1 00:00:00,240 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,520 --> 00:00:13,680 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,680 --> 00:00:16,200 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,239 --> 00:00:18,800 Speaker 2: all around the world. Straight Ahead on the program, we'll 5 00:00:18,840 --> 00:00:21,279 Speaker 2: look ahead to March jobs data in the US and 6 00:00:21,320 --> 00:00:24,280 Speaker 2: what they may need for fit policy. I'm Nathan Hager 7 00:00:24,400 --> 00:00:25,200 Speaker 2: in Washington. 8 00:00:25,400 --> 00:00:27,440 Speaker 3: I'm Caroline Hetka in London. While we're looking at the 9 00:00:27,520 --> 00:00:29,960 Speaker 3: drive for investment in South Africa, I'm. 10 00:00:29,800 --> 00:00:33,320 Speaker 4: Doug Krisner looking at the movement to reform corporate governance 11 00:00:33,520 --> 00:00:36,200 Speaker 4: in South Korea. 12 00:00:38,280 --> 00:00:42,279 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,360 --> 00:00:46,040 Speaker 1: eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,560 --> 00:00:50,800 Speaker 1: Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 15 00:00:51,240 --> 00:00:54,440 Speaker 1: Sirius XM one twenty one, and around the world on 16 00:00:54,520 --> 00:00:57,640 Speaker 1: Bloomberg Radio, dot Com and the Bloomberg Business App. 17 00:01:02,840 --> 00:01:04,679 Speaker 5: Good day to you. I'm Nathan Hager. 18 00:01:04,760 --> 00:01:07,360 Speaker 2: We begin today's program with the latest read on the 19 00:01:07,480 --> 00:01:11,000 Speaker 2: labor market in the US. The March non farm payrolls 20 00:01:11,000 --> 00:01:14,640 Speaker 2: report comes out Friday at eight thirty am Wall Street Time, 21 00:01:15,000 --> 00:01:16,640 Speaker 2: and here with us now is the man who's going 22 00:01:16,680 --> 00:01:18,680 Speaker 2: to break those numbers as soon as they cross your 23 00:01:18,720 --> 00:01:21,959 Speaker 2: Bloomberg terminal later this week. Michael McKee is with US 24 00:01:22,080 --> 00:01:26,440 Speaker 2: International Economics and Policy correspondent for Bloomberg Radio and Television. 25 00:01:26,840 --> 00:01:29,920 Speaker 2: So great to talk with you ahead of Another Job's Friday, Mike. 26 00:01:30,000 --> 00:01:33,720 Speaker 2: Of course, we saw that surprise job's loss in the 27 00:01:33,760 --> 00:01:38,160 Speaker 2: February numbers. Can you make any expectations for March? 28 00:01:39,120 --> 00:01:41,120 Speaker 6: Well, you can't have a whole lot of confidence, but 29 00:01:41,200 --> 00:01:44,479 Speaker 6: this is going to be released on time and all 30 00:01:44,520 --> 00:01:47,400 Speaker 6: the data will be included, and we won't have any 31 00:01:47,640 --> 00:01:54,000 Speaker 6: lingering problems from the government shutdown that we can really anticipate. 32 00:01:54,160 --> 00:01:57,720 Speaker 6: So I think at this point it will get attention 33 00:01:57,840 --> 00:02:00,280 Speaker 6: as a realistic view of where the labor marks it 34 00:02:00,560 --> 00:02:05,040 Speaker 6: was in the month of March. The issue is what 35 00:02:05,080 --> 00:02:08,000 Speaker 6: does that really mean to the FED at this point? 36 00:02:08,760 --> 00:02:11,480 Speaker 6: And I go back to Jay Poll at the last 37 00:02:11,639 --> 00:02:14,880 Speaker 6: FED me to get the news conference where he said 38 00:02:14,880 --> 00:02:19,000 Speaker 6: that we don't know what's going to happen, and we 39 00:02:19,040 --> 00:02:23,240 Speaker 6: don't know exactly why we saw the big drop in 40 00:02:23,320 --> 00:02:27,000 Speaker 6: February jobs and why we might see it reverse. Because 41 00:02:27,440 --> 00:02:30,280 Speaker 6: we've seen a big change in the number of people 42 00:02:30,320 --> 00:02:33,400 Speaker 6: who are in the labor force, and we may not 43 00:02:33,560 --> 00:02:37,680 Speaker 6: need so many jobs, and so the companies may not 44 00:02:37,760 --> 00:02:41,080 Speaker 6: be hiring so many people. So whether it's a sign 45 00:02:41,200 --> 00:02:44,639 Speaker 6: that the economy is falling off if the numbers are low, 46 00:02:44,760 --> 00:02:46,920 Speaker 6: or a sign that the economy is hanging in there 47 00:02:47,040 --> 00:02:50,200 Speaker 6: if they're high, we're going to have to kind of 48 00:02:50,320 --> 00:02:52,040 Speaker 6: guess at that for this moment. 49 00:02:52,320 --> 00:02:54,919 Speaker 2: Well, before we get a little bit more into what 50 00:02:55,080 --> 00:02:57,880 Speaker 2: the numbers could mean going forward, let's talk about what 51 00:02:57,919 --> 00:03:02,000 Speaker 2: we are expecting looking back. What is the expectation among 52 00:03:02,040 --> 00:03:05,919 Speaker 2: economists about what we could see in terms of that 53 00:03:05,960 --> 00:03:06,640 Speaker 2: March number. 54 00:03:07,120 --> 00:03:10,040 Speaker 6: Well, remember the original February number was a negative ninety 55 00:03:10,040 --> 00:03:13,360 Speaker 6: two thousand, So the bet is we see one hundred 56 00:03:13,360 --> 00:03:16,880 Speaker 6: and fifty thousand turnaround where we get about fifty thousand 57 00:03:17,000 --> 00:03:21,679 Speaker 6: jobs during the month of March, which would fit in 58 00:03:21,760 --> 00:03:25,399 Speaker 6: with the guestimation of economists for how many we need 59 00:03:25,400 --> 00:03:28,919 Speaker 6: to keep the unemployment rates steady given the decline in 60 00:03:28,960 --> 00:03:31,880 Speaker 6: the labor force, and the forecast is that the unemployment 61 00:03:31,919 --> 00:03:35,720 Speaker 6: rate stays at four point four percent, So it's kind 62 00:03:35,760 --> 00:03:40,320 Speaker 6: of a conservative let's go with the median view by economists, 63 00:03:40,360 --> 00:03:42,360 Speaker 6: But I don't think anybody would be surprised if we 64 00:03:42,360 --> 00:03:44,720 Speaker 6: saw another decline or if we saw a bounce back 65 00:03:44,720 --> 00:03:46,520 Speaker 6: to some of the numbers we were seeing in the fall. 66 00:03:46,920 --> 00:03:50,320 Speaker 2: So we could have a pretty significant range one where 67 00:03:50,360 --> 00:03:53,640 Speaker 2: the other sounds like in terms of what this could 68 00:03:53,640 --> 00:03:57,280 Speaker 2: mean though for the Fed's planning going forward, since we 69 00:03:57,360 --> 00:04:01,280 Speaker 2: do have that uncertainty that you mentioned that Chairman Powell 70 00:04:01,360 --> 00:04:05,120 Speaker 2: talked about, I mean, how do we gauge what the 71 00:04:05,160 --> 00:04:07,040 Speaker 2: FED could be considering here? 72 00:04:08,080 --> 00:04:11,000 Speaker 6: Well, the thing to keep in mind is that at 73 00:04:11,080 --> 00:04:14,440 Speaker 6: this point, the next meeting for the FED is at 74 00:04:14,440 --> 00:04:19,919 Speaker 6: the end of April. We are going to get this 75 00:04:20,120 --> 00:04:22,800 Speaker 6: job's report at the beginning of April, and then we'll 76 00:04:22,800 --> 00:04:26,200 Speaker 6: get a couple of inflation reports before we get to 77 00:04:26,200 --> 00:04:28,599 Speaker 6: the April twenty nine FED meeting. So this is the 78 00:04:28,680 --> 00:04:32,960 Speaker 6: last big employment number. And if you're on the side 79 00:04:33,000 --> 00:04:35,520 Speaker 6: of the FED that says we're worried about the economy 80 00:04:35,720 --> 00:04:39,559 Speaker 6: falling off, then if we get a bad number, it'll 81 00:04:39,600 --> 00:04:41,279 Speaker 6: help make the case that maybe you want to go 82 00:04:41,320 --> 00:04:44,600 Speaker 6: back to rate cuts. If we don't get a bad number, 83 00:04:44,680 --> 00:04:49,400 Speaker 6: then they can focus more on inflation, which is likely 84 00:04:49,440 --> 00:04:52,360 Speaker 6: to go higher in March just because of the war, 85 00:04:52,680 --> 00:04:56,320 Speaker 6: and we'll see oil prices push up headline inflation, and 86 00:04:56,360 --> 00:04:59,800 Speaker 6: we'll see what tariffs are still doing. So there's more 87 00:04:59,800 --> 00:05:02,680 Speaker 6: of a concerned on the inflation side then on the 88 00:05:02,800 --> 00:05:07,440 Speaker 6: job side. But jobs will still be important to because 89 00:05:07,600 --> 00:05:10,400 Speaker 6: the last one we get before the meaning well, is. 90 00:05:10,320 --> 00:05:15,680 Speaker 2: There a concern among economists about whether the job market 91 00:05:15,720 --> 00:05:20,120 Speaker 2: could be affected if the war continues for an extended 92 00:05:20,160 --> 00:05:20,840 Speaker 2: period of time. 93 00:05:20,920 --> 00:05:23,240 Speaker 5: Is that something that's being considered. 