China Warns Blinken of ‘Detrimental Factors’ Affecting Ties | Bloomberg: The China Prove 4/26/2024

Good morning and happy Friday.Half an hour away from the opening bell here in Hong Kong and Shanghai andShenzhen. You're watching the China show.I'm David Inglés with Hannibal Jewelers. Our top stories here in Asian investorsdigesting blowout earnings from Alphabet and Microsoft.The Bank of Japan decision coming up as well.And potentially complicated by Tokyo. Inflation falling short of everyeconomist forecasts. We're talking geopolitics as well.Anthony Blinken set to wrap up his trip to China today as Beijing responds tohis trade complaints, saying they are.

Playing by international rules.And we're live at the Beijing Auto Show speaking exclusively with pony CEO JamesTong for his outlook on EVs and autonomous driving. A quick look at the market action thismorning. And we were just discussing then Asianstocks eyeing perhaps their best week for the year so far.It is a bit of an earnings theme that's developing and we can get more on thoseafter hours movers in just a moment. What else we're tracking as well is justthat reaction that's coming through to US economic data and actually thosenumbers really surprising to the.

Downside here.Weaker growth figures coming through, higher inflation, reviving that talk ofstagflation once again. So we saw Treasury yields, for instance,hitting their highest 20, 24 levels being reflected so far.What you see for the Aussie bonds base, for instance, that ten year yield rising13 basis points. That big countdown as well to the BOJdecision watching JGB yields there as well as the Japanese yen here holdingabove that 155 mark. And we'll get more on that Tokyoinflation number in just a moment as well.Brent crude, of course, one to track you.

Very close to that $90 a barrel level atthis point in time. Iron ore just a little bit underpressure so far, but let's change on big focus after the bell today.We had better numbers coming through for the likes of Alphabet, Microsoft, SNAP,that big surge. Their sales forecast really impressinginvestors for the current quarter. But certainly if yesterday the story wasabout better not seeing any sort of ROI from its spend, you're really startingto see that playing up, particularly for the likes of Microsoft with itspartnership with Openai Intel. You can see they're under pressure here,but it is that concern.

Intel very much the laggard in theChipmaking space. How long is that turnaround plan reallygoing to take quick check as well? As I mentioned, Tokyo inflation numberscoming out and this sort of complicates the picture for the BOJ coming into thedecision at Tokyo CPI earlier falling short of every single economist estimatethat level of deceleration. It just is that question.Dave, are we starting to see that cycle of of of inflation and and demand driveninflation really starting to take effect.Yeah. It's certainly going to feature into theconversation today.

You know, we still have a couple ofhours of deliberations going on and also at that press briefing will look likewill they set the stage? Can they set the stage for further rateincreases ahead? Certainly the BOJ as well, pointing outpart of the conversation today. Back here in this part of the world,this part at least in Asia. So we could see could is the operativeword here, the Hang Seng index and we'll end theweek higher. That's that's almost a given.But every single day so far. Monday, Tuesday, Wednesday, Thursday andFriday.

The last time that happened, we thinkback in back in July of last year. More on the rally in a moment.Anthony Blinken wrapping up his trip to Beijing, is set to meet China's topdiplomat, of course, Wang Yi. The question is, will they he then moveon to meet Wang, his boss, of course, Chinese President Xi Jinping, we believeat the Beijing Auto Show. Pony Air joins us in a couple of minuteshere. Just drop in, see an inch high.Boy, that we went from 6 to 2 yesterday, so about 400 basis point drop on andthat's overnight. To be more specific, get tech stocks infocus and also within the tech space,.

Earnings in focus.So a very good representation, cross-section of Chinese industry comingout today. So everything from a maotai to airlinesto financials like WorldCom and CITIC Securities.And also interesting enough, a lot of the gold mining stocks and which havebenefited from gold prices are also reporting to De Jong Jing and alsoShandong Gold reporting as well. All right.That's the set up for today. Let's let's get into it.That's right. Yeah.Let's get more on how markets are.

Shaping up, bringing in Bloomberg's NYstrategist, Mary Nikola. And Mary, we were just discussing therethe numbers coming out from the likes of Microsoft Alphabet as well, reallyimpressing investors after hours. Do you think that's going to be enoughto offset any concern building around the US economy?I think this is exactly what the market needs to rally, is to show that thefundamentals of these companies are still going strong.So you still have a few more coming through.You still have Amazon next week. So there's still a few of theMagnificent Seven coming through in.

Terms of earnings.We haven't heard yet from NVIDIA as well.So that all this all these earnings and outlooks that show the resilience givemarkets and traders some relief that there's not that there is sustainabilityand some fundamental support behind this equity rally.Right. Mary, the other development overnightalongside the earnings story, we had the data, of course, GDP and also PCE.And, you know, yields are back to highs of the year.We're now down to one cut priced in from the Fed.When you look at swaps, I think the.

Question there, is that actuallynecessarily a problem? Yeah, I mean, one of the key things Ithink we need to look at is the GDP numbers.Yes, the headline was weak, but if you look at just under the hood, asBloomberg Economics points out, that if the numbers when you strip about some ofthe volatile components, whether it's inventories or trade, it was actually apretty much a solid number. Yes, slower than Q4, but still prettysolid. And it still tells us that the Fed isgoing to have to wait, going to have to be patient.And of course, the number adds to it.

And then we have a piece of E tonightthat will just solidify that higher for a longer mantra.So then the onus goes on the Fed next week.And obviously we don't have any parts to really focus on.So it comes down to what Jay Powell says and how he interprets all this data, andespecially now for the inflation data. We do have a trend, especially since thefirst three months of the year, we're showing that inflation is still quitesticky. Yeah.And when you think about inflation and perhaps patients as well, the BOJ, ofcourse, very much a focus today, Mary,.

With that rate decision coming out.The Tokyo numbers, though, that were due came out in the last hour or so,concerns that that wage price cycle is still lacking vigor.How does the BOJ come up against that when you've got as well a really weakyen that's starting to hurt consumption. For the Tokyo numbers this time around,I think it's important to to add in that there was an effect from the tuitionaffects that were pulled out. So it might not be that indicative ofhow and it could be and it's very Tokyo specific so it might not be thatindicative of the trend of inflation. But if you look at other factors that infor for inflation, whether we look at.

The GDP deflator or whether we look atTokyo CPI, it still shows that there is inflation, that the BOJ can useinflation as a way to vindicate and say that we're going to hike or dosomething, especially because of where the yen is.The yen has been trading quite weak and if they don't do something, come outsome some some kind of hawkish or suggest that they're going to starttightening their balance sheet, we could see another leg higher in dollar yen.Mary Nicola, thank you in Singapore for us.Our strategists markets in focus here in Hong Kong, especially today, given therally we've seen, H.

S eye is on track for the best weekgoing back to about December 2022. Let's see if that holds.Of course, Asian equities are in fact on track because of what's taking placehere in Hong Kong, on track for the best week this year.Certainly. Cha joins us our asia stocks.Reporter hong kong stocks are hot again. Chinese money's been flowing into HongKong. What's going on?Yeah, this week has been a great week for hang seng index.It's gained more than 6% this week and it's going towards the best weeklyperformance since late 2022 when we were.

Hoping for the reopening hopes.So it's been great and we've seen that in the HK ex how it's gained 15% thisweek alone. And we are seeing that some of theseChinese money flooding in to you know via the trading links is because they'repreparing themselves ahead of these sources pledge to boost liquidity in theHong Kong market and also as the depreciation expectations rise for theyuan, this is usually what happens when we see more of that southbound inflowscoming in. So these are some of the things thathave driven these rally. But of course, the tech stocks havedefinitely powered the rally and HCI as.

Well.And where a lot of the money's gone, of course, is into Chinese tech stocks inparticular was sort of the catalyst for that.And and are there any other sectors as well that we could see those funds gointo? That's why we've seen Meituan, Tencent.These are some of the Chinese tech names that have driven the sector especially.But what's bewildering is that we don't see an immediate or direct catalysthere. It's more of the traders shying awayfrom in the crowded trade, for instance, the Japanese stocks and the MagnificentSeven.

The US tech stocks have been a bitunderperforming and under pressure in April, especially because of theheightened expectations around earnings as well as the waning hopes for the Fedcuts. Right.And there's always that theme park analogy, you know, when it's just toocrowded and you have to wait for hours for rides, you don't really want to dothat. So that's where you are going to.Some are cheaper and that's where the Chinese stocks comes in.So we've been looking at that and of course, we're looking ahead for theimpacts from Blinken's visit.

So some of the places like the solarspace and the EVs and batteries where Treasury Secretary Yellen has alsomentioned about the overcapacity issues and we go so many.Thank you so much. This last point there, right, AnthonyBlinken, we're waiting for more progress there.He's in Beijing right now and we're getting a news line coming through outof Xinhua that they are, in fact meeting.The secretary of state at the US is in fact meeting there with the Chineseforeign minister, Wang Yi. More details on that to follow, ofcourse, right, just ahead.

