July 14, 2025 • 17 mins
Asian equities are poised for a positive open as traders brush off President Donald Trump's latest tariff threats as bargaining tactics that are unlikely to derail global trade. Stock-index futures for Japan, Hong Kong and Australia pointed to a higher open in early Asian trading. The S&P 500 eked out a gain Monday as Trump indicated he's open to trade talks, though still insisted his new tariff rates are "the deals." Contracts for the S&P 500 and the Nasdaq edged lower and Bitcoin retreated from its record high. We get some market perspective from Carol Schleif, Chief Market Strategist at BMO Private Wealth.
Plus - Mizuho Financial Group CEO Masahiro Kihara is signaling that he is confident the Japanese lender can meet its long-term target of about ¥1 trillion - or $6.8 billion - in annual profit even as trade wars threaten to stifle growth. He speaks with Bloomberg's Francine Lacqua in London.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We
begin with the story dominating much of the news cycle, tariffs. Today,
President Trump seemed to be sending mixed signals when it
comes to levies on European goods. He said there's still
room for trade talks with the EU, but Trump also
insisted the letters he recently sent outlining new tariff rates
(00:30):
are final. Well, markets seemed to look past the rhetoric.
US equities pushed higher, and in a moment we'll look
at the tariff story from the Asian perspective and part
of our conversation with the CEO of Misahu Masahiro Kihara.
But we begin here in the States. Joining me now
is Carol Schleife. She is the chief market strategist at
BEMO Private Wealth. Carol is on the line from Chicago.
(00:52):
Good of you to make time to chat with me.
Can we look ahead to the earnings that we're expecting
this week from the big banks. I'm curious as to
what you're expect.
Speaker 3 (01:01):
Expecting good earnings because you actually saw it in the
first quarter already. You saw trading volumes doing very well.
You've seen M and A pickup. We'll be listening closely
to for the commentary around the health of the consumer,
and I think they'll be There's a lot of great
data coming out this week and having the banks kick
things off will be really interesting to watch that. But
(01:21):
you've also got loosened to capital requirements, so you've basically
got a lot of money burning holes in big bank
pockets and I'll want us listen to and see how
they're intending to use that.
Speaker 2 (01:33):
What about the trading revenue side of the equation, given
a lot of the market volatility that we had in
Q two, I would imagine that some of these results
will be pretty robust.
Speaker 3 (01:43):
Yeah, I would think that because we saw surprises already
in the first quarter, and that was before the April
second and all of the subsequent trading, and when you
think through if you remember back to that time, there
was one point in time where we went down five
percent to up five percent, all based on rumor and
take away the rumor, all in the same day, and
that trading revenue will all come into this quarter.
Speaker 2 (02:06):
So I mentioned the tariff story a moment ago. Tomorrow
we get CPI here in the US, and the big
question is whether or not we're going to begin to
see evidence that companies are passing along those higher cost
of imported goods merchandise associated with the tariffs. Would that
be your expectation.
Speaker 3 (02:24):
I would think we're going to see it more in
the PPI than the CPI at this point, and we
might be a quarter two or not necessarily a quarter two,
we might be a month or two away from seeing
it creep through into the CPI because you've got in
a big way because you've had a lot of companies.
Do they brought it over, they hoarded it, They've absorbed
(02:45):
it pretty well, but that's wearing pretty thin, and so
as opposed to looking to the aggregate numbers for it,
I think we'll be looking over the next couple of
weeks and listening really closely to what the company companies
are all saying, particularly the consumer goods companies, and how
they're able to either absorb it or pass it on.
Speaker 2 (03:06):
There were some new research today coming out of twenty
two v research about what investor expectations are for the
average effective tariff rate when the dust settles. That number
is seventeen percent. That seems pretty high. Would that cause
you to kind of take a closer look at a
lot of the holdings that you have on the equity side.
Speaker 3 (03:27):
Not necessarily a closer look, but we think it's pretty absorbable.
Speaker 4 (03:32):
And markets may not be quite that high.
Speaker 3 (03:35):
They might be more like twelve or thirteen percent, But
you know, it's just it's important that we don't lose
sight because I know the administration is very positive about
look at all the tariff revenues that are coming in,
and it's importantly not lose sight that those teriff revenues
are coming out of either consumer or business pockets in
the United States, and sooner or later that's going to
(03:58):
wear away at the margins. And if it's in slightly
slower growth or moderately slower growth, I think the issue
would be the market is not prepared for broader sectoral tariffs,
and we have a shot at getting some of those.
Speaker 4 (04:14):
I think maybe there's partial.
Speaker 3 (04:18):
Expectation too, that the longer we push out these full
country tariffs, the likelier we are to see some sort
of legal overturning. Because the testimony in those in that
case starts in I think it's July thirty.
