WEBVTT - Vanke Debt, APAC Markets 0:00:02.480 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.640 --> 0:00:12.880 This is the Bloomberg Daybreak Aisia podcast. I'm Doug Prisner. 0:00:12.920 --> 0:00:15.400 You can join Brian Curtis and myself for the stories, 0:00:15.440 --> 0:00:18.520 making news and moving markets in the Apec region. You 0:00:18.600 --> 0:00:21.439 can subscribe to the show anywhere you get your podcast 0:00:21.520 --> 0:00:24.919 and always on Bloomberg Radio, the Bloomberg Terminal, and the 0:00:24.920 --> 0:00:26.080 Bloomberg Business App. 0:00:29.800 --> 0:00:32.000 It is time to check in with Bloomberg Opinion. We're 0:00:32.080 --> 0:00:35.519 joined by opinion columnist Schuli n who is writing about 0:00:35.840 --> 0:00:39.360 wang Ka, the Chinese developer that recently had its credit 0:00:39.440 --> 0:00:43.720 rating cut too junk Shuley, thanks very much for joining us. 0:00:44.280 --> 0:00:47.120 So there's a debt swap plan that is being considered, 0:00:47.680 --> 0:00:50.240 but it doesn't change the fact, does it that there's 0:00:50.320 --> 0:00:53.280 just no clarity on future sales here for these developers. 0:00:55.080 --> 0:00:59.360 That's absolutely that's absolutely right, Brian, And that's why the 0:00:59.440 --> 0:01:02.959 Chinese cover and is perhaps nudging it's a state owned 0:01:03.000 --> 0:01:06.280 banks to consider a death swap. The thing with one 0:01:06.319 --> 0:01:09.400 cur is until basically this Monday, it was an investment 0:01:09.440 --> 0:01:14.040 graded real estate developer and it's not anything like a 0:01:14.200 --> 0:01:18.839 China Evergrant or country Garden. It has a professional management 0:01:19.040 --> 0:01:24.399 and its balance sheet is fairly sound. However, because China's 0:01:24.720 --> 0:01:28.760 physical market is doing so badly that even one who's 0:01:29.000 --> 0:01:31.840 sales is being dragged down and it just looks like 0:01:32.120 --> 0:01:35.520 it may not be able to make the next bond 0:01:35.600 --> 0:01:37.200 repayment schedule. 0:01:37.319 --> 0:01:40.000 Yeah, so you're facing a liquidity crunch. Do you think 0:01:40.040 --> 0:01:42.440 there will be some type of reorganization to try to 0:01:42.480 --> 0:01:44.080 remove some of that stress? 0:01:45.840 --> 0:01:51.880 Well, investors probably hope not, because restricting usually means a 0:01:52.080 --> 0:01:56.320 very very little returns to the investments. But at this 0:01:56.440 --> 0:01:59.200 point you will have to because with one cur right. 0:01:59.280 --> 0:02:02.200 Last year, try this property market was doing very badly, 0:02:02.320 --> 0:02:04.680 but it was doing not too bad. It's a contracted 0:02:04.720 --> 0:02:07.400 sales was down only ten percent because it was taking 0:02:07.440 --> 0:02:10.720 some market share away from the likes of Country Garden 0:02:10.919 --> 0:02:13.360 and the evergrants. But this year, in the first two 0:02:13.400 --> 0:02:16.560 months this year, we are seeing a forty percent drop 0:02:16.639 --> 0:02:19.880 from one year ago. That just shows that at this 0:02:20.000 --> 0:02:23.200 point it's not just about this or that developer, but 0:02:23.240 --> 0:02:27.120 about the overall market. Chinese households are just not willing 0:02:27.160 --> 0:02:31.880 to go into the primary property sales, and some of 0:02:31.919 --> 0:02:34.600 them are going into the secondary sales, in which case 0:02:34.840 --> 0:02:37.760 the developers are not getting any benefits. 