 Speaker 1: our price is down relative to where they have been. 68 00:03:32,680 --> 00:03:34,440 Speaker 3: Yeah, it does kind of seem that way, And I think, 69 00:03:34,440 --> 00:03:36,920 Speaker 3: you know, the issue with the deflationary the threat of 70 00:03:36,920 --> 00:03:39,800 Speaker 3: a deliflationary spiral is that prices continue to fall, or 71 00:03:39,800 --> 00:03:43,320 Speaker 3: at least consumers expect prices to continue to fall, and 72 00:03:43,360 --> 00:03:45,440 Speaker 3: so they hold off on spending any more money because 73 00:03:45,440 --> 00:03:47,880 Speaker 3: they're saving for that continued downward trend in prices. I 74 00:03:47,920 --> 00:03:50,720 Speaker 3: think we're still seeing a bit of that is as 75 00:03:50,760 --> 00:03:53,280 Speaker 3: a threat that's looming over the Chinese economy right now. 76 00:03:53,320 --> 00:03:55,160 Speaker 3: What you'd really hope is for people to start picking 77 00:03:55,200 --> 00:03:57,960 Speaker 3: up more spending durable goods in particular. I think one 78 00:03:58,000 --> 00:04:01,440 Speaker 3: of the problems that we're I'm still dealing with right now. 79 00:04:01,640 --> 00:04:01,720 Speaker 2: Now. 80 00:04:01,800 --> 00:04:04,480 Speaker 3: Remember, even over this lunar New Year period, people are 81 00:04:04,480 --> 00:04:07,120 Speaker 3: maybe spending on tourism and they're going places and they're 82 00:04:07,120 --> 00:04:09,480 Speaker 3: spending out on you know, restaurants and dining and everything 83 00:04:09,520 --> 00:04:13,400 Speaker 3: like that. But good sales I think are still fairly weak. 84 00:04:13,520 --> 00:04:16,719 Speaker 3: I mean if you looked at especially in sales such 85 00:04:16,760 --> 00:04:19,440 Speaker 3: as you know, cars and things like that, and so 86 00:04:19,480 --> 00:04:21,320 Speaker 3: I mean that's still a concern in. 87 00:04:21,320 --> 00:04:21,920 Speaker 4: China right now. 88 00:04:21,960 --> 00:04:24,400 Speaker 2: It's important to have these early indicators and look at 89 00:04:24,400 --> 00:04:26,679 Speaker 2: these numbers because if you look at the official data, 90 00:04:26,800 --> 00:04:29,599 Speaker 2: it may not show up, as you know, a pickup 91 00:04:29,640 --> 00:04:32,280 Speaker 2: in growth or activity because of course the factories are 92 00:04:32,279 --> 00:04:34,960 Speaker 2: all closed, and so those numbers would be dismal. And 93 00:04:35,000 --> 00:04:37,440 Speaker 2: then you have to take January and February together and 94 00:04:37,520 --> 00:04:40,040 Speaker 2: average it out. But I'll raise one point that if 95 00:04:40,040 --> 00:04:43,560 Speaker 2: you wait too long, if you're an investor, well, look 96 00:04:43,560 --> 00:04:46,120 Speaker 2: at Trip dot Com. This is one of the premium 97 00:04:46,200 --> 00:04:49,320 Speaker 2: Chinese companies and it had struggled for a long time. 98 00:04:49,560 --> 00:04:52,080 Speaker 2: In the first week of December, it was at two sixty. 99 00:04:52,440 --> 00:04:55,120 Speaker 2: Now it's at three twenty and we haven't even had 100 00:04:55,120 --> 00:04:58,360 Speaker 2: trading in a week in China. So there are some 101 00:04:58,920 --> 00:05:01,040 Speaker 2: there are some other indie cators that are telling you 102 00:05:01,120 --> 00:05:03,760 Speaker 2: that that business is picking up. How long do you 103 00:05:03,760 --> 00:05:06,160 Speaker 2: think we have to wait chill until it's kind of confirmed. 104 00:05:06,720 --> 00:05:09,240 Speaker 3: I mean, to actually confirm it. It's probably going to 105 00:05:09,320 --> 00:05:11,559 Speaker 3: take until you know, we're getting into the second quarter, 106 00:05:11,680 --> 00:05:13,800 Speaker 3: if not toward the you know, the second half of 107 00:05:13,839 --> 00:05:15,359 Speaker 3: the year. I mean, it does take a while for 108 00:05:15,400 --> 00:05:17,680 Speaker 3: these things to come into play. I think the other 109 00:05:17,760 --> 00:05:20,400 Speaker 3: thing too, that really complicates this lunar New Year season 110 00:05:20,480 --> 00:05:22,960 Speaker 3: is that it's a really late lunar New year this year. 111 00:05:23,000 --> 00:05:25,080 Speaker 3: I mean, we're getting into the middle, if not that 112 00:05:25,160 --> 00:05:27,760 Speaker 3: the back half of February as compared to last year, 113 00:05:27,800 --> 00:05:30,080 Speaker 3: for example, it was, you know, fairly early in the year, 114 