Welcome to Zurich, Australia.I'm Harry Stroud. What's in Sydney?We're counting down to Asia's major market opens.I'm out of old rulers in Hong Kong. And the top stories this hour.Asian stocks set for a lower open, with the Fed walking an inflation tightropeahead of this week's US CPI report. Investors also awaiting key economicdata from China and Japan. Australia's budget out Tuesday is set topredict inflation returning to target by year end.Our interview with the Treasurer, Jim Chalmers, in just a few minutes.Plus, President Biden set to quadruple.
Some tariffs on Chinese goods this week,framing the move as a pre-election defense of US workers.Take a look at how we're setting up this first thing Monday morning.Really, we've got to Aussie features a little bit on the back foot there.Of course, we did have the ASX 200, really a third week of gains forAustralian stocks really following on the gains that we've seen on Wall Streetover the past few sessions with the data really supporting that Goldilocksscenario. But it is looking like a pretty sluggishset up after what was really ultimately disappointing China data.Of course that China proxy was a pretty.
Big heavyweight when it comes to thefactors that we look at here in Australia as well.Kiwi stocks are already off by about 8/10 of 1%.We're seeing Chicago Nikkei futures looking pretty flat at the moment.50 China futures also not moving terribly much, but we did get reallysigns of slowing US economy in addition to, of course, the weekend data, thecredit data in particular when it comes to China that signals continuing weakdemand, consumer prices lifting for a third month.But the industrial price side extending that long decline.And of course, front and center is that.
Credit number as well is shrinkingreally for the first time since April as we really see that demand side very,very weak in China. Yeah, certainly a big question as well,given we've had quite a few optimistic good data points coming out of thecountry as well. But let's take a look at how US futuresare coming online this morning because as you said, a little bit sluggish andthat was sort of the theme of the session on Friday.We actually really struggled to gain traction here.And this morning you're coming on fairly steady as well.So we've got the S&P 500.
It was hovering around that 5220 mark.Still, though, it did notch its third straight week of gains.That's the longest winning run that we've had going back to February of thisyear at Treasury. Ten year yields as well.That advanced around five basis points to 4.5%.And at this point in time, you've actually got a full rate cut priced inby November by Fed swaps. That's what we're seeing indicated thatwhat else we're tracking, of course, is the outlook for data.And actually, let's bring up this terminal chart here because ahead of theUS inflation print this week and we can.
Get more on that in just a moment.We actually had the University of Michigan survey coming out here.And what we saw in those numbers is that actually we saw US consumer sentimentdeclining to a six month low, but short term inflation expectations, thoseactually picked up. You can see that circle there.And certainly something that does actually perhaps raise those questionsaround stagflation once again. But let's get more on inflation,because, of course, it is one of the key points in the week ahead.As we said, inflation numbers coming out of the US and and Bloomberg Economicsexpects April's CPI API numbers to show.
A marginal improvement from March.It also says core CPI moderating and the headline figure rising due to highgasoline and food prices here in Asia. China is going to be releasing a slew ofeconomic data on Friday, which will probably show a production rebound.The PBOC is also expected to keep its one year MLF rate unchanged onWednesday, and that would be to avoid further yuan weakness.And Heidi, of course, Australia's government front and center, we've gotthat annual fiscal blueprint that is due on Tuesday.Yeah. And so much of that comes down to theinflation forecasts, right?.
BELL The Treasurer is forecasting thatinflation here in Australia could return to the RBA's target band before the yearend. Treasurer Jim Chalmers told us about theGovernment's spending priorities and his only international TV interview ahead ofTuesday's budget. I think we've got to strike a finebalance in this budget between the near term and the longer term.Also making sure we can provide that cost of living relief for people who aredoing it really tough at the moment. At the same time as we invest in afuture made in Australia, so will be a responsible budget.It will ease cost of living pressures,.
But it will also invest in the future.Now obviously forecasting inflation at the moment is is tricky.It's tricky at the best of times. But what the budget will do is it willput downward pressure on inflation rather than upward pressure oninflation. Now, we've made substantial progresshere in Australia in the fight against inflation, but it's not missionaccomplished because people are still doing it tough.And so the budget will be very focused on that.Obviously, over the past six, six months or so since you've been putting thisbudget together.
The outlook for inflation is has changedquite a lot. Has that changed your thinking on theway you put the budget together? We're making that progress in the fightagainst inflation. We know that it needs to be the primaryfocus, particularly at the front end of the budget, and that's why you'll seesubstantial spending restraint. You'll see our cost of living measuresdesigned in a way that takes the edge off inflation rather than adds toinflation, so that overall our budget will be part of the solution toinflation rather than part of the problem.Now, moving on to a future made in.
