Bloomberg Crack of break of day: Asia 01/25/2024

This is DAYBREAK, Asia.We're counting down to Asia's major market opens.And Paul, I got to say, just after from the open for South Korea today, what I'mmost excited to see is the trading for S.K.high earnings, because we had those numbers in the last hour.Returning to operating profit after four straight quarters of losses.And I think it really surprised a lot of people because it was well, higher thanwhat the average analyst estimate had been.Yeah, nobody was expecting those numbers.We were expecting a loss.

We got a pretty healthy profit.In fact, it could move the cost be as a whole as well as the risk high.Definitely one to watch when we get going in a few seconds time.And later on we're watching China as well.We had something of a rally yesterday on the news of this imminent triple lockcut as well. So plenty to watch this morning, though.Yeah, that's right, Paul. But we'll just to take a look at how SKHynix comes online. Remember, of course, it takes about 30minutes or 30 seconds, rather, to say live pricing in Korea.So we'll wait for that to come.

But we'll just recap those numbers fromSK Hynix. As I said, it was a surprise operatingprofit, really big demand coming through for high end chips because those onesare used to help train AI tools. And the company saw big demand for thatoperating profit. It came in at 346 billion won.Now you put that in comparison to what we had for the average analyst estimate,and that was for a near 170 billion won loss.So huge, huge difference there on what analysts had been expecting in terms ofthe market reaction that we're seeing so far.We've got SK Hynix just coming online.

This morning and it's trading justfractionally higher, actually, only up 0.4 of a per cent so far, rather 1.1%,rather in the green here today, but not really doing too much to boost the costbeat so far, even though it is one of the heaviest weightings on that indexcontinuing to track the Korean one, they're just slightly firmer against thegreenback. GDP numbers a note as well, because wehad those from South Korea a couple of hours ago and results telling us thatgrowth actually held up in the fourth quarter.The recovery there still looking on track.So could help the be okay as well to.

Keep its rates higher for longer.Let's change on. Take a look at how Japan is faring sofar because we are just coming online this morning.Again, fairly flat so far. Not too much movement in eitherdirection, but the US session overnight, again, just pulling back from some ofthose intraday highs. But we're at pretty elevated levels andperhaps, Paul, just a level of uncertainty given we're still fairlyearly in on the earnings season. It was just getting across some breakingnews on the Bloomberg terminal. At the moment, we're hearing from theFederal Reserve is raising the rates on.

The emergency loan program to stoparbitrage. So the Fed raising that just as bankscan still use the discount window for liquidity needs.But it's going to end bank term funding program on March the 11.And that rate tweak is going to ensure that the BSP does continue to supportprogram goals. The change to those loan rates, though,they're going to be effective immediately.So the Fed raising the rates on loans to banks issued under that emergencylending program to prevent arbitrage there.Let's take a look at our trading in the.

Bond space in the early going in theTokyo session. Not a huge amount of movement.The yield on the ten year just creeping up a little to 418 at 20 there.Let's take a look at how we're tracking here in Australia.Meanwhile, seeing some modest positivity on the ASX at the moment.Kind of a mixed picture in terms of sectors though, financials kind of flat.The heavyweight materials sector though, performing pretty strongly.A better buy at 1.2%. The Aussie dollar has been holdingpretty steady there all week, just below the $0.66 US level.Now we'll hear from the Prime Minister,.

Anthony Albanese, a little bit later on.He'll be addressing the Press Club in about 2 hours time.We're going to hear more news on the amended tax cut plans in Australia.Crude prices, meanwhile, 7543 for New York crude at the moment.We have seen US stockpiles shrinking a little bit more than expected.And of course a gas production bell in the US falling as well on cold weather.So that's helping to support crude prices as well.Okay, let's get to our next guest now. He's neutral on Chinese equities.We're joined by Ben Powell, chief APAC investment strategist at the BlackRockInvestment Institute.

Ben, thanks so much for joining us.I do want to start in China. We've got a 50 basis point cut to thetriple off being foreshadowed. Also a promise to improve the quality oflisted. So is but still a little bit of light ondetail here. China's very, very cheap, of course.How are you approaching this market at the moment?Yeah. Good morning, Paul.Great to be with you. So you're absolutely right.I think the market is going to continue to have a wait and see for validation ofthese very interesting.

