Welcome to Daybreak Australia,I’m Haidi Stroud-Watts in Sydney. We're counting down to Asia's majormarket opens. I'm Annabelle Droulers in Hong Kong and thetop stories this hour. Investors keeping their powder dry aheadof US inflation numbers, with some trading desks warning of big stockswings after Wednesday's CPI. Janet Yellen admits China may retaliateagainst the Biden administration's plan Tariff increases.We hear exclusively from the US Treasury Secretaryand the Albanese government set to announce Australia's second straightbudget surplus as it tries to ease cost.
Of living pressures without stokinginflation. Really cautious, open, given all ofthose are threats looming when it comes to the start of trading this Tuesdaysession. We are seeing Sydney futures lookingpretty muted at the moment, about a 10th of 1% higher.We're following that very session on Wall Street ahead of key inflation datafrom the US. Again, that's going to weigh on theoutlook when it comes to what the Fed does and what some of these othercentral banks will do in turn as well. We are seeing these headwinds reallybuilding not just from the inflation.
Outlook and the data risk there, butalso the risk of the threats on tariffs on China and potentially retaliation, asJanet Yellen flagged in our exclusive conversation.We'll get a bit more details on that, but certainly not a great deal of riskappetite as we head into this open. Kiwi stocks are already looking a littlebit softer there in the early part of the morning session.Chicago Nikkei futures looking pretty flat at the moment.A50 China futures, they're also not making too much of a move for Australia,of course, looking to that second budget surplus.They're back in the black for the.
Government for a second straight year.The fiscal standing is really near the top of developed world counterparts.But of course for Bell, when it comes to market expectations, it really is thiskind of what can they do to address the cost of living crisis that won't stokeinflation, make the RBA jobs harder and push out even further expectations orhopes of rate cuts? Yeah, that's right.It's really just that call perhaps coming through from a lot of the marketmood. Speaking with economists yesterday aboutthat need for fiscal prudence from Australia as well.But here's the outlook.
We've got four Aussie or US futures thatare coming online rather and you're seeing again, it pretty much reflectswhat we had intraday, which was a very cautious and subdued session.So equities, bonds, the dollar really not moving too much because traders arejust on that countdown to the US inflation print that's due Wednesday.The expectation that we'll see some sort of moderation but still too high towarrant any sort of Fed rate cuts. So that's the state of play there.But let's also take a look at what we did see a lot of the action.And Heidi, I don't know if you're ready for this just yet.I don't know if anyone in the market is.
Ready for this just yet, but possiblythat return to to meme stock mania. What happened?And I won't get into all the details here, but essentially we had the man orthe person, Keith Gill, he drove that meme stock mania back in 2021 under themoniker Roaring Kitty. He made a return to social media.Is it FOMO? Is they go, I don't know what's going onin the retail crowd, what the institutional side thinks is, well,that's probably a different story, but that is the state of play that let'sshift go to, as you said, Heidi, that exclusive into we have with the Treasurysecretary, Janet Yellen.
Our top story today saying that Chinacould always retaliate against any steps the US takes to protect its critical newindustries. Speaking as I said exclusively toBloomberg, Yellen declined to confirm that the Biden administration is aboutto unveil new tariffs on Chinese goods, including electric vehicles, batteriesand solar cells. He believes it's unacceptable, as I do,to be completely dependent on China in these areas.And he wants to make sure, given that China is really not playing by the rulesin this sense, they have enormous subsidies in critical areas of advancedmanufacturing is resulted in.
Overcapacity.He wants to make sure that the stimulus that's being provided through theInflation Reduction Act to support these industries and these are industries thatare creating good manufacturing jobs in parts of the country that have beenoverlooked or have suffered from deindustrialization in the past.The president wants to make sure that he protects these investments.And I don't want to get ahead of the 301 review on tariffs, but this is acommitment that President Biden has made.And I agree with that. I was in China just a couple of weeksago and made clear that we would not.
Allow Chinese overcapacity to harm our.Emerging industries. Does the U.S.want a trade war, though, with China? We we believe that we should have a deepand productive and we do in most areas, trade and investment relationship.We're working to stabilize our economic relationship.We do not wish to disengage from China economically, but we do think that theplaying field should be fair. And China engages in unfair practiceslike massive subsidies of industries they have decided are critical.And those are cases where we will act to protect ourselves.We've seen Beijing in the past, though,.
