WEBVTT - Stocks Decline as US Announces Tariff Rates

0:00:02.520 --> 0:00:07.040
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

0:00:10.680 --> 0:00:14.240
<v Speaker 2>Welcome to the Bloomberg Daybreak Asia podcast. I'm Dan Schwartzman.

0:00:14.640 --> 0:00:17.480
<v Speaker 2>We're just hours away from the August first tariff deadline

0:00:17.480 --> 0:00:20.680
<v Speaker 2>imposed by US President Donald Trump. We'll have more on

0:00:20.720 --> 0:00:23.280
<v Speaker 2>trade in a moment, plus a look at the Chinese

0:00:23.320 --> 0:00:26.880
<v Speaker 2>property sector. Later on, we'll bring you Doug Prisner's conversation

0:00:26.920 --> 0:00:32.520
<v Speaker 2>with Adriel Chan, chair of Hang Lung Properties. President Trump

0:00:32.520 --> 0:00:36.199
<v Speaker 2>will keep minimum global tariff rates at ten percent, according

0:00:36.200 --> 0:00:39.280
<v Speaker 2>to a White House statement Thursday. Meantime, it appears that

0:00:39.320 --> 0:00:42.000
<v Speaker 2>the US and Canada have not reached a trade agreement.

0:00:42.280 --> 0:00:44.720
<v Speaker 2>The White House says the terifate on Canada has now

0:00:44.760 --> 0:00:48.519
<v Speaker 2>been increased from twenty five to thirty five percent. Thailand

0:00:48.560 --> 0:00:51.760
<v Speaker 2>and Cambodi have received a nineteen percent tariff rate, while

0:00:51.800 --> 0:00:55.040
<v Speaker 2>Taiwan's was set at twenty. Switzerland was a standout the

0:00:55.120 --> 0:00:57.880
<v Speaker 2>rate of thirty nine percent. For a closer look, we

0:00:57.920 --> 0:01:01.200
<v Speaker 2>heard from Jenny Gordon, non resident fellow the Loewe Institute.

0:01:01.320 --> 0:01:03.920
<v Speaker 2>She spoke with Bloomberg's Sherry on In Heidi Stroud Watts

0:01:03.920 --> 0:01:05.080
<v Speaker 2>on the Asua trade.

0:01:05.400 --> 0:01:07.000
<v Speaker 3>Jenny, really great to have you with us, particularly at

0:01:07.000 --> 0:01:11.080
<v Speaker 3>a time where the news and the tariff news continues

0:01:11.120 --> 0:01:13.680
<v Speaker 3>to move at such a frenetic pace. We're still sort

0:01:13.680 --> 0:01:16.560
<v Speaker 3>of a few hours out from the official deadline, of course,

0:01:16.720 --> 0:01:20.160
<v Speaker 3>But has anything surprised you about the numbers that we've seen,

0:01:20.240 --> 0:01:23.399
<v Speaker 3>and also the fact that, you know, obviously for maximum

0:01:23.520 --> 0:01:29.119
<v Speaker 3>leverage or negotiating pressure, this is pushed to the eleventh hour. Industry,

0:01:29.200 --> 0:01:32.119
<v Speaker 3>logistics exporters and importers, not a whole lot of time

0:01:32.120 --> 0:01:34.320
<v Speaker 3>to be able to prepare for these scenarios.

0:01:35.319 --> 0:01:38.360
<v Speaker 4>No, no's that's definitely the case. And I think the

0:01:38.400 --> 0:01:42.319
<v Speaker 4>other problem is that nobody's clear that August first and

0:01:42.360 --> 0:01:45.600
<v Speaker 4>all these numbers will be the final round. You know,

0:01:46.480 --> 0:01:49.760
<v Speaker 4>Trumps could well ask for more at some other point

0:01:49.800 --> 0:01:52.480
<v Speaker 4>in time, and I suspect probably will, so I guess

0:01:52.480 --> 0:01:55.760
<v Speaker 4>there's that lack of certainty is a real concern for

0:01:55.840 --> 0:01:57.800
<v Speaker 4>most countries. I think the one that really surprised me

0:01:57.960 --> 0:02:01.400
<v Speaker 4>was thirty nine on Switzerland. I had thought they might

0:02:01.520 --> 0:02:05.200
<v Speaker 4>get kind of treated like the rest of Europe, but

0:02:06.280 --> 0:02:10.320
<v Speaker 4>that one was a surprise. The fact that it's fairly

0:02:10.360 --> 0:02:15.480
<v Speaker 4>common nineteen percent across Indonesia and Malaysia and many of

0:02:15.520 --> 0:02:19.880
<v Speaker 4>the other countries in Southeast Asia. I suspect is you know,

0:02:20.440 --> 0:02:24.920
<v Speaker 4>that's a common tariff, the high tariff on Lao and Cambodia.