0:02:37.840 --> 0:02:42.160 Right, you say that a government bailout of one would 0:02:42.160 --> 0:02:44.720 actually be good for the government to explain. 0:02:46.160 --> 0:02:50.399 Well, because just like Hong Kong, the Chinese government local governments, 0:02:50.520 --> 0:02:54.000 they rely heavily on land sales. Lens sales can account 0:02:54.000 --> 0:02:57.200 for up to one third of their total revenue. So 0:02:57.240 --> 0:03:01.880 what we're seeing is that the Chinese local government's revenue 0:03:01.880 --> 0:03:04.680 from lens sales is already down one third from it's 0:03:04.720 --> 0:03:05.839 twenty twenty one high. 0:03:06.200 --> 0:03:08.200 Right, So if one still. 0:03:07.960 --> 0:03:11.320 Goes down and the no developers are left in China, 0:03:11.720 --> 0:03:13.560 then how are they going to sell their land? 0:03:13.720 --> 0:03:15.560 It is a big fiscal problem. 0:03:15.639 --> 0:03:19.079 Like I think, if at this rate, even the likes 0:03:19.080 --> 0:03:22.720 of One can now survive, that means there will be 0:03:22.720 --> 0:03:27.359 no private sector developers left and the local governments can 0:03:27.360 --> 0:03:28.120 sell any land. 0:03:29.160 --> 0:03:31.800 So if you're talking about a bailout, everyone is whole. 0:03:31.919 --> 0:03:32.119 Right. 0:03:32.200 --> 0:03:35.360 We're not talking about a cash infusion, maybe in a 0:03:35.360 --> 0:03:39.160 little bit of state sponsored reorganization to kind of get 0:03:39.160 --> 0:03:42.240 things more in line, but you're talking about a full 0:03:42.280 --> 0:03:45.120 blown rescue of the company. 0:03:46.040 --> 0:03:51.640 Well, some one possibility is what Chinese government did to 0:03:52.240 --> 0:03:58.000 the distressed local governments, basically allowing one to issue that 0:03:58.360 --> 0:04:02.200 and a substantially to to refinance its public that a 0:04:02.360 --> 0:04:05.960 substantially lower rates, that's one possibility. 0:04:06.640 --> 0:04:09.200 So that would be a sort of restructuring. 0:04:09.200 --> 0:04:13.640 Then right, well it is. 0:04:13.800 --> 0:04:16.920 It's a restructuring of that, but it's not a restructuring 0:04:17.000 --> 0:04:19.599 of the company's business operations. 0:04:20.640 --> 0:04:23.159 Now you say that that one cub you know has 0:04:24.120 --> 0:04:28.360 a strong past and equality management, and then it's closely 0:04:28.480 --> 0:04:31.040 intertwined with shen Xen. Why does that make a. 0:04:30.960 --> 0:04:36.960 Difference, Well, it's kind of one symbolic. 0:04:37.160 --> 0:04:40.240 It went to it went public in Chanchang nineteen ninety one, 0:04:40.320 --> 0:04:44.039 and Chanchhan was basically the first city that adopted the 0:04:44.160 --> 0:04:47.359 private home ownership in China. Right before that, like you know, 0:04:47.440 --> 0:04:50.560 all the Chinese they lived in those crabby housing provided 0:04:50.600 --> 0:04:55.359 by the state owned employers, et cetera. So Hinxhuan was 0:04:55.560 --> 0:04:59.360 a pilot city for this new home ownership model, and 0:04:59.480 --> 0:05:02.440 one was a pioneer in that pilot city. So if 0:05:02.520 --> 0:05:06.000 one goes down, it's quite symbolic in the sense that 0:05:06.200 --> 0:05:09.440 you know, then shall pains a sudden tour is getting reversed. 0:05:10.600 --> 0:05:12.719 So it's almost like we're looking at the end of 0:05:12.760 --> 0:05:15.560 privatization of property developers in China is going to be 0:05:15.600 --> 0:05:17.000 state sponsored. 