94 00:05:23,120 --> 00:05:26,279 Speaker 6: Well, it's something that's theoretically possible. It depends on how 95 00:05:26,320 --> 00:05:29,120 Speaker 6: long the war goes and what kind of costs are imposed. 96 00:05:29,600 --> 00:05:33,640 Speaker 6: If you get high enough gas prices and higher inflation 97 00:05:33,760 --> 00:05:36,560 Speaker 6: in other areas of the economy and people stop spending 98 00:05:36,640 --> 00:05:39,920 Speaker 6: because they can't afford it or don't want to spend 99 00:05:39,960 --> 00:05:44,240 Speaker 6: into inflation, then you see a decline in demand, and 100 00:05:44,279 --> 00:05:46,839 Speaker 6: then you see companies don't need to have as many 101 00:05:46,880 --> 00:05:50,640 Speaker 6: employees and so they may let some people go. That's 102 00:05:50,680 --> 00:05:53,760 Speaker 6: the classic recession set up. There's not really a feeling 103 00:05:53,760 --> 00:05:57,640 Speaker 6: that that's going to happen. Now we're talking about gasoline 104 00:05:57,640 --> 00:06:01,080 Speaker 6: prices going back to levels they've been at four so 105 00:06:01,960 --> 00:06:04,640 Speaker 6: people are somewhat used to that and somewhat used to 106 00:06:04,720 --> 00:06:07,960 Speaker 6: dealing with it. But depending on how long the war 107 00:06:08,040 --> 00:06:12,000 Speaker 6: goes and what happens, It's certainly a possibility down the road. 108 00:06:12,880 --> 00:06:15,880 Speaker 2: All right, Mike, thanks for this As always, that's Michael McKee, 109 00:06:15,880 --> 00:06:19,880 Speaker 2: international economics and policy correspondent for Bloomberg Radio and Television. 110 00:06:20,080 --> 00:06:22,279 Speaker 5: Again, look out for those March jobs numbers. 111 00:06:22,360 --> 00:06:25,240 Speaker 2: This Friday morning at eight thirty am Wall Street Time, 112 00:06:25,680 --> 00:06:27,880 Speaker 2: Let's take a look now at some stocks making news 113 00:06:27,920 --> 00:06:30,520 Speaker 2: in the week ahead. I'm Nathan Hager, joined by Bloomberg 114 00:06:30,560 --> 00:06:34,720 Speaker 2: Equities reporter Alexandra Semenova, getting us ready for some stocks 115 00:06:34,720 --> 00:06:37,240 Speaker 2: that are going to make news on earnings. 116 00:06:36,800 --> 00:06:39,200 Speaker 5: Starting this Tuesday. With Nike. 117 00:06:39,640 --> 00:06:42,760 Speaker 2: You know, alex that the struggle for this company has 118 00:06:42,920 --> 00:06:44,120 Speaker 2: been real. 119 00:06:44,480 --> 00:06:47,000 Speaker 7: Yeah, Nathan. It is going to be an important company 120 00:06:47,040 --> 00:06:50,360 Speaker 7: for investors to watch, giving its role as a retail 121 00:06:50,440 --> 00:06:54,360 Speaker 7: and consumer bellweather. Its results will test whether it's long 122 00:06:54,440 --> 00:06:58,200 Speaker 7: promise turnaround is gaining traction or not so. All in all, 123 00:06:58,400 --> 00:07:01,839 Speaker 7: Nike anticipates low sing go digit revenue declines in a 124 00:07:01,880 --> 00:07:05,320 Speaker 7: gross margin contraction year over year for the fiscal third quarter, 125 00:07:05,720 --> 00:07:10,960 Speaker 7: and analysts are also anticipating soft global sales momentum through March. China, 126 00:07:11,000 --> 00:07:14,640 Speaker 7: of course, remains the swing factor for this company. Its 127 00:07:14,680 --> 00:07:17,760 Speaker 7: turnaround still runs through China, where sales have been deeply 128 00:07:17,840 --> 00:07:22,240 Speaker 7: negative and remain a major drag on both revenue and earnings. 129 00:07:22,520 --> 00:07:25,960 Speaker 7: So any sign of stabilization for that sector, even something 130 00:07:25,960 --> 00:07:30,440 Speaker 7: that is just less bad, could shifts sentiment quickly. Sales 131 00:07:30,480 --> 00:07:33,520 Speaker 7: in China are estimated to be down sixteen percent, with 132 00:07:33,680 --> 00:07:37,240 Speaker 7: operating margin down five hundred bases points, and in North 133 00:07:37,280 --> 00:07:41,160 Speaker 7: America there are early signs of improvement helping offset some 134 00:07:41,280 --> 00:07:44,760 Speaker 7: of the weakness in direct to consumer and international markets. 135 00:07:44,960 --> 00:07:47,920 Speaker 7: When it comes to the stock reaction that people anticipate 136 00:07:47,960 --> 00:07:51,560 Speaker 7: on the earnings, options markets are implying a seven point 137 00:07:51,680 --> 00:07:54,360 Speaker 7: six percent share move post earning, so going to be 138 00:07:54,600 --> 00:07:57,560 Speaker 7: interesting to see the market reaction to its results. And 139 00:07:57,680 --> 00:08:00,600 Speaker 7: looking at some of the Wall Street analyst reactions ahead 140 00:08:00,600 --> 00:08:04,200 Speaker 7: of the reports, UBS lowered its price target on the company. 141 00:08:04,280 --> 00:08:05,640 Speaker 7: Deutsche Bank did as well. 142 00:08:05,960 --> 00:08:09,040 Speaker 2: Okay, so it sounds like the bar is pretty low 143 00:08:09,280 --> 00:08:11,800 Speaker 2: when it comes to Nike, right, I mean, if they 144 00:08:12,080 --> 00:08:15,320 Speaker 2: can come out and you know, beat earnings, does that 145 00:08:16,240 --> 00:08:19,840 Speaker 2: imply that we could see a pretty significant boom for Nike. 146 00:08:20,080 --> 00:08:24,040 Speaker 7: It certainly does, you know, indicate that if they do 147 00:08:24,160 --> 00:08:27,320 Speaker 7: surprise to the upside, if they say anything positive, then 148 00:08:27,360 --> 00:08:30,080 Speaker 7: we could see a pretty strong reaction from the results, 149 00:08:30,120 --> 00:08:33,760 Speaker 7: hence that nearly eight percent move that investors are pricing in. 150 00:08:34,080 --> 00:08:37,600 Speaker 2: Also on Tuesday, we hear from Beyond Meat or are 151 00:08:37,600 --> 00:08:40,360 Speaker 2: they calling themselves Beyond now? Did they drop the meat 152 00:08:40,360 --> 00:08:41,400 Speaker 2: from that? I can't remember. 