Australia that's going to be a big partof this budget. How does the future made in Australia,does that differ from the IRA in the United States?Yeah, what we're trying to do here is to make sure that Australia grabs the vasteconomic and industrial opportunities from the global shift to net zero andthe sorts of things that we are contemplating are not out of place inwhether it's in the United States or indeed in most of the developed world.But for Australia we've got some huge advantages.Yeah, we've been dealt some incredible cards, our resources by say, ourindustrial base energy, our human.
Capital base, our attractiveness as aninvestment destination. And so what a future made in Australiais all about is not replacing private investment in the opportunities of thefuture but attracting more of it. That will require some public investmentand we need to make sure we get value for money for that.We've got our own unique set of advantages.As the economy changes, the global economy and the pace of that changeaccelerates. We want to make the most of it.We want to create good, secure, well-paid jobs and prosperity into thefuture.
And that requires us to renew andbroaden and deepen our industrial base. But you mentioned, obviously,Australia's unique advantages, but isn't Australia coming too late to this?I mean, a lot of the people will be competing against a lot of the othercountries our partners have put out have had these policies in place for quitesome time. Well, we better get cracking then, andwe will on Tuesday. We have made substantial investmentsalready in our ambitions to become a renewable energy superpower, which isreally at the core of the future made in Australia, that the global economy ofthe future will be powered by cleaner.
And cheaper energy.And we've got a big role to play in supplying that to become a reliablesupplier of that energy. But there is more that needs to be done.A combination of tax incentives, targeted grants, making sure that we'vegot the architecture to attract, to attract and absorb and deploy all ofthis private investment. You'll see a lot of that on Tuesdaynight. And now on Critical minerals, which ispart of this immense $500 million so far for exploration for critical minerals.Is that all that we're expecting for critical minerals in this budget, orshould we expect more on Tuesday?.
You should expect more.On Tuesday, Critical minerals are the opportunity of a century for Australia.This is genuinely a golden opportunity for Australia.Our critical minerals base is one of the reasons why there is so muchattention from global and domestic investors.But we need to make sure that we can attract and deploy, that the explorationis an important part of that. That geoscience opens open sourcescience to map Australia, our groundwater, our critical mineralsopportunities, a very important part of it, but there'll be more.Speaking of global opportunities, China,.
We've seen, say, a few green shoots intheir economy, but for Australia we'd like to see a lot more.I'm sure from your conversations around the world ahead of us of this budget,but ahead of the rest of the year, are you expecting to see more stimulus inthe Chinese economy as the year goes forward?I think there's certainly a prospect of that.Our budget will forecast Chinese growth with a four in front of it, four in thenear term, and if that eventuates, that'll be the weakest period of growthof of that length since Australia, since China began opening up in the late1970s.
And so the Chinese economy has beensoft. The property sector has been a big partof that, but not the only part of that. And and that weakness has kind of offsetin our global forecast the strength we've seen in the US.Australian Treasurer Jim Chalmers, speaking with Bloomberg's Ben Westcottthere in Canberra. Let's get some views now from Katrina.As a director of economic research and of Moody's Analytics, he joins me now inour Sydney studio. Always great to have you with us.How do you assess the risk that more lenient fiscal policy within 12 monthsof an election is going to potentially.
Run the risk of undermining what the RBAis trying to do? Yeah, I think you hit the nail on thehead with that question and concern. I mean, that's a huge concern for usheading into Tuesday's budget because I think we need to really see fiscalpolicy working alongside monetary policy and these continued hints of cost ofliving relief. It does concern us.I mean, there's no doubt that particular household segments are under pressure inthe Australian economy at the moment because of the high interest rateenvironment that we're experiencing. But at the same time, the Reserve Bankof Australia is deliberately trying to.
Cool the economy and if we see thisbudget deliver meaningful cost of living relief, that actually adds to theinflationary picture, then it will push out rate hikes and then it will actuallymean that households remain under pressure for longerthan I spoke about. Obviously, the huge role that Chinacontinues to play in the Australian economy and the outlook.And I just want to throw up one chart which, you know, we've got a bunch ofdifferent charts and none of them are very pretty in terms of the data thatcame out over the weekend when it comes to credit demand and lower demand.Government borrowing dropping for the.
First time since 2018.Credit extension, a net drop for the first time in 2005.The aggregate financing contracting for the first time in almost two decades.And we're seeing weakness across household demand and corporate borrowingas well. How much of that I suppose my questionto you about how much of that still correlates to what happens withAustralia's economy? And is this kind of the reality dawningwhen it comes to how difficult it's going to be for Beijing to shore upgrowth? Yeah, it's a good question.So in response to the first part of your.