00:05:30,080 --> 00:05:33,400 Speaker 3: still in January. So that's another complicating factor is that, 115 00:05:33,440 --> 00:05:35,000 Speaker 3: you know, when you talk about these two months that 116 00:05:35,040 --> 00:05:37,359 Speaker 3: are kind of smushed together, that creates all of this 117 00:05:37,520 --> 00:05:40,479 Speaker 3: noise in the data. It's really not until we get 118 00:05:40,480 --> 00:05:43,400 Speaker 3: into to March that we start to get away from 119 00:05:43,440 --> 00:05:45,960 Speaker 3: this very complicated period to even gauge activity in. 120 00:05:46,240 --> 00:05:49,240 Speaker 1: So last question very quickly, could there be some type 121 00:05:49,240 --> 00:05:52,320 Speaker 1: of policy response before the equity market opens on Monday. 122 00:05:52,360 --> 00:05:54,560 Speaker 1: I was reading a little bit of chatter on the 123 00:05:54,680 --> 00:05:58,279 Speaker 1: m Live blog talking about whether or not or questioning 124 00:05:58,279 --> 00:05:59,800 Speaker 1: whether or not there would be a reduction in the 125 00:05:59,839 --> 00:06:03,640 Speaker 1: world one year flm MLF I'm sorry over the weekend. 126 00:06:03,680 --> 00:06:04,280 Speaker 1: Is that likely? 127 00:06:05,240 --> 00:06:08,119 Speaker 3: It's possible. I think most economists think they might hold 128 00:06:08,200 --> 00:06:11,680 Speaker 3: pat this month, although Bloomberg Economics is forecasting a cut. 129 00:06:11,720 --> 00:06:15,520 Speaker 3: You have to remember that the MLF right was held 130 00:06:16,320 --> 00:06:18,599 Speaker 3: in January, which was quite a surprise to most in 131 00:06:18,640 --> 00:06:20,400 Speaker 3: the market, so maybe they do make a cut. I 132 00:06:20,400 --> 00:06:23,960 Speaker 3: will say though, that the Central Bank did just trim 133 00:06:24,000 --> 00:06:27,039 Speaker 3: the reserve requirement ratio for major banks, bringing up some liquidity. 134 00:06:27,200 --> 00:06:31,200 Speaker 3: There's also this big National People's Congress legislative meeting at 135 00:06:31,200 --> 00:06:33,560 Speaker 3: the beginning of March, so you know they might want 136 00:06:33,560 --> 00:06:35,479 Speaker 3: to hold off until we actually get clear of some 137 00:06:35,520 --> 00:06:37,599 Speaker 3: of these key events before they make a major policy 138 00:06:37,600 --> 00:06:38,040 Speaker 3: move again. 139 00:06:38,279 --> 00:06:40,760 Speaker 2: All right, Jill, thanks very much for joining us. Jill Lisiz, 140 00:06:40,800 --> 00:06:44,640 Speaker 2: Bloomberg China ECOGOV editor here in our Hong Kong bureau. 141 00:06:52,320 --> 00:06:55,640 Speaker 2: Let's get to our guest, Gareth Nicholson, CIO and Head 142 00:06:55,680 --> 00:07:01,600 Speaker 2: of Discretionary Portfolio Management at Nomura International Management, Gerra. Thanks 143 00:07:01,680 --> 00:07:04,479 Speaker 2: very much for joining us. So when you speak to 144 00:07:05,080 --> 00:07:08,640 Speaker 2: your managers and actually to clients, what are you telling 145 00:07:08,680 --> 00:07:11,880 Speaker 2: them about the best options at the moment for deploying 146 00:07:11,920 --> 00:07:12,720 Speaker 2: fresh capital. 147 00:07:15,440 --> 00:07:18,120 Speaker 4: Well, I mean if you think about it. Equity is 148 00:07:18,160 --> 00:07:20,000 Speaker 4: just done phenomenally. This has been a great year and 149 00:07:21,680 --> 00:07:24,680 Speaker 4: for cash at the moment. This really there's the Barbell approach. 150 00:07:24,720 --> 00:07:26,840 Speaker 4: You've got a lot of investors that are still heavily 151 00:07:26,840 --> 00:07:30,440 Speaker 4: weighted in many markets six trillion dollars in counting, and 152 00:07:30,520 --> 00:07:33,160 Speaker 4: you have a lot of investors that are heavily skewed 153 00:07:33,200 --> 00:07:36,680 Speaker 4: towards US equity, which continues to do too well. Our 154 00:07:36,720 --> 00:07:38,880 Speaker 4: case is to work in the margins. We still think 155 00:07:38,880 --> 00:07:43,160 Speaker 4: the US economy is solid, but we think the cream 156 00:07:43,200 --> 00:07:45,760 Speaker 4: on the top is starting to look a little bit off. 157 00:07:46,360 --> 00:07:47,800 Speaker 4: We really do think you want to take some of 158 00:07:47,840 --> 00:07:50,200 Speaker 4: that off and you want to diversify out into other places. 159 00:07:50,440 --> 00:07:54,120 Speaker 4: Other places from the risk perspective would be Asia, particularly Japan. 