Traders Wager on More Coverage Abet for China’s Developers | Bloomberg: The China Stammer 5/21/2024

Herewe are, half an hour away from the opening bell, Hong Kong, Shanghai andShenzhen. You're watching the China show.I'm David and Glass. Let's get to top stories today.Stocks in China in focus amid this return in volumes and turnover with theCSI 300 set to retest, the 3700 level, shares across the regions are tradingflat ahead of NVIDIA earnings. Right.Hot debates on Chinese social media platforms about whether new easingmeasures are enough to lift property prices.State media flagging growing calls for.

Policy to boost consumer demand.Plus succession in focus for major Middle East rivals.And after the Iranian president's death and the ill health for the Saudi king. Finally, we're here.Welcome to the show once again. The Tuesday session was just under 28,29 minutes away. We're hitting the pause button really inmost parts of this equity markets. You know, we are at record highs in theglobal benchmark. We've been up for seven straight days inthe Asia Pacific. We're looking for further clues whichactually could come in the form of let's.

See.And you know what? Invidious still more than a full dayaway. Thursday morning Asia time.So we'll see whether that's a catalyst. We'll see what, of course, the next fewhours holds as well. Flip the boards, please, if we could.And look at the Golden Dragon index overnight also declines there.So really not a clear lead coming out of Wall Street.We were down 1.7%. Earnings in focus in these greater Chinamarkets, though you have the likes of Ali are out with earnings.Trip.com reported a couple of hours back.

A beat there and on deck today isexpunged. EV maker shares are down effectively byhalf this year so far year to date. So we're looking at things like revenuesfor example. Still not in the money as far as profitand loss is concerned. They're on2/10 of 1% to the downside right in the Asia Pacific.Flip the boards, please. So a50 futurescoming online in singapore. So we're looking at fairly weaknessacross these markets going into the open today.So you know a couple of things.

Right.So when you look at what's been happening in Hong Kong, we're what, ten,11 weeks into this rally on price where 30, 35% in some of these overboughtsignals have been flashing for some time.Bollinger bands, 14 day relative strength index, I think we're now atabout 8081. And some of these.So effectively, not just 70. Right.Effectively, we're back to the extreme levels on some of these momentum gauges.You had to go all the way back to, what, 20, 23, the peak of the reopening rallyand going all the way back to 2021.

More on that in a moment there.But certainly one of the items on the agenda today will be whether or not weare able to continue this risk rally across these markets, which, by the way,and in terms of correlations, we've certainly divorce from what we've seenso far outside of China. Right.So world beating rally still 30, 35% export earnings.We talked about that. There's a briefing this hour out of JohnLee. Mining and crypto stocks mining wide isrally in base metals. We know where copper is.We know where gold is.

But it's iron ore, for example, is atabout 120. Some of these rebar futures in Chinawere two or three month highs. Crypto stocks, in case you missed thatvery big move overnight in ether, I think last I checked, Bitcoin wasclosely, if not a surprise, about 70,000 as I speak.So that group of specific stocks will be very much in focus today.Apart from that, of course, all the Fed be coming out and where we are as far asthis conversation goes, another raft of what the Fed officials reiterating thecentral banks, a wait and see approach on rates these last few hours or so.Pablo,.

I was on the record before saying I wasat the median, which was three big developments I've seen in the economyright now. I would not think that that's stillappropriate because the inflation risk so moved up.I do think that our new steady state is likely to be higher than what peoplehave known over the last decade, maybe back to where we were in the 1990s and2000s. But we'll just have to see.Okay. Joining us now, amidst this push backstill from Fed officials in this melt up, still in risk assets, Stephanie Elamis here with us.

And Seth, CIO at wealth manager, SashaWay, nice to see you and good morning. I think you were here about six or sevenweeks back. Yes, we were just about I want to say,beginning with we were at the cusp of escape trajectory in the Chinese market.More on the China movement conversation in a moment.But everything seems to be going well. The two.Well, should I should I be worried? Well, I mean, never a dull moment inmarkets. I think about a month ago in April, wemade a pretty significant call to kind of look at the cyclical side of theeconomy.

And when we look at that, it's basicallysignaling that the economy's expanding again.And we made adjustments to our portfolio, basically moving cash towork, putting in cash from just kind of a kind of short duration bonds toequities and also cyclical parts of the equity market.And the rationale back then was basically we're seeing the globalmanufacturing cycle have an upturn. In the meantime, inflation is stillcoming down, but we are basically not seeing inflation coming down as quicklyas the market would expect. And therefore we're still in aninflationary environment.

But given that growth is coming back,that's actually pretty good for cyclical stocks and that's why we've actuallybeen putting cash to work to buy into industrials, to buy into emergingmarkets, etc.. And these have worked out quite well inthe past kind of four or five weeks, and we expect this cycle to be continuing.Okay. Would you be leaning further into riskassets at this point in time? So I think I mean, you mentioned a lotabout the overbought conditions. Now, of course, we've had a big rallyand a short term, who knows? NVIDIA earnings may put a cap on tomarket sentiment or it may kind of.

Rocket it higher.And I think if you look at kind of a medium term perspective, yes, we do seemore upside in terms of the overall market.Reason being that if you look at valuation for a lot of stocks, forexample, especially for the cyclical stocks, I mean, they are actually notthat expensive. China, for example, given the rally, isnot at eight times earnings, but it's still like kind of ten, 11 times, whichis I mean, about the historical average, maybe five, 10% more upside that.But I think in terms of earnings, we're seeing earnings recovery and thesecyclical sectors and there are more.

Fields now to choose from.So we think about kind of the bull market that we've had in the US.It was all about the back seven. It was all about air because there wasno other things to choose from. Everything else was basically goingthrough an earnings downturn. Now we're seeing actually that changing.So while the liquidity environment is still quite supportive, that actuallymeans the rally can actually brought it up.Okay. So broaden out your meaning, broaden outbeyond AIG or are there other options within the broader air theme to play?I actually I think I think both are.

We're seeing a big rally in terms ofinfrastructure, power companies. I mean, even utilities are benefitingfrom this theme. And when you look at the fundamentals, Imean, there are actually I mean, somewhat justified.For example, one search and and generative, I, if you like, kind ofinput your query requires ten times as much power as like a Google search.So there is fundamentals to it. Now, the other thing that adds to it isthat the cyclical recovery and in particular China's sort of bottomingout, means that these industrial companies actually have anothertailwind.

From a macro perspective as well.So I think actually it's kind of everything kind of working in favor ofthese sort of more cyclical sectors. What about China?So, I mean, earnings you mention, I think last time backward lookingindicator, you know, funds have been rewarded to beunderweight China. Yes.That might have changed this quarter. In fact, that's the opposite thisquarter. At this point, though, you know, if I'vemissed out on this initial leg higher, do I still chase this rally or is do Ido I stay put?.

Because that's a different dynamic.I mean, we get a lot of questions about this on China.And I think so we've had like a 30% rally and that is from a very, veryoversold condition. A refund is on the way.So there's been a lot of kind of chasing back.Now valuations are back to a kind of more normalized range.So you can still see some somewhat kind of normalization to historical averagesor even beyond. But it's not as juicy as before.From a earnings perspective, if you think about kind of Chinese earnings,revenues have actually been historically.

Growing at 5 to 6%, which is quite inline with GDP. So going forward, I think we can expectsimilar numbers in terms of margins. Actually, Chinese margins have beencompressing and a lot of that has been due to the significant compression and.Margins for technology companies like Alibaba or Tencent, we're starting tosee that stabilize. But for us to kind of project a marginrecovery, I think that's still too early.So if you combine the two in terms of revenue growth and margin not changingthat much, then I mean, going forward, you expect kind of 5 to 6% or mid-singledigit earnings growth for Chinese.

Equities, which if you compare with USstocks, is still not particularly attractive.It's not kind of I think at least you're not seeing earnings kind of declining.Right. And the Chinese market, to your point,is trading at half the value it is in the US.Yes, like 10 to 2010 in China, Taiwan, in the U.S..So do I take it that in short, what you're saying is maintain your exposurein China? But we haven't seen enough to broadenout beyond the big growth names? I think actually so in terms of ChineseChinese exposure, apart from the China.

Market, I mean, there are otheralternatives that you can play. Okay.One example is actually commodities in particularly copper.Okay. So copper prices just kind of brokeabove 10,000. And when you think about copper, I thinkit's actually in a very, very interesting juncture because one thingthat held back copper in the last two or three years was actually the Chineseproperty slump. And I mean, copper is called Dr.Copper for a reason because it actually tells you kind of what's going on in thereal economy.

