China Sends Powerful Message of Toughen For Yuan | Bloomberg: The China Present 3/25/2024

Well, half an hour away from the open inHong Kong, Shenzhen and Shanghai. We're watching the China show.I'm Harry Stroud, once in Sydney, and I'm Yvonne Man in Hong Kong.Our top stories this morning, investors looking ahead to a busy week of earningsand data, including the Fed's preferred inflation gauge.Today's Jan six in focus as the currency fell that four month low, Premier LiChow downplaying investor concerns about China's debt and property risks asofficials front run in positive economic news to support markets.For us, we track investor appetite and where the money is moving across assetclasses.

Speaking exclusively with Aberdeen CEOStephen Berg. All right.A quick look at the market action here right now.Certainly is coming off of a huge week when it comes to central bank action.And for the most part, it came out slightly more on the dovish side.You take what the Fed did. Obviously, what the SNB and what majorcentral banks are saying here about the eagerness to ease policy, and thatcertainly has left the dollar on a stronger footing here.The Bloomberg dollar index is some of the highest levels that we've seen in amonth or so, and really leaving.

Investors still wondering what this allmeans for risk assets in particular. But we're still talking about slightdownside when it comes to Asian equities.The Nikkei 2 to 5 still hover around those record highs, though.But the CSI 300, mind you, did snap out of five weeks of gains.So that winning streak coming to an end. In some ways.We'll see how sentiment plays out for the rest of the week.But certainly the renminbi very much in focus, which we'll talk about in alittle bit. We're not seeing a whole lot of movingacross bond markets, although you are.

Seeing the Aussie ten year down somefive basis points here. There's morning the yen still very muchin focus, one 5131 We're hearing from the top currency official there, Mr.Bond, talking about they have seen some speculative moves in the markets, sothey will take action if needed. So we're a little bit on interventionwatch here post BOJ and we're watching very closely what happens across Chinesemarkets may want earnings very much in focus without a bite to jumping quite abit in the air overnight with some reports in the Journal say that theycould be collaborating with Apple when it comes to air.Here's your set up for the China Open.

Here.Right now, we're flat when it comes to futures.231 we're back above 230 at least for your Chinese ten year yield and 727we're at four month lows. We talked about what it comes of Chinawatching very closely that fix, Heidi. Just a few minutes.Yeah. As you mentioned of on the renminbi fixis really key front and center today, particularly as we saw the yuan fallingthe most in more than two months. Ultimately, there's signs that, ofcourse, policymakers and authorities are slowly loosening their vice like grip onthe trading of the currency.

That sort of unleashed that slide thatwe saw and pulled down those Asian peers along the way as well.So after that, weaker than expected daily, it will be watching for thoselevels today as well. We're also watching the property sectoras well. When when when do we not watching theproperty sector, I should say, but some developments.We heard from Premier Retail calling for further optimization of propertypolicies, systematic planning, a relative supportive policy is not agreat deal of detail there, but it may stir some hope that more support one wayor another will be on the way from.

Policymakers for this deeply beleagueredsector there. We're also getting a few bits of newsflow when it comes to the Chinese developer.One could cut to junk territory by future.We'll be watching for this sort of wash up from that and country garden, a unitof country garden getting a partner for one of its projects in Gwangju.And finally, tech tensions, of course, we're watching Baidu and also a reportthat China is shunning availability of foreign ships and service fromgovernment PC. So some of the kind of thematics thatwe're watching and of course it is a.

Busy week when it comes to earnings aswell in this part of the world. Some of the big ones, Petro Chinafinancials as well, China Merchants Bank, China Resources, land and some ofthe big energy players as well of on the sort of the big banks will be very muchin focus. Oil prices of course.What does this mean? We did see those Sinopec earnings comethrough here as well. So we're talking a lot more about theeconomy. And we did hear from Chinese Premier LiChang downplaying investor concerns of challenges facing the economy.He says Beijing is stepping up policy.

Support to spur growth.Let's get to our Asia economy and government editor Jill Dees is joiningus now. What was the message coming through forthe premier? Yeah, I think ultimately what he'strying to say is that these major concerns that are facing the economy,obviously, you know, local debt risks is one, the property sector, massive one.Yes, those are still challenges, but the things aren't really as bad as itotherwise seems. He spent a lot of the speech trying tosay, look, you know, things are improving in China.You know, we've recently gotten some.

Economic data that was incrediblypositive on industrial output figures, some more improvement on investment aswell. So he's really spotlighting some ofthose. And then he also spent his speech reallytalking about some of the measures that China is taking to try to shore up otherparts of the economy, consumption growth in particular.He acknowledged that consumer price growth is still pretty weak.You know, we saw CPI improve in February, although you're still in thislarger trend of, you know, some deflation problems.But he pointed to some efforts to, for.

Example, have businesses and consumerstrade in old goods for new ones. Other measures that he's kind of takingto try to stimulate economic growth there and consumption in particular.So we did see, I think, overall this message, trying to reassure foreigninvestors that, yes, things are improving in China this yearand certainly the messaging has been key.Roger, we've kind of seen this shift in the way that communications are beinghandled. We're hearing a lot of the good newsearlier. Yes, Heidi, I think that this Lee Changspeech is certainly.

Example of that.But we've seen several instances over the past couple of months where a lot ofofficials have actually kind of front run some data ahead of an officialrelease, kind of getting ahead of the narrative there.We just saw this last week with the vice finance minister talking about somebudget figures before they officially came out spotlighting some of thosepositive numbers. We also saw this earlier this month atthe National People's Congress, where you saw the commerce minister announcesome export figures that were incredibly positive for China, kind of, again,front running that idea of things are.

Maybe not as bad as they that theyotherwise may seem, or at least, again, trying to set that narrative tone.It does kind of seem like it's this idea that we're shifting the narrative towardmore positive figures in China. All right, Jill, thank you.Is there something about what we heard over the weekend as well as we talkabout the renminbi, still very much front and center here today after thecurrency slipped to a four month low last week.And that followed the people's decision on Friday to lower the daily referencerate by the most since early February. Let's bring in tonya chen, professorrates reporter.

Joining us now.If you told me that we'd be above, well above 7020, I would have thought that'sa bit swift, right? Mean what's really driving this rightnow? Yeah.I mean last week PBOC he let the UN fixing it kind of weakened the weakestlevel since February which one would think maybe it's not a huge move butthey've been holding this currency at 7.2 for the past, I want to say the lastsix months, maybe like late last year. And it kind of just like sent the entireAsian currency market in a tailwind, right?I mean, Aussie sold off Thailand, sold.

Off, Korean one sold off.And so right now today, you know, it's a day after we are quite uncertain aboutwhat the officials are trying to do here.Are they trying to test the market to see if maybe they're going to allow aslight depreciation measures to kind of slowly set in?Obviously, depreciation pressure has been building.Right? So we saw with the yen, it didn't movethat much stronger after the BOJ. But then also there's considerationsaround whether or not the ECB and the Bank of England will cut before the Fed.And there's also now talks of maybe.

Concerns around tariffs.There's talks of potentially lowering the reserve ratio requirement.Again, all of these things are going to be difficult for the yuan.Tanya, we're also watching the UN and of course we're expecting potentially morevolatility. But ironically, it's the prospects oflow volatility and rangebound trading that makes it potentially a highlightfor carry trade. Yeah, that's exactly what is kind offunny about this timing of everything, right?We saw that the yen, the Taiwan dollar, the yuan were kind of key carry tradefunders for the past couple of months.

And suddenly you see this big move outof the yuan. And it's kind of creating volatilityacross all of the markets, even in Taiwan as well.So we're going to have to wait and see and kind of see what the officials aregoing to do around what we saw in the yuan in the last session.But some analysts are saying that they're definitely going to startbringing back these currency management tools that they've done in the past,tightening liquidity offshore. We didn't see last Friday state banksselling dollars to kind of manage the currency depreciation.So we're going to be looking out for.

What state banks are going to be doingthis week. All right, Tanya, thank you.Tony Chan on that week again, which really has kind of led to that selloffthat we saw in stocks on Friday as well. We'll see if that plays out here todayas well. That fix coming through any minute now.Still ahead, her job security is quickly vanishing when it comes to Hong Kong'sformerly high flying bankers, as IPOs slug to their lowest level in more thantwo decades. And before that, I'm going to get themacro economic outlook from Aberdeen. The CEO, Stephen Bird, joining usexclusively next to talk about where.

Investors are moving their money.We are counting down to the open of trading in Shanghai, Shenzhen and HongKong. This is the China show.Good morning. You're watching the China show.I'll take a look at the week ahead that we're setting up.And on Monday, we'll be getting us new home sales, of course, incremental datathat really adds to what the picture that the Fed is dealing with here andwill feed through to expectations in terms of where we're headed next.After that pretty dovish meeting that we had last week, Malaysia and SingaporeCPI also would be contributing to the.

Data docket here in Asia.On Tuesday, we'll be getting some more inflation numbers out of Japan and thattime it will be the Japan services. Again, we're focusing on every piece ofincremental inflation data to feed through to what the next move could beafter finally getting that lift off last week heading into the middle of theweek, we'll be watching inflation numbers on the consumer side here out ofAustralia. We had, of course, some prettysurprisingly robust I'll be a lot of question marks over the labor marketdata we got into the end of last week. So that will help kind of clear up thepicture on a macro basis.

