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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. We're

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Speaker 2: seeing a cautious tone in markets across the APAC this

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Speaker 2: morning after equity market weakness in the States. Joining US

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Speaker 2: now for a closer look is Olivier Dossier, head of

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Speaker 2: Investment decision Research for the APAC at Simcorp Olivier It's

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Speaker 2: always a pleasure. Would you say that the lack of

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Speaker 2: conviction is correlated directly with the uncertainty that we're seeing

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Speaker 2: around these tariffs.

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Speaker 3: Yeah, certainly, we haven't got many kind of details yet

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Speaker 3: as to the status of these talents. For especially with

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Speaker 3: regards to the US and China relationship. The largest and

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Speaker 3: second largest economies in the world are about to have

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Speaker 3: another trade war, and that really makes everybody else nervous

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Speaker 3: because you can't plan anything until you know what direction

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Speaker 3: this is taken, and if a deal is possible, and

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Speaker 3: what shape would that deal take. Nothing is known at

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Speaker 3: this point and that makes it very difficult.

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Speaker 2: For no doubt about that. Today the White House did

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Speaker 2: warn of big tariffs. I think the spokesperson was referring

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Speaker 2: to the reciprocal tariffs that we're expecting next week. Today,

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Speaker 2: I was struck by the fact that double line capitalist

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Speaker 2: Jeff Gunlock was saying these tariffs could very well be inflationary.

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Speaker 1: Now.

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Speaker 2: FED Chair j Powell seemed to concede that point yesterday,

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Speaker 2: although the term that he applied to tariffs being inflationary

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Speaker 2: was transitory. Now we know where we've been when the

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Speaker 2: FED has used that term in the past. How do

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Speaker 2: you expect the tariff's story to contribute to inflation if

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Speaker 2: at all?

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Speaker 3: Terriffs will be inflationary if they're maintained, if they're kept

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Speaker 3: long enough, if they're just a tool to get a

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Speaker 3: trade deal, and they are on the here a few

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Speaker 3: months and then gone, then they don't usually show up

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Speaker 3: in the data because most of the resellers will absorb

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Speaker 3: that that that monthly bump in their in their margins,

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Speaker 3: So they really have to be there for a long

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Speaker 3: period to be inflationary. What they can do in the

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Speaker 3: short term, though, is raise inflation expectations among consumers, which

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Speaker 3: will some of them will try to jump the gun

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Speaker 3: on some purchases, and that could lead to, you know,

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Speaker 3: a lit a bump in or short term bump in

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Speaker 3: inflation because people rush to buy things before they take effect,

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Speaker 3: but that is transitionary in impact.

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Speaker 2: So Olivier imagine that the tariffs last a couple of months.

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Speaker 2: Perhaps does that necessarily force central banks in Asia to

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Speaker 2: consider adjusting their policy when it comes to currencies.

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Speaker 3: But a lot of them are, you know, peg to

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Speaker 3: the dollars, so obviously they need to follow what the

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Speaker 3: Fed does in that sense. But if the you know,

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Speaker 3: if the Fed things terrists are inflationary, they will maintain

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Speaker 3: the interest rates where they are, which is which is

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Speaker 3: quite a restricted level at this time. And that's the

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Speaker 3: problem for a lot of the deptors in Asia who

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Speaker 3: have US dollar bonds out that are expiring this year

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Speaker 3: or next year, and they need to start rolling that

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Speaker 3: debt over at a much higher interest rate than when

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Speaker 3: they first took it out.

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Speaker 2: So oliviate. Today we had the CPI data for Japan

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Speaker 2: coming in a little above forecast in the same week

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Speaker 2: that we had the BOJ meeting, and Governor uwaita sounding

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Speaker 2: a little relaxed in terms of the move that we

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Speaker 2: have seen the upward push and yields on jgb's He

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Speaker 2: didn't seem to be too alarmed by the fact that

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Speaker 2: that appreciation has been happening pretty quickly. Are you in

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Speaker 2: the camp that we're going to get a BOJ rate

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Speaker 2: hike in May?

