Speaker 1: This is Bloomberg day Break Asia for this Wednesday, April
Speaker 1: twenty sixth in Hong Kong, Tuesday April twenty fifth in
Speaker 1: New York, and coming up today.
Speaker 2: First Republic Bank is said to be considering selling up
Speaker 2: to one hundred billion dollars in assets. Shares plunge as
Speaker 2: much as fifty percent.
Speaker 1: Alpha Met's quarterly revenue beats analyst estimates as ad sales recover.
Speaker 2: And Microsoft reports strong sales and profit with increased demand
Speaker 2: for cloud services.
Speaker 3: Germany announcing intentions to improve relations with China. Biden makes
Speaker 3: reelection bit official, China loosens travel test restrictions, I Space
Speaker 3: Japan as disappointing, and to Moon mission. I'm at Baxter
Speaker 3: 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 1: Good morning, I'm Doug Chrisner and I'm Brian Curtiz. Here
Speaker 1: are the stories we're following today. We hear that First
Speaker 1: Republic Bank is exploring divesting fifty to one hundred billion
Speaker 1: dollars worth of long dated mortgage and securities as part
Speaker 1: of a broader rescue plan. The sales are aimed at
Speaker 1: reducing the mismatch between the bank's assets and liabilities, and
Speaker 1: buyers may be offered some incentives to pay above market rates.
Speaker 1: Here's Bloomberg Shinali Bassok.
Speaker 5: There may be sweeteners for potential buyers here, that's part
Speaker 5: of the deal here. Potentially warrants are preferred equity as
Speaker 5: an incentive to buy some of these assets. Remember when
Speaker 5: we looked at First Republic, loans at the end of
Speaker 5: the quarter were one hundred and seventy three billion, but
Speaker 5: deposits were one hundred billion. There are a lot of
Speaker 5: concerns about the strength of the balance sheet here. But
Speaker 5: the hope here is that by getting Whittf's assets, selling
Speaker 5: these assets at above market value, there can be something
Speaker 5: here for the buyer to hang on to.
Speaker 1: We hear that Fresh Republic may need the US government
Speaker 1: to facilitate negotiations with some of the largest banks in
Speaker 1: the country to try to stabilize the lender as it
Speaker 1: executes its turnaround. First Republic shares dropped as much as
Speaker 1: fifty percent today in the session.
Speaker 2: We heard from Microsoft after the closing Bell. The company
Speaker 2: reported quarterly profit and sales above expectations. Sales of the
Speaker 2: company's Azure cloud computing business were up thirty one percent. Now,
Speaker 2: these positive results were due in large part to resilient
Speaker 2: corporate demand not only for software, but services as well,
Speaker 2: delivered over the Internet. We got some reaction from Bloomberg's
Speaker 2: onnarrog Rana.
Speaker 6: That's very good, which means that the increased cost of
Speaker 6: computing because of new AI applications, at least what they
Speaker 6: have lot so far, is not eating away from the profit.
Speaker 6: In terms of growth, I think it's going to take
Speaker 6: a few quarters before we see growth coming.
Speaker 2: In Bloomberg's onarrog Rana. Now, going forward, Microsoft is placing
Speaker 2: massive bets on artificial intelligence. The company is investing ten
Speaker 2: billion dollars into Open AI and a new bing search
Speaker 2: chat Microsoft is opening. The increase will help future sales
Speaker 2: of not only Azure, but search ads as well, along
Speaker 2: with office productivity programs. Shares and Microsoft were up about
Speaker 2: five percent in late US trading.
Speaker 1: Yeah, and you can contrast that with Google. So right
Speaker 1: now you've got Google shares up about two point four
Speaker 1: percent and just looking at Microsoft shares up eight point
Speaker 1: two percent. In late trading, Alphabet reporting first quarter sales
Speaker 1: and profit that did top analyst estimates. The results show
Speaker 1: that Alphabet's search advertising business is weathering an economic downturn.
Speaker 1: It also performed well even as Google faces heightened competitive
Speaker 1: threats from Microsoft and open Ai. We heard earlier from
Speaker 1: Bloomberg's man Deep Singh.
Speaker 7: It was, you know, given the macro environment, probably the
Speaker 7: best print that we have seen, you know, from Alphabet
Speaker 7: in terms of digital ad spending holding up and no
Speaker 7: impact whatsoever from chat GPT. Look, everyone talked about, you know,
Speaker 7: how howuch at GPT would hurt search volumes. None.
