October 1, 2025 • 20 mins
US stocks ended Wednesday's session higher, notching a new record and seemingly shrugging off the first government shutdown in nearly seven years. Treasuries rallied after private payrolls data reinforced bets that the Federal Reserve will lower interest rates later this month. Both the S&P 500 and the Nasdaq 100 rose for a fourth consecutive session. We spoke to John Pantekidis, Managing Partner at TwinFocus.
Plus - Asian equities gained at the open after global stocks rallied to a new all-time high, shrugging off the first US government shutdown in nearly seven years. Stocks in Japan, South Korea and Australia all rose with gains in chips and technology stocks the most notable. We spoke to Ritesh Ganeriwal, Head of Investment & Advisory at Syfe.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Welcome to the Daybreak
Asia podcast. I'm Doug Krisner. It was day one of
the US government shutdown early Wednesday. The Senate failed to
pass a bill that would have reopened operations. Meantime, the
White House is now planning to swiftly dismiss federal workers.
(00:25):
There was also news in the last session of an
unexpected drop in US private sector payrolls, according to ADP,
a drop of thirty two thousand. So if you look
at market action, yields were down across the treasury curve. Meantime,
the equity market finished at record highs, and in a
moment or two we'll look at how the US price
action is affecting sentiment in the Asia Pacific. But we
(00:47):
begin here in the States. Joining me now is John Pantakeites.
He is managing partner at Twin Focus. John joining from Boston.
Thank you so much, sir for making time to chat
with me. A little nervous right now in terms of
the levels that the equity market is trading at.
Speaker 2 (01:05):
We are getting nervous given where they're trading at, given valuations. However,
we think you know, given where we think that the
FED will go in terms of interest rates, and the
US economy is still showing signs that it's even though
it's softening, it's not falling apart. We think that, you know,
this has room to go. There's lots of plenty of
(01:27):
money on the sidelines, and with the FED being more accommodative,
equities can have some definitely room to go here, although
we're being very selective and where we put our new money.
Speaker 1 (01:37):
So talk to me about that selection process. Where are
you finding value in the equity space right now?
Speaker 2 (01:42):
Well, we started the year relative to what our peers
were doing, we were more equal weight we'd say international
development markets and emerging markets, and on the year to date,
that's proved to be really a good move and we
continue to be positioned that way. Although in the US
markets we still like large cap growth that we've outweighed
(02:03):
that for years and that continues to do well. We
like sectors like utilities, like we still like technology, and
would still stay away from certain other sectors like healthcare
given the political risks. But you know, that's how we're
positioning ourselves with inequities more on the international given where
the dollar's going, given the political tensions and what's going
(02:26):
on geopolitically.
Speaker 1 (02:27):
So gold reached a new all time high today during
New York trading. I think we got very close to
around thirty nine hundred. What is that telling you? What
do you make of the gold market these days?
Speaker 2 (02:39):
What we're saying, it's interesting you raise that we've been
big believers in gold for the past decade or so,
we've been overweight that what we're seeing is the key
difference is if you're looking what's going on with central
banks and the reserves, you're seeing central banks decreasing their
(02:59):
whole dollars and increasing their holdings in gold, and we
think that's a key to what's driving prices. And on
top of that, you're seeing now all you know, different
advisors recommending bigger and biger allocations to gold. It's becoming
more mainstream and that's just feeding the frenzy, and with
its continued central market buying, we think that has room
(03:23):
to go. We have portfolios probably greater than five percent
in gold. You know, since we've held it for such
a long time, you know the denominative effect. We're stilling
to trim, but we still like gold here.
Speaker 1 (03:36):
So part of that is the FED story being accommodative,
and we've also seen a little bit of easing that's
being discounted in the market right now. I think accumulative
forty six basis points in terms of what the swaps
market is saying between let's say now in the end
of the year. How do you think the FED fits
into this story right now? And I guess I'm more
(03:57):
interested in whether or not there is a risk here
that the market is underestimating, and maybe that has to
do with inflation being stubborn or perhaps maybe even moving higher. Again,
here's what I would say.
Speaker 2 (04:11):
We're seeing the jobs market, the employment market is definitely softening,
and that's a key thing that the FED is looking at.
We're seeing housing, which is a key component to CPI
that's showing starting to soften, and the economy is getting weaker.