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Speaker 3: I think yes, this is something they should have done already.

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Speaker 3: In my book, inflation has been above the two percent

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Speaker 3: target for what eight nineteen straight months now, and they're

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Speaker 3: still reacting very slowly. And I think the danger is

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Speaker 3: for them to have this kind of lack of communications

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Speaker 3: with market where they say we're not alarmed, we're not alarmed.

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Speaker 3: Then they raise rates and everybody gets get spooked, and

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Speaker 3: that's what happened last August. So they need to communicate

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Speaker 3: more clearly about what their plans is so that markets

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Speaker 3: have time to adjust in a disciplined fashion.

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Speaker 2: How would you evaluate risk assets right now? In Japan?

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Speaker 3: So there's been a lot of you know, Japan had

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Speaker 3: with the second best market last year with the US,

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Speaker 3: there's been a lot of people that are looking at

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Speaker 3: moving money around. We don't know yet what the situation

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Speaker 3: is between US and Japan. That hasn't even been discussed yet.

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Speaker 3: So well, there be terrorists on Japan, we don't know.

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Speaker 3: We know that Donald Trump would like a weaker dollar

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Speaker 3: therefore stronger in so that might be negative for the

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Speaker 3: Japanese market, so would hire bog interest rates. So I

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Speaker 3: think Japan is probably peaked in a sense in my

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Speaker 3: mind last year, both economically and in terms of the market,

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Speaker 3: and I think people are looking at relative that you

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Speaker 3: to move out of this expensive market into cheaper ones.

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Speaker 2: I'm curious as to how you're feeling about Japanese tech

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Speaker 2: talks in particular. We've talked a lot on this program

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Speaker 2: about the deep Seek moment in China and the ripple

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Speaker 2: effect that it created around the world. So when it

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Speaker 2: comes to Japanese tech shares, how are you feeling.

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Speaker 3: So Japan benefited from the decoupling that the US is

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Speaker 3: trying to do with its especially tech supply chain away

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Speaker 3: from China towards more you know, US friendly countries and

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Speaker 3: in age of pack Japan is the only signatory to

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Speaker 3: some of their defense treaties. So Japan was a big

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Speaker 3: benefactor of that, of that relocation, relocation of supply chains.

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Speaker 3: But it also led to a market that performed really well,

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Speaker 3: but was very, very concentrated, maybe just two sectors, industrials

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Speaker 3: and technology was the bulk of the move for the

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Speaker 3: NIK and I think those are getting a little bit

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Speaker 3: expensive now, and if the FED needs, if the BOG

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Speaker 3: needs to start raising rates and the YET starts to strengthen,

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Speaker 3: then those gains there are a bit at risk right now.

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Speaker 2: So what is your outlook for China in the meantime.

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Speaker 3: So, China, you know, has obviously very big structural problems

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Speaker 3: on its economic model, and I'm not sure that the

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Speaker 3: authorities yet know how to address them. They are those

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Speaker 3: supporting their market, they are creating this floor, they are

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Speaker 3: trying to reinflate their banking sector, They're trying to reinflate

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Speaker 3: some other parts of the consumption food. But ultimately they'll

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Speaker 3: wait until they hear from Donald Trump and where that

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Speaker 3: trade war is going to decide what kind of measures

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Speaker 3: need to be taken to to turn their economy around.

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Speaker 3: But it's going to be a very very tough fight.

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Speaker 3: I think that China is three years into potentially it's

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Speaker 3: last decade because it's still doing the old you know,

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Speaker 3: let's borrow more and increase the debt and ask the

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Speaker 3: banks to roll over the debt that a cheaper margin,

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Speaker 3: and that game is not scalable, and I think it's

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Speaker 3: reaching its end right now. So I would say China

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Speaker 3: has support of the government. Lots of money there that

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Speaker 3: they can throw at the stock market and create a

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Speaker 3: floor and create a better feeling. But ultimately, if the

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Speaker 3: US and China has a trade war, if the the

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Speaker 3: coupling of these two economies goes on, it'll be very

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Speaker 3: tough for China to turn that ship around.