Respond and it's become tit for tat.Are you expecting a response? Could they go after Tesla or maybeAmerican farm products? Well, President Biden believes thatanything we do should be targeted to our concerns and not broad based.And hopefully we will not see a significant Chinese response.But that's always a possibility. U.S.Treasury Secretary Janet Yellen there speaking exclusively to Bloomberg.Let's get some analysis now with our guest, Carrie Craig, who's a globalmarket strategist at J.P. Morgan Asset Management.And it seems like we're here again.
It feels like a flashback in so manyways in terms of both the meme stocks and also talking about the risk of a titfor tat trade war. Again, how much is the markets or howmuch are you concerned about this really being amplified as we get into closer tothe November election? Good morning, Heidi.Well, it's certainly a risk out there. We think about the policy direction wesee out of the US. I think for now, when we look at what'sbeen announced that what can come through around EVs, there's still therealization that, you know, when it comes to China, they do refine.I think 90% of the world's critical.
Minerals and inputs that go intobatteries that was going to have a place in their terms of that production andsupply chain for these things. And that is quite strategic in terms ofhow they are being applied around certain industries or strategicpriorities, which is a little bit more narrow than thinking about the impact ofa broad based tariff and a tariff war, which is what we saw last time, whichwould have much larger economic and inflationary consequences.For now, though, I think the markets are really preoccupied with the very shortterm view on inflation and haven't even got to thinking about what the outcomeof the November election might mean for.
Markets.It's not something where you really tend to get into until after August.Once you have the conventions come through and maybe you get a little bitmore clarity around the policy outlook. But for sure, international relationsand tariff policy is something that can be determined through executive order inthe White House. So regardless of the split betweenCongress, it is something that could be determined by the next president andtherefore could have quite a meaningful impact.We think about the outlook for the markets and for our economies in 2025.GARRETT Janet Yellen was speaking.
Earlier about China offering significantsubsidies to critical industries. And to be fair, we see that across a lotof major economies, including with the Inflation Reduction Act and includingwith the proposed future made in Australiasort of policy measures as well. So is this a theme that you would beinvesting around in terms of we're expecting a boost to critical mineralsin the Australian budget today? Where are you seeing the opportunitiesbased around policy lines? I mean, I think it comes back to thatidea around the deep fragmentation of globalisation you've seen materialiseover the last few years.
It really is the idea that countriescan't be as reliant on their trading partners for some of these criticalresources. They need to think about how to survivethose supplies. And so that leads to, you know, agreater focus on industrial policy, which is what the Inflation ReductionAct is and is what effectively made for Australia or made in Australia is goingto be. So it is a case of thinking about howthat can benefit certain sectors in the focus of government spending to supportthat. So I think there's definitely aninvestment theme there, whether it's.
Whether it's around renewable technologyand greening of the economy that's around the some of these criticalminerals that are going to be needed and the support, it will become a focus asan investment theme in terms of the markets.And I think also coming out of the budget, again, support for householdsthinking about the cost of living pressures, they could be obviously knockon effects of that in terms of thinking about some of the retailers out thereand how they might benefit. So there will be implications from that,from the budget, some of them more long term if we think about that industrialpolicy, some of them potentially a bit.
More short term, if we think about justa little bit more more money and households and spenders pockets over thecourse of the next year. Carey Which market in this part of theworld is looking most attractive to you at the moment?Because we're seeing a lot of investors that are sort of shifting back intoChina. Are you in that camp or are you stillpreferring other markets like Japan, for instance?China is showing some signs of stabilization.I think there's still a huge untapped potential there.It's really looking for a catalyst which.
Is going to release all that pent uphousehold savings that can flow through to the consumer and really boost thatdomestic demand picture. You know, one of the issues around whythere is so much focus on subsidies in China is that the government issupporting these manufacturing basis to drive growth in the interim andobviously can't rely on trade as a as a big get a jail free card when it comesto thinking about the growth outlook. So China does show some promise.I mean, the valuations have crept up a little bit, but still very low byhistorical standard. And I think you will see tacticalopportunities that come through there.