So I think that the FED. There's political pressure for
(04:31):
the FED to to move lower, and I think that's
all going to create a situation where it will move lower.
Now inflation again, with employment being where it is softening,
with housing softening, you know, at least on the shorter term,
it should it should act a little better. Although there's
you know, key reasons why over the longer term inflation
(04:51):
might be stubbornly high above the FED two percent target.
On the shorter term, I think there is a room
where the FED can cut given the inflation outlook.
Speaker 1 (05:03):
So, John, you don't think stagflation is an issue, then,
at least not yet.
Speaker 2 (05:09):
We're not seeing it with what the US economy is doing,
what the global economy is doing, and with inflation inflation
still you know, it's not running rampant. We don't see
stagflation being a major concern here, although we are paying
attention to that.
Speaker 1 (05:24):
So, if you've been a little concerned about valuations in
the equity market and you're beginning to get I don't
want to say defensive, but cautionary, and I'm wondering whether
or not the bond market represents any opportunity for you.
Speaker 2 (05:36):
You know, the bond market is a funny place given
where yields are, given the current geopolitical situation. You know
what's happening with treasuries. Is China buying our treasuries? Aren't
they buying our treasuries? What impact will that have over
the long run. We're being very cautious in terms of bonds.
(05:56):
We still like for our clients who tend to be
ultra high networth families. We still like municipals here, but
we tend to be higher investment grade and we tend
to be shorter on the curve, probably between the three
to ten year. So we're picking our spots. Are we
going crazy with our global fixed income allocations? No, we
(06:18):
do like we've liked some emerging markets bond exposure for
the FX exposure, and you know, it was a relative trade.
It's done really well, spreads have compressed. Would we add
to that trade here? Probably not, But we're being very
cautious on the fixed income as well.
Speaker 1 (06:36):
What about opportunities offshore? Where are you finding value these days?
Speaker 2 (06:41):
Again, we've liked relative to the US, both developed anti
emerging markets, emerging markets especially and especially Asia. Let's call
it Asia ex China. What's going on with China and
the trade situation. We're seeing the rerouting of trade, We're
seeing the rerouting of supply chains, and that's been of
fitting all the smaller companies surrounding China, and that's where
(07:04):
we're probably seeing opportunity. I mean, over the past five years,
US markets have doubled, em markets are barely there, are
up about forty percent, So there's there's a way to
go on a relative basis for those markets, and that's
where we're probably seeing some opportunities.
Speaker 1 (07:20):
So what is the strategy? Is it an ETF play
that you look.
Speaker 2 (07:23):
At mainly ETF on the global equities. We think those
markets are very efficient, so we've played on, you know,
and we like to get low cost, tax efficient exposure
and ETF is probably the best vehicle for that.
Speaker 1 (07:37):
You talked about things that you might be inclined to
lighten up on right now, and I'm curious about areas
of the market that you think may have peaked and
if you needed to raise a little bit of cash
or you needed to kind of look at reducing risk.
What areas of the market right now are kind of
flashing caution and may prompt you to kind of reduce
(08:00):
your exposure.
Speaker 2 (08:01):
I want to say flashing caution, I would just say
flashing Because we've been overweight large cap growth, it's become
from the denominator effect the big part of our portfolio.
We're just taking profits. We still like it, but we're
lightning up there. We're using that as a source to
raise cash where we need be.
Speaker 1 (08:18):
John will leave it there. Thank you so much for
joining us. John Pantakets, managing partner at Twin Focus, joining
from Boston here on the Daybreak Asia podcast. Welcome back
to the Daybreak Asia Podcast. I'm Doug Krisner. Equity markets
in the Asia Pacific are trading higher. This is after
(08:41):
records for US stocks, and in South Korea, memory chip
maker Samsung and sk Heinez are rallying. This on news
the companies will supply chips to open ais Stargate project.
Joining me now from Singapore is Retesh Canarywall. He is
head of Investment and Advisory at Seife. Ritesh, thank you
so much for taking time to chat with me. A
(09:02):
lot of strength today in information tech in the States.
Earlier we had the Nasdaq one hundred finishing at all
time high. I mentioned a moment ago the South Korean
chip story. We know that the theme of AI has
been a big driver of the price section. Are you
feeling confident about this trade? Still? Does it have legs
to continue?