We're also getting China industrialprofits and headed into the end of the week.Could be see, that'll be a key one for the Fed from the US.We're also getting GDP numbers and rounding out the week inflation on theconsumer side from Tokyo as well as IP numbers out of South Korea of then.Yeah certainly a lot on the backdrop here and really let's talk a little moreabout asset management overall facing a range of headwinds, including highinterest rate environment. You have geopolitical tensions and ournext guest can give us an insight on the challenges and opportunities developingright now.

Let's bring in Stephen Bird, CEO ofAberdeen, joining us exclusively here in Hong Kong, where he's visiting forclient meetings as part of his North Asia tour.Stephen, it's great to have you here in the region.We're just coming off a big week of central banks.It seems like at least in the developed world, they're eager to to cut rates.Now on the flip side, in this part of the world, we have a China economythat's still waiting for more signs of green shoots.I mean, how do you look at client demand here right now?Was that telling you about the.

Investment landscape?Yeah, well, that's really why I'm here meeting institutional investors, banks,insurers and pensions. And we're seeing a world where there ispolicy divergence. You mentioned that we had the US dovishcalls out of the US, Canada, Europe, UK, but we saw the Bank of Japan tighten forthe first time in 17 years last week. So we we are we're actually emphasizingincome strategies for our clients for the reasons that rates are coming off.There's a divergence between growth and there's high geopolitical risk in theworld. So we think that having we are wellpositioned across dividend paying.

Equities, across fixed income and alsoacross alternative investing. And in this type of environment, therereally is a role for active investing. I mean, how do you how do you look atjust overall a Fed is looking at maybe a higher neutral rate?I mean, given just the resilience in the economy and all that, I mean, is thatmeeting lower future returns when it comes to fixed income?Well, we do think that last week JPL's narrative was very interesting becausehe really signaled that they understood more about what was going on in the jobsmarket. So their jobs were one.Immigration has been one and a half.

Million of one and a half million abovetrend line. And he really pointed at that as thereason why there was such a strong labor market, because it may have been unusualto say that we've got higher growth, inflation came in a bit hotter and andunemployment was down. But we are still confident that we cancut rates in the summer. And that was really because we believethat they understand what's going on in the labour market.No, no, that should augur well for the equities.So we know that when we're in a second longest pause, right?No, since in the post-war period the.

Last time was 0607, this pause betweenthe last rate hike and the cut is actually normally good for investing.Okay. No, it's very interesting.Sitting here in Asia is the after the first cut, emerging markets in Asia tendto have outperformance versus the US from an equity standpoint.So it's sort of almost darkest before the dawn.But we do think that as rates come off that we will see a significant bid for.Yeah, hold on a second. See, we do have that to be fixed.Just crossing the Bloomberg as you're seeing, there is a big move when itcomes to dollar China here I've ever.

Dropped here to 709 96.That is the strongest fix there versus estimates this year.So after what we saw on Friday, it seems like we're seeing the central bank comethrough with a little bit more when it comes to support for the currency here.So that's why you're seeing a bit of a reversal here.But we're still hovering around that 725 level for dollar China, which is stillthat four month low. It brings me to the China Discussion.then, Stephen, of how clients are looking at China now is that is theremore allocation towards or less this year?Well, right now, I mean, I think we're.

Reaching peak pessimism.You can think of investing in China right now as a contrarian bet.Valuations are incredibly compelling.Interestingly, our holdings in China, we've been investing in China for along, long time. Last year,earnings growth in our holdings was 23% earnings growth in our holdings.This year we're forecasting to be at 21%.So so we do think that I thought the Kristalina Georgieva comments yesterdaywere true, that there's a there's a fork in the road and we are seeing leaders bemoved more quickly.

And I think that's a positive thing.Released data more quickly. That's a positive thing.Still the second largest economy in the world.I think the urbanization focus, which was which came from Premier Liyesterday, that, you know, half the population still don't live in cities.Every 1% increase is 14 million people. So we think that the fundamentaldrivers, the real issue is confidence. Yeah.And confidence is has got to come back and and domestic confidence has got tocome back. You look at China today has the highestsavings rate in the world, 46%.

Household savings in the mid-thirtiesand that reflects a lack of confidence people spend when they're confident.So we think that we our clients are looking at that and we're looking atthat. It's very important that confidencecomes back when people may feel feel more confident.With the future, you will get the demand which Premier Li is really wanting tostoke. Stephen, is confidence an issue for yourbusiness as well? Because we see costs remainingstubbornly high. The share price has fallen by about athird and assets under management.

Continue to underperform both on a threeand five year basis compared to previous years.How much longer do you need to turn the ship around?So great question, Heidi. Of course, you've got to look at it inthe context of asset management, active asset management, the industry.You'll see that if you actually compare the trends within the industry, thenthey are more favorable. We just reported that we were able tohold our earnings within 5% of the prior year.However, that was because of the investments that we had made in the UKsavings and wealth businesses.

So platforms and wealth businesses thatgenerated very strong profitability last year.That diversification helped to model within our active asset managementbusiness, which is our core business. We've refocused and specialist equities,fixed income and alternatives and improving performance and a moreefficient business. I made a commitment last year that wewould reduce expenses by 75 million. We exceeded that to over 100 million,and we are in the process of transforming the business still to be amore efficient investor that delivers good outcomes for clients.I would ask the question, if you're not.

Transforming an active asset managementtoday, if you're not reallocating capital into higher growth areas andinto it as such at higher margin areas such as wealth, then you're going tohave a lot of difficulty in the future. We are three and a half years in.The board told me it would take five. I was hoping it would take less.But the reality is that we are we are highly energised and mobilised and ourteam today is executing well and I'm sure that we'll deliver on ourcommitments for 2024. In the meantime, though, the unfortunatereality is that a lot of investors have headed for the exits.You've ruled out a break up of the.

Business, but a lot of these investorsare saying the only clear investment case would be something seismic to that.Is that something that you might reconsider or something else that's moredramatic? So I think I think a breakup is a reallylazy answer. The day after the breakup, you stillhave all of these colleagues. You still have $500 billion invested.You still have all the end investors, pensioners who expect to be able toretire with with a healthy pension. So I don't think that, you know, abreakup, you know, you describe as an event, we don't consider a breakup to bea sensible thing to do at all.

We think the business is veryundervalued. Part of the challenge has been that weare a large emerging markets investor. The emerging markets haveunderperformed. Global institutional investors are 7%underweight in emerging markets. Now that will turn.I highlight that when rates come off and the interest rates in the developedworld come off in the developed world, central banks are signaling, you know,dovish intent probably at June being the first cut.Historically in tends to outperform after that happens.So so so goes in.

Aberdeen is influenced by that.So our team on the ground here are very focused on serving clients well andensuring that when those rotations and allocations occur, we are ready toreceive them. What does that mean then, if there's noup? What other scenarios are you consideringthere to bring your profit margins where they need to be?Is it more job cuts? Yeah.So we actually we announced the voluntary transformation programme,which did include job cuts. We're not alone in doing that.Many of our asset management businesses.

Are focused on margin.The group has got three businesses Active Asset Management Advisor and thepersonal business, the latter two being UK investing businesses and thosebusinesses you can think of as delivering higher earnings andsustainably good margins. The key, the isolated challenge isgetting your investments business back to positive flows, and that's abouthaving the right products that perform well and that can operate with anacceptable margin. The programme that we announced, £150million of transformation, we are confident will restore that marginwithin the asset management business.

And then you have a modern moderninvesting company and we think a diversified modern investing companythat is content and distribution is a better business than a month later.And the investor still doesn't don't seem convinced.I'm looking at David Herro from Harris Associates, obviously just said thatthey sold a stake in last year because it lacked the confidence, themanagement, to repair the business. Do you think you have the propermanagement in place to see this through? Well, we absolutely do.Harris We're a very small investor in Aberdeen, erm major investors who we arevery close to understand the.

Transformation programme.We have renewed the entire top team. We had a new CEO, Peter Brunner, who'scoming up to his one year anniversary and has made very good progress.We got a new CFO just four months ago, Jason Windsor, and he has made a verygood start. So we've renewed the whole team.These types of transformations, particularly in the face of techdisruption, which is what's going on with active asset management.They do take time, but we believe that the hard work of building a sustainablebusiness is better than the lazy answer. Thank you so much.Stephen Bear, CEO of Aberdeen, are.

Joining us here in Hong Kong,particularly when it comes to this fix. Of course, certainly we're seeing quitea bit of move when it comes to the renminbi here this morning.So the fixing was a stronger level than what we saw from Friday.And one of the strongest we've seen actually versus consensus for 2024.So that certainly is helping at least support the renminbi and put a floor onthis after the swift sort of weakness that we've seen and depreciation of therenminbi here. We're still trading around 725 here thismorning, Heidi. So does that impact the equity market?That certainly is what we where we saw.

