Speaker 1: This is Bloomberg Daybreak Asia for this Thursday, April twenty
Speaker 1: seventh in Hong Kong, Wednesday April twenty sixth in New
Speaker 1: York and coming up today.
Speaker 2: Shares in First Republic Bank plunge on word Advisors have
Speaker 2: lined up potential buyers of new stock as part of
Speaker 2: a rescue plan.
Speaker 1: Shares in Meta Platforms jump after the company reports sales
Speaker 1: that top analyst estimates.
Speaker 2: And Microsoft sixty nine billion dollar takeover of Activision. Blizzard
Speaker 2: is blocked by the UK government.
Speaker 3: McCarthy's debt ceiling Bell Biden says any North Korea nuclear
Speaker 3: attack will end Kim's regime. Disney sues DeSantis. I'm at
Speaker 3: Baxter with Global News.
Speaker 4: That's all straight ahead on Bloomberg Daybreak Asia, The business
Speaker 4: news you need to start your day in just one
Speaker 4: fifteen minute podcast available on Apple, Spotify, the Bloomberg Business App,
Speaker 4: and everywhere you get your podcasts.
Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the
Speaker 2: stories we're following today. Will begin with Meta Platforms after
Speaker 2: the bell, the company reported first quarter sales jumping to
Speaker 2: twenty eight point six billion dollars. The street was looking
Speaker 2: for something about a billion dollars less than that, so
Speaker 2: this represents a return to growth after three straight quarters
Speaker 2: of declines. Meta continued to add users. In the prior
Speaker 2: quarter for Facebook, Instagram, and WhatsApp, more than three billion
Speaker 2: people used it at least one of the products, I
Speaker 2: should say daily. That's a new milestone. Some setbacks though.
Speaker 2: Reality Labs, which is the Meta division focused on kind
Speaker 2: of R and D revenue there down fifty one percent.
Speaker 2: This is the division focused on building a virtual reality
Speaker 2: tech for the metaverse. Bloomberg's man Deep Singh tells us
Speaker 2: the company will continue to pour money into this area.
Speaker 5: The foundational layer is AI. They are harnessing a lot
Speaker 5: of that data. They are training their own equivalent of
Speaker 5: large language models. We don't know how they'll be monetizing it.
Speaker 5: It's not in the form of cloud infrastructure, which is
Speaker 5: how Google and Microsoft are doing it. So we don't
Speaker 5: know what that next application will be where they'll be
Speaker 5: able to monetize it beyond the ad pricing, and you
Speaker 5: know the ad business they already have, which is firing
Speaker 5: on all cylenders. When it comes to the monetization they
Speaker 5: have right.
Speaker 2: Now, Bloomberg's Mandeep sing there Meta platforms up as much
Speaker 2: as twelve percent in the late US session, and if
Speaker 2: you go back from the first part of this year,
Speaker 2: meta shares are up about seventy four percent. Let's take
Speaker 2: a look at First Republic Bank. The stock was down
Speaker 2: today quite a bit. This is after CNBC reported a
Speaker 2: rescue plan is in the works for the struggling lender.
Speaker 2: We have more from Bloombergs and Cates.
Speaker 6: Advisors will try to persuade big US banks who've already
Speaker 6: built out. First Republic wants to purchase its bonds at
Speaker 6: above market rates for a loss of a few billion dollars,
Speaker 6: and they have already aligned up possible purchasers. Analystit Tdcounts
Speaker 6: say that while regulators don't act based on stock price,
Speaker 6: a steep decline could raise questions about the ability of
Speaker 6: a bank to raise fresh capital, and they believe there
Speaker 6: will have to be a broader restructuring of First Republic.
Speaker 6: First Republic last month got thirty billion dollars in deposits
Speaker 6: from bigger financial institutions in Washington and Kates Bloomberg day
Speaker 6: Break Asia.
Speaker 2: Now separately, we are told US bank regulators are weighing
Speaker 2: the prospects of downgrading their private assessment of First Republic.
Speaker 2: The move may limit the troubled firm's access to those
Speaker 2: lending facilities at the Federal Reserve well. As I mentioned earlier, tomorrow,
Speaker 2: we'll get the latest report card for the American economy.
Speaker 2: GDP numbers for Q one out at eight thirty am
Speaker 2: Wall Street time. We have a preview from Bloomberg's Michael McKee.
