US, China Offer Conflicting Visions of Indo-Pacific Security | Bloomberg: The China Expose 6/3/2024

Good Monday morning from the AsiaPacific. Just half an hour away from the openingbell, Hong Kong, Shanghai and Shenzhen. You're watching the China show at DavidIngles seven Yvonne Man. Our top stories this morning, Asianstocks see early gains as signs of easing.U.S. inflation boosts Fed rate cut backs oilfalling after Opec+ sets a date to bring some barrels back online.Now conflicting visions on regional security at Singapore's Shangri-LaDialogue with China, blaming outside forces for destabilisation, and the UStouting expanding military partnerships.

And I'm Haslinda Amin in New Delhi.Indian markets set for a boost, with exit polls tipping a landslide electionvictory for Prime Minister Narendra modi. All right.Happy Monday to you. It looks like we are seeing a prettypositive day when it comes to these risk assets here.So you got to think that U.S. PC inflation report on Friday wascertainly did show signs of cooling and the slowest print we've seen this year.That certainly is helping to continue on with this rally that we're seeing acrosstreasuries or yields are still ticking.

Lower, at least stabilizing in the U.S.But you are seeing that follow through into some of these sovereign bonds inAustralia, even in Japan, slightly here, we're watching very closely what isgoing on with, of course, dollar yen. We're back to 157 levels here right now.But we finally got that confirmation right, that last month they did, infact, intervene. It was quite a big price tag, $62billion to prop up the currency. And yet we're still back at 157 levels.And, you know, that number also exceeded what they actually used to defend thecurrency all of 2022, mind you. So the size of it was quite telling,although was expected from us most that.

We're watching this very closely.We're also watching those crude markets, as we just talked about, where Opec+meeting. Yes, they did decide to extend thoseproduction cuts, but maybe only until the third quarter is what they're sayingnow. And they're setting up about a 12 monthplan afterwards to start unwinding those output cuts.So market participants are saying that's bearish for oil in the longer term.They were expecting at least those cuts to extend throughout this year.Brent, markets are doing slightly better, but we're watching Shanghaicrude reflecting the drop that we've.

Seen in the past day or two or so.We're down about one and a half percent in Shanghai.Half of the bars are take a look at equity.Markets are still doing quite well. Of course, we're watching India veryclosely. Right.So it looks like these exit polls are signaling a pretty good victory for theprime minister Narendra modi there. So policy continuity certainly is whatmarkets like. And you're seeing that optimismreflected in some of these ETFs in Korea as well as in Japan today.We'll see how those Hong Kong traded.

Ones play in just a few minutes time.Here's a setup for the China Open. The big thing we're going to watch, ofcourse, is we did enter into technical correction when it comes to the techgauge on Friday. It was a bit like a late day sellingthat we saw into those Chinese tech stocks.The Thai CPI numbers are going to be quite telling, Right.If we see a contraction similar to what we saw in the official numbers onFriday, Dave, does that not bode well for the sustainability of this rally?Yeah, in fact, just to mention that, too, right, Since you bring it up, theyou know, the Asian numbers tend to be.

Slightly higher always.Well, most times in the official PMI if that also to your point, interestingcorrection and I think the one on Friday missed just about every single forecastfrom economists. Well we'll see where that comes out inof course, in about 40 minutes or so. Just another note to what we're talkingabout, India. So we're looking at, as one is pointingout, 2% pop in futures there. That should put us and we'll see thatshould put us a record in sight at the open in India abit later on in the show. Right now, back to China right now as weare on our it depends which index you're.

Looking at here.Two weeks of losses, Hang Seng index and the CSI 300 Shanghai comp is on a threeweek skid. We're coming off a softer and that'srelatively speaking, softer dollar on Fridayfollowing, of course, the core PC numbers coming through as well.So we'll see what the fix looks like today.Just in terms of sectors to watch here, you have tech because of what'shappening, of course, across broadly. You look at Korea and Japan today.Tencent was also denied this reports out of the Nikkei that China was asking thecompany to lower its market share.

Requirements in the payments market.So we'll see any reaction there. And also some of theseauto stocks on the back of some numbers coming through in terms of monthly salesnumbers coming out. So it's it's going to be busy and we'llI promise you, we will be get into all these things in in just a moment.And obviously, we're tracking what's been going on over the weekend as well,these conflicting security strategies from the U.S.and China in the Asia Pacific. We're in focus at the Shangri-LaDialogue in Singapore over the weekend near the U.S.defense chief, Lloyd Austin, touting.

Washington's expanding militarypartnerships across the region, which he says reflect free choices of sovereignstates. But Chinese officials pushed back,blasting U.S. support for Taiwan and warning againstthe development of an Asian NAITO. Safeguarding the security and prosperityof this region. Remains the core organizing principle ofU.S. national security policy.The United States can be secure only if Asia secure.And that's why the United States has long maintained our presence in thisregion.

And that's why we continue to makeinvestments necessary to meet our commitments to our allies and partners.We will not allow anyone to bring geopolitical conflicts or any war wherethey're hot or cold to our region some day.So we will not allow any country or any force to create conflict and chaos inour region. Now the trade was well is present tensealso at the centre of tensions between the two, of course, U.S.and China. And economist Stephen Roach saysWashington risks entering into a forever war against Chinese trade practices.Roach says that the Biden White House.

And a protectionist stance against Chinacould be a blunder possibly of historic proportions.He says China has an advantage in producing non-carbon alternative energyproducts and and certainly comes as the world grapples and is trying to combat,of course, climate change. Washington has high tariffs on someChinese products in a bid to protect its domestic.Yeah, that was the comment to the S&P and we have.Himself Stephen Roach joining us now here in Hong Kong.Along with us is our chief medical correspondent, Stephen Engel.Stephen Roach, it's great to have you.

Back here in the region.Certainly we'll talk a little bit more about Hong Kong a little bit, but I wantto get your latest column about how you think U.S.trade policy is incoherent. What do you think is wrong about itright now? Well, I don't think we know what we'retrying to accomplish with trade policy. Are we trying to reduce the tradedeficit? Are we trying to stopChinese technology? Are we trying to protectU.S. industries andgreen technology products who do not.

Have a comparative advantage?You do not have the scale. Are we trying to contain China and geostrategically, what are we trying to do?I mean, we're multiple goals with with one instrument.And I would say and I've written books about this, thatwe have a huge trade problem. We have deficits with over 105countries. We're going after the biggest one.But, you know, that leaves, you know, 100 plus countriesthat still have significant imbalances with the United States.And as we squeeze the Chinese piece,.

That portion of our deficit goes to themand their higher cost producers and that taxes American consumers.So what are we doing? What trade policy do we actually have aclue, a strategy as to what we're trying to accomplish?You know, politicians, they see the word trade deficit and they start running andthey start trying to put a positive spin.As an economist, do you think having a trade deficit is a bad thing?You know, for politicians who most of whom have never taken an economicsclass? Trade deficits are bad.But the point that I have made to our.

Friendly politicians in Washington isthat the trade deficit really is on their backs.By running massive budget deficits, the United States is suppressing domesticsaving, forcing us to import surplus savings from abroad and running massivetrade deficits to attract the capital. So you want to fix the trade deficit,Mr. Politician, Look in the mirror and fixthe budget deficit in the United States. Stephen Walt, We're talking theintersection of politics and business, obviously.Let me take the devil's advocate on your claim about essentially a forever war.The Biden administration, they tell me.

Essentially in economics and in trade,the Biden administration officials that I've spoken to say, listen, it's only asmall proportion of products that are being tariffs right now of the overalltwo way trade between China and the United States, EVs, even at 25%, theywouldn't nobody there was no access to EVs.A Chinese EV is in the United States. Syringes and surgical gloves.The Chinese have the scale already to outcompete any product that the UnitedStates might make, and that's not going to necessarily spur domestic industry.And so it goes back to the question is, is this just for political show?Because Donald Trump and the Republicans.

Are talking 60% across the board on allChinese tariffs? Well, there's no mistaking, Steve, thepolitical motives here is, you know, we're certainly in moving into the mostintense part of our rather insane political season.But the new tariffs that were just announced a couple of weeks agocover $18 billion of items. But how about the old tariffs that arestill in place that were put in place by President Trump 2018 to 2019?That covers something like $350 billion of imports from China.They are still in place. So we're throwing bad money after badmoney and the level of tariffs.

I think the latest numbers are roughly20% tariffs on all Chinese products versus free trade war of a number closerto three. So,you know, I take no comfort from the. These latesttariffs on Chinese imports are small. The overall volume of tariff imports ishigh and likely to rise further. What about what the U.S.says about overcapacity? I mean, are those claims you think,overdone? I mean, the Chinese obviously have beensubsidizing and supporting the production of clean tech and the like.They're totally overdone.

