May 11, 2025 • 16 mins
The US and China both reported "substantial progress" after two days of talks in Switzerland aimed at de-escalating a trade war, marking what Chinese Vice Premier He Lifeng called "an important first step" toward resolving differences. While neither side immediately announced specific measures on Sunday, He said the world's two biggest economies agreed to create a mechanism for further talks, led by US Treasury Secretary Scott Bessent and himself. Bessent said the US would share details on Monday and He promised a joint statement. We get analysis from Alicia Garcia Herrero, Chief APAC Economist at Natixis. She speaks with Bloomberg's Shery Ahn and Haidi Stroud-Watts.
Plus - Japanese stock futures rose on optimism the US-China trade tension may begin to de-escalate after those talks. The Nikkei 225 has climbed 5% through Friday since US President Donald Trump announced so-called reciprocal tariffs on April 2nd, among the best performing major markets. Japan last month was one of the first countries to formally engage in talks with the US, though an agreement is yet to be made. For more on Japan's outlook, we hear from Jean Eric Salata, Chairperson at EQT Asia.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak g Asia podcast. I'm Dan
Schwartzman Doug Prisoners off this morning, the US and China
both reported substantial progress after two days of talks in
Switzerland aimed at de escalating their trade war. Chinese Vice
Premier haw Lee fun called the meeting quote an important
first step towards resolving differences. US Trade Representative Jameison Greer
had this to say about the meeting.
Speaker 3 (00:32):
It's important to understand how quickly we were able to
come to agreement, which reflects that perhaps the differences were
not so large as maybe thought. That being said, there
was a lot of groundwork that went into these two days.
Speaker 2 (00:45):
That's US Trade Representative Jamison Greer. From more on how
markets are digesting the latest headlines. We heard from Alicia
Garcia Herrero, chief apack economist that not exists. She spoke
at Bloomberg's Sherry on In, Heidie Stroud, Watts and Lycia.
Speaker 4 (00:58):
Great to have you with us at a course we
have been talking about US China competition that trade for
so long. Now scanned on the details at this point,
but do you think the world investors have reason to
be optimistic here.
Speaker 5 (01:12):
Yeah, because the situation was so bad. So anything they
announced will be good news. And I think they've already
taken actions that explain why the market has actually read
those good news already past last week, starting with the
lifting of export controls. There's very good news for a
number of key players, Nvidia and so on, moving the
(01:35):
market in the US. So we know that the negotiations
have happened even before the meeting started. Boy, you know
big orders from China, so you can tell that that
in a way, we knew that there were going to
be good news. Now, how specific they might be, I
think not really for two reasons. First, they need to
keep the action moving. I think they don't want like
(01:59):
a big now, but they rather want to keep the
market happy with good news coming on, and that is
why they announced that they would be meeting regularly. So
this is just, you know, a way to keep the
market on both sides, which they need because we will
have bad news on inflation. We will have bad news
on China's inflation too, not only the US this week,
(02:22):
so you know, they need to keep the positive discussion.
It's kind of the opposite of what we had before.
Speaker 4 (02:28):
How much a sentiment already taken a dent, right, We've
seen a lot of frontloading from companies and factories already.
There's a lot of uncertainty when it comes to households
over the next six months for the US economy and consumption.
Do you think sort of an unwinding or a de
escalation is going to be able to reverse all of that.
Speaker 5 (02:48):
No, that's a great question because what's happening is normally
about China and the US. In fact, some people may wonder,
and this is particularly true in Europe. Okay, now that
China has jumped the Q what is it in for US? Yeah,
so you know, sentiment about Europe made worsen. But even
if you ask about the US, there's many other things
(03:09):
happening that are unrelated to two times on China that
remain of great concern to US investors. So in that regard,
I think it's not over in terms of market volatility whatsoever.
But it is exactly for that reason that they decided
to come up with this let's call it mini deal
(03:30):
or agree to agree, you name it. All of these
are you know, soft for empty words that just want
to guide the market and they will, but the market
will read something else, as you said, and those something
else is really happening. The US economy is accelerating and
the world is in a much better, much worse place
than it was before Trump to what.
