1 00:00:00,040 --> 00:00:10,640 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,480 --> 00:00:15,040 Speaker 2: Welcome to the Daybreak Asia podcast. I'm Dog Krisner. US 3 00:00:15,080 --> 00:00:17,560 Speaker 2: markets were rattled just a bit by a hint of 4 00:00:17,640 --> 00:00:22,120 Speaker 2: trouble around the buildout of AI data centers. Oracle's longtime 5 00:00:22,200 --> 00:00:26,640 Speaker 2: financing partner, Blue Owl Capital, will no longer contribute equity 6 00:00:26,680 --> 00:00:29,840 Speaker 2: capital to a project in Michigan, and that news sent 7 00:00:29,920 --> 00:00:32,400 Speaker 2: shares an Oracle down by more than five percent today, 8 00:00:32,760 --> 00:00:35,839 Speaker 2: and it pushed the cost of insuring against default on 9 00:00:36,000 --> 00:00:39,280 Speaker 2: Oracle's debt to the highest level since two thousand and nine. 10 00:00:39,840 --> 00:00:42,920 Speaker 2: And then after the bell, we heard from Micron Technology. 11 00:00:42,960 --> 00:00:46,519 Speaker 2: This company is the largest US maker of computer memory chips. 12 00:00:46,920 --> 00:00:51,239 Speaker 2: Micron reported a blowout quarter and offered even stronger guidance, 13 00:00:51,680 --> 00:00:54,720 Speaker 2: and we got reaction from Jake Silverman, he is semiconductor 14 00:00:54,760 --> 00:00:56,320 Speaker 2: analyst at Bloomberg Intelligence. 15 00:00:56,600 --> 00:00:58,480 Speaker 3: If you look at the gross margin guidance as well, 16 00:00:58,480 --> 00:01:01,920 Speaker 3: which midpoint was sixty eight percent, or really just implies 17 00:01:02,040 --> 00:01:04,800 Speaker 3: such incredible pricing strength that they have right now, and 18 00:01:05,120 --> 00:01:07,720 Speaker 3: it really comes down to supply and demand, and for 19 00:01:07,760 --> 00:01:10,400 Speaker 3: the most part, there's just been a real supply limitation. 20 00:01:11,440 --> 00:01:13,920 Speaker 3: All of that for the most part, driven well for 21 00:01:13,959 --> 00:01:16,880 Speaker 3: the most part driven by AI. Also, there's been strong 22 00:01:16,920 --> 00:01:19,480 Speaker 3: demand for PCs smartphones. 23 00:01:19,560 --> 00:01:23,920 Speaker 2: That is Jake Silverman's semiconductor analyst at Bloomberg Intelligence. Micron 24 00:01:24,000 --> 00:01:27,640 Speaker 2: shares were up by nearly seven percent in late US trading. Now, 25 00:01:27,680 --> 00:01:31,400 Speaker 2: this company has been a key beneficiary of AI demand 26 00:01:31,480 --> 00:01:36,600 Speaker 2: because it's high bandwidth memory. Those HBM very critical to 27 00:01:36,840 --> 00:01:41,479 Speaker 2: the systems that develop artificial intelligence models. Micron has key 28 00:01:41,520 --> 00:01:45,000 Speaker 2: competitors in both Samsung and s K Heinez, so keep 29 00:01:45,040 --> 00:01:48,320 Speaker 2: your eye on those stocks during the South Korean session. 30 00:01:48,520 --> 00:01:51,440 Speaker 2: To help us understand the forces working on markets in 31 00:01:51,520 --> 00:01:53,840 Speaker 2: the eight pack, let's bring in Paul Dobson. He is 32 00:01:53,880 --> 00:01:58,400 Speaker 2: Bloomberg's executive editor for Asian Markets. Paul, thanks for being here. 33 00:01:58,720 --> 00:02:02,120 Speaker 2: Let's start with the AI trade. To what degree do 34 00:02:02,160 --> 00:02:05,440 Speaker 2: you expect the Micron news to impact markets in the APEC? 35 00:02:06,240 --> 00:02:06,400 Speaker 1: Yeah? 36 00:02:06,480 --> 00:02:09,359 Speaker 4: Hi, that Doug, so as you were saying, Micron may 37 00:02:09,440 --> 00:02:12,960 Speaker 4: have some reader cross for the South Korean chip makers 38 00:02:13,000 --> 00:02:17,720 Speaker 4: in particular, Potentially something positive there in terms of that 39 00:02:17,840 --> 00:02:20,680 Speaker 4: read across, given how glowing those results