HK Shares Scurry Reveal to Terminate, Segantii Talked about to Shut Down | Bloomberg: The China Picture 24/5/2024

We are half an hour away from theopening bell last session of the week. Happy Friday, by the way, here in HongKong, in Shenzhen and in Shanghai. You're watching the China show.I'm David in Glass with Yvonne Man. Our top story this morning, Asian stocksslip as strong U.S. business data spurs bets on a Fed holduntil December. Now very rare splash of green on WallStreet while the SEC opens a door for spot ether ETF.Now Bloomberg learns that Simon Sadler Saigon t hedge fund is shutting down andreturning capital to investors after an insider trading charge here in the city.And fresh protests expected in taiwan as.

The opposition pushes a bill thatcritics say will limit president lighting does ability to govern. All right.We're wrapping up this train week all over on the back foot here.When it comes to Asian risk assets, we're slightly down when it comes toAsia. Extra about China or the like.Everything. Well, we're almost 6/10 of 1%, butcertainly we're seeing global stocks set to snap out of four weeks of gains.And stellar gains are that, you know, borrowing from Nvidia, we saw that popin shares after those earnings.

Now, most most of us were actuallylower. And of course, we're getting closer tothat U.S. Memorial Day weekend.So Monday markets will be shut. So volumes alike certainly is one thingin focus. And we're certainly seeing thoseinflation concerns wobble once again after what we saw from those PMI dataout of the US. So once again, we're seeing that selloff across treasuries and you're starting to see yields pick up butstabilize a little bit in the Asia session though.But we're still hovering about for 91.

When it comes year to year.That's around levels that we've seen the highest in about two or three weeks, tenyear yield as well. We haven't seen that those two Tuesdaytimes inverted since. Well, the most since, I think, April orso. So certainly that is the ongoing talknow. And you're starting to see what theswaps are pricing in and continuing to push back the possibility of these ratecuts. We went from November yesterday maybe asthe first rate cut to now December as well.So you're seeing that across maybe some.

Of these sovereign bond markets.Australia ten year yields up some four basis points.We're watching that ten year JGB yield at 1%.So inflation in Japan cooling for a second month, but we're still abovetarget for a 25th month, I believe. So does that change at all, what the DOJcan do this week know or whether does it change at least the speculation thatthey're going to have to hike later on this year as well?Most people say maybe not. Right now, oil is around those threemonth lows. Right now, we're hovering around 81bucks when it comes to Brent and we're.

Still seeing dollar.Again, we just approach that 157 level, so maybe we could be closer to thatintervention. Watch as well for Japan.And we're to watch this dollar story, what this means for air assets,particularly in this region. We continue to see weakness across theboard when it comes to Korean wine, the Taiwan dollar, as well as the Malaysianringgit here in the early part of the session.We're also watching these Taiwan stocks. So, I mean, these military drills thatChina has undergone the most and, you know, the biggest in the year, notreally deterring at least the equity.

Side of things.That market is still looking pretty hot with that air theme.Keeping on the theme of tech, though, take a look what's been going on.The Golden Dragon. Overnight, we saw quite a bit of a steepdrop there, about 4%. Alibaba took a bit of a leg lower therethat really dragged things down. So we'll see how this all plays out inthe Hong Kong session because it looks like day we are set to snap out of thisoutperformance in China when it comes to the MSCI China benchmark over its globalpeers for the first time in about eight weeks or so.So certainly are we likely to see.

Things, I don't know, revive or is thisthe start of something of a turn we're seeing futures are on the back foot herethis morning, 725, close to seven, 26 levels here.That six very much important today, Dave.Yeah, I mean, the lack of catalysts just looking ahead, right?I mean, we're done with earnings season in Greater China, for example, where Imean, who knows what we will gets or we could possibly get as far as sort ofregulatory policy announcements or pronouncements are concerned there.But yeah, certainly to your point there, it's been eight weeks of bliss reallyfor MSCI China.

Well, most of the benchmarks in GreaterChina have really outperformed all of that.All that being said, so on a daily basis, we are, I think, down for threestraight days. We could get day number four.We are likely to get the number for looking at how futures are tradingtoday. More on and if I'm touched on the dollarstrength story just a couple of seconds ago.More on this yuan fixing that should be fairly eventful today.Looking at where the currency is trading.We have a ten year bond.

So I think those are regular bonds.The special purpose bonds. I think that the 20 year bond sale aswell in terms of data, you have GDP numbers coming out of Macao and we arestill in a window for FDI numbers to come through as well.And apart from all of that, yes, we're looking at to what extent we will see,of course, this momentum start to come off as equity and also the bond market,just seeing how far yields have picked up as well.Just the lack of light, I guess, in terms of to the macro picture, how farwe have not pushed back this these expectations of rate reductions formajor central banks.

Yeah, because, you know, we're stilldon't know what's really going to happen with the Fed here as well.And that certainly is why we're seeing this kind of US outperformance storycome back to the fore once again. What does that mean for the world of MMust bring in Sean Taylor, CEO and portfolio manager at Mathews Asia.He joins us here in the Hong Kong studios.We talk about the strong PMI as you talk about these hawkish comments from theseFed minutes this week. And it really changes the narrative onceagain of inflation concerns coming back. What does that mean when it comes toemerging markets in this part of the.

World?I mean, it's good for Asia, actually relative to LatAm and it's good for thecyclical side of Asia, because one reason that's driving these thesechanges in interest rate policy or potential interest rate policy isgrowth. And we are seeing synchronized worldgrowth, and that's good for risk assets. But one has to be selective on.Countries. So, you know, ASEAN's not looking sogood in that. And, you know, LatAm, which is did verywell at the end of last year when rate expectations came down, is reallybeginning to underperform.

And the margin of, you know, the extramarginal dollar is going into North Asia.Would that be a, I guess, a function? And then there's perhaps a little bitmore nuance to hit here, but is it more a growth story now in the equity marketthan it is a value play given all the themes at play?I think relative to global equities, Asia is cheap.It's less cheap than it was at the beginning of the year.Well, we've done very well. We've done well.I mean, you know, if we'd said at the beginning of the year, 10 to 12% is sortof average return, we were expecting 15%.

Would be a really good year.We're already that the average. And so maybe we pull back andconsolidate. But the driver seems to be there andthey seem to be getting broader. We don't need Fed cuts use of that thento really keep this rally going. I think there's a lot of central banksin Asia that would like the Fed to cut because they're they're finding interestrate policy quite tight, but not in North Asia, not in the bigger markets.Well, what themes stand out to you? So we have what.Different pillars of of of of of outperformance we're seeing in theregion for you.

I there's I.Is there an earnings outperformance still to to talk about here.Yeah so what themes are you latching on to.There's all sorts of medium term theme which I think is working out quite wellis that Asia is basically recovering post-COVID though, two years behind theUS, and that's coming into GDP numbers but really coming in to earnings andwe're beginning to see them change. If you look at earnings revisionsglobally, US has been very strong, but it's mainly been in the in the topseven. That's widening out.Europe is beginning to see earnings pick.

Up.Japan has had quite good earnings the last couple of years, hasn't been inAsia is this year, but it's very selective.It's mainly in technology in Taiwan and some of the cyclical side of Asia.We would expect with some of the, you know, the better data coming out of therest of Asia that that will sort of pick up over the year.Okay. You mentioned China that it's hard tosee underweight this market now. I mean, given the rally we've seen thelast few weeks or so, what do you do after a 20 to 30% rally now?I mean, I think you have to be patient.

And be very selective.I mean, there are definitely differences in the company's earnings.So, you know, take a little bit of capital out of those that have gone outbecause of risk premium changing. But the earnings aren't delivering afocus on the companies that are delivering earnings.Talk to us about sectors down because so we're we're about about a month to twoand the second quarter. So if you have been long China you'vedelivered you know it's given you alpha for example but you want to protect thatfor the second quarter. Where do you what exposure do you keep?And for those that you don't give, where.

Do you take that?We still keep a structural overweight in tourism to domestic tourism becausethat's continuing to go right. We are seeing selective Internets doinga lot better. And also they're buying back stock.You know, the capital the capital management side of that is verypowerful, better dividends, better buybacks, because it's very low relativeto history. And actually we're still keepingexposure to property. And, you know, if it pulls back over thenext couple of weeks, we would add to that because I think property is an areawhere you've still got a lot of upside.

And the stocks are quite cheap, right?So you've actually bought into this property story like actual participatein this. Yeah, the actual developers themselves.Yes. I mean, we've gone through the estateagents and some of the developers and the so ease and a little bit of poker,but just quite selective. But I do think what changed on Fridaycould be quite good news. I mean, the market will wait forevidence, so it might take a few months. But, you know, it is another area thathasn't performed in China for the last four years and it doesn't take muchdelta for it to really pick up.

People say that the place that's maybethe safest amidst this sort of higher for a longer scenario is Hong Kong.Because you have this dollar peg, you're shielded by the currency risk.And of course, the volatility there. Is Hong Kong still the safer place overthe domestic market? I think the and the Hong Kong listedstocks. Yes.In Hong Kong and Hong Kong domestic stocks probably not, because I think,you know, if you look at some of the malls, some of the companies, I mean,the retail spends going across the border, it's clearly in the Greater BayArea, not really in Hong Kong.