153 00:08:41,679 --> 00:08:44,480 Speaker 7: Yeah, Remember, it's hard to keep up. So they have 154 00:08:44,600 --> 00:08:48,079 Speaker 7: a new overhand that we are monitoring, which is accounting 155 00:08:48,160 --> 00:08:52,000 Speaker 7: and control issues. So they delayed their earnings results after 156 00:08:52,080 --> 00:08:57,240 Speaker 7: identifying accounting errors and material weakness tied to inventory. That's 157 00:08:57,320 --> 00:09:00,880 Speaker 7: raised questions about its internal controls and for investors now 158 00:09:01,080 --> 00:09:04,400 Speaker 7: the focus isn't just on the fundamentals from the earnings report, 159 00:09:04,440 --> 00:09:08,040 Speaker 7: but about governance and execution risk as well, depending on 160 00:09:08,080 --> 00:09:10,240 Speaker 7: what they say about those issues. So the company had 161 00:09:10,280 --> 00:09:14,320 Speaker 7: found errors, and it's previously issued financial statements for the 162 00:09:14,440 --> 00:09:18,080 Speaker 7: first three quarters of twenty twenty five. Management had tried 163 00:09:18,120 --> 00:09:22,559 Speaker 7: to assure investors that these aren't material errors and they're 164 00:09:22,600 --> 00:09:25,360 Speaker 7: going to get them fixed pretty quickly. But investors will 165 00:09:25,400 --> 00:09:27,880 Speaker 7: be keen to hear what they say during the earnings 166 00:09:27,920 --> 00:09:32,000 Speaker 7: call about those accounting mishaps. And then on the fundamental side, 167 00:09:32,040 --> 00:09:36,240 Speaker 7: Beyond Me is facing shrinking sales and ongoing losses. The 168 00:09:36,280 --> 00:09:40,320 Speaker 7: company expects preliminary net revenues of about sixty one million 169 00:09:40,360 --> 00:09:43,240 Speaker 7: for the fourth quarter of twenty twenty five. That aligns 170 00:09:43,280 --> 00:09:46,600 Speaker 7: with prior guidance of between sixty million and sixty five 171 00:09:46,640 --> 00:09:49,600 Speaker 7: million dollars, and the company is still expecting to post 172 00:09:49,679 --> 00:09:53,959 Speaker 7: a loss, highlighting how far it remains from any sustained profitability. 173 00:09:54,440 --> 00:09:57,439 Speaker 7: This comes, of course, as consumers just pull back from 174 00:09:57,480 --> 00:10:02,320 Speaker 7: their product due to higher prices, competition from cheaper animal protein, 175 00:10:02,760 --> 00:10:05,679 Speaker 7: and a broader shift toward less processed food. 176 00:10:05,880 --> 00:10:06,080 Speaker 8: Yeah. 177 00:10:06,120 --> 00:10:08,200 Speaker 2: I mean, it's got to be tough just from the 178 00:10:08,240 --> 00:10:12,559 Speaker 2: fact that traditional meats have gotten more expensive these days 179 00:10:12,559 --> 00:10:15,600 Speaker 2: as well, So definitely keeping an eye on that stock 180 00:10:15,679 --> 00:10:18,880 Speaker 2: as well. And then on Thursday we get results from 181 00:10:19,000 --> 00:10:21,679 Speaker 2: OURH I think a lot of us might remember this 182 00:10:21,720 --> 00:10:24,679 Speaker 2: one better is restoration hardware, but this could be really 183 00:10:24,720 --> 00:10:27,680 Speaker 2: interesting to hear from a furniture maker in this environment. 184 00:10:28,000 --> 00:10:31,160 Speaker 7: It certainly will be because this company was kind of 185 00:10:31,160 --> 00:10:34,280 Speaker 7: at the center of some of the tariff volatility last year. 186 00:10:34,640 --> 00:10:38,040 Speaker 7: So our AH is expected to experience sales gains extending 187 00:10:38,080 --> 00:10:41,160 Speaker 7: into twenty twenty six, a positive they are given its 188 00:10:41,280 --> 00:10:45,040 Speaker 7: unique position with high end consumers and a small share 189 00:10:45,120 --> 00:10:48,640 Speaker 7: of the home furnishings market and sales growth is projected 190 00:10:48,760 --> 00:10:52,040 Speaker 7: to slow a bit to a six quarter low in 191 00:10:52,040 --> 00:10:55,240 Speaker 7: the fiscal fourth quarter, falling a slight softening in twenty 192 00:10:55,320 --> 00:10:59,000 Speaker 7: twenty five. Our Ah is moving forward with its hospitality 193 00:10:59,080 --> 00:11:03,000 Speaker 7: and international expansion strategies, so investors will be keen to 194 00:11:03,040 --> 00:11:06,720 Speaker 7: hear what updates they have on that. Those, of course, 195 00:11:06,800 --> 00:11:10,440 Speaker 7: could lead to stronger market share, but they also involve 196 00:11:10,600 --> 00:11:14,840 Speaker 7: execution risk and concerns still remain about the impact from 197 00:11:15,040 --> 00:11:19,000 Speaker 7: tariffs and any ongoing investment spending. You might remember that 198 00:11:19,360 --> 00:11:23,559 Speaker 7: the company had trimmed its fullier outlook before citing pressures 199 00:11:23,559 --> 00:11:27,480 Speaker 7: from tariffs, and famously, last April, its CEO drew attention 200 00:11:27,640 --> 00:11:31,839 Speaker 7: during the company's earnings call after blurting out a curse 201 00:11:31,880 --> 00:11:35,480 Speaker 7: word watching their stock decline as tariffs were implemented. So 202 00:11:35,960 --> 00:11:38,120 Speaker 7: that's an interesting one to remember, and it's going to 203 00:11:38,160 --> 00:11:41,160 Speaker 7: be really important to hear what they say about tariffs. 204 00:11:41,400 --> 00:11:45,600 Speaker 2: Yeah, a lot of potential headwinds still for all of 205 00:11:45,640 --> 00:11:49,800 Speaker 2: these companies. It sounds like the bar is pretty high 206 00:11:50,000 --> 00:11:50,680 Speaker 2: all around. 207 00:11:51,200 --> 00:11:53,640 Speaker 7: Yeah, I mean, the earnings reports will be a make 208 00:11:53,800 --> 00:11:57,920 Speaker 7: or break moment for equity investors given all the updates 209 00:11:57,960 --> 00:12:00,600 Speaker 7: we're expected to get on the impact of oil prices 210 00:12:00,640 --> 00:12:04,440 Speaker 7: on their businesses and on the continued unwind of tariffs. 211 00:12:04,760 --> 00:12:06,080 Speaker 5: Okay, alex thanks for this. 212 00:12:06,240 --> 00:12:10,720 Speaker 2: As always, that's Alexander Semenova, equities reporter for Bloomberg News, 213 00:12:11,120 --> 00:12:13,920 Speaker 2: and coming up on Bloomberg day Break weekend, we'll look 214 00:12:13,960 --> 00:12:18,440 Speaker 2: ahead to the sixth South Africa Investment Conference. I'm Nathan 215 00:12:18,440 --> 00:12:33,559 Speaker 2: Hager and this is Bloomberg. This is Bloomberg Day Break Weekend, 216 00:12:33,600 --> 00:12:36,199 Speaker 2: our global look ahead at the top stories for investors 217 00:12:36,200 --> 00:12:38,960 Speaker 2: in the coming week. I'm Nathan Hager in Washington. Up 218 00:12:39,040 --> 00:12:41,800 Speaker 2: later in the program we'll look to shareholder meetings in 219 00:12:41,880 --> 00:12:44,720 Speaker 2: South Korea. But first in the coming days, the South 220 00:12:44,760 --> 00:12:48,280 Speaker 2: African government will intensify its efforts to attract two million 221 00:12:48,360 --> 00:12:51,320 Speaker 2: rand in new investment commitments over the next five years. 222 00:12:51,559 --> 00:12:54,720 Speaker 2: The upcoming South Africa Investment Conference, due to take place 223 00:12:54,760 --> 00:12:57,080 Speaker 2: in Johannesburg, will be an attempt to build on the 224 00:12:57,120 --> 00:13:00,480 Speaker 2: success of the country's previous five year investment cycle, which 225 00:13:00,520 --> 00:13:05,000 Speaker 2: surpassed its fundraising goal, but will geopolitical tensions and uncertain 226 00:13:05,040 --> 00:13:08,560 Speaker 2: trade relationships threaten new commitments for more, Let's go to 227 00:13:08,600 --> 00:13:12,480 Speaker 2: London and bring in Bloomberg Daybreak europe Anker Caroline Heger Nathan. 228 00:13:12,640 --> 00:13:16,720 Speaker 3: Amongst the aims of the sixth South Africa Investment Conference 229 00:13:16,880 --> 00:13:21,720 Speaker 3: is a desire to translate momentum into capital deployment, strategic 230 00:13:21,760 --> 00:13:27,040 Speaker 3: partnerships and measurable economic outcomes. The country has some momentum, now, 231 00:13:27,120 --> 00:13:30,120 Speaker 3: expanding at the fastest pace in three years. In twenty 232 00:13:30,160 --> 00:13:34,480 Speaker 3: twenty five, helped by stronger output in agriculture, in terms 233 00:13:34,520 --> 00:13:38,959 Speaker 3: of trade and in finance industries, GDP grew by one 234 00:13:39,040 --> 00:13:43,520 Speaker 3: point one percent, according to report earlier this month. Twenty 235 00:13:43,520 --> 00:13:47,440 Speaker 3: twenty five's figures represent the fastest pace of expansion since 236 00:13:47,480 --> 00:13:51,560 Speaker 3: twenty twenty two, but the gains come after a period 237 00:13:51,679 --> 00:13:55,160 Speaker 3: of stalling. South Africa's economy has underperformed for more than 238 00:13:55,160 --> 00:13:57,920 Speaker 3: a decade, growing by an average of less than one 239 00:13:57,920 --> 00:14:02,880 Speaker 3: percent annually. Because of it electricity shortages and logistics snarl 240 00:14:02,960 --> 00:14:07,360 Speaker 3: ups that have curbed mining and manufacturing production and also 241 00:14:07,679 --> 00:14:12,720 Speaker 3: deterred investment. Now, a prolonged war in Iran and sustain 242 00:14:12,880 --> 00:14:17,679 Speaker 3: higher oil prices threatened progress once again. Speaking to Bloomberg 243 00:14:17,760 --> 00:14:21,560 Speaker 3: earlier this month, South African Finance Minister Inot god Guana 244 00:14:22,000 --> 00:14:24,720 Speaker 3: described the situation as worrying. 