Speaker 1 (03:53):
About the Chinese economy, because we have seen that economy
really decelerating for a while, right, but nowadays we're not
even and getting clear data, whether it's on the labor
market or just what consumers are feeling at the moment.
Speaker 5 (04:07):
Okay, so watch for today because we'll have CPI today.
And I still remember, you know, March CPI, we were told, oh,
this is a lot of you know, favorite CPI, even
a lot of basically CNHY you know, impacts, and don't worry,
it will become positive. And you know most analysts have
(04:30):
rather positive CPI for this year. But today we'll probably
get to negative again. Let alone producer prices, let on
export prices. So by today, I think nobody can deny
China is in deflation. And this is a big thing.
This is a big thing because it means that you
just can't get your act together to have decent margins
(04:51):
independently on the tariffs if you want. Because we saw
exports experts are ruined at a percent. So it's not
about exports, it's about the over competition, this evolution of
the Chinese economy that is happening as we speak. We
had a we calculated impact of high tariffs. They don't
have to be one hundred and forty five percent. Even
(05:11):
eighty percent, even probably sixty percent are too higher embargo
level for China, and we estimated that impact to be
literally two point five percent of GDP growth shaped off.
So they China will need to stimulate the economy big
time this year if they want to avoid the massive deceleration,
no matter the talks today.
Speaker 1 (05:34):
Yeah, April's inflation in China are really decelerating again, both
when it comes to consumers and factory as well as lysia.
So what can we expect in terms of what the
US and Chinese policy makers will do next in order
to support their economies as the trade negotiations continue.
Speaker 5 (05:51):
Well, I mean, I think the ultimate goal, the US
ultimate goal of kind of big Caplin or if you want,
you know, the reducing its dependence trade dependence of China
is true. No matter what we see on the news today,
I think what both and by the way, and China
is also substituting any component that is not basically domestic
(06:15):
other than commodities in its supply chain or of countries
that China basically controlled. So the long term direction is clear,
it is bifurcation. But both parties have every interest in
harming themselves the least possible so that this direction is
not too painful. That's what's happening, and that's how the
(06:37):
market should really And is this world going to be
better or worse? Well, I mean we're no longer in
this wonderful globalization mood, so maybe it is better to
bifurcate slowly and steadily and nicely rather than fighting it
over as we were doing right before this conversation started
in Geneva, Alysia.
Speaker 1 (06:56):
Always great to get your insights. Alicia or Cifro, chief
a Pacific economist at not Texas.
Speaker 2 (07:10):
Welcome back to the Daybreak Asia podcast. I'm Dan Schwartzman
in for Doug Prisner. This morning, we turn our focus
to Japan, where stock futures rose on optimism. The US
China trade tension may begin to de escalate after two
days of talks over the weekend. Then e K two
two five has climbed five percent through Friday since US
President Donald Trump announced so called reciprocal tariffs on April
(07:30):
twond among the best performing major markets. For more, we
heard from Jean Eric Salada, chairman and head of private
credit at EQT Asia. He spoke at Bloomberg's sherry On
in Heidi Stroud Watts really good to.
Speaker 1 (07:42):
Have you with us. Are you seeing what people are
talking about this veering away from US assets when you
talk to your clients.
Speaker 6 (07:50):
Yes, good morning, Sherif, thanks for having me here today. Absolutely,
we're seeing a big shift in asset allocation away from
the US, both I say in public markets and private
markets where we specialize. I think it's driven by some
of the policy uncertainty in the US, but also I'd
say there's been a period of time where US assets
outperformed and people were over allocated to US assets, and
(08:10):
I think there's a rebalancing going on. And we see
a lot more asset flows coming back to Asia, coming
back to Europe.
Speaker 1 (08:15):
Despite the volatility that we're seeing in market. So you
sense the optimism about Asian Where are those flows going?
Speaker 2 (08:22):
Well?