20 minutes away, give or take.19 now, the opening bell. Shanghai, Shenzhen.And here in Hong Kong, that's, of course, a live shot of Beijing.The opening bell 18 minutes away. You're watching the China show. You're watching the China show and USSecretary of State Antony Blinken in China this week for some prettydifficult and thorny discussions. But one of those just taking place,we're hearing from local media that he has started talks with the Chineseforeign minister, Wang Yi, this morning. Lots of different items on the agenda.Perhaps China's support for Russia's war.

Machine, industrial overcapacity reallyfront and center, but also balancing those against some other needs.A request that Beijing, for instance, help curb North Korea's nuclear programand do more as well to to help ease tensions in the Middle East.So let's get more on that now. Bring in Digby Ren.He's geopolitical risk analyst and policy advisor at Belt and Road CapitalPartners and Digby. There are so many different items on theagenda here, but given we've seen that increasing hawkishness really from bothsides, what would you constitute as a success from these discussions?Oh look, any consensus agreement that.

Can be arrived at is going to be asuccess. But of course, I think within thecontext that we have now, especially with all of the statements and the andthe brouhaha that just happened in the week before Blinken leaving for Beijing.So spies, genocide, overcapacity, all that sort ofthing. It doesn't it doesn't put a nice smoothground for the beginning. So it's a case of a lot of a big medianarrative splash. But when it comes down to it in Beijingtoday, I think it's going to be very small ripples.Very small ripples.

But sometimes small helps, though,digging in and wondering for both sides to follow up on this question there.What specific concessions do you think the Americans will be able to take backhome? And also, what would constitute a winfor Beijing? What do you think they'll get out of theUS? Well, I'd rephrase your question justslightly and say, you know what? What is what is the US going to get outof it? And.And the answer is what the US is going to get out of.This is really nothing.

I don't see any possibility for Blinkento come home with a package that's going to make the election in November lookbetter. That's going to make the Americans lookbetter in any way. One has to remember that the beat, thenarrative push that the Americans have released in the run up to Blinken'svisit to Beijing is really just a noise at this point in time.And so even in that meeting room right now, it's going to be a very differentstory. And I think the five points that Chinabrought up, you know, and the first one, the very, very first one is, you know,can this be done with mutual respect?.

And I think that, you know, there's noreservoir in Beijing anymore for the for the actions of the US, you know, whichis always punch first and then try to be nice later.This is not going to work. It's the same old playbook.And I think Blinken's and Biden have put themselves in a very strange situation.Visa v China. And I don't I can't see a lot coming outof this that I don't think there's going to be any takeaways for the US out ofthis at all. Just as we're speaking, Digby, we'regetting a line actually coming out from one guy saying that ties have stabilisedbetween China and the US.

And and there is, I guess, an argumentthat talking is at least a positive being in, in, in negotiations ordiscussions with each other on a semi-regular basis is better thannothing. But still the negative factors arebuilding. How do you think China's weakenedeconomic position sets it up going into these discussions?Well, I think the figure I just saw some figures.The very first thing this this morning was 1.6% GDP growth for the US, 5.3 forthe for China. And going forward, I think China is setfor it's probably going to stay hovering.

Around 5% for at least the next fewyears unless something really big happens.But look, in the lead up to the November election, I think the US has got tomaintain this idea that, you know, it's got great economic growth and that youand that China doesn't that China's weakening.But look the 5.3% growth. Sure it's slower growth, but it canhardly say that the economy was weak. So, look, this doesn't bode well for theUS, actually. So and with the, you know, look,overcapacity is going to be a big thing about exports and everything else.But you can see that the Europeans are.

Slightly in Macron's recent statement.The Europeans are kind of trying to now balance with Asia to offset theirproblems with, you know, with Russia and so forth.And, you know, Macron saying, well, hang on, maybe a little bit of distance withwhat the US policy really is. So look, yes, speaking to each other isalways good. But I have to I have to say that.Really in this way. It's very pragmatic and I honestly can'tsee that that that any real positive outcomes are going to come from this.Other than that, there's still diplomatic contact.But, you know, Blinken's record in.

Diplomacy and amongst diplomats is notgood. Okay, Well,Digby, just hold that thought there, because we are getting speaking ofAnthony Blinken, we're just getting more lines coming through from this meetingthat is, in fact, taking place as we speak here.He's told his his counterpart that, well, the need to avoid miscalculationsand my brain, Digby, immediately goes to the South China Sea in terms of justmiscalculate miscalculations here. Among the many things that they need tosort of sort out and keep within the rails.What do you think happens with the South.

China Sea?Well, South China Sea is going to just keep going.The the the essential problem in the South China Sea is is not so muchmilitarization. The real problem in the South China Seais that that's where all the trade goes through.And most of that trade is Chinese based trade when China trade with itsneighbors. And China's problem is always it wantsto guarantee its own security for its own trade, its own periphery.And of course, as long as America is active, far from its frontiers and onthe periphery of China, I think China.

Has no choice.It's it's always going to to have to say that, look, our security in ourperiphery is more important. And this this means that the long termmeeting point for activity in the South China Sea is actually related tosomething else. It's not really related to the SouthChina Sea. And you can see that there's only onevery small problem that's been going on for the last six months, which is, youknow, the Philippines. So, look, I think that the code ofconduct is Indonesia tried to push it through the Asia this year, will now tryto keep doing that.

Let's hope so.But look, I don't think the South China Sea is the biggest problem.Final question for you. We're still trying to we still don'tknow whether or not Anthony Blinken then gets an audience with the Chinesepresident before he flies back up, Stick your neck out.Do you think they'll meet? And what would that mean in case, ofcourse, he does meet with the Chinese president.Well, that would mean that something some consensus, some positive step hascome out of the of the three day trip and that a meeting with Xi Jinping willkind of seal that there is some kind of.

Consensus going on.Whether that's going to actually happen right now, I think depends on whathappens today. If it rolls out today that there is abreakthrough, where can they get a breakthrough, Something on trade that'sgoing to be very difficult with more sanctions on chips.Look at the possibility of swift banking system.That's a very dangerous maneuver. Look, I think Xi Jinping might very wellmeet Blinken, but it's got to be based on the sense that something comes out ofthese talks. And Blinken's wants that.I think he definitely wants the.

Opportunity.So he's got to find one thing and look that possibly, you know, what can thatbe? Multilateral cooperation is the obviousone. But all the other ones, militarysecurity, human rights, the trade. I think these are all going to be very,very complex. And the and the really the one thatyou're going to get is diplomatic engagement.Yes. Keep going forward.Keep having discussions, but and multilateral cooperation.But I think that's all all of that is.

Still very, very complex and going toprovide us with a lot of of media attention until the November electionsin the US. All right, Digby, Digby, thanks for yourtime. That was Digby Wren there, geopoliticalrisk analyst and policy advisor at Belt and Road Capital Partners.And as we said, the US Secretary of State Antony Blinken, meeting withChina's Foreign Minister Wang Yi. Talks is opening in Beijing, but let'sget a look at some of the other top geopolitical stories that we're trackingthis morning because Saudi Arabia plans to host a meeting on Monday to discussGaza's future with foreign officials,.

Including U.S.Secretary of State Antony Blinken. Sources say the talks in Riyadh may alsoinclude the EU, the U.K., Jordan, Egypt and Qatar, as well as the PalestinianAuthority. We're told it's designed more forinitial contact between the parties than anything likely to achieve concreteoutcomes. The U.S.has decided that Australia and the U.K. do not yet meet the arms exportstandards required for the three way military alliance known as ORCUS.It's a sign the security agreement announced two years ago may be in fordelays.

The US was required to formally certifythe standards by April 20 and Australia and the UK now have 120 days beforetheir next assessment. It's 9 a.m., 920 in the morning here inHong Kong. It's when you look outside the window,though, it seems as if it's 930 in the evening.It's dark, the clouds are upon us and it looks like the heavens are about to openup. So hope you're wearing your cheap shoestoday. Hong Kong stocks set to open higher,though, this Friday, 6 minutes away. The opening bell.This is Bloomberg.

Just about 5 minutes away from the openin mainland China and Hong Kong. But some of the stocks that are movinghere in pre-market trade. One of those well, JD logistics actuallyunchanged right now, but it has been reinstated to A by Goldman B wide.Of course, tracking here, doing a share buyback of nearly a million shares.See, Snoop, we had its earnings out, record profit output expanding to an alltime high. And then as well, watching junky copperhere because copper, as you were saying, are reaching its highest level, theDalian contract since 2006, 80,000 there for the first time renminbi for thefirst time since that time.

