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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: Welcome to the Daybreak Asia podcast time Doug Prisoner. We

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Speaker 2: begin today with geopolitical risk. Clearly they are not in

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Speaker 2: short supply. We have the situation in Venezuela and how

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Speaker 2: oil markets have been impacted. Earlier, US forces seized a

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Speaker 2: Russian flagged oil tanker in the North Atlantic after a

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Speaker 2: weeks long pursuit across the Atlantic Ocean, and a second

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Speaker 2: vessel was apprehended near the Caribbean Sea. And then there's

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Speaker 2: Greenland and President Trump insisting the US needs the island

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Speaker 2: for security reasons since Russia and China have been increasing

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Speaker 2: military activities nearby. And let's not forget Beijing turning up

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Speaker 2: the heat on Tokyo. Now the Chinese have banned all

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Speaker 2: so called dual use shipments for military use. Let's bring

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Speaker 2: in Bloomberg's Paul Dobson. He is Executive editor for Asia Markets.

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Speaker 2: Paul joins from our studios in Singapore. I'd like to begin,

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Speaker 2: Paul by looking at the Chinese threat on tighter controls

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Speaker 2: for the exports of rare earths to Japan. Clearly this

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Speaker 2: would be a major negative for the Japanese auto sector.

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Speaker 3: Yeah, Hi there, Doug. It really depends how China choose

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Speaker 3: is to use these measures. But yes, there are certainly

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Speaker 3: parts of the Japanese supply chain that are pretty heavily

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Speaker 3: exposed to imports from China and make use of them.

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Speaker 3: I think that the jury is out on what China

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Speaker 3: actually intends to do here. It's deliberately being quite opaque,

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Speaker 3: I think, in terms of what the pronouncement is and

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Speaker 3: what the measures might look like, and that gives Japan

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Speaker 3: some room to try to, you know, de escalate the

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Speaker 3: situation if it wants to. That's not what we've seen

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Speaker 3: so far from Japan. They seem to have dug in

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Speaker 3: quite hard as well, and there are countermeasures that Japan

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Speaker 3: could take. By the way, there would also be quite

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Speaker 3: harmful for the Chinese supply chains. So it's not out

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Speaker 3: of the realms of possibility that this could continue to escalate,

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Speaker 3: and at least in the short term, that would presumably

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Speaker 3: quite be quite a negative for both nations markets. But

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Speaker 3: on the other hand, there is definitely some open ground

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Speaker 3: for and off ramp to be found if they if

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Speaker 3: they want to find that and look for it.

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Speaker 2: We had President Trump saying today that he will request

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Speaker 2: an increase in the US military budget by five hundred

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Speaker 2: million dollars. He went on to say the increase is

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Speaker 2: necessary in very troubled and dangerous times to build a

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Speaker 2: in his words, dream military. But I'm wondering whether or

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Speaker 2: not we may see kind of commensurate moves on the

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Speaker 2: part of certain jurisdictions in Asia to kind of respond

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Speaker 2: in kind. Is that possible and could that be reflected

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Speaker 2: in market prices for some defense contractors.

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Speaker 3: Yeah, and already has been all the way through last year.

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Speaker 3: You know, some of the defense names in Korea, for example,

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Speaker 3: and also in Japan have really been performing exceptionally strongly,

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Speaker 3: and you know, for the first time really Japan is

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Speaker 3: sort of really increasing its budget spend on defense, and

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Speaker 3: I'm sure that you will see more of that everywhere.

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Speaker 3: I think, you know, even countries that haven't really had

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Speaker 3: to think about it before can see that their airports

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Speaker 3: might suddenly be exposed and well need to put different

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Speaker 3: defensive measures in place as a result. So those defense

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Speaker 3: companies do look like they're in you know, a good

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Speaker 3: spot in terms of their earnings potential. Not that it's

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Speaker 3: a particularly nice thing to be talking about, but definitely

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Speaker 3: we have that and also the scope for that to

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Speaker 3: drive more innovation and more creativity and therefore for new

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Speaker 3: products to emerge that would be also interesting for investors.

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Speaker 2: I have to ask you about the Samsung results, which

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Speaker 2: seem to beat estimates by a wide margin, both in

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Speaker 2: terms of operating profit and revenue. What are we seeing

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Speaker 2: in terms of what the analyst community is saying and

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Speaker 2: how the market is responded.

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Speaker 3: I'm still waiting for more details on it, but the

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Speaker 3: initial market reaction was actually a little bit negative despite

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Speaker 3: the beats on the top line that were announced. But

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Speaker 3: Samsung has had a real roaring start to this year.

