Lai Ching-te Takes Helm as Taiwan’s Original Leader | Bloomberg: The China Order 5/20/2024

Good Monday morning.You're watching the China show. Welcome to the program.We take you straight now to live pictures out of Taipei where.There we go. As we can see, of course, lighting isabout to be sworn in as the president in Taiwan amid lingering tensions betweenthe U.S. and China.We'll get you, of course, more on the story.We have a full team on the ground to cover this and all the implicationsgeopolitically. Certainly, the conversation broadensbeyond simply domestic affairs and.

Conversations there within Taiwan.Of course, Stephen Engle, we'll be bring him in just a moment.And the market is also coming on line over in Taipei with little change rightnow, midst. Also, the other big story, the backdropof this melt up in risk assets. Stocks across the Asia Pacific are up aseventh straight day. We're at a record as far as gold neargold prices, of course, and up. Global stocks are now at about thehighest level so far on record. We'll take you straight now to Taipei,where our chief North Asia correspondent, Stephen Engle is with usto talk us through.

Of course.And it's Steve. It's a busy day today.It's been a busy weekend, too, where you are going to be the new president therein that video along with his vice president shall be Kim and the outgoingpresident saying, one, I will be here as, of course, lighting to get sworn into be the next president. We'll have live reaction.We'll have analysis as he takes his place at the heart of the geopoliticalrivalry between the world's two largest superpowers, China and the UnitedStates. Stephen Engle, chief North Asiacorrespondent.

They're live for us in Taipei.And later on the show, in fact, we'll get more analysis on Taiwan with a lotof conversations coming up here in the show with the Prospect Foundation andalso the Hoover Institution that takes place in about an hour from now.Keep your eye on those interviews coming up.Also, keep in mind on your terminals live.Go to keep abreast of developments in Taiwan with the inauguration oflightning to ask, the Taiwanese president takes us straight into theagenda today across Greater China. And again, this market melt up.We're seeing this rally this fourth week.

Of gains across these markets in HongKong, property stocks and bonds. Big news on Friday.More on this in a moment here. We'll unpack.And really also, we've already gotten some analysis really coming out of someanalysts on how in terms of the scale, the scopeof the measures put in place on the smaller side, but certainly indicativeof policy intention, I think is key. This tech rally in Hong Kong, so we'reabout two and a half percent away now from hitting 20,000.Now, the Hang Seng index, which by the way, wasn't really part of theconversation as recently as, what, five.

Or six weeks back.We get a loan prime rate today. This is for May.No change expected there. One in five should be out in about 12minutes from now. Data in the form of the jobless rate inhong kong. And earnings li auto and trip.com areset to report, of course, later today against the backdrop of markets, half of1% to the upside here. Seven straight dayof gains. Oh, okay.We're also just getting some breaking news out of china.We'll get more on this when I have more.

Details.I promise I'll give them to you. China has now included three UScompanies in an unreliable list. More on that in a moment.We're looking at Boeing, defense space and security in that list out of out ofChina as well. Okay.Broadly speaking, though, nearly 2 to 5, 1.24%.Morgan Stanley out with a note. They're bumping up their target on thetopics index at 3200. Apart from this as well, yields are onthe way down, not on your screens, but I'll tell you anyway, copper is actuallynow hitting a record.

The LME contract ten eight right now.As far as that specific. There we go.Contract is concerned going into the open today, the Golden Dragon indexworth reminding you, of course. And Friday, I think 3/10 of 1% on thatchanged a page please, if we can. There we go, 4/10 of 1% off highs oftoday within this still, of course, it's the story within the property marketwhere volumes hit a record and Friday turnover third highest on record.Futures are doing this ahead of the open.And of course GBS also yields on your screens and China about 11 minutes tothe first fixing of the week.

We're now trading up to 31 right now ona ten year SGB. We are poised for a higher open acrossthese markets in Greater China. We'll take you straight back to StephenEngle. He's in Taipei for a Steve laid out layout the foundation for us the conversations you'll be having ofcourse, today as we try and extrapolate what this relationship looks movingforward. Yeah.Hi, Dave. Yeah.The man who Beijing is called an instigator of war and a dangerousseparatist lighting day is about to.

Become the next president if he has notbeen sworn in already. There you see, of course, the outgoingpresident saying, one, paying his respects to the Taiwanese flag, theirRepublic of China and lighting, duh. And his vice president shall be Kim willsoon be the next administration and unprecedented third consecutive term forthe Democratic Progressive Party, the DPP, and obviously interesting times incross-strait relations. And that's why we're going to bewatching and hanging on every word after this.He will give his address. I'm talking about lighting the as thenew president.

What tone will he take?Well, we're getting indications it will be a speech of solidarity with allTaiwanese people, of continuity of policy from tying Wen to lighting.And again, essentially the message to Beijing across the strait is neitherside of the Taiwan Strait is subordinate to the other and that is key.Obviously, the DPP in Taiwan has never really ascribe to the 1992 consensusthat there is one China, but they can disagree on the definition of that.So that is key. Also going forward, what is take willprobably be continuity of of Taiwan's policy of the 1992 consensus.There will be a number of different.

Dignitaries here in that presidentialoffice, including the heads of state. Of at least seven of the 12 remainingDemocratic allies are diplomatic allies with Taiwan, including the king ofEswatini, the prime minister of Paraguay, prime minister of Belize,Palau, Marshall Islands, Tuvalu, Saint Vincent and others, and also a fewrepresentatives from the United States, including the former Biden White Houseeconomic adviser Brian Deese, and the former George W Bush Deputy Secretary ofState Richard Armitage, and of course, the chair woman of the AmericanInstitute of Taiwan Aid, which is the de facto embassy here in Taiwan.Laura Rosenberger So again, we're just.

Awaiting this swearing in for the nextpresident of Taiwan. Steve, just one last question with you.I can't let you go without asking you. Certainly events over the weekend andthe fights that broke out. You know, when you talk about what'staking place for lawmakers there. And the reason I bring that up, fairlydomestic issue, but that could come to a boil, as you mentioned earlier on onTuesday. Just give us the context and why Tuesdayis important to Steve. Yeah, there.There could be some rallies. Depends on how this bill goes forward.On Friday, there were scuffles as you're.

Seeing the pictures in the legislativeyuan between the rival parties, the KMT, the Guomindang.They lost the presidential election. Obviously the candidate joyy, but theytook back control of the legislative yuan, the parliament by just one seat,52 seats for the KMT and 51 for the DPP. So the DPP of the ruling party ofLightning is has lost that control. The TPP, the upstart third party, woneight seats and they've sort of aligned with the opposition KMT on this billthat would essentially or could potentially undermine the opening daysof lighting this man's rule as president simply by requiring it in a fast trackbill.

Lighting does to give a state of thenation address every year and also have a separate meeting with lawmakers and tobe grilled by those lawmakers. And they put the provision in there thatif he is determined to be lying, they could potentially criminalize thatenlighten do. And the DPP is essentially set thisprocess of this bill to do this is unconstitutional.So it's set up for a potential fight if indeed this goes forward and is pushedby the KMT. And it's it's sort of partner, the DPP,they would outnumber the DPP in the K in the in the KMT now led legislative yuan.So it does set up for a contentious.

Issue.Now it might be just sound like domestic politics, but it could have lastingglobal ramifications if indeed this undermining could undermine his policieson defense spending and other issues with Beijing.That would put the the tenuous relationship across the strait in evenmore jeopardy. Stephen Engle, our chief North Asiacorrespondent in Taipei for us. Of course, the big story there and infact has just happened. As Steve was talking, the lightning hasbeen sworn in as the new president of Taiwan for Bloomberg clients.You can continue watching all the things.

Taking place, of course, there on live,go on your terminals. So all the big diary entries, of course,also coming up are on that page as well. Check that out in case you missed someof the conversations and developments from earlier on today.Right. Some other big stories we're trackingfrom around the world. The latest here out of Iran here.Rescue teams are still searching for President Ibrahim Raisi here and hisforeign minister after the helicopter they were traveling crashed.State media say dense fog in the region is making conditions extremelydifficult.

Now the government says the country'saffairs will not be disrupted. Raisi won Iran's presidency back in2021, has been and has been seen, rather, as a possible successor toSupreme Leader Ayatollah Ali Khamenei. But Saudi Arabia's state media says KingSalman is suffering a lung inflammation at a Saudi official Saudi press agencysays the 88 year old monarch will receive antibiotics at a palace inJeddah after developing a high fever and also joint pain.King Salman has led Saudi Arabia since 2015.Now the illness comes as with his son, Crown Prince Mohammed bin Salman,expected to travel to Japan this week.