There we go.If Paris Hilton was commenting on this market, she'd say one thing that's hot.This is Bloomberg. Welcome back.Your watching the China show. We're counting down to the marketopening, but also underway this morning is Secretary of State Antony Blinkenmeeting China's top diplomat, Wang Yi. And so far, some of the headlinescrossing from that is that Blinken is saying they kind of avoid any sort ofmiscalculation. And Wang Yi as well, saying that tieshave stabilized, although negative factors, David.And they're also said to be building.

Here.Yeah, there we go. More lines coming through which we'llget to you once they do cross, of course, the Bloomberg terminal.Welcome to the show and happy Friday. 10 seconds to the opening bell.And the question really on Antony Blinken is after this, does he then moveon to board the plane or did he meet with the Chinese president, Xi Jinping,ahead of that trip back on the open and market way?So it's been very good. It's been very hot weather wise and inthe markets at Hang Seng Index 17 for right now, 3/10 of 1%.Every single day this week, five.

Straight days, give or take.Last time, actually, we had a gain Monday to Friday was back in July oflast year. Effectively, we're looking at just abouttwo depending on the index. You're looking at.Of course, the best week for equities here in Hong Kong, in particular goingback to late 2022. What happened then?China was coming out of of Covid zero weakness across the currency markets.A quick glance at commodities but since we're wrapping up the week right aglance up you're the the four best performing stocks effectively here inHong Kong.

Is there any temptation to take moneyoff the table given the move up in price?We've seen and we were having this conversation earlierwith our interest support, essentially China and really a symptom perhaps ofthis rally taking place are the gains we're seeing in shares of HK this week.In fact, we're going to show you that once we turn the page here, a couple ofstocks leaning side a biopharma HK is still up May one, 3/10 of 1%, as you cansee on your screens. We talked about earnings.I'll do this very, very briefly, page one, of course, of the big earningscoming through.

So you have the big consumer staplesnames, liquor makers, Kweichow, Moutai, and of course, one of its rivals, Lu JoLao Zhao. A lot of the big industrial, too, comingout to Bausch and Steel Chancey copper financials like China Life, Bank of BOEcomments also coming out with results today.And there we go see the SEC. A lot of the gold mining stocks, ofcourse. And speaking of and given the themewe're tracking as well this week, Gwangju art is coming out with earnings.Some data, initial estimates on data for April coming through a decline, Ibelieve, out of the year.

They're doing estimates going into theselast few days of April, bottom of your screens down one and a half percent yearon year. So yeah, no, that's a big auto theme, ofcourse, coming through overseas markets this week.Very big autos. They really a big focus, of course.And I'm just thinking if you're not glued to the headlines coming out fromfrom Secretary of State Antony Blinken, Wang Yi, then you're probably also justfocusing on what's happening in the Beijing Auto Show.And let's get back to our correspondent Stephen Engle, who's there with our nextguest.

Yes, that's right.I mean, technology is the theme here. Obviously, EVs are in high displayacross the spectrum of different kinds of cars, obviously.And the Chinese players are major players here, of course, in the EV spaceand high tech smart EVs. But, you know, it's not just gadgets.Obviously, in technology, fully autonomous cars, they are a reality andthey are likely the future. And I have with me the founder and CEOof Pony A.I., James Pung, who is pioneering a lot of this technology forautonomous driving, including the one behind you, which is the partnershipwith Toyota and also Gwangju.

Otto That joint venture essentially hasthis fleet of Robotaxis. You are already rolling these out on thestreets of China. How much of a good test ground is Chinabecome for this kind of technology? Yes, great.It's great to see you, Steve, in the Beijing Auto Show.In fact, we have already testing the driverless vehicles on the open road inChina for the last six years, starting from a year and a half ago.We're running fully driverless in both Beijing and Guangdong to the public, tothe public. So actually paying passengers aregetting in these and using them as a.

Robotaxi.Absolutely. In select areas, though, in the wholeregion. So in the whole district, it's not likea small hop off the road, for example, in Beijing is 60 square kilometers ofAdrian district. And in Guangdong, it's 800 square feet,a square kilometers of the Lanzhou District.So it's the regular users using this vehicles as a taxi service fortheir daily usage. So what's the next step?I heard there was an announcement yesterday along with Toyota, your mainpartner, that there will be a fleet of.

These robo taxis across China.Can you give me what you plan over the next five years?Absolutely. So the first and foremost, Toyota is astrategic partner and an important collaborator for I.And the joint venture we've formed lately is for the mass production of thevehicles that we have seen over here. And this will be the thousands ofvehicles that will be off the assembly line of the AC factory, and they will bedeployed into the cities for the regular users and passengers to enjoy.Tell me a little bit about the technology.We're going to talk about the IPO coming.

As well and some of the other finances.But as far as the technology here, of course, there's there's some debateabout the right technology going forward.We know that Elon Musk is talking about Robotaxis as well.He's kind of looking, though, for a pure vision technology using cameras less onmaps and LIDAR. What kind of technology do you havebuilt in here on the on the in the in front of the car as well as on the top?Yeah. Of course I think this vehicles comparewith our previous ones at least on the look on the look youhave two important improvements.

One is it's much more integrated.If you take just a glass of it, you can hardly tell this is a robotaxi, right?It's like that. All the sensors are fully integratedwith the vehicle. Another feature is we have greatlyenhanced that user user interaction features.For example, the interface inside the front panel even has the welcome lightson top. In terms of the technology.We use sense of fusion with LIDAR with camera.The main reason is we think technology is the means to the end, which the endis for safety for companies.

And we use a good technology to ensurethe passengers are safe. They're going to enjoy the ride.And as the technology progress, of course, we'll probably use cheapersensors and the like. The price is going down to that to thehundreds of dollars even cheaper. Right.So so what all you obviously you've applied for an IPO potentially in theUnited States, either the NYSE or the Nasdaq.We got that announcement this week from Chinese regulators.They've essentially approved. That is correct.Right.

That's why these regulators haveapproved for you to go listing the United States, which is a big move aswell, because there's been a bit of a chill, obviously, for Chinese listingsin the United States. First of all, how significant is that tolist in the United States to tap those institutional investors?And how much do you really need to raise to essentially propel this?That currently is a CCRC approval. So that means we are from the Chineseregulatory point of view, we. Are eligible to be listed.But then, of course, it's just the beginning step of the IPO journey.And along the way, we'll talk to the.

Investors, well, see what the marketcondition is. And then based on that, we'll form ourfinancing strategy. Do you need to be profitable before youlist? Are you profitable or when will you beprofitable is the better question. No, I think for us, the compare with.Multiple several years ago. The good news is we actually formed asolid business flat. Right now we have actually solid revenuecoming in. We have great partners like Toyota.So and we have actually formed into a trucking business, into the massproduction ADAS business.

So our business lines is diversified andI think we are in a good solid condition to be IPO eligible.Of course, in terms of the profitable, I think it's along the way, part of thejoint venture and the mass production of the autonomous driving vehiclesis a solid step towards the path to profitability.However, if you do this in the United States, obviously you have some globalambitions. How do you address the data securityconcerns that have risen? I mean, you have to navigate geopoliticsand data security. You don't want to become the next one inthe crosshairs like tick tock.

Right.So how do you address these issues? Yeah, absolutely.That's that's I shoot in the front at the center of our strategy, goinginternational. Actually, currently, we already haveplans to work in the in the Korea market in the Middle East.And we actually have a small effort in the Luxembourg as well.Each of those efforts, the local regulation has always been thenumber one in our mind, and we'll follow all the regulatory requirements in termsof data security. We have a strict policy.All the local data stays local.

And of course, all the other.In terms of just that, the other mapping issue, that everything else, we aredefinitely conforming to the regulation. Are you finding you talked about thoseinternational ambitions in South Africa, in Luxembourg, in Saudi Arabia,obviously potentially listing in the United States.Are you finding that these the Chinese offerings, including what you'reoffering, is is being well received because the U.S.has its own offerings as well, like Waymo and Cruise?What kind of reception you get? Yeah, I think the reason well we'll gointernational is the first thing is it's.

Our vision.It's our mission where we our our company model is upon us and mobilityeverywhere. So very start from day one.We have the global vision to offer a driving service to the users globally.We have good partners in those local markets and they value and cherish ourtechnology, our product. So it's their help.It's their local government's help that enabled empowered us to go to that thosemarkets. Very quick, we have to go.But I feel within five years, within two years, hopefully sold out.But we'll see within two years,.

Hopefully.Hopefully. I knew he wasn't going to nail that downfor me. We'll see.We're going to go down and test out their autonomous driving vehicles aswell, potentially as early as this weekend.We're going to we're going to see for sure if this works as claimed.Back to you guys. We'll stay.Really looking forward to hearing how that goes.So much expectation around these autonomous cars.That was Steve Engle there speaking with.

James Peng.He's the co-founder and CEO of Pony Eye. Of course, as we said, looking aheadperhaps to a listing in the US. But let's take a look at some of theother stories that we're tracking in China on the policy front.A State Council report says authorities will strengthen their informal guidanceamong state owned banks. It's a bid to stabilize credit growthand boost economic development. The report also says China will supportstate owned banks in selling total loss absorbing bonds.A commentary by the BBC and the People's Daily says it will promote legislationin key and emerging areas of the.

