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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 Derek Krisner. We

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Speaker 2: begin today in Japan, where sana A Takaichi was reappointed

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Speaker 2: as Prime Minister following her electoral win in the recent

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Speaker 2: snap election. This will allow Takeiichi to focus on passing

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Speaker 2: the annual budget and implementing a trade deal with President Trump.

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Speaker 2: Here is Bloomberg's Brian Fowler.

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Speaker 3: So we heard from her last night and we'll get

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Speaker 3: her big policy speech tomorrow in which she'll lay out

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Speaker 3: a lot of what her agenda is going to be.

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Speaker 3: We expect her to talk about this idea of cutting

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Speaker 3: the sales tax on food purchases for two years. She's

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Speaker 3: already said that she wants to put that on a

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Speaker 3: priority list. But she'll also talk about the deal that's

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Speaker 3: been done. I think that gives her a lot of

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Speaker 3: momentum going into her meeting with Trump next month. And

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Speaker 3: the great thing about the deal from her perspective is

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Speaker 3: that it touches on a lot of the priorities for Japan,

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Speaker 3: from critical minerals to energy.

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Speaker 4: So I think she'll.

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Speaker 3: Tout that and give us some, you know, some more

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Speaker 3: information about that.

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Speaker 2: That is Bloomberg's Brian Fowler. The Japanese company Kieran is

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Speaker 2: perhaps best known for its beer, and these days the

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Speaker 2: company is being confronted with a long term decline in

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Speaker 2: alcohol consumption worldwide. Health concerns are just one factor. Many

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Speaker 2: liquor companies are being forced to diversify, and Kieran is

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Speaker 2: no exception. It's making a full scale push into health

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Speaker 2: sciences to help drive growth. And that's where we begin

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Speaker 2: our conversation with Toro Yoshi Mura, senior executive officer at Kieran.

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Speaker 2: Toru spoke with Bloomberg TV host Cherry On and April Hong.

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Speaker 1: So tell us a little bit about how significant your

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Speaker 1: division is the rest of the kidding group.

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Speaker 4: Okay, thank you. Kirian has the long expan.

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Speaker 5: It from it's a founding to be a brewing business

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Speaker 5: in nineteenth century and then into the food domain and

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Speaker 5: then we enter to the pharmaceutical sector back in nineteen eighties.

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Speaker 5: And uh, health science business is kind of another pillar

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Speaker 5: which bridges between food and the medicine and which we

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Speaker 5: are confident to nurture. You know, the global is solving

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Speaker 5: the people's health problem like immunity, anti aging and gut

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Speaker 5: health UH and sleep. And you know UH that we

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Speaker 5: are expanded our business based on the two key UH expertise.

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Speaker 5: One is R and D based on their fermentation the

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Speaker 5: biotechnology and also other marketing uh you know, UH with

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Speaker 5: understanding or deep understanding of the consumer.

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Speaker 6: Is.

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Speaker 1: So this seems like a very natural progression for Kating

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Speaker 1: at this point. You also purchase Fango brand in China.

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Speaker 1: Where are the bright spots around the world, because even

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Speaker 1: the Chinese market is such a tricky one, isn't it?

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Speaker 4: Yeah, it is uh.

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Speaker 5: You know, the China involves a lot of you know,

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Speaker 5: the uncertainties like regularly and microeconomic and also a geoparticle

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Speaker 5: uh at some point. And but you know, the China

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Speaker 5: is one of the spots that we are looking at

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Speaker 5: as the kind of a potential market for us leveraging

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Speaker 5: the Fanco brand and the Fango is the Japanese leading

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Speaker 5: uh the supplement and the cosmetics or skin care company

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Speaker 5: h which we acquired under twenty twenty four, and that

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Speaker 5: is a really key uh business unit for us to

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Speaker 5: nurture of the brand and also the health science plan.

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Speaker 5: And in the China, you know, the hang Fugal brands

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Speaker 5: are already there along with another business c unit brand Blackmoss,

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Speaker 5: you know Australia. Yeah, that's right, you know, the joint

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Speaker 5: the King Group in twenty twenty three. Uh, and that

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Speaker 5: with the infrastructure Brockmore and China. Sorry the fun call

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Speaker 5: in China, we are confident to the expanded business.

