May 26, 2025 • 19 mins
BYD Co. led Chinese electric vehicle stocks lower in Hong Kong on Monday, as investors digested the auto giant’s sweeping price cuts of as much as 34% late last week. We got reaction from Bloomberg's Asia Transport Reporter Danny Lee.
Top trade officials from the European Union and China are planning to meet again early next month, another sign that both sides are stepping up engagements as they try to push back against tariff pressure from Donald Trump. News of the sit-down comes as President Trump agreed to extend the deadline for the EU to face 50% tariffs until July 9, following a phone call with Commission President Ursula von der Leyen. We have more from Bloomberg's China Correspondent Minmin Low.
Plus - Asian shares fluctuated as investors awaited fresh trade news, with the dollar edging down and the yen rising after the Bank of Japan Governor's comments. For more, we caught up with Joohee An, the CIO of Mirae Asset Global Investments.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia podcast. I'm Doug Chrisner. On today's episode, we'll
look in a moment at the state of US trade talks,
especially negotiations involving the European Union and also China. We
(00:24):
begin though with the latest on the Chinese ev maker BYD.
It shares fell more than eight percent in Hong Kong
trading on Monday. The market was reacting to BYD's sweeping
price cuts of as much as thirty four percent. The
company is offering discounts on twenty two of its electric
and plugin high Bred models sold in China until the
(00:45):
end of June. Bloomberg's Asia Transport reporter Danny Lee spoke
with Bloomberg's Heidi Stroud Watts question how well placed is
BYD to engage in a price war with the other
Chinese EV makers.
Speaker 2 (00:59):
Well.
Speaker 3 (00:59):
BYD, how the first mover advantage by its shifts size,
dominating a marketplace and having a huge grip on sales
in the world's biggest auto and EV market. And we
saw BID taking out the playbook once again to shake
up the market and really slash prices prices being cut
by thirty four percent over last week, and therefore we
(01:22):
saw that market reaction, the market reaction that that saw
BID's own shares for almost nine percent, wiping our thirteen
billion US dollars off its market cap, and the broader
sector they're also following as well. And it really adds
to just fears across the sector of not just BYD's
largest but the fact that they're all having to respond
to BYD's price cuts, price cuts across entire lineup effectively
(01:46):
or twenty two models that BID produces. And when you
look at kind of the healthiest sector is you know,
at the back end of last year, inventories of evs
of you know, it rose to fifty seven days and
that's a that's a that's quite a high in the
most recent period. So therefore, it is going to be
a challenge as automakers look to offload stock and to
(02:09):
try and compete by having to cut prices.
Speaker 4 (02:13):
Yeah, Danny, do we know who we expect to be
kind of the hardest hit by this change.
Speaker 3 (02:19):
I mean, every automaker you know seems to be hit,
no matter how big or how small. We've seen various
rivals of bod from from Leap Motor to to Gili
all having to reflect and respond to US, its major
competitor in following through with with similar price cuts, price
cuts which are not necessarily as large as BID, but
(02:43):
still the fact that this will eat into margins and
as we've seen many automakers recover from a prior set
of price wares over the recent period and recent years,
this is a little bit of bad news for the
industry as they've been trying to grap with this transition
and generally speaking have performed very well compared to piers
outside of China, that.
Speaker 1 (03:04):
Is Bloomberg Stanny Lee. In Beijing, the government is considering
a new version of its Made in China twenty twenty
five campaign. We know the aim is to boost production
of high end technological goods and to prioritize technology that
would include chip making equipment. Well. Against that backdrop is
the story on global trade and news today that the
(03:26):
European Union has agreed to fast track trade negotiations with
the US. Here is Bloomberg's MIDMN Low.
Speaker 5 (03:33):
Well.
Speaker 4 (03:34):
Very little is being disclosed publicly for now, but we
know that this is coming ahead of EU officials traveling
to China in July, also ahead of the July nine deadline,
when the US is looking to potentially raise tariffs on
EU goods from twenty to fifty percent. So it looks
like this is an opportunity for both sides to find
(03:55):
out what their stand is in terms of how they
will deal with the US. And this is the those
US threats to the EU not to lean too closely
towards China. It looks like the EU is still playing
this balancing act here because this is the third time
that EU and Chinese official was going to engage publicly.