Right now, back to China.Another big story taking place. Here are some of these the most forcefulmeasures yet out of Beijing to rescue and to hopefully bring us to some sortof resolution here to what's been taking place in the real estate sector.In fact, for more on the story and in case you missed all of this, let's bringin our China correspondent, Ben Mellow, to walk us through some of the measuresthat they announced, of course, over late Friday going into the weekend.So the PBOC has cut the minimum mortgage rate nationwide and they are alsocutting down payment ratios for home buyers for first time homebuyers to 15%,second time homebuyers to 25%.

Now that's 5% less than previous ratios.And the government has also called on local governments to buy back theseunsold homes at a reasonable rate. And to that end, the central bank isproviding a ¥300 billion in re lending facility to fund state bank loans.And of course, the broader hope is that by turning around the property sector,the government can get consumers to spend again.That's after those very disappointing retail sales numbers that we saw comeout on Friday. Plus property investments down nearly10% in April, home buying home sales as well, down 45% in April.But there are still many questions about.

How this will be implemented.For instance, which are the developers, the distressed developers that will bebailed out. Which city?And local governments are going to receive what kind of funding.And estimates are that the government actually need to spend along the linesof between 1 trillion to ¥8 trillion to mop up those housing inventory that areat an eight year high. So it looks like it's still far fall,falling, far short of expectations here. Here we got smaller, but policyintention is clear. We'll have more from Emilio in a momentthere.

A China correspondent just getting us upto speed here on the latest steps Beijing has taken and announced toreally address the weakness in the property market.In fact, we'll be getting the insights here out of BNP Paribas joining us in acouple of minutes and really where they think this economy heads with policy andrates. And also in a couple of minutes, the onein five year loan rates are actually coming out.Julianne joins us in a few minutes. I will leave you with some live picturesout of Taipei, Of course, the inauguration taking place relatinglighting has been sworn in as the new.

President of Taiwan.Happy Monday. You're watching the China show. Okay, There we go.Breaking news right now coming through loan prime rates, one in five isunchanged, 3.4 or 5% on the one year bottom of your screen, just under 4%, ofcourse, on the five year, which is certainly given the narratives aroundthis economy recently has really been where the focus has been on,particularly because this one is really when you talk about mortgages, certainlytied to this specific one as well. Okay.Let's get instant reaction right now and.

Perhaps where we go with the story andplus all the news we have to encapsulate from about six or seven days back.Joining us here on set is Joanne, head of Greater China Effects and RatesStrategy at BNP Paribas. It's nice to see you.Good morning. What don't we start up with loan primerates as well as a no move now, But you think they might move next month?They're still going to move next month and we expect another 2 to 3 timesbefore year end. Essentially, we think, you know, theChina's existing mortgage rate is still too high, is above 4%.So even though the Friday's announcement.

About lowering the mortgage rates flooris encouraging, but that doesn't solve the existing mortgage load pricingproblem. So more monetary policy easing are stillon the way. How much more?Sorry if you could differentiate that as well.What the new mortgage rate is and also for existing ones as well, because itgets a bit confusing when although it's going on as well.How much do you think the existing one needs to come down?Oh, I think people have done some surveys that average rental use in Chinasetiawan to city is around 2%.

So essentially, if you can't bringmortgage rates lower to close to that level, then household is still going torun a negative carry, which means they will keep deleveraging by pay back theirmortgage loans. So from this methodology, you know, it'squite clear that more cuts are still going to come and that's on the loanprime rate. What about on the other benchmark rates?You expect more lowering ahead? I think the banks will start to pricelower mortgage rates, you know, after the Friday's announcement, simplybecause they're also highly aware that if they don't do so, the householderwill, you know, keep pay down the loans.

They're going to lose their long assetsanyways. But, you know, there's a there's acompetition among the banks. There will be some, you know, detailedcalculations for all, you know, I think banks pricing plus, you know, policyrate pricing, they're all going to come down further in the coming years.Right. There are many steps that they'vethey've taken in announcing on aggregate.Do you think is this a reflation moment? Is it too early to talk about that?I think in China, policy direction is always very important for market.So I think the signal now sent from.

Friday essentially confirming the all inpro-growth policy stance after the Politburo meeting.So this is very important. And I think some people are comparingthis to September 30, 2014, the last time that China started very aggressiveproperty policies, you know, two years after the market start to see propertymarket stabilizing 2016. But still, you know, people remember itwas the 2014 September 30th. That was the beginning of this ownpro-growth policy. I think we're comparable to that at themoment. Is it safe to assume that governmentbond yields have bottomed now yet?.

Longer end?Yes. I think we also get the message from thePBOC. They don't want the market to overlyspeculated in the ultra longer dated bonds to avoid some Silicon Valley bank,you know, risk for smaller banks but for the very short end all the way to thebelly. We think there's still room for us to golower because you know, even the successful bailout in 20 1416 takesanother one or two years before the market bottomed out.In terms of property investment, no doubt this time the challenge is muchbigger.

So initially, the monetary policy stillneeds to take a heavy lifting, which means, you know, easing is still goingto come. And that means the bonds, particularlythe short end, all the way until the belly are still good buy at the moment.Okay. So the call there is what, a boldstatement or that it's just even though we have 530.So stepping up in the curve in terms, of course, the implication for China iswhat up or is it because reflationary, it's increasingly down.If there's no peep, you see, I think the pressure is for the R&D to go up becausethe carry erosion is still happening.

Markets are looking for fair to curve,but that's not going to come until, let's say, September or December.So the carry at the moment is still in the arm is the disadvantage.However, as you mentioned, you know, the pro-growth policies somehow is, youknow, it will help the equity market, but that's improved, helping thesentiment. So that's a little.It positive, But in a market loss of time, the carrier dominance dominateddirection at a list of all the new at home.The second thing is that we we we noticed that PvZ is still keeping a veryflat fixing every day.

So essentially this is saying a holdingpattern is doing a tighter range and waiting for bigger things to happen,whether it be fed cars or tariffs or other things.We'll keep an eye on this policy of the U.S.elections. So just very quickly here, do you thinkit's a weakening by a still given? As Carrie dominates?It's a weakening bias, is still funding currency.Okay. Thank you so much.Fantastic having you on the show is, as always, to hang there, of course.Head of Greater China effects and rate.

Strategy at BNP Paribas.Very quickly, just going into the opening bell here, 8 minutes to, Iguess, specific sectors you want to track very closely here,but industrial metals and also precious metals as well on the back of news earlyon and that those levels, to be more specific here.Gold and copper are currently trading at all time highs going into the opentoday. Hang Seng index is now just under 400points short of the 20,000 level on week four.We were on week four last week. Do we get week number five of gains thisweek?.

The opening bell 7 minutes away.You're watching the China show. Good morning.Yeah, right. 5 minutes to the opening bell.And as you can see here on my right, this world leading rally in Hong Kong isset to continue and extend. We're out four straight weeks and 20,000is now about 2% away, give or take, at about these levels.One stock in particular, bottom of your screen to take an eye and keep an eyeon, of course, is by the electronic to be more specific on that inclusion inthe Hang Seng index. Other stocks to watch today.That question goes to April Hong, who.

Joins us right now with a preview April?Yeah, I think as a sector, we're watching those property developers veryclosely, but there are some that we're keeping a close eye on than others.I mean, a lot has been said about how that property rescue plan will addressabout ¥500 billion worth of those unsold homes in terms of value.And analysts have really talked about how that's not enough.7 to 8 trillion is what they see as needed.But I think what is also worth highlighting is the way it's going to beimplemented and how those funds are going to be allocated.So we might really start to see some.

Divergence in these Chinese propertydeveloper stocks. But these are the ones that were rallyreally hard last Friday. Let's flip the board and take a look atwhat we're seeing on the Chinese tech names as well, because, of course, weget the rest of the Chinese Tech eight reporting this week.We get Pinduoduo and then later on in the the rest of them and of course, outof the three or four that reported last week, Tencent really showing through andwe've seen how by two JD dot com also were the ones that really beat themarket expectations. So there is that sense that thatearnings momentum can continue.