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Speaker 2: What about the story on domestic demand? We have seen

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Speaker 2: the government take a number of steps to try to

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Speaker 2: improve that. Is it going to be enough to change

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Speaker 2: the narrative?

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Speaker 3: No, Because you know the top ten percent of earners

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Speaker 3: in chrying to make sixty percent of the retail sales,

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Speaker 3: you can double the other sixty percent, That doesn't really

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Speaker 3: move the needle in terms of the economic things. And

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Speaker 3: those ten percent are not rushing to the store right

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Speaker 3: now to exchange their old toaster for a new one.

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Speaker 3: They want to buy big ticket items. They want to

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Speaker 3: buy long term, durable things, and for that they need confidence.

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Speaker 3: They need reassurance that the economy is going to turn around,

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Speaker 3: that there is a plan to do better, that there

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Speaker 3: won't be a trade war with the US, there won't

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Speaker 3: be a war with Taiwan, that sort of thing, And

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Speaker 3: I think that's uncertainty is holding that segment of the

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Speaker 3: consumption back and that's the bulk of it.

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Speaker 2: So, Olivia, your challenge now is to formulate an investment strategy.

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Speaker 2: Given everything that we've described, give me something that you

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Speaker 2: think will succeed in the next six to nine months.

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Speaker 3: So what we've seen is a lot of rebalancing has

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Speaker 3: already happened since about mid December, when investors went into

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Speaker 3: twenty twenty five thinking betting on growth, betting on momentum.

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Speaker 3: They had a pro business president in the US, they

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Speaker 3: had a peaceful transfer of power, they had a Republican Congress.

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Speaker 3: They thought that growth was back on. And these are

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Speaker 3: kinds of assumptions are being threatened right now. Even inflation,

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Speaker 3: the assumption that inflation would keep going down is being

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Speaker 3: threatened right now. So we've seen a big rebalancing move

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Speaker 3: in the last two plus months towards more or defensive

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Speaker 3: assets and away from growth assets. So we now have

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Speaker 3: a situation where you have two times more risk averse

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Speaker 3: investors than risk tolerant ones in the market. So any

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Speaker 3: kind of shock, any kind of risk event, might create

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Speaker 3: a very big overreaction right now in the market, and

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Speaker 3: that's what worries us. But I would wait for that

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Speaker 3: to happen, because I think something is going to shock

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Speaker 3: the system. There's not enough confidence for people to hold

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Speaker 3: on very long right now that don't know if any

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Speaker 3: of their assumptions for twenty twenty five are going to

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Speaker 3: come through, and that's creating an environment where big drawdowns

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Speaker 3: or sharp drawdowns are likely. So I would wait for that.

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Speaker 3: I would say, for me, markets, equity markets right now

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Speaker 3: are buy on the dip thing, not chase the trend.

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Speaker 2: All right, So let's assume you're right for the moment

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Speaker 2: and there is some type of shock event. Does that

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Speaker 2: necessarily create a buying opportunity?

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Speaker 3: I think it does in the short term because as

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Speaker 3: we saw from from Nike's earnings and other earnings, earnings

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Speaker 3: and some of the economic data is coming in better

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Speaker 3: than feared, in some cases better than expected. So there

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Speaker 3: is still quite a strong economy underneath, and consumers would

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Speaker 3: like to keep spending. They just need to be given

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Speaker 3: a little bit more certainty about where all of this

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Speaker 3: is going. There's just so many things happening right now.

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Speaker 3: Geopolitics is a live show right now. It used to

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Speaker 3: happen once every decade. Now it was happening every ten minutes.