Speaker 1: Alphabet's closely watched Cloudy and it also made money for
Speaker 1: the first time, reporting profit of some one hundred and
Speaker 1: ninety one million dollars. Alphabet shares, as mentioned, are gaining
Speaker 1: in the after hours, although they are off the best
Speaker 1: levels of the day, which was up four percent and
Speaker 1: at the moment two point three percent.
Speaker 2: We had a lot of weakness in semiconductor stocks during
Speaker 2: the regular session. The Philadelphia Semiconductor Index was down today
Speaker 2: by three point four percent, and then after the bell,
Speaker 2: Texas Instruments with a lackluster forecast for the current quarter.
Speaker 2: The story from Bloomberg's Charlie Pellett.
Speaker 8: TI is the chip industry's most diversified maker of electronic components,
Speaker 8: and it indicates that a slump in demand is spreading
Speaker 8: two previously unscathed areas. The outlook suggests that even the
Speaker 8: chip industry's bright spots, such as the industrial market, are
Speaker 8: getting swept up in the broader slowdown. Texas Instruments gets
Speaker 8: a large portion of its revenue from factory equipment, and
Speaker 8: that had helped the company's sidestep of sales slide suffered
Speaker 8: by personal computers and smartphones in New York. Charlie Pellett
Speaker 8: Bloomberg Daybreak Asia.
Speaker 1: Apple plans to put AI to work as your personal
Speaker 1: wellness coach. Let's get that story from Bloomberg's Tracy Junkie.
Speaker 9: Apple has made health and wellness features central to devices,
Speaker 9: including the Apple Watch. People with Knowledge tell Bloomberg that
Speaker 9: Apple is now working to combine data from the watch
Speaker 9: with machine learning to create a personalized coaching service code
Speaker 9: named Quartz. The aim is to motivate people to exercise
Speaker 9: and improve their eating and sleeping habits, plus moderate people
Speaker 9: to pay for the service. Apple is also developing a
Speaker 9: mood tracker that will be added to the current health
Speaker 9: app this year. I'm Tracy Johnkie Bloomberg Daybreak Asia.
Speaker 1: I'm Brian Curtis, along with Doug Christner and Rashad Salama
Speaker 1: will join us in a few moments. Our guest coming
Speaker 1: up is Poojamalk, partner at Niepun Capital, So that should
Speaker 1: be an interesting discussion, Dug, a lot more give and take.
Speaker 1: So we had a take day in the markets, as
Speaker 1: you pointed out, it was a real risk off, David.
Speaker 1: Now you look at the futures. Nasdak I mini's up
Speaker 1: one point four percent, So here we go again.
Speaker 2: Yeah, a lot of the earnings after the bell giving
Speaker 2: positivity to the Nasdaq one hundred contract. But you got
Speaker 2: to pay attention, and I think, Brian, to the bond
Speaker 2: market and the signal it may be sending right now
Speaker 2: with this big move lower right across the curve today.
Speaker 2: And I was struck by the fact that in the
Speaker 2: swaps market right now it seems to be pricing in
Speaker 2: just twenty one basis points in FED tightening from current levels,
Speaker 2: which as you know, would be less than a full
Speaker 2: quarter point move. So right now the market seems to
Speaker 2: be very, very divided on what the Fed may begin
Speaker 2: to do.
Speaker 1: Yeah, and in terms of June is down to only
Speaker 1: nine percent for a hike. But obviously a lot of
Speaker 1: this comes down to the data. You mentioned the consumer
Speaker 1: confidence was weak, yet some of the economic data that
Speaker 1: we've seen has been reasonably solid. I wanted to get
Speaker 1: a quick word in Doug on this possibility of a
Speaker 1: property tax coming in China, and we were speaking with
Speaker 1: a China economist yesterday about possible reforms that might be
Speaker 1: good for nurturing along the economy. But it wasn't tax
Speaker 1: hikes that we were talking about. It was the possibility
Speaker 1: of tax cuts. So at the moment, given where they are,
Speaker 1: although this is probably inevitable to bring in a property tax,
Speaker 1: that timing does not look good.
Speaker 10: Yeah.
Speaker 2: The infrastructure, from what I understand, Brian, has been put
Speaker 2: in place, this nationwide real estate registration system, so it
Speaker 2: appears to be a property tax is just one step
Speaker 2: away from this.
Speaker 1: Yeah, this has been coming for a decade or so.
