China to Originate Selling Ultra-Long Debt This Week | Bloomberg: The China Indicate 5/13/2024

All right.We made it. It's Monday.Half an hour away from the opening bell here in Hong Kong, in Shanghai and inShenzhen. You're watching the China show.I'm David Inglés with Yvonne Man. Top stories this morning.Asian stocks open lower following data showing fresh signs of slack in China.We're talking about the credit data shrink.And in April, while industrial prices extending that long losing streak,President Biden is set to quadruple some tariffs on Chinese goods this week withelectric vehicles in the crosshairs.

Plus, a deep dive into China's airdevelopment as we kick off an earnings week featuring the country's bigInternet names. All right.Take a look. When it comes to the market sentimenthere, that's why we're pretty much flat when it comes to some of these Asianstocks. But we are mostly lower.If you take a look at some of these benchmarks, like in Japan and Australiahere today, it's kind of slow going in terms of news flow.But certainly we're still waiting on some of these signs that we're seeing inChina, whether it's that week, a big.

Miss on the credit data over theweekend. You still have CPI prices at leastinching up a little bit, but high prices still very much in contraction.And then the threat of maybe 100% tariffs on Chinese EVs certainly sendsus in a bit of a vulnerable position in terms of risk here this morning.U.S. futures are pretty much flat here rightnow. And of course, what really is going tobe dominant later on this week is going to be that U.S.CPI report that happens on Wednesday. Is it going to fuel this recent rallythat we've seen in bonds or actually.

Really to its glue?And that certainly is one thing we're watching very closely.We're pretty much slow going when it comes to the U.S.Treasury curve here this morning, 485 for U.S.two year yield. But we've seen such dramatic volatilityreally when it comes to these moves in the bond market of late.So this U.S. CPI print could be pretty, prettytelling as well. And we're watching very closely whatgoes on some of these commodity markets. Iron ore is down about 1% here thismorning.

The dollar is slightly on the firmerside. We're getting close to 156 for dollaryen as well. What we've been tracking when it comesto China. So obviously we talked about the weakerdata. You also have the threat of thesequadruple tariffs. Now, according to what we've beenhearing as well, that could be announced as early as I think believe tomorrow.So we'll see how that all plays out. But certainly what it comes from is 80hours on Friday, you saw, you know, one of the biggest drags was some of thoseChinese makers, the Neo's, the buy these.

The like that did overall drag as well.You take a look at how futures are set up here this morning for this Chinaopen. It looks like we could be dealing with,of course, a little bit of a back foot here.So we're down about 4/10 of 1% right now.So a weaker open that we're set for here today, 234 the ten year yield, there'sbeen a lot of talk about these ultra long bonds to get you an A but it aswell and seven 2362 for the currency here right now Dave yeah the meeting onthose ultra long bonds we understand will be taking place on Monday.So we're looking at about 140 billion to.

$2 worth of those bonds potentiallyhitting this market. All that being said, too, we're lookingat yields where they are and what pricing are.We're looking around That, of course, ebbs and solar as one is pointing out.Property stocks given in focus as well. Starting this week, of course, the stockbound for stock connect flows. So we'll be operating with one lap,well, one data point less, if you will, as far as the daily numbers areconcerned. Northbound, an imminent bullish crosson, well, two key benchmarks here as I and MSCI China, we're looking at a 50day over the 100 day moving or 200 day.

Moving average on that.And of course, we are in the window as well here for the credit numbers to comethrough. Right.Speaking of data, so inflation out and we can also credit numbers which camethrough, which arguably was the sort of bigger dip there.So left side of your screens, contraction in April, confluence offactors seasonal and also a cyclical weakness in government fundingactivities, consumer demand for mortgages on your right and alsocorporate bond issuance, where enough reading to offset the efforts to extendloans from the banks.

For more details on this, of course,let's bring in David Chu, our Bloomberg economists, to talk us through this,too. David, let's talk about this drop in 200billion. Is there anything beyond seasonaleffects at play here? Definitely.Usually, China registered slower growth in the credit in April because after thethe banks and other financial institutions rushing for extendingcredits in Q1, but this time it's doubling that it should be aseasonality. So what does this mean?Right.

I mean, are we starting to see wherecredit demand is basically slowing for households as well as corporations?And what what can policymakers do to fix this problem now?Well, I think the they have done a lot of things.For example, the U.S. injected a lot of liquidity via the freemarket in Q1 and also encouraged banks to extend their loans.And we also see some of the result. For example, if you look at the bankloans for this month, it was still okay. But on the other hand, there we see thatthe market oriented funding activities such as bond issuance and the shadowbanking activities.

So was a very weak.So this told us that it was not the central bank's problem now and the theball I think is on the government side because they need to do they need totake concrete actions to boost the confidence in the economy.Otherwise they cannot see the strong demand.Yeah, it's really demand. And that goes into the inflation reportwhich came out. And just your thoughts on the inflationreport. Yeah, well, overall.Thinking that data scientists would still soft or sluggish, because if youlook at the the CPI, you to think that.

Okay, the CPI picked up a bit but itit's just a small, very, very small pickup a tiny pickup and that we haveseen this several times over the past 12 months and that actually if for me thistells nothing and what I'm looking at is the the pie because the pie is a morerelating to to to to to industrial a profit so that if you have to have ahealthy economy you must have the the companies making money.Right. Otherwise it's not healthy.It's not sustainable. There's been a lot of headlines aboutChina having this meeting of of when they're going to sell these ultra longbonds as well.

So is that going to help in any way thecredit cycle maybe in May and June that we could see credit bounce back on theback of this issuance? Yes, definitely.If you look at the credit data or the the aggregate source of financing isdefinitely will help, because that is one of the components in the in thebasket. But on the other hand, yeah, we we wantto see that this can help the the investment side because the it is upfunding for government investment. But on the other hand the question comesto, you know, the very, very beginning question is whether it can help boostingthe confidence in the in the private.

Sector.Well, I'm a I'm not so sure about that because thethe government has taken such policies or such actions several times over thepast the two years. But yeah, it helps, but not so much.David Chu They're getting us warmed up here for the week out of BloombergEconomics there. Now to our other top story here.The Biden White House is set to significantly hike tariffs this week onsome Chinese goods, nearly quadrupling duties on Chinese made EVs.I'm just looking at my screens right now be white is indicated lower asymptote xpong.

Let's bring in Stephen Engle here in thedetails for us. What do we know about what we might seethis week? Steve Yeah, I mean, this is beentelegraphed, this has been a review that's been going on for two years atthe Biden administration. We've heard, you know, Janet Yellen anda lot of other US officials talk about the concerns about overcapacity andsubsidies that go into these new green tech industries from China that do haveovercapacity and potentially they could dump them in export markets.The United States, though, keep in mind it's such a small sliver, if if even anyChinese EVs in the US market, they had a.

Previously a tariff of about 27 and ahalf percent. But again, there wasn't a huge appetitefor Chinese EVs. Yes, the price is very interestingbecause, you know, a lot of these bids, or at least two or three of them areright around 10,000 or below US dollars per car, like the Seagull and theDolphin and the like. But they're not getting into the USmarket. So now the Biden administration backingup some of these claims about overcapacity in the concerns that hasbeen echoed, of course, by Ursula von der Leyen, the president of the EuropeanCommission.

They're raising it to 102.5%.It's an increase in the tariffs on EVs by the Biden administration of 272%.So that's nearly a quadrupling. We're also hearing from sources that,again, this has not been confirmed by the White House.As Yvonne said at the top of the show, that announcement could come as early asTuesday in the United States tomorrow, but there could be seeing a doubling oreven a tripling of other targeted industries of products like batteries,like solar cells. Steel and aluminum have already beentargeted. Whether there's going to be an increasethere.

But again, these products are notimported into the United States in great volumes.So it does smack of election, you know, November election positioning, becauseDonald Trump has been talking about even more tariffs.And it seems like China is basically in the crosshairs of either presidentialcampaign here right now. What does Donald Trump said?Well, he has mocked the Biden administration on many occasions.And again, he says, I would have done or he should have done this four years ago.And if he said he was in charge right now, he would probably slap a 200%tariff on Chinese EVs.

He also warned that China could use itsmanufacturing facilities in Mexico. And through the deal that he signed aspresident, the US Mexico-canada agreement, they could then export to theUnited States. Whether that would happen or not is yetto be seen. But again, he says 200% tariffs would behis choice. On top of the broad base across theboard 60% tariff that he is proposed for all Chinese goods.So this is a lot of it smacks a lot of electioneering going on here.We'll have to see how it plays out over the next six months.Yeah.

So do you think you're our chief NorthAsia correspondent? If they go there and we'll hear moreabout the state of U.S.? Relations and China's overcapacityissues from Treasury Secretary Janet Yellen herself should be speakingexclusively with Bloomberg TV and radio later on today.On Monday, with those screen times right in front of you right now, we'rechecking one stock in particular, TSMC. Just 11 minutes into the open.And there you go. You're seeing a pop in the shares of 2%or more. So April sales saw a jump of 60%.So it looks like this demand for chips.