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Speaker 3: I think that's pooking people. But ultimately, the will to

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Speaker 3: spend and the will to invest is there. It just

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Speaker 3: needs a little bit more comfort.

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Speaker 2: All right, Olivier, We'll leave it there. Thank you so much.

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Speaker 2: Enjoy the weekend. Olivia Dossier is head of investment decision

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Speaker 2: Research for the APEC at Simcorp. Joining us here on

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Speaker 2: the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.

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Speaker 2: I'm Doug Chrisner. On Thursday, in the US, President Trump

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Speaker 2: reiterated his support for stable coin legislation and he called

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Speaker 2: on Congress to create simple, common sense rules. Let's take

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Speaker 2: a closer look now at the crypto space with Peter Chung.

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Speaker 2: He is head of research at Presto Research. Peter is

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Speaker 2: normally based in Hong Kong. Today is on the line

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Speaker 2: from Soul, South Korea. Peter, I'm glad you could make

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Speaker 2: time to chat with us now. President Trump seems to

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Speaker 2: be having a lot of influence over the market for

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Speaker 2: digital assets these days, and he's been promoting a few projects.

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Speaker 2: One is World Liberty Financial. We can talk more about

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Speaker 2: that in a moment. It was earlier in the month

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Speaker 2: that he signed an executive order calling for the creation

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Speaker 2: of a strategic bitcoin reserve. Give me your assessment of

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Speaker 2: this plan.

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Speaker 1: Yeah, so, what he has announced so far is that

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Speaker 1: there's going to be two things, Bitcoin strategic reserve and

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Speaker 1: a digital asses stockpile. Both of these two funds is

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Speaker 1: going to be funded through the common phiscated assets, which

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Speaker 1: is currently mostly held under the DOJ. Most of it

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Speaker 1: is actually bitcoin, but there's some small portion of a

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Speaker 1: non bitcoin digital assets as well. So what Trump has

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Speaker 1: ordered is to create two different set of funds, one

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Speaker 1: purely funded by bitcoin only and the other one with

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Speaker 1: non bitcoin digital assets. And the big coin Strategic Reserve

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Speaker 1: is going to be you know, he has ordered the

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Speaker 1: Commerce Secretary and the Treasury Secretary to figure out a

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Speaker 1: way to accumulate more through a bud neutral way. And

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Speaker 1: for digital asset stockpile, they've indicated that they're not going

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Speaker 1: to try to add anything more.

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Speaker 2: I know you've been in markets for quite some time,

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Speaker 2: I think more than twenty years professionally, so I want

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Speaker 2: you to give me your analysis as to whether or

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Speaker 2: not promoting a strategic bitcoin reserve, or even developing one

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Speaker 2: in any way would undermine the confidence in the US

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Speaker 2: dollar is the world's reserve currency. Isn't that a risk?

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Speaker 1: I know that there are some people who argue makes

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Speaker 1: that point, and I tend to disagree. There's no real

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Speaker 1: hard evidence that the existence of a bitcoin reserve is

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Speaker 1: going to lead to lack of declining confidence in US dollars.

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Speaker 1: I mean, we already have a gold strategy reserve. I

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Speaker 1: know it's the kind of the legacy of the past

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Speaker 1: financial system. But nonetheless, I think, you know, you cannot

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Speaker 1: just directly jump onto the conclusion that just because you

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Speaker 1: have another hard asset supporting or backing the US dollars

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Speaker 1: market is going to suddenly freak out and say that

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Speaker 1: this means that the you know, the US dollar is

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Speaker 1: not to be trusted. There are other factors that supports

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Speaker 1: the US dollar confidence.

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Speaker 2: Would there need to be some sort of regulatory regime.

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Speaker 2: I can only imagine this making the Fed's job, as

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Speaker 2: one instance, a lot more difficult.