The wobbles on Friday.We'll see if that continues on this Monday morning.Yeah, and it very interesting to be talking about a bit of volatility aroundthe yuan, fixing the yuan trade. Right.Take a look at some of the stocks by watching so far in the very early partas we get into kind of pre trading there ahead of the open May Taiwan will be oneto watch That already indicated quite a bit higher there.The fourth quarter results based cost optimization has been in focus as well,better than expected revenue and net income for the fourth quarter withmanagement really doubling down on those.

Cost cuts.We're also watching Sinopec as well. Some of these will be sort of earningsrelated news flow as well.The 2023 profit falling 13% on the back of oil prices and refining, though,hitting a record. We'll be watching some of those othernames Petro China and try to match and spank when it comes to earnings.Also watching Baidu and some of these Apple suppliers, Apple in talks to useBaidu's in Chinese iPhones according to a report of onyeah I that be interesting right how does the U.S.look at a potential collaboration.

Between Baidu and Apple when it comes toI made my raise over what I Jp morgan is certainly one to watch in that streetwrap here today. We've got the Open coming up next.This is Bloomberg. All right.Welcome back. You're watching the China show.So it was that six. That is what we're fixated on in someways here. So it is back below 710 again, that'shelping to support the renminbi here this morning, Heidi.So it's a question whether they were just kind of testing the market abouthow, you know, this weakness and the.

Like here.Maybe they've kind of flipped the switch a little bit more here today in terms offavoring the currency and supporting it in some ways was certainly maybe thatcould help this equity market here on this Monday morning.Yeah. What does it mean for this emerging yuancarry trade as a base of stability and rangebound trading?Right. If we start to get more volatility, butvolatility certainly always expected. But it comes to these markets where, ofcourse, heavy into earnings season. Still a lot to come, though, in terms ofwhat we're expecting today.

Petros trying to try to Merchants Bankand a couple of the energy names, just some of the ones who are watching as wehead into the open. And this is of course probably will bereally keenly in focus as we had some pretty sort of vague, I guess, remarksfrom Premier Li Town talking about the optimization of supportive policies forthe property sector. Not a great deal of detail, butcertainly perhaps that will be enough to give it a little bit more confidencethat some support will be on the way. We had him really downplaying investorconcerns about some of these economic challenges, but taking a look at whatwe're watching in the days trading.

Session May 21, that was indicated to bequite active ahead of the open there. We are seeing watching that as it comesonline is on the back of some robust and better than expected earnings there.We're also watching some of the tech needs, the Apple suppliers in particularon the news that Apple is in talks to use Baidu's AI technology in ChineseiPhones and other devices within the Chinese market, according to reporting.And that would be a huge win for the domestic search leader, which has beencoming under some pressure in its business.Baidu is up by 1.3% at the moment. And watching for a little bit ofdownside, though, when it comes to some.

Of those Apple suppliers.But of course, we know that the Apple story in China has its own idiosyncraticweaknesses at the moment, Ivan. Yeah, certainly it's there's still a lotup in the air. This may not even be, you know,something that's confirmed as of yet. So certainly we'll see if that all playsout when it comes to that Apple story. But Meituan certainly having a great dayhere today. For more, let's bring in our asiaequities reporter, Charlotte Yang. Talk us through what we're seeing acrossthese markets here right now. We've got to focus on the currency andof course, earnings, earnings, earnings.

So today is going to be a big earningsday because, you know, we're starting with May, Taiwan.We're seeing that revenue as well as net income beating estimates.And investors are applauding the management's efforts to cost cuttingcosts. But then we're also seeing themwitnessing the energy names, starting with China.Shenhua, this cold producer that's seeing some weakness in also wasSinopec, which is one of your investment favorite earlier this year because oftheir dividend efforts. And then for the bottom market, we'realso watching where they to go today.

Because Friday's session we saw theweakness in the currencies were actually ahead when they're hurting massivesentiment. So yeah.What are the other sectors that you're watching today is eBay's.Yeah. Yeah.So we're also watching if there will be any negative rate across from Tesla,which is the the leaders of selling electric vehicles in China.They have is reporting that they're cutting their production for causingChina. And as we know, that the sector has beensurrounded with passwords and the.

Weakness in growth.What the leaders being doing could be seen as a negative, you know, catalystfor the other players in the sector. There's going to be a lot earnings onthe property side, country garden, the likes and the big, big names.Is that going to be a big headwind for investors here?I mean, the How country garden as well as Vanco, where we're put later thisweek is definitely keeping everybody's watching because, you know, even thoughwe have this one policy support news coming out over the weekend, it's notit's very clear to investor the authorities want to support the sector.But what hasn't really turned is, you.

Know, we're still seeing property pricesfalling. And more and more of those earningsresults, I think, will show investors how it's actually hurting the developersif from the weaker ones, because the relative stronger ones like that.Cool. All right, Charlotte thank you.Charlotte yang. There are asia equities reporter and asshe mentioned, of course, it's we're in the thick of earnings here right nowwhen it comes to Hong kong as well as in greater china.US, you know, earnings are going to start next week as well.So where we are right now.

So if you take a look at where they are,the pulse check of earnings and where we're looking at here, we'll look atmovers first, guys. Meituan is up close to 8% here rightnow. So certainly that earnings beat isreally lifting this market. Apple suppliers, though, are definitelyon the back foot. You take a look at you see tech andsunny Optical. But this is where we are when it comesto the surprises that we've seen. Right.22% of MSCI China has actually reported earnings that most companies and mostcompanies actually missing on their.

Estimates as well.So certainly that dictates what this whole sentiment is like.This is obviously the the last sort of, I guess, missing piece of what has beena pretty stellar equity rally barring last week as well.So this is what we're looking at. Right.So country Gardner Wonka, shall I mention Logan among the developers here,we're watching Kaisa as well. Sino Ocean So of all the big names thatyou of obviously have heard of and has been part of the news flow is certainlygoing be reporting. Let's get more now from our breakingnews earnings specialist Rachel Yo.

Let's start with the property side ofthings. What are we expecting in terms of theearnings, this side of it? Yeah, we are seeing two major troubledeveloper China, China, Vanke and Country Guardian reporting this week.So both of them have been facing a sales plunges and then losses as well.So for China, Vanke even though they did secure a loan to avoid a default, theproperty woes is still shaking investors confidence as well because investorshave earlier regarded the firm to be one of the most stable players in the in theChinese property sector as well. And if a country got in, we are going tosee losses deepen as well.

So the cash crunch is also not lookingvery good with falling sales as well. Yeah.And the earlier they also receive so a Hong Kong court order know receive acreditors petition to one other company as well.So the earnings outlook for both of these major developers, they are notlooking good for the Chinese property sector.So their earnings will sort of give a give a look on how you know that theproperty sector is at the moment. And of course, you know, a lot of thesebanks are do have exposure to this property market are also going bereporting what's expected there.

Yeah.So earnings for major China banks like ICBC, you see Agricultural Bank of Chinalater this week. That will also give you an idea on wherethe property sector is heading as well. So earlier on, many of these majorChinese banks, they maintain their benchmark lending rates and then alsoloans also grew the slowest on record in February, despite earlier easing of thefiscal and monetary steps. So so we are seeing, you know, realestate troubles, you know, hitting these Chinese banks as well.So in terms of individual earnings wise, ICBC, they may see stagnant growth withsuch troubles and also because of the.

Stagnant economy and then banks, Bank ofChina and also Agricultural Bank of China, for example, they will also bereporting low single digit growth as well.Yeah. What should be reporting earnings iswhat are at a time when the carmaker is really discounting more aggressivelythan ever. Yes.So we are going to see big idea doing relatively well for this year.So why didn't we see more focus on its market share and volume?As we can see the competition in the Chinese EV sector heating up reallywell.

And then but their profit is stillexpected to remain solid because of the exports and also the premium branding aswell. All right, Rachel, thank you.Rachel Jo, they're setting us up for what to expect in terms of earnings herethis week are breaking news earnings specialists.There are some corporate stories that we're tracking for you.This fourth quarter revenue rose to almost $7 billion at some 55% from ayear earlier. It shows a gradual recovery for theChinese ride hailing leader. I have a planned Hong Kong listing thisyear.

Didi has been losing market share since2021 when regulators launched an investigation into its data handling andforced it to delist in New York. Sinopec's annual profit declined 13% asoil prices fell and Chinese refiners posted a record year for processing andimports. China's largest fuel processor reported$8 billion in net income for last year. That's compared with $72 billion in2022. Global oil prices were 17% lower in2023, reducing the value of Sinopec's drilling output.Apple has reportedly discussed using Baidu's generative AI in iPhones andother devices within China.

That's according to the Wall StreetJournal. Apple sought a local partner becauseregulators there must vet all AI models. Bloomberg earlier reported that Appleheld discussions with Alphabet and open AI about using their artificialintelligence software on the iPhones. Apple can tap multiple partners as itdoes with search in its web browser. Apple CEO Tim Cook has revealed plans toinvest further in supply chain stores and research in China.State media says he made the promise in a meeting with the Commerce.Mr. WANG When Tao Cook also spoke at theannual China Development Forum, saying I.