I mean, first of all, and I think youreported on this when you mentioned my comments in Beijing on Friday, when itcomes to green technology goods in today's world that is gettinghugely challenged by climate change. There is no such thing as excesscapacity. We need all the capacity we can get tomove away from carbon to alternatives. Shame on us if we don't have thecapacity to make those goods at home. But in the meantime, let's takeadvantage of somebody who has the technology, who has the scale, who hasthe product, who can help make global climate,you know, certainly well and climate.

Change, but help make global climatemore more tolerable in the meantime. Right.What do you think the fix should be? So what should a what should a USpresident that's party agnostic question What should a US president do to eithermanage or spin the deficit problem, whether that's trade or budget?Like far be it for me to have a solution to a problem that has spanned bothparties over decades. I mean, I have looked at the budgetnumbers, you know, since I think 1962, According to the Congressional BudgetOffice, we've been in deficit every year except two.So there's no easy fix.

It's politically expedient forpoliticians to keep pumping more money into theirconstituencies, and they never lose by doing it.They never lose their position in office.So they're not going to stop. And they are unaware or unwilling toaccept the consequences for their irresponsible fiscal policy.And trade is one of them a big one. Stephen, you just came back fromBeijing. What's the mood on the street that yougot from them? I mean, you've taught lessons at YaleUniversity about the property crisis in.

Japan that lasted nearly two decades.You see parallels there and just at the beginning.But there's also some despair, I would assume, among small and medium sizedenterprises and young people. What did you find?I found a Beijing that really didn't have muchof the spark that I had been accustomed to over my many years of travelingthere. Steve, especially, as you said, amongstprivate sector entrepreneurs and students, not just undergraduatestudents, but graduate students completing PhDs in leading Chineseuniversities with not much hope for job.

Prospects.Post Ph.D.. I think the mood was onecertainly the best I could call it was a mood of grim resignation.And you could go further, but I don't care to really do that.No, fixable either. So cyclical or is there a structuralcomponent here that and if it's structural, do you think they had thetoolkit to manage that structural? It's a big structural issue.And what what my work shows and actually whatPresident Xi has elliptically said recently is that because the populationis declining, the workforce is.

Declining, China needs to boostproductivity, even cited a term I'm sure he knows nothing about total factorproductivity as a potential offset. And China's new approach to focusing onnew productive forces is aimed at doing that.And there are consequences of that of that for the rest of the world that, youknow, we're pushing back on, which is unfortunate.China needs a lot of help in grappling with its structural issues.And it would be not only in China's best interest, but for the rest of thisregion as well as the world for them to succeed.And in you're seeing that Hong Kong.

Might be feeling those effects in someways. I mean, it's been a few months since youwrote that controversial column that that Hong Kong may be over.Just wondering what what are you looking for this trip being in Hong Kong?Well, I'm. Looking for some interesting discussionsfrom my good friends.Number one, to see if they're still friends.And number two, to, you know, hear their side of the story.They have pushed back on me a lot, saying Hong Kong ishistorically the most resilient economy.

In the world and you're missing that.And even you said, well, you know, China's connection may cause problems.It's not that it may cause problems, it will cause problems.The linkage between Chinese economic growth and Hong Kong economic growth hasa precision that would stagger you. I've done the math.I can cite the numbers, but when China underperforms, there is no waythat Hong Kong can overperform. So is this more about Hong Kong being apart of the Greater Bay Area as maybe it was?What, China's a vision or is it you know, is is is Hong Kong still able tomaintain that international status?.

That's the question.You know, I'm looking forward to debating that.I think Hong Kong still has an important role to play as an internationalfinancial center. But, you know, it's getting certainlyswallowed up by the mainland. It's part of the Greater Bay Area.It is not the crown jewel of the Greater Bay area, as the press release wouldlead you to believe. I am delighted to be back here, but Ithink Hong Kong faces challenges of historic proportions for this city.All right. Stephen Roach, thank you so much.It's nice to see you.

Have a great week ahead.Hopefully it's eventful. Positive, constructive conversation.Stephen Roach, a senior fellow at Yale Law School and also former former MorganStanley Asia chairman, also the author. The book, I have it Here in My HandsHere, Accidental Conflict America, China and the Clash of False Narratives.Right. There we go.Just going into the Monday open here, 12 minutes away.Futures should be pointing to the upside here.So we'll see what happens at the open Shanghai, Shenzhen and what looks to bea fairly gloomy Hong Kong Monday.

Morning.There we go. Plenty more ahead.This is Bloomberg. You're watching the China show. All right.Get back to the elections in India, as exit polls indicate a resounding victoryfor Prime Minister Narendra modi, his party and his allies.Look at those nifty futures now popping close to 3% at the early geko.Our Bloomberg Markets Asia anchor Haslinda Amin joins us live in New Delhifor more. It seems like it's ever closer toanother win for Modi.

What's the latest now has?Well, you know, Vaughn, you talk about the markets.We've seen a lot of volatility in recent weeks in Indian markets amid murmurings.So perhaps Modi fatigue or a lack of a modi wave.But if you take a look at the exit polls that came out after the elections endedon Saturday, well, they're suggesting perhaps a landslide victory.Some of the exit polls suggesting that perhaps he'll win 350 seats out of the543 up for grabs. That is a landslide victory nonetheless.But remember, a modi win was never in question.The real question is whether or not Modi.

Will secure the landslide super majoritythat he is after leading up to the elections, he talked about wanting 400seats that would allow him to perhaps implement controversial policies, landpolicies, labor policies. Well, that remains to be seen.He posted on ABC's saying he is confident that he'll get the numbers hewants. There'll be record numbers, recordseats, but we'll find out only tomorrow when counting begins from 8 a.m.local time. Remember for him to get to 400.He needs to win the hearts and minds of the southern states which havetraditionally voted for the opposition.

Yeah.Has YouTube outlined their 400? Is that sort of the next key milestone,if you will? Let look, let's say we do get 400.What's what's next in the agenda for investors there now that they have, ofcourse, have that mandate to push some of these reforms further reformsforward. It is about getting those mandates, Imean, the land reforms and labor reforms.And we're talking about a controversial. He needs 400.He needs a super majority to push through those reforms.We talk about how India is an 8%.

Economy.This is the fastest growing major economy in the world, But that is notenough. India needs 9% growth, 10% growth tolift more people out of poverty. I remember Modi himself has said hislifted 250 million people in India out of poverty, but 900 millionof the population still live below the poverty line.He needs to do more and talk about, you know, an economy that's reliant of anyfactoring on infrastructure investment. He needs to do more as well.He needs to look at the services sector, for instance.So these are the things he needs to look.

At and he can look at these policies andreforms if he gets a super majority. Haslinda Amin there in New Delhi for us,our Bloomberg Markets Asia anchor and looking at futures right now, weprobably might just open at a record high there in India, right going intothe open here in Greater China here, just what, 6 minutes away.Futures are pointing up the Hang Seng index in the early going start.We got up 1.1% and we're coming off a two week skid.A preview of the trading day just ahead. This is Bloomberg.Happy Monday. Brian welcome back to Shows ten Cent andFocus today after the company denied.

This earlier report that in the Nikkeithat it was going it was asked to shrink its market share requirement.More on that in a moment. Casino stock's data was out and we'll bejoined later on shows by the director of the Macao government tourism office, YaoMing. Gaming revenue jumped nearly 30% in May.Got to think of course that golden week holiday.So you're seeing most of these casino operators are up property is also uphere this morning new home sales slump easing in May.We'll talk more about that coming up. Welcome back here watching the Chinashow where China on the open markets on.

This Monday morning.We are seeing a decent rally take place here on the Hang Seng.We're seeing gains of about 1%. It's really been driven by this wholetech play. Property is also doing quite well hereas well. We talk about that Tencent report alsowhen it comes to that PC inflation gauge in the US, really did.I had a bit of a relief rally across the tech sector overall.So we're seeing that sort of follow through here.We got China PMI chasing numbers coming out in a few minutes time.Yeah, the range of forecasts will be.

Key.Certainly the low end will be very much in focus following the that massive missthat we had on the official numbers of course on Friday, which you guys ofcourse talked about there. We're going into the open today andwe're coming off two weeks of losses, particularly in the Hong Kong marketswere really and Yvonne is pointing out this correction that we have entered inon the tech age as well. There's one key support level to watch.We'll show you that level in just a moment here.The open onshore in China, flat, CSI 335 677 right now.So we're looking ahead obviously, to the.

PMI numbers coming through as well.Will that effectively also mirror what we're seeing in the official numbers?And certainly one thing I'd note there is that that's a different sample sizefor private companies, more smaller companies, more export orientedindustries there as well. So we could get maybe somewhat of agauge there. Maybe something similar would be thesmall gauge PMI that we got on Friday on the PMI numbers, official ones whichactually showed a further deterioration across the smaller companies.Although the larger companies are doing much better, the bigger heavily weightedones on your screens as well.