Financial industry.The report says the central bank will bring all financial activities undersupervision and promote risk prevention in key areas.It also threatens lifetime business bans for people who are, quote, seriouslydishonest. Bloomberg has learned that China hastaken another step to limit domestic investors exposure to offshore debtissued by fees. Sources say the country's interbankmarket watchdog has halted registration of new credit linked notes.That's the derivatives product that uses offshore Lgv debt as underlying assets.It's indicated the suspension is.

Temporary, but not when it may belifted. Dave, get brief checkup markets 12minutes into the session and we are looking and getting a day five and alltogether now. Currently on track for the best week forHong Kong equity markets going back to the official start of that reopeningrally in early November of 2022. Does it help?Question Mark, plenty more ahead. This is Bloomberg. All right.Good news on the earnings front. Two big tech coming out, numbers inFocus after the bell, Microsoft.

Alphabet.You can see that surge coming through. SNAP another big gainer.Intel, of course, disappointing to the disappointing investors, but we can getmore on those earnings. Bloomberg's Jon Hyland is breaking downthe numbers for us. Alphabet, Microsoft and Intel are allout with earnings results after the closing bell here in the U.S., theGoogle parent alphabet posting strong first quarter results and announcing itwould pay a dividend of $0.20 a share and repurchase an additional $70 billionin stock. Shares were jumping in post-markettrading on those results, which saw.

First quarter revenue come in aboveestimates at $67 billion, excluding partner payouts.And when it comes to artificial intelligence, the company's president,CFO and CIO report said they're excited about what I can add to the userexperience within the search business. Meanwhile, Microsoft also out withrevenue numbers for the quarter that topped analyst estimates coming inoverall at $62 billion for its third quarter.The company's cloud division Azure, saw revenue come in better than expected ascorporate demand for artificial intelligence was a driver of strength.On the earnings call, the CFO said that.

Azure sales beat was fueled by AI andnon A.I. tasks.And finally, chipmaker Intel trading lower after offering a lacklusterforecast for the current quarter. Intel, which is the biggest maker ofpersonal computer processors, said that sales will range somewhere between 12and a half to 13 and a half billion dollars, which is just below the averageanalyst estimate. The company's CFO said the forecast washurt by a packaging capacity shortage. He also added that the first half of theyear has been softer than expected, but they do expect stronger results in thesecond half.

From New York, I'm John Highland.This is Bloomberg. To read more on these earnings comingthrough this week, robert li with us here on set, bloomberg intelligencesenior analyst for a deep dive into what we've heard and what we've seen so farand what stood out to you the most. Okay.I think it has to be Google. So we saw three main companies reportlast night being Alphabet or Google, which was really good than Microsoft,which was pretty good. And then Intel, you know, a continuationof the company, specific issues that it's suffering at the moment.So just looking at the Google, we saw.

The dividend, which was a bit speculatedin the market beforehand. So again, enhanced shareholder returns,that has to be a good thing. Their ads business is holding up reallywell given the strength of the US economy.Numbers came in ahead on that front. YouTube related ads.The very strong margins came in substantially ahead of expectations.What's not to like? So I think, you know, the Google numberswere alphabet numbers. So I'm a bit old school.I keep referring it to Google. It's alphabet these days.But, you know, I think it looks pretty.

Strong.Having said that, just to take a brief step back, their CapEx is ramping upsignificantly, as we saw with matter a couple of days ago.They're looking to put heavy investment on the side going forward.And I think there still is that question for investors.While things are definitely moving in the right direction, you know, are theygoing to fully monetize that in the long run and are they going to fully recouptheir investment? So I think there is a residual questionthere. And also, one last thing just onAlphabet, the free cash flow numbers for.

The quarter actually came belowexpectations. Market doesn't seem to care about thatat the moment. But again, it's the very heavy CapExburden which is impacting free cash flow generation.And I think that's a trend we're going to see in coming quarters.Do you think Microsoft is doing a better job at monetizing on the AI front?Because a lot of investors that we speak to are saying that this is now becominga key stock driver and we are actually seeing revenue being generated.But if the outlay is is is a lot higher than that, why do you think thatinvestors are more optimistic when.

Yesterday they really slammed Mira forfor increasing its CapEx but not seeing so much ROI on A.I.spend? Yeah, the beauty of Microsoft is it's avery broadly spread business. Having said that, it still has a mainexposure to the PC industry. So what we saw there is that cash cowbusiness on PCs. While it may not be the highest growth,you know, it's doing very well and very steady.We had the impact of the Activision game side that mainstream games and Xbox isdoing well. You know, it's very diversified broadlyspread.

And don't forget as well they own Azure,which is the number two ranked cloud business in the States.So that is both generating from decent demand still on the corporate side plusthe incremental side. So I think and don't forget as well,Microsoft has this major stake in Openai.So I think it's a much more diversified business with key inherent strengths andmarket leaderships in most of its business, plus with a much strongerposition in AI overall. So I think on fundamentals, I thinkMicrosoft, while it may be a slightly slower burner versus the others, it's alower risk play on AI.

So yes, I agree that I think they'revery well placed in the long run. Yeah.Speaking of fundamentals, I mean, Intel fundamental is a very different story.It's really very weak in in in the chip race.And and the company is sort of asking investors to be more patient with itsturnaround plan. Do you think that we're going toactually see the light at the end of the tunnel?And what are you expecting as well for its new Goudie chip as well?Yes, the Intel has had challenges for, you know, a good number of years.Going back to the beginning of my.

I mean, they're a PC centric businesswhere they very you know, they're the number one ranked in PC processes andalso server processes. As that market has slowed over theyears, they've looked to diversify into other markets.Going back, you know, more than a decade they were looking to diversify intomobile. That really didn't come off for them.These days, the focus is more on foundry.And again, given the technology and market leadership of TSMC, it's really,really hard for them to break into that. So what we saw last night is, you know,foundry isn't really coming through for.

Them, and that's been the case, Goudy.It may or may not benefit them, but we'll have to wait to the end of theyear to see that. It's very early days and winner takesall because Nvidia, you know, it's got a commanding lead at the moment.Yes. Still around 90% of market share.It is substantial market share. Yeah.All right. Robert Lee, thanks for your time.That was Robert Lee there from Bloomberg Intelligence.And speaking of I of course, the the information is reporting that ElonMusk's A.I.

Startup, SAIC, is close to raising $6billion from investors as the company looks to compete with Openai.Their sources say the funds would value the company at $18 billion, excludinginvestment. Sequoia Capital is said to be one of theinvestors participating in the funding round.We'll have plenty more ahead. This is Bloomberg. Right.As it's Friday, it's certainly good to wrap up.One of the key themes that's emerged this week was really the revival of thedeals market here in Hong Kong.

Soa lot of IPOs, a lot of trading debuts, but not to mention, of course, how thetrading day is sort of. Yeah, well, a lot of disappointmentmaybe as well. That was so I was trying to avoid it,but. Yeah.Okay. Since you're going there.Yeah. Three big ones in focus.But the main one is at Bardo, which is a tea maker or tea company in that listedin Hong Kong that's debuted or raised more than 300 million, which is sort ofa threshold that we look at for.

Something more significant value.But big underperformance and you saw the smaller deals there, the engineeringservices firm, that's the second one on the list and a Google backed aircompany, that's Mobvoi as well. Not great results really coming through,does it? In fact, on Bell's point.Right. So the the bubble tea maker is tradingat the 11 IPO price of, what, 17 and a half?So that's still what was below water. What was really interesting as well isthat they had a fixed price for that. They didn't do a marketed range.Yeah, the shares at 1750 apiece.

And so what we also heard from sourcesthat a lot of people that subscribed to the share sale were family or friends aswell. So it didn't even really perhaps getmore of an institutional cornerstone. Investor.Exactly, Yeah. So as you can see, that really bigslide, it doesn't bode very well. Of course, Hong Kong is trying toattract more listings. The IPO pipeline is very weak.But I also find it really interesting against the backdrop of the performance.So is same for Hong Kong stocks as well, the Hong Kong stocks and Hong Kong StockExchange.

Right.Which is which has done very, very well this week amidst the flops we're seeingin the IPO market. And just a juxtaposition.It's night and day, right? We've done very, very well on abenchmark basis here in Hong Kong. GME is looking like this reports for thebest week so far of the year. All week we almost forgot it's BOJ day.I guess we have another hour to discuss that.More on that and others in a moment. This is bloomberg happy friday. Welcome back to the China show.Saying gains for mainland equities been.

