1
00:00:02,480 --> 00:00:06,800
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:09,640 --> 00:00:12,880
Speaker 2: This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner.

3
00:00:12,920 --> 00:00:15,400
Speaker 2: You can join Brian Curtis and myself for the stories,

4
00:00:15,440 --> 00:00:18,520
Speaker 2: making news and moving markets in the Apec region. You

5
00:00:18,600 --> 00:00:21,439
Speaker 2: can subscribe to the show anywhere you get your podcast

6
00:00:21,520 --> 00:00:24,919
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

7
00:00:24,920 --> 00:00:26,080
Speaker 2: Bloomberg Business App.

8
00:00:29,800 --> 00:00:32,000
Speaker 3: It is time to check in with Bloomberg Opinion. We're

9
00:00:32,080 --> 00:00:35,519
Speaker 3: joined by opinion columnist Schuli n who is writing about

10
00:00:35,840 --> 00:00:39,360
Speaker 3: wang Ka, the Chinese developer that recently had its credit

11
00:00:39,440 --> 00:00:43,720
Speaker 3: rating cut too junk Shuley, thanks very much for joining us.

12
00:00:44,280 --> 00:00:47,120
Speaker 3: So there's a debt swap plan that is being considered,

13
00:00:47,680 --> 00:00:50,240
Speaker 3: but it doesn't change the fact, does it that there's

14
00:00:50,320 --> 00:00:53,280
Speaker 3: just no clarity on future sales here for these developers.

15
00:00:55,080 --> 00:00:59,360
Speaker 4: That's absolutely that's absolutely right, Brian, And that's why the

16
00:00:59,440 --> 00:01:02,959
Speaker 4: Chinese cover and is perhaps nudging it's a state owned

17
00:01:03,000 --> 00:01:06,280
Speaker 4: banks to consider a death swap. The thing with one

18
00:01:06,319 --> 00:01:09,400
Speaker 4: cur is until basically this Monday, it was an investment

19
00:01:09,440 --> 00:01:14,040
Speaker 4: graded real estate developer and it's not anything like a

20
00:01:14,200 --> 00:01:18,839
Speaker 4: China Evergrant or country Garden. It has a professional management

21
00:01:19,040 --> 00:01:24,399
Speaker 4: and its balance sheet is fairly sound. However, because China's

22
00:01:24,720 --> 00:01:28,760
Speaker 4: physical market is doing so badly that even one who's

23
00:01:29,000 --> 00:01:31,840
Speaker 4: sales is being dragged down and it just looks like

24
00:01:32,120 --> 00:01:35,520
Speaker 4: it may not be able to make the next bond

25
00:01:35,600 --> 00:01:37,200
Speaker 4: repayment schedule.

26
00:01:37,319 --> 00:01:40,000
Speaker 2: Yeah, so you're facing a liquidity crunch. Do you think

27
00:01:40,040 --> 00:01:42,440
Speaker 2: there will be some type of reorganization to try to

28
00:01:42,480 --> 00:01:44,080
Speaker 2: remove some of that stress?

29
00:01:45,840 --> 00:01:51,880
Speaker 4: Well, investors probably hope not, because restricting usually means a

30
00:01:52,080 --> 00:01:56,320
Speaker 4: very very little returns to the investments. But at this

31
00:01:56,440 --> 00:01:59,200
Speaker 4: point you will have to because with one cur right.

32
00:01:59,280 --> 00:02:02,200
Speaker 4: Last year, try this property market was doing very badly,

33
00:02:02,320 --> 00:02:04,680
Speaker 4: but it was doing not too bad. It's a contracted

34
00:02:04,720 --> 00:02:07,400
Speaker 4: sales was down only ten percent because it was taking

35
00:02:07,440 --> 00:02:10,720
Speaker 4: some market share away from the likes of Country Garden

36
00:02:10,919 --> 00:02:13,360
Speaker 4: and the evergrants. But this year, in the first two

37
00:02:13,400 --> 00:02:16,560
Speaker 4: months this year, we are seeing a forty percent drop

38
00:02:16,639 --> 00:02:19,880
Speaker 4: from one year ago. That just shows that at this

39
00:02:20,000 --> 00:02:23,200
Speaker 4: point it's not just about this or that developer, but

40
00:02:23,240 --> 00:02:27,120
Speaker 4: about the overall market. Chinese households are just not willing

41
00:02:27,160 --> 00:02:31,880
Speaker 4: to go into the primary property sales, and some of

42
00:02:31,919 --> 00:02:34,600
Speaker 4: them are going into the secondary sales, in which case

43
00:02:34,840 --> 00:02:37,760
Speaker 4: the developers are not getting any benefits.

44
00:02:37,840 --> 00:02:42,160
Speaker 3: Right, you say that a government bailout of one would

45
00:02:42,160 --> 00:02:44,720
Speaker 3: actually be good for the government to explain.

