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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Bloomberg Daybreak Asia podcast. I'm Charlie Pella.

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Speaker 2: Doug prisoners off this week on today's episode, a conversation

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Speaker 2: on commodities with Van Donahari, founder at Vanda Insights. But

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Speaker 2: first trading resumes in China following the Labor Day holiday.

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Speaker 2: The greenback was steady after weekening on Monday against most

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Speaker 2: major currencies. This is speculation around potential trade deals sparked

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Speaker 2: an extraordinary spike in Taiwan's dollar and resonated across global

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Speaker 2: FX markets. For more, we heard from Siiesh Tantya, chief

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Speaker 2: investment officer an APAX strategist at UBS Global Wealth Management,

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Speaker 2: and he spoke to Bloomberg Sharryon and Heidi Stroud Watts.

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Speaker 1: Great to have you with us. That optimism over potential

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Speaker 1: trade deals really so and Asian currencies higher. You like

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Speaker 1: still Taiwanese equities, but if you have a surge in

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Speaker 1: the Taiwan dollar, will that make this very trade dependent

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Speaker 1: economy less appealing?

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Speaker 3: Absolutely. I think in the short term there is going

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Speaker 3: to be some impact on the companies in Taiwan given

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Speaker 3: the search in Taiwan dollar but keep in mind that

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Speaker 3: most of these companies they have strong pricing power. There

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Speaker 3: is no competition for these companies in the world, especially

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Speaker 3: in the semi connector space, so I wouldn't be surprised

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Speaker 3: if these companies are able to have their way, manage

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Speaker 3: the prices and offset the impact of the currency strength.

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Speaker 3: The other thing to keep in mind is that the

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Speaker 3: result from the tech companies in the US is of

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Speaker 3: any guide. The kepex on ai is only going to accelerate.

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Speaker 3: We are looking at aikpex from Big four companies in

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Speaker 3: Big four companies in the tech space in US increasing

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Speaker 3: by fifty percent this year and thirty percent next year,

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Speaker 3: and that would mean strong earnings potential for the tech

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Speaker 3: names in Taiwan. So despite short term vulgility, I think

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Speaker 3: the outlook for the equerdity market in Taiwan looks quite.

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Speaker 1: Promising given the business environment that you mentioned In the

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Speaker 1: United States. Does that mean that you still like that

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Speaker 1: market because right now what we're seeing is the pressure

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Speaker 1: on the US dollar, pressure on US assets because of

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Speaker 1: this sell American narrative.

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Speaker 3: Yeah, I think the outlook for US secuity market is

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Speaker 3: still positive, especially if you look at the recent economic

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Speaker 3: data the jobs report last week and the m numbers

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Speaker 3: last night point towards healthy economy. We are not looking

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Speaker 3: at a recession scenario in US, and healthy economic growth

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Speaker 3: is good for an earning perspective. This quarter earnings have

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Speaker 3: been so far much better than market expectations. We are

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Speaker 3: looking at nine percent EPs growth for the first quarter

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Speaker 3: compared to earlier expectations of five percent EPs growth. So

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Speaker 3: I think a combination of strong earnings and healthy economy

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Speaker 3: can drive the equery market higher. And from an index perspective,

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Speaker 3: I think it's quite possible that SMP goes higher to

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Speaker 3: fifty eight hundred from current levels.

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Speaker 4: How do you feel about emerging markets at the moment,

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Speaker 4: particularly markets like India.

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Speaker 3: Yeah, so, Apart from Taiwan, India is one of our

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Speaker 3: other favorite market within em the region being it's more

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Speaker 3: a domestic oriented economy. So far, the growth was struggling,

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Speaker 3: but I think it has bottomed out, specially as the

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Speaker 3: keepex deployment from government is coming in. The consumer demand

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Speaker 3: is also picking up as Zero Bank of India is

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Speaker 3: cutting rates again. So I think a combination of that

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Speaker 3: should support the earnest growth for Indian equity market. And

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Speaker 3: if you look at the EPs growth this year, India

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Speaker 3: should deliver close to fifteen percent growth, which would place

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Speaker 3: it as one of the highest ernest growth market in

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Speaker 3: the world. So these factors should support higher equity prices

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Speaker 3: in India.