Is still very strong here right now.They also got a bit of a cash dividend as well for Taiwan.Dollars is what was came out of that and that was Jp morgan is basically saying,yeah it might get a boost in the shares and the pace of these dividend hikessomewhat. Yeah.What a setup ahead of NVIDIA next week, May 23 mark your calendars.Their targets index up 7/10 of 1%, bucking the overall trend just ahead.And speaking of nice setup, as we go into this deep dive into A.I.and in SPAC in China as we kick off an earnings week featuring a lot of the bigtech names in China where we make.

Hopefully and also Andrew Scott's atthose times about 18 or so minutes from now.Ahead of that, though, we're talking all things fixed income.Inflation is, of course, coming out of the U.S.We're up two straight weeks on U.S. treasuries after being down in the lastbefore before that. So decide joins us next in a couple ofminutes. Counting down to the open of trade,Shanghai, Shenzhen and here in Hong Kong, the first session of the week.You're watching the China show. Good morning.

All right.We're just looking at some breaking news right now from the Bank of Japan.So they are going to be buying a smaller amount of bonds today than the prioroperation. So that's a quarter what we're hearing.You're starting to see some of these bond futures are falling after this bondoperation. And we are seeing a bit of movement inthe yen here right now. Yeah, we're stronger here.Underlying quite a big move. In fact, when you look at the intradaymoves are giving us, again, something to a reminding us of something that we needto be talking about as well.

They did flag, of course this that therewill be some flexibility for at least maintaining the ability to be flexiblearound where they think rates should be. Of course, in a ten year yield as wellgoing into well, we were just talking about the BOJ meeting, right.Jun's life, really, when you look at this.Okay. Now we're also getting the renminbi fixof the day just out. I believe we're talking about that nowas well. We're looking at and by the way, justcoming off a week where the dollar was actually on the way up reference rate.There we go, seven, 1030 against against.

The US dollar and really setting us upfor quite a busy week. Yeah, we get the US CPI print.That certainly is going to be the dominant sort of event risk here thisweek. And really does it solidify this rallythat we've seen across treasuries and the dramatic move as we've seen inyields? I think treasuries have gained basicallytwo weeks now. Let's bring in Sun Odyssey, executive VPand CIO at Franklin Templeton. Fixed income.We'll get to the BOJ in a minute, but it is really about the CPI this week.Are we likely to see this disinflation.

Trend finally come back in some way?Well, I think mechanically you're probably going to see a slight declinein year on year rates, but I think headline still going to look like 0.4ish. I think the market's probably right onthat core is still going to look like 0.3.It's not going to be enough importantly for the Fed to have that critical amountof disinflation trend back in place. I just don't see that.Outside of the US story, though, it seems for now, and changing the fluidconcept that most central banks are probably going to cope with in the nextsix months, is that an assumption that.

We can,we can confidently assume is going to happen?Well, as long as you're not talking about the beauty, of course.But yeah, so I'd say that's a different story.That is a different story. And I think that yes, the ECB, but we'reseeing divergence essentially. Right.And so we I think the ECB absolutely. If I look at the BOJ instead, I thinkthat market's probably coming around to the view that they're going to hike acouple of times this year over time. And I think the move we've seen thismorning, it's it's just like a little.

Bit of a flavour of what we're likely tosee more of going forward. That depreciation of the yen isbeginning to hurt Japanese consumers. Right.So you think that they probably have to hike in some ways to support thecurrency in some way? I think so.In a more to support domestic consumption, actually more than anythingelse, I think that is it is becoming an issue.So, I mean, it's a rock and a hard place, right?They don't want to go too far too soon. But on the other hand, that yen isbeginning to damage sentiment and.

Domestic consumption.Is it time to finally think about increasing duration in Japan?Well, generally speaking, generally, I would say well, and you can also includeJapan in there a little bit more broadly, I think we're getting closer tothe point rate at around four and a half.That's roughly in the middle. Near term, we are getting closer towhere the Fed, for example, starts getting closer, but we're not there yet.And I think it's going to be a pretty shallow cutting cycle because ultimatelyI think US treasuries are going to head higher just on the back of what's goingon with the fiscal deficit in the U.S.

When I say ultimately, I mean in acouple of years, we're going to go back. All right.And when you say shallow, what's the assumption there?How low do we go? I can look where that is around 5.25.I think that neutral Fed funds nominally, is it around 4 to 4.25.So, you know, that's around 125 basis points.But I mean, it sounds shocking, but prior to the global financial crisis,you can go all the way back to the 1950s and the average I mean, we survived withFed funds. Yeah.Substantially higher than what we've.

Gotten used to over the last 15 years.It's remarkable how much movement we've seen across, you know, the short end ofthe curve. And, you know, we've seen, what, 85basis points increase in the two year yield basically from February to April.What when you look back now, it was at more of a just a correction to you or wegoing back to the old underlying trends. No, no, I think that was a correction.At the start of the year, markets were pricing in as many as seven rate cuts.I mean, you do know this is the third year in a row that the first quartermarkets get really excited. And dare I say it, the Fed gets reallyexcited by the end of the previous year,.

That mission accomplished inflation'scoming down. And then in Q1comes the realization that, yes, maybe but nowhere near fast enough.And so I think it's just a correction to right now we for, you know, we couldarguably not see. Yields at these levels, a generationalopportunity, if you will, when you look at all in yields, for example, acrossthe board. And what I'm trying to get to is what ifyou are an income investor? Where do I look?What are the best opportunities right now if if it's all in yields, if it'sall in yields?.

Honestly, despite the spreads, I thinkhigh yield is actually quite attractive. At 7.83 or so, 7.8% all in it isattractive. But you've got to be very careful.You've got to pick your pockets. I'm not anticipating a massive slowdown,but the reality is many corporates did finance at lower rates and they aregoing to have to refinance at substantially higher rate.So you have to be careful to find your opportunities.But the reality is if I look at mortgages, you can get as much as 6%yield. These are very attractive levels tostart considering reentering fixed.

Income from from sidelines, from cash,from cash and ultra short over the next quarter two quarters.Absolutely. We start moving back into duration.Okay. What about when it comes to tips?It seems like that's come through. That's come back has come back in someways, too. And I think it probably will.I think I think inflation, inflation protection is here to stay for a whilelonger. There's no doubt about it.Yeah. What do you think of it?It's a market that's gone completely.

Opposite way as far as yields goglobally. The governments warned and said yieldsmight be too low, although when you look at inflation numbers in China, they'relittle to none. Where do you think value is right now inthe Zigbee market? So here we have to stop and just look.I think there is value there. We are going to see issuance.It is going to be quite attractive probably to look at that issuance.But against that you have to trade it off against the fact that you arelooking at a slightly muddied growth outlook.I don't think Q1 is likely to be.

Repeated.The property sector is still under some stress and it doesn't matter whathappens in November in terms of who comes in, we are going to see anescalation of trade tensions. So this there are all these trade offs,I'd say. And very quickly, what are theimplications of that if we do see tariffs come up just so very quickly?I'd just say that it's a non-issue. Keep in mind that 0.1% of China's marketin the U.S., I think lithium batteries are where potentially there is somesomething going on. But it's two ways.The US depends on China.

For 70% of its lithium batteries, solarpanels EVs almost a non-issue. The US is not a major market for China.It's nice to see you. Have a great week ahead.Thank you for gracing us with your presence in the studio.So now they say their executive V.P. and CEO of Franklin Templeton fixedincome, right. Going into the open 8 minutes away.Futures should be pointing down last we checked.There we go, 3/10 of 1% ahead of the Monday open, 7 minutes away.Happy money versus Bloomberg. Welcome back.Hang Seng index, initial pricing and.

Also some of the big tech plays as well.It's a busy week on earnings here. We'll talk more about this and previewjust I mean, pick your spot, really. Monday's big companies reporting thisweek in terms of the price action in the early goings fairly consistent withswing lower across most parts of the Asia Pacific.All of that said, this is simply mathematics here, which might mean MSCIChina and also CSI 300 on your screens might see the first Golden Cross goingback to early of last year. That's a bullish signal.Of course, if you do some trend following watches closely next few days.Yeah.

Whether they can actually catch up tothis Hong Kong rally we've seen of late certainly watching analyst actions foryou today. There's a bit when it comes to theproperty space here this morning China resources land ready to buy as Socialsecurity is Sinopec Asia's cut to neutral at CCB we got Costco shipping aswell as raised to a buy at Jefferies with a price target of just under 5here this morning in terms of stocks to watch.So we're watching everything from EVs, some of these solar stocks as well on,you know, what we've been hearing so far from multiple reports and our sources aswell, that we could be seeing 100%.

Tariffs when it comes to some of theseChinese EVs. There were some exclusions when it comesto some of these solar companies as well.But certainly that's one to watch. Yeah, you pair that with Zeekr, whichhad a great day in the U.S. on Friday.So there's a bit of a, I guess, dichotomy there.But you're looking very closely at these biotech stocks here today.So the U.S. introduced a revised version of a billaimed at blocking biotech companies from abroad.So there's an eight year grace period.

Now, and analysts are saying that'senough time for them to find a way out. The likes of Lucci bio on the Like.There we go. Those stocks are up.The open is next. This is Bloomberg. You're watching the China show.Happy Monday. We're kind of on the open air markets.There's a still a lot of things to really digest here this morning.So, yes, that big mess on the credit data, we're see a rare contraction whenit comes to our debt financing. The light that brings us back.If you go back to these old data sets,.