160 00:07:54,200 --> 00:07:56,960 Speaker 4: We do you think Nikaichu Tou five forty thousand is 161 00:07:56,960 --> 00:07:59,520 Speaker 4: on the cards. We do like career, We do like 162 00:07:59,840 --> 00:08:02,320 Speaker 4: in the nisure of the elections and other space that's 163 00:08:02,360 --> 00:08:06,000 Speaker 4: very attractive. And India still remains the dialing, which we 164 00:08:06,040 --> 00:08:08,240 Speaker 4: think will be supported by the politics. So on the 165 00:08:08,880 --> 00:08:13,160 Speaker 4: risk riskier side, the equity side, it's using the money 166 00:08:13,360 --> 00:08:17,080 Speaker 4: that has potentially got too much concentration and looking to 167 00:08:17,160 --> 00:08:19,480 Speaker 4: diverse line into other growth areas and then on the 168 00:08:19,480 --> 00:08:23,560 Speaker 4: other side, the more money markets. The You know, some 169 00:08:23,600 --> 00:08:25,360 Speaker 4: people say they may have missed out, but you know 170 00:08:25,400 --> 00:08:27,880 Speaker 4: you've been paid five percent to be patient to wait. 171 00:08:28,440 --> 00:08:30,000 Speaker 4: We think that needs to. 172 00:08:29,960 --> 00:08:31,800 Speaker 1: Start evolving a little bit. 173 00:08:32,480 --> 00:08:37,959 Speaker 4: We see some opportunities to stop buying some duration tactically, 174 00:08:38,240 --> 00:08:40,600 Speaker 4: given that this rates volatilty is crazy. No one knows 175 00:08:40,600 --> 00:08:42,439 Speaker 4: where treasure is going, and don't think treasure knows where 176 00:08:42,440 --> 00:08:44,960 Speaker 4: treasure is going. So when it's up and down like that, 177 00:08:45,040 --> 00:08:49,240 Speaker 4: let's play the ball. Let's keep interested there and stop 178 00:08:49,280 --> 00:08:51,840 Speaker 4: boarding opposition. So very active in the fixed income and 179 00:08:51,880 --> 00:08:53,800 Speaker 4: the equity. It's fine in the spaces where we want 180 00:08:53,800 --> 00:08:54,400 Speaker 4: to buy and hold. 181 00:08:54,559 --> 00:08:56,520 Speaker 1: So you don't seem to be too optimistic that we're 182 00:08:56,559 --> 00:08:58,720 Speaker 1: going to get the type of rate cuts maybe that 183 00:08:58,760 --> 00:09:00,520 Speaker 1: the market had been and to disippating. 184 00:09:02,360 --> 00:09:06,120 Speaker 4: Look, the market had one hundred and forty rate cuts 185 00:09:06,160 --> 00:09:08,600 Speaker 4: one hundred prety basis points in December. That has come 186 00:09:08,679 --> 00:09:11,320 Speaker 4: down massively. We've been sitting on four rate cuts for 187 00:09:11,360 --> 00:09:13,720 Speaker 4: the year in twenty twenty four. Now we reduce it 188 00:09:13,720 --> 00:09:16,559 Speaker 4: down to three. The market is getting very close to 189 00:09:16,600 --> 00:09:19,679 Speaker 4: where we are, and I think that has been the opportunity. 190 00:09:19,960 --> 00:09:23,400 Speaker 4: It's been this divergence in thoughts between the market and 191 00:09:23,440 --> 00:09:25,680 Speaker 4: the FED. Now, when you get down to the fact 192 00:09:25,679 --> 00:09:27,760 Speaker 4: that the market is agreeing with the Fed, they have 193 00:09:27,840 --> 00:09:31,720 Speaker 4: to reprice their assumptions that wow, okay, rates high for longer? 194 00:09:31,760 --> 00:09:34,319 Speaker 4: Who's sensitive to rates? Where do we want to move 195 00:09:34,360 --> 00:09:36,400 Speaker 4: our money? So I think we're in a stage of 196 00:09:36,480 --> 00:09:39,640 Speaker 4: real repricing around assets that are sensitive to rates. And 197 00:09:39,679 --> 00:09:42,680 Speaker 4: you've seen that with flows. You're seeing more money going 198 00:09:42,679 --> 00:09:46,520 Speaker 4: into investment grade as these yields are moving up a 199 00:09:46,559 --> 00:09:49,320 Speaker 4: little bit. You've seeing many coming out of equities, and 200 00:09:49,400 --> 00:09:52,280 Speaker 4: this is a stage where the kind of divergence of 201 00:09:52,320 --> 00:09:54,400 Speaker 4: thought is now coming altogether. 202 00:09:55,640 --> 00:09:59,000 Speaker 2: Gareth, you talked about deploying capital into Japan and into 203 00:09:59,080 --> 00:10:03,120 Speaker 2: other parts of Asia. Would that be along the lines 204 00:10:03,160 --> 00:10:06,439 Speaker 2: of the themes of AI, the area that has grown 205 00:10:06,520 --> 00:10:10,000 Speaker 2: so much in US training it hasn't really advanced as 206 00:10:10,080 --> 00:10:13,400 Speaker 2: much outside of the US. Or would you would you 207 00:10:13,480 --> 00:10:17,000 Speaker 2: go with you know, other pockets of strength in the economy. 