Rumors around a potential marketstabilization fund. Valuation is inexpensive Chinavaluations relative to its own history and by comparison to global peers lookvery, very cheap. But on the other hand, we have theseongoing structural headwinds around the geopolitics, around property and aroundlocal. We can say animal spirits, a real kindof collapse in confidence amongst the investor entrepreneurial class.So we're all waiting, I think, for the spark to kind of take advantage of thesecheap valuations. I think it's too early to declarecategorically that this is the spark,.

But the market obviously up 7% in thelast two days. We're all watching with great interest,I guess, to see if there's more here. Do you buy at these levels or is thatpicking the bottom of the China market just too dangerous a game at the moment?Okay. So we're neutral.So we're not underweight, we're not bearish, we're not too constructive aswe kind of balance those structural forces, those headwinds which candidlyare not going away. So I think they're going to persist andcontinue to create headwinds over the medium term.More tactically, I think there may be.

Some selective opportunities maybe incompanies with balance sheets which allow them to do self-help, maybe theirown buybacks rather than relying on a government stabilization fund, which mayor may not materialize. So it's a very candidly, it's a verydifficult situation. It's very uncertain as to exactly what'sgoing on. Just last week in Davos, I thoughtPremier Li speech was very interesting, where broadly he said that 2023 had goneapproximately fine for the China economy, grown more than the targetsthey hadn't needed to resort to a big kind of fiscal splurge.So it's not obvious that the Chinese.

Authorities are too concerned.So again, we're in this very difficult wait and see moment to see if there ismore to this story, more reality, and if there is, of course, that could beencouraging. But I think the market is going to haveto wait for action. We're very short on confidence at themoment. So just a story is not enough.Where you are overweight, though, is Japan.And it's been a very strong start for the Nikkei over the course of this year.But the rally is sort of lacking breadth as well.So does that concern you at all that.

Perhaps a peak could be near?Oh, no, we're constructive.So we've been bullish Japan for a few quarters now and that's gone prettywell. There's a lot of nuance in the Japanstory, but I still think we shouldn't miss the points.The point is Japan has moved from deflation to inflation.That's both obvious and extremely important in two regards at least.Firstly, the. Earnings outlook.Obviously, if you have to cut your price every year for two decades, that's kindof difficult now as Japanese corporates.

Can benefit from inflation, meaningputting their prices up, that totally transforms the earnings outlook in avery positive direction. That's the first.Secondly, Japanese savers have around $7 trillion of saving in cash or somethinglike cash. Earning zero zero is a great return in atime of deflation and in time of inflation, it's much less good.So it's hard to know exactly how much of that 7 trillion is going to move.But I think it's just the math. Some portion of that 7 trillion is goingto have to move into real assets, which for sure can include real estate andother.

But obviously equities is the is theobvious one. And I think we're going to see that kindof structural flow over the course as in years ahead.And are there any specific sectors that you think that that money would flowinto? And I think that you're watching.So what I'm watching, I guess, is the evolution of the Japan story.I think we are going to see a normalization from the BOJ over the nextmonths and quarters. And I think what's critical is this isnot so much to do with Japan's excellent exporting companies into the worldbenefiting from a weekend.

This is much more to do with Japan,meaning Japan, a reinvigoration of animal spirits, a renaissance, if youlike, and investor consumer confidence. So it's much more domestic consumerbank. So Japan, meaning Japan, I guess.I think rather than Japan's brilliance, exports are benefiting from a weakeryen. So it's an evolving story and I thinkthe market is still not totally on top of that for now.All right. That was Ben Powell, chief investmentstrategist at the BlackRock Investment Institute.Thanks so much for your time this.

Morning.We are just under 10 minutes into the session so far for trading in Korea andwe're keeping an eye on what's happening with SK Hynix very closely here becausewe have seen actually that stock now slipping into negative territory here,even though we actually saw the company posting a surprise fourth quarterprofit. Let's get more on those earnings now andbring in our Asia stocks. Reporter you can lee in seoul.So really blowout numbers from the company, but I'm sort of surprised bythe stock market reaction so far. Talk us through the numbers and also thereaction we're seeing as well.

Sure.So so we're seeing the Chinese erasing all about 1% gain earlier and thenturning to the negative territory in this early trading session on Thursday.And that might be reflecting some somewhat on concerns from the investorsafter this really strong surprise fourth quarter, which was probably driven bythis higher than expected demand from PCs, smartphones, A.I., there maybe someconcerns that clients maybe may have to reduce their orders for the firstquarter after this really strong fourth quarter that has to help driven Chineseneeds to turn post the turnaround in their fourth quarter operating profit.Also, you have to see that that's behind.