46
00:02:46,160 --> 00:02:50,399
Speaker 4: Well, because just like Hong Kong, the Chinese government local governments,

47
00:02:50,520 --> 00:02:54,000
Speaker 4: they rely heavily on land sales. Lens sales can account

48
00:02:54,000 --> 00:02:57,200
Speaker 4: for up to one third of their total revenue. So

49
00:02:57,240 --> 00:03:01,880
Speaker 4: what we're seeing is that the Chinese local government's revenue

50
00:03:01,880 --> 00:03:04,680
Speaker 4: from lens sales is already down one third from it's

51
00:03:04,720 --> 00:03:05,839
Speaker 4: twenty twenty one high.

52
00:03:06,200 --> 00:03:08,200
Speaker 1: Right, So if one still.

53
00:03:07,960 --> 00:03:11,320
Speaker 4: Goes down and the no developers are left in China,

54
00:03:11,720 --> 00:03:13,560
Speaker 4: then how are they going to sell their land?

55
00:03:13,720 --> 00:03:15,560
Speaker 1: It is a big fiscal problem.

56
00:03:15,639 --> 00:03:19,079
Speaker 4: Like I think, if at this rate, even the likes

57
00:03:19,080 --> 00:03:22,720
Speaker 4: of One can now survive, that means there will be

58
00:03:22,720 --> 00:03:27,359
Speaker 4: no private sector developers left and the local governments can

59
00:03:27,360 --> 00:03:28,120
Speaker 4: sell any land.

60
00:03:29,160 --> 00:03:31,800
Speaker 2: So if you're talking about a bailout, everyone is whole.

61
00:03:31,919 --> 00:03:32,119
Speaker 3: Right.

62
00:03:32,200 --> 00:03:35,360
Speaker 2: We're not talking about a cash infusion, maybe in a

63
00:03:35,360 --> 00:03:39,160
Speaker 2: little bit of state sponsored reorganization to kind of get

64
00:03:39,160 --> 00:03:42,240
Speaker 2: things more in line, but you're talking about a full

65
00:03:42,280 --> 00:03:45,120
Speaker 2: blown rescue of the company.

66
00:03:46,040 --> 00:03:51,640
Speaker 4: Well, some one possibility is what Chinese government did to

67
00:03:52,240 --> 00:03:58,000
Speaker 4: the distressed local governments, basically allowing one to issue that

68
00:03:58,360 --> 00:04:02,200
Speaker 4: and a substantially to to refinance its public that a

69
00:04:02,360 --> 00:04:05,960
Speaker 4: substantially lower rates, that's one possibility.

70
00:04:06,640 --> 00:04:09,200
Speaker 2: So that would be a sort of restructuring.

71
00:04:09,200 --> 00:04:13,640
Speaker 1: Then right, well it is.

72
00:04:13,800 --> 00:04:16,920
Speaker 4: It's a restructuring of that, but it's not a restructuring

73
00:04:17,000 --> 00:04:19,599
Speaker 4: of the company's business operations.

74
00:04:20,640 --> 00:04:23,159
Speaker 3: Now you say that that one cub you know has

75
00:04:24,120 --> 00:04:28,360
Speaker 3: a strong past and equality management, and then it's closely

76
00:04:28,480 --> 00:04:31,040
Speaker 3: intertwined with shen Xen. Why does that make a.

77
00:04:30,960 --> 00:04:36,960
Speaker 1: Difference, Well, it's kind of one symbolic.

78
00:04:37,160 --> 00:04:40,240
Speaker 4: It went to it went public in Chanchang nineteen ninety one,

79
00:04:40,320 --> 00:04:44,039
Speaker 4: and Chanchhan was basically the first city that adopted the

80
00:04:44,160 --> 00:04:47,359
Speaker 4: private home ownership in China. Right before that, like you know,

81
00:04:47,440 --> 00:04:50,560
Speaker 4: all the Chinese they lived in those crabby housing provided

82
00:04:50,600 --> 00:04:55,359
Speaker 4: by the state owned employers, et cetera. So Hinxhuan was

83
00:04:55,560 --> 00:04:59,360
Speaker 4: a pilot city for this new home ownership model, and

84
00:04:59,480 --> 00:05:02,440
Speaker 4: one was a pioneer in that pilot city. So if

85
00:05:02,520 --> 00:05:06,000
Speaker 4: one goes down, it's quite symbolic in the sense that

86
00:05:06,200 --> 00:05:09,440
Speaker 4: you know, then shall pains a sudden tour is getting reversed.

87
00:05:10,600 --> 00:05:12,719
Speaker 2: So it's almost like we're looking at the end of

88
00:05:12,760 --> 00:05:15,560
Speaker 2: privatization of property developers in China is going to be

89
00:05:15,600 --> 00:05:17,000
Speaker 2: state sponsored.

90
00:05:18,000 --> 00:05:19,160
Speaker 1: Yes, absolutely.

