1
00:00:00,240 --> 00:00:07,240
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:10,560 --> 00:00:13,360
Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the

3
00:00:13,360 --> 00:00:16,040
Speaker 2: top stories in the coming week from our Daybreak anchors

4
00:00:16,079 --> 00:00:18,840
Speaker 2: all around the world. Straight ahead on the program will

5
00:00:18,840 --> 00:00:21,759
Speaker 2: get you set for more corporate earnings in the tech sector.

6
00:00:21,960 --> 00:00:23,720
Speaker 2: I'm Nathan Hager in Washington.

7
00:00:24,000 --> 00:00:26,880
Speaker 3: I'm Caline Hetpet in London, where we're asking how Middle

8
00:00:26,920 --> 00:00:30,200
Speaker 3: Eastern and African countries are focused on business in a

9
00:00:30,320 --> 00:00:31,640
Speaker 3: changing world order.

10
00:00:31,800 --> 00:00:34,400
Speaker 4: I'm Doug Krissner looking at whether the le boo boo

11
00:00:34,479 --> 00:00:37,560
Speaker 4: craze is due for a Beeanie Baby style bust.

12
00:00:37,880 --> 00:00:41,880
Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg

13
00:00:41,920 --> 00:00:45,600
Speaker 1: eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC,

14
00:00:46,120 --> 00:00:51,239
Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius

15
00:00:51,400 --> 00:00:54,920
Speaker 1: XM one twenty one, and around the world on Bloomberg Radio,

16
00:00:55,000 --> 00:00:57,200
Speaker 1: dot Com and the Bloomberg Business App.

17
00:01:02,640 --> 00:01:05,399
Speaker 2: Good day to you. I'm Nathan Hager. We begin today's

18
00:01:05,440 --> 00:01:09,920
Speaker 2: program with more corporate earnings in tech. Cybersecurity provider crowd

19
00:01:10,040 --> 00:01:13,240
Speaker 2: Strike reports on Tuesday than we hear from software names

20
00:01:13,280 --> 00:01:17,240
Speaker 2: Snowflake and Salesforce on Wednesday for more. We're joined by

21
00:01:17,280 --> 00:01:21,119
Speaker 2: the analysts who cover these companies most closely, Bloomberg Intelligence

22
00:01:21,120 --> 00:01:24,160
Speaker 2: Global head of Tech Research Mandeep Singh and On a

23
00:01:24,240 --> 00:01:27,360
Speaker 2: rag Rana, tech analyst for Bloomberg Intelligence. It's great to

24
00:01:27,360 --> 00:01:29,520
Speaker 2: have the both of you with us on this weekend program.

25
00:01:29,560 --> 00:01:31,720
Speaker 2: Of course, we've heard from a lot of big tech

26
00:01:31,840 --> 00:01:34,800
Speaker 2: names already. A lot of the hyper scalers have reported

27
00:01:34,880 --> 00:01:37,319
Speaker 2: as well. Mandy, we'll start with you. Do the results

28
00:01:37,319 --> 00:01:39,880
Speaker 2: that we've heard so far. Tell us anything about what

29
00:01:39,920 --> 00:01:42,399
Speaker 2: we could hear from these software players this week.

30
00:01:42,920 --> 00:01:47,080
Speaker 5: Yes, I think when you look at the hyperscale cloud numbers,

31
00:01:47,160 --> 00:01:51,880
Speaker 5: especially Microsoft and Google, it's pretty clear that you know,

32
00:01:52,000 --> 00:01:56,880
Speaker 5: we are seeing that lift from AI workloads for both

33
00:01:56,960 --> 00:02:01,880
Speaker 5: Microsoft and Google, and that's why Microsoft is growing close

34
00:02:01,920 --> 00:02:05,640
Speaker 5: to forty percent. Google was mid thirty percent, and they're

35
00:02:05,760 --> 00:02:10,680
Speaker 5: ramping up kpex in anticipation of those numbers going even higher.

36
00:02:10,760 --> 00:02:14,440
Speaker 5: So I expect that to trickle down to some of

37
00:02:14,480 --> 00:02:18,120
Speaker 5: the software players like Snowflake, for example, is in the

38
00:02:18,160 --> 00:02:23,480
Speaker 5: business of using enterprise data for deploying some of these

39
00:02:23,680 --> 00:02:27,919
Speaker 5: agents that everyone is looking to add in terms of

40
00:02:27,960 --> 00:02:34,359
Speaker 5: their enterprise functionality and snowflake data is to my mind critical,

41
00:02:34,440 --> 00:02:37,640
Speaker 5: so they should see a similar lift to their top

42
00:02:37,680 --> 00:02:42,200
Speaker 5: line from AI workloads and CrowdStrike. Being a cybersecurity provider,

43
00:02:42,800 --> 00:02:46,960
Speaker 5: I think they are finding the tack surface when it

44
00:02:47,000 --> 00:02:51,560
Speaker 5: comes to generative AI is far bigger than what anything

45
00:02:52,200 --> 00:02:55,280
Speaker 5: you know, these security companies have dealts with and you

46
00:02:55,320 --> 00:02:59,400
Speaker 5: could have prompt injunction attacks and some other types of

47
00:02:59,480 --> 00:03:02,239
Speaker 5: new attack at that no one even conceived of before.

48
00:03:02,360 --> 00:03:07,320
Speaker 5: So they should similarly benefit from enterprises looking to secure

49
00:03:07,400 --> 00:03:14,400
Speaker 5: their you know, firewalls and their infrastructure. Given everyone is

50
00:03:14,400 --> 00:03:19,080
Speaker 5: deploying AI, so I expect a crowd strike print should

51
00:03:19,120 --> 00:03:21,799
Speaker 5: be strong as well. In terms of AI demand.

52
00:03:22,080 --> 00:03:24,520
Speaker 2: Let's bring you into the conversation on a RAG as well.

53
00:03:24,520 --> 00:03:28,480
Speaker 2: I know you cover salesforce pretty closely as well. What

54
00:03:28,520 --> 00:03:30,480
Speaker 2: do the hyper scale numbers tell you about what we

55
00:03:30,520 --> 00:03:31,560
Speaker 2: could get from salesforce?

56
00:03:32,120 --> 00:03:34,240
Speaker 6: So salesforce is on the other side of the equation.

57
00:03:34,360 --> 00:03:37,440
Speaker 6: They really, you know, are in a completely different business

58
00:03:37,480 --> 00:03:40,280
Speaker 6: than some of the other vendors that when they've talked

59
00:03:40,280 --> 00:03:44,920
Speaker 6: about In their case, the only product that hasn't overlapped

60
00:03:44,960 --> 00:03:47,880
Speaker 6: is some of the data cloud that they started to

61
00:03:47,960 --> 00:03:50,960
Speaker 6: sell in the last couple of years as part of

62
00:03:51,000 --> 00:03:53,920
Speaker 6: their Jenny I offering. Now that product is a small

63
00:03:53,920 --> 00:03:57,840
Speaker 6: portion of the overall portfolio, so even if they doubles,

64
00:03:57,880 --> 00:04:00,200
Speaker 6: really it's not going to really move the needle for them.

65
00:04:00,640 --> 00:04:04,840
Speaker 6: For them, they're on the receiving side of the lower

66
00:04:05,000 --> 00:04:08,600
Speaker 6: end of it spending, which is as people are spending

67
00:04:08,640 --> 00:04:11,880
Speaker 6: more and more money on AI related workloads and AI

68
00:04:11,920 --> 00:04:15,480
Speaker 6: related infrastructure. You know, it's taking out from some of

69
00:04:15,480 --> 00:04:18,280
Speaker 6: the stuff that Salesforce is selling. And in fact, one

70
00:04:18,320 --> 00:04:20,400
Speaker 6: of the things that they are grappling with is the

71
00:04:20,880 --> 00:04:25,160
Speaker 6: lack of seat count growth in their enterprises that they

72
00:04:25,200 --> 00:04:27,599
Speaker 6: sell into. So it's I mean, you know, in our view,

73
00:04:27,640 --> 00:04:30,320
Speaker 6: it's not going to be that exciting for them. They're

74
00:04:30,360 --> 00:04:33,400
Speaker 6: running at at about ten percent Booking's growth rate number.

75
00:04:33,440 --> 00:04:36,480
Speaker 6: That's a that's probably where it will see for them.

76
00:04:36,880 --> 00:04:38,680
Speaker 6: The big question for them would be, you know, how

77
00:04:38,760 --> 00:04:41,599
Speaker 6: much of the guidance they're going to go out and

78
00:04:41,680 --> 00:04:45,800
Speaker 6: improve because of the closure of the Informatica deal which

79
00:04:45,880 --> 00:04:46,360
Speaker 6: just happened.

