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

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Speaker 2: Welcome to the Daybreak Asia Podcast. I'm Doug Krisner. We

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Speaker 2: are less than a week into the second Trump administration,

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Speaker 2: and markets have been very busy reacting to various announcements

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Speaker 2: from the President. It was early on Thursday that President

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Speaker 2: Trump addressed the World Economic Forum in Davos, Switzerland through

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Speaker 2: a video link, and among his many remarks, he called

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Speaker 2: on OPEC nations to increase oil production and lower cost.

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Speaker 1: And I'm also going to ask Saudi Arabia and OPEK

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Speaker 1: to bring down the cost of oil. You got to

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Speaker 1: bring it down, which frankly, I'm surprised they didn't do

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Speaker 1: before the election. That didn't show a lot of love

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Speaker 1: by them not doing it. I was a little surprised

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Speaker 1: by that if the price came down, the Russia Ukraine

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Speaker 1: war would end immediately.

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Speaker 2: That is President Trump speaking earlier to the World Economic

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Speaker 2: Forum in Davos. Joining us now is Paul Dobson. He

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Speaker 2: is Exacts Executive Editor for Asia Markets at Bloomberg News.

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Speaker 2: Joining us from Singapore. Can we begin with the price

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Speaker 2: action that we had in crew today? We saw a

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Speaker 2: little bit of weakness in New York trading, and right

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Speaker 2: now I see that in electronic trading, oil is continuing

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Speaker 2: to weaken. I'm looking at WTI here, Paul, down about

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Speaker 2: a little more than a half of one percent at

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Speaker 2: around seventy four to twenty. How do you think this

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Speaker 2: is being greeted in the Asia Pacific?

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Speaker 3: Yeah, hi, Doug, So I think that in general, you know,

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Speaker 3: the comments continue to weigh on crude oil, which, depending

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Speaker 3: on if you're looking at Brent or WTI, is down

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Speaker 3: for six sort of seventh straight day as well, the

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Speaker 3: first decline for the year. You know, in general, a

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Speaker 3: weaker oil prices is good for oil importing nations, including

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Speaker 3: some of the big countries in our region, Japan and

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Speaker 3: India for example, and I think that, you know, for

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Speaker 3: the US as well. It has this extra benefit of

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Speaker 3: sort of showing that Trump is mindful of the inflation

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Speaker 3: outlook and not being too inflationary in the policies that

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Speaker 3: he wants to introduce, which is helping to control yields

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Speaker 3: to a certain extent at the back end of the curve,

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Speaker 3: and the equities market is taking a cue from that

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Speaker 3: as well as being extra positive. So you've got the

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Speaker 3: benefit of cheaper oil in the first place, cheaper energy prices,

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Speaker 3: but also, you know that sort of inflation read back

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Speaker 3: across you know, all things being equal, if the inflationary

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Speaker 3: impulse from Trump's policies is lower than maybe the fair

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Speaker 3: could continue to cut interest rates as well, which is

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Speaker 3: also what Trump was saying that he would like to see.

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Speaker 2: Conventional wisdom would suggest that tariffs in and of themselves

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Speaker 2: are inflationary. It's kind of interesting that we didn't hear

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Speaker 2: Trump making a lot of tough remarks where China is concerned.

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Speaker 2: Did that surprise you?

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Speaker 3: It has surprised me, and I think since the start

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Speaker 3: of the administration this week, we haven't seen the extreme

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Speaker 3: measures on China that had been touted by Trump, you know,

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Speaker 3: during the election campaigning and even more recently than that.

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Speaker 3: You know, there was this talk of a sixty percent

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Speaker 3: tariff coming on day one. In fact, no tariffs came

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Speaker 3: on day one. And while he's been talking about it,

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Speaker 3: he has mentioned China, but more explicitly he's been talking

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Speaker 3: about Mexico and Canada as the sort of proximate target.

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Speaker 3: I think if you listen to what he's saying, there's

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Speaker 3: a couple of things going on in the background. That

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Speaker 3: he feels like he would like to sort first, one

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Speaker 3: of which is the war in Ukraine. He's talking about

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Speaker 3: how She Jimping has a lot of influence there and

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Speaker 3: could help to brok her a peace deal. And he's

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Speaker 3: also talking quite a lot about TikTok and getting that sorted.