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Speaker 1: First of all, it's gonna be under the Department of Treasury,

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Speaker 1: not under the FED, So I don't think FED is

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Speaker 1: going to be directly involved in managing this. So it

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Speaker 1: does not necessarily make the FED job more difficult in

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Speaker 1: my view. Remember, there is a legislative efforts to codify

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Speaker 1: bigcoin strategic reserve as well. So Trump is not going

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Speaker 1: to be in the White House forever. There's a you know,

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Speaker 1: in order to make this a more permanent thing, you

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Speaker 1: need legislations to support this, and that work is already underway.

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Speaker 2: What would be the effective other countries were to adopt

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Speaker 2: a similar strategy and set up their own strategic bitcoin

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Speaker 2: reserve or some other reserve tied to another cryptocurrency.

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Speaker 1: Well, I think the effect would be very positive for

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Speaker 1: the market, I think, and I think the likelihood of

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Speaker 1: that happening has gone up with the most powerful country

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Speaker 1: in the world giving visiitimacy to bitcoin as a strategy asset.

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Speaker 1: So I think, you know, when you think about this,

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Speaker 1: this is a huge development. It's something that the six

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Speaker 1: month ago, I don't think anybody would have kind of

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Speaker 1: imagined happening. So I think there's going to be a

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Speaker 1: similar conversation taking place in many other governments around the world,

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Speaker 1: and it's going to be a lot easier for them

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Speaker 1: to make an argument to own bitcoin as a strategy asset.

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Speaker 1: Then let's say six months ago, when you know, no

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Speaker 1: major government was actually doing it.

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Speaker 2: When cryptocurrencies were first introduced. There was a lot in

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Speaker 2: the conversation at the time around using these cryptocurrencies as

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Speaker 2: a means for conducting or transacting business. Right now, the

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Speaker 2: emphasis seems to be on holding them as anyone would

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Speaker 2: hold gold as kind of a reserve asset. Does that

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Speaker 2: surprise you, The fact that we haven't moved into a

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Speaker 2: world where we're used in cryptocurrencies to transact business more frequently.

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Speaker 1: That doesn't surprise me at all. Bigcoin is going through

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Speaker 1: three stages of becoming a money, and whether it end

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Speaker 1: up actually becoming a money or not, I don't know.

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Speaker 1: But these three stages are you know, they don't happen simultaneously.

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Speaker 1: It first needs to be adopted as a store of value,

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Speaker 1: and secondly, only after that you get a medium of

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Speaker 1: exchange stage, and the last one is the unit of

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Speaker 1: account stage. And so bitcoin is going through the first

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Speaker 1: stage of being adopted as a stove value and this

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Speaker 1: can take a long time. It's a multi decade process.

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Speaker 1: A similar thing happened with the gold as well. So

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Speaker 1: and right now I don't think it's it's wise to

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Speaker 1: spend your bigcoin as a medium of exchange because it's

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Speaker 1: going to be a very expensive spending ten years from

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Speaker 1: now if the bigcoin value goes a lot higher from

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Speaker 1: where it is. So right thing to do right now

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Speaker 1: is just hold on to your bit coin, don't spend it,

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Speaker 1: And after the adoption is more widely spread out and

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Speaker 1: the upside potential of a big cooin kind of peeks out,

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Speaker 1: and that's when you start thinking about maybe spending it

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Speaker 1: as a medium of exchange.

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Speaker 2: So maybe we can talk a little bit about President

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Speaker 2: Trump's World Liberty Financial. This is something I think that

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Speaker 2: his family is involved with and has endorsed, and from

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Speaker 2: what I understand, World Liberty Financial has just completed its

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Speaker 2: second set of token sales, raising about a quarter of

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Speaker 2: a billion total amount of coins now sold just over

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Speaker 2: around five hundred and fifty million dollars worth. Are you

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Speaker 2: concerned when you have something like this where the president,

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Speaker 2: who is obviously invested in the success of this project,

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Speaker 2: may have a little bit of a conflict of interest.