0:05:18.000 --> 0:05:19.160 Yes, absolutely. 0:05:20.080 --> 0:05:22.440 What's tricky though, is that when you look at Evergrand 0:05:22.720 --> 0:05:25.080 with the liquidator here in Hong Kong trying to sell 0:05:25.120 --> 0:05:27.640 assets in China, it's a mess. I mean, certainly the 0:05:27.680 --> 0:05:28.640 government doesn't want that. 0:05:28.600 --> 0:05:29.320 Again right. 0:05:31.080 --> 0:05:34.240 Evergrand is a complete different story. But the problem with 0:05:34.360 --> 0:05:39.160 liquidators in Hong Kong is they like Evergrand, the company 0:05:39.200 --> 0:05:43.080 that the shell company that is to those dollar bounds. 0:05:43.839 --> 0:05:45.960 It is a shell company and it didn't have a 0:05:45.960 --> 0:05:50.920 lot of operating assets overseas. So the liquidators in Hong Kong, 0:05:51.120 --> 0:05:55.120 their best case scenario is basically to call back whatever 0:05:55.200 --> 0:05:58.560 ever Grand has outside of mainland China when you go 0:05:58.640 --> 0:06:02.719 into mainland China are way down the packing ordering herself quite. 0:06:02.520 --> 0:06:06.240 Absolutely, all right, Julie, thank you Bloomberg Opinion Colin Shuleyren. 0:06:06.360 --> 0:06:09.080 You can find her pieces on the terminal by typing 0:06:09.160 --> 0:06:09.920 OPI N go. 0:06:26.320 --> 0:06:30.039 Mark Cranfield, he is our m live strategist. If you 0:06:30.040 --> 0:06:33.200 have a Bloomberg terminal, the function is m l I 0:06:33.320 --> 0:06:36.400 V than the green go key. Mark doesn't seem to 0:06:36.480 --> 0:06:38.800 be moving the needle here. On expectations that we're going 0:06:38.839 --> 0:06:41.679 to see fed raid cuts sometime midyear, right. 0:06:42.360 --> 0:06:44.960 Well, people are waiting for the dot plots the next 0:06:44.960 --> 0:06:49.120 week FOMC. That's really the big issue, and you've heard 0:06:49.640 --> 0:06:52.479 a variety of FED voices over the past couple of weeks. 0:06:52.520 --> 0:06:54.400 Obviously they're in a blackout now, so there won't be 0:06:54.440 --> 0:06:57.800 any comments this week, but you can see there's a 0:06:57.839 --> 0:07:00.560 divergence between different people in the FED. We even had 0:07:00.800 --> 0:07:03.640 Neil Kashkai saying that maybe only one rate cut is 0:07:03.680 --> 0:07:06.440 necessary this year. There's a number of people that think 0:07:06.480 --> 0:07:10.600 only two cuts is necessary. And then at the moment 0:07:10.640 --> 0:07:13.960 the dot plots, officially, they still show a median of 0:07:14.040 --> 0:07:18.080 three cuts. So another CPI number, which has come in 0:07:18.080 --> 0:07:20.800 slightly above Foe Coast obviously puts into question the whole 0:07:20.880 --> 0:07:24.080 outlook for the dot plots, and that's what traders are 0:07:24.120 --> 0:07:28.119 waiting to see, whether or not they drop the number 0:07:28.160 --> 0:07:29.960 to two cuts for this year. Would they leave it 0:07:30.000 --> 0:07:33.679 at three or do we even have even maybe dropping 0:07:33.720 --> 0:07:36.800 even to one, But certainly a change to only two 0:07:36.880 --> 0:07:39.920 rate cuts this year is a distinct possibility, and that's 0:07:40.000 --> 0:07:41.520 keeping everyone a little bit on edge. 0:07:43.280 --> 0:07:46.200 It seemed like this report, the CPI report, was a 0:07:46.200 --> 0:07:48.360 little bit like the Jobs report, and that there was 0:07:48.360 --> 0:07:50.920 something in there for both the bulls and the bearers. 