(04:15):
The European Trade Commissioner, one of the trade representatives traveled
to Beijing in March. That was followed by a video
call in April, and this time you have the Chinese
Commerce Minister one went out traveling to Paris to meet
with his European counterpart on the sidelines of the WTO meeting.
So whether or not this will lead to some or
at least pave the way for some sort of concrete
(04:36):
deliverables in July when those EU officials travel to Beijing,
that is something we want to look out for. Whether
they will continue to perhaps look into picking up discussion
of an investment pact that had been put on hold
for many years, or perhaps lowering tariffs on Chinese evse.
These are of course things to look up for, and
whether they will look to deep in trade cooperation as
(04:57):
well as both sides counter those impact of US tariffs.
Speaker 2 (05:03):
Yeah, and manufacturing strength remaining a theme in China as well.
Speaker 5 (05:06):
Tell us a little bit about this new version.
Speaker 2 (05:08):
Of the Maid in China Plan that Beijing is said
to be preparing.
Speaker 4 (05:13):
Yeah, so, China first introduced a maiden China Plan in
twenty fifteen. It was a ten year plan that's opposed
to sort of expire by twenty twenty five, and we
understand that policymakers are now looking at a new iteration
of this plan, a decade long sort of blueprint to
map out China's manufacturing capabilities over the next ten years,
and once again it is expected to focus on high
(05:35):
tech manufacturing, especially things like chip making gears, given those
cubs from the US and how that threatened China's national security.
Here you can see in the pie chart that manufacturing
has remained a pretty big part of China's share of GDP,
and we understand from policy makers that they plan to
keep that share of GDP contributed by manufacturing stable in
(05:56):
the mid to long term. And again, this doesn't seem
to address that criticism from the US of the trade
imbalance because that concentration in manufacturing has been one of
the key drivers of that imbalance. And this is despite
as well Chinese policy makers acknowledging that they need to
boost domestic consumption. We know there is this ongoing debate
(06:17):
among policy makers as to whether to place a target
on how much consumption should contribute as a share of GDP,
but according to sources, policy makers are still leaning against
putting a target there because they're unsure whether they have
enough policy tools to really ramp up consumption.
Speaker 5 (06:33):
In a big way.
Speaker 1 (06:34):
That is Bloomberg's Minmnlow speaking with Bloomberg's Paul Allen on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia podcast.
I'm Doug Christner. In the currency markets today, the dollar
is hovering near its lowest level in almost two years now.
(06:55):
A portion of this move is tied to a stronger yen. Earlier,
Bank of Japan Governor Kazu Ouweda said the boj will
adjust easing if the economy improves as expected. Even so,
there is no escaping how volatile the dollar has been,
largely the result of US trade policy, and it's causing
investors in Asia to look away from US assets and
(07:18):
examine opportunities in the region. My colleagues at Bloomberg Television
caught up with Juhi on Cio of Murray Asset Global Investments,
and here she is speaking with David Inglace and Yvonne Mann.
Speaker 6 (07:30):
You've kind of shifted more in terms of domestic plays
right now. Tell us what you've been doing.
Speaker 7 (07:35):
We made that changes late last year and the early
this year. So there are two reasons. Of course, the
uncertainties regat in tariff wait on the attractiveness of the exporters.
And secondly, if you just think about the last four
to five years and actually consumption and domestic demand to
relate the stories where have been very weak, much weaker
than the other sectors like a technology and the shells
(07:57):
in China, also in India, which are the major countries
in Asian region. So the well, there are so many
you know the reasons for that, but the key point
is from this year, I think from the government's perspective
as well, these domestic demand sectors are becoming more important
to boost economy. So in China, for example, now we
(08:18):
all know that they for the last for five years
export export has been stronger than expected. So there's no
kind of very the big reason for them to aggressively
in the boost domestic demand. But now they have to, uh,
you know, make the kind of more internal tool to
have less dependence on the US or other external demand.
(08:39):
And also in India, as we sult from early this year,
this finally after two terms of the Moody and finally
this this term, now they are shifting the focus to
the domestic consumption from more investment linked sectors. So that's why,
that's the kind of background why we shifted our focus
to more domestic demand related sectors.
Speaker 2 (09:00):
That change worked out as far as performance goes.
Speaker 7 (09:03):
Yeah, so maybe you still doesn't performance or bid or
shell me or all the Yeah, those actually are performed well.