80
00:04:46,560 --> 00:04:50,240
Speaker 2: Let's dig into all these companies much more closely. Man, Deep,

81
00:04:50,279 --> 00:04:53,920
Speaker 2: I know you cover CrowdStrike in particular, and I got

82
00:04:53,920 --> 00:04:56,200
Speaker 2: to admit, whenever I think of CrowdStrike, I think of

83
00:04:56,480 --> 00:05:00,760
Speaker 2: outage from last year, just because you know, full disclosure,

84
00:05:00,760 --> 00:05:03,720
Speaker 2: it affected me personally, I think a lot of listeners

85
00:05:03,760 --> 00:05:06,440
Speaker 2: can relate to that as well. Is that still an overhanger?

86
00:05:06,560 --> 00:05:08,680
Speaker 2: Is it fair to still think about the outage when

87
00:05:08,680 --> 00:05:09,720
Speaker 2: it comes to crowd strength?

88
00:05:10,240 --> 00:05:13,560
Speaker 5: Well, so when I look at the new customers that

89
00:05:13,720 --> 00:05:17,640
Speaker 5: CrowdStrike has at it since, then, clearly their pace of

90
00:05:17,760 --> 00:05:22,400
Speaker 5: new customer ads have slowed because of what happened, and

91
00:05:23,080 --> 00:05:27,960
Speaker 5: I feel they've come out of it relatively okay, even

92
00:05:28,000 --> 00:05:31,239
Speaker 5: though there was a slowdown, but they managed to hold

93
00:05:31,279 --> 00:05:34,800
Speaker 5: on to their existing customer base. And now we are

94
00:05:34,839 --> 00:05:39,680
Speaker 5: at a point where because of generative AI deployments. I mean,

95
00:05:39,760 --> 00:05:43,159
Speaker 5: there are three or four companies that probably our best

96
00:05:43,160 --> 00:05:46,800
Speaker 5: position to benefit from, you know, the GENAI deployment. So

97
00:05:47,360 --> 00:05:51,800
Speaker 5: I would put CrowdStrike amongst one of them. And clearly

98
00:05:52,320 --> 00:05:54,520
Speaker 5: there is M and A going on with pallel to

99
00:05:54,880 --> 00:05:59,640
Speaker 5: buying you know a Chronosphere and cyber Arc and Google

100
00:05:59,720 --> 00:06:03,599
Speaker 5: buy with so there are other dynamics at play. But

101
00:06:03,760 --> 00:06:07,760
Speaker 5: on an organic basis, I think crowd strike has done

102
00:06:07,839 --> 00:06:11,120
Speaker 5: well and they have themselves made some tuck in, so

103
00:06:12,160 --> 00:06:16,600
Speaker 5: I feel they have been able to at least stabilize

104
00:06:17,279 --> 00:06:23,120
Speaker 5: the impact and second half for them would be faster

105
00:06:23,200 --> 00:06:27,200
Speaker 5: growth compared to the first half of twenty twenty five.

106
00:06:27,240 --> 00:06:30,119
Speaker 5: And so from that perspective, I mean, given there around

107
00:06:30,160 --> 00:06:34,520
Speaker 5: twenty percent growth, I expect growth to improve going forward.

108
00:06:34,560 --> 00:06:37,880
Speaker 2: It's interesting to think about the opportunities presented by artificial

109
00:06:37,880 --> 00:06:41,279
Speaker 2: intelligence for the cybersecurity space. When it comes to CrowdStrike,

110
00:06:41,360 --> 00:06:42,520
Speaker 2: are there challenges?

111
00:06:43,800 --> 00:06:48,000
Speaker 5: So crowd Strike to me, you know, is still a

112
00:06:48,040 --> 00:06:52,799
Speaker 5: company that is a category leader in the endpoint security space,

113
00:06:52,880 --> 00:06:57,960
Speaker 5: and so the challenge is if everyone starts deploying security

114
00:06:58,160 --> 00:07:02,200
Speaker 5: in a different way. So imagine, you know, we have

115
00:07:02,320 --> 00:07:06,360
Speaker 5: a lot more agent take functionality out there, you don't

116
00:07:06,400 --> 00:07:10,200
Speaker 5: need to secure as many human users, and so that

117
00:07:10,280 --> 00:07:14,480
Speaker 5: could have an impact on crowd Strike going forward, and

118
00:07:15,200 --> 00:07:18,920
Speaker 5: they clearly have to adapt to their business model in

119
00:07:19,040 --> 00:07:22,880
Speaker 5: terms of the agentic functionality. But as I said, you know,

120
00:07:22,960 --> 00:07:26,800
Speaker 5: I don't see any pure play AI security provider really

121
00:07:27,800 --> 00:07:29,560
Speaker 5: challenging their position right now.

122
00:07:29,920 --> 00:07:33,360
Speaker 2: And when it comes to artificial intelligence opportunities on a

123
00:07:33,440 --> 00:07:37,160
Speaker 2: rog looking at sales forces upcoming earnings, we just heard

124
00:07:37,160 --> 00:07:40,000
Speaker 2: from the CEO ahead of the report saying he's not

125
00:07:40,120 --> 00:07:45,240
Speaker 2: going back to chat GPT after seeing what Google's Gemini offers.

126
00:07:45,280 --> 00:07:48,840
Speaker 2: Now there's been a lot of attention on this new

127
00:07:48,920 --> 00:07:52,600
Speaker 2: large language model coming from the alphabet unit. Where does

128
00:07:52,640 --> 00:07:54,920
Speaker 2: that position salesforce hetting into earnings?

129
00:07:55,360 --> 00:07:58,000
Speaker 6: Yeah, I think the Google THEO must thank him for

130
00:07:58,040 --> 00:08:01,520
Speaker 6: a few billion in market capital over there, because that

131
00:08:01,640 --> 00:08:06,120
Speaker 6: was a very big statement. Google works very closely with Salesforce.

132
00:08:06,160 --> 00:08:10,200
Speaker 6: They provide cloud services to Salesforce, so it is a

133
00:08:10,320 --> 00:08:13,720
Speaker 6: very good relationship between the two firms. And also remember

134
00:08:13,760 --> 00:08:16,640
Speaker 6: that open ai is starting to get into the wheelhouse

135
00:08:16,680 --> 00:08:19,800
Speaker 6: of a lot of these software providers by saying that

136
00:08:19,920 --> 00:08:24,240
Speaker 6: you can run some of the software like functionalities through CHATGPT,

137
00:08:24,440 --> 00:08:26,200
Speaker 6: so they could be a little bit of that. But

138
00:08:26,320 --> 00:08:30,640
Speaker 6: frankly speaking, when it comes to Salesforce, the fundamentals are

139
00:08:31,000 --> 00:08:34,160
Speaker 6: that non AI related it spending is weak, and it

140
00:08:34,240 --> 00:08:36,840
Speaker 6: has been weak for some time in the last couple

141
00:08:36,880 --> 00:08:42,600
Speaker 6: of years. As corporations are spending more on expanding their

142
00:08:42,760 --> 00:08:47,120
Speaker 6: AI footprint or either an infrastructure or models, they are

143
00:08:47,200 --> 00:08:51,400
Speaker 6: pulling back in areas such as traditional software spending where

144
00:08:51,440 --> 00:08:54,559
Speaker 6: salesforce lies, or in consulting, which is impacting some of

145
00:08:54,600 --> 00:08:57,240
Speaker 6: the consulting names. So that's the theme that we are

146
00:08:57,240 --> 00:09:00,280
Speaker 6: seeing right now. Let's see if that reverses in twenty

147
00:09:00,360 --> 00:09:03,679
Speaker 6: twenty six. But as of now, things you know, I

148
00:09:03,720 --> 00:09:05,640
Speaker 6: would say from a macro point of view are not

149
00:09:05,760 --> 00:09:07,480
Speaker 6: that rosy for Salesforce.

150
00:09:07,720 --> 00:09:10,679
Speaker 2: Interesting Why is that? Is it just because there's too

151
00:09:10,760 --> 00:09:13,320
Speaker 2: much of a reliance on artificial intelligence right now?

152
00:09:13,760 --> 00:09:15,040
Speaker 7: No, that's not that.

153
00:09:15,120 --> 00:09:17,000
Speaker 6: You know, if you are a JP Morgan or a

154
00:09:17,040 --> 00:09:19,400
Speaker 6: City Bank, I mean, you have to make sure that

155
00:09:19,440 --> 00:09:22,920
Speaker 6: you invest aggressively in AI related aspects of it now.