91
00:05:20,080 --> 00:05:22,440
Speaker 3: What's tricky though, is that when you look at Evergrand

92
00:05:22,720 --> 00:05:25,080
Speaker 3: with the liquidator here in Hong Kong trying to sell

93
00:05:25,120 --> 00:05:27,640
Speaker 3: assets in China, it's a mess. I mean, certainly the

94
00:05:27,680 --> 00:05:28,640
Speaker 3: government doesn't want that.

95
00:05:28,600 --> 00:05:29,320
Speaker 1: Again right.

96
00:05:31,080 --> 00:05:34,240
Speaker 4: Evergrand is a complete different story. But the problem with

97
00:05:34,360 --> 00:05:39,160
Speaker 4: liquidators in Hong Kong is they like Evergrand, the company

98
00:05:39,200 --> 00:05:43,080
Speaker 4: that the shell company that is to those dollar bounds.

99
00:05:43,839 --> 00:05:45,960
Speaker 4: It is a shell company and it didn't have a

100
00:05:45,960 --> 00:05:50,920
Speaker 4: lot of operating assets overseas. So the liquidators in Hong Kong,

101
00:05:51,120 --> 00:05:55,120
Speaker 4: their best case scenario is basically to call back whatever

102
00:05:55,200 --> 00:05:58,560
Speaker 4: ever Grand has outside of mainland China when you go

103
00:05:58,640 --> 00:06:02,719
Speaker 4: into mainland China are way down the packing ordering herself quite.

104
00:06:02,520 --> 00:06:06,240
Speaker 3: Absolutely, all right, Julie, thank you Bloomberg Opinion Colin Shuleyren.

105
00:06:06,360 --> 00:06:09,080
Speaker 3: You can find her pieces on the terminal by typing

106
00:06:09,160 --> 00:06:09,920
Speaker 3: OPI N go.

107
00:06:26,320 --> 00:06:30,039
Speaker 2: Mark Cranfield, he is our m live strategist. If you

108
00:06:30,040 --> 00:06:33,200
Speaker 2: have a Bloomberg terminal, the function is m l I

109
00:06:33,320 --> 00:06:36,400
Speaker 2: V than the green go key. Mark doesn't seem to

110
00:06:36,480 --> 00:06:38,800
Speaker 2: be moving the needle here. On expectations that we're going

111
00:06:38,839 --> 00:06:41,679
Speaker 2: to see fed raid cuts sometime midyear, right.

112
00:06:42,360 --> 00:06:44,960
Speaker 5: Well, people are waiting for the dot plots the next

113
00:06:44,960 --> 00:06:49,120
Speaker 5: week FOMC. That's really the big issue, and you've heard

114
00:06:49,640 --> 00:06:52,479
Speaker 5: a variety of FED voices over the past couple of weeks.

115
00:06:52,520 --> 00:06:54,400
Speaker 5: Obviously they're in a blackout now, so there won't be

116
00:06:54,440 --> 00:06:57,800
Speaker 5: any comments this week, but you can see there's a

117
00:06:57,839 --> 00:07:00,560
Speaker 5: divergence between different people in the FED. We even had

118
00:07:00,800 --> 00:07:03,640
Speaker 5: Neil Kashkai saying that maybe only one rate cut is

119
00:07:03,680 --> 00:07:06,440
Speaker 5: necessary this year. There's a number of people that think

120
00:07:06,480 --> 00:07:10,600
Speaker 5: only two cuts is necessary. And then at the moment

121
00:07:10,640 --> 00:07:13,960
Speaker 5: the dot plots, officially, they still show a median of

122
00:07:14,040 --> 00:07:18,080
Speaker 5: three cuts. So another CPI number, which has come in

123
00:07:18,080 --> 00:07:20,800
Speaker 5: slightly above Foe Coast obviously puts into question the whole

124
00:07:20,880 --> 00:07:24,080
Speaker 5: outlook for the dot plots, and that's what traders are

125
00:07:24,120 --> 00:07:28,119
Speaker 5: waiting to see, whether or not they drop the number

126
00:07:28,160 --> 00:07:29,960
Speaker 5: to two cuts for this year. Would they leave it

127
00:07:30,000 --> 00:07:33,679
Speaker 5: at three or do we even have even maybe dropping

128
00:07:33,720 --> 00:07:36,800
Speaker 5: even to one, But certainly a change to only two

129
00:07:36,880 --> 00:07:39,920
Speaker 5: rate cuts this year is a distinct possibility, and that's

130
00:07:40,000 --> 00:07:41,520
Speaker 5: keeping everyone a little bit on edge.

131
00:07:43,280 --> 00:07:46,200
Speaker 3: It seemed like this report, the CPI report, was a

132
00:07:46,200 --> 00:07:48,360
Speaker 3: little bit like the Jobs report, and that there was

133
00:07:48,360 --> 00:07:50,920
Speaker 3: something in there for both the bulls and the bearers.