Speaker 2 (04:32):
First, so I'm wondering whether the uncertainty around tariffs and
the impact in terms of the inflationary impact or the
inflationary pressure that these tariffs may create, really keeps the
FED on the sidelines for perhaps longer than the period
that would take us through September.
Speaker 3 (04:50):
Our expectation is still in September, and you may see
enough continued wear and tear on the economy by then
that the FED feels compelled to go ahead, and because
they're not necessarily going to wait for hard data to
come through, and by the time we get to September,
you will have you'll have a couple more CPI prints,
a couple more PPI prints, You'll have some data for
(05:12):
the FED to start looking at. And we do think
you'll see a continued deceleration if you will. We're not
looking We don't think it's recessionary, but we do think
that you're impacting the strong growth We came into January
with I.
Speaker 2 (05:27):
Want to focus a little bit if we can, on
one industry, in particular, artificial intelligence. Today, Mark Zuckerberg said
that Meta is going to be building massive data centers
to power AI. Elon Musk saying that Tesla shareholders will
be voting soon on whether to invest in Musk's startup Xai,
and tomorrow in Pennsylvania, President Trump will be announcing a
(05:49):
seventy billion dollar investment package that will focus not only
on AI but energy generation as well. Are you still
playing this and if so, how is that unfolding in
your portfolio?
Speaker 3 (06:03):
I think it's hard not to play it if you will,
in terms of I mean just owning a plan ol
INDICX fund in any of the technology names, and you're
at least market weighted, if not overweighted, in that play.
And we do think the combination of that and some
of the more pro growth, pro business friendly aspects of
(06:25):
the one big beautiful bill that was passed last week
or the week before, those things do put some nice
support underneath. So that's one of the reasons why we're
not out there with a massive recessionary call. And that
could help surprise relative to employment too, because you've got
tighter labor markets in there.
Speaker 4 (06:43):
And if you get some support.
Speaker 3 (06:45):
Where companies are hiring again because they need to hire
for construction workers, they're going to need to pay those
workers a little more than they historically have.
Speaker 4 (06:54):
If you will, we're going to put up.
Speaker 3 (06:55):
Those data centers leverage AI across a variety of industries,
and we don't think it's close to the final innings.
It's definitely in the early and still in terms of
the build out there in much the same way as
you're probably in the mid nineties, not the late nineties,
when we were building out the infrastructure for the Internet
to begin with.
Speaker 2 (07:16):
The other thing that's happened under the Trump administration is
this embracing of cryptocurrencies. House Republicans have declared this week
as Crypto Week. We've got three bills on the agenda
on the House side. Maybe a regulatory framework begins to emerge,
and maybe some institutional investor appetite begins to occur around crypto.
(07:38):
And as I'm speaking to you, Carol, bitcoin is above
one hundred and twenty thousand, which is hard to believe
because when President Trump was elected to his second term,
I think bitcoin was under seventy thousand. So this has
been a pretty phenomenal run. And I'm curious as to
how you're feeling about it.
Speaker 4 (07:56):
It's interesting, it's something we've watched.
Speaker 3 (07:58):
It still feels like it's in the speculative zone pieces
of it, but build again, building out the infrastructure of it,
watching it, by having a regulatory.
Speaker 4 (08:07):
Framework of it will help.
Speaker 3 (08:09):
And I think we need to pick a handful of
industries that we want to make sure we stay at
the forefront of and you know, trying to bring some
battery technology back, whether it's restarting some of the nuclear energy,
because it's one thing. All of this stuff is going
to take energy on the grid and we're not going
to get there just by.
Speaker 4 (08:31):
Pumping oil and drilling coal.
Speaker 2 (08:33):
Okay, Carol, We'll leave it there. Thank you so very much.
Carol Schleife. She is the chief market strategist at BEMO
Private Wealth. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner,
the CEO of Japan's third largest bank, says the US
(08:55):
will continue to be an important trading partner for Japan
even with tariff uncertain still. Misuvo CEO Masahiro Kihara says
Japan will need to diversify away from its second biggest
trading partner. Kihara spoke with Bloomberg's friends in Laquaw in London. Here.
Speaker 1 (09:12):
As part of their conversation, mister Kihara Thank you so
much for speaking to us here at Bloomberg. Now, how
confident are you about reaching the one trillion en profit
within a few years given all the global uncertainty and
given what we heard on tariffs and trade.
Speaker 5 (09:26):
Thank you very much for having me. In fact, I
think from a current earning profile, I think we have
almost reached one trillion. Again, actually we had eight hundred
last year. We had eight hundred eighty billion. We took
one time losses around somewhere around one hundred and twenty
(09:48):
billion actually, so I think in reality we reached one trillion.