156
00:09:23,240 --> 00:09:26,319
Speaker 6: And these companies also don't have unlimited budgets. So if

157
00:09:26,360 --> 00:09:28,680
Speaker 6: your overall budget is only going to grow up by seven,

158
00:09:28,720 --> 00:09:30,880
Speaker 6: eight percent or nine percent, you know, and you are

159
00:09:30,880 --> 00:09:33,560
Speaker 6: allocating a large portion of that into AI, you know,

160
00:09:33,880 --> 00:09:36,560
Speaker 6: you have to find money from somewhere else, and that

161
00:09:36,679 --> 00:09:39,600
Speaker 6: somewhere else is usually tapering down in some of the

162
00:09:39,679 --> 00:09:42,679
Speaker 6: other areas, whether it's buying new hardware or you know,

163
00:09:42,679 --> 00:09:44,480
Speaker 6: cutting your consulting spends, et cetera.

164
00:09:44,600 --> 00:09:47,800
Speaker 7: And that's what's you know, impacting Salesforce.

165
00:09:47,600 --> 00:09:51,120
Speaker 2: And Mandeep looking at Snowflakes earnings the same day as

166
00:09:51,360 --> 00:09:54,320
Speaker 2: Salesforce on Wednesday, looks like there's a lot of focus

167
00:09:54,400 --> 00:09:58,079
Speaker 2: on how they're navigating artificial intelligence as well.

168
00:09:58,600 --> 00:10:01,120
Speaker 5: Yeah, I mean, look, I mean I come pair Snowflake

169
00:10:01,240 --> 00:10:05,960
Speaker 5: to a company like Palenteer. Palenteer has seen, you know,

170
00:10:06,080 --> 00:10:11,080
Speaker 5: remarkable acceleration on the commercial side, you know, by integrating

171
00:10:11,080 --> 00:10:16,400
Speaker 5: their ontology product with these llms. And to me, the

172
00:10:16,480 --> 00:10:20,240
Speaker 5: closest competitor for Snowflake is Palenteer and Data Breaks. So

173
00:10:20,679 --> 00:10:25,280
Speaker 5: from that perspective, you know, Snowflake hasn't seen that kind

174
00:10:25,360 --> 00:10:29,320
Speaker 5: of a bump that Palenteer has seen. That's partly to

175
00:10:29,400 --> 00:10:33,280
Speaker 5: do with they didn't have as many llms on their platform,

176
00:10:34,120 --> 00:10:37,840
Speaker 5: you know, to integrate with for agentic functionality. They've been

177
00:10:38,120 --> 00:10:42,959
Speaker 5: trying to add more llms and that for me, is

178
00:10:43,000 --> 00:10:46,280
Speaker 5: a catalyst for that top line acceleration. But there is

179
00:10:46,320 --> 00:10:48,880
Speaker 5: no doubt that they are behind when it comes to

180
00:10:49,920 --> 00:10:53,320
Speaker 5: some of the agentic functionality compared to Data Breaks and Talenteer.

181
00:10:53,400 --> 00:10:55,920
Speaker 2: So when it comes to bringing in more of those

182
00:10:56,000 --> 00:10:58,720
Speaker 2: large language models, does that add to some of its

183
00:10:58,800 --> 00:11:01,440
Speaker 2: costs And could that have an effect on its margins?

184
00:11:02,000 --> 00:11:05,680
Speaker 5: It certainly could, And that's our view as well that

185
00:11:05,800 --> 00:11:10,400
Speaker 5: Snowflake may see some pressure on margins. And look, they

186
00:11:10,480 --> 00:11:15,760
Speaker 5: use all these hyperscalers, Microsoft, Google and Amazon for deploying

187
00:11:16,679 --> 00:11:22,600
Speaker 5: their products. So if Microsoft or Google have to raise prices,

188
00:11:22,760 --> 00:11:25,880
Speaker 5: then they're going to pass it on to a Snowflake.

189
00:11:25,960 --> 00:11:29,880
Speaker 5: So from that perspective, we do think with more AI

190
00:11:29,960 --> 00:11:33,440
Speaker 5: workloads Snowflake, a company like Snowflake may see pressure on

191
00:11:33,520 --> 00:11:34,120
Speaker 5: the margins.

192
00:11:34,320 --> 00:11:36,200
Speaker 2: Of course, all these earnings are coming at a time

193
00:11:36,240 --> 00:11:42,040
Speaker 2: where investors broadly are questioning artificial intelligence valuations on a

194
00:11:42,160 --> 00:11:44,760
Speaker 2: rog How does that play into what we could get

195
00:11:44,760 --> 00:11:45,280
Speaker 2: this week?

196
00:11:45,679 --> 00:11:47,480
Speaker 7: Yeah, I mean you look at valuations mine.

197
00:11:47,520 --> 00:11:50,480
Speaker 6: You know, Salesforce, as I said, is the completely opposite

198
00:11:50,600 --> 00:11:54,120
Speaker 6: realm of all the AI infrastructure play that's out. Their

199
00:11:54,120 --> 00:11:58,040
Speaker 6: evaluation is a lotless which has been historically. In fact

200
00:11:58,080 --> 00:12:00,640
Speaker 6: SaaS trend that have seen a decline in the last

201
00:12:00,800 --> 00:12:04,199
Speaker 6: twelve for twenty four months because of the seatcout pressure

202
00:12:04,320 --> 00:12:06,800
Speaker 6: that we talked about, and even for them, you know,

203
00:12:06,840 --> 00:12:08,640
Speaker 6: when you look at margins, you're not going to get

204
00:12:08,679 --> 00:12:11,360
Speaker 6: the same lift in margins that we have seen in

205
00:12:11,400 --> 00:12:14,600
Speaker 6: the last two to three years of Salesforce under the

206
00:12:14,600 --> 00:12:18,760
Speaker 6: attack of some activist investor really went out and gave

207
00:12:19,040 --> 00:12:22,559
Speaker 6: margin back to the investors. But I think right now

208
00:12:22,600 --> 00:12:25,760
Speaker 6: with their Agent Force product, they really are investing heavily

209
00:12:25,840 --> 00:12:28,560
Speaker 6: into sales and marketing, and I think a lot of

210
00:12:28,600 --> 00:12:31,960
Speaker 6: that will you know, show up in this quarter's earnings.

211
00:12:32,400 --> 00:12:35,240
Speaker 2: Again, we hear from a crowd strike on Tuesday and

212
00:12:35,280 --> 00:12:39,280
Speaker 2: then Snowflake and Salesforce on Wednesday. Thanks to both of

213
00:12:39,280 --> 00:12:41,640
Speaker 2: you for being with us. That's man Deep Singh and

214
00:12:41,640 --> 00:12:45,200
Speaker 2: on a rag rana of Bloomberg Intelligence and coming up

215
00:12:45,240 --> 00:12:47,720
Speaker 2: on Bloomberg day Break weekend, we'll look at how Middle

216
00:12:47,760 --> 00:12:51,000
Speaker 2: Eastern and African countries are focused on business in a

217
00:12:51,080 --> 00:12:55,280
Speaker 2: changing world order. I'm Nathan Hager, and this is Bloomberg.

218
00:13:06,559 --> 00:13:09,560
Speaker 2: This is Bloomberg Daybreak Weekend, our global look ahead at

219
00:13:09,600 --> 00:13:11,920
Speaker 2: the top stories for investors in the coming week. I'm

220
00:13:12,000 --> 00:13:14,960
Speaker 2: Nathan Hager in Washington. Up later in the program, we'll

221
00:13:14,960 --> 00:13:17,960
Speaker 2: look ahead to the holiday shopping season, as those trendy

222
00:13:18,120 --> 00:13:20,480
Speaker 2: La Boo Boo dolls are expected to be a hot

223
00:13:20,480 --> 00:13:25,079
Speaker 2: item in Asia. But first in the coming days, industry leaders, investors,

224
00:13:25,080 --> 00:13:28,400
Speaker 2: and government officials descend on the UAE for the seventh

225
00:13:28,440 --> 00:13:32,240
Speaker 2: Milkin Institute Middle East and Africa Summit. This year's edition

226
00:13:32,360 --> 00:13:35,719
Speaker 2: is taking place at a time when shifting geopolitical landscapes

227
00:13:35,760 --> 00:13:40,320
Speaker 2: and technological advances are dramatically altering the world order. Attendees

228
00:13:40,360 --> 00:13:43,000
Speaker 2: will seek to understand where the Middle East and Africa

229
00:13:43,040 --> 00:13:46,120
Speaker 2: fit in the new hierarchy. For more, let's go to

230
00:13:46,160 --> 00:13:50,400
Speaker 2: London and bring in Bloomberg Daybreak Europe anchor Caroline hepger Nathan.