But for now, we believe it's a littlebit too early to become more strategically positive on China until wesee that catalyst, which would see that release of demand in the households inChina. We prefer to think about other marketsaround the Asian region. Obviously, Japan is one that's continueto perform very well and we see that continuing in both the economic sense aswell as thinking about the market sense and the earnings growth that's comingthere. And then a focus around what we'reseeing in Korea and Taiwan, given that benefits are coming from the supplychains, the supply of chips and.
Semiconductors and the fact that globalgrowth is looking a little bit better around the world and that should be apositive for thinking about demand and exports from Asia to the rest of theworld. Yeah.So you're still thinking that the Fed is going to cut rates in September of thisyear, Is that right? And and if so, how do you see that sortof environment benefiting Asia? Because some people are saying Asiacould be the region that really outperforms when the Fed does start toreduce. Yeah.I mean, we're definitely looking at our.
Forecast and thinking about theinflation outlook. We do see inflation coming down a littlebit this week. That trend for inflation to hit lowerover the course of the year for us does mean the Fed can cut by one potentiallytwo rates and that would be starting in September.I mean, it's a bit of a baseline call given that that inflation print thisweek, you know, if it takes up a little bit, would really see those expectationsof rate cuts being priced largely out for this year rather than thinking aboutthem being hiking rates. In that context, I think of that easymonetary policy.
We should start to see that coming downin terms of the US dollar as well, that should be a bit of a boost for thinkingabout emerging markets and Asia performance.And again, if it's a case of that balance between growth still being goodin the US, inflation coming off a little bit, that nominal growth story beingquite good, that's still an area where you see corporates creating earnings andequities doing well. I think that spillover effects into therest of the region is what we're really looking for there in terms of the easingpressures around central banks in Asia and having to hike rates of the rates inthe Fed in the US are going down and the.
Dollar is going in the right directionand also thinking about the demand that's being created from a US economythat's still expanding. That was Gary Gray, global marketstrategist at Jp morgan Asset Management.Thanks so much for your insights. And still ahead here, why CLSA thinksTencent's total revenue grew at a slower pace in the first quarter.We'll have a preview of China's big tech earnings later in the hour.But first, Emmanuel Macron calls for a level playing field with China.Our exclusive interview with the French president is next.This is Bloomberg.
The Middle East and Africa.Vibrant resources and high yield investment opportunities abound.Join me on Horizon, Middle East and Africa for the stories, newsmakers andinsights from this exciting region. Now, we think.Only on Bloomberg. Anglo American has rejected a secondapproach from BHP that values the miner at $43 billion.The takeover would have made BHP the world's largest copper producer formore. Let's bring in our metals and miningreporter Paul Allen Hunt, who joins us out of Melbourne.So BHP increased the bid by 15%.
Still no deal.What's sort of the sticking point here and what does the board want?So the board last night, the Anglo board last night responded to BHP, his offerof $43 billion by saying that it significantly undervalued the companyand its future prospects. Specifically of concern to the Angloboard has been the structure of the deal.The structure would require Anglo American to spin off its Amplatsplatinum group Metals business and its Kumba Iron Ore projectsManagement have spoken to shareholders within Anglo American and they are undera lot of pressure to add value back to.
The company.Anglo American for some time has has failed to keep up with its peers,including Glencore and BHP, Rio Tinto and the likes.And Anglo, of course, is under a lot of pressure to explain how it's going tocreate more value than simply selling it to to its rival.So we do understand we're going to get more details on that then.Yes. So it was last year when the AngloAmericans Board launched a formal review into its internal assets and its futurestrategy. Of course, a strategic review is usuallythe precursor to divestments or spinoffs.
Themselves.However, Anglo shareholders have been largely left in the dark for for well,ever since that strategic review was launched.Overnight, the company said it would suddenly release the results of thatstrategic review. So they've really been scrambling topresent shareholders with an option of growth and promising that there's goingto be value in the future. I mean, the copper business alone willbe a significant assetas as the world transitions. It's a key metal for the energytransition and that's why BHP is so keen.
To get its hands on it.There are a few things that Anglo's board could do.The first is the poly highlights fertiliser projects.I mean that's nine $9 billion project and it is eating up a lot of money.So in terms of expenditure, that's an option to either slow down that projectsor find a joint venture partner for it as soon as possible.There are two other assets, of course. One is De Beers, the diamond businessthat has been struggling for for quite some time, and the Amplats business too.So we wait to see what the strategic review that is coming out later todayactually says and whether it can add.