245 00:14:24,800 --> 00:14:28,280 Speaker 9: As I've indicated oil process. If they could, they begin 246 00:14:28,400 --> 00:14:32,280 Speaker 9: to go up South Africa as a price taker, and 247 00:14:32,320 --> 00:14:37,080 Speaker 9: that will have implication patrol and inflation envision impactful for us. 248 00:14:37,160 --> 00:14:39,280 Speaker 9: So the war is worrying. 249 00:14:40,240 --> 00:14:43,800 Speaker 8: What are the potential implications for the debt profile of 250 00:14:43,840 --> 00:14:46,520 Speaker 8: South Africa which has been rising. And then, of course 251 00:14:46,600 --> 00:14:49,160 Speaker 8: you and your government have pledged to stabilize debt levels. 252 00:14:49,640 --> 00:14:51,960 Speaker 8: Can you continue to commit to that in this environment? 253 00:14:52,200 --> 00:14:56,320 Speaker 9: And then we will continue to commit to a destabilisation 254 00:14:56,520 --> 00:15:01,560 Speaker 9: process of We'll have to take into account to what 255 00:15:01,840 --> 00:15:04,720 Speaker 9: the nature of the shocks. At the moment, we've not 256 00:15:04,800 --> 00:15:07,480 Speaker 9: been able to model the shocks, but we'll have as 257 00:15:07,520 --> 00:15:10,000 Speaker 9: time goes on. We have hoped that is going to 258 00:15:10,040 --> 00:15:14,000 Speaker 9: be four weeks, as President Trump as said. If it 259 00:15:14,080 --> 00:15:16,920 Speaker 9: is four weeks, then that is going to be fine. 260 00:15:16,960 --> 00:15:19,560 Speaker 9: But it goes beyond four weeks, we'll have to have 261 00:15:19,640 --> 00:15:21,800 Speaker 9: to pencil down the implication. 262 00:15:22,600 --> 00:15:25,920 Speaker 3: That was South Africa's Finance minister in a god Guana 263 00:15:25,960 --> 00:15:29,760 Speaker 3: speaking to Bluebergs, Tom Mackenzie, Ana Edwards and Lizzie Burden. 264 00:15:30,280 --> 00:15:34,080 Speaker 3: So will South Africa make good on its growth protections 265 00:15:34,200 --> 00:15:38,280 Speaker 3: or could geopolitical tensions derail plans? So joining me now 266 00:15:38,320 --> 00:15:42,520 Speaker 3: Blueberg's Chief for Africa correspondent Jennifer Zabasaja and Africa Economists 267 00:15:42,560 --> 00:15:46,840 Speaker 3: if on Mango. Thank you so much for being with me. Jennifer, 268 00:15:46,880 --> 00:15:49,640 Speaker 3: can I start with you? Do we expect to see 269 00:15:49,680 --> 00:15:53,120 Speaker 3: any important names or businesses at this conference in the 270 00:15:53,160 --> 00:15:54,000 Speaker 3: next few days. 271 00:15:55,000 --> 00:15:57,120 Speaker 10: Yeah, thanks so much for having me. Look, this is 272 00:15:57,160 --> 00:16:00,480 Speaker 10: a very important conference for the South African gouvern. It's 273 00:16:00,480 --> 00:16:04,920 Speaker 10: the sixth South African investment conference that we've seen and 274 00:16:05,080 --> 00:16:08,880 Speaker 10: if you speak to the government, they really do champion 275 00:16:08,960 --> 00:16:12,160 Speaker 10: this event as one for the investors in the business 276 00:16:12,160 --> 00:16:15,840 Speaker 10: community and also civil society and public to come together 277 00:16:16,600 --> 00:16:19,000 Speaker 10: and talk about some of the nation's progress and what 278 00:16:19,080 --> 00:16:22,520 Speaker 10: it will take to see some more progress, potentially that 279 00:16:22,560 --> 00:16:26,920 Speaker 10: comes through capital or other forms of reform. And so 280 00:16:27,400 --> 00:16:30,480 Speaker 10: we always tend to see the president there. So President 281 00:16:30,520 --> 00:16:35,160 Speaker 10: Sera Ramaposa, the deputy Finance Minister, is supposed to be there, 282 00:16:35,200 --> 00:16:39,760 Speaker 10: as well as the Minister of Trade of course, Parkstow, 283 00:16:40,480 --> 00:16:43,320 Speaker 10: which will be it'll be very interesting to hear from him, 284 00:16:43,400 --> 00:16:45,760 Speaker 10: especially considering a lot of the back and forth that 285 00:16:45,800 --> 00:16:49,760 Speaker 10: we've been hearing about trade and tariffs in South Africa's 286 00:16:50,200 --> 00:16:54,400 Speaker 10: position when it comes to the business community. Our expectation 287 00:16:54,800 --> 00:16:57,480 Speaker 10: is that potentially we will see the CEO of Anglo 288 00:16:57,520 --> 00:17:01,520 Speaker 10: American there as well as the CEO of Votercom, So 289 00:17:02,120 --> 00:17:06,480 Speaker 10: very different sectors there, but just illustrating just how varied 290 00:17:06,880 --> 00:17:11,080 Speaker 10: potentially the attendees are and really a lot of what 291 00:17:11,359 --> 00:17:14,040 Speaker 10: potentially will go into some of the progress and the 292 00:17:14,080 --> 00:17:17,640 Speaker 10: growth of the economy that South Africa needs to see 293 00:17:17,680 --> 00:17:19,439 Speaker 10: and investors want to see. 294 00:17:19,840 --> 00:17:20,159 Speaker 11: Yeah. 295 00:17:20,200 --> 00:17:23,320 Speaker 3: Absolutely, there has been lots of fanfare, hasn't there ahead 296 00:17:23,320 --> 00:17:27,760 Speaker 3: of this event, Yvonne. Recent projections for South Africa are 297 00:17:27,880 --> 00:17:32,280 Speaker 3: encouraging despite a long period of lack luster growth. What 298 00:17:32,480 --> 00:17:35,880 Speaker 3: has the country done to turn its economic story around? 299 00:17:35,920 --> 00:17:37,439 Speaker 3: What's it going to be telling people? 300 00:17:38,920 --> 00:17:41,719 Speaker 12: Yes, So I think the growth number that came out 301 00:17:41,760 --> 00:17:45,320 Speaker 12: for twenty twenty five is symbolic of the reforms we've 302 00:17:45,320 --> 00:17:48,480 Speaker 12: been seeing. We saw growth double its pace to one 303 00:17:48,480 --> 00:17:51,840 Speaker 12: point one percent last year from a zero point five 304 00:17:51,840 --> 00:17:55,240 Speaker 12: percent in the previous year, and that's a reflection of 305 00:17:55,400 --> 00:17:57,840 Speaker 12: reforms that we've seen in the power sector that have 306 00:17:58,600 --> 00:18:01,800 Speaker 12: resulted in the return of more reliable power. Also in 307 00:18:01,840 --> 00:18:06,159 Speaker 12: the logistics sector that's also helped ease trade on that front. 308 00:18:07,040 --> 00:18:11,560 Speaker 12: So those have manifested in an pickup in demand. We're 309 00:18:11,560 --> 00:18:15,440 Speaker 12: seeing househood consumption pick up. That's also on the back 310 00:18:15,560 --> 00:18:19,159 Speaker 12: of lower inflation and easing of rates that's helped credit 311 00:18:19,200 --> 00:18:23,359 Speaker 12: driven demand pick up. And I think most encouraging is 312 00:18:23,400 --> 00:18:27,840 Speaker 12: that we've seen a return of growth in growth fixed 313 00:18:27,840 --> 00:18:31,840 Speaker 12: cap deformation, particularly the second half of twenty twenty five, 314 00:18:31,880 --> 00:18:34,879 Speaker 12: suggesting that we're seeing a recovery on that front as well. 315 00:18:35,600 --> 00:18:39,239 Speaker 3: So ivon just compare this, how does the growth in 316 00:18:39,280 --> 00:18:42,520 Speaker 3: South Africa compare to its regional pairs. 