Speaker 7: The GDP data are likely to present a picture of
Speaker 7: a US economy that started the year strong before losing momentum.
Speaker 7: The strength of the report is expected to be consumer spending,
Speaker 7: particularly in January, although at least one bank suggests the
Speaker 7: government's recent statistical adjustments to spending may cut growth concent considerably.
Speaker 7: Inventory should be a drag, falling back after a big
Speaker 7: bill at the end of twenty twenty two. Residential investment
Speaker 7: will take a hit from the battered housing market and
Speaker 7: durable goods. As they showed Wednesday, show business investment has
Speaker 7: been tepid. Analysts and the Fed will have to decide
Speaker 7: whether the slowdown is as expected given the Fed's rate increases,
Speaker 7: or if it signals trouble ahead in the next few quarters.
Speaker 7: Michael McKee, Bloomberg Daybreak Asia.
Speaker 2: Well, it could be game over from Microsoft and its
Speaker 2: hopes of buying Activision Blizzard. Let's get the story from
Speaker 2: Bloomberg's to Nise Pellegrini.
Speaker 8: The UK's antitrust watch dog is blocking the planned sixty
Speaker 8: nine billion dollar takeover. The Competition and Markets Authority says
Speaker 8: its concerns can't be resolved by any proposed remedies. In
Speaker 8: the US, the Federal Trade Commission has already sued to
Speaker 8: block the deal, and the European Commission is supposed to
Speaker 8: rule by May twenty second. The Microsoft takeover of Activision
Speaker 8: was being builled as the biggest ever deal pending in
Speaker 8: the gaming industry. Microsoft and Activision both say they do
Speaker 8: plan to appeal that decision. Denise Pellgrity, Bluebirg day Break
Speaker 8: Asia maytime.
Speaker 2: The Biden administration is urging China to improve its protections
Speaker 2: for intellectual property. The US has the pace of Beijing's
Speaker 2: reform simply slowed last year. Now, Washington has been closely
Speaker 2: monitoring China's progress in the implementation of commitments made in
Speaker 2: the recent deal. The agreement was signed after a two
Speaker 2: year tariff war launched under the Trump administration. In an
Speaker 2: annual review, the Office of the US Trade rep says
Speaker 2: China should provide a level playing field for IP protection
Speaker 2: and enforcement. It went on to say concerns remain about
Speaker 2: the implementation of China's measures, the USTR saying that China
Speaker 2: should open its market to foreign investment and embrace market
Speaker 2: oriented policies. This is Daybreak Asia. I'm joined now by
Speaker 2: Brian Curtis, who's coming in from Hong Kong. Your thoughts
Speaker 2: as we get set for trading in Asia today.
Speaker 1: Well, you look at meta higher revenue at a time
Speaker 1: when you're reducing costs, So that's very good recipe for gains,
Speaker 1: and that's why we see such big gains after hours.
Speaker 1: But I think it's really not a good sign for
Speaker 1: the bulls dug to see the broader benchmarks not being
Speaker 1: able to rally today after such strong earnings from companies
Speaker 1: like Microsoft and alphabet and so it may bode for
Speaker 1: a little bit more selling in the market. We don't know.
Speaker 1: A lot depends on the data as well, but anyway,
Speaker 1: if you're a bull, you're probably a little concerned.
Speaker 2: And I noted earlier that THESC China Index was able
Speaker 2: to snap a six day losing streak that may be significant.
Speaker 2: The MSCI China Index up about that nine tenths of
Speaker 2: one percent, and then stateside we had the Nasdaq Golden
Speaker 2: Dragon China Index up about one percent. But I was
Speaker 2: struck by this survey published on Wednesday, data shared exclusively
Speaker 2: with Bloomberg. More than half of Chinese travelers say they
Speaker 2: haven't plans to go abroad this year during the Golden
Speaker 2: Week holiday.
Speaker 1: Yeah, that'll be a big till, won't it. The Golden
Speaker 1: Week holiday is one thing. And then also what we
Speaker 1: might get from the Pollit Bureau, they're still expected to
Speaker 1: meet this week to look at economic priority. Now, we
Speaker 1: had interpreted that in one of our main stories at
Speaker 1: Bloomberg that this could mean less stimulus coming. That's what
Speaker 1: we're hearing from different economists around the region. But you know,
Speaker 1: you're getting some really interesting cross currents here. Picta Asset
Speaker 1: Management is calling for six point six percent growth for
Speaker 1: the full year for the economy, and Goldman Sachs is
Speaker 1: saying that strong earnings will lift China stocks. Ninety percent
Speaker 1: of China firms giving positive first quarter guidance. Yet we've
Speaker 1: had nearly half a trillion dollar sell off that you
Speaker 1: mentioned at the beginning there in Chinese stocks, so albeit
Speaker 1: with a little pause in the selling today.