If I mean, Chinese property sector dustbottom, I mean that is positive for copper.On the other side also, I think if you think about the whole I demand power,demand infrastructure demand, that is also possible for copper.Added to that, I mean, that's a demand side from a supply side.I mean, copper infrastructure has also been invested in past few years.So therefore if you do get a recovery in China, I mean I think that would be agood play to to think about as well. Okay.But clearly, point a copper was an indicator that this manufacturing storymight might have turned.

Final question for you.Having talked about fixed income, short durations, Trump going up the durationscale. What role does fixed income play inportfolios these days? Yeah, so we're still maintaining ourkind of underweight in duration. Reason being the coffee is stillinverted. I think in the near term you still getbetter kind of prospects from shorter term rates, andparticularly since we've seen growth picking upin this environment, you typically don't want to go longer duration.The other overhang is, of course, the.

Longer term inflation outlook.We've spoken about this before, and if inflation actually settles at two and ahalf to 3% instead of the 2% target for the Fed.That has implications, negative implications for going long duration aswell. Of course, the market was also veryworried about fiscal conditions of the US a few months ago.Now that debate kind of subsided, but to us that is the structural problem thatwe have to think about in the next decade.Okay. And your portfolios have done well,right?.

Very quickly.Yes. Okay.There we go. Stephanie.Fantastic. Stephanie Long there, stashed away CEOjust ahead here on shows. We just brushed on this topic.Individual shares up overnight ahead of that highly anticipated earnings reportis an understatement. Here exclusively from Jensen Klein, CEO.A bit later on in the show. I'm ahead of that.No power transitions in the Middle East in focus as the death of Iran'spresident adding a new layer of.

Uncertainty to a region already inturmoil. Details just ahead here.Counting down to the opening of trade, futures are pointing lower.In fact, we're now session lows on the A50 contract in Singapore.It's a rainy, fairly wet Tuesday morning here in Hong Kong, 17 minutes away.The opening bell. This is the China show. Right.Welcome back. 15 minutes and into the show here, rightin time here for this daily adjustment. And it's quite a noticeable one on Chinaright now following the fix of the day.

Okay.This is actually moving quite a bit now. We're looking at seven 1069.The estimate was effectively at seven 2349.So still quite some distance there. So there seems to be some dollarstrength coming through here and this market will try and get to the bottomthat this and tell you why in a moment. Let's pivot, though, and let's have alook at the Middle East. Certainly, this week has been fairlyheavy as far as news flow is concerned. Power transition certainly is reallywhat underscores conversations there right now.We had the death, of course, of Iranian.

President Ibrahim Raisi in Saudi Arabia.You have King Salman bin Abdulaziz and the health there and his health beingclosely watched, of course, as he receives treatment for a lunginflammation. Let's bring in Bill Faries, our senioreditor, who joins us from Singapore right now to talk us through this.And Bill, let's start with Iran and certainly the latest on Iran and also inSaudi Arabia. Just get us up to speed here.Yeah, well, as you were hinting at there, it's really been one of the mosttumultuous periods we can any of us can remember.In the Middle East.

You've got a succession potentiallyunderway in the two of the region's real heavyweights with Iran and Saudi Arabia.Saudi Arabia, of course, it's been a little more telegraphed and the crownprince has been running things on a day to day basis for quite a while.But in Iran, there's really two big questions.The first is, is who will emerge to be the next president?They are expected to have elections within 50 days.If if everything follows the constitution, the interim vice presidentis now in power. He may he may end up being thecandidate.

But actually, the biggest question, ofcourse, is who would potentially be in line to succeed this country's supremeleader, Ali Khamenei, who is in his mid eighties at this point.And and the late President Raisi had been seen as a very likely successor.So that opens up a lot of debate. What's not really in question at thispoint is kind of the general direction of Iran, the conservative control overthe government that is expected to stay along with the foreign policypriorities. This is not expected to be an electionwhere you see some kind of a moderate, more moderate candidate emerge.The clerical establishment will keep.

Control of the candidates and thepotential nominees, but it is still quite a bit of change in a region that'salready obviously facing a lot of turmoil with the Mideast conflict.Well, just to shift our focus, I also want to ask you about these warrantson the press. All well, Israeli Prime MinisterNetanyahu now, we also heard on that story from President Biden and also theIsraeli prime minister on those ICC warrants issued against the Israelileader and Hamas officials. Let's have a listen to that and thenwe'll talk about it on the back of it. We reject the ICC application for arrestwarrants against Israel.

Whatever these laws may imply, there isno equivalence between Israel and Hamas. The outrageous decision by the ICCprosecutor Karim Khan to seek arrest warrants against the democraticallyelected leaders of Israel is a moral outrage of historic proportions.Bill, what exactly do we know about these warrants?Well, the ICAC, as you know, has put out a warrants for top leadership in bothIsrael, including Prime Minister Netanyahu and in the top leadership ofHamas as well for their October 7th attack in Israel.There's been some, as you heard there, there's been a lot of outrage at theseeming equivalence between going after.

A democracy and and a group labeled aterrorist organization. The ICC has had a real a lot ofdifficulty in the past enforcing these kind of warrants.There's a large number of there have been some African heads of states andmilitary leaders who have basically continued to go about their lives intheir business and in their positions without getting arrested, even when theytravel to some countries that are members of the ICC.So it's hard to see what happens in in the immediate future.But these ICC warrants are there are they are realities that tend to hangover leaders heads for years and years.

To come, whether they can be enforced.This is going to be a very open question.Bill, thank you. Bill Faries there, a senior editor whotakes us really into just a brief look at how commodity prices are doing atthis point in time. Certainly oil is very much in focus, butreally away from that, the story this week has been this melt up and stillmelt up press intense in copper 89,000 now on the Shanghai contract.Gold futures seeing a little bit of downside.All that being said, though, these are pretty much at record highs as far asthese two are concerned.

Right.Futures going into the open 9 minutes away.We are looking at some weakness across these markets.We're coming off seven days of gains across the region, half of 1% to thedownside right now. Dollar.China now trading at seven effectively 725.They're against the US dollar. Right?Plenty more ahead. This is Bloomberg. We'll get back to watching the Chinashow.

Dell's CEO says the company is unveilinga new line of personal computers optimized for A.I.tasks. Now, we spoke exclusively with MichaelDell alongside India Chief Jensen Huang at the Dell World Conference takingplace in Vegas. All our new PCs will be PCs.All right. And the reason is that anything thatyou're doing that has an added prompt is going to be sped up because everysoftware developer in the world is figuring out how to use all this newpower in the GPUs and the NPAs in these new hypotheses.So processing units for exactly as you.

Said.So that experience will be better. So when when your PC is now four yearsold, it's time for you to get a new one, right?You're going to want the one that speeds up those new capabilities.And inside your company, they're going to want to make sure you have that,that, you know, they don't want to buy a machine that's going to last for severalyears that doesn't have that capability. Jensen Where is invidious place in theAPC? I know you as gaming.That's again, I grew up with the gaming side at NVIDIA.Do you have a place in the IPC market?.

Come back next year.There's a bunch of bunch of them. Video is in Dell pieces on Dellworkstations. All of our GPUs have the same tensorcores that are running in 100 hundreds in the cloud.And so every one of our GPUs use AI to do its work.I, of course, is going to transform gaming all the NPCs, the non-playercharacters. They're going to be checked by time, howit will be cut. For example, creating world is going tobe easier. Instead of instruction driven computing,it's now intention driven computing, so.

It's easier to write programs.Python programs will be even easier to write.Video conferencing will be a lot better because of it.But what you did with Blackwell and other products is you innovated bysaying, okay, let's combine GPU with CPU.Is that the next iteration for you? In HPC, you go, okay, here's the NvidiaCPU that goes with it. We want to support every CPU the worldmakes. And there are, there are places that onex86 we support x86 there, places that prefer arm, we support ARM.We just went to ESI and the top most.

Energy efficient supercomputers in theworld are now powered by grasshoppers. And so wherever it makes sense willsupport the right cpu's. There we go.In video earnings, of course, very much in focus, probably the most importantmarket event this week. Speaking of earnings, that's Thursdaymorning, by the way, Asia time in video earnings coming through in greaterChina. Li auto getting absolutely thrown outthe window today on the back of the disappointment around deliveries.Xpeng is out later today with their earnings trip.com reported decent set ofnumbers earlier on.

A tectonic is a reshuffle a shift thereamidst the company announcement its ceo is resigning.Going into the open today. We are poised for a lower open hang sengindex 8/10 of 1%, 12 eight right now. Nifty futures, the opening bell 3minutes away. You're watching the China show. Welcome back to Shows.The opening bell just under a minute away here in Hong Kong and China.CSI 300 Retesting 3700 is in recent days here.20,000 was a distant dream six weeks ago.We're closer to that dream.