Value to Anglo American's shareholders.Yeah, so a lot of focus on those plans that Anglo will lay out.Well, that was our metals and mining reporter Paul Allen.We'll have more with you in the next hour.But moving to the French president now because he's used the trade summit inperson to unveil more than 6 billion in foreign investments from companiesincluding Amazon, Microsoft and Morgan Stanley.Emmanuel Macron spoke exclusively to Bloomberg editor in chief JohnMicklethwait, who began by asking him about Totalenergies recent threat tomove its primary listing from France to.
The US.I wait for any confirmation. I understood it was remorse.So but it's interesting that it's tied to the idea that he would face extra ESGmeasures here that he would not face in America and thinks that would affect hisvaluation. Do you mean that we are most used in theUS in terms of green economy and position?Yes. But you also in your speech at theSorbonne, you said, as I'll paraphrase, you said, you cannot let decarbonizationand growth be enemies. And this would have to be an example.And this is my point.
Yeah, but the point is just we have tobe sure when we regulate, we should not overregulate.Yes. And I think now we have to deliver.We need in Europe much more investment. We have to have more flexibility.But in parallel, everybody has to be serious.I saw a lot of phones, a lot of asset managers saying, we are with you onclimate change. Where is the beef?Are you sure you are sufficiently compliant?Are you sure you are clearly addressing the same issues?This is my point and this is why we need.
The high synchronization between the USand Europe. The only synchronisation is number one,the US regulation in terms of climate change as it should be more serious andaligned on the European ones. Second, the Europeans have to investmuch more and be more serious and realign themselves on the US.If I look at all those people, or certainly as LVMH carrying all thoseones, they have done spectacularly well by exporting to places like China,they've done very well out of globalisation and all theprescriptions you were just talking about in terms of Europe having highertrade rules, being tougher with China.
You know what will happen in a couple ofmonths time? The Europeans will say we want to puttariffs on electric vehicles and what will happen is Mr.G, despite what he told you last week, he will come back and he will he willput tariffs on cognac and that will help those those very successful Frenchbusinesspeople. Look, I think this is exactly themistake we made 20 years ago on solar panels and we killed our industry.I'm very simple. I don't lecture and blackmail anybody.I just look at the picture. When you have tariffs of ten for yourelectric for Chinese electric vehicles.
Entering into our market, and when youare taxed between 15 and 24, when you go to the Chinese market, you have anissue. And on all the different sectors, whatwe want is just reciprocity. We want and in fact, moderntechnologies. Andregarding the relation with China level playing field.So what we ask for is exactly that. We want to be sure that in terms oftariffs, subsidies, rules of production, we have a fair competition and Imentioned it very openly to prison. XI So it is not a geopolitical agenda.We don't want to blackmail and push back.
Some some of the production.We want to be sure it is fair. It's fair to launch precisely enquiriesand and look in details the situation and revised.If we are weak, if we are threatened by the fact that you can be, you can havegreat torsion measures, you just don't do what you have to do.We had this discussion and this is why they decided not to implement the firstmeasures on cognac, but to withdraw as a first one.So I think it's it's a normal approach. But look at the situation today.The European Union is the most open place of the world, but you cannotsurvive if at the same time you have.
Subsidies and overcapacity in China andprotection in some part of the Market and Inflation Reduction Act and byAmerican Act in the US, it doesn't fly once again.So Europe has got to get tougher now. But this is a necessity not because weare protectionist, but because we want to protect our rich German.The Germans do not agree with you about this.I think it depends who in Germany and for which perspective.It's totally true that some German companies, when they are incorporated inChina, for instance, benefiting from subsidies, not just German,European-American, their interest is.
Probably to preserve that and to sellthemselves the overcapacity in China to the rest of the world, and especiallythe European markets. But the German economy's interest istotally aligned with the French economy's interests, meaning creatingjobs, creating value, but just protecting your business and your peoplewhen they are attacked by unfair measures.And it's it's normal. It's part of the business.So for me, it's just a no brainer. That was the French president emmanuelMacron, speaking exclusively with bloomberg editor in chief JohnMicklethwait in visi and you can get a.