0:07:51.120 --> 0:07:54.160 In the end, the equity market shows to kind of 0:07:54.200 --> 0:07:58.800 set it aside and to rally on it. Is that 0:07:59.000 --> 0:08:03.320 because wasn't anything all that surprising in the data? Or 0:08:03.400 --> 0:08:05.880 is it more just that equities are moving more on 0:08:06.000 --> 0:08:08.840 earnings than on the FED and macro. 0:08:09.800 --> 0:08:11.880 I think where you have to take into account when 0:08:11.880 --> 0:08:15.680 you particularly for the US equity market, you have to see, okay, 0:08:15.720 --> 0:08:18.440 what is really driving the US equity market and how 0:08:18.560 --> 0:08:21.520 much whether twenty five basis point rate cut change to 0:08:21.600 --> 0:08:25.800 the picture. Well, whether the Federal Reserve cuts by twenty 0:08:25.840 --> 0:08:28.680 five basis points now in three months, in six months, 0:08:28.720 --> 0:08:31.240 it is not going to make any difference whatsoever to 0:08:31.320 --> 0:08:33.839 the drivers of the US equity market. They've got use 0:08:34.240 --> 0:08:36.760 to having short term interest rates about five percent for 0:08:36.800 --> 0:08:38.920 a long time. They can live with it because the 0:08:39.000 --> 0:08:42.000 underlying US economy is doing so well. As you say, 0:08:42.080 --> 0:08:46.120 earnings in many places are extremely good. And one of 0:08:46.160 --> 0:08:49.160 the other main drivers of the US market right now 0:08:49.320 --> 0:08:51.840 is the AI narrative, and that has got nothing to 0:08:51.880 --> 0:08:54.920 do with interest rates. It doesn't matter whether interest rates 0:08:54.920 --> 0:08:57.840 are five, six seven, They can live with it. The 0:08:57.880 --> 0:09:01.200 AI story is a completely different set all together, and 0:09:01.240 --> 0:09:04.160 as long as people think that that is a strong 0:09:04.360 --> 0:09:07.160 medium term drive of equities, it doesn't really matter what 0:09:07.200 --> 0:09:07.840 interest rates do. 0:09:08.040 --> 0:09:10.600 You're absolutely right about that. I was looking at Oracle 0:09:10.600 --> 0:09:12.640 today the stock hit a record. I was up about 0:09:12.640 --> 0:09:16.560 twelve percent. Yeah, the cloud computing businesses on growing very well. 0:09:16.600 --> 0:09:20.120 But yesterday the company said what it announced quarterally results. 0:09:20.160 --> 0:09:24.920 Demand for that Gen two AI infrastructure is substantially above 0:09:25.640 --> 0:09:27.880 where supply is right now. But in the time that 0:09:27.920 --> 0:09:29.560 we have left with you, I want to get your 0:09:29.640 --> 0:09:32.559 view on the BOJ because we've got these wage increases 0:09:32.880 --> 0:09:35.960 that will be reported through the week. I guess there's 0:09:36.000 --> 0:09:38.800 a very heavy dock at today. The big number will 0:09:38.840 --> 0:09:41.559 be reported on Friday. Do you think we're going to 0:09:41.600 --> 0:09:45.439 get kind of the preponderance of data that's will force 0:09:45.480 --> 0:09:48.160 the boj's hand as soon as next week's meeting. 0:09:48.800 --> 0:09:49.000 Yeah. 0:09:49.080 --> 0:09:51.120 I mean we've had a big story on Bloomberg saying 0:09:51.120 --> 0:09:53.320 that the meeting is too close to cool. I think 0:09:53.360 --> 0:09:55.520 you have to take you face value, and I think 0:09:55.559 --> 0:09:57.760 it's really just a question of whether the bankage or 0:09:57.760 --> 0:10:00.680 paying feel was ready to go all in March or 0:10:00.679 --> 0:10:03.200 whether to do a step by step move so some 0:10:03.360 --> 0:10:06.240 in March and some in April. So what we could see, 0:10:06.600 --> 0:10:09.480 we could see yel curve control removed at the March meeting, 0:10:09.760 --> 0:10:12.520 and probably a message to say no more ETF buying. 