DavidThere we go a lot to watch ahead of the opening bell, just under over 3 minutesaway. We'll get you to that on the other sideof this break. Hope you're all well.Thanks for joining us. This is Bloomberg. Good Monday morning from the AsiaPacific. Thank you for joining us.So as we approach the first session of the week and these greater Chinesemarkets were poised for a higher open, as you can see, it's certainly been andit certainly is.

You stick a weekend in between.It's almost as if you turn the page really effectively.We haven't. The risk rally continues across justabout across the world. But global benchmarks, these are stopsrecord highs to your heart's in the Asia Pacific, seven straight days of gains.Asia Pacific, which actually at this point in time, if be closed higher forthe day, would be the longest winning streak for equities.This part of the world going back to top early of last year.I haven't even talked about where we are with commodity markets with I think incase you missed it, copper, that's.

London, not the US copper.And by the way the short squeeze arbitrage there from about last week andalso gold hitting the highest levels first time in to borrow that phrase fromDisney, first time in forever. Okay.Mainland markets opening up this way. We're looking at a 10 to 1% to theupside CSI 300. That's small caps.The China index is eye 1000. Seeing some upside.Now, some of the big names, bottom of your screens.Maotai is flat out about the open Seattle, 1.4%.We're also looking at and by the way,.

We're also looking at the brokerages inparticular, given the sort of volumes that have come through, especially inHong Kong, especially in the property sector.So case in point, we have a Bloomberg gauge that tracksproperty stocks. On Friday, volumes hit a recordturnover, a third highest on record. We're up 75% on property stocks.And here's a crazy bit of trivia, too. After 75% rally, we're still down 75%from the peak. Anyway.Sink your teeth into that one. Hong Kong markets coming online as wellfor four weeks of gains.

19 seven, shall we call that.Yeah, 19 seven. Let's spin it and hope 19.Okay. 19 six, 1970, 6/10 of 1% of stock stillseeing some upside here. A couple of earnings to tell you abouttoday. And the rest of the China's tech arereporting this week, of course, as Avery was pointing out, reporting later today,this week, rather, li auto and trip.com. Those are the results on deck thismonday. BYD electronic added to the hang sengindex. She nee solar was removed out of theenterprises index in favor of surging.

Mining which is on your screens, butthat should be able to see some upside. Of course, that's a gold mining stock.And very, very quickly, a glance at developer stocks.Okay. Behaving themselves after what's reallybeen a manic, what, four weeks? The gauge was up 22% just last weekalone. We're up overall the 1.1%, although, Imean, you're still trading in price to book of, what, 30%?So hardly out of the woods. But direction of travel at this pointremains clear right now. Some analysts say that when you look atsome of these measures to rescue, the.

Housing markets are a bit too small toend the crisis. The support package, in case you missedit, announced on Friday, features a $42 billion lending facility from thecentral bank to then fund those loans for the firms charge to then buy some ofthe unsold housing stock. For more on this story and what thismeans really for the banking sector in particular, because they're being calledin again in terms of their national service.Frances Chan is with us to talk us through this.Frances. Well, lots to unpack with you.Why don't we start off with a simple.

Question How can banks help out thistime around? Well, as usual, to fund thoseinitiatives and in this case we are talking about citing people withknowledge. Local governments may ask the localstate firms to step in buying those unsold homes.Hopefully those will be completed. And so homes and the banks are financed.Those are local firms to to do those purchase and those will be turned intoaffordable housing. So now we have to do the math forwhether, you know, banks have enough capacity to fund those purchases, atleast in theory.

Right.Okay. So that brings up that's opened up a lotof doors there. So when I look at the balance sheets ofthe banks, then. Yeah, and we don't know yet how muchthey'll buy, how much to buy it for. Yeah.Do you think they'll need to raise money?What does it mean to the credit profile or the quality profile of some of thoseassets? And what does it mean for margins?Sure. Shore of the banks.Because if you have lower mortgages as.

Well, too, to take care of, if you tryto gauge the size of unsold completed housing inventory, according to nationalhealth statistics, there are about 400 million square meters left.Hmm. And the last ISP from the same, youknow, pool hall. Yeah.It's like a 9800 R&B. You do the math is like 4 trillion.Oh, maybe only for that part. Right.But that's all, though. That's all inventory, right?That's the complete. I wasn't completed housing.Okay.

So if there would be a discount,assuming a steep discount, we don't need 4 trillion.And for the banks, just give you some numbers for reference.Last year, the whole banking sector learned of 22.2 trillion of new loans.And so far this year alone, 9.5 trillion of those.So is that a huge amount? Taking a deep discount to that 4trillion, I think is something the banking sector can absorb.And also the state sectors in China, they are of better asset quality thanthe private sector. I just take reference to what Ministerof Finance are telling us.

The tap to asset ratio for the wholestate sector is low 65% as of March. And if you take a look off of the indexstocks like CSI 300 or Shanghai Composite Index, that that asset ratiois like 80.5%. Okay.So just giving some numbers of real reference.Right. That's that's one part of the rescuepackage. The other one that was announced onFriday was effectively removing the floor on on mortgage rates.Right. And mortgage rates are already quite lowon new prices and exist on existing.

Mortgages.That's still where you need to get the adjustment lower.What does it mean for margins and what is demand for credit right now?Yeah, well, I think if we talk about marginsnow, just margins have been on a downward trend for more than 18 months.For Chinese banking sector, it has be just a fear for for them.Many of the banks can even be pulled back from the pool for consecutivequarters. And this year, consensus is stillexpecting less. 17 bips a margin squeeze, four maybe tenlargest banks recovering Hong Kong and.

Asia, banks with 45% market share.So and if we add this to the equation, the margins Greece can extend totransitioning to five because many of the repricing will also be coming in atthe turn of the coming year. Transition five.Right. Andthe mortgage rate of the whole system is like five or six, 9% or with the like 50pips down in the last week, you can see. And if you discounted from from thebenchmark, you expect another 30 for the first time at least the market isexpecting that and it's about 16% of the all the loans in China are mortgages forthe big banks, multiplex state banks.

It's more than 20% for the long palace.All right. A moment.Very quickly in 20 seconds, if you could answer this chart of dividends at risk,because that's the equity play for the banks.Well, so far we didn't see that yet. Okay.We have different factors also coming into the equation.There has been a capital rule reform starting from the people from thebeginning of transition. Therefore,you know, anyway, it leads to a bit of reduction to the risk weighted assetsfor the banks.

So the capital ratios may look betteraccording to our calculation. As of March, they have excess.I see one capital of about 4.4 trillion. I'm talking about the top ten we arecovering. Well, those are the banks that typicallythe SPI anyway. Right.Yeah. Okay.From the hello Francis 930 on a monday morning.How can you check out this information? It's too much for me.More on that in a moment. Of course.Fascinating, amazing stuff.

Bloomberg intelligence analysts, by theway, for our Bloomberg clients, our question of the day is how far can thishousing market rescue continue to lift? The Chinese equity markets were up forweeks. Now it's world beating rally when youlook at some of the Hong Kong benchmarks.So chime in, of course, on your terminals and you can slip into my I binto my DMS in the terminal if you're a client to give you your take there aswell. You have my permission.There we go. Okay.We'll take a straight now back to.

Taipei.Live pictures there we'd like to do now. Sworn in as the island's president.Plenty more ahead. This is Bloomberg. All right.We're off to a decent start across equity markets right now.See is our 306/10 of 1%, 3700 Hang Seng index is by 370.Am I doing my math correctly at 370 points there to 20,000?Well, a lot will depend on earnings. So you have, I think, pinduoduo thisweek rounding up the tech eight. More on that in a moment.Also and talk about this also coming out.

With earnings today.I think the auto and xpeng is coming out maybe before wednesday.Anyway, to correct me on that. Linda liu is here to give us a sense ofthe earnings coming through. Okay.Let's start with li auto and when does xpeng report ex hong should be reportingtomorrow. Okay.And then we've got the auto today. And the thing we're really watching foris gross margins. Okay?Because the Chinese EV market has just been going through this intense pricewar.

It's really taking a hit tomanufacturers, bottom line. So Li Auto seems to be holding up okay.The gross margin is expected to be around 20% or holding up above 20%.And the profits are also expected to grow this quarter for expanding thepicture a bit more mixed. They haven't been profitable sincethey've been since they were founded, although net loss for this quarter isexpected to narrow. So these are the key, key metrics we'rewatching for. Yeah, and I think that's what has keptpushing back the target of profitability over two years or so.Is that why they're not paying their.

