1
00:00:02,520 --> 00:00:13,200
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the Daybreak

2
00:00:13,240 --> 00:00:16,319
Speaker 1: Asia podcast. I'm Doug Prisner. It was another day of

3
00:00:16,360 --> 00:00:19,680
Speaker 1: heavy selling in US software stocks given worries over the

4
00:00:19,720 --> 00:00:24,120
Speaker 1: impact of AI. Today, Anthropics said its most powerful AI

5
00:00:24,239 --> 00:00:28,960
Speaker 1: model can carry out detailed financial research and analysis tasks

6
00:00:29,000 --> 00:00:32,360
Speaker 1: that would normally take a person days to complete. And then,

7
00:00:32,400 --> 00:00:34,879
Speaker 1: on top of that, after the bell, Amazon said it's

8
00:00:34,920 --> 00:00:38,360
Speaker 1: intending to spend two hundred billion dollars this year on

9
00:00:38,520 --> 00:00:42,360
Speaker 1: data centers, semiconductors, and other equipment. That capex figure is

10
00:00:42,479 --> 00:00:46,519
Speaker 1: roughly forty percent above what analysts had expected. Let's take

11
00:00:46,560 --> 00:00:49,760
Speaker 1: a closer look at market action now with Bloomberg's Winnie Sue.

12
00:00:50,120 --> 00:00:53,479
Speaker 1: She is Asia Equities reporter joining from our studios in

13
00:00:53,560 --> 00:00:56,680
Speaker 1: Hong Kong. Thank you for being here. If we can,

14
00:00:56,760 --> 00:00:59,160
Speaker 1: let's start with South Korea because the market seems to

15
00:00:59,160 --> 00:01:02,080
Speaker 1: be in a bit of all right now, heading toward

16
00:01:02,120 --> 00:01:05,240
Speaker 1: its first weekly loss this year, and it seems to

17
00:01:05,280 --> 00:01:08,720
Speaker 1: be entirely related to this meltdown that we are seeing

18
00:01:08,760 --> 00:01:12,840
Speaker 1: in tech talks in the States, right, Yeah, absolutely.

19
00:01:13,160 --> 00:01:16,160
Speaker 2: I mean part of that story is that, like you mentioned,

20
00:01:16,240 --> 00:01:19,800
Speaker 2: there is that global sell off in tech, and yes,

21
00:01:20,120 --> 00:01:23,400
Speaker 2: when it comes to the COSPY, s K Heinix and

22
00:01:23,440 --> 00:01:26,640
Speaker 2: Samsung together probably takes up about fifty percent or so

23
00:01:26,680 --> 00:01:29,319
Speaker 2: if the market share, So any kind of risk of

24
00:01:29,560 --> 00:01:35,319
Speaker 2: mood around the AI story will definitely impact the South

25
00:01:35,360 --> 00:01:38,800
Speaker 2: Korea's market compared to some of the other Asian markets. So,

26
00:01:39,200 --> 00:01:41,440
Speaker 2: but it's I think it's very important to also point

27
00:01:41,440 --> 00:01:44,959
Speaker 2: out that the South Korean market has been very volatile.

28
00:01:45,240 --> 00:01:47,319
Speaker 2: If you look at just this week, I think on

29
00:01:47,319 --> 00:01:49,680
Speaker 2: one of the days it was up some six percent

30
00:01:49,720 --> 00:01:53,120
Speaker 2: and Samsung was jumping ten percent or so, and then

31
00:01:53,320 --> 00:01:56,480
Speaker 2: then you drop, you know, as much as three percent

32
00:01:56,560 --> 00:01:58,440
Speaker 2: or so of today. So it's just being a very

33
00:01:58,520 --> 00:02:03,000
Speaker 2: volatile market. And when it comes to the broader Asia market,

34
00:02:03,320 --> 00:02:07,279
Speaker 2: we're talking about SMP down about two percent this week,

35
00:02:07,400 --> 00:02:11,800
Speaker 2: but Asia is down about one point six percent, so

36
00:02:11,960 --> 00:02:15,800
Speaker 2: worst headed forward, its worst week since December, while for

37
00:02:15,840 --> 00:02:19,040
Speaker 2: the SMP's the worst maybe since October. It depends on

38
00:02:19,040 --> 00:02:23,640
Speaker 2: how we open up later today. But overall, Asia is

39
00:02:23,680 --> 00:02:27,480
Speaker 2: doing slightly better because first of all, we don't have

40
00:02:27,680 --> 00:02:31,600
Speaker 2: as many software exposure compared to what we see in

41
00:02:31,880 --> 00:02:34,680
Speaker 2: the US. For example, it's a bit more hardware driven

42
00:02:34,720 --> 00:02:39,480
Speaker 2: and more AI related, which is actually supporting the overall

43
00:02:40,080 --> 00:02:43,120
Speaker 2: AI story in Asia. And also when we talk about

44
00:02:43,120 --> 00:02:45,920
Speaker 2: all these KPEX spanding in the end, a lot of

45
00:02:45,960 --> 00:02:49,440
Speaker 2: that will trickle down into the supply chains in Asia.