Thanks for all the you know, circumstances.
Speaker 1 (09:56):
But what does the uncertainty do? The uncertainty surrounding some
of the Trump policy and trading.
Speaker 5 (10:00):
Yes, yes, so before April second, we were aiming on
somewhere around one point one trillion for this year. Actually, however,
because of all the uncertaintyes, we sort of shrink it
down from as a conservative base to nine hundred and
fifty trillion. I'm sorry, nine hundred and fifty billion yen.
(10:22):
But I think you know, when things get certain, the
corporate action will come back, which means that we can
wratchet up a little bit. Yeah, our guide.
Speaker 1 (10:34):
So where are you seeing that uncertainty play into right now?
Is it loans? Is it cheap executives not spending, not
deploying cash?
Speaker 5 (10:41):
Yes, right now, the CEOs are very very on the sidelines. Actually,
But for example, if it is a domestic deal, even
in each region, if it is a domestic deal, things
are happening, which means that we don't see a lot
of crossworder happening right now. All of them are. We
(11:01):
have a big chunk of pipeline, but they're not executed.
But from a domestically perspective, people are moving a little bit,
so I think, you know, there is a good chance
that people will get confident at some point.
Speaker 1 (11:13):
You've also built up a US investment bank basically franchise.
How's that going?
Speaker 5 (11:19):
So we're started from building the capital markets by ourself.
We went to equity capital markets, M and A was
missing for us, but we purchased Greenhill, and I think
at this moment we have the necessary pieces on the
ground actually, so I'm very very looking forward to see
(11:40):
the synergies between our former missile platform and the Green
Hill platform to materialize.
Speaker 1 (11:46):
Actually, do you plan to take the model of the
successful investment bank that you build and actually apply it elsewhere,
including an Asia.
Speaker 5 (11:54):
Yes, so we would like to uh sort of use
our US capabilities transplanted to Europe Asia and so that
the also even in Japan, so that there will be
(12:15):
cross regional collaboration between our regions and so that and
I think that will bring our next growth.
Speaker 1 (12:22):
Actually, how much of your growth will be organic and
how much will be through mergers and acquisitions.
Speaker 5 (12:28):
From now on on. I think we did the Green
Hill deal. It's very important that we make sure that
the synergies will be built out and for us, the
next growth will basically be organic.
Speaker 1 (12:44):
Okay, because you said in the past that you weren't
used to or you didn't want to, for example, interested
in buying some traditional commercial banks with a physical branch network.
So that's still that's still the case. That's that's still
the case. But how do you seem it's so changing
actually in the next four to five years.
Speaker 5 (12:59):
Yeah, So, I mean there are a couple of areas
that should be interesting for us, just as I said, UH,
investment banking, regional collaboration that will bring a lot of
synergies inside our institution. Also, as you may know, as
a management. Wealth management is growing in Japan and this
(13:20):
will be another area and also one of one more
area that will be very interesting will be Japanese midcaps actually,
so the medcaps are keen to grow or if they
can outgrow, they might deal list. And there are a
couple many corporate actions happening in that space. So I
think this will be another interesting area for US.
Speaker 1 (13:40):
Is competition very fierce in wealth management?
Speaker 5 (13:44):
Yes, it is very high competitive, but I think the
thing is that the overall market is growing and that
is beneficial for all of the banks.
Speaker 4 (13:57):
I think yeah.
Speaker 1 (13:58):
And on the medcap is there something so if it,
will it be basically lending that they need or all services?
Speaker 5 (14:03):
As they grow there will be advisory and also lending,
so both how.
Speaker 1 (14:09):
Do you see them? You know, Japanese landscape for businesses changing,
how much will they look? I mean Japan has been
a great experiment right in terms of financials for a
lot of time. Yes, is it companies that will then
grow also abroad as economy stabilizes.
Speaker 5 (14:25):
I would say that if right now there's many uncertainties,
but things get clearer, the corporate action will come back.
These couple of years, we have seen many corporate actions
happening investing outside Japan, you know, changing their business s, portfolio,
(14:49):
misk selling parts of the business that they are not
doing well, so concentrating the areas that has strengths. So
I would say that once things get clearer, corporate action
will come back and many you know, Japanese corporates will
try to invest in outside of Japan too.
Speaker 1 (15:07):
Are you confident in the Japanese economy overall? Over?
Speaker 5 (15:11):
I think we still have strengths in the economy sectors
that we have, so I think over we are very
I am very confident in that. The thing is that
we have to concentrate our resources in the area that
(15:31):
we have strengths. We have high quality manufacturing, high quality
you know products, So I think we need to figure
out where the strengths are and try to sell it
to the world.