Question, I would say that what we'reseeing in China is this pronounced weakness, right?And particularly households are having a surprisingly weak segment, post-COVID,because they haven't been a recipient of meaningful government support.We see that in those high youth unemployment figures and more broadlyacross high unemployment figures. And so it's it's not surprising that weare particularly seeing ongoing weakness in household credit, because even thoughlending rates might have been lowered, there's still not that appetite forcredit because they're just so, you know, feeling that they're strugglingbasically.
And more broadly, what it means forAustralia is that I think that we've seen this really bearish sentimentbecome the norm when it comes to China's economy, Right.So no longer with China. It is seen as this, you know,unrelenting growth engine with no issues.Now, we clearly recognise within the consensus that China does have thesesignificant kind of structural issues and ongoing weaknesses that it'scarrying. There's still obviously signs of of hopeand they're still kind of manufacturing and industrial strength, particularlywhen it comes to these strategic.
Industries like EVs, batteries, solarpanels. And that's obviously getting a lot ofstimulus and a lot of support. And we are seeing that in the numbers.But more broadly, we do know that China is carrying that weakness.And so it's not this kind of ongoing, prosperous engine anymore.I had to chuckle when the Treasurer said, Well, we'd better get crackingthen on. You know, the reality is that when itcomes to this sort of made in Australia type policy, other countries havealready been doing it for quite some time.How optimistic are you that this is.
Going to deliver as an effective policy?Yeah, I mean, the jury certainly remains out, but I would say I am in the skepticcamp because now we do have a lot of mineral endowments, which is a hugeadvantage for us. But at the same time, as exactly youpoint out, other countries have already made these investments and theseinvestments in improving infrastructure exploration.They do take time to materialise. And I think because we're so already farbehind the ball when it comes to that exploration and building thatinfrastructure, I wonder whether we will be able to catch up.And at the same time, the cost of.
Capital in Australia is so expensiverelative to other places where they are and Katrina as well.I mean, one country that's been quite good in this area has been Japan, ofcourse, because they've been really focus on bringing in the chip sector,for instance, and reinvigorating that. But we've got it, the first quarter GDPnumbers that are due this week. What are you expecting?So unfortunately for Japan's GDP figures that are released later this week, it'snot going to be good news. We're looking at a 0.1% Q-on-Qcontraction. Unfortunately, a lot of that softness isactually coming from the household.
Sector.Households make up about half of the economy, and unfortunately, elevatedinflation means that wage gains are trailing.So households just don't have money to spend at the moment.At the same time, actually, exports are going to remain a drag on the economy inthe March quarter, but at least that will be a temporary drag that was drivenby disruptions coming from the earthquake earlier in the year, as wellas some government related shutdowns to production.So overall, that the Q1 GDP figures are going to be weak.And that certainly does complicate the.
Story for Bank of Japan, which does seemcommitted to continue to gradually pull back on its ultra accommodative monetarystance. Yeah.What does it mean exactly for the BOJ? Where do they go from here if we areseeing that weakness coming through? And they've already said that theyexpect inflation to trend down any way to the end of the year.Yeah. So our expectation is that we willactually continue to see kind of modest rate hikes.We've got one more 25 basis point rate hike pencilled in for September.And I think that what is a key driver of.
That rate hike will be that the hawkishstance really that they're delivering and they're clearly communicating is ispartly aimed at trying to find some sort of floor for the yen, which isincredibly weak. And it's also adding to importedinflation and also adding to the pressure that households are feelingbecause if they've got wage growth, not really going anywhere yet, and thenthey've got that imported inflation really crimping and adding to cost ofliving pressures, then at least a stable yen might help the picture.So that's, I think, the hope for the Bank of Japan with this this hawkishbias that they're really unrelenting.
WithChina. Always great to have you with us.Katrina El, director of economic research at Moody's Analytics.Still ahead, we'll be speaking with the Japanese VC firm Cardon Capital aboutthe challenges facing when it comes to investing in Asia and fintech startupsin Southeast Asia and across the Middle East.But first, President Biden set to hike tariffs on a range of Chinese goods thisweek with EVs in the crosshairs. Those details are next.This is Bloomberg. Spring season is here.This is a get out the popcorn moment.