As bad as what we saw back in 2005.So there is that weak data to contend with.On the flip side, though, inflation's coming back a little bit in China aswell. So how are traders looking at this herethis morning? It seems like we're still in a slightlyon the back foot when it comes to the Hang Seng.Pre-market futures are still pointing lower here this morning, Dave.And yeah, we could be we'll see if we continue this rally in Hong Kong thisweek. Yes, I think the Hong Kong stalled lastweek as I guess outperformer compared to.

The S&P.It's the mainland markets which have started to relatively wake up later tothe game, not late, later to the game compared to ultra China.I think we're up four straight weeks. There we go.Bottom of your screens there. So week is coming through in Avon'spoint, just away from equity markets here.Very briefly, while you look at some of the gains we've seen A to B job market,of course, based on our reporting as well,ultra long bond yields, we understand, of course, they're meeting with some ofthe dealers right now to just gauge, of.

Course, 140 billion.That's U.S. dollars.So just to get a sense of the market on the back of the inflation print changedthe board's place, which came out over the weekend.CLP, bottom of your screen out with earnings today, curtain raiser for allthe big earnings coming through out of out of Hong Kong this week.The biggest of the biggest of the biggest Chinese tech companies arereported this week. More on that in a moment.Weakness coming through across those. And speaking of some of the weakness,Tencent there on your screens.

Okay.Geopolitics, we're talking things like EVs, for example and perhaps out of theWhite House this week said to credit ruble, the existing tariff regimeimposed on some of these names, for example, should be widely exposure onyour screens. 5% already the drag from Friday and someof the solar names as well here on your screen.So we'll continue to track what happens here.Plus, of course, some of the other stocks we which we followed earlier on,we wish you, for example, on the back of that new draft legislation, but I guesswe can talk about that later.

Stop tech, Move on.Why not? Yeah, but a relief for some of thesebiotech stocks. We'll check in a bit here.Of course, we talked about the tech earnings this week, Right.So as we I really what goes on when it comes to the likes of Tencent by too hasa published their earnings and then their air progress will be closelywatched as well by they of course was one of the first to win approval for itsair services from China's regulators and it boasts a chat bot similar to Openai'schat GPT called you may know it Ernie, but now it says that service hasattracted over 200 million users since.

It was released last year.China's media say regulators have approved more than 40 AI models sincethe process began last August. Among them is the likes of Sensetime,which says this latest gen AI model focuses on mathematics and coding.While startups such as Ju Pu and Moonshot, I have attracted millions ofdollars of backing from the likes of Tencent and Alibaba.I think our very own Robert Li will say Moonshot actually has been supersedingthe likes of Ernie on today's. Yeah.And of course Bloomberg Intelligence also thinks Beijing will need toredouble its development efforts in the.

Face of an apparent widening tech gapwith the U.S. you have tightening export restrictionson Nvidia chips are also expected to hamper China's research efforts.Yep. Let's discuss all of this where we arein the story on the back of earnings coming through the trends to watch thesenext few months or so. Joining us here on set is Andrew Scottin capital founding partner and also with us is Sino Venture InnovationVentures chairman Kai Fuli, whose startup, of course, is launching.And we'll talk more about this capability in a moment.But first, I application for consumers.

Thank you for gracing us with yourpresence, both of you. Let's start with you, Andrew Scott.Looking at or should I call you Jen? Jenny, I mean, maybe I can do that thisweek. A lot of big earnings coming through.What are you most curious to see from these these big tech giants?David, Yvonne, great to be back. Thank you very much for having me.Right now, both in the US and China ecosystem, the air space is racing on abreathtaking speed in terms of the US, of course, in the infrastructure side,in terms of semiconductor and also a large model as a softwareinfrastructure.

China's is still playing catch up alittle bit and in terms of application, China's speed is second to none.So I don't want to steal the thunder, but I think today probably the racechange a little bit in terms of performance.A lot of those earnings impact actually going to come down to including Nvidia.I know do is one of your favorite topics is going to be impact about howefficient those models going to be, how well performed they're going to be andhow much data processing they require. So I thinknot only just in the past few months, we have witnessed all the big tech both inU.S.

And China.You could. The system issue a lot of their ownmodels. But also we start to see thiscompetition of efficiency starts as well.Kai Fu Yeah, as Jan just mentioned, maybe the game has changed a little bitwith now today your new model. Tell us a little bit about Wang Zhu.Is this really China's answer to GPT and why do you think some of the otherprevious sort of ones that we've seen chat bots in China have not been goodenough? Hmm.Right.

So we are launching today our new modelcalled E Large, which is the model that has API being released throughout theworld. We intend to be a global company, so notjust for China, but for China. We've developed an app on top of Elarge, so e largest to compete for as one is to charge up to.We now have both 01.II. My company was founded only one year agoand when we started we were at least seven or eight years behind that to openthe AI. But now I'm proud to say that our latestmodel E Large is performing comparably.

With ship for by third partyevaluations. And on top of a powerful model is reallythe only way to support a product with product market fit that will excite itsusers bring about the Djibouti moment. So we are hopeful that our model withthis performance will provide a chat bot that will rival chat to be t for China.But we also think the model will support all kinds of apps throughout the world.It looks like we are bracing for just explosive growth these next at leastthis next year or so, hopefully. And Jen, I want to get your thoughts onthis. But, Kyra, let me just get your thoughtson this first.

You mentioned it carefully, you know,barely 12 months old and you're in the market.This applies to other players in this market, to the fact thatthe fact that barriers to entry are low, which perhaps is a good thing.How do you expect competition to change these next 12 months or so?Do you should we expect more competition?And how and how are you looking to innovate your product ahead of perhapscompetition coming in Q4? Right.I actually don't think barriers are low. You don't see these upgrade models, LGBTlike products, and everywhere in the.

World there are maybe half a dozencompanies that are in a similar situation in U.S., China, perhaps Franceand other countries. So we are one of the few.And certainly the Chinese companies have achieved this level of performance atbreakneck speed. And that is the essence of Chineseentrepreneurship is first, we don't have as many GPUs, so we need to figure outhow to use them efficiently. So for example, at zero one that I wetrain our models at one half or a third the cost of comparable companies becausewe don't have access to the latest GPUs. And also we have many, many, many fewerof them compared to open the AI.

And despite these challenges we'vereached for performance. So we're quite proud of that.I think many of our Chinese peers have also done quite well.So I think a lot of the saying in in the media that China is way behind is notaccurate. Now, that said, companies like Mather,Google, Microsoft are putting 5100 times more resources in this.So we certainly don't take it lightly. So as we catch up with currently bestmodel, we realize that even better models will come from Openai and othersand we want to stay as close as we can. But we also think is about building agreat user experience, is really.

Understanding what the users want andusing that which is China's advantage. As Jen said earlier, if you think aboutChinese applications, Tik Tok is better than Instagram.Products like Tamal and Sheehan have taken over the world.Users love it. I think China's ability to develop greatapplications that focus on what users want and that product market fit is aunique attribute to Chinese companies. Can I for you mentioned about GPUs, Iwas I was going to ask you, it seems like you guys have been basicallyloading up on these are video chips. You know, you foresaw that this wasgoing to come.

I think we spoke to you back in Novembersaying you may have maybe a year or a year and a half worth of supply left.What do you think was going to happen after that?You know, do you think that, you know, basically gender of AI is going to befor those the deep pockets you have to keep, you know, shelling out dollars forthis? Or do you think that there's going to bethese smaller sort of a newer business models that can actually evolve to givesmaller startups here more access to these compute resources?Well, I think there are two questions here.One is accessibility to GPUs.

We're in fine shape right now.We I mean, we've raised a lot of money, but it's a tiny percentage of what thetop American companies have. So we're really more bounded, not somuch by what we can buy, but how much money we have.So we have to be extremely parsimonious and practical and really build that theright models with the right size that fit the user's needs.Now, one could certainly train a you know, with with the resources that aGoogle and Microsoft and matter have, you know, train a 50 trillion parametermodel. But such a model will not run foreveryday applications.

Everyday applications require minimallatency. These are very good accuracy, anddifferent applications require models of different sizes.So today we're also releasing a whole series of models from 60 to 90 to 30, 40to E large, which is over 100 B, And for every application we've demonstratedthat we have a model size that performs as well as, if not better than thecompetition. So I think that demonstrates for realpractical use we as zero and that are able to compete on a global basis.Now there could be a huge model that one of the top American companies developedthat performs better.

But it's still remains to be seenwhether such a huge model with corresponding.Fired. A large amount of compute resource canbe deployed in real applications that delivers return on investment and has areasonable infrastructure and latency for the user.Gen Your reaction to a K fully opened up many doors there.Just Yeah. Yeah.First of all, I'd like to congratulate the co-founder and his team for makingsuch meaningful effort to grow plays to China's soft software side ofinfrastructure.