46
00:02:49,560 --> 00:02:52,640
Speaker 2: So once that build out starts to happen with these

47
00:02:52,680 --> 00:02:56,280
Speaker 2: big spanding, Asia is likely to be a big beneficiary

48
00:02:56,320 --> 00:02:59,040
Speaker 2: of that. And again we discussed about how we still

49
00:02:59,080 --> 00:03:02,120
Speaker 2: have lower value here in Asia versus the US, so

50
00:03:02,160 --> 00:03:05,120
Speaker 2: I would say overall a bit more insulated from this

51
00:03:05,240 --> 00:03:07,720
Speaker 2: big sell off compared to what you saw, yeah, overnight

52
00:03:07,720 --> 00:03:08,200
Speaker 2: in the US.

53
00:03:08,320 --> 00:03:10,520
Speaker 1: So whenning I saw the Taiwan Semi is planning to

54
00:03:10,520 --> 00:03:14,399
Speaker 1: begin making some more advanced chips for AI, the manufacturing

55
00:03:14,440 --> 00:03:16,760
Speaker 1: will happen in Japan, but I'm curious as to what

56
00:03:16,800 --> 00:03:19,400
Speaker 1: this means for TSMC and Taipei.

57
00:03:20,600 --> 00:03:24,160
Speaker 2: Yeah, so it is a positive development because first of all,

58
00:03:24,200 --> 00:03:29,880
Speaker 2: there's more demand and you're diversifying all these geotopolitical risks

59
00:03:29,880 --> 00:03:34,160
Speaker 2: that we potentially expect if they focus too much on,

60
00:03:34,280 --> 00:03:37,160
Speaker 2: for example, the US. Obviously there is a big commitment

61
00:03:37,240 --> 00:03:40,800
Speaker 2: to investing more in the US, but just being able

62
00:03:40,960 --> 00:03:44,880
Speaker 2: to kind of diversify that supply chain to other countries,

63
00:03:45,000 --> 00:03:48,400
Speaker 2: especially Japan, which has been a big ally for Taiwan

64
00:03:48,720 --> 00:03:52,040
Speaker 2: is overall good for not just TFSMC, but also the

65
00:03:52,760 --> 00:03:56,600
Speaker 2: semiconductor supply chain in Taiwan. And I also just wanted

66
00:03:56,600 --> 00:03:59,560
Speaker 2: to highlight that something very interesting recently has been happening

67
00:03:59,680 --> 00:04:02,560
Speaker 2: is that because TSMC has been rising so much and

68
00:04:02,600 --> 00:04:05,760
Speaker 2: that it is getting close to actually about fifty percent

69
00:04:05,880 --> 00:04:10,520
Speaker 2: of its mark of the overall Taiwanese stock market market cap,

70
00:04:10,720 --> 00:04:14,320
Speaker 2: so some of the fund managers who are capped in

71
00:04:14,400 --> 00:04:17,000
Speaker 2: terms of how much exposure they can have for TSMC

72
00:04:17,080 --> 00:04:19,480
Speaker 2: had to kind of trim a bit of that exposure

73
00:04:19,600 --> 00:04:22,479
Speaker 2: just because how much TSMC has been rising, and that

74
00:04:22,680 --> 00:04:27,400
Speaker 2: they have been diversifying into some of the other names

75
00:04:27,440 --> 00:04:30,800
Speaker 2: in Taiwan along the supply chains. So we're seeing that

76
00:04:31,160 --> 00:04:36,360
Speaker 2: some smaller companies in Taiwan, specifically the memory chip companies,

77
00:04:36,440 --> 00:04:40,520
Speaker 2: have been doing very greatly this year. It's jumped some

78
00:04:40,560 --> 00:04:43,880
Speaker 2: of the names I was checking just now, the names

79
00:04:43,920 --> 00:04:47,719
Speaker 2: like power chip, names like Nanya, they are jumping some

80
00:04:48,320 --> 00:04:52,240
Speaker 2: fifty percent or forty percent just so far this year.