Obviously we're looking at what'shappening with yields following what probably was the most pronounced pushback on this rally on Friday as well. You don't have a range, two and a halfto 3%. That's probably our playground for now.The open in Hong Kong. Have a look at this.Tencent was in focus Alibaba to on the back of this move up in tech there we gotwo and a half percent on ten said so two things intense and one is bottom ofyour screens the company acquiring 10% of the the Thai music firm which isvalued about 700 million USD. So that puts it about a 17 millionquestion mark injection there as well.

And also this denial from the companythat it was being asked to lower its payment market share.So we're up two and a half percent there.Bob was also up by a similar amount. Also listed in Hong Kong are some ofthese ETFs. The trade here, of course, that mirrorwhat we're seeing across this sort of Indian narrative when he's on theelections coming through. You have obviously just contract tradingthis hour, two and a half percent up there.So we are seeing some of these ETFs that are trading here in Hong Kong alsomoving higher.

Okay.As promised, some data coming through. Right.So auto sales data, you had a lot of these numbers.NIO came out with their effectively month and month jumps compared to theprevious month there. Sharma came out with somethinginteresting too. I think it's 15,764, if I remembercorrectly, on that new SUV. I think they're looking at 160,000, Ibelieve, in terms of the guidance coming through it as well.In any case, we are seeing gains across these stocks.Great Wall Motor, there's a report out.

Of the Nikkei that it was shutting itsoffice in Europe and laying off all of its staff.More on that later on the show. Shares are up, up about 2% there.Very quickly, as promised, a stock entered a correction on Friday, blewthrough the 200 day moving average. We're now looking at your 50 day asperhaps your next line into said. We're going to get that up.There we go on your screen such as Purple Line.And we are opening with a slight nice allowance there just over that key levelto watch. Let's throw this forward.Where do we go from here after we did.

Enter Yvonne, that correction on Friday.Yeah. Let's bring that question to OverbrookAsia Equities reporter Charlotte. Yeah.Her team of course not just watching the tech space but everything, all thingsChina, equities. What are you watching out for today?Yes, I think today are where the sentiment is boosted by still prettypositive report starting with ten saying no.They denied that request to lower the chairman about market share.And also we have the Michael Casino data that was really positive which showedthat casino sales has been in the.

Highest level of post-COVID.And also we're seeing stocks actually higher today was BYD show me ID it'sactually that the monthly sales for May is actually not that far away from theirpeak sales in December boosted mainly by the price causing the analysts and alsowe have the kind of home sales that I think that depends on which you take on.Some analysts are saying that it's better because the easing weakness isbetter than expected, which is showing some, you know, recent measures havebeen helpful to boost sales. But for the bottom market, you know, theHCI as well as the index, they are still not that far away from a correction fromthe May hot.

So I think that shows that during themonth of June will be very important because that's before the big meeting.So planning meeting coming out in July. So it won't matter if they find morecallus to help this rally sustain. Right.Thank you so much for just getting us warmed up today.Charlotte Yang, our Asia equities reporter now with more on this techstory as well. Oh, yeah.I mean, what a weekend in taiwan. We've been following everything that.Goes on with video. CEO Jensen Huang announcing plans tolaunch a next generation platform for.

Its chips in 2026, and Huang seesgenerative AI playing a major role in the future of PCs.For Future Laptop, your future PC will become an art.He'll be constantly helping you, assisting you in the background.The PC will also run applications that are enhanced by AMD and your PC willalso host applications with digital humans that are areas.Let's get more on that keynote and bring in our tech reporter Bell.Here with us in our studios here. So translate some of these things intosimple English for us. What did he present there?Well, it actually went on for nearly 2.

Hours.So it's a pretty long presentation. And we know that Jensen Huang has beenin that venue before last year. For you to think about the focus, it wasreally on the hardware capability. So we had, for instance, the H1 process,so the 100 processor was being talked about.There were different server rack modules.So proprietary technologies, it was really about bringing multiplecomponents together to work like one unified computer.If you think about the difference this year, perhaps,as I said, it was quite a long.

Presentation, but around half of itreally was focused on the sort of applications or tools that we're goingto have as a result of this, because it really it just isn't about hardware.It's it's really pushing itself as sort of a full stack solution here.So there were things like a different way the capabilities are going to beable to be borne out of the technology that it has where you can reallyforecast down to the meter. There were things like virtualassistants or virtual medical personnel that can work alongside a human personas well to deliver a sort of post-operative or post visit care athome, things like interior designers,.

You know, lots of different things.So that was part of the focus. And then the other focus as well was abit of an update because just a few months ago we got the new Blackwellprocessor that was unveiled. And that is a hugely powerful computerthat can run the the biggest large language models.And we're going to update to that as there's going to be a Blackwell ultrachip coming in 2025. And there's an upcoming Rubin A.I.platform as well. And that's going to use the highbandwidth better HBM four chip, which is the next iteration essentially ofmemory.

That's that's been really a key stickingpoint for for sort of accelerated production.Obviously, there's a lot of we talk about the benefits this whole revolutionagenda no one talks about with AI. There was also a big focus on energyefficiency. Also when it comes to cost savings.What do we hear about that? Yeah, well, this is this is somethingthat's becoming perhaps a really big talkingpoint. And actually last week when I was atthat conference in Singapore, this was the panel that I moderated on was AI andand the environmental needs that go.

Around that.And there's a really interesting statistic that was reported recently bythe World Bank, and they said that the computing power that is required for AItools is doubling every roughly 100 days.So every 100 days you need double the amount of computing power.That is huge amounts of energy needs that are totally constraining nationalenergy grids. And so Jensen Huang as well made that areally big focus of his keynote address, saying that these processes now they arebecoming so fast and so much more energy efficient that essentially the more youbuy, the more you save.

That was what he called CEO math, but itwas something that was really discussed during the presentation.The more you buy, the more you save. But really that big focus on energyefficiency and trying to bring down those energy needs.Yeah. CEO math.I love how he talks. Like my wifewas our tech reporter, our guy watching what's going on in Computex And yeah, wegot plenty more coming through from that conference in Taiwan as well.We're expected to hear from the AMD CEO, Lisa Su.She's expected to head on stage there in.

Just a few moments.Of course, they are still the next one to watch.Also in this whole I play. Yep, there we go.Okay, let's get to some of your other big corporate stories that we'retracking at this point in time. Okay.Cathay Pacific, here we go. Speaking of and we'll get to the Macaostory in a moment here. So in terms of flight capacity, we'reback to 80%. That's for June here.So and it is on track for a full recovery by early next year.CEO run a lam says the summer booking.

Period for Cathay looks very healthyfrom both a passenger and also cargo perspective.He says ticket prices are gradually normalizing.Hopefully that's down with supply and demand getting back into sync.Well, Hong Kong Securities Regulator says 11 cryptocurrency exchanges are astep closer to obtaining licenses. The CFC website says applicants,including Crypto.com and bullish, are deemed to be licensed.Now the move comes a year after the city rolled out a digital asset rule booktrying to foster a hub for the industry. Fashion company Sheehan is reportedlypreparing to file a prospectus for.

Approval ahead of its potential Londonlisting. We're told a confidential filing couldhappen as soon as a coming week or later on this month.The timing of the filing does not necessarily indicate when an IPO wouldhappen. Saudi Aramco's $12 billion shareoffering sold out shortly after the deal opened on Sunday.Bloomberg's sources say the order book reflected a mix of local and foreigninvestors. They're buying in for a piece of thecompany's $124 billion in annual dividends.Bloomberg Intelligence estimates that.

Would give a stock a dividend yield ofmore than 6%. Right.We are going into the session today with slightly weaker in oil, but althoughfrom the cut off, as you can see, we're slightly higher from that.Although compared to late last week, certainly at softer just about acrossthe futures curve. Opec+ the news here has extended thesesupply cuts through the third quarter, but also laid out a timeline forunwinding them over the next 12 months or so.Our Olympic careers in the Middle East and Africa.Anchor Jomana reset.

She has more from Riyadh.The part virtual and part in-person opec+ meeting has just ended.Now the main takeaway is that the group production cuts are going to continueuntil the end of 2025. That caps daily production at 39 millionbarrels per day. But we also got color on those voluntarycuts. Now, these were cuts introduced inNovember 2023, taking 2.2 million barrels per day off the market and wereintroduced by eight countries, including Russia and the UAE, all of whom wererepresented in Riyadh. Now, we found out that those voluntarycuts are going to be extended by another.