0:10:12.840 --> 0:10:15.880 That would be the end of one part of the policy, 0:10:16.080 --> 0:10:19.679 and then they leave exiting negative rates till April or 0:10:19.720 --> 0:10:22.520 till later. They may go all in for March as well. 0:10:22.559 --> 0:10:25.679 I suspect it will be staggered because they're trying to 0:10:25.840 --> 0:10:28.520 limit the impact to financial markets in Japan, and they 0:10:28.559 --> 0:10:30.920 do have the fiscal year end coming up on the 0:10:30.960 --> 0:10:33.920 thirty first of March, so I suspect they won't want 0:10:33.960 --> 0:10:36.520 to cause too many ripples in March, and they will 0:10:36.600 --> 0:10:39.800 leave something on the table for April. But certainly changes 0:10:39.800 --> 0:10:42.000 are coming, and it's going to be over the next 0:10:42.240 --> 0:10:44.160 couple of meetings you'll see the Bank of Japan make 0:10:44.240 --> 0:10:45.120 some very big steps. 0:10:46.520 --> 0:10:49.360 Mark I tipped this a few moments ago. Perhaps you 0:10:49.360 --> 0:10:51.679 can squeeze in a quick answer. The Hanks Hang Tech 0:10:51.720 --> 0:10:55.000 index powering up twenty percent now from its lows. It 0:10:55.120 --> 0:10:58.480 had a big jump yesterday, So technically in a bull market, 0:10:59.480 --> 0:11:02.640 is that in believing in the story from China, from 0:11:02.640 --> 0:11:04.479 the NPC or something else. 0:11:04.840 --> 0:11:08.160 He's probably got more to do with Navidia, Navidia making 0:11:08.200 --> 0:11:11.480 record highs after record hise and just accentuating the whole 0:11:11.840 --> 0:11:14.920 tech and AI story. I mean, who could ignore something 0:11:15.040 --> 0:11:17.640 like a juggernaut like that has global impact, and I 0:11:17.640 --> 0:11:19.400 suspect it's got a lot more to do with that 0:11:19.720 --> 0:11:21.720 than anything going on locally in Asia. 0:11:21.800 --> 0:11:24.480 Yeah, we had Nvidia shares today jumping by more than 0:11:24.760 --> 0:11:27.880 seven percent. So to go back to that AI narrative 0:11:27.920 --> 0:11:31.160 that you were talking about earlier, it's not yet faded. 0:11:32.000 --> 0:11:34.640 Perhaps it won't anytime soon. Mark, It's always a pleasure. 0:11:34.720 --> 0:11:37.160 Thanks for joining us, So, Mark Cranfield, Bloomberg m Live 0:11:37.200 --> 0:11:39.800 strategist joining from Singapore here on daybreak Asion. 0:11:56.520 --> 0:11:59.440 Joining us now in our studios is Daniel Lamb, head 0:11:59.480 --> 0:12:03.200 of Equity strategy at Standard Chartered Wealth Management. For a 0:12:03.240 --> 0:12:06.800 closer look at markets. Daniel I mentioned that the Hanksan 0:12:07.000 --> 0:12:11.640 Tech indecks passed twenty percent higher from the lows or 0:12:11.720 --> 0:12:14.000 came up twenty percent from the lowest here of late, 0:12:14.120 --> 0:12:17.280 so technically puts it in the bull market. It has people, 0:12:17.400 --> 0:12:19.800 I think scratching their heads. The one thing I might 0:12:19.840 --> 0:12:22.720 say is that in China, the NPC did approve a 0:12:22.840 --> 0:12:27.079 ten percent increase in the budget for science and technology 0:12:27.440 --> 0:12:30.320 up to fifty one point six billion dollars. Is it 0:12:30.320 --> 0:12:32.720 possible that that is part and parcel of these big 0:12:32.760 --> 0:12:34.439 gains