Speaker 6 (08:22):
I think for private equity, for what we do, we're
sort of structured to take on volatility as an industry
because our funds are set up as ten year funds,
they're locked up capital, so we don't have the redemption
issues that public managers have. So in many ways, we
have an ability to kind of ride through this volatility
(08:43):
and look at the long term. And these kind of
environments are actually quite interesting for us because you have
more interesting opportunities to buy at better valuations. There's less
competition in many cases for opportunities that we see, So
I think overall, we're investing, we remain commit to our strategy,
and we're seeing opportunities. For example, here in Japan, we
(09:04):
continue to see opportunities in a lot of take privates,
publicly listed companies where there's a real sense of shareholder
reform happening and a new focus on operational efficiency and
new growth strategies. So we're very excited about the opportunities
here in Japan, and we've you know, we're planning to
invest something like five billion dollars over the next couple
of years into the market here.
Speaker 1 (09:25):
What about fundraising.
Speaker 6 (09:27):
Fundraising, I think the fundraising market is becoming more bifurcated.
There's a bit of a consolidation happening globally and private
equity fundraising. But I think there's a group of managers
that are continuing to raise capital and grow the fund sizes,
and then I think there's another group that's finding it
more difficult, and I think you're going to continue to
see this divergence in fundraising. But there's you know, at
(09:49):
the end of the day, what private equity offers investors
is higher returns. Essentially, if you look at it over
long periods of time, the private markets offer significantly higher
returns in the public more markets if you look at
extended periods of time, and I think that's why the
asset class continues to grow. But I think investors are
getting a lot more a lot more careful about manager
(10:11):
selection and focusing a lot more on investment performance and
track record.
Speaker 4 (10:15):
China has been attracted from evaluation perspective for quite some time.
And now that we are sort of hearing murmurings of
progress when it comes to the US and China's relationship,
does that make that market a little bit more compelling?
Speaker 6 (10:28):
Hi, Heid, I think for a China, you know, our
strategy is a regional strategy, so our strategies essentially has
four components to it. We are a buyout investor, so
we only invest in control situations where we can drive
change in companies. Secondly, we have a regionally diversified portfolio
where we invest across the region. If you look at
(10:49):
geographic exposure today, our two biggest areas of focus are
Japan and India. That would be one and two, and
then behind that we would be looking at Australia and
Southeast Asia. China continues to be a market that we
are interested in. It's a large economy, but it's still
i'd say a difficult market to underwrite through the kind
(11:10):
of current market volatility and particularly some of the policy
changes in geopolitics that we see, so it wouldn't be
one of our top priority markets in our strategy today.
Speaker 4 (11:19):
How much of the trend are you seeing of that
sort of dialing back of US enthusiasm and how much
of that is being willingly reallocated to Asia.
Speaker 6 (11:29):
I think there's a significant asset allocation shift happening in
the world. I think people are reassessing risk. In the US.
I think there's been there's been a lot of public
market and private market beta in America. There's been a
tremendous last ten year run of asset prices, and everybody's
made a lot of money doing that, and I think
that may.
Speaker 2 (11:49):
Have run its course.
Speaker 6 (11:51):
Is what people are assessing right now and looking for
sources of alpha. Where can you deliver returns independent of
what's happening in the public markets. And I think what
Asia offers people, and this is why there's an attraction
to the region, is structural alpha. You look at Japan
for example. Here there are just a lot of opportunities
here where we believe companies can be run more efficiently
(12:11):
and there's a lot more room to deliver better returns
and better outcomes that are being delivered today in the
public markets through this active ownership approach that private equity takes.
So I think this search for alpha, the search for
structural alpha, is really benefiting Asia because Asia has undermanaged assets.
We also have higher growth rates in the region, and
we also have what I would call less correlated liquidity
(12:33):
and markets. If you look at say public markets, you know,
one of the biggest IPOs happening right now is happening
in Hong Kong this week, in the next few weeks
with COATL, and you have a similar situation in India
where we have a lot of our investments also seeking
to go public there and finding grid liquidity in the
IPO markets there for our private equity investments. That's a
(12:53):
very different narrative, very different story than what you see
in the US, where the public markets have been a
little bit more challenging. So I think this idea of
diversification is really something that investors are starting to pay
attention to. It's not to say that people are not
going to be investing in the US. It's the biggest
and deepest market. It's going to continue to be a
very important part of investor allocations, but I think the
relative weightings are changing.
