Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. Tech
Speaker 2: is once again dominating the conversation in markets, especially as
Speaker 2: it relates to AI in Japan. Shares and soft banker
Speaker 2: trading higher on where the company is studying potential acquisitions,
Speaker 2: including the data center operator SWITCH. We are told SoftBank
Speaker 2: has held discussions with leadership at Switch and the company's
Speaker 2: been conducting some due diligence on Switch. Stateside, we had
Speaker 2: some tech weakness that seemed to be the blemish on
Speaker 2: an otherwise record setting session, with the S ANDP and
Speaker 2: the Dow Industrial Average each closing at all time highs. However,
Speaker 2: the Nasdaq comp was in retreat thanks to a drop
Speaker 2: in Oracle. Those shares were down nearly eleven percent on
Speaker 2: concern over Oracle's plans for vast capital outlays on infrastructure.
Speaker 2: For a closer look at the price action, I'm joined
Speaker 2: by Steven Schoenfeld. He is the CEO of Market Vector Indexes. Stephen,
Speaker 2: thank you so much for making time to chat with me.
Speaker 2: What did you make of the price action today?
Speaker 3: It was encouraging despite Oracles drop and holding the nastac back.
Speaker 3: I think, you know, there's definitely rotation. Value stocks are strong,
Speaker 3: small cap is actually leading, and you know, we didn't
Speaker 3: have a record in Nasdaq, but we didn't in the
Speaker 3: Dow and S and P. Also, the transports are at
Speaker 3: new highs they haven't been in almost two years, so
Speaker 3: it feels like a healthy market. The jitters are mostly
Speaker 3: in tech, just like you just said with Broadcom.
Speaker 2: So are they justified though? I mean, if you look
Speaker 2: at what Broadcom had to say, EPs for the quarter
Speaker 2: was above estimates for the latest quarter. However, the outlook
Speaker 2: for revenue where AI is concerned, maybe did not meet
Speaker 2: the most lofty expectations. Do we need to discuss valuations here?
Speaker 3: I think we can, because you know, tech is still
Speaker 3: priced to perfection, and US and developed markets in general
Speaker 3: are very very highly valued historically, right, So the talking
Speaker 3: points I sent you, you know, tell the story. Even
Speaker 3: though emerging markets have had a good year, they're still
Speaker 3: dramatically cheaper than developed markets, and US is really the
Speaker 3: tip of the sphere of developed market valuations.
Speaker 2: So, Steven, if you're optimistic on the US equity market
Speaker 2: going into the new year, I'm curious about how much
Speaker 2: of that is predicated on much easier FED policy. Just
Speaker 2: the other day we had the Fed maintaining its outlook
Speaker 2: for just one rate cut in twenty twenty six. That
Speaker 2: despite the fact that the swaps market is sticking to
Speaker 2: the bet for two rate cuts in the new year.
Speaker 2: What is your view on the outlook for rates?
Speaker 3: You know, I think they'll be a new FED president,
Speaker 3: and I think that will have some influence. The market
Speaker 3: reacted well to the you know, it was like a
Speaker 3: soft talkish kind of press conference by Powell. So I
Speaker 3: think I do think the market will be okay with either.
Speaker 3: I think the fundamentals of earnings and that the US
Speaker 3: economy is not as weak as people feared, even as
Speaker 3: recently as a month ago, is what's holding up the market.
Speaker 3: You would not you would not see small cap and
Speaker 3: value performing the way they are if that was the case.
Speaker 3: If that wasn't the case.
Speaker 2: So you mentioned emerging markets a moment ago. What's your
Speaker 2: outlook for EM in twenty twenty six?
Speaker 3: Broadly speaking, So, obviously emerging markets are heterogeneous. Different markets
Speaker 3: show greater or less potential, but as a whole, the
Speaker 3: valuations in emerging markets are really attractive. The forward pe
Speaker 3: is about half of the US and developed markets. Cyclically
Speaker 3: adjusted PE or CAPE is also in the twelve to
Speaker 3: thirteen compared to twenty four to twenty five for developed markets.
Speaker 3: And then you look at some specific markets. Brazil has
Speaker 3: performed very well despite being hit with US tariffs. India
Speaker 3: is one of the few large emerging markets that is flat,
Speaker 3: and I believe it has huge potential. And Vietnam has
Speaker 3: had a great year, almost up to fifty percent, but
Speaker 3: it has a structural change coming up next year. The
Speaker 3: potential to be graduate well, not the potential the reality
Speaker 3: of being graduated to emerging market status by the Footsea benchmark.