0:02:24.960 --> 0:02:27.400
<v Speaker 4>There's very little trade and most of it is in

0:02:27.800 --> 0:02:33.639
<v Speaker 4>consumer goods. I think that's probably reflecting concerns about transshipment

0:02:34.080 --> 0:02:38.680
<v Speaker 4>and the ability to control transhipment from China, so it

0:02:38.760 --> 0:02:41.520
<v Speaker 4>might reflect that. But none of this is good. None

0:02:41.520 --> 0:02:45.280
<v Speaker 4>of this is good for the globe, nor actually for

0:02:45.600 --> 0:02:48.400
<v Speaker 4>the US consumer. And I think one of the big

0:02:48.480 --> 0:02:52.600
<v Speaker 4>things is the US imports a lot of inputs and

0:02:52.639 --> 0:02:55.920
<v Speaker 4>so costs are going to rise, even in non traded industries.

0:02:56.600 --> 0:02:59.360
<v Speaker 4>So you know, it's going to get more expensive to

0:02:59.400 --> 0:03:02.880
<v Speaker 4>set up a new business or a new factory in

0:03:02.919 --> 0:03:06.200
<v Speaker 4>the United States as a result of these tariffs on

0:03:06.280 --> 0:03:09.320
<v Speaker 4>the inputs as well as on the final goods.

0:03:10.680 --> 0:03:13.320
<v Speaker 3>It's interesting because as you say, none of this is good.

0:03:13.360 --> 0:03:15.960
<v Speaker 3>Obviously ten percent tariff is better than a forty percent tariff,

0:03:15.960 --> 0:03:18.600
<v Speaker 3>and on that it's interesting. Australia isn't even on this

0:03:18.680 --> 0:03:21.639
<v Speaker 3>annex that we can see at the moment, so not

0:03:21.720 --> 0:03:23.920
<v Speaker 3>quite clear what the tariff is on the likes of

0:03:23.960 --> 0:03:26.760
<v Speaker 3>Australia for now. But do you think that there is

0:03:26.760 --> 0:03:29.200
<v Speaker 3>a level of complacency. Certainly that we've seen in financial

0:03:29.240 --> 0:03:32.240
<v Speaker 3>markets that well, these are you know, levels and tariff

0:03:32.320 --> 0:03:35.720
<v Speaker 3>rates that were better than expected and so therefore somehow

0:03:35.880 --> 0:03:36.560
<v Speaker 3>more palatable.

0:03:37.320 --> 0:03:39.840
<v Speaker 4>Well it's funny, isn't it, Because as you go from

0:03:40.120 --> 0:03:45.760
<v Speaker 4>almost zero tariffs to ten, fifteen, twenty, you know, thirty

0:03:45.760 --> 0:03:48.920
<v Speaker 4>five percent, you're kind of saying, oh, thank goodness, I

0:03:48.920 --> 0:03:51.320
<v Speaker 4>don't have thirty five percent. I've only got fifteen percent.

0:03:51.440 --> 0:03:54.640
<v Speaker 4>And so you know, it's kind of interesting because really

0:03:54.680 --> 0:03:59.000
<v Speaker 4>the baseline was close to zero in most cases, and

0:03:59.160 --> 0:04:04.280
<v Speaker 4>so this this is a massive cost impost and you know,

0:04:04.440 --> 0:04:07.920
<v Speaker 4>you could almost think if you had one single uniform tariff,

0:04:08.400 --> 0:04:11.160
<v Speaker 4>then it would be largely a revenue raising exercise and

0:04:11.200 --> 0:04:14.120
<v Speaker 4>it would almost be like putting a value added tax

0:04:14.200 --> 0:04:16.920
<v Speaker 4>on the American consumer. And that'd be one way to

0:04:16.960 --> 0:04:20.599
<v Speaker 4>think about it. But this is creating different opportunities for

0:04:20.640 --> 0:04:24.880
<v Speaker 4>different countries because of different tariff rates. The actual rates

0:04:24.960 --> 0:04:29.680
<v Speaker 4>don't actually reflect very closely what those countries export to

0:04:29.720 --> 0:04:33.080
<v Speaker 4>the United States. So there doesn't seem to be an

0:04:33.120 --> 0:04:38.040
<v Speaker 4>overwhelming strategy of you know, countries that export mainly inputs

0:04:38.080 --> 0:04:41.440
<v Speaker 4>into production face lower tariffs and countries export final goods.