134
00:07:51,120 --> 00:07:54,160
Speaker 3: In the end, the equity market shows to kind of

135
00:07:54,200 --> 00:07:58,800
Speaker 3: set it aside and to rally on it. Is that

136
00:07:59,000 --> 00:08:03,320
Speaker 3: because wasn't anything all that surprising in the data? Or

137
00:08:03,400 --> 00:08:05,880
Speaker 3: is it more just that equities are moving more on

138
00:08:06,000 --> 00:08:08,840
Speaker 3: earnings than on the FED and macro.

139
00:08:09,800 --> 00:08:11,880
Speaker 5: I think where you have to take into account when

140
00:08:11,880 --> 00:08:15,680
Speaker 5: you particularly for the US equity market, you have to see, okay,

141
00:08:15,720 --> 00:08:18,440
Speaker 5: what is really driving the US equity market and how

142
00:08:18,560 --> 00:08:21,520
Speaker 5: much whether twenty five basis point rate cut change to

143
00:08:21,600 --> 00:08:25,800
Speaker 5: the picture. Well, whether the Federal Reserve cuts by twenty

144
00:08:25,840 --> 00:08:28,680
Speaker 5: five basis points now in three months, in six months,

145
00:08:28,720 --> 00:08:31,240
Speaker 5: it is not going to make any difference whatsoever to

146
00:08:31,320 --> 00:08:33,839
Speaker 5: the drivers of the US equity market. They've got use

147
00:08:34,240 --> 00:08:36,760
Speaker 5: to having short term interest rates about five percent for

148
00:08:36,800 --> 00:08:38,920
Speaker 5: a long time. They can live with it because the

149
00:08:39,000 --> 00:08:42,000
Speaker 5: underlying US economy is doing so well. As you say,

150
00:08:42,080 --> 00:08:46,120
Speaker 5: earnings in many places are extremely good. And one of

151
00:08:46,160 --> 00:08:49,160
Speaker 5: the other main drivers of the US market right now

152
00:08:49,320 --> 00:08:51,840
Speaker 5: is the AI narrative, and that has got nothing to

153
00:08:51,880 --> 00:08:54,920
Speaker 5: do with interest rates. It doesn't matter whether interest rates

154
00:08:54,920 --> 00:08:57,840
Speaker 5: are five, six seven, They can live with it. The

155
00:08:57,880 --> 00:09:01,200
Speaker 5: AI story is a completely different set all together, and

156
00:09:01,240 --> 00:09:04,160
Speaker 5: as long as people think that that is a strong

157
00:09:04,360 --> 00:09:07,160
Speaker 5: medium term drive of equities, it doesn't really matter what

158
00:09:07,200 --> 00:09:07,840
Speaker 5: interest rates do.

159
00:09:08,040 --> 00:09:10,600
Speaker 2: You're absolutely right about that. I was looking at Oracle

160
00:09:10,600 --> 00:09:12,640
Speaker 2: today the stock hit a record. I was up about

161
00:09:12,640 --> 00:09:16,560
Speaker 2: twelve percent. Yeah, the cloud computing businesses on growing very well.

162
00:09:16,600 --> 00:09:20,120
Speaker 2: But yesterday the company said what it announced quarterally results.

163
00:09:20,160 --> 00:09:24,920
Speaker 2: Demand for that Gen two AI infrastructure is substantially above

164
00:09:25,640 --> 00:09:27,880
Speaker 2: where supply is right now. But in the time that

165
00:09:27,920 --> 00:09:29,560
Speaker 2: we have left with you, I want to get your

166
00:09:29,640 --> 00:09:32,559
Speaker 2: view on the BOJ because we've got these wage increases

167
00:09:32,880 --> 00:09:35,960
Speaker 2: that will be reported through the week. I guess there's

168
00:09:36,000 --> 00:09:38,800
Speaker 2: a very heavy dock at today. The big number will

169
00:09:38,840 --> 00:09:41,559
Speaker 2: be reported on Friday. Do you think we're going to

170
00:09:41,600 --> 00:09:45,439
Speaker 2: get kind of the preponderance of data that's will force

171
00:09:45,480 --> 00:09:48,160
Speaker 2: the boj's hand as soon as next week's meeting.

172
00:09:48,800 --> 00:09:49,000
Speaker 3: Yeah.

173
00:09:49,080 --> 00:09:51,120
Speaker 5: I mean we've had a big story on Bloomberg saying

174
00:09:51,120 --> 00:09:53,320
Speaker 5: that the meeting is too close to cool. I think

175
00:09:53,360 --> 00:09:55,520
Speaker 5: you have to take you face value, and I think

176
00:09:55,559 --> 00:09:57,760
Speaker 5: it's really just a question of whether the bankage or

177
00:09:57,760 --> 00:10:00,680
Speaker 5: paying feel was ready to go all in March or

178
00:10:00,679 --> 00:10:03,200
Speaker 5: whether to do a step by step move so some

179
00:10:03,360 --> 00:10:06,240
Speaker 5: in March and some in April. So what we could see,

180
00:10:06,600 --> 00:10:09,480
Speaker 5: we could see yel curve control removed at the March meeting,

181
00:10:09,760 --> 00:10:12,520
Speaker 5: and probably a message to say no more ETF buying.