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Speaker 4: What about Obviously China remains a strong anchor, and you

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Speaker 4: talk about some of the mess stick stories in India.

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Speaker 4: There are domestic reasons why Chinese equities might be compelling

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Speaker 4: to write or do you see that as too direct

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Speaker 4: an exposure to the trade and US related risks.

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Speaker 3: Yeah. I think in the short term the Chinese equity

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Speaker 3: market could remain volatile because we still need to see

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Speaker 3: both sides coming to the table and start the negotiation.

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Speaker 3: But from a long term perspective, the Chinese tech stocks

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Speaker 3: the ev story look very promising. For the last few years,

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Speaker 3: the Chinese tex stocks have been under pressure becaus of

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Speaker 3: regulations at home and at overseas, but finally that era

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Speaker 3: is ending. We are seeing government is more friendly to

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Speaker 3: these companies, to the private sector, and with the end

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Speaker 3: of regulations, finally, the sales growth, the earnest growth for

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Speaker 3: the tech names in China is improving. So from a

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Speaker 3: long term perspective, I think the tech name looks very promising.

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Speaker 3: Short term definitely depends on the trade negotiations. I think

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Speaker 3: quite possible that with the messaging coming from authorities on Friday,

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Speaker 3: the trade nequisations starts soon.

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Speaker 1: Yeah, I mean, we still have to watch how those

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Speaker 1: negotiations go, right, But Suresh. Just looking at the currencies

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Speaker 1: right now, especially in these smaller, more trade dependent economies,

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Speaker 1: we are seeing the Thai bat the ring it as well,

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Speaker 1: at the strongest level since October twenty twenty four. Not

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Speaker 1: to mention, of course, the Philippine peso also at the

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Speaker 1: strongest level since March of twenty twenty four. The weakness

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Speaker 1: of the US dollar. You mentioned how Taiwan, at least

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Speaker 1: when it comes to the likes of these big tech names,

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Speaker 1: could still fuel the equities boost in this market. What

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Speaker 1: happens to smaller markets, say Malaysia, Thailand, Philippines, just Southeast Asia.

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Speaker 3: In the short term. What we have seen in the

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Speaker 3: past is that whenever Asian currency is tendon, normally you

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Speaker 3: tend to see capital influence in this part of the world,

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Speaker 3: and the equity market in Asia they tend to actually

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Speaker 3: outperform the rest of the world. So I would expect

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Speaker 3: this happening. But from a longer term perspective, definitely, a

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Speaker 3: stronger currency is not good from an economic point of view,

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Speaker 3: because that would mean it would impact the earnings of

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Speaker 3: the exporters. So it depends on what kind of move

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Speaker 3: where we see. If we see a move similar to

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Speaker 3: what we have seen in Taiwan ten fifteen percent, definitely

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Speaker 3: there would be some economic damage as the earnings of

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Speaker 3: the exporters will come into effect. But anything single digit

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Speaker 3: I think companies can manage, and equity market should do well.

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Speaker 4: I've seen a twenty six percent search for gold this year. Right,

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Speaker 4: do you think we have paid or do you think

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Speaker 4: that trade uncertainties continue to see that relevance in the market.

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Speaker 3: I don't think this is the end of the bulldening

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Speaker 3: gold because the giopilical tensions are going to stay with

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Speaker 3: us for the next four years. It depends on the

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Speaker 3: commentary that we get from US administration. It's quite possible

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Speaker 3: that there is a change of mind and that lead

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Speaker 3: to further tension, tensions and escalation on the trade front,

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Speaker 3: and that could lead to further demand from central banks

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Speaker 3: around the world for gold. Also, keep in mind that

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Speaker 3: gold tends to do well whenever FED is cutting rate,

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Speaker 3: we still expect FED to cut rade by seventy five

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Speaker 3: too hundred business point by the end of this year,

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Speaker 3: and that would only increase the demand for gold. So

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Speaker 3: we still see this pullback as a buying opportunity and

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Speaker 3: expecting gold prices to go up to three thy five

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Speaker 3: hundred by the end of this year.