231
00:13:50,480 --> 00:13:53,040
Speaker 3: The Middle East and Africa have the advantage of young

232
00:13:53,080 --> 00:13:57,240
Speaker 3: demographics and strategic location. They could well be poised to

233
00:13:57,320 --> 00:14:01,880
Speaker 3: take advantage of the next frontier in global devaslopment this year. Already,

234
00:14:02,240 --> 00:14:06,080
Speaker 3: Middle Eastern states, including Kuttar have played a pivotal role

235
00:14:06,200 --> 00:14:09,280
Speaker 3: in the signing of the Gaza Peace Plan, with President

236
00:14:09,320 --> 00:14:12,720
Speaker 3: Donald Trump thanking Arab and Muslim nations in advance for

237
00:14:12,800 --> 00:14:18,079
Speaker 3: pledging money to rebuild the devastated Palestinian territory. Questions, do

238
00:14:18,080 --> 00:14:20,840
Speaker 3: you remain over the extent to which these nations in

239
00:14:20,880 --> 00:14:24,240
Speaker 3: the region, including Saudi Arabia and the UAE, will help

240
00:14:24,320 --> 00:14:28,920
Speaker 3: fund the reconstruction. While several deep pocketed and energy rich

241
00:14:29,040 --> 00:14:33,160
Speaker 3: countries in the area worked on and enthusiastically endorsed the

242
00:14:33,200 --> 00:14:38,480
Speaker 3: peace Plan, almost all have specific reservations. Meanwhile, countries in

243
00:14:38,520 --> 00:14:42,880
Speaker 3: Africa are grappling with a complex relationship with the US President.

244
00:14:43,200 --> 00:14:46,800
Speaker 3: Bloomberg opinion columnist Andrea's Kluth has written about how Donald

245
00:14:46,800 --> 00:14:51,680
Speaker 3: Trump's claims that South Africa is facing government sponsored race

246
00:14:51,760 --> 00:14:56,880
Speaker 3: based discrimination and that in Nigeria quote, they're killing Christians

247
00:14:57,480 --> 00:15:01,280
Speaker 3: are evidence of the current administration's u use of African

248
00:15:01,440 --> 00:15:06,280
Speaker 3: policy to promote an America First agenda. The position of

249
00:15:06,320 --> 00:15:11,760
Speaker 3: African countries, therefore, in a world increasingly dominated by US rhetoric,

250
00:15:11,920 --> 00:15:16,920
Speaker 3: does face challenges, and it's something that was discussed widely

251
00:15:17,080 --> 00:15:21,680
Speaker 3: at the recent Bloomberg Africa Business Summit. During the event,

252
00:15:21,800 --> 00:15:26,800
Speaker 3: South Africa's Minister of Finance, Ino Godongwana told Bloomberg Jennifer's

253
00:15:26,840 --> 00:15:31,200
Speaker 3: Abasaja that talks between the United States and South Africa

254
00:15:31,680 --> 00:15:32,760
Speaker 3: are ongoing.

255
00:15:33,520 --> 00:15:36,840
Speaker 8: The and negotiations taking place between ourself and the USA.

256
00:15:37,600 --> 00:15:41,400
Speaker 8: Accept that we can be through the media through what

257
00:15:41,600 --> 00:15:44,440
Speaker 8: details of this agament when we're not negotiating with them

258
00:15:44,760 --> 00:15:45,360
Speaker 8: in the media.

259
00:15:46,200 --> 00:15:48,560
Speaker 9: What would you say the current state of relations are

260
00:15:48,720 --> 00:15:50,640
Speaker 9: between South Africa and the US.

261
00:15:51,000 --> 00:15:55,600
Speaker 8: Absolutely non problem. Accept that now and again we hear

262
00:15:55,680 --> 00:15:59,720
Speaker 8: what the the USA says about general side and all

263
00:15:59,760 --> 00:16:00,000
Speaker 8: of them.

264
00:16:00,880 --> 00:16:03,600
Speaker 9: Do you think it is putting a dent on potential

265
00:16:03,720 --> 00:16:05,560
Speaker 9: investment into the country.

266
00:16:05,760 --> 00:16:10,280
Speaker 8: Yes, the US is powerful and to that extent it

267
00:16:10,440 --> 00:16:14,840
Speaker 8: influenced the attitude of Inversta community to South Plus, I

268
00:16:14,920 --> 00:16:15,160
Speaker 8: love you.

269
00:16:15,920 --> 00:16:19,960
Speaker 3: That was South Africa's Enoch Godongwana speaking there to Bloomberg's

270
00:16:20,000 --> 00:16:23,960
Speaker 3: Jennifer Zaba Saja on the sidelines of the Bloomberg Africa

271
00:16:24,080 --> 00:16:29,480
Speaker 3: Business Summit. This ahead of the Milkan Institute Middle East

272
00:16:29,520 --> 00:16:33,880
Speaker 3: and Africa Summit in the coming days. So I've been

273
00:16:33,920 --> 00:16:38,200
Speaker 3: getting some information about what is to come from Bloomberg's

274
00:16:38,280 --> 00:16:42,280
Speaker 3: UK and Middle East Finance editor Jenny Seraine and our

275
00:16:42,360 --> 00:16:46,960
Speaker 3: Chief Africa correspondent Jennifer Zabasaja. Welcome to both of you.

276
00:16:47,440 --> 00:16:49,600
Speaker 3: Thank you for speaking to me in terms of the

277
00:16:49,680 --> 00:16:54,400
Speaker 3: Milkan Institute this particular event. Jenny, give us a sense

278
00:16:54,440 --> 00:16:56,720
Speaker 3: of how big a deal the gathering is, who the

279
00:16:56,840 --> 00:17:00,280
Speaker 3: main players are going to be attending, because there is

280
00:17:00,360 --> 00:17:03,880
Speaker 3: increasingly a focus on the Middle East and it's connections

281
00:17:03,960 --> 00:17:04,639
Speaker 3: around the world.

282
00:17:05,640 --> 00:17:11,159
Speaker 10: What we've seen increasingly is, especially as the US, you know,

283
00:17:11,400 --> 00:17:13,520
Speaker 10: maybe has pulled back in a lot of ways from

284
00:17:13,600 --> 00:17:17,040
Speaker 10: some of these big global summit type things, you've seen

285
00:17:17,080 --> 00:17:19,480
Speaker 10: a real big emphasis on some of these midiest players

286
00:17:19,560 --> 00:17:21,320
Speaker 10: that can kind of step in and fill the void.

287
00:17:21,480 --> 00:17:24,719
Speaker 10: So this is a region that just has vast amounts

288
00:17:24,720 --> 00:17:28,959
Speaker 10: of capital You've got entities and specific investors that are

289
00:17:29,000 --> 00:17:30,879
Speaker 10: looking to put that capital to work in new and

290
00:17:31,000 --> 00:17:33,960
Speaker 10: interesting ways, and so that's why you see so many

291
00:17:34,080 --> 00:17:37,560
Speaker 10: Wall Street names and sovereign names from around the world

292
00:17:37,960 --> 00:17:40,360
Speaker 10: kind of flocking to these events and looking to get

293
00:17:40,400 --> 00:17:41,480
Speaker 10: in touch with these investors.

294
00:17:41,720 --> 00:17:45,040
Speaker 3: How do you think those Middle East and countries the

295
00:17:45,119 --> 00:17:50,800
Speaker 3: GCC are balancing the bizarre for investment and also their

296
00:17:50,880 --> 00:17:51,800
Speaker 3: domestic issues.

297
00:17:52,119 --> 00:17:54,520
Speaker 10: Yeah, it's interesting. I do think we're starting to see

298
00:17:55,160 --> 00:17:58,200
Speaker 10: more of a divergence between the different countries themselves. So

299
00:17:58,440 --> 00:18:01,800
Speaker 10: over the years, Abudabi's relying on oil, it has lessened

300
00:18:01,840 --> 00:18:03,680
Speaker 10: to some degree, and a large part of that is

301
00:18:03,720 --> 00:18:06,119
Speaker 10: because they've been able to go and invest so heavily

302
00:18:06,200 --> 00:18:08,960
Speaker 10: in these new and different areas. Saudi, on the other hand,

303
00:18:09,040 --> 00:18:11,440
Speaker 10: is still heavily reliant on oil, and so you kind

304
00:18:11,480 --> 00:18:14,480
Speaker 10: of see that and how their different budget dynamics play out.