182
00:10:12,840 --> 00:10:15,880
Speaker 5: That would be the end of one part of the policy,

183
00:10:16,080 --> 00:10:19,679
Speaker 5: and then they leave exiting negative rates till April or

184
00:10:19,720 --> 00:10:22,520
Speaker 5: till later. They may go all in for March as well.

185
00:10:22,559 --> 00:10:25,679
Speaker 5: I suspect it will be staggered because they're trying to

186
00:10:25,840 --> 00:10:28,520
Speaker 5: limit the impact to financial markets in Japan, and they

187
00:10:28,559 --> 00:10:30,920
Speaker 5: do have the fiscal year end coming up on the

188
00:10:30,960 --> 00:10:33,920
Speaker 5: thirty first of March, so I suspect they won't want

189
00:10:33,960 --> 00:10:36,520
Speaker 5: to cause too many ripples in March, and they will

190
00:10:36,600 --> 00:10:39,800
Speaker 5: leave something on the table for April. But certainly changes

191
00:10:39,800 --> 00:10:42,000
Speaker 5: are coming, and it's going to be over the next

192
00:10:42,240 --> 00:10:44,160
Speaker 5: couple of meetings you'll see the Bank of Japan make

193
00:10:44,240 --> 00:10:45,120
Speaker 5: some very big steps.

194
00:10:46,520 --> 00:10:49,360
Speaker 3: Mark I tipped this a few moments ago. Perhaps you

195
00:10:49,360 --> 00:10:51,679
Speaker 3: can squeeze in a quick answer. The Hanks Hang Tech

196
00:10:51,720 --> 00:10:55,000
Speaker 3: index powering up twenty percent now from its lows. It

197
00:10:55,120 --> 00:10:58,480
Speaker 3: had a big jump yesterday, So technically in a bull market,

198
00:10:59,480 --> 00:11:02,640
Speaker 3: is that in believing in the story from China, from

199
00:11:02,640 --> 00:11:04,479
Speaker 3: the NPC or something else.

200
00:11:04,840 --> 00:11:08,160
Speaker 5: He's probably got more to do with Navidia, Navidia making

201
00:11:08,200 --> 00:11:11,480
Speaker 5: record highs after record hise and just accentuating the whole

202
00:11:11,840 --> 00:11:14,920
Speaker 5: tech and AI story. I mean, who could ignore something

203
00:11:15,040 --> 00:11:17,640
Speaker 5: like a juggernaut like that has global impact, and I

204
00:11:17,640 --> 00:11:19,400
Speaker 5: suspect it's got a lot more to do with that

205
00:11:19,720 --> 00:11:21,720
Speaker 5: than anything going on locally in Asia.

206
00:11:21,800 --> 00:11:24,480
Speaker 2: Yeah, we had Nvidia shares today jumping by more than

207
00:11:24,760 --> 00:11:27,880
Speaker 2: seven percent. So to go back to that AI narrative

208
00:11:27,920 --> 00:11:31,160
Speaker 2: that you were talking about earlier, it's not yet faded.

209
00:11:32,000 --> 00:11:34,640
Speaker 2: Perhaps it won't anytime soon. Mark, It's always a pleasure.

210
00:11:34,720 --> 00:11:37,160
Speaker 2: Thanks for joining us, So, Mark Cranfield, Bloomberg m Live

211
00:11:37,200 --> 00:11:39,800
Speaker 2: strategist joining from Singapore here on daybreak Asion.

212
00:11:56,520 --> 00:11:59,440
Speaker 3: Joining us now in our studios is Daniel Lamb, head

213
00:11:59,480 --> 00:12:03,200
Speaker 3: of Equity strategy at Standard Chartered Wealth Management. For a

214
00:12:03,240 --> 00:12:06,800
Speaker 3: closer look at markets. Daniel I mentioned that the Hanksan

215
00:12:07,000 --> 00:12:11,640
Speaker 3: Tech indecks passed twenty percent higher from the lows or

216
00:12:11,720 --> 00:12:14,000
Speaker 3: came up twenty percent from the lowest here of late,

217
00:12:14,120 --> 00:12:17,280
Speaker 3: so technically puts it in the bull market. It has people,

218
00:12:17,400 --> 00:12:19,800
Speaker 3: I think scratching their heads. The one thing I might

219
00:12:19,840 --> 00:12:22,720
Speaker 3: say is that in China, the NPC did approve a

220
00:12:22,840 --> 00:12:27,079
Speaker 3: ten percent increase in the budget for science and technology

221
00:12:27,440 --> 00:12:30,320
Speaker 3: up to fifty one point six billion dollars. Is it

222
00:12:30,320 --> 00:12:32,720
Speaker 3: possible that that is part and parcel of these big

223
00:12:32,760 --> 00:12:34,439
Speaker 3: gains we've seen in tech in Hong Kong.