Speaker 2: Now, the direction of EM, as we know, often comes
Speaker 2: down to the relative strength or weakness of the US dollar.
Speaker 2: Today it was a story of dollar weakness, and the
Speaker 2: Bloomberg Dollar Spot index right now is on pace for
Speaker 2: its third weekly decline. If we can assume the dollar
Speaker 2: remains on the back foot, does that necessarily create more
Speaker 2: bullishness for you when it comes to EM.
Speaker 3: Yeah, that is the case. Emerging market performance is generally
Speaker 3: helped by a weaker dollar as well as Emerging market
Speaker 3: currencies in general have been strong this year, and we've
Speaker 3: had a role reversal the fiscally responsible countries around the world.
Speaker 3: In general, it's more emerging markets than developed markets, so
Speaker 3: it is the market speaking about the relative health of
Speaker 3: emerging markets.
Speaker 2: In my opinion, what's your biggest concern is we go
Speaker 2: into twenty twenty six.
Speaker 3: To start their geopolitical concerns are not only not diminish,
Speaker 3: but they've increased. We now have the possibility of a
Speaker 3: hot war in the Caribbean as well as continuation of
Speaker 3: the Ukraine Russia War. I do expect the Middle East
Speaker 3: to be somewhat attenuated compared to the last two years.
Speaker 3: I believe the ceasefire will hold, but trade tensions will
Speaker 3: continue to be a factor. The US and China are
Speaker 3: seeming to signal mutual understanding and accommodation, so that could
Speaker 3: be a positive. And it's a midterm election year, there's
Speaker 3: a lot of unpredictability about that and what the White
Speaker 3: House will do in order to try to maintain a
Speaker 3: Republican control of the House and Senate.
Speaker 2: So you've highlighted a few of the risk and given
Speaker 2: those risks, maybe you could address some of the more
Speaker 2: defensive or perhaps hedging strategies that you're using.
Speaker 4: Right now.
Speaker 3: Sure, well, as a global index provider.
Speaker 5: We.
Speaker 3: Encourage investors to use our indexes and make their own decisions,
Speaker 3: But what we really strive to do is create asset
Speaker 3: class choices for our investors. So, for example, gold and
Speaker 3: gold mining stocks as well as silver and silver mining
Speaker 3: stocks have been an excellent hedge this year. I do
Speaker 3: think the trends in metals and now coppers coming up
Speaker 3: are going to continue to be of value. In contrast,
Speaker 3: crypto has not added value to anyone's portfolios this year.
Speaker 3: It could be a good time to allocate just a
Speaker 3: few percentage to diversified crypto. And then finally, emerging markets
Speaker 3: broadly defined are definitely a hedge against debt and potential
Speaker 3: overvaluation and develop market.
Speaker 2: Steve will leave it there, Thank you so much. Steven
Speaker 2: Schoenfeld is the CEO at Market Vectors in dex Is
Speaker 2: joining us here on the Daybreak Asia podcast. Welcome back
Speaker 2: to the Daybreak Asia Podcast. I'm Doug Krisner. Uber is
Speaker 2: looking for some new avenues of growth in the Asia Pacific,
Speaker 2: especially in Japan and Hong Kong, and the focus of
Speaker 2: the strategy will involve self driving cars. Uber CEO Derek
Speaker 2: Kasper Shahi is in the region. He spoke with Bloomberg's
Speaker 2: Annabelle Droolers.
Speaker 5: It's been a very busy week for you today if
Speaker 5: you've been Japan, Korea, Taiwan, Hong Kong. What's doing this
Speaker 5: sort of standout so far? The key takeaways, well, the.
Speaker 1: Key takeaways for US is growth the Apak market and
Speaker 1: in particular the North Asia markets as well. They are
Speaker 1: huge growth markets for US. And if you look, for example,
Speaker 1: in the rideshare business, over thirty percent of our global
Speaker 1: first trips coming into the category come from the Apak region.
Speaker 1: The area is growing very quickly, including taxi as well,
Speaker 1: which is actually one of our newest products on the platform.
Speaker 1: So for me coming here, seeing the teams, meeting with
Speaker 1: local business people and regulators and talking about how we
Speaker 1: can be part of the future growth of the region
Speaker 1: is really what my agenda is.
Speaker 5: Early this year you also put out a statement on
Speaker 5: the robot taxi push as well, and so the Middle
Speaker 5: East and Asia were the markets for twenty twenty five
Speaker 5: to launch, and we've seen of course that initial deployment
Speaker 5: in the Middle East already.