0:04:42.720 --> 0:04:45.320
<v Speaker 4>So there seems to be I can't quite work out

0:04:45.440 --> 0:04:48.919
<v Speaker 4>the rhymal logic to all of this, right, and I

0:04:48.960 --> 0:04:51.919
<v Speaker 4>don't know stock markets have woken up to it either.

0:04:52.920 --> 0:04:55.480
<v Speaker 1>I'm trying to get through this annex and I'm not

0:04:55.480 --> 0:04:59.120
<v Speaker 1>sure if I'm reading this correctly. But is Brazil's tariffy

0:04:59.320 --> 0:05:03.719
<v Speaker 1>a ten now? Because then President Trump just threatened fifty

0:05:03.760 --> 0:05:07.039
<v Speaker 1>percent tariffs and in fact he was ready to impose them,

0:05:07.160 --> 0:05:11.120
<v Speaker 1>and he had linked some of that animosity with Brazil

0:05:11.279 --> 0:05:15.320
<v Speaker 1>and President Lula to political reasons around the former president

0:05:15.360 --> 0:05:18.440
<v Speaker 1>Bilsonaro as well. Right now, I'm seeing the annex, and

0:05:18.520 --> 0:05:21.159
<v Speaker 1>as we're trying to digest his new tariff rates, Brazil

0:05:21.640 --> 0:05:24.760
<v Speaker 1>is now back a ten percent. Jenny. When he comes

0:05:24.760 --> 0:05:30.719
<v Speaker 1>to linking geopolitical issues with economic sanctions like tariffs, has

0:05:30.760 --> 0:05:32.760
<v Speaker 1>President Trump changed the pleabook?

0:05:32.800 --> 0:05:36.560
<v Speaker 4>Now? Well, I think the US has always used financial

0:05:36.600 --> 0:05:40.880
<v Speaker 4>sanctions for geopolitical purposes, and so they've tended to use

0:05:40.920 --> 0:05:43.480
<v Speaker 4>that rather than tariffs. And part of that was because,

0:05:43.920 --> 0:05:47.320
<v Speaker 4>you know, really they'd been part of this global commitment

0:05:47.400 --> 0:05:50.760
<v Speaker 4>to bring tariffs down across the world, and the only

0:05:50.880 --> 0:05:54.920
<v Speaker 4>sort of potential upside of Trump's threatening tariffs was to

0:05:55.120 --> 0:05:58.160
<v Speaker 4>help other countries who were struggling politically to bring down

0:05:58.200 --> 0:06:02.080
<v Speaker 4>their tariffs to do so in exchange for lower tariffs.

0:06:02.120 --> 0:06:06.640
<v Speaker 4>But I think this has moved the US into entirely

0:06:06.720 --> 0:06:09.920
<v Speaker 4>new territory. And this is why I don't think we

0:06:10.000 --> 0:06:12.719
<v Speaker 4>feel like we've seen the end of tariffs and that

0:06:12.800 --> 0:06:16.320
<v Speaker 4>this final set of numbers is the one that will

0:06:16.320 --> 0:06:20.520
<v Speaker 4>go ahead, because Trump has changed the way he uses tariffs,

0:06:20.520 --> 0:06:23.359
<v Speaker 4>and that just increases the uncertainty in the global economy,

0:06:23.560 --> 0:06:26.080
<v Speaker 4>and if you're trying to get investment going, that's the

0:06:26.160 --> 0:06:30.200
<v Speaker 4>last thing you want his uncertainty. Investors need certainty. And

0:06:30.279 --> 0:06:34.080
<v Speaker 4>so even though he's extracted promises of large amounts of

0:06:34.120 --> 0:06:37.880
<v Speaker 4>extra investment into the United States, that faces some real

0:06:37.960 --> 0:06:41.400
<v Speaker 4>barriers to go ahead, because one, you've got a shortage

0:06:41.400 --> 0:06:44.719
<v Speaker 4>of construction workers anyway in the United States, so constructing

0:06:44.760 --> 0:06:49.760
<v Speaker 4>new manufacturing plants is going to take time. And two,