Speaker 1 (13:14):
Is that why you're also really invested in Australia's software
sector as well. What do you like in Australia?
Speaker 6 (13:20):
Yeah, I think Australia is a really interesting economy. It's
continued to grow for the last thirty years almost without interruption. Thematically,
we love the software sector in Australia. We've invested in
for software companies there in the last two years. There's
a lot of innovation there and many of the companies
that we find they are actually able to then become
global businesses and grow outside of the local market there
(13:42):
by moving into Europe or even the United States. So
I think that's one of the big themes there. Healthcare
is another big theme in Australia, even pet care. I
would say we bought a business, yes, that is a
great business, and we've just bought the largest veterinary services
practice in Australia last year. So it's a market that
(14:02):
we continue to stay active in. And we have both
a large cap fund and a mid market fund, and
i'd say in the mid market space it's even more
interesting because there's a lot of mid sized companies that
are really very rapidly growing and we see a lot
of innovation there and a lot of potential for growth.
Speaker 1 (14:17):
It seems these days monetary policy sort of has fallen
to the background just because of everything that's happening with
trade negotiations. But when it comes to investing for the
long term and just raising funds, how much do the
divergent monetary policies across Asia matter?
Speaker 6 (14:33):
I think at the end of the day, for what
we do, the changes in monetary policy on a year
to year basis or even currency fluctuations don't matter that much.
And what we're really looking at is earnings, growth and
the ability to drive value creation and the businesses that
we manage and that we invest in. So I think,
you know, we're trying to invest behind multi decade themes
(14:56):
in society, whether it's things like better healthcare, the emerging
middle class, areas like the move to the cloud, and
how there's more. For example, invested here in Japan in
a company called hr Brain, which is doing HR software,
but it's a cloud native company, so trying to gain
share from all of the traditional companies that are doing
(15:16):
client server based HR software solutions, which is still the
predominant form of doing business in Japan, but we think
things are changing, so trying to get behind these multi
decade trends early, finding great companies with great managers or
bringing in new management and then driving growth and driving change.
Speaker 1 (15:31):
Son Eric Soaltter, really good to have you with us,
chairperson at eqt Asia, joining us here in the Tokyo studio.
Speaker 7 (15:40):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast, YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(16:02):
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak g Asia podcast. I'm Dan
Schwartzman Doug Prisoners off this morning, the US and China
both reported substantial progress after two days of talks in
Switzerland aimed at de escalating their trade war. Chinese Vice
Premier haw Lee fun called the meeting quote an important
first step towards resolving differences. US Trade Representative Jameison Greer
had this to say about the meeting.
Speaker 3 (00:32):
It's important to understand how quickly we were able to
come to agreement, which reflects that perhaps the differences were
not so large as maybe thought. That being said, there
was a lot of groundwork that went into these two days.
Speaker 2 (00:45):
That's US Trade Representative Jamison Greer. From more on how
markets are digesting the latest headlines. We heard from Alicia
Garcia Herrero, chief apack economist that not exists. She spoke
at Bloomberg's Sherry on In, Heidie Stroud, Watts and Lycia.
Speaker 4 (00:58):
Great to have you with us at a course we
have been talking about US China competition that trade for
so long. Now scanned on the details at this point,
but do you think the world investors have reason to
be optimistic here.
Speaker 5 (01:12):
Yeah, because the situation was so bad. So anything they
announced will be good news. And I think they've already
taken actions that explain why the market has actually read
those good news already past last week, starting with the
lifting of export controls. There's very good news for a
number of key players, Nvidia and so on, moving the
(01:35):
market in the US. So we know that the negotiations
have happened even before the meeting started. Boy, you know
big orders from China, so you can tell that that
in a way, we knew that there were going to
be good news. Now, how specific they might be, I
think not really for two reasons. First, they need to
keep the action moving. I think they don't want like
(01:59):
a big now, but they rather want to keep the
market happy with good news coming on, and that is
why they announced that they would be meeting regularly. So
this is just, you know, a way to keep the
market on both sides, which they need because we will
have bad news on inflation. We will have bad news
on China's inflation too, not only the US this week,
(02:22):
so you know, they need to keep the positive discussion.