Speaker 2: All right, let's get global news next. We have House
Speaker 2: Speaker Kevin McCarthy getting his debt bill passed ed. Baxter
Speaker 2: has the latest from the Bloomberg newsroom in San Francisco.
Speaker 3: Eddie, Yeah, boy, the major victory for him, Doug, he
Speaker 3: just snuck it through his party barely call list behind
Speaker 3: him Bloomberg's Emily Wilkins.
Speaker 1: Here.
Speaker 9: They spend all day to day twisting arms, getting folks
Speaker 9: on board. Certainly those handful of changes that they put
Speaker 9: into place at two in the morning were helpful. They
Speaker 9: addressed concerns that iwins had about corn and biofuels. They
Speaker 9: addressed some some concerns that those across the conference had
Speaker 9: on when work requirements would start.
Speaker 3: Yeah. A Republican Congressman Josh Holly, though, repeated, it's all
Speaker 3: about getting Joe Biden to the table. We all know
Speaker 3: how this is going to be resolved in the end.
Speaker 3: If it is resolved, and that is, the president is
Speaker 3: going to have to He's going to have to negotiate.
Speaker 10: Now.
Speaker 3: President Biden has said today again he'd be glad to
Speaker 3: sit down with McCarthy to discuss raising the debt ceiling.
Speaker 3: If McCarthy took the fault off the table so it
Speaker 3: is passed, it will have a tough time in the Senate.
Speaker 3: Democrat Richard Blumenthal.
Speaker 11: There may be a way to combine the two, but
Speaker 11: right now, let's do the debt ceiling and have an
Speaker 11: understanding that there can be discussions and conversations and even
Speaker 11: negotiation about what the any limit should be going forward
Speaker 11: in the next budget.
Speaker 3: So let's see if it even gets brought up in
Speaker 3: the Senate. That will be the next step. The meetings
Speaker 3: between presidents of South Korea and the United States come
Speaker 3: with a promise of increased deterrence against nuclear threats. President
Speaker 3: Joe Biden today in a meeting with South Korean President
Speaker 3: Eun Suk Yule, mentioned North Korea and Kim John undirectly.
Speaker 12: A nuclear attack by North Korea against the United States
Speaker 12: or its allies or partisans partners is unacceptable and will
Speaker 12: result in the end of whatever regime we're to take such.
Speaker 3: An action, he says. The agreement signed today will have
Speaker 3: nuclear weapons deployed on will not have nuclear weapons deployed
Speaker 3: on the peninsula, but there will be visits to ports
Speaker 3: by nuclear submarines, Biden saying nuclear attack is not the
Speaker 3: only thing that this partnership will serve.
Speaker 12: There's still a contest between autocracies and democracies, and we're
Speaker 12: the meeting democracy in the world. And it's something I
Speaker 12: know fair amount about, something I care about. I have
Speaker 12: found a willingness and offl out of our allies and
Speaker 12: trends to call it so.
Speaker 3: At the briefing, President Ewn was asked whether the intelligence
Speaker 3: leaks in the US threatened the relationship.
Speaker 13: Hamlana with regard to that we are communicating between our
Speaker 13: two countries and we are sharing necessary information. I believe
Speaker 13: that investigation isn't your way in the United States, and.
Speaker 3: To that point, Bloomberg Sam Kim, who's traveling with President Ewan,
Speaker 3: says they kind of expected the intelligence gathering anyway.
Speaker 14: There's American soldiers, about thirty thousand American soldiers station and
Speaker 14: some of them are stationed right at the center of
Speaker 14: the city. They still are, and there's a massive intelligence operations.
Speaker 14: I'm not saying they're spying in South Korea, but they
Speaker 14: need to do that in order to maintain the treaty
Speaker 14: around the peninsula.
Speaker 3: Sam says trust very important part of the relationship, and
Speaker 3: both say that it is there. Well only it was
Speaker 3: para by more than twenty seven hundred journalist and listen
Speaker 3: over one hundred and twenty countries in San Francisco. I'm
Speaker 3: at Baxter and this is Bloomberg.
