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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Bloomberg day Break Asia Podcast. I'm Denise

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Speaker 2: Pelgriny Doug Krissner Off. This week, on today's episode, we'll

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Speaker 2: bring you a conversation with Hido Nori Kameza, CEO of

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Speaker 2: Mitsubishi UFJ Financial Group. But we begin with markets. Asian

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Speaker 2: stocks rising at the open after a wave of dip

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Speaker 2: buying and optimism about interest rate cuts helped the S

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Speaker 2: and P five hundred post its biggest rally since May.

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Speaker 2: For more on the market landscape, we heard from hartmant Issel,

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Speaker 2: head of APEC Equities and Credit at UBS Wealth Management.

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Speaker 2: He spoke with Bloomberg's Heidi Stroud Watts.

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Speaker 1: We have seen sort of another move high when it

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Speaker 1: comes to sentiment. What do you make of this? Is

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Speaker 1: this sort of complacency when it comes to the trade risks?

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Speaker 1: There is no alternative at the moment. Is it just

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Speaker 1: the kind of continuation of the taco trade?

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Speaker 3: I think there's two factors coming together. So one is yeah,

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Speaker 3: economy we already seeing that is probably not the last

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Speaker 3: kind of data that we're seeing that it slows a bit,

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Speaker 3: I mean not towards a recesion, but certainly is lower

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Speaker 3: than was last year, for example. And also on the

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Speaker 3: earning side, Yeah, we saw very strong second quarters, especially

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Speaker 3: also in the US, but it's also relatively clear to

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Speaker 3: us that quite that number will probably not be held up.

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Speaker 3: It probably will come a bit lower, sort of mid

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Speaker 3: single digits maybe for the next two quarters. That kind

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Speaker 3: of scenario. On the other hand, Yeah, with more and

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Speaker 3: more clarity that the rate side, of the fat side,

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Speaker 3: that that will come down. I saw the rate cuts

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Speaker 3: are probably only a month away by now, and that

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Speaker 3: supports Then lastly, you have sort of a pe multiple

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Speaker 3: that is, especially in the US, already there where we

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Speaker 3: should be. And therefore what we're seeing is, yes, summer

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Speaker 3: upside maybe called it a six thousand, five hundred towards

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Speaker 3: the middle of next year, so say twelve months, but

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Speaker 3: it will be a grinding one or especially over the

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Speaker 3: next couple of months. Probably a little bit of a

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Speaker 3: pause here is also in place, and then we can

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Speaker 3: move a bit higher towards maybe middle of next year.

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Speaker 1: Your base cases that tariffs will kind of stay at

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Speaker 1: around fifteen percent, right, if that sort of eventuates, where

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Speaker 1: do you see the opportunities, particularly in the Asia Pacific.

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Speaker 3: In Asia Pacific, we have a couple regional ideas. I

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Speaker 3: saw on the China tech side, we like that part.

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Speaker 3: And then India you just mentioned, Yeah, it is a

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Speaker 3: bit you have. Perhaps surprising. India was actually the first

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Speaker 3: economy that went into negotiations or you know, talks with

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Speaker 3: the US very very early, basically January this year, and

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Speaker 3: still not fully done. Right. So on the other hand,

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Speaker 3: that also means I think both sides want to come

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Speaker 3: to a deal, so maybe it takes until the end

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Speaker 3: of this month, right, We not that the US delegation

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Speaker 3: also will visit India, so we'll visit India, so there

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Speaker 3: are some potential there and otherwise in the maybe somewhat

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Speaker 3: smaller market. It's also more here in the regional ASI.

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Speaker 3: And I would also highlight Singapore, which we upgraded a

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Speaker 3: couple of weeks ago, so not too longo. And that's

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Speaker 3: again on the other side, right, So here we're seeing

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Speaker 3: dividends in a very stable currency environment that also attracts

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Speaker 3: a lot of investors. And on top of that, throughout

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Speaker 3: the second half of this year, we'll also expect more

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Speaker 3: in Asia in general what is called oftentimes value are programs,

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Speaker 3: right so Korea is another one, etcetera as a couple

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Speaker 3: of markets. So Singapore also trying to from the official

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Speaker 3: site here support the markets a bit. So Singapore could

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Speaker 3: also be an interesting diversification angle.

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Speaker 2: Do you look at.

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Speaker 1: China at this point given what appears to be an

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Speaker 1: ongoing if not perhaps cerch and truth between the US

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Speaker 1: and China.