And I think you can see that in the FNBas well. So I would have thought the Delta wasmore in mainland China, but listed in Hong Kong to MSCI China as opposed tothe Asia, because Asia earnings are really not picking up.They'll probably be the last to pick up. What about Chinese banks?You have a juicy dividend there that this group is actually offering you.And I'm surprised not a lot of people are picking up on that.Well, it's I think it's a theme from mainland investors, from the onshoreinvestors. They're definitely trying to buy, youknow, the cheaper Chinese banks in in.

Hong Kong with a decent yield.And you can see that all the time. And actually, you know, maybe they solda bit in the rally, but, you know, when they have to be invested and that's nota bad idea, I think the trouble is. Most international investors don't likebuying state owned banks. And also with the property changes, theywant to know, well how much the banks going to have to do national service.So it is a worry, but I think it's overly worried.The defensive characteristics of Chinese banks are, you know, are not to beignored when markets are volatile. Okay.We have more, of course, coming up.

There, which until we've barelyscratched the surface. More, of course, in a big market.These out of MATTHEWS Asia in a moment here, of course, in about 4 minutes fromnow, we'll be getting the mid-point of the day that you want midpoints toThursday, actually, just to remind our viewers, was actually set in the weeksince January. The BBC, of course, appearing to bewhat, allowing the currency to adjust further to the strong dollar story.There you go. Visually, that's the yuan fix year todate and since yesterday, since that point in time, the dollar's actuallystrengthened even further.

So I would be, I guess in some ways semibracing for some news in a couple of minutes from now.Yeah. Whether we actually see something alittle bit higher than yesterday is certainly going to be quite interestingand telling of how willing the PBOC is in loosening their grip on the currencyhere. Still ahead, Bloomberg has learned thisgigantic capital is shutting down and returning capital to investors after aninsider trading charge sparked concern about a flood of redemptions.We have the details coming up next. We're also going down the open of tradein Shanghai, Shenzhen and Hong Kong.

This is the China show.Happy Friday. Right.Welcome back. So we're just waiting on the dailymidpoint of the day to come out of the PBOC.Should be out at any point now. So we're looking at.Well, let me just give you the survey range for now.Seven, 1115 up all the way up to seven 2575.We are expecting this, though, to come in, if not below the lowest.And okay, it is coming in and it is below the lowest end, but it is abovethe 711 handle there against the US.

Dollar.So that's the first time, I believe, all the way since early of the year thatwe've actually seen a mid-point with that print ads, which really continuesthe theme we were following yesterday. This the PBOC needing to adjust to thisstrong dollar reality. Yep.And they are. And you're starting to see the movementin dollar China are live with a spike up here so continued weakness across the AMcomplex here with 726 handle now for your offshore rate so certainly now howare they you know how much willingness do they have a tolerance they have toweaken it any further from here but when.

You have a dollar yen at 157, somehow,you know that's really it's one thing to blame as well.It's not just a dollar story. Yeah.These these key crosses are going to be in focus right now really on the backof, you know, which one is cheaper than the rest.And certainly the dollar is the underpinning and you were justmentioning earlier the tie. But yeah, I mean, the line right nowalso coming in weaker yet again for a second straight day.Anyway, I think we digress. But the dollar story is certainly a keyparts of this because of this invidious.

Story that just.Well, yeah, I mean that was the one sort of good news yesterday, really.After the Wall Street reopened and the earnings and this 9% pop in the sharesin the like. So certainly, you know, this theme, isit really being overshadowed by the Fed and inflation higher for longerconcerns, but the NVIDIA stock continues to be a standout story.Let's bring back John Taylor, CIO portfolio manager at MATTHEWS Asia.So obviously that's still an air theme that has reinvigorated once again, whenyou look at this part of the world, though, what are some of the keybeneficiaries of this whole A.I.

Boom, you think?I think the markets here started off looking at A.I.as a sort of speculative trade, and you saw a lot of smaller midcaps go upwithout really any earnings, you know, which is quite often happens in Asia.But I think now with the NVIDIA results quarter by quarter, what we can look atis the total addressable area. The market in Asia is increasing andthat means the demand that NVIDIA and other companies will have for the chips,you know, is really beneficial for Taiwan and also Korea and also for thehardware. Then you have to think, well, when Imoves from the computer to the humanoid.

To the phone, who's going to benefit?And actually the supply chain and particularly Taiwan is a majorbeneficiary. So you've got to be very selective onstocks, but it is a real driver. And at the same time, as we were talkingearlier, we've got this cyclical driver that DRAM NAND are looking better.So you've got a sort of structural story plus a cyclical story.Right. Which makes it very interesting.The old tech, which is quite funny as we put the DRAM story, the new tech, whichis well, let me add another layer to the Korea story, but you also have thisvalue up program.

There doesn't seem to be well, there isprobably a risk, but there doesn't seem to be a strong case not to be in Koreaat the moment. No.I mean, Korea is actually underperformed this year, but it's mainly to do withone of the largest stocks. But, you know, the value up trade Ithink is very interesting. You know, we are it's not as it's notgoing to be as enforced by the by the government and the regulations as it isin Japan. There might be over time, you know, ithad a little bit blip with the election result.But actually, you know, you look at the.

Banks and the autos, they're stillincredibly cheap and they've still gone up about 40 or 50% this year.So I do think that, you know, yet again, selectivity is important.The chaebols it's probably going to be harder to look at some of the holdingcompanies structure until the law changes on inheritance tax and other taxissues. But there is great value there and it'suncorrelated. That's why we like it.It's not correlated to China growth or China risk premium.So what happens in the Fed or to the cyclical side of markets, you stillthink that Japan offers the best upside.

In the region?Why and how do I deal with this yen right now that continues to weaken.So I'm actually quite not that constructive on the yen rangebound atbest. And I think the central bank pressurewill be to keep supporting the yen because I think the yen there's no realreason for the yen to go up in its own right.There will only be a US dollar move. So that's pretty positive for markets.Look, a massive fall in the yen would not be positive because people don't getworried and they don't like intervention.But the yen is is leading to more money.

Going into Japan, more sort of tourism,more business is more competitive and the earnings are coming through andthat's important. In Asia.We're saying summer earnings are coming through.We hope others are. But in Japan, the earnings are comingthrough. International investors are still veryunderweight. And I think at some stage they're goingto look and say we've got to take more money out of the US.And they're not quite kid, they're not quite convinced on China yet, You know,they're not quite convinced that they.

Should go into India at this level ofvaluation. So I think North Asia is the Bay Areaand Japan's probably the best. You've got to get the best argument forthat. So you're not seeing that sort of theconditions being met for that rotation out of Japan, out of North Asia, toChina as of yet. You saw that.I mean, over the last if you take a six week period, we had India up about 3%,Japan up about one or 2%, and we had China up 20%.So, yes, for short periods of time. Yeah.But I think people still go, you know, I.

Think a lot of us see China as atactical story where you've got this sort of cyclical pick up and maybe overthe next three months you might have, you know, more policy that changes that.But we need earnings to make it a structural story, right.Where, you know, India and Japan are structural stories.So people just rotate out and then they come back.Anything to avoid in the region? I'd also be cautious on Asia with therate with the rate situation. We're actually quite overweight Vietnam,but the rest of ASEAN really needs rates to come down and we don't believe that'sgoing to happen.

Shawn Fantastic.Yeah, Nice to speak with you. Have a great weekend ahead.Thank you very much. It's looking rainy out there, so but Imean, lots of indoor activity. Same thing every week.Yes, that's it changes every day really this week.But I think it's correlated with the equity market rally in Hong Kong.Eight straight weeks now. We'll see.John Taylor with that, by the way, CIO, PM at MATTHEWS Asia going into the opentoday, 8 minutes away. Futures are pointing down 7/10 of 1%.So it's looking like a fourth day of.

Declines here in Hong Kong.This is the China show. Good morning. Done. Welcome back and good morning.Good Friday morning. In case you're just joining us rightnow, one big story that we're tracking here in Hong Kong is certainly thesedevelopments with hedge fund 70. Well, the company is said to be shuttingdown and returning capital to its investors here as well.The hedge fund faces an insider trading investigation.A sources have told us that they will.

The Hong Kong based hedge fund ispotentially facing significant redemption requests, which would beunsurprising, give it a news flow and that it will unwind down in a measuredfashion. Now, the fund said separately that it issuspending redemptions at this point in time.So a lot of details to the story, of course, and certainly what a what aquick turn of events here for for the company.It's an abrupt end, but certainly it looks like what we're seeing in thecourts might be something that we have to continue to watch.It's not over just yet.

We haven't heard much in terms of whatthis means for compensation and jobs. You talked about 140 people that mightbe involved are affected by this shutdown.But certainly there is a lot of questions now about what the legalprocess is going to be, because basically this case has been moved tothe high court. Yep.Which does imply, according to our sources, that we could be dealing withsome longer sentences here. Okay.Well, we'll keep on top of this story and we'll revisit it later on in theshow.