are. But it 40 00:02:20,760 --> 00:02:23,280 Speaker 4: feels like the start of the Asia trading session is 41 00:02:23,320 --> 00:02:25,440 Speaker 4: going to be more responsive to the down move that 42 00:02:25,520 --> 00:02:30,040 Speaker 4: we saw in US technology companies in the NASDAG. Pretty 43 00:02:30,040 --> 00:02:35,360 Speaker 4: hefty drop there, and that kind of nerve and anxiety 44 00:02:35,440 --> 00:02:39,160 Speaker 4: that we're seeing related to Oracle, to the affordability of 45 00:02:39,200 --> 00:02:42,040 Speaker 4: the data center build out and the appetite to continue 46 00:02:42,080 --> 00:02:46,519 Speaker 4: to put money into it when the payoffs are uncertain 47 00:02:46,600 --> 00:02:50,799 Speaker 4: and the risks arising is challenging the market view into 48 00:02:50,880 --> 00:02:51,400 Speaker 4: year ends. 49 00:02:51,440 --> 00:02:53,720 Speaker 2: So as long as we're talking about AI, there was 50 00:02:53,760 --> 00:02:58,320 Speaker 2: a chip maker in China that debuted yesterday, Metax Integrated 51 00:02:58,400 --> 00:03:01,840 Speaker 2: Circuits Shunghai. I can't believe this stock was up nearly 52 00:03:01,960 --> 00:03:05,079 Speaker 2: seven hundred percent on its first day of trading. What's 53 00:03:05,120 --> 00:03:06,120 Speaker 2: happening here. 54 00:03:06,360 --> 00:03:12,040 Speaker 4: Yeah, pretty phenomenal. So it's the second Chinese chip related 55 00:03:12,080 --> 00:03:14,840 Speaker 4: company in the last few weeks that had a pretty 56 00:03:14,840 --> 00:03:18,920 Speaker 4: astonishing debut. We also saw that with more Threads, which 57 00:03:18,960 --> 00:03:22,079 Speaker 4: was up around five hundred percent on its debut. So 58 00:03:22,160 --> 00:03:27,560 Speaker 4: it seems that the domestic demand for these stocks is 59 00:03:27,600 --> 00:03:30,240 Speaker 4: incredibly strong because they seeing the same thing that we 60 00:03:30,280 --> 00:03:33,440 Speaker 4: saw in the US last year or the year before, 61 00:03:33,840 --> 00:03:37,280 Speaker 4: where there's that gigantic enthusiasm for the growth potential of 62 00:03:37,320 --> 00:03:39,920 Speaker 4: these companies. In China, of course wants to develop its 63 00:03:39,960 --> 00:03:43,040 Speaker 4: own stack away from the US system to use its 64 00:03:43,120 --> 00:03:46,000 Speaker 4: own technology as much as it possibly can, and so 65 00:03:46,080 --> 00:03:49,160 Speaker 4: that all goes particularly well for these kinds of companies. 66 00:03:49,320 --> 00:03:51,520 Speaker 4: It also talks to the idea that, you know, was 67 00:03:51,600 --> 00:03:55,080 Speaker 4: the IPO really priced at the right level of the 68 00:03:55,120 --> 00:03:58,080 Speaker 4: start when you've got this much demand. We saw, you know, 69 00:03:58,560 --> 00:04:03,480 Speaker 4: the allocation being very small for people that were trying 70 00:04:03,520 --> 00:04:05,920 Speaker 4: to get a hold of the shares because there was 71 00:04:06,080 --> 00:04:09,520 Speaker 4: just so much demand for it. And by the way, 72 00:04:09,600 --> 00:04:12,000 Speaker 4: there's five or six other chip makers coming down the 73 00:04:12,000 --> 00:04:15,240 Speaker 4: line that are also getting ready to IPO. So should 74 00:04:15,240 --> 00:04:18,479 Speaker 4: see more enthusiasm for this sector coming through from the 75 00:04:18,560 --> 00:04:20,360 Speaker 4: Chinese mainland in the coming weeks as well. 76 00:04:20,480 --> 00:04:24,120 Speaker 2: So will those IPOs happen on the mainland in Shanghai 77 00:04:24,200 --> 00:04:27,360 Speaker 2: or Shenzen as opposed to Hong Kong. Which market will 78 00:04:27,360 --> 00:04:27,960 Speaker 2: they choose? 