But in India still the recovery in consumption has been
much slower. So but at least now we have seen
some signs of recovery. So for example, over ninety percent
of NESCI Indian India Index names they already released their earnings,
(09:25):
but over fifty eight percent of that they beat the
market consensus, which is much higher than the average level,
and the only twenty two percent they missed the earnings estimates.
And so even like the earnings vise now we believe
it's kind of going through the bottom now. And also
from the inflation pressure perspective as well, it's still you know,
(09:46):
continue to go down. So that's why there will be
no pressure from the RBI to you know, cut the
weight to boost the domest demand.
Speaker 2 (09:56):
The So you think we bought them in India because
so the market actually led the rally after Liberation Day
from Donald Trump.
Speaker 5 (10:03):
It was one of the best performers.
Speaker 2 (10:04):
And I'm wondering right now from an earnings perspective, do
you think they'll catch up?
Speaker 7 (10:08):
It will be very gradual, I will say. I want
to add, yeah, it's not going to be like a
V shape recovery. But at least, you know, for the
last three to four quarters, you know, this market has
been underperforming while the other in technology sectors or kind
of manufacturing AI you know, the kind of sectors kind
of for performing. So but if you just think about
how underpenetrated so many sectors are in India still with
(10:31):
a huge population, and then you the governments. They are
very aggressive in the boosting domestic demand as well, and
they're also telef issue that unseris is also less so
even though they are still treading at the premium compared
to the other countries. But we have to have a
long term perspective to India. It's actually usually our perspective
to the India is much longer than the other in
(10:51):
other countries. Because yeah, considering this kind of you know,
very positive fundamental reasons.
Speaker 6 (10:57):
You mentioned the shifted domestic I look at your something
top holdings, So TSMC is still in there. This is
very much a very global sort of company as well.
Speaker 7 (11:05):
Yes, having said that, we shifted our focus more to
domestic demand ones, but still we have a dissent and
then good exposure to some explorers for example technology sectors
or industrials. So for example, TSMC is one of the
examples in Taiwan. We believe that they have a bargaining
power which is strong enough to pass on the type
(11:25):
cost to customers. And even though it's still on the
pressure from uncertainties regarding the JV with the Intel and
also you know the AI demand or even there are
so many kind of ertagists are still time. Of course
it's going on, but I think if you just consider
their valuation, which is only like fourteen times next year,
I think a downside risk is manageable. So for the
(11:50):
next you know, like one or two quarters, until all
the uncertainties become clearer, I think it will be you know,
range boundary on the pressure. But we still think that
the oft PTI shop is higher than downside risks. And
then another example is also kind of transformer manufacturer in
Korea as well.
Speaker 2 (12:08):
Yeah, I was going to ask you about since we're
talking about tech in in vidious reporting this week and
so far, have you any key takeaway so far from
the sort of the big tech earnings and what that
means for TSMC or is the bet on TSMC something
something else?
Speaker 7 (12:23):
So I also traveled to Taiwan last week and kept
computer text you know, the conference as well. So I
think that so far, I think the demand and that
all the tones of the of the companies and the
AI demand is still very quite strong and rosy. But
still we have to see the final numbers of coas
you know, the expansion plan from TSMC. There are so
(12:44):
like three or four key factors that we have to
keep watching. So I think the food the second half,
it's still possible that we are going to see some
volatility in the second half, but at least in first half,
I think we still see the momentum to continue to
be strong.
Speaker 6 (13:00):
Talked about a little bit more about the domestic place,
and certainly one thing we're focused on is of course
the consumption side of things in China. Is it still
opportunities there.
Speaker 7 (13:08):
Yes, I think that we have to keep the long
term perspective to consumption opportunities. So because compared to the
other sectors, the consumption and consumers mindset and behaviors patterns,
actually the changes.
Speaker 5 (13:24):
Are much slower.
Speaker 7 (13:25):
So now again for the last four to five years,
it has been very weak and then now it's we
are going through the inflection phase. I would say it's
not an inflection point. So yeah, because of the governments,
they need to put lots of efforts to restore the
confidence and they but luckily this time you know the
very differently gesture to private companies early this year in China.
(13:46):
Actually it's very helpful and very meaningful for consumption as well,
because now I think at the burden to hire more
people or kind of you know, like the improved the
income growth, they kind of burden can be shared by
private companies, which is cash reach tech companies for example.