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Speaker 3: He's been lent a little bit more favorably. He had

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Speaker 3: that call with Xi Jinping about this time last week,

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Speaker 3: which also gave a positive impression for the market. So

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Speaker 3: that pressure that we had maybe been expecting to see

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Speaker 3: from day one really hasn't come through so far. Doesn't

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Speaker 3: mean to say that there isn't that sort of sort

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Speaker 3: of damocles still hanging over China, and if there's a

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Speaker 3: reluctance to do some of these deals, then maybe he

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Speaker 3: will come back harder on the other stuff quite quickly.

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Speaker 3: But it does feel like there's that, you know, kind

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Speaker 3: of willingness to talk and to do deals with China

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Speaker 3: that is taking just a little bit of pressure off

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Speaker 3: of the UN and off of the Chinese equity market too.

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Speaker 2: We had a very interesting development yesterday where the government

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Speaker 2: in Beijing took steps to stabilize the equity markets in China,

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Speaker 2: and that included increasing pension investments in listed companies and

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Speaker 2: also kind of guiding some of the state owned insurance

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Speaker 2: companies to do a little bit more buying of a shares.

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Speaker 2: Is it having an impact on markets in China?

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Speaker 3: So I think that it's unlikely. Do you have an

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Speaker 3: immediate impact. This is a very long term policy, very gradual,

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Speaker 3: steady inflows, talking about mutual funds, talking about in these

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Speaker 3: sort of pensions and insurers adding to their exposure over time.

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Speaker 3: But that doesn't mean they're going to be buying on

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Speaker 3: day one or day two, and in fact, you know

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Speaker 3: that's not really the purpose. The purpose is to give

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Speaker 3: more of the long term buy and holwood investor kind

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Speaker 3: of flow into the market that gives it that sort

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Speaker 3: of more stable bedrock over time. So it was kind

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Speaker 3: of positive a sentiment. We did see a little bit

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Speaker 3: of a pop yesterday, but some of that eroded pretty

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Speaker 3: quickly as well because of the more immediate concerns about

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Speaker 3: the state of the economy. I think if you're looking

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Speaker 3: on a five year time horizon, then this is certainly

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Speaker 3: a decent piece of news for Chinese equities overall. It's

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Speaker 3: just not something that's going to turn around sentiment immediately.

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Speaker 2: I know, next week we get PMI data for China

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Speaker 2: as well as industrial profits. If you were to take

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Speaker 2: a look at some of the high frequency data on

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Speaker 2: China as we get ready for the Lunar New Year

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Speaker 2: festivities in the coming week, how do things look right now?

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Speaker 3: Well, certainly in the fourth quarter we saw a little

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Speaker 3: bit of a pickup in the economy that was enough

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Speaker 3: to get the growth to the five percent target or

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Speaker 3: more or less. But I think, you know, do not

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Speaker 3: celebrate that there was some emergency measures in the fourth

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Speaker 3: quarter that got you there, and the fact that China

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Speaker 3: was content with that tells you that it's not going

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Speaker 3: to be pushing necessarily to get much stronger growth beyond that.

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Speaker 3: As a sort of situation or the backdrop, I think

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Speaker 3: what's going to be really interesting over the Lunar New

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Speaker 3: Year holiday is to look at some of that fast

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Speaker 3: flow data that we get in terms of spending, travel, transport,

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Speaker 3: and you know, things like movie attendance as well, to

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Speaker 3: see whether there is a little bit more of a

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Speaker 3: glimmer of hope in terms of trying to consumer confidence

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Speaker 3: doesn't really feel like it from most of the information

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Speaker 3: that's been coming in and certainly the way that the

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Speaker 3: market has been trading. But you know, perhaps there's there's

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Speaker 3: the possibility that we get a slightly more optimistic start

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Speaker 3: to the new year, given given this auspicious time for

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Speaker 3: people to be doing those kinds of things.

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Speaker 2: So do you suspect that authorities in China would wait

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Speaker 2: for those results, for that high frequency data to trickle

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Speaker 2: in before deciding on the next policy.

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Speaker 3: Move Never never rule it out. China loves to do

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Speaker 3: things on a Friday afternoon, and we're getting close to

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Speaker 3: that time, so it could be that there's action more immediately.

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Speaker 3: You know, we've had to be very patient waiting for

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Speaker 3: PBOC to move on policy. It's been doing quite a

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Speaker 3: lot of short term injections in order to make sure

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Speaker 3: that the market has sufficient liquidity for this holiday period.

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Speaker 3: And maybe it will confuse or become difficult to follow

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Speaker 3: the whole question and equation if it were to act

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Speaker 3: before the holiday, So maybe it makes more sense to

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Speaker 3: wait until afterwards.