It's kind of the opposite of what we had before.
Speaker 4 (02:28):
How much a sentiment already taken a dent, right, We've
seen a lot of frontloading from companies and factories already.
There's a lot of uncertainty when it comes to households
over the next six months for the US economy and consumption.
Do you think sort of an unwinding or a de
escalation is going to be able to reverse all of that.
Speaker 5 (02:48):
No, that's a great question because what's happening is normally
about China and the US. In fact, some people may wonder,
and this is particularly true in Europe. Okay, now that
China has jumped the Q what is it in for US? Yeah,
so you know, sentiment about Europe made worsen. But even
if you ask about the US, there's many other things
(03:09):
happening that are unrelated to two times on China that
remain of great concern to US investors. So in that regard,
I think it's not over in terms of market volatility whatsoever.
But it is exactly for that reason that they decided
to come up with this let's call it mini deal
(03:30):
or agree to agree, you name it. All of these
are you know, soft for empty words that just want
to guide the market and they will, but the market
will read something else, as you said, and those something
else is really happening. The US economy is accelerating and
the world is in a much better, much worse place
than it was before Trump to what.
Speaker 1 (03:53):
About the Chinese economy, because we have seen that economy
really decelerating for a while, right, but nowadays we're not
even and getting clear data, whether it's on the labor
market or just what consumers are feeling at the moment.
Speaker 5 (04:07):
Okay, so watch for today because we'll have CPI today.
And I still remember, you know, March CPI, we were told, oh,
this is a lot of you know, favorite CPI, even
a lot of basically CNHY you know, impacts, and don't worry,
it will become positive. And you know most analysts have
(04:30):
rather positive CPI for this year. But today we'll probably
get to negative again. Let alone producer prices, let on
export prices. So by today, I think nobody can deny
China is in deflation. And this is a big thing.
This is a big thing because it means that you
just can't get your act together to have decent margins
(04:51):
independently on the tariffs if you want. Because we saw
exports experts are ruined at a percent. So it's not
about exports, it's about the over competition, this evolution of
the Chinese economy that is happening as we speak. We
had a we calculated impact of high tariffs. They don't
have to be one hundred and forty five percent. Even
(05:11):
eighty percent, even probably sixty percent are too higher embargo
level for China, and we estimated that impact to be
literally two point five percent of GDP growth shaped off.
So they China will need to stimulate the economy big
time this year if they want to avoid the massive deceleration,
no matter the talks today.
Speaker 1 (05:34):
Yeah, April's inflation in China are really decelerating again, both
when it comes to consumers and factory as well as lysia.
So what can we expect in terms of what the
US and Chinese policy makers will do next in order
to support their economies as the trade negotiations continue.
Speaker 5 (05:51):
Well, I mean, I think the ultimate goal, the US
ultimate goal of kind of big Caplin or if you want,
you know, the reducing its dependence trade dependence of China
is true. No matter what we see on the news today,
I think what both and by the way, and China
is also substituting any component that is not basically domestic
(06:15):
other than commodities in its supply chain or of countries
that China basically controlled. So the long term direction is clear,
it is bifurcation. But both parties have every interest in
harming themselves the least possible so that this direction is
not too painful. That's what's happening, and that's how the
(06:37):
market should really And is this world going to be
better or worse? Well, I mean we're no longer in
this wonderful globalization mood, so maybe it is better to
bifurcate slowly and steadily and nicely rather than fighting it
over as we were doing right before this conversation started
in Geneva, Alysia.
Speaker 1 (06:56):
Always great to get your insights. Alicia or Cifro, chief
a Pacific economist at not Texas.