(14:07):
So I think the government at the same time they
can just take care of the risks coming from property
or local government debt issues. So now I think it's
it's step by step they're going to do more and more.
But the thing is now, because of the delayed negotiations,
the tariff negotiations between the China and the US, I
think that implementation of this, you know, very aggressive. The
(14:28):
similest plan in China is also being delayed. So I
think in terms of timing, initially we thought maybe at
the end of you know, first half or early second half,
but it's kind of keep pushing back in terms of timing.
Speaker 2 (14:41):
That's interesting the way you phrased msorider interrupt. You know,
we for a long time we talk about how China
is using its banks in terms of national service right
to help boost the economy to some extent. Like what
you're saying, correctly, I'm wrong is that they're outsourcing some
of the subsidies for consumption to the private company themselves.
Speaker 5 (15:00):
That comes at the cost of margining.
Speaker 2 (15:02):
And I think the question I have is the are
you concerned about margin pressure?
Speaker 7 (15:07):
Isn't the margin pressure if the reason that the com
private companies they didn't really hire the people or they
didn't really spend on kpex, it's because of lack of confidence.
Also because if you remember in twenty twenty one, the
big regulator crackdown on private sector as well. So now
they are they kind of you know, the negative things
are being restored. So that's why I think they want
(15:29):
to invest a little more and then more, and then
they want to hire more people, and especially in a
tech sector, they need more younger people. And then now
the unemployment issue is actually more material in youth, you know,
the sector. So that's why I think the kind of
the positive you know, virtus cycle is going to be
created from what we saw early this year. So I
(15:52):
think it's going to be very gradual. Again in the
consumption story is always yeah yeah, but the direction wise,
I think it's going to be different from what we
have seen for the last four to five years.
Speaker 5 (16:02):
What is the playbook then?
Speaker 6 (16:04):
I mean, I know you're looking at tourism, you look
at cosmetics in sort of these domestic places.
Speaker 5 (16:08):
Why these sectors. Yeah, So first of all, I think.
Speaker 7 (16:12):
The people they tend to spend more on experiences than goods,
so the tourism is one of them, and also cosmetic
is a good. But actually, you know, they want to
take care of their kind of the beauty or inner
beauty or health. So we have more exposures to healthcare
and or kind of the consumer services in China and
Korea and also in India across Asia.
Speaker 5 (16:36):
The just a hard pivot here.
Speaker 2 (16:38):
The other thing I'm going to ask you is how
has this melt up and treasure yields affected what you do?
Speaker 7 (16:45):
So I believe the impact, of course, you know, usually
the general impact on equity is negative, but I think
from our Asian I'm the investors in Asia perspective, I
think it will be less than we saw in the
past because now very unusual divergence between the treasury yield
and US dollar. So that's why I think because of that,
(17:06):
I think the central banks in emerging Asian countries they
have less pressure when they cut the rates to to
the you know, the boost domestic demand, because now their
currency is relatively strengthening. So that's actually less negative than
we used to see in the past, That's what I
can say.
Speaker 6 (17:26):
And for the dollars, is the path of this resistance
still for the dollar to go lower? Sorry, is the
path of these resistance for the dollars still to go lower.
Speaker 7 (17:34):
It really depends on the further progressing the tariff and
old napologies from the US. But I think so death
is it's very hard to predict, but at least you
know this this this time so many people and then
the governments and central banks they find that it was
tricker for them to think about, oh we I need
(17:56):
some other alternatives. So the trend wise unless we are
going to see very sweet the conclusion of the tariff
and then they are going to do more marketferently policies
like you know, text cuts, what these regulations, because if
there are those three are kind of needs to be
more balanced. So now although the timing of those market
friendly ones are being pushed back, but at least you
(18:19):
know they have to do it considering the midterm election
next year. So it really depends on how fast they
are going to conclude the tariff and then they move
on to the more positive ones.
Speaker 2 (18:28):
Have you seen in your strategies inflows of ALM and
funds because of this you know, US exceptionalism fading away.
And actually the other question there is do you see
a catalyst that might that might spur a reversal in
those flows back into you as at some point this year.
Speaker 7 (18:44):
But our investors finally they think about the non US assets,
so many people they are getting out of the US
you know, exceptionalism. So that's why I think the inflow
wise so far it was not very very much yep,
but I got lots of requests from our clients and
our investors that they are more interested in China or
(19:07):
other non US assets including equities.