Our focus very much shifting to Japanthis morning as we await the BOJ decision.No change is expected, but if history is any sort of guide, we could be waiting alittle bit longer for the decision because since the way to took the helm,the BOJ has released its policy decision at an average of 12:31 p.m.local time. David Yeah, so I guess we're takingbets. We are in fact taking friendly bets herein the NEWSROOM what time that decision comes out.I think I take it if they come out this hour or so.So fingers crossed for that.

No incentives, particularly marketswise. Hang Seng index 30 minutes into thesession, 1.4%, 17 five right now, five straight days of gains on track for thebest week here, going back to November 2022.That's doing that's doing what you're reading.Bottom of your screens right now. Asia Pacific lifted by what's takingplace here. A glance under the hood, the four bestperforming sectors so far. So you have developers at a very toplast we checked, at least commercial services, consumer discretionary.And also you're getting a lot of the big.

Tech names as well playing out.In fact, number four, in fact, as we speak right now, we are pushing sessionhighs on that specific benchmark. We look at a forward, please, if we canas well. Now, all that being said is when youlook underneath the hood, for example, big Tech's been doing very, very well.Consumer names leaning Sino BioPharma, May one has done very well.H.K. Ex, which is the operator exchangeExchange operator here has its number four and Hang Seng index.Very good gains so far today. Japan, as we were pointing out.And Bell, just outline, of course, what.

This hour in the next hour, in fact,let's let's include a press briefing taking place in about 5 hours or so intothe conversation. Two year yields are back to the highsince 2015. The ten year yield earlier on wasactually back, I believe, to the high since November.Fantastic. I could be mistaken there.But that being said, we're fairly extreme level topics.Banks index, which typically is a proxy trade if you go long that long change inthe BOJ Nikkei 2 to 5 4/10 of 1% 30 minutes at a lunch break right now.Very briefly, all all things put.

Together, the benchmark is up.We'll see the top of your screens. It's been a very big week for earningsin the US. Of course, US futures are coming up aswell to a ten year yield slightly lower right now.So we're back below the 5% handle on the two year.Effectively, though, nominal yields are back to the highest level since 20 well,for the start of the year, since the start of the year, 1.8% undertakesindex. Yep, we can be here forever, Bill, but Iguess we can talk more about Japan right now.Yeah, that's right.

And the Tokyo inflation of course.I mean really essential data point ahead of the release early this morning andreally undershooting what economists had been expecting.But let's get the view or the reaction to that from Bloomberg Economics, Japaneconomist Tara Okamura joining us some more in Taro, a lot of this is sort ofbeing attributed to Tokyo's government waiving high school fees.But do you think that's the whole story here, or is there something more thatthat we haven't been really focusing on enough?I think actually even stripping out the effects from the wave here of Tokyo'shigh school fees, I see the goal is.

Surprisingly weak.For example, the food items and also household troubles slowed its pricegain. That speaks to me about like, you know,given like so far we had high inflation and there's a cost of living crunch forconsumers. So now the retailers are kind of stillhesitant to raise its prices, although their customers cost price pressure isstill imminent. So that was a bit of a bad sign for theBank of Japan. But looking at looking ahead, we have wecan expect a very strong wage growth from this new fiscal year or businessyear starting this month.

So I think the BOJ can send some hawkishsignal at this at today's meeting. All right.And Tara, on that note, you think they set the stage for rate hikes?What specific meetings are we talking about?Where do you expect those incremental hikes to come when rather this year?Because we have a couple of meetings coming up, of course.Right. I'm expecting two hikes this year inJuly and October where the BOJ update its outlook.So the thing is that like in the in the longer run, it's really hard for Japan'seconomy to keep stable 2% inflation.

But at least during this year, we aregoing to see a solid CPI, core CPI inflation comfortably above 2% eventhough today's talk of CPI undershoot. But it doesn't it won't matter still.So that's why the last thing the Bank of Japan wantsis if something happens, for example, the US unexpectedly stall or China getsinto a worse situation before this inflationary pressure kicks in again.The last thing it wants is coming up with another unconventional monetarypolicy. So I think they want to have some policybuffer when the CPI is comfortably above its 2% inflation.Do you think then that the BOJ perhaps.

Might signal something around cuteinstead? Right.I think it's easier for the Bank of Japan to announce cut, and I actuallybelieve that the Bank of Japan will announce to start r Kutty in thismeeting and it's actually reported by g. And because like you know the other issignaling many times about like, you know, he's thinking about reducing GDPpurchases and it's not going to be that much a surprise in for for the market.So that's that's going to be a convenient tool for for the BOJ to showits kind of hawkish stance to the market.Taro Kimura, our senior Japan economist.

In Tokyo for us on the economics ofthings. Let's talk about the currencies ofthings. Here are Asia effects and ratestrategist Steven Chu is joining us right now to talk us through these thisspecific angle. Dollar yen intervention, nointervention. What or do we this is as poor as weperceived the same drivers over two years.I've spoken over ten times. I'm sure you differentiate.Okay Stephen do their job. Okay.Thank you.

They go ahead.Go ahead. Yes.Okay. So the question is, firstly, of course,like how fast or when the Fed is going to cut.Obviously, that's more important than when the BOJ is going to hike.Again, just because when we talk about hikes, I've read like Tara's research,she was expecting 40 bits of BOJ hike in the second half of the year.The thing is if the Fed has to cut, they will cut more than that for sure.But if they don't, then even though with the 45th BOJ, it's not going to help therate down.

We saw two year gap, ten year gap.US Japan gap is still widening. So that's why the dollar just keeppushing higher and higher. 150 over the last two years.Now when 55 is not going to end, it's going to stop because it's all aboutcarry it. You can't just short the dollar, the yenand wait for the BOJ to do something and wait for the Fed because the cost ofcare is so expensive. So that's why yes, I believe market willkeep pushing higher and the BOJ would be around and wait for intervention.But as Taro was also just saying that he's expecting the BOJ to announce thestart of duty today, even if they don't.

Do that, perhaps they just signaling theintent to do so. Is that something that's going to be away to put a floor underneath the Japanese currency?Not necessarily, but I think, yes, they will announce and if they don't, theywill probably do something that's called stealth tapering.So they would not say, but they would start buying less and less usually.The reason being that we have also alluded to that over and over is thebecause BOJ, it's only over half of the job market and that's not healthy at alland they want to quit. And now is the perfect juncture,especially in the first half.

If they don't hike rates in the secondhalf, what they can do to convey a hawkish signal is actually signaltapering or cut, as Taurus alluded to. So that's why they're going to do that.But whether that's going to help you, that's going to help is another story.So now you see the ten year GDP actually creeping higher to its 1%.But how fast it will break beyond 1% is another question, I'm sure, like Bill.If they're seeing the ten year old rising too fast, then going to have tospeed up buying again. So that's why for DeLay, I don't thinkthat's going to matter for now. And speaking of the carry, it's safe toassume the yen remains one of the most.

Preferred, if not the most preferredfunding currency. That's one part of the question.And where do you think that then where do people then take that money?Mexican peso has done very well. The US dollar, we were talking again,for example. How are you looking at a carry rightnow? I mean, obviously the issue apart fromagain, the CNY is also a favorite favor for new currency.So, yeah, it's going to stay that way until the rate get like narrowmaterially. But they're going to buy I mean,obviously from from a year perspective,.

It's not the highest if you compare to.But then from a risk adjust perspective, it's also a safe haven.So I wouldn't actually go anywhere apart from the dollar.Now you're talking about US election. We're talking about a lot ofgeopolitics, Iran, Israel, a lot of uncertainties and volatility this year.So of course, Ian could give you a higher Kerry, but then like if you wantto prevent the risk of some risk of selling anytime.Dollar is do our best friend do we get to one $71 yen less level 164Do we get to 160 possibly if the if a Fed does nothing for the rest of theyear.

All right.Steven Chu there and this was watched He-Man and Skeletor, who knows Skeletor.Anyway, I yeah, I don't I'm very old school, isn't it.Yet you've got all the references today. There we go.All right. You can, you can tell me where I shouldbuy. Where I can buy those glasses so I canavoid it. Okay?For sure. Yeah.Okay. Yeah, I'm getting.There we go.

All right.Thank you, Dave. Thanks, David.Mostly. All right, You can turn to yourBloomberg terminal for more on the OJ decision.Go to t live. Go to get commentary and analysis frombloomberg's expert editors that coming up on the china show.We'll have the latest from the us secretary of state.His visit to china as he meets with chinese foreign minister wang yi.This is bloomberg. But China is warning that the US iswarning the US that problems are.

Mounting between the two nations just asdiplomatic ties are beginning to stabilize.China's top diplomat, Wang Yi, has just delivered that message in a meeting inBeijing with US Secretary of State Antony Blinken.Pretty much the Chinese relationship is beginning tostabilize. Across the areas, our two sides haveincreased dialogue, cooperation and the positive side of the relationship.This is welcomed by our two peoples and the international community.But at the same time, the negative factors in the relationship is stillincreasing and building.