This was one of the strongest performerin South Korea last year. The shares rose 90% in 2023, and that'sa lot ahead of its key rival, Samsung Electronics.And that's been driven by the expectations forSK Hynix being ahead in the air race. But the shares rising nine 2% was one ofthe strongest annual performance. So the investor might be taking somebrighter at the moment. You can what are we hearing from S.K.Hynix in terms of its outlook and CapEx plans?So it's the Minister has given somewhat guidance that shows some increase in theCapEx, but it hasn't told us whether.

I'll wear that increase in the past willgo to. So that will be the one key questioncoming from the investors during the earnings conference call this morning.They're really curious where that increased capacity will be spent onwhether that will go to the chip related area or others.That could also affect the supply and demand situation, that that reallyaffects memory chip prices. So that will be one of the area thatinvestors will be curious. The other is that investor will also askSK Hynix about its plan on staying ahead in the air race.A lot of investor I spoken to said they.

Expect this to maintain its edge aheadas rivals Samsung Electronics. This is one of the key supplier of chiprelated devices called hbm2 and video and that has helped SK Hynix sharesoutperforms its rival Samsung Electronics last year.So what investors will be curious about is how long that competitive edge willlast. Yeah, that's what I'm curious aboutbecause we actually have seen Samsung and Micron as well, that they are theones that are looking to get more of that market for HBM chips.So what's your sense from the analysts and investors that you're speaking to sofar?.

So it looks like a lot of people I'vespoken to don't want to leave the party too early.And they seem to they seem to believe that there will be several quarters togo offer the memory chip profit share upturn for going ahead.So they don't want to leave the party too early.And some of them expect Chinese to be staying ahead in the eight in the race.But but, but as in years as Samsung is the highest must be really working hardto stay ahead in this really key important area for the tech techindustry. So we'll have to see how that goes.All right.

Asia's sports reporter, union leader inSeoul updating us on S.K. High next.Still to come, Boeing is under pressure in late trading after the FAA haltsexpansion of its max jet production. For further safety checks.We have details of that next. This is Bloomberg. We fly safe planes.We don't put airplanes in the air there. We don't have 100% confidence in.I'm here today. In the spirit of transparency, though,number one, recognize the seriousness of what you just asked.Number two, to share everything I can.

With our Capitol Hill interests andanswer all their questions because they have a lot of them.That was the Boeing CEO, Dave Calhoun, speaking in D.C.hours before the FAA halted expansion of Boeing 737 max planes, including its Maxnine series. So really just the latest in this sortof crisis that's taking hold at Boeing, following the panel blowing off a newMax nine operated by Alaska Airlines in early January.So the stock market reaction you can see here so far almost noticeable, ofcourse, in Boeing and after hours. And we have seen that stock slipping asmuch as 5% at some point, paring some of.

Those losses, but still trading lower.And then some of the major Boeing suppliers, again, not seeing too much ofa reaction so far. But again, trying to track quiteclosely. So let's get more from our transportreporter, Danny Lee. And I think one of the strongeststatements or understanding so got out of this is that following that AlaskaAirlines incident, the scrutiny now on Boeing, it's it's not going back to towhat it was before, not returning to be a you know, not returning to the statusquo. And and what we heard from the USFederal Aviation Administration over the.

Past couple of hours now is that this isa escalating response into what they see as unacceptable quality lapses inmanufacturing. So what they've now announced is thatthey are not going to permit at the moment expansion of of Boeing's 77 maxproduction line. So the surface of Max's is cash cow.The Max nine has been involved in the Alaska Airlines plug to apply, butBoeing was actually going to go from £38 a month.It produces an output to 50 over the next couple of years.Clearly, this has a direct impact with billions of dollars on the line, howmuch cash it generates.

And actually, on January 31st, we wereexpecting Boeing with its results, to deliver annual targets for 77 maxdeliveries. That may well completely change as theFAA scrutiny continues and builds as well.Danny, kind of interesting timing as well, because Boeing's just handed overits first 737 max to a Chinese airline for the first time since it was groundedin 2019. Is there any risk for Boeing and thenthe China market after this incident? Boeing has clearly taken a hugereputational hit from ongoing quality lapses in manufacturing and its qualityassurance, its quality control and yes,.

Indeed, the first 77 max overnight to bedelivered to China in nearly five years. So despite this element of good news,Kerry, there's a whole slew of bad news happening almost on an hourly basis withBoeing right now. And even as we heard from the FAAcracking down on production expansion, they did actually, in fact, approved theinspections needed to get the 77 max nine back up in the air.And we also heard from the loss in the last hour or so from the affectedairlines. United and Alaska are saying thatthey're going to get their first planes back into the air sometime later thisweek.