0:06:49.880 --> 0:06:53.520
<v Speaker 4>it's just that you're not sure what that tariff ruling

0:06:53.600 --> 0:06:56.240
<v Speaker 4>is going to be. And if you know, the Trump

0:06:56.279 --> 0:06:59.719
<v Speaker 4>administration gets annoyed at a particular leader in a country

0:06:59.800 --> 0:07:03.880
<v Speaker 4>or a particular country for doing something, then they might

0:07:03.960 --> 0:07:05.359
<v Speaker 4>just sort of say, oh, we're going to raise your

0:07:05.400 --> 0:07:10.520
<v Speaker 4>tariff again. So it just completely undermines the certainty that's

0:07:10.600 --> 0:07:12.320
<v Speaker 4>needed for investment around world.

0:07:12.840 --> 0:07:15.480
<v Speaker 1>And Jenny, we're also seeing that the White House is

0:07:15.720 --> 0:07:19.400
<v Speaker 1>really emphasizing the transship goods. So if there are any

0:07:19.440 --> 0:07:22.400
<v Speaker 1>ways to try to evade the thirty five percent tariff,

0:07:22.480 --> 0:07:24.720
<v Speaker 1>I think it's talking about Canada that there will be

0:07:24.840 --> 0:07:28.360
<v Speaker 1>subject to transhipment tariffs of forty percent. And that has

0:07:28.400 --> 0:07:30.480
<v Speaker 1>been a key issue right because we have seen other

0:07:30.520 --> 0:07:33.440
<v Speaker 1>countries like China, for example, trying to send goods through

0:07:33.480 --> 0:07:38.040
<v Speaker 1>Southeast Asian countries. How meaningful is it that this administration

0:07:38.120 --> 0:07:40.400
<v Speaker 1>is cracking down on transhipments.

0:07:41.280 --> 0:07:45.280
<v Speaker 4>Well, I think that actually makes you know, more difficult

0:07:45.360 --> 0:07:48.840
<v Speaker 4>for China's strategy is to how does it bring down

0:07:49.400 --> 0:07:52.640
<v Speaker 4>you know, just the stretcham shipment is you just you know,

0:07:52.680 --> 0:07:54.760
<v Speaker 4>stick it in a container and take it to somewhere

0:07:54.800 --> 0:07:58.280
<v Speaker 4>and relabel it and ship it off. But the bigger

0:07:58.320 --> 0:08:01.000
<v Speaker 4>issue is all the componentory. That is where you've got

0:08:01.000 --> 0:08:05.679
<v Speaker 4>the integrated supply chain problem, where countries, particularly in Asia,

0:08:06.440 --> 0:08:09.520
<v Speaker 4>import a lot of components, add value to them and

0:08:09.880 --> 0:08:12.760
<v Speaker 4>may ship it back to China and then gets shipped

0:08:12.800 --> 0:08:16.680
<v Speaker 4>back again. The complexity of supply chains is enormous, and

0:08:16.720 --> 0:08:19.239
<v Speaker 4>so what Asian countries are looking to do is almost

0:08:19.320 --> 0:08:22.360
<v Speaker 4>have dual supply chains, so that they'll have one set

0:08:22.400 --> 0:08:25.920
<v Speaker 4>of supply chains that try to keep Chinese content out

0:08:26.120 --> 0:08:27.840
<v Speaker 4>in order to ship to the US, and then they'll

0:08:27.840 --> 0:08:31.440
<v Speaker 4>have another set of supply chains that use Chinese content

0:08:31.680 --> 0:08:35.120
<v Speaker 4>because of the price advantages of it. And so that's

0:08:35.200 --> 0:08:37.680
<v Speaker 4>I think from what I'm here from Asian colleagues, is

0:08:38.360 --> 0:08:41.679
<v Speaker 4>what they're trying to kind of work towards. And it

0:08:41.679 --> 0:08:44.480
<v Speaker 4>adds costs, so it just is less efficient than the

0:08:44.600 --> 0:08:47.440
<v Speaker 4>character and which means the prices of everything go up.

0:08:47.800 --> 0:08:51.040
<v Speaker 2>That was Jenny Gordon, non Resident fellow at the Lower Institute,

0:08:51.240 --> 0:08:54.600
<v Speaker 2>speaking to Bloomberg. Sherry On and Heidi Shroud wants coming

0:08:54.679 --> 0:08:58.040
<v Speaker 2>up a conversation with Adrial Chen Chaff Hang Lung Properties

0:08:58.240 --> 0:09:00.160
<v Speaker 2>here on the Daybreak Asia podcast.