But also I want to just departurebriefly depart from this US-China framework for a little bit.What we are talking about is the community where is very GPU rich and thecommunity of the GPU poor, either because you are open source community oryou have because of geopolitical issues, the starved from GPU and the mostadvanced GPU supplies. The world actually vast majority ofpeople in the tech industry, not only justin the US-China framework, in the global community, vast majority of playersdon't have a lot of GPUs like, you know, open the AI, etc..So the I see this actually an.

Opportunity in terms of where I shouldgo, because if you think about the large model right now, because most of thelarge models are still kind of black box, we don't really know which set ofdata really made a difference in terms of the algorithm to understand and makesense. Therefore, one of the easier lazier wayto approach this, to add more and more data, use more and more GPU.But if you think of our human brain, we aretalking about the biggest model in the world is opening.I charge about for its rumored more than 1 trillion parameters.Yeah, but our human brain consumes 30.

Walk and where process processing 100trillion parameters. So there's no comparison.I have always said this you don't get to Mars by building tall and taller,building on earth. So by building bigger and bigger model,consuming more and more GPU is not really the way to get truly flexible.A.I. So I actually think what confused team,a lot of companies and developers, their pursuitto more efficient and smaller model is the future.Microsoft just issued a Phase three as well using, you know, 7 billionparameter.

It's actually outperform much largermodels over my open opening. I yeah, you mentioned this emergence ofsmaller language model and what what implications is that going to have forthese GPU companies? What is their share price and this wholerace right now, I wrote a link to you a while ago.I when the video's price is highest, I actually did not believe the price willstay that high because precisely for the reason I mentioned.But also if you take a look at the what's happening in the global attackscene. Right.I think people realizing, you know, in.

Social media age where you share, yousaw you are sharing your information, pictures to your friends, family, you'reactually sharing with Mark Zuckerberg. But now people are realizing your mostintimate questions you're asking. Judge he charged you be you GBP isactually not private conversation. You chat with a private owned commercialcompany opening I run by Sam at MIT. That's kind of creepy, I think.Yeah. So so so I think what's going to happenbecause of this combination of geopolitical situation, GPUdistribution, I think this kind of smaller model localized, the A.I.local agent is going to happen.

A couple of trends need to notice here,as we have already well address them that in China, GPU is becoming aresource that's very difficult to access.Yeah. However, if you take a look at China'ssmartphone smartphone life, for example, OnePlus 12 is selling24 to 4G and one terabyte phone and 900 U.S.dollars. And China's EV market is developing sofast, right? It took China 2427 years to produce thefirst 10 million EVs. But you only took 17 months to producepast the 20 million mark.

So all these EVs, we are tablets onwheels. So what's happened is that all the very,very powerful individual applications, they will have the capability to holdtheir own data locally, process locally. Of course there's a trade off in termsof efficiency and performance, but eventually I think those kind ofeternity of, I suppose very centralized approach that I open, the AI will startto flourish or will become much more popular outside of the US system.Who can I bring you in on that? Just your thoughts on the the trendsaround efficiency that you think we should be paying attention to not justthis year but in the years to come?.

Yeah, certainly.I think the we're currently very fixated on the training market, which is how totake a whole world's data and train giant models.And for that you do need the giant cluster.And currently India is the best solution.But as Jen said, inference is a very different story when you actually deploythese models. Bigger is not necessarily better.You want to be able to look at the app that you're building.If you're building something with deep reasoning skills,that generates great content.

You do need a large model.But for a chat bot, customer service and games, you do not.So there needs to be a model for every occasion.And that's why 01.8 we've deployed a models of different sizes and the APIsISE are being made available globally at very competitive prices.I think what's important, an indicator important to watch is really the cost ofinference. I think that is the gating factor,assuming people always find good enough technology for each application use.It's all about writing down the cost of inference.We see inference costs dropping about.

Ten times a year.So that means things that seem impractical today will be widespread inone year at most in two years. So I think a proliferation of GPUsmodels and agents and applications that run on all different sizes I think willbe the key to the next phase of development of Ava Labs.Genuine to safety Come in. When should safety come in?Conversations around, say, yesterday. I think that the problem with safetyright now it's actually not so much a lack of discussion, but it's a lack ofunderstanding where the discussion there's a lot of distraction in terms ofinflating what I can do and therefore.

Actually describe what need to happen.My personal belief, I'm a huge proponent of open source and keep localize andhave distributed approach instead of centralized approach, which is that allthe large tech is doing right now. And the end of the day when it comes tosafety, everybody have very different and very nuanced approach.Right. We we we all see our privacy in the verydifferent way. So leaving to a handful, few companiesor even for regulators to decide every single aspect to what individuals shoulduse or access and express and interact with the AI is limited.So therefore, I think the more we have.

The open source approach, localizedapproach, a distributed approach combined with regulation and combinedwith this kind of leadership with a with value and the concern of the societyfrom the large companies is probably the recipe, the best recipe you can haveright now. Yeah.And coffee, maybe to give you the last word here, there's the potential forA.I. to create havoc on the world.I mean, what's the counterargument to that?For those concerned, the AI may be an existential threat?Well, one concern is that I will take.

Over the world like Terminator.Terminator. I would say that's completelyunjustified. A.I.is a tool that we use. Now, I do agree that AI's very, verypowerful and can be used by the bad guys that will bring about very serious harm,for example, for terrorist groups and things like that.So it's important to put all the check checks and balances in place andsafety measures. I would point out that every greattechnology always came with big risk. Elected electricity brought about riskof electrocution.

People invented circuit breakers onInternet, on PC, brought about viruses. People invented antivirus software.So I would say now is the to call to do the for all the people working on theirlimbs to not just focus on bigger a better model, but having a renewed focuson safety. And I also believe open source isimportant and we are open source. It's that our biggest model today aswell. Garfield, it's great to have youhopefully there. 01.I CEO and set of Engine Ventures chairman and Jensen Scott of coursefounding capital of in Capital.

I remember a guy who mentioned back inany last year day our jobs are still okay for a few more years maybe plentymore ahead this is Bloomberg. Okay.A couple of stocks that are rising. Quite.I was about to say substantially, but live TV folks in live markets stillrising nonetheless, amidst what's really a downdraft across equity markets.Some Chinese biotech stocks, some on your screen as well on the OP, this newdraft, new information around this bio secure bill, which might allow and thisis according to the folks at Morgan Stanley, thatthis eight year grace period, the.

Deadline of the decoupling is 2032,might actually allow the Gucci family of companies, in their words, here to finda way out with a soft landing. So perhaps positive news for the stocktoday. We'll see, of course, what the sort offorce multiplier. So a bit of a relief there for some ofthese companies. Some other stories that we're trackingfor you today. China's securities watchdog says it isinvestigating hedge funds, Zhejiang Raven Asset Management for suspectedillegal activities. Media reports say the fund failed to payinvestors seeking redemptions and its.

Controlling shareholder is missingeconomic crime. Investigators in Shanghai havereportedly sealed off the company's office in the city.ANZ group has revealed that Australian regulators are investigating itsexecution of a government bond sale last year.The inquiry relates to the issuance of ten year Treasury bonds by theAustralian Office of Financial Management, or AFM.ANZ was appointed by the AOA firm to act as a risk manager in relation to theissuance of the debt. The bank says it is cooperating fullywith the investigation.

And Friends says Amazon, Pfizer andMorgan Stanley are among the companies poised to boost their presence in thecountry, expects a flurry of new foreign investments to be unveiled Monday withtop last year and will top last year's 4 billion.President Emmanuel Macron is hosting 180 CEOs and executives this week in a pushto re industrialize France and make it a financial hub for the post-Brexit EU.And we will be speaking exclusively later to the French President EmmanuelMacron, about trade, geopolitics and of course international investment.That's one. And Tuesday, if you're still up in HongKong, this is Bloomberg.

Yep.Just very quickly, looking at markets right now.So about 24 minutes into the session here, similar declines we're seeingacross Hong Kong and China, 6/10 of 1%. In terms of market breadth, I'd also sayit's largely, largely almost a mirror image of whatyou're seeing. So CSI 300 down, six 210 stocks are downon that benchmark, HSBC, but 60 stocks are down.So that give, I would say, about what, 65 to 75% of constituents are down goinginto a fairly important week as far as not just data.So data points in China, most important.

Would be back end of the week on Friday.But a lot of earnings coming to justify this rally.We'll see what happens with this, of course.And yeah, just ahead, of course, a lot of key milestones to tell you about.Yeah. Yeah.So obviously we were talking about the tech earnings and the like here of, asyou mentioned, from OPEC. Joining us in the next hour, take usthrough markets and what's in store this week as well.This is Bloomberg. Welcome back to watching the China ShowHour two here.

Right now, we're looking at how the someof these CSI 300 ads and these benchmarks are doing here right now.We're slightly still on the back foot here when it comes to the onshoremarket. MSCI China's also down just slightly.So, you know, there's a lot to contend with, whether it was the weak creditdata that we got, which was a bit of a shock just given the rare contractionthat we saw in April day, but also this threat of, you know, more tariffs or atleast 100% tariffs on Chinese EVs, that certainly is sort of weighing onsentiment here this morning, too. Yeah, I mean, just the lack ofunderlying activity.