Will be an essential tool for helpingbusinesses reduce their carbon footprints.We would not be able to recover the level of material that we do today forrecycling without air. I mean, it's already fundamental in ourcalculation, and I think it provides an enormous tool in the tool kit for everycompany that's wishing to to be carbon neutral or to lower their emissions bysubstantial amount. All right.We got plenty more ahead, of course. Take a look at these markets here.Right now. We're still seeing our Hang Seng inpositive territory onshore, though.

We're seeing a little bit of negative onthis Monday morning. But certainly what's been hot, it's beenthe weather. It was the hottest day yesterday orhottest march we've seen in 140 years at one point hitting, what was it, 31 and ahalf Celsius for those of you and the other part of the world, that Fahrenheit88.7. That's hot.That's hot. Plenty more to come.This is when we're. Oh.Take a look at how warfarin, which is about ten or so minutes into the startof trading in the cash session, you see.

The space has 300 sitting, a little bitof downside, about 2/10 of 1% that we were watching to see if there was goingto be much support for property stocks, in particular after some intended to becomforting remarks, I'm sure, from primarily telling about more supportivepolicies and optimization of property policies.But we are seeing actually real estate lease trading in Shanghai down by about6/10 of 1% at this point. We're seeing a few green shoots when itcomes to energy names, half a percent higher.We have numbers out of Sinopec and more out of PetroChina expected as earningsseason rolls on as well.

Hang Seng just keeping its head abovewater there. We're seeing tech stocks unchanged.We've been watching some of the Apple supplies in particular on this reportthat potentially the company is in talks to use Baidu's generative intelligencein its iPhones and other devices within the Chinese market.Hasn't been confirmed, but would be a pretty big deal for Baidu if that turnsout to come to fruition. We're also watching Dollar China tradingat the moment at seven spot 19. We have really seen a little bit of anedging higher for the yuan the February sitting that stronger than expectedfixing this morning so managing to kind.

Of shrug off some of Friday's prettysignificant losses there. We have had, of course, of on somejitters on these expectations of the the loosening or the experimentation of moreflexibility there. Yeah, certainly is.And but at least we're seeing a stronger renminbi here today.719 for your own sure rate, which is at leaststabilizing the currency here after that fixture this morning.Let's talk a bit more about some of the news that we were overheard over theweekend here with. Russia has held a national day ofmourning for 137 people killed in.

Friday's attack on a moscow concerthall. Russian officials have continued tosuggest the Ukrainian role in the massacre even after the Islamic Stateclaimed responsibility. Let's bring in our Bloomberg reporterBruce Einhorn with the latest on this story here right now.So, Yvonne, the latest is, according to Russian media, two of the four suspectshave admitted their guilt over the weekend.President Putin spoke over the weekend and he didn't directly accuse Ukraine.He did say that the suspects had been prepared to flee to Ukraine.He said that there had been a window.

Prepared for them.The Ukrainians, for their part, have denied any involvement in this and havesaid that this was a false flag operation on the part of Russia.President Zelensky made a statement like that, as well as the foreign ministerfrom Ukraine. Andthe other thing, of course, is that the United States had said earlier thismonth had shared information with the Russians about a possible attack.The US embassy had even issued a warning on March 7th that an attack was possiblefrom extremists. At the timethe Russians ignored this.

President Putin just a few days ago haddismissed that as essentially propaganda from the Americans and the fact thatPresident Putin still seems to be blaming Ukraine or at least hinting atthat. What does it tell us about his trueintentions of where this war is headed next?Well, we do know that there was a big barrage of Russian missilesattacking Ukraine over the weekend, one of the largest of the war.The Russians do have a sense opportunity in Ukraine because of the inability ofUkraine to get ammunition from the Americans that's been held up inCongress.

Just recently, the Kremlin has startedusing the word war to refer to this. Up until now, it's been a specialmilitary operation. Now, President Putin's spokesman hasused the word war. So that could be an indication thatthere's a change in the way that they're approaching this.There may be a change in the way they're trying to get more support in from fromthe Russian population to the war. How all this ties into the fallout fromthis terrorist attack. We still have to seeby how much more mobilization could we seefrom Russia.

And potentially this is kind of beingused in terms of the attack that we saw over the weekend and the connectionthat's being made? Or is there a sense thatreally Moscow is waiting to see what happens after November and how muchsupport Ukraine can continue to get from allies as well?You do make a good point about about the November election in the United States.Former President Trump, the likely Republican nominee, hasin the past have not expressed a lot of support for Ukraine,the Republicans in Congress. Aligned with former President Trump havehelped to hold up additional aid to.

Ukraine.So there is a possibility that Putin is looking ahead to that and a possiblemajor shift in the balance in terms of what sort of support that the Ukrainiansare going to be getting from the Americans.As far as any, you know, what we should make of statements from from Russia atthis point. Chancellor of the Exchequer from theU.K., Jeremy Hunt, did say over the weekend he accused Russia of what hecalled a smokescreen of propaganda related to the attack, the terroristattack. He also said we have very littleconfidence in anything the Russian.

Government says.Bloomberg's Bruce Einhorn, though, with the latest some of the othergeopolitical stories that we're tracking this hour.And the Philippine military says a Filipino civilian boat was severelydamaged on Saturday with some crew members injured when two China CoastGuard ships fired water cannons as as a Chinese ships deliberately targeted thevessel, which was on its way to resupply a Filipino troop stationed at anoutpost. It is the latest in a series ofconfrontations between Chinese and Philippine boats in the disputedwaterway.

US Vice President Kamala Harris hasdeclined to rule out consequences for Israel if it invades the crowdedsouthern Gaza city of Rafah. She told ABC News Washington has beenclear in multiple conversations with Israel that a major military operationin the city would be a huge mistake. But Prime Minister Benjamin Netanyahuhas rejected US warnings about attacking Rafah, where more than 1 millionPalestinians have sought shelter. Well, coming up next, how job securityis quickly vanishing for Hong Kong's formerly high flying bankers.This IPO slumped to their lowest level in more than two decades.This is Bloomberg.

So our big take here this morning isreally focusing on some of these once high flying Hong Kong bankers, nowbecoming a bit of a lost generation here.Of course, we're talking the ones that have Chinese expertise that were highlysought after in Hong Kong maybe about five years ago now.We're talking about job security that's vanishing as IPOs or slumping to theirlowest since 2001. For more on our big take here today,let's bring in Lulu Chen, who leads our Asia investing for Bloomberg News.She joins us now. I mean, what's was sentiment like?Sounds quite dire.

The key concern here for these bankersis whether the downturn that we're seeing is that a cyclical change or ismore structural. And the concern is that this booming erathat we've Chinese companies with global capital markets in Hong Kong and NewYork, that formed a $6 trillion trail, would that be coming to an end?And is this the end of the good days? Not everyone is convinced.Some think that this is only a brief downturn that could come back.But as we're seeing the layoffs come, come on, come into the market.And recruiters say that there are hundreds of bankers now on the searchfirm up for jobs.

People are really concerned about theirshort term job security. And it seemed like, you know, anyonethat spoke Chinese had that expertise. You know, this whole kind ofidea of having tighter ties with the mainland was always going to be abenefit. What what do you think is change themost shocking to us, the psychology of a lot of these people, the financiersworking in this industry, is that they thought this was the norm.And as we've seen and the changes in the past few years with the tighteningscrutiny of data security and also the shrinking of the IPO pipeline right nowand the scrutiny of Washington against.

Chinese companies and capital, whetherthat model is now broken. Well, especially when you take a look athow much financial services makes up the broader economy.Right. About a quarter of economic growthrelies on it. Is this kind of going to be part of thenew normal as we continue to see this structural slowdown?You know, not not all people are convinced that this is the new normal.And some are saying the world financial market participants need to do istoughen up and wait for the next boom. There's a lot of factors at play here,especially from the policy and.

Geopolitical aspect of things.So lots of things up in the air right now that people need to wait for and getmore clarity, especially running into the election year.All right. Thank you, Lou Chen there who leads ourAsia investing team. And make sure to check out that big takehere today on, of course, the prospects here for Hong Kong bankers.You can turn in to that story and more in your newsletter, of course, Hong Kongedition that comes out every Thursday as well.You can head over there to Bloomberg.com to check it out.And a big take for that big story as.

Well Heidi.And Ivan, of course, we can get that insider's guide to money and the peopleshaking up the finance hub in our new Hong Kong edition newsletter.That's out every Thursday. You can sign up via bloomberg.com slashnewsletters. Let's get you back to the markets interms of how some of the key stocks up we're watching trending at the moment.May one is obviously a big one, as we saw really that jump after the fourthquarter beat the price target, seeing a number of upgrades as well.7.2% is how they're doing at the moment. We have really seen better than expectedrevenue for income as well for the.

Fourth quarter.And a lot of the management efforts when it comes to cost cutting beinghighlighted by analysts who have been quite impressed as well.And we saw a number of brokers raising their target, also watching some of thecarmakers be one day ahead of earnings softer by 1.2%.There's a lot of aggressive discounting going on.But more broadly, the EV sector may be reacting to this story of Tesla trimmingtheir output in China as well as we see that slowdown in their EV sales growththere. Ron.Yeah, and this is what your dashboard is.