Maybe still a dream.30 seconds away. Now, speaking of, we're looking at acouple of things that are set to take place in the next half hour or so.One is RBA minutes are set to come out. This is for the most recent meeting.I think it was May 7th or May 6th or seventh, early this month.And John Lee, Hong Kong chief executive, is set to speak as well as a weeklybriefing, of course, there. So we'll keep an eye on any sort of newslines coming through out of the chief executive here.In the meantime, though, the opening bell here we go.We're looking at some declines here in.

The opening minutes and the RBA minutesare also just dropping across my screens.My producers will try and sort the order at which we hit these pieces this year.Goldman Sachs. More on that call in a moment here.3700 was we were briefly above that level on AC 300 yesterday.We're looking at mostly declines, as you can see.Bottom of your screens on the big heavyweights on a CSI 300.So really, you have literally a book ending you your two big newsmakers,Maotai Will and Will Yang here uninsurance is down about 1%.The boards, please have a look at where.

We are as far as Hong Kong is concerned.Effectively tech where the winners have been is Teck.That's where we're seeing most downside still 1.7%.There's a big earnings theme across the TV space to tell you about today andreally big declines. If free markets were any indication ofhow this day is going to go. Apart from that, crypto ether was a bigmove up overnight. Bitcoin 70,000, in fact.Let's have a look at some of these crypto stocks trading here in thegreater China region. You have three on your boards in HongKong, one in mainland China.

A mixed bag there, although you areseeing, of course, that moving slightly against the grain, 71,000 Bitcoin bottomof your screen. So there we go.Okay, well, here's a big one. Xpeng is out with earnings later today.Looks like the options market going into this one was is wrong footedoptions. Actually we had to look at the data didimply a post earnings lull. Well to be fair this post earnings onthat pre earnings level Li auto is down 17%.Big drop overnight with earnings as well disappointing as far as sales concerned.Trip.com.

More on that in a moment.And tektronix is down 2.6%. The company announced its ceo isresigning for personal reasons. Right.As promised. Goldman out yesterday revising theirtargets for msci china and a CSI 300 old underwrite new on the left 70 and we'reat 64. So just do the math.Really. These are 12 month targets.So about five, give or take from current levels, five points and a C is about4100. Also, HSBC also dropping a note almostsimultaneously, really saying it's too.

Early to take profits on to China'sstock rally. All that being said, I mean, you youlook at technicals as well. And it could also be a differentquestion. I should emphasize this.Some of the momentum indicators are flashing hot.Right. So I think one of them that we've beentracking in recent days is the 14 day relative strength index.So you look at the Hang Seng index, I think we have one coming on your screenson MSCI China. It's comparable to the extremes we'veseen in recent years.

We're trading at about, what, 35% intothe rally, 80 level 70 is typically where people go and say, okay, a littlebit overbought. Well, is has the rally gone too much,too fast? Let's put that question and others toMarvin Chen, our Bloomberg intelligence equity strategy analyst.Talk us through this. Has it gone too fast?MORGAN Yeah, I mean, if we look at the momentum indicators, as you justmentioned, it definitely seen we overbought, but we think there's aelements of fear of missing out that's kind of driving this market rally.You know, we took a look at the EEM fund.

Manager positioning.You know, the active wait for China was still declining in the first quarter.So, you know, we're seeing this rebalancing scrambling and this is whathas really been powering the sharp move up since April.From a valuation perspective, you know, China Hong Kong is still relativelyundemanding compared to global markets, but we are kind of nearing thesenear-term averages. So we think earnings are going to haveto be doing more of the legwork going forward.Right. And weightings and exposure to Chinafrom M funds, can we at least assume.

That that's hit a bottom and that thatsimply goes up for here on the fear of missing out trade.Yeah, exactly. So we think the first quarter willlikely be a bottom for for the exposure and we basis on two things that welooked at. You know, we looked at the top 100 e mactive funds and we noticed that even though the their weighttowards China was declining in the first quarter, the pace was actually slowerthan the decline of China within the MSCI EM index.Also, we're seeing more of the funds that we looked at around 50 to 60 ofthese funds moving towards a neutral to.

Slightly overweight position.So we do think that this and this is something that we haven't seen since thethe pivot reopening pivot in late 2022.Right. In early 2023, because it's been sinceat that point it's really been all India and the you know, some of the funds hasbased on your research here that have outperformed were rewarded because ofthe overweight in India. Is that is that changing you think.Yeah. So we are seeing a shift out, you know,particular within the tech space. We've seen a lot of movement there.You know, North Asia.

Samsung, SK, Hynix, TSMC, these were thereally hot stocks coming into the year and we've seen some rotation out ofthese stocks and towards China winners such as Tencent, which has really beenleading the kind of rotation. Yeah, well, speaking of tech, earningsare just about to wrap up. I think we still have one more, I'm notmistaken coming out, but you know, what are your broad takeaways so far fromthis earnings season? Yeah, broadly speaking, the tech sectorhas been delivering positive surprise on both the top and bottom line.And this has been enough to kind of sustain the momentum for the sector.And this has translated into gains at.

The index level as well.What's interesting is, you know, if we look at the largest eight China techcompanies which have been reporting last week, your tech eight.Yeah, the tactic a tech, a popular tech and they have contributed like around50% of the gains since this since the January lows.And this 50% contribution is in line with the impact that Matt MagnificentSeven has had on the S&P 500. But what's more interesting is that, youknow, China tech valuations are still trading at a 30 to 40% discount to theto their U.S. peers.So, you know, this suggests there is.

Room for some valuation convergencewithin the tech sector. And I think that's what we've beenseeing happening, this rotation going on over the past month.Right. Is there a case at this point or mightit be too early for a case to broaden out beyond a decade?Yeah. Oh, for now.You know, this index move has been driven by the tech.But we do think that some of the steps, such as, you know, the property measuresthat that have that have come up over the past week or so, these things arekind of broadening that the positive,.

The potential momentum within the marketproperty. I just ask you about as a finalquestion, I mean, it's a tiny percentage of weighting in this market, but itcertainly, you know, punch above its weight.It's you know, some of these names are up 100%.Yeah. How are you looking at property measuresis as a function, I guess, of just that sector or is this perhaps also a leadingindicator of the broader market, too at this point in time?Yeah, we think it is an important indicator, particularly for consumer andmarket sentiment.

You know, there are some concerns that,you know, the recent measures are not enough to fully address the propertysupply issue. But we do think that there is value inthe signaling effect of these concrete actions that policymakers are taking.I think we are seeing I think we're seeing a shift in the policyimplementation, whereas, you know, in the past two years we had like, youknow, we may get vague guidelines with lack of details, but now we're seeingconcrete actions. And I think these things can helpstabilize market sentiment. And, you know, we also may hear more onthe property front with the upcoming.

Plenum in July.So, yeah, I think there's there's more to hear on that front.Stay tuned for more regular programming if this market continues.Marvin's fantastic stuff and his research and his team.There I go for Bloomberg clients on your terminals.Okay. Some big moves in the currency market totell you about. Well, we were talking about equitymarkets in China. Let me get started with why not thePhilippines? Okay.So we were trading above 58 that.

Sort of line into said that key.Well pass a dollar passive level right now we were above that at this point intime. Now broadly speaking, I'm looking at I'mjust trying to search for any domestic catalysts there.Just keep in mind that broadly speaking, we're looking at a broad, strong dollarstory today, 0 Chinese to seven, $25 against moving up as well.So that simply could be a function of that as well.Keep that in mind and we'll keep an eye on this.Of course, amidst this melt up and amidst all the Fed speakers coming out,of course, still these next a few hours.

Or so on the back of this.Also the Aussie dollar holding on to strength.These are RBA minutes coming out ads among.The lines here. Okay.I'm going to pick. And bear with me.This is live TV. I'm trying to pick the most editoriallyrelevant to you guys here. There is limited tolerance for CPI toreturn to Target later than 2026. In other words, they will do what isnecessary to bring that inflation target within target.There we go.

This is from the meeting in early May,May six or May seven. Okay.That's a currency market story for now. Equity markets on offer dollar is fedAspen crypto as with commodities. We'll talk more about the earnings storyjust ahead. This is Bloomberg. Right.Welcome back to shows here. There's a fairly decent earnings themecoming through across these markets. A trip.com out earlier on and 2.7%there. Perhaps a sign of rebounding travelappetite in china.

