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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 Charlie Pella. Doug

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Speaker 2: Chrisner has the week off. Crude oil rebounded, equities edged lower.

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Speaker 2: Is on certainty surrounding US Iran ceasefar talks kept investors

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Speaker 2: cautious amid conflicting headlines. Even so, the White House insisted

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Speaker 2: that peace talks with Iran are ongoing, even as Tehran

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Speaker 2: publicly rejected US overtures and issued fresh conditions of its

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Speaker 2: own to end the conflict that has brought havoc across

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Speaker 2: the Middle East and global markets. And for more, we

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Speaker 2: heard from Rosemary Kolonik, the director of the Middle East

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Speaker 2: Program at Defense Priorities, and she spoke with Bloomberg's Heidi Stroud,

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Speaker 2: Watts and Sherry On.

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Speaker 3: Rosemary, great to have you with us.

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Speaker 4: Give us, first of all, your reaction on this back

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Speaker 4: and forth between Iran and the Trump administry. Then where

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Speaker 4: you think is the Tulsa on right now?

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Speaker 5: I think that my reaction is that this is a

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Speaker 5: lot of political theater from the Trump administration. I think

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Speaker 5: it's quite clear that Trump is planning trying to play

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Speaker 5: markets and keep them calm during the week so that

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Speaker 5: he can potentially escalate on the weekend, if not this weekend,

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Speaker 5: some future weekend. Trump's ceasefire plans are not a ceasefire, right,

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Speaker 5: this is these are you know, Iran gave these counterproposals

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Speaker 5: that are ceasefire proposals. What needs to happen for hostilities

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Speaker 5: to cease. The US is trying to negotiate a whole

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Speaker 5: comprehensive package, which most countries don't agree to do in

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Speaker 5: the middle of a war because if they did, it

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Speaker 5: would just incentivize other countries attacking them. So the US

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Speaker 5: and Iran are just they're operating on totally different levels here,

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Speaker 5: and the US side is pretty disconnected from reality. I think.

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Speaker 4: Wouldn't be the wouldn't that be the right approach coming

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Speaker 4: from the Trumpets, especially if you think of it militarily

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Speaker 4: try to hit them the heart is while they're down,

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Speaker 4: instead of putting a ceasefire when the Iran could actually

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Speaker 4: rebuild their defenses. And at this point, when the Trump

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Speaker 4: administration went into this war, they wanted a bigger package

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Speaker 4: out of it. Right, we were still a little bit

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Speaker 4: confused about exactly what the target and would be and

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Speaker 4: what they could call victory. But wouldn't this be sort

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Speaker 4: of the strategy from the Trump administration, although the rest

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Speaker 4: of the world might not agree.

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Speaker 5: I disagree with that. So yes, I think the Trump

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Speaker 5: administration wants big concessions from Iran. Where I think they're

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Speaker 5: wrong is they don't seem to understand how badly this

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Speaker 5: war is going for the United States. Right, so, the

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Speaker 5: US had a theory of victory that was we decapitate

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Speaker 5: the leadership and within a couple of days Iran surrenders

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Speaker 5: and the whole thing is over. It's quite clear they

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Speaker 5: didn't plan for a long war and they don't have

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Speaker 5: the theory of victory for a long war. Meantime, their

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Speaker 5: bargaining position has improved by fighting the United States. They

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Speaker 5: have now asserted control over the Straight Offoremus. They've stayed standing,

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Speaker 5: and they've demonstrated that they can continue to hit the

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Speaker 5: region pretty much indefinitely, albeit at lower levels, but continually

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Speaker 5: harassing the region as long as they want. And they're

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Speaker 5: you're they're using guerrilla tactics that are that are cheap

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Speaker 5: and easy to do that. So, you know, Trump seems

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Speaker 5: to either not understand what's happening on the ground or

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Speaker 5: this might just be proposals that he expects Aron is

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Speaker 5: going to reject, which they already have.

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Speaker 1: Is the ordering of thousands of troops to the region

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Speaker 1: also a negotiation tactic or is it the administration putting

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Speaker 1: in place, you know, an insurance policy if this doesn't

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Speaker 1: work out.

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Speaker 5: I don't think it's a negotiating tactic. I think it

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Speaker 5: is real escalation that Trump was planning, and he's getting

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Speaker 5: options for himself to do that escalation. And I think

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Speaker 5: it's unlikely that that he's going to back down now.

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Speaker 5: He should back down. He should back down because ultimately,

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Speaker 5: this is a war of attrition now, and the question

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Speaker 5: is not who's more militarily powerful, but who cares more

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Speaker 5: about the outcome? And Iran cares more about the outcome.