I mean, I'm just looking at our liveshot that you just showed our viewers there.It's just me or there's just not a lot of traffic there now in in Lujiazui,which is a financial district. Anyway, that's anecdotal.That's literally one block in terms of the sample size.Okay. We're looking at some of biotechs aresome are up, as you can see on your screen, this new draft giving maybeslightly more encouraging information, 2032.That's perhaps more of a long enough window for some of these companies thento adjust their.

Sort of revenue exposure, leading tosome. Of course, Morgan Stanley came out withthat note fairly positive as far as what this might mean for this group of stocksis concerned. So that's this story for now.On the weekend, Yvonne was pointing out, of course, the credit numbers which camethrough. Right.So it's rare that you can see a contraction there, a confluence offactors, seasonal. You had a big spike in March and inApril and also cyclical as far as the economy is concerned.Plus, of course, you're also getting.

Some data around developers, forexample, so long for I believe, came out with contracted sales as well, long fora year. Now, we don't have long point here.Okay. Interestingly enough, but in case you'rewondering what Americans were long for, right.Asia to China, fairly consistent with the move we're seeing in Chinese marketsanyway. Is this downdraft across equities rightnow sort of treading water? It's a big week ahead.It's early, I should also note as well. So volumes are on the lighter side ofthings.

We're coming off quite, quite a bit of arun as far as Chinese equities go. I mean, Hong Kong maybe last weekstarted consolidating onshore. We're up for fourth straight weeks andthen we're going into this week with a lot of big earnings coming through and alot of sort of macro events in the Asia Pacific.Right. Plenty of U.S.inflation coming through midweek. Just keep that in mind.US ten year yield, bottom interest gains four and a half percent as far as that'sconcerned. And of course, we talked about thewhat's been taking place.

We have dollar yen in here somewhere.Here we go, stronger one 5583 And some news earlier in about an hour back thatJapan is not buying as much of BOJ is not buying as much bonds really sendingdollar yen lower to its current levels. I believe we have JGBs on your screens.We should be coming having that if we don't anyway.Okay. In that case, if I said it back to you.All right. We'll get that board.Coming up. You had a promise to make it.What's story this week? It is a pretty busy week as well, right?So US CPI, that seems to be the.

Certainly the a big event that's goingto be happening on Wednesday. So whether this can actually solidify oractually put a drag on this Treasury rally is certainly one thing arewatching out for when it comes to the you know, the credit data out of China.Obviously, we've got to get any indications of policy and that oneyou're MLF right on Wednesday as well. Does that kind of change the equation abit? Economists are still thinking no changeon that front. But certainly when it comes to whatcomes out, you know, there's activity data on Friday from China, so everythingfrom retail sales to like home prices,.

That's all coming through here as well.So certainly there is there's a lot that the Fed up with the policy budget that'shappening tomorrow as well. Dave Yep.So the simple question is do stocks go up or down with, with all of that infront of us, Vasu? And maybe here to help us answer thatquestion, he's the investment strategist, Ocbc Bank, actually.Good morning. Happy Monday morning.Thanks for joining us and hope you had a restful weekend.What's your sense of equity markets at this point?We're not doing anything currently.

Is a risk reaction down?Well, you know, I think the markets are going to tread water at least in theshort term until we get some clarity of, you know, where the inflation outlook inthe US is headed, where Fed policy is headed, when the Fed is going to pivot.I think those things are playing out. You've got some data that indicates thatthe US economy is softening, inflation potentially soften further.The Fed could pivot in the second half of this year.So that's giving, you know, investors hope.It's really a, you know, a tug of war between hope and fear.And what that means for the markets is.

That it's going to create somevolatility in the markets. Markets will track water.But if you take a medium term view, we are still positive of the marketsbecause we think it's a matter of time before the Fed cuts rates.We're not negative for the US economy. We think earnings will still comethrough. There's an abundance of liquidity on thesidelines as rates are cut. That liquidity will make its way intothe markets. So short term, yes, you know, things arelooking a little iffy, but medium term, you know, negative.It's interesting just the volatility.

We've seen.Right. If you take a look at like, you know,the two year Treasury yield, which basically has swung 37 basis points overjust comments from Jay Powell, I took I take a look at dollar yen and the swingsthat we're seeing. You know, first they were sub 150.Now we you know, we briefly touched 160 at one point.I mean, what does volatility tell you about do are we underpricing sort of thetail risk still in this market? Well, you know, no doubt.I mean, the markets are you know, essentially the volatility does indicatethat, you know, they are tail risk and.

Investors should not be complacent.But nevertheless, I think, you know, short termthey are risk. But medium term, we think that, youknow, the outlook is still sanguine and we think that's still a case forinvestors to stay positive in the medium term andperhaps adopt a dollar cost averaging approach.And so there's still a case for investing in the markets and to stayinvested. So we are definitely not negative on themarkets. We see risks, but they don't negative.Maybe more specific on equity market.

Exposure at this point in time.Several markets have done well. China for one, several markets beforeChina did well like the US has an exceptionally well.What type of exposure do I want? Given all the earnings coming throughthis week and in video of us who is coming out middle of next week?Well, you know, we are not negative on, you know, technology stocks, air stocks.They've done very well. You know, just like the broader market,they're going to run into volatility from time to time, matters ofvolatility. But air is really at the cusp infancy,you know, and it's going to be a ten.

Year story.So investors, you know, should not turn negative on technology.It's here to stay. It's going to revolutionize our lives.Revolutionized businesses is only just beginning.But of course, along the way, you'll have hits and misses as far as earningsare concerned. And that's going to create somevolatility in the markets. Now, as far as Chinese equities areconcerned, yes, they've done well. You know, they've been on a winningstreak for, you know, four or five weeks, I believe.And, you know, again, we're not negative.

On China.We are neutral. And China, we've got a positive watch onChina. And the Chinese government has beendoing some things right. They've been, you know, undertakingstimulus. China has underperformed.So you're seeing some rotation of interest in China.But the weekend announcement or the weekendnews that, you know, you could see tariffs on Chinese sectors like EV and,you know, others in China clearly highlights that in an election year inthe U.S., Chinese equities do pose some.

Degree of short term risk.What do you make of the just the macro picture?To me, obviously, this you know, what we saw in the credit numbers is prettydisappointing for April. People are still under a long streak ofof contraction. And then CPI, though, still doing alittle bit better. But we're still close to zero here rightnow. I mean, does that change anything foryou about you? Well, it doesn't change a lot.You know, China's expectations as far as that is concerned is very, very lowright now.

Foreign ownership of Chinese stocks isvery low as well at this juncture. Retail participation is also fairly low,you know, so and valuations are low as well.So, you know, the Chinese equity market is very under all.And some of those sectors you highlighted earlier have been there inthe background, the latest, of course, being the credit data, but that could beseasonal. But then again, you know, it is just asmall part of a wider equation. And I think we need the property marketto stabilize in China. We need to see more stimulus out ofChina.

We need to see the Chinese governmentput some kind of backstop on backstop on the property market and the economy.But we don't think it's negative for China.We still see China growing at, you know, between five and five and a halfpercent. And we think that at some stage, youknow, there'll be a stronger case for investors to have greater convictionthat Chinese equities can get higher. But right now it's had a good run.We take a breather. But the election year in the U.S., onehas to be bit more careful. Okay, Vasu, thank you so much forkicking off the week with us about a man.

On the managing director investmentstrategy Ocbc Bank. Still ahead, China investigates a localhedge fund for suspected illegal activities, while media reports say thefund's controlling shareholder is missing.This is Bloomberg. Right.Welcome back to show's price is on the down here across these equity markets.I'm looking at my Bloomberg terminal and I'm looking for data here.So southbound flows at this point in time.So we're getting some positive flows into Hong Kong.I'm looking at northbound.

I don't I don't have any northboundflows on my screens. That's probably because of this nextstory. China's halting the publication of livestocks connected on a minute to minute basis.I believe they're still publishing it, end of the day.To clarify that for us, shanghai is with us here on set Asia stocks.Reporter So what is what is happening today and what can we expect?Yeah, in fact, it's already implemented. Apparently it's terminated.So there is strong, high and frenzied exchanges.They have decided to entirely scrap this.

Whole real time data release of how theforeign funds are purchasing or selling the local, local stocks.And this has been this has been watched very closely fromespecially the retailers in the local market because they trade on thissentiment. Right.So the foreign funds, they look at how there's a rally and then they would allcome in. But then there were multiple of thesesell offs in the past. And so a lot of the retailers have beensaying, hey, why don't we obscure that data?And so that's what the authorities said.

Just now.And so we're not seeing that that inflows that that flows anymore.Instead, it's going to be turned into intraday more of like one day kind offlows data. The end of the end of day.Exactly. And then so we will be seeing that a lotof the an analyst. So it does really affect the valueinvestors because the intraday intraday moves are more of a noise for them butit is still going to be a difference there.So we will be watching how they'll be released.Just to clarify as well.

Right.So this is and this is in line with what they do any way outside of China, right?That's true. That financial service are saying.But again, that that is that is in line. So other parts of the world.They do Exactly. They don't have the real time data ofthe sell offs and the flows. Right.But still, it's just different in the sense that, yeah, we were just talkingabout our previous guest. Our markets are sort of treading waterin China here as well. I mean, is there a sense that there'sjust a bit of consolidation going on.