Just going into the markets right now, 4minutes to the opening bell. A week is coming through, not just inGreater China. This is really a story and not just inAsia. Globally, we've seen apart from, Iguess, a pocket of green and in video and friends, just this downdraft acrossglobal equity markets and global bonds have actually done also quite poorlythese last 24 hours or so. Really on the back of data really the USand suggests that rates are not going to come down any time, any time soon.And we're watching in terms of some analyst actions here today, Obviouslywhen it comes to the shipping space and.

COSCO shipping, this is according toHSBC, they've cut the COSCO energy and the shipping side, the business to holdthere. And either I that's cut to neutral atGoldman with a price target of 15 renminbi in terms of stocks to watchit's really we're continuing to try to tech space after what we've been seeingAlibaba we have a scoop about a convertible bond they're offering pricedit so they've the pricing that's come through here.So we'll see how that plays out When it comes to the stock here this morning,we're still seeing some downside. Lenovo down some 2% after those earningsas well.

We got plenty more.The open is next. This Bloomberg. Welcome back.You're watching the China show where China on the open of markets here.We're ending this week on sort of the back foot when it comes to this equityrally that's been really going on globally for four weeks now.We are set to really snap out of it, and especially here in Hong Kong, wherebasically we are poised to, of course, and that long outperformance on MSCIChina, eight weeks of gains over its global peers may have to come to an endthis week days unless we get, I think,.

What should be about a three and a halfpercent rally today, which you're probably not going to get given theweather out there and just a lack of calculation unless, of course, we getsome big announcement. Of course it is Friday.And typically you do get, of course, some of that.And, you know, this time last week was when we got that announcement on onPoppy. Not to say that something's coming, butI certainly have my my point really being here, there's nothing that you cansee over the agenda these next few hours or so that might indicate that some bigcatalyst is coming.

On that note, there we go, 3/10 of 1%.MSCI, let's see, is our 300 rather small caps and some of the large caps, ofcourse, in terms of bond auctions today. Oh, by the way.Yes. This is a good story, too.Thank you for reminding us. A Shinhwa.It's actually reported yesterday that President Xi Jinping outlining whichcould be, I guess, in many ways a preview of what the third plan mightlook like in terms of priorities here, breakthroughs on housing and employment,which is why we're looking at some of those sectors today.And we're literally what's moving on the.

Back of that in that last 10 seconds asit's going through that. As you can see, things have turned morered here on your screens in terms of a bond sale today.I think we have to. Certainly worth noting would be the 20year bond sale special purpose bonds that's today as well.So when you look at where you are as far as yields are concerned, your 2.3%.Okay, Flip the boards. Thank you so much.There we go. ¥40 billion in 20, 44 points in HongKong. The open is this, 18 seven.Right now, eight shares are doing that.

Alibaba slightly to the upside had a bigdrop overnight. The big story there was convertiblebonds that they then came out and confirmed and that we now have pricingon those bonds as well air May Taiwan and China construction back.Nothing much to tell you about a weaker fix again from the PBOC first one northof 711. Fairly convenient you got the pun.There we go. All the way back to January of thisyear. Certainly with the dollar moving up,it's adjusting to that new reality. Apart from this, there's really not muchis going right.

So we have to look ahead to next week.Pimeyes I believe there's the Shangri-La Dialogues coming up, the industrialprofits. But as of this week, we're pretty muchdone with earnings season. So I think while that perhaps is is thecase and while that this absence of new catalysts and information, we'llprobably see these these markets consolidate even further.All right. We'll continue to watch this one.We still wrapping up that earnings season, as you mentioned.And Xiaomi was certainly one of the last to report, but really some interestingsort of new targets, really aiming to.

Deliver 120,000 of its S U.Seven electric vehicles this year and hiking its initial targets for a car ithopes could eventually compete with Tesla.For more on the company's latest earnings and forecasts, bring in ourAsia Transit reporter Danny Li. Yeah, it's a tech company, but webrought him in. Talk about this ev 120,000, obviously anot a confidence from the company, but is this a pretty ambitious target, youthink? Yeah.I mean, it's it shows healthy demand really for its new first foray into theelectric vehicle industry.

This as you said seven sedan in fact andso yeah going from a bump from initially 100,000 and which again not that longago launched. This is a good sign for them that theyare building on momentum and and again when they have gone from making justsmartphones which they still are, to making also electric cars, the fact thatthey can get to that level of 100,000, as we have spoken on this show so manytimes, to get to a level of 100,000 and many other Chinese EV upstarts havereally struggled over a multi-year period.So it's a good sign for them, especially as they tried to take on Tesla in thelong run.

And it has big ambitions in this space.What's special about it? It's a cool looking car.It's a cold looking, kind of a cool looking.You make a very good point right there, coming in in a very competitive carmarket. And, you know, I think they're one ofthe very few that have raised guidance on what they think they'll be able todeliver. Yeah.I mean, still, we're talking about very small numbers in an ultra competitivespace. Again, they're priced competitively.And even when you look at its earnings.

Now overall, this is still notnecessarily feeding in a big way into the overall picture.Whilst revenue growth is at its fastest in two years, that's still net that netincome line did still drop year on year. So it's still baby steps.But the fact that there is this pipeline in future with an SUV coming into playthat's going to rival Tesla's Model Y. And so there is there is encouragingkind of signs from them that they feel more confident to raise that deliveryguidance and potentially what that means for production as well being a littlebit higher going forward. Okay, Janet Leigh, thank you so much.As a transport reporter as we were.

Talking there.There we go. Shout me down out of 3%.In the opening minutes here, just regularly.I guess in many ways, just underscoring the point you're making earlier postearnings, there's people are taking money off the table.And certainly when you take a bigger step back the earnings season, let's getthe key takeaways. Charlotte Yang or Asia Equities reportis here with us, of course, to just take us through now that we're done or notcompletely done. You guys have done some work on this.What have we seen?.

Yeah.So so far for these earnings season, we're seeing that there's actuallygrowing optimism that China earnings are showing signs of bottoming out.So an analysis done by Bloomberg Intelligence shows that about 40% ofMSCI China index members have reported they have delivered better than expectedearnings. And to give you a little more context,for the last four season, that's about 39% of the index numbers that have beat.I mean, it's a small improvement, but it's the second quarter of secondstraight quarter that shows an improving earnings per share.And if we look at specifically by.

Sector, the communications servicesdiscretionary as well as industries are the ones that industrials are the onethat deliver the most positive surprises.And I think the China tech earnings results with Tencent, for example, alsobe, you know, boosting sentiment, helping people as we look at thevaluations side of things. But with that said, I think a bigmissing element for this for broader recovery is property.So the property sector as well as materials continuing to be the sectorthat delivered the most negative surprises and real estate stock on themessage index have missed the estimates.

This season.So I think the property sector recovery is continuing to be the focus.Everybody's will watch much going forward.So we're at a bit of an inflection point on earnings.What else are going to be some catalysts then to keep this rally going?I think that the a big part of the optimism earlier was because ofBeijing's policy, more pro-growth signals, whether that's where's reducingproperty inventory or, you know, that the issuance of actual long sovereignfunds I think for property is like how the local governments actually follow upwith that will be the key one.

One of the Carlos, you know, investorsuse to assess whether this policy will translate into improving consumerconfidence as well as bottom line for these companies.All right, Charlotte, thank you. Charlotte Yang there on what's next whenit comes to this. What has been a world beating rally thathas hit a bit of a consolidation, as David mentioned here.Let's get to those big story that's happening here in Hong Kong.The U.S., as you see, has approved a proposal, the first U.S.ETFs investing directly in the ether, a token and putting the crypto industry onthe cusp of a major landmark.

But here in Hong Kong is now said to beconsidering allowing staking for exchange traded funds, investingdirectly in ether markets. Reporter Annabel Jewellers is on top ofthe story with this big scoop. Tell us more.Well, it will be what is what we want to know exactly.Staking. Yeah.For us. Okay.Yeah, I think we can start here. Okay.I'm not going to get into all the details, but we can just sort of startat a high level.

What staking exactly is.So what you need to know is that Etherium, It's what's called a proof ofstake blockchain. So in the Bitcoin world, you havesomething a Bitcoin miner and many people are familiar with that.They validate those transactions on, on the blockchain in the Etherium space.These, these sorts of things are called validators.So essentially what you do is you, you're a validator you lock up or youstake some of your tokens on the blockchain, and then when you'revalidating transactions, it proves that you've got skin in the game.You want to do everything right because.

You want to ensure that this is alegitimate blockchain as well. So that's code that's called the that,that's the validation process. That's why it's proof of stake.You've staked your tokens on the blockchain.Of course you want to reward for that. And that comes through in the form oftokens in a given to you. It's a sort of yield.It's around 3 to 4% and that's paid out in the form of more coins.So that's, that's staking at the, at the high level and that's, that's what's thereally big question here is is staking would you allow it for the for the HongKong ETFs and the spot ether ETFs, would.

You allow those funds to be staked.Yeah. Versus what's happening in the US andit's a very divergent path we're in right now.And so far our understanding is that is the key difference between where weperhaps find ourselves in Hong Kong than what we are what we did see in the U.S..Yeah, well, it really comes down to how the different regulators are perceivingEtherium or Ether the token. Is this something that's the security oris it not a security? So in the US, because you have thatyield and that's the form of reward that they they're a little bit more cautiouson how they want to approach it.