Speaker 2 (07:10):
Welcome back to the Daybreak Asia podcast. I'm Dan Schwartzman
in for Doug Prisner. This morning, we turn our focus
to Japan, where stock futures rose on optimism. The US
China trade tension may begin to de escalate after two
days of talks over the weekend. Then e K two
two five has climbed five percent through Friday since US
President Donald Trump announced so called reciprocal tariffs on April
(07:30):
twond among the best performing major markets. For more, we
heard from Jean Eric Salada, chairman and head of private
credit at EQT Asia. He spoke at Bloomberg's sherry On
in Heidi Stroud Watts really good to.
Speaker 1 (07:42):
Have you with us. Are you seeing what people are
talking about this veering away from US assets when you
talk to your clients.
Speaker 6 (07:50):
Yes, good morning, Sherif, thanks for having me here today. Absolutely,
we're seeing a big shift in asset allocation away from
the US, both I say in public markets and private
markets where we specialize. I think it's driven by some
of the policy uncertainty in the US, but also I'd
say there's been a period of time where US assets
outperformed and people were over allocated to US assets, and
(08:10):
I think there's a rebalancing going on. And we see
a lot more asset flows coming back to Asia, coming
back to Europe.
Speaker 1 (08:15):
Despite the volatility that we're seeing in market. So you
sense the optimism about Asian Where are those flows going?
Speaker 2 (08:22):
Well?
Speaker 6 (08:22):
I think for private equity, for what we do, we're
sort of structured to take on volatility as an industry
because our funds are set up as ten year funds,
they're locked up capital, so we don't have the redemption
issues that public managers have. So in many ways, we
have an ability to kind of ride through this volatility
(08:43):
and look at the long term. And these kind of
environments are actually quite interesting for us because you have
more interesting opportunities to buy at better valuations. There's less
competition in many cases for opportunities that we see, So
I think overall, we're investing, we remain commit to our strategy,
and we're seeing opportunities. For example, here in Japan, we
(09:04):
continue to see opportunities in a lot of take privates,
publicly listed companies where there's a real sense of shareholder
reform happening and a new focus on operational efficiency and
new growth strategies. So we're very excited about the opportunities
here in Japan, and we've you know, we're planning to
invest something like five billion dollars over the next couple
of years into the market here.
Speaker 1 (09:25):
What about fundraising.
Speaker 6 (09:27):
Fundraising, I think the fundraising market is becoming more bifurcated.
There's a bit of a consolidation happening globally and private
equity fundraising. But I think there's a group of managers
that are continuing to raise capital and grow the fund sizes,
and then I think there's another group that's finding it
more difficult, and I think you're going to continue to
see this divergence in fundraising. But there's you know, at
(09:49):
the end of the day, what private equity offers investors
is higher returns. Essentially, if you look at it over
long periods of time, the private markets offer significantly higher
returns in the public more markets if you look at
extended periods of time, and I think that's why the
asset class continues to grow. But I think investors are
getting a lot more a lot more careful about manager
(10:11):
selection and focusing a lot more on investment performance and
track record.
Speaker 4 (10:15):
China has been attracted from evaluation perspective for quite some time.
And now that we are sort of hearing murmurings of
progress when it comes to the US and China's relationship,
does that make that market a little bit more compelling?
Speaker 6 (10:28):
Hi, Heid, I think for a China, you know, our
strategy is a regional strategy, so our strategies essentially has
four components to it. We are a buyout investor, so
we only invest in control situations where we can drive
change in companies. Secondly, we have a regionally diversified portfolio
where we invest across the region. If you look at
(10:49):
geographic exposure today, our two biggest areas of focus are
Japan and India. That would be one and two, and
then behind that we would be looking at Australia and
Southeast Asia. China continues to be a market that we
are interested in. It's a large economy, but it's still
i'd say a difficult market to underwrite through the kind
(11:10):
of current market volatility and particularly some of the policy
changes in geopolitics that we see, so it wouldn't be
one of our top priority markets in our strategy today.
Speaker 4 (11:19):
How much of the trend are you seeing of that
sort of dialing back of US enthusiasm and how much
of that is being willingly reallocated to Asia.
Speaker 6 (11:29):
I think there's a significant asset allocation shift happening in
the world. I think people are reassessing risk. In the US.