Three months until at the end ofSeptember of 2024, after which they will be gradually phased down over the courseof the next 12 months, ending in September 2025, subject to marketconditions. Now, one of the surprise announcementswas the fact that the UAE have now been given an extra production boost of up to300,000 barrels per day in 2025. And of course, the UAE had been pushingfor extra production capacity over the last couple of months.Now, clearly, this shows that OPEC are still trying to provide some support tothe market, but at the same time looking to appease some of the countries who hadbeen pushing for higher production, not.

Just the UAE here, but many of the othercountries in the alliance as well. And as far as the market takeaway fromall of this, well, on one hand, people are welcoming the visibility and theoutline of what the production barrels are going to look like over theforeseeable future. But on the other hand, there arequestions about how much supply is coming back to the market and whetherthe demand over the next 12 months can actually match up versus that supplygrowth for Bloomberg in Riyadh, I'm reminded Versace.All right. That's the latest from Opec+.We're also watching when it comes to.

These autos as well, particularly theChinese EV sector. We just got that CCTV line that wasinteresting. We're talking about China allocating a6.4 billion renminbi for vehicle trade in subsidies.That's according to CCTV. We also got some new delivery numbersfor some of these automakers. Relatively speaking, everything lookspretty good for the month. So that's why you're seeing likes of NIOof three and a half percent. Same goes to Great Wall Motor as well,Macau casinos. There you go.Also, what's been driving this rally.

Here today and take a look what we sawin the gaming revenue in May and we basically saw the highest level sinceCovid. Right.So we jumped nearly 30%. There was a Goldman Week holiday effect.Also new travel permits for Chinese tourists as well that actually helpedfuel spending. Yeah.And we'll get more on the story in the next hour of the China show withsomebody who might just know what's going on here.There we go. The director of the Macao governmenttourism office joins us at about this.

Time in the next hour.So stay tuned for that interview. Plus, plenty more ahead here on theChina show. Australia's Defence Minister RichardMarles, says security and societies still remain in the country'srelationship with China. Speaking to us at the Shangri-LaDialogue in Singapore, he also called on Beijing to uphold the global rules basedorder. We have sought to stabilize ourrelationship with China and again, if you take a step back and look at what'shappened in the last two years, big steps have been taken forward.You know, we went for a period of a.

Number of years where there was noministerial contact between Australia and China.That changed two years ago when I had my meeting with my Chinese counterpart,which was the first meeting at a ministerial level between our twocountries in three years. Now, in the two years since thatmeeting, we've had numerous meetings between ministers of both ourgovernments. There is significant dialogue across thewhole range of our bilateral relationship and we have seen a lot ofthe trade restored. We've seen a stabilisation of therelationship.

Now, you know, there are tensions, thereare security tensions that we have, but there are security anxieties that wehave. We obviously want to work through all ofthose, but there's no point in denying the fact that they exist, which is whywe talk about cooperating with China, where we can, disagreeing where we must.And we we have been very clear about our disagreements when they occur.One of the really important things is that when our militaries interact, theyneed to do so in a manner which is both professional and safe.This is a more aggressive China. We're seeing that in the South ChinaSea.

It's also a China that wants to expandits presence in the Pacific. Surely you must be quite worried aboutthat. Well, what we I mean, firstly, we makereally clear that the rules based order that people talk about that phrase alot, and maybe at times people can think it's almost becomes glib.But the rules based order has been profoundly important for the maintenanceof peace and security in the East Asian timezone in South East Asia, in NorthEast Asia. And it's been upon that bedrock thatwe've seen such an enormous economic advancement of this region, very much tothe betterment of China, to the.

Betterment of Australia.And that's what we want to see continue. But, but what underpins that is thatrules based order. We need to know that we can operate inthe global commons according to a set of rules which everyone consistentlyunderstands, which have been in place for decades.We call on China, but we call on every nation to engage in in that way and tomaintain that rules based order. And now when we have our Navy operatingin the South China Sea, in the East China Sea, all we're doing is assertingthat rules based order operating in accordance with international law.And we understand that in that process.

Will interact with other militaries,particularly the Chinese navy. But those interactions must beprofessional. They must be safe.You talk about a rules based order by China wants a multipolar world wherethere's more than just one power. Is there more room for that, given thatChina is on the rise and, you know, the middle countries are doing a lot more aswell? I think middle countries are doing a lotmore. But let's be clear, China is a greatpower. No one's denying that America isobviously a great power, but China is a.

Great power.And we clearly see that. And there is no problems with the riseof China. I mean, the economic growth of China hasseen the alleviation of poverty for hundreds of millions of people.The economic rise of China has occurred in a way which is very much a part ofAustralia, and we acknowledge all of that.But but as a great power, there is a responsibility,an increased responsibility really, to be the guardian of that rules basedorder which has enabled this economic growth.And that's what we look to.

And that was the Australian Deputy PrimeMinister and Defence Minister Richard Marles speaking in Singapore with ofcourse our Haslinda Amin right. We do have some breaking news I believewe're getting to at first here on the typhoon numbers which are coming inbetter than expected. Oh yeah.So we were expecting something to be maybe less.Well, consistent with this. Yeah.You know, less bad or less good or less bad, I should say, but not this good.Right? So 51.7 is what came out from this isthe private gauge, mind you.

So that beat expectations.I use the approach that even the lowest estimate was around 51.Yeah. So it does paint quite a differentpicture to what you're seeing. The official numbers, which were sub 50on Friday. You know, obviously there's there'salways differences in these two sort of sets of data.But yeah, maybe could help these equity markets to today to the strength of thecurrency coming through the markets reacting.There we go. Okay, Plenty more ahead here on show us.This is the China show.

Right.Welcome back. You're watching the.Trying to show a tiny spacecraft has landed on the far side of the moon,boosting Beijing's efforts in its space race with the US.Bruce Einhorn, our reporter, is here with us to tell us about the story.And it's quite an achievement here. It's.It is indeed. So China is the only country that hasever managed to land on the far side of the moon.So this is the second spacecraft that the Chinese have sent to the far side.What's interesting about this one,.

Compared to the previous one, which wasin 2019, is this is one that's a sample retrieval mission.What that means is that it's going there.It's going to collect stuff, rocks and dirt, and it will drilldown beneath the surface and will then fly back to Earth.And so it will give scientists a chance to really examine things from the farside for the first time. How does this all fit into China'soverall space program and, of course, this space race that we're seeing withit? Well, the reason they're doing this isthis is part of a longer term plan that.

They do want to send Chinese astronautsto the moon by the end of the decade. And so this mission is toward thesouthern part of the moon near this lunar South Pole where it's believedthat there may actually be ice water, ice that potentially could be used tomake oxygen to to make fuel that could be used for either flying back to Earthor flying on to Mars or just to sustain human presence there.China wants to build a space station in that a moon base, I'm sorry, a researchstation in that area. It's also an area that the Americans areinterested in that India is interested in, that a lot of countries all arefocusing on that area.

So there is a bit of a race on to seewho can get there. First.The Americans want to be sending astronauts back to the moon for thefirst time since the end of the Apollo program in the early 1970s.The Americans are hoping to do that by 2026, but most likely that'll that's adate that could very well slide. So it will be interesting to see as theyears progress which country is going to be able to get there first.I mean, that first, I should say the Americans obviously were there first.Who could get there again? Yes.All right.

First in our lifetimes.You know, I think most of our life that'sthe first line or of of a reward are the latest there when it comes to this veryinteresting moon landing from China here today.Another check of the markets. Yeah, it looks like we're going to themoon some ways when it comes to this HS tech age here today.There you go. We're up some 3% and really bouncingback after we enter the technical correction on Friday.You've been taking a look at the technicals and it really it looks likethat two day moving average is looking.

More like a support for them now.Yeah, because we crashed below that following what was really a horrendousweek last week that we've put as into a correction.Yeah. 10% down and then right now we're seeingthat bounce back not just under 50 days. So we're probably at these levels backabove the tune of a moving average. We'll see if we close above that atthese levels. 3800 right now is the Hang Seng indexmight have to do with the fact that, well, a couple of things might have beenoversold. This in some cases might be this 1010story, of course, and the company.

Denying that it was, of course, beingasked to shrink its market share or lower, of course, some of its pricingaround that. And also just the fact that inflationand of course, the core PC number and Friday is doing its best to helpreassess, particularly when you look at some of these growth related names.Hang Seng index up 2.4%. Coming up the next hour, we're speakingwith Del Toro Capital Partners at risk analysis from Japan on geopolitics.Also talking to the Macao government tourism office director next. Welcome back to the China show.Here's a look at the age of Sirius, a.