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Speaker 4: Such Tanja Ipek strategist and c Are at EBS Global

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Speaker 4: Wealth Management.

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Speaker 2: Welcome back to the Daybreak Asia podcast. I'm Charlie Palette

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Speaker 2: in for Doug Chrisner. This week, OPEK plus has agreed

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Speaker 2: to another large output increase, raising concern that additional supply

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Speaker 2: could lead to a global glot, just as the trade

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Speaker 2: will threatens demand. Then Dana Harry is founder at vander Insights.

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Speaker 2: She believes that crude prices may stabilize if the US

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Speaker 2: announces a deal with a major trading partner. This week,

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Speaker 2: Van Dana spoke with Bloomberg sharing on and Heidi Stroud Watts.

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Speaker 4: Always great to have you with us. What magnitude of

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Speaker 4: trade deal do you think we would need to see

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Speaker 4: and how that play out given that you know the

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Speaker 4: OPEC plus supply return has happened at a pretty difficult

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Speaker 4: time for the demand side for this market.

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Speaker 5: Yeah, good morning, Heidi.

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Speaker 6: So it does look like the only thing that could

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Speaker 6: put a bottom under prices now, or even lift them

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Speaker 6: a little bit, would be some sort of a reprochma

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Speaker 6: starting to happen on the trade deals front. Now, of course,

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Speaker 6: we I think overnight we heard Trump saying a few

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Speaker 6: deals may be announced as early as this week, and

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Speaker 6: from reports it seems like it could be some of

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Speaker 6: the major countries, major trading partners, including India, perhaps Japan,

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Speaker 6: South Korea. But really, what the markets are waiting for,

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Speaker 6: and I would say this is especially true for oil,

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Speaker 6: is what the US and China are going to do together.

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Speaker 6: As you were just mentioning, the trade between the two

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Speaker 6: countries is almost seized up. But you know, for the

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Speaker 6: for oil, these you're talking about the world's two largest

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Speaker 6: not just two largest economies, but the two largest oil consumers.

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Speaker 6: And China, yes, its growth has been slowing down, but

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Speaker 6: it has still been a major driver of oil demand growth.

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Speaker 6: So it looks like what happens between the US and

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Speaker 6: China is still a bit up in the air. So

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Speaker 6: I won't hold my breath for oil starting to climb

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Speaker 6: anytime soon.

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Speaker 4: Were you surprised that I picked plus decided to go now.

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Speaker 5: Not really.

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Speaker 6: I think there were plenty of hints through last week,

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Speaker 6: and I'm not sure if that was deliberate on the

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Speaker 6: part of some of the OPEK plus ministers to you know,

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Speaker 6: kind of prepare the market for the shock. But there

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Speaker 6: were reports that this was going to be the outcome

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Speaker 6: that they decide to yet another acceleration, putting nearly three

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Speaker 6: times as much oil as they had initially planned back

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Speaker 6: into the market in June, about four hundred and eleven

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Speaker 6: thousand barrels per day. I think what is pooped the

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Speaker 6: markets more than that decision is reports coming out after

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Speaker 6: the ministers' meeting on Saturday that Saudi Arabia has put

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Speaker 6: the quota busters, you know, Kazakhstan, Iraq, Russia on notice

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Speaker 6: that if they don't improve the compensatory mechanism, the compliance

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Speaker 6: with compensatory cuts, then all of the oil could be

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Speaker 6: brought back before the end of this year, you know,

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Speaker 6: instead of staggered over eighteen months. I think that would

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Speaker 6: probably spell quite a bit of glut in the market.

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Speaker 1: It's been interesting as we really frame like trying to

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Speaker 1: punish these cheating cartel members. But how much of it

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Speaker 1: could also be about a fundamental shift when it comes

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Speaker 1: to sell the oil policy at this point.