0:09:07.360 --> 0:09:10.200
<v Speaker 5>Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner.

0:09:10.720 --> 0:09:13.720
<v Speaker 5>Let's turn our attention now to the property markets in

0:09:13.760 --> 0:09:16.600
<v Speaker 5>both Hong Kong and on the Chinese mainland. Joining me

0:09:16.760 --> 0:09:20.760
<v Speaker 5>is the chairman of Hong Long Properties, Adrial Chan. Adrill

0:09:20.840 --> 0:09:23.080
<v Speaker 5>joins us from our studios in Hong Kong. Good of

0:09:23.120 --> 0:09:25.000
<v Speaker 5>you to make time to chat with me. I want

0:09:25.000 --> 0:09:27.200
<v Speaker 5>to bring up a source subject right out of the gate.

0:09:27.240 --> 0:09:31.040
<v Speaker 5>I'm sorry because I noted that net income for your

0:09:31.080 --> 0:09:34.719
<v Speaker 5>company was down fourteen percent year over year in the

0:09:34.800 --> 0:09:37.440
<v Speaker 5>latest period. Can you give me a sense of what's happening,

0:09:37.520 --> 0:09:39.000
<v Speaker 5>what you're struggling with right now?

0:09:39.559 --> 0:09:43.559
<v Speaker 6>Thanks Doug. The decrease in net income really is as

0:09:43.559 --> 0:09:47.160
<v Speaker 6>a result of a lower number of sales of apartments,

0:09:47.800 --> 0:09:51.000
<v Speaker 6>and that is something that fluctuates for us. The primary

0:09:51.160 --> 0:09:54.480
<v Speaker 6>sector of our business is retail leasing and office leasing.

0:09:54.520 --> 0:09:59.240
<v Speaker 6>So commercial leasing is actually down low single digits, which

0:09:59.559 --> 0:10:02.600
<v Speaker 6>is a lot less bad than being down fourteen percent,

0:10:03.120 --> 0:10:05.920
<v Speaker 6>but that's the explanation for that. If you look into

0:10:06.520 --> 0:10:10.800
<v Speaker 6>retail and offices, retail has been actually surprisingly resilient in

0:10:10.800 --> 0:10:13.920
<v Speaker 6>the mainland. I think our share price has reacted relatively

0:10:13.960 --> 0:10:17.880
<v Speaker 6>well since the announcement of our results, and that was

0:10:17.880 --> 0:10:19.680
<v Speaker 6>a little bit of a surprise to me, honestly, But

0:10:19.720 --> 0:10:23.440
<v Speaker 6>I think that the market was perhaps expecting worse. So

0:10:23.600 --> 0:10:27.600
<v Speaker 6>we're down retail sales low single digits, but I think

0:10:27.640 --> 0:10:29.280
<v Speaker 6>people were probably expecting worse than that.

0:10:29.440 --> 0:10:32.320
<v Speaker 5>So give me a sense of what your portfolio looks like.

0:10:32.360 --> 0:10:35.360
<v Speaker 5>When you talk about retail spaces, I think shopping malls

0:10:35.400 --> 0:10:40.400
<v Speaker 5>are you catering to retailers that perhaps service the higher

0:10:40.480 --> 0:10:43.479
<v Speaker 5>end of the market. Are these luxury type retailers primarily?

0:10:43.840 --> 0:10:44.719
<v Speaker 5>Absolutely so.

0:10:45.000 --> 0:10:48.800
<v Speaker 6>Our biggest exposure is to the luxury brands, and as

0:10:48.840 --> 0:10:50.559
<v Speaker 6>we've been seeing over the past couple of days, the

0:10:50.640 --> 0:10:55.640
<v Speaker 6>luxury brands have been posting let's say, mixed results. Asia

0:10:55.800 --> 0:11:00.200
<v Speaker 6>extrapan is sort of broadly flat ish, while Japan is

0:11:00.240 --> 0:11:02.360
<v Speaker 6>down significantly, and that kind of I think is what

0:11:02.400 --> 0:11:07.600
<v Speaker 6>explains our reasonable performance. A lot less Chinese outbound tourism

0:11:07.960 --> 0:11:11.440
<v Speaker 6>to Japan for shopping and staying on shore to do

0:11:11.480 --> 0:11:14.480
<v Speaker 6>that shopping. So that's one of the macro trends that

0:11:14.520 --> 0:11:17.120
<v Speaker 6>we've seen. I don't know if that's because of all

0:11:17.200 --> 0:11:20.439
<v Speaker 6>this rumors about earthquakes and this and that, but for

0:11:21.360 --> 0:11:24.480
<v Speaker 6>various reasons, the Chinese consumers seem to be staying put

0:11:24.640 --> 0:11:26.040
<v Speaker 6>on shore.