305
00:18:14,600 --> 00:18:17,000
Speaker 10: But you see, I think across the board a desire

306
00:18:17,119 --> 00:18:20,119
Speaker 10: to move beyond oil. That's why you see them rushing

307
00:18:20,160 --> 00:18:24,240
Speaker 10: to invest in all these new economy up and coming area.

308
00:18:25,240 --> 00:18:28,639
Speaker 3: Jennifer, You've just come through a very busy time in

309
00:18:28,880 --> 00:18:31,800
Speaker 3: the past few days in Africa, talking to a lot

310
00:18:31,880 --> 00:18:35,040
Speaker 3: of African leaders. We heard a little snippet of one

311
00:18:35,160 --> 00:18:38,480
Speaker 3: finance minister who you spoke to, just tell us first

312
00:18:38,760 --> 00:18:42,240
Speaker 3: some of the complexities that are facing African nations, of

313
00:18:42,359 --> 00:18:46,080
Speaker 3: which there are so many right now as this sort

314
00:18:46,119 --> 00:18:48,680
Speaker 3: of new world order is establishing itself.

315
00:18:49,240 --> 00:18:52,200
Speaker 9: You know, it was the first Group of twenty summer,

316
00:18:52,240 --> 00:18:55,040
Speaker 9: and of course that was on the African continent, that

317
00:18:55,160 --> 00:18:58,560
Speaker 9: was held on the African continent, which was significant for

318
00:18:59,280 --> 00:19:02,480
Speaker 9: many countries outside of just South Africa, which is really

319
00:19:02,600 --> 00:19:06,000
Speaker 9: the only sovereign nation that's a part of the G twenty,

320
00:19:06,080 --> 00:19:10,159
Speaker 9: but also the African Union was also a part of

321
00:19:10,280 --> 00:19:12,480
Speaker 9: the Group of twenty, and so we saw a number

322
00:19:12,520 --> 00:19:16,879
Speaker 9: of leaders that use this opportunity, and even South African

323
00:19:16,920 --> 00:19:20,280
Speaker 9: President Zero Ramaposa, who has held the G twenty presidency

324
00:19:20,560 --> 00:19:25,000
Speaker 9: for the past year, used this, you know, opportunity to

325
00:19:25,880 --> 00:19:29,840
Speaker 9: amplify a lot of the challenges that these countries are

326
00:19:29,880 --> 00:19:34,360
Speaker 9: facing that even pre date a lot of the shifting alliances,

327
00:19:34,720 --> 00:19:37,240
Speaker 9: if it were, that we've seen in the past few months.

328
00:19:37,560 --> 00:19:41,280
Speaker 9: And so of course one of the major you know,

329
00:19:41,320 --> 00:19:43,520
Speaker 9: and probably one of the top concerns that many of

330
00:19:43,600 --> 00:19:46,919
Speaker 9: them have told us is this issue of debt sustainability.

331
00:19:47,760 --> 00:19:50,639
Speaker 9: This is of course, you know, really came to light

332
00:19:50,760 --> 00:19:54,800
Speaker 9: even more so after the pandemic when we saw a

333
00:19:54,960 --> 00:19:59,560
Speaker 9: number of African countries actually you know, fall into to

334
00:19:59,800 --> 00:20:02,119
Speaker 9: debt and they were not able to pay back some

335
00:20:02,240 --> 00:20:06,200
Speaker 9: of the debt that they had borrowed. We saw that

336
00:20:06,320 --> 00:20:11,440
Speaker 9: from from Zambia. We've also seen that from Ethiopia, and

337
00:20:11,600 --> 00:20:16,520
Speaker 9: so the concern really was how do these African countries

338
00:20:16,680 --> 00:20:22,359
Speaker 9: develop and industrialize when most of the revenues and the

339
00:20:22,480 --> 00:20:25,239
Speaker 9: payments and you know, their their cash flow that they

340
00:20:25,320 --> 00:20:30,200
Speaker 9: have domestically is going to servicing debt more so than

341
00:20:30,320 --> 00:20:32,639
Speaker 9: you know, many of our reports indicate more so than

342
00:20:33,119 --> 00:20:36,600
Speaker 9: sectors like education and health. And so we heard from

343
00:20:36,680 --> 00:20:40,320
Speaker 9: a number of ministers wanting to at least find some

344
00:20:41,119 --> 00:20:44,439
Speaker 9: ways in which they are able to maybe look at

345
00:20:44,920 --> 00:20:48,320
Speaker 9: various ways of financing. And so it's not just you know,

346
00:20:48,480 --> 00:20:51,840
Speaker 9: getting services from the IMF or the World Bank, but

347
00:20:51,960 --> 00:20:54,240
Speaker 9: it's also from from new investors.

348
00:20:54,520 --> 00:20:59,040
Speaker 3: Jen, where do you think the focuses then, what do

349
00:20:59,119 --> 00:21:01,920
Speaker 3: you think that as African nations are thinking about in

350
00:21:02,080 --> 00:21:06,040
Speaker 3: terms of their ties to the Middle East. As you say,

351
00:21:06,119 --> 00:21:08,440
Speaker 3: you know, there's a lot of focus on the Trump

352
00:21:08,440 --> 00:21:12,159
Speaker 3: administration and the US relationship with these countries. What are

353
00:21:12,200 --> 00:21:15,200
Speaker 3: those ties between African countries and the Middle East.

354
00:21:15,800 --> 00:21:19,240
Speaker 9: What's been interesting is that, you know, the Trump administration

355
00:21:19,359 --> 00:21:23,240
Speaker 9: and the US sort of scaling back in their aid,

356
00:21:23,920 --> 00:21:27,359
Speaker 9: you know, going from aid to trade or transactions to

357
00:21:27,440 --> 00:21:30,040
Speaker 9: a certain extent, has sort of come at the same

358
00:21:30,119 --> 00:21:32,320
Speaker 9: time in which a number of African countries have been

359
00:21:32,359 --> 00:21:36,520
Speaker 9: able to stabilize many of their economies, so much so

360
00:21:36,640 --> 00:21:39,480
Speaker 9: that there's some of the fastest growing economies in the world.

361
00:21:39,600 --> 00:21:44,040
Speaker 9: And so while of course the shock of usaid was

362
00:21:44,920 --> 00:21:48,560
Speaker 9: very relevant and focused for a number of countries, it's

363
00:21:48,600 --> 00:21:52,879
Speaker 9: also come when there's a lot of new investors that

364
00:21:53,000 --> 00:21:55,760
Speaker 9: are looking for capital to deploy. And you know, we

365
00:21:55,880 --> 00:21:59,840
Speaker 9: were actually speaking to the Barclays head of South Africa,

366
00:22:00,160 --> 00:22:04,360
Speaker 9: and he's also head of the private banking across the continent,

367
00:22:04,680 --> 00:22:08,200
Speaker 9: and he was just saying just how much capital there

368
00:22:08,320 --> 00:22:11,280
Speaker 9: is in some of these Gulf nations and how you know,

369
00:22:11,400 --> 00:22:15,200
Speaker 9: the extent of the money and where it's coming from,

370
00:22:15,600 --> 00:22:18,600
Speaker 9: and the opportunities are or more so than he's seen

371
00:22:19,040 --> 00:22:20,560
Speaker 9: in the past few years.

372
00:22:20,800 --> 00:22:24,600
Speaker 3: Okay, So that's an interesting point, Jenny. I'm also thinking,

373
00:22:25,080 --> 00:22:27,640
Speaker 3: i mean, maybe some of this turns on the military,

374
00:22:27,800 --> 00:22:30,520
Speaker 3: but also a lot of it turns on soft power

375
00:22:30,600 --> 00:22:34,520
Speaker 3: as well. How does soft power, not just hard power,

376
00:22:34,600 --> 00:22:37,920
Speaker 3: play into the mindset of the Middle East?

377
00:22:38,040 --> 00:22:38,159
Speaker 11: Now?

378
00:22:38,400 --> 00:22:43,800
Speaker 3: Huge investment in lots of other things to project, you know,

379
00:22:44,280 --> 00:22:47,520
Speaker 3: whatever image it is that those leaders want to, maybe

380
00:22:47,640 --> 00:22:51,080
Speaker 3: in sports or in other ventures. How do you think

381
00:22:51,119 --> 00:22:53,200
Speaker 3: about soft power now in the Middle East?

