WEBVTT - JD.com Earnings, Asia Markets

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis

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<v Speaker 2>along with Doug Krisner. Join us each day for the

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<v Speaker 2>stories making news and moving markets in the Asia Pacific.

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<v Speaker 2>You can subscribe to the show anywhere you get your

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<v Speaker 2>podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and

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<v Speaker 2>the Bloomberg Business app.

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<v Speaker 1>So here in the States, today, we had those US

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<v Speaker 1>listed shares in JD dot Com rallying by around sixteen percent.

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<v Speaker 1>Several factors were play, not the least of which a

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<v Speaker 1>three billion dollar stock buyback plan. JD reported a modest

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<v Speaker 1>beat on both revenue and profit. And let's take a

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<v Speaker 1>closer look now with our own Katherine Limb, Bloomberg Intelligence,

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<v Speaker 1>Senior analyst on Asia, Consumer and Tech, joining us from

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<v Speaker 1>our studios in Singapore. Catherine, it's always a pleasure. Let's

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<v Speaker 1>begin on the e commerce side here. What did you

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<v Speaker 1>hear from JD that would allow the market to believe

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<v Speaker 1>that this company has really turned a corner.

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<v Speaker 3>Well, you know, the results itself was a little less overwhelming.

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<v Speaker 3>It's two percent marginal bid as you've actually mentioned earlier itself.

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<v Speaker 3>I think it was more of a relief that the

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<v Speaker 3>company is giving back cash to its shareholders via a

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<v Speaker 3>twenty two percent hiken dividends as well as an extension

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<v Speaker 3>of their three billion share buyback program. Now just bear

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<v Speaker 3>in mind that previously they had in place a three

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<v Speaker 3>billion and now they're going to start another new three

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<v Speaker 3>billion for the next three years. So not much of

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<v Speaker 3>a new news coming out from there. But really I

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<v Speaker 3>think it is a relief that it's probably you know,

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<v Speaker 3>syncing into the markets, particularly since we've heard so much

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<v Speaker 3>about the competition and the company is going hits on

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<v Speaker 3>with Ali Baba.

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<v Speaker 2>Yeah, the competition is fierce, for sure. The executives did

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<v Speaker 2>seem pretty confident this year, saying that they could take

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<v Speaker 2>market leadership. And I see in your comments that both

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<v Speaker 2>the dividend and the and the and the buyback shows

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<v Speaker 2>that you don't really have to worry too much about

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<v Speaker 2>a cash drain. Is that how sustainable? Is that kind

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<v Speaker 2>of feeling?

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<v Speaker 3>Well, you know, there are many parts again to JD's

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<v Speaker 3>dot COM's overall reported numbers, and really if you look

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<v Speaker 3>at the numbers itself, we had a twelve percent drop

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<v Speaker 3>in the retail profits. That is the e commerce side

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<v Speaker 3>of things, and the you know, the bum up really

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<v Speaker 3>came from the logistics side of the business, which is

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<v Speaker 3>a good and good to have, particularly since you know,

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<v Speaker 3>the business, the logistics business will continue to enjoy economies

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<v Speaker 3>of scale as it actually goes bigger. So you're going

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<v Speaker 3>to have to actually these two forces coming together, which

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<v Speaker 3>then I guess what JD dot Com really is, you know,

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<v Speaker 3>can lean on the logistics business to help offset you know,

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<v Speaker 3>the profit drag coming from the competition. So net Net

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<v Speaker 3>I think, you know, they're in a fairly neutral position.

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<v Speaker 3>I would say, we'll have to see whether they succeed

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<v Speaker 3>in getting that market share back from Ali Baba and not.

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<v Speaker 3>Let's not forget PDD and doing.

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<v Speaker 1>Yeah Prian grow duo. I mean, so let's talk a

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<v Speaker 1>little bit about the Chinese consumer because I'm looking at

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<v Speaker 1>what really drove a lot of the revenue gains electronics

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<v Speaker 1>and home appliance. Is what does this tell us about

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<v Speaker 1>the appetite for durable goods in China.