After this rally or do you think thenews of the week credit data, you know, threat of Chinese tariffs, is thatreally what's weighing on things right now?Right. We had multiple all of these areoptimistic catalysts as well. But at the same time, we've been seeingsome of those. Those are bad news over the weekend aswell. You know, last Friday especially, we'veseen that tariff woes from Biden coming in.So we're watching closely the solar cells makers, the makers of batterymakers as well.

But it's just overall, we're seeing theshares are down everywhere else other than Taiwan and TSMC.And so, of course, just like you said, the numbers in in you know, in thecredit woes are just like hitting back. And also the property.We're just will have to watch for whether there will be more of thosecatalysts coming from the local governments in China, whether they'regoing to continue to really, you know, continue to scrap these home buyingcurves that they have in place. And so more of these catalysts need tobe seen to actually see. And of course, this week we're going tobe watching carefully the tech earnings,.

Often saying, yeah, I'll buy you some methank you so much. Are there are asian stocks?Reporter We've just got some breaking news.It's crossing the terminal here right now.So china is said to be planning its first ultra long central debt sale onfriday. This is according to people familiarwith the matter as it tries to seek to raise funds to support the economy hereright now. And, you know, just given the backdropthat we saw with that credit data on April, they're going to need this a bitmore issuance now.

Yeah, because the lack of governmentfinancing was one of the components which led to that contraction in theoverall figure. And to Sandy's earlier point, we'll needto wait and see more support measures and this probably could be one of themjust breaking that down. 138 billion.That's okay. Let's let's state this in local currencyterms, 1 trillion renminbi. So the total issuance based on thepeople that Bloomberg is able to speak with is 300 billion will be in 20 orbonds, 600 will be in 30 year and 100 billion will be in 50 year tenor.There we go.

So these are ultra long bonds.They'll be sold from May through November.And as everyone is pointing out, they'll begin that sale off the first batch onFriday towards the end of this week, which interestingly enough is when theyreleased the activity numbers. Yeah.For for China. Yeah.The actually kind of had a bit of report here on whether they were they werelooking for, you know the PRC asking brokers for advice on how to price thesebonds. Yeah.So certainly there was indication that.

This is going to happen pretty soon andwe'll maybe we'll get more details on the pricing side of things as well.Get to know the story that we're tracking right now in the hedge fundindustry, though, was pretty interesting.Yeah. So the securities watchdog is actuallyinvestigating this hedge fund job away from the asset.Management for suspected illegal activities.Claire Valentine is here with us on set to talk us through what we know so farand how this fits into the sort of regulatory action we've seen out ofauthorities recently.

Yeah, so very much so.Developing story. What we know so far is that China'ssecurity watchdog is investigating this hedge fund for suspected illegalactivities. There have been some local news reportsthat have said the fund has failed to pay investors seeking redemptions andthat the controlling shareholder is missing.Very interesting. Still a developing story, but this issort of in the background of China cracking down on hedge funds, imposingstricter rules. So so to sort of see how this plays out,but it very much is fitting with that.

Theme.Yeah. And I mean, obviously, we've beentracking this this rally that we're seeing in the mainland.You know, what are you what are you talking to people about?What's driving this rally? What are some of the headwinds still?Definitely some of the things driving the rally, I think, are some optimismaround policy support from Beijing. That's been a huge aspect of it.We've also seen tech doing really well. Yeah, we're going to see tech earningsthis week and see if that can continue the rally in terms of headwinds.There are quite a few that are piling.

Up.We're seeing potential tariffs from Biden coming in.It's an election year, so that's always really volatile.And then there's this sort of fear of missing out that's been driving therally that could sort of be fading potentially.You know, it's been pretty significant rally this year.So there's always a chance it gets a bit overheated.But I think tech earnings this week are really going to be a pivotal point.Absolutely. As really that is one part of thisequity market where you seeing.

Projections really come alive.Apart from that, it's hard to all to see any clarity on sector dispersion.There we go. Claire Fantastic.Thank you so much for for an update there, Clare Valentine.Okay. Plenty more ahead here on shows, lots ofbig movers. Plus, we'll unpack this breaking newsstory on the job market. Ultra long bonds coming your way andcoming your way very soon. A lot of them.This is number. Let's talk about Zika now.The shares of the Chinese electric car.

Brand gave 35% on his debut in New Yorkon Friday, and that really followed expanded IPO, the biggest U.S.listing by a China based company since 2021.The CFO, GE Green, told us more about the timing of the IPO amid heightenedtrade tensions between Beijing and Washington.We at Seeker never try to time the market or chase the net.The latest trends, I mean, we follow our own strategies.If you think about over say for example, a Chinese EV market, if you read thenumbers in first half of April in China, the passenger vehicle market recorded anew energy vehicle penetration rate of.

More than 50%.If I look at my pipeline, I've introduced my own use of old double onein the in February this year and earlier this year.In 1st of January, we started we buy all new double seven.So my pipeline is also very strong. And if you think about my internationalexpansion strategy and starting selling cars to international markets in lengthsince last October and sorry and and you can see we're going tosell more cars. So we need this kind of transparencyacross by us leasing all you all we do think is a good time but not consideringabout short time headwinds.

We think long term and try to look attrying to make sure that in the long run we make a very, very good business case.Well, sir, as you talk about how you're expanding to international markets,considering the existing tariffs in place in the United States, the countryin which as of today you are now listed and it potential that tariffs go evenhigher, are you now listed in a market that you may never actually be able toenter and be competitive in because of those tariffs?Yes. So we are not entering this this in thismarket. So we are not just listing the USbecause we want to we want to.

Incentivize markets.We get listed in the US. As I mentioned earlier, we think aboutall the transparencies being the US leads the public company, all thepublic, all those qualities that I received and the level I can provide toglobal regulators that's transparent and basically very good global corporatecitizen. We think that is actually moreimportant. Mr.Yu, on the reality check seems to come in your prospectus here, as Zeekr warnsinvestors that the Chinese government could in fact intervene in its businessto further its own regulatory, political.

And societal goal.Sir, why would a U.S. citizen ever invest in a Chinese companyright now? Yes.So I was thinking about if you look at the US capital market, its continue tobe a very big transparency and probably the most liquid capital markets in thisworld. So being a foreign issuer, we want tosee if we can tap these type of markets and we want to see, you know, who willhave access to capital at time of need. Again, it's more about my strategy.It's more about long term view rather than short term.Hathaway's.

There we go.Gen Z Cur CFO speaking with our colleagues, of course, Kailey Leinz andJoe Matthew there when they debuted going into the weekend.Right. Some other corporate stories that we'retracking and we're following this Monday.This is a big one. So ANZ down 3%, as you can see.Bottom of the screens has revealed that Australian regulators are investigatingits execution of a government bond sale its last year.Now the inquiry relates to the issuance of ten year Treasury bonds by theAustralian Office of Financial.

Management, or a of 11 or Australia inshort. Now, and that is a point.It was appointed by the OPM to act as a risk manager in relation to the issuanceof the debt, and the bank says it is cooperating fully with this ongoinginvestigation right now. South Korea is preparing to invest morethan $7.3 billion to strengthen its semiconductor industry.The Finance Minister says the program could include financing from state ownedKorea Development Bank. The move comes as the US presses alliesto further tighten restrictions on China's access to chip technology.Now France says Amazon, Pfizer and.

Morgan Stanley are among the companiespoised to boost their presence in the country.It expects a flurry of new investments to be unveiled.That's a monday will top last year's 4 billion figure.President Emmanuel Macron is hosting 180 CEOs and executives this week in a pushto industrialize France and make it a financial hub for the post-Brexit EU.Yup. Or speaking to the president, of course,as well. Take a look.When it comes to markets here today, we're checking very closely.These KGB's and this reports, according.

To our sources of that, you know, Chinais going to start issuing some ultra long bonds starting on Friday.This is according to sources, mind you, right now.But it's a, trillion German, B, basically worth when it comes to 20 yearor onwards or so. So certainly that's one thing to watchhere about. Now, what this means when it comes tothe credit cycle of China, obviously, we talked about how this was one of thereasons why we saw such a big miss in the credit data in April as well.Is this going to make up for It is a key question economists are asking as well.Why aren't you?.

Some is.Water stocks in particular. So apparently there's been some pricehikes. Reports are that in cities like Wang,that's what we're seeing. Some of his water stocks are up herethis morning and we're watching this, the strategic partnership in the techspace in China. So Jade AECOM in Show Me.They're saying this agreement to deepen their cooperation.Xiaomi is saying they're aiming to reach sales target of 200 billion renminbi inthe next three years through JD's sales channels here.So it could be everything from retail,.

Logistics, tech, finance, other feelsthat they could be cooperating on not a whole lot of movement in those stocks.But keep in mind, JD does report earnings on Thursday.Yet along with firewall, the whole gamut of Chinese tech firms, of course, saidBIDU, Baba, Baba Meituan all coming out with earnings.In fact. We'll get you guys a preview of allthose numbers coming through on the other side of this break.All that being said, markets are off to a slow, quiet and friendly Monday andstart here to Monday, a 10th of 1% to the upside.We're headed into the Japanese lunch.