Suppliers?Are they paying their suppliers or are they paying on?Time is a question as an industry wide trend, I think cash and liquiditypressure is just getting very intense. Like I mentioned before, there's a pricewar in China. You've also got an economic slowdownweighing on consumer sentiment. All of these makers are just creating avery intense competition. So they're trying to drag out thepayments time when they're trying to address the bills.And hopefully that can give them some leeway to manage their cash flow.But that means the pressure is rippling.

Out to the wider industry, the biggersuppliers holding out, But the smaller suppliers are also being pressured toessentially delay receiving what they do.So we're going to see a consolidation consolidation speeding up in theindustry. Speaking of competition news thismorning, we might get another front of competition here, Japan and SoutheastAsia. What do we know about Japan?And that's ASEAN countries are looking to perhaps come up with a new autostrategy, I think as soon as September this year, essentially, you know, withChinese EVs gaining foothold in all of.

These parts of the world, probablyexcept for North America and Southeast Asia, Beady Eye on.You've got some of these brands already establishing production there.They're really making headways in these emerging markets.And especially Japan used to be the leaders in these markets.So they they're really hoping to come up with this new strategy to competeagainst these new Chinese players. Linda, Fantastic.Thank you so much, Linda Liu there, our Asia transport reporter.To the other big corporate news that we got here, this concerns Didi Global.Jean Leo will be giving up her roles as.

President and board director of theChinese ride hailing giant. It's after almost a decade in those twospecific positions, and a shift comes as the company tries to revive growth afterthis regulatory crackdown out of Beijing.Let's bring in Sara Zhong. I tried to check reporter for the latesthere. Yes, So she's given up those twopositions and she's now being what's what's the new what's the new gig rightnow? So what Gina and the CEO, Will Chung aresaying in an internal letter to employees is that she will no longertake on those roles and the president.

Rule of the company will no longerexist. Instead, she will be a permanent partnerand she'll continue to report to will as sort of a chief people officer.So focusing more on the talent building organization and social responsibilityside of things, she and Will, we're were trying to reassure employees in thismemo that she will stay on at the company and her responsibilities won'tchange. But of course, we know that this is abig change. Like you mentioned, she's been at thesein these roles for nearly a decade and she was one of the ones who wasspearheading.

Didi's success over the years and theirfundraising, including the backing of major companies like Uber, Tencent andSoftBank as well. And this comes at a fairly critical timeor maybe even part of the strategy really, as the company tries to revivegrowth. And is turnaround really amid thecrackdown regulatory wise? What does this mean for that endeavor?Exactly. That's right.I mean, I think Didi has been trying to mount this comeback since everythingthat went down with their 2021 IPO. I mean, we as we remember.Regulators came in with this.

Cybersecurity probe and they were forcedto delist in New York. That probe closed sometime in 2022,where they had to pay a $1.1 million fine and a personal fine.Also that Jean and Will both had to pay as well.We reported that they are planning to potentially a wireless in Hong Kongsometime this year. We don't know how this would potentiallyaffect those plans or where those plans are at this current moment.But definitely data is trying to come back to growth and we're seeing somesigns of that. Sara Fantastic.Sara Jiang There are China Tech reporter.

Breaks.So lots of corporate news to tell you about here.Amidst this market melt up, we're seeing a little bit to look at markets 15minutes into the session here. CSI 300 is now trading just at about3700 for the first time since about September of last year.A good start to the week. Plenty more ahead.This is Bloomberg. Welcome back.Here are some some of the other big corporate stories that we're tracking atthis point. Star Entertainment, that's theAustralian casino operator, says it has.

Received inbound interest from a numberof external parties but has not yet had any substantive talks here.Now that comes as the AFR reports. A consortium led by Hard Rock Cafe, HardRock Cafe and Casino is considering a bid for a star that would see the firmrebranded and its property separated from the eventual casino operatorrights. SPACEX, Texas StarLink has launched itsInternet services in Indonesia. CEO Elon Musk says his other companiesare likely to invest in the nation as well, but did not provide details atthis point. Indonesia has been courting Musk's Teslato invest in its battery industry, given.

Its strong mining sector, of course, inparticular here for battery metals. Jeff Bezos Blue Origin has resumedspending or sending rather, tourists to space.You read that. It's Monday.Bear with me here. Launching six private passengers on ashort flight, more than a hundred kilometres above the earth.The passengers included Ed Dwight, a former Air Force captain who in 1961 wasactually selected as the first black astronaut candidate.The company plans to debut a much larger and much powerful rocket later thisyear, capable of launching this time.

Cargo into orbitfrom up in the skies to what's beneath the earth here.We're talking mining with BHP. What's big is, of course, is consideringwhether to make an improved bid for Anglo American before, of course,deadline this week. Let's bring in our metals and miningreporter Paul Hunt for more on the story.Paul, can you just recap what happened last week for viewers that might havemissed all the big news there? I think it was Anglo announcing itsstrategic path forward. Well, last last week was a very busyweek indeed.

BHP had just made an improved informaloffer, valuing Anglo American at 43 US billion dollars.The structure of that offer still would say Anglo have to spin off its Amplatsplatinum business and of course its Kumba South African iron ore too.But then Anglo came back, Anglo's board came back and announced the results of astrategic review. That strategic review had been announcedlast year. But shareholders were kept in the darkall the way up until last week, when the board finally revealed its plan that itwould divest its Amplats business. It was divest its met coal assets inQueensland of Australia, divest DeBeers.

And simplify itself into just threeareas. Of course, the copper would remain theKumba iron ore business would remain and so would the controversial would SmithPoly highlights business. Now the would Smith poly highlightbusiness is a fertilizer mine, but it's a $9 billion CapEx project and Anglo hadbeen spending about $1,000,000,000 a year on that.As part of the review, Anglo said it would come down with spending.It was becoming a bit of a cash sink and would only spend $200 million in 2025before not spending anything more on it. So it was a it was a massive move orpivot by Anglo's board.

But the message that it sent to BHP wasalso we can divest assets in South Africa and elsewhere and get throughthose regulatory approvals. So BHP may come back.The deadline is May 22, so over the next three days there's a chance that they'llcome back with with a higher offer. We don't know for sure.What we can be fairly sure of, though, is that it won't be a formal bid at thisstage, not until Anglo's board come to the table.Obviously, BHP want to do due diligence and without being able to do duediligence, they won't be putting forward a formal bid.Yeah, hopefully they do.

So you mentioned the deadline That's onWednesday. That's end of May end of business, Ibelieve. London, London Times What's the state ofplay and what happens if what happens to BHP if it does walk away then.Well, if it walks away, it's got us. It has to leave the table for sixmonths. If it were to put forward a bindingproposal and go forward with that. Obviously, the story continues there.But but realistically, it will probably be an informal bid if we see one beforethat Wednesday deadline. Now, if BHP do walk away for six or 12months, that will give Anglo time to.

Start its divestments and take action onits strategic review. But what does that then look like forBHP? If it wants to come back to the tablethat there is a chance that Anglo could see a higher valuation?Does BHP really want to pay something like a 30% premium on the business in 12months time? So a lot at play here.The stakes are high. Paul, thank you.Getting us up to speed there. Certainly Wednesday.All eyes on that, too. Who?That's just around the end.

Video time to just occurred to me.Paul Thank you. Paul Hunt in Melbourne for us.Metals and Mining report is all right. We'll look at markets right now.I'm just looking at my screens and as Hang Seng index rally continues to getmore on that in a moment. Copper and gold record highs in both tenfour well, 11,000 right now is in play. Wow.Really? Huh, copper?11,000 a pop. We'll talk more about really the thediscrepancies, the spreads between where you are and the London contract is theone, of course, in the US.

And there is is the Chinese currencydenominated one that's trading, of course, in Shanghai.See you a by the way, the ticker for that gold record highs on this, too.Brent, is seeing some upside 3/10 of 1%. Overall, commodity markets are have beenon a tear, in case you missed that. So, in fact, on the commodity spotindex, let's note about highest level here in about a year or so, bottom ofyour screen. Thank you so much to my fantasticproducers. There we go.The state of play across Chinese equity markets 25 minutes into the session.Here is one where.

Well, from one to CSI 300 is now testingthis 3700 level for the first time in about eight months or so.More signs that maybe and this is in Hong Kong.This rally might be due for a breather. The 14 day relative strength index onthe Hang Seng index is now at 80 spot five, which is about at parity with thehighest levels during the peak of that reopening rally in early of last year.So arguably, we're now looking at the most overbought conditions in Hong Konggoing back to 2021 anyway. But momentum continues this asBloomberg. Right on target on Shanghai.There we go.