Speaker 1: What's happening on the Asia side, well, lots of discussions.
Speaker 1: On the Asia side, I think what's really important is
Speaker 1: to set up a regulatory framework to go forward. For example,
Speaker 1: Hong Kong has various trials and pilots going on, and
Speaker 1: in many other markets, we're talking to regulators about how
Speaker 1: we can be a part of shaping ride share and
Speaker 1: autonomous ride shair going forward. The technol ology is absolutely
Speaker 1: getting there. These are the robot driver. It doesn't get tired,
Speaker 1: doesn't get distracted, and we very much look forward to
Speaker 1: working with various authorities to introduce rod shair into the markets.
Speaker 1: We're now live in four markets now as we speak,
Speaker 1: in the US and in the Middle East, and I
Speaker 1: expect to be in ten plus markets by next year,
Speaker 1: and we want those markets to be in the Asia
Speaker 1: Pacific region as well.
Speaker 5: Where then, in Asia do you think is the most
Speaker 5: likely place.
Speaker 1: We'll see I think that certainly Japan has great potential,
Speaker 1: you know, with.
Speaker 5: They are behind on their regulation.
Speaker 1: They are behind in their regulation, but I think that
Speaker 1: they also understand that with an aging population, there's a
Speaker 1: real need for transportation, not just in the large cities
Speaker 1: but in.
Speaker 4: The rural areas.
Speaker 1: And for example, I experienced that personally going to Kaga
Speaker 1: city and where we have communal rod share and kind
Speaker 1: of took a ride share trip and understood what the
Speaker 1: needs are there. So we're talking with various countries regulatory authorities.
Speaker 1: I think Japan is going to be part of it.
Speaker 1: I certainly hope that Hong Kong is going to be
Speaker 1: a part of it. Australia, where we were just talking about,
Speaker 1: is a huge market for us. So we're having those
Speaker 1: dialogues and I think that the picture will shape up
Speaker 1: over the next two years because the technology is definitely
Speaker 1: getting there.
Speaker 5: Speaking of Hong Kong, because we do see the trials
Speaker 5: that are underweight and they're being conducted by Baydu's Apollogo program.
Speaker 5: Would you be looking to work with them on that
Speaker 5: or are you working with them on that?
Speaker 1: By Do is a partner of ours, so we partner
Speaker 1: with Baidun we ride for example in Abadhabi and expanding
Speaker 1: their ponies another partner of ours. So we absolutely expect
Speaker 1: to be on the road with all three of them.
Speaker 1: When you look at Chinese autonomous technology and the development there,
Speaker 1: they are one of the leaders on a global basis,
Speaker 1: and for us, we want to partner with a whole
Speaker 1: autonomous ecosystem to bring this technology to reality.
Speaker 5: So, just to clarify, you're expecting to ramp up the
Speaker 5: markets that you're into ten autonamous driving markets ten plus
Speaker 5: yes by next year, and you anticipate that those could
Speaker 5: also come from the Asia region.
Speaker 1: They could come from the Asia region, and they could
Speaker 1: also involve some of the partners that we talked about.
Speaker 4: By do we ride a pony?
Speaker 5: And if not Hong Kong, then where else? Do you
Speaker 5: think in Japan? As I said, it's really is behind
Speaker 5: on the regulatory.
Speaker 1: Side, every major market in which we operate, we are
Speaker 1: having discussions with autonomous partners and then most importantly regulators
Speaker 1: as to how we can introduce autonomous either in a
Speaker 1: pilot way or within some restricted operational domain. You know,
Speaker 1: everyone wants this product. It's a product that's delightful in
Speaker 1: markets for example, in Atlanta, in Austin and Abu Dhabi.
Speaker 4: Our consumers love the product.
Speaker 1: They feel safe, and this technology is hitting primetime now
Speaker 1: in every major city in the world.
Speaker 4: To be a part of that.
Speaker 5: Revolution, I do find it interesting by in particular with
Speaker 5: the Apollogo program, because they are conducting the trials here,
Speaker 5: they're already starting to remove the human drivers across some
Speaker 5: of their markets in mainland Shiner and the way that
Speaker 5: you can get a buy to apologo ride in mainland
Speaker 5: China is often through a buy do control platform. Do
Speaker 5: you see that risk of them maybe pursuing that strategy
Speaker 5: here instead of teaming up with you on it.