we've seen in tech in Hong Kong. 0:12:35.559 --> 0:12:40.600 Thanks, that's part of it, although I believe that more 0:12:40.720 --> 0:12:46.120 of it is the fact that investors, some of the 0:12:46.160 --> 0:12:51.600 investors begin to look for opportunities outside the megacap us 0:12:51.720 --> 0:12:56.240 gross docks. That's what's been happening, connecting all the dots. 0:12:57.240 --> 0:13:01.400 So you've seen that. Of course, within this seven magnificent seven, 0:13:01.480 --> 0:13:04.040 people are trying to narrow that down to six, five 0:13:04.200 --> 0:13:06.920 or four stocks, So that's become a narrow and narrow 0:13:07.320 --> 0:13:10.880 and investors have been branching out to look for opportunities 0:13:10.960 --> 0:13:15.280 outside that set of names. Now, if you're looking at 0:13:15.520 --> 0:13:21.760 a tailwind from say, you know, lower inflation numbers, well 0:13:21.880 --> 0:13:26.360 you're not You're not really getting the full lower inflation 0:13:26.440 --> 0:13:29.199 right because it's still past the sticky So the ten 0:13:29.280 --> 0:13:33.839 year yield becomes, you know, more solid in terms of 0:13:34.000 --> 0:13:37.400 level and maybe grinding higher. So investors are naturally looking 0:13:37.440 --> 0:13:42.160 for other areas to park their money outside the seven stocks, 0:13:42.360 --> 0:13:45.120 at least for the short term, so naturally they're looking 0:13:45.120 --> 0:13:47.760 at you know, like China for example, because it's so 0:13:47.880 --> 0:13:50.920 cheap right in variation, And you said that, yes, it 0:13:51.080 --> 0:13:53.880 rebounded twenty percent from the lows, but you know, buying 0:13:53.960 --> 0:13:56.320 large these stocks are still at a massive discount to 0:13:56.360 --> 0:13:57.120 the counterparts. 0:13:57.320 --> 0:13:58.720 So what are the risk Daniel? 0:14:00.360 --> 0:14:04.960 The risk is that the economy is still not very 0:14:04.960 --> 0:14:08.120 solid in China, right, So you've seen that the latest 0:14:08.600 --> 0:14:12.640 CPI figure in China. Yes, it's kind of stopped the 0:14:12.679 --> 0:14:17.880 deflation trend one print, but is this going to be sustainable? 0:14:18.160 --> 0:14:22.720 I mean, the PPI was still relatively tough, right the 0:14:22.800 --> 0:14:26.560 latest number. So I guess you know, the question now 0:14:26.760 --> 0:14:30.720 is that, you know, if we do see another print 0:14:31.040 --> 0:14:35.360 of CPI being in the positive space in China, then 0:14:35.400 --> 0:14:37.920 this rarey could continue, but it could be just a blip. 0:14:38.760 --> 0:14:40.600 Yeah. I think there's a lot of wisdom in what 0:14:40.640 --> 0:14:42.640 you said, because I noted that the other day when 0:14:42.680 --> 0:14:44.960 you had Netflix selling off ten percent, in the day, 0:14:45.240 --> 0:14:48.440 you had tech stocks going up in Hong Kong. So 0:14:49.280 --> 0:14:52.080 among the companies that had a big balance yesterday was 0:14:52.080 --> 0:14:54.600 shell Me. This is a little puzzling too, I mean, 0:14:54.680 --> 0:14:57.960 up eleven percent, the company saying it will sell electric 0:14:58.040 --> 0:15:02.160 vehicles this month. So it's going into a market which 0:15:02.280 --> 0:15:05.480 itself has been sort of churning down a little bit, 0:15:06.120 --> 0:15:09.280 and you're going in and competing against Tesla and BYD 0:15:09.480 --> 0:15:10.960 and the stock goes up eleven percent. 0:15:11.160 --> 0:15:14.600 Explain that to me, well, basically, I would. 