Roundup of the stories you need to knowto get your day going. In today's edition of DAYBREAK, terminalsubscribers go to de b go. It's also available on mobile in theBloomberg Anywhere app. You can customize your settings so youonly get news on the industries and the assets that you care about.This is Bloomberg. Some of the top stories that we'refollowing this morning in the U.S. has ordered a Chinese crypto miningcompany off a property it bought near Wyoming Air Base that houses neatnuclear missiles. The US Committee on Foreign Investmentsays the proximity of mine won this.
Operation to a strategic missile base isa significant national security risk. The company must now sell the realestate it bought back in 2020 to senior South Korean and Chinesediplomats have held their first face to face talks in Beijing in around sixyears. Chinese Foreign Minister Wang Yireportedly told his Korean counterpart Choe that both sides should oppose tradeprotectionism. A trilateral summit with Japan isexpected later this month in Seoul. And coming up, we'll get the outlook onChina's big tech as traders await the reports or earnings reports of Alibabaand Tencent.
The Australian Government is set tounveil its third budget later on Tuesday.One of the centrepieces will be spending around the future Made in Australiapolicy, which has similar interventionist ambitions to the USInflation Reduction Act. Bloomberg's Paul Allen has more.Australia's economic strength has been built on digging stuff up and shippingit out. It's an old idea which has paid off andnow another old idea is being revived. Adding value to those raw materials.First this week in Canberra, billions in new spending will be thrown at greensteel, critical minerals processing,.
Solar panel manufacturing and otherlocal industries. They want a future made in Australia isall 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.A future made in Australia is a flagship policy of the Albanese government as iteyes an election campaign likely next year.In many ways it was born out of competitive necessity.The US says the Inflation Reduction Act, Japan has the Green Transformation Act.Canada and France are giving billions in.
Tax credits to companies developingclean energy. Direct government intervention is havinga moment worldwide and Australia doesn't want to be left behind.An early recipient of the $260 million loan has been Alfa HPI, which produceshigh purity, alumina oxides, nitrates and sulfates.Critical minerals key to the energy transition.Australia has abundant critical mineral deposits but limited manufacturing, withthe global supply chain dominated by China.Sceptics warn reducing that dominance will require more than nationalistpolicies and cheap loans, I think is.
Critical for Australian to build its ownbuild a so-called alternative supply chains for critical minerals processing.But to replace or challenging China's dominance is impossible because China'spower is not just in the processing technologies.Is the entire value chain supply chains behind it.With extreme sadness that I confirm thought that we have stopped buildingcars in Australia. It's worth remembering it was only adecade ago that government subsidies for car manufacturing in Australia werepulled, causing Ford, GM and Toyota to shut down local production.Subsidies and tax breaks are now back.
For future facing industries, at leastfor as long as the political climate encourages it.Paul Allen. Bloomberg.Sydney. And on budget.As we're waiting for the details of that, we are seeing pretty muted startto trading being flagged for Sydney stocks here.We're seeing futures down by just about a 10th of 1%.A pretty cautious start more broadly across the region.Kiwi trading already a little bit on the back foot there.We have really seen kind of US equities.
Ending Monday, mixed investors reallystaying on the sidelines a bit for what is going to be a data fuelled week andcapped off by inflation of course and all the implications that it holds forthe Fed and policy going forward. Nikkei futures looking a little bit moreoptimistic now. Singapore trading seeing upside of about3/10 of 1%. The S&P futures looking very much flatat the moment. That caution also spreading a little bitmore to Fox as well as we see the likelihood of yen intervention, maybe alittle bit less, a little bit more remote bell going into that inflationreport.
Yeah, inflation report.That's really the big market countdown. But also just the thick of earnings thatwe're in as well, particularly in this part of the world, given us ones prettymuch in the in the rearview mirror for now.But Tencent and Alibaba both set to report their numbers on Tuesday.Tencent expected to post its slowest pace of revenue growth since 2022.Alibaba, on the other hand, may lag on profitability, especially in itse-commerce and cloud businesses. With us now is Eleanor Luong, head ofAsia Telecom and Internet research at CLSA.And Eleanor, it.