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<v Speaker 3>Well, you know, electronics and home appliances, that has always

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<v Speaker 3>been a strong category for JD dot Com. They started

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<v Speaker 3>off in that business and that had also triggered earlier

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<v Speaker 3>talks about them, you know, looking to actually acquire Curast

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<v Speaker 3>in London. So that's that bit of that, and I think,

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<v Speaker 3>you know for it when it comes to electronics and

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<v Speaker 3>home appliance, let's not forget that there's a lot of

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<v Speaker 3>actually there's a lot of price cuttings going on in

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<v Speaker 3>China right now. With getting seeing a lot of the subsidies,

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<v Speaker 3>et cetera, it's probably going to be less of you know,

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<v Speaker 3>there's going to be less of an impact on home

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<v Speaker 3>appliance given that we're going to step into Women's Day tomorrow.

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<v Speaker 3>So it's all about the cosmetic frenzy out there, but

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<v Speaker 3>price cuts, low price affudibility that is likely still got

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<v Speaker 3>a hole in China for the rest of twenty twenty four.

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<v Speaker 2>Yeah, part of Doug's question about how healthy is the consumer,

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<v Speaker 2>they actually did say that they felt that consumption recovery

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<v Speaker 2>would be further strengthened this year. So that's one company

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<v Speaker 2>to Doug's question. And if we could sort of put

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<v Speaker 2>together the earnings from Ali Baba and JD and others,

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<v Speaker 2>you put it all together, do you feel confident that

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<v Speaker 2>the consumer will be back this year?

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<v Speaker 3>Well, I guess that really depends on your definition of

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<v Speaker 3>where we are expecting them to go back to. Are

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<v Speaker 3>we expecting them to do more impulse buying as what

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<v Speaker 3>we have seen, you know, prior to the COVID, I

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<v Speaker 3>don't think so, really facing a more rational shoppers and

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<v Speaker 3>probably more discerning in their spending. With also seen that

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<v Speaker 3>continued trend that you know, the consumers would like to

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<v Speaker 3>actually spend more on travel, leisure activities versus you know,

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<v Speaker 3>your discretionary goods, and you know, particularly you're super high

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<v Speaker 3>and luxury, they're just not buying as much as they

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<v Speaker 3>used to before.

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<v Speaker 1>So, Catherine, you were talking a moment ago about price

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<v Speaker 1>cuts discounts on electronics and home appliances. I'm thinking that's

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<v Speaker 1>going to create margin pressure here? Is this something that

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<v Speaker 1>JD addressed.

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<v Speaker 3>Now that's an interesting point because I think right now

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<v Speaker 3>in China you're looking at you know, the entire supply

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<v Speaker 3>chain right now, you know, seeing a surplus of you know, inventories.

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<v Speaker 3>They are also manufacturers are getting more operating efficiency and

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<v Speaker 3>in a position to actually lower costs. And what's happening

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<v Speaker 3>is that you know, some of them are passing their

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<v Speaker 3>margins and profits through to the consumers. So in a

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<v Speaker 3>case of JD dot Com. No doubt there is still

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<v Speaker 3>going to be a drag on down margins, particularly as

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<v Speaker 3>they tried to actually win back more users from Ali

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<v Speaker 3>Baba and PDD via incentives and pots that we continue

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<v Speaker 3>to actually see on their platform.

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<v Speaker 2>Yeah, all right, Catherine, thanks so much. I like that point, Doug,

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<v Speaker 2>that Catherine made about it depends what consumers go back to,

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<v Speaker 2>because they were spending really crazily over the past. I

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<v Speaker 2>think I told you before that when I first came here,

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<v Speaker 2>the Americans and the Europeans were the rich tourists in Asia.

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<v Speaker 2>Then in the eighties it became the Japanese for sure,

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<v Speaker 2>and then after you moved a little bit later on

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<v Speaker 2>you had the Chinese, and the Chinese were buying up

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<v Speaker 2>properties with all cash and spending on luxury goods and

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<v Speaker 2>lined up outside the Louis Vuitton stores like fifty to

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<v Speaker 2>eighty people in line to get in this store. I

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<v Speaker 2>don't think we're going back to that well again. One

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<v Speaker 2>of the featured stories this morning on the Bloomberg Terminal,

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<v Speaker 2>China is targeting it's one hundred and seventy million migrant

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<v Speaker 2>workers to help shore up the economy, and part of

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<v Speaker 2>that has to do with the Houko system joining us

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<v Speaker 2>now is shule N Bloomberg opinion columnists. The only problem

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<v Speaker 2>with this, Shulely, is that reforming the Houko system is

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<v Speaker 2>a little bit about freedom and giving workers and people

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<v Speaker 2>a little more access to go where they want and

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<v Speaker 2>to still collect their benefits. Do you believe that this

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<v Speaker 2>is something that can make a measurable impact on the

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<v Speaker 2>Chinese economy and can it happen anytime soon?