0:15:14.760 --> 0:15:15.040 I would. 0:15:15.160 --> 0:15:21.040 I would say that the the stock's been beaten down 0:15:21.080 --> 0:15:24.040 a lot, right, not just you know the stocks they mentioned, 0:15:24.080 --> 0:15:27.720 but you know, a whole the whole EXHS Tech index, right, 0:15:27.800 --> 0:15:31.000 every single one of them has been beaten down. So 0:15:31.640 --> 0:15:35.120 you know, when there's flow of funds coming, you don't 0:15:35.120 --> 0:15:38.120 need that much for a fund to make them go 0:15:38.240 --> 0:15:40.640 up by ten percent a day, right, because it's so 0:15:40.720 --> 0:15:45.640 beaten down, right, So I would say that, you know, 0:15:45.800 --> 0:15:50.640 in terms of China, the stocks that actually have been 0:15:50.680 --> 0:15:58.520 working even during the direst diarist of time back in February, right, 0:15:58.640 --> 0:16:03.720 are the ones where you know investors could be considering okay. 0:16:03.800 --> 0:16:07.880 So the banks, they have got high dividends and they 0:16:07.960 --> 0:16:11.720 were actually pretty solid during that January February you know, 0:16:11.840 --> 0:16:17.160 dire times, those of course would be underperforming in you know, 0:16:17.360 --> 0:16:20.160 big rebound day like yesterday. But then you know, I 0:16:20.200 --> 0:16:22.440 would argue that you know, for the medium to long 0:16:22.520 --> 0:16:25.680 term investors. They would be the ones that investors could 0:16:25.760 --> 0:16:28.320 be looking at given the fact that you know the 0:16:28.800 --> 0:16:34.160 Sasak said that the SOOE management should have market cap 0:16:34.920 --> 0:16:38.160 management as their KPI i e. They need to boost 0:16:38.160 --> 0:16:40.520 the market caps. So sees are looking pretty good. 0:16:41.160 --> 0:16:44.200 Can we turn to Japan and we've got the BOJ 0:16:44.400 --> 0:16:47.280 meeting next week, We've got the wage data coming through 0:16:47.280 --> 0:16:50.040 the end of this week, and maybe that's the determinant, 0:16:50.200 --> 0:16:52.520 the factor that will let us know whether or not 0:16:52.560 --> 0:16:56.440 the BOJ intends to change policy for the first time 0:16:56.480 --> 0:16:58.920 since two thousand and seven, at least where the policy 0:16:59.040 --> 0:17:01.920 rate is concerned. We've and a negative ten basis points 0:17:01.920 --> 0:17:06.119 for it was like a long, long time eternity. Yet 0:17:07.000 --> 0:17:10.160 are you still seeing opportunities in the Japanese secuity market? 0:17:11.080 --> 0:17:15.040 That's an opportunity. Definitely opportunity because our view is that 0:17:15.119 --> 0:17:17.720 they will be tightening this year, right, may not be 0:17:17.760 --> 0:17:21.080 this time, but eventually they will be tightening this year, right, 0:17:21.960 --> 0:17:26.359 So of course that would lead to volatility in the market. 0:17:26.680 --> 0:17:29.719 Yen's going to strengthen when that time comes or just before, 0:17:30.800 --> 0:17:34.960 and the equities will be selling off right on the 0:17:35.000 --> 0:17:40.320 back of that. But the improvement in the corporates have 0:17:40.640 --> 0:17:45.679 definitely been there. The corporate governance improvement, earnings have been decent. 0:17:46.640 --> 0:17:49.879 Foreign interest has been picking up, you know, since the middle. 0:17:49.600 --> 0:17:50.200 Of last year. 0:17:50.240 --> 0:17:53.639 So you know, all that factors combined means that the 0:17:53.720 --> 0:17:56.000 pullback is a good opportunity for Japan. 