CSR 300 just off highs of the day,although it looks like we could be retesting this 3700 level.We were briefly above that for a brief, fleeting moment, first time since earlyOctober that we're trading at these levels.Hey, we're here right start of the week. LPR No change there.One in five year big news of course and Friday smaller than expected packagelending package to be more specific on the property sector that specific groupof stocks though up 75% on the high yield bond index.More on this in a moment. We've rallied from under $0.50 to nownorth of 86.

So markets have come a long way in termsof pricing this recovery. We'll have to wait and see.I guess, for more concrete, I guess, a change, a fundamental turn around in thestory, because certainly new home prices on that specific measure still down,though, 6/10 of 1%, I think was the last metric, 11 straight months of declinesright on the equity markets. But here in Hong Kong, to be morespecific, now, we're up 3/10 of 1%, a third day of gains.So the Hang Seng index four weeks in a row.And we're not looking at this specific measure of momentum reason we're doingthis.

It's now actually at these levels.It's now done this in the last few minutes or so.It's now surpassed the highest level that we had back during that reopeningrally in 2023. So overbought signals are flashing onthis world beating Hang Seng index to be more specific there.So we're not trading well. That specific one is trading at 80 spotfive right now. So that's the highest.And perhaps that's the reason also why when you look at the Hang Seng indexintraday, we're also coming off highs of today, maybe just maybe 19 six, onethree, Asia, ex-Japan, S&P futures on.

Your screens fed minutes on deck thisweek. You have inflation coming out of Japanand the U.K. You have individual reporting earningsand a rate decision in South Korea, half of 1% to the upside to year highs inAsia, all time highs in the global benchmark, all time highs in copper, alltime highs on gold, up seven straight days now on the regional benchmark.So it's risk on as we speak today. Okay.We'll leave markets there for now. In the meantime, though, we'll get let'sget you up to speed on certainly events in Iran over these last over the lastday or so.

So rescue teams are still searching forthe president and his foreign minister after the helicopter they weretravelling in crashed the Chinese foreign ministry about in the last houror so has put out a statement effectively saying that they are closelyalso closely monitoring the situation there.Let's bring in Jill. Does this our news desk editor is withus to just get us up to speed on where we are here.What do we know at this point? Yes, David.Well, look, Iranian President Racey, he was coming back from an event to sort ofa sort of a celebratory events at the.

Northwestern part of Iran along itsborder with Israel by drone. And it seems that the helicopter crashedsomewhere in that mountainous region. Rescue teams have been working on thisfor many hours at this point. But you have to understand that this isa really, really remote section of Iran, very mountainous.It's also been very foggy, very rainy. So they still have been trying to getrescue crews out to the region, trying to figure out, you know, where they canreach this helicopter. We still have no updates on the statusof any of the individuals on board. It seems to include both the presidentalong with his foreign ministers, along.

With a couple of other localauthorities. But still no news on exactly whetheranyone who survived the crash, what's exactly happening there.They're still trying to get those rescue teams in place and is, of course, Ithink, five in the morning there. So it's also quite dark to your pointthere on, Kristie, the difficulty in the conditions.We heard from Iran's supreme leader effectively saying that there won't beany disruption to the country's affairs. Just talk to us about what thegovernment's been saying as well in terms of the order of business andperhaps where we go from here.

Yes, David, what you have to understand,so the supreme leader in Iran, that's ultimately the true seat of power withinthe country. So the president carries out a lot ofthose orders, but ultimately it kind of runs up to the supreme leader.So I would imagine that in the event of anything, including, you know, potentialdeath of the Iranian president here, you're looking at a fair amount ofpolicy continuity within that region. Now, again, this is happening.This crash has happened at an incredibly politically tumultuous time within theMiddle East. You've obviously got the war in Gaza isa major consideration here.

There's also been some domestic turmoilat home within Iran. So I'd imagine that in any case, if itdoes indeed happen to be the case that the Iranian president has passed away asa result of this crash, it would take, I think, about 50 days for vice presidentto come in and kind of lead things in the interim.Then you'd have another election take place.But then after that, I mean, it's difficult to see Iran put someone inplace who doesn't share a lot of the same political views as the present.And he's seen within the country as a pretty, you know, ultra conservativehardliner.

Imagine that there's going to be somelevel of policy consistency in the case that he has passed away in this crash.Jill, Thank you, Jill, Jesus there with the latest on what we know so far andnot a lot at this point in time. Still some other big stories that we'retracking from around the world. Let's say the Middle East here.Saudi Arabian state media says King Salman is suffering a lung inflammation.The official Saudi press agency says the 88 year old monarch will receiveantibiotics at a palace in Jeddah after developing a high fever and also jointpain. King Solomon has led Saudi Arabia since2015.

Now, another big political story thatwe're watching is this time in China. So the country is investigating itsminister for agriculture and rural affairs for what it calls seriousviolations of the law. Tong Ren Jin is the latest high levelgovernment official here to be investigated for alleged wrongdoing.Now, he was appointed minister of Agriculture back in 2020 of December2020, rather. President Xi Jinping has spearheaded asweeping anti-corruption campaign since 2012, ensnaring dozens of CommunistParty officials. Let's take you straight back now toStephen Engle, our chief North Asia.

Correspondent.He's in Taipei for us with the inauguration, of course, there oflighting Steve. Yeah.Well, let me recap what's happened already.It is now President Lightning. The Vice president shall be Kim.They have been sworn in within the last hour as the new leadership of the newadministration here. A continuity candidate, if you will, thethird consecutive unprecedented, third consecutive term for the DPP, theDemocratic Progressive Party. But keep in mind as well, we all knowthat January elections also ushered in a.

Change in the legislative yuan where theKMT, the main opposition party, took a one seat lead with 52 seats there, 51for DPP and the upstart third party. The TPP, won eight seats.There's also two independents who tend, we're told, to lean more towards theopposition KMT. So that puts this man lighting on a bitof the back foot as he comes in as the new president now, because he will havesome challenges within the legislative yuan and we've already seen steps topotentially, I wouldn't necessarily say undermine, but potentially add someturmoil to the opening days of his presidency.There's already a bill going through.

That was hotly debated and actuallythere were scuffles that broke out Friday in the legislative yuan,essentially over steps to require the new president to have a State of theUnion, the nation address, as well as meetbefore legislators at least once a year. And within that bill, it dictates if heis determined to be lying, he could be held on criminal charges.So that is something that sets the stage for lightning as he is now president.Domestic politics. But the big overarching issue,obviously, is going to be cross-strait relations and he is going to give aspeech within this hour, just before top.

Of the 11:00 hour, where he will outlinehis policies towards China. It will be a status quo policy for sure.Stephen Engle achieving or is it Asia correspondent in Taipei for us.In fact, Steve will be back in a few minutes, of course, but a roundtablediscussion and really what this all means, really taking this into a deepdive. cross-Strait relations two challengesfacing Taiwan's new leader as well. Just ahead of that.And before we get to break, two breaking two pieces of breaking news to tell youabout. One is that we talked about the thehealth of the.

Well, the Saudi king.So this concerns Japan right now. So the crown prince was actuallysupposed to be headed to Japan there. And we now understand based on thisstatement from the Japanese that the crown prince has delayed his tripbecause of developments around the king's health.That's one piece of breaking news dropping just in the last minute or so.The other is concerns markets right now. So the ten year yield this time in Japanstill has risen 2.975. Why is that level important?That's now taken out the high of last year, which means the entire JGB curve,five, ten, 20, 30 and 40 year yields,.

That entire part of the sovereign yieldcurve in Japan is now at the highest level in at least a decade or so.The tenure was the one that was the blip we're in now.That across that curve from five all the way out to 30 to 40 years, to be morespecific, plenty more ahead had this is one more. While you may decide to fully realizethe high sensitivity at the Taiwan question.Some any form of official interactions and military contact with China's Taiwanregion and stop sending wrong signals to the Taiwan independence separatistforces and deliver on its commitment of.

Not supporting Taiwan independence.The title question is at the core of China's core interest.The Chinese side will take resolute and decisive countermeasures against anyTaiwan independence and separatist activities and foreign convenience andsupport. That was China's Ministry of NationalDefense, the spokesman there. Of course, amid the developments todaythere, the inauguration of Taiwan's new president likely do more on that in amoment. Just some breaking news at this point intime, the Islamic Republic News Agency or the IRS?A, that's the official news agency of.