But a significant setback for Boeing,really, overall. Yeah, absolutely.And I think the pressure it's under not just from the regulators, but fromCapitol Hill. Ultimately, this is something thatBoeing management really is firefighting on all fronts here.You know, clearly with unhappy customers who are already sounding very loudlythat doubting they're going to take delivery of the max nine.And obviously this future max ten aircraft, which is still yet to becertified. So there's a lot at stake.And clearly it's going to do a lot to.

Try and win the trust again of not justthe airlines, but also the regulators. All right.Bloomberg's transport reporter, Danny Lee in Hong Kong.Well, Tesla shares fell in extended trading after fourth quarter earningscame in short of expectations and a warning as well of weaker sales growthto come. Detroit bureau chief David Welch joinsus now for more. So, David, why is Tesla's growth rateslowing down? They cut prices dramatically, so thatbrings revenue down. Automotive revenue in the quarter onlygrew 1%, which is kind of unheard of for.

Them.And vehicle unit sales are slowing in everymarket. They're still growing.But in China, for example, we widely surpass the company in that there's alot tougher domestic competition in the Chinese market, which is a big one forthem. In the U.S.market, consumers are slowing down purchases again.That market, U.S. heavy sales still growing as well, butnot nearly as fast. And you do have competition coming infor us.

There are the Koreans, Hyundai and Kiaare doing pretty well. BMW has TVs in the market now that wouldcompete with Tesla models. Little by little, General Motors isgetting into the game. So you have slowing growth, morecompetition in all of these markets. Tesla has cut prices 25, 30% in some ofthese markets. All that conspires to bring down revenuegrowth. And they're not even giving us guidanceas to where they'll be in growth of the year for last year was 20% way down from50%. So growth rates from 15 to 20 and noguidance for where that lower growth.

Rate will be in 2024.And that has investors a bit nervous about where is the bottom on the Teslagrowth story and is it even a growth story anymore?Yeah, it tells us perhaps that the days of 50 or even 30 to 40% growth year onyear isn't really going to be the case for 2024.That's right. Look, if they can grow at 20%faster than 20% last year when they've got more competition coming this year,it's going to be pretty, pretty troublesome.They do have new vehicles coming in with the Cybertruck and they're working on asmaller vehicle that smaller, cheaper.

You will not show up in 2024.So unless the cybertruck really does great things for them in some of thesemarkets, it's going to be very difficult for them to to get back on and the kindof growth range they were and with revenue that I can be able to do, unlessthey can raise prices and given where interest rates are, thatwill be very tough to do. So I just don't see where they get thegrowth in the automotive side of the business.They could maybe in energy storage, but they're still a small further businessin raising prices in the environment of a price war could be difficult as well.And how is that impacting profits?.

Profit margins are okay.Their gross margins were where the Street had predicted, but they missed onearnings and they missed on revenue. So, you know, when you're not selling asmany vehicles recently, again, growth rates are slowing and you're cuttingprices as dramatically as they have. You know, it's it's just really tough tokeep your profits up. They sustain pretty strong margins.GROSS margins of 17.2% are solid, but that's not that much better than GeneralMotors. And General Motors hasn't been a veryfavorite stock. And other car companies have similargross margins as well.

So they're just kind of starting to looklike any other car company as opposed to this high growth tech company thatthey've been admired as for the past, really, five, eight years?Yeah. And I guess that that that lack ofadmiration being perhaps reflected in the after hours trading that we'reseeing so far. That was David Welch, our Detroit bureauchief joining us. Thanks so much for your time.And now you can. Get a roundup of the stories you need toknow and to get your day going. In today's edition of DAYBREAK,Bloomberg subscribers go to de B, go on.

Their terminals.It's also available on mobile in the Bloomberg Anywhere app.You can customize your settings so you only get news on the industries andassets you care about. More ahead.This is Bloomberg. You're watching DAYBREAK Asia, thelatest stories from around the world. Danish shipping giant Moller-maersk saystwo container ships carrying a US government cargo into the southern RedSea turned back after a Navy escort intercepted a missile attack.The US military says it shot down two of three missiles who militants fired fromYemen while another fell into the sea.