81
00:04:52,480 --> 00:04:56,039
Speaker 2: So it's interesting to see how this whole global memory

82
00:04:56,160 --> 00:05:01,120
Speaker 2: crunch story is benefiting lots of the smaller Asian memory

83
00:05:01,200 --> 00:05:04,760
Speaker 2: chip makers, and they are kind of these hidden real

84
00:05:04,960 --> 00:05:09,200
Speaker 2: winners in AI so far this year when you look

85
00:05:09,200 --> 00:05:14,880
Speaker 2: at this whole AI kpex and memory crunch story versus

86
00:05:16,000 --> 00:05:19,320
Speaker 2: the companies that are really getting hit were the were

87
00:05:19,440 --> 00:05:23,159
Speaker 2: the old favorites foreign investors, right. We were talking about

88
00:05:23,240 --> 00:05:27,000
Speaker 2: Nintendo Sony for example, that just had their earnings this week,

89
00:05:27,040 --> 00:05:29,480
Speaker 2: but the highlight a lot of it was on that

90
00:05:29,560 --> 00:05:32,680
Speaker 2: struggle with the memory crunch. So that's why you saw

91
00:05:32,800 --> 00:05:37,719
Speaker 2: Nintendo's shares down about eleven percent after earnings. And also

92
00:05:37,839 --> 00:05:40,640
Speaker 2: Sony had a bit of a jump in shares right

93
00:05:40,680 --> 00:05:44,600
Speaker 2: after earnings because the results were actually positive, but that

94
00:05:44,720 --> 00:05:50,080
Speaker 2: memory crunch actually kept the upside of stocks and hence

95
00:05:50,760 --> 00:05:54,400
Speaker 2: Sony actually wiped out all of its gains just yesterday.

96
00:05:54,880 --> 00:05:57,400
Speaker 1: So we're about a little more than a week away

97
00:05:57,480 --> 00:05:59,880
Speaker 1: from the Lunar New Year holiday. You are in home,

98
00:06:00,400 --> 00:06:03,559
Speaker 1: and I'm curious about what the betting is right now

99
00:06:03,600 --> 00:06:06,600
Speaker 1: on the way in which consumers are going to engage

100
00:06:06,760 --> 00:06:08,840
Speaker 1: during the Lunar New Year festivities.

101
00:06:09,560 --> 00:06:12,160
Speaker 2: Yeah, that's very interesting because yes, for sure we are

102
00:06:12,240 --> 00:06:16,839
Speaker 2: seeing more of that kind of festive vibe coming up.

103
00:06:16,920 --> 00:06:20,240
Speaker 2: And in terms of investment, actually, when you look at

104
00:06:20,360 --> 00:06:24,200
Speaker 2: yesterday's stock market, for example, the sector that was doing

105
00:06:24,520 --> 00:06:27,320
Speaker 2: very well yesterday in the Hong Kong China market is

106
00:06:27,320 --> 00:06:31,919
Speaker 2: actually a consumer sector, like you mentioned, whether it's restaurant names,

107
00:06:32,680 --> 00:06:37,080
Speaker 2: local cosmetics brands, or even popmar actually jumped a lot

108
00:06:37,160 --> 00:06:40,479
Speaker 2: as well, and that is with the expectation that people

109
00:06:40,520 --> 00:06:44,600
Speaker 2: are going to spend more into this Lunar New Year.

110
00:06:44,880 --> 00:06:47,720
Speaker 2: And that is also part of again we are going

111
00:06:47,760 --> 00:06:50,839
Speaker 2: back to the tech sell off story, but that rotation

112
00:06:51,120 --> 00:06:54,320
Speaker 2: out of tech right so, we are seeing rotation away

113
00:06:54,440 --> 00:06:58,800
Speaker 2: from the growth stocks, whether it's due to the worries

114
00:06:58,839 --> 00:07:01,800
Speaker 2: around AI or due to kind of just global yields

115
00:07:02,320 --> 00:07:05,440
Speaker 2: very high right now, so higher funding costs and rotating

116
00:07:05,560 --> 00:07:09,000
Speaker 2: into these value driven names. So a lot of that

117
00:07:09,080 --> 00:07:13,200
Speaker 2: are in the consumer sector. So it's kind of two

118
00:07:13,240 --> 00:07:16,559
Speaker 2: factors in play. One of that like the global sell

119
00:07:16,560 --> 00:07:21,040
Speaker 2: off going on and the rotation into defensive names. And yes,

120
00:07:21,160 --> 00:07:24,560
Speaker 2: like you said, the Lunar New Year definitely also provided

121
00:07:25,120 --> 00:07:27,200
Speaker 2: another new catalyst for this sector.

122
00:07:27,560 --> 00:07:30,200
Speaker 1: So we've talked a lot about tech stocks in Asia.

123
00:07:30,600 --> 00:07:32,600
Speaker 1: I'm curious as to how some of them, let's call

124
00:07:32,640 --> 00:07:35,840
Speaker 1: them the old economy stocks are performing in Hong Kong.