0:11:26.160 --> 0:11:28.520
<v Speaker 5>So when you cater to that segment of the real

0:11:28.600 --> 0:11:32.959
<v Speaker 5>estate market, those higher end retailers, do they have expectations

0:11:33.000 --> 0:11:38.439
<v Speaker 5>about certain upgrades or modifications that the landlord in your

0:11:38.520 --> 0:11:41.319
<v Speaker 5>case has to provide them, And does that kind of

0:11:41.400 --> 0:11:44.760
<v Speaker 5>draw down or maybe force you to do a little

0:11:44.800 --> 0:11:46.080
<v Speaker 5>bit of cap X.

0:11:46.520 --> 0:11:49.839
<v Speaker 6>Oh, it certainly does. So you know, in terms of

0:11:49.960 --> 0:11:54.000
<v Speaker 6>luxury moles, this sector in the mainland of China has

0:11:54.160 --> 0:11:57.480
<v Speaker 6>only been around for maybe twenty years or so, twenty

0:11:57.480 --> 0:11:59.800
<v Speaker 6>twenty five years, and so if you think about the

0:11:59.840 --> 0:12:02.600
<v Speaker 6>life time of a mall, that's kind of the time

0:12:02.720 --> 0:12:05.760
<v Speaker 6>that you need to definitely start looking into capex upgrades.

0:12:06.040 --> 0:12:09.000
<v Speaker 6>We've done quite a few. We've done three upgrades in

0:12:09.520 --> 0:12:12.520
<v Speaker 6>three of our separate malls across the mainland. They've been

0:12:12.800 --> 0:12:16.760
<v Speaker 6>well received. I think now in terms of the market cycles,

0:12:16.960 --> 0:12:19.439
<v Speaker 6>it's a relative down market, it's probably a good time

0:12:19.520 --> 0:12:22.720
<v Speaker 6>to be investing in oneself. That being said, because we're

0:12:22.720 --> 0:12:25.720
<v Speaker 6>in a down market, the tenants have pricing power. It's

0:12:25.720 --> 0:12:29.440
<v Speaker 6>a buyer's market for our tenants, and so we have

0:12:29.520 --> 0:12:31.240
<v Speaker 6>to make sure that we're on the ball in terms

0:12:31.240 --> 0:12:35.040
<v Speaker 6>of how those capex upgrades go and our ability to

0:12:35.080 --> 0:12:37.240
<v Speaker 6>deliver on operations and service.

0:12:37.360 --> 0:12:39.520
<v Speaker 5>Okay, let's change gears talk a little bit about the

0:12:39.520 --> 0:12:43.080
<v Speaker 5>commercial office space and the return to work. What is

0:12:43.120 --> 0:12:46.600
<v Speaker 5>that situation right now and how is it impacting your business?

0:12:47.280 --> 0:12:51.839
<v Speaker 6>So the return to work phenomenon is more important here

0:12:51.880 --> 0:12:54.520
<v Speaker 6>in Hong Kong, less important in the mainland of China

0:12:54.559 --> 0:12:57.079
<v Speaker 6>because in main and China they never really worked from

0:12:57.080 --> 0:13:00.439
<v Speaker 6>home except for during certain lockdowns here in China. What

0:13:00.480 --> 0:13:02.640
<v Speaker 6>we're hearing actually just over the past couple of weeks

0:13:02.840 --> 0:13:04.880
<v Speaker 6>has been that some of the big banks are asking

0:13:04.920 --> 0:13:07.880
<v Speaker 6>their staff to come back to the office. And you know,

0:13:08.040 --> 0:13:11.560
<v Speaker 6>there's the vacancies in central Hong Kong have been pretty high.

0:13:11.760 --> 0:13:14.720
<v Speaker 6>There's been a lot of new supply, but there's been

0:13:14.720 --> 0:13:18.000
<v Speaker 6>a lot of pressure on both occupancies and rents, and

0:13:18.120 --> 0:13:20.600
<v Speaker 6>I think that this request for people to come back

0:13:20.640 --> 0:13:23.080
<v Speaker 6>into the office is going to help with both of those.