Across the board, just pummeling ofexpectations matter. That's really clear.Bloomberg is first to break the numbers. Folks, we've got Microsoft, Appleearnings crossing the wire alphabet. Wow.Coming in way above expectations. It's driving in the opposite direction.And that's still to come with the smartest insights.It's just kind of damned if they do and damned if they don't.Is this their iPhone moment? Maybe this is Operation Kick the can toAugust. Continuing coverage on Bloomberg Contextchanges everything.
Well, the Biden administration is set tosignificantly hike tariffs this week on some Chinese goods, including nearlyquadrupling duties on Chinese made electric vehicles.Our chief North Asia correspondent, Stephen Engle is here with the details.And Steve. Of course, it's all ahead of the USelection in November and it's rising hawkish sentiment.But what do we know so far? Well, I think the November electionlooms large on this whole new tariff regime, if you want to call it that, orthe hiking of tariffs. But at the same time, they're onproducts that are not really going into.
The United States in large numbers rightnow. Right.We're talking the solar cells and batteries.And also we heard the earlier announcement of steel and aluminum.Still not a significant amount of the U.S.imports, but very symbolic, obviously, at a time when China is trying to exportits overcapacity in these key industries driven by Xi Jinping has become apolitical hot potato, obviously. And I'll get to Donald Trump's commentsin just a little bit. But here's, you know, fleshing out thisscoop that we had on Friday where we.
Heard that the Biden administration verylikely could be Tuesday, as early as Tuesday of this week, announcing totaltariffs on Chinese made electric vehicles will rise to 102.5%, up from27.5% right now. So that's an increase of 272%, nearlyquadrupling. Other tariffs will be doubled or tripledin targeted industries, including, as I said, batteries, solar cells, steel andaluminum. It's not clear yet, Annabel, which itemswere spared in this new tariff hike, but sources say there won't be any ratereductions. Okay.Tariff rate reductions by administration.
Has signaled to U.S.solar industry that they could move to exclude some items, including machineryused to make solar panel components. But again, all of this did not reallydampen on Friday because the story did come out on Friday, the IPO debut on thein New York of Zeekr, which is the high end EV maker from Geely.It rose 35% on its debut, its biggest Chinese IPO since Didi in 2021.Steve, you mentioned Trump before. Is this sort of an attempt todifferentiate his trade policies from Donald Trump?Have we had a reaction from him? We have had a reaction from him.And he said he sort of mocked the move.
And said Biden should have done thisfour years ago and also warned that the Chinese could be using its plants inMexico to essentially make EVs. And then through the US Mexico-canadaagreement that Trump did end up signing, then they could export that to theUnited States. Trump says he'd put tariffs of Chinesemade EVs in Mexico up to 200%. So again, yes, this is going to be apolitical issue, but as I said earlier, again right now the US market forChinese made EVs is pretty small, extremely small, and also the US.It seems like they are sort of going away from the whole electrificationtrend in the auto industry.
But this is a political issue, no doubt,with the United Auto Workers Union and the like.So this is a symbolic move for sure to kind of protect jobs in the U.S.auto industry. Chief North Asia correspondent StephenEngle there. And, you know, this sort of shifting ofindustrial policies and trade policies, really, Bill, comes at a time when we'reseeing signs of renewed weakness or perhaps weakness that has not been quiteresolved when it comes to the Chinese economy.Right. As you mentioned at the top of thecredit numbers that we had over the.
Weekend, sort of brought down to realitythis idea that because we had a couple of months on a couple of sort of sets ofpretty encouraging data and a lot of it was sort of seasonally distorted, Iguess we're now getting to perhaps across because of the weakness that wecontinue to see, which is on that demand side.You talk about household debt, you talk about corporate borrowing, but aggregatefinancing. That was a chart that we brought upearlier as well, contracting for the first time in almost 20 years,government financing, that borrowing is negative for the first time since 2018.We're seeing contractions in weakness.
When it comes to borrowing from fromhouseholds, from bond issuance as well. And so much of this comes down to theproperty sector. There is another chart that we have aswell that takes a look at just the big decline that we've seen in in in termsof demand for mortgages about this, I guess makes it pretty clear cut.How much policymakers do have to do in terms of having their work cut out forthem to be able to shore up support Katrina from Moody's Analytics is sayingearlier in a big sort of chunk of this issue is the fact that householdspost-COVID have not received that meaningful support for confidence.Yeah, and we're seeing policy support.
Being expressed in other ways as well.One of the more interesting ones that could take place as soon as this weekis, is China actually removing a possible source of negative data aswell? Because historically we've actually beenable to say on a on a live basis the trading that was coming through of localstocks with links in Hong Kong that is actually now going to be scrapped orremoved as as soon as this week. So China is going to be switching offthe live feed of foreign flows, as I said.Instead, that is going to be provided those turnover details on a daily basis.Now, authorities in China, they're.