125
00:07:35,920 --> 00:07:39,520
Speaker 1: I'm thinking of property even some of the banks, how

126
00:07:39,560 --> 00:07:40,320
Speaker 1: are they holding up.

127
00:07:41,360 --> 00:07:44,320
Speaker 2: Yeah, So that is actually a very interesting trend that

128
00:07:44,360 --> 00:07:49,400
Speaker 2: we've recently observed over the past few months because yes,

129
00:07:49,920 --> 00:07:54,240
Speaker 2: hs Tech specifically the hand Saying Tech index is actually

130
00:07:54,360 --> 00:07:57,120
Speaker 2: close to a bear level at this point, so down

131
00:07:57,160 --> 00:08:00,720
Speaker 2: about twenty percent since it's October because the global sell

132
00:08:00,720 --> 00:08:02,920
Speaker 2: off because of kind of lack of catalysts when it

133
00:08:02,960 --> 00:08:05,840
Speaker 2: comes to news around deepseek for example. But on the

134
00:08:05,880 --> 00:08:10,120
Speaker 2: other hand, when you look at Hanshn's Property index or

135
00:08:10,400 --> 00:08:13,320
Speaker 2: the financials index, they're up some ten percent in the

136
00:08:13,320 --> 00:08:17,000
Speaker 2: past three months, and that is again part of rotation,

137
00:08:17,200 --> 00:08:20,080
Speaker 2: but they have their own factors. When it comes to property,

138
00:08:20,120 --> 00:08:24,200
Speaker 2: we actually saw home prices jumped, I believe three point

139
00:08:24,240 --> 00:08:28,600
Speaker 2: five percent year over year, and that is actually the

140
00:08:28,680 --> 00:08:33,400
Speaker 2: first increase in four years. So the data came out

141
00:08:33,520 --> 00:08:38,199
Speaker 2: earlier last last week. So that basically gave a brighter

142
00:08:38,240 --> 00:08:41,160
Speaker 2: outlook when it comes to the housing market for Hong Kong,

143
00:08:41,960 --> 00:08:44,679
Speaker 2: and beyond that, when it comes to the financial sector.

144
00:08:44,960 --> 00:08:48,440
Speaker 2: Because of these IPO pipelines that we've been talking about,

145
00:08:48,559 --> 00:08:53,640
Speaker 2: it actually provides a more vibrant capital market view when

146
00:08:53,679 --> 00:08:56,600
Speaker 2: it comes to Hong Kong's banking sector as well. So

147
00:08:56,800 --> 00:09:00,560
Speaker 2: lots of bets on that. But because also of this

148
00:09:00,640 --> 00:09:06,720
Speaker 2: whole global geopolitical tension, people do prefer higher yield stocks,

149
00:09:06,880 --> 00:09:10,160
Speaker 2: so a lot of that is also in these sectors.

150
00:09:10,280 --> 00:09:14,560
Speaker 2: So quite an interesting dynamic that we're seeing playing out

151
00:09:14,640 --> 00:09:19,000
Speaker 2: that the old economy names like you mentioned are actually

152
00:09:19,320 --> 00:09:20,520
Speaker 2: back and play in Hong Kong.

153
00:09:20,679 --> 00:09:23,319
Speaker 1: It's very interesting. Winnie, Thank you so very much. Bloomberg's

154
00:09:23,320 --> 00:09:27,080
Speaker 1: Winnie Sue. She is Asia equities reporter joining from Hong

155
00:09:27,160 --> 00:09:37,360
Speaker 1: Kong here on the Daybreak Asia podcast. Welcome back to

156
00:09:37,400 --> 00:09:40,719
Speaker 1: the Daybreak Asia Podcast. I'm Dog Prisner. It's only been

157
00:09:40,760 --> 00:09:44,400
Speaker 1: three months since sun of Atagichi was elected as Japan's

158
00:09:44,480 --> 00:09:48,160
Speaker 1: first female premier, and now she's on the verge of

159
00:09:48,200 --> 00:09:51,400
Speaker 1: a snap election. It's been called for Sunday, February eighth.

160
00:09:51,640 --> 00:09:54,440
Speaker 1: This may be an attempt to convert her strong approval

161
00:09:54,520 --> 00:09:59,560
Speaker 1: ratings into a clear mandate for a new ruling coalition. Victory,

162
00:10:00,240 --> 00:10:03,040
Speaker 1: to say, may provide her public support for a spending

163
00:10:03,080 --> 00:10:06,960
Speaker 1: and investment plan for economic growth. For a closer look,

164
00:10:07,000 --> 00:10:10,680
Speaker 1: I'm joined by Bloomberg Sokkara Murakami. She covers the economies

165
00:10:10,720 --> 00:10:13,960
Speaker 1: of Japan and South Korea for Bloomberg News Sokkara joins

166
00:10:14,040 --> 00:10:16,680
Speaker 1: us from our studios in Tokyo. Thank you for being here.