Whereas in Hong Kong they already see itas a security. It's been a big commodity security sortof debate in the US here in Hong Kong. They're seeing it as a security.They're okay with pushing ahead and allowing staking to happen for theseETFs. The big question, of course, is, is foranyone that's looking to invest their funds into an ether ETF, why would youchoose to do it if you can get staking rewards elsewhere?If you're investing directly into ether on a crypto exchange, why wouldn't youcontinue to do that? Because you can get that yield thatyou're not going to be able to get if.

You're in the ETF.There you go. Well, thank you so much, AnnabelJewellers. And of course, you can catch Bell storyon your Bloomberg and also on the website and also get an insider's guidebroadly speaking here to the money and people shaking up the finance hub herein Hong Kong. Our Hong Kong edition newsletter that'sout every Thursday. So that should it well, the new versionshould be out of the oven or ready at this point in time.Check that out. Also from the Internet at that addressbelow.

There we go.Plenty more ahead this summer. Here's a look at some of the bigcorporate stories we're tracking for you today.Alibaba is raising four and a half billion dollars from a convertible bondssale and one of the largest such offerings in recent years.Sources say the company Price has seven year notes due on 2031 with a coupon ofhalf of a percent. The offering is expected to close on May29th. Alibaba plans to use the proceeds forstock buybacks. Alibaba also says its plan to launch itsfirst cloud services region in Mexico is.

Looking to establish at least six datacenters in key markets, including Malaysia, Thailand, Philippines, SouthKorea in the next three years. Alibaba's AI Development Platform Modelstudio will soon be available in Singapore.Ferrari says European carmakers need to be more competitive amid the emergenceof Chinese EVs. The CEO, Benedetto Vigna, told Bloombergthat Chinese EVs are nice competition for his industry.His comments come with Brussels set to announce the results of an investigationinto Chinese EV subsidies. For me, this is a call to action forEurope is a call to action and to become.

More, I can say, pushing lesscomplacent. And Boeing shares slipped after itscrapped a plan to generate cash again this year and warned of anothersignificant outflow in the current quarter.Boeing says cash burn will be similar or worse than the prior period when it ranthrough almost $4 billion. Boeing's delivery woes have beencompounded by China's request for additional certification on someaircraft parts. The CAC has asked for additionalvalidation on a lithium battery in that recorder, and because of that, we havenot been delivering airplanes to China.

Recently.And HSBC says a lack of certainty on tariffs and rates are weighing heavilyon the minds of investors. The bank's US and Americas CEO MichaelRoberts tells us exclusively how they plan to navigate an unpredictableenvironment. Clearly, we're in a period of risingtariffs, rising quotas. Don't know what the Chinese responsewill be to the latest tariffs put on by the US.But, you know, trade liberalism is certainly in a different phase than itwas in the past. So I think we have to accept that.Our companies have to accept that.

So a couple of responses.One, were there to provide that advice with the largest trade bank in theworld. We have abilities to really helpcompanies manage their trade wherever they may be.So if a client is exporting from China as an example and wants to move thatproduct to their production capacity outside of China, we can help them.We're the largest foreign bank in India. We're a significant bank in Vietnam, avery big bank in Mexico. So we're really there to help themnavigate through this unpredictability. I think that will continue regardless ofwhat happens in the elections.

We will have more tariffs, more quotas,a less easy trade environment to navigate going forward.If I said to you, what's the biggest lever for the business in the near term?Yeah, is it going to be rate cuts from the Fed or a clarity in politics andtariffs? I think it's both.I think you need predictability. Companies need predictability to maketheir investments. Investors need predictability.What we haven't had really is that predictability.Lots of discussion on interest rates, lots of discussion of when and by howmuch.

Now you've got the, quote,uncertainties. I think policy needs to be predictable.So if there's a rate cut, fine. If there's not, then it's the questionof how companies then react to that. How do they then build their businessesto exist in a rate environment which is higher than it has been the last 15years? But I would argue that the last 15 yearshave been an abnormal rate environment. So if they had that predictability, theycan adjust their own production, they can adjust how they run their companies,and I think they'll do much better. But they need policy predictability.But herein lies the point for the.

Commercial bank that let's just squarethat away, which is many people say to me they've refinanced a great deal ofrefinanced on the retail, retail private side.Do you think that's the same for corporates?Are they holding back on doing deals, doing M&A, doing debt capital markets asa result of uncertainty? Yeah, I think they were in the past.I think last year was certainly a reflection of that uncertainty and we'vejumped over that. We have jumped over it.If and if you look today, the capital markets are on fire.We've had $750 billion of issuance in.

The debt.Capital markets for investment grade spreads are the tightest we've been in along, long time. The lot of CLO formation of capital forthe non-investment grade market, which I think will continue.But even the equity market, we've seen a lot more IPOs led by the tech sector, ofcourse, but IPOs are trading very nicely now, a lot more activity.So I think that sense of predictability is coming back.Michael Roberts there, the CEO of HSBC. You as an American with, of course, ourvery own Manus Cranny. Just very quickly here.So Alibaba has now given us something to.

Talk about slightly 60 minutes into thesession here. So amidst this broader weakness acrossthese equity markets, Bob is actually going the opposite way.In fact, just a few minutes back here, seconds back, hit a session high up 1%.That's one part of the story. The other one is this convertible bondsstory, which, by the way, I should also mention, I think JD.com also issuedtheirs. In any case, Baba pricing now that fourand a half billion dollar convertible. So we're looking at a coupon of half apercent. It matures on well in 2031 and isexpected to close in terms of size.

The offering here, subject to the usualclosing conditions, is expected to close in five days from now.So the company intends to use the proceeds here to repurchase get thisrepurchase shares and that's why the stock's up.I mean, it's interesting just how much that we've seen this sort of themeemerge among some of these trying to tap Alibaba specifically, though.Right. The firm has basically approvedexpansion of its share buyback program earlier this year.They're adding $25 billion in stock repurchases already.That's one of the largest ever that.

We've seen in China.It looks like this bond offering is going to be keeping that theme strongerand going. And also, I should also mention the thecorporate news and Alibaba. So yesterday, anyhow, how this week wetalked about had them slashing their pricing for cloud.Yes. So the company announced also I thinkthis was yesterday. So they're planning to launch the cloudbusiness in Mexico. Yeah.And further expanding across the region here.So we're looking at at least six data.

Centers in total Malaysia, Thailand,Singapore, Philippines and South Korea. That's over the course of the next threeyears. Yeah.So looking abroad. Yeah, right now.All right. We got plenty more ahead.Check out these markets yet. We're still seeing the Hang Seng pairingup some of the losses here. But with any given update coming up,this is Bloomberg. Right.Welcome back here. More on the cigar ante story here.So the.

These redemptions, we now have a number,in fact, here based on the sourcing and our reporting here from our colleaguesat Bloomberg News here. So we understand that requests requestnot so much. Of course, the money that was actuallytaken out hit $1 billion before the move to actually shut.So as of well, nearly $1,000,000,000 of requests before the decision to shut onThursday, That's according to what we understand from people familiar with thematter and certainly underscoring the lack of confidence.Really. Yes.Given the news flow here with the.

Company and the fund's rules, what we'veseen before usually allowed only monthly or quarterly redemptions before thesewithdrawals were suspended on Thursday, we're hearing that some of the secondlargest investors had already indicated plans to pull their money.So certainly this is something that we're hearing getting a number behind ithere. But, yes, this is on the back of what weheard, that they're going to be winding down.What this means for the hedge fund. It certainly is a lot of questions.I think that the FDA to interesting report about whether, you know, possiblywhat they actually moved this hedge fund.

To to maybe more of a family office ofsome sort where it's something that doesn't deal external funds, but maybejust salaries funds. But certainly uncertainty still issomething that we're kind of a lot of question marks about.What's next. Yeah, literally it's now up to thecourts. Yeah, right.So were there more on this later on, of course in the show right now as we wrapup, Also a week where it's been a fairly eventful as far as I guess this ralliesconcert in Hong Kong to the lack of it, really.So after, what, eight straight weeks of.

Outperforming just about every singleindex out there globally, we're now poised to underperform.It was going to come. You did see some signs of overheatingand some of these benchmarks. You have that certainly that in videoreport, which I guess in some ways fuels and maybe a perhaps a rotation back intolaggards as well. So after eight straight weeks, we're nowunderperforming the global benchmark. That takes us into the other story we'retalking about earlier on the earnings story, while good perhaps was not goodenough to keep investors here, and we're still waiting for, I guess, the morepolicy pronouncements along the legs of.

Property, which I think I guess earlieron, that was a big deal. I mean, at least we're seeing less ofthe downward revisions in China. So maybe we're hitting a turning pointon the fundamental side of things, but tech certainly has been thatoutperformer Charlotte was talking about property materials is still that dragwhen it comes to those earnings projections here right now.But that was a very interesting note from Gina martin and from our Bloombergintelligence team, along with Marvin Shen, talking about the impact of reallythe likes of in video. Right.And on global markets, maybe that sort.