Speaker 1: I don't think it's going to be black and white
Speaker 1: in terms of the strategy. I think that there could
Speaker 1: be many hybrid approaches, and you know, I compare it
Speaker 1: to the food delivery business. For example, we work with
Speaker 1: Starbucks or McDonald's that has a direct app and customers
Speaker 1: go direct to get the food there. At the same
Speaker 1: time they also participate in the marketplace. So I think
Speaker 1: the autonomous ecosystem will be the same way. There will
Speaker 1: be some direct kind of some customers going direct, and
Speaker 1: we think that with the Uber market place, we can
Speaker 1: bring the kind of demand that over two hundred million
Speaker 1: monthly active platform customers can bring to autonomous, so that
Speaker 1: we get those cars on the road and incredibly busy
Speaker 1: with very high utilization.
Speaker 5: Let's talk about the US as well, because you're partnering
Speaker 5: there with Weimo as well in certain cities. Perfect partner, Yeah,
Speaker 5: terrific partnering. Actually in the latest earnings, I think you
Speaker 5: said excellent as well. But in some places, Weimo is
Speaker 5: expanding into new cities without you and becoming a direct competitor.
Speaker 5: And that's something that was highlighted even by Webbush earlier
Speaker 5: this week as being a potential risk for your business
Speaker 5: next year. How are you assessing that.
Speaker 1: Well, I think it's the same example that I gave
Speaker 1: you that in some ways the McDonald's app is a
Speaker 1: competitor to Uber Eats and the two can coexist. And
Speaker 1: it's very very early in the development of autonomous we
Speaker 1: have to make sure that we have access to autonomus
Speaker 1: technology in the major cities that have the right regulatory
Speaker 1: framework to allow autonomous and we're very confident as we
Speaker 1: look at our roadmap and we look at our partners.
Speaker 1: We have over twenty partners autonomous partners globally that we
Speaker 1: will have access to autonomous technologies in the large cities
Speaker 1: and markets that really count.
Speaker 5: When you say access to twenty different partners, do you
Speaker 5: think that that is the way that the industry will
Speaker 5: continue to evolve or do you expect consolidation on the
Speaker 5: robotaxi side as well, or the autonomous driving software.
Speaker 1: Side we're seeing is this is a trillion dollar plus
Speaker 1: market in terms of autonomous mobility. I think delivery eventually
Speaker 1: will be of a similar size. And when you have
Speaker 1: markets that are that large, you usually don't have winner
Speaker 1: take calls.
Speaker 4: It's the same way with these LLM models.
Speaker 1: There are many to choose from, whether it's an open
Speaker 1: AI or a Gemini, and I think the same will
Speaker 1: be true of autonomous It's an exciting technology, but there
Speaker 1: are many players getting to the finish line. We just
Speaker 1: have to make sure that the players that we work
Speaker 1: with are safe and that again we're working with the
Speaker 1: regulators in constructive manner.
Speaker 5: Part of the strength of Uber, of course is your
Speaker 5: data mode and just how much information you're collecting on
Speaker 5: users and in the rise they're taking and their behavior patterns.
Speaker 5: But other competitors in the market, like Way more like
Speaker 5: Tests are still continuing to build up that infrastructure as well.
Speaker 5: So how secure do you see that data mode being?
Speaker 1: Well, there's nothing secure about the technology space. There's always innovation,
Speaker 1: and so we just have to move fast and isay.
Speaker 1: Actually the more important factor in Uber is our global coverage.
Speaker 1: We are operating in seventy countries. The demand that we're
Speaker 1: bringing every day, We've got millions of consumers opening our
Speaker 1: app all over the world, and we can point that
Speaker 1: demand not just to our current driver partners and delivery partners,
Speaker 1: but as autonomous comes in to autonomous partners.
Speaker 4: You know, these are.
Speaker 1: Very expensive cars, it's a very expensive technology, and you
Speaker 1: want to amortize the upfront, spend it as many transactions
Speaker 1: as possible. And Uber certainly is the leader around the
Speaker 1: world in terms of the demand that we can point
Speaker 1: to our autonomous partners.
Speaker 5: Yeah, when you talk about a capital and just general
Speaker 5: capital raising plan, an interesting move that you made earlier
Speaker 5: this year was raising one point two billion dollars by
Speaker 5: selling those exchangeable senior bonds linked to your stake in
Speaker 5: Aurora for a few details in that one, but do
Speaker 5: you see yourself doing that again in twenty twenty six
Speaker 5: something similar again just to it was really seen as
Speaker 5: an innovative and creative way I guess to raise money.