79 00:04:28,800 --> 00:04:31,920 Speaker 4: It seems like for startups and for first time listings, 80 00:04:31,960 --> 00:04:35,120 Speaker 4: there's a renewed enthusiasm for listing on the mainland, so 81 00:04:35,160 --> 00:04:39,279 Speaker 4: that's what we've seen with the past two But for 82 00:04:39,640 --> 00:04:42,000 Speaker 4: more established companies, they want to get in on the 83 00:04:42,000 --> 00:04:44,400 Speaker 4: Hong Kong action as well, and you know, have exposure 84 00:04:44,440 --> 00:04:47,159 Speaker 4: to the international markets. So it seems like we'll see 85 00:04:47,200 --> 00:04:51,599 Speaker 4: a mix and Hong Kong has been really extremely busy 86 00:04:51,640 --> 00:04:53,640 Speaker 4: in terms of IPOs this year, so is the whole 87 00:04:53,640 --> 00:04:56,720 Speaker 4: of the Asia region for that matter, India too, but 88 00:04:57,440 --> 00:05:01,000 Speaker 4: it's mostly dominated by those Chinese. These companies that already 89 00:05:01,000 --> 00:05:02,880 Speaker 4: have listings on the main Dan now coming to Hong 90 00:05:02,960 --> 00:05:07,800 Speaker 4: Kong to sort of broaden their appeal and ownership structures. 91 00:05:07,880 --> 00:05:09,560 Speaker 2: So, as you know, when we look at the high 92 00:05:09,560 --> 00:05:12,320 Speaker 2: tech story in the US, particularly as it relates to 93 00:05:12,560 --> 00:05:18,080 Speaker 2: artificial intelligence, big question mark over valuations, is that something 94 00:05:18,240 --> 00:05:21,360 Speaker 2: that investors in the apecker are struggling with as well. 95 00:05:22,880 --> 00:05:25,280 Speaker 4: I think it depends what you look. So the more 96 00:05:25,360 --> 00:05:30,760 Speaker 4: established companies Japan, South Korea and of course Taiwan TSMC 97 00:05:31,240 --> 00:05:33,560 Speaker 4: are sort of bumbling along a little bit at the moment. 98 00:05:33,680 --> 00:05:38,080 Speaker 4: They're not going higher, but they're not coming dramatically lower either, 99 00:05:38,480 --> 00:05:40,600 Speaker 4: And it's that people are grappling with the same issues 100 00:05:40,640 --> 00:05:42,560 Speaker 4: that they are in the US, and you know, it 101 00:05:42,640 --> 00:05:46,400 Speaker 4: all becomes a little bit of a one one trade 102 00:05:46,440 --> 00:05:49,440 Speaker 4: in some ways, with that little bit of differentiation depending 103 00:05:49,440 --> 00:05:52,560 Speaker 4: on whether you'll open AI or Google or you know, 104 00:05:52,600 --> 00:05:55,000 Speaker 4: the different chains. I think one of the one of 105 00:05:55,040 --> 00:05:57,760 Speaker 4: the bellwethers that people will look to is soft Bank 106 00:05:57,839 --> 00:06:02,400 Speaker 4: in Japan, which is so heavily into the AI trade, 107 00:06:02,480 --> 00:06:04,120 Speaker 4: it's sold off, it's in n video stock, so it 108 00:06:04,160 --> 00:06:07,880 Speaker 4: could get more into some of the newer and more 109 00:06:07,880 --> 00:06:12,960 Speaker 4: innovative companies that are still building up their sort of profile. 110 00:06:13,839 --> 00:06:17,440 Speaker 4: But that company has had a pretty rocky stock performance 111 00:06:17,480 --> 00:06:21,480 Speaker 4: over the last few weeks because of that confidence that's 112 00:06:21,600 --> 00:06:23,440 Speaker 4: suddenly starting to drain a little bit. 113 00:06:23,520 --> 00:06:23,719 Speaker 1: Now. 114 00:06:24,000 --> 00:06:26,240 Speaker 4: It could all be year end stuff as well, right Doug. 115 00:06:26,279 --> 00:06:29,479 Speaker 4: It doesn't have to necessarily be all about confidence. It 116 00:06:29,520 --> 00:06:31,080 Speaker 4: could just be that it's been such a stead of 117 00:06:31,160 --> 00:06:32,560 Speaker 4: year that people want to take a little bit of 118 00:06:32,600 --> 00:06:35,479 Speaker 4: profit to flooden their books, to broaden their portfolios into 119 00:06:35,560 --> 00:06:37,560 Speaker 4: year end. So I think that the start of next 120 00:06:37,640 --> 00:06:39,520 Speaker 4: year and how we trade in January will be a 121 00:06:39,560 --> 00:06:42,599 Speaker 4: real clear tell for what enthusiasm lest it is for 122 00:06:42,640 --> 00:06:43,479 Speaker 4: the AI trade. 