Is the first time we've seen we've seenTencent and Alibaba reporting on the same day in a number of years.What are you going to be watching most closely between the two of them?That's right. Actually, it's the first time that theyreport on the same dates. We expect that $0.10 result is going tobe quite solid. Top line grows about 6%.non-GAAP operating profit will likely be up around 16% for attention givingbusiness is the major concerning business segments last year becausetheir top two gain was in decline and also they don't have a big blockbustergame last year.
We still going to see the mobile game.Revenue growth is going to decline year on year in the first Q because they arevery aggressive in terms of monetizing their top game last year.But however, we do expect that given business, that rebounding in the secondquarter recurring positively on year because they already changed themonetization team of their top game escape elite and they are going tointroduce more innovative virtual items that is going to increase themonetization or revive the growth of the game.And for the second tier game, which revenue is over 4 billion and monthlyactive users is over 500 million, the.
Accelerated monetization updates gameand that including Larry Fight of the Golden Spatula as well as the CROSSFIREwhich we see those game are growing at over 30% each year and they also have 20approve game in the pipeline and upcoming game is calling D and F mobilewhich has a very good feedback initially.And with over 20 million registered pre-registered users, we expect thisgame can contribute additional 5 to 10 billion roaming revenue for Tencent.She is likewise overseas. The ship business also repositioned thatgame last year, leading to a revenue decline, but this year they are alreadydone with the repositioning.
So if you look at that, growth stock isup more than double each year and they also have a new game coming up is calledthe Squat Busters.Which size is going to be comparable to the star?On top of that, they're also going to have a Nightingale assassin Okereke, aswell as Delta Force to be launching to oversee market this year.So we do expect that gaming business can grow at around 8% this year and non-gamebusiness can grow high teens to 20% because their revenue is going to bedriven by video account which traffic grow is still at over 50% year on yearby growing users as well as time spend.
Per users at low is still low 1 to 2%and they haven't really done e-commerce at STAIR and that will further boost adrevenue as they also increase monetization of that payment and theprice of cloud as well as their live e-commerce business.Although the top line growth is low, but their profit growth is going to be muchhigher compared to the revenue growth because a lot of their revenue now theyare recognizing in a net basis and they are going to have a high margin for thisbusiness. So we expect bottom line can sustain 15to 20% growth this year. So 5% overall total EAL plus 5 to 10%earnings growth and that's just trading.
At 14 times P potential.Yeah, we've actually just been showing a graphic here, Eleanor,of the revenue breakdown. So so continue.What else are you tracking from these numbers?Because you can see that, for instance, fintech business service is actuallymaking up the largest proportion. You're saying you expecting that togrow? Yeah.So for the gaming is growing 8%, but a gaming that we talk about is just appgames. We haven't really talk about mini game,which is basically booming in China.
Because the small game studio isstruggling to compete because of the regulations and also because afterintensified competition in the market, because the government resumed gameapproval. So there's an influx of new games useacquisition of for the game go up. So without any innovation, small gamestudio is difficult to compete and they go to mini games to get revenues.So the budget for the mini game pension reorganize on a net basis.So the revenue impact will be small, but the gross profit is basically 100% ofthe revenues. And that's why, although the top linegrowth is slower on a full year basis,.
Maybe ten, 12%, but the gross profitgrowth is going to be much higher, which is 15 to 20%, because I think thesecompanies are now more looking for quality revenues and that's why theprofit growth will be much higher compared to the revenue growth.So we still can see that is a high growth company for these top names.Elena, When it comes to AI, what are your expectations from bothTencent and Alibaba? Because it's obviously a prettydifficult, a struggle for competition and for access to to to chip technologyfor China in this space. But those two companies are seen asbeing the best kind of place to to be.
Able to come out in front amidst thatcompetition. Yeah, I think the China Internet Companyhas already acquired a lot of the NVIDIA high performance chips right before theban. So they all say that they have enough ahigh performance chip to train them all the way up to 4.0 level at least.And once they've done with the 4.0 level, they will be able to dumbed downthe model to smaller models and train that with the industry specific datas,and that will enable the customer to use the model in a more cost effective way.The model inferencing is going to be a lot more efficient and also they can usesome of the low performing chips for the.