Speaker 3 (09:24):
It does seem so, Doug. It's very interesting, Like you know,
you see more bad data and the market can't catch
a breath. It keeps rallying further higher and higher. And
the ai story. The amount of investments that going into
the space just continues rolling as well. And the latest
that you see is the partnership with you know, of
open Ai with Skehihnis as well as Samsung. So that's
(09:46):
definitely again propping up these companies that like you know,
multi year highs as you see right now, but even
last week you saw you know, partnership between Nvidia and
open Ai. What's really interesting here is the you know,
entanglement of investments that is happening, and it's becoming more
and more murky as to how the picture evolves as
we move forward and what the applications of these would
(10:09):
be in the year to come. But interestingly enough, like
if you think about Nvidia, they invest into core Viv,
and core Viv, you know, is this data center manufacturer,
and that data center capacity is then made available to
open Ai. So they have like you know, feeding their
own customers in a certain way. And this is interesting
(10:30):
because you know, for now the story seems to hold.
What will be interesting, of course, is how that pans
out in terms of actual implications on the application side
as we move forward.
Speaker 1 (10:42):
I'm curious to get your take on the Nvidia story
as it relates to the Chinese market, because we know
that Huahwei has been doing very well in terms of
its development, and Beijing is actually preferring Huawei over in
video when it comes to providing those chips for a
lot of the AI companies on the mainland. Do you
think this represents a major threat for Nvidia.
Speaker 3 (11:04):
Not really in a global context. I think China is
moving more towards self sufficiency at the stage given the
kind of curbs that they have to deal with, and
that is actually benefiting the local ecosystem. And you've seen
like Ali Baba also coming in in committing more than
fifty billion dollars of investments in today I space. Alibaba
(11:25):
is up more than one hundred percent this year, so
you're seeing that surge a little bit of a late surge,
I would say, coming into the Chinese stock market as well.
It started with the Deep Seek moment, but I guess
we've now had the Ali Baba moment and we will
continue to see more such news items coming in from China.
Speaker 1 (11:44):
It's also been a pretty amazing run for the market
in Hong Kong. I think the Hang Saying is up
about thirty percent so far this year, is that something
you expect will continue?
Speaker 3 (11:54):
Absolutely. I think again, from a data standpoint, things are
still weak within China, but this is more of an
expectations based valley, right, Like you know, there is renewed
expectations that because data is weak, there will be more
policy stimulus that is going to kick in, and we
have the fifteenth five year Plan upcoming as well. Plus
(12:17):
I think some of the measures that have been taken
this is the golden week. You're seeing a surge in
you know, the number of interregional trips. There is a
lot of like positive sentiment coming in on the consumer
and the spending side of things as well. CPI is
starting to look a little bit better at point nine
percent and all. And from a policy standpoint, I think
so far most of the policy stimulus has been exhausted,
(12:41):
so investors are really looking forward to, you know, what's
next to come from a policy standpoint, as we move forward,
the whole anti involution aspects of it, in terms of
focusing on quality and you know, really on the demand side,
helping with the consumer sentiment, I think that is gonna
be the key drivers as we move forward as well.
(13:02):
But I think most of the rally, if you see,
has been driven a little bit more through the retail participation.
So that's very interesting because compared to the US market,
the participation of the retail segment in the China markets
have been much more pronounced. And I guess like a
little bit of fomo, a little bit of you know,
the policy expectations as well, but I do see this
(13:24):
equity rally continuing on expectations of you know, more policy
stimulus coming in.
Speaker 1 (13:30):
So I'm glad you mentioned the retail trade there because
we are now in the Golden Week holiday and I
want to get your take on what you're expecting to
see in terms of performance among Chinese consumers. Will they
come out and spend fiercely?
Speaker 3 (13:47):
Looks like, look, I think what I read readers, the
interregional trips are expected to rise to two point four billion,
So that's like four percent, not big, but in the
context of the you know, higher bar that's still major
uptick that we are seeing. And even in terms of
you know, total trips outside of mainland China, that's also
doubling year on year as well. So there is definitely
(14:10):
you know, positivity that is starting to show up in
the market. And as I said, you know, while the
consumer sentiment has been weak so far and there is
this deflationary trend out there, core CPI is now the
more stable you zero point nine percent as well. So overall,
I guess, like you know, when it comes to the
Chinese consumer, it is really the story of how do
(14:32):
you convert the savings into you know, spendings. And on
that front, I think investors are just under allocated into
the Chinese equity market, both locally as well as globally.