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<v Speaker 4>I think the microworkers have had a really really tough

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<v Speaker 4>time in the last four years, especially during the COVID era, right,

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<v Speaker 4>and then like allowing them to move around more freely

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<v Speaker 4>that will help the political stability in the society. I mean,

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<v Speaker 4>they really had a very tough time.

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<v Speaker 1>So if you're talking about things like access to housing

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<v Speaker 1>and medical care as well as education resources, this is

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<v Speaker 1>a long term vision here. I mean, I think the

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<v Speaker 1>government is trying to target some type of transformation. Am

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<v Speaker 1>I right on that?

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<v Speaker 4>Yes? And let's keep in mind that the China's micro

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<v Speaker 4>workers have been going to the cities for like three decades, right,

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<v Speaker 4>some of them are already hitting their retirement age. Believe

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<v Speaker 4>it or not, China is getting old. Some of them

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<v Speaker 4>are in their sixties, and even so they don't have

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<v Speaker 4>any retirement money because whatever they have earned they have

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<v Speaker 4>sent back to their villagers to support their children and grandchildren.

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<v Speaker 4>And again, the last four years have been very tough time.

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<v Speaker 4>And then everybody in China knows about that, and we

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<v Speaker 4>read about news articles of interviews of microworkers saying, you know,

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<v Speaker 4>I'm in my sixties, I'm still working minimum wage. What

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<v Speaker 4>am I going to do with the future. So this way,

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<v Speaker 4>it's just a way to help appease the Chinese society

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<v Speaker 4>and make people feel a little bit better about the government,

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<v Speaker 4>if that makes sense. And by the way, the Chinese

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<v Speaker 4>government is also increasing the pension funds for retirees by

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<v Speaker 4>a slight amount for the farmers, right, you know, this.

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<v Speaker 2>Is the type of thing that actually a lot of

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<v Speaker 2>critics have been calling for for a long time. It

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<v Speaker 2>is about freedom though, as I mentioned earlier, it is

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<v Speaker 2>about giving people more choice in what they do. And

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<v Speaker 2>when you think about President c Jinping and what his

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<v Speaker 2>priorities are, it's national security and control and that sort

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<v Speaker 2>of thing. You wonder if you know they're sort of

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<v Speaker 2>competing ideologies or efforts.

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<v Speaker 4>No, I don't necessarily see it that way. I mean,

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<v Speaker 4>like China has built all these infrastructure, right, like, what's

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<v Speaker 4>the use of all this infrastructure and the returns on

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<v Speaker 4>the asset if you don't let people move about and

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<v Speaker 4>the go about it the trends and the UH and

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<v Speaker 4>the flights, et cetera. So I don't see it that way.

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<v Speaker 4>And also it helps local governments boost their competitive animal

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<v Speaker 4>spirit if I may say, uh, you know, the best

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<v Speaker 4>cities will attract the best labor supply and the and

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<v Speaker 4>as a result they can sell more land. So allowing

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<v Speaker 4>migrant workers to move around more freely, it actually helped

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<v Speaker 4>boost competition across China.

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<v Speaker 1>So to Brian's initial point about the impact that it

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<v Speaker 1>will have on the overall economy in China, do you

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<v Speaker 1>have a sense of that, I mean, is it going

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<v Speaker 1>to be significant in the impact?

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<v Speaker 4>I think it's hard to say. I mean, the services

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<v Speaker 4>sector is uh is a little bit weak, right, Like

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<v Speaker 4>the government is spending a lot of money on the

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<v Speaker 4>higher manufacturing, leaving the services sector behind. So perhaps more

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<v Speaker 4>freedom of labor movement will boost that naturally without the

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<v Speaker 4>government spending a lot of money on it.