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Speaker 5: So Iran is not going to be cowed. It's not

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Speaker 5: going to be intimidated by the US sending more forces

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Speaker 5: to the region. And I do think that Trump is

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Speaker 5: basically using these negotiations as employed by time to assemble

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Speaker 5: the forces that he wants to take this, you know,

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Speaker 5: into an escalation, which would be a terrible, terrible outcome

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Speaker 5: for the US getting deeper involved when we have no

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Speaker 5: theory of victory or sense of how to extract ourselves.

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Speaker 3: The element of.

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Speaker 1: Israel Benjamin it now who also interests me too, because

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Speaker 1: you know, there's been a lot of analysis that this

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Speaker 1: is the war that Israel has been wanting to fight.

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Speaker 1: Right in terms of dealing with Iran, do you think

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Speaker 1: Israel will so easily come to the table and agree

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Speaker 1: to a seize bile when perhaps It's objectives different to

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Speaker 1: that of Washington's have not been met.

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Speaker 5: Well, Israel is supposed to be the junior partner in

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Speaker 5: this relationship, and so the United States should be able

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Speaker 5: to say to Israel no. Right. As you noted, this

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Speaker 5: is a war Israel has been arguing for the United

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Speaker 5: States to be part of for at least twenty years,

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Speaker 5: back to the days of George W.

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Speaker 3: Bush.

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Speaker 5: Trump is just the first president that actually said yes

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Speaker 5: to them. All the other presidents said no, and Trump

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Speaker 5: can also say no.

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Speaker 2: Now.

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Speaker 5: I'm sure Israel would not be happy with it. It

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Speaker 5: seems quite clear to me they really want regime change

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Speaker 5: or regime collapse. They want Iran to just be taken

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Speaker 5: off the geopolitical game board from their perspective. But Israel

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Speaker 5: is not supposed to be able to dictate US policy.

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Speaker 5: The President does that, and the President could tell Israel no,

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Speaker 5: and the US has enough leverage over Israel that we

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Speaker 5: could get them to stop if we really wanted them to.

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Speaker 4: We're are Golf states in all of this, and can

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Speaker 4: we expect them to get involved in the war if

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Speaker 4: they hit to their economies and entergy facilities warsin.

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Speaker 5: That's a great question, and we don't know at this point.

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Speaker 5: The more this escalates, the more they will bear the

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Speaker 5: brunt of that escalation, and so it's in their interest

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Speaker 5: for this to de escalate. So if Trump actually goes

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Speaker 5: through with attacking Iran's energy infrastructure, right their electricity grid,

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Speaker 5: then Iran can do the same to Golf states attack

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Speaker 5: their electricity grids. And Golf states are much more much

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Speaker 5: more reliant on desalinization, which of course requires electricity for

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Speaker 5: their water, whereas Iran depends on desalination for two percent

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Speaker 5: of their water and the rest of is fresh water.

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Speaker 5: So it's not good for the Golf states of this escalates.

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Speaker 5: By the same token, they can't just let Aron continue

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Speaker 5: to attack them without retaliating. So I would not be

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Speaker 5: surprised if we saw dout Arabia where the UAE joined

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Speaker 5: the war, other countries may not. We might see a

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Speaker 5: split among the Gulf states in this scenario. It's unclear.

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Speaker 5: But Trump has put them in a very difficult position

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Speaker 5: by starting this war.

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Speaker 4: And US allies have also remained quite detached from the

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Speaker 4: conflicting haven't they, especially after President Trump made it clear

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Speaker 4: that he wanted their help in reopening this rate of

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Speaker 4: horror moves. How likely is it that we're going to

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Speaker 4: get any sort of significant backup coming from US allies

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Speaker 4: at a time when we have seen President Trump really

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Speaker 4: renege on a lot of previous zeals, whether it's trade

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Speaker 4: or anything else.

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Speaker 3: Yeah.

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Speaker 5: I think that's a crucial point. I mean, Trump has

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Speaker 5: alienated US allies over the past year, and he alienated

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Speaker 5: them further by not getting them on board before he

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Speaker 5: attacked Iran. So he attacked Iran, it turned into a mess.

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Speaker 5: And now he's asking allies that he you know, previously

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Speaker 5: you know, had disdain for publicly to help us, and

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Speaker 5: they don't want to do it because they understand that

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Speaker 5: trying to reopen horror moves by force is a very

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Speaker 5: dangerous thing to do. So I think it's very unlikely

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Speaker 5: that that NATO countries are going to come into this.

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Speaker 5: They've said that they won't. They've said that after the

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Speaker 5: conflict stabilizes, so after the war's over, maybe they will

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Speaker 5: help with managing, you know, sort of peacekeeping mission, a

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Speaker 5: naval peacekeeping mission in a way through horror moves, but

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Speaker 5: they're not going to do the heavy lifting.

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Speaker 1: Here.