I think there's been there's been a lot of public
market and private market beta in America. There's been a
tremendous last ten year run of asset prices, and everybody's
made a lot of money doing that, and I think
that may.
Speaker 2 (11:49):
Have run its course.
Speaker 6 (11:51):
Is what people are assessing right now and looking for
sources of alpha. Where can you deliver returns independent of
what's happening in the public markets. And I think what
Asia offers people, and this is why there's an attraction
to the region, is structural alpha. You look at Japan
for example. Here there are just a lot of opportunities
here where we believe companies can be run more efficiently
(12:11):
and there's a lot more room to deliver better returns
and better outcomes that are being delivered today in the
public markets through this active ownership approach that private equity takes.
So I think this search for alpha, the search for
structural alpha, is really benefiting Asia because Asia has undermanaged assets.
We also have higher growth rates in the region, and
we also have what I would call less correlated liquidity
(12:33):
and markets. If you look at say public markets, you know,
one of the biggest IPOs happening right now is happening
in Hong Kong this week, in the next few weeks
with COATL, and you have a similar situation in India
where we have a lot of our investments also seeking
to go public there and finding grid liquidity in the
IPO markets there for our private equity investments. That's a
(12:53):
very different narrative, very different story than what you see
in the US, where the public markets have been a
little bit more challenging. So I think this idea of
diversification is really something that investors are starting to pay
attention to. It's not to say that people are not
going to be investing in the US. It's the biggest
and deepest market. It's going to continue to be a
very important part of investor allocations, but I think the
relative weightings are changing.
Speaker 1 (13:14):
Is that why you're also really invested in Australia's software
sector as well. What do you like in Australia?
Speaker 6 (13:20):
Yeah, I think Australia is a really interesting economy. It's
continued to grow for the last thirty years almost without interruption. Thematically,
we love the software sector in Australia. We've invested in
for software companies there in the last two years. There's
a lot of innovation there and many of the companies
that we find they are actually able to then become
global businesses and grow outside of the local market there
(13:42):
by moving into Europe or even the United States. So
I think that's one of the big themes there. Healthcare
is another big theme in Australia, even pet care. I
would say we bought a business, yes, that is a
great business, and we've just bought the largest veterinary services
practice in Australia last year. So it's a market that
(14:02):
we continue to stay active in. And we have both
a large cap fund and a mid market fund, and
i'd say in the mid market space it's even more
interesting because there's a lot of mid sized companies that
are really very rapidly growing and we see a lot
of innovation there and a lot of potential for growth.
Speaker 1 (14:17):
It seems these days monetary policy sort of has fallen
to the background just because of everything that's happening with
trade negotiations. But when it comes to investing for the
long term and just raising funds, how much do the
divergent monetary policies across Asia matter?
Speaker 6 (14:33):
I think at the end of the day, for what
we do, the changes in monetary policy on a year
to year basis or even currency fluctuations don't matter that much.
And what we're really looking at is earnings, growth and
the ability to drive value creation and the businesses that
we manage and that we invest in. So I think,
you know, we're trying to invest behind multi decade themes
(14:56):
in society, whether it's things like better healthcare, the emerging
middle class, areas like the move to the cloud, and
how there's more. For example, invested here in Japan in
a company called hr Brain, which is doing HR software,
but it's a cloud native company, so trying to gain
share from all of the traditional companies that are doing
(15:16):
client server based HR software solutions, which is still the
predominant form of doing business in Japan, but we think
things are changing, so trying to get behind these multi
decade trends early, finding great companies with great managers or
bringing in new management and then driving growth and driving change.
Speaker 1 (15:31):
Son Eric Soaltter, really good to have you with us,
chairperson at eqt Asia, joining us here in the Tokyo studio.
Speaker 7 (15:40):
Thanks for listening to today's episode of the Bloomberg Daybreak
Asia Edition podcast. Each weekday, we look at the story
shaping markets, finance, and geopolitics in the Asia Pacific. You
can find us on Apple, Spotify, the Bloomberg Podcast, YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
(16:02):
and Australia. I'm Doug Prisoner and this is Bloomberg
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