And the relationship is facing all kindsof disruptions. There's no substitute, in our judgment,for face to face diplomacy in order to try to move forward, but also to makesure that we're as clear as possible about the areas where we havedifferences, at the very least to avoid misunderstandings, to avoidmiscalculations, that it really is a shared responsibility that we have notonly for our own people, but for people around the world.Given the impact that the relationship between our countries has around theworld. And our senior reporter Ian Marlow is infact traveling with Blinken and his team.

In Beijing.In fact, joining us right now is Ian Marlow to talk us through what tookplace. Ian, we've seen the pictures.We just played out the sound bite there for our viewers.We've even seen the headlines. Take us, you know, a level below.What was the mood like and what's what's the takeaway so far among the staff ofAntony Blinken? How did this one go?Yes, this meeting is still ongoing. It's going to probably be at least acouple of hours. The meetings today are a lot more.Everyone knew there were going to be a.

Lot more tense than the ones they hadyesterday in Shanghai. And one of the big questions is, iswhether Blinken's going to be meeting Chinese President Xi Jinping.Is there room in the agenda? I mean, is is is is the is this going tohappen? We want to we want to know. Okay.I think. I think we have some issues.Yeah. At first I thought he was just beingfairly succinct. And then I realized showing how unitythere is a problem with the line, but.

They will try and get him back.Of course. Ian Marlow Just in case you missed that.So he just mentioned that this meeting should be taking place over the next fewhours or so. And to your point, the question iswhether or not he then moves on to meet the Chinese president, which I think Iguess this time in the last hour said if he does meet, the Chinesepresident might have signaled some concessions did take place.Yeah, And there's certainly, of course, a lot for them related to be discussing.I mean, we know overcapacity issues are a key one.There's China support for Russia's war.

In Ukraine.But then there's also reasons or or needs that the US has where it needssupport from Beijing to help curb North Korea's nuclear weapons program and andto ease tensions as well in the Middle East.So certainly a lot on the agenda for them to be discussing.But Dave. Yes, as we said, that the big questiontoday is whether the the results from what we get with the Blinken Wang Yimeeting, whether that's enough to open the door for a meeting with President XiJinping. Yeah, we'll find out.Once we do, we'll let you guys know very.

Quickly as we try to get Ian back, ofcourse, is a brief look at markets and we'll I guess re circle back in the nextin the next segment or so. But you know, there's been some goodnews to tell you about 3.1% now is this rally on the Hang Seng tech index, asyou can see on your screens, every single stock on this specific index isup. So it's been it's been a Good Friday sofar. It's been a fantastic week if you'vebeen long. These equity markets, plenty more ahead.This is Bloomberg. Right.Welcome back to watching the China show.

Let's bring in Ian Marlow, our seniorreporter who is traveling with Anthony Blinken.He's in Beijing for us in this meeting, I believe is still takingplace between the Chinese foreign minister and the US secretary of state.You were there. You are there, Your team is there.What was the mood like? Yeah, the mood today was definitely alot more tense than the first day of Blinken's china trip here, where he wasdoing some more public facing events, going to a basketball game and lettinghimself be seen in Shanghai. Today in Beijing, these officialmeetings are all about being very clear.

With the Chinese side about the U.S.position on a range of issues, from Chinese support for Russia's war inUkraine to North Korea, sending weapons to Russia, human rights concerns, Taiwanand the rest of it. So this is the day where they have, youknow, a bit of a bit more of a tense feeling for these meetings.And you really got that in the room with Wang Yi kicking it off, warning Blinkenthat even though the relationship between the U.S.and China has stabilized after President Xi and Biden, you know, met inCalifornia late last year, that negative factors in the relationship are growing.And it's a it's sort of a big question.

As to whether the U.S.and China keep moving forward on this stabilization path or sort of veer offthat, you know, into misunderstanding, miscalculation and potentially evenconflict. So there is a real sense of oscillatingbetween, you know, stability and volatility here, you know, in Beijingtoday. So, Ian, based on that, do you thinkthere's going to be enough guanxi or goodwill between the two sides to merita meeting later today or later this week between Blinken and Xi Jinping?Yeah, I mean, I think we can pretty much count on that.He met him the last time he was here.

The two men met sort of at the lastminute, right before, you know, Blinken addressed the press and flew out what,last time? It was a bit more of a crap trip.It was the sort of icebreaking trip that that allowed all the other cabinetsecretaries to come through Beijing. And then, you know, the Biden XI meetingitself. But yeah, I think we can probably counton that. It hasn't been officially confirmed, butthat's kind of how these things work. Ian, what else is on the agenda today?Apart from what we don't know, hopefully that we will see.Yeah.

So one of the big things, you know,Blinken stressed this in his opening comments this morning that the meetingstoday are really to follow up on some of the agreements that Biden and she agreedto in California, which were sort of military to military communicationchannels, cooperation on counternarcotics, which is basicallyfentanyl and the U.S. opioid epidemic and an artificialintelligence. Now, Blinken's delegation is actuallyquite big and senior compared to some of the previous trips that I've been onthere. There's assistant secretary for youknow, for Asia.

There's a counter-narcotics seniorofficial. There's even a cyber policy and digitalpolicy official who's who's is taking part in these meetings, which kind ofshows the sort of tech regulation and all the controversies that we have, youknow, over TikTok and other things between the U.S.and China. So there's a sort of range of issuesthat they're going to try and get through today.We have this really elongated meeting today, this morning, which began around9 a.m.. They'll probably be some otherengagement today between, you know,.

Blinken and Wang likely kind of focusedprobably on fentanyl. And then there's other engagements latertoday. So there's just a host of sort ofconversations that are going to keep taking place today, you know, literallyhours and hours of talking, working lunches, those kind of things.And then we'll see whether it's all capped off with a with a Blinken XImeeting before before the secretary of state flies out later today.Yeah. With with yourself, of course.Ian Marlow. We'll leave it to it.It's a busy day, as you point out there.

In Beijing for us.He is traveling with the U.S. secretary of state, now speaking to stayin China here. Earnings is still a big theme here.So a couple of big names coming out as well.This is just really a partial list of what a very long list of results comingout in the first to us on your screens, consumer staples Booz makers are set toreport today, in fact, for a preview of what to expect a tally or Bloombergintelligence senior analyst is with us right now.It feels as if this company just reported recently, but that's for thethe other set of results.

So anything new that we can talk aboutand that's caught your eye so far? Absolutely.So in terms of molto, we're still expecting some solid top line and bottomline. So we're expecting high teens percentagegrowth in both sales and earnings per share, and that is supported by the 20%increase in selling price for MOUTAI in fourth quarter last year.But I think what is important to look at Malta's numbers is how resilient themomentum is going to be, because what we are seeing now is the wholesale sellingprices of maotai. So people that actually buying maotai atthe you know, at the consumer level,.

That process is under pressure at themoment. So it is currently at about ¥2,800 perbottle for bottle feet in Maotai, which is a 7% drop from the high in Septemberlast year, which is over ¥3,200. What's driving that drop?And then second to that, how important is it going to be for water then tocontinue to launch other segments or products like it had sparkling wine, analcoholic hot chocolate, for instance, in the first quarter?How important is that going to be to try and broaden out the consumer base?Correct. So in terms of that drop, it is actuallyquite a concern.

I think firstly for MAOTAI is in termsof launching new product, what is the pricing level like you correctly pointout? And secondly, also whether the consumerdemand and appetite for the alcohol is still there.I think that is one of the key concern to watch out for.Secondly, just on a broader scale is that we often use Maotai as a barometerfor the economic recovery of China and the actual underlying consumption andwillingness to spend by the Chinese consumer.And if this is under pressure, that also means that other premium baijiu pricescould also be under pressure.

So certainly, just to answer yourquestion in terms of launching other products, I think those ones is actuallyto broaden the consumer target group for maotai to incentivise younger childrenor children, younger consumers to drink, not children at all.Very good. Andand just to get them used to the Maotai brand because one of the key risks forsomeone like Maotai is that, you know, people associated with an older consumergroup, maybe just for businessmen, but what they are trying to do is make surethe younger consumer is also consuming the alcohol.Now we go not that young, though.

Not that young, okay.It's just sort of a mindset, just a shift in the.In the target in the target market. Ada, thank you so much.ADA Leader on all things consumer staples.Okay, we're just getting word right now that thiseffectively 2% coupon bond in China has been halted and trade after a big pop inthe 10%. So might have to do with the fact thatthis and there's a great story by the way and here's a plug there's a story inthe Bloomberg today that talks about how this bond fever might be cooling on theback of supply risks and the drop in,.

You know, might be susceptible to a arebound in yields, according to both the PBOC has been pushing back, of course,among the risk to watch and to see people run as well.There we go. Yeah, and a couple of different moviesthat we're tracking this morning. One of those is is Golden Securities.Yeah, that's a brokerage brokerage, although that actually could besuspended from trade right now. The so this is tricky because the eightshares which is on your screen just trading the shares, you're right, issuspended from trade I believe on the back of a now this announcement thatit's planning to raise funds for this.