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Speaker 2: Rose Murray Klank, director of the Middle East Program at

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Speaker 2: Defense Priorities, speaking to Bloomberg's Heidi Stround Watts and Sherry On.

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Speaker 2: Coming up, we will take you to Australia where the

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Speaker 2: Asia Pacific Financial and Innovation Symposium is underway. We'll bring

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Speaker 2: you our exclusive interview with Sam Cecilia, cio at Host Plus.

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Speaker 2: That's coming up right here on the Daybreak Asia podcast.

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Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Charlie Pella.

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Speaker 2: Doug Chrisner's got the week off. We go to Australia

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Speaker 2: next where the Asia Pacific Financial and Innovation Symposium is

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Speaker 2: underway in Melbourne, one of the country's largest funds. Host

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Speaker 2: Plus is taking part in the event. We had the

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Speaker 2: opportunity to speak to Sam Cecilia, the CIO at Host Plus.

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Speaker 2: He spoke exclusively to Bloomberg's Heidi Stroud Watts with.

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Speaker 3: The ongoing conflict in the middle of eies.

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Speaker 1: Has that affected the way that you sort of run

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Speaker 1: your portfolio? Has it meant any changes or thoughts about changes?

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Speaker 6: Look at an understandable question, thank you.

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Speaker 7: The reality is that we're going to be living in

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Speaker 7: a world of uncertainty and a world of volatility that

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Speaker 7: is here to stay. But that's always been the case

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Speaker 7: when you think back twenty five years, go back to

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Speaker 7: the year two thousand. If you were a investor in

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Speaker 7: the year two thousand, what didn't you know about the

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Speaker 7: next twenty five years. You didn't know about the about

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Speaker 7: the dot com bust, you didn't know about Brexit, you

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Speaker 7: didn't know about COVID, you didn't know about the global

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Speaker 7: financial crisis. You didn't know about Trump tariffs, you didn't

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Speaker 7: know about Ukraine Russia war. You didn't know about a

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Speaker 7: lot of things. And so you know, you have a

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Speaker 7: choice as a long term investor. If you need to

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Speaker 7: think and act long term. You can sit by the

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Speaker 7: sideline waiting for the dust storm to settle, but it's

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Speaker 7: never going to settle ever, and so as a consequence,

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Speaker 7: you should invest throughout that period, which is what we did,

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Speaker 7: and so bringing it to your question today, yet another conflict,

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Speaker 7: yet another source of uncertainty, yet another source of volatility.

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Speaker 6: We need to continue to invest through that period.

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Speaker 1: You're as cool as a cucumber, So tell me. Is

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Speaker 1: it defensively opportunistically? How are you investing through this period,

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Speaker 1: particularly pertaining to the possibility of a higher inflation and

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Speaker 1: rate environment.

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Speaker 6: It's diversified, that's the real answer, right.

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Speaker 7: You need to look at all the opportunities that present

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Speaker 7: before you in terms of deploying capital and take advantage

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Speaker 7: of the opportunities where it makes sense and mitigate the

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Speaker 7: risks as best you can.

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Speaker 6: And the best way to do that is to diversify it.

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Speaker 3: Where does that diversification lie.

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Speaker 1: We've been talking about crypto, and that's caused quite a splash.

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Speaker 7: Sure well, crypto if we decide to go down that path,

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Speaker 7: and we haven't made that decision yet, the mechanism for

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Speaker 7: doing so, and the rationale for doing so includes that

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Speaker 7: it acts as a diversifier to some of the other

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Speaker 7: investments that we have in the fund. There are different

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Speaker 7: ways to access crypto that meets our.

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Speaker 6: Fiduciary and regulatory obligations.

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Speaker 7: If we can't meet our fiduciary and regulatory obligations, then

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Speaker 7: we will not be proceeding down that path. Pretty straightforward, right,

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Speaker 7: And the easiest, lowest hanging fruit of accessing digital currencies

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Speaker 7: in its generic form is through an exchange trade and fund,

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Speaker 7: So you can do it through an ETF, which provides

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Speaker 7: you with some level of diversification, that provides you with

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Speaker 7: mark to market pricing. There's a whole set of advantages

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Speaker 7: liquidity provisions. So we'll be looking at all of those characteristics.

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Speaker 7: But unless we can get satisfaction that all of those

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Speaker 7: have been addressed in including custody of assets, and we

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Speaker 7: can get our regulator comfort, give them comfort that we

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Speaker 7: have crossed and ticked all of those boxes, then we

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Speaker 7: won't be proceeding.

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Speaker 1: Is that a reflection of what the younger membership cohort

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Speaker 1: want to see in terms of alternative asset classes?