123 00:06:43,600 --> 00:06:46,120 Speaker 2: As long as we're talking about confidence, let's talk a 124 00:06:46,160 --> 00:06:48,520 Speaker 2: little bit about the lack of it as it relates 125 00:06:48,560 --> 00:06:50,880 Speaker 2: to the property market in China. And I was reading 126 00:06:50,960 --> 00:06:55,680 Speaker 2: on Bloomberg the China Van Kuh, once China's largest home builder, 127 00:06:55,880 --> 00:06:59,440 Speaker 2: is moving closer toward what could be one of China's 128 00:06:59,520 --> 00:07:03,840 Speaker 2: largest debt restructurings. What do we know about what's happening currently. 129 00:07:04,800 --> 00:07:09,600 Speaker 4: So it's getting worse, basically, would be a one line 130 00:07:09,640 --> 00:07:14,600 Speaker 4: answer to that question. So Venka was already, you know, 131 00:07:14,800 --> 00:07:18,640 Speaker 4: seeking to delay payments on some bonds, and the bondholders 132 00:07:18,640 --> 00:07:21,960 Speaker 4: weren't willing to accept the terms that it was offering 133 00:07:22,040 --> 00:07:26,640 Speaker 4: a first glance, and so they were demanding more credit 134 00:07:26,720 --> 00:07:30,920 Speaker 4: enhancements and more upfront payments on that one security, which 135 00:07:31,000 --> 00:07:33,520 Speaker 4: was for not a huge amount of money. Now, the 136 00:07:33,600 --> 00:07:36,120 Speaker 4: latest that we're hearing is the VANKA isn't just seeking 137 00:07:36,160 --> 00:07:38,600 Speaker 4: to delay payment on that one bond but other bonds, 138 00:07:38,840 --> 00:07:41,720 Speaker 4: and also talking to its banks about decurring payments on 139 00:07:41,760 --> 00:07:43,880 Speaker 4: some of its debts that are coming due with them 140 00:07:43,920 --> 00:07:46,760 Speaker 4: as well. So it's getting you know, kind of you 141 00:07:46,800 --> 00:07:49,160 Speaker 4: can feel the new kind of tightening in a way 142 00:07:49,520 --> 00:07:53,480 Speaker 4: around the company. People starting to talk openly about the 143 00:07:53,560 --> 00:07:57,360 Speaker 4: prospects for default and need to restructure the debt more holistically. 144 00:07:57,760 --> 00:08:01,600 Speaker 4: It's not quite at that point yet, but you know, 145 00:08:01,760 --> 00:08:04,240 Speaker 4: unless it manages to find some extra money from somewhere 146 00:08:04,360 --> 00:08:06,680 Speaker 4: or some sort of a stay of execution or the 147 00:08:06,680 --> 00:08:09,120 Speaker 4: bondholders get in line, then that does seem to be 148 00:08:09,160 --> 00:08:11,480 Speaker 4: the direction and that this company is headed in which 149 00:08:11,520 --> 00:08:15,520 Speaker 4: is really significant actually because it's sort of quasi state owned. 150 00:08:15,520 --> 00:08:18,840 Speaker 4: It has at least some ownership from a state backed company, 151 00:08:19,160 --> 00:08:21,280 Speaker 4: and that's the sort of that's what separates it from 152 00:08:21,280 --> 00:08:26,080 Speaker 4: all of the other property developers that we saw needing 153 00:08:26,080 --> 00:08:28,760 Speaker 4: to turn to restructuring like Evergrand and Country Garden over 154 00:08:28,800 --> 00:08:29,400 Speaker 4: recent years. 155 00:08:29,600 --> 00:08:32,760 Speaker 2: Does it have an outsize effect when it comes to 156 00:08:33,200 --> 00:08:36,560 Speaker 2: market psychology or because this company has been struggling for 157 00:08:36,600 --> 00:08:39,000 Speaker 2: such a long period of time many many years now, 158 00:08:39,360 --> 00:08:43,040 Speaker 2: is it pretty much accepted and kind of discounted by 159 00:08:43,080 --> 00:08:43,520 Speaker 2: the market. 