Speaker 1: I'm Brian Curtis in Hong Kong along with Rishard Salamad,
Speaker 1: and our guest is Jin Bailu, who is portfolio manager
Speaker 1: at Trabeca Investment Partner, is joining us from our studio
Speaker 1: in Sydney. Jim Belu, Nice to have you on the program.
Speaker 1: As usual, we mentioned it's an interesting environment where you
Speaker 1: have such strong earnings from the tech companies and the
Speaker 1: major benchmarks don't rally. However, if you pick the right companies,
Speaker 1: you're singing all the way to the bank. If you
Speaker 1: pick the right bank, that's the world we live in.
Speaker 15: Well, absolutely, thank you so much for having me. Look,
Speaker 15: this is a crazy world, and you know, I would
Speaker 15: actually say this is really a market for active investors.
Speaker 15: You pick the right company that will deliver you earning
Speaker 15: and high expectations and growth, and that company is going
Speaker 15: to deliver a lot of return. You know, this is
Speaker 15: not the sort of market environment where you can just
Speaker 15: buy benchmark and hopefully generate return. There's a lot of
Speaker 15: uncertainties out there. There's lack of generally lack of investor
Speaker 15: confidence in you know, just buying up all the sectors.
Speaker 15: You know, some of the risks are tail risks that
Speaker 15: were previously thought were really just tail risk and now
Speaker 15: just become a little bit more significant. And and that's
Speaker 15: what sort of investors grappling with every single day.
Speaker 10: Well, you say you've got to be active and nimble. Well,
Speaker 10: I mean, surely you just put your money into a
Speaker 10: money market fund and you're getting a decent return fixed
Speaker 10: income wise, and you know that's one way of playing this,
Speaker 10: I guess, and having the safety.
Speaker 15: Yeah, look absolutely, but given them an equity market manager
Speaker 15: that I certainly think the share market represents significant amount
Speaker 15: of opportunity for the right investor being nimble and finding
Speaker 15: you know, return opportunity. You know, we just talked to
Speaker 15: some of those you know, great megacabs like Microsoft, like
Speaker 15: the Google reporting phenomenal results and you know.
Speaker 16: So far this year they've done very very well relative to.
Speaker 15: You know the likes of banks and you know, the
Speaker 15: cyclicals that's being sort of under pressure at the moment,
Speaker 15: so it's really yeah, put your money to work, whether
Speaker 15: it's fixed income. My view is that capital growth is
Speaker 15: going to be quite significant and in the equity market,
Speaker 15: so that's a good place for the money too.
Speaker 1: You're pretty positive. I note that in your three conviction
Speaker 1: calls you like US stocks to finish the year higher.
Speaker 1: China reopening is gathering momentum. Perhaps you can talk about
Speaker 1: that and that Australia will avoid recession. So given that
Speaker 1: positive view, let's switch to China. Is the China reopening
Speaker 1: part and parcel of that positive view for even US
Speaker 1: stocks and Australia avoiding recession.
Speaker 16: Look absolutely.
Speaker 15: I think you know, for Australia, China is a very
Speaker 15: important trading partner and a big part of our market
Speaker 15: cap is very much linked to the fortune of China.
Speaker 15: And you know, the will the reopening thematic is well
Speaker 15: on the way, and I do think that the progress
Speaker 15: has been very very promising. Now clearly there's you know,
Speaker 15: star stop and then there's slowing data and consumption isn't
Speaker 15: as good as fast as what everyone expecting. But don't
Speaker 15: forget every other market when we went through reopening, like Australia,
Speaker 15: like the US, we had many star stop and it
Speaker 15: took years for US to really get back to that
Speaker 15: one hundred percent you know, reopened activity. And you know,
Speaker 15: I think China is achieving incredible progress and in the
Speaker 15: next six month we will see some of those data
Speaker 15: gathering momentum, you know, some.
Speaker 1: Of the Yeah, that's that's I think that's consensus. But
Speaker 1: why why is the stock market selling off so much?
Speaker 1: You know, has been a really rough.
Speaker 15: Month absolutely, so stock market is really grappling with you know,
Speaker 15: I think the China reopening is definitely happening, but the
Speaker 15: stock market is grappling with what's happening with the US
Speaker 15: and Europe, some of the developed markets where things are
Speaker 15: really slowing down very quickly. And the I think the
Speaker 15: financial stress caused by some of those regional bank you know,
Speaker 15: going under or having liquidity crisis is just really put
Speaker 15: some heightened some of those risks that the investors sort
Speaker 15: of you know, have been worried about for quite some time.