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Speaker 7: Look, I think there's no doubt that the that the

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Speaker 7: overwhelming proportion of requests that we get for digital currencies NFTs,

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Speaker 7: there's a whole set of related investment opportunities comes from

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Speaker 7: younger demographics. But historically host plus's member base has been

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Speaker 7: the hospitality industry, which is a very young member demographic

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Speaker 7: to begin with.

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Speaker 1: The war is not by far the only risk facing masket.

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Speaker 1: I wanted to get your views on private credit. We

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Speaker 1: heard a bit this morning from Blackrock. We've also heard

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Speaker 1: from Lloyd blank find saying that he sees a firerus there.

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Speaker 1: What's your assessment of what's going on on the risk levels.

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Speaker 7: So we've had exposure as a fund to private credit

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Speaker 7: since twenty ten, and so all of a sudden, everyone

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Speaker 7: acts as if this is a new ass a class,

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Speaker 7: and it is not. It could be new for retail investors,

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Speaker 7: but there are institutions, but not for institutionals. It shouldn't

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Speaker 7: be new to institutional investors, right, and so you'll find

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Speaker 7: that if you are investing in private credit with bona

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Speaker 7: fide institutional asset managers, then they would have mechanisms in place.

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Speaker 6: They have.

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Speaker 7: Credit assessment facilities, workout teams, a whole set of necessary

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Speaker 7: infrastructure to access private credit in the right way. We

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Speaker 7: know this is true because we've been doing it since

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Speaker 7: twenty ten and there's never been a problem.

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Speaker 1: So des that men, your fund managers and maybe looking

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Speaker 1: for bargains at this point on the secondary market.

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Speaker 7: Well that's their prerogative. To do so right, we allocate

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Speaker 7: capital to our fund managers. We then don't restrict them

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Speaker 7: as to where they see where they sawce those opportunities from.

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Speaker 7: And if they can find secondary markets or they can

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Speaker 7: find distressed sellers, et cetera, then all power to them.

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Speaker 3: Would you be looking at reduce exposure to software? Though, again.

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Speaker 6: We need to look at the word software and.

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Speaker 7: Know and believe that different software companies are differently placed

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Speaker 7: to access AI. I presume that's the nature of your

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Speaker 7: question there. And so you have certain software companies that

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Speaker 7: are laggered in the AI in adoption of AI in

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Speaker 7: part of their software, they will have a very hard

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Speaker 7: path going forward. And then you've got some software companies

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Speaker 7: like Canva that are in essence an AI company now

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Speaker 7: that have been implementing AI tools.

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Speaker 6: They've got nearly thirty AI.

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Speaker 7: Tools implemented into their software, and they're ranked amongst open

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Speaker 7: AI and Anthropic as the third ranked design tool that

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Speaker 7: has adopted AI. We expect that type of software company

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Speaker 7: to thrive in these circumstances.

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Speaker 1: As the super nest tag and the pile continues to grow.

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Speaker 1: There's been lots of questions as to whether super funds

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Speaker 1: in Australia upgrowing the home market.

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Speaker 3: Can you give us an indication of what that.

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Speaker 1: Looks like in terms of flows to Australian assets or

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Speaker 1: overseas at the moment for you guys.

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Speaker 6: Sure. So there's two parts to my response. If we're

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Speaker 6: talking about deploying money in.

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Speaker 7: The domestic liquid public markets, equity markets, that's approaching.

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Speaker 6: Approaching capacity.

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Speaker 7: But if we're talking about real assets, infrastructure, real estate,

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Speaker 7: nation building assets, show us the projects and we can

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Speaker 7: fund them here, and we can fund them offshore as well.

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Speaker 7: The reason we go offshore in a for diversification b

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Speaker 7: gives us access to assets that we can't get in

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Speaker 7: our home country. And let's remember that our beneficiaries, our

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Speaker 7: members are based in Australia. So at the end of

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Speaker 7: the day, that capital that we invest offshore needs to

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Speaker 7: come back home to end up in their retirement accounts.

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Speaker 7: And so we should be encouraged if you like to

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Speaker 7: look globally for the best opportunities to get the you know,

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Speaker 7: the best return we can for our superannulation members.

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Speaker 2: Sam Cecilia Cio at host Plus speaking to Bloomberg's Heidi

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Speaker 2: Stroud Watts of the Asia Pacific Financial and Innovation Symposium

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Speaker 2: in Melbourne. Thanks for listening to today's episode of the

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Speaker 2: Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at

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Speaker 2: the story shaping markets, finance, and geopolitics in the Asia Pacific.

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Speaker 2: You can find us on Apple, SPOTIFYLMBERG podcast, YouTube channel,

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Speaker 2: or anywhere else you listen. Join us again tomorrow for

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Speaker 2: insight on the market moves from Hong Kong to Singapore

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Speaker 2: and Australia. I'm Doug Prisner, and this is Bloomberg