Looking like when it comes to some ofthe major benchmarks here. The Hang Seng is pretty much flat.Where are you racing? Some of the initial gains here, MSCIChina and the CSI 300 are still in negative territory.Is tech is on offer. And we're watching very closely whatgoes on. As you talked about the tech space, thatrebound, though, and the renminbi not really doing too much to really helpwith sentiment here this morning, but we're still talking about 724 for China.Your Asia benchmarks are looking like this year.Right now, we're still slightly on the.

Back foot here on this Monday morning.We're down about a third of 1%. U.S.futures flat. This is Bloomberg. Welcome back to the China Show, the Hourtwo. And we're looking at the CSI 300 doingthis year. Right now, we're just slightly on theback foot on this Monday morning, just a half hour into the session here rightnow. Not a whole lot going on.Obviously, we're waiting for a lot of earnings to play out in Hong Kong aswell as in Greater China here this week.

The property developers are certainlyone the banks. So quite interesting in terms of whatcould actually dictate sentiment throughout the week here.Also, this rebound in the renminbi, just given the fix that we saw here, maybethat helps clear out some of the concerns about whether the PBOC was on abit of a weakening bias when it comes to the renminbi here today.But we'll see, Heidi. That's correct.Yeah. A pretty significant move when it comesto trading in the yuan. And does that kind of kill off thevolatility that we're seeing going into.

The end of last week, but of course,affects markets more broadly? Pretty interesting, as we always havealso had that very robust message of warning from Japan's currency chief aswell of all. And take a look at how all of this isplaying into broader markets is often mentioned.We're still in the thick of earnings in China, but of course, we're also lookingto some of the macro data. And for the Fed and for some of theseother central banks is a big week of inflation.Key inflation readings from the US, also in Australia, across Europe as well willbe really critical in terms of.

Tracking the the trajectory for some ofthese central banks and the way forward. And in fact we've got Japan services PMIon Tuesday. So potentially also adding a little bitmore color around expectations to really where does the BOJ go from here afterfinally attaining liftoff. We're rounding out the week with TokyoCPI as well. Always a good leading indicator towatch. Let's bring out our strategist, MariNicola, who's with us. And Maria would say that the sort of thekey focus of this Monday morning has really been trading across face markets.Right.

Let's kick it off with what we're seeingwith the yen. We're seeing certainly a lot morereaction from policymakers in Japan, though.Oh, yeah. And that's the key message that we getnot only from Japanese policymakers but also from the policymakers in in China,is that affects is not a one way bet and they don't want to see much greaterweakness in their currencies from here or greater speculation.So obviously, we'll see a lot of two way volatility in the meantime.But it's hard to see these currencies really break free when you've got twoconflicting and opposing forces coming.

Through.So fundamentals remain remain on the side of of currency weakness.While the policymakers are suggesting that they don't want the currencyweakness to go further or that they want a two way bet, but that internalstruggle is going to continue. But fundamentals are likely to dominate,which will likely keep the currency weaknesscontinue. And when it comes to the renminbi, Imean, do you think the PBOC was a bit concerned about this yen weakness insome ways? I mean, what do you make of the fixingtoday?.

Yeah, the fixing today was a clearindication that they were not happy with the market reaction on Friday.And Friday's market reaction was that once they pushed the CNY fixing above710, the markets just took it and took an and said and it included furtherweakness on the on the CNY. But the key thing here, especially forthe CNY, is that it's not that it's this lone soldier that's just weakening onits own. It's more or less moving with broaddollar strength and where we're seeing the other Asian currencies.In addition, if you look at the way the CNY is moving, let's say, against itstrade weighted partners, it's actually.

Been appreciating since the start of theyear. So it should temper some concerns aboutexcessive weakness in the currency in that sense.But at the end of the day, it's that dollar CNY that keeps being verywatched, watched very closely by traders, and that is going to be keeppolicymakers on edge. Yeah, particularly as we get the Fed'score preferred gauge of inflation this week, as well as well as inflationreadings out of a number of other economies, including Japan.But the direction for the dollar, have we kind of seen the path being set,particularly against the yen, which, you.

Know, even as we saw thatfor other currencies, a one way bet for the dollar, the yen kind of stilltravelling in its own direction after the break.Yeah, it looks like the dollar trajectory is still is still positiveand we're likely to still see dollar strength going forward.If you look at the PC numbers this week, the there's likely to be more suggestionthat CPI and inflation is not going away any time soon and so that it's not goingto find reassurance or reassure policy makers that they are ready to cut justyet. So the dollar's likely to see anotherlike higher and see some support on the.

Back of that, especially since the PC enumbers we already know that they'll likely be hotter than expected with bothCPI and API numbers, we're on the stronger side, so the dollar trajectorylooks still quite positive and we're likely to still see that dollar momentumgoing through. Mary Thank you.Mary Nikola there, my strategist joining us out of Singapore.Coming up on the China show, signs of fresh support may be on the way for thecountry's troubled property sector, with a premier calling for systematic andsupportive policies. But first, a drive you as builder takingaim at some major Chinese biotech and.

Genomics companies will be speaking withBernstein on the outlook for the pharma sector next.This is Bloomberg. A draft U.S.law is casting a cloud over some Chinese pharma firms.The Bio Secure Act aims to block certain foreign biotech companies from accessingU.S. federal contracts on national securitygrounds. And among them is Uzi Aptaker, which USlawmakers accused of being a play affiliated company.They manufacture medical products and supply essential ingredients to some ofthe world's top pharmaceutical.

Companies.And with the uptick generated 65% of its 2023 sales from the United States.And that is now our source of revenue. Yvonne, that is under threat.Yeah, we've been trying to talk a little more and maybe do a deeper dive intothis health care space just given the headlines that we've seen.Right. And even though the bill hasn't beenpassed. Take a look at the weight it has on thefirm here in terms of these geopolitical risks.The Hong Kong listed stock has fluctuated since the US Senate Committeeadvanced the act earlier this month and.

Shares of its sister company, Wu ShiBiologics, is also under pressure. Both stocks have lost.Over half have been cut a basically in half this year, making them the worstperformers on the Hang Seng index and in an open letter.We heard it here from Russia after calling the US legislation, quote,misguided and says a firm does not pose a national security risk to any country.It isn't the only Chinese company in the crosshairs, though.For more, let's bring in our senior medical reporter, Michelle Cortez,joining us along with Rebecca Liang. She's a senior research analyst forChina, farmer and biotech at Bernstein.

Michelle, I'll start with you.Thanks so much for joining us, by the way.First of all, are they a threat to U.S. national security?Well, I mean, what a great question. And of course, that comes that's thecrux of the entire issue, right? There's two things actually that arehappening here. There is the potential threat to U.S.security, national security. Some of the companies that have beenmentioned in this bill do do things like provide genomic research, genomic work,and theoretically would hold information about American's health.Then there's also U.S.

App Tech, which does an awful lot of themanufacturing research and development, that kind of thing.But it's not just the individual health of Americans.There's also the economic benefit. China has really focused onbiotechnology as an industry of the future.They want to have a key role. The US completely leads the world inthis space, does not want to give an inch.So not only do you have the national security, the personal integrity, butthere's also an overlay of economics here.Yeah.

Rebecca, maybe chime in beyond justmaybe punishing U.S. in this biotech bill.I mean, what do you think the U.S. is trying to achieve?Well, I think, Yvonne, there are two different things.We look at the targeted companies. BGI is in genomics genomic sequencingand she is in the space of Cdmo. They provide capacity for biologics.So I think the the threat, the the alleged threat on national security ismore about the genomic data, the sensitive personal information.But I think for Cdmo, it's quite different.What the politicians in the US have.

Stated is that they would like to keepthe US leadership in the capacity and supply of global of the biologicsglobally, and they see companies like AB Tech and Biologics as an emerging threatto that. And interestingly, you know, althoughboth companies are ruchi there, they have essentially the same owners, RuchiBiologics, have made an earlier move to expand their capacities in the US.They now have 10% of their capacity in the US, in in Massachusetts.And by 2024, 2026, that number is going to further go up to something like 40%.So, you know, Ruchi Biologics in that sense, it's actually having more stakesor having having done more localization.

In the US versus ADTECH, which is moretargeted now for not having any capacity in us at all.So, Rebecca, what do you think is going to be the ultimate impact here?Do you think that that will she attack and biologics, are they going to have todivest if it does go through? Where do you think it's going to fallout in the end? I think the the ultimate impact dependsnot only on whether the bill passes. We don't know.Right. It also depends on if the bill passes,how it's going to be resolved. The result, in my opinion, is I think ahard landing scenario is quite unlikely.

Because the US also has a lot of stakes.We know that public companies like Lilly have stated that they really dependheavily on the contrast with which biologics.It would be hard for them to switch their supply chain entirely in a in avery short time frame. So I think now you also see when itcomes to the. Bill itself.There is grandfather clause that exam some of the earlier contracts.There's also a grace period up to two years for it to materialize.You know, not to mention there are also waivers that you can make.So all in all, I think it would be quite.