167
00:10:17,400 --> 00:10:21,000
Speaker 1: Can you add to anything that I said previously in

168
00:10:21,080 --> 00:10:23,200
Speaker 1: terms of trying to create a bit of context for

169
00:10:23,280 --> 00:10:24,160
Speaker 1: this election.

170
00:10:25,720 --> 00:10:26,000
Speaker 2: Yeah.

171
00:10:26,040 --> 00:10:32,280
Speaker 3: So Takeichi became Prime Minister last October, and she's enjoyed

172
00:10:32,679 --> 00:10:36,280
Speaker 3: like very strong personal popularity throughout her three four months

173
00:10:36,280 --> 00:10:39,520
Speaker 3: in office. Now, the thing is she doesn't have a

174
00:10:39,600 --> 00:10:44,400
Speaker 3: majority in either chamber of the Parliament, and so she's

175
00:10:44,840 --> 00:10:49,000
Speaker 3: seen a lot of difficulty pushing through her policies. She

176
00:10:49,000 --> 00:10:51,760
Speaker 3: has a raiser thin majority in the lower House, but

177
00:10:52,120 --> 00:10:54,680
Speaker 3: you know, if one person falls ill and can't turn

178
00:10:54,760 --> 00:10:57,800
Speaker 3: up to vote, she loses that majority. So in order

179
00:10:57,880 --> 00:11:00,800
Speaker 3: to consolidate her power in order to pushed through some

180
00:11:00,840 --> 00:11:06,320
Speaker 3: of the more yes controversial or like bigger policies that

181
00:11:06,440 --> 00:11:09,840
Speaker 3: she's trying to push through, she's called a snap election.

182
00:11:10,000 --> 00:11:12,679
Speaker 3: It came as a surprise, no one was really expecting it.

183
00:11:13,280 --> 00:11:17,199
Speaker 3: But she's really banking on her personal popularity to translate

184
00:11:17,240 --> 00:11:21,320
Speaker 3: that into votes and actually consolidate her power in the

185
00:11:21,360 --> 00:11:25,440
Speaker 3: lower House and as the Prime minister as well.

186
00:11:25,520 --> 00:11:29,160
Speaker 1: So we're very aware of the problem with inflation in Japan,

187
00:11:29,200 --> 00:11:31,679
Speaker 1: and I'm sure that households across the country have been

188
00:11:31,720 --> 00:11:34,679
Speaker 1: feeling the pinch. Is that a big part of her

189
00:11:34,679 --> 00:11:36,880
Speaker 1: agenda here dealing with higher prices?

190
00:11:37,760 --> 00:11:42,080
Speaker 3: Yes, definitely. So through her initial months as Prime Minister,

191
00:11:42,600 --> 00:11:46,760
Speaker 3: she's consistently said that her top priority is the cost

192
00:11:46,800 --> 00:11:51,520
Speaker 3: of living crisis, lowering prices for the average household, and

193
00:11:51,800 --> 00:11:55,000
Speaker 3: in polls, you know, that is the top concern for voters.

194
00:11:55,640 --> 00:11:59,680
Speaker 3: So when she called the snap election, she said we're

195
00:11:59,679 --> 00:12:04,360
Speaker 3: going to look into cutting the sales tax on food

196
00:12:04,679 --> 00:12:08,800
Speaker 3: for two years. This was kind of a big deal

197
00:12:09,080 --> 00:12:12,520
Speaker 3: for her party because her party has always been against

198
00:12:12,880 --> 00:12:18,080
Speaker 3: cutting taxes. The thing is, she's kind of toned that

199
00:12:18,240 --> 00:12:22,720
Speaker 3: down during the campaign. In the initial days of the campaign,

200
00:12:22,800 --> 00:12:24,800
Speaker 3: she was, you know, like touting it as like one

201
00:12:24,800 --> 00:12:28,400
Speaker 3: of the main policies of the LDP, the ruling LDP,

202
00:12:28,679 --> 00:12:31,440
Speaker 3: But she's not brought that up as much. There are

203
00:12:31,440 --> 00:12:33,440
Speaker 3: probably several reasons for that, but one of them is

204
00:12:33,440 --> 00:12:36,240
Speaker 3: that all of the parties are now campaigning on a

205
00:12:36,280 --> 00:12:41,480
Speaker 3: sales tax cut to varying degrees. If anything, Takaichi's policies

206
00:12:41,520 --> 00:12:44,640
Speaker 3: are more fiscally responsible because the sales tax cut would

207
00:12:44,679 --> 00:12:47,199
Speaker 3: only be for two years compared to forever.