Speaker 5 (19:11):
Okay, fantastic, Thank you so much.
Speaker 2 (19:13):
It was great there With Julie on there, we covered
everything CIO of Mira Acid Global Investment.
Speaker 1 (19:23):
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
(19:45):
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia podcast. I'm Doug Chrisner. On today's episode, we'll
look in a moment at the state of US trade talks,
especially negotiations involving the European Union and also China. We
(00:24):
begin though with the latest on the Chinese ev maker BYD.
It shares fell more than eight percent in Hong Kong
trading on Monday. The market was reacting to BYD's sweeping
price cuts of as much as thirty four percent. The
company is offering discounts on twenty two of its electric
and plugin high Bred models sold in China until the
(00:45):
end of June. Bloomberg's Asia Transport reporter Danny Lee spoke
with Bloomberg's Heidi Stroud Watts question how well placed is
BYD to engage in a price war with the other
Chinese EV makers.
Speaker 2 (00:59):
Well.
Speaker 3 (00:59):
BYD, how the first mover advantage by its shifts size,
dominating a marketplace and having a huge grip on sales
in the world's biggest auto and EV market. And we
saw BID taking out the playbook once again to shake
up the market and really slash prices prices being cut
by thirty four percent over last week, and therefore we
(01:22):
saw that market reaction, the market reaction that that saw
BID's own shares for almost nine percent, wiping our thirteen
billion US dollars off its market cap, and the broader
sector they're also following as well. And it really adds
to just fears across the sector of not just BYD's
largest but the fact that they're all having to respond
to BYD's price cuts, price cuts across entire lineup effectively
(01:46):
or twenty two models that BID produces. And when you
look at kind of the healthiest sector is you know,
at the back end of last year, inventories of evs
of you know, it rose to fifty seven days and
that's a that's a that's quite a high in the
most recent period. So therefore, it is going to be
a challenge as automakers look to offload stock and to
(02:09):
try and compete by having to cut prices.
Speaker 4 (02:13):
Yeah, Danny, do we know who we expect to be
kind of the hardest hit by this change.
Speaker 3 (02:19):
I mean, every automaker you know seems to be hit,
no matter how big or how small. We've seen various
rivals of bod from from Leap Motor to to Gili
all having to reflect and respond to US, its major
competitor in following through with with similar price cuts, price
cuts which are not necessarily as large as BID, but
(02:43):
still the fact that this will eat into margins and
as we've seen many automakers recover from a prior set
of price wares over the recent period and recent years,
this is a little bit of bad news for the
industry as they've been trying to grap with this transition
and generally speaking have performed very well compared to piers
outside of China, that.
Speaker 1 (03:04):
Is Bloomberg Stanny Lee. In Beijing, the government is considering
a new version of its Made in China twenty twenty
five campaign. We know the aim is to boost production
of high end technological goods and to prioritize technology that
would include chip making equipment. Well. Against that backdrop is
the story on global trade and news today that the
(03:26):
European Union has agreed to fast track trade negotiations with
the US. Here is Bloomberg's MIDMN Low.
Speaker 5 (03:33):
Well.
Speaker 4 (03:34):
Very little is being disclosed publicly for now, but we
know that this is coming ahead of EU officials traveling
to China in July, also ahead of the July nine deadline,
when the US is looking to potentially raise tariffs on
EU goods from twenty to fifty percent. So it looks
like this is an opportunity for both sides to find
(03:55):
out what their stand is in terms of how they
will deal with the US. And this is the those
US threats to the EU not to lean too closely
towards China. It looks like the EU is still playing
this balancing act here because this is the third time
that EU and Chinese official was going to engage publicly.
(04:15):
The European Trade Commissioner, one of the trade representatives traveled
to Beijing in March. That was followed by a video
call in April, and this time you have the Chinese
Commerce Minister one went out traveling to Paris to meet
with his European counterpart on the sidelines of the WTO meeting.
So whether or not this will lead to some or
at least pave the way for some sort of concrete
(04:36):
deliverables in July when those EU officials travel to Beijing,
that is something we want to look out for. Whether
they will continue to perhaps look into picking up discussion
of an investment pact that had been put on hold
for many years, or perhaps lowering tariffs on Chinese evse.