Break.Plenty more ahead. This is Bloomberg. All right.Welcome back to shows the firsts. Here's a way to spend Monday, the firstlunch break of the week. There we go.Across markets in Tokyo, Nikkei 2 to 5 are not doing anything out of the gateshere. Now, a couple of big movers in thatmarket. SoftBank was moving early on.Some news, by the way, in case you missed it out of Biogen, let me justbring up my screens right now.

So in terms of about 90 minutes back,bond futures came under a bit of pressure.The yen was bid after the BOJ, a much smaller amount of bonds today than theprevious operation, perhaps leading opening the door there a little bit morefor yields to push up a little bit further.Things did go the opposite way, though. I should mention that 94.94%, not onyour Japanese ten year, about ten year yield, that exchange rate will be at themercy of this U.S. inflation print, which comes out onWednesday. So keep an eye on that.Among other things, of course, to keep.

An eye on.Yep. In terms of the rest of the region, wetalked about how slow going things are looking here right now, but we'reslightly just basically just flat in Japan.And that's really not doing much when it comes to the broader region as well.We're basically just slow going. U.S.futures aren't doing much dollar slightly to the upside here as well.And it's a mixed picture across sector by sector.Yeah, there's there's things like, you know, the weaker demand picture out ofChina when it comes to credit, this.

Threat of tariffs.I mean that certainly might be weighing on a little bit, especially in thegreater China markets here today because we're watching very closely.Japan got to the BOJ story. There's also earnings coming up as well.SoftBank could be a pretty interesting one.Yeah, I would earnings we talked about this in fact expected to see a return toprofit after the shift to air and chips. Of course the vision fund didn't workout perfectly is a diplomatic way to say that.Min. Jon Lee, our tech reporter, joins usonline out of Tokyo to talk to his.

Manager.Let's start with the the full year results is shaping up.Just your thoughts to know what to expect and what we're watching.Yeah. Yeah.So hopefully we will see sort of positive move toward earnings.In terms of annual we are expecting SoftBank group to report much narrowerlosses still in loss the much narrower than the previous year thanks to acomeback in technology valuations across the globe.And this is also help the vision fund start ups recoup some losses with therecovery in valuations.

And for the group, there was a prettybig one time gain from their T-Mobile stock options arrangement.But overall, hopefully, yes, looking a little bit positive.And before they've mentioned the vision fund,they've been actually selling assets. What does that mean for SoftBank?Yeah, Yeah.So they do have been selling down a lot of its publicly held assets.We analysed the filings of its US listed assets and it tells us that the totalvalue of those assets have been reduced by about 29 billion years,,000,000,000 over the course of two.

Years, and thisshare price declines have impacted the value drop, but it also has a lot to dowith Vision Fund actively kind of offloading quite a bit of shares.Nike assets, including Coupon DoorDash. This indicates a shift in focus forMasayoshi Son, who is paying more and more attention to new areas that havegreater emphasis on AI and chip technologies.And these new strategic investments are being executed more for the group sideand less for the vision fund. So it will be interesting to see howmuch more development we see in that in that side.All right, John, thank you for that.

Preview there.Our tech reporter, John Lee, joining us out of Tokyo here this morning.Of course, you can turn to your bloomberg for more on those t live goand they'll be opening up soon to get commentary analysis from our experteditors are tracking all things SoftBank this morning.Yeah speaking of earnings so just I guess the agenda of this week and thebig names coming through and when they're coming through as well.So I mean, take your pick, right? Take your big large cap tap Mizuho iscoming out That's Japan, Sony, SoftBank. We talked about that.So as far as China goes, you have Baidu,.

You have Tencent on your screens,Jindong Baba, and may want to add to that as well.Okay, let's have a look at earnings expectations.So projections, right? So 12 months earnings expectations.When you look at the reason why tech's very much important this week, Tech hasled the rally and we're seeing guidance coming out of those companies and we'llsee whether or not analysts will get a further reason to bump their projectionsup on a 12 month basis. And as you can see, this sector hasreally stood out compared to the broader benchmark on your screens.Yeah.

And if you take a look at what our bigtake is here this morning, a great story out, just really talking about thosetrade lines being formed in hard hit in some ways here.So we're. Ours are basically led by the U.S.and the European Union have funneled nearly 81, $81 billion into producingthe next generation of semiconductors. And it really escalates a globalshowdown with China for chip supremacy. Let's bring in our U.S.industrial policy reporter Mackenzie Hawkins.She has more on today's big take. And she's here in Hong Kong.It's great to see you here.

Great to meet you, Mackenzie.Great piece. Just highlight what this all means, thissurge in domestic spending that we're seeing in the U.S..So, you know, chips have been there is one of the main topics of the kind ofglobal geopolitical technology struggles since the pandemic, when we had ashortage of chips that, you know, put supply lines on halt for things likeautos, phones, consumer electronics. And we've seen governments across theworld pour billions and billions of dollars into trying to make more chipson their soil because of worries about an overconcentration in East Asia.The US is leading this push.

The European Union governments fromSouth Korea to India to Taiwan to Japan are getting in on the chips game.But all of this is kind of to catch up with China's decades of industrialpolicy in the sector. So all of this spending by us and itsallies really pales in comparison to what you see Beijing pouring intosemiconductor technology. Yeah, and I guess it begs the question,should we expect the same magnitude of spending to continue in the U.S.?And certainly the conversation we're having all the time here is, you know,what China has been doing, to your point, industrial policy and what Iguess other places in the Asia-Pacific.

Are doing, South Korea perhaps being oneof them. Just try to extrapolate for us what thatspending might look like in the U.S. in the years to come.So the U.S. has set aside $52 billion for chips.This is the largest industrial policy effort that we've seen in the country inmore than a generation, really, since World War Two.And there's a question about whether it's going to be a one and donesituation or we might see a so-called CHIPS act, too.You know, Intel CEO Pat Gelsinger, the day before, Intel received the biggestaward from the chips at eight and a half.

Billion dollars in grants, plus 1billion in loans, said we're actually going to need more.But U.S. voters and the lawmakers who supportedthis bipartisan piece of legislation in the first place want to see resultsbefore I think anybody would consider endeavoring on a similar effort.We are starting to see some results, though.The U.S. is the only country in the world to havewon investments from all five of the world's top chip makers.And if all of them pan out, we could see nearly 30% of advanced logic chips madein the U.S.

By 2032.And people debate about this all the time of just how advances this U.S.technology when it comes to the like the design of these chips.Is it a wide gap still with China or do you think it's actually narrowing now?So China is still several generations behind the U.S.and its allies. What's important, however, is the U.S.right now produces 0% of these advanced chips.They're actually pretty much all made in Taiwan.But TSMC is building three factories in Arizona.They will produce their most cutting.

Edge chips there.Still a couple of years after those chips come online in Taiwan.China, meanwhile, broke through with seven nanometer.So a couple of generations behind the cutting edge, two nanometers or 1.8nanometer technology in this mate 60 phone that debuted in August, thatreally caught Washington by surprise. You know, the US had been trying to keepChina from getting to that advanced chip technology level with export control,saying you're not allowed to buy the most advanced chips or the most advancedchipmaking tools from the US or the allies that Washington has managed toget on board some of those restrictions.

Yeah.Yet when we opened that phone, lo and behold the seven nanometer chip as Yeah,fantastic big take here, by the way. So for our viewers and clients to checkthat out on your Bloomberg, our U.S. industrial policy reporter MackenzieHawkins said. Right.For more on the state, of course, of U.S.and China relations and a lot of these overcapacity conversations, U.S.Treasury Secretary Janet Yellen there because she'll be speaking exclusivelywith Bloomberg TV and radio that takes place at those times later on Monday.Yep.

And you take a look at what reallypeople are thinking when I look at tech now.Right. You know, is it more a bet on justinnovation? Why are there's still so much interestin it? And it's interesting, these results thatwe get from this Bloomberg Markets live Pulse survey is that it's actuallyserving as a haven and almost like an inflation hedge.We ask that question to a lot of our people that took this survey.Basically, what is your still haven of choice here right now?Is it the likes of the dollar, the Swiss.

And the yen?Well, the dollar is still very much in terms of a haven currency.So the yen definitely diminishing on that front as well.And really, you know, what else are we looking at?I mean, tech news seems to be. Yeah.Is even beating the likes of gold in some ways as a better way to safeguardagainst inflation? Yeah.I mean if if if it continues to return and just performance alone just undermax seven. Right.If it continues to do this way it it has.

Not just been a hedge in.Inflation, it's actually outpaced an offset and sort of paid for theinflation that you would have taken. And the fact that, you know, again,we're talking about invented here. You know, the headline is in Rivals Goldas a Shield against Inflation. The fact that this earnings report istwo weeks away and we're talking about it at this point in time justunderscores how important this stock is really to this global bull market.Then you as bull. I mean, bear in mind, there's still alot of people say, no, you can't use large cap you as a source, as aneffective recession hedge as well.

But you are seeing gold take still thefirst seat and then maybe these other tech giants are following and, you know,definitely beating other asset classes, even Bitcoin 5% only.Yeah. Okay.We play Morehead. This is Bloomberg. Welcome back.You watching the China show. So we've actually learned that Beijingplans to start the sale of these ultra long special central bank.Well, central government bonds on Friday.Conversations, in fact, took place with.