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Speaker 5: Yeah, so it's two sides of the coin. To my mind.

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Speaker 5: One could look at it as.

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Speaker 6: Punishing or even warning, you know, trying to get them

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Speaker 6: back in line, but it could also be simply placating

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Speaker 6: the other members, you know, the remaining five members of

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Speaker 6: that eight member group who have been disciplined about their

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Speaker 6: quotas and who are perhaps now not too comfortable, unhappy

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Speaker 6: even that the three of their group members are overproducing,

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Speaker 6: are not adhering to their compensatory cuts either, because now

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Speaker 6: it's really a race to the market, back to market share,

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Speaker 6: even more than what would have been the case in

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Speaker 6: normal times, because oil demand is going down. The market is,

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Speaker 6: especially in Asia, are going to be shrinking a little bit,

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Speaker 6: and these countries, especially the eight amongst the OPEK plus

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Speaker 6: that have been holding back two point two million barrels

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Speaker 6: pedations January of last year, have given up a lot

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Speaker 6: of their market share. And while they have given it

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Speaker 6: up to the non OPEK plus members, you know, there's

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Speaker 6: quite a bit of competition internally as well, because amongst

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Speaker 6: these eight the five that have been more disciplined, you

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Speaker 6: could argue, have given up more of the market than

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Speaker 6: the three that haven't been. So there's quite a bit

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Speaker 6: of this internal dynamics playing out as.

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Speaker 1: Well about those non open competitors. How much is this

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Speaker 1: to do potentially with US shell producers. Of course, we

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Speaker 1: know that historically Saudi Arabia has fought back against them

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Speaker 1: and flooded the markets back in twenty fourteen and twenty

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Speaker 1: sixteen with oil.

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Speaker 6: Yeah, so as US as the biggest oil producer and

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Speaker 6: growing not as phenomenally as was the case during the

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Speaker 6: shale boom, but you know, still growing to successive record

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Speaker 6: highs above thirteen million barots. But it will always remain

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Speaker 6: a competitor, especially one that is not given to restraining

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Speaker 6: its production except under you know, responding to market economics.

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Speaker 6: It will always be a competitor. I don't think, however,

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Speaker 6: that OPEC plus decisions are being guided by this competition

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Speaker 6: with the US. It's pretty clear in fact, since late

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Speaker 6: last year, but especially so in the last few weeks.

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Speaker 6: Overnight we had Diamondback Energy, which is a pure play

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Speaker 6: major shale producer in the Permian, saying that they are

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Speaker 6: going to be cutting back, cutting back on drilling, fracking,

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Speaker 6: and that's story across the shale sector.

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Speaker 5: So you know, shale is going to sort of.

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Speaker 6: Come down moderate quite a bit, and its growth in

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Speaker 6: because of lower oil prices current or even you know,

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Speaker 6: below seventy oil prices. So I don't think opek plus

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Speaker 6: particularly needs to drive that sector down with its policies.

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Speaker 6: I think it's more to do with maintaining opek plus

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Speaker 6: internal cohesion. And at this point, really you know, they're

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Speaker 6: out of chips. It's hard for opek Plus, especially just

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Speaker 6: eight member to be struggling against this major contraction that

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Speaker 6: we are seeing wave of economic downtown and demand downturn.

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Speaker 1: Fandana Harry always good to see you, founder of van

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Speaker 1: That Insights, with her take on oil prices right now, Thanks.

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Speaker 7: For listening to today's episode of the Bloomberg Daybreak Asia

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Speaker 7: Edition podcast. Each weekday, we look at the story shaping markets, finance,

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Speaker 7: and geopolitics in the Asia Pacific. You can find us

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Speaker 7: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

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Speaker 7: else you listen. Join us again tomorrow for insight on

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Speaker 7: the market moves from Hong Kong to Singapore and our Australia.

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Speaker 7: I'm Doug Prisoner and this is Bloomberg.

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Speaker 1: M