These are of course things to look up for, and
whether they will look to deep in trade cooperation as
(04:57):
well as both sides counter those impact of US tariffs.
Speaker 2 (05:03):
Yeah, and manufacturing strength remaining a theme in China as well.
Speaker 5 (05:06):
Tell us a little bit about this new version.
Speaker 2 (05:08):
Of the Maid in China Plan that Beijing is said
to be preparing.
Speaker 4 (05:13):
Yeah, so, China first introduced a maiden China Plan in
twenty fifteen. It was a ten year plan that's opposed
to sort of expire by twenty twenty five, and we
understand that policymakers are now looking at a new iteration
of this plan, a decade long sort of blueprint to
map out China's manufacturing capabilities over the next ten years,
and once again it is expected to focus on high
(05:35):
tech manufacturing, especially things like chip making gears, given those
cubs from the US and how that threatened China's national security.
Here you can see in the pie chart that manufacturing
has remained a pretty big part of China's share of GDP,
and we understand from policy makers that they plan to
keep that share of GDP contributed by manufacturing stable in
(05:56):
the mid to long term. And again, this doesn't seem
to address that criticism from the US of the trade
imbalance because that concentration in manufacturing has been one of
the key drivers of that imbalance. And this is despite
as well Chinese policy makers acknowledging that they need to
boost domestic consumption. We know there is this ongoing debate
(06:17):
among policy makers as to whether to place a target
on how much consumption should contribute as a share of GDP,
but according to sources, policy makers are still leaning against
putting a target there because they're unsure whether they have
enough policy tools to really ramp up consumption.
Speaker 5 (06:33):
In a big way.
Speaker 1 (06:34):
That is Bloomberg's Minmnlow speaking with Bloomberg's Paul Allen on
the Daybreak Asia podcast. Welcome back to the Daybreak Asia podcast.
I'm Doug Christner. In the currency markets today, the dollar
is hovering near its lowest level in almost two years now.
(06:55):
A portion of this move is tied to a stronger yen. Earlier,
Bank of Japan Governor Kazu Ouweda said the boj will
adjust easing if the economy improves as expected. Even so,
there is no escaping how volatile the dollar has been,
largely the result of US trade policy, and it's causing
investors in Asia to look away from US assets and
(07:18):
examine opportunities in the region. My colleagues at Bloomberg Television
caught up with Juhi on Cio of Murray Asset Global Investments,
and here she is speaking with David Inglace and Yvonne Mann.
Speaker 6 (07:30):
You've kind of shifted more in terms of domestic plays
right now. Tell us what you've been doing.
Speaker 7 (07:35):
We made that changes late last year and the early
this year. So there are two reasons. Of course, the
uncertainties regat in tariff wait on the attractiveness of the exporters.
And secondly, if you just think about the last four
to five years and actually consumption and domestic demand to
relate the stories where have been very weak, much weaker
than the other sectors like a technology and the shells
(07:57):
in China, also in India, which are the major countries
in Asian region. So the well, there are so many
you know the reasons for that, but the key point
is from this year, I think from the government's perspective
as well, these domestic demand sectors are becoming more important
to boost economy. So in China, for example, now we
(08:18):
all know that they for the last for five years
export export has been stronger than expected. So there's no
kind of very the big reason for them to aggressively
in the boost domestic demand. But now they have to, uh,
you know, make the kind of more internal tool to
have less dependence on the US or other external demand.
(08:39):
And also in India, as we sult from early this year,
this finally after two terms of the Moody and finally
this this term, now they are shifting the focus to
the domestic consumption from more investment linked sectors. So that's why,
that's the kind of background why we shifted our focus
to more domestic demand related sectors.
Speaker 2 (09:00):
That change worked out as far as performance goes.
Speaker 7 (09:03):
Yeah, so maybe you still doesn't performance or bid or
shell me or all the Yeah, those actually are performed well.
But in India still the recovery in consumption has been
much slower. So but at least now we have seen
some signs of recovery. So for example, over ninety percent
of NESCI Indian India Index names they already released their earnings,
(09:25):
but over fifty eight percent of that they beat the
market consensus, which is much higher than the average level,
and the only twenty two percent they missed the earnings estimates.