The law of the Islamic Republic of Iranhas now reported that the crash site of Iranian president, that the helicopter,of course, which crashed, has now been found.That's what we know so far. One specific headline more.We will get you more details on this. Of course, once we do more, once we dohave more information. But as of now, the crash site of thathelicopter has now, according to official news, has now been found.Let's pivot back right now from breaking news there to what's taking place inTaiwan. A couple of minutes back, the USSecretary of State, Antony Blinken, has.

Put out the congratulatory, not out ofthe US here for president lurching to let's take the helm really of the theinputs, the at the very heart of the geopolitical conversation and therivalry between the US and what's taking place in China.We heard from the Chinese. We've now also heard from the US fromAntony Blinken. Lie is set to give his inaugural addressvery soon, which will be closely watched, of course, for signs and howthey will navigate this very complex relationship and their place in it, ofcourse. Stephen Engle chief North Asiacorrespondent Irene joins us now from.

Taipei with his guest.Steve, take it away. All right.Thanks a lot, Dave. Yes, it is.Now, President lighting and vice president shall be Kim.They have been sworn in as the next administration and of course, a sort ofa continuity of administration from the past eight years of trying.One, the president, the former now former president.There are a lot of issues, obviously, domestically, but also internationally,geopolitically, and the relationship that Taiwan plays in the supply chain,global supply chain of semiconductors.

And the role it plays in thegeopolitical rivalry between China and the United States.Let's broaden the analysis of this Inauguration Day and bring in two of ourguests. One who is here sitting to the left ofme, Raymond Sung, vice president of the Prospect Foundation, and also a down theline we have Charisse Templeman, Hoover Institution Research Fellow.So we're going to talk about a number of different things.Gentlemen, Raymond, let me begin with you.And I can also pose the same question to chorus here as lighting takes over aspresident.

There are issues of his mandate.How much of a mandate he potentially has.He got 40% of the vote. Right.At the same time, we have the former president of the common Don, the KMT,going to Beijing and getting welcomed by Xi Jinping.There's a polarization in this country. How much does all of this potentiallyundermine the opening days of President Lai's term?I think for the whole term, for the administration, that will be a hugedivisive issue on this, which much a pretty much a continuation of what'shappening during the campaign, the basic.

Differences between the two camps,whether it was just strengthened capability to defend itself versus tohave a more negotiable or more friendly relations, trying to achieve peace bydialogue. I think that debate will continue.But the one thing to remember that the voters of Taiwan, these are given like aclear mandate to maintain this past eight years are deterrence projects,which means that we will will cooperate with the United States and theinternational allies to strengthen ourselves of capabilities to defend.You're a regular commentator in Taiwan media.You do expect a bumpy road ahead,.

Though, for cross-strait ties.What do you expect from his speech, which will be held within this hour?What kind of tone should he strike? The dilemma for any speech is for thepresident. Taiwan is how to you maintain the statusquo, but not giving too much weight to the one-China policy, which Beijingwanted to hear. So for the time when the ministry, whichwhich will be the constitution of the rules see Taiwan, but the formulationthat there will be a new answer to that, all you statutes which will beconstitutional order of the U.S., Taiwan, which means that's not prettymuch 100% tied to the tasks of the.

Constitution, but the whole orderdivided by the democratic Taiwan within its Constitution's cast.Let me bring you in here. I know you've been watching thiselection process quite closely. I mentioned that he got 40% of the vote,but that's because there were three main candidates with the upstart TPP, a coupand just kind of throwing a bit of a spanner in the works there.But they also the DPP lost the majority in the legislative yuan by one seatessentially to the KMT, and there's been some already political wrangling goingon and fights going on within the the Parliament body.How much of a mandate do you feel that.

Lightning to actually has?Well, I think if we compare his situation to Tsai Ing Wen eight yearsago, he's clearly boxed in in a way that she was not.He's yeah, he obviously won only 40% of the vote.He doesn't have a legislative majority. When I was there in January talking toDPP officials after the election, the working assumption was that he mayactually struggle to win re-election in four years.So I think he has a lot less room to maneuver domestically than he did thanhis predecessor did either eight years or four years ago.Now, obviously, Taiwan is very.

Strategic.That's why we put so much emphasis on this election process strategically,economically, with semiconductors, but obviously militarily and the potentialconflicts across the Taiwan Strait. I know you wrote one of the chapters orco-wrote one of the chapters in the book, The Silicon Triangle.And if we can bring chips into this dialogue.There's been a lot of talk about the so-called silicon umbrella that the theimportance and the rise of the semiconductor industry makes Taiwan farmore strategic now than it was in decades past.Do you buy that argument?.

And what happens when there is thisfriendship for ensuring trend where manufacturing of chips is going toKumamoto, Japan, it's going to Arizona. Does that lessen Taiwan's strategicimportance to the United States? I don't think it least since thestrategic importance of importance of Taiwan to the United States and in fact,Taiwan's own importance far precedes the emergence ofthe semiconductor industry as a thing in Taiwan.So the U.S. was very concerned about Taiwan securityin the eighties and nineties as well. And the other thing to note here is thatTSMC itself is running up against limits.

Of production in Taiwan there already.The semiconductor industry as a whole is producing.They account for something like 20% of Taiwan's overall GDP by themselves.And so you can't take that number much higher without having some majornegative impacts on the overall diversity of Taiwan's economy.And so I actually think the future of the semiconductor industry is going tobe increasingly global and TSMC is doing the right thing by trying to diversifyparts of their supply chain and parts of their production outside of Taiwan.Taiwan is, you know, facing challenges with recruiting labor, with havingenough electricity and water, and by.

Just being able to build out the fabsthat they need for the next generation of production and diversifying to, youknow, satisfy concerns of both other foreign governments, but also, moreimportantly, their own customers, including big customers like Apple, whoare concerned about a, you know, an interruption of potential Christmassupplies. I think those things are all importanthere. So, Raymond, in the realm of safety andgeopolitics and the protective umbrella of the United States, do chips makeTaiwan safer or more vulnerable potentially in terms of ensuring it'sdefinitely safer because Taiwan proved.

Itself to be so essential in the globalsupply chain, especially in the advanced tech advanced chip making.And so for the short term, the Taiwan's integral role for the global supplychain. So the allies will try everything todefend the stability of the supply chain.Now, militarily, how prepared is Taiwan and what still needs to be done there?He's bringing in a new defense minister, Wellington Koo.He's a civilian. We haven't had that in more than adecade. So does that help break down maybe thevested interests within the Taiwan.

Military, with the defence ministers,usually a former general or something? Hope so.That's a clear signal that Taiwan got very serious about defense reformbecause for them, modern warfare is very clear.That's not decided by the battlefield. But for the whole society, for forexample, for the reform of the societies, civil resilience and thebuilding of our psychological defense tour, for example, propaganda will bethe whole overall wholesome view to the national security.I think that national defense will be part of it, integral part of it.They need to modernize and make it more.

Of a military that is more mobile, moreflexible and modern with the times, and have that porcupine strategy hard to doto devour a porcupine full of missiles. Right.And with the international consolidation and for example, to really talk to meabout what Taiwan needs to defend no magic border or for the deterrence ofagrees on operations from China and to cooperate with the allies like Japan,the Philippines. Corus, Let me bring you back into theconversation. What do you expect and what do you thinkthe administration needs to do to keep the peace across the Taiwan Strait?At a heightened sense of of of conflict,.

If you will, or the threat of aconflict. Yeah, Well, I think on the one hand,there's a need to kind of stay the course on Sanguins approach tocross-strait relations and relations with the United States.So it's I was I've argued many times that she was about the best presidentthe U.S. could hope for in Taiwan because therewere no surprises in the relationship. And so if Lai is able to to follow herlead and to to maintain that consistent, reliable partnership with the UnitedStates, I think he will he will help preserve peace across the strait.And then secondly, I think some of the.

Defense reforms that the Thaiadministration started to put in place still have a long ways to go.And if Lai is able to to move those to the next level.So deepening the training of conscripts, for instance, the Thai administrationhas just re-impose a one year conscription requirement.And there's a lot of concern outside of Taiwan that that may look a lot like theold conscription training, where there wasn't a whole lot of shooting of gunsor other things that might actually be applicable to a real fight.And so having some more realistic training in that process is, I think,important.