317 00:18:43,960 --> 00:18:46,960 Speaker 12: That's a good question. So I've just mentioned that growth 318 00:18:47,000 --> 00:18:50,000 Speaker 12: doubled its pace in South Africa, but it's still alls 319 00:18:50,040 --> 00:18:52,120 Speaker 12: far short of what we're seeing in the region. Sub 320 00:18:52,160 --> 00:18:55,159 Speaker 12: Sahara Africa is expected to grow it around four percent 321 00:18:55,320 --> 00:18:58,000 Speaker 12: this year, So that gives you a good idea of 322 00:18:58,040 --> 00:19:00,000 Speaker 12: the sort of growth rates we're seeing on the continent 323 00:19:00,040 --> 00:19:04,760 Speaker 12: and the fastest growing countries, particularly in Eastern Africa, where 324 00:19:04,760 --> 00:19:08,040 Speaker 12: we're seeing growth in the mid to high single digits, 325 00:19:08,080 --> 00:19:12,160 Speaker 12: also in West Africa, with countries such as Qurtujuan Senegal 326 00:19:12,560 --> 00:19:16,800 Speaker 12: also growing pretty rapidly. So compared to its peers, Yes, 327 00:19:17,000 --> 00:19:21,000 Speaker 12: South Africa's growth is rather weak, but when we compare 328 00:19:21,040 --> 00:19:24,359 Speaker 12: ourselves here to where we're coming from. It is a recovery. 329 00:19:25,880 --> 00:19:29,520 Speaker 3: Jennifer tell us about the political situation in South Africa 330 00:19:29,560 --> 00:19:34,720 Speaker 3: then and how that is affecting and influencing economic policy 331 00:19:34,760 --> 00:19:37,680 Speaker 3: then as South Africa tries to boost growth. 332 00:19:38,960 --> 00:19:42,080 Speaker 10: Yeah, I think, you know, South Africa has been balancing 333 00:19:42,200 --> 00:19:45,320 Speaker 10: quite a bit of different developments. I think when it 334 00:19:45,400 --> 00:19:48,960 Speaker 10: pertains to some of the bilateral relationships that it has, 335 00:19:49,320 --> 00:19:52,200 Speaker 10: and also when you look at just what's going on 336 00:19:52,200 --> 00:19:55,359 Speaker 10: ongoing in the Middle East with the war in Iran 337 00:19:55,560 --> 00:19:59,000 Speaker 10: and the potential stance of the Bricks Nations, which of 338 00:19:59,000 --> 00:20:02,720 Speaker 10: course South Africa makes up part of that, and the 339 00:20:02,880 --> 00:20:07,200 Speaker 10: challenge that the Bloc has had in at least coming 340 00:20:07,200 --> 00:20:10,760 Speaker 10: to some sort of consensus on the stance of where 341 00:20:10,960 --> 00:20:14,040 Speaker 10: they position themselves at this point. And just to Avon's 342 00:20:14,080 --> 00:20:15,640 Speaker 10: point about some of the growth that we had seen 343 00:20:15,680 --> 00:20:19,440 Speaker 10: over the past few years, it really is a priority 344 00:20:19,480 --> 00:20:23,880 Speaker 10: for this government to actually show not just South Africans 345 00:20:23,880 --> 00:20:27,159 Speaker 10: but also the investment community that they really can accelerate 346 00:20:27,240 --> 00:20:29,280 Speaker 10: some of the promises that they are making. And so 347 00:20:30,000 --> 00:20:32,439 Speaker 10: time and time again we hear the government trying to 348 00:20:32,520 --> 00:20:36,080 Speaker 10: at least put forward this rhetoric that illustrates that they 349 00:20:36,080 --> 00:20:38,199 Speaker 10: are non aligned when it comes to some of the 350 00:20:38,240 --> 00:20:44,240 Speaker 10: conflicts and the politics of today, but that behind the scenes, 351 00:20:44,280 --> 00:20:46,399 Speaker 10: I think is a bit more complex, as some of 352 00:20:46,480 --> 00:20:49,439 Speaker 10: our Bloomberg reporters have been able to uncover in the 353 00:20:49,440 --> 00:20:50,600 Speaker 10: past few days and weeks. 354 00:20:51,359 --> 00:20:55,120 Speaker 3: Yeah, indeed, so that's on the view of the Yvonne 355 00:20:55,119 --> 00:21:00,600 Speaker 3: ware geopolitics that's happening from the South African perspective, of course, 356 00:21:00,680 --> 00:21:04,399 Speaker 3: is layered with this period of strained relations with the 357 00:21:04,520 --> 00:21:08,400 Speaker 3: United States, and that's also huge important to consider, isn't 358 00:21:08,400 --> 00:21:11,960 Speaker 3: it what's been happening recently on that front. 359 00:21:12,520 --> 00:21:15,720 Speaker 10: Yeah, we've seen relations between South Africa and the US 360 00:21:15,880 --> 00:21:20,000 Speaker 10: really deteriorate sharply since President Trump came back into the 361 00:21:20,040 --> 00:21:24,040 Speaker 10: White House last year. We saw that the US president 362 00:21:24,080 --> 00:21:28,680 Speaker 10: falsely accusing South Africa of what he believes was subjecting 363 00:21:28,680 --> 00:21:32,399 Speaker 10: white farmers to a genocide also seizing their land. We 364 00:21:32,400 --> 00:21:35,360 Speaker 10: should note that there have been many findings and reports 365 00:21:35,400 --> 00:21:42,000 Speaker 10: that actually deny that claim. We also had seen concerns 366 00:21:42,000 --> 00:21:45,840 Speaker 10: about what South Africa had said about their own stances 367 00:21:45,920 --> 00:21:50,520 Speaker 10: on relations with Iran and Hamas, and Trump has also 368 00:21:50,600 --> 00:21:54,520 Speaker 10: rejected the black economic empowerment policies of South Africa, and 369 00:21:54,560 --> 00:21:59,399 Speaker 10: so I think it has been a relationship quite tense 370 00:21:59,520 --> 00:22:01,879 Speaker 10: over over the past year, and it doesn't seem like 371 00:22:01,960 --> 00:22:04,040 Speaker 10: this is a relationship that is going to be repaired 372 00:22:04,080 --> 00:22:07,400 Speaker 10: anytime soon. But it's one that South Africa definitely needs 373 00:22:07,400 --> 00:22:10,359 Speaker 10: to repair, especially if you think about its trading relationship. 374 00:22:09,840 --> 00:22:10,359 Speaker 5: With the US. 375 00:22:10,920 --> 00:22:15,359 Speaker 3: Yeah, okay, interesting points, Jen, Thanks Yvonne. In terms of 376 00:22:15,440 --> 00:22:20,440 Speaker 3: then the need to try to drum up investment, external investment, 377 00:22:21,040 --> 00:22:24,840 Speaker 3: what is being sought at this investment conference? How important 378 00:22:24,880 --> 00:22:30,000 Speaker 3: will it be to South Africa's economic trajectory as it 379 00:22:30,080 --> 00:22:33,880 Speaker 3: tries to also build trade and just you know, revive 380 00:22:33,960 --> 00:22:36,440 Speaker 3: the economy. What do they want to see from investors? 381 00:22:36,440 --> 00:22:36,879 Speaker 6: Do you think? 382 00:22:38,440 --> 00:22:42,920 Speaker 12: So investment is important, particularly for countries that run current 383 00:22:43,040 --> 00:22:45,840 Speaker 12: count deficits like we do in South Africa. It implies 384 00:22:45,880 --> 00:22:50,040 Speaker 12: that you don't have sufficient domestic savings to invest as 385 00:22:50,119 --> 00:22:52,720 Speaker 12: much as you'd like in your economy. So in order 386 00:22:52,760 --> 00:22:57,480 Speaker 12: to attract investment or what you governments typically do is 387 00:22:57,520 --> 00:23:00,679 Speaker 12: try to improve the regulatory environment to just make it 388 00:23:01,040 --> 00:23:04,320 Speaker 12: attractive and conducive for investors to come to a country. 