Adjusted earnings per adr adds here,beating estimates later Tuesday and late on Monday saw two stories li autodisappointing and as you can see, 68% biggest drop in about two years there orclose to two years. The next bond reports later today.And the earnings call I believe is 8 p.m.local time. So yeah, if youif you have an entry ticket to that, of course, stay tuned for that.Anyway, let's talk about these earnings stories and some big moves across thesemarkets right now. Let's bring in our team, Linda Liu, ourAsia transport reporter and also.

Bloomberg intelligence senior analystAngela hanley to talk us through the trip.com story.Linda, I'll start with you. Why don't we start with li auto.The market doesn't like that. It like what it saw.No bad morning for li auto after they missed earnings estimates.Most of that is probably due to the latest.Well, the first pure electric vehicle called the mega was a was.It wasn't too mega, was it? No.The sales disappointed the Li auto had really high expectations for thisvehicle but it didn't deliver.

So now going forward I think Li autoprobably shift focus, maybe slow down on the pure electric offerings and justcontinue to really push their stable of reliable vehicles, which is the plug inhybrids, the extended range vehicles. Okay.One last question on LI ought to be for women to expand.Didn't they already revise lower their sales targets on on mega?Yes, they did. And Mega has just been a flop, I wouldsay. And I guess even with the revised sales,they still didn't manage to kind of achieve expectations, right From about100 K to about 70 K, it was the revised.

Benefit.Okay. Expand a company that is well, thestock's down 50% this year, give or take.It's not making money still. Well, the bar is quite low going intothis earnings report. Yeah.So I think the picture right now seems a bit more positive.Analysts are expecting the profits to grow compared to last year withestimated 50% of revenue growth for the last quarter.Ex Hall has seen some healthy growth and deliveries for the first quarter thisyear about 20%.

So that's hopefully going to bring insome higher returns for them. They also have got some new brands andnew products coming up. So I think they're hoping customers willlike what they've got to offer. Yeah, they had a launch at a mall hererecently, didn't they? Listen late last week, Angela, I'llbring you in. And just to pivot to Trip.com outearlier on, this one was a decent set of numbers.Yes, it looks like car was also okay and Tico was not that bad either.So the number has been very strong. It's mainly because, again, it's aboutthe leisure travel demand.

Though corporate travel is not thatstrong. It was only up like a 15% in the firstquarter. But if you talk about like a package,tours was up like a more than doubled in the first quarter of this year.And also it looks like a more people are heading out to other destinations sopeople are staying longer outside and also actually they spend more becausethey have to fly to Singapore or Thailand or even to Europe.It looks like people are pretty excited about that.So I feel like actually rich people are still rich.They're sick of traveling out.

But if you talk about like the pureChina domestic travel, it looks like a process spending is worsening.So shall we say that like a divergence between though, like the wealth gap isincreasing. That's like a kind of my takeaways.Okay, Is this a trip.com story or is this a broad recovery in travel story?And in other words, how does trip.com compared to other travel related place?Yes, in China, I would say Take home has been doing better than other travelnames because the company gained market share during pandemic, as we saidearlier. But in general, I think China outboundtourism is something that is really.

Happening and then it's people are goingto other that's faster than we expected. We thought something like people willstart going to Europe maybe from the second half of this year, but even likea more like a full queue up this year. But the company is already saying that,like many people are traveling the Europe from the second quarter of thisyear like of France and don't think about like Olympics later.So I feel like the up on tourism is recovering faster than expected.But one other interesting thing is that the companies say they want to designsome some products to cater to sustainable generations travel demand.So think about like even a year earlier,.

Everyone was talking about making moneyfrom millennials. Now suddenly we are want to make moneyfrom elderly people like children and our parents.Thank you so much. Angela Hanley, of course, and Linda Liuthat okay that was a strange and. Apologies for that.Okay. 60 minutes into the session, we'relooking at weakness across these equity markets.Plenty more ahead. You're watching the China show. Taiwanese PC maker Acer says it'sconfident its air focused laptop can.

Compete in a global stampede here todeliver products focused on this new technology.Sam Sidhu, the co-CEO, spoke exclusively with us in Taipei about his company'sstrategy and also ambitions within three years.We want to achieve our number one in the consumer market, whether you come intothe commercial path. We would like to to be a ranking onnumber three. You have this new Snapdragon Elite x xelite processor, right? That's correct.Why the switch to Qualcomm? Are they able to offer the speeds thatare necessary to incorporate like.

Microsoft Copilot and the AIcapabilities and at the speed and battery life that is necessary asopposed to what you were previously getting with Intel because of the newaero of. The application is totally new.So those are Kyle Erwin about the legacy application.Compatibility about ARM is not so important.Do you think this is going to rekindle the debate and give new life to the olddebate of PC versus Mac? This time I do believe this is a goodopportunity for those PC brand, including Asus, to compete with Applebecause of the introduction of the.

Qualcomm ARM based CPU and APU.There's been a lot of hype over A.I., as you know.But at what point is there the risk of overhype?So this is an opportunity and a challenging for the industry.So do I know. I do believe through the joint effortsof the PC industry, stakeholders, our joint efforts.We are developing our necessary technology and to overcome the challengemight maybe both brought by the technology we willovercome and to bring this kind of new opportunity.Co-pilot in particular from Microsoft.

Co-pilot.I will be on the consumer laptops. I believe that these require access touser information for co-pilot. How do you navigating that trickyrequirement, according to the experience or the collaboration between K-Swiss andMicrosoft? I am confident that the co-pilot privacyissue will be carefully tackled. Right.But how many of these features, these types of features would be available onpieces that potentially go into places where data privacy is much more enforcedlike China? The core part of the data or differentcore part of a system application or.

Into to are provided on May byMicrosoft. So this time Microsoft called parallelfunctions will be only partially available in China market.What kind of demand are you expecting for this new AI laptop?Our estimation is a single digit global single digit penetration.No APAC, but single digits is anywhere from 1 to 9%, Maybe high single digit.High single digits. Yeah, if I say it in more specifically.Much is made about cross-strait ties and also the economy.How do you see the significance of of lies inauguration and of the the needfor a status quo across the Taiwan.

Strait not to get too political, but asfar as creating and maintaining a steady and stable business environment.President nai the we understand that ICG technology in taiwan plays a mostlyimportant role contributing to the nation's GDP.And I actually appreciate and I used to have a veryfrequent contact or even meeting with theindustry leaders and of, well, myself. I also have several times of interest tomeeting to have meetings with him so he understand very well the needs andpinpoints of the Taiwan industry. Yeah, so very interesting in we wouldlook at the the new appointment or the.

Leadership or our new government.You will see a lot of what the Parliament has for ICP industry.Yeah. So I'm very confident thatpressure that. We urge the new government to develop anew policy here before for the ICG industry to holda poll on the strengths of Taiwan techindustry. Yeah, that was Steve there with Samson,who the co-CEO adds is in an exclusive conversation.Right. Just back to markets right now.And you know, what were few bright spots.

Really for being completely honest rightnow and this is really the story across the region.So Leon is a big story to watch. That's an earnings disappointment, down18%. We're 1.3% to the downside here.And the Hang Seng index, that's really where most of the gains so far, the bulkof the gains have been so far in this China rally.And within that space, of course, it's really been in things like gold miningstocks and tech aid. In terms of points, contribution.We're still watching other things in this market right now.Two days of dollar strength, the.

Continued melt up we're seeing in pricesof things like copper and iron ore. More on that in a moment.Just ahead here on the China show, Conversations coming up on the well,where we go next with Iran conversation. Atlantic Council on really where theysee that story going after the death of its president.Plus, we'll look at where Goldman Sachs is seeing uncertainty in theAsia-Pacific region. We're talking all things economics withGoldman guys, Of course, in about those times.This is Bloomberg. Welcome back.You're watching the China show.

We're entering the second hour of theprogram here. And just a brief look at where marketsare, just a run through very quickly of the key benchmarks into the GreaterChina equity markets. The bottom of your screens, MSCI, China,CSI, 300 volumes are light, extremely tight range on the benchmark today.We were testing 3700 yesterday. That seems to be a more a monday storythan it is currently right now. Really the lack of catalysts out there.But, you know, who knows what this market could given the sort ofregulatory and policy pronouncements that have really managed to lift thismarket to current levels very quickly.

Hang Seng index are we are at sessionlows. We're now down 300 points.One big mover with to to track or we have been tracking since the open hasbeen li auto 17% on the back of that earnings disappointment.So that's a flavor of chinese markets for a flavor of broader markets.Let me bring in my co-anchor this hour. Haslinda Amin joins us of course out ofSingapore has it's a fairly risk off day going into Fed's important Fed speak.And of course this the big and video earnings report coming out to.Well, that's right. It's not too bad, right, Dave?I mean, taking a breather after a run of.