Saying that this practice actuallyaligns the country with international practices as well.But it is still sort of an attempt perhaps to try and stem the impact ofdata showing foreign funds selling on market sentiment, because intradayratings actually have been blamed for worsening sentiment among Chinese retailinvestors in the past Heidi. Got that.We'll also be sort of taking a look at some of the trading locations when itcomes to China's partners. We've just come on the back of, ofcourse, Payne's visit to Europe. They selected countries, includingFrance.
We'll be speaking exclusively later tothe French president, Emmanuel Macron, about trade, geopolitics, thatrelationship with Beijing and international investment.That is at 3 a.m. Tuesday, Sydney time.This is Bloomberg. Take a look at how we're setting up thisMonday morning. We're looking like a pretty sluggishstart when it comes to trading here in Asia.Sydney stocks are down about 2/10 of 1% in a feature session.We did have three straight weeks of gains, though, for Australia.So we're seeing perhaps a little bit of.
Profit taking when it comes to Aussiestocks futures in Japan and Hong Kong as well as mainland China showing someslight losses as well. US contracts edging low.The S&P 500 really struggled to gain traction on Friday.Consumer sentiment fell to that six month low and short term inflationexpectations picked up as well. So really at that Fed challenge stillfront and center, this is Bloomberg. Asia's earnings spotlight shifts thisweek to China's Internet giants. Alibaba and Tencent could report singledigit revenue growth last quarter. That's according to the latest analystestimates.
Bloomberg Intelligence is also expectingslower first quarter growth, providing better margins for JD.com.That's the big China tech ones in focus. We're also going to hear from Japan'smega-banks, which could see a jump in their annual profits.And later on Monday, SoftBank, you can see there as well, probably going toreport trimmed losses as its vision fund returns to profit.Some of the earnings are watching there, but as well, as we said, SoftBank, oneof the key ones. And let's bring in our tech reporter MinJong Li in Tokyo. And Ming Jong, it seems like we've gotsome causes for optimism here, huh?.
Yes, you're right.We are anticipating some recovery both on the group level and at the visionfund. So after posting quite a big loss forthe previous year, we do still expect losses.But for that not loss to have narrowed quite a bit.This is largely thanks to a comeback in technology evaluations across the globe,which has helped the vision fund start ups to recoup some losses with therecovery in valuations. There was also a pretty significant onetime gain from T-Mobile stock options, but yes, a recovery.Vision fund has been selling assets.
What are the implications for SoftBank?Right. So they have been selling down quite abit of their publicly held assets. They're looking just at us listedassets. We see that the total value of thoseassets has been reduced by about 29 billion.Those share price declines have impacted the value drop, but the Vision fund hasalso been offloading quite a bit of shares in key assets like Groupon,DoorDash and Grab. So what we're seeing here is a shift infocus for Masayoshi Son as he pays more and more attention to new areas thathave greater focus on AI chip.
Technologies.And these new strategic investments we're seeing are being executed for thegroup level and not vision fund. So it will be interesting what happenshere going forward. And is that one of the things that weshould sort of be looking out for in the earnings press, what are you going to belistening for? Right.A lot of investors are paying attention to any details or hints about SoftBank'snext big investment because they've been relatively quiet for several quarters.And some people think that maybe there could be an announcement about their newCHIP project, which would be billions of.
Dollars worth of investments whichreported about in February. There is also some interest in anypotential announcement about p P, which could be their next asset to go public.So quite a few things that could come out.But but we'll see if there are actually inventions, then we'll have to see.Our technology reporter, Jon Lee there in Tokyo.You can also turn to Bloomberg for more on this story as you go for commentaryand analysis from our team of expert editors on SoftBank.Not just watching SoftBank, but Japan's mega-banks as well.Reporting their results on Wednesday.
Our Asia Investing editor Russell Boydjoins us now from Tokyo. So, Russell, tell us more about whatwe're expecting from these numbers and what you're sort of most keenlywatching. Joining Heidi.Yes. What we're expecting is the megabanks toall post record profits for the fiscal year that just ended in March.But really, the focus will be on their outlook for this year and whether theywill be forecasting even higher profits, fresh records for this this currentyear. I mean, the megabanks really are on abit of a sweet spot right now.
Interest rates are obviously finallyrising at home. They've been benefiting from higherinterest income in their businesses abroad for some time now.They're also actually benefiting from the weekend.Look at Ifg. Half of its revenue comes from abroad,so those repatriated profits in midterms are higher.And they're also benefiting from the Japan stock market.The banks have a lot of crusty holdings, which they are selling and booking gainson those. It's also benefiting the market activityhere in the trading businesses.