Of impact is fading a little bit becauseyou have this reemergence of of these tech eight coming out of China now too,which which is a good thing. The it was brought up by our guestearlier on, Sean Taylor that you know the fact that, you know, we've beentalking about this the fact that markets have been doing well despite the Fed notwilling to cut rates just yet. Yeah, and you look at why, the reasonswhy that's so in Asia, I think in South Korea and Taiwan, you have Indiaearnings coming through. You have a broadening out of the rallybeyond in video, which might just add, I guess in many ways bring down vol, forexample, globally and really make it a.

Good year to be long only invest inequity markets not so much bonds. Well we'll talk more about bonds and ina moment with Jp morgan but yeah, just a brief look at markets at this point.Yeah, you talk about when it comes to the tech space, we're focusing on thathere today. I mean, Alibaba, we talked about thatconvertible bonds sale. So that certainly has helped lifting thestock here because are using those proceeds to buyback more stockpotentially according to that statement. But you're still seeing a pretty mixedsort of reaction to the tech space. Xiaomi, you know, despite what we sawwith hiking their targets for EV.

Deliveries and the like, the stock isstill down some 2%. Perhaps we're down to some profittaking, some consolidation. As we've mentioned, NetEase is up some3% on the earnings as well. But there you go, Bilibili.That's the big standout there were down close to 10% losses there for thatstock. The broader benchmarks looking like thisyear right now. So we're still seeing some declines butmaybe paring off some of the initial sort of declines.But we're starting to see when it comes to what's really driving this is atleast onshore is a flow.

So we're up about a fifth of 1%.Hang Seng is down about half of 1%. And there you go.Is tech still seems to be that drag This morning we talked about Jp morgan AssetManagement, talking about Asia credit staying pretty resilient and why theythink that they can afford to stay higher for longer. Welcome back to The Shadow show.Here's a look at the site just half hour into the session.So we've pare back some of the initial sort of gains, I guess you could say.But we are still seeing the downside, about 6/10 of 1% here today.It's interesting what you know, we.

Talked about the end of the earningsseason, so there's not really anything to really trade on.You talk about the dollar. I think it's firm for another four days,a fourth day. So really the EEM sort of complex isvolatile once again. And you talk about, you know, the lackof catalysts really until we get to maybe I guess the plateau.Dave, that that probably is what we're watching out for as well.Yeah, we did. And I have to emphasize this point, wedid hear from Xinhua news yesterday on yes,the Chinese president and sort of his.

Marching orders, and he wants to seebreakthroughs in employment and in the property market, which might give us agood indication of what they probably will sort of emphasize when we get tothat plenum as well. So but, you know, that's in July.So we have about seven weeks of consolidation, if you will.We are coming off eight weeks of outperformance globally.Welcome back to the show, by the way. So I Divine's point, right, it's lack ofcapital, the stronger dollar, so dollar yen we'll start with this.So inflation came in as expected earlier on reason why we're looking at this thisway the level to watch is one 5752 and.

Not that we're close to that, but thefact that that level is the level at which the first of two recentinterventions are seen to have happened. So.Right. So we're almost back to those levels,which underscores and turn to page, please, if we can, on the strong dollarstory, which has reemerged of late Fed officials pushing back and rates.You have good data coming through out of the US, for example, I think last nightit was the PMI and of course the jobless rate coming through.And you know, dollar is looking like this, right?The one is trading near one 1400 Taiwan.

Dollars weakness the but again openweaker today what you don't just create I should just tell you the peso thePhilippine peso is beyond a point at which Evine was having a conversationwith the central bank governor this time last week, above a level at which theyprobably will need to intervene. They're probably intervening right now.They'll they'll probably send us an impact.We'll tell you. Yeah, he'll tell us fairly directly.But they have had to come in and this has been a re theme.Yes. So we've been trying said they're readyto if they have to, but they did not.

During the last decision but before thatin small doses. That was according to the governor justabout last week. But yes, so still that's one thing towatch here. Of course, this volatility we're seeingacross Asia affects here this morning in terms of what the rest of Asia islooking like here today. We talk about, you know, basicallyglobal stocks have been a bit of a back foot here.And it's not just what we're seeing in Asia, but really globally as well.We saw in the U.S. borrowing in video was really thestandout there because even the Nasdaq.

Fell.But U.S. futures are still punching a bit higher.We talked about the dollar still gaining some strength here.And yeah, it looks like most equity markets are in the red here right now.Nikkei is where we're seeing most of that pain.Yeah, well, we wrap up this week, of course, as a recap of central bankconversations this week. Finally, we had quite a few surprisesright today, I think the U.K. inflation came in slightly stickier thanexpectations here. So when you look at, I think where weare with interest rates itself so.

Elevated for now, Japan also I thinkthis week the breaking news was the ten year yield hitting oh 1% nominal yield.I think we have some graphics to show you The do we have that?Can we find a place if we can? So this schedule that we've beenrevisiting of when they'll cut interest rates has been pushed back and pushedback even for I forgot about the RBA and Z2.Oh yeah yeah that they were saying that they're you know they could be ready tohike. They were considering it.What weren't you talking about a cut just three months ago.So everything's been pushed back, right.

You take a look at all the kind of majoracross day at least, you know ECB, maybe resources.I think in July. The bogey though, that's been pushedback to November, we were thinking something pretty soon.And when it comes to the Fed right. I think after what we heard from the USPMI data yesterday, which continue to be strong, you know, we went from being aNovember story to now a December story and then the minutes threwa wrench into that Powell press briefing where he said no pushing back theprospect of higher interest rates and then a minute show they did consider itand some officials are open to the idea.

Yeah,but yeah, what's this chart we're looking at here?Okay, this doesn't seem to be the chart anyway.Okay, well, but yeah, on New Zealand, this is also a point to make.Let's bring in Julie Caligari here, CIO of Asia Fixed Income at Jp morgan out ofmeasure. Good morning.It's nice to see you. Good morning.Amidst that promising backdrop that we've just outlined there for fixedincome, how has the market remained resilient or not?Well, yeah, it's definitely resilient on.

The high yield space.Right. I think what is true, though, is thatthe idea of high for longer is is there. Because the data is resilient in us andthis is a challenge for the pure duration idea.So it's better just to have carry and nice use.Why do we wait until we have finally the rate cuts?And where is the best place to find Kerry Now?We think that Asia Hyatt is a very nice place, actually is the best, you know,asset class on the fixed income is the Asia hired with close to 9% year to datereturn.

It's true that this high figure isrelated to, you know, very idiosyncratic stories to some extent, you know, likethe very risky part. But even if you focus on the more thesafer part of the high yield, like the double B's, you still get something like5%. So it's it's a pretty decent return.So when you say it is and. Craddock, I'm guessing you mean some ofthe the outperformance in China. Yes.So the very let's say high return is related, let's say to part of the SriLanka or Pakistan. Yes.And also the China real estate, which we.

Think is very interesting critic.But I think even if you exclude that right, there's still, you know, a decentapproach in which you go only for the safer part of the high yield.And then you have this nice carry while we wait.And what do you think the next three months when window looks like for thefor the specific group. I think it should be quite okay becauseas we were discussing in here here it's quite possible that we are not going tohave, you know, any central bank cuts over the next three months except forthe ECB. Right.But it seems that particularly in Asia,.

Is a key challenge because the strongdollar is, you know, putting a pressure on the central banks across the board.And it's very unlikely that we are going to have rate cuts while you can affordto have decent returns on the high yield.Yeah, it's interesting. We've seen a surge in kind of localcurrency corporate bond issuance this year, relatively speaking, compared tothe US dollar credit primary market. Is this a trend that's going to last,you think? Is it a way to mitigate a little bitfrom this dollar strength? Right.Well, it is a way in the sense that if.

You in in many places, we you can buythe local currency, corporate bond and hedge it back into dollars and have anice return. So this is a is an approach in which youmitigate the currency risk because the dollar may well remain strong and youstill have your carry. Okay.The you like casinos Macao casino stocks.I'm simply I say that is because when you look at say the US gaming creditspace for example just compare and contrast that for us and why you thinkthis part of the world's version of that it offers the best value right So thereis a bit of a premium on a relative.

Basis, right?And on top of that, we we are confident that, you know, China will hold up wellin terms of growth. So this combination of some premium anda benign view or benign outlook for for growth and the idea that we should befocusing on Kerry, that's one of the but those are the key reasons why we like,you know, Macau casino but also, you know, India renewables and part of thesubordinated debt in in let's say Korea or Australia.So there are interesting pockets in which you can get to Kerry in Asia.Do you look at the KGB's face at all? Yes.Given some of these natural on bond.

Sales, there have been just gone nutsthis week. Live is retail driven.Right. But do you expect more of these sort ofthe institutional investors to really step in to now and buy?Yes, I think so. But honestly, we think that the KGB'swill be in this sort of narrow range trading because for two reasons.Right. If you think about the big rally, peoplealready said that they don't want to see.That's it, right? Yeah.So it's very unlikely that we are going.

To see a big move.On the other hand, it would be really counterproductive to see a sell off.Right. And probably they would inject liquidityand manage that. So we think that is not like a greattrade, You know, in terms of a proposition for a capital gang on theKGB's is more, you know, stability there.That seems like a booty call. You don't know that.But it's like my job. Well, speaking of anything across theregion as far as sovereigns go, so that that stands out to you.Well, sovereigns, I mean, you have the.