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<v Speaker 2>And sorry to bring up the Orwellian side of it

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<v Speaker 2>a couple of times in this interview. But you know,

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<v Speaker 2>that's what we've been dealing with in China, and I

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<v Speaker 2>know that you understand that better than even we do.

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<v Speaker 4>I still think, you know, like the government is quite

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<v Speaker 4>okay with you know, freedom of movements, right, like a

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<v Speaker 4>freedom of expression perhaps is censored, but not movements.

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<v Speaker 2>Yeah, I guess so. Well, it's it is interesting to

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<v Speaker 2>think about how quickly this can be implemented. We also

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<v Speaker 2>know that in terms of the individual traveler schemes, for instance,

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<v Speaker 2>more people are being allowed to travel to Hong Kong.

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<v Speaker 2>Do you think that that eventually makes a difference for

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<v Speaker 2>Hong Kong?

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<v Speaker 4>So far it doesn't. And then local news media has

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<v Speaker 4>reported on that because I mean, like a lot of

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<v Speaker 4>the city city's residents they cannot really travel to Hong

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<v Speaker 4>Kong individually, but they have to do it through a

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<v Speaker 4>tool group, right, But essentially they have been coming to

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<v Speaker 4>Hong Kong individually anyhow, because the two group will say, okay,

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<v Speaker 4>let me just design a package with only two people.

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<v Speaker 4>That's a tour, right. So there has been a roundabout

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<v Speaker 4>way and this is like not really meaningful.

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<v Speaker 1>To be honest, So let me take the other side

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<v Speaker 1>of the trade. Surely, what could possibly go wrong with

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<v Speaker 1>this plan, the.

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<v Speaker 4>Mainland Chinese government's plan or the Hong Kong.

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<v Speaker 1>Main the mainland plan.

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<v Speaker 4>Well, everyone wants to go to the biggest cities like

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<v Speaker 4>Shanghai and Beijing, and then these cities will be very

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<v Speaker 4>crowded and we will see that, you know, the big

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<v Speaker 4>cities of Shanghai Beijing will say okay, too many of

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<v Speaker 4>my grown workers will have to kick them out. And

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<v Speaker 4>we're going to see that again from ten years ago,

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<v Speaker 4>we had that kind of episodes.

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<v Speaker 2>Right, surely does does rapid urbanization lead to more pollution

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<v Speaker 2>in a sense and hurt the fight against climate change?

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<v Speaker 5>I think.

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<v Speaker 4>In the biggest cities, like I'm from Shanghai, and if

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<v Speaker 4>you look at the air quality in Shanghai, it's getting

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<v Speaker 4>much much better. Like the government is doing a fairly

0:13:10.000 --> 0:13:14.880
<v Speaker 4>good job at the environmental protection. And then let's be honest,

0:13:14.880 --> 0:13:16.840
<v Speaker 4>the economy is not so great. There are so not

0:13:16.920 --> 0:13:19.000
<v Speaker 4>so many factories turning out.

0:13:18.960 --> 0:13:23.880
<v Speaker 2>Things fairly positive. Shule renn Today love it. Thanks very

0:13:23.960 --> 0:13:26.640
<v Speaker 2>much Shuley for joining us here on the program. Shuly

0:13:26.679 --> 0:13:37.520
<v Speaker 2>Ren Bloomberg Opinion colonists with this live let's take a

0:13:37.559 --> 0:13:40.760
<v Speaker 2>closer look at markets now. Our guest in studios with

0:13:40.840 --> 0:13:44.640
<v Speaker 2>US in Hong Kong is Ekaterina Biggos, who's Chief investment

0:13:44.679 --> 0:13:48.600
<v Speaker 2>officer on Core Investments for Asia ex Japan at AXA

0:13:48.800 --> 0:13:52.280
<v Speaker 2>Investment Managers. Ekaterina, we have lots of time to talk

0:13:52.320 --> 0:13:55.319
<v Speaker 2>about China. I just wanted to ask you about FED

0:13:55.559 --> 0:14:00.599
<v Speaker 2>Chief J Powell and the commentary about interest rates. We

0:14:00.960 --> 0:14:03.280
<v Speaker 2>know he didn't really say all that much. He didn't