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Speaker 1: So you're planning to expand in China. What about the

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Speaker 1: United States? Because you now have this US Japan trade deal,

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Speaker 1: the mood seems very favorable. Is that one market that

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Speaker 1: you could target?

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Speaker 5: Well, actually, our primary target right now is Asia Pacific. Uh,

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Speaker 5: you know, because we're going to be at one of

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Speaker 5: the largest and the most stressed health sales companies in

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Speaker 5: Asia Pacific.

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Speaker 4: So probably the first off.

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Speaker 5: Our priority will be on the southeast is and the China. However, uh,

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Speaker 5: you know, because of the scale of the awareness market. Uh,

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Speaker 5: the US is really also very important for US and

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Speaker 5: uh uh you know, but the unit US has you know,

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Speaker 5: kind of higher barrier entry and uh here has competition there,

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Speaker 5: so we really need to establish our serves as kind

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Speaker 5: of a credity credit the based position in the US. Uh,

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Speaker 5: probably with a science at its core.

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Speaker 7: How else you expecting to perhaps establish that as you

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Speaker 7: perhaps look to the US as a key market. Torosian, Oh,

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Speaker 7: the US market are you looking at in terms of

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Speaker 7: a science based approach when you look at the US

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Speaker 7: as a place of opportunity? What some of the other

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Speaker 7: metrics and A just might be as you explore the US?

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Speaker 4: I see, thank you.

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Speaker 5: And you know, as I mentioned, you know, creditive based

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Speaker 5: approach means that we leverage our expertise in UH, uh

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Speaker 5: R and D based on the fermentation about technology, and

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Speaker 5: I strongly believe that we can leverage our approprietary ingredients.

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Speaker 5: Killing has been developing something like we call the ELC

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Speaker 5: plasma plasma lactic acid bacterium and also a citical in

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Speaker 5: UH is A and LC plasma is actually UH the

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Speaker 5: the ingredients up which activates called the PDC the command

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Speaker 5: center of your whole immune system. And UH citicle in

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Speaker 5: UH the works primarily in your community or brain function.

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Speaker 5: And we sell the citical in UH in the US

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Speaker 5: already UH the produced by our biochemical business unit. So

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Speaker 5: UH you know, with this kind of the scientific evidence,

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Speaker 5: UH really helped to deploy our expertise and also the

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Speaker 5: nurture of our business in this.

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Speaker 1: Space you mentioned earlier. Also geopolitical tensions really not helping.

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Speaker 4: When it comes to China.

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Speaker 1: Are you seeing any change in the business because of

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Speaker 1: the US, because of the Japan China attentions?

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Speaker 5: Well, you know for both black Moss uh and fun course,

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Speaker 5: it's too important uh you know uh uh to nurture.

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Speaker 4: Or expand our business in China.

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Speaker 5: So uh you know, uh, and the people places their

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Speaker 5: value in the science and the product product quality, product quality,

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Speaker 5: so that's where we can you know, leverage our expertise

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Speaker 5: us hearing and where do you produce?

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Speaker 1: I'm sorry, because the end is also very vulnerable, right,

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Speaker 1: So do you have manufacturing facilities in China or here

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Speaker 1: in Japanelly?

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Speaker 6: There?

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Speaker 5: You know, all all products are actually produced either in

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Speaker 5: Japan or the Australia, so that we are doing the

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Speaker 5: mainly through our e commas, including the crossboorder economas. So

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Speaker 5: now this is the time for us to really consider

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Speaker 5: to establish uh their domestic.

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Speaker 4: Or local sales channels there.

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Speaker 5: And also you know, sometimes we need to consider their

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Speaker 5: local production. However, because of the size at this moment,

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Speaker 5: it's too early to think about it. So uh, this

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Speaker 5: kind of diplomatic tension is really uh you know uh

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Speaker 5: uh you know, the area we need to uh got

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Speaker 5: carefully watch and I strongly hope you know this kind

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Speaker 5: of direct attention will be eased by the administration. Uh,

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Speaker 5: especially for the assound trade marketing environment.