Two extremes here in which the veryidiosyncratic names and, you know, Pakistan in Sri Lanka, for those thatlike that kind of risk is to a good proposition, a good idea of having risk.But also the return while on the let's say, the AIG part.Right, the Indonesia or, you know, India, Philippines, we think that it'sit's more a duration trade because it spreads are too tight.So. I mean, it's there are better ways.I would say if you want to go in the IG space instead of using the sovereignAsia, AIG. All right.And I forgot, we haven't even touched on.

Just your broad thoughts on Treasuries.Everything is priced based on Treasuries as well.Just your your thoughts and where we are as far as that range in yields ornominal yields. Right.Well, I think what we should see here is that even though it's likely that theFed will end up ended up cutting rates, but it's hard to make the case that willbe much more or at least with today, information that would be much more thanit's priced in. Right.So that's why if that's the scenario in which we are going to see a very gradualslowdown in activity, very gradual.

Moderation in inflation, so that the Fedwill also move very gradually. So that's is is an environment in which,you know, as we've seen this year or year to date, the carry is what we'll beproviding, you know, the year alpha until we start to see more steepening onthat curve. Yeah.But for that is probably you really need more information about the slowdown inus, something that we are not seeing very clearly yet.There is a moderation, but not a very clear slowdown.How about the. I know overall, a lot of people havetold us this, that it's not time,.

Obviously, to your point and SteveWinters, it's not also time to go up in terms of duration.Right. But in terms of just the delta from weekto week on adding duration, we've seen data that suggests people have beenadding duration at the margin. Right.Are you guys doing the same thing, for example?Not much. Okay.Because we think that basically what we could see here is more of this same, youknow, mixed data and rates, maybe range trading here.So we don't feel the need to rush to add.

Duration.We are much more, you know, in the idea of having carry.And that's probably what will continue to work in the near term.Right. How are you looking at, I guess, as afinal question, the biggest risks to your, you know, in your universe is itinflation is an intervention on currencies, for example, that might ruinsome of the carry return. Right.Is it something else? Well, I think that some sort of realcelebration in U.S. with much higher than expected inflationis is what would be people would be bad.

For markets.And this is not I would say that this is not only for for duration I think wouldbe hard even for spreads to some extent, because if there is a, you know, an ideathat the Fed can hike again and even for equities, I think, you know, would bebad. So it would be bad across that.A snippet of that. Yeah, I will stop me there.Yeah. Julio, it's great to have you, JulioGuy. You're very, very CEO of Asia Fixedincome at Jp morgan Asset Management. Still ahead, China continues militarydrills around Taiwan, its most expansive.

In over a year.We're getting an update from Taipei next.This is Bloomberg. Right.Happy Friday. Good.Good morning. Good Friday morning from the AsiaPacific. If you're joining us out of the UnitedStates, there abouts. There we go.So weakness across these equity markets. Why don't we talk about defense?Yeah, let's try that. There's something coming up thisweekend.

Chinese premier Li Chung heads to Seoulfor a summit with the leaders of Japan and South Korea, their first trilateraltalks in about five years or more. We're joined by our China correspondent,Ben Menlow. So what's on the agenda and is it reallygoing to be all about chips this time? Yeah, chips is going to be a big part ofthose talks because it's coming at a time when China faces this wall ofrestrictions from the US, the Dutch, the Japanese as well.The US is really picking off the suppliers one by one of China and China.Like Korea, it's the largest supplier of chips to China at the moment.Japan is the largest supplier of silicon.

Wafers to China at the moment, and weknow Washington has been courting Korea and Japan to really expand theserestrictions of semiconductor equipment exports to China.And so a lot is at stake here. Premier Li will be using this trip toreally shore up its supply chain security, but also big stakes for Koreaand Japan as well, because they have these companies, SK Hynix, Samsung withhuge presence in China. They will be worried about retaliationand time is of the essence as well. Washington is said to be pushing toreach an agreement on these curbs with Korea before June, before that G7summit, and then after that, the.

Japanese and Korean leaders are said tobe considering a trip to the US to meet with President Joe Biden for anothertrilateral summit. So there's a lot of negotiations that'sgoing on just ahead of those meetings. Yeah, and a lot of other items in theagenda, which I imagine would include would North Korea be part of the agenda?Military ties, for example? Yeah, for sure.South China Sea is China's security issues will be on the agenda because,again, Korea, Japan and the US, they have been strengthening this securitymechanism. They've been holding drills in the EastChina Sea, where China has this disputed.

Territorial claim with Japan over theSenkaku Islands. Depending on who you speak to, they'redifferent names for these islands. And then Taiwan as well in focus,because Japan had sent their largest ever delegation to attend theinauguration ceremony of president luncheon on Monday.Beijing obviously angered by that. They had all those military drillsyesterday and a North Korea as well, the perennial issue with its nuclear andmissile program and then allegations of that weapons for eight exchange withMoscow that both Pyongyang and Moscow have denied.But again, Korea and Japan, they're.

Going to push Beijing to use itsleverage over Kim Jong un to really be in Pyongyang.And it's interesting, though, because, you know, it's been a while since thesethree nations have met. I believe covert was certainly onefactor, but certainly geopolitical tensions as well.And Korea seems to really want to express that this is a chance to restorethese three way talks. But you talked about the division andall these sort of issues. I mean, what's the chance of actuallyseeing a normalization of relations then?Yeah, there is a lot of hope riding on.

This summit because they haven't met forfour years and so much has changed in the last four years.We see Korea and Japan leaning closer towards the US and there's this almostfundamental shift in geopolitical dynamics here, because if you look attrade, China remains the largest trading partner for Korea and Japan.But if you look at new investments that's declined from both Korea andJapan in recent years and exports as well.Korea's exports to the US had overtaken its exports to China for the first timein over 20 years. So that's huge.That's a lot for Beijing to manage here.

But the good news is there is someintention, it seems, from these three countries to stabilize relations becausethey are they look set to adopt a joint declaration.So from the summit to detail some of these outcomes, we could look at perhapsincrease in people to people exchanges, increase collaboration in science andtech and in things like dealing with infectious diseases, climate change,perhaps efforts to bolster trade and investment as well.Amendment. Thank you so much.Amendment Lower China Correspondent And one of the things that amendment justtouched on there, in case you missed.

That, of course, were these militarydrills around Taiwan. So let's get more on that, of course.And let's bring in our Taipei bureau chief Samson Ellis is with us with thelatest. Sam, thanks for joining us.So I think certainly this time yesterday wasthe busiest point on the story. And in late, yes, I believe the Taiwan'sdefense ministry held a press briefing. Just get us up to speed on what we knowfrom this point yesterday. Yeah, Well, so we're just four days intothe presidency of lurching, and already he's besieged on multiple fronts, bothat home and abroad.

And so it all really kicked offyesterday morning when China announced a new round of military drills in theTaiwan Strait, but they didn't actually confine it to the Taiwan Strait.These drills are surrounding Taiwan completely in five locations, includingin the Pacific off of Taiwan's east coast.And these really are reminiscent of drills China has held over the pastcouple of years. They're not quite as big as the drillswe saw two years ago when Nancy Pelosi visited Taiwan.But they are around the same scale we saw last year when President Tsai IngWen met with then US House Speaker Kevin.

McCarthy in the United States.So we have seen these before. And to put it into context, they arenot, you know, they are now encroaching fairly close to Taiwan, much closer thanthey have on a regular basis. They are around 24 nautical miles off ofTaiwan, just just outside what Taiwan considers territorial waters.And I just want to highlight also a video released by Taiwan's Defenseministry earlier today showing just how close these ships are coming in.You can see a Taiwanese naval officer looking through binoculars at a time ina Chinese play naval vessel just a few hundred meters away from them.And that really is a rare insight to.

Just how close these navies are gettingto each other. And it just so happens I was on a boatin the Taiwan Strait yesterday visiting an offshore wind farm that had newlybeen inaugurated. And there was absolutely no sign fromwhat we could see of these drills at all.You know, they are happening quite a long way off of Taiwan for the mostpart. And, you know, but it just goes to showthat the fact that this you know, the visit I was on yesterday for this windfarm and with a bunch of investors who'd plowed money into this wind farm, itjust goes to show that that, you know,.

It doesn't seem to be spooking investorstoo much as things stand. Yeah.I mean, the equity market continues to be at records, Samson, which is a goodpoint. But interestingly enough, it's not justthe threat of China, but also something that Washington is dealing withdomestically. There's an opposition bill that Ibelieve is going to be going to a vote here today.Tell us more about what could happen today.Yeah. So we're down to what's likely the finalday of this.

The opposition Kuomintang isabsolutely set on pushing through a new bill that would greatly expand thepowers of the legislature. It would allow the legislature much moreinvestigative powers that would allow them to request documents from thegovernment, from companies, from groups, from individuals.It would allow them to call in for questioning a whole range of officials,including the president. And it would mandate fines andpunishments for anybody found to have disregarded the legislature or indeedlied to the legislature. So the government of lighting and alarge amount of protesters have have.