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Speaker 2: Paul will leave it there. Thanks so much for making

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Speaker 2: time to chat with us about what's happening in the

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Speaker 2: Asia Pacific. Paul Dobson, Executive Editor for Asia Markets at

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Speaker 2: Bloomberg News joining us here on the Daybreak Asia podcast.

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Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner.

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Speaker 2: We go next to Davos, Switzerland, the site of the

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Speaker 2: World Economic Forum's annual meeting. It was there we heard

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Speaker 2: from Paul Chen. He is Financial Secretary of Hong Kong.

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Speaker 2: He sat down with Bloomberg' hustling to Armen and the

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Speaker 2: conversation covered chance outlook for both Hong Kong and mainland China.

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Speaker 2: We also got his take on the threat of those

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Speaker 2: US tariffs. Here's part of the conversation.

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Speaker 4: Second, John, thank you so much for joining us.

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Speaker 5: Yeah, thank you for having me.

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Speaker 4: Trump's tariffs have dominated conversations here. Now there's some medications

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Speaker 4: that he's mulling a ten percent tariff on China.

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Speaker 5: What do you make of that?

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Speaker 6: Well, this is something expected, but on the other hand,

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Speaker 6: there could be also socks to the financial market given

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Speaker 6: his style. So for us in Hong Kong, we ensure

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Speaker 6: our financial stability. Of course, in terms of trade, the

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Speaker 6: Goobal self trade with China is growing, in particular Middle

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Speaker 6: East region Asian so perhaps in terms of trade, in

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Speaker 6: terms of supply chain management, we need to re ally ourselves,

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Speaker 6: particularly over the past few years, a lot of mainland

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Speaker 6: companies do go goble as part of.

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Speaker 5: The national strategy.

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Speaker 6: So when this company is go go go, they need

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Speaker 6: help Hong Kong reposition ourselves as their risk manager and

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Speaker 6: also as their professional advisors as they move their industry

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Speaker 6: base to other parts of Usian.

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Speaker 4: Invests, though, have been very concerned about the potential impact

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Speaker 4: of US tariffs in China and with the spillover on

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Speaker 4: Hong Kong. Is there reason to continue to be worried.

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Speaker 6: Well, we have taken this into consideration, but as you know,

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Speaker 6: the trade between China and the US in terms of

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Speaker 6: total China export in terms of percentage has been declining,

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Speaker 6: and we in Hong Kong were basically re exporting for them.

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Speaker 6: So we have seen tremendous growth in terms of the

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Speaker 6: trade within the Asian region, the Asia specific region. So

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Speaker 6: I think perhaps the way for US to respond to

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Speaker 6: that is on the one hand, continue to engage and

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Speaker 6: reinforce the relationship with our US business partners, but at

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Speaker 6: the same time time open up new markets, new capital

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Speaker 6: sources like Usian, Middle East in general, global self emerging economies.

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Speaker 4: The other concern is also the sanctions list. Is there

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Speaker 4: concern that perhaps Trump may expand that sanctions list. I

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Speaker 4: mean you're the highest ranking non sanctioned executive in Hong Kong.

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Speaker 6: Oh on this in sanctions on individuals, you have seen

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Speaker 6: that it may have caused some inconvenience to the person's concern,

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Speaker 6: but it doesn't cause any systematic risks.

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Speaker 5: So indeed, to us, it's nothing.

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Speaker 4: Hong Kong's growth is front and center. People are wondering

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Speaker 4: how you're positioning Hong Kong for long term growth.

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Speaker 6: For long term growth, we need to play to our

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Speaker 6: strengths and capture the major global trend. Pray to our strength,

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Speaker 6: meaning that in terms of international financial center status, we

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Speaker 6: need to enhance our offerings our competitiveness. This is one

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Speaker 6: of trading. As I mentioned, we ally our positioning to

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Speaker 6: facilitate mainland and international trade.

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Speaker 5: And for the new area.

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Speaker 6: The way we see it is technology and innovation, and

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Speaker 6: we have been investing heavily in this area, and we

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Speaker 6: focus on four areas. One is artificial intelligence and big

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Speaker 6: data analytics. The other is biotech, health TAP, the third

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Speaker 6: one is fintech. The fourth one is new material, new energy.

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Speaker 5: So we groom this.

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Speaker 6: Sector and also work closely with Sunjian and other cities

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Speaker 6: in the Greater Bay Area to leverage each other's competitive advantages.