208 00:10:18,440 --> 00:10:20,280 Speaker 4: I think there's two points, and we definitely want to 209 00:10:20,280 --> 00:10:24,000 Speaker 4: touch on the AI side. AI has been the latest 210 00:10:24,040 --> 00:10:28,559 Speaker 4: wave of kind of positive tailwinds for the US, and 211 00:10:28,800 --> 00:10:30,640 Speaker 4: this trade has been phenomenal. What we're saying is we 212 00:10:30,679 --> 00:10:33,920 Speaker 4: still like the US, but there's just too much concentration. 213 00:10:34,240 --> 00:10:36,600 Speaker 4: So when we moved to the next high conviction trade, 214 00:10:36,960 --> 00:10:40,080 Speaker 4: we still like the idea of a semiconductor recovery. In Asia, 215 00:10:40,360 --> 00:10:43,160 Speaker 4: we still like the idea of AI growing a lot 216 00:10:43,200 --> 00:10:46,320 Speaker 4: of value. The difference within Asia is most of the 217 00:10:46,360 --> 00:10:51,760 Speaker 4: production of the chain is actually done in Asia and 218 00:10:51,960 --> 00:10:54,439 Speaker 4: a lot of the initiative, a lot of the embracing 219 00:10:54,480 --> 00:10:56,960 Speaker 4: of this technology. We see Asia as a space that 220 00:10:57,400 --> 00:10:59,680 Speaker 4: is on the forefront and if you imagine it's like, 221 00:11:00,160 --> 00:11:03,440 Speaker 4: you know, the refrigerator being the AI equivalent. When the 222 00:11:03,440 --> 00:11:06,920 Speaker 4: events of the refrigerator that was a very innovative technology, 223 00:11:07,400 --> 00:11:12,000 Speaker 4: Coca Cola user refrigerator really to enhance its product. Where 224 00:11:12,559 --> 00:11:15,200 Speaker 4: we see Japan and the rest of Asia look to 225 00:11:15,320 --> 00:11:18,080 Speaker 4: use AI to really enhance the use of this. So 226 00:11:18,160 --> 00:11:21,200 Speaker 4: the next kind of iteration we feel is going to 227 00:11:21,200 --> 00:11:24,000 Speaker 4: come from this part of the world. We think the 228 00:11:24,000 --> 00:11:26,880 Speaker 4: whole supply chain is, yeah, we don't have huge champions 229 00:11:26,920 --> 00:11:29,160 Speaker 4: like they do in the US, and we think we're 230 00:11:29,160 --> 00:11:31,720 Speaker 4: going to see development from a lower base in the 231 00:11:31,760 --> 00:11:34,080 Speaker 4: side and really gain. So to us, this is a 232 00:11:34,120 --> 00:11:36,680 Speaker 4: still exciting space where there's a lot of room to. 233 00:11:36,679 --> 00:11:38,719 Speaker 1: Grow, no doubt about it. I mean, and I think 234 00:11:38,760 --> 00:11:42,560 Speaker 1: the market joins in on the enthusiasm that you may have. 235 00:11:42,600 --> 00:11:44,720 Speaker 1: I mean, look at Nvidio, even look at ARM. We 236 00:11:44,720 --> 00:11:48,120 Speaker 1: were talking about this phenomenal rally in shares of ARM 237 00:11:48,160 --> 00:11:50,920 Speaker 1: earlier in the week. I'm curious to get to get 238 00:11:50,960 --> 00:11:53,920 Speaker 1: your perspective on what clients are telling you. Are they 239 00:11:54,000 --> 00:11:57,720 Speaker 1: concerned at all? Are they expressing any level of unease 240 00:11:57,840 --> 00:12:00,920 Speaker 1: with what's happening. Maybe you have to considered, like the 241 00:12:00,960 --> 00:12:04,160 Speaker 1: geopolitics of what we're dealing with these days when when 242 00:12:04,200 --> 00:12:07,440 Speaker 1: addressing uncertainty, But is there a level of nervousness that 243 00:12:07,480 --> 00:12:08,319 Speaker 1: you're picking up on? 244 00:12:10,160 --> 00:12:10,880 Speaker 3: I think there is. 245 00:12:11,280 --> 00:12:14,640 Speaker 4: To the point that we're seeing this baviatle approach, people 246 00:12:14,720 --> 00:12:17,360 Speaker 4: are potentially taking out of some of the sectors that 247 00:12:17,400 --> 00:12:19,959 Speaker 4: they can't see the talons and putting it into a 248 00:12:20,000 --> 00:12:23,240 Speaker 4: cash or a lower volatility earn their income while you wait. 249 00:12:23,480 --> 00:12:25,360 Speaker 4: At the same time, they're saying on the other side 250 00:12:25,400 --> 00:12:27,240 Speaker 4: of that, I don't want to miss out on the 251 00:12:27,280 --> 00:12:30,440 Speaker 4: teams I'm very convicted in and they're investing. So we 252 00:12:30,480 --> 00:12:32,960 Speaker 4: still see flows going into Japan quite aggressively. 