208
00:12:47,880 --> 00:12:50,720
Speaker 1: Whether you think the behavior of the bond market recently

209
00:12:50,880 --> 00:12:53,559
Speaker 1: probably had a little bit of impact on her approach

210
00:12:53,679 --> 00:12:55,360
Speaker 1: or her way of thinking. Is that possible?

211
00:12:55,800 --> 00:13:00,520
Speaker 3: That is possible. She's also come under fire recently for

212
00:13:01,280 --> 00:13:04,840
Speaker 3: how do I say this suggesting that the week yen

213
00:13:05,000 --> 00:13:08,360
Speaker 3: is good for Japan for example. Well, she didn't say

214
00:13:08,360 --> 00:13:12,040
Speaker 3: it as clearly, but she's having to play this sort

215
00:13:12,080 --> 00:13:17,079
Speaker 3: of this balancing act with stocks, with the bond market,

216
00:13:17,320 --> 00:13:20,800
Speaker 3: and with the yen, and it's a very delicate balancing

217
00:13:20,880 --> 00:13:25,440
Speaker 3: act for her. It seems like the markets are concerned about,

218
00:13:25,880 --> 00:13:30,160
Speaker 3: you know, they're wondering about her fiscal responsibility. She has

219
00:13:30,200 --> 00:13:33,160
Speaker 3: consistently said we need to invest more, we need to

220
00:13:33,200 --> 00:13:37,160
Speaker 3: spend more, but be fiscally responsible at the same time.

221
00:13:38,240 --> 00:13:41,240
Speaker 3: Whether how she intends to pay for, for example, the

222
00:13:41,280 --> 00:13:47,240
Speaker 3: sales tax cut, that's not clear yet though, So we'll

223
00:13:47,360 --> 00:13:50,240
Speaker 3: just have to see if she wins the election and

224
00:13:51,080 --> 00:13:53,040
Speaker 3: what the plan is after she wins the election.

225
00:13:53,320 --> 00:13:55,840
Speaker 1: So what do you think the risk is of taka

226
00:13:55,880 --> 00:13:59,600
Speaker 1: Ichi miscalculating and ending up in a situation similar to

227
00:13:59,640 --> 00:14:02,120
Speaker 1: what was with UK Prime Minister Liz Trust.

228
00:14:02,679 --> 00:14:09,520
Speaker 3: The thing with Takaichi is that she has consistently although

229
00:14:09,520 --> 00:14:12,640
Speaker 3: the messaging might have gotten lost at times, especially because

230
00:14:12,760 --> 00:14:15,720
Speaker 3: with such like a huge policy like cutting the sales

231
00:14:15,760 --> 00:14:19,840
Speaker 3: tax on food. For two years, she has been very

232
00:14:19,920 --> 00:14:23,960
Speaker 3: very careful about trying to put out the message that

233
00:14:24,040 --> 00:14:28,160
Speaker 3: she will be fiscally irresponsible. The problem with that messaging

234
00:14:28,240 --> 00:14:33,680
Speaker 3: is that she hasn't actually clarified where the funding will

235
00:14:33,720 --> 00:14:37,080
Speaker 3: come from. So, you know, it's vague at this point

236
00:14:37,240 --> 00:14:40,880
Speaker 3: on the point of how she's going to be fiscally irresponsible.

237
00:14:41,080 --> 00:14:45,640
Speaker 3: But that being said, the sales tax cut is nowhere

238
00:14:45,680 --> 00:14:49,920
Speaker 3: near as big as Liz Trust's plan. You know, experts

239
00:14:49,920 --> 00:14:53,320
Speaker 3: are saying we're not going to see a Liz Trust

240
00:14:53,400 --> 00:14:58,960
Speaker 3: style kind of downfall. Takaii knows what she's doing. She

241
00:14:59,160 --> 00:15:03,920
Speaker 3: understands the messaging. You know, she's a pretty savvy politician,

242
00:15:04,400 --> 00:15:08,560
Speaker 3: and from what I can tell, the sales tax cut

243
00:15:08,560 --> 00:15:12,520
Speaker 3: policy is really for the campaign for the election. That

244
00:15:12,600 --> 00:15:17,280
Speaker 3: messaging could change after she wins or if she wins,

245
00:15:17,840 --> 00:15:21,720
Speaker 3: and she's already starting to tone down the wording there.

246
00:15:21,760 --> 00:15:24,240
Speaker 3: She's already starting to say, oh, you know, we're going

247
00:15:24,280 --> 00:15:27,600
Speaker 3: to accelerate the conversation on cutting the sales tax. You know,

248
00:15:27,680 --> 00:15:31,360
Speaker 3: she's not pledging the sales tax cut immediately already, so

249
00:15:31,920 --> 00:15:35,920
Speaker 3: eliztra style meltdown is probably not on the books.