0:14:03.320 --> 0:14:05.959
<v Speaker 2>rock the boat for sure. Everyone knows that the Fed

0:14:06.000 --> 0:14:08.960
<v Speaker 2>wants to be careful on this front, but that cuts

0:14:08.960 --> 0:14:11.720
<v Speaker 2>could be coming. I think everyone also knows that the

0:14:11.840 --> 0:14:13.840
<v Speaker 2>FED funds rate that was in place to deal with

0:14:13.920 --> 0:14:16.760
<v Speaker 2>inflation at more than eight percent probably isn't the right

0:14:16.840 --> 0:14:20.760
<v Speaker 2>level now that you have core inflation down under three percent.

0:14:21.320 --> 0:14:23.960
<v Speaker 2>So I'm not sure what ACCES is projecting. But will

0:14:23.960 --> 0:14:25.640
<v Speaker 2>we see these cuts coming anytime soon?

0:14:26.440 --> 0:14:26.640
<v Speaker 4>Yeah?

0:14:26.640 --> 0:14:28.600
<v Speaker 6>And I think the stance that Joonpower has taken it's

0:14:28.600 --> 0:14:31.960
<v Speaker 6>not a surprise for us. As we drafted our outlook

0:14:32.000 --> 0:14:34.680
<v Speaker 6>for twenty twenty four and with the rally that was

0:14:34.680 --> 0:14:37.280
<v Speaker 6>seen in raids into the year end twenty twenty three,

0:14:37.280 --> 0:14:40.360
<v Speaker 6>we've said that the market is running ahead of itself,

0:14:40.560 --> 0:14:45.120
<v Speaker 6>so the rallying rates was overdone. So the expectations were

0:14:45.120 --> 0:14:47.280
<v Speaker 6>the cuts or priced in for as soon as March

0:14:47.320 --> 0:14:50.880
<v Speaker 6>and certainly more than what the FED dot plot was suggesting,

0:14:51.680 --> 0:14:54.560
<v Speaker 6>And certainly that was an indication that some market participants

0:14:54.600 --> 0:14:57.640
<v Speaker 6>thought that the economy US economy still has a risk

0:14:57.800 --> 0:15:01.040
<v Speaker 6>to potentially enter into recession and slow down. Our view

0:15:01.160 --> 0:15:05.040
<v Speaker 6>was that the US economy, supported by still strong consumer

0:15:05.640 --> 0:15:08.440
<v Speaker 6>and with some recovery and investment in twenty twenty four

0:15:08.520 --> 0:15:11.240
<v Speaker 6>supported by the Cheap and Inflation Reduction Act, is going

0:15:11.280 --> 0:15:14.080
<v Speaker 6>to stay more resilient twenty twenty four. So our view

0:15:14.280 --> 0:15:18.200
<v Speaker 6>was from the beginning of the year that the FED

0:15:18.240 --> 0:15:21.160
<v Speaker 6>will have scope to normalize and get retraded and normalize

0:15:21.200 --> 0:15:25.440
<v Speaker 6>monitory policy in twenty twenty four to be in line

0:15:25.480 --> 0:15:28.120
<v Speaker 6>to where the growth is for the US at this stage,

0:15:28.280 --> 0:15:31.880
<v Speaker 6>instead of cutting rates aggressively, which is more applicable for

0:15:31.880 --> 0:15:33.320
<v Speaker 6>a slow down growth environment.

0:15:33.560 --> 0:15:36.440
<v Speaker 1>Speaking of growth, we've got a target now for the

0:15:36.560 --> 0:15:40.520
<v Speaker 1>Chinese economy is roughly five percent this year that coming

0:15:40.560 --> 0:15:43.320
<v Speaker 1>out of the NPC. What's your takeaway with all the

0:15:43.360 --> 0:15:47.000
<v Speaker 1>other kind of points that we heard in terms of

0:15:47.320 --> 0:15:50.560
<v Speaker 1>economic policy or ways to stimulate and try to encourage

0:15:50.560 --> 0:15:53.560
<v Speaker 1>a little bit more demand. Are you confident now that

0:15:53.880 --> 0:15:56.880
<v Speaker 1>maybe things are at a point where we can say

0:15:57.280 --> 0:15:59.320
<v Speaker 1>the bottom is in and we're going to see some

0:15:59.520 --> 0:16:02.360
<v Speaker 1>kind of recovery going forward, or is it just simply

0:16:02.360 --> 0:16:03.480
<v Speaker 1>too soon to make that call.