224
00:12:35,559 --> 00:12:40,600
Speaker 6: Thanks, that's part of it, although I believe that more

225
00:12:40,720 --> 00:12:46,120
Speaker 6: of it is the fact that investors, some of the

226
00:12:46,160 --> 00:12:51,600
Speaker 6: investors begin to look for opportunities outside the megacap us

227
00:12:51,720 --> 00:12:56,240
Speaker 6: gross docks. That's what's been happening, connecting all the dots.

228
00:12:57,240 --> 00:13:01,400
Speaker 6: So you've seen that. Of course, within this seven magnificent seven,

229
00:13:01,480 --> 00:13:04,040
Speaker 6: people are trying to narrow that down to six, five

230
00:13:04,200 --> 00:13:06,920
Speaker 6: or four stocks, So that's become a narrow and narrow

231
00:13:07,320 --> 00:13:10,880
Speaker 6: and investors have been branching out to look for opportunities

232
00:13:10,960 --> 00:13:15,280
Speaker 6: outside that set of names. Now, if you're looking at

233
00:13:15,520 --> 00:13:21,760
Speaker 6: a tailwind from say, you know, lower inflation numbers, well

234
00:13:21,880 --> 00:13:26,360
Speaker 6: you're not You're not really getting the full lower inflation

235
00:13:26,440 --> 00:13:29,199
Speaker 6: right because it's still past the sticky So the ten

236
00:13:29,280 --> 00:13:33,839
Speaker 6: year yield becomes, you know, more solid in terms of

237
00:13:34,000 --> 00:13:37,400
Speaker 6: level and maybe grinding higher. So investors are naturally looking

238
00:13:37,440 --> 00:13:42,160
Speaker 6: for other areas to park their money outside the seven stocks,

239
00:13:42,360 --> 00:13:45,120
Speaker 6: at least for the short term, so naturally they're looking

240
00:13:45,120 --> 00:13:47,760
Speaker 6: at you know, like China for example, because it's so

241
00:13:47,880 --> 00:13:50,920
Speaker 6: cheap right in variation, And you said that, yes, it

242
00:13:51,080 --> 00:13:53,880
Speaker 6: rebounded twenty percent from the lows, but you know, buying

243
00:13:53,960 --> 00:13:56,320
Speaker 6: large these stocks are still at a massive discount to

244
00:13:56,360 --> 00:13:57,120
Speaker 6: the counterparts.

245
00:13:57,320 --> 00:13:58,720
Speaker 2: So what are the risk Daniel?

246
00:14:00,360 --> 00:14:04,960
Speaker 6: The risk is that the economy is still not very

247
00:14:04,960 --> 00:14:08,120
Speaker 6: solid in China, right, So you've seen that the latest

248
00:14:08,600 --> 00:14:12,640
Speaker 6: CPI figure in China. Yes, it's kind of stopped the

249
00:14:12,679 --> 00:14:17,880
Speaker 6: deflation trend one print, but is this going to be sustainable?

250
00:14:18,160 --> 00:14:22,720
Speaker 6: I mean, the PPI was still relatively tough, right the

251
00:14:22,800 --> 00:14:26,560
Speaker 6: latest number. So I guess you know, the question now

252
00:14:26,760 --> 00:14:30,720
Speaker 6: is that, you know, if we do see another print

253
00:14:31,040 --> 00:14:35,360
Speaker 6: of CPI being in the positive space in China, then

254
00:14:35,400 --> 00:14:37,920
Speaker 6: this rarey could continue, but it could be just a blip.

255
00:14:38,760 --> 00:14:40,600
Speaker 3: Yeah. I think there's a lot of wisdom in what

256
00:14:40,640 --> 00:14:42,640
Speaker 3: you said, because I noted that the other day when

257
00:14:42,680 --> 00:14:44,960
Speaker 3: you had Netflix selling off ten percent, in the day,

258
00:14:45,240 --> 00:14:48,440
Speaker 3: you had tech stocks going up in Hong Kong. So

259
00:14:49,280 --> 00:14:52,080
Speaker 3: among the companies that had a big balance yesterday was

260
00:14:52,080 --> 00:14:54,600
Speaker 3: shell Me. This is a little puzzling too, I mean,

261
00:14:54,680 --> 00:14:57,960
Speaker 3: up eleven percent, the company saying it will sell electric

262
00:14:58,040 --> 00:15:02,160
Speaker 3: vehicles this month. So it's going into a market which

263
00:15:02,280 --> 00:15:05,480
Speaker 3: itself has been sort of churning down a little bit,

264
00:15:06,120 --> 00:15:09,280
Speaker 3: and you're going in and competing against Tesla and BYD

265
00:15:09,480 --> 00:15:10,960
Speaker 3: and the stock goes up eleven percent.

266
00:15:11,160 --> 00:15:14,600
Speaker 2: Explain that to me, well, basically, I would.