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Speaker 1: Do you see that already happening with the Taga administration

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Speaker 1: now that she has a strong romandate, how do you

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Speaker 1: assess her business support?

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Speaker 5: We are not sure yet, you know, from the deportion

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Speaker 5: of the government and uh probably just uh a new uh.

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Speaker 5: You know, the administration has started, so we we will

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Speaker 5: see what's going to happen. But in the meantime, we

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Speaker 5: really need to select our winnable area carefully for Kring

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Speaker 5: and also Black manson funcles. Uh then probably operate with

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Speaker 5: and the discipline.

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Speaker 1: It's a strategy m and as because it seems you

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Speaker 1: purchase fan call blackmore so your expansion of receipts. Will

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Speaker 1: that be inorganic through purchases?

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Speaker 4: Well, actually, uh, we.

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Speaker 5: Don't have you know, any specific transaction I can discuss

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Speaker 5: here in public, but you know, because.

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Speaker 1: They're some under consideration.

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Speaker 5: Yes, and because we are acquired the blackness of Hong Kong,

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Speaker 5: our primary focus is to grow organically to leverage the

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Speaker 5: existing on the business units. However that we really would

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Speaker 5: like to explore the opportunity if it helps to grow

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Speaker 5: or enhance the health science business. Uh from the view

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Speaker 5: of the brands to market and the any capability were lack.

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Speaker 4: Of so uh.

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Speaker 5: And also you know, to the point that I mentioned earlier, Uh,

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Speaker 5: you know, we are looking at our focusing in the

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Speaker 5: Asia Pacific.

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Speaker 4: However you know probably will.

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Speaker 5: Would uh look at outside of Asia PACIFICA as well.

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Speaker 5: The one example in the United States because it is

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Speaker 5: the biggest you know, wellness market in the world.

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Speaker 1: Given the high entry barrier that you mentioned earlier, and

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Speaker 1: M and A would potentially make sense if they already

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Speaker 1: had the channels.

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Speaker 5: Established it it would be but still again, you know,

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Speaker 5: our primary focus in the growth and CIBA and in

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Speaker 5: the meantime we have long list short lists, so that

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Speaker 5: will we'll keep looking at it.

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Speaker 1: What about Southeast Asia because it's such an important market

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Speaker 1: as well or is it for killing I guess is

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Speaker 1: my question. Because you have big markets like China, you

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Speaker 1: have Australia, but what about the smaller countries in Southeast.

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Speaker 5: Well, Southeast Southeast Asia is a really important for us

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Speaker 5: because uh, this area is really growing almost a double

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Speaker 5: digit and one of the fast the world's fastest growing

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Speaker 5: uh you know, probably the space for our health related

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Speaker 5: hispanic over the next ten to twenty years. However, the

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Speaker 5: consulman needs a really differ you know, among these markets,

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Speaker 5: so we really need need the market specific approach.

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Speaker 1: How are they different, they are different from each.

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Speaker 5: Other, regulations and also we need to consider the religious

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Speaker 5: part as well, and also some in some countries for skin,

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Speaker 5: some countries for the gut system, some country you know

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Speaker 5: and has an East for the anti jing anti aging

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Speaker 5: is actually becoming more and more more popular. But number

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Speaker 5: one is that regulations so and but unfortunately black mars

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Speaker 5: are already there and we can leverage their capabilities and

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Speaker 5: regulation part as well.

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Speaker 2: That is Toro Yoshi Mura, senior executive officer at Kiaran,

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Speaker 2: speaking with Bloomberg TV host Cherry On and April Home.

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Speaker 2: We're bringing it to you here here on the Daybreak

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

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Speaker 2: It's difficult to avoid the debate over how AI may

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Speaker 2: disrupt various business models. We know software shares have been

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Speaker 2: a notable casualty. For a closer look, I'm joined by

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Speaker 2: Tim Pagliari, He is the chief investment officer at cap Wealth.

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Speaker 2: Tim is on the line from Nashville, Tennessee. Thank you

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Speaker 2: for being here. So this phrase that's being used shoot first,

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Speaker 2: ask questions later when it comes to these certain software names,

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Speaker 2: is that basically what we've been seeing in recent days.