The Houthis have continued attacks onRed Sea shipping despite two weeks of strikes by US forces.Russia has accused Ukraine of shooting down a military plane carrying 65Ukrainian prisoners for an exchange. The Defense Ministry in Moscow says theIL 76 aircraft crashed in Russia's Belgorod region, killing everyone onboard. It says radar systems tracked the launchof two surface to air missiles from Ukrainian territory.Ukraine is calling for an international investigation.The hacking gang lost. It says it's behind a ransomware attackthat shut down some of the operations of.

Equity land.The firm, partly owned by Jp morgan and Goldman Sachs, processes trillions ofdollars of securities lending transactions every month.It says unauthorized access to its systems on Tuesday caused some to gooffline. That wants payments in exchange forunlocking the affected systems. Canada's public inquiry into foreigninterference will examine the allegations that India tried to meddlein recent national elections, and that could further inflame already elevatedtensions. The inquiry was announced last yearafter leaked documents claimed China.

Tried to interfere in the vote.Public hearings are set to begin next week.Annabel Well, Paul, let's just take a look athow you futures are coming on line here. We've got the Stoxx 50 here pointing toa little bit of weakness ahead of the start of trade, continuing to track theexpectations around the ecb. We've had policymakers signaling thatthey are unlikely to cut anytime soon. But still the outlook for full recessionthere is continuing to build and Bloomberg economics saying that the ECBhas finished hiking their first cut could be mid this year or perhaps evensoon.

But where we are seeing rate cuts, weknow coming up, China saying it's cutting the triple-A ratios of the bankswithin two weeks to help the economy. So more on that surprise move with theTexas ahead. This is Bloomberg. I think they're trying to do right nowis signaling we don't care about the stock market.You can see that by the fact that it is going down year after year after yearlately. But at a certain point, we're going tohave to set a floor and let people know that the government is behind thesystem.

And that's what they're trying to donow. They're just trying not to overpromise.And the question is, will investors see that as enough?I think there's some fiscal space there and they seem to be not using thatdirectly. They're doing indirectly through thebanking system. I'm not really sure why you'd want torelever the stock market rather than use fiscal policy.Those were some of the Bloomberg TV guests that we've spoken to about thepboc's sudden announcement of a reserve ratio card.And as we know, the PBOC Governor PEN.

Made the announcement in a newsconference on Wednesday in a rare public foreshadowing of a policy change.Let's get more on that now with alicia garcia Herrera, chief Asia Pacificeconomist and a Texas so. ALICIA Yeah, I mean, very, very unusualfor those sort of foreshadowing, especially a couple of weeks out aswell. Talk us through what that tells us aboutthe seriousness of the issues facing China's economy.Well, it just shows us that it is very serious because otherwise they wouldjust cut, you know, as they've done so many times.And I would say that if they really.

Needed the time, that it means maybemore than just a cut will come, maybe a series of cuts, maybe a path of cuts,maybe a full fledged monetary stimulus with notes, maybe QE.I mean, I'm going very far. But the point is, why wait?So so I'm expecting a series of measures.Unfortunately, the signs we get are not so much on QE, as I mentioned, butrather on the actual mechanism to intervene in the markets.So we will call 2015. And you know, it's all about who's goingto buy the stocks we overheard by you actually great storythat it would be state owned enterprise.

Is buying generates its own funds to dothis so you know maybe nobody wants to take the time to take this verydifficult role of spending money if they see, for example, not a flaw.Last time in 2015, there was a problem and 3000.So, you know, what's the now? And I think this may be things for whichthey need time. So I would be expecting more than just agot. Yeah.Actually, let's let's take a look at some of the market reaction that weactually had. As you said, that 2015 intervention,another significant period where they.

Stepped in to try and stabilize.And you can see that that box in green, that's that's the period between June toAugust of that year, 2015 when China did step in.But you can see once they actually lift that, the market continued to drop onthe bottom panels there. That's the PPE, the CPI.And during that period in 2015, the the market was actually in deflation.And that's a similar situation, of course, that we're seeing there thatboxed in in in red on the right hand side.We're still in deflationary territory. So clearly the economy continues to bein the doldrums.

I mean, what else are you expecting,Alicia, if you're saying you're expecting a series of measures?Yes. So what happened then is that theystarted buying stocks and this is what we've heard so far, at least overheard,because there's been no announcement. But it really only worked.You're absolutely right. In early 2016, during the G-20,basically held by China or hosted by China, because a big stimulus wasannounced and of course, not as big as 2008, which already shows the direction,is that it is hard to do a big stimulus, increasingly hard.It was hard in 2016.