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Speaker 3: We had the CEO saying a few days ago, Samsung

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Speaker 3: is back. That was the quote, and investors seemed to

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Speaker 3: like that and piled onto it. I think it was

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Speaker 3: up seven or eight percent in a single day. And

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Speaker 3: this is like one of the biggest companies not just

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Speaker 3: in Careers Index, but in the Asia wide index as well,

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Speaker 3: so it really matters a great deal. So the fact

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Speaker 3: that it's already had that huge gain already this year,

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Speaker 3: on top of big gains last year as well, does

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Speaker 3: mean that the bar is very high. In order to

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Speaker 3: impress investors at the current valuations and for the rally

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Speaker 3: to continue to go higher. That said, I do you

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Speaker 3: think you know that the memory chip pricing has definitely

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Speaker 3: been lifting extremely aggressive recently, and the technology companies in

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Speaker 3: general across North Asia are still very much in favor,

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Speaker 3: just like you see with the mag seven in the US.

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Speaker 2: So we're in the first full trading week of the

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Speaker 2: new year and we have a flood of global corporate

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Speaker 2: bond issuance happening this week. Is that a surprise to

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Speaker 2: you at all?

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Speaker 3: Not a surprise. It's always busiest at the side of

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Speaker 3: the new year, but it's hefty. It's a record. And

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Speaker 3: what I think is perhaps interesting, if not hugely surprising,

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Speaker 3: is the fact that the demand is just getting taken

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Speaker 3: or all of this supply is getting taken down by

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Speaker 3: the demand, with very few problems at all. New issuance

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Speaker 3: concession seem extremely low, and so it tells you that

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Speaker 3: there's really hunger out there for corporate bond issuance. People

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Speaker 3: want that income, they want the steady revenue that they

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Speaker 3: can gain. They don't see any particularly big credit worries

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Speaker 3: on the horizon, and that's good news for the global economy.

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Speaker 3: Right If funding conditions are loose or easy, companies can

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Speaker 3: raise cash can put it to work, including the big

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Speaker 3: technology companies. We saw Broadcom in the US already issuing

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Speaker 3: as well. Then that speaks to, you know, money flowing

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Speaker 3: around the economy that can help to continue to fuel

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Speaker 3: what's looking like a pretty decent global growth backdrop at

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Speaker 3: the moment.

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Speaker 2: What are you hearing about the overall outlook for Asian

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Speaker 2: equity markets in the year ahead.

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Speaker 3: I'm hearing lots of positive commentary about emerging markets and

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Speaker 3: about Asia as well. So for example, yesterday I was

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Speaker 3: reading a note from Goldman Sachs and they were talking

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Speaker 3: about all these different prongs that they see that are

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Speaker 3: favorable for They were singling out North Asia and India

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Speaker 3: as their picks, but they were saying, you know, first

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Speaker 3: of all, you have the technology story, that AI story,

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Speaker 3: and that is still something that has plenty of momentum. Yes,

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Speaker 3: there are evaluation concerns, but there are also all these

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Speaker 3: other companies across the supply chain that are emerging that

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Speaker 3: look like they have plenty of potential. So they like that.

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Speaker 3: They like the favorable economic and macro environment that I

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Speaker 3: was just talking about. You know, don't forget okay, Trump

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Speaker 3: is raising to your political risk, but he's also keeping

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Speaker 3: down oil prices and that's also an important input into

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Speaker 3: global funding conditions. And then you have the idea that

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Speaker 3: in geesst rates are going to come low again this

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Speaker 3: year most likely. In any case, if you look at

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Speaker 3: the FED dot plot for example, they're pricing it, or

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Speaker 3: the policymakers are telling us they're planning to cut interest

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Speaker 3: rates more, maybe not immediately, but down the path, and

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Speaker 3: that would allow for Asian central banks also to lose

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Speaker 3: monetary policy if needs be. And then they talk about

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Speaker 3: on the political side or the fiscal side. You know,

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Speaker 3: governments also have the back of the companies. We talked

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Speaker 3: about defense spending. It's not just that in Japan there's

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Speaker 3: more stimulus measures. In China, there's going to be efforts

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Speaker 3: to continue to fuel growth as well. So all of

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Speaker 3: that adds up to what the goldmin Sex analysts was saying,

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Speaker 3: and what a lot of other names that I've been

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Speaker 3: talking to over the past few days are saying is

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Speaker 3: a very positive overall backdrop for Asian equities.

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Speaker 2: So as you know, this week we have two key

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Speaker 2: events from markets stateside. We have the employment report, for

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Speaker 2: December that's due on Friday, and the Supreme Court may,

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Speaker 2: and I stress may issue an opinion on the legality

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Speaker 2: of President Trump's global tariffs. What is the conversation happening

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Speaker 2: in Asia around the tariff story and the possibility that

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Speaker 2: these tariffs may be illegal.