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Speaker 6: The vision we have is the GBA Greater Bay Area

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Speaker 6: will rise as a combination of the San Francisco Bay

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Speaker 6: Area and the New York Bay Area.

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Speaker 4: You talked about Hong Kong's capital market. China has come

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Speaker 4: out to say that investor confidence remains fragile. How do

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Speaker 4: you respond to.

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Speaker 6: That, Well, we see the economy is growing steadily. The

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Speaker 6: economic structure did have going full transformation, but that would

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Speaker 6: enable the growth to be on a more diversified and

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Speaker 6: sustain basis. We need to concentrate our efforts in doing

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Speaker 6: the writing. Say, for example, in the case of the mainland,

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Speaker 6: the economic drivers of growth are domestic circulation and external circulation,

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Speaker 6: and these tool reinforce each other. Given the massive size

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Speaker 6: of the mainland economies, by growing private consumption, continuing to

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Speaker 6: invest and advot technology and digitalization, I believe the high

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Speaker 6: quality development will be achieved also with the green transition

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Speaker 6: and investment.

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Speaker 4: Do you think what China said is sort of like

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Speaker 4: a report card of your performance for the year twenty

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Speaker 4: twenty four.

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Speaker 6: Well, for us, our role is super connector and supervaluator,

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Speaker 6: so in terms of super connector connecting the mainland capital

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Speaker 6: market with the advanced economies US Europe and further expanding

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Speaker 6: it to global South emerging economies in terms of value adding.

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Speaker 6: In the process, we bring in not just companies from

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Speaker 6: overseas to go into the GBA, but also organize gate

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Speaker 6: business delegations to go out together to expand their foot pain.

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Speaker 5: In the market.

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Speaker 6: So we're trying very hard on both funds.

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Speaker 4: There is a white paper with ideas on how Hong

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Speaker 4: Kong's capital market can be strengthened. Where are you with that?

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Speaker 4: What's the progress so far?

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Speaker 6: We always welcome suggestions, welcome ways to improve ourselves, and

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Speaker 6: indeed we have form a group to study how to

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Speaker 6: increase our liquidity and those recommendations of this working group

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Speaker 6: has been implemented step by step.

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Speaker 5: And the world is changing.

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Speaker 6: We need to adjust realiable So if there are useful,

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Speaker 6: constructive suggestions, we'll love to embrace them.

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Speaker 4: And of course the budget is coming and they are

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Speaker 4: plans at least being mild on taxing high income earners.

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Speaker 4: I mean, where are you going with that? Is there

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Speaker 4: an amount your targeting?

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Speaker 6: Well, you know, tax is a very sensitive issue for

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Speaker 6: Hong Kong. We need to return a budget to balance

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Speaker 6: in two three years time. So on the one hand

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Speaker 6: is expanding income, the other is cutting expenditure growth. The

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Speaker 6: majority of the effort to achieve balance budget is to

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Speaker 6: cut expenditure growth. In terms of increasing revenue, we have

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Speaker 6: to be very careful. My guiding principle is that number one,

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Speaker 6: we have to be mindful of the simple and low

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Speaker 6: text regime of Hong Kong.

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Speaker 5: This is our core competitiveness.

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Speaker 6: The second is whatever we contemplate must be on a

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Speaker 6: user pay basis as well as those who can afford

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Speaker 6: can pay a little more. And thirdly, try to minimize

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Speaker 6: the impact.

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Speaker 5: On people on average citizen.

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Speaker 6: So these are the fee guiding principles and we are

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Speaker 6: contemplating around this in the preparation of the budget.

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Speaker 4: Would you consider other measures like the freezing of civil

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Speaker 4: service pay.

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Speaker 6: Or increases There are different suggestions from the community, and

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Speaker 6: this is one of the suggestions put to us. We

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Speaker 6: are evaluating different options and also consider the lighting impact

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Speaker 6: of any action the government takes on the private sector

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Speaker 6: and on general economy. So we have to be taken

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Speaker 6: We have to be considering this in a totality basis.

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Speaker 2: That's Hong Kong Financial Secretary Paul Chan there in conversation

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Speaker 2: with Bloomberg's hustling de Aarment. Thanks for listening to today's

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Speaker 2: episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday,

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Speaker 2: we look at the story shaping markets, finance, and geopolitics

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Speaker 2: in the Asia Pacific. You can find us on Apple, Spotify,

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Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.

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Speaker 2: Join us again tomorrow for insight on the market moves

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Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Prisoner,

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Speaker 2: and this is Bloomberg