160 00:08:45,080 --> 00:08:50,640 Speaker 4: I think it depends where you're looking, because the problem 161 00:08:51,000 --> 00:08:53,680 Speaker 4: is again that sort of what it talks to in 162 00:08:53,760 --> 00:08:57,200 Speaker 4: terms of consumer confidence and confidence in the property sector. 163 00:08:57,280 --> 00:09:02,480 Speaker 4: So each time another developer for into trouble, the people 164 00:09:02,760 --> 00:09:05,160 Speaker 4: wanting to buy homes in China will think, oh boy, 165 00:09:05,240 --> 00:09:07,400 Speaker 4: that we're not out of this yet. Prices are still 166 00:09:07,400 --> 00:09:08,959 Speaker 4: going to fall. So where should I buy a new 167 00:09:09,000 --> 00:09:11,680 Speaker 4: home yet? I'll wait until I can get it cheaper, 168 00:09:11,720 --> 00:09:15,000 Speaker 4: And so in terms of confidence in the economy, I 169 00:09:15,000 --> 00:09:18,040 Speaker 4: think that it has a quite significant impact. In terms 170 00:09:18,040 --> 00:09:21,360 Speaker 4: of impact on the broader market for sort of read 171 00:09:21,400 --> 00:09:26,640 Speaker 4: across from Vanka itself, probably as you were saying, since 172 00:09:27,720 --> 00:09:30,480 Speaker 4: we've known that the property sector has been in that 173 00:09:30,720 --> 00:09:33,720 Speaker 4: down wood slump and hasn't really managed to put itself 174 00:09:33,800 --> 00:09:37,839 Speaker 4: clear so far, I feel like perhaps not so much, 175 00:09:38,080 --> 00:09:39,800 Speaker 4: but it will be interesting to keep an eye on 176 00:09:39,840 --> 00:09:44,200 Speaker 4: other state owned property developers that have yet to default 177 00:09:44,559 --> 00:09:47,240 Speaker 4: on debts, just to check. So far, they seem to 178 00:09:47,240 --> 00:09:51,040 Speaker 4: be weathering the storm reasonably well. But you know the 179 00:09:51,840 --> 00:09:54,959 Speaker 4: in a bond market or a credit situation, often people 180 00:09:55,000 --> 00:09:57,200 Speaker 4: turn their attention to the next one in the chain 181 00:09:57,800 --> 00:09:59,680 Speaker 4: once a weeklink is found. 182 00:10:00,080 --> 00:10:02,120 Speaker 2: Paul, I want to get your take on this week's 183 00:10:02,200 --> 00:10:04,839 Speaker 2: rate decision from the Bank of Japan. We'll do that 184 00:10:04,960 --> 00:10:15,400 Speaker 2: next here on the Daybreak Asia podcast. Welcome back to 185 00:10:15,400 --> 00:10:19,520 Speaker 2: the Daybreak Asia Podcast. I'm Doug Prisner. On Friday in Tokyo, 186 00:10:19,600 --> 00:10:22,320 Speaker 2: the Bank of Japan is widely expected to raise its 187 00:10:22,400 --> 00:10:26,040 Speaker 2: benchmark interest rate to the highest level in three decades. 188 00:10:26,120 --> 00:10:29,720 Speaker 2: Let's bring back Paul Dobson. He is Bloomberg Executive Editor 189 00:10:29,720 --> 00:10:32,960 Speaker 2: for Asian Markets. So we know, Paul that a key 190 00:10:33,080 --> 00:10:36,280 Speaker 2: focus will not be just on the idea of a 191 00:10:36,400 --> 00:10:38,960 Speaker 2: rate hike, which I think right now the market is 192 00:10:39,200 --> 00:10:42,600 Speaker 2: clearly expecting. I think the probability is well above ninety percent, 193 00:10:43,000 --> 00:10:45,360 Speaker 2: But the focal point seems to be on how Governor 194 00:10:45,520 --> 00:10:49,000 Speaker 2: Uweita will present the path forward. Is that a fair statement? 