It had to be more limited.The economy is much weaker. So, you know, you need to do so muchmore. You need also is a very, very leveragedeconomy. So you need so much more credit to makeit more like, you know, you get older in a way.And this this all of this means that it would be so much more needed now than in2016. So the problem is that it didn't havethe space to do that. I think on the monetary side, one couldargue, yes, they do, because rates are actually real rates in China are higherthan in the US.

We forget because of the recent youmentioned deflation. But of course, on the fiscal front, Iwould argue that, you know, 100% of of public debt is not a joke for China'sGDP per capita. So it is a lot of debt.And I think that's the problem. How to execute a stimulus at thisjuncture. Yeah, debt, definitely a very liveissue. China, non-financial sector debt now294% of GDP. This is from Bloomberg reporting.Is there a risk that the route that we're seeing in stocks, you know,effectively becomes the property crisis?.

2.0, yeah.Yes. Well, I would imagine that is that's onepossibility. But let me give you one more,because part of those stocks, those stocks, I mean, imagine that you focuson on on the most vulnerable part of that, which is local governments, localfinancial vehicles. That's about 70% of GDP.So you start looking for stocks that relate to local governments, whetherthey're specific or for that matter, that bonds becausethey've issued debt and you start saying this is the new real estate prices,the fiscal muscle at the moment to to.

Basically put the funds in in thoseinfrastructure projects behind the local government financial vehicles.So you asked me a second real estate type of crisis.I would say local governments in particularwhen we talk about other central banks around the world, we often use phraseslike communication, policy error, that sort of thing.When you look at China policy makers, if you could give them a mark out of tenfor clear, transparent communication, what mark would you give them?I would respond to that question. They are not independent enough for meto view them anymore because they can't.

Do what they want to do.And this is the key problem on this. All right.Alicia Goss Herrera, chief Asia-Pacific economist at in Texas.Thanks so much for joining us. We're going to stay on China just as wemove ahead of the market open here. Let's bring in Bloomberg's executiveeditor for Asia markets, Paul Dobson in Singapore.So, Paul, we saw a pretty reasonable rally for Chinese stocks yesterday onthe back of some of this news of triple lock cuts, other potential stimulus aswell. But is this going to be sustainable?It depends.

If there's more follow through would bethe easy answer to that question, I suppose.On the one hand, there's definitely some momentum now in the market.First of all, with the support for equities that we've been reporting onand then with this sort of package of moves by PBOC, not least of which wasthe imminent cut to the chip R rate by a hefty 50 basis points as well.You know, everybody seems to have been whipped into action by these words fromlijiang to support the market. But the thing is,while this can give some sort of a short term boost to sentiment in equities,which it certainly has done so far,.

Continuingly what we're hearing frominvestors, what we're hearing from analysts is that they still want morefollow through in terms of economic support as well.What else can there be to help out, particularly the property sector, asyour last guest was talking about, to resolve the local government debt?To get sentiment among consumers turned around and to start pushing forwardagain. So,yes, maybe the equity market can continue to buzz for a little while, butit's going to run out of gas pretty quickly if there isn't that continuingsort of a thread now of supportive.

Measures from the government.And it does seem that China is really resorting to a pretty familiar playbookin terms of saying that it wants to continue to to back squeeze and improvetheir that their value management is. Is that going to really excite tradersat all? Well, I wouldn't say this is acompletely familiar playbook. Playbook in the you know, we haven'tseen the PBOC hold a press conference and pre-announce a triple.You know, that gives you a sense that there's more urgency this time around.Yes. Some of the measures and not thatcreative, but something like a support.

Fund for equities, you know, issomething that hasn't been tried in a while.Does sound like it could help. Certainly using offshore cash is adecent idea because it can support the currency as well, which means that givesthem more confidence to lower interest rates if needed as well without losingcontrol of the UN. So it does seem like there's some sortof joined up thinking going on here, that there are some measures and andtricks being pulled out of the hat. So, you know, it doesn't sound like sameold story. What I think is important, though, isthis idea, though.

There's one thing to prop up the market,but it's a whole other thing to prop up the economy, which is bubbling along atthat 5% growth rate. People seem pretty happy with that.Maybe they don't feel that there's a great deal of need to juice it too muchmore. And that's where that disconnect comesbetween investors who are hopeful for faster growth, who are hopeful forbetter, better earnings prospects for companies and maybe the authorities,which are happy to see growth going steady while they manage all of thesedebt issues in the property sector, in the local government sector, and getthrough that kind of hump.