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Speaker 6: So I think it's just the uneasiness about what's it

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Speaker 6: going to cost, first, how are they going to get

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Speaker 6: a return? And then how fast it's evolving. And I

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Speaker 6: know even as an analyst, we are experiencing that. I mean,

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Speaker 6: we're working with different tools and it's amazing how quickly,

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Speaker 6: like Claude six, it is revolutionary. And we have this

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Speaker 6: debate internally about how it's going to impact software. And

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Speaker 6: so I think some of these software companies that have

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Speaker 6: very very expensive packages, they're going to be under some

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Speaker 6: pricing pressure. They're going to have to bundle and end

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Speaker 6: and innovate around it. So as of right now, it

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Speaker 6: really looks to me like it will be impactful primarily

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Speaker 6: on pricing. I don't think people are going out of business,

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Speaker 6: but I think they're going to have to innovate around it,

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Speaker 6: and that's going to lead to a lot of job disruption,

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Speaker 6: Like people are predicting.

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Speaker 2: So there was some evidence today of dip buying and

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Speaker 2: software names. The IGV ETF was up nearly one point

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Speaker 2: three percent. When you take a step back and you

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Speaker 2: look at various software companies, is it likely that this

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Speaker 2: route that we've seen recently has been a bit too

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Speaker 2: aggressive and we just have to maybe approach this with

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Speaker 2: a little bit more sobriety when it comes to the

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Speaker 2: longer term view on how AI will disrupt the industry.

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Speaker 6: Yes, And I think that's a real good point. If

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Speaker 6: we could use Oracle for an example. You know, Oracle

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Speaker 6: has seventy eight data centers under construction. Their revenue is

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Speaker 6: going to you know, expand exponentially. And after they did

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Speaker 6: an earnings report last summer, the stock nearly doubled, I

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Speaker 6: mean almost overnight, and then it completely retraced that and

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Speaker 6: went back because of the concern about how much money

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Speaker 6: they were going to have to borrow. But I think

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Speaker 6: what they missed was the unique application, for example, that

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Speaker 6: Oracle is focusing on, and they're moving to Nashville. They're

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Speaker 6: putting making a four billion dollar investment into a campus.

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Speaker 6: It's going to be their headquarters. Nashville is the headquarters

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Speaker 6: for all innovation related to healthcare. And so I think

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Speaker 6: Oracle is going to have a unique advantage with AI

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Speaker 6: that they will be able to monetize around healthcare, lead

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Speaker 6: to better outcomes, innovation, lowering healthcare costs, all of those things. So,

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Speaker 6: you know, I think I think Oracle's a little different

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Speaker 6: than the rest. Now, if I was, for example, had

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Speaker 6: a software company that was in engineering, architectural engineering, I

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Speaker 6: think that is an area where AI is just going

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Speaker 6: to completely, you know, upend traditional ways of you know,

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Speaker 6: looking at things. So I think it's a case by

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Speaker 6: case study. You know, Oracles different, Microsoft's different, Amazon's going

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Speaker 6: to be different. You know. So these big companies are

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Speaker 6: going to have an edge. They'll get more profitable, more efficient,

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Speaker 6: and we'll really do a lot of value added to

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Speaker 6: the consumer and you know, the public at large.

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Speaker 2: So maybe we can pivot and talk a little bit

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Speaker 2: about the minutes from the last FED meeting that we're

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Speaker 2: released on Wednesday. They indicate that officials are worried over inflation,

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Speaker 2: and a number of FED members suggested maybe the next

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Speaker 2: move is to raise interest rates if inflation were to

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Speaker 2: stay above the Fed's goal. Does that sound a little dramatic?

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Speaker 2: To you or do you think there's a real concern

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Speaker 2: here that we need to consider the possibility of higher

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Speaker 2: interest rates.

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Speaker 6: You've got to put that in the context of Worsh's nomination.

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Speaker 6: And Kevin Warrish is an academic, he's well respected. He

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Speaker 6: was unanimously confirmed the last time he went to the FED.

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Speaker 6: And what Warshoes focused on is reducing the Fed's balance sheet.