0:16:04.480 --> 0:16:05.560
<v Speaker 5>Yeah, it is a combination.

0:16:05.960 --> 0:16:07.880
<v Speaker 6>Making that call is a bit too soon, But certainly

0:16:07.960 --> 0:16:11.280
<v Speaker 6>the five percent target, it's a bit ambitious considering that

0:16:11.320 --> 0:16:13.640
<v Speaker 6>we have less favorable base effects that we had.

0:16:13.480 --> 0:16:14.640
<v Speaker 5>In twenty twenty four.

0:16:15.440 --> 0:16:21.000
<v Speaker 6>I mean, clearly the policy makers are choosing gradualism over

0:16:21.040 --> 0:16:23.880
<v Speaker 6>a kind of speedy measures to support the economy. So

0:16:23.920 --> 0:16:27.880
<v Speaker 6>we might say the market anticipated or expected to have

0:16:28.400 --> 0:16:31.840
<v Speaker 6>much more aggressive measures and suddenly disappointed to some degree,

0:16:32.160 --> 0:16:36.040
<v Speaker 6>particularly the fact that you was a supply centric fiscal stimulus.

0:16:36.160 --> 0:16:38.280
<v Speaker 6>What does it mean is that investment is still staying

0:16:38.280 --> 0:16:41.880
<v Speaker 6>in focus to lift and grow the economy for twenty

0:16:42.040 --> 0:16:46.320
<v Speaker 6>twenty four, and investment is focused on infrastructure, urban ripertalization,

0:16:46.920 --> 0:16:49.960
<v Speaker 6>and certainly some places like technology development is coming as

0:16:49.960 --> 0:16:53.760
<v Speaker 6>a top task for twenty and twenty four. Consumption or

0:16:53.800 --> 0:16:58.080
<v Speaker 6>the measures directed to consumption were there on a periphery,

0:16:58.120 --> 0:17:02.120
<v Speaker 6>but somewhat disappointing considering that consumption is a way to

0:17:02.200 --> 0:17:04.520
<v Speaker 6>remove some of the slack in the economy that we're seeing,

0:17:04.880 --> 0:17:08.560
<v Speaker 6>or they access manufacturing capacity that we see in the economy.

0:17:08.600 --> 0:17:13.680
<v Speaker 6>So again nothing surprising, somewhat disappointing, and again the measure

0:17:13.720 --> 0:17:17.440
<v Speaker 6>is ambitious, but it's all now centered around implementation of

0:17:17.840 --> 0:17:20.719
<v Speaker 6>some of the measures, and certainly down the line whatever

0:17:20.720 --> 0:17:23.640
<v Speaker 6>they're going to use the monetary policy as a way

0:17:23.680 --> 0:17:25.000
<v Speaker 6>to support the economy as well.

0:17:25.119 --> 0:17:27.200
<v Speaker 2>You do hear a lot from investors. It's a sort

0:17:27.240 --> 0:17:30.040
<v Speaker 2>of hue and cry that they don't seem to be

0:17:30.080 --> 0:17:32.919
<v Speaker 2>too concerned about growth, and that the policy makers at

0:17:32.920 --> 0:17:35.800
<v Speaker 2>the very top, led by Cigenping, are all about self

0:17:35.800 --> 0:17:39.679
<v Speaker 2>defense now and national security and self reliance and all

0:17:39.720 --> 0:17:41.919
<v Speaker 2>of that. But that's still something as an investor that

0:17:41.960 --> 0:17:45.040
<v Speaker 2>you can play. So would your message or should the

0:17:45.080 --> 0:17:47.919
<v Speaker 2>message be to investors, wake up, this is what they

0:17:47.960 --> 0:17:50.080
<v Speaker 2>want to do. Just go find something that will benefit

0:17:50.119 --> 0:17:50.719
<v Speaker 2>as a result.