Speaker 15: So I think this is what's happening. And right now,
Speaker 15: you know, certainly seems like some of those regional banks
Speaker 15: and the crisis liquidity crisis is contained to those markets.
Speaker 16: But yes, you know, if it gets started spreading.
Speaker 15: Into other markets, then they could put pressure or tighten
Speaker 15: the financial condition. So don't forget we are in this,
Speaker 15: you know, in this world where China is trying to
Speaker 15: loosen the financial condition, trying to get it to going again,
Speaker 15: whereas everywhere else was trying to contain or trying to
Speaker 15: tighten the financial condition. So clearly I know where the
Speaker 15: capital should go to generate return. But you know a
Speaker 15: lot of global investors, you kind of if you have
Speaker 15: to be invested, it's you know, it's a challenging period.
Speaker 10: Well, obviously a lot of money has also gone into
Speaker 10: fixed income as well, hasn't it. But I'm just looking
Speaker 10: for a recording point of view, and what are the
Speaker 10: I suppose the geographies you like in the sectors within
Speaker 10: those geographies that you like, and the ones that you
Speaker 10: absolutely do not.
Speaker 15: Yeah, look absolutely, So you know our view is that,
Speaker 15: you know, given this we talked to this uncertain world.
Speaker 15: You know, we do think the quality growth leaders is
Speaker 15: going to do well. Companies are actually not unprofitable. Growth
Speaker 15: leaders is the quality that the company actually make, you know,
Speaker 15: make significant returns and high roes and generate growth is
Speaker 15: going to be the key return generator in this market.
Speaker 15: You know, healthcare we talked to before is you know,
Speaker 15: sits really well within that space where they have structural
Speaker 15: growth driver and many of them have you know, is
Speaker 15: going to have tailwind post in the post pandemic world.
Speaker 15: And aside from that, we are seeing you know, sectors
Speaker 15: where you know, they're being sold off because of you know,
Speaker 15: uncertainties around the world, but they are linked to the
Speaker 15: China reopening trade, you know, and we see those sectors
Speaker 15: actually represent really good short term tactical opportunities, you know,
Speaker 15: as we we we sail through this uncertain period.
Speaker 1: Okay, you mentioned you mentioned the geopolitics is one reason
Speaker 1: why stocks have been faltering in the China sphere. Now
Speaker 1: you're saying that Australia will avoid recession, Australia is also
Speaker 1: kind of wrapped up in a lot of the geopolitics
Speaker 1: with China as well. What's the best play then for
Speaker 1: your confidence in Australia.
Speaker 16: Look Australia economy.
Speaker 15: We if you look at some of the data in
Speaker 15: terms of inflation the like it wasn't it didn't rise
Speaker 15: as sharply as every other markets like the China and
Speaker 15: other countries. You know, it's partly because our you know
Speaker 15: lockdown and disruption to reopening was longer than other markets,
Speaker 15: so in the way, we sort of avoided that peak
Speaker 15: of you know, inflationary pressure.
Speaker 16: Now, our inflation is high, our.
Speaker 15: Interest rate is still yet to be at the you know,
Speaker 15: the reasonable level, but it certainly seems like the interest
Speaker 15: rate increases is slowing down Australia and the inflation read
Speaker 15: it seems to be sort of topping out. And that
Speaker 15: is you know, encouraging because we may not have to
Speaker 15: get to the interest rate that is achieved by other
Speaker 15: markets like the US. So you know, so that together thinks, okay,
Speaker 15: housing is not falling as bad as what people are expecting,
Speaker 15: so that creates a bit of a little bit more confidence.
Speaker 16: Clip.
Speaker 10: I just want to just get one very quick one.
Speaker 10: And if suddenly we get to this announcement, let's say
Speaker 10: the Fed went twenty five basis points and okay, we're done.
Speaker 10: They just say that, why would the market react to you?
Speaker 15: Of you, market will be very pleased, but twenty five
Speaker 15: basis point is being priced in, so market would like that.
Speaker 15: And then in the next six month we should begin
Speaker 15: to see a very strong equity market on basis of
Speaker 15: the certainty of the interest rate directions.
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