Seven days if you look, the S&P up,what, a massive 2 trillion since since October.So it is time for markets to take a breather.Wait and see if and when it comes out with the numbers that they want.Remember, the bar is really, really high, Max.Seven has had a fantastic gain so far and it's going to take an outstandingnumber for that rally to continue. Right.Yep, absolutely number. I think it's number three in terms ofjust market cap behind Microsoft and Apple.Yeah, I think the bar is extremely high.

For a company of that size.Growing almost like a startup still too, has this point, right?Maybe just the latest market booms that we've seen and this actually came outcame from one of our guests earlier on. So we've been talking about this copperrally that is continuing at this point in time.So you have three contracts, LME, Chicago and the one in Shanghai.And our previous guest in the last hour, Stephanie Long, talked about how what'shappening in the copper market to them is an indicator of a bottom and arecovery in the global manufacturing story, which might actually mean stilltilts in terms of favoring risk in your.

Portfolios.And we're also joined by iron ore which is the Dalian on your bottom fourscreens and also where you are with the copper iron ore contract in Singapore atabout 1:20 a.m.. Also joining the rally today on perhapsa different story is also crypto. So Ether did very well overnight.It's still doing well right now we're back above 70 71,000.In fact, they're on bitcoin and some of the crypto related equity names in theregion like woori and will be hobby tech are also feeling this jump right thebroader rally. Well that's so far where we are seeingthe bright spots elsewhere though we're.

Trading sideways to lower Nothing muchto tell you about as far as this is concerned.Second day of dollar strength has. I'll leave it there.Back to you. Well, that's right.Let's get insights perspective. Bloomberg strategist Mark Granvillejoins us now here in the line city with me.You know what it is about Nvidia. It is also about the Fed.And we had Masters saying, you know what, three no longer in the cuts.Well, surprise, surprise is now one. But really the question really iswhether it is policy is restrictive.

Enough.Meza says restrictive, but is it restrictive enough given the currentsticky inflation? Yes, but they pretty going to try andthread the needle. They're going to have to change fromthree lots. Time has passed and they've been keep onsaying higher for longer. Inflation's not been doing what theywant to. So obviously they need to acknowledgeit. It's almost like a mark to market.You can't stick with three rate cuts when there's just not possible with thetime of year left.

But they might go for two.They might try to find a way to keep the markets relatively happy, keep the dooropen in case inflation starts to come down a little bit quicker than theythought in the second half of the year or the unemployment situation worsens.And there are some signs those cracks starting to appear in there.So they would like to have as many options.A good central banker would always like to have as many options on the table asthey possibly can. So and the markets will probably takethat pretty well if they do just change the two potential cuts for this year,that will be something the markets can.

Live with pretty well if you get acombination of a decent immediate result this week and the Fed plot summary goingto two, we're probably going to be in for a pretty good period for markets tocontinue for for the weeks ahead. You know, not too long ago we heardpeople say don't fight the Fed, markets fighting the Fed.Yes, but he's done it before as well. I mean, the markets always tend toextrapolate. They get they get carried away on boththe upside and the downside. So we saw right at the beginning of thisyear, the market got way carried away on having rate cuts all the way through tothe middle of next year.

And of course, that turned out to be wayin advance because we had a couple of hot inflation prints.In the meantime, we also saw at the beginning of the Fed hiking cycle wherethe markets were expecting hikes forever and they got way ahead again, that iswhat markets do. I mean, it's not it's not only thatpeople are trading positions. They want to do something with it.They want to show that they know how to put this money to work.So currently we haven't got to extreme levels, but we're starting to go to thepoint where markets are getting very optimistic.You can see it in equity market.

Currencies help being helpful in thesense that the dollar is strong but not too strong.So our people are beginning again to look for the easing cycle to go on forlonger maybe than they should. Really.Mark market. Arguably that's you know, what's what'scarry the torch in the absence of any any clues from theFed on what they're going to cut or how many they will go for.It has been the invidious story and I know you guys mentioned this as well,but just contextualize for us the Question of the day for our viewers.I mean, it's rare we talk about a.

Company whose earnings are in two daysthis point. But I guess it underscores the pointhere, Mark, when will innovative become the largest US company?Well, if it continues at the pace that we've seen this year, it will just be amatter of a few months probably. It's is unusual because it's rare when asingle company can have a macro effect across risk assets.And that's what we're talking about here with the media.It's something like in the heydays of Apple, they were able to do it as well.And the interesting thing is there goes the bar is very, very high for Nvidia.They've already had very good results in.

February.Since then, the stock is up about 40%, which is crazy for a $2 trillion companyalready. But what we saw many times with Applewas that even when people had very high expectations for several years, Applekept on achieving them. So it may well be that Nvidia hassomething up their sleeve. The A.I.story has got legs and they come in with something which satisfies the market.Either way, it's a huge event because they are quite capable of.These are bringing down the broad market by 5 to 10% or extending the massiverally that we've seen already.

You just can't avoid it and everybodywill have to be glued to the results when they come later this week.And Mark, just back to macro here, Aussie, Kiwi Cross, you've been writingabout that on the blog today. So our BNZ rate decision, put that inthe context of that and also these RBA minutes, which just came through about30 minutes back. Well, the New Zealand Treasury put outanother report today giving a pretty bleak assessment of the economicconditions in New Zealand and surely the central bank will be taking note ofthat. So I think there's a pretty decentchance that what you'll see from the New.

Zealand is going to be a dovish outlook,possibly even hinting at their first rate cut to come maybe before the end ofthis year, which looks like it will be quicker than the RBA because today theysounded slightly on the hawkish side and ready to keep rates higher for longer.So you've got a bit of a disconnect there which probably favours theAustralian dollar. All right, Mark Cranfield, we thank youso much for your insights today. And of course you can follow more onthis story and all the day's trading in our markets live blog.That's on the Bloomberg and am live go. You can get a market rundown in just oneclick that's commentary this analysis.

From Bloomberg's expert editor so youcan find out what's affecting your investments right now.And Dave, right now we're doing a check on the run up in copper.Yeah. Which could include really what'saffecting leading indicators of perhaps growthahead. So copper is coming off highs of theday. We just checked this about 5 minutesback and we're showing greens. I guess that goes to show really ofmaybe the market's gotten a little bit overextended here.We are at record highs effectively still.

For many of these contracts.Plus, of course, iron ore is back to where the high is in about two or threemonths. Let's bring in Martin Ritchie, ourBloomberg Commodities Edge reporter, for more color and context here.Martin, let's start with copper. I mean, have we set ourselves up for adrop after what has been so far up to this point?Quite a powerful move up. You know, it's interesting listening toyour previous guest there, Marc, talking about the sort of markets perhapslooking a bit frothy because if you look at copper hit 1,000 a tonne yesterday,a record high.

We've seen a flood of sort ofspeculative money investment funds piling into copper over over recentweeks and months. And that's really driven up the price.Why are they coming in? Well, there's a couple of reasonsspecific to the copper market, and there's been a big short squeeze in theNew York COMEX market, the signs of tight, raw material supply.And those could have attracted people who are also looking at copper as a sortof long term bet on energy transition. But, you know, the fact is that realphysical demand around the world, it doesn't look particularly exciting.And there is, of course, the danger that.

Prices do take a bit of a take a bit ofa correction from here on. Martin.Iron ore, not to be outdone, up for a third day, getting to 120.What's the story? Yeah, a slight uptick in iron ore.What I would say is nothing to a dramatic, though.It's not like anything that's happening in the copper market over the past fewweeks. You know, iron ore went down below ahundred back in April. It has kind of floated up and obviouslyyou've had sort of slightly more slightly more forceful measures on theproperty market from from Beijing.

And I think that's justhelped pro-growth sentiment in China. And the idea that, you know, steeldemand might not be quite as bad as feared, that perhaps later in this yearand into next year. But again, iron ore does look fairlyfragile even at these even at these modest levels.MARTIN Richard Blumberg, commodities Reporter.Thank you so much for that. Well, still to come, we'll look atwhat's next for Iran after the death of its president.Hear why the Atlantic Council sees no change in Tehran.Strategic direction.

This is Bloomberg. Welcome back.Power transitions in the Middle East are in focus as the death of Iran'spresident poses questions about who will succeed Supreme Leader Ayatollah AliKhamenei, who is in his mid-eighties. Meanwhile, in Saudi Arabia, KingSolomon's health is being closely watched as she receives treatment for alung inflammation. Let's bring in Jonathan Pentecost,director of the Scowcroft Middle East Security Initiative at the AtlanticCouncil. Jonathan, good to have you with us.Let's start with Iran and the passing of.