382
00:22:54,000 --> 00:22:57,200
Speaker 10: I think it's definitely still top of mind for these governments,

383
00:22:57,359 --> 00:23:00,080
Speaker 10: and so that's why you see a lot of the

384
00:23:00,119 --> 00:23:04,040
Speaker 10: different entities, whether it's sovereign wealth funds or other alternative

385
00:23:04,200 --> 00:23:08,680
Speaker 10: asset managers that they've set up, going after these kind

386
00:23:08,720 --> 00:23:10,919
Speaker 10: of more unique assets that are on the market. I mean,

387
00:23:10,960 --> 00:23:13,680
Speaker 10: I think you saw it with the piffs decision to

388
00:23:14,240 --> 00:23:17,280
Speaker 10: you know, go and take electronic arts private and kind

389
00:23:17,320 --> 00:23:19,320
Speaker 10: of the big take private deal of the year. That

390
00:23:19,520 --> 00:23:22,560
Speaker 10: was a huge display of the kind of wealth and

391
00:23:22,640 --> 00:23:25,639
Speaker 10: then the kind of ambitions that they have, and that

392
00:23:25,880 --> 00:23:27,840
Speaker 10: was all tied to, you know, their desire to be

393
00:23:28,560 --> 00:23:31,680
Speaker 10: the leader of the gaming industry and have this huge,

394
00:23:32,960 --> 00:23:35,919
Speaker 10: you know, footprint in a space that's obviously fast growing

395
00:23:36,000 --> 00:23:39,240
Speaker 10: but also kind of captures the minds and imaginations of

396
00:23:39,280 --> 00:23:42,000
Speaker 10: a lot of consumers around the world and so I think, yeah,

397
00:23:42,080 --> 00:23:44,920
Speaker 10: we'll definitely continue to see these players, you know, look

398
00:23:45,000 --> 00:23:46,720
Speaker 10: for ways that they can make that kind of mark

399
00:23:46,800 --> 00:23:49,399
Speaker 10: and kind of these key industries, and I think sports

400
00:23:49,480 --> 00:23:52,280
Speaker 10: is a great one. As you mentioned, you see them

401
00:23:52,320 --> 00:23:55,280
Speaker 10: doing it in arts and culture increasingly, so it'll be

402
00:23:55,520 --> 00:23:57,960
Speaker 10: really interesting to watch as they kind of pick their

403
00:23:58,000 --> 00:24:00,960
Speaker 10: spots and pick their moments to deploy this trillions and

404
00:24:01,000 --> 00:24:02,720
Speaker 10: trillions of dollars of sovereign wealth that they have.

405
00:24:03,240 --> 00:24:06,760
Speaker 3: My thanks to Bloomberg's UK and Middle East Finance editor

406
00:24:06,880 --> 00:24:12,199
Speaker 3: Jenny Soarraine and to our chief Africa correspondent Jennifer Zaba Saja.

407
00:24:12,840 --> 00:24:15,480
Speaker 3: I'm Caline Hebgar here in London, and you can catch

408
00:24:15,560 --> 00:24:18,960
Speaker 3: us every weekday morning for Bloomberg Daybreak Europe, beginning at

409
00:24:19,000 --> 00:24:21,639
Speaker 3: six am in London. That's one am on Wall Street.

410
00:24:22,000 --> 00:24:25,800
Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg day Break Weekend,

411
00:24:25,840 --> 00:24:27,879
Speaker 2: we'll look at whether the La Boo Boo craze is

412
00:24:28,000 --> 00:24:31,919
Speaker 2: due for a Beanie Baby style bust. I'm Nathan Hagar

413
00:24:32,160 --> 00:24:46,560
Speaker 2: and this is Bloomberg. This is Bloomberg day Break Weekend,

414
00:24:46,680 --> 00:24:49,399
Speaker 2: our global look ahead, the top stories for investors in

415
00:24:49,480 --> 00:24:52,520
Speaker 2: the coming week. I'm Nathan Hager in Washington. As the

416
00:24:52,600 --> 00:24:56,399
Speaker 2: holiday shopping season gets underway, those trendy La Booboo dolls

417
00:24:56,400 --> 00:24:58,679
Speaker 2: are expected to be a hot item. The toys are

418
00:24:58,720 --> 00:25:02,560
Speaker 2: produced and sold exclusive by the China based retailer PopMart,

419
00:25:02,920 --> 00:25:05,400
Speaker 2: But some are wondering if these toys have reached their

420
00:25:05,560 --> 00:25:08,000
Speaker 2: peak and whether La Boo Boo is due for a

421
00:25:08,119 --> 00:25:11,520
Speaker 2: Beanie Baby style bust. For more, let's go to Daybreak

422
00:25:11,600 --> 00:25:13,320
Speaker 2: Asia podcast hosts Doug.

423
00:25:13,240 --> 00:25:17,960
Speaker 4: Krisner Nathan These dolls have become a global phenomenon. They're

424
00:25:18,040 --> 00:25:21,760
Speaker 4: fictional characters, and they appear to be an interesting mix

425
00:25:21,880 --> 00:25:24,960
Speaker 4: of cute and creepy. If you haven't seen a Laboobu doll,

426
00:25:25,720 --> 00:25:27,600
Speaker 4: it might be helpful to think of it as a

427
00:25:27,840 --> 00:25:30,920
Speaker 4: fuzzy elf like figure with a row of jagged teeth.

428
00:25:31,080 --> 00:25:34,000
Speaker 4: Images of these dolls reminded me of the characters from

429
00:25:34,160 --> 00:25:37,760
Speaker 4: Where the Wild Things Are created by Maurice Sendek, Lu

430
00:25:37,840 --> 00:25:41,160
Speaker 4: Boobo isn't a standalone character. I was surprised to make

431
00:25:41,240 --> 00:25:44,520
Speaker 4: that discovery. She is part of a larger group called

432
00:25:44,560 --> 00:25:48,280
Speaker 4: the Monsters, created by Hong Kong artist and author Ki

433
00:25:48,359 --> 00:25:51,879
Speaker 4: Sing Loom. For a closer look at the popularity of

434
00:25:52,160 --> 00:25:55,000
Speaker 4: La Booboo and what it means for the company that

435
00:25:55,200 --> 00:25:59,119
Speaker 4: controls this property. I'm joined by Bloomberg Shirley Jao. Shirley

436
00:25:59,200 --> 00:26:02,480
Speaker 4: covers consumer companies in Asia and she joins us from

437
00:26:02,520 --> 00:26:04,639
Speaker 4: Hong Kong. Thank you for making time to chat with me.

438
00:26:05,119 --> 00:26:07,760
Speaker 4: So we know now La booboo is gone global. Can

439
00:26:07,800 --> 00:26:10,520
Speaker 4: you help me understand the beginning of this craze? How

440
00:26:10,600 --> 00:26:11,280
Speaker 4: did things start?

441
00:26:12,280 --> 00:26:17,200
Speaker 11: So the things really started around late last year when

442
00:26:17,600 --> 00:26:20,800
Speaker 11: it started to you know, caught a lot of people's

443
00:26:20,880 --> 00:26:25,960
Speaker 11: attention and the global craze really started to rise after

444
00:26:26,400 --> 00:26:31,439
Speaker 11: a series of K pop stars and Hollywood stars started

445
00:26:31,520 --> 00:26:36,560
Speaker 11: to feature La Booboo in their photos. And the most known,

446
00:26:36,760 --> 00:26:42,280
Speaker 11: perhaps is Black Pink's Lisa, and she is known as

447
00:26:42,520 --> 00:26:46,440
Speaker 11: a huge fan of La Booboo and she is seen

448
00:26:46,800 --> 00:26:51,800
Speaker 11: in many photos, you know, showing her personalized La Boo

449
00:26:51,840 --> 00:26:57,520
Speaker 11: Boo with really trendy clothing and really fancy handbags. And

450
00:26:58,240 --> 00:27:02,359
Speaker 11: you know a lot of well people started to show

451
00:27:02,440 --> 00:27:05,160
Speaker 11: a Boo boo in in their you know, social media.

452
00:27:05,720 --> 00:27:12,320
Speaker 11: That really triggered this global frenzy starting from earlier this year.

453
00:27:12,840 --> 00:27:15,440
Speaker 4: Can we say that it began in China on the mainland.

454
00:27:15,560 --> 00:27:16,199
Speaker 4: Is that accurate.

455
00:27:17,560 --> 00:27:20,760
Speaker 11: Yes, it is accurate. I think a lot of this

456
00:27:21,000 --> 00:27:24,679
Speaker 11: trend is to do with the economic slowdown in China.