So really, the banks are in a sweetspot. One other thing we'll be looking for isany commentary from the chief executives about the yen and about the outlook formonetary policy, which really is affecting their businesses.Russell We've seen so many banks so far in other regions returning capital toshareholders that we're going to see that profit sharing again in Japan, doyou think? Yeah, I think there's high expectationsfor that, at least from for Mitsubishi UFJ.Jay and for Sumitomo Mitsui. They're probably going to announceshareholder buybacks.
Mizuho It's a little bit less sin forthem, their capital ratios a little bit lower.So they may hold off this quarter. But certainly, you know, just take alook at the share prices of the Japanese banks.They're all up more than 25% this year. And Mufg has a price book ratio of onenow, which is, you know, they've reached the threshold that the TSE is hoping allcompanies can benefit from it, shareholders can benefit from, you know,and take a look back just four years ago, images price book ratio was 0.3.So, you know, the shares have risen on a very, you know, a lot over the pastcouple of years on high expectations for.
Those shareholder returns to comethrough. As your investing editor.Russell bought that in Tokyo, pointing to the latest headlines in geopolitics.The US says Israel risks fueling a postwar insurgency in Gaza, withthousands of armed militants remaining in the territory even if Israeli forcesinvade Rafah. Israel says it has now evacuated theeastern third of the city as it prepares to expand its military operation.Last week the US said it would withhold weapons that it may be used in Rafah andcited evidence that Israel had breached international laws protecting civilians.Russian President Vladimir Putin has.
Replaced his long serving defenseminister in a surprise move. Sergei Shoigu had been in the post since2012. The reshuffle is the first major shakeup of the Kremlin's military leadership since the Ukraine invasion and comes asRussian forces seek to capitalize on a battlefield advantage in that war.Ukraine's leader, Vladimir Zelensky, has called on his people not to panic asRussia's advances in the Kharkiv region threatens a local city.He called the situation on the outskirts of town.Extremely difficult after orders were given for a mass evacuation.Earlier, Russia recorded reported.
Multiple deaths after the partialcollapse of a residential building it said was struck by a missile.The Philippines says China has deployed vessels andto explore a shoal in the South China Sea for reclamation.The nation's US coast guard said that it sent a patrol ship to what Manila callsis called a shell to deter China's activities.The area is close to the Philippines, Palawan Island, which directly faces thecontested waters. The development adds to growing tensionsbetween Manila and Beijing. More ahead here on DAYBREAK Australia.This is Bloomberg.
Well, Japanese markets will open at thetop of the next hour. Take a look at what we're seeing when itcomes to trading equity futures. And broadly, we're seeing some weaknessplaying out at the start of trading here Monday morning across Asia, we're seeingfutures trading in Singapore looking a little bit softer there after, ofcourse, a weekend really dominated by the weakness in the China creditnumbers. Potentially, though, we could see Japanpolicymakers with a little bit more room to defend the yen if they should feelthe need to do so. One 5580 is what we're seeing in tradingat the moment.
But there has been, of course,increasing concern on Japan's currency to spot what it looks like, potentiallyevidence of two interventions so far, that rate gap between the dollar andthat again, policy between the US and Japan still seeing that big gap.Right that June Bank of Japan meeting now considered by investors to be verymuch alive. We had remember that all those commentsfrom Governor Ueda saying that they would consider a hike.That very much concerned on watching the impact of the weakness in the yen.Yes, certainly something we're tracking very closely there.As you said, we're just continuing to.
See that sort of slide across the pastfew sessions, even though we did have those possible two bouts ofintervention. But let's get to our next guest whorecently established a venture capital firm to invest in startups coveringfintech and AI targets include companies across Japan, Southeast Asia and theMiddle East, with plans to invest in up to 30 names over the next few years.Joining us from Singapore is Ryan Murakami, venture partner at GaidenCapital. And Ray, let's just get started withwhere you're at in the process of establishing this firm.You have a first fund, is that right?.
And also, what's the size of that fund?Right. So we've just announced in March toinvest in early stage companies in Southeast Asia, Southeast Asia andJapan. We have announced the we have notannounced the A, um, we actually investor owned preparatory capital,meaning that we're kind of the VC arm of our family office based out ofSingapore, but we plan to invest in about 20 to 30 startups in the in thecoming few years depending on the macro environment.Okay, so you have a first fund. We don't know the the amount of capital,but st allocated to that.