253 00:12:33,000 --> 00:12:33,800 Speaker 5: We still see. 254 00:12:33,679 --> 00:12:35,600 Speaker 4: Flows going into em I mean it was a record 255 00:12:35,880 --> 00:12:38,920 Speaker 4: a record week last week. At the same time, cash 256 00:12:39,040 --> 00:12:41,880 Speaker 4: is now up at record level, so there is there 257 00:12:41,920 --> 00:12:45,240 Speaker 4: is a case for hedging your bets, a case for 258 00:12:45,600 --> 00:12:48,040 Speaker 4: having that liquidity in the short en. They're still getting 259 00:12:48,040 --> 00:12:49,680 Speaker 4: paid to be able to react if we do see 260 00:12:49,920 --> 00:12:53,120 Speaker 4: further paying geopolitics or the like, But at the same 261 00:12:53,120 --> 00:12:55,000 Speaker 4: time they don't want to miss out too much, So 262 00:12:55,080 --> 00:12:57,000 Speaker 4: I think it's instead of all being in, it's about 263 00:12:57,040 --> 00:12:57,520 Speaker 4: spreading it. 264 00:12:58,040 --> 00:13:01,120 Speaker 2: Yeah, you almost wonder whether now more than other times, 265 00:13:02,320 --> 00:13:04,840 Speaker 2: you're getting paid to be a good stock picker rather 266 00:13:04,880 --> 00:13:07,360 Speaker 2: than just go with passive investing, Because if you look 267 00:13:07,400 --> 00:13:09,720 Speaker 2: at these charts, I'm just looking at TSMC, I mean 268 00:13:09,760 --> 00:13:12,640 Speaker 2: it's it's parabolic as well, and it hasn't even seen 269 00:13:12,679 --> 00:13:16,400 Speaker 2: anywhere near the gains of Nvidia and some of the 270 00:13:16,440 --> 00:13:19,520 Speaker 2: other companies in this space. Do you have to be 271 00:13:19,559 --> 00:13:22,520 Speaker 2: a stock picker here or can you? Can you average 272 00:13:22,520 --> 00:13:24,720 Speaker 2: it out and go with an index fund in some 273 00:13:24,800 --> 00:13:26,079 Speaker 2: of these markets you prefer. 274 00:13:26,080 --> 00:13:28,319 Speaker 4: To be honest. In Asia, it's always about stock picking. 275 00:13:28,440 --> 00:13:31,880 Speaker 4: The indices are not as developed or as broad as 276 00:13:31,880 --> 00:13:34,839 Speaker 4: you see in the West, so you really are picking 277 00:13:34,880 --> 00:13:39,079 Speaker 4: a few a few champions, and that's kind of the 278 00:13:39,160 --> 00:13:42,280 Speaker 4: drivers of different regions within Asia have their specialties, had 279 00:13:42,280 --> 00:13:44,800 Speaker 4: their champions, so going straight to those names makes a 280 00:13:44,840 --> 00:13:47,280 Speaker 4: lot more sense. So that's why in this part of 281 00:13:47,320 --> 00:13:50,960 Speaker 4: the world, particularly even in Japan, we want to go 282 00:13:51,040 --> 00:13:53,680 Speaker 4: into the sectors. We want to go into the specific companies. 283 00:13:53,920 --> 00:13:56,480 Speaker 4: Definitely agree with you. Stock picking is the way forward 284 00:13:56,720 --> 00:13:59,880 Speaker 4: in this environment where you've got so much value of 285 00:14:00,000 --> 00:14:02,640 Speaker 4: really baked in that was last year, right, The way 286 00:14:02,760 --> 00:14:04,920 Speaker 4: this year is select the specific one you want to 287 00:14:04,920 --> 00:14:05,720 Speaker 4: stand up on the board. 288 00:14:06,840 --> 00:14:09,600 Speaker 1: Are there opportunities that you're seeing in China? That market's 289 00:14:09,600 --> 00:14:13,160 Speaker 1: been so badly beaten? Is it time to test the water. 290 00:14:14,679 --> 00:14:18,880 Speaker 4: Well China? As you said, it's been an extremely messy 291 00:14:18,920 --> 00:14:22,200 Speaker 4: storm for some time. We believe we're actually if you 292 00:14:22,560 --> 00:14:24,320 Speaker 4: keep with the picture of the storm, we're in the 293 00:14:24,360 --> 00:14:27,640 Speaker 4: eye of the storm. So there is a small sweet 294 00:14:27,680 --> 00:14:31,720 Speaker 4: spot where tactically that weeks of the months you can 295 00:14:31,760 --> 00:14:34,760 Speaker 4: buy into the China story and you can do well. 296 00:14:34,760 --> 00:14:36,400 Speaker 4: We've been calling this for the last couple of weeks 297 00:14:36,440 --> 00:14:38,680 Speaker 4: and you're actually on to see Infloce come into China 298 00:14:38,920 --> 00:14:41,240 Speaker 4: through ETFs and another pise. 299 00:14:41,920 --> 00:14:44,200 Speaker 2: So can you give me the address of that sweet spot. 300 00:14:45,600 --> 00:14:48,440 Speaker 4: Well, that is the biggest problem is the sweet spot 301 00:14:48,520 --> 00:14:50,040 Speaker 4: is pretty small and we don't think it's going to 302 00:14:50,160 --> 00:14:52,720 Speaker 4: last for too long, so we really want to find 303 00:14:52,840 --> 00:14:54,760 Speaker 4: the space that we're going to see. Ten fifteen. 