And the reality is, like you know, there are not
too many options because you know, interest rates are low,
bank returns are low, property market is not that attractive.
(14:53):
Where do you go? So you know, from that perspective,
I do see that momentum continuing going forward as well.
Speaker 1 (15:00):
I'd like to get your take on trade relations between
the US and China. I know this could be a
very long conversation on that topic alone. Today we had
word that President Trump is intending to confront Chinese President
she over Beijing's refusal to purchase American soybeans. Now, apparently
Trump is under pressure from Republican lawmakers from agricultural states
(15:22):
in the US to break this impasse. We know that
China has been diversifying away from the United States when
it comes to certain agricultural products, and I'm thinking of
a country like Brazil in particular, perhaps secondarily Argentina. Do
you think there's going to be a lot more tension
that has to be kind of confronted here before we
(15:44):
see some type of trade agreement between the US and
China worked out.
Speaker 3 (15:50):
I guess, like in fact, I do see, you know,
us feeling the pinch at this point of time, to
the extent that like on the agricultural sector. You know,
on the AI, you know stand there is great guns blowing,
but I think on the agricultural side, as you mentioned,
you know, there is problems, and these are problems on
the ground to the common man. So that definitely means
in my opinion that instead of being more confrontational at
(16:14):
the end of the day, Trump will have to have
an agreement sooner than later with the Chinese counterparts.
Speaker 1 (16:21):
So, whether we're looking at the equity market in the
US at record highs, or whether we're talking about near
records for markets in Asia, whether it's Hong Kong or
even South Korea, are you a little concerned right now?
Are you apt to become perhaps a little defensive.
Speaker 3 (16:39):
I think this begs the question of, like, you know,
how you're allocating your money and you know at siphe Again,
from an investor standpoint, what we have been observing is
clients are hedging number one, like, you know, they still
want the US growth story. So there's you know, investing
into the US market still, but they're hedging their exposures
in terms of you know, the dollar weakness that you're observing.
(17:00):
And that's a bigger story in my opinion, because if
as the dollar weekends, the emerging markets start to become
much more attractive as a region, and that's where we
have also observed investors, you know, shifting allocations away from
the US and into the emerging markets. Some of our
you know, China portfolios have the AUMs have doubled in
(17:21):
the course of this year. And so these are like
some of the aspects that we believe will continue to
happen as we move forward, where US dollar based exposure
and into the US market itself, that over concentration will
get paired out as we move forward. And even in
terms of you know, other asset classes, we're seeing more
domestic companies and investment opportunities panning out, especially in Singapore
(17:44):
for example, the reeds market has been on the uptrend
as soon as we hear the story of the FED
cutting through the end of this year and as well
as next year, plus the banking stocks as well. So
with the narrowing rate differentials between the US dollar, US
US interstrates and the other markets, that story will continue
to evolve as we move forward as well.
Speaker 1 (18:04):
What about other areas of asion, I'm thinking in particular
of India, What do you think of that market these days?
Speaker 3 (18:12):
I think it's an interesting juncture right now. Obviously there
is a lot of tensions with respect to the Indian
market again being bogged down a little bit with the
tension between US and India, and you've seen that pan
out in terms of the tariff's being imposed, in terms
of the H one B visa issues as well, and
(18:33):
then now into other territories as well. But I think
the domestic consumption story and the demographic dividends story of
India is still very very intact. In fact, like the
number of IPOs that are happening out there, the kind
of wealth that is getting created now. I hear that
every thirty minutes, there is a millionaire getting created in India.
So from all of those aspects, I think the positioning
(18:54):
could be more from a standpoint that there's an opportunity
for you to come in because the Indian market has
been stagnant and over the last one one and a
half years, So if you do want to take that position,
this might be a great opportunity for you to come in.
And there is also this you know, fungibility of capital
because we had a juncture a year or so back
where there was this em allocation x China that was
(19:17):
panning out as a theme, so money was pouring into
India and now as China comes back, some of that
money is going back into the Chinese side. But from
a longer term story, I think, you know, there's definitely
an opportunity to you know, pick on the growth story
that is secular growth story that's still intact within India.