0:13:23.240 --> 0:13:24.439
<v Speaker 6>I don't know if it can take up all of

0:13:24.440 --> 0:13:26.000
<v Speaker 6>the slack, but certainly it'll help.

0:13:26.240 --> 0:13:28.920
<v Speaker 5>I have to ask you about high technology. There's been

0:13:28.960 --> 0:13:32.439
<v Speaker 5>so much focus right now in the market around artificial intelligence.

0:13:32.480 --> 0:13:34.199
<v Speaker 5>Are you tempted to do a little bit in the

0:13:34.280 --> 0:13:35.480
<v Speaker 5>data center end of things?

0:13:36.000 --> 0:13:37.640
<v Speaker 6>You know, we looked at the data center end of

0:13:37.679 --> 0:13:41.760
<v Speaker 6>things probably ten years ago. At the time, we felt

0:13:41.760 --> 0:13:44.120
<v Speaker 6>like maybe we were even late to the game. In hindsight,

0:13:44.160 --> 0:13:48.800
<v Speaker 6>we probably weren't. So yes, we are tempted, if you may,

0:13:49.160 --> 0:13:52.840
<v Speaker 6>to look at that. But we've made this, We've basically

0:13:52.840 --> 0:13:56.160
<v Speaker 6>made the decision that that's not our business model. It's

0:13:56.240 --> 0:13:58.959
<v Speaker 6>real estate, but everything else about it is very different

0:13:59.000 --> 0:14:01.959
<v Speaker 6>from the location to operations, the capex required.

0:14:02.240 --> 0:14:04.800
<v Speaker 5>What about your act sss to capital these days? Are

0:14:04.800 --> 0:14:07.720
<v Speaker 5>you having difficulty or is it not a problem for

0:14:07.760 --> 0:14:08.960
<v Speaker 5>a company such as yours.

0:14:09.640 --> 0:14:13.400
<v Speaker 6>It's a little bit polarized. So we have a very

0:14:13.600 --> 0:14:16.560
<v Speaker 6>good access to capital. We just raised ten billion Hong

0:14:16.640 --> 0:14:19.160
<v Speaker 6>Kong dollars earlier this year, and you know that was

0:14:19.600 --> 0:14:22.000
<v Speaker 6>We did that at a very favorable rate as well,

0:14:22.680 --> 0:14:25.000
<v Speaker 6>you know, because we're a high quality and because people

0:14:25.000 --> 0:14:28.160
<v Speaker 6>trust us because they see our financials in the very

0:14:28.160 --> 0:14:33.440
<v Speaker 6>sound But definitely it's a polarized market and if you're

0:14:33.480 --> 0:14:36.720
<v Speaker 6>not in my camp, then it could be a very

0:14:36.760 --> 0:14:38.360
<v Speaker 6>difficult time to raise money right now.

0:14:38.440 --> 0:14:41.640
<v Speaker 5>So you do business obviously, both on the mainland and

0:14:41.680 --> 0:14:43.800
<v Speaker 5>in Hong Kong. Talk to me a little bit about

0:14:43.840 --> 0:14:46.840
<v Speaker 5>what happens when you're dealing with two different currencies, the

0:14:46.880 --> 0:14:49.440
<v Speaker 5>Hong Kong dollar on one hand and the Chinese you

0:14:49.480 --> 0:14:50.080
<v Speaker 5>on on the other.

0:14:50.600 --> 0:14:53.240
<v Speaker 6>I mean, it's it's like any other company that has

0:14:53.240 --> 0:14:58.880
<v Speaker 6>exposure to multiple currencies. We experienced a depreciation of the

0:14:59.000 --> 0:15:01.480
<v Speaker 6>R and B over the past half year, so our

0:15:01.560 --> 0:15:05.040
<v Speaker 6>numbers from mainland China are about one point four percent lower.

0:15:05.440 --> 0:15:08.680
<v Speaker 6>In reported currency, which is Hong Kong dollars, and you know,

0:15:08.920 --> 0:15:13.560
<v Speaker 6>thankfully the fluctuations haven't been too big, but when they

0:15:13.600 --> 0:15:16.080
<v Speaker 6>come around, you know, we do have to make sure

0:15:16.080 --> 0:15:18.000
<v Speaker 6>that we're on top of that in terms of currency

0:15:18.000 --> 0:15:20.800
<v Speaker 6>swaps and the way that we borrow, where we finance

0:15:20.800 --> 0:15:23.760
<v Speaker 6>in mainland China versus offshore, so on, so forth.