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Speaker 3: For China overall we have a neutral So really the

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Speaker 3: sector and it's of course by now a very very

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Speaker 3: big sector that we're like is indeed the tech side.

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Speaker 3: So here we have earning growth that is a bit

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Speaker 3: difficult to find elsewhere, and so it's the Internet site

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Speaker 3: for sure. But also here and there we're looking at

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Speaker 3: robotic so manerids in and also some new waves that

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Speaker 3: are coming up that could also be interesting for some

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Speaker 3: of these stocks. So probably the focus within China is

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Speaker 3: a bit on that side right now.

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Speaker 1: There's a host of other concerns as well, right not

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Speaker 1: list of which is also the worries of a FED

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Speaker 1: independence and some of the institutional independence in the US.

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Speaker 1: Is that something that weighs into the outlook when it

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Speaker 1: comes to the idea of fading US exceptionalism.

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Speaker 3: Yeah, certainly there's a lot of discussion around it, but

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Speaker 3: we'll see so a potential candidate for succession. And on

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Speaker 3: the FED side, we're probably not going to have to

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Speaker 3: wait too long to see that, but that doesn't necessarily

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Speaker 3: it's too early to say, oh yeah, it will certainly

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Speaker 3: question the independence. We'll see actually who comes in and

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Speaker 3: how that plays out. So certainly something to But is

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Speaker 3: that something I would place a lot of investment calls

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Speaker 3: on right now? Probably not at this point.

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Speaker 1: Does a move that we see in sovereign bonds treasuries

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Speaker 1: in particular, is that sustainable?

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Speaker 3: I think it is sustainable. We think it is sustainable.

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Speaker 3: So we have for the end of this year in

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Speaker 3: the US, for example, on a tenure we have a

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Speaker 3: four zero percent, So there's still more upside if you will.

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Speaker 3: On the bond side, and indeed, this is probably an

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Speaker 3: area where we really also put some focus, or we

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Speaker 3: call it quality bonds. So one is the high grade side,

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Speaker 3: the other one, maybe to some extent, investment grade. We

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Speaker 3: see that if we go higher on the risk curve

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Speaker 3: we have actually it spreads already a bit tight, right,

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Speaker 3: so the pricing is not quite as attractive, we think,

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Speaker 3: and with our view that yes, rates come down on

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Speaker 3: the front end yields also on the longer end, there's

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Speaker 3: actually quite a good scenario here for the bond side,

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Speaker 3: especially the more quality ones.

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Speaker 1: You would like to still keep some position in gold,

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Speaker 1: and I think.

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Speaker 3: Probably that's not a bad idea. We also have a

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Speaker 3: forecast here for three and a half thousand, so even

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Speaker 3: a bit of a clip up here for for profits.

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Speaker 3: But yeah, it gives us sort of a diversification, especially

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Speaker 3: with a risk angle, right. You mentioned the terrorists before

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Speaker 3: have fed independence, et cetera. I mean, all these discussions

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Speaker 3: they keep going. So having a bit of gold there

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Speaker 3: in the portfolio is also a good idea.

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Speaker 1: About It's all a VBS Wealth Management. Always great to.

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Speaker 4: Have you with us.

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Speaker 2: Welcome back to the Daybreak Asha podcast. I'm Denise Pellegrini,

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Speaker 2: the chief executive of Japan's largest bank, says the country's

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Speaker 2: central bank could raise its policy rate as early as

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Speaker 2: the next meeting, given the outlook for higher inflation in

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Speaker 2: the country. That is according to hiro Nori Kameza. He

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Speaker 2: is CEO of Mitsubishi UFJ Financial Group, and he spoke

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Speaker 2: in an exclusive interview with Bloomberg's Hideki Suzuki in Tokyo need.

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Speaker 5: To be a concert used.

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Speaker 6: Tear negotiations have finally concluded and the results have been finalized.

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Speaker 6: Could you please explain how this will impact Japan's economy

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Speaker 6: as well as the potential effects on mufg's performance.

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Speaker 5: What's I don't think everything is completely clear yet, but

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Speaker 5: the fact that an agreement has been reached is significant.

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Speaker 5: I believe this gives us a clearer outlook than before.