Speaker 1 (19:35):
All right, Ritesh, we'll leave it there. Thank you so much.
Ritesh Canary Wall is head of Investment and Advisory at
siphe joining us here on the Daybreak Asia podcast. 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
(19:56):
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 and Australia.
I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, podcasts, radio news. Welcome to the Daybreak
Asia podcast. I'm Doug Krisner. It was day one of
the US government shutdown early Wednesday. The Senate failed to
pass a bill that would have reopened operations. Meantime, the
White House is now planning to swiftly dismiss federal workers.
(00:25):
There was also news in the last session of an
unexpected drop in US private sector payrolls, according to ADP,
a drop of thirty two thousand. So if you look
at market action, yields were down across the treasury curve. Meantime,
the equity market finished at record highs, and in a
moment or two we'll look at how the US price
action is affecting sentiment in the Asia Pacific. But we
(00:47):
begin here in the States. Joining me now is John Pantakeites.
He is managing partner at Twin Focus. John joining from Boston.
Thank you so much, sir for making time to chat
with me. A little nervous right now in terms of
the levels that the equity market is trading at.
Speaker 2 (01:05):
We are getting nervous given where they're trading at, given valuations. However,
we think you know, given where we think that the
FED will go in terms of interest rates, and the
US economy is still showing signs that it's even though
it's softening, it's not falling apart. We think that, you know,
this has room to go. There's lots of plenty of
(01:27):
money on the sidelines, and with the FED being more accommodative,
equities can have some definitely room to go here, although
we're being very selective and where we put our new money.
Speaker 1 (01:37):
So talk to me about that selection process. Where are
you finding value in the equity space right now?
Speaker 2 (01:42):
Well, we started the year relative to what our peers
were doing, we were more equal weight we'd say international
development markets and emerging markets, and on the year to date,
that's proved to be really a good move and we
continue to be positioned that way. Although in the US
markets we still like large cap growth that we've outweighed
(02:03):
that for years and that continues to do well. We
like sectors like utilities, like we still like technology, and
would still stay away from certain other sectors like healthcare
given the political risks. But you know, that's how we're
positioning ourselves with inequities more on the international given where
the dollar's going, given the political tensions and what's going
(02:26):
on geopolitically.
Speaker 1 (02:27):
So gold reached a new all time high today during
New York trading. I think we got very close to
around thirty nine hundred. What is that telling you? What
do you make of the gold market these days?
Speaker 2 (02:39):
What we're saying, it's interesting you raise that we've been
big believers in gold for the past decade or so,
we've been overweight that what we're seeing is the key
difference is if you're looking what's going on with central
banks and the reserves, you're seeing central banks decreasing their
(02:59):
whole dollars and increasing their holdings in gold, and we
think that's a key to what's driving prices. And on
top of that, you're seeing now all you know, different
advisors recommending bigger and biger allocations to gold. It's becoming
more mainstream and that's just feeding the frenzy, and with
its continued central market buying, we think that has room
(03:23):
to go. We have portfolios probably greater than five percent
in gold. You know, since we've held it for such
a long time, you know the denominative effect. We're stilling
to trim, but we still like gold here.
Speaker 1 (03:36):
So part of that is the FED story being accommodative,
and we've also seen a little bit of easing that's
being discounted in the market right now. I think accumulative
forty six basis points in terms of what the swaps
market is saying between let's say now in the end
of the year. How do you think the FED fits
into this story right now? And I guess I'm more
(03:57):
interested in whether or not there is a risk here
that the market is underestimating, and maybe that has to
do with inflation being stubborn or perhaps maybe even moving higher. Again,
here's what I would say.
Speaker 2 (04:11):
We're seeing the jobs market, the employment market is definitely softening,
and that's a key thing that the FED is looking at.
We're seeing housing, which is a key component to CPI
that's showing starting to soften, and the economy is getting weaker.
So I think that the FED. There's political pressure for
(04:31):
the FED to to move lower, and I think that's
all going to create a situation where it will move lower.
Now inflation again, with employment being where it is softening,
with housing softening, you know, at least on the shorter term,
it should it should act a little better. Although there's
you know, key reasons why over the longer term inflation
(04:51):
might be stubbornly high above the FED two percent target.