All right.Bloomberg's executive editor for Asia Markets, Paul Dobson there in Singapore.Just want to get you a couple of stocks that are moving here in Australia.First off, the iron ore miner Fortescue Metals with second quarter iron oreshipments coming in a little bit higher quarter on quarter, but falling 2% on aquarter from a year earlier. Fortescue saying that demand remainingstrong for iron ore. We've got shares rising about 2% at themoment. We also heard from Santos with itsquarterly production numbers maintaining 2024 outlook between 84 and 90 millionbarrels of oil equivalent production,.

23.4 million barrels of oil equivalentslightly higher on the third quarter coming into the fourth.Santos shares rising modestly as well, and it is materials that are doing areasonably well on the broader ASX at the moment and the market higher by aquarter of 1%. Remember that Bloomberg uses caninteract with the charts that we're showing you there using GTV Go.You can browse recent charts featured on Bloomberg TV.You can also catch up on key analysis and save some of those charts for futurereference. This is Bloomberg.

You're watching DAYBREAK.Asia taking a look at how SK Hynix is faring.Just over half an hour into trading so far and we're seeing it sort ofrecovering some of those losses. But it's been pretty whipsaw trading sofar for the memory chip giant. We saw it reporting a surprise fourthquarter profit, far outpacing what analysts had been expecting and a lot ofdemand really coming through for its high bandwidth memory chips.They used to go into NVIDIA accelerators that areused to train AI tools. They're still seeing demand for that.Other chip names and chip supplies are.

Moving to the upside here so far.But the handsets also after we got what we got from the Dutch chip equipmentmaker ASML, because it's saying that it's seeing positive signs in salesgrowth. That's after orders more than tripledlast year or last quarter, rather. CEO Peter Vanek told us more about theoutlook for China as Washington pushes for export bans to hobble Beijing's techambitions. 90% of our business in China has to dowith mature technology, and that's the technology that we need for all themajor transitions. You know, if you think about the energytransition, the electrical vehicle.

Transition, digitalisation rollout ofthe smart grid, you know, life sciences, it's all maturetechnology. That's where the masses are you.So what is your message to those in Washington, lawmakers in Washington,lawmakers in The Hague, even who are pushing to expand those restrictionsbeyond the most cutting edge lithography machines, to expand those restrictionson the sale of lithography to China? Well, you know, full respect fornational security concerns, that's not the point.But I think we need to take into consideration that this the chipindustry has created an almost seamless.

Ecosystem across the globe that hasgiven us massive advantages in terms of innovation and cost reduction.So that's from an economic point of view.We need to make sure that that economic system that we have created, which hasgiven us so much benefit that we keep that intact.It's not about national security. It's about making sure that innovationcan keep going. So you are you're stepping down inApril. Does your successor at least have towargame the possibility, the scenario where ASML has to operate in a globalmarket ex China?.

Well, you know,I don't know whether he's war gaming. I don't think he's a gamer, to be veryhonest. You know, we'll just have to deal withthe reality. But I also, you know, I'm I'm anoptimist That worries a lot. And I do believe that we have created,you know, macro economic systems that are sodependent on each other that I think that is a scenario you can always put inthe way into a game. But I don't think that's a veryrealistic one. You do not have generative AI withoutASML.

It's as simple as that without yourextreme ultraviolet lithography machines.How much demand are your clients saying they are seeing for chipmaking equipmentto generate those kind of AI chips? Well, let me first of all say that Ithink the full extent of what I could bring is not totally clear because it'sall about the applications now and that still needs to develop.But one thing is absolutely sure it's going to need massive amounts of computepower and storage, data storage. So I think withoutASML, without our technology, that's not going to happen.So it's very clear there's going to be a.

Big driver going forward for ourbusiness and the business of our customers,as is MLC. Peter Vinik speaking to Bloomberg's TomMackenzie there. The coverage continues on DAYBREAK.Just stay with us for more. This is Bloomberg. Thailand's deputy finance minister isamplifying rate cut calls as borrowing costs hover at a ten year high.We are told us exclusively that high interest rates are holding back theeconomic recovery. The problem with Thailand right now isthat when we leave the economy, the.

Economy growth of GDP is not where itshould be. The past ten years, the growth rate ofThailand is about 2% only. I wish we believe that with thecapability of Thai people and Thai economy.The current government often said how always said we plan to stimulate it andbring it up to 5% per year. At least the current central bank policyrate is a two and a half percent. Does the government think the economicconditions are in place? For two and a half percent to be lower.Is that does that look too high given the reality on the ground?The current interest rate is quite.