Model inferences.They can even source the domestic alternative for the chip supply tosupport the model inferencing. So yeah, so I think China, in terms ofA.I. application, generative application, Idon't think that is going to lag compared to the U.S.But of course the challenge is the future that what if we want to upgradethe model from GPT 4.0 to even SORA or a more advanced model?We do need more advanced chips to support our evolutions and China need tocome up with their own alternative solutions.I think the chip design they still be.
Able to do, but in order to get thewafer like seven nanometer wait for five nanometer wafers, I think they stillneed to invest more to come up with their own solutions for China.I wanted to get a last word on Alibaba. We're expecting to see a lag onprofitability or the rise on sales. What are you looking for in thesenumbers? Right.We think that e-commerce business is going to improve in the March quarterbecause they already adjust the business position.They focus on re growing the user traffic on Taobao apps and that helpsthem to increase the monetization.
And also they are acquiring 5 millionnew merchants over the last 12 months. Most of them are white label merchantproviding low price product to suit the new needs for the consumers.So we do expect that e-commerce may grow at around 7% in terms of GMV, which isfaster than the retail sales versus 0% last year.So it is a lot better as take rate. Maybe it'll slightly decline becausewhile the advertising is growing along with a trough, their commission revenuehas come down a little bit, but they are planning to introduce a lot more advanceat Prada in the next few months that will help them to improve thatefficiency in the future.
So hopefully in the future GMV andcommercial growth gap is going to be narrow.On the earnings side, you're right that we do expect that profit is going to bedown year on year because of the reinvestments such as the traffic andcontent. But investment on that top out EPS aswell as the aggressive global expansion. AliExpress Taobao deal time now and alsosonar is still repositioning at that position closing down some store to alsoincrease the costs there. But I think towards that year, byDecember quarter we probably will be able to see that it comes recurring assome 8% there.
Cloud returned to double digit growthand profit is going to grow, possibly even year.But in the meantime, you have a massive share buyback trial, billion USD a year,which will be able to help them to support to share price while they aredoing the restructuring of that business.Right. All right, Eleanor, thanks so much foryour insights. That was the head of Asia Telecom andInternet research at CLSA. And switching to another earnings story,SoftBank as well, has laid out plans to get more aggressive in artificialintelligence after reporting a second.
Quarter profit and a surge in the valueof its assets, including chip designer holdings.For more, let's bring in our tech reporter, Min Jong Li and Min Jong.It seems like Masayoshi Son aiming to go on the offensive once again.Yes, they did reveal some positive results yesterday withsome profit on the group side, which is positive as a mother, as you saw, andgets ready to do more investments on startups relating to AI and technologiesrelating to chips. However, we didn't see too much clarityon what kind of investments or companies or how much Masayoshi Son spent plans tospend on these new technologies.
And we still saw the vision fundinvestment kind of continuously on this shrinking trend where they how they'respending, they're kind of investing less and are kind of busy so still sellingassets. So we need to see a wait and see a bitmore for clues from SoftBank on what kind of investments they do have planneddown the road. In would be here in terms of theturnaround when it comes to the vision fund.Right. We sort of through the period ofdivestments, it's been sort of a quiet shedding of assets that we've seen.Mm hmm.
Correct.As the company releases quarterly data on how much disposals of assets versusinvestment they've had. But for the past eight quarters or so,it has mostly been a lot of disposals. Navneet, the CFO of Vision Fund,explained yesterday that the disposals is a natural course because they arealready seven years into the fund and it's time for them to dispose of someassets. Still, when we asked them about theirplans on how to pick when they plan to pick up the pace of investments, wedidn't really get a clear answer on when they really plan to become a little bitmore aggressive on spending.
So I think the odds are we do anticipatesome more activity from SoftBank going forward.Forward. Butthe odds are likely that I think more action will likely come from theSoftBank group side and the less from the pension fund side.But we'll see. But we'll see what happens.Technology reporter Jon Lee there with the latest on SoftBank.Still ahead, we'll be discussing the Biden administration's plan to hiketariffs on Chinese EVs. Here why Bloomberg thinks the move islargely symbolic.
That's next.This is Bloomberg. President Biden believes that anythingwe do should be targeted to our concerns and not broad based.And hopefully we will not see a significant Chinese response.But that's always a possibility. US Treasury Secretary Janet Yellen thereexclusively speaking to Bloomberg about whether Beijing may retaliate againstWashington's steps to safeguard investments in critical new industries.Yellen was speaking to us after we reported that Chinese EV's could facetariffs of more than 100% under measures the Biden administration made announcedthis week.