0:17:51.600 --> 0:17:53.720
<v Speaker 6>Yeah, And I think the point we do have to

0:17:53.760 --> 0:17:57.560
<v Speaker 6>look as often as the investors above kind of the headlines,

0:17:57.840 --> 0:18:00.240
<v Speaker 6>and we look at the direction of travel and the

0:18:00.280 --> 0:18:03.800
<v Speaker 6>ambitions for China is certainly to evolve or become more

0:18:04.080 --> 0:18:09.200
<v Speaker 6>technological advanced. That's important in terms of upgrading the manufacturing

0:18:09.400 --> 0:18:12.840
<v Speaker 6>and in terms of productivity growth. So the ambitions for

0:18:13.119 --> 0:18:16.520
<v Speaker 6>China to become a lot more technological advance, I think

0:18:16.520 --> 0:18:18.720
<v Speaker 6>it's going to support some of the sectors. And I

0:18:18.720 --> 0:18:22.600
<v Speaker 6>think the focus on that is important and the emphasis

0:18:22.600 --> 0:18:25.119
<v Speaker 6>that they put into the current package on that, I

0:18:25.160 --> 0:18:27.240
<v Speaker 6>think it's something to investors need to bear in mind.

0:18:27.640 --> 0:18:31.240
<v Speaker 6>The other themes that China is, of course paying attention

0:18:31.359 --> 0:18:34.680
<v Speaker 6>is likely to benefit is energy transition, and energy transition

0:18:34.800 --> 0:18:36.840
<v Speaker 6>is a scope for China, but also is a scope

0:18:36.880 --> 0:18:40.399
<v Speaker 6>for developed economies. And China still holds a large percentage

0:18:40.520 --> 0:18:44.440
<v Speaker 6>of clint tech production, and also it dominates in terms

0:18:44.480 --> 0:18:48.400
<v Speaker 6>of processing of commodities or rare metals that are part

0:18:48.560 --> 0:18:52.040
<v Speaker 6>of evs and some of the turbanes, wind turbines. So

0:18:52.480 --> 0:18:54.760
<v Speaker 6>the point is that we need to look beyond the

0:18:54.800 --> 0:18:57.240
<v Speaker 6>broader macro store and look at some of the themes

0:18:57.280 --> 0:19:00.920
<v Speaker 6>that are happening in economy, some of the drivers.

0:19:01.160 --> 0:19:03.119
<v Speaker 2>But the thing is that's all top down, isn't it.

0:19:03.119 --> 0:19:05.120
<v Speaker 2>And I think what investors, you know, just to argue

0:19:05.119 --> 0:19:08.240
<v Speaker 2>against the point I made a few moments ago, is investors,

0:19:08.800 --> 0:19:11.760
<v Speaker 2>you know, like those those internet and e commerce companies

0:19:11.760 --> 0:19:13.879
<v Speaker 2>because that was bottom up, that's what people wanted, not

0:19:13.960 --> 0:19:15.320
<v Speaker 2>what the policy makers wanted.

0:19:16.040 --> 0:19:18.440
<v Speaker 5>Yeah, and it seems that there is certainly a shift.

0:19:19.160 --> 0:19:21.399
<v Speaker 6>It's happening, or at least an indication that there's a

0:19:21.440 --> 0:19:24.680
<v Speaker 6>desire for the shift to happen, putting kind of private

0:19:25.680 --> 0:19:29.439
<v Speaker 6>institution of private corporations on the same level playing field

0:19:29.480 --> 0:19:31.639
<v Speaker 6>as the state owned enterprises.

0:19:31.680 --> 0:19:33.240
<v Speaker 5>So I think the scope.

0:19:32.920 --> 0:19:35.639
<v Speaker 6>Is there, and the desire seems to be or the

0:19:35.640 --> 0:19:39.440
<v Speaker 6>messaging seems to be the right message at the moment. Clearly,

0:19:39.800 --> 0:19:43.240
<v Speaker 6>due to the current macrocom environment, sees are doing better.

0:19:43.680 --> 0:19:47.680
<v Speaker 6>They're perceived as being a lot more quality, the dividend

0:19:47.840 --> 0:19:50.639
<v Speaker 6>payouts are much higher, So certainly they're benefiting at the moment.