Half hour into the session.And there you go. It is driving this rally across the AsiaPacific here this morning. We're up two and a half percent.It comes off after two weeks of losses really for this equity benchmark andreally talking about consolidation. But today, at least we're seeing alittle bit more of the bulls out here today.Yeah, it's are we or have we? I think this is perhaps a better way tophrase that. Have we entered this trend where we areseeing, of course, nothing goes up in a straight line, but are we seeing a trendwhere things are you're looking at.

Higher and higher lows and buyers comingin at sort of these levels initially? Yes, they are.The answer to that is yes. We'll see, of course, how long thislast. On the stick index, for example, thisone actually entered a correction, which is 10% down from the peak.So going into this morning, we were looking at one specific level, which wasyour 50 day moving average. We bounced off that going into the closeon Friday. We're now back above your 200 day, whichwe'll see whether that actually holds in, whether Friday was simply anaberration in a sort of broader trend of.

Strength moving higher.The specific index were up 120 points. Now in terms of news flow as well, notjust a technical bounce, you are getting a lot more push and points contributionfrom, of course, the biggest one here, which is which is which is Tencent.That stock last we checked was up four or 5%.There's a lot also positive news for as far as that stock is concerned today.So we'll continue to track this, of course, and how we end the day.It's early days, 31st, 30 minutes, a trade here, Asia ex China is how we'redoing. So we're doing very well across some ofthe tech heavy benchmarks like Korea,.

For example, up 1.8%.The Thai is up 1.6%. Of course, all these conversations onComputex. So you had Jensen Huang, of course, overthe weekend. Lisa, do I believe should be speaking ifnot already conversations there as well? Right.A two year yield actually just bounced back a little bit higher in the last, Iwould say 3 minutes or so. Although the direction of travel fromFriday has really been a rally in treasury markets dollar yen.So we now know they intervened quite a big amount.Of course, I think it was about 9.

Billion or so US dollars.Do we get a repeat of that now that we might get an indication, of course, ofwhen the Fed cuts maybe one just once as the late great James Ingram once hoped?Euro dollar We're looking at this because there's a key central bankdecision mind this week of course out of the ECB to probably cut rates given allthe signaling that they've done in recent.Yeah I mean June was was what people are forecasting so it might be happeningthis week that really kind of leads our eco week ahead on what to expect and notjust on the ECB. You mentioned about what we've beenseeing in the US and the data there.

We also get some jolts, jobs, openingnumbers, so more clues on what the labor market is doing as well.Some CPI numbers coming through in the region like South Korea, thePhilippines, some Aussie GDP numbers as well.And of course, to wrap up the week, the non-farm payrolls.So a lot when it comes to the jobs market.Also trade data out of China. Interestingly enough, exports are likelyto rise about some 5%. But we certainly saw those official PMInumbers that may be export. This export driven recovery is seeing abit of a, I guess, vulnerable sort of.

Position here.I'll give it some of these geopolitics. Yeah, the new export orders, which arenot arguably which are the more forward looking indicator than a number we'llget on on Friday, although I think it's really the composition of where thoseexperts are trading as well. Let's get a sense of what the week lookslike. Certainly, it's it's a day where ifyou're long, these markets are risk assets.Good on you so far. Mary Nicholas with us in Singapore, ourstrategist. Mary, good morning and happy Mondaymorning to you.

The risks, the bulls are out.Good morning. What's behind you?Think what's behind this bounce that we're seeing todaythere? There is an elements of it from PC onFriday where you did see a cooling in numbers.So getting markets excited about, you know, maybe that that inflation isstarting to cool down. Maybe that signals that cuts come soonerrather than later. But it's way too early to start to getahead of ourselves on it. It's only one month of data.The Fed is going to need a lot more to.

Be really convinced so that elements ofpatience is going to really have to come through.I think what's key for this week is for a lot of the data to show that pricesare cooling a lot faster than activity. We don't want to see that activityslowing and prices are resilient because that could really hurt the the both thestock market rally and the bond rally. Yeah, and we've been tracking, ofcourse, this election in India was certainly some of these ETFs alreadyflying here on optimism of another third term, potential third term from thePrime Minister. Mary, does is sort of put the wholeIndia sort of theme still alive for now.

For sure, because here we had for quitesome time is that we saw a lot of outflows and there were a lot of marketjitters surrounding the elections and what would be the outcome.So now you have a little bit more clarity, you have a little bit morecertainty on the politics front. And of course, if you get a big majorityfor Modi, then he can push through a lot of the reforms that we were that thatwill continue and to help economic expansion.And that's absolutely crucial for India, especially because we're seeing, youknow, really strong growth. And of course, that is showing that sucha big divergence from China.

And so if you continue to see thatdivergence between China and India, India is likely to win out.Yeah. And Mary, just on the theme of, youknow, geopolitical risk premium out there at EMS, to your point, was a verybig theme. India, Mexico, South Africa, all keyelections. And we're literally getting moreinformation and clarity on these things. Doesn't look like we're getting anythingout of a surprise or at least a range of probabilities that markets had expected.How do you think investors should be looking at geopolitical risk premium onthe back of better EM?.

But it doesn't seem we're any better offas far as the U.S. China conversation goes following theShangri-La Dialogue where you are. Yeah, you know, I think it's one of thekey things is that we have seen em trudging along and carrying along,irrespective of seeing some of the lackluster data out of China.And that's large in part to do with what we've seen from the US and that the UShas been quite strong and quite resilient.Even in equities, they've held up quite substantially while China was was wasunderperforming and that had a large part to do with the fact that they weremore reliant and dependent on what was.

Happening in the US than in China.So that will obviously be a continued theme unless we see a really substantialturnaround in the economic recovery in China.But until then, I think the there's still that the geopolitical premiumthat's still going to come through, especially if, let's say in SouthAfrica, you get a very weak coalition and then of course, there are concernsabout, you know, if the the inability to foster reforms that especially is verymuch needed in a place like South Africa.And of course, if you get any surprise out of India, you get the same results.But so far it looks like especially for.

India, it's moving in the direction thatinvestors are looking for and what they would like.Mary, fantastic stuff. Thank you for the insights this Monday.Mary Nikola, their strategist. India's probably gonna open at a recordtoday, too. More on this Mexico story coming throughas well to the country might just get or is set to have its first female leaderlandslide victory is coming to Brazil based on these numbers Claudia Sheinbaumis just expected to come through by a very large margin that that is accordingto these exit polls, just literally coming to our screens right now.All right.

Well, coming up, do a deep dive intoUS-China tensions after the Shangri-La Defense Summit lays bare some deepdivisions on security strategy. We've got an analysis with Belt and RoadCapital Partners and risk analysis firm Geo Quant next. Safeguarding security and prosperity ofthis region remains the core organizing principle ofU.S. national security policy.United States can be secure only if Asia.And that's why the United States has long maintained our presence in thisregion.

And that's why we continue to makeinvestments necessary to meet our commitments to our allies and partnersthat we will not allow anyone to bring geopolitical conflicts or any war,whether hot or cold, to our region. We will not allow any country or anyforce to create conflict and chaos in our region.And you just heard from the defense chiefs there, from the U.S.and China speaking at the Shangri-La Dialogue in Singapore, of course, overthe weekend. Let's dissect what we know.Based on the conversations that took place, are we in a better position rightnow moving forward?.

Joining us now is Digby Wren,geopolitical risk analyst and policy advisor at advisory firm Belt and RoadCapital Partners. He joins us out of Beijing.And of course, also joining us today is Ross Sharp, head of research at GeoQuant, which provides high frequency predictions on geopolitical and countryrisks using AI driven models. Jens, thank you so much for joining us.Lots to unpack. Digby, let me let me start with you.Busy weekend as we try and unpack and the key takeaways there.What stood out to you the most there? Well, I think the first take away, ofcourse, is the completely differing.

Perspectives.China's perspective is also, you know, much closer to two, you know, theimpact, if you like. It's on its periphery.Whereas the American impact, of course, is from a long distance.The perspective is further away. And I think that from Beijing alwaysmakes the American view difficult to take.And I think the Beijing sees it, too. The Americans are creating instability,whereas the Chinese believe they're creating stability.And that's the basic differences. Okay.Maybe to follow up on that then, do you.

Think that the fact that these defenseministers are meeting from both sides, I mean, there's been so much scrutinyabout why we are not getting, you know, these defense talks under way and nowwe're finally seeing a little bit of that conversation, at least.Does that put us more in terms of a more, I guess, stabilizing relationsbetween the U.S. and China?Definitely in relation to the military, to military communications that's beengoing on now for at least a few months. And that's a really good step forward.However, all the, you know, the essential problems exist.But yes, you're right, communications is.

Always going to be dialogue.And that's exactly what the Chinese have always been asking for and what theycontinue to ask for. And I think that's their primary concernis to ensure dialogue and not, you know, actions.So US actions unilateral say it's seen as unilateral and then some kind ofdialogue after the provocation has been made.So this is always essentially still going to rub China the wrong way.Yeah. Ross, let me bring you in.But before we before I get to before we ask it, before you can lay out, ofcourse, some of the the findings of some.