389 00:23:04,359 --> 00:23:08,960 Speaker 12: So that's the sort of position South Africa's and they're 390 00:23:09,000 --> 00:23:13,960 Speaker 12: seeking investment well in logistics sector and the telecommunication sector, 391 00:23:15,280 --> 00:23:19,600 Speaker 12: and particularly in sectors that can absorb labor. Do you 392 00:23:19,640 --> 00:23:24,400 Speaker 12: know South Africa has a particularly high unemployment rate. One 393 00:23:24,480 --> 00:23:29,719 Speaker 12: third of its labor force is without a job, so 394 00:23:30,640 --> 00:23:33,920 Speaker 12: investment is particularly important in trying to address that particular 395 00:23:34,000 --> 00:23:37,600 Speaker 12: goal for the country I mentioned earlier. We've just recently 396 00:23:37,640 --> 00:23:40,520 Speaker 12: seen a pickup in growth fixed capital information after being 397 00:23:40,560 --> 00:23:45,880 Speaker 12: in decline for several quarters. Boosting or its attracting more 398 00:23:46,520 --> 00:23:51,920 Speaker 12: external investment, particularly foreign direct investment would help in terms 399 00:23:51,920 --> 00:23:55,760 Speaker 12: of sustain that recovery on the investment front and help 400 00:23:55,920 --> 00:23:56,959 Speaker 12: growth accelerate. 401 00:23:57,480 --> 00:23:57,800 Speaker 11: Yeah. 402 00:23:57,840 --> 00:24:01,520 Speaker 3: Absolutely, so let's see what can be done then in 403 00:24:01,600 --> 00:24:05,280 Speaker 3: terms of South Africa hoping to attract two trillion rand 404 00:24:05,400 --> 00:24:08,640 Speaker 3: in new investment commitments over the next few years as 405 00:24:08,720 --> 00:24:12,080 Speaker 3: part of this South African summit. My thanks to Bloomberg's 406 00:24:12,119 --> 00:24:16,360 Speaker 3: Chief Africa correspondent Jennifer Sabasaja and to our Chief Africa economist, 407 00:24:16,560 --> 00:24:20,639 Speaker 3: Yvonne Muhungo for joining me. I'm callin Hebge here in London. 408 00:24:20,680 --> 00:24:23,240 Speaker 3: You can catch us every weekday morning for Bloomberg Daybreak 409 00:24:23,240 --> 00:24:25,920 Speaker 3: you at beginning at six am in London. That's one 410 00:24:25,960 --> 00:24:27,000 Speaker 3: am on Wall Street. 411 00:24:27,240 --> 00:24:31,280 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg day Break Weekend, 412 00:24:31,280 --> 00:24:34,120 Speaker 2: we'll look ahead to shareholder meetings in South Korea as 413 00:24:34,160 --> 00:24:37,880 Speaker 2: the country's corporate reform drive faces a crucial test. I'm 414 00:24:37,960 --> 00:24:52,880 Speaker 2: Nathan Hager, and this is Bloomberg. This is Bloomberg Daybreak Weekend, 415 00:24:52,960 --> 00:24:55,680 Speaker 2: our global look ahead at the top stories for investors 416 00:24:55,680 --> 00:24:58,680 Speaker 2: in the coming week. I'm Nathan Hager in Washington. It's 417 00:24:58,680 --> 00:25:00,919 Speaker 2: been a busy month for a show. Sareholder meetings in 418 00:25:01,000 --> 00:25:03,919 Speaker 2: South Korea and they'll continue in the weekend. For a 419 00:25:03,960 --> 00:25:06,639 Speaker 2: closer look, let's get to Bloomberg's Doug Krisner, host of 420 00:25:06,640 --> 00:25:08,159 Speaker 2: the Daybreak Asia podcast. 421 00:25:08,720 --> 00:25:11,760 Speaker 4: Thanks Nathan. These are not your typical meetings. They're being 422 00:25:11,800 --> 00:25:14,760 Speaker 4: conducted as South Korean President Lee J Mung pushes for 423 00:25:14,880 --> 00:25:18,240 Speaker 4: corporate governance reform, and there has been a flurry of 424 00:25:18,280 --> 00:25:22,240 Speaker 4: shareholder proposals and activist campaigns. For a closer look, I'm 425 00:25:22,280 --> 00:25:25,720 Speaker 4: joined by Bloomberg's Winnie Sue. She is Asia Equities reporter 426 00:25:25,840 --> 00:25:28,680 Speaker 4: and Winnie joins from our studios in Hong Kong. Thank 427 00:25:28,720 --> 00:25:30,879 Speaker 4: you for being here. I'm going to start with the 428 00:25:30,880 --> 00:25:35,480 Speaker 4: big companies, names like Samsung, Hondai, LG familiar names that 429 00:25:35,680 --> 00:25:39,879 Speaker 4: certainly dominate the South Korean economy. These are conglomerates. They 430 00:25:39,920 --> 00:25:44,880 Speaker 4: are essentially massive family owned enterprises known as chabols. Are 431 00:25:44,920 --> 00:25:48,679 Speaker 4: they the primary drivers for this push on corporate reform? 432 00:25:49,000 --> 00:25:52,040 Speaker 13: Yeah, they are basically the issue the court issues of it, 433 00:25:52,240 --> 00:25:57,280 Speaker 13: just because how much they control of these companies. Right, 434 00:25:57,920 --> 00:26:04,960 Speaker 13: Like you mentioned, these family conglomerates control hundreds of corporates 435 00:26:05,040 --> 00:26:08,640 Speaker 13: in Korea, and that is an issue because they sit 436 00:26:08,720 --> 00:26:12,800 Speaker 13: on the board and they would then prioritize their interests 437 00:26:12,840 --> 00:26:18,440 Speaker 13: over the shareholder's interests. And that is what the government 438 00:26:18,560 --> 00:26:22,560 Speaker 13: is trying to unwine or unpack to make sure that 439 00:26:22,920 --> 00:26:27,120 Speaker 13: these chabels actually have less impact or less say on 440 00:26:27,600 --> 00:26:31,840 Speaker 13: the companies and that companies can really push forward for 441 00:26:32,240 --> 00:26:34,840 Speaker 13: their value and for the shareholder's value. 442 00:26:34,960 --> 00:26:37,320 Speaker 4: As you know, and we've talked about this in the past, 443 00:26:37,359 --> 00:26:39,800 Speaker 4: we have seen how the big South Korean firms like 444 00:26:39,880 --> 00:26:43,919 Speaker 4: Samsung and sk Heinex have benefited from the trade in 445 00:26:44,119 --> 00:26:47,359 Speaker 4: artificial intelligence and how their share prices have helped to 446 00:26:47,400 --> 00:26:51,080 Speaker 4: power the South Korean equity market. So, Annie, I'm wondering 447 00:26:51,119 --> 00:26:54,520 Speaker 4: whether the chabels are being blamed at all for limiting 448 00:26:54,960 --> 00:26:56,000 Speaker 4: the market in any way. 449 00:26:57,160 --> 00:27:01,160 Speaker 13: Yeah, absolutely, So, as you mentioned, the most recent catalyst 450 00:27:01,359 --> 00:27:06,040 Speaker 13: is that AI demand or the AI drive, But there's 451 00:27:06,160 --> 00:27:10,280 Speaker 13: also some expectation going in with President Ejmi on pushing 452 00:27:10,320 --> 00:27:13,919 Speaker 13: forward for this value app program so to improve the 453 00:27:14,000 --> 00:27:17,639 Speaker 13: corporate governance. And we are talking about, for example, Korean 454 00:27:17,720 --> 00:27:21,320 Speaker 13: stocks right now at trading at one point eight price 455 00:27:21,440 --> 00:27:26,520 Speaker 13: to book ratio, and that's way below MSCI Asia at 456 00:27:26,560 --> 00:27:29,320 Speaker 13: around two point one, and Taiwan even at three point three, 457 00:27:29,359 --> 00:27:32,880 Speaker 13: so you can see that it's really been very undervalued. 