267
00:15:14,760 --> 00:15:15,040
Speaker 5: I would.

268
00:15:15,160 --> 00:15:21,040
Speaker 6: I would say that the the stock's been beaten down

269
00:15:21,080 --> 00:15:24,040
Speaker 6: a lot, right, not just you know the stocks they mentioned,

270
00:15:24,080 --> 00:15:27,720
Speaker 6: but you know, a whole the whole EXHS Tech index, right,

271
00:15:27,800 --> 00:15:31,000
Speaker 6: every single one of them has been beaten down. So

272
00:15:31,640 --> 00:15:35,120
Speaker 6: you know, when there's flow of funds coming, you don't

273
00:15:35,120 --> 00:15:38,120
Speaker 6: need that much for a fund to make them go

274
00:15:38,240 --> 00:15:40,640
Speaker 6: up by ten percent a day, right, because it's so

275
00:15:40,720 --> 00:15:45,640
Speaker 6: beaten down, right, So I would say that, you know,

276
00:15:45,800 --> 00:15:50,640
Speaker 6: in terms of China, the stocks that actually have been

277
00:15:50,680 --> 00:15:58,520
Speaker 6: working even during the direst diarist of time back in February, right,

278
00:15:58,640 --> 00:16:03,720
Speaker 6: are the ones where you know investors could be considering okay.

279
00:16:03,800 --> 00:16:07,880
Speaker 6: So the banks, they have got high dividends and they

280
00:16:07,960 --> 00:16:11,720
Speaker 6: were actually pretty solid during that January February you know,

281
00:16:11,840 --> 00:16:17,160
Speaker 6: dire times, those of course would be underperforming in you know,

282
00:16:17,360 --> 00:16:20,160
Speaker 6: big rebound day like yesterday. But then you know, I

283
00:16:20,200 --> 00:16:22,440
Speaker 6: would argue that you know, for the medium to long

284
00:16:22,520 --> 00:16:25,680
Speaker 6: term investors. They would be the ones that investors could

285
00:16:25,760 --> 00:16:28,320
Speaker 6: be looking at given the fact that you know the

286
00:16:28,800 --> 00:16:34,160
Speaker 6: Sasak said that the SOOE management should have market cap

287
00:16:34,920 --> 00:16:38,160
Speaker 6: management as their KPI i e. They need to boost

288
00:16:38,160 --> 00:16:40,520
Speaker 6: the market caps. So sees are looking pretty good.

289
00:16:41,160 --> 00:16:44,200
Speaker 2: Can we turn to Japan and we've got the BOJ

290
00:16:44,400 --> 00:16:47,280
Speaker 2: meeting next week, We've got the wage data coming through

291
00:16:47,280 --> 00:16:50,040
Speaker 2: the end of this week, and maybe that's the determinant,

292
00:16:50,200 --> 00:16:52,520
Speaker 2: the factor that will let us know whether or not

293
00:16:52,560 --> 00:16:56,440
Speaker 2: the BOJ intends to change policy for the first time

294
00:16:56,480 --> 00:16:58,920
Speaker 2: since two thousand and seven, at least where the policy

295
00:16:59,040 --> 00:17:01,920
Speaker 2: rate is concerned. We've and a negative ten basis points

296
00:17:01,920 --> 00:17:06,119
Speaker 2: for it was like a long, long time eternity. Yet

297
00:17:07,000 --> 00:17:10,160
Speaker 2: are you still seeing opportunities in the Japanese secuity market?

298
00:17:11,080 --> 00:17:15,040
Speaker 6: That's an opportunity. Definitely opportunity because our view is that

299
00:17:15,119 --> 00:17:17,720
Speaker 6: they will be tightening this year, right, may not be

300
00:17:17,760 --> 00:17:21,080
Speaker 6: this time, but eventually they will be tightening this year, right,

301
00:17:21,960 --> 00:17:26,359
Speaker 6: So of course that would lead to volatility in the market.

302
00:17:26,680 --> 00:17:29,719
Speaker 6: Yen's going to strengthen when that time comes or just before,

303
00:17:30,800 --> 00:17:34,960
Speaker 6: and the equities will be selling off right on the

304
00:17:35,000 --> 00:17:40,320
Speaker 6: back of that. But the improvement in the corporates have

305
00:17:40,640 --> 00:17:45,679
Speaker 6: definitely been there. The corporate governance improvement, earnings have been decent.

306
00:17:46,640 --> 00:17:49,879
Speaker 6: Foreign interest has been picking up, you know, since the middle.

307
00:17:49,600 --> 00:17:50,200
Speaker 1: Of last year.

308
00:17:50,240 --> 00:17:53,639
Speaker 6: So you know, all that factors combined means that the

309
00:17:53,720 --> 00:17:56,000
Speaker 6: pullback is a good opportunity for Japan.

310
00:17:56,080 --> 00:17:58,560
Speaker 1: But here's a caveat.