Of your models.And certainly when we were looking at some of your notes here, it's quitesomething that you have. If you could just lay out for us howyour models work and how you use technology to just try and extrapolatewhat really are very difficult outcomes to to map out.Yeah. Well, if you want, we've developed anatural language processing machine learning model that basically tracks thenews and scores it for a range of political or country risk concerns.Right. And so on the basis of that data, webuild models around discrete sorts of.

Negative events.So China-Taiwan conflict is an event that we track Russia, Ukraine, Israel,Iran, etc.. And we're building additional models,scenario analysis models that track and sort of create and generate up to datedata day by day to track those events and how sort of hot they are or soft orquiet. They go.Right. And just to follow up on that as well,because you mentioned large language models and sorry to get a bit techiehere, but how do you sort of how do you drown out the noise,particularly when you get, you know, a.

Very hot geopolitical story, You get alot of bots and commentators coming through.And I'm just wondering how you just sift through that and just get us through towhat? To what matters?Well, you know, our our model reads the news, right?Reads thousands of articles every day and aggregates this over time.So, yeah, there is a lot of noise and even noise after aggregating through thevariety of models that we run through. But that does soften, you know, sort oflike creating a moving average of the news in a sense.Okay, Just we have a chart that shows a.

Little bit more of your analysis of theoverall political risk race that we're seeing around the world is interestingenough as we talk about these rising tensions between the U.S.and China. You're actually seeing geopoliticsrising in the U.S., but actually dropping in parts like China, thePhilippines as well. It's interesting when you talk about theSouth China Sea, too, what do you think is really driving that right now?Um, well, for the US, right. The US does sort of put its fingers inlots of different events around the world and constantly is pushing itsposition, especially on sort of.

Non-economic events, diplomatic securityconcerns. And so that generates more risk for theUS than it does for China. And I think China has in recent months,certainly so far this year and a little bit sort of last year, taken a number ofsteps on trade to sort of soften its trade relationship with Australia andothers. And those sort of go hand in hand with,I think, improving or decrease in risk on diplomatic concerns with a variety ofbilateral partners. Yeah.Digby, I'll bring you in. On that note that Ross, just the broadernote, I should underscore that Ross just.

Outlined that, you know, China is tryingto mitigate its political risk by reaching out to other places in theworld. I know you've done some some work onChina's efforts to bring the Middle East and influence and increase its footprintthere. Tell us about what you're seeing there.Digby. Well, what I'm seeing in the in theMiddle East and West Asia and the Eastern Mediterranean is problems.You know, the last thing in the Belt and Road needs to complete the Afro-Asianconnection is the roads through Iraq and Syria, to Israel, to the Red Sea, themouth of the Red Sea.

And this is where you see the conflict.And so but the BRICS plus, I think, is now stabilizing that whole Red Sea area.And I was just in I just did a keynote speech in Beijing a couple of days agowhere I had ambassadors from all of those regions, Somalia and Eritrea,Saudi, so, so forth. And look, they're seeing a stabilizingfactor in the BRICS plus. And I think China is having a largeeffect there. Russia is also active in the area.The Turks are active in the area. And I think they all want to stabilizethat. They don't want to see these problems inthe Ukraine, in Gaza and Taiwan.

They don't want to see that going, youknow, crazy into Africa and across the Red Sea.And that's basically a stabilizing factor.And I think Iran, Iran and Saudi Arabia and Egypt and Ethiopia, who had conflictbefore and they're now settling those water problems.So that's actually a positive outlook on the Red Sea in general.But of course, the Gaza Israel situation is still going to be very difficult.And what does it mean for, you know, the South China Sea also when it comes tothe Taiwan Strait? I want to throw some sound first.We heard from the defense minister in.

China.Don't just talk a little bit more about the situation in Taiwan.Let's listen to that first. Look, it's the Chinese People'sLiberation Army will remain a strong force for upholding nationalreunification. We will take resolute actions to curbTaiwan independence and make sure such a plot never succeeds.He for anyone who dares to separate Taiwanfrom China, where only end up in self-destruction.It's similar rhetoric we've heard before, Digby, but certainly, you know,it does raise the question after less.

Than two weeks.So we saw these large scale military exercises around the Taiwan Strait fromChina. Are we closer to some sort of conflictin the Taiwan Strait or should be looking elsewhere like the South ChinaSea more? No, I don't think we're looking atconflict. I think that's just just using the wordconflict is kind of changing the context too far towards the red lines.No, I mean, these are just really consistent positions in real terms.And they're being they're being stated slightly more vociferously, like morewith more strength.

But the essential situation is exactlythe same. Now, in terms of the naval movementsaround and the air movements of China around Taiwan.I mean, they just demonstrating capability.That's the key part here. But the actual position is not the same.And as we said at the beginning of the top end of the show, the dialoguebetween the military, both militaries and especially in a context of theAmerican US election. Sothere's some manipulation of public opinion going on here.Conflict is not the right way to look at.

This.It's definitely a continuation and a heightening of this because it feedspublic opinion, especially in election cycles.But the reality is that China's capabilities are growing and America'scapabilities are not growing. Roz, let's put some numbers behind that.I know you guys have done some work, quantitative work on this as well.And we're going to flash on our screens for our viewers and for you guys towhat? Well, at least what the base case lookslike. But you know, what's worrying your eyesis that widening out of the outcomes.

Either side of the I guess, the statusquo, if that's a good way to put that, that doesn't make me sleep well at nightdraws. Yeah, well.Well, the trend line, they're right. Is the average trend really over thelast dozen years or so. And right now we're basically at trend.So risk is relatively low and it's actually forecast to fall a littlefurther. You see the confidence interval in thatforecast rate. And obviously these are very difficultconfidence intervals to sort of generate.And so they grow very large, very.

Quickly beyond a sort of 3 to 6 monthforecast. And that's why you see that heightthere. But you didn't see you don't see anysort of risk even in that confidence interval that looks like it would riseto the level at which we would see actual conflict.Right. It's maybe at the end of the confidenceinterval where maybe for standard deviations off of trend and I'm sorry totalk math, but that's well below where we would think a conflict might get hitin our data. Yeah, well, for standard deviations,that's black swan territory, isn't it?.

But let's make it simple then.You mentioned 3 to 6 months. How much visibility do you have on 3 to6 months? Do things get better?Is that a simple question? Well, I think that, you know, thingsactually it's sort of weird because everyone's, you know, looking at thisthing, they're looking at and seeing heightened risk.But since the election in Taiwan earlier this year, we've actually seen areduction in risk in our model. And we think that's really in some partbecause the new Taiwanese president is actually going to be constrained, willnot have the legislative majority that.

The prior president had.And that will has obviously created a lot of hoopla and some noise in Taipeiafter, you know, along with the inauguration as the opposition partiestry to sort of generate a variety of new rules that will help them monitor andsort of sanction the president or the executive offices.At the same time, that's probably good, right?It's a constraint on President ly, and that constraint is probably going togenerate greater stability, greater policy stability in particular.And that's probably good for overall sort of stability in the region andacross the street.

Digby, just to bring you back in.But let's shift the topic to to Ukraine. And, you know, President Zelensky was inSingapore. He made that appearance there.He I think he tried to gathering support from the region for that before theconference they have in Switzerland, I believe, middle of June that might beable to lay out for us a path towards a an end to this war.Doesn't seem China is going to be attending that as well.How big of a challenge does that become then in achieving an end that these areat least a map towards an end to the war in Ukraine?Me.

Yeah.Look, China's policy in relation to the peace talks, the Swiss peace talks.Look, China has open channels to Switzerland, evidently.And look, they are not going to attend because it doesn't include Russia andUkraine. That's very, very simple.Those parties have to be there and they have to be included until that happens.And they you know, there's not going to be any peace talks.But China definitely wants it to happen. And they've released a six pointstatement with the Brazilians. But, you know, this is basically andthat statement was about non escalation.

So on the battlefield, you know, supplyof weapons, etc.. And I think that position seems, youknow, and my friend at quant analysis, I think you'll agree with this is, youknow, until that happens, risk is going to remain higher.But look, I think China is trying to mediate and they've definitely got amuch stronger position for mediation than the US or the EU and eight othercountries who have a stake in the war, in fact.So, you know, China's position, I think is a more balanced one.And and B, I think, you know, the global South generally global majority is alsogoing to follow that.

And that's an important part that thatthey understand now in a real sense that the US, the US has kind of a real youknow, they're sitting on the fence, so they're trying face one way, then facethe other way. But at the end of the day, China's stakeis much, much lower and they're going to be able to be more helpful in mediationeventually. Thank you so much for joining us.Also our thanks to Ross Digby, political risk analyst and policy advisor at Beltand Road Capital Partners, and Rush Sharp, head of research at GEO Quant.We got plenty more ahead. This is Bloomberg.