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Speaker 3: Yeah, it's a great question and one that we have

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Speaker 3: to ask all of the people that we're speaking to

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Speaker 3: as well. But I do think that actually the consensus

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Speaker 3: is that for the most part across Asia, the trade

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Speaker 3: deals that are already in place and have been agreed

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Speaker 3: with Trump are most likely accepted now, and so therefore

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Speaker 3: we'll stay in place. I guess people would expect that

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Speaker 3: even if the tariffs as they are now outlawed by

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Speaker 3: the high courts, in time, the Trump administration will find

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Speaker 3: a different way to put exactly the same tariffs in place.

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Speaker 3: And so if you've already got your trade deal and

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Speaker 3: you think that's probably as good as you're going to

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Speaker 3: get in any case them, you know, go along with

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Speaker 3: it rather than rocking the boat. Seems to be the consensus.

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Speaker 3: And as I said, you know, experts are holding up

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Speaker 3: in the economy is looking reasonably strong. For all that

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Speaker 3: we have that I do think that it will create volatility.

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Speaker 3: I do think that Monday morning would be a rocky

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Speaker 3: ride for US if we do get a repeal of

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Speaker 3: the tariffs, and if we get some very surprising payrolls

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Speaker 3: number as well, you know, that could add to the equation.

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Speaker 3: And of course Asia is always the first to react.

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Speaker 3: So we'll be here nice and nerdy looking forwards to

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Speaker 3: what we get on Monday morning.

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Speaker 2: All right, we look forward to it. Paul, Thank you

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Speaker 2: so very much. Bloomberg's Paul Dobson. He is executive editor

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Speaker 2: for Asia Markets. Joining from Singapore here on the Daybreak

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

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Speaker 2: Derek Krisner. Certainly was a lot more news from the

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Speaker 2: oil patch in the last session. The Trump administration said

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Speaker 2: the US will seek to control Venezuelan oil sales indefinitely.

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Speaker 2: US Energy Secretary Chris Wright told a conference sponsored by

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Speaker 2: Goldman Sachs sales would initially come from crude held in

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Speaker 2: storage and later from fresh Venezuelan oil production. Now, the

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Speaker 2: White House indicated the US has already begun marketing this

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Speaker 2: crude oil. And at the same time, we are being

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Speaker 2: told that Chevron is in talks with the US on

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Speaker 2: expanding its license in Venezuela. We got reaction from Vondana Harri.

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Speaker 2: She is founder and CEO of Vanda Insights. She spoke

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Speaker 2: to Bloomberg TV host Paul Allen and Avril hon and

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Speaker 2: the conversation began with Vondana being asked about her outlook

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Speaker 2: for oil.

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Speaker 4: There's a few time related narratives around the oil market.

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Speaker 4: At the moment, I mean, in the short term we're

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Speaker 4: back pretty much to where we were before the US

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Speaker 4: operation in Venezuela. But longer term, in Venezuela supplies so

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Speaker 4: little at the moment, but could supply so much. But

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Speaker 4: with oil prices so depressed right now, how viable is

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Speaker 4: more investment in Venezuela.

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Speaker 1: Good morning, Paul. So amongst all the hurdles that are

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Speaker 1: stacked up for Trump's ambition of US companies tapping the

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Speaker 1: three hundred odd billion barrels of Venezuelan reserves, you just

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Speaker 1: mentioned yet another one, which is the outlook for oil prices.

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Speaker 1: And again here we are not just talking about twenty six,

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Speaker 1: twenty seven for that matter, but longer term, because let

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Speaker 1: us remember tapping these reserves and rehabilitating the overground infrastructure

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Speaker 1: that is needed to support the movement of that oil

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Speaker 1: is going to take years, if not decades. So, assuming

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Speaker 1: that global oil demand is going to continue, growth is

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Speaker 1: going to continue decelerating, which means oil prices are probably

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Speaker 1: going to continue softening. You know, we may not return

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Speaker 1: to eighty and ninety dollars a barrel kind of range

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Speaker 1: on a sustained basis. That will be yet another question

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Speaker 1: amongst everything else, which is political stability for oil companies

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Speaker 1: before deciding to make those kind of investments or billions

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Speaker 1: of dollars in Venezuela.

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Speaker 4: Yeah, we do need to talk about the everything else

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Speaker 4: as well, because as you mentioned, there are so many

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Speaker 4: factors here. If you were an oil major like a

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Speaker 4: Chevron or Conico or Exon, and you'd have a lot

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Speaker 4: of questions around security, future, political stability, and of course

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Speaker 4: Venezuela has form when it comes to nationalizing oil assets.