A rainy there.I'm just wondering, how does it change the calculation of succession in Iran?Yeah. Great to be with you.Thanks for having me. Look, I think whether a change orsuccession long term is going to be a question of when the supreme leaderactually passes on. Raisi was a leading contender to be thenext supreme leader. Obviously, with his death, it opens upquestions about who going to fill that spot.The early prognostication has been that it helps Khamenei son, Mojtaba, thathe's close with the Revolutionary.

Guards.That without. Right.You see in the picture, he's the most likely.I'm a little skeptical of that analysis. I think the reality is the system isgoing to put other contenders in place, other ultra conservatives and otherswith better religious credentials, frankly, than Mojtaba.So if it's a short term question, then you see the supreme leader, forinstance, pass on in the next few months, then, yes, most probably be ableto consolidate power over the long term. I think there's going to be a number ofcontenders.

But who wins out?It's too early to say. A smooth transition has been key forIran for the past ten years. Does it change that at all?Well, the desert race certainly doesn't really change much simply becauseultimately the power vested in Iran is held by the supreme leader.And so the president passing away is not going to have a big impact on Iraniandomestic or foreign policy for the supreme leader itself.No, it's probably not going to change much as in you're going to have avariety of other contenders who are possible to succeed Ayatollah Khamenei.But obviously, the big challenge becomes.

Raisi was supposed to be one of the topcontenders. He's no longer available to be so.So the question is going to be, is there somebody who takes his place?Right. Jonathan, David here.So when I think we're looking at two roads here point now here in terms ofsuccession. So if I'm not mistaken, theConstitution, if they do go that direction, means that we'll getelections, let's say, within the next two months or so.Do any specific people come to mind that might actually be in the lead forelections?.

And then we'll talk about implicationsafter that. Yeah.So I think immediately the Constitution, Section 131 says, look, elections haveto be held within 50 days. Right now, power is transferred to thefirst vice president, Mohammed Mosque, or he's not going to be the ultimatesuccessor to IEC after 50 days happens in the election.There's a couple of people. The name that's been thrown around mostis Mohammed Qalibaf, who is the speaker of the Majlis, the former mayor ofTehran, and has been a long time contender for the presidency.He's run for it a few different times.

But there are going to be others who aregoing to come into the picture and take a shot.Who ultimately succeeds? It's unclear because it's unclear who isgoing to be allowed to run in Iran. The Guardian Council ultimately is acollection of senior establishment clerical figures, and they literally sayno person A is not allowed to run, Person B is.And so it really narrows the pool to only contenders who fit the more ultraconservative model that are IEC also represented.Right. And Jonathan, just to take a half a stepback, you also you also view this.

Development as something that the regimedid not want to get into. I mean, elections would be perhaps oneof the last options they wanted to have is tell us tell us why this exercise ischallenging, in your view. Yeah, look, the regime is doing betterin terms of its foreign policy and its regional policy.Connections with Russia, connections with China have really been extendedover the last year. But domestically, in the wake of thematter, mini protests, the regime is really struggling still.There were parliamentary elections in March, and in those elections theofficial turnout was 41%.

That almost was certainly wayoverestimated. We're frankly just lied about.The more accurate numbers are probably around 15, 16, 17% turnout.That kind of turnout gives rise to questions about legitimacy of thepresident, of the leading politicians. And there's also a concern unlikely, Ithink, but a concern that you could see protests again, that this could be anaperture for people to say, look, we're going to have another new president.He's not respected, he's not supported by the broader population, and thatcreates incentive to go back out onto the streets.Jonathan.

Meantime, in Riyadh, we have the healthof King Salman in question. How concerning is that, especiallyagainst the context of his son and his is known already running the day to daybusiness? Yeah, look, I don't think you see a hugeshift, at least immediately in terms of what would change in Saudi Arabia.As you said, NBC has been running the day to day business of the kingdom forquite a while now. We've seen him grow into that positionquite a bit from when he came in and held, frankly, hundreds in the rights toprotest corruption issues. And we saw the killing of JamalKhashoggi.

But the reality is it's a fragile timein the kingdom where saw saw them pull back on some of the vision 20, 30projects like Neom. We're seeing questions about how farVision 2030 is going to be able to extend in terms of success as thekingdom desperately tries to diversify away from hydrocarbons.So I don't think there's going to be a big shakeup in terms of policy, but itis at a bit of an inflection point as it seeks to move forward.Jonathan, final question. We didn't get to it, but I guess theundertone across all these conversations is really what's happening in theregion.

Israel and Hamas, I think the the latestdevelopment here was the ICC, International Court of Justice, seekingarrest warrants for both the Israeli prime minister and the Hamas leader.Do you think that changes anything and do you think they will actually getarrested? Is the other question I have.I don't think it changes everything immediately, other than it actually maymake it easier unintentionally for Netanyahu to continue militaryoperations. In other words, there's a bit of a rallyaround the flag issue in Israel at a time when he was under significantpressure, including from his own.

Cabinet.And you saw Gantz come out and Gal-on come out and vehemently objected tohaving the ICC arrest warrants, whether they will be arrested.Look, I think it becomes a real challenge.It means that they may not be able to step foot in many European countries andmany Latin American countries under 24 countries have accepted the jurisdictionof the ICC. Theoretically, they'd be obligated toarrest Netanyahu and Netanyahu and Galon.On the other hand, let's see if the arrest warrants are actually issued.What the prosecutor did was refer the.

Warrants to the pre-trial chamber to beissued. I expect that they probably will be, butthey haven't yet. So there's still quite a few steps to gohere. Jonathan, a pleasure to have you on theshow. Thank you for taking the time.And of course, thank you for staying up as well live out of Washington.Jonathan Pentecost, director of the Scowcroft Middle East SecurityInitiative at the Atlantic Council, will leave you with a like look at it justmoving into 1030 in the morning, which looks like 1030 in the evening, if youask me, here in Hong Kong.

It's really coming down both in terms ofcondensation and these equity markets, as you can see, both on your screens.Amber rainstorm warning is now up across the city.This is Bloomberg. I have the energy that I've always hadthat's important. I think when I can put the jersey on andgiven false thing, I should leave. You know, basically the board probablyit's up to them at the time. Will I stay as chairman for a while?We'll see. But I think the and we're on the way.I mean, we're moving people around. Jamie Dimon there to see J.P.Morgan speaking about surprisingly so,.

Has succession plans at the bank wellunderway is, I think, how it was described.And, you know, we have a full store in this house, but effectively.Right. He's always bantered when he was askedabout who was going to succeed him or how long he would stay, that it was itwas always five years away. But in this case, of course, the answerto that question wasn't five years away. So maybe it is closer than five.And of course, this is a man who's been in that position since 2006.So he's had quite a run. And to be fair on his leadership, Jpmorgan has done really well.

And he's also said it's really up to theboard to decide when or how this happens.But, you know, to qualify, he has made changes.In fact, early this year, he did move some of his top lieutenants to, youknow, more senior positions to, I guess, test them out to see who is best to leadJp morgan when he leaves. So it is closer than you think, perhaps,Dave. Yeah.And I guess the point we also want to make here, too, is to your point, it'sperhaps not five years, but it doesn't seem imminent as well, I guess is theyou know, markets tend to overcorrect on.

The narrative here as well.There we go. At least we're talking about it at thispoint in time. Right.We're looking at shares of ten Cent right now.We're down about 2.7%. It looks like we are giving up some ofthe gains in recent weeks, although that said, this has really been one of thebest performing, if not the best performer, biggest points contributor.To be more specific on his Hong Kong and Greater China rally.Yeah, other things happening as well. Just to pivot away, this dollar strengthstory is really coming through and just.

Have a look at where you are.A dollar peso, for example, trading now above that key 58 level.A couple of other currencies coming online, like the board, of course,seeing some weakness there, the Korean one and also the Chinese currency.The opposite, though, is true when you look at where you are on cable and at127 takes you back all the way, a couple of weeks here.As far as cable is concerned. The broader story, though, is all theFed conversations has been a stronger dollar story.Yes. All right.Up next, we'll be talking about.

Economies with Goldman Sachs.And he had some tea, they saying amid tensions between the U.S.and China. Welcome back.It's 11:29 a.m. in Tokyo.Japanese markets going on a break in just a moment, managing to eke out somegains on a day when Asia is in negative territory.Japanese insurers in particular are trading higher after announcing stockbuybacks here. We're talking about the likes of TokyoMarine as well as plan to sell that holdings in client companies, Nikkei to25 up to a 10th of 1%.