304 00:14:55,960 --> 00:14:57,960 Speaker 2: I'm just joying with you, Gareth, Thank you so much 305 00:14:57,960 --> 00:15:00,120 Speaker 2: for joining us out of time, but good session. And 306 00:15:00,240 --> 00:15:12,680 Speaker 2: Gareth Nicholson from Nomura International Wealth Management. This is joining 307 00:15:12,760 --> 00:15:15,520 Speaker 2: us in our studios is Helen jew Managing director and 308 00:15:15,640 --> 00:15:19,280 Speaker 2: CIO of NF Trinity with a look at markets and 309 00:15:19,320 --> 00:15:21,440 Speaker 2: a look at China. We didn't mention in the data 310 00:15:21,520 --> 00:15:24,560 Speaker 2: check there that China remains closed today. It is still 311 00:15:24,600 --> 00:15:27,960 Speaker 2: the Lunar New Year holiday. Helen. We're getting a little 312 00:15:27,960 --> 00:15:32,840 Speaker 2: bit more anecdotal evidence of China's economy and the recovery. 313 00:15:32,880 --> 00:15:36,040 Speaker 2: The Shanghai Securities News with a story today saying that 314 00:15:36,200 --> 00:15:39,480 Speaker 2: average spending on May twan jumped more than one hundred 315 00:15:39,480 --> 00:15:42,640 Speaker 2: and fifty five percent during the Chinese New Year from 316 00:15:42,680 --> 00:15:47,400 Speaker 2: the same period of twenty nineteen, So that's pre pandemic levels. 317 00:15:47,920 --> 00:15:51,240 Speaker 2: It's just anecdotal in nature, but in your own channel checks, 318 00:15:51,560 --> 00:15:53,640 Speaker 2: is the Chinese economy starting to recover? 319 00:15:54,840 --> 00:15:56,880 Speaker 5: I think it's still probably a little bit too early 320 00:15:56,920 --> 00:15:59,200 Speaker 5: to say that we're firmly on their road of recovery. 321 00:15:59,880 --> 00:16:02,160 Speaker 5: The base effects are getting a little bit easier, for sure, 322 00:16:03,080 --> 00:16:05,480 Speaker 5: So we do have some promise and hope going into 323 00:16:05,480 --> 00:16:07,560 Speaker 5: the next few months, and we do expect more policy 324 00:16:07,640 --> 00:16:10,240 Speaker 5: action as well, But so far what we're seeing is 325 00:16:10,240 --> 00:16:13,760 Speaker 5: more of like a landing rather than a meaningful recovery. 326 00:16:13,800 --> 00:16:15,600 Speaker 6: I would have to say for Chinese. 327 00:16:15,600 --> 00:16:18,680 Speaker 5: Year specifically, I think because so many families have not 328 00:16:18,800 --> 00:16:21,440 Speaker 5: been reunited for the past few years because of COVID, 329 00:16:21,480 --> 00:16:23,600 Speaker 5: including even last year, right because COVID was just kind 330 00:16:23,600 --> 00:16:25,440 Speaker 5: of phasing out back then. So I think there's a 331 00:16:25,480 --> 00:16:28,640 Speaker 5: little bit of like revenge consumption during this Chinese Year 332 00:16:28,680 --> 00:16:30,520 Speaker 5: year versus previous seasons. 333 00:16:30,640 --> 00:16:33,600 Speaker 1: So what might that policy response look like and may 334 00:16:33,640 --> 00:16:36,880 Speaker 1: it happen before the equity market opens on Monday of 335 00:16:36,960 --> 00:16:37,600 Speaker 1: next week. 336 00:16:39,000 --> 00:16:41,160 Speaker 5: Well, you know, I think these types of things will 337 00:16:41,160 --> 00:16:42,840 Speaker 5: probably take time to play out. 338 00:16:43,120 --> 00:16:44,960 Speaker 6: We have already seen a number of interest. 339 00:16:44,760 --> 00:16:46,960 Speaker 5: Rate cuts, are our cuts and so on and so forth, 340 00:16:47,000 --> 00:16:49,560 Speaker 5: and so I think more of that is possible, but 341 00:16:49,640 --> 00:16:52,440 Speaker 5: it's not really going to be sufficient to really get 342 00:16:52,480 --> 00:16:55,600 Speaker 5: confidence back on track. So I think what we're looking 343 00:16:55,640 --> 00:16:59,320 Speaker 5: for over the coming few months or you know, weeks, 344 00:16:59,320 --> 00:17:01,320 Speaker 5: and you know, maybe leading up to the People's Congress 345 00:17:01,320 --> 00:17:04,320 Speaker 5: in March would be both a combination of cyclical as 346 00:17:04,320 --> 00:17:07,080 Speaker 5: well as hopefully some kind of announcements regarding