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Speaker 5: An increase to a fifteen percent tariff is not a

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Speaker 5: small number, and many sectors and companies are likely to

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Speaker 5: be affected. On the other hand, the fact that we

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Speaker 5: can now see some clarity is important. When we set

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Speaker 5: our performance targets at the beginning of the fiscal year,

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Speaker 5: we did so based on the assumption of an increase

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Speaker 5: of tariffs to ten percent plus a buffer, the level

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Speaker 5: at which the global network and supply chain would not

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Speaker 5: be disrupted. In that sense, the fifteen percent increase is

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Speaker 5: slightly higher than our initial forecast, which was closer to

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Speaker 5: ten percent, but it's still within the range we expected. Overall,

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Speaker 5: regarding the outlook for the Japanese economy, I think the

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Speaker 5: underlying economic recovery will remain intact. GDP will probably decline

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Speaker 5: by around zero point five to zero point six percent,

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Speaker 5: but the underlying economic recovery will continue as far our

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Speaker 5: current plans. At MUFG, we believe that there is no

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Speaker 5: need to make any major changes at this point. There

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Speaker 5: are a few uncertainties, so we'll wait until the situation

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Speaker 5: becomes clearer.

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Speaker 6: JJB JGB yields are rising not only for ultra long

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Speaker 6: term bonds, but also for ten year bonds. You've explained

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Speaker 6: that you are taking a cautious approach to position building.

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Speaker 6: Could you explain that in addition, how high do you

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Speaker 6: think ten year bond yields will rise in the future?

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Speaker 2: Head?

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Speaker 4: How many where.

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Speaker 5: Can you We do not consider it prudent to publicly

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Speaker 5: disclose our position at this stage, but our basic view

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Speaker 5: is that given the current trend of rising interest rates

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Speaker 5: in Japan, the key question is at what level we

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Speaker 5: should purchase bonds At the same time a scene in

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Speaker 5: the results of the recent Upper House election, rising yields

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Speaker 5: are an alarm bell in the policy debate over fiscal expansion.

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Speaker 5: I think the trend will continue for a while, so

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Speaker 5: I don't think it's a situation where we should rush

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Speaker 5: to buy right now. While it's hard to pinpoint and

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Speaker 5: an exact level. If we assume a terminal rate of

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Speaker 5: around one point five percent, the tenure yield at that

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Speaker 5: point would be around two percent, So the range from

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Speaker 5: the latter half of one percent to around two percent

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Speaker 5: could be a level where we could consider buying. But

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Speaker 5: as I mentioned earlier, the current trend is toward a

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Speaker 5: slight rising interest rate, so I think it's important to

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Speaker 5: wash the situation closely and wait for the right timing.

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Speaker 6: The Bank of Japan held its Monetary policy meeting. The

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Speaker 6: decision was to keep rates unchanged, but with tariff negotiations

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Speaker 6: settling down summer, saying that the environment for a rate

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Speaker 6: hike within the year is in place. What is your

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Speaker 6: view on the possibility of a rate hike within the year.

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Speaker 5: Our official company view since March next year is a

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Speaker 5: possible timing of the rate hike, but personally I think

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Speaker 5: September or October is quite possible. I think that a

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Speaker 5: rate hike in September or October could be desirable. The

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Speaker 5: reason is that inflation is still quite strong. The number

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Speaker 5: of items subject to price increases has grown by about

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Speaker 5: five times compared with last year, and there is also

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Speaker 5: the issue of important inflation. In that sense, I personally

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Speaker 5: think that this autumn is a reasonable time for an

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Speaker 5: interest rate hike, well as various statistical data will be

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Speaker 5: released in the coming months. If the growth rate figures

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Speaker 5: are not as strong as expected when they come out,

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Speaker 5: there may be discussions to take a weight and see approach.

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Speaker 5: The timing could shift to around March next year. We'll

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Speaker 5: see a period of careful monitoring of economic data. But

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Speaker 5: I think it's entirely possible.

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Speaker 2: And that's hiro Nori Kamezawa, CEO of Mitsubishi UFJ Financial Group,

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Speaker 2: speaking exclusively to Bloomberg's Sideki Suzuki here on the Daybreak

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Speaker 2: Asia Podcast.

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Speaker 4: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 4: Asia Edition podcast. Each weekday, we look at the story

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Speaker 4: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 4: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 4: or anywhere else you listen. Join us again tomorrow for

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Speaker 4: insight on the market moves from Hong Kong to Singapore

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Speaker 4: or and Australia. I'm Doug Prisoner and this is Bloomberg

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Speaker 3: M HM.