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Speaker 1: Yeah, not only that, Paul, but also I couldn't look

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Speaker 1: to anybody to authoritatively be able to tell me or

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Speaker 1: guarantee that kind of security and stability. So I could

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Speaker 1: be talking to, of course President Trump and and the

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Speaker 1: core team that is overseeing the transition in Venezuela. I

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Speaker 1: could talk to the Energy Secretary Chris right, but really,

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Speaker 1: who has the crystal ball today to be able to

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Speaker 1: guarantee me, as a US major, that this is exactly

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Speaker 1: how things are going to play out in Caracas. How

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Speaker 1: long the transition will take, who will be the new leader,

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Speaker 1: how will the new government operate, how will it operate,

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Speaker 1: and under whose influence after Trump is gone from the

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Speaker 1: White House? Right, So, all of these questions are definitely

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Speaker 1: going to be swirling in the minds of the executives

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Speaker 1: of the oil companies. And then again, let us not

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Speaker 1: get it's billions of dollars. It's not a small investment.

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Speaker 1: So again I think we should differentiate here. If talking

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Speaker 1: about just for instance, Chevron, which is already in the country,

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Speaker 1: to go in and maybe do a little bit of

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Speaker 1: you know, moderate modest investments and just get some things

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Speaker 1: back in order to be able to exploit the current

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Speaker 1: maximum production potential, that's one thing. But saying that, you know,

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Speaker 1: putting tens of billions of dollars at a minimum to

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Speaker 1: tap those three hundred billion barrels of reserves is absolutely

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Speaker 1: another question.

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Speaker 5: Okay, So that's on the US side of things. Also,

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Speaker 5: worth remembering, as you well know, Vanna, how China was

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Speaker 5: the big market for Venezuelan coude. Where does this leave

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Speaker 5: it in terms of China procuring supplies of energy.

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Speaker 1: Yeah, so I think the re routing and reshuffling of

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Speaker 1: when oil flows is probably going to be a key

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Speaker 1: theme in the medium term, and one of the biggest

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Speaker 1: affected parties as a result of that is definitely going

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Speaker 1: to be China. So, as we know, China was taking

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Speaker 1: the lion's share of venezuel in crude exports close to

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Speaker 1: six to seven hundred thousand battles per day at heavily

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Speaker 1: discounted prices, So this was benefiting the small independent players

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Speaker 1: in China, often known as teapots, who operate on very

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Speaker 1: thin margins. They're very reliant on discounted crude from places

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Speaker 1: like Venezuela, Iran and more lately Russia as well. They

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Speaker 1: are going to be on the losing side. I mean,

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Speaker 1: even in the near term. We can already see the

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Speaker 1: US is prohibiting or blocking ships from taking oil to China.

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Speaker 1: So China has already been deprived of that discounted oil

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Speaker 1: that it has depended on for the past at least

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Speaker 1: five to six years since the first Trump terms. Sanctions

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Speaker 1: on Venezuela to some extent will be impacted as well.

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Speaker 1: If the US ends up taking a lot of the

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Speaker 1: Venezuelan crude, which is my base case at least for

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Speaker 1: the foreseeable future, Canadian crude will need to be backed

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Speaker 1: out and potentially seek home in Asia again where China

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Speaker 1: is the main buyer. Probably, but then for China doesn't

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Speaker 1: get the Canadian extra Canadian crued at the same price

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Speaker 1: as the discounted Venezuelan and probably not so you know,

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Speaker 1: the Chinese teapotrofilals especially are looking at very the further

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Speaker 1: thinning of their margins.

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Speaker 5: At the same time, there is a sense that what's

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Speaker 5: happened in Venezuela is setting a pretty dangerous president, especially

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Speaker 5: if the US is going after natural resources in this manner.

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Speaker 5: What is your sense of where my potentially set its

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Speaker 5: sights next.

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Speaker 1: Anybody's guess, right though. There's of course a couple of

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Speaker 1: names which are being discussed more prominently, Greenland being one

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Speaker 1: we'll hopefully not rattle the oil markets. But the other

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Speaker 1: one is Iran. Not the same kind of intentions, but

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Speaker 1: we do know we have seen in the past few weeks,

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Speaker 1: especially Trump amp up his rhetoric against the government in Tehran,

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Speaker 1: and that is a different ball game altogether. So if

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Speaker 1: we see renewed tensions in the Gulf in the Middle

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Speaker 1: East between Israel and US on the one side, and

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Speaker 1: Iran on the other side, we could be in for

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Speaker 1: a very very geopolitically driven risk premium driven oil markets

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Speaker 1: going into twenty twenty six.

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Speaker 2: That was von Donah Harri, founder and CEO of Vanda Insight,

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Speaker 2: speaking with Bloomberg TV host Paul Allen and April Hong

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Speaker 2: here on the Daybreak Asia podcast. Thanks for listening to

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

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Speaker 2: we look at the story shaping markets, find nance and

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Speaker 2: geopolitics 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 Chrisner

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Speaker 2: and this is Bloomberg