structural reforms 347 00:17:07,119 --> 00:17:09,920 Speaker 5: as well. The cyclical could be monetary, it could be fiscal, 348 00:17:10,000 --> 00:17:14,600 Speaker 5: could be property liquidity alleviation, could be short term consumption policies, etc. 349 00:17:15,160 --> 00:17:17,080 Speaker 5: But I think what's more important is to get people 350 00:17:17,119 --> 00:17:21,120 Speaker 5: to feel like this period of deflation and de risking 351 00:17:21,240 --> 00:17:26,080 Speaker 5: and de leverage and prioritizing these types of objectives is 352 00:17:26,160 --> 00:17:29,200 Speaker 5: behind us and that we're firmly on the path of. 353 00:17:29,160 --> 00:17:31,560 Speaker 6: Reflation, recovery and reforms. 354 00:17:31,960 --> 00:17:34,600 Speaker 5: I think that's where the market needs to rebuild its confidence, 355 00:17:34,640 --> 00:17:36,080 Speaker 5: and that'll be a gradual process. 356 00:17:36,320 --> 00:17:40,400 Speaker 2: We did a survey of economists and basically the result 357 00:17:40,440 --> 00:17:43,840 Speaker 2: was that the PBOC will likely leave its one year 358 00:17:43,880 --> 00:17:47,200 Speaker 2: policy loan steady at two and a half percent, possibly 359 00:17:47,240 --> 00:17:50,200 Speaker 2: as soon as this Sunday. And the suggestion is that 360 00:17:50,240 --> 00:17:54,520 Speaker 2: the PBOC is doing so to wait till things stabilize 361 00:17:54,520 --> 00:17:57,040 Speaker 2: a little bit and support that you want. Do they 362 00:17:57,080 --> 00:17:59,400 Speaker 2: need to support that you want or is money still 363 00:17:59,400 --> 00:18:01,240 Speaker 2: trying to flee that currency. 364 00:18:01,840 --> 00:18:03,960 Speaker 5: I think at the current juncture, they are still in 365 00:18:04,000 --> 00:18:06,280 Speaker 5: the process of supporting the R and B, and that's 366 00:18:06,280 --> 00:18:07,800 Speaker 5: basically because the US dollar. 367 00:18:07,600 --> 00:18:08,960 Speaker 6: Has continued to be quite strong. 368 00:18:09,560 --> 00:18:12,080 Speaker 5: You've seen the dxy rebound from one hundred to almost 369 00:18:12,160 --> 00:18:14,520 Speaker 5: one oh five recently, so you know, kind of back 370 00:18:14,560 --> 00:18:17,240 Speaker 5: to like a mini cycle high. And that's because inflation 371 00:18:17,320 --> 00:18:19,960 Speaker 5: in the US has been hotter than expected and economic 372 00:18:20,040 --> 00:18:21,800 Speaker 5: data has been fairly robust as well. 373 00:18:22,440 --> 00:18:24,720 Speaker 6: But it's really just a delay rather. 374 00:18:24,560 --> 00:18:28,399 Speaker 5: Than a you know, change in the fundamental picture. We 375 00:18:28,440 --> 00:18:30,600 Speaker 5: are still expecting the FED to start to cut rates 376 00:18:30,600 --> 00:18:32,600 Speaker 5: probably around the middle of this year, and that means 377 00:18:32,600 --> 00:18:36,320 Speaker 5: that you will have some kind of deviation in terms 378 00:18:36,320 --> 00:18:38,720 Speaker 5: of FEDS yields. 379 00:18:38,359 --> 00:18:39,480 Speaker 6: Versus the rest of the world. 380 00:18:39,520 --> 00:18:42,080 Speaker 5: So I do think that the dollar will start to 381 00:18:42,119 --> 00:18:44,520 Speaker 5: weaken again going into the coming onth and that's going 382 00:18:44,600 --> 00:18:46,000 Speaker 5: to be more helpful for the R and B as 383 00:18:46,040 --> 00:18:48,360 Speaker 5: well as other em currencies. But for the time being, 384 00:18:48,400 --> 00:18:51,639 Speaker 5: there is definitely still more depreciation pressure and alflow pressure, 385 00:18:51,800 --> 00:18:53,840 Speaker 5: so I think the PBOC still has to intervene from 386 00:18:53,880 --> 00:18:54,400 Speaker 5: time to time. 387 00:18:54,440 --> 00:18:56,600 Speaker 1: I'm going to go out Donald Limb here. We got 388 00:18:56,640 --> 00:19:00,159 Speaker 1: the news on Japan going into a recession with the 389 00:19:00,200 --> 00:19:03,639 Speaker 1: contraction in fourth quarter GDP at four tens of one percent. 390 00:19:03,880 --> 00:19:06,800 Speaker 1: One of the things we learned that both households and 391 00:19:06,920 --> 00:19:10,280 Speaker 1: businesses cut spending. And I'm wondering whether or not you 392 00:19:10,359 --> 00:19:13,240 Speaker 1: see the possibility of what's happening in China having had 393 00:19:13,440 --> 00:19:18,440 Speaker 1: some modest impact on the Japanese economy. Is that possible. 