And you're looking to invest instartups. So what's sort of the time horizon herethat you're looking at? Right.So we've just started to invest in and we're looking to, you know, spendanother few years investing in supporting our portfolio companies.But in terms of the timeline, we've already, you know, looking intocompanies and starting investing. And which sectors are you mostinterested in? Right.Beyond that also depends on which ones. Yeah.Right.
So on.Especially with in Japan, we're going to be focusing more on the B2B, SaaS and AIsectors, especially because we see that, you know, the issues with, you know,aging population, decreasing population as a result, decreasing workforce inJapan. We think that these issues will create ahuge opportunities for disruptive technology like B2B SaaS.And as you know, Japan has to improve their efficiency and productivity.So for Japan, we're looking into more B2B sales.And I but within Southeast Asia, I mean, Southeast Asia can be very different ineach country, but especially for.
Indonesia, we're going to be focusingmore in fintech, which be a more infrastructure that will need for thecountry. Right.Can you elaborate a little bit more? So a little bit about Southeast Asia?What about the Middle East? What opportunities you see across thatthose sort of markets? Right.So we are looking into, you know, where our main focus in terms of the regionis, Japan and Southeast Asia. But we also have within the, um,opportunistic bucket where, you know, if we see other opportunities in othermarket, we would be investing in other.
Markets and we think that Middle Eastwould be, I think, the third region that we will be looking into.And within Middle East where we're quite excited about, especially as thegovernment has, you know, the governments in Middle East have decidedto invest quite a lot in infrastructures of air.And within it, you know, Middle East, they have a kind of special, you know,barrier to entry because of the language.So I think for Middle East, we're going to be focusing more on I.What sort of returns are you targeting at this point?Can you repeat the question?.
Sorry.What? What sort of returns are you targetingat this point? Right.Right. Yeah.So I think we're thinking to, you know, target about, you know, 3 to 4 Mesi interms of the return in ten years. So that would be, you know, more than30% IRR. But because we are, you know, just usingour own private proprietary capital rather than kind of fundraising fromother external ops, we will have quite a lot of flexibility to kind of invest into startups for a longer term if that's.
Necessary.So we will be very flexible with, you know, how we keep our portfoliocompanies. Right.Just quickly, what sort of size investment are you planning to make herein each of the different companies sort of stage are you most interested in?Right. So when it comes to the stages, we aregoing to be investing from seed stage to series a stage.So that would be about 500 K to million into an investment for eachcompany. And that would be the first step that wewould invest in.
But over the time, if we believe thatthe companies will grow, we will probably do another follow oninvestments on top of that first check. And are you looking to it?It seems like the capital is coming from from family investors, is that right?Are you looking to get outside investment as well?So right now we are just a firm, you know, kind of a VC arm of our familyoffice. So the money is coming from my ownfamily office or we're just invest in our own preparatory capital when itcomes to fundraising in the future. We haven't decided yet, but we are opento kind of, you know, have our long term.
Strategy to think about fundraising inthe longer term. But as of now, we're kind ofaccumulating our own pipeline and investments as a family office.The Tokyo Stock Exchange is trying to build some more outside companies.Would you recommend any of the companies that you invest in to perhaps considerlisting in Japan? Can you give us, I guess, yourassessment in terms of how you feel Japanese capital markets are at themoment, given the improvements have been made in governance?Right. Right.So I think when it comes to VCs, I think.
We're going to be supporting ourportfolio companies in Southeast Asia to be connected to Japanese investors andpartners, potentially, especially for fintech in Southeast Asia.We believe that Japanese investors has become one of the most importantinvestors. So when you know, when we look at thenumbers, the Japanese investors actually invested 1.4 billion USD in 2022 intoSoutheast Asia fintechs, which accounts for about 15 to 20% of the entirefunding into fintech. And we believe that this will continue.The Japanese investors will continue to be one of the most important investorsinto the region.
So one of our unique approach is toconnect these portfolio companies in Southeast Asia to corporates andpartners and in Japan to facilitate the partnership or even the market entryinto Japan or even in a potential exit. So that's one of the kind of uniqueapproach that we do for VCs. And when it comes to corporategovernance, I think it's a quite different topic in Japan.But we believe that when it comes to, you know, public market in Japan, wereally see that, you know, Japanese public market has been performing prettywell because of the contribution of improvements of corporate governancesince the TSC has announced to know.
Announced to the listed companies toimprove their price book ratio. I think the listed companies has, youknow, entered into this trend to reallyreturn, you know, shareholders by, you know, increasing dividends and doingbuybacks and the shareholders returning better.Shareholders receive in return, better return are now reinvesting those profitsinto the market. So I think this has created a reallygood positive cycle of recycling the money.And we we I personally feel that for public markets in Japan, that marketwill stay strong for the next few years.