On the shorter term, I think there is a room
where the FED can cut given the inflation outlook.
Speaker 1 (05:03):
So, John, you don't think stagflation is an issue, then,
at least not yet.
Speaker 2 (05:09):
We're not seeing it with what the US economy is doing,
what the global economy is doing, and with inflation inflation
still you know, it's not running rampant. We don't see
stagflation being a major concern here, although we are paying
attention to that.
Speaker 1 (05:24):
So, if you've been a little concerned about valuations in
the equity market and you're beginning to get I don't
want to say defensive, but cautionary, and I'm wondering whether
or not the bond market represents any opportunity for you.
Speaker 2 (05:36):
You know, the bond market is a funny place given
where yields are, given the current geopolitical situation. You know
what's happening with treasuries. Is China buying our treasuries? Aren't
they buying our treasuries? What impact will that have over
the long run. We're being very cautious in terms of bonds.
(05:56):
We still like for our clients who tend to be
ultra high networth families. We still like municipals here, but
we tend to be higher investment grade and we tend
to be shorter on the curve, probably between the three
to ten year. So we're picking our spots. Are we
going crazy with our global fixed income allocations? No, we
(06:18):
do like we've liked some emerging markets bond exposure for
the FX exposure, and you know, it was a relative trade.
It's done really well, spreads have compressed. Would we add
to that trade here? Probably not, But we're being very
cautious on the fixed income as well.
Speaker 1 (06:36):
What about opportunities offshore? Where are you finding value these days?
Speaker 2 (06:41):
Again, we've liked relative to the US, both developed anti
emerging markets, emerging markets especially and especially Asia. Let's call
it Asia ex China. What's going on with China and
the trade situation. We're seeing the rerouting of trade, We're
seeing the rerouting of supply chains, and that's been of
fitting all the smaller companies surrounding China, and that's where
(07:04):
we're probably seeing opportunity. I mean, over the past five years,
US markets have doubled, em markets are barely there, are
up about forty percent, So there's there's a way to
go on a relative basis for those markets, and that's
where we're probably seeing some opportunities.
Speaker 1 (07:20):
So what is the strategy? Is it an ETF play
that you look.
Speaker 2 (07:23):
At mainly ETF on the global equities. We think those
markets are very efficient, so we've played on, you know,
and we like to get low cost, tax efficient exposure
and ETF is probably the best vehicle for that.
Speaker 1 (07:37):
You talked about things that you might be inclined to
lighten up on right now, and I'm curious about areas
of the market that you think may have peaked and
if you needed to raise a little bit of cash
or you needed to kind of look at reducing risk.
What areas of the market right now are kind of
flashing caution and may prompt you to kind of reduce
(08:00):
your exposure.
Speaker 2 (08:01):
I want to say flashing caution, I would just say
flashing Because we've been overweight large cap growth, it's become
from the denominator effect the big part of our portfolio.
We're just taking profits. We still like it, but we're
lightning up there. We're using that as a source to
raise cash where we need be.
Speaker 1 (08:18):
John will leave it there. Thank you so much for
joining us. John Pantakets, managing partner at Twin Focus, joining
from Boston here on the Daybreak Asia podcast. Welcome back
to the Daybreak Asia Podcast. I'm Doug Krisner. Equity markets
in the Asia Pacific are trading higher. This is after
(08:41):
records for US stocks, and in South Korea, memory chip
maker Samsung and sk Heinez are rallying. This on news
the companies will supply chips to open ais Stargate project.
Joining me now from Singapore is Retesh Canarywall. He is
head of Investment and Advisory at Seife. Ritesh, thank you
so much for taking time to chat with me. A
(09:02):
lot of strength today in information tech in the States.
Earlier we had the Nasdaq one hundred finishing at all
time high. I mentioned a moment ago the South Korean
chip story. We know that the theme of AI has
been a big driver of the price section. Are you
feeling confident about this trade? Still? Does it have legs
to continue?