0:15:24.000 --> 0:15:26.280
<v Speaker 5>So when you're dealing with let's call it a soft

0:15:26.360 --> 0:15:30.480
<v Speaker 5>market in relative terms, are you inspired maybe to expand

0:15:30.560 --> 0:15:32.920
<v Speaker 5>at this time or do you have any expansion plans?

0:15:33.280 --> 0:15:37.600
<v Speaker 6>You know, we just announced one partnership in hang Jo,

0:15:37.760 --> 0:15:40.120
<v Speaker 6>which is the final city in which we have yet

0:15:40.160 --> 0:15:44.120
<v Speaker 6>to open our mall. And by expansion in partnership, what

0:15:44.160 --> 0:15:49.080
<v Speaker 6>I mean is we've agreed to rent the neighboring plot

0:15:49.800 --> 0:15:52.080
<v Speaker 6>to our shopping mall that we're building ourselves. So we

0:15:52.160 --> 0:15:55.160
<v Speaker 6>have our own asset, which is the main asset, and

0:15:55.320 --> 0:15:59.000
<v Speaker 6>we've rented the neighboring plot in which we will extend

0:15:59.240 --> 0:16:02.920
<v Speaker 6>our footprint, and that sort of represents our commitment to

0:16:03.000 --> 0:16:07.480
<v Speaker 6>the market, our conviction in the market as well. Honzo

0:16:07.600 --> 0:16:09.800
<v Speaker 6>is a super strong market in me and then China.

0:16:09.840 --> 0:16:11.680
<v Speaker 6>I think it's probably the hottest right now.

0:16:11.680 --> 0:16:12.360
<v Speaker 5>Because of tech.

0:16:12.440 --> 0:16:14.240
<v Speaker 6>But also because of commercial.

0:16:14.120 --> 0:16:16.520
<v Speaker 5>Are there areas of the market that you're curious about

0:16:16.520 --> 0:16:18.960
<v Speaker 5>that you might begin to test And I'm thinking of

0:16:19.360 --> 0:16:23.120
<v Speaker 5>gaming being one industry. Does that interest you at all?

0:16:24.160 --> 0:16:29.560
<v Speaker 6>I am always looking at different sub sectors of the market.

0:16:30.120 --> 0:16:34.200
<v Speaker 6>Gaming financially is great, it's just not our bread and butter, though.

0:16:34.400 --> 0:16:37.320
<v Speaker 6>It's something that we have agreed many years to stay

0:16:37.320 --> 0:16:41.720
<v Speaker 6>away from despite the financial returns, and so that's in particular,

0:16:41.760 --> 0:16:44.240
<v Speaker 6>it's not something that we're looking at. However, I think

0:16:44.480 --> 0:16:47.160
<v Speaker 6>it behooves us to make sure that we're looking at

0:16:47.160 --> 0:16:49.080
<v Speaker 6>all the opportunities in the market.

0:16:49.560 --> 0:16:51.760
<v Speaker 5>Adriel, we'll leave it there, Thank you so very much.

0:16:51.880 --> 0:16:54.760
<v Speaker 5>He is Adriel Chan, the chairman of Hong Long Properties,

0:16:54.880 --> 0:16:58.200
<v Speaker 5>joining us from Hong Kong here on the Daybreak Asia Podcast.

0:17:00.640 --> 0:17:04.000
<v Speaker 5>Thanks for listening to today's episode of the Bloomberg Daybreak

0:17:04.200 --> 0:17:07.560
<v Speaker 5>Asia Edition podcast. Each weekday, we look at the story

0:17:07.640 --> 0:17:11.960
<v Speaker 5>shaping markets, finance, and geopolitics in the Asia Pacific. You

0:17:12.000 --> 0:17:16.119
<v Speaker 5>can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

0:17:16.240 --> 0:17:19.240
<v Speaker 5>or anywhere else you listen. Join us again tomorrow for

0:17:19.359 --> 0:17:22.879
<v Speaker 5>insight on the market moves from Hong Kong to Singapore

0:17:23.280 --> 0:17:27.040
<v Speaker 5>and Australia. I'm Doug Chrisner, and this is Bloomberg