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Speaker 6: So the Fed's balance sheet got up to eight trillion dollars.

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Speaker 6: They've cut it to six trillion. Now. That is tightening.

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Speaker 6: When they reduce their balance sheet, they're tightening, they're taking

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Speaker 6: money out of circulation. So I believe Worsh looks at

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Speaker 6: interest rates differently than the rest of the world. You know,

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Speaker 6: this idea, for example, that hedge funds owning homes and

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Speaker 6: gobbling up you know, rental properties. They have a competitive advantage.

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Speaker 6: They can deduct their interest expense, they can do a

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Speaker 6: lot of things that regular homeowners can't. And so you've

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Speaker 6: got this disconnect right now in the homeowner's market, where

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Speaker 6: they're very sensitive to rates, and so you've seen home prices,

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Speaker 6: stall is not as sensitive. You know, rates could be

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Speaker 6: one percent, they could be five percent, they can be

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Speaker 6: twelve percent, and if they can borrow the money, make

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Speaker 6: an investment and profit from that after the interest expense,

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Speaker 6: they go ahead and do it. You can't change the

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Speaker 6: dynamics of a homeowner that has to pay a seven

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Speaker 6: percent mortgage versus the cost of that versus a four

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Speaker 6: percent mortgage. And so worsh is going to force the

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Speaker 6: hand of lowering rates at the time that he's same

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Speaker 6: time that he's sensitive to inflation by reducing the Fed's

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Speaker 6: balance sheet.

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Speaker 2: I'm wondering whether you think there is a risk that

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Speaker 2: any balance sheet reduction could potentially put asset prices under pressure.

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Speaker 6: Oh, I think they are under pressure. And I think

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Speaker 6: you know, part of what's happened with the FED is,

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Speaker 6: you know, they compete with the private sector because they're

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Speaker 6: borrowing the money, you know, from the banks with the

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Speaker 6: FED funds rate. So they printed some of the money

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Speaker 6: and they borrow it also. And so if you reduce

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Speaker 6: the balance sheet, then you leave more money out in

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Speaker 6: circulation for the banks to do their job. And one

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Speaker 6: of the things that's got Vestent and Treasury wants to do,

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Speaker 6: and I heard him speak earlier this year in a

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Speaker 6: private meeting, he wants to get more of you know,

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Speaker 6: this opaque market in private credit. He wants it under

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Speaker 6: the umbrella of regulation. He wants it brought back into

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Speaker 6: the system. And so this is a major policy shift,

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Speaker 6: and it's one that I support. I think it will

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Speaker 6: be successful, you know, longer term.

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Speaker 2: Let's talk a little bit about the macro, because we

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Speaker 2: had a number of data points today on the American

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Speaker 2: economy that basically indicate things are holding up pretty well.

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Speaker 2: Industrial production up in the month of January by the

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Speaker 2: most in nearly a year. We also had news that

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Speaker 2: orders for business equipment rose in December by more than expected.

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Speaker 2: And housing starts, to your point on the housing market,

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Speaker 2: housing starts at a five month high. Given everything that

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Speaker 2: I just laid out there, it's kind of tough to

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Speaker 2: argue right now that we need lower interest rates.

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Speaker 6: Yes, well now it is because you still have, as

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Speaker 6: we speak directly to housing, housing costs or the shortage

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Speaker 6: of housing is still real. I mean, we're anywhere from

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Speaker 6: four to eight million units short in housing. And so

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Speaker 6: this uptick today just kind of counterbalances the losses that

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Speaker 6: we had and the stagnation that we had in housing starts,

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Speaker 6: you know, most of last year. So I do believe

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Speaker 6: that it will not be inflationary, and it will. We'll

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Speaker 6: see a lot with Trump's State of the Union address

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Speaker 6: next week and how He's going to address all of this.

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Speaker 2: Tim, we'll leave it there, Thank you so very much.

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Speaker 2: Tim Pagliara is the chief investment officer at cap Wealth.

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Speaker 2: On the line from Nashville, Tennessee. Joining us here on

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Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode

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

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

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Speaker 2: 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: and this is Bloomberg