Some of the dealers early this morning.Let's bring in James Bigger, our China economy editor to just get us up tospeed, James, and what we know in particular about the sale and maybe ifyou know the breakdown of all of the sort of tenors we're talking about thatmight hit this market on Friday. So we're looking at about¥1,000,000,000,000 worth of bonds. It's broken down into 20 bonds, 38bonds, and then about ¥100 billion of 50 year bonds, which is, I think, thelongest government bond that has been issued by the by the government here.And what these are these are announced in the budget and in March, and this isbasically meant to provide money for the.

Central government that it can then useto support spending by local provinces and local governments across thecountry. The really the the the need for this, Ithink, was showing the need for these new bonds that was really shown by thecredit data we saw over the weekend where you saw a government bond issuancefall for the first time I'm sorry, the second time in since2017, you saw a big slump in borrowing by households and by companies.And so the total credit data showed credit issuance in April was actuallywas actually was actually negative for the first time since 2015, sorry, since2005.

So, you know, basically there isn't anydemand for credit right now in the economy.April is very weak. And so these bonds that the governmentis is going to have this money, the borrowed money the government is goingto borrow by selling these bonds is meant to make up for the slump inmortgages because of the housing crisis, the slump in demand from companies forloans because the economy is weaker. Right.So what can we expect then, that the credit data, I mean, in May and June cancan actually expand from here? I mean, what was April going to lookmore like an anomaly now, now that we.

Have this announcement?I think it will. Obviously, the government bond portionof that was probably going to look a little bit better.But you did see a ¥98 billion fall in that amount of government bonds that wassold in April. And so there has to be you know, thesebonds have to be sold pretty quickly now to really boost that that was fully inthat hole that we saw. But it's not going to fill in the holethat you're seeing in the lending data. I mean, if people are willing to borrowfor mortgages. Household borrowing is still going to beweak if companies aren't willing to.

Borrow to invest.Company data, the company borrowing data is still going to be weak.So, you know, we may well see a pickup in the government bond portion of thetotal social financing data when it comes out for May in early June and thenthrough July through the rest of the year.But the other parts of the economy, the real economy, not just governmentspending, but private spending and household spending, all of those thingsare not going to be directly affected by these by these bond sales.And it really is going to take time for the government to sell the bonds andthen sort of just spend the money on.

Infrastructure and other projects.And then for that spending to filter through and actually try to boostdemand. So, you know, this is a good sign.The question is a lot of people have is why did they wait so long to actuallystart selling dates? But it's a good sign.But obviously, you know, this kind of spending doesn't have an immediatemultiplier. Yeah.Yeah. Where do we see it in?Well, we I guess, try and figure out the the the delta, the rate of improvementin the economy.

James, just if you could set us up forthe for the data that comes out this week, later on in Friday, I believe theactivity numbers have set the scene for us on what to expect from those numbers.I think what you're going to what we're expecting from those numbers is the theindustrial side of the economy will continue to be doing okay.We saw export data in April, which was pretty strong.I mean, part of that is is a price effect.Your prices are falling. So actually exports are doing muchstronger than that. They would have done that they did lastyear.

But that's being undercut a little bitby because prices have fallen so much. So I think the industrial side of theeconomy, the exports are the economy will well do.We'll continue to do to do better. I do know whether the retail side of theeconomy also continues to improve or not.I think is there really is the really big question.We did see better household spending over the holiday period on services andthings like that. But, you know, there wasn't really amassive increase in how much it was spending.The per capita spending over the.

Holidays was down.It was just the more people went out and spent.So I think here you are still looking at that.So we'll continue to see that two track kind of economy that we've seen for along while now. And China, where industrial is good orindustrial is better and household is worse.Yeah. James, thank you.James Baker, There are China economy editor with the latest on that.We got plenty more ahead. This is Bloomberg.

Welcome back to watching the China show.Here are some geopolitical stories that we're following right now.The Philippines says China has deployed vessels and divers to explore a shoal inthe South China Sea for reclamation. The nation's coast guard says it sent apatrol ship to what Manila calls shoal to deter some of theseactivities from the Chinese. Now, the area is close to Paul AllenIsland, of course, that's in the Philippines, which directly faces thecontested waters. The development adds to growing tensionsbetween Manila and Beijing. Now Russian President Vladimir Putin hasreplaced his long serving defense.

Minister in what was really a surprisemove. Sergei Shoigu, who had been in the Postsince 2012. And that reshuffle is the first majorshakeup of the Kremlin's military leadership since the Ukraine invasionand comes as Russian forces, as Russian forces seek to capitalize on abattlefield advantage in that war. Now, the U.S.says Israel risks fueling a postwar insurgency in Gaza with thousands ofarmed militants remaining in the territory, even if Israeli forces invadeRafah. Israel says that it has now evacuatedthe eastern third of the city as it.

Prepares to expand its militaryoperation. Last week, the U.S.said it would withhold weapons that may be used in Rafah and cited evidence thatIsrael had breached international laws protecting civilians.All right. Take a look at your China brief thismorning, a look at what's making headlines.And national newspapers, The Security Times quoting housing industry insiderspredicting further easing of restrictions on property purchases.It also cites analysts who say Beijing may set up a platform to consolidatehousing inventories.

That's why we're seeing these propertystocks really flourish. Share some of the China's major citiesdid scrap home buying curbs last week in a bid to revive demand.And the Security Journal also seeing that credit growth is stabilizing asgovernment bond issuance speeds up on the back of that breaking news that wejust brought to you, it also predicts real lending rates dropping further onexpectation of a modest rebound in inflation.And there's been some commentary in the Economic Daily saying that officialsshould make and deploy policy tools, including ultra long term specialgovernment bonds, to help build up.

Security capabilities in key areas.Very timely. Yeah.Guess what? Breaking news could come on Friday.A lot of these. Okay.So from tomorrow, by the way, public service announcements, you can tune into Tiger Money, a Bloomberg podcast co-hosted by myself and BloombergIntelligence ETF experts Rebecca Sense. And we'll be chatting and really take meinto the deep waters of investing and getting career advice from some highprofile guests. Tune in every second Tuesday.You can find that on Apple, Spotify,.

YouTube and also Bloomberg.com.So if you like what you hear but hate what you see, this is the audio versionof me in another version.And if you want more of David, not not one or the other.Come on. Yeah, yeah, right.I can't have one. I'm kind of sick and tired.Of what? Guess What was the first guest, youknow? Well, yeah.So tomorrow, the one that drops is the BlackRock head of the region, GreatSusan Chan.

So she has some interesting takes.And by the way, we want to hear if you're long Japan and if you want togain more exposure to private markets if you if you've had it with these publicmarkets. Yeah those are two big priorities forthem this year. Plus, of course, there's many othersthat of course I'm not going to spill the secret sauce.The first one hints. Yeah, sprinkle some teases there, youknow. So I just want to help hear yourpodcast. There we go.All right.

So global markets here right now arewatching very closely. I think the chip stocks as well.Of course, TSMC with a jump in those April sales that certainly did suggestthat this air demand is still very much there.There's also a dividend hike as well. So that was a bit of a surprise.So another catalyst for the stock higher up some 2% on the taiex here watchingtech. So in the last like let's say 15, 20minutes or so. Yeah, it's been a bit of a reversal.Take a look at it. Just take us now up some 1%.It's helping reverse some the losses on.

The Hang Seng.In fact we are now in the green right now in Hong Kong.Not sure what's sparking it, but certainly there's a lot of tech earningson tap here. Take a look at what's really in store.So Alibaba, Tencent, Meituan, Tencent music reports, I believe today first.But yeah, this is really what's driving it right.Take a look at Alibaba up about three and a half percent.There we go. So we're up now three straight days onthe Hang Seng tech index, which now puts us back.In fact, I'm looking at some of the.

Weeklies right now.So we did take a bit of a break last week in terms of technicals, HS techindex we're looking at. So at 4000, this is actually a key levelthat we haven't managed to break sustainably on this specific index.So this probably gets us well underway, but it depends on what these companiesreport and what they say about what's ahead and as one.Pointing out, of course, Tencent music reports today to just get started.Okay, we're looking at some of the banks as well and some of the earnings coming.So there we go. So Baidu, Baba, JD, dot com and Tencent,just some of the big companies reporting.

This week.A lot of them Japan of course as well, Rakuten and also some of the bigJapanese banks reporting as well. So yeah, conversations around really howyou know, this higher rate environment in Japan has benefited question marksome of the net interest margins there in Japan.Yeah, it'll be interesting. So on all this, I was just sayingearlier on, you know, we are just going to probably have to hike Yeah.A few times more this year as well. That's why we'll take a look at thesemarkets. It's your global macro level.Doesn't really tell me much.

I mean, it's basically just a mixedpicture across the board, but equities are slightly doing a little bit better,mostly higher here. The dollar is a bit firmer across Asia,affects here this morning. And yeah, you're watching some of thesesovereign yields picking up just a little bit.Japan in particular, again, that breaking news of the OJ buying lessbonds than expected here today as well. That's it for us here on the China showwhere markets Asia is next.

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