Speaker 1: And as mentioned, it would be probably good for the
Speaker 1: Chinese economy because it would be raising tax from the
Speaker 1: wealthier classes, so it would be good for a lot
Speaker 1: of the people that Hi Jinping is trying to help
Speaker 1: with the common prosperity. So it's coming, but the timing
Speaker 1: again just doesn't look all that great. By the way,
Speaker 1: you can learn a lot more about this on the terminal,
Speaker 1: not only from our piece, our news piece, but also
Speaker 1: from the China Today column. It's time now for global news.
Speaker 1: Germany is openly announcing today that it wants to improve
Speaker 1: relations with China in the coming months. At Baxter has
Speaker 1: Global News from the nine to sixty newsroom in San Francisco.
Speaker 1: As you like to say, it.
Speaker 3: Is yeah, thank you, Brian. Yeah. Chancellor Olive Schultz has
Speaker 3: invited Chinese Premiarily Tying for talks in Berlin June twentieth.
Speaker 3: It is the latest bid by Germany to ease attentions
Speaker 3: between Europe and Beijing. Schultz wants to talk global peace
Speaker 3: and tackle climate change while setting out changes to the
Speaker 3: status quo in Taiwan and it's official President Joe Biden
Speaker 3: launching his twenty twenty four campaign for reelection and vitio
Speaker 3: on video once again saying freedom is on the line.
Speaker 1: Around the country.
Speaker 11: Mag you're extremists, We're light enough to take on those
Speaker 11: bedrock freedoms, cutting social security and you've paid for your
Speaker 11: entire life, while cutting taxes from very wealthy, dictating what
Speaker 11: healthcare decisions women can make, banning books, and telling people
Speaker 11: who they can love all I'm making it more difficult
Speaker 11: for you to be able to vote.
Speaker 3: He says they're strong record of legislative achievement in spite
Speaker 3: of the obstruction of the MAGA Republicans and a battle
Speaker 3: again for the soul of the Republic. Bloomberg's Mario Parker
Speaker 3: on Bloomberg's Balance of Power notes. The video opened with
Speaker 3: scenes from the January sixth insurrection as a first attack
Speaker 3: on Republicans.
Speaker 12: They're almost giddy looking at poles, saying that there's a
Speaker 12: rematch for twenty twenty. Not thirty seconds into the video,
Speaker 12: President Biden was evoking MAGA. I mean that was a
Speaker 12: clear sign and that's the fight they want.
Speaker 8: To see them.
Speaker 3: Yeah. Mario also saying it's time to make some money
Speaker 3: and that a group of potential donors will come to
Speaker 3: the White House the end of the week. GOLP presidential
Speaker 3: candidate Nikki Haley is out today talking about the issue
Speaker 3: of abortion, which is sure to become a major campaign issue.
Speaker 3: She says what is needed is consensus.
Speaker 13: No one talks about finding consensus. Everyone goes to the
Speaker 13: barricades and attacks the other side. They turned a sensitive
Speaker 13: issue that has long divided people into a kind of
Speaker 13: gotcha bidding war.
Speaker 3: Yeah, she says she wants to save as many babies
Speaker 3: as can be saved. But that agreement of how to
Speaker 3: be reached, well, she says, it can't be political. China
Speaker 3: will no longer require travelers to the country to provide
Speaker 3: a negative PCR test result. This opens the door to
Speaker 3: get rid of a major deterrent for visitation since China
Speaker 3: has emerged from COVID isolation in January. Disappointment today at
Speaker 3: the end of Japan's I space landing process on its
Speaker 3: mission to the Moon.
Speaker 14: And now we are at the moment of planned landing
Speaker 14: time again. Everyone, please give us a few moments to confirm.
Speaker 3: Moments past our.
Speaker 14: Mcc crew standing by waiting to confirm. You can really
Speaker 14: feel at tension and despair and it is so difficult
Speaker 14: feeling hollowless now, But all we can do is cheer
Speaker 14: them up.
Speaker 3: Yeah. And later the crew assembled, mission head Takashi Hatamata.
Speaker 15: We confound DOT. We have established the communication until very
Speaker 15: end of randin.
Speaker 3: Yeah, and lead them to conclude the lander was damaged
Speaker 3: not able to communicate. But note that the launch happened
Speaker 3: in December, thrown into orbit by SpaceX Falca Iron rocket,
Speaker 3: orbiting the Moon for three months, picking up data and
Speaker 3: sending it home.
Speaker 15: We are very proud of the fact that we have
Speaker 15: already achieved many things during this mission.
Speaker 3: WAM and prepare for missions two and three. Global News
Speaker 3: powered by more than twenty seven hundred journalists and analysts
Speaker 3: in over one hundred and twenty countries in San Francisco.