394 00:19:20,280 --> 00:19:20,879 Speaker 6: I think it's. 395 00:19:20,720 --> 00:19:24,360 Speaker 5: Possible, because indeed, the Japanese economy is very external facing, 396 00:19:25,160 --> 00:19:29,680 Speaker 5: and so less demand coming from China, particularly for industrial manufacturing, automation, 397 00:19:29,760 --> 00:19:32,800 Speaker 5: et cetera. That certainly hasn't been helpful for a lot 398 00:19:32,800 --> 00:19:35,760 Speaker 5: of japan enterprises. But you know, the similar type of 399 00:19:35,760 --> 00:19:38,440 Speaker 5: trends from elsewhere may have been a bit more robust 400 00:19:38,640 --> 00:19:41,399 Speaker 5: versus what we've seen coming from China. I think for 401 00:19:41,520 --> 00:19:45,639 Speaker 5: Japan specifically, I'm not too worried about the headline, you know, 402 00:19:45,760 --> 00:19:49,639 Speaker 5: small kind of technical recession in the second half of 403 00:19:49,720 --> 00:19:50,200 Speaker 5: last year. 404 00:19:50,359 --> 00:19:51,200 Speaker 6: First of all, I think. 405 00:19:51,080 --> 00:19:54,000 Speaker 5: This year will have positive real GDP growth, And secondly, 406 00:19:54,040 --> 00:19:56,440 Speaker 5: I think Japan's been a lot more about nominal. 407 00:19:56,040 --> 00:19:57,120 Speaker 6: GDP and reflation. 408 00:19:57,560 --> 00:19:59,879 Speaker 5: So even if real GDP is only low single digit, 409 00:20:00,000 --> 00:20:02,679 Speaker 5: omenal GDP has been like five percent last year, and 410 00:20:02,680 --> 00:20:05,560 Speaker 5: that's been incredible right, it's been phenomenal for revenues and 411 00:20:05,600 --> 00:20:07,639 Speaker 5: earnings and the stock market. 412 00:20:07,760 --> 00:20:10,240 Speaker 2: So, Helen, I think of you as an economist, but 413 00:20:10,640 --> 00:20:13,120 Speaker 2: you are the chief investment officer at and F Trinity 414 00:20:13,440 --> 00:20:16,280 Speaker 2: SO and managing director. So what should I do with 415 00:20:16,320 --> 00:20:19,200 Speaker 2: my money? Should I continue to buy these big megacap 416 00:20:19,280 --> 00:20:22,200 Speaker 2: tech stocks in the US? Should I go for a broadening. 417 00:20:22,240 --> 00:20:24,159 Speaker 2: Should I go with Japan and sort of ride the 418 00:20:24,240 --> 00:20:26,159 Speaker 2: gains there or take a punt on China? 419 00:20:26,200 --> 00:20:29,040 Speaker 5: What I think at some point this year we're going 420 00:20:29,080 --> 00:20:31,800 Speaker 5: to see inflection point come across. I don't know when 421 00:20:31,840 --> 00:20:34,199 Speaker 5: exactly that is, but things are getting a little bit 422 00:20:34,320 --> 00:20:37,679 Speaker 5: extreme in terms of the current positioning, which is long US, 423 00:20:37,720 --> 00:20:41,359 Speaker 5: long US dollar, long tech, long Japan. Those are the 424 00:20:41,359 --> 00:20:44,000 Speaker 5: consensus trades for the last six to twelve months, and 425 00:20:44,040 --> 00:20:47,399 Speaker 5: I think the positioning, valuations and expectations are all getting 426 00:20:47,400 --> 00:20:50,280 Speaker 5: fairly stretched. At some point we will see the US 427 00:20:50,359 --> 00:20:52,600 Speaker 5: economy start to weaken, the FED go into a great 428 00:20:52,680 --> 00:20:54,480 Speaker 5: cut cycle, the dollars start to weaken. 429 00:20:54,640 --> 00:20:56,760 Speaker 6: Yeah, and that's going to benefit a lot of other stuff. 430 00:20:56,840 --> 00:20:59,199 Speaker 2: Yeah. I wonder if emerging markets could do well, But 431 00:20:59,200 --> 00:21:01,840 Speaker 2: then China is not really carrying the flag there, so Helen, 432 00:21:01,840 --> 00:21:05,680 Speaker 2: we're out of time unfortunately. Thanks Helen Chu from NF Trinity. 433 00:21:05,960 --> 00:21:07,280 Speaker 2: This is Bloomberg. 434 00:21:09,160 --> 00:21:12,119 Speaker 1: This has been the Bloomberg Daybreak Asia podcast, bringing you 435 00:21:12,200 --> 00:21:15,280 Speaker 1: the stories making news and moving markets in the Asia Pacific. 436 00:21:15,800 --> 00:21:18,920 Speaker 1: Visit the Bloomberg Podcast channel on YouTube to get more 437 00:21:18,960 --> 00:21:22,560 Speaker 1: episodes of this and other shows from Bloomberg. Subscribe to 438 00:21:22,600 --> 00:21:26,399 Speaker 1: the podcast on Apple, Spotify, or anywhere else you listen 439 00:21:26,480 --> 00:21:29,600 Speaker 1: and always on Bloomberg Radio, the Bloomberg Terminal, and the 440 00:21:29,600 --> 00:21:30,680 Speaker 1: Bloomberg Business app.