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Speaker 2: Does that concern you at all?

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Speaker 1: Yeah? I mean that's I mean, I generally in support

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Speaker 1: of everything that Trump is doing crypto space, but this

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Speaker 1: is one part where I wish that he didn't really

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Speaker 1: proactively engaged in because it does create room for some

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Speaker 1: potential problems down the road, So I think that White

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Speaker 1: House is trying their best to make everything transparent to

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Speaker 1: avoid any future problems. So we'll see how it goes.

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Speaker 1: But yeah, it's one part that I wish that the

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Speaker 1: Trump kind of was stayed away from.

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Speaker 2: So you're in soul at the moment, and I know

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Speaker 2: you travel frequently across Asia. Give me a sense of

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Speaker 2: how what is happening here in the States with crypto

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Speaker 2: policy is impacting the mindset of the people who play

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Speaker 2: in this space across Asia.

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Speaker 1: As I mentioned earlier, I think this definitely has prompted

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Speaker 1: a lot of conversations through many jurisdictions in Asia in

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Speaker 1: terms of how these governments in Asia will have to

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Speaker 1: approach the big cooin as potential strategy assets. And I

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Speaker 1: think every country is different, depending on their priorities, their

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Speaker 1: eventual approach will look quite different. And I think some

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Speaker 1: countries will be more proactive than others. And I think

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Speaker 1: the countries that will be more proctive are the ones

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Speaker 1: where they kind of see the value that the blockchain

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Speaker 1: technology delivers to their own economy and generally the open

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Speaker 1: economy that value is open financial system. I think it's

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Speaker 1: going to be a lot more proactive in adopting or

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Speaker 1: incorporating a blockchain into their system. But Hong Kong or Singapore,

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Speaker 1: which is the financial hubs and also our keenly trying

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Speaker 1: to compete against other financial hubs like the New York

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Speaker 1: or London, is going to be more proactive in trying

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Speaker 1: to adopt the blockchain as part of their financial system.

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Speaker 2: So would it surprise you if a country like China, Russia,

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Speaker 2: maybe even Japan, if those nations were to go about

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Speaker 2: accumulating bitcoin in the run up to any strategic bitcoin

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Speaker 2: reserve that may get created in the United States.

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Speaker 1: Yeah, I mean, I think out of the surprise that

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Speaker 1: these countries also embrace bitcoin, you know, as part of

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Speaker 1: their strategy assets. I mean, it can come in many

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Speaker 1: shape and forms. It may not necessarily be in the

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Speaker 1: form of a strategy reserve, but maybe their public pension

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Speaker 1: system may allocate some small portion to bitcoin, or maybe

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Speaker 1: they air sofverey wealth funds may allocate small portion to bitcoin.

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Speaker 1: Some people speculate that that has already taken place with

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Speaker 1: some of the Asian governments. They are under no obligation

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Speaker 1: to disclose their holdings, so maybe we may we simply

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Speaker 1: may not know about it, So I wouldn't be surprised

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Speaker 1: at all if that that that happens.

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Speaker 3: Uh.

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Speaker 1: And you know, I think that's all going to be

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Speaker 1: very positive for the digital uset prices.

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Speaker 2: Peter will leave it there, always a pleasure. Thank you

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Speaker 2: so much, Peter Chung. They're head of research at Presto Research.

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Speaker 2: Joining us here on the Daybreak Asia Podcast. Thanks for

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Speaker 2: listening to today's episode of the Bloomberg Daybreak Asia Edition podcast.

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Speaker 2: Each weekday, we look at the story shaping markets, finance,

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Speaker 2: and geopolitics in the Asia Pacific. You can find us

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Speaker 2: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

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Speaker 2: else you listen. Join us again tomorrow for insight on

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Speaker 2: the market moves from Hong Kong to Singapore and Australia.

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Speaker 2: I'm Doug Chrisner, and this is Bloomberg