Vowed to to try and fight this.The KMT likely has the votes in the in the legislature to be able to push itthrough today. So we're expecting to see that today.And then outside the legislature, we're seeing increasing protests.So we expect that to grow throughout the day and culminate in the evening.We don't know exactly how many people, but earlier this week, we saw around10,000 people in the streets outside the legislature calling for it to bewithdrawn. So we'll have to see this eveningexactly how it goes, how many people show up, and then to see what exactlyhow the government deals with this,.

Whether they refuse to sign it into lawor whether they challenge it in the constitutional court in Taiwan.Samson thank you. Sense analysts there.Our Taipei bureau chief joining us with the latest there.We got plenty more ahead. This is Bloomberg. All right.Checking markets here right now, Samsung Electronics, that one is seeing a bigdrop here, about 2% in Seoul. This is according to what we're hearing.There's a Reuters report that basically talking about how the latest HBM chipshave yet to pass in videos tests due to.

Heat and power consumption problems.Maybe that's why we're seeing that dip here this morning.We're also watching the china of property space here as well, just givenwhat we heard from Shinhwa. And President Xi Jinping really lookingfor some breakthroughs when it comes to the jobs front, as well as a real estatesector. So far, though, the developers are lowerthis morning. Plenty more ahead.This is Bloomberg. All right.It is getting to that lunch break in Tokyo.And yes, what you're seeing still some.

Downside when it comes to equity marketsthere. In fact, they are one of the laggardswithin the equity space in the region. The Nikkei is down about 1%.Topics, relatively speaking, do a lot better, but still seen some downside, a4/10 of 1%. But look at that dollar yen trade.We are above 157 here right now. And we have also that JGB yield backabove that 1% level. So despite what we heard from the CPInumbers, which did cool down for a little bit, we're that speculation thatthe BOJ is going to do something still there in some ways.Yeah, because I guess in some ways the.

Conversation is now certainly the CPIstory is still one of the sort of key features of their, you know, their theirtable is what the currency is. It's a currency.Yeah, right. And you know, until until they dosomething more, this currency is really going to play in this way.So. One 5711 Should this be the highest ofthe session so far? I'm going to try and look for thespecific level we're in. We actually hit that.We're watching because if we get close to that level, that might again, sort ofspark intervention talk.

Not that we are headed intointervention, but the reason I say that is one 5752 to be more specific, is thelevel at which the first of the two recent interventions are seen to havehappened. Right.And by the way, right. So that seems like it's far away.Several weeks back, data at the end of this month should actually tell uswhether or not they actually intervened or not, right?Oh, yeah. Yeah.We were talking about the end of the month was when they would release thatdata.

We're still a ways away.Yeah. Yeah.I think we've been hanging. If anything, we're really kind ofstarting to see. It's not really a question of whetherintervening. I think now it's a question of themarket is how many times are they going to have to hike.You take a look at what Bloomberg Data has been crunching and they basicallysay if you have that JGB yield at 1%, I mean, it's markets are fully pricing ina ten basis point hike at the July meeting now.So we could be seeing something as early.

As this summer, over the next eightweeks, give or take. Right.The rest of Asia looking like this, though.So amidst the weakness in the dollar, really, we can point to one culprit,which is the Bloomberg dollar index. There are some green there and youreally see what a strong dollar tends to do to these risk assets.Just about every single sector is down or every single sector is down.To be more specific, Asia dollar index down about a 10th of 1%.S&P futures are still pushing up after, of course, that weakness in video.And we're down 9/10 of 1% on the.

Regional benchmark.We are set for a weekly loss across global equity markets this week.Let's bring in Garfield Reynolds who leads our Markets Live Asia coverageright now to talk us through this. GARFIELD Why don't we start off withjust a strong dollar story and why not talk about dollar yen?Is this a dollar yen story or is this a dollar story?Well, I think it's mostly a dollar story.That's that's been the issue in general for theJapanese authorities. You know, they they can't be all thatcomfortable to see the yen grinding.

Higher towards the levels whereeverybody is assuming they intervened, you know, back late last month,beginning of this month. But there's not that much they can doabout it. They haven't even been jawboning thatmuch lately because this is very much about the dollar and it's very muchabout, you know, the Fed pivoting back towards, you know, hawkish hold kind ofrhetoric. We've got Fed speaker after Fed speakerstressing the need for patience, stressing concern that inflation isgoing to take longer to bring under control than they thought.And all of that points to, you know,.

We're going to go into the Fed meetingnext month with everyone certain that they're going to hold rates and thatthey're going to shift the dot plot higher.And the question is going to be, do they leave to rate cuts on the table or onlyone? And that's driving the dollar up againsteverything. It's just the yen is among the mostvulnerable to that. Yeah.I mean and we've heard of departures from the I mean the RBA said this weekeven, you know, the okay in some ways that you know, everyone's hesitant toeven talk about rate cuts right now.

What does this mean for the Treasurer?Where does it leave the Treasury market? Right.I mean obviously we've seen yields picking up once again.Are we have you seen a peak yet this year?No, I can't say that we have seen a peak this year because, you know,Goldman's CEO the other day was talking about the potential the Fed doesn't cutat all this year. The Fed doesn't cut it all this year.And you're going into an election season where whoever wins the presidentialelection and whatever happens with the two houses of Congress, you're likely tohave increased spending going forward.

So increase bond supply.You've also got what's going on with commodities where they're taking a bitof a break just now at the end of this week.But in general, they've been much higher.All of that argues for the potential that we haven't seen the peak.We may have seen it. You know, there is the potential that atsome stage, you know, central bank rate hikes do start to bite.But for now, we're not seeing that. Garfield.Reynolds, I thank you so much. Well, these are live our markets livecoverage across the region.

More on this Japanese yen story becausethis might actually be leading to or the weekend might be leading to perhaps moreon shoring of capacity back into Japan. Right.So what you're looking at on your screen says dollar yen is yellow.The white line? Our expectations of where the exchangerate will be from Japanese corporate is based on the BOJ tank and survey.And what that actually might actually mean is, again, this boosting of capitalspending for some Japanese businesses. In fact, let's bring in our senior asiastocks reporter here. You can see i know where the story forus from tokyo.

I mean, it's on side of the yen as wejust showed, weakened so much. Expectations are also quite weak.Should investors expect companies to shift production back into Japan as afunction of that? Hi, David.Yeah, There's expectations in markets. The Japanese companies might shift backtheir production back home. I know that.I guess it's very easy to see the reason the Yang is very cheap moment.And if you look at trade weighted inflation adjusted terms, the yen is atthe lowest level since the currency went into free float like 50 years ago.So it does make sense from the.

Currencies perspective to be at somefactories here. And something I can point out today isthat the according to economists that Sony Financial there's typically longerof three years between the yen started weakening and or strengthening.And and from that point you knowcompanies started to change their behavior.So for instance, in the past, basically after the currency markets trend haschanged, it took three years for companies to change the behavior.And since the yen started weakening enthusiasm 21, it could be that this inmy see the beginning of the change of.

The behaviors among Japanese companies.So have we seen any sign of that, any increase in capital spending in Japanlately? Yeah.I mean, so far the most moves we have seenhave been limited to the semiconductor sector, and that's mainly supported bygovernment subsidies as well as geopolitical concerns.And so we we haven't seen any sort of widespreadmoves. That said,the machinery orders data has shown that the march, that much machinery, it was adata show that the.

Orders picked up more than much morethan expected. And so that could be a sign that thedowntrend in machinery orders may be reversing.Now, we know that it's a highly volatile data set, so we can't talk about thetrend by just one month figure, of course.But that said, I mean, it's a positive sign that capital spending might bestarting to pick up here.I think you could take your case on other.Joining us for the latest on what this weekend really means when it comes thiswhole reshoring trend, we got Buddy.

Moorhead.This is Bloomberg. That stronger dollar that continues herefor another day. Take a look at what we've been seeingacross Asia affects we continue to see 157 levels for dollar yen.Yes. Across some of these GM currencies.You still seeing weakness in the Aussie dollar, for example.But really it's it affects that. We really need to check here today whenyou see that renminbi still hovering about 725 726 handle.But we certainly have seen some weakness when it comes to the one the Thai baht,the ringgit here this morning to Dave.

Yeah, well, I guess this really, Iguess, in many ways underscores the pain we're seeing in Hong Kong equity marketstoday as well. This dollar story.Speaking of Hong Kong, big news over the last, what, 12 hours or so here in thecity amongst the financial community. Of course, Bloomberg has learned a storythat's gone to capital management, the hedge fund facing nearly $1 billion ofwithdrawal requests before the decision to shut down.Let's bring in our deals, reporter Manuel Blagoy to just get us up to speedon just let's let's just go through the basics of what we know at this point.Yeah.

David, I mean, it's an evolving story, ahuge story with a lot of impact here in Hong Kong and even globally.I mean, it's relatively well-known hedge fund, notoriously well-known for forcarrying out complex block trades. And and and they were managing around $5billion in assets. I mean, you know, as our SCOOPsays, I mean, $1 billion in redemptions, I mean, that's a huge number.I mean, you know, the scandal, you know, hitting hitting the fund is is prettysevere. And they just announced as well thatthey are winding down the operation. So now the question is how they willreturn that capital to investors in an.