Against the national interests of the USas well to go for a complete hard landing, given that these companies domanufacture life threatening lifesaving medicines.Right. Do you think the stock reaction we'veseen has been quite dramatic? Has that priced in already the worstcase scenario then? Yeah, I mean, you know, markets arereally, I think, driven by emotions. Now it's both stocks are down over 50%year to date. Our colleagues at Bernstein, who docover biologics saying that, you know, it's already beyond the worst casescenario.

But I think it's you know, emotions areeverywhere and people seem to markets trying to figure out what is exactly theworst case. And I think what the capital market is,you know, is deciding at this point is decoupled from the actual businesssense, which is going back to how, you know, a hard landing case is not in thebest interest for both China and the US. I mean, it goes with the timing.We are the bill is going to pass for one thing.How long do think it's going to take and what are the pros and cons around thetiming, Michel? Right.Well, I mean, whether or not the bill is.

Going to pass, this is one of thosethings where we're trying to read the tea leaves on American politics rightnow. I mean, it's a nightmare.I don't know. I'm glad I'm not covering that all thetime, because what they're doing over there is crazy.This is one of the very few areas where there is bipartisan agreement.Everybody wants to come down on China. They definitely don't want to give aninch. So there is, you know, collaborationthat we haven't seen across any other industry.That being said, Republicans do not want.

To give Joe Biden any type of a wincoming into this election year. So perhaps there's going to be somepushback there. We don't know.It's definitely going to take a couple of years.Yvonne, the other thing we haven't talked about.Although Rebecca did didn't touch on it, there is huge ramifications for theglobal pharmaceutical supply chain. That means if you're taking obesitymedicines, if you're taking Lilly's obesity medicines and we do have a hardlanding, it's tough to get them now. It could be impossible to get them goingforward.

It is not possible to overestimate or toover overstate how important this industry is to the world.Rebecca, maybe you can add to that. I mean, if this law goes into effect,who is it going to impact the most? Is is it some of the big companies orwe're talking some of the small ones? Is are we likely to feel it from theconsumer as well? Right.So as of now, the named entities are just just genomic PGI and watching techattack. There's no public information to supportthis, but it's widely accepted that they do have a big order from Eli Lilly.And this goes to one show saying, you.

Know, that it has been launched a coupleof months ago and Lilly has repeatedly said that they are going to face supplydifficulties, although they are building their own large expansion.It's not going to be in time for the next two years.And so I think for sure, GAAP ones, the shortage would continue.Not to mention that there are more serious medicine like, you know, inoncology and other life threatening cases than just obesity meds.So, Rebecca, it's not even just though she app tech because the bill issupposed to be looking at a whole host of other companies, right?They're going to ask the government to.

Weigh in on different things and thatcould be weighing on the China biotech health care sector as well.Last year wasn't great with the crackdown on corruption.Now this year we're having this geopolitical fight.What do you think about the broader health care industry in China and Asiangeneral? Right.So the bill definitely in terms of name entities, it's limited, but we know thatthere are blanket statements that could affect the whole space of China biotechand cdmo. I think that we see thatstocks of politics in China in the way.

That have been dragged down also by thiswhole Wu Xi story in terms of headwinds.There's you know, times are tough for China biotechs.We know that the indices are down for some time.But what we're seeing now is some of the headwinds earlier.They're dissipating a bit. You know, for example, the overhang ofthe anti-corruption campaign that's been in effect since last year, we see thatthe result is limited in terms of the drug sales that's coming out in thethird quarter, it was only down 2% on the industry average.And on the fourth quarter, it's supposed.

To be even better.We also see the leading companies that can the poly.Survive this better than others in event that would switches in our coverage.They reported over 30% growth even in the second quarter of last year.Even amidst the campaign. So I think the headwinds are a bit gonecompared to before. Also, we see signs of recovery.Investment that goes into clinical research in the form of a number of newclinical trial starts. They have been in straight decline forthe past two years. But starting from the last year, we alsosee an uptick again.

So I think the fundamentals of theindustry still look very strong. In a way, the what's triggering thiswhole political drama is that China has indeed been advancing on the innovationtoward innovative drugs. A few years back when we started thecoverage, we saw that there was almost no real innovation in China.There was almost 0% drugs called first in class.These are the truly innovative ones. But today, that number has gone up toabout ten or 20% of the entire national pipeline.We saw hundreds of bankruptcies within the pharma space just last year.Are you expecting this consolidation in.

The industry to speed up in any way thisyear? Yeah, definitely.We saw the acceleration of bankruptcies of acceleration by about 30, 40% lastyear. I think that trend is going to continue.That's actually good for the industry because we know there are earlier that'sbeen quite a lot of oversupply in drugs that are more or less the same, youknow, the MeToo drugs. But I think now we're seeing that theone thing is the the funding drought that's still going on.It's bad news for the tail companies, but we see that the leading players,again, they're able to find other.

Creative ways of financing, for example.Last year we saw that the Outlicensing deals which involve these companiesselling the overseas rights of their innovative drugs to I mean, seapartners, the upfront payments on those deals have actually gone up so much thatthey have compensated for the lack of funding from the capital market.So I think the the you know, the leading players will find ways to get out ofthis. All right.It is certainly one of the according to Rebecca.Thank you so much, Rebecca Liang there, senior research analyst at China Pharmaand Biotech at Bernstein.

Also our thanks to our chief healthcarecorrespondent, Michelle Cortez. We got plenty more ahead.This is Bloomberg. Some of the war stories that we'retracking this hour. And Diddy's fourth quarter revenue roseto almost $7 billion, up 55% from a year earlier.It shows a gradual recovery for the Chinese ride hailing leader ahead of aplanned Hong Kong IPO this year. Didi had been losing market share since2021 when regulators launched an investigation into its data handling andforced it to delist in New York. Sinopec's annual profit declined 13% asoil prices fell and Chinese refiners.

Posted a record year for processing andimports. China's largest fuel processor reported$8 billion in net income for the last year.That compared with $72 billion in 2022. Global oil prices were 17% lower in2020, reducing the value of Sinopec's drilling output.Chinese Premier Li Chung. Yvonne had some interesting, althoughnot terribly specific, comments about the property sector.Yeah, further optimization of property policies to stimulate demand.That's what we heard. A sign that further support possiblycould be coming for the sector as well.

Let's get to our bonus.Bond is low. Reporter loretta cheng joining us now onwhat that means, what we heard from the premier.The overall message from town is quite strong.You know, he talk about all these measures.Of course, that's building upon what the central government has already beendoing for the property sector. There are some highlights.For instance, you talk about this systematic planning of support forproperty sector, especially on the demand side.So that could mean more loosening of.

Home buying policy that we've alreadybeen seen since last year. So are are is Beijing going to lose allthe home buying restrictions for all the major cities?That could be a question that people are asking.And on the other hand, you talk he talks about this mixed model in the Chinaproperty sector of a government led housing and also commercial housing.While in the past decade, you're mostly seeing this very market led, marketdriven market in China. So that's going to change.And that's a key policy for Beijing. And I mean, we tried abig inaugural event.

Sorry.Go ahead, Heidi. No, but I was going to say, you know,we're not so patiently waiting. If you're a property developer, writeone copy and cut to junk for its investment grade credit.So this is going to be even more difficult when it comes to sales andfinancing. Yeah, definitely.I think in the offshore market of Vancouver, eventually be in the junkname and I think the third rate cut is just in the horizon is only a matter oftime for for S&P, which still has a big rating for a venue to cut that it willjust be a losing more financing channel.

For banking in the offshore capitalmarkets. So the only channel that's reallyreliable for the company would be in the onshore, you know, what kind of bankloans it can receive from these lenders. With that call of help from the centralgovernment, are they actually going to extend those credit lines for thecompany? That will be the key.All right. I think you were right there on what toexpect. Of course, we're still waiting.Country garden bankers said to report earnings this week as well.Could be a big one there when it comes.

To the results.You take a look when it comes to the market check here.Right now, we're slow going, but we're still seeing this Hang Seng at leastcatch a little bit more momentum around this rally here.We're up about about half of 1% of the Hang Seng.When you watch these property developers, in particular China, Wankel,that we mentioned, Country Garden, those are the big ones this week to watch longfor is also up with earnings ahead of that.We're up some 4% for that stock right now.So it's a mixed picture across these.

Developers here on, of course, thatmessage that we heard from the premier in terms of other ones are watching outfor. It's it's it's a major one.There you go. That continues to be an outperformerhere on the back of those results talking about the beat their costoptimization in focus. The AIC are watching the sector veryclosely just given we've been hearing from Tesla trimming their output of carsin China, just given the slowdown we're seeing in this industry down cycle.And we're watching very closely what's going on in terms of movers here today,it's a mixed bag, but energy seems to be.

At least still on beat here today wasmaterials. Real estate is the big laggard.This is Bloomberg. It is.11:29 a.m.. In tokyo.Japanese markets are going on a break in just a minute.We are seeing perhaps a little bit of profit taking given we didn't even seethe bank of japan and the moves in the yen really derailing any of this recordbreaking surge that we've seen in Japanese equities.It is a downside a day, as I said, the Nikkei 2 to 5 and the top picks postingdownside of about 8/10 of 1% there.