Speaker 1: Well, we have a very creative team. I think the
Speaker 1: good news for us is we're now free cash flowing
Speaker 1: close to ten billion dollars, and we expect that to
Speaker 1: increase substantially over the next couple of years. So through
Speaker 1: a combination of the substantial free cashroow that we have
Speaker 1: and also monetizing some of the equity stakes that we
Speaker 1: have in other companies. Now it's over ten billion dollars.
Speaker 1: We think we have plenty of capital to be able
Speaker 1: to continue to invest in our autonomous technology part or
Speaker 1: building out a fleet presence and or vehicles across the
Speaker 1: autonomous ecosystem so that we can continue to be a
Speaker 1: leader in the space.
Speaker 5: You're well capitalized. That's sort of taking away from that,
Speaker 5: But would you look to do something similar with your
Speaker 5: stakes in DD and GRAB in particular.
Speaker 4: I think we'll be opportunistic.
Speaker 1: Certainly, we love GRAB and it's a strategic partner of ours.
Speaker 1: D D of course hasn't gone public yet, so to
Speaker 1: the extent we have an opportunity, we will look to.
Speaker 1: You know, we call it recycling the investments that we've made.
Speaker 1: But at the same time, we don't need to do
Speaker 1: that because the company continues.
Speaker 4: To throw off cash flow. We have a lot of
Speaker 4: options ahead of us.
Speaker 5: I want to talk about also the sparsa geography's strategy
Speaker 5: and the importance of that. Can you maybe spell it
Speaker 5: out a little bit for people exactly what you mean
Speaker 5: by that because it is interesting, as you make sort
Speaker 5: of a push into lots of different centers, it actually
Speaker 5: seems to be less the centers that are doing well
Speaker 5: for you as a company.
Speaker 1: Well, the urban centers continue to grow. But I do
Speaker 1: think that we as I reflect on Uber's growth, we
Speaker 1: used to be a big city company, and what we're
Speaker 1: seeing is there's enormous demand for both mobility and delivery
Speaker 1: outside of the large cities, in the more sparse markets,
Speaker 1: the suburbs, et cetera. And our growth in the sparse
Speaker 1: markets is anywhere from two to three times faster for
Speaker 1: mobility and delivery than in the big urban markets, even
Speaker 1: though the urban markets are growing at the same time.
Speaker 1: Some governments actually need access to mobility. You know, there
Speaker 1: isn't great taxi service in some of these rural destinations
Speaker 1: in Japan, bus services is also not readily available, so
Speaker 1: you know, as Uber, obviously we run a business, but
Speaker 1: we want to be there for stakeholders and we want
Speaker 1: to help address some of the needs of the government
Speaker 1: in Japan. Particular, rural transportation is a real need, and
Speaker 1: we wanted to step up and give back to Japanese
Speaker 1: society because that market has been such a great market
Speaker 1: for us, and that's what communal ride share in these
Speaker 1: rural destinations like Carga City is all about. I experienced
Speaker 1: it myself. The countryside is absolutely beautiful and you know,
Speaker 1: our driver was so thankful. Assually runs a soba shop
Speaker 1: that's on Uber Eats as well. He delivers for Uber Eats.
Speaker 1: He's a part of our ecosystem and it's amazing to
Speaker 1: see that happen not just in the big cities but
Speaker 1: also in a lot of small cities and rural destinations.
Speaker 5: What do you make then for India in particular, because
Speaker 5: of course you big competitor there is rapid of and
Speaker 5: then they've been very successful with a slightly different operating model,
Speaker 5: but including going down into the lower tier or solar
Speaker 5: tier cities, how do you also stay competitive there? And
Speaker 5: does that sparse a geography strategy also fit for India?
Speaker 4: Yeah, very much so so with India.
Speaker 1: Really the fastest growing part of the Indian market is
Speaker 1: two wheelers and three wheelers, and the business man is different.
Speaker 1: Actually it's not a commission model, but it's actually a
Speaker 1: subscription model as well. Rapido's a real upstart there, but
Speaker 1: over the past months we've been pushing back against them,
Speaker 1: and India continues to be a hugely promising market for us,
Speaker 1: so we're very happy about the recent results that we're seeing.
Speaker 2: That is Uber CEO Derek Koswershahi speaking with Bloomberg's Annabelle
Speaker 2: Droolers in Hong Kong here on the Daybreak Asia Podcast.
Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak
Speaker 2: Asia Edition podcast. Each weekday, we look at the story
Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You
Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,
Speaker 2: or anywhere else you listen. Join us again tomorrow for
Speaker 2: insight on the market moves from Hong Kong to Singapore
Speaker 2: and Australia. I'm Doug Chrisner, and this is Bloomberg