Bloomberg Any of the analysts me joinsus from Shanghai to talk about the implications.So let's start off with how much of an implication, how much impact youactually see in a potential tariff hike on the broader Chinese EV sector.Thanks. I think this would just have moresymbolic meanings because many of the Chinese EVs have already been log of thelog out of the US market. In fact, last year we see that US onlyimported less than 11,000 EVs from China.So Chinese TVs are out of the US market for two reasons.First, the current tariff at 27.5% is at.
A relatively high level compared tothose in Europe, Australia and other Southeast Asian market, where some ofthem even have a free trade agreement with China.And second is even some of the Chinese can make into the US marketbecause of the strange requirement under way they have to compete with locallymade EVs on a unsubsidized level, meaning that they're going to undermineone of their core advantages on the price and affordability.There's already debate, as we'll see, around how China could possibly getaround any new tariffs. But could they look to attack Mexico orSouth East Asia, for instance, the back.
Door to the US?Yes, definitely. In fact, we already see some of the topChinese TV makers like BYD are increasing their EV capacity in likeMexico, Thailand or even Indonesia. But the primary purpose of those newinvestment is still to capture the local demand, where there's a rising demanddriven by kind of new policies as well as the new models.And they're also hinted at some hinted at that they're going to use thoseoverseas production bases as an export hub to North America and as a market.But I think there's still a wait and see how the election pans out and whetherthe US administration will introduce new.
Tariffs on those China made EVs.SI I wonder when it comes to the overcapacity issue, what options arethere for Chinese automakers? Right.I guess I could start manufacturing offshore in the way the Japaneseautomakers did, but where do you see this, I guess, overcapacity issueconcluding? Yeah, I think the overcapacity issuewill just prolong in the next one or two years, at least in China.They're also resorted to a various kind of strength competition strategies likereducing their domestic prices to to capture more demand.But also overseas market is where they.
See of more growth opportunity.I think most of the Chinese automakers are still looking for like Europe andmany of the South Asian country where they can absorb those overthe excessive demand. But for us, I think given the tariff andother kind of unfair but favorable policy environment, there is still seeis will be a demo of a market, but there's potential but in the long run.So in this sort of environment of escalating or potentially escalatingtariffs and what are the broader implications for the decarbonisationtrajectory of road transport? I think increased tariff as well asother form of trade barrier, could be.
Detrimental to both the local buyers butalso to those governments climate targets.The reason is that in many of the major markets like Europe or the UnitedStates, a lack of affordable EVs is one of the reason that the EV sales arestalling in 2024. And Chinese automakers have a wideportfolio of affordable EVs. And more importantly, so whether it's aChinese brand, whether it's a Korean brand, they can really bring thecompetition into the local market and pressure the local incumbents to makebetter cars at an affordable price. So according to the long term outlook,we still see that the road transport of.
The world road transport sector is on apositive trajectory to reaching a zero emission fleet by 2050, but a still lowdown in 2024 and means that we have to speed up in the upcoming years.And if the governments don't really speed up the measures, they will likelymiss the 2050 target. That was at Bloomberg.And if analysts see me there in Shanghai and as President Biden prepares that newwave of tariffs. A US trade group is pushing for higherlevies on used Chinese cooking oil. Soybean crashes say a flood of used oilis weakening demand for US crop based ingredients that are used in renewablediesel and sustainable aviation fuel.
A group that represents the biggest USsoybean processors wants levies to be higher than the current 15.5% rate.And we'll have more ahead on DAYBREAK Australia.This is Bloomberg. We are seeing that the market has turnedand it's gathering great momentum and we are seeing basically the end to decadesof deflation and economics that places. That was the BlackRock head of AsiaPacific, Susan Chen, speaking exclusively to Bloomberg about Japanbecoming an attractive destination for global investors.And that certainly has been, of course, really predicating or underpinning thatbig runup we've seen in Japanese.
Equities, that optimism we're seeinghere. But this is the outlook ahead of Japancoming on line here. Producer prices data to note as well,pretty much coming in line with estimates.