Concerning to to the government.It is too high considering the spending power that the Thai citizens and Thaipeople has at the moment. It's difficult for the people ofThailand to to live at this number, 2.5% interest rate, the digital handouts.The timing on when that becomes public or when it takes effect.Well, yes, Give us an update when you think that that might happen.The initial planning was in May, but we announced that it has to be postponed.Is it definitely going to pass, though? It is in place.The proposed project should be still on within this year.Within this year.

Okay.This rift that's going on between the government and the Bank of Thailand.What's going on? The thing is thatthe government, the government and the Bank of Thailand is structure inThailand, maybe differently from some countries.Okay. Because the Bank of Thailand has to beindependent from the government, from from from anyone you know, has to befully independent. The Bank of Thailandmentioned about some issue, for example, the digital wallet project that they areconcerning.

The successful of the project, thesource of funds, which we will listen. Okay.We listen to to to adapt. But we are also concerned that right nowthe. Fang is a bit too distant from thepeople. After we announced a digital walletproject. There are so many poles in the country.Lastly, there is a poll from one of the top commentators in Thailand.He asked if people think that the injection of money to the problem aboutthe situation of the economy is real in Thailand.90 93% said right now the economy is in.

Bad shape.Okay, so the government thing and believe that it is imperative that weneed to inject money into the system so that people canhave better living, you know, have better lives.The targets on tourism, that's a very big part.What happens when tourism plays a very big part on whether you achieve yourgrowth targets? 8 million is the target, I believe, formainland Chinese tourists into Thailand. 8 million tourists.Well, the goal for this year, number of tourists coming into Thailand is 30million people.

Chinese people accounted for 20%.Okay. We believe that we can reach that numberafter we announced the free visa policy lastyear. Right.Yeah. The beginning of this year, the numberof tourists from Chinese has double already.So we believe that we can reach that number, even though it's at millions.Not too difficult. That was Thailand's deputy financeminister, speaking exclusively with Bloomberg Markets co-anchor DavidEnglish at the Asian Financial Forum.

Now, that event is still underway inHong Kong. It has leaders, government officials,finance and business people from around the region gathering together.And let's cross back to David, who is still at the event.So, Dave, what's coming up on the agenda today?Yeah, well, suffice to say and good morning, Bill, from from the side here.A lot of good conversations coming up. I love I love to tell you, things arealready buzzing here in the ground. As you can probably see behind me.I'd be lying if I didn't say that. It is early, of course, and these talkswill be starting in about a few minutes.

From now.Main stage is right up to my left. We'll have a lot of good conversationshere. Will be hosting the show over the next 3hours or so here on side, as you can see on your screens in about 30 minutes fromnow. And I think this is really morepressing. Barry Chan, who's head of investmentbanking and CIC, he will be joining us here on site to talk us through reallywhat the deal flow perhaps looks like, given the softness that persists stillin this greater Chinese economy conversation coming up.Plus, of course, many of these other.

Broader themes, including things likeA.I., for example, cryptocurrencies, web3 and brought across as investments.Back to you guys in the studio. All right.Bloomberg Markets co-anchor David Inglés there at the Asian Financial Forumtaking place there in Hong Kong. Just want to get to another interestingstory in the Bloomberg Terminal Bells. Asia's 20 richest families, some ofthose Hong Kong families not doing so well, sliding down the rankings, butmoving up the rankings. It's quite instructive on the shift ofwealth in the Asia-Pacific at the moment as the Ambani family of India on topthree generations there with 102.

Billion.Of course, Ambani's got his fingers in so many industries, but to second on thelist the Hartono is of Indonesia started out as the cigarette company before thesons diversified into banking. So bank Central Asia with 44 billion.This is now the the bulk of the family fortune but Hong Kong, as I say, notquite doing so well. Yeah, it really just tells you how muchhow much the concentration of wealth and power is shifting away now from Chinaand Hong Kong to India instead. And actually in those rankings, we sawfour out of five Hong Kong dynasties who have ranked amongst the 20 richest Asianfamilies.

Their fortunes actually eroded over thepast year. So it really is, as I said, that thatthat significant change that we're seeing around the region that move intoIndia and out of the region here. And we are, of course, seeing thatplaying out in the likes of the Chang family behind new well development,growing their fortunes from a single jewellery shop.But succession plans, that's still in play.More from DAYBREAK. That's it from DAYBREAK Asia.More ahead.

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