195 00:10:50,160 --> 00:10:50,360 Speaker 1: Yeah? 196 00:10:50,360 --> 00:10:54,040 Speaker 4: Absolutely, I think that the a pretty much consensus view 197 00:10:54,080 --> 00:10:56,920 Speaker 4: among analysts and economists is that they're going to be 198 00:10:57,320 --> 00:11:01,280 Speaker 4: hiking interest rates. They've been pretty clear in communication about 199 00:11:01,320 --> 00:11:05,200 Speaker 4: that for this meeting. So it's that future path that 200 00:11:05,280 --> 00:11:09,040 Speaker 4: will be of interest and the idea that they'll be 201 00:11:09,360 --> 00:11:13,120 Speaker 4: communicating they can go beyond zero point seventy five percent 202 00:11:13,200 --> 00:11:16,280 Speaker 4: carry on hiking through next year. So what people will 203 00:11:16,320 --> 00:11:17,800 Speaker 4: want to know is, well, what does that look like 204 00:11:17,840 --> 00:11:19,880 Speaker 4: in terms of pace, and what does that look like 205 00:11:19,960 --> 00:11:23,120 Speaker 4: in terms of endpoint? You know, how high can interest 206 00:11:23,200 --> 00:11:25,440 Speaker 4: rates go and how quickly are we going to get there. 207 00:11:25,480 --> 00:11:28,880 Speaker 4: The Bank of Japan has been incredibly slow and cautious 208 00:11:28,920 --> 00:11:31,240 Speaker 4: about the way that it's been raising rates so far, 209 00:11:31,360 --> 00:11:33,920 Speaker 4: and you can understand that, right They've been through twenty 210 00:11:34,000 --> 00:11:36,440 Speaker 4: years and more of very low inflation. They don't want 211 00:11:36,480 --> 00:11:39,160 Speaker 4: to raise rates too quickly and snuff that out. But 212 00:11:39,240 --> 00:11:41,400 Speaker 4: at the same time, they do want what they would 213 00:11:41,440 --> 00:11:43,920 Speaker 4: say refer to as normalize interest rates. How you get 214 00:11:43,960 --> 00:11:47,240 Speaker 4: them to levels more comparable with other economies around the 215 00:11:47,280 --> 00:11:50,520 Speaker 4: world and lower and a lot higher than they are 216 00:11:50,600 --> 00:11:55,400 Speaker 4: right now, so they will probably not want to rock 217 00:11:55,440 --> 00:11:58,040 Speaker 4: the boat too much, but also make it clear that 218 00:11:58,640 --> 00:12:00,920 Speaker 4: the path that we're on is still for higher interest 219 00:12:01,000 --> 00:12:02,319 Speaker 4: rates over time. 220 00:12:02,640 --> 00:12:04,560 Speaker 2: Could you make a case that the move up and 221 00:12:04,640 --> 00:12:07,280 Speaker 2: yields that we have seen across the curve in Japan 222 00:12:07,679 --> 00:12:10,480 Speaker 2: the tightening has done some of the work that the 223 00:12:10,480 --> 00:12:13,040 Speaker 2: BOJ intends to do. Is that plausible? 224 00:12:14,440 --> 00:12:15,760 Speaker 4: It is a bit at the same time that it 225 00:12:15,760 --> 00:12:18,800 Speaker 4: hasn't really worked in terms of the currency space, because 226 00:12:18,800 --> 00:12:21,679 Speaker 4: we've still seen the yen continue to weaken. So I 227 00:12:21,760 --> 00:12:24,400 Speaker 4: don't think that you will characterize financial conditions as tight 228 00:12:24,440 --> 00:12:26,720 Speaker 4: by any means in Japan. I think that what people 229 00:12:26,760 --> 00:12:28,920 Speaker 4: are more worried about when you look at the BUN 230 00:12:29,040 --> 00:12:31,000 Speaker 4: yield curve is whether the government is going to be 231 00:12:31,040 --> 00:12:34,560 Speaker 4: able to continue to finance its debts, and how worried 232 00:12:34,559 --> 00:12:36,400 Speaker 4: people get about that. At the moment, we seem to 233 00:12:36,400 --> 00:12:39,040 Speaker 4: have sort of stabilized in terms of longer term yields. 