458 00:27:33,200 --> 00:27:37,680 Speaker 13: So investors are saying that if the value there is improved, 459 00:27:37,840 --> 00:27:42,960 Speaker 13: we can expect further foreign inflows. And a big reason 460 00:27:43,400 --> 00:27:48,640 Speaker 13: to Korea stocks underperformance over the past many many years 461 00:27:48,800 --> 00:27:53,040 Speaker 13: is because of this Korea discount and because it's so 462 00:27:53,359 --> 00:27:58,679 Speaker 13: undervalued compared to its major global peers, whether it's Micron 463 00:27:58,880 --> 00:28:04,800 Speaker 13: or TSMC. That has first stopped foreign investors from investing 464 00:28:04,920 --> 00:28:08,520 Speaker 13: in Korean stocks because it's so undervalued, and also local 465 00:28:08,600 --> 00:28:13,720 Speaker 13: investors preferring stocks in the US because of this as well. 466 00:28:13,960 --> 00:28:18,000 Speaker 13: So that is a core issue why Korean stocks have 467 00:28:18,160 --> 00:28:21,880 Speaker 13: been underperforming in the past many many years, and that's 468 00:28:21,920 --> 00:28:24,760 Speaker 13: why it's so important for that to be addressed for 469 00:28:24,880 --> 00:28:27,800 Speaker 13: Korean stocks to even trail hire. 470 00:28:28,119 --> 00:28:30,920 Speaker 4: So as I understand, the history of Chabels goes back 471 00:28:30,960 --> 00:28:33,680 Speaker 4: to the nineteen sixties, and I'm thinking that in order 472 00:28:33,720 --> 00:28:37,000 Speaker 4: to counter their influence, any type of reform is going 473 00:28:37,040 --> 00:28:38,800 Speaker 4: to take a very, very long time. 474 00:28:39,200 --> 00:28:44,840 Speaker 13: Yeah, exactly. It is a very big structural issue to change, 475 00:28:45,240 --> 00:28:49,720 Speaker 13: and because they have such oversized influence by holding so 476 00:28:50,000 --> 00:28:54,600 Speaker 13: many subsidiaries across the country, and also they do have 477 00:28:54,840 --> 00:28:58,440 Speaker 13: very cozy relationship with the government as well, so that 478 00:28:58,600 --> 00:29:02,200 Speaker 13: is another difficult part to kind of tease out. And 479 00:29:02,680 --> 00:29:08,080 Speaker 13: we are though, however, under the latest you know, the 480 00:29:08,120 --> 00:29:12,320 Speaker 13: government that we're finally seeing some kind of changes, although 481 00:29:12,360 --> 00:29:15,400 Speaker 13: it is taking time. So for example, you're looking at 482 00:29:15,520 --> 00:29:20,560 Speaker 13: Samsung and sk Ink now announcing how they are canceling treasuries, 483 00:29:20,600 --> 00:29:24,760 Speaker 13: basically the first step of unwinding these kinds of cross shareholding, 484 00:29:25,000 --> 00:29:28,400 Speaker 13: and just recently with the finance regulators also coming in 485 00:29:28,520 --> 00:29:33,280 Speaker 13: to ban the double listing of basically the parent company 486 00:29:33,440 --> 00:29:37,240 Speaker 13: as well as the subsidiary companies. So the goal really 487 00:29:37,320 --> 00:29:40,560 Speaker 13: here is that they want to make sure the parent 488 00:29:40,640 --> 00:29:46,160 Speaker 13: companies can focus on improving their own value instead of 489 00:29:46,280 --> 00:29:50,760 Speaker 13: trying to raise money or to raise their value through 490 00:29:51,200 --> 00:29:58,000 Speaker 13: these IPOs of their subsidiary companies. So these small changes 491 00:29:58,040 --> 00:30:01,080 Speaker 13: that we are seeing right now are just depths of 492 00:30:01,600 --> 00:30:05,640 Speaker 13: kind of unwinding these cross shareholdings that we are seeing. 493 00:30:06,080 --> 00:30:08,520 Speaker 13: And I think one thing to point out is that 494 00:30:09,200 --> 00:30:11,719 Speaker 13: it's going to take time, and we saw how it 495 00:30:11,800 --> 00:30:15,960 Speaker 13: has been taking time in Japan, for example. If we, 496 00:30:16,480 --> 00:30:19,000 Speaker 13: you know, take the example of Japan, they have a 497 00:30:19,080 --> 00:30:23,080 Speaker 13: very similar system called the daibats, which is also basically 498 00:30:23,120 --> 00:30:26,680 Speaker 13: the same word of chabel in Korea. But the thing 499 00:30:26,760 --> 00:30:32,200 Speaker 13: is it is a less entrenched system in Japan, and 500 00:30:32,280 --> 00:30:34,800 Speaker 13: yet it still has been taking such a long time. 501 00:30:34,960 --> 00:30:38,840 Speaker 13: First started back all the way in twenty thirteen under 502 00:30:38,840 --> 00:30:41,920 Speaker 13: the then Prime Minister Shinzo Abe who started to push 503 00:30:42,000 --> 00:30:45,680 Speaker 13: for corporate governance. But for Japan, they really start picking 504 00:30:45,760 --> 00:30:50,080 Speaker 13: up in twenty twenty three under the new TSE, the 505 00:30:50,080 --> 00:30:53,800 Speaker 13: Tokyo Stock Exchange head, who came up with a series 506 00:30:53,880 --> 00:30:58,200 Speaker 13: of measures to improve corporate governance. And Korea right now 507 00:30:58,320 --> 00:31:02,280 Speaker 13: is really taking exactsard taking hints from that, so some 508 00:31:02,360 --> 00:31:06,760 Speaker 13: of it being for example, they ask companies that have 509 00:31:07,000 --> 00:31:09,640 Speaker 13: very low corporate governance to come up with plans to 510 00:31:09,760 --> 00:31:13,800 Speaker 13: improve their capital efficiency. They actually ask them to submit 511 00:31:13,840 --> 00:31:16,680 Speaker 13: the plans to the exchange. And another example is that 512 00:31:16,720 --> 00:31:20,480 Speaker 13: they came up with this list name and jame list 513 00:31:20,760 --> 00:31:24,840 Speaker 13: of companies who are trading below book value. So these 514 00:31:24,960 --> 00:31:28,800 Speaker 13: push from the regulators in the government of Japan has 515 00:31:29,000 --> 00:31:33,400 Speaker 13: helped Japanese stocks to rise to record highs and people 516 00:31:33,480 --> 00:31:38,240 Speaker 13: really quote on how it is a fundamental change in Japan, 517 00:31:38,480 --> 00:31:41,080 Speaker 13: So we can see some similarities there as well. 518 00:31:41,160 --> 00:31:42,959 Speaker 4: What are people saying about the way in which this 519 00:31:43,040 --> 00:31:47,720 Speaker 4: corporate reform, this change in corporate governments may begin to 520 00:31:47,800 --> 00:31:49,680 Speaker 4: impact the South Korean equity market. 521 00:31:50,120 --> 00:31:53,880 Speaker 13: What we've been hearing from investors is that this is 522 00:31:54,000 --> 00:31:59,760 Speaker 13: basically the most important catalyst or the more structural change 523 00:31:59,800 --> 00:32:02,640 Speaker 13: that they are looking forward to when it comes to 524 00:32:03,440 --> 00:32:08,280 Speaker 13: becoming the long term investor for South Korea's market, because 525 00:32:08,880 --> 00:32:13,920 Speaker 13: so far, because of that undervaluation of Korean market, the 526 00:32:13,960 --> 00:32:17,400 Speaker 13: market really is seeing more of a short term trade 527 00:32:17,400 --> 00:32:20,520 Speaker 13: market and hence the very high volatility because people really 528 00:32:20,600 --> 00:32:25,280 Speaker 13: don't believe in longer term investing in this market because 529 00:32:25,280 --> 00:32:27,440 Speaker 13: of all these issues we talked about, whether it's the 530 00:32:27,800 --> 00:32:34,080 Speaker 13: table or the companies not really valuating shareholder value shorholders interests. 531 00:32:34,560 --> 00:32:39,120 Speaker 13: So being able to address these problems is very core 532 00:32:39,360 --> 00:32:43,760 Speaker 13: when it comes to attracting foreign investors to become the 533 00:32:43,880 --> 00:32:48,920 Speaker 13: long term investors for South Korean market, and recently we 534 00:32:49,000 --> 00:32:51,800 Speaker 13: are looking at, for example, how South Korean stocks have 535 00:32:51,840 --> 00:32:56,120 Speaker 13: been really rising on the AI demand and the AI story, 536 00:32:56,600 --> 00:33:00,480 Speaker 13: but the underperformance that we're seeing in the past few 537 00:33:00,520 --> 00:33:04,360 Speaker 13: weeks driven by the concerns around the around war or 538 00:33:04,480 --> 00:33:08,760 Speaker 13: people profit taking from some of the top performers, that 539 00:33:09,000 --> 00:33:12,440 Speaker 13: is also heard in Korean stocks right now. So as 540 00:33:12,480 --> 00:33:15,600 Speaker 13: the AGM goes on, people are looking forward for this 541 00:33:15,800 --> 00:33:20,040 Speaker 13: to become the next catalyst or the key catalyst for 542 00:33:20,240 --> 00:33:23,600 Speaker 13: a rebound for the South Korean stocks that have been 543 00:33:23,640 --> 00:33:27,520 Speaker 13: recently struggling because of the lack of the AI story. 