And so even like the earnings vise now we believe
it's kind of going through the bottom now. And also
from the inflation pressure perspective as well, it's still you know,
(09:46):
continue to go down. So that's why there will be
no pressure from the RBI to you know, cut the
weight to boost the domest demand.
Speaker 2 (09:56):
The So you think we bought them in India because
so the market actually led the rally after Liberation Day
from Donald Trump.
Speaker 5 (10:03):
It was one of the best performers.
Speaker 2 (10:04):
And I'm wondering right now from an earnings perspective, do
you think they'll catch up?
Speaker 7 (10:08):
It will be very gradual, I will say. I want
to add, yeah, it's not going to be like a
V shape recovery. But at least, you know, for the
last three to four quarters, you know, this market has
been underperforming while the other in technology sectors or kind
of manufacturing AI you know, the kind of sectors kind
of for performing. So but if you just think about
how underpenetrated so many sectors are in India still with
(10:31):
a huge population, and then you the governments. They are
very aggressive in the boosting domestic demand as well, and
they're also telef issue that unseris is also less so
even though they are still treading at the premium compared
to the other countries. But we have to have a
long term perspective to India. It's actually usually our perspective
to the India is much longer than the other in
(10:51):
other countries. Because yeah, considering this kind of you know,
very positive fundamental reasons.
Speaker 6 (10:57):
You mentioned the shifted domestic I look at your something
top holdings, So TSMC is still in there. This is
very much a very global sort of company as well.
Speaker 7 (11:05):
Yes, having said that, we shifted our focus more to
domestic demand ones, but still we have a dissent and
then good exposure to some explorers for example technology sectors
or industrials. So for example, TSMC is one of the
examples in Taiwan. We believe that they have a bargaining
power which is strong enough to pass on the type
(11:25):
cost to customers. And even though it's still on the
pressure from uncertainties regarding the JV with the Intel and
also you know the AI demand or even there are
so many kind of ertagists are still time. Of course
it's going on, but I think if you just consider
their valuation, which is only like fourteen times next year,
I think a downside risk is manageable. So for the
(11:50):
next you know, like one or two quarters, until all
the uncertainties become clearer, I think it will be you know,
range boundary on the pressure. But we still think that
the oft PTI shop is higher than downside risks. And
then another example is also kind of transformer manufacturer in
Korea as well.
Speaker 2 (12:08):
Yeah, I was going to ask you about since we're
talking about tech in in vidious reporting this week and
so far, have you any key takeaway so far from
the sort of the big tech earnings and what that
means for TSMC or is the bet on TSMC something
something else?
Speaker 7 (12:23):
So I also traveled to Taiwan last week and kept
computer text you know, the conference as well. So I
think that so far, I think the demand and that
all the tones of the of the companies and the
AI demand is still very quite strong and rosy. But
still we have to see the final numbers of coas
you know, the expansion plan from TSMC. There are so
(12:44):
like three or four key factors that we have to
keep watching. So I think the food the second half,
it's still possible that we are going to see some
volatility in the second half, but at least in first half,
I think we still see the momentum to continue to
be strong.
Speaker 6 (13:00):
Talked about a little bit more about the domestic place,
and certainly one thing we're focused on is of course
the consumption side of things in China. Is it still
opportunities there.
Speaker 7 (13:08):
Yes, I think that we have to keep the long
term perspective to consumption opportunities. So because compared to the
other sectors, the consumption and consumers mindset and behaviors patterns,
actually the changes.
Speaker 5 (13:24):
Are much slower.
Speaker 7 (13:25):
So now again for the last four to five years,
it has been very weak and then now it's we
are going through the inflection phase. I would say it's
not an inflection point. So yeah, because of the governments,
they need to put lots of efforts to restore the
confidence and they but luckily this time you know the
very differently gesture to private companies early this year in China.
(13:46):
Actually it's very helpful and very meaningful for consumption as well,
because now I think at the burden to hire more
people or kind of you know, like the improved the
income growth, they kind of burden can be shared by
private companies, which is cash reach tech companies for example.
(14:07):
So I think the government at the same time they
can just take care of the risks coming from property
or local government debt issues. So now I think it's
it's step by step they're going to do more and more.
But the thing is now, because of the delayed negotiations,
the tariff negotiations between the China and the US, I
think that implementation of this, you know, very aggressive. The
(14:28):
similest plan in China is also being delayed. So I
think in terms of timing, initially we thought maybe at
the end of you know, first half or early second half,
but it's kind of keep pushing back in terms of timing.