311
00:17:58,960 --> 00:18:01,960
Speaker 6: Caveat is that for the investors, they need to be

312
00:18:02,680 --> 00:18:07,000
Speaker 6: looking to rotate the sectors. So high interest rate, heighten

313
00:18:07,040 --> 00:18:10,680
Speaker 6: manatory policy, right, that can improve the U curve there

314
00:18:10,840 --> 00:18:14,760
Speaker 6: in Japan bank and that like the banks, yeah yeah, yeah, yeah, those,

315
00:18:15,080 --> 00:18:17,720
Speaker 6: So look at those, look at those sectors.

316
00:18:18,240 --> 00:18:22,920
Speaker 3: Given the heavy exposure to robotics and to efficiency levels

317
00:18:22,920 --> 00:18:25,960
Speaker 3: in manufacturing and such. In some ways in the past

318
00:18:25,960 --> 00:18:29,359
Speaker 3: we've talked about the Japanese companies being a sort of

319
00:18:30,240 --> 00:18:33,439
Speaker 3: warrant on global growth, and the fact that Japan has

320
00:18:33,480 --> 00:18:36,560
Speaker 3: been rallying, is there perhaps a little bit of an

321
00:18:36,560 --> 00:18:39,840
Speaker 3: indication in there that you might see the global economy

322
00:18:40,000 --> 00:18:43,280
Speaker 3: hold steady or actually turn around and start to gain again.

323
00:18:45,240 --> 00:18:49,480
Speaker 6: Well, certainly, the no lending probability in the US, for example,

324
00:18:49,520 --> 00:18:53,560
Speaker 6: has been gaining gaining this year. The proberlity of death

325
00:18:53,560 --> 00:18:58,160
Speaker 6: has been rising so you know, we could well see

326
00:18:58,200 --> 00:19:03,720
Speaker 6: that the economy may escape that you know, long long

327
00:19:03,800 --> 00:19:09,879
Speaker 6: pitch recession narrative, right, in which case is certainly you know,

328
00:19:10,000 --> 00:19:13,560
Speaker 6: good for equities. And that's probably the reason why you're

329
00:19:13,600 --> 00:19:15,800
Speaker 6: seeing that, you know, the US market has been pulling

330
00:19:15,840 --> 00:19:18,399
Speaker 6: back and then people buying on dips, and I would

331
00:19:18,440 --> 00:19:21,040
Speaker 6: expect the same to be for Japan and use this

332
00:19:21,720 --> 00:19:25,919
Speaker 6: you know, volatility in the Japanese esa as an opportunity

333
00:19:25,960 --> 00:19:28,000
Speaker 6: to buy Japanese stocks.

334
00:19:28,680 --> 00:19:30,640
Speaker 2: I'm sure it would be a very different world for

335
00:19:31,200 --> 00:19:35,600
Speaker 2: Japanese equities if the Chinese economy were firing on all

336
00:19:35,640 --> 00:19:38,880
Speaker 2: cylinders to what extent very quickly, Daniel, is a weak

337
00:19:39,000 --> 00:19:40,320
Speaker 2: China holding back Japan.

338
00:19:41,000 --> 00:19:45,880
Speaker 6: Yeah, well, in areas like you said, in automation, we've

339
00:19:45,920 --> 00:19:50,160
Speaker 6: seen that because of these slowing Chinese demand, it does

340
00:19:50,480 --> 00:19:54,320
Speaker 6: hurt the you know, the robotics or the automation sector

341
00:19:54,440 --> 00:19:58,200
Speaker 6: for example. Also the fact that you know, slow in

342
00:19:58,280 --> 00:20:01,560
Speaker 6: China perhaps less it's too risks in the Japan and

343
00:20:01,600 --> 00:20:04,199
Speaker 6: that's the lowest the japan domestic comedy. But all that

344
00:20:04,240 --> 00:20:05,800
Speaker 6: can improve if China improves.

345
00:20:06,480 --> 00:20:08,800
Speaker 3: All right, thanks very much, Daniel. We see here here

346
00:20:08,840 --> 00:20:12,560
Speaker 3: today the nick Kay has advanced almost eleven percent. Daniel

347
00:20:12,600 --> 00:20:15,040
Speaker 3: Lamb has been with a set of equity strategy at

348
00:20:15,080 --> 00:20:17,000
Speaker 3: Standard Chartered Wealth Management.

349
00:20:23,920 --> 00:20:26,879
Speaker 2: This has been the Bloomberg Daybreak Asia podcast, bringing you

350
00:20:26,920 --> 00:20:30,040
Speaker 2: the stories making news and moving markets in the Asia Pacific.

351
00:20:30,560 --> 00:20:33,680
Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

352
00:20:33,680 --> 00:20:37,320
Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

353
00:20:37,320 --> 00:20:41,119
Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen

354
00:20:41,200 --> 00:20:44,320
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

355
00:20:44,320 --> 00:20:45,400
Speaker 2: Bloomberg Business App.