0:19:50.840 --> 0:19:52.600
<v Speaker 6>But as we look into the second part of the

0:19:52.720 --> 0:19:54.840
<v Speaker 6>year with the themes that I talked about, of the

0:19:54.920 --> 0:19:57.320
<v Speaker 6>drive that I talked about, and with the shift and

0:19:57.400 --> 0:19:59.840
<v Speaker 6>monetary policy, and you have to account for the fact

0:19:59.840 --> 0:20:01.880
<v Speaker 6>that China will have a lot more room to move

0:20:02.119 --> 0:20:05.240
<v Speaker 6>when the FED moves that said, it will provide support

0:20:05.480 --> 0:20:09.560
<v Speaker 6>to the other growth sectors that existing in China economy.

0:20:09.600 --> 0:20:11.920
<v Speaker 5>So I would say it's two stage process.

0:20:12.880 --> 0:20:15.359
<v Speaker 1>But if the focus remains on supply, the risk is

0:20:15.359 --> 0:20:18.520
<v Speaker 1>in maintaining I would argue maintaining over capacity. You talked

0:20:18.520 --> 0:20:20.960
<v Speaker 1>about the EV I mean clearly that seems to be

0:20:21.040 --> 0:20:24.120
<v Speaker 1>a case of a lot of overcapacity, and that has

0:20:24.320 --> 0:20:27.639
<v Speaker 1>kind of a deflationary implication, which is the other trapped

0:20:27.680 --> 0:20:29.080
<v Speaker 1>that China's caught in right now.

0:20:29.800 --> 0:20:32.120
<v Speaker 6>Yeah, and absolutely this is not one point to say

0:20:32.119 --> 0:20:35.239
<v Speaker 6>that there is no precedent a rule book or an

0:20:35.240 --> 0:20:39.639
<v Speaker 6>economic rule book of gearshift from where for where China

0:20:39.720 --> 0:20:41.879
<v Speaker 6>is at the moment and an economic cycle, and certainly

0:20:41.880 --> 0:20:43.520
<v Speaker 6>in the microeconomic challenges that.

0:20:43.640 --> 0:20:45.240
<v Speaker 5>Are also structural.

0:20:46.080 --> 0:20:49.680
<v Speaker 6>So the overcapacity isn't important, and they've on a periphery

0:20:49.720 --> 0:20:53.359
<v Speaker 6>addressed it to some degree through the trading programs. But

0:20:53.359 --> 0:20:55.440
<v Speaker 6>I would expect as we go down the line, there

0:20:55.480 --> 0:20:58.880
<v Speaker 6>will do a lot more measures to support the consumer.

0:20:59.160 --> 0:21:02.360
<v Speaker 6>And one part to consider again relating consumer to investment

0:21:02.600 --> 0:21:05.760
<v Speaker 6>is the consumer confidence is very much related to labor

0:21:05.800 --> 0:21:09.560
<v Speaker 6>market as related to property market. So efforts to revive

0:21:09.760 --> 0:21:13.280
<v Speaker 6>the property market and investment to direct it in the

0:21:13.480 --> 0:21:17.040
<v Speaker 6>property market recovering that will suddenly create the wealth effect

0:21:17.400 --> 0:21:19.320
<v Speaker 6>and we'll bring the consumer confidence.

0:21:19.080 --> 0:21:21.120
<v Speaker 5>And will bring jobs. And I think this is important.

0:21:21.160 --> 0:21:23.879
<v Speaker 6>So again we need to look at what is the

0:21:23.960 --> 0:21:27.359
<v Speaker 6>repercussions of some of those investment measures that China is

0:21:27.400 --> 0:21:28.040
<v Speaker 6>putting in place.

0:21:28.440 --> 0:21:30.600
<v Speaker 2>Hey, Katerina, thank you so much for joining us here

0:21:30.600 --> 0:21:34.160
<v Speaker 2>in our studios. We do appreciate it. Katerina Biggos, Chief

0:21:34.160 --> 0:21:38.359
<v Speaker 2>Investment Officer on Core Investments Asia ex Japan for EXA

0:21:38.640 --> 0:21:39.840
<v Speaker 2>Investment Managers.

0:21:41.680 --> 0:21:44.639
<v Speaker 1>This has been the Bloomberg Daybreak Asia podcast, bringing you

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<v Speaker 1>the stories, making news and moving markets in the Asia Pacific.

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