Topix in the positive as well.We're taking a look at where the yen is trading 98 to is the number we'relooking at pretty flat versus the U.S.. We're also tracking the earnings seasonin Japan with just four more companies reported earnings yesterday.224 out of 225 companies have now reported in the Nikkei to 25.The last one is happening on Thursday. So far during this earnings season,that's been pretty positive in most companies posting an upside earningssurprise. Financials in particular, the highestlaggard posting 35% revenue growth and a -45% decline in net profit.There you have it, the earnings season.

In Japan.Dave. Yeah.Which takes us now into I guess in some ways the the back into the macro aswell. Right.So I think yesterday when you look at these markets and we're pivoting alittle bit away from that because away from risk today, just about every singlesector is done. As you can see on your screens, Thestrong dollar is back for a second straight day.It's mostly a story against impacts and it is against major currencies at thispoint in time.

And case in point is sterling and whereyou are as far as that's concerned. But yeah, it's a risk off day.Certainly the lead coming out of Wall Street wasn't a strong and clear cut asusual. But who's to blame, of course, in videois coming out with earnings in about a day and a half.Well, almost two days. In fact, it's coming out, I think 5 a.m.ish Thursday morning. So we're still good two days away.But it's perhaps the biggest event in markets this week, 6/10 of 1% of thedownside, Asia, Asia Pacific benchmark, S&P futures are effectively doingabsolutely like most of you guys sitting.

At home, absolutely nothing.Okay. A brief look at a brief recap of datawhich had come through recently. So late yesterday.Taiwan export orders up the most in two years, arguably, of course, backwardlooking data on the way up Taiwan, bottom of your screen, 30 to 30.Of course, this has taken place against a backdrop of a new president taking andbeing inaugurated yesterday, pivoting to Korea right now.And the data came out about two and a half hours back.So prelim numbers first, 20 days this time around, one and a half percent.Can he has that has the range shifted.

Higher compared to what we saw in early2023? Maybe you could argue.So is the data turning is a bigger question?Is this more than a chip? Is this more than a chip storybroadening out as far as exports go? Let's put that question really to ournext guest in a couple of moments here. But before that, too, there's a ratedecision in Korea this week about apart from others, of course.That's right. It's all about waiting on the Fed,though. It's set to be a busy week for centralbanks in the Asia Pacific.

On Wednesday, Both the RBA, NZ and Bankin Asia are set to release their latest monetary decisions.BLUNT The economic thinks both will keep that policies tight, while on Thursdaythe Bank of Korea delivers its latest decision.Bloomberg Economics sees the BOC playing a game of patience as it waits for theFed to pivot. And earlier we got minutes from theRBA's latest policy meeting showing officials discuss rate hikes beforedeciding that the case to stand pat was strong.Let's put it all in perspective. Dave.Yeah, why not?.

Joining us here in set is Kun Quan,senior Asia economist at Goldman Sachs. It's nice to see you.Good morning. So perfect timing to have you on to talkabout all these developments. Bank of Korea's this week.How do you think they're going to what's their assessment, you think, of thiseconomy, particularly when it comes to exports?Yeah, export doing well, but their consumption is weak, although Q1 numberwas a surprise. But we think that going forward, wecontinue to see downside risk to consumption because of the interest rateand also the property, you know, the the.

Market downturn.At the same time, inflation is falling. When you look at core inflation, whichin the case of Korea and many other Asian countries is a lower than headlineright opposite to the US. Right.So we continue to see the trending down core inflation, which should allow Bankof Korea to cut sometime later this year, but this time in May, a meeting Ithink they were on hold again with a cautious outlook given what's happeningwith the, you know, the US monetary policy stance, you know, risk theiruncertainties, data dependency, oil price, etc..So but we think that if our focus is.

Broadly right, then core inflation willcontinue to fall and headline inflation will also begin to fall along when weapproach the summer. Because in our view, you know, ourestimation about a 60 basis point of increase in the headline inflation comefrom fruit price, which should be, you know, the shortage should be easing overthe summer because of new supplies are coming.Okay. Yeah, I guess the question now formarkets is to find unlikely they will move in Thursday.The next meeting, to your point, is tricky because it's in July.It's a few months from now.

It's in the second half of the yearwhere they said they could maybe entertain a rate cut.Do you think? Well, the data will cooperate by Julydata and also the major central bank decisions.You know, last time they had the the qualifier about the one of theconsiderations for their monetary policy decision, which is debt diversificationin major central bank of monetary policy, which is for the first time.So that our interpretation is that even if the Fed does not cut by the end ofJuly, by the end of September, then if the ECB and Bank of England go aheadwith the cut, we'll be okay for the.

Consider if inflation, core coreinflation continue to go down. On.It's also about the U.S. exceptionalism that's weighing on Asiancentral banks in particular. We saw how it forced bank amnesia tohike rates. I mean, really, how might this play outin terms of their respective economies? Because, you know, as much as they'reexporters, they're also importing materials.Yes, you're absolutely right. I mean, that's why I think back in 2000,22 August, the Dixon board meeting, when corporate governance said that all isnot independent from the Fed.

So that still resonates.Having said that, exports doing well in a way to, you know, constrain less onmonetary policy of Korea, because I didn't know the people, you know,central bank cared about, including Bank of Indonesia, care about the ratedifferential because of its impact on exchange rate.But if you export doing well and also capital inflow, the increase is becauseof better earnings prospects, etc.. In the case of tech companies, then Bankof Korea will be less worried about the incremental increase or just, you know,elevated a rate differential then otherwise it could have been.How much capacity do central banks in.

Asia have to keep supporting their owncurrencies, including China? The I mean, it depends on the country,because that's a good question. But like, for example, you know, youknow, North Asia economies like Taiwan, Korea, they have a sufficiently largereserves. And also on top of that, they have ahuge year now to find an asset. I think Taiwan is totally off the chart,but 100% of GDP. Korea, I think, is about the third,about, you know, 50, 50, you know, 50% of GDP.So I think in the case of Korea, they can also rely not only on capital inflowand the current account surplus, but.

Also rely on, you know, some of themoney coming back from outside of Korea, given that they have a huge, you know,the foreign assets, including U.S. securities.The you bring up now the the topic that's come up, the broad topic that'scome up is, you know, competitive devaluation of currencies given, youknow, exports in the case of China, for example, is really where they're gettingthe growth. Yes.And I'm wondering broadly, are you seeing a turnaround in the export cyclewhen you look at Taiwan and Korea, Are you seeing any crowding out effects ofChinese shipments?.

Are those two do they export todifferent, broadly speaking, types of goods?For example, like where are you on that? I think for at least for North Asia,naught naught naught naught naught is the Asian economies are Japan,Korea, Taiwan, China, they are less. And when you look at the numbers, theexport or on that export are less dependent on the labor competitivenessis more driven by capital flows, especially in the case of Japan and thesimilar to Korea, Taiwan definitely. And also when you see the the theindustry by industrial company, by company, you see the the the waycompanies are adjusting is not nearly.

The volume or price but actuallymargins. That's because they moved into highvalue added. That's right.High value added cars and high value added the semiconductor and theelectronics. Therefore, you know, currency weaknessdoes not necessarily mean that they have to cut as because, for example, fromJapan does not mean that the Korean one should do.We should should we can or should weaken, because now what is driving isactually the earnings earnings earnings prospect and the kept that flowed otherthan through the competition, which is.

Not the case in the case of SoutheastAsian economies because they are still producing labor intensive goods, etc..And just briefly, final question. We have the US imposing new tariffs onChina. How might this play out on China as wellas Asian economies? Yes, I mean, you know, still it is ahypothetical. You are talking about the next twoyears, you how policy. But so far what has been done is veryminimal because you know, whatever that you know put on a China is very smallpart of China's exports to the United States although even export is a lot forEurope European bound you know China.

Export.But if our you know, our China team come with the numbers on the hypotheticalcase of, you know, 60% of telephone or cross-border US import from China, thenwe will be quite damaging. You know, if that happens based onexperience, you know, four or five years ago and the Trump administration, ourChina team estimate that impact on GDP almost as much as 2% of GDP.Gulland Quan, fantastic to have you. Let's run this back again.We didn't get to talk about the inclusion of Korea and also the Bank ofThailand, which is getting interesting. Maybe you can do the next time goingquite senior economist there at Goldman.