But the topics, of course, we're downabout 3% from the all time record high in December 1989.So not too far from those record highs. But of course, some of this profittaking, perhaps not unexpected given that we see that relative strength indexfor both the topics and the Nikkei greater than 70.So suggesting that these two markets are still in overbought territory.Olympic opinion columnist Mohamed El-Erian says it's still too early forinvestors to pivot away from US markets, given the country's exceptional economy.El-Erian also told us what he's seeing in the Fed's latest rate decision andChair Powell comments.

Initially, we had bottom up drivers,secular themes that were very powerful, but that rally was narrowing.Now suddenly you have a very powerful top down factor that has come inenabling central banks that clearly are going to do what they want to doregardless of selective data focus. It's about the same.We can these two things coming together are really powerful.Were you surprised by what came out of the news conference with ChairmanPowell? I was surprised by the extent to whichhe stressed patience in two ways. Patience with inflation running higher.He basically dismissed the fact that.

We've had some pretty surprising, hotterthan expected inflation prints. And then the second patience of thebalance sheet saying, you know what? We may get there slower than we wouldhave otherwise, which means that monetary policy is going to be moreexpansionary. That would have been otherwise.So I was struck that on on the balance sheet, he took such a big step forwardwhen he could have waited till the next meeting to do that.So we keep wondering what shoe is going to drop.Right. We keep thinking everyone's bullish andthen more bullish and then bullish on.

Top of bull.And you have to wonder, okay, well, when does something break?And we were talking on Wednesday. It's the inflation expectations that atsome point this is going to be a higher, more inflationary environment with a Fedthat is less willing to fight it. And yet I'm not seeing it and break evenrates. I'm not seeing it in other places thatyou normally would. Why do you think that is?You're seeing it in gold. Look at the reaction of gold, recordhighs on gold. I think what you're having is and you'veall said it really well the of the.

Everything rally.So it's going everywhere. What's interesting now is this notion ofmarket enthusiasm, not economic enthusiasm.There's a big difference. Market enthusiasm, enthusiasm couldspread to the rest of world. And that is quite a consequentialstatement. If that occurs, then the US relativestrength is going to be somewhat diminished.I think it's actually too early to pivot.I do think that, to use your phrase, US exceptionalism, economic exceptionalismisn't going to expand to the rest of the.

World.The US is really exceptional when it comes to its economy.The others aren't doing what the US is doing in terms of investing in thefuture drivers of growth. They don't have the entrepreneurialsociety that we have. They don't have the mobility of factorsof production that we have. The US is truly exceptional among otheradvanced economies. So do you think it's rational for peopleto stay in the United States and to keep adding more, even if valuations are atsuch high levels relative to the rest of the world, to continue to kind of bet onthis ship and not expect it to expand?.

So I've been asked that question everysingle year for the last five years, and every single year the US premium hasincreased and every single year I said, Don't say the US too early.I see some argument for diversifying away from the US purely on thisenthusiasm and on relative valuation, but I don't see it as strong.It is not being supported by fundamentals.People have to realize this. This is more betting on the momentum andI understand that the momentum factor is very strong right now.That was Mohamed El-Erian there from Bloomberg opinion columnist, speaking,of course, to our colleagues.

A surveillance.And you take a look when it comes to the market set up here after what was a hugeweek when it comes to central banks, what we heard from the Fed and the restof the world, and it was more leaning towards a dovish side.Here you are still seeing risk off is a little bit on offer here today.We're not seeing a whole lot of conviction.Obviously, we still have that PC inflation gauge coming out of the end ofthis week. For more clues on what the Fed could doand will they actually deliver on those three cuts this year?Certainly is still where the optimism.

Lies that maybe that cut could come asearly as June. Let's bring in Martin Hennessy, theirAsia investment director at St James's Place Wealth Management here in HongKong with us. What do we learn last last week, do youthink? And what does this mean for this wholeeverything rally that Mohamed had just talked about?Well, I think one key fact is being missed a lot by the central bankers,politicians and a lot of major contributors, and that's their reallylarge deficit and debt. We have talked about this quite sometime ago already, but it's been.

Accelerating.And so you have to take into account not just US GDP, but the amount of deficitsthat's being put in there to generate that.But maybe if we cut to the chase briefly on investing, one thing Al-Arian justdid mention, though, that he's increasingly open.If I understood that right to some degree at least of globaldiversification, and that's certainly something we are quite keen on.You know, if you're looking back a little bit further in history from theyear 2000 to 2010, S&P was really flat. Emerging markets were flying overAmendment 2010.

There were huge amount of emergingmarket seminars, Brazil and what not. Now people have almost forgotten Brazileven exists. I think there are some greatopportunities in some of the less popular economies at really attractiveprices. So don't give up on those and staydiversified would say. I'm just saying in terms of what the Fedhighlighted. Right.Is this the central bank that you think is a bit more sensitive to maybe now,the more downside risks to the data versus the upside risk?And what does that have actually.

Implications for the dollar?Gold, for example? Well, I think it's really hard to say.I would say the key the key bit just coming to what's missed and I think it'smissed by the majority of investors. When you look at the last IMF projectionof the US budget deficit, they say, well, the next five years is six and ahalf to 8%. Now, when the eurozone was formed, whichI was very keen to watch at the time, as obvious as I'm German, there was thislimit of 3%. No country could have a budget deficitabove 3% or risk being on an unsustainable path.And, you know, I don't think we learned.

A lot from from the comments of thosecentral bankers last week. But I want to give you a quote I've donethere before, but I want to give you that quote again for a way.I think you can learn a lot more from Alan Greenspan because he is not tiedanymore by this politics. So he said before the inflation uptickin 2020, just before I can give you the quote, he said, Unless we bring thoseextraordinary budget deficits under control.History tells us there's going to be a much more rapid rate of price increases.And we have seen. So ultimately, I think they are nottalking about it.

They're just about, you know, economy,labor numbers. They're not talking about the deficit.And I think the inflationary pressures might still be here to stay much longerand surprise on the upside. So if as an investor, one can tolerate areasonable degree of volatility, stay, you know, there's a reasonable amount ofyour assets in inflation for things that are more volatile than casing deposits,but less at risk of being eaten up by negative real interest rates.When it comes to Japan, we're seeing it really the markets shrugging off thelift off shrugging off the moves that we've seen.Oh, expectations for the yen.

Does that mean this record breakingrally continues? Well, valuations have risen somewhatnow. The yen is still cheap.So for international investors who haven't hedged, it hasn't gone up allthat much. But let me just briefly say it's not thecheapest in the world anymore. So that makes us maybe look again atChina, where actually I think there are quite a lot of positive there that'sbeing overlooked. And maybe one thing briefly beforecoming back on Japan, on on China, a lot of people seem to be really disappointedthere wasn't any bazooka being launched.

To support consumer market in the shortterm. But as was said on the weekend in theglobal conference by the Premier, they are focused more on upgrading themanufacturing, upgrading technology and in the longer term, they think thatbrings the competitive advantage. But both for China and Japan, I thinkthere are good opportunities in equities.Equities also have one more inflation proof assets.And I think, you know, for those who are worried about currencies plus the yenand also there was a bit of a wobble, you know, last Friday on the renminbi orjust say that, well, we would prefer in.

Those kind of markets to look atequities rather than fixed interest, because if you have companies with anedge in the market, they can just ride on inflation and increase prices in linewith the rising input costs. So we've seen preferential flows headtowards the likes of India and Japan away from China.You think it's really important to have China in a diversified portfolio andwhere. But yes, absolutely.You won't believe how many investors have been asking us to dump all my Chinaexposure and move it all to India, because obviously and I say that's thebetter story and a better investment.

Place.Of course, India has some some good factors going, some good macroeconomics, good demographics, which is a big challenge in China and some otherthings. But, you know, the valuation gap isclose to records in terms of the discount of China to India.So don't give up, maintain a diversified balance, don't go overboard on any onemarket and the economy. However, popular story often meansvaluations and might be quite high already.Now within China, one thing that I think is really, really important to be awareof is that when you look at those.

Companies that have a dual listing inthe market and the share market in Hong Kong, on average they trade at a 33%discount right now in the Hong Kong market.So that's probably the first bet or the first toss there to look at for realgood bargains in the Chinese market. They don't necessarily have to be valuestocks could be growth at reasonable price as well.Oh, yeah. I mean, we talk about whether tech is avalue player or what our growth playing out.But you mention about the tech space. I mean, everyone's been focused on EV isnew energy or are you focusing on those.

Those sectors?Are you looking elsewhere? Oh yeah.There are definitely good opportunities there.In fact, you know, some value managers, if you have been checking some, they areactually looking at Chinese tech, you know, which is like the first couple ofyears in history because some of them are actually trading interesting atreasonable prices. Everybody looks for air in the UnitedStates, but you have some companies that directly or indirectly benefit in Asiafrom this or other high growth areas, trading at very reasonable prices.And the way and speed with which China.