Speaker 3 (09:24):
It does seem so, Doug. It's very interesting, Like you know,
you see more bad data and the market can't catch
a breath. It keeps rallying further higher and higher. And
the ai story. The amount of investments that going into
the space just continues rolling as well. And the latest
that you see is the partnership with you know, of
open Ai with Skehihnis as well as Samsung. So that's
(09:46):
definitely again propping up these companies that like you know,
multi year highs as you see right now, but even
last week you saw you know, partnership between Nvidia and
open Ai. What's really interesting here is the you know,
entanglement of investments that is happening, and it's becoming more
and more murky as to how the picture evolves as
we move forward and what the applications of these would
(10:09):
be in the year to come. But interestingly enough, like
if you think about Nvidia, they invest into core Viv,
and core Viv, you know, is this data center manufacturer,
and that data center capacity is then made available to
open Ai. So they have like you know, feeding their
own customers in a certain way. And this is interesting
(10:30):
because you know, for now the story seems to hold.
What will be interesting, of course, is how that pans
out in terms of actual implications on the application side
as we move forward.
Speaker 1 (10:42):
I'm curious to get your take on the Nvidia story
as it relates to the Chinese market, because we know
that Huahwei has been doing very well in terms of
its development, and Beijing is actually preferring Huawei over in
video when it comes to providing those chips for a
lot of the AI companies on the mainland. Do you
think this represents a major threat for Nvidia.
Speaker 3 (11:04):
Not really in a global context. I think China is
moving more towards self sufficiency at the stage given the
kind of curbs that they have to deal with, and
that is actually benefiting the local ecosystem. And you've seen
like Ali Baba also coming in in committing more than
fifty billion dollars of investments in today I space. Alibaba
(11:25):
is up more than one hundred percent this year, so
you're seeing that surge a little bit of a late surge,
I would say, coming into the Chinese stock market as well.
It started with the Deep Seek moment, but I guess
we've now had the Ali Baba moment and we will
continue to see more such news items coming in from China.
Speaker 1 (11:44):
It's also been a pretty amazing run for the market
in Hong Kong. I think the Hang Saying is up
about thirty percent so far this year, is that something
you expect will continue?
Speaker 3 (11:54):
Absolutely. I think again, from a data standpoint, things are
still weak within China, but this is more of an
expectations based valley, right, Like you know, there is renewed
expectations that because data is weak, there will be more
policy stimulus that is going to kick in, and we
have the fifteenth five year Plan upcoming as well. Plus
(12:17):
I think some of the measures that have been taken
this is the golden week. You're seeing a surge in
you know, the number of interregional trips. There is a
lot of like positive sentiment coming in on the consumer
and the spending side of things as well. CPI is
starting to look a little bit better at point nine
percent and all. And from a policy standpoint, I think
so far most of the policy stimulus has been exhausted,
(12:41):
so investors are really looking forward to, you know, what's
next to come from a policy standpoint, as we move forward,
the whole anti involution aspects of it, in terms of
focusing on quality and you know, really on the demand side,
helping with the consumer sentiment, I think that is gonna
be the key drivers as we move forward as well.
(13:02):
But I think most of the rally, if you see,
has been driven a little bit more through the retail participation.
So that's very interesting because compared to the US market,
the participation of the retail segment in the China markets
have been much more pronounced. And I guess like a
little bit of fomo, a little bit of you know,
the policy expectations as well, but I do see this
(13:24):
equity rally continuing on expectations of you know, more policy
stimulus coming in.
Speaker 1 (13:30):
So I'm glad you mentioned the retail trade there because
we are now in the Golden Week holiday and I
want to get your take on what you're expecting to
see in terms of performance among Chinese consumers. Will they
come out and spend fiercely?
Speaker 3 (13:47):
Looks like, look, I think what I read readers, the
interregional trips are expected to rise to two point four billion,
So that's like four percent, not big, but in the
context of the you know, higher bar that's still major
uptick that we are seeing. And even in terms of
you know, total trips outside of mainland China, that's also
doubling year on year as well. So there is definitely
(14:10):
you know, positivity that is starting to show up in
the market. And as I said, you know, while the
consumer sentiment has been weak so far and there is
this deflationary trend out there, core CPI is now the
more stable you zero point nine percent as well. So overall,
I guess, like you know, when it comes to the
Chinese consumer, it is really the story of how do
(14:32):
you convert the savings into you know, spendings. And on
that front, I think investors are just under allocated into
the Chinese equity market, both locally as well as globally.
And the reality is, like you know, there are not
too many options because you know, interest rates are low,
bank returns are low, property market is not that attractive.