544 00:33:27,720 --> 00:33:29,600 Speaker 4: Can you give me a sense of the magnitude of 545 00:33:29,600 --> 00:33:32,760 Speaker 4: these shareholder proposals? How many are we talking about? How 546 00:33:32,800 --> 00:33:33,840 Speaker 4: big is this movement? 547 00:33:34,280 --> 00:33:37,880 Speaker 13: Yeah, so this time around, we're talking about more than 548 00:33:38,120 --> 00:33:41,120 Speaker 13: you know, two thousand companies going through this AGM season 549 00:33:41,240 --> 00:33:45,719 Speaker 13: right now, and we are already based on our data 550 00:33:45,760 --> 00:33:50,400 Speaker 13: that we see about sixty shareholder proposals this year. It 551 00:33:50,480 --> 00:33:53,600 Speaker 13: is kind of at around a similar level versus last year, 552 00:33:53,600 --> 00:33:56,160 Speaker 13: but way more than what we saw back in twenty 553 00:33:56,160 --> 00:33:59,880 Speaker 13: twenty one two, for example. So it is quite a 554 00:33:59,880 --> 00:34:03,360 Speaker 13: big pickup that we are seeing, and we're also hearing 555 00:34:03,400 --> 00:34:07,160 Speaker 13: from fund managers that this time around, companies are more 556 00:34:07,240 --> 00:34:10,760 Speaker 13: willing to engage with them, to talk to them ahead 557 00:34:10,760 --> 00:34:13,880 Speaker 13: of the meeting versus previously. Even when they write letters 558 00:34:13,880 --> 00:34:16,280 Speaker 13: to these companies they might not even get a response. 559 00:34:16,600 --> 00:34:18,960 Speaker 4: Winnie will leave it there. Thank you so much, Bloomberg's 560 00:34:18,960 --> 00:34:22,879 Speaker 4: Winnie Sue Asia Equities reporter. Joining from Hong Kong, Let's 561 00:34:22,880 --> 00:34:26,239 Speaker 4: get to Bloomberg's Charlie Pellett for another market moving conversation 562 00:34:26,440 --> 00:34:27,600 Speaker 4: from the APAC region. 563 00:34:28,160 --> 00:34:31,480 Speaker 11: Thanks Doug. We go to Beijing next wherein the last 564 00:34:31,520 --> 00:34:35,600 Speaker 11: week the China Development Forum took place, bringing together senior 565 00:34:35,719 --> 00:34:40,560 Speaker 11: Chinese officials and global executives to discuss economic podlcy. It 566 00:34:40,600 --> 00:34:42,840 Speaker 11: was there that we caught up with UBS Group CEO 567 00:34:43,000 --> 00:34:46,560 Speaker 11: Sergio or Mati, and he spoke to Bloomberg's Steven Engel 568 00:34:47,000 --> 00:34:50,640 Speaker 11: and Stephen began with asking Ramdi how clients are reacting 569 00:34:50,680 --> 00:34:52,240 Speaker 11: to the conflict in the Middle East. 570 00:34:52,560 --> 00:34:57,719 Speaker 14: We saw clients already diversifying their portfolios early on this year. 571 00:34:58,200 --> 00:35:00,719 Speaker 14: You saw much more dispersion in the way they were 572 00:35:00,760 --> 00:35:05,920 Speaker 14: looking at maybe shifting away from moredai technology to a 573 00:35:05,960 --> 00:35:09,920 Speaker 14: more diversified portfolio. That was a good move considering what 574 00:35:09,960 --> 00:35:12,760 Speaker 14: we see in the last few weeks. At these stage, 575 00:35:12,800 --> 00:35:17,560 Speaker 14: clients are still broadly speaking calm. We don't see any 576 00:35:17,640 --> 00:35:21,440 Speaker 14: major shifting us at allocation. But of course, uh, you 577 00:35:21,480 --> 00:35:24,680 Speaker 14: know this, this pressure on the economy will start to 578 00:35:24,719 --> 00:35:25,760 Speaker 14: weigh into the market. 579 00:35:25,800 --> 00:35:28,160 Speaker 15: So what are your clients directly telling you. I mean, 580 00:35:28,160 --> 00:35:30,719 Speaker 15: they're worried about the length of this. Everyone I've talked 581 00:35:30,760 --> 00:35:33,080 Speaker 15: to here, they're just they don't know how long this 582 00:35:33,880 --> 00:35:36,160 Speaker 15: uncertainty is going to last, and we don't know where 583 00:35:36,280 --> 00:35:37,880 Speaker 15: oil prices are going to end up at the end 584 00:35:37,880 --> 00:35:38,279 Speaker 15: of the day. 585 00:35:38,400 --> 00:35:40,680 Speaker 14: Well, the topic, I would say is not only how 586 00:35:40,760 --> 00:35:43,440 Speaker 14: long it's going to go, but really to fully understand 587 00:35:43,640 --> 00:35:47,279 Speaker 14: how long it's going to take to digest this, the 588 00:35:47,360 --> 00:35:51,160 Speaker 14: shock somehow, the surprise of this crisis, particularly for the 589 00:35:51,200 --> 00:35:54,920 Speaker 14: Middle East, I mean, the fact that the entire region 590 00:35:54,960 --> 00:35:58,879 Speaker 14: has been destabilized in that way will take some time 591 00:35:58,920 --> 00:36:03,480 Speaker 14: to be adjust buy investors and buy the market. So 592 00:36:03,880 --> 00:36:07,040 Speaker 14: I would say that I think it's much more important 593 00:36:07,040 --> 00:36:10,960 Speaker 14: to understand the second part, the digestions, rather than how 594 00:36:11,040 --> 00:36:14,879 Speaker 14: quickly this will we Land. I don't know how long 595 00:36:14,920 --> 00:36:17,680 Speaker 14: it is going to go, but for sure I don't 596 00:36:17,680 --> 00:36:20,799 Speaker 14: think that we kind of have a situation like that 597 00:36:21,000 --> 00:36:22,160 Speaker 14: going on for too long. 598 00:36:22,360 --> 00:36:26,120 Speaker 15: How cautious does it make you and your expansion plans? 599 00:36:26,160 --> 00:36:28,719 Speaker 15: I know you just got the designation changed in the 600 00:36:28,800 --> 00:36:32,960 Speaker 15: United States with your chartered bank there. That's a positive development. 601 00:36:33,040 --> 00:36:35,520 Speaker 15: Last year you got full ownership and the securities business 602 00:36:35,719 --> 00:36:38,920 Speaker 15: here in China. I mean, does it affect your m 603 00:36:39,000 --> 00:36:41,719 Speaker 15: and A outlook and how you plan to grow the 604 00:36:41,760 --> 00:36:42,600 Speaker 15: business going forward? 605 00:36:43,040 --> 00:36:43,360 Speaker 12: Well? 606 00:36:43,680 --> 00:36:46,040 Speaker 14: No, I mean it is not so mean because we 607 00:36:46,080 --> 00:36:48,440 Speaker 14: don't really run the business on us stop and go 608 00:36:49,160 --> 00:36:52,319 Speaker 14: kind of. So I think that we may tactically have 609 00:36:52,440 --> 00:36:56,680 Speaker 14: to slow down certain investments. But of course the direction 610 00:36:56,800 --> 00:36:59,800 Speaker 14: of growth in the US, in Asia and across the 611 00:37:00,440 --> 00:37:03,800 Speaker 14: is there. So I think that we need to continue 612 00:37:03,800 --> 00:37:08,200 Speaker 14: to invest in capabilities in artificial intelligence to make our 613 00:37:08,640 --> 00:37:12,759 Speaker 14: processes more efficient. We need to invest in order to 614 00:37:12,760 --> 00:37:17,080 Speaker 14: make our client advisor more efficient. 615 00:37:17,440 --> 00:37:22,000 Speaker 11: UBS Group CEO Sergio or Madi speaking with Bloomberg Steven 616 00:37:22,040 --> 00:37:26,080 Speaker 11: Engel from the China Development Forum, and I'm Charlie Pellett. 617 00:37:26,120 --> 00:37:30,440 Speaker 11: You can catch us weekdays on the Bloomberg Daybreak Asia podcast. 618 00:37:30,520 --> 00:37:33,200 Speaker 11: It's available wherever you get your podcasts. 619 00:37:33,560 --> 00:37:36,360 Speaker 2: Nathan, thanks, and that does it for this edition of 620 00:37:36,400 --> 00:37:39,719 Speaker 2: Bloomberg Daybreak Weekend. Join us again Monday morning at five 621 00:37:39,760 --> 00:37:42,759 Speaker 2: am Wall Street Time for the latest on markets overseas 622 00:37:42,880 --> 00:37:44,560 Speaker 2: and the news you need to start your day. 623 00:37:44,840 --> 00:37:46,480 Speaker 5: I'm Nathan Hager. Stay with us. 624 00:37:46,600 --> 00:37:49,919 Speaker 2: Top stories and global business headlines are coming up right now.