Has been upgrading manufacturing isreally quite enormous. In 2022, there's 290,000 industrialrobots installed, which is partly to address the demographics challenge.Now that's 54 times the amount of India robots installed there and about seventimes the amount of us. So just don't count them out as yet.All right, Look at the automation space there.All right, Martin, got to leave it there.Thank you. Martin Hennessy, Asia investmentdirector at St James's Place Wealth Management, joining us here in HongKong.

And of course, you can follow majorthemes and all the day's trading on our markets Live blog that is on theBloomberg I am live. Go and get a market rundown in just oneclick. There's commentary.There's analysis from our team of expert editors so you can find out what'saffecting your investments right now. This is Bloomberg. All right, let's talk Bitcoin.Why not? Right.Given what we saw, a little bit of weakness.Well, at least you could say a bit of.

Weakness there when it comes to in termsof ETF trading. Turnover seems to be cooling and reallyfalling close to 10% from the all time highs that were reached just a few weeksago. And this is really just seen as one ofthe largest retreats this year. And that's if we start to see appetitemoderating for some of these spot Bitcoin ETFs to more or less bring inour Bloomberg Intelligence ETF analyst Rebecca Shen.So have we reached I would say goodbye to the best of the best of Bitcoin.Mean what's next for these ETFs now? I think there's still hope for them,especially for the US one.

So what a lot of people may not realizeis in the US the spot Bitcoin has only been around for two months and it's hitphenomenal records. On average it trades $100 billion innotional turnover. They've reached globally 70 billion interms of spot bitcoin at 3053 billion in assets under management.And in terms of flow, 12 billion. So by all accounts the most successfulETF launch ever and I think this exceeded everyone's expectation.And one of the things we're seeing is that in the US, all of the demand we'reseeing is purely organic retail demand is people enquiring what happens in theUS for the ETF to be sold through the.

Advisor and distribution channel, youneed to wait 90 days. So come April, we could see that demandgo even further because now people can start selling their products and startsoliciting it. So in the US, the advisory business isroughly a $1 trillion market and their estimate is even if you put 1% of thatinto Bitcoin virtual assets, you know, that demand could increase a lot.And so I think that there's still there's still room for Bitcoin to go upand some estimate that it could reach as high as 100,000 or even 150,000.Yeah. I mean, as you say, it's only been twomonths, right?.

What insights are you getting on top ofthis Hong Kong spot Bitcoin ETF? Are we likely to see one soon?If so, when? So in terms of spot Bitcoin ETF in HongKong, the FSC actually approved it in December and so there was a potentialraise that Hong Kong may have beaten the U.S.in terms of spot bitcoin, but we could see one as early as May in Hong Kong.And so the person that has filed for this is Harvest Asset Management.They're first to file, but in Hong Kong there's actually already $135 millionworth of Bitcoin and Ethereum futures based ETF by CSP and Samsung.And so I think spot Bitcoin could come.

As early as May.But I think one of the challenge the Hong Kong market faces is that if it'sas successful as the US in terms of notional trade, like in the US spot,Bitcoin has $53 billion in Hong Kong, the entire ETF market is only roughly at50 billion. And so if Hong Kong were to replicatethe success of the US, you know, I don't think the current infrastructure wouldbe set up for it. And one of the challenge is that the SChas said of the custodians needs to be Hong Kong based.So the only one set up currently is hash key and also and so I think we reallyneed the big players like Citi and HSBC.

To come on board to take spot Bitcoinbefore we can really see a big rise in it.But I think that if you know, one, three, five years later, we could seeHong Kong being the hub of Asia for spot Bitcoin ETF.When it comes to the halving, are we expecting that to really have an impactor is that a case where the pricing has already been taken into account?I think the having is definitely going to impact the pricing of Bitcoin and thereason why is that there's currently only 21 million Bitcoin in circulationand so come April of that 1 million that's left, there's only going to be500,000 that can be mined.

And what a lot of people may not realiseis of these 21 million, roughly 25% of those are lost and or will not be found.And so the ETF only accounts for roughly 4% of the Bitcoin assets that can bemined at the moment. And so with the demand increasing andthe supply going down, we expect that the price to continue to go up.And so that's why I think April is going to be a very important month for Bitcoinspecifically because when you have the having so you have a reduction in supplynow. But then the other thing is you have inthe US where spot Bitcoin is now going to be available for sale to the mass andso advisors are going to start selling.

That.So I could see an increase in demand based on that.And the thing is most of the holdings of Bitcoin ETF is or Bitcoin as a whole is60% individual in retails. And so I think retail investors couldsee the price going up and maybe at 100,000 or even higher, they could seethat as a point to liquidate and cash in on their bitcoin.And so I think that with the increased demand in the US coming after the spot,Bitcoin has been listed for 90 days as well as the organic growth.So for instance, if Hong Kong gets a spot Bitcoin as well, the demand is onlygoing to increase because now retail.

Investors can access bitcoin via an ETFand so they feel that it may be a more secure way.And so those holding Bitcoin may realize that the price has gone high enough forthem to be willing to sell. So I think it will be a very interestingmonth as the Bitcoin is halved and as the US is able to add these two retailplatforms. Bloomberg intelligence analyst Rebeccain there. Well, coming up, why a job ad for asupermarket in China is generating buzz about ageism on Weibo.That's next on the China brief. This is Bloomberg.

You're watching the China show.Take a look at some of the political stories that we're following.And Russia has held a national day of mourning for 137 people killed inFriday's attack on Moscow's concert hall.People across the country gathered in memory of the victims amid heightenedsecurity at major airports and railway stations.Russian officials are continuing to suggest a Ukrainian role in themassacre, even after the so-called Islamic State claimed responsibility forthe attack. Ukraine says Russian forces launched anaerial barrage on Sunday, including a.

Missile that briefly crossed into Polishairspace while Kiev's forces struck two Russian shifts off the annexed Crimeapeninsula. Ukraine's Air force command says it shotdown 18 of 29 missiles and most of 28 drones launched by Russia.Poland says it notified NATO allies about a Russian missile that enteredPolish airspace for about 39 seconds. The Philippine military says a Filipinocivilian boat was severely damaged on Saturday with some crew members injuredwhen two China Coast Guard ships fired water cannons.It says the Chinese ships deliberately targeted the vessel, which was on itsway to resupply Filipino troops.

Stationed at an outpost.It is the latest in a series of confrontations between Chinese andPhilippine boats in the disputed waterway.Let's get now to our China break for a look at the stories making headlines innewspapers and online. A commentary in the Economic Daily saysChina should use fiscal funds more efficiently.That's how some local governments continue to face notable fundingshortages. The Daily says that governments shoulduse their investments to guide more private capital into sectors that arekey to China's economic development.

Yep, certainly a little bit more signsof what this means for fiscal policy. And while it's quite interesting,there's a job ads that's been circling around online at a supermarket in Chinathat's generating a lot of buzz here right now.So that's because it comes at the age requirement between 18 to 30 years old,and that's lower than 35, which is sometimes the unofficial cutoff age forpotential employers. It also comes as, of course, as Chinagrapples with slowing economic growth. There's an aging population, youthunemployment, which we talked about as well, Heidi, time and time again.All right.

What does this mean?Right. At least one user on way was as they'reabove the age of 35. And there are three issues in jobhunting right now, while others know that the so-called lucky ones will haveto nail down everything between 20 to 30, including getting a job, gettingmarried, and having a child. Yeah, I'm not a big fan of age limitswhen it comes to looking for jobs, Heidi, This goes to show I mean, I don'tknow, we we should just stay at Bloomberg for some time.This is just this is giving me anxiety about how much stations are piling on ina country where we know the demographics.

Are not in favor of.Right. People having less kids in Chinadespite, you know, all of the sort of policy support to try and convince themotherwise to build the population. But like this is the second ranked poston Weibo at the moment, 74 million views, over 8000 comments.And it's interesting when you talk about this happens in the context of youthunemployment. We know that last summer youthunemployment numbers were hitting record highs.So I don't know is is putting a tight range when it comes to specifications.And I guess one way to widen that a.

Little bit more, right?Yeah, just it's 535 is fine, right? Even even higher.Just open up the possibilities. 50 is a new 40, 40 is a new 30 age.Yes. Number, etc..Of course cetera. Let's speaking of numbers, let's take alook at how markets are faring at the momentand, of course, what's in a number? Well, a lot when it comes to trading inthe yuan. Right.We've seen a bit of relief when it comes to the currency fixing that we got fromthe PBOC today.

But take a look at this chart shows theoffshore onshore yuan really seeing a blowout.So trading at the cheapest to CNY in just about over a year.But certainly the mechanism when it comes to dollar trading today reallyhearing loud and clear that paper or sea fixing message to cool your jets a bit.We've seen the young crossing dollar China across, as I should say for dollarChina below seven spot to again so this is the picture when it comes to tradingin the yuan that stronger fixing that we saw on Friday we had of course a bigmoves but certainly this is sending home the message if on that video sees notletting go of the yuan 20 effect.

Yeah that's that's giving a little bitof relief of course to some of these yuan traders out there maybe, though arebouncing off some of the lows here certainly.But we're still a little bit on the back foot.Not a whole lot of conviction in these markets on this Monday morning ahead ofsome key data and earnings this week as well.Global markets Asia is next. Stay with us.

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