250
00:15:35,960 --> 00:15:38,960
Speaker 1: What about her comments on Taiwan in the way in

251
00:15:39,040 --> 00:15:43,120
Speaker 1: which leadership in Beijing was a little aggravated by those

252
00:15:43,160 --> 00:15:47,040
Speaker 1: remarks helped me understand the extent to which she is

253
00:15:47,240 --> 00:15:51,640
Speaker 1: committed to spending more on defense and whether the story

254
00:15:51,840 --> 00:15:54,119
Speaker 1: on Taiwan is a part of that strategy.

255
00:15:54,920 --> 00:15:59,960
Speaker 3: So Takagi's already pledged to accelerate defense spending. She wants

256
00:16:00,080 --> 00:16:03,920
Speaker 3: to spend more on defense in general, and that's all

257
00:16:04,000 --> 00:16:07,800
Speaker 3: part of her plan for a more assertive, more bold,

258
00:16:08,400 --> 00:16:14,600
Speaker 3: more stronger Japan. Basically that definitely is exemplified in her

259
00:16:14,640 --> 00:16:19,240
Speaker 3: remarks on Taiwan back in November. Her stance of not

260
00:16:19,320 --> 00:16:22,320
Speaker 3: taking back those comments kind of makes sense in the

261
00:16:22,320 --> 00:16:25,800
Speaker 3: context of things that the government did say. It doesn't

262
00:16:25,800 --> 00:16:29,480
Speaker 3: indicate a change in the government's position on Taiwan, and

263
00:16:29,600 --> 00:16:31,600
Speaker 3: also there's no need to take back the comments, but

264
00:16:32,120 --> 00:16:36,000
Speaker 3: it has come across us the kind of strong leadership

265
00:16:36,040 --> 00:16:40,000
Speaker 3: style that the Japanese people might be maybe might expect

266
00:16:40,000 --> 00:16:43,080
Speaker 3: from her if she wins a mandate in the following election.

267
00:16:44,000 --> 00:16:46,320
Speaker 3: It kind of is a taster of what we can

268
00:16:46,400 --> 00:16:50,000
Speaker 3: expect in terms of the relationship between Japan and China

269
00:16:50,040 --> 00:16:54,120
Speaker 3: as well. So that's kind that all kind of fits

270
00:16:54,160 --> 00:16:57,720
Speaker 3: into her style of being a strong leader and putting

271
00:16:57,760 --> 00:17:00,000
Speaker 3: Japan back on the international scene as well.

272
00:17:00,120 --> 00:17:03,000
Speaker 1: So I mentioned her strong approval ratings. What do we

273
00:17:03,080 --> 00:17:08,760
Speaker 1: know about the distribution of her support demographically? I mean,

274
00:17:08,800 --> 00:17:11,840
Speaker 1: I'm thinking in particular of young people in Japan. Does

275
00:17:11,880 --> 00:17:15,680
Speaker 1: she have a strong following, strong support, Yeah.

276
00:17:15,480 --> 00:17:20,719
Speaker 3: Definitely, She's She's very personable in a way that we

277
00:17:21,280 --> 00:17:25,800
Speaker 3: haven't seen in recent Japanese prime ministers. She's very popular

278
00:17:25,960 --> 00:17:31,280
Speaker 3: among the younger generations in polls I think back. I

279
00:17:31,320 --> 00:17:34,480
Speaker 3: think last year there were some polls that showed like

280
00:17:34,640 --> 00:17:38,680
Speaker 3: almost a ninety percent approval rating among people who were

281
00:17:39,720 --> 00:17:46,840
Speaker 3: on the younger side. So very very popular. There's I

282
00:17:46,880 --> 00:17:50,480
Speaker 3: think part of that comes from her ability to connect

283
00:17:50,600 --> 00:17:54,959
Speaker 3: with an online audience. She's very active on x in

284
00:17:55,000 --> 00:18:00,719
Speaker 3: a way that her predecessors haven't been. She you know,

285
00:18:01,200 --> 00:18:03,800
Speaker 3: she's personal. She talks about dyeing her hair. She has

286
00:18:03,960 --> 00:18:09,520
Speaker 3: these handbags and you know, pens, and it's you know,

287
00:18:09,640 --> 00:18:12,920
Speaker 3: she has a strong fan base. Basically. Her messaging is

288
00:18:12,960 --> 00:18:19,520
Speaker 3: also very clear and straightforwardlike previous prime ministers who sometimes

289
00:18:19,520 --> 00:18:22,439
Speaker 3: you know, waffled on or what they were trying to do.