457
00:27:24,840 --> 00:27:29,320
Speaker 11: So previously consumers in China were seen posting photos on

458
00:27:29,480 --> 00:27:34,440
Speaker 11: social media flaunting you know, air Mess handbags or you know,

459
00:27:35,040 --> 00:27:40,360
Speaker 11: Louiston handbags and other really pricey luxury goods. But now

460
00:27:40,840 --> 00:27:47,040
Speaker 11: with consumers confidence starting to weaken, but still people want

461
00:27:47,160 --> 00:27:51,320
Speaker 11: a taste of this luxury lifestyle of you know, the

462
00:27:51,400 --> 00:27:55,200
Speaker 11: lifestyle of really well off people. But they don't. They're

463
00:27:55,280 --> 00:28:00,119
Speaker 11: being more cautious in buying luxury goods now, so what

464
00:28:00,200 --> 00:28:03,200
Speaker 11: else can they do? And they see people like Lisa

465
00:28:03,480 --> 00:28:08,639
Speaker 11: and people like a lot of rich people all, you know,

466
00:28:08,840 --> 00:28:12,240
Speaker 11: showing their La Booboo dolls, and then they want to

467
00:28:12,320 --> 00:28:15,440
Speaker 11: buy the doll because that gives them a taste, like

468
00:28:15,800 --> 00:28:19,760
Speaker 11: what they call a small luxury, a taste of the

469
00:28:20,040 --> 00:28:24,520
Speaker 11: upper class lifestyle in the background of an economic slow down.

470
00:28:25,280 --> 00:28:27,119
Speaker 4: Are these expensive? How are they priced?

471
00:28:27,920 --> 00:28:32,280
Speaker 11: They are relatively pricey in terms of you know, just

472
00:28:32,400 --> 00:28:37,120
Speaker 11: the little fluffy doll. For small dolls like this, it's

473
00:28:37,200 --> 00:28:40,920
Speaker 11: quite easy to fake it. So you can find a

474
00:28:41,040 --> 00:28:44,200
Speaker 11: lot of different versions of fake La Boo boos on

475
00:28:45,160 --> 00:28:49,160
Speaker 11: China's e commerce platforms going for much cheaper than the

476
00:28:49,240 --> 00:28:52,480
Speaker 11: real ones, and sometimes you can't tell whether it's real

477
00:28:52,680 --> 00:28:55,640
Speaker 11: or it's fake. The fake ones are known as La fufus.

478
00:28:55,880 --> 00:28:58,440
Speaker 11: So a lot of people are joking that even though

479
00:28:58,920 --> 00:29:02,320
Speaker 11: they spend a lot of money and effort to buy

480
00:29:02,800 --> 00:29:06,000
Speaker 11: a La Boo Boo doll that they want, they don't

481
00:29:06,080 --> 00:29:09,680
Speaker 11: know whether it's real La Boo Boo or La fufou. So.

482
00:29:09,840 --> 00:29:12,240
Speaker 4: The doll is made by a company called PopMart. What

483
00:29:12,280 --> 00:29:13,680
Speaker 4: do we know about PopMart?

484
00:29:14,600 --> 00:29:18,960
Speaker 11: So? PopMart is known as McKain. The so called blind

485
00:29:19,040 --> 00:29:24,400
Speaker 11: box dolls they actually have started quite a few years ago,

486
00:29:24,640 --> 00:29:29,920
Speaker 11: before the global popularity of La Boo Boo. A lot

487
00:29:30,000 --> 00:29:35,480
Speaker 11: of other popmarked products are also relatively well known, although

488
00:29:35,560 --> 00:29:39,040
Speaker 11: none of them is as viral as La Boo Boo. So.

489
00:29:39,640 --> 00:29:45,800
Speaker 11: Other pop marked toys include Skulp Panda, Molly Twin called

490
00:29:45,880 --> 00:29:51,480
Speaker 11: Twin Cole, and even La Boo Boo's boyfriend Tay Cocoa.

491
00:29:52,360 --> 00:29:55,400
Speaker 4: Suirley, can you help me understand the history of blind

492
00:29:55,480 --> 00:29:57,360
Speaker 4: box gift giving? How did it start?

493
00:29:58,640 --> 00:30:02,560
Speaker 11: I think it really starts guarded in recent years, and

494
00:30:03,600 --> 00:30:08,040
Speaker 11: it's actually no different from other forms of blind box

495
00:30:08,640 --> 00:30:12,120
Speaker 11: toys like Gatcha machines that has been going on in

496
00:30:12,280 --> 00:30:16,960
Speaker 11: Japan for many, many years. I think it's the sense of,

497
00:30:17,520 --> 00:30:20,800
Speaker 11: you know, excitement that you don't know what you'll get,

498
00:30:21,400 --> 00:30:25,440
Speaker 11: and especially if you have a line of products. For example,

499
00:30:25,520 --> 00:30:28,880
Speaker 11: there is a series of La Boo booths, and every

500
00:30:29,040 --> 00:30:34,320
Speaker 11: La Boo Boo features a different outfit or a different theme,

501
00:30:34,680 --> 00:30:38,040
Speaker 11: and you want to collect every one of them, and

502
00:30:38,240 --> 00:30:41,200
Speaker 11: you have to spend a lot of money because sometimes

503
00:30:41,280 --> 00:30:43,560
Speaker 11: you know, you may end up getting the same one

504
00:30:43,640 --> 00:30:46,720
Speaker 11: over and over and over. And that's what get people

505
00:30:47,040 --> 00:30:51,240
Speaker 11: get consumers into spending to get what they want, to

506
00:30:51,320 --> 00:30:54,080
Speaker 11: get the toy that they want, or to collect the

507
00:30:54,200 --> 00:30:55,840
Speaker 11: whole series of the toys.

508
00:30:57,240 --> 00:31:00,640
Speaker 4: So in terms of PopMart, it's a publicly traded company

509
00:31:00,760 --> 00:31:03,360
Speaker 4: right the trades in Hong Kong? Is that correct? How

510
00:31:03,440 --> 00:31:05,680
Speaker 4: well has the stock been performing well?

511
00:31:05,800 --> 00:31:11,200
Speaker 11: The stock actually surged more than one five hundred percent

512
00:31:11,680 --> 00:31:15,160
Speaker 11: from the start of last year to August, so the

513
00:31:15,320 --> 00:31:18,000
Speaker 11: price is peaked in August and a lot of that

514
00:31:18,280 --> 00:31:21,760
Speaker 11: was writing on the global popularity of La Boo Boo,

515
00:31:22,680 --> 00:31:26,960
Speaker 11: but then it dropped more than thirty percent since August,

516
00:31:27,320 --> 00:31:31,840
Speaker 11: and that highlights a lot of questions and concerns in

517
00:31:31,960 --> 00:31:36,400
Speaker 11: the market about whether this la booboo frenzy can last.

518
00:31:36,840 --> 00:31:40,320
Speaker 4: I would imagine that. Yeah, calling into question the sustainability

519
00:31:40,360 --> 00:31:43,600
Speaker 4: of a fad like this makes good sense. But I

520
00:31:43,680 --> 00:31:45,920
Speaker 4: think we would be remiss if we didn't acknowledge the

521
00:31:45,960 --> 00:31:48,480
Speaker 4: fact that the holiday shopping season is coming up in

522
00:31:48,560 --> 00:31:51,320
Speaker 4: the West. Obviously, we have the Christmas holiday, and then

523
00:31:52,040 --> 00:31:54,440
Speaker 4: New Year will be here before you know it for

524
00:31:54,720 --> 00:31:57,320
Speaker 4: parts of Asia that celebrate the New Year holiday, not

525
00:31:57,440 --> 00:31:59,960
Speaker 4: the Chinese New Year necessarily, but just the beginning of

526
00:32:00,080 --> 00:32:03,680
Speaker 4: the calendar year. Is the expectation here that we see

527
00:32:03,720 --> 00:32:06,560
Speaker 4: a lot of sales moving into the holiday season.

528
00:32:07,280 --> 00:32:11,040
Speaker 11: We are definitely expecting a surge into the holiday season,

529
00:32:11,200 --> 00:32:14,160
Speaker 11: but as I mentioned just now, there is also a

530
00:32:14,400 --> 00:32:18,280
Speaker 11: rise of fake la boo boos. So a lot of

531
00:32:18,680 --> 00:32:23,040
Speaker 11: people have already been complaining about these fakes, and actually

532
00:32:23,520 --> 00:32:28,800
Speaker 11: different countries, especially China, has been tightening their scrutiny against

533
00:32:28,880 --> 00:32:32,800
Speaker 11: the fakes of la boo boos. So it remains to

534
00:32:32,960 --> 00:32:37,600
Speaker 11: be seen whether the holiday season can really trigger a surge.

535
00:32:38,480 --> 00:32:41,360
Speaker 4: Would you consider giving it as a gift still?