0:17:56.080 --> 0:17:58.560 But here's a caveat. 0:17:58.960 --> 0:18:01.960 Caveat is that for the investors, they need to be 0:18:02.680 --> 0:18:07.000 looking to rotate the sectors. So high interest rate, heighten 0:18:07.040 --> 0:18:10.680 manatory policy, right, that can improve the U curve there 0:18:10.840 --> 0:18:14.760 in Japan bank and that like the banks, yeah yeah, yeah, yeah, those, 0:18:15.080 --> 0:18:17.720 So look at those, look at those sectors. 0:18:18.240 --> 0:18:22.920 Given the heavy exposure to robotics and to efficiency levels 0:18:22.920 --> 0:18:25.960 in manufacturing and such. In some ways in the past 0:18:25.960 --> 0:18:29.359 we've talked about the Japanese companies being a sort of 0:18:30.240 --> 0:18:33.439 warrant on global growth, and the fact that Japan has 0:18:33.480 --> 0:18:36.560 been rallying, is there perhaps a little bit of an 0:18:36.560 --> 0:18:39.840 indication in there that you might see the global economy 0:18:40.000 --> 0:18:43.280 hold steady or actually turn around and start to gain again. 0:18:45.240 --> 0:18:49.480 Well, certainly, the no lending probability in the US, for example, 0:18:49.520 --> 0:18:53.560 has been gaining gaining this year. The proberlity of death 0:18:53.560 --> 0:18:58.160 has been rising so you know, we could well see 0:18:58.200 --> 0:19:03.720 that the economy may escape that you know, long long 0:19:03.800 --> 0:19:09.879 pitch recession narrative, right, in which case is certainly you know, 0:19:10.000 --> 0:19:13.560 good for equities. And that's probably the reason why you're 0:19:13.600 --> 0:19:15.800 seeing that, you know, the US market has been pulling 0:19:15.840 --> 0:19:18.399 back and then people buying on dips, and I would 0:19:18.440 --> 0:19:21.040 expect the same to be for Japan and use this 0:19:21.720 --> 0:19:25.919 you know, volatility in the Japanese esa as an opportunity 0:19:25.960 --> 0:19:28.000 to buy Japanese stocks. 0:19:28.680 --> 0:19:30.640 I'm sure it would be a very different world for 0:19:31.200 --> 0:19:35.600 Japanese equities if the Chinese economy were firing on all 0:19:35.640 --> 0:19:38.880 cylinders to what extent very quickly, Daniel, is a weak 0:19:39.000 --> 0:19:40.320 China holding back Japan. 0:19:41.000 --> 0:19:45.880 Yeah, well, in areas like you said, in automation, we've 0:19:45.920 --> 0:19:50.160 seen that because of these slowing Chinese demand, it does 0:19:50.480 --> 0:19:54.320 hurt the you know, the robotics or the automation sector 0:19:54.440 --> 0:19:58.200 for example. Also the fact that you know, slow in 0:19:58.280 --> 0:20:01.560 China perhaps less it's too risks in the Japan and 0:20:01.600 --> 0:20:04.199 that's the lowest the japan domestic comedy. But all that 0:20:04.240 --> 0:20:05.800 can improve if China improves. 0:20:06.480 --> 0:20:08.800 All right, thanks very much, Daniel. We see here here 0:20:08.840 --> 0:20:12.560 today the nick Kay has advanced almost eleven percent. Daniel 0:20:12.600 --> 0:20:15.040 Lamb has been with a set of equity strategy at 0:20:15.080 --> 0:20:17.000 Standard Chartered Wealth Management. 0:20:23.920 --> 0:20:26.879 This has been the Bloomberg Daybreak Asia podcast, bringing you 0:20:26.920 --> 0:20:30.040 the stories making news and moving markets in the Asia Pacific. 0:20:30.560 --> 0:20:33.680 Visit the Bloomberg Podcast channel on YouTube to get more 0:20:33.680 --> 0:20:37.320 episodes of this and other shows from Bloomberg. 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