Okay, coast to coast.Gentlemen, thanks so much for joining us.And also, Raymond Sung, we could talk the whole hour about this topic.We appreciate you giving us time on Inauguration Day here, David.We'll send it back to you. Right, Steve?Fantastic stuff there. Markets are bid this Monday morning.Plenty more ahead. This is bloomberg. Right.This melt up in risk assets continues. Copper prices just about across theseexchanges surging this Monday morning.

All right.Welcome back. Your shows here, we're just headed intothe Tokyo lunch break there with risk assets bid the topics index 2800.The fact Morgan Stanley just dropped this in our inboxes earlier on.They've revised their forecast here on the topics index now by 400 points.3200 is where they think the index will be and the Japanese ten year bond justcoming off high as of today. But effectively at these levels, yourentire curve from five all the way to 40 years JGBs wise.Highest level in at least 11 years there the entire curve including just a fewminutes ago, the ten year yields for a.

Pulse check of how the rest of theregion is doing. Let's bring in April.Hong is with us, of course, to talk us through this.This well, I don't know if the question is how much fuel is this property rescueplan in China providing for markets at this point?Yeah, I think we've already seen quite a bit of that as of last week.Ryan, the Asia stock gauge climbing for the seventh straight session.And so I think on the margins that is providing a bit of a lift.But let's also take a look at what we're seeing in terms of the move us becauseon Immigration Day, we're seeing TSMC,.

The stock in Focus, We have reportscoming in that the Apple CEO actually visited the TSMC plant.We have our Bloomberg intelligence analyst telling us that we could see thecompany in a bit of outperformance mode given how the sector is still reallyfocused and reliant indeed on its advance processes.Still, the stock is down today. Steins attainment, another one thatwe're tracking down on the surging 23%. This is the Australian casino operatorand it says that it is being courted by suitors, including hot rock group.This could go some ways in helping to ease some of its funding issues.We're seeing BHP group, another one that.

We're watching amid the Chinese propertyrelaxation and the measures there to support the Chinese sector.But we are also keeping an eye on it. Of course this is because there might bean improved version of its deal to take over Anglo and that is something we'rewatching later on the wheels for the board and take a look at what's movingin the space this week. As you talked about earlier, we'reseeing that yields in Japan the way they've moved, but we also keeping aneye out on the nationwide CPI at the end of the week, inflation expected tomoderate. So that could put the doves still incontrol of things on the BOJ and New.

Zealand dollar, something that's beenrallying of late. But we could get the RBNZ it keepingthings on hold and then potentially sending a bit of a less hawkish message.So that could help that rally indeed to actually picked out Davidalong there getting us up to speed here this week risk assets are bad.Yep you had the right decision you're fed minutes you have inflation coming.So I think out of Japan and the UK and of course I think we all said ratedecision coming out of the Bank of Korea.More on that in a moment. Breaking news right now coming throughout of Thailand.

GDP numbers for the first quarter, oneand a half percent. The estimate was 4.8%.We're coming as a slightly better two compared to the previous reads on thatspectrum of that range of forecast. This one actually coming at the highestend of forecasts there. So, yeah, one and a half percent growthin Thailand, that's almost double the median forecast.And at the very highest end of that range of economists projections datathere. For now, let's take it back to marketsand bring in Mary Nicola for some color and context with these markets.Mary, we're off to a fantastic start to.

The week.Yeah, absolutely. We had a really good tailwind on Fridayfrom from US equities and that's going to continue straight through the realthing and the real impediment for stocks and for sentiment this week is reallygoing to be invidious earnings. We know that it's been the darling forthe tech sector, the darling for equity markets.And so it will really has to deliver not only on expectations but on outlook aswell. So that's really going to be the hurdlefor this Goldilocks environment right now.And so and so we're for now, we're going.

To be in this mode of everything is is,is is positive. But then we'll have to see whether invideo does deliver. Right.The most important stock in the world. I mean, not even part of the pricingaround Fed conversations, I would imagine, also hinges on the guidancecoming out of Jensen Huang and his team, underscore for us how high the bar isfor in video this time around, particularly since I think if you lookat this current earnings season in the US, that bar to impress investors hasbeen particularly high. We've seen some disappointment in termsof market reaction.

MaryYeah, absolutely. So there are going to have to bespectacular essentially to say that they're that Nvidia is doing well.We've seen some of the other big tech in terms of the Magnificent Seven that havecome through and a lot of them have come through, but it's more about theoutlook. And if the outlook doesn't doesn'tdoesn't register and doesn't come strong, that's where things are going tobe really affected, especially because you need fundamentals to stay strong.First for US equities when you're starting to see cracks in the USconsumer.

And of course we'll have some of thesome other consumer companies reporting this week who will also give us aflavour of what's happening with the with with the consumer and consumerexpectations. Right.Mary, speaking of fundamentals, I want to bring in the conversation aroundcommodity markets, particularly if I consult Dr.Copper. Things appear.You do look good. What's, what's going on with coppertoday? Yeah, there's obviously some supplyconstraints and concerns about supply in.

The copper market that's really beenhelping and support this rally in copper.But of course copper has been an integral part and an integral resourcefor a lot of this new energy and the Green revolution.So obviously the demand is still there, but you get that tailwind for copper forlet's say the Australian dollar, which is a big exporter of copper.So that's going to be positive as well. And of course for something like theChilean peso, which is a big exporter of copper, but obviously the supplyconstraints are going to continue to weigh on prices and that's where you'veseen that drive continue.

I might be going into also theconversation around Chinese property. Mary, if you could just contextualizefor us the question of the day and maybe where your thoughts are on really howthis cop well, this housing market story might be fueling the broader equitymarket rally in Greater China, Mary. Yeah, I think there's there's somethingto be said on what's happening with the China equity markets especially.We had the it's more about the fact that policymakers are prioritizing propertyand saying that this is going to be one of our key focuses in terms of trying toprop it up. The problem is if you digest the newsfrom Friday is that it doesn't really.

Come through as to being enough tosupport the market. We've heard from many analysts who aresaying that the size that they've put out isn't enough to stem some of theissues in the supply. They've definitely done done a lot interms of doing something on the demand side and trying to remedy the demandside. But it's still about supply and it'sstill about delivering a lot of the property that hasn't yet been delivered.It's about managing the supply glut and the numbers that they're suggestingaren't enough. So if the market does have a pullback,you would expect that there could be.

Some more news coming through.And also the support will have to come from the central government in terms ofsaying so not to put an extra burden on some of the local government financesthat we've already seen. Mary, thank you so much.Mary in Singapore for us. Mary Nicola, our love strategist there.Right. From semiconductors to solar panelstocks in some of the world's fastest growing industries perhaps are riskingfalling prey to another round of trade tensions between the world's two largesteconomies. And as you can see, there's the oldtariff and the new one, in some cases.

The higher one.And in some cases, of course, the only one we're coming up zero.In some cases, they're suddenly. Chad joins us right now to talk usthrough the winners and the losers from these tariffs.And yeah, why don't we answer that? Who's winning and who is losing?Yeah, So these tariffs are not really new, although some of them quadrupled,you know, the free EVs from 25% to 100%. But what's in focus is that it might notbe the end of it because Biden and Trump are jostling to show the voters that whocan be tougher on China. But what's in focus now is whetherEurope will follow suit, because if.

Europe does that, Europe consumes 45% ofthe new three exports from China, the EVs, the lithium ion batteries and thesolar cells. So that would be a pretty much worrisomething for Beijing when comparing to us, it only imports 0.2% of the solar cellsand just 1% of the Chinese EVs. So those are in focus.And when we look at the EV sector, of course, BYD is in focus with 27% of itsrevenue coming from exports last year. And so if Europe does that and also U.S.is aware of the plants in Mexico, so that could be used to circumvent thosetariffs. So that's in focus.Seattle is always, you know, the watch.

The stock to watch in the the batteriesand it could actually benefit from this tariff in for the next two years becauseit also makes SS batteries and that could be that could mean that many arecoming to Russia to purchase those batteries before the tariff hits.And then of course, the medical equipment sector was something of aninterest for me, especially when given it was the terrorists were zero thereand suddenly went to 50%. So we've seen some rubber glove makersin Malaysia. Their shares soar along with Kumalopetrochemical from South Korea that actually produces this latex for theserubber makers.