Sachs.Just ahead here, it shows the growing chatter on Weibo over what whetherhousing prices might actually see a rebound.Your China brief is just ahead. This is Bloomberg. Okay.Welcome back to your show as you're watching the China Show.Just an alert to tell you about here. Ali Cloudhas announced that it will be cutting its prices on services.Tong Chan, when effective May 21st. All that being said is the reaction andthe stock price, not so much.

I mean, markets have been on offerreally for the most part of this morning.The other thing I'd mention as well is when you talk about the cloud sector,generally speaking, of course you have the sort of private sector companies,Tencent and Alibaba increasingly, of course, competing with some of the stateowned names there as well in that specific space.Anyway, Ali Cloud coming out with a strategic decision to cut prices ontheir services effective, I just realized May 21 is today aswell. Now let's get you your China brief, alook at what's making headlines in.

National newspapers and trending online.The Communist Party's official mouthpiece, The People's Daily, has afront page be slamming you as accusations of industrial overcapacity.This has been a recurring theme in Chinese state media for several weeksnow. The article quotes experts who say theclaim is meant to contain China's new energy industry and is an excuse fortrade protectionism. Meanwhile, Shanghai Securities Newsreports that foreign investors enthusiasm for Yuan bonds is growing.Citing data from the ethics regulator. It says foreign institutions increasetheir Chinese bond holdings for an.

Eighth consecutive month.And the PBOC back to financial news is flagging calls for the government toshift policy from increasing credit supply to boosting consumer demand.It goes unless you see plenty of room to boost lending to consumers becauseborrowings excluding mortgages account for less than 10% of total loans.Dave Yeah, has in fact, yeah, when you look at other platforms in social media,Weibo, for example, and really on the conversation around consumption andproperty debate is heating up whether housing prices will actually see arebound. And that's after authorities, of courserelaxed fairly big rules, mortgage.

Rules.They urged local governments to step in and buy unused inventory.The strongest moves yet to ease this ongoing property problems bring anamendment low I China correspondent more context here in this these discussionstaking place. So how is this rescue rescue packagebeing received? Yeah, it's interesting.Since the government rolled out this broad rescue package, we see statelinked media like Global Times saying that there has been this huge surge inproperty trade over the weekend. And on social media, there is thisdebate about whether we'll see this.

Retaliatory rise in home prices.Now, that's a term that we've heard last time when the government lifted pandemicrestriction measures, whether we would see this retaliatory rise in spending.Now, most people on social media are saying no, but there have been someinteresting and rather sarcastic comments.Take a look at this one. They think once family planning isabolished, the population will grow with a vengeance.Once pandemic measures were lifted, people were consumed with a vengeance.Once housing restrictions are lifted, people will buy houses with a vengeance.They thought we would retaliate, but we.

Chose to be good people and let go ofour hatred. This comment just cracks me up.And take a look at this other one. We're anticipating a rise in houseprices because some officials are lazy and not handling the economy well.Ouch. That hurts.Yeah, And look, I feel that there's almost like a direct correlation withhow rich people feel and the direction of housing prices because two thirds ofpeople's wealth are locked up in housing and those prices have gone down for 11straight months now. So there's this very sticky sense ofpessimism right there.

Another interesting story trending onsocial media utility price rises, hitting consumers really hard and arestaurant even being canceled for it. Yeah, this is an interesting one.So according to one study about in about 125 cities and counties were seeing gasprices rise by about 10%. And it's not just gas utilities as well,your power and water. So and the timing is rather unfortunate.It comes at a time when China Railway has also just announced that it wouldincrease prices on a couple of its more popular high speed rail routes by 20%.And so even though inflation is just hovering just above zero, but utilitiestransport, these are things that you use.

Everyday.So people are concerned it's going to have an outsized impact on consumerconfidence. And this restaurant owner had proposedhad supported this price hike for consumers.And he's been canceled on social media, people leaving negative reviews on hison an app that review restaurant. So it's on its way out now.Okay amendment Lo they're going through. Taking us through the nuance there areChina correspondent now back to the property story and certainly very goodpoint amendment just brought up there right the debate whether or not theexcess supply issue is going to go away,.

Debate whether or not prices havebottomed. Let's bring in a Bloomberg Opinioncolumn that actually ran her latest column, A Tale of two, a tale of China'stwo housing markets. You mentioned one of the argument you'reputting out here is investors need to be cautious.Yes. At this point in time.Well, tell us why and then maybe let's look at the different parts of thishousing market. Let's take a look at the last threeyears after such harsh property crackdowns on the developers idea offinancing everything.

Right.Has President Xi Jinping really changed his mind that that that's the realquestion on investors mind. And from his viewpoint, China's housingmarket can be very complex, just like the US, where the huge variations fromcity to city, for instance, if Shanghai or Hangzhou they have bottomed out, doesthat mean that the worst days are over and the Chinese government's housingrescue is done? That that really is a very importantquestion. And I think going forward,what we are going to see is that a few cities will actually bottom out thisyear, like, as maybe just mentioned on.

Social media.Right. Like a household is doing fairly well.Shanghai last week, the luxury days, there was a new luxury project pushedout by Singapore's capital that it was sold out within 45 minutes.On the other end of the scale, there will be like northeast cities ingharping or chilling. They will take decades, decades to toclear their inventory. Speaking of decades, surely, what's alasting impact of this property downturn?I think the Chinese measures or in China's case, the party secretaries,they will have to be a lot smarter in.

Managing their cities going forward atall the big cities, they are going to fight for young talent and thepopulation inflow because that's the key.That's the key factor, too, to prop up a city's property prices, fiscal income,etc. And you are seeing it already in somecities such as Shanghai and how the city governments, they are quiteefficient. If you raise a complaint about thesewage problems, water shortage problems, that the fixes will comewithin the day. So I think what's going to happen isthat there will be huge variations.

Across different cities in China, justlike what you see in Japan, where Tokyo new condo prices are hitting recordhighs. And then in the countryside, the vacancyrate is 13 to 14%. Julia, thank you so much.Bloomberg opinion columnist, her latest column is on your Bloomberg terminals.Right. Just looking at markets right now andwe're just, what, an hour or 20 minutes into the session here.And yeah, we are on offer here. 2.2% now, 450 points, give or take, 19to buy the Hang Seng index. A big drag, of course, a big take place,tense and of course, very much in focus.

As well.Right. Plenty more ahead.This is Bloomberg. Welcome back.A look at some stories we're following today.China has criticized the inaugural address of new Taiwanese presidentlighting duh. A spokesman says Lee sends a signal ofseeking independence and that the motherland must be reunited.Lie was sworn in on Monday and used his first speech as president to call onChina to end its campaign of pressure on Taiwan.South Africa's top court has barred.

Former leader Jacob Zuma from runningfor parliament. That's due to his 2021 convictionrelated to the plunder of over $27 billion of state funds during hispresidency. Zuma's upstart political party is seenas a wildcard. As South Africa gears up for electionsnext week. Just looking the markets right now.So it's a day finally where we are seeing some, well, most weakness acrossthese markets. So a case in point here is very much infocus you have. While you are coming out with earningsyesterday, big drop overnight in the.

U.S., unsurprisingly.So a very big drop today, 20% on the auto here.This should be the biggest drop in about two years since 2022.And I guess this is really dragging down the sector.And of course, just keep in mind, many of these names have performed very, verywell of late. Next in line is Xpeng is coming out withearnings later today. And of course, there's an earnings callas well around 8 p.m. local time.That is, of course, in Hong Kong, 7.9% to the downside.Right.

Let's pivot have a look at some otherstocks that we're tracking. So Tech Tronic and the companyannouncing the resignation of the CEO. Stock is down seven and a half percenttrip.com. It came out with earnings but a fewhours back was higher. Has now reversed course is and istrading lower right now down about 1% in the Hong Kong session.Very, very quickly, have a look at where we are as far as crypto goes.So crypto related equity equity names, crypto assets have been bidsubstantially 5% up today in ether. I think we were up 14% yesterday.Bitcoin is now above 71,000 and some of.

The related names are also tradingagainst the green here in the Asia Pacific.11% on is Korean listed one and of course Forbes is listed here in HongKong global macro movers. The story is equity markets are tradingsideways to slightly lower. Most sectors are down, volumes are onthe lighter side of things. We're just about wrapping up earningsseason in Japan and we are almost in the thick of things well towards the tailend of things here in Hong Kong. And I think this graphic tells youeverything you need to know about the story across these markets right now.Dollar strength, equity market weakness,.

Yields are pushing higher VIX futures,bottom of your screen. Start seeing some upside after we closebelow the 12 handle on Monday. S&P futures are flat.The big one coming up in a few days, two days or so in.That's it from us here on the china show.Bloomberg Markets is next. This is bloomberg.

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