Right.Murakami, venture partner at Highland Capital there.We do have some breaking news crossing the Bloomberg when it comes to ANZ.The bank says that it's cooperating fully with an asset probe on a 2023 hourfirm. Bond issuance are investigatingcontraventions of the ESIC Act, as well as the Corporations Act.ANZ group say that the regulator is investigating their Australian bondissuance. This after local media reported that ANZwas under investigation by the corporate regulator over concerns that its tradersmanipulated the sale of government debt.
Last year.This is the second time in a decade that ANZ fixed income team, according to thisreport, has been accused of improperly profiteering.We are now hearing that ANZ has made a statement saying that they're in fullcooperation with us in this investigation.That we're seeing the probe when it comes to the 2023bond issuance of ten year Treasury bonds by the Australian Office of FinancialManagement. ANZ was appointed by the AFM to act as arisk manager in that case in relation to the issuance of Treasury bonds.The bank saying that they understand.
That ASIC's is investigating suspectedcontraventions of a number of provisions of the ACT and the Corporations Act.So we'll continue to bring you more details as they come to us.Coming up, we'll be talking all things air at the China show with speakexclusively with 01. CEO and salivation.Vice chairman Kathie Lee will be joining us in capital founding partner AndrewScott will also be in that conversation that's at 11:30.If you're watching in Sydney now, 30 AM in Hong Kong.This is Bloomberg. Shares of Chinese Electric Car brandZico gained 35% on debut in York.
That followed an expanded IPO, thebiggest US listing by China based companies since 2021.CFO urging Yuan told us more about the timing of the IPO amid heightened tradetensions between Beijing and Washington. We at Seeker never tried to time themarket. I'll trace the latest trends.I mean, we follow our own strategies. If you think about over say for exampleglobal or Chinese EV market. If you read the numbers in first half ofApril in China, the passenger vehicle market recorded a new energy vehiclerate of more than 50%. If I look at my pipeline, I'veintroduced my own use of old double one.
In the in February this year and earlierthis year. In 1st of January, we started we buy allnew double seven. So my pipeline is also very strong.And if you think about my international expansion strategy of starting sellingcars to international markets in length since last October andsorry and and you will see we're going to sell more cars.So we need this kind of transparency is crossed by a US leasing.All in all we do think is a good time, but not considering about short timeheadwinds. We think long term and try to look attrying to make sure that in the long run.
We make a very, very good business case.Well, sir, as you talk about how you're expanding to international markets,considering the existing tariffs in place in the United States, the countryin which as of today you are now listed and it potential that tariffs go evenhigher, are you now listed in a market that you may never actually be able toenter and be competitive in because of those tariffs?Yes. So we are not entering this to this missmarkets. We are not just listening to us becausewe want to we want to incentivize markets.We'll get listed in the US.
As I mentioned earlier, we think aboutall the transparencies being the US lifts the public company, all the allthose communities that how we receive and the comfortable I can provide toglobal regulators that's transparent and basically very good global corporatecitizen. We think that is actually moreimportant. Mr.Yu, on the reality check seems to come in your prospectus here as Zeekr warnsinvestors that the Chinese government could in fact intervene in its businessto further its own regulatory, political and societal goal goals.Sir, why would a U.S.
Citizen ever invest in a Chinese companyright now? Yes.So I was thinking about if you look at the US capital market, it's continue tobe a very big transparency and probably the most liquid capital markets in thisworld. So being a foreign issuer, we want tosee if we can tap these type of markets and we want to see, you know,we have access to capital at time of need.Again, it's more about my strategy. It's more about long term view ratherthan short term headways.That was a Z because they're fighting.
You and they're speaking withBloomberg's Kailey Leinz and Joe Matthew.These are the stocks that we're watching when trade opens in Korea, Japan andAustralia in just about 5 minutes. Also watching Honda, the Japanesecarmaker forecasting another year of record profit on solid demand forhybrids in the U.S. and two wheelers in Asia.Also watching Tokyo Electron, that two full year operating income forecastmissed analyst estimates. We'll also be keeping an eye on, ofcourse, SoftBank ahead of its results a little bit later as well.The market opens in Sydney, Seoul and.
Tokyo up next.But looking like a pretty mixed start to trading.Some weakness, just modest weakness across the board as we get into thefirst few minutes of the trade and not much of a carry through when it comes tothe lack of conviction in Wall Street. And of course, that slew ofdisappointing China data over the weekend as well.This is Bloomberg.
Silver?