All right.We're talking about market right now, markets and chip stocks in particular.Overall, the tech space is doing quite well, but yes, looking toward semi closeto 850 bucks here right now. And certainly there's a lot of optimismwhat's been going on. Computex in Taipei, AMD's Lisa Su justfinished her speech as well. So certainly that's what's lifting thesesemiconductor stocks here today. We've got plenty more ahead.This is Bloomberg. 11:29 a.m.in Tokyo Japanese market to hands out lunch break here in just a minute and weare seeing a pretty good day when it.

Comes to Japanese stocks up close to 1%for the Nikkei, 2 to ¥5. We're still seeing some strength, butwe're back to those 157 levels as well. Keep in mind, we also got confirmationthat, in fact, we did hear that Japan intervened the currency last month about¥9 trillion or so, which was a quite a sizable amount here.Yields are not doing a whole lot. We're still hovering around that 1%level here, Dave. Yeah, So a lot of things due to theyield to the point and just yields right now.Right. There's still in the element of Asiareadjusting back to maybe a low.

Inflation outlook that currentenvironment outlook with the PC numbers coming through so lower yields we'relooking at this really, really strong rally we just showed you TSMC andSamsung a couple of minutes ago, about 3% on that.We might also get a India opening at a record high today on the back of morefavorable news there. So, you know, a lot of the confluence offactors as you look at Asia extra pan right now coming together and reallypushing this market even forward. So first row, leftmost side, MSCIAsia-Pacific Infotech index, 2.3% to the upside.Every single sector just about is higher.

As well.Financials, industrials, even utilities, which tend to act as a defensive play,are also catching a decent bit. Asia, as the Asian currencies are seeinga bit as well. Big week as far as economic data isconcerned, economic events and certainly the ECB should be the top of the agendathis week here. That Thursday comes out, of course, thefirst rate cut and might that, of course, be leading usinto this rate cutting cycle. Speaking of tech in Taiwan at Computex,in case you don't know who that is, of course, that is Lisa Su, the AMD's CEO.She is set to speak.

I think they're just setting her upright now and some ryzen. Are we listening in?I guess we are sure. And we are excited.Okay. Well, obviously we're hearing a lot ofoptimism that everyone wants to watch after what we heard from Jensen Huangunveiling this sort of new set of chips and the like or the Rubin, as they callit, this next generation, that what is aimed to present in this in thispresentation as well. They are still the one that, you know,is the one to watch that potentially could catch up to this whole Nvidia sortof trade, right?.

Yeah, the moats around the moat, aroundNvidia and how far they are caught is the fact that are they related?Yeah, they're cousins. They're cousins.Right. Oh my goodness.And I was just with my cousin over the weekendand the talk about the difference in the levels we operate on.Oh, in any case, thank you so much. There we go.Okay. Well, we'll we'll get to this.We'll revisit this in a moment here out of Taiwan.Any more news lines coming through as.

Well?Let's pivot back to this part that least closer to Hong Kong, Macau casinos,Right. So you had a big jump in revenue, nearly30% in May. That's that's year on year.So we're now, in fact, at the highest level here since COVID gross gamingrevenue. So that's the intake of these casinos,two and a half billion. That's US dollars for the month.You had a lot of these multi multiple entry permits in China, boosting, ofcourse, the flow of tourist and of course tourism.Of course.

I think we have a sort of take a stepback piece on this are Chinese tourists are to spend nearly a trillion onholidays at home as well.Yeah so let's I guess let's talk about Macau.Yeah I mean certainly you're seeing these casino operators are rallying onthe back of this data as well. For more on what's been going on inMacao's tourism push, joining us exclusively now is Maria Elena de setoff Fernandez director at the Macao government tourism office.Helena, thank you so much for joining us.It's a pleasure to have you on the.

Program.Yeah, the numbers are looking good, but you take a look at how visitation hasbeen in Macao that has actually slowed this year.We're talking about falling to about 76% of COVID 2019 levels.What do you think are the reasons behind that and what do you think casino offersyou to do more to boost tourism? Well, I guess, you know, in terms ofnumbers, I mean, well, we're seeing that probably in May.You know, figures have a little bit slowed down a bit.But in fact, you know, we're still on target to hit probably 33 million by theend of this year.

Last year was 28 million years.So obviously it's not yet up to 2019 levels, but at least, you know, thingsare going in the right direction. And in terms of expenditure, we'reseeing that. Besides, obviously, you've talked about,you know, gaming or gaming receipts, you know, hitting very, very good resultsknow. But at the same time, non-gamingspending is also going up. So we're seeing you know, I would saythat, you know, besides gaming, which people talk a lot about in terms ofMacao, we're also going in the right direction in terms of non-gamingactivities as well as expenses, you.

Know, So we are.On track in terms of our diversification strategy and hopefully, you know, goingforward. So we will not just talk about the interms of gaming, but also non-gaming. Yeah.Helena, we're to your point. I think you bring up a very importantand salient trend that we are starting to see, not just in Macau, we're seeingthat in Hong Kong. We've seen in many places where touristsanecdotally, but many examples of this, are starting to spend more onexperiences than big, big ticket items. And I'm wondering, is that somethingyou're seeing more pronounced Li in.

Macau?What are people spending on if that is the case as well?Do you see that continuing? Well, interestingly, you know, in thesurveys coming up, you know, during the last, you know, last year and now we'reseeing that a lot of the money goes in terms of shopping.I guess about half of the non-gaming expenses actually go into shopping.And then the second would be in terms of accommodation and that third food andbeverage, you know, so these are really the the items that people are spendingon. Obviously, there are a lot more thingsto do now in Macao.

You know, after the new gaming licenseswere issued, you know, they were you know, all the six operators are chargedwith the operating out of the responsibility to actually investheavily in terms of non-gaming activities.You're seeing a lot more of performances, a lot more on culturalactivities and a lot of sports activities actually happening in Macao.And obviously we are investing very, very heavily in terms of attractinginternational visitors. We are seeing gradually more flightscoming in. I've just been in Korea last week, youknow, and obviously in July we will see.

An additional carrier, Korean Air,flying to Macao. We are in Macau itself.It's also adding international flights as well.So I guess, you know, there's a lot there are a lot more opportunities goingforward. But we have to work hard, obviously, toto get the visitors. It's not like before, you know, you canjust put up an advertisement and then, you know, people start thinking aboutyour destination. They will come.Right now, people are actually looking more on in terms of content.We have to tell more about the.

Destination.We have to give them reasons to come to your destination.And so there's a lot more work to do now.You mentioned more work to do. I'm just wondering a lot of the sort ofnon-gaming offerings have been done by the six casino operators.What exactly is the government doing? Because a lot of it has has these bigprojects are done by gaming licenses, not so much the government.So beyond just airport capacity, what what more are you working on now?Well, I think, you know, the government is also investing in a lot of differentactivities.

It's not that, you know, the six licenseholders are, you know, doing more activities.It's really because of the government actually, you know, obliging them to doa lot more activities as well as, you know, that, you know, under the newgaming licenses, which were you know, which started last year, you know, theall the gaming all the six gaming operators are required to actuallyinvest and they have a commitment to the government in order to invest innon-gaming activities, in order to get their gaming licenses.So a lot of all these activities also have to be approved by the governmentevery year.

You know, So I guess, you know, there isa lot of say in terms of the government as well.The government also launch a diversification diversification strategyas of November last year, which requires that, you know, the going forwards wehave we are engaging in what we call the one plus four strategy one, which meansintegrated, you know, tourism, obviously gaming plus tourism activities.And then, you know, they are we have, you know, four additional areas whichthe government would like to see developments going into.Obviously, we're talking about more than finance.We're talking about.

Technology, we're talking aboutwellness. We're also talking about a very bigarea, which is actually meetings and conventions plus sports and culture.You know, so there there is a lot of direction that the government is givingout, you know, to steer the destination towards a more diversified, diversifiedportfolio going forwards. Obviously, we are also doing our ownactivities. We are utilizing our strengths.One as say, you know, obviously we our historic center of Macao is UNESCO'sWorld heritage. On the other side, we are also investingheavily in terms of food activities.

Because we are also a UNESCO creativecity of Gastronomy. So going forward, we would definitelyuse more of these strengths of Macao. And with the recent visit of a the highlevel government official from from China, we are also, you know, we have wehave also a new responsibility to actually bring Macao forward as ainternational metropolis, you know, which we call the the new golden callingcard of Macao. Yeah.Helena, You know, I was joking with some of my friends.You know, I would give up some members of my family for one of your fantasticand delicious pork chop buns.