536
00:32:42,200 --> 00:32:45,080
Speaker 11: I would still because I know, you know, a lot

537
00:32:45,160 --> 00:32:47,760
Speaker 11: of my friends are still quite into la Boo boo.

538
00:32:48,080 --> 00:32:53,120
Speaker 11: And I think it's this sense of scarcity and the

539
00:32:53,200 --> 00:32:57,400
Speaker 11: secondary market price that's still there, So that's still making

540
00:32:57,520 --> 00:33:01,200
Speaker 11: people think, you know, oh they want this doll because

541
00:33:01,280 --> 00:33:05,880
Speaker 11: it's often out of stock in stores. For consumers like me,

542
00:33:06,200 --> 00:33:09,560
Speaker 11: if I see, you know, even if I'm willing to pay,

543
00:33:10,480 --> 00:33:13,560
Speaker 11: but then you know, after a long time of waiting

544
00:33:13,840 --> 00:33:17,680
Speaker 11: or after a lot of effort, and I finally get

545
00:33:17,880 --> 00:33:21,400
Speaker 11: a lat Boo boo, but still, you know, I see

546
00:33:21,400 --> 00:33:24,080
Speaker 11: a lot of fake La boo boos that's much cheaper

547
00:33:24,120 --> 00:33:28,200
Speaker 11: and much easier to get. For me, it's you know,

548
00:33:29,240 --> 00:33:31,640
Speaker 11: I tend to think that it may be a waste

549
00:33:31,680 --> 00:33:35,360
Speaker 11: of effort and time, but for a lot of other consumers,

550
00:33:35,800 --> 00:33:39,280
Speaker 11: they still think the sense of scarcity makes it such

551
00:33:39,320 --> 00:33:42,400
Speaker 11: a rare thing that they still want.

552
00:33:43,080 --> 00:33:45,120
Speaker 4: When you look at the market, surely, is there a

553
00:33:45,200 --> 00:33:49,440
Speaker 4: specific demographic that we should address here? Are they primarily

554
00:33:50,080 --> 00:33:54,560
Speaker 4: younger people? Are they teenagers? Are they a little older? Certainly?

555
00:33:54,640 --> 00:33:57,120
Speaker 4: And I'm wondering about whether there is an adult audience

556
00:33:57,200 --> 00:33:57,880
Speaker 4: for this product.

557
00:33:58,720 --> 00:34:01,920
Speaker 11: I think there is definitely an adult audience. You know,

558
00:34:02,080 --> 00:34:04,720
Speaker 11: a lot of them are in their mid thirties. But

559
00:34:04,800 --> 00:34:07,560
Speaker 11: I think it's worth noticing that a lot of them

560
00:34:07,640 --> 00:34:11,120
Speaker 11: are parents, so that means it's their children who got

561
00:34:11,200 --> 00:34:15,160
Speaker 11: into it first. But then they started to get into

562
00:34:15,239 --> 00:34:19,360
Speaker 11: it as well. I remember last year I was chatting

563
00:34:19,520 --> 00:34:23,480
Speaker 11: with somebody who started looking at PopMart and La Bubu,

564
00:34:23,600 --> 00:34:26,399
Speaker 11: and I asked them, you know, why do you think

565
00:34:26,840 --> 00:34:32,080
Speaker 11: that this toy or the company will will be successful?

566
00:34:32,520 --> 00:34:35,440
Speaker 11: And they said that they went to China and they

567
00:34:35,880 --> 00:34:39,239
Speaker 11: went to a shopping mall and the majority of the

568
00:34:39,320 --> 00:34:42,960
Speaker 11: shopping mall was very empty because you know, in China,

569
00:34:43,160 --> 00:34:47,600
Speaker 11: the e commerce platforms are ubidiquous and that's really affected

570
00:34:47,840 --> 00:34:51,320
Speaker 11: the performance of a lot of shopping malls in the country.

571
00:34:51,920 --> 00:34:55,360
Speaker 11: But the only place where there were a lot of

572
00:34:55,480 --> 00:35:00,640
Speaker 11: people gathering, especially you know, young people like primary school students,

573
00:35:01,200 --> 00:35:05,200
Speaker 11: is Popmark stores and that's where you know, people are

574
00:35:05,560 --> 00:35:09,640
Speaker 11: gathering and they are spending money to try to get

575
00:35:09,960 --> 00:35:14,160
Speaker 11: their blind box toys. And that was when this person

576
00:35:14,480 --> 00:35:17,800
Speaker 11: started to think that, oh, this may become a trend.

577
00:35:18,400 --> 00:35:22,120
Speaker 11: But again, how long this trend may last it remains

578
00:35:22,160 --> 00:35:22,680
Speaker 11: to be seen.

579
00:35:23,560 --> 00:35:28,000
Speaker 4: So the Hollywood Reporter recently reported that Sony Pictures has

580
00:35:28,080 --> 00:35:32,719
Speaker 4: a deal now to the rights from PopMart International. This

581
00:35:32,960 --> 00:35:35,319
Speaker 4: is the company that has the rights to the doll

582
00:35:35,920 --> 00:35:38,920
Speaker 4: about creating a motion picture. And to the point that

583
00:35:39,000 --> 00:35:41,840
Speaker 4: you were raising earlier about the analyst community being a

584
00:35:41,880 --> 00:35:46,960
Speaker 4: little suspicious or at least questioning whether this mania can continue.

585
00:35:47,760 --> 00:35:50,640
Speaker 4: That seems to say to me that the idea of

586
00:35:50,719 --> 00:35:55,160
Speaker 4: putting a film together based on this phenomenon, it may

587
00:35:55,239 --> 00:35:58,359
Speaker 4: not last, and that is inherent in that is maybe

588
00:35:58,400 --> 00:35:59,200
Speaker 4: a little bit of risk.

589
00:36:00,000 --> 00:36:04,319
Speaker 11: There are indeed questions about whether this film is going

590
00:36:04,440 --> 00:36:07,400
Speaker 11: to be a hit or not. We don't know a

591
00:36:07,440 --> 00:36:10,239
Speaker 11: lot of details about the film, like we don't even

592
00:36:10,360 --> 00:36:13,239
Speaker 11: know whether this film will be animated or if it

593
00:36:13,280 --> 00:36:17,120
Speaker 11: will be live action. The observation is that it appears

594
00:36:17,239 --> 00:36:21,920
Speaker 11: that this deal came first and then you know, Sony

595
00:36:22,040 --> 00:36:26,480
Speaker 11: will probably figure out all those details later. But we

596
00:36:26,600 --> 00:36:31,560
Speaker 11: have seen in the past examples of similar films developed

597
00:36:31,680 --> 00:36:36,320
Speaker 11: from popular toy lines that turn out to be failures.

598
00:36:36,680 --> 00:36:42,520
Speaker 11: For example, there are Brats, the Movie, Masters of the Universe,

599
00:36:43,200 --> 00:36:46,759
Speaker 11: pand Puppies, and The Legend of Big Paul, and they're

600
00:36:46,840 --> 00:36:50,920
Speaker 11: all based on really popular toy lines, but they weren't

601
00:36:50,960 --> 00:36:54,960
Speaker 11: developed until several years down the line, and some of

602
00:36:55,080 --> 00:36:59,839
Speaker 11: them barely recover their budget, while others didn't really sell

603
00:37:00,200 --> 00:37:02,400
Speaker 11: tickets to cover the cost.

604
00:37:03,160 --> 00:37:04,960
Speaker 4: Shirley, We'll leave it there, Thank you so very much.

605
00:37:05,040 --> 00:37:08,400
Speaker 4: That is Bloomberg Shirley Choo. Shirley covers consumer companies for

606
00:37:08,560 --> 00:37:12,440
Speaker 4: US in Asia from Hong Kong. I'm Doug Krisner. You

607
00:37:12,480 --> 00:37:15,440
Speaker 4: can catch us weekdays for the Daybreak Asia podcast. It's

608
00:37:15,480 --> 00:37:18,640
Speaker 4: available wherever you get your podcast, Nathan.

609
00:37:18,960 --> 00:37:21,279
Speaker 2: Thanks Doug. And that does it for this edition of

610
00:37:21,360 --> 00:37:24,879
Speaker 2: Bloomberg Daybreak Weekend. Join us again Monday morning at five

611
00:37:24,960 --> 00:37:28,120
Speaker 2: am Wall Street Time for the latest sun markets overseas

612
00:37:28,360 --> 00:37:30,399
Speaker 2: and all the news you need to start your day.

613
00:37:30,520 --> 00:37:33,720
Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global

614
00:37:33,800 --> 00:37:35,719
Speaker 2: business headlines are coming up right now