234 00:12:39,240 --> 00:12:43,120 Speaker 4: We've got the tenure just below two percent. It hasn't 235 00:12:43,120 --> 00:12:45,240 Speaker 4: breached above that level yet. We may well get there 236 00:12:45,280 --> 00:12:47,079 Speaker 4: if the BOJ does give us a sense that it's 237 00:12:47,120 --> 00:12:50,920 Speaker 4: going to be on a more determined hiking cycle. I 238 00:12:50,920 --> 00:12:53,200 Speaker 4: think that that will be really interesting because it matters 239 00:12:53,200 --> 00:12:55,200 Speaker 4: not just for the Japanese government bond market, but for 240 00:12:55,240 --> 00:12:59,040 Speaker 4: global markets as well, because remember, Japan's supposed to be 241 00:12:59,040 --> 00:13:02,040 Speaker 4: the anchor for global rates, and if those yields get 242 00:13:02,120 --> 00:13:04,800 Speaker 4: high enough, then they will start to tempt Japanese money 243 00:13:05,360 --> 00:13:08,920 Speaker 4: into jgb's in you know, as an alternative to investing 244 00:13:08,960 --> 00:13:12,120 Speaker 4: in say US treasuries or UK or French government bonds. 245 00:13:12,160 --> 00:13:14,959 Speaker 2: So with higher JGB yields, isn't that a positive for 246 00:13:15,040 --> 00:13:16,319 Speaker 2: some of the big banks in Japan? 247 00:13:17,400 --> 00:13:19,560 Speaker 4: It is, well, it is some finance socks all around 248 00:13:19,559 --> 00:13:22,160 Speaker 4: the world have had a really brilliant second half of 249 00:13:22,200 --> 00:13:25,640 Speaker 4: the year, And yes, definitely a steeper yield curve and 250 00:13:25,679 --> 00:13:30,640 Speaker 4: higher higher rates is good news for Japanese banks, you know, 251 00:13:30,679 --> 00:13:33,400 Speaker 4: which which which are already pretty flushed with cash I think, 252 00:13:33,400 --> 00:13:36,040 Speaker 4: and having a reasonable time of it. The question is 253 00:13:36,080 --> 00:13:39,600 Speaker 4: can they get cash flowing through the economy more and 254 00:13:39,640 --> 00:13:44,120 Speaker 4: continue to fuel growth, because what you don't want is 255 00:13:43,120 --> 00:13:47,040 Speaker 4: a situation where you still have reasonably high inflation. You 256 00:13:47,080 --> 00:13:49,800 Speaker 4: have the central bank raising interest rates, but that kind 257 00:13:49,840 --> 00:13:53,400 Speaker 4: of squishing the economy as well. So there is that balance, 258 00:13:53,440 --> 00:13:54,959 Speaker 4: and I think that the you know, if you look 259 00:13:55,000 --> 00:13:58,040 Speaker 4: at what the new leader Takahi has been saying, she's 260 00:13:58,160 --> 00:14:01,320 Speaker 4: very hot on the need to kind of keep inflation 261 00:14:01,440 --> 00:14:03,559 Speaker 4: under wraps from a fiscal points of view as well, 262 00:14:03,559 --> 00:14:06,760 Speaker 4: and try to keep on stimulating the economy and keeping 263 00:14:06,760 --> 00:14:08,000 Speaker 4: growth going at the same time. 264 00:14:08,320 --> 00:14:11,280 Speaker 2: So away from the financials and the banks in Japan, 265 00:14:11,440 --> 00:14:14,080 Speaker 2: what is the outlook for the overall equity market? Would 266 00:14:14,400 --> 00:14:17,120 Speaker 2: stronger yen necessarily be a negative for the n K 267 00:14:17,280 --> 00:14:17,880 Speaker 2: Let's say. 268 00:14:18,040 --> 00:14:19,680 Speaker 4: What you want to think about is would a week 269 00:14:19,720 --> 00:14:22,480 Speaker 4: a yen be helpful? Probably not with much stronger yen, 270 00:14:22,560 --> 00:14:26,640 Speaker 4: as you said, the beneficial maybe it can be in 271 00:14:27,040 --> 00:14:30,880 Speaker 4: the sense that although Japan is still quite a big exporter, 272 00:14:31,160 --> 00:14:35,720 Speaker 4: at the same time, if you have more of a 273 00:14:35,880 --> 00:14:38,960 Speaker 4: sort of sense of confidence flowing back into the economy 274 00:14:39,280 --> 00:14:41,800 Speaker 4: and reflective through a stronger exchange rate, that can be 275 00:14:42,360 --> 00:14:45,600 Speaker 4: beneficial both for sort of confidence and growth and also 276 00:14:46,280 --> 00:14:48,960 Speaker 4: for the outlook for the companies and so bring in 277 00:14:49,040 --> 00:14:51,680 Speaker 4: more money, you know, and we've seen overseas investors have 278 00:14:51,760 --> 00:14:54,760 Speaker 4: been interested in Japanese stocks and bonds this year and 279 00:14:54,760 --> 00:14:58,760 Speaker 4: putting money to work there. You know, the stocks are 280 00:14:58,800 --> 00:15:02,640 Speaker 4: still quite close to record highs too. It doesn't take 281 00:15:02,680 --> 00:15:04,560 Speaker 4: an awful lot to keep their momentum going. 