Speaker 2 (14:41):
That's interesting the way you phrased msorider interrupt. You know,
we for a long time we talk about how China
is using its banks in terms of national service right
to help boost the economy to some extent. Like what
you're saying, correctly, I'm wrong is that they're outsourcing some
of the subsidies for consumption to the private company themselves.
Speaker 5 (15:00):
That comes at the cost of margining.
Speaker 2 (15:02):
And I think the question I have is the are
you concerned about margin pressure?
Speaker 7 (15:07):
Isn't the margin pressure if the reason that the com
private companies they didn't really hire the people or they
didn't really spend on kpex, it's because of lack of confidence.
Also because if you remember in twenty twenty one, the
big regulator crackdown on private sector as well. So now
they are they kind of you know, the negative things
are being restored. So that's why I think they want
(15:29):
to invest a little more and then more, and then
they want to hire more people, and especially in a
tech sector, they need more younger people. And then now
the unemployment issue is actually more material in youth, you know,
the sector. So that's why I think the kind of
the positive you know, virtus cycle is going to be
created from what we saw early this year. So I
(15:52):
think it's going to be very gradual. Again in the
consumption story is always yeah yeah, but the direction wise,
I think it's going to be different from what we
have seen for the last four to five years.
Speaker 5 (16:02):
What is the playbook then?
Speaker 6 (16:04):
I mean, I know you're looking at tourism, you look
at cosmetics in sort of these domestic places.
Speaker 5 (16:08):
Why these sectors. Yeah, So first of all, I think.
Speaker 7 (16:12):
The people they tend to spend more on experiences than goods,
so the tourism is one of them, and also cosmetic
is a good. But actually, you know, they want to
take care of their kind of the beauty or inner
beauty or health. So we have more exposures to healthcare
and or kind of the consumer services in China and
Korea and also in India across Asia.
Speaker 5 (16:36):
The just a hard pivot here.
Speaker 2 (16:38):
The other thing I'm going to ask you is how
has this melt up and treasure yields affected what you do?
Speaker 7 (16:45):
So I believe the impact, of course, you know, usually
the general impact on equity is negative, but I think
from our Asian I'm the investors in Asia perspective, I
think it will be less than we saw in the
past because now very unusual divergence between the treasury yield
and US dollar. So that's why I think because of that,
(17:06):
I think the central banks in emerging Asian countries they
have less pressure when they cut the rates to to
the you know, the boost domestic demand, because now their
currency is relatively strengthening. So that's actually less negative than
we used to see in the past, That's what I
can say.
Speaker 6 (17:26):
And for the dollars, is the path of this resistance
still for the dollar to go lower? Sorry, is the
path of these resistance for the dollars still to go lower.
Speaker 7 (17:34):
It really depends on the further progressing the tariff and
old napologies from the US. But I think so death
is it's very hard to predict, but at least you
know this this this time so many people and then
the governments and central banks they find that it was
tricker for them to think about, oh we I need
(17:56):
some other alternatives. So the trend wise unless we are
going to see very sweet the conclusion of the tariff
and then they are going to do more marketferently policies
like you know, text cuts, what these regulations, because if
there are those three are kind of needs to be
more balanced. So now although the timing of those market
friendly ones are being pushed back, but at least you
(18:19):
know they have to do it considering the midterm election
next year. So it really depends on how fast they
are going to conclude the tariff and then they move
on to the more positive ones.
Speaker 2 (18:28):
Have you seen in your strategies inflows of ALM and
funds because of this you know, US exceptionalism fading away.
And actually the other question there is do you see
a catalyst that might that might spur a reversal in
those flows back into you as at some point this year.
Speaker 7 (18:44):
But our investors finally they think about the non US assets,
so many people they are getting out of the US
you know, exceptionalism. So that's why I think the inflow
wise so far it was not very very much yep,
but I got lots of requests from our clients and
our investors that they are more interested in China or
(19:07):
other non US assets including equities.
Speaker 5 (19:11):
Okay, fantastic, Thank you so much.
Speaker 2 (19:13):
It was great there With Julie on there, we covered
everything CIO of Mira Acid Global Investment.
Speaker 1 (19:23):
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
(19:45):
and Australia. I'm Doug Prisoner and this is Bloomberg
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