Speaker 3: I'm at Baxter.
Speaker 8: This is Bloomberg.
Speaker 1: I'm Brian Curtis here in Hong Kong alongside Rashad Salamat
Speaker 1: and as you heard there at Baxter on News and
Speaker 1: Krisner looking at markets. So we've got it all covered
Speaker 1: for you. And our guest is Pooja Malik, partner at
Speaker 1: Nipun Capital, and she's here to provide the pithy comment.
Speaker 1: So Pooja, thanks very much for joining with us or
Speaker 1: joining us. You're just looking at markets here and how
Speaker 1: to navigate through this. We've had a period of low volatility,
Speaker 1: but you'd almost think that given the really diverse outcomes
Speaker 1: that we're seeing from earnings and from economic data that
Speaker 1: we should see an increase in volatility. Would you buy
Speaker 1: volatility here?
Speaker 10: Yeah, you're absolutely right. I think weal city is set
Speaker 10: to rise across the world as well as in emerging
Speaker 10: markets in Asia, and the market can come from manufacturers. There's,
Speaker 10: of course, the geopolitical risks, the situation between the US China,
Speaker 10: with other countries like Korea and Germany now sort of
Speaker 10: being involved in the middle. There's also tailed risk coming
Speaker 10: from the high levels of interest rates in the US,
Speaker 10: So I see a lot of risk on the horizon
Speaker 10: that their quer market is manufacturing in as of now.
Speaker 16: Well, tell me something, what's going on with First Republic?
Speaker 16: How worried are you about that? And perhaps other banks
Speaker 16: finding themselves in the same position in the weeks and
Speaker 16: days to come.
Speaker 10: I have no doubt that a lot of other banks
Speaker 10: are in similar positions. The extent of how bad the
Speaker 10: situation is, of course varies, and the access to new
Speaker 10: capital to cover some of these problems also varies. And
Speaker 10: I said that, I think the good news is that
Speaker 10: emerging market banks are more or less isolated from this issue.
Speaker 10: You know, most central banks in em have been raising
Speaker 10: weights for a while, and rates are quite deep in
Speaker 10: those markets, and I would say the grates might be
Speaker 10: even behind us in most of em The banks mem
Speaker 10: have also been very resilient because they've been through crisis
Speaker 10: in the past and have learned from that, so they're
Speaker 10: very well capitalized. So the good news here is that
Speaker 10: banks across emerging markets seem very stable and less vulnerable
Speaker 10: to this interest rate situation, whereas regional banks in the US.
Speaker 10: Definitely I could see more problems looming ahead.
Speaker 16: I just want to get to where we are in
Speaker 16: this part of the world. And you know, the whole
Speaker 16: reopening story. Is that something which is now in the
Speaker 16: rear view mirror and is it done?
Speaker 10: I think so. I think we have seen the headlines
Speaker 10: relating to the reopening story, but we're still seeing earnings
Speaker 10: recovery on the ground. Earnings for Chinese companies both this
Speaker 10: year and next year are projected to be in double
Speaker 10: digit The next year will be particularly strong. So I
Speaker 10: think we will see the recovery story play out and
Speaker 10: translate into earnings over the next twelve to twenty four months,
Speaker 10: and that will hopefully then act as a mechanism or
Speaker 10: a catalyst for rerating equities as well.
Speaker 1: China is its own big beast. But for the rest
Speaker 1: of the world. And I know you've been pushing emerging
Speaker 1: markets in this discussion, but isn't the key question still
Speaker 1: if the US goes into recession, all bets are off.
Speaker 1: So how you figure that is what you.
Speaker 10: Want to do in em or No, If the US
Speaker 10: goes into recession, definitely there's huge rapper cussions for ams,
Speaker 10: especially for globally exposed stocks, so thinking Korea, Taiwan, the
Speaker 10: supply chain, et cetera. We're seeing more and more signs
Speaker 10: of decoupling between US and China, which is a good
Speaker 10: thing because if the US does go into recession, we're
Speaker 10: still seeing five percent growth in China, so that will
Speaker 10: somewhat offet the effect for US specifically, we are saying
Speaker 10: very close to domestic themes. We are saying away from
Speaker 10: globally exposed stocks and we're looking for true emotional market
Speaker 10: stocks that are exposed to the dynamics of local demand.
Speaker 10: So stocks like telecom, hospitals, medical services, stocks that are
Speaker 10: benefiting from growth in domestic markets and reopening.