Orderly manner.But but yeah, I think it highlights kind of like the severe impact in confidence,right. When when these when these insidertrading, you know, scandal hit a firm like the guarantee definitely has a bigimpact. I can tell you that the community youknow is is talking nonstop about about these these topic here in Hong Kong andthe impact they may have on other firms as well.Is it likely to have any sort of impact me what's next really I think yeah, evenI mean, that's that's that's a good point.I mean, I think for the banks as well.

I mean, because the you know, thesehedge fund had a handful of banks that was working very closely with them.So they will have to find their or the brokers when it comes to carrying outthese block trades, you know, they need to execute whenever a company, you know,needs to to carry out a broad trade. They need to be able to to sell that inthe market real quick. And I think that what was one of theguarantees strength and that's why banks really liked working with them, becausethey were able to pull off these complex deals in a very timely fashion.So I guess the question is now, you know, how banks are going to adapt to toto finding the right broker for for.

These upcoming deals in the future aswell. And now think about Bulgari.There are deals report out with the latest when it comes to 70 some otherstories that we're following today. The U.S.Commodity Futures Trading Commission is ordering JPMorgan to pay $200 millionfor supervision failures. The regulator says they failed toproperly monitor billions of fine orders between 2014 and 2021.In March, JPMorgan was fined $348 million by the Office of the Comptrollerof the Currency and the Federal Reserve over some similar gaps.Boeing shares slipped after it scrapped.

A plan to generate cash again this yearand warned of another significant outflow in the current quarter.Boeing says cash burn will be similar or worse than the period prior when it ranthrough almost $4 billion. Boeing's delivery woes have beencompounded by China's request for additional certification on someaircraft parts. Tesla CEO Elon Musk won't say if he'sstill committed to a low cost. He was pressed on the issue during atech conference in Paris, initially telling one reporter that it was, quote,difficult to answer such questions. Musk later said he didn't think thesubject would be of interest to the.

Audience.He also says he doesn't want either tariffs or tax incentives for EVs.Yeah, okay. If that's not interesting, maybe thisnext Lenovo story might just pique your interest here.Shares were up 44% from the lows were down slightly today.I get an earnings story there and that's really despite the fact that the PCmaker actually gave earnings guidance that Citigroup actually describes asweaker than expected. And earlier on, the company CFO alsotold us how he sees their new HPC performing.On the initial market feedback, I think.

That was well received the product, Ithink because I think our our, our PC offers, they have features that actuallymeet the requirements of the customers. As I said, we announced our our APC afew weeks ago. I think the initial response of themarket is very positive and will begin to start shipping out I think later thismonth or probably I think in a matter of weeks.So what do you think is most appealing? And again, how many more iterations ofthese products will we be able to see? Yeah, I think using our own definition,because at the moment APC, I think the different companies using differentdefinition, I think we actually use a.

Very tight definition, I think havecertain features that we consider APC. I think for Lenovo, we expect that wewill we will obviously have the whole portfolio of products by initialshipment in the first in the current fiscal year probably will be in singledigit and then will grow into double digit.I think up to IDC at the moment expecting that the market will probablyhave about 50 60% I think in 2 to 3 years time.We believe that is probably we will definitely follow that track.So the electronics industry has largely bounced back.Do you think this is a new trend?.

Do you think it's bottomed out thatthings will get better for electronics in general?Well, definitely from a PC perspective, with we with we are very confident or wehave very strong evidence. I think that A.I.or the application of A.I., I think is going to have a major impact, I think,in the PC industry. Now, we actually saw and the otherevidence that we see that when you call bounce back is when you look at ourresults, we look at our own results. We actually we have a very challengingfirst half of the 2324, and we begin to see the rebound in the third quarterwhere the group actually reported, I.

Think, growth in revenue this quarter.On quarter four, we have we see the all our three business group, I think thedevice group, the Enterprise group, as far as the services, they all beenactually growing through year. Now looking at I think the the orderbook, I think talking to customers, I think we are very confident that thistrend will continue. That was the chief financial officerthere of Lenovo just after they released their earnings and guidance ahead,speaking with our Francine LaCour. Right.Just some of the other corporate stories that we're tracking at this point.Alibaba, the big story, too, here,.

Raising four and a half billion dollarsfrom a convertible bonds sale in one of the largest such offerings, in fact, inrecent years. Now, sources say the company priced itsseven year notes. That's due in 2031 with a coupon hereof, what, half of 1%? The offering is expected to close inabout five days or so. Now, Alibaba plans to use the proceedsto then buy back some stock. Now, Alibaba also says that it isplanning in a separate note here and the company planning to launch its firstcloud services in Mexico. It's looking to establish at least sixdata centers in key markets in the Asia.

Pacific, separately, including Malaysia,Thailand, Philippines, South Korea over the next three years.Bob, as a development platform model studio will soon be available inSingapore. Right.That's a wrap of those stories for now. Plenty more ahead here and shows.This is the China show. Here is your trying to brief a look atwhat's making headlines in national newspapers this morning as state mediaare focus on China's two day military drills around Taiwan, which started onThursday. A Shanghai commentary says suchexercises are necessary because any acts.

Of Taiwanese independence cannot betolerated. And the editorial also criticizes theisland's new leader, Lightbringer, and says his actions pushed the territorycloser to the brink of war. And over at the Global Times runningthis cartoon showing a rickety boat titled Taiwan Independence.And it's actually heading there, you go to the edge of a waterfall.There's editorial says that basically any separatist attempts will face astrong counterattack and accusing President Lee of inciting anti-Chinasentiment. The fact that this is happening, thesemilitary drills just days after he.

Became president is in some ways quitetelling of just the risks that are really liao we could see here because,you know, there's not really so much that we're getting closer to conflict aswhat may be state media might allude to. But really any of some sort ofmiscalculation or escalation is something that we could be seeing there.It's a pretty straight you're right. It's a it's probably a preview of whatis likely going to be a recurring issue. Yes.During this term. Right.And I guess in many ways, it draws a line.And I'm just being the pessimist.

It draws a line to how good things canget. Yeah.And of course, not to also mention that lighting is also going through.And today, of course, there's that bill in Taiwan.That's a domestic story that of course has the first few days, hasn't been anyhas been anything but smooth, really smooth sailing for him.And it goes into, I think, you know, couple of things, right.You had the trial coming up. Yes.The three countries into the Shangri-La Dialogue coming up next week, too.Yeah.

So it's interesting, too, when youcompare our very own Jennifer Welsh from Bloomberg Intelligence.Yeah. She talks about this, a speech that weheard it in his inaugural day, which had much harsher sort of criticisms ofBeijing than perhaps his predecessor, Taiwan.And maybe that's how you are seeing such a strong response from China right now.Meanwhile, we're talking about another report here, Sara, talking aboutPresident Xi wanting deeper reforms for some of the country's key sectors,including housing. That's a key word there, as well as jobreforms.

And he says they're in need ofbreakthroughs and changes aimed at improving people's livelihoods.The report offers clues as to potential focus areas.Now, maybe it's a sign, Dave, that, you know, we could be hearing something atthe point I'm in July, which is about eight, eight or so weeks, you know,which I guess gives enough time for it to work out the details if indeed thisis what his marching orders are. Yes.You know, for the different departments going into that as well.Right. So and this really comes on the back ofwe're waiting for more forceful.

Measures.The one this time last week on property actually was, I guess in many wayssmaller amount than what was needed to buy up all that inventory.Yeah, but a lot of people consider that announcement itself, just the turning ofthe page into something more forceful from the central government that it hasa little bit more punch now than what we've seen previously.And in fact, a lot of those measures came out when I believe were thepresident wasn't even in China. He was he was actually abroad.So the fact that we're hearing this from China does suggest that maybe it iscoming from the top right now, it's clue.

How markets are doing here.And we talk about how things are looking is looking like things are lookinglooking like that's a lot of looks. Yeah, we're looking everywhere, butwe're off some of the lows. There you go.We're losing our worries as we get closer to Friday.But yes, so it seems like things are picking up in terms of the sell off hereacross Hong Kong. We're certainly seeing that when itcomes to the tech space in particular, you look at the things like Bilibili,these were all that came out with earnings, despite some of them actuallycoming out, doing better than expected.

You're seeing quite a sizable reactionnegatively to the stock. It does show that this rally, maybe itdoes have some maybe not much life left right, that maybe people are juststarting to take profits now after we're seeing these results.And some of these are you know, some of these were the big winners during therally, right? Yeah, I think property is a very goodexample of, you know, some of these stocks are up 100% from the lows.Right. So you do understand why there is thistemptation to sort of take money off the table, just given all of the confluenceof factors out there on the strength of.

This Fed conversation, with ratesremaining higher for longer, we're seeing bonds also pulling back, which isexactly what you're about to see when you look at as cross as it going intomidday in the Asia Pacific this Friday. Futures are pointing slightly higher inthe US. We're steady on European futures goinginto the open there. But as you can see, it's generallyspeaking, a a day when people are taking risk off the table as we wrap up thistrading week. Right.That's it from us here on the China show.We see you all on Monday.

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