Other deal but it's playing out acrossthis this the one specific one that you could express have with in Hong Kong, up14% here, along with other broken stocks, of course, after the companyannounced plans to acquire control of midstream.Security. We're headed into the Tokyo lunch break.Plenty more ahead. This is one big. Welcome back.You're watching the China show where most things China.But in cases like today, of course, we're slightly paying more attention towhat's been taking place or what could.

Possibly take place in Japan, where theDOJ is set to announce its latest policy settings.And it could, in fact, come out any time now.But the average, I believe, since the new government took over is around 1230local time, which would mean that's about an hour from now, 4/10 of 1% intothe lunch break. Dollar yen won 5561 and your ten yearyield is getting closer to 1%. Handle highest level here in a couple ofmonths. A two year yield is back to the highs in15 years. Yeah, and actually that since we seetreasury yields hitting their highest.

Levels that's true for the year ago dataof course out overnight we had that core inflation reading and and and reallyshowing that inflation is very much persistent in the US and at the sametime we've got echo figures around GDP that is showing a slowing in the economyas well. So it's that concern of stagflationthat's coming back into focus once again.But what we're seeing today in the session so far is gains are actually ontrack for the best week for Asia. Stocks.This year has been good numbers really coming out from big tech overnight.So the likes of Microsoft Alphabet, for.

Instance, really allaying any investorconcerns around, for instance, spend on AI, whether that's really starting tocontribute to our ROI and also really contrasting what came through from Mettaearly this week because that stock was really slammed in after hours yesterday.Today, though, we're actually seeing it. You can see that top left, they'regaining the most among the region. What else we're tracking again is thatstory of of earnings coming through. You've got energy moves, of course, andthen also bond yields just rising here. But the dollar gauge right nowfairly flat. Really that focus on on the Japaneseyen, of course, ahead of the BOJ.

But what else we're tracking, of course,is China's largest auto show. It's back in Beijing, first time sincepre-COVID days. And some of the biggest names in theindustry are showcasing their extravagant new models.Yeah, Stephen Engle, of course he was. In case you didn't get what Bill wasalluding to. By every time I can talk about thislater, let's get to this for Stephen Engle.Of course, he spoke with the head designer of wide Wolfgang Eger, eagerabout the inspiration behind those hot cars, which we'll talk about in amoment.

Let's play the tape.Technology and design. They need to be also one firm unitaryand therefore these we are also very as designers and as we generally also ourcustomers very happy because the latest technology and the platforms, they arethought from the very beginning to offer the.Opportunity also to realize these proportions, because this depends alsoon the technology here, because sometimes you you want to do it.You cannot because the basis is is not adapted.But in in our case, we are so lucky that we have wonderful platforms.This is Wolfgang Eggers latest offering.

From the joint venture that BYD has withMercedes. Danza is the company and the car is thez9gt. You can really see some of thoseEuropean influences coming out in the lines of this car, kind of a shootingbrake style luxury. EB really emphasizes technology as wellas speed. This car will go 0 to 100 kilometers perhour in just 2 seconds, and it could be quick to the European market, perhaps asearly as the fourth quarter of this year.The company Chairman also my boss, Mr. Lien,they give a complete free space for.

Design because they know about theimportance of design. And I never enjoy enjoyed so muchfreedom as I am doing here now in this period.The new thing is really to search again and bring backthe emotion, the emotion to to these cars with the beauty.You have these lines very elegant, still not ours, but we are we are reallylooking to get close to this challenge, to have a timeless piece and a beautifulpiece that people can can love in all over the world.You can definitely see Edgar's Lamborghini experience shaped in thisyoung among you nine super sports car,.

Also from a BYD affiliate, Young one.Now, speed, obviously is a big theme here, including speed to market.One thing Edgar told us is that unlike the legacy automakers in Europe, BYD andthe Chinese automakers can take from design phase to market pretty quick inas little as about two years. The speed is higher and the money ishigher. Now we are running much moreand working hard. Also, our team is working day and nightvery hard. They are all in competition, creativecompetition, but they are all one team and they have a common heart killer.Now we reached the 24 months target for.

Developing the car again from thecreative moment to to the production. And so, yes, this is amazing.It's amazing. And what would a Beijing auto show bewithout a concept car? This is a super car from, of course,designer Wolfgang Egger, perhaps his vanity project.It is a concept, yes, but could come to market.It is the Hong Kong Ball Super nine. And I can kind of see where theinspiration came from. If the Batmobile or the Mark five fromSpeed Racer were in TV, this would be it.Limited windshield, no roof Fast as.

Lightning Stephen Engle Bloomberg Newsat the Beijing Auto Show. Yeah, and Stephen Engle is in fact atthe venue for us right now. Steve I mean that that that last modelthat you just put out there, the two seater,I would say maybe more appropriate if you're having a date, but you're notsure about the date because there is that hard division between you guys.Fantastic work, by the way. Pretty cool models, of course, out ofbody. Yeah.I mean, I was a kid again. Obviously here.I wanted a mark five all my life.

That's from Speed Racer.And this was really taken right out of the pages of that Japanese comic book.But it's a beautiful car. And really one of the thing that's beeneye opening for me these last couple of years, I haven't been back for the autoshow for quite, quite a few years. The last Beijing auto show waspre-pandemic in 2020. And, you know, it really is thedominance of the Chinese players in this market like BYD.They're the overwhelming leader, 33% of the market.And that joint venture you talk we talked about.DANZA that's a that's a quite a sleek.

Car as well.That was a joint venture between Mercedes and obviously BYD.They used to be 5050. But, you know, just a little while ago,Mercedes actually kind of dumped out of it a little bit down to just 10%.I wonder if they're regretting that now, because Danza has really picked up a lotof momentum, sales momentum with these new designs.Like we just focus there, that green car because of Wolfgang Egger, reallybringing more of a European design style to these models.And six out of the top ten models of EVs that were sold in China in the firstquarter were from BYD.

Sure, the more affordable versions, butstill BYD really making waves and making a lot of these legacy carmakers questionhow to do and how to regain their momentum in this market.And in fact, the Mercedes CEO gave a roundtable yesterday and he essentiallysaid they're not going to do joint ventures, further joint ventures.They also have a joint venture with Geely.They're not going to do that. Instead, they want to partner withChinese technology companies, because a big theme here, Dave, has been theblurring of lines between pure technology companies and automobilemakers.

Because of the EV space, there is no,you know, delineation anymore. Technology companies can be EV makersand they are like the one behind me right here.The show me Sue's seven really making waves in late June.The chairman is right here, was just right here just a second ago.Yeah, it's really incredible. Steve when you've got Apple that thattried to develop its own car for more than a decade and then you've got Shamiand Huawei that managed to pull them out and really short amount of time.But I'm curious what you're hearing on the ground there about concerns aroundpossible overcapacity.

There's only so many consumers in Chinathat can buy these. There are concerns, of course, from theU.S., Europe in particular. We already know.And when you have Chinese EVs, that often do have quite a resemblance tosome European makes, what's the sort of sense you're allthat? Are there any concerns and conversationsthat are happening about that? Yeah.You know, though, that design element to look like European cars is not a fluke.I mean, that is by design, so to speak. I mean, in years past, perhaps peoplewould saying they're ripping it off or.

They're copying, but they're hiringthese European designers like Wolfgang Egger and others, and they're alsobringing to market some of the designs that the global audience wants and theChinese consumer wants tech laden, gadget laden vehicles.And let's face it, a lot of the legacy makers have been slow and they're incockpit kind of. Telematics or not?The telematics, but the the gadgets and the like.You know, the Chinese consumer wants to go from their house to the car andeverywhere and still always be connected via their smartphone.So that is really a major trend right.

Now.So, again, as far as the protectionism and the like and as far as theovercapacity issue, the Mercedes CEO did talk about that yesterday.He says there's going to be a reckoning among the EV players here in China.There's going to be further consolidation.He said, quote, Many Chinese startups are currently burning through cash.So all this hype that's happening these few weeks here at the Beijing Auto Show,yes, they're trying to grab eyeballs, are trying to grab traction.But will they all be around by 2030? Mercedes CEO says no, there'll beconsolidation.

Steve, great stuff.Stephen Engle there in Beijing for us. Checking shares of Bhiwadi right now, 4%here in Hong Kong. Among the many other stocks that aredriving this market high. In fact, just on that note here, comingoff the highs of the day, although on price itself, we're doing very, verywell across these markets. Hang Seng index, one and a half percentas tech as you can see. There we go, two and a half percent.We were up as much as 3% at one point, but still on track for the best five dayperiod going back to November of 2022. This is the China show.