(14:53):
Where do you go? So you know, from that perspective,
I do see that momentum continuing going forward as well.
Speaker 1 (15:00):
I'd like to get your take on trade relations between
the US and China. I know this could be a
very long conversation on that topic alone. Today we had
word that President Trump is intending to confront Chinese President
she over Beijing's refusal to purchase American soybeans. Now, apparently
Trump is under pressure from Republican lawmakers from agricultural states
(15:22):
in the US to break this impasse. We know that
China has been diversifying away from the United States when
it comes to certain agricultural products, and I'm thinking of
a country like Brazil in particular, perhaps secondarily Argentina. Do
you think there's going to be a lot more tension
that has to be kind of confronted here before we
(15:44):
see some type of trade agreement between the US and
China worked out.
Speaker 3 (15:50):
I guess, like in fact, I do see, you know,
us feeling the pinch at this point of time, to
the extent that like on the agricultural sector. You know,
on the AI, you know stand there is great guns blowing,
but I think on the agricultural side, as you mentioned,
you know, there is problems, and these are problems on
the ground to the common man. So that definitely means
in my opinion that instead of being more confrontational at
(16:14):
the end of the day, Trump will have to have
an agreement sooner than later with the Chinese counterparts.
Speaker 1 (16:21):
So, whether we're looking at the equity market in the
US at record highs, or whether we're talking about near
records for markets in Asia, whether it's Hong Kong or
even South Korea, are you a little concerned right now?
Are you apt to become perhaps a little defensive.
Speaker 3 (16:39):
I think this begs the question of, like, you know,
how you're allocating your money and you know at siphe Again,
from an investor standpoint, what we have been observing is
clients are hedging number one, like, you know, they still
want the US growth story. So there's you know, investing
into the US market still, but they're hedging their exposures
in terms of you know, the dollar weakness that you're observing.
(17:00):
And that's a bigger story in my opinion, because if
as the dollar weekends, the emerging markets start to become
much more attractive as a region, and that's where we
have also observed investors, you know, shifting allocations away from
the US and into the emerging markets. Some of our
you know, China portfolios have the AUMs have doubled in
(17:21):
the course of this year. And so these are like
some of the aspects that we believe will continue to
happen as we move forward, where US dollar based exposure
and into the US market itself, that over concentration will
get paired out as we move forward. And even in
terms of you know, other asset classes, we're seeing more
domestic companies and investment opportunities panning out, especially in Singapore
(17:44):
for example, the reeds market has been on the uptrend
as soon as we hear the story of the FED
cutting through the end of this year and as well
as next year, plus the banking stocks as well. So
with the narrowing rate differentials between the US dollar, US
US interstrates and the other markets, that story will continue
to evolve as we move forward as well.
Speaker 1 (18:04):
What about other areas of asion, I'm thinking in particular
of India, What do you think of that market these days?
Speaker 3 (18:12):
I think it's an interesting juncture right now. Obviously there
is a lot of tensions with respect to the Indian
market again being bogged down a little bit with the
tension between US and India, and you've seen that pan
out in terms of the tariff's being imposed, in terms
of the H one B visa issues as well, and
(18:33):
then now into other territories as well. But I think
the domestic consumption story and the demographic dividends story of
India is still very very intact. In fact, like the
number of IPOs that are happening out there, the kind
of wealth that is getting created now. I hear that
every thirty minutes, there is a millionaire getting created in India.
So from all of those aspects, I think the positioning
(18:54):
could be more from a standpoint that there's an opportunity
for you to come in because the Indian market has
been stagnant and over the last one one and a
half years, So if you do want to take that position,
this might be a great opportunity for you to come in.
And there is also this you know, fungibility of capital
because we had a juncture a year or so back
where there was this em allocation x China that was
(19:17):
panning out as a theme, so money was pouring into
India and now as China comes back, some of that
money is going back into the Chinese side. But from
a longer term story, I think, you know, there's definitely
an opportunity to you know, pick on the growth story
that is secular growth story that's still intact within India.
Speaker 1 (19:35):
All right, Ritesh, we'll leave it there. Thank you so much.
Ritesh Canary Wall is head of Investment and Advisory at
siphe joining us here on the Daybreak Asia podcast. 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
(19:56):
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 and Australia.
I'm Doug Prisoner and this is Bloomberg
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