When it was hit with 50% tariffs, BD andthree from the US are going to benefit from this.One last thing could be solar cells. Trina Solar and longing.There wouldn't be too much of a material impact on those Chinese SA assignmentmakers because they actually make their brands in Southeast Asia, which is not,which is not the subject to these tariffs.But again, the first order from the US is going to be the biggest beneficiary.Okay, so that's the entire list there. Okay.So the what are you watching on for today?I think we saw some earnings coming.

Through in Greater China.Know what else is top of mind for you? Yeah.So we are watching, of course, the property shares after Friday.We've seen the gauge drop close to 10%. But today we've seen it's it's gottendown a little bit. So we're just trying to see how themarket is gauging the real impact from these mortgage ratelowering of these mortgage rates and some of these more measures coming in.But, you know, the analysts are saying that we need more of this, more thanthis for the market to be boosted. You know, and of course, we're lookingat travel related stocks with Trip.com,.

The giant bookings.Some company reporting earnings on Tuesday.And so we've seen it hit another record today after Xi Jinping actually saidthat he will be he he called for measures to boost tourism sectors.We're seeing other other bookings companies as wellas some of the hotel Hotel companies are also rising today.Yeah, they would go online booking agencies, hotels and also retailingafter the president, of course, calling for further supports to boost thetourism sector. So on which everything that we go andthese greater Chinese markets are Asia.

Stocks.REPORTER Yeah, we're doing well this Monday morning.Plenty more ahead. This is bloomberg. The market has about two years, probablyeven more than that of inventory outstanding in the market.So if you want to go from, you know, 25 months to 18 months, right.So you need probably about 7 to ¥8 trillion with the speciallong dated Treasury bonds. And those are, you know, some of thereasons stimulus measure, including the re discount.No, I think it amounts to about less.

Than ¥2 trillionand that was how long partner and chief economist at Coro investment groupspeaking with us earlier on of course. And the big news out of China or big ishnews out of China, not as big as expectations, but fairly major as far asthe these forceful attempts to rescue the housing market is concerned.In fact, more in the story right now. So the figure is 300 billion.That's renminbi, central bank funding to help some of these state ownedenterprises, then buy back some of these unsold housing inventory.Yes, there's a lot of parts involved here.CHANG Shu is with us here on set, our.

Chief economist, and also Kristie Helm,of course, who oversees our industry sector analysis on the property sectorKristie. Well, thank you so much for joining us,by the way. Good morning.Why don't we start with Kristie. 300 billion.Certainly not nearly enough given the unsold the amount of unsold homes.But what is 300 billion? What does it help?Right. I think the issue is when we look atdevelopers balance sheets, a lot of them already pledged that unsold inventory tosecure bank loans, meaning that even if.

The government are buying and soinventory is not going to generate a lot of incremental funding to shore up theirliquidity. And also, if you look at, you know,2023, we already had ¥100 billion pilot program in assets to, you know, forlocal governments to buy that. And so inventories that didn't generatea lot of impact in, you know, easing the inventory life of reviving home sales.So it's unsure how and March program with ¥300 billion is going to make adifference. I think, you know, for this program towork, we need to start allowing developers, we need to be willing totake a discount on the inventories.

We also need local governments to bewilling to implement this program, given how affordable housing is actuallysomething with low return. And also we need banks to be willing tolend to these local governments because with the 300 billion program, banks doneed to bear the risks of 40% of the loans charged.You can China pull this off? I very much share Christie's concern,although I do see quite a lot of positivity is coming out of this insignaling and in fact are quite strong. You can you can see that the governmentwill keep trying until at some point the market something works to act as apositive signal.

An interesting thing is that the thegovernment is trying a new approach, which the previous day the governmenthad been trying to cut the funding costs and try to relaxvarious restrictions on housing purchases.And as we just talked about, they haven't worked especially well.So this particular home buying approach is started as acity level sort of experiment, as it were, just for a few cities.But it looks as if the government, the central government is promoting this andand potentially turning this into a more nationwide measure.So and compared to some previous.

Approaches, it does have the advantagethat it doesn't create more supply, which is a big concern for the market.So we do see some positivity is coming out of this.But the the the issue of how big the program is is big enough to make a denton the inventory and and also various implementationchallenges. We do see this is more like a first stepand we expect more could be coming. Right.You're not the first person that's that. I've heard that from that this one mightnot be as big, but if this doesn't work, they're prepared to put in somethingbigger.

How important is it that the centralgovernment is now involved? I think it's very, very important thatthe local governments much they want to save themselves.We don't think they really have the resources and the central governmentwill have to have some way of providing resources.But but obviously the challenge will come how they allocate resources, thethe locations will or the regions that need the most help are most likely to bethose with a greater inventories and greater.Challenges in fiscal positions. And if the money goes there, can cancan the market be turned around in those.

Locations?So there's an issue of whether the money goes to the most needy regions or issupports the regions, the central fund, the central cap.Yeah, that is a little less. But they have the hope of stabilizing.So this is very challenging question. I know it's a very because Christine,I'll bring it in now. On the other measures that they put sothey have they've removed the the mortgage floor effectively and they'vealso lowered a down payment restriction, the down payment requirements.How do those two things help? Right.So for down payment and mortgage rate.

Cuts, we think that that is going tolend a little bit of help to first home and alsoupgrade demand for property. But as we said before, it doesn't matterhow much the government is making it easier for people to buy a home thatwon't overcome a lack of confidence, especially on the economy and on thejobs outlook. So I think an issue here we are lookingat is as they are making down payment smaller, the monthly installment isgoing to be bigger. So can households to make that change.Right. So if we are looking at the time arm somortgage rate cuts, there are actually.

Two thirds of citizens already eligibleto remove their mortgage rate floor for first home loans.So now I think the biggest change would be for second home loans, which isinvestment demand. But if people's home price expectationis not changing, they might not be investing in properties.I've talked to you. Thank you so much, Kristi Hong and ChangShu there on the economics knowledge of the industry side of things.Just unpacking for us this latest major piece of news out of China.We will leave you right now with a look at property shares.We have been on a four week tear pause.

Somewhat today.Plenty more ahead. This is Bloomberg. Welcome back.It's time. It's time for your China Brief, a lookat what's making headlines. And national newspapers are, in thiscase, not making headlines. The inauguration of Taiwanese presidentlike to The Global Times is running a strongly worded piece about the eventdescribing Lai and his party as secessionists.The article says the Taiwanese people want peace and quote, observers whoexpressed concern that Taiwanese.

Authorities might work to shrink thepossibility of peaceful reunification. Right.Turn to page. Xinhua, quoting President Xi Jinpinghere, stressing efforts to boost in this case, of course, we're seeing the markettoday, the tourism sector. He's calling for improved servicequality and also to the sector could give a boost to economic development.Now, she also adds that China has the largest domestic tourism market in theworld and is now, in fact, a top destination for travelers rights infinancial papers today. And we're pivoting to the propertysector more reporting here on some of.

These support measures which wereannounced. The PBOC back financial news is flaggingthe possibility of mortgage rates falling even further.The front page story quotes industry insiders forecasting a decrease of up2.4 percentage points after authorities scrapped the floor on rates.At this point in time, at least, of course, on Friday.One piece of news here, Securities Times says that the new policies are alreadyhaving an impact. It says Beijing, Shanghai, Gwangju andother major cities saw a home buying surge over the weekend's activity, withsome housing developments almost selling.

Out.Now on to property story. Right.Let's take stock on where this really is taking place.Of course, 75% up from the bottom. We'll keep an eye on volumes, of course,too, an indication really of tactical and cyclical trade turnover, a thirdhighest on record and Friday volumes, highest on record in this group ofstocks right now in terms of price. We're up four weeks.We're up 75% from the lows. We're looking at 2018.Highs, of course, are measuring this at how far we are from that.Guess what?.

After 75% up, we're still 75% down.It's a long way back up to the very top. Now, as far as the bond market side ofthe equation is concerned, we've also seen a rally as far as junk bonds areconcerned, up nearly every single week since Novemberand certainly on price itself. The average price on our junk bond indexhas risen from 50 and we're now trading at about 86 $0.50.So it's we've gone quite a bit. There we go.That's that's a look at taking stock, really, or taking bonds, both assets, ofcourse, of how far this rally has come. It's a fantastic day to be along theserisk assets, particularly, of course, if.

You're also long commodities as well.Copper prices hitting the highest level on record.That's it from the China show. Thanks for joining us.Plenty more ahead, though, with Bloomberg Markets.This is Bloomberg.

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