290
00:18:22,520 --> 00:18:24,760
Speaker 3: What they were trying to say wasn't very clear. So

291
00:18:25,080 --> 00:18:28,879
Speaker 3: she's very forthright, very direct, and that has a massive

292
00:18:28,880 --> 00:18:34,320
Speaker 3: appeal among younger generations. And yeah, basically people under sixty

293
00:18:34,520 --> 00:18:35,480
Speaker 3: from what I understand.

294
00:18:35,520 --> 00:18:40,800
Speaker 1: Another issue that Japanese citizenry have been dealing with lately

295
00:18:41,000 --> 00:18:43,560
Speaker 1: is this idea of immigration, and is do you think

296
00:18:43,600 --> 00:18:47,359
Speaker 1: that's going to have a meaningful impact in the election

297
00:18:47,480 --> 00:18:49,360
Speaker 1: results that we're about to see.

298
00:18:50,200 --> 00:18:54,600
Speaker 3: Yes, most probably all of the parties now have kind

299
00:18:54,720 --> 00:19:00,520
Speaker 3: of shifted towards this kind of narrative of like we

300
00:19:00,600 --> 00:19:04,840
Speaker 3: need to do something about immigration, we need to kind

301
00:19:04,840 --> 00:19:09,800
Speaker 3: of tighten the rules around immigration, to varying degrees depending

302
00:19:09,800 --> 00:19:12,399
Speaker 3: on the party. But one of the parties that the

303
00:19:12,440 --> 00:19:15,160
Speaker 3: polls also predict will do quite well in this election

304
00:19:15,320 --> 00:19:19,720
Speaker 3: is Sanseto, which is a pretty fringe for now right

305
00:19:19,720 --> 00:19:25,199
Speaker 3: wing party, and they have constantly campaigned on, you know,

306
00:19:25,960 --> 00:19:31,160
Speaker 3: very sort of having harsh rules or very strict rules

307
00:19:31,200 --> 00:19:36,240
Speaker 3: against immigrants. One thing to note though, is that overall

308
00:19:36,320 --> 00:19:39,720
Speaker 3: Japan understands that it's one of the biggest issues that

309
00:19:39,800 --> 00:19:42,480
Speaker 3: faces is declining population.

310
00:19:42,840 --> 00:19:44,359
Speaker 1: Demographic change too, right.

311
00:19:44,560 --> 00:19:49,879
Speaker 3: Yes, demographic change, declining population and just like the shrinking

312
00:19:50,119 --> 00:19:55,560
Speaker 3: workforce basically, and there is a tone of reality around

313
00:19:55,600 --> 00:19:59,200
Speaker 3: the fact that, you know, there is this understanding that

314
00:19:59,440 --> 00:20:03,240
Speaker 3: Japan is probably going to have to rely on immigrants

315
00:20:03,280 --> 00:20:07,800
Speaker 3: to solve this issue. So the kind of discussion around

316
00:20:07,800 --> 00:20:12,440
Speaker 3: it is like, how can we be opened to immigrants

317
00:20:12,440 --> 00:20:15,280
Speaker 3: who are going to be able to integrate into Japanese

318
00:20:15,320 --> 00:20:20,240
Speaker 3: society really well, but crack down on immigrants who I

319
00:20:20,240 --> 00:20:23,320
Speaker 3: guess won't contribute to the economy as much.

320
00:20:23,480 --> 00:20:26,119
Speaker 1: Thank you so much, Sokkora for helping us set up

321
00:20:26,160 --> 00:20:28,760
Speaker 1: the election this Sunday. This is an Apple election called

322
00:20:28,760 --> 00:20:33,719
Speaker 1: by Prime Minister Takeiichi Soakora. Murakami covers the economies of

323
00:20:33,800 --> 00:20:36,480
Speaker 1: Japan and South Korea for Bloomberg News, joining from our

324
00:20:36,520 --> 00:20:42,120
Speaker 1: studios in Tokyo here on the Daybreak Asia podcast. Thanks

325
00:20:42,160 --> 00:20:45,800
Speaker 1: for listening to today's episode of the Bloomberg Daybreak Asia

326
00:20:45,960 --> 00:20:50,400
Speaker 1: Edition podcast. Each weekday, we look at the story shaping markets, finance,

327
00:20:50,760 --> 00:20:53,840
Speaker 1: and geopolitics in the Asia Pacific. You can find us

328
00:20:53,880 --> 00:20:58,040
Speaker 1: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere

329
00:20:58,080 --> 00:21:01,199
Speaker 1: else you listen. Join us again tomorrow for insight on

330
00:21:01,240 --> 00:21:05,360
Speaker 1: the market moves from Hong Kong to Singapore and Australia.

331
00:21:05,800 --> 00:21:08,280
Speaker 1: I'm Doug prisoner, and this is Bloomberg