That's.That's banter. Banter aside.Banter aside. I want to understand the the where thetourists are coming from. So we know mainland China is a very bigfeeding market. We know Guangdong.Yes. The province itself is, I think, about athird of your visitor numbers. Where else are you seeing the sources offlow starting to pick up and also where things starting to soften because youare also having to deal with regional competition.Philippines, for example.

I think Thailand and Japan are coming upwith their own integrated resorts at some point.Mm hmm. Well, I guess it's not just competing onthe on the gaming markets, but it's also competing on leisure as well as meetingsand conventions altogether. You know, So it is it is a verycompetitive, competitive environment out there.I think at this point in time, we're seeing that the international visitationis coming up gradually. We our target for this year would be 2million visitors from international markets, which means, you know, takingout mainland China, Hong Kong and.

Taiwan.And so we are on track right now. I think we should hit more than 2million this year. And we we are hopeful that by next year,end of next year, we should be back to the 3 million mark, which means, youknow, probably, you know, up to the 2019 levels, we are seeing a softening of thethe big groups markets which last year, I should say, you know, 2019 before thepandemic, we have more or less like 8 million people who declared that theycome in excursion groups, I mean, big tour groups.But now last year, the number is only about 1.2 million, which means, youknow, the the market is changing into.

Smaller groups, demanding more, I wouldsay personalised services as well as you know, more, you know, I would sayimmersive experiences or family experiences.So the market has also, you know, the trade also has to re-engage themselvesor, you know, or really do a little bit more in terms of these kinds of newmarkets. And we are seeing that, you know,gradually people are realizing that and then obviously the product itself isalso more now nowadays geared towards the smaller family and also family andfriends, you know, kind of experiences. And we've also seen China easing some ofthese travel permits to Macao.

I mean, one example is as Hong Kong,right? You know, anyone that attends a tourconference or exhibition in Hong Kong Island, they're allowed to enter Macaomultiple times. Can you tell us more about theopportunities when it comes to this island?And what of some of the casino operators and what sort of feedback are theygiving you so far? Well, I guess function is a function asof 2021 is a new development area, which is, I would say administered togetherbetween Macao and also Guangdong. So it is a completely new arrangementbetween ourselves and all our friends.

Across the border.And it's a very, very special area, which is the entire strategy is reallyto support the diversification strategy of Macao as well.So we are working very closely with Hong Hengqin and with the new policy whichhas come into place just recently. Obviously, tour groups are able to, ofcourse, when we're talking about tour groups of there as little as twopersons, they can actually come multiple times,you know, between Macao and Hungary within seven days of their you know, oftheir stay. And so this also opens up opportunitiesin terms of activities that we can do.

Together with Hong Chen or we can alsotap into the hotel market in the country.And as well, we have around 48,000 rooms licensed in Macao right now, which isalso better than 2019. That 2019 we had only about 41,000rooms. So we do have new room inventory that.But at the same time, we see that there is a possibility that to also utilisethe rooms around. I think they have around 10,000 roomsacross the border in Jin and we can also utilise their other activities toresample the time long resort because the problem with Macao right now is thatwe don't have enough land.

We cannot host a very big theme park sowe can also utilise the theme parks and also other theme activities across theborder in Hong Kong to better extent, because previously you can only comeonce into Macao. So it's very difficult to actually fiteverything into your once, you know, your one state.So with multiple possibilities now we can actually plan our itinerariesbetter. We can also utilize for mice groups.You know, you can actually, you know, plan how you can spread your.We are a group of people between Macao and Hungary and also utilised better theresources on both sides.

So I guess it actually would work to thebenefit of both sides. This year we're also seeing thatmainland China has also opened ten new cities for individual flow into Macaoand Hong Kong. So now we are actually, you know, tryingto utilize more of these possibilities. Not all of them have direct flights intoMacao, but I guess, you know, even working together with the Greater BayArea, especially Hong Kong, especially Guangdong, Guangdong Airport, as well asZhuhai airport, I guess there are a lot of possibilities to strike Multi-discNation tours. Great.We're going to leave it there.

Thank you so much, Maria Elena Fernando,director at the Macao government tourism office.We got a lot more ahead. This is Bloomberg. China has a a whole economic model thatis not sustainable, vastly inadequate. Domestic spending.Vastly inadequate. Consumer demand has run out ofsufficient investment opportunities to keep the economy rolling.It still seems inclined to try to export its way out, which is not going tohappen. The world is not going to accept it.There you go.

In case you didn't know, that was PaulKrugman, City University of New York, professor of economics, of course,joining us a little bit earlier here on our shows.Also joined us earlier on was Tsinghua University director and former Puseyadviser David Lee. Dow Cui talking about how consumers inChina are reluctant to spend. And that could actually be underscoringsome challenges for Beijing. He spoke with us about these issues he'sseeing, of course, in this part of the Chinese economy.The situation in China is that this tremendous amount of liquidity,tremendous amount of liquidity, people.

Are very cautious.They hold their hold on to their cash, they hold on to their bank deposits.They do not want to spend as much as they usually do.And the investors are also doing the same.So the huge amount of liquidity is are trapped in the banking sector.What the central government should do is to issue lots of central governmentdebt. By the way, the central government onlyhas about 20% of GDP in the amount of the central government debt.Much, much more more than double doubling the size and can work for thefor the whole economy.

But local governments are holding on toa lot of debt, which amounts to 100% of GDP, by my calculation.So what is going on is like this. Households are willing to buy centralgovernment debt and the households are not willing to buy directly localgovernment debt. There should be a swap.The BBC finds itself really as the key player in what it can do to try andboost sentiment. It's got a lot of powerful tools in itskit. Can any of them really serve to revivebroader household confidence for the property sector, whether through thingsChinese authorities can do, which they.

Are doing?But I would I would argue they are going too slow.Number one is to provide more liquidity to the largest developers of theproperty market to actually make sure that they are not not the default fortheir defaulting on any debt. The other thing is to issue much, muchmore central government debt. To swap out local government debt.The local governments are heavily burdened in their debt.And don't forget, local governments are one of the biggest market, biggestinvestors, biggest buyers of pools in the economy.The government has issued recently a 1.

Trillion RB in the amount of extra longcentral government debt. What they should do do more than double.They should have 10 trillion or even 24 trillion that amount of extra long bond.Actually, the market response, the 1 trillion extra long maturity bond of thecentral government has been extremely, extremely enthusiastic.So I do believe that in the coming months there will be a lot of more of amore and more policies to come out. People are holding their breath to waitfor the policy announcements in July when the third plenary of the of theCentral Committee of the CCP will be held.For the property sector, it's.

Interesting.Would you say that it's more important, more critical for you to be shoring upconfidence for the developers as opposed to chipping away at excess inventory,which we've seen The PBOC unleashes ¥300 billion when it comes to credit forbanks to be able to fund some of these local government property purchases.Well, I would argue that the 300 billion are and be going to local governmentsfor them to buy the inventory is good, but not enough.Okay. I would argue that the actor the moreimportant the thing is to float the developers, because when the developersactually the headquarters of developers.

Are not in good shape, the they may needmay further default on their debt, whether domestic or international.When that line when they imports their debt, there will be tremendous shocks inthe financial markets. And that was the foreign policy adviser,David Lee, down there speaking speaking to the Asia trade a little bit earlier.We got plenty more ahead. Get you another market check after thisbreak. This is Bloomberg. All right.Take in some movers here. We're talking a lot of developers here.There's more.

Looks like they're doing decently well.The fact that long for us up on 3%. So we did get some data over the weekendwhere home sales basically the slump that we've been seeing for for some timenow looks to be easing. So maybe their signs that thisgovernment support is finally making it through to these numbers as well.And certainly we are also talking about, you know, there's a lot of big, biglines in some of these property brokerages or people really looking forhomes now. Yes, first tier cities.We're getting some pictures out of Securities Times really talking abouthow I think anecdotally outside many of.

Thesefamilies, which is like the real estate property agents here, you're getting alot of people, of course, bustling and that interest is picking up.I like this line out of city on the back of this story that may sales actuallysaw a slight pick up in the recent two weeks despite having fewer launches.So we are getting incrementally better information coming through.And the property story here. Okay.Well, that certainly is helping. Here's what markets are doing here rightnow. So we continue to track this tech rallythat's going on across Asia.

$0.10 on the is leading that charge.Well, we'll see about 4% gains there. They denied this report about beingasked to lower their WeChat payment market share.That certainly did help the stock here. But take a look at some of these EVstocks like NIO, the auto coming up with the delivery numbers, which looks prettygood as well. BYD up some 6%.We're watching India futures on the back of that election.Official counting could be ending on Tuesday, but certainly it looks like athird term for Modi.

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