All right.All roads lead to that building on your screens.And it's some room inside that building with a group of people deciding onmonetary policy in Japan. And at some point, they're moving toanother room to talk to the president a couple of hours.Any moment now, the Bank of Japan is set to release their latest policy settings.For more on this and markets that have done exceptionally well, of course, inJapan, Kate Okamura joins us right now, senior vice president and portfoliomanager at Neuberger Berman K. As always, a pleasure to speak with you.The.

We in the media and years back you'realso part of the media tend to over obsess over certain things like the BOJfor example. And I'm wondering whether or not youcould put this context this this meeting into context for us.Is this a big meeting or is it meant. I think it is a big meeting in the sensethat, you know, we expect that the policy rate will likely remainunchanged. But as you said, it's what's going tohappen in the other rooms in that building that you showed earlier interms of, you know, what's going to be the outlook on prices going forward andalso the comments that are going to be.

Made by Governor Wade in the upcomingpress conference. And specifically, I think the view inthe market is, is that the Bank of Japan is considering rate hikes going forwardand how data dependent they're going to be, especially when it comes to consumerprices and the sustainability of prices going forward.Having seen, of course, the Tokyo CPI numbers earlier today.Yeah. I'm interested for your take on that.Do you think that that we're starting to see sort of a self-sustaining cycle ofof of demand coming through, or do you think that it's just too weak yet toreally necessitate any sort of move.

Higher from the BOJ?Yeah, that's a great question. And the short answer is, is that we'restarting to see the beginning innings of it.Obviously, you know, the rising demand is a function of the falling inflationas a result of the falling import prices.And then what will follow through from that is higher wages.Now, we've all been hearing about the positive spring wage negotiations, butobviously I think what we need to be looking at is how that will filterthrough to the rest of the economy in the months to come.Namely, May, June, July.

And from there, I think we will start tosee a pickup in consumption. And then from there, that would feedthrough into hopefully a positive sort of cycle of rising consumer prices goingforward. And that, I think, is is where it'sgoing to become a game changing moment for Japan.Yeah, the stars have really come together for this market in Japan, youknow, corporate governance, for example, which we'll get to in a moment.I know you you've written a lot about that as well.But but but simply just in terms of, you know, having an interest rate, having apositive interest rate in Japan is.

Something I guess many fund managerswere not accustomed to. Now that that's here, how is thataffecting what you do? How does that affect managing equitymarkets in Tokyo? Of course.Look, you know, with this sort of prospect of rising interest rates, we'veobviously adjusted our portfolio in our strategy as well.So, you know, we are now overweight financials and say three years ago whenthe outlook for that was a little bit more uncertain, we had a much moreneutral and underweight position before that.The reason why we're not we're more.

Overweight, of course, is the fact that,you know, with the rising interest rate means that you're going to have positivenet interest margins. And that should bode well for, say,earnings of lenders. But in our case, as long termfundamental stock pickers and, you know, we want to be investing in some of thesecompanies over the mid to long term, we have to make sure that it's going to besustainable growth and therefore, we're not investing indiscriminately acrosslenders. We're picking out the ones like, say,Yamanashi Tule Bank, which is in the foothills of Mt.Fuji next to Japan.

They've got a great local exposure thereright next to the Tokyo area. They're going to be going into thewestern Tokyo area to increase mortgage loans business.And then in addition to that, they're going to be seeing, you know, higher netinterest margins. And then added to that is improvementsin capital efficiency as they bring down their tier one capital ratio that'scurrently in excess at the moment. They'll take the surplus capitalreinvesting in the business, but also increase shareholder returns goingforward. Those are the types of companies Ithink, that are becoming increasingly.

More interesting in this type ofenvironment. But of course the BOJ is likely to stayon hold for a period to come here. So in that sort of environment, when youhave a weaker yen off the back, you've got that really feeding intoconsumption. Consumption stocks have been underpressure. How are you playing that sort of trade,especially where we had seen those strong wage negotiation results?Right. This is a very important point because Ithink, you know, in the last to 12 months, we have been seeing a quite astrong rally in Japanese equities, as.

David pointed out earlier.I think the point, though, is that going forward, as Japan enters into this newparadigm of, you know, real interest rates, rising prices, and of course, atthe same time increasing labor costs, there's going to be winners and losersemerging in this market. And that's why we've always beenadvocating for long term investors to take an active investing approach inthis market as opposed to passive. And so the types of companies that we'relooking increasingly at are those that can take market share, continue to passon a pass on rising input costs and can clean up its balance sheet.And really, those are the companies that.

Are run by progressive management.So herein really lies the important point, which is that you need toactively pick your stocks. You should do your due diligence.You need to sit down with the companies and in some cases you need to engage toget them to rewrite. It's a bit of a hard working process,but going forward, if you do that, you'll be seeing some good returns goingforward in this market. Right.And that takes us into, you know, one of your passions, if I could call it that,certainly, you know, calling for an improvement in corporate governance inJapan.

And I'm wondering, is that aconversation you mentioned you're directly, of course, involved in talkingto some of these corporates, for example.Is that a conversation that's taking place only among the bigger corporates?They're more receptive to that idea, or are you starting to see that permeatelower and lower down to market cap scale?It's permeating lower and lower, and especially in the small to midsizemarket. You know, if, David, you I'm sure you'vebeen looking at how the market has moved in the last 12 months, we've seen abifurcation in the market where large.

Caps have outperformed at the expense ofthe small to midsize market. Now, this is partly a result of, youknow, the market dynamics. The strong run up in the large cap spacehas meant that, you know, a lot of foreign inflows have come in using cheappassive vehicles linked to the large cap names.And then of course, the weekend has had been a strong support for large capexporters. But another reason why is because a lotof these small to midsize companies are under research.And of course, at the same time, their disclosure hasn't been up to the samestandards as these large caps.

So a lot of these managements of thesmall to midsize companies have been scratching their heads trying to figureout what they should do. And this is where we come in and weengage the companies to act on capital management address, on the corporategovernance and sustainability front. And we've been getting some really goodresults. But that said, we do need to continue toapply pressure from the outside, which is why earlier today we put out with theAsian Corporate Governance Association an open letter for companies to unwindand increase the pace of unwinding of its strategic shareholdings, which wethink will be crucial to see some of.

These companies rewrite going forward interms of improving capital efficiency. And to that point, this this call toeliminate these these cross holdings, how much value do you think that thatwould unlock in particular? I mean, it's substantial.You know, if we look across, you know, the topics 500, there's almost 10% ofthese. Of the entire market held amongst theseacross shareholdings. I mean, think about this.It's basically capital that should be deployed into growth, investments thatare now being trapped in the equities of companies and it's not being put intouse.

So what we've advocated is thatcompanies that will should basically have this a zero, but if they're goingto maintain it, then they need to have a timely target to reduce its zero.And then in the interim, they need to disclose what they're going to be doingwith all of these business transactions that they have through these strategicinvestments. Sometimes it has really resulted inanti-competitive behaviour, such as what the financial services watchdogannounced last year with the insurance companies.And we think that, you know, as this sort of cleanup process takes place,this would obviously bode very well for.

Corporate governance and capitalmanagement going forward. And at the same time, I think it'simportant to remember it's not just the holders of this of these couple of thesecross shareholdings. That's an issue.It's also the ones that are being held as well.And so it would help those companies and those tend to be the small to midsizecompanies. They will obviously find this as a greatopportunity to take those proceeds, invest in business, and seek for betterreforms going forward. Mate, fantastic.As always, a pleasure to have you on.

Show us and give your insights.Kay Okamura, senior vice president and portfolio manager at Neuberger Berman.Just in case you missed that interview, of course, and just in case you'recurious as well on this big meeting that's about to hopefully drop, maybe inthe next 6 minutes, we'll see. Turn your attention to the Bloombergtelevision show to get commentary analysis from our expert editors.In case you're wondering, that's an inside that's inside inside banter here,inside baseball. David's bet for when to be O.J.comes out. To be clear in the next 6 minutes,nothing to say more than very.

Welcome back.You watching the China show? Equity markets across the region, 6/10of 1% on track for the best week so far this year.Of course, it's relatively early days and who knows what we'll get from theBOJ, which could come out any time now. BELL Yeah, that's a big watch.Yeah, Yeah. Actually, if you take a look at sincethe way it became governor tends to come at an average of.12:31 p.m. So we're still about 35 minutes awayfrom that happening. But certainly the big focus forinvestors over the next hour or so, even.

Though we're not expecting any sort ofmove, it's the question of what we get in terms of guidance, whether we get anyannouncements around q t signaling as well on on further rate hikes to come.Yeah. And maybe how the also to your pointearlier, how they frame this horrible but Tokyo CPI print which came outhorrible in a sense that maybe it doesn't really go with their narrativeof inflation really coming back that massive miss of course across allmetrics. There we go in bottom of your screensand we are on the lunch break over in the cash markets in Tokyo.That's it from us here.

Plenty more ahead, though, withBloomberg Markets Asia. Stay with us for coverage.This is Bloomberg and happy Friday.

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