Speaker 16: Actually when he comes to hospitals because of healthcare tourism.
Speaker 10: Exactly in fact, one of the stocks that we favor
Speaker 10: is a Thailand hospital stock called Bamaran Grad, and it's
Speaker 10: exactly the thesis you stated.
Speaker 1: Yeah, absolutely, such a famous one.
Speaker 6: You know.
Speaker 1: The property text story in China in a sense is
Speaker 1: a great little microcosm for looking at China. There's a
Speaker 1: lot of things that they would like to do, but
Speaker 1: they're held back a little bit because they're trying to,
Speaker 1: as I put it earlier, nurture this economic recovery. You'd
Speaker 1: almost think that they would be trying to remove some
Speaker 1: of the friction, some of the fees and charges and
Speaker 1: some of the taxes that they have that are holding
Speaker 1: the economy back. Yet it just so happens that one
Speaker 1: of our big stories today is that they've put in
Speaker 1: this registration system. It now would enable them to put
Speaker 1: in a property tax. Do you agree with our take
Speaker 1: that that's kind of a good long term story but
Speaker 1: might be disastrous at the moment.
Speaker 10: Definitely agree that this may not be the right time
Speaker 10: to do it. Having said that, I think the government
Speaker 10: is more focused on refund that is the kind of health,
Speaker 10: the technology, the data, the AI and the semi conductor sectors.
Speaker 10: Right now, given what's happening with the US and rest
Speaker 10: of the world. So that's a theme where you're likely
Speaker 10: to see positive reform versus the common prosperity story is
Speaker 10: sort of a long term thing that they almost have
Speaker 10: to stick with, not viewing that so much in as
Speaker 10: sort of a short term problem to fix. But I
Speaker 10: would expect more positive support for tech and semiconductor in
Speaker 10: the new term.
Speaker 16: Indeed, So I want to get a said sols really
Speaker 16: of what you are looking at in terms of the
Speaker 16: you know, the geopolitical situation here as well, and is
Speaker 16: there any way of actually actually playing that.
Speaker 10: The geopolitical situations actually worsen before it gets better, right,
Speaker 10: you know, with a US trying to get Korea on
Speaker 10: its side instead of ally all the Western nations together.
Speaker 10: The way we're putting this is to stick with smaller
Speaker 10: cap stocks mid cap stocks, and if you look here today,
Speaker 10: it's small cap domestic Chinese stocks as measured by the
Speaker 10: CSI one thousand have outperformed MSCI China by almost eight percent.
Speaker 10: So that's I think a thing that's likely to continue,
Speaker 10: which is small cap stocks, stocks that are give to
Speaker 10: was the domestic economy, stocks that are not in technology.
Speaker 10: We're looking at consumer staples. We're looking at dolcom stable
Speaker 10: cash flow yielding stocks that are unlikely to be impacted
Speaker 10: by the geopolitical situation, or it least likely to be
Speaker 10: impacted less than high momentum, has absoluty growth or staying
Speaker 10: away from those teams in the.
Speaker 1: Big broad macro story and what the FED does and
Speaker 1: how the US economy is doing. One final question, we
Speaker 1: talked about the diversity of outcomes. Today. You had the
Speaker 1: earnings from Visa in Chipotle and McDonald's that were all
Speaker 1: pretty strong and looked pretty solid. Microsoft and Google, you know,
Speaker 1: the big monster tech companies also very strong, and yet
Speaker 1: you know, we've had a lot of misses too. How
Speaker 1: do you put it all together into a strategy.
Speaker 10: Yeah, I think this portion is going up definitely in
Speaker 10: the US, but also across the world in China as well. Right,
Speaker 10: we've seen sectors really outperformed, and we've seen information technology,
Speaker 10: consumer discretionary vice super voltails actually down for the year.
Speaker 10: At this point, this disportion is really creating a strong
Speaker 10: opportunity for ACTIVEMN and for stock picking. So again we
Speaker 10: see the way to play this as sticking with strong,
Speaker 10: consistent dividing using stocks sticking with domestically oriented stocks, sticking
Speaker 10: with mid caps well cap stocks, and staying away from
Speaker 10: high momentum hyped teams like batteries or even very high
Speaker 10: gloth internet stocks.
Speaker 1: Pooja, thanks so much for joining us. Pooja MALEG, partner
Speaker 1: at Nippon Capital. This is Bloomberg Daybreak Asia, your morning
Speaker 1: brief on the stories making news from Hong Kong to
Speaker 1: Singapore and Wall Street.
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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Join us again
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