282 00:15:05,280 --> 00:15:07,240 Speaker 2: So, Paul, before I let you go, what else is 283 00:15:07,440 --> 00:15:10,320 Speaker 2: top of mind as you look at markets today? 284 00:15:11,440 --> 00:15:13,240 Speaker 4: It's very dynamic of the moment. I think that we've 285 00:15:13,240 --> 00:15:15,520 Speaker 4: got a lot of interesting things going on in currencies 286 00:15:15,600 --> 00:15:18,320 Speaker 4: right across Asia. We've got the koreem one where the 287 00:15:18,360 --> 00:15:21,000 Speaker 4: authorities are really battling to try to support it at 288 00:15:21,040 --> 00:15:24,440 Speaker 4: the moment, but it comes on too continuing pressure. Likewise, 289 00:15:24,440 --> 00:15:26,800 Speaker 4: we've seen quite a lot of weakness in Taiwan's currency 290 00:15:26,840 --> 00:15:30,200 Speaker 4: we recently and in some of the Southeast Asian nations, 291 00:15:30,360 --> 00:15:31,920 Speaker 4: and on the flip side of that, we've seen quite 292 00:15:31,920 --> 00:15:34,680 Speaker 4: a lot of undesired strength in some of the markets 293 00:15:34,680 --> 00:15:36,720 Speaker 4: as well. The type bart just keeps on going up 294 00:15:36,760 --> 00:15:38,920 Speaker 4: and the authorities don't really want that. We had a 295 00:15:38,960 --> 00:15:41,200 Speaker 4: cut by the Central Bank yesterday to see if they 296 00:15:41,200 --> 00:15:43,600 Speaker 4: can control it a little bit more. And the Chinese 297 00:15:43,720 --> 00:15:46,880 Speaker 4: un just continues to steadily strengthen day by day as well. 298 00:15:46,880 --> 00:15:49,560 Speaker 4: So I think those are interesting things. Those tensions in 299 00:15:49,600 --> 00:15:54,360 Speaker 4: the Chinese equity market, despite the excitement over the AI space, 300 00:15:54,520 --> 00:15:58,280 Speaker 4: also are pretty interesting. And then over in India. You know, 301 00:15:58,320 --> 00:16:01,960 Speaker 4: the rupee as well has been under seedge recently, weakening 302 00:16:02,080 --> 00:16:04,360 Speaker 4: to record lows on a mid daily basis. Yesterday we 303 00:16:04,400 --> 00:16:07,840 Speaker 4: saw really strong and aggressive pushback from the central Bank 304 00:16:07,920 --> 00:16:10,680 Speaker 4: to try to stop the market from getting too one 305 00:16:10,720 --> 00:16:13,800 Speaker 4: sided in those bets. So lots of strength, tensions, and stresses, 306 00:16:13,840 --> 00:16:16,320 Speaker 4: I think in the FX market is what I'm particularly 307 00:16:16,320 --> 00:16:18,000 Speaker 4: interested in as we head into your ends. 308 00:16:18,040 --> 00:16:19,720 Speaker 2: All right, Paul, we'll leave it there. Thank you so 309 00:16:19,800 --> 00:16:22,840 Speaker 2: much for being here. Paul Dobson, Bloomberg's Executive editor for 310 00:16:22,880 --> 00:16:25,720 Speaker 2: Asian Markets, joining us here on the Daybreak Asia podcast. 311 00:16:27,240 --> 00:16:30,600 Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak 312 00:16:30,760 --> 00:16:34,120 Speaker 2: Asia Edition podcast. Each weekday, we look at the story 313 00:16:34,200 --> 00:16:38,560 Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You 314 00:16:38,600 --> 00:16:42,680 Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, 315 00:16:42,800 --> 00:16:45,840 Speaker 2: or anywhere else you listen. Join us again tomorrow for 316 00:16:45,960 --> 00:16:49,440 Speaker 2: insight on the market moves from Hong Kong to Singapore 317 00:16:49,840 --> 00:16:53,640 Speaker 2: and Australia. I'm Doug Chrisner, and this is Bloomberg