Speaker 1 (15:46):
Do you worry or are there dangers actually to Japan
given the spike and long term interest rates.
Speaker 5 (15:52):
Yes, so twenty years so for the long end es
for the twenty years thirty years, there has been spike
and there has been volatility, but I think the government
said that they will try to shift the issuance to
a ten years below. I think that BOJ is a
(16:12):
little bit shrinking, is qt. I think that will help.
Speaker 1 (16:16):
Is there a point where it actually starts shirting your
business and starts shirting the real economy?
Speaker 5 (16:22):
Well, I think BOJ is saying that the neutral rate
is somewhere around one point one percent to one point
five percent, and on top of that, ten years will
be somewhere around two to two point two five percent.
Then I think that that's the level that is okay.
But if it goes beyond to three percent or so,
(16:43):
they will then hurt the budget.
Speaker 1 (16:44):
I think, are you expecting more turmoil in you know,
in the end, but also not in the bond.
Speaker 5 (16:50):
Market, not at this moment. Actually, I think the current
level of one point four one point five for ten
years is very It's okay, I think, you know, and
we have I haven't seen any turmol in the ten
years old. So as long as the ten year is fine,
I think it's fine.
Speaker 2 (17:08):
That is masahiro Kihara, the CEO of Misoho, speaking with
Bloomberg's friend Sine Laqua 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
(17:29):
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
and Australia. I'm Doug Chrisner, and this is Bloomberg
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Daybreak Asia podcast. I'm Doug Krisner. We
begin with the story dominating much of the news cycle, tariffs. Today,
President Trump seemed to be sending mixed signals when it
comes to levies on European goods. He said there's still
room for trade talks with the EU, but Trump also
insisted the letters he recently sent outlining new tariff rates
(00:30):
are final. Well, markets seemed to look past the rhetoric.
US equities pushed higher, and in a moment we'll look
at the tariff story from the Asian perspective and part
of our conversation with the CEO of Misahu Masahiro Kihara.
But we begin here in the States. Joining me now
is Carol Schleife. She is the chief market strategist at
BEMO Private Wealth. Carol is on the line from Chicago.
(00:52):
Good of you to make time to chat with me.
Can we look ahead to the earnings that we're expecting
this week from the big banks. I'm curious as to
what you're expect.
Speaker 3 (01:01):
Expecting good earnings because you actually saw it in the
first quarter already. You saw trading volumes doing very well.
You've seen M and A pickup. We'll be listening closely
to for the commentary around the health of the consumer,
and I think they'll be There's a lot of great
data coming out this week and having the banks kick
things off will be really interesting to watch that. But
(01:21):
you've also got loosened to capital requirements, so you've basically
got a lot of money burning holes in big bank
pockets and I'll want us listen to and see how
they're intending to use that.
Speaker 2 (01:33):
What about the trading revenue side of the equation, given
a lot of the market volatility that we had in
Q two, I would imagine that some of these results
will be pretty robust.
Speaker 3 (01:43):
Yeah, I would think that because we saw surprises already
in the first quarter, and that was before the April
second and all of the subsequent trading, and when you
think through if you remember back to that time, there
was one point in time where we went down five
percent to up five percent, all based on rumor and
take away the rumor, all in the same day, and
that trading revenue will all come into this quarter.
Speaker 2 (02:06):
So I mentioned the tariff story a moment ago. Tomorrow
we get CPI here in the US, and the big
question is whether or not we're going to begin to
see evidence that companies are passing along those higher cost
of imported goods merchandise associated with the tariffs. Would that
be your expectation.
Speaker 3 (02:24):
I would think we're going to see it more in
the PPI than the CPI at this point, and we
might be a quarter two or not necessarily a quarter two,
we might be a month or two away from seeing
it creep through into the CPI because you've got in
a big way because you've had a lot of companies.
Do they brought it over, they hoarded it, They've absorbed
(02:45):
it pretty well, but that's wearing pretty thin, and so
as opposed to looking to the aggregate numbers for it,
I think we'll be looking over the next couple of
weeks and listening really closely to what the company companies
are all saying, particularly the consumer goods companies, and how
they're able to either absorb it or pass it on.
Speaker 2 (03:06):
There were some new research today coming out of twenty
two v research about what investor expectations are for the
average effective tariff rate when the dust settles. That number
is seventeen percent. That seems pretty high. Would that cause
you to kind of take a closer look at a
lot of the holdings that you have on the equity side.
Speaker 3 (03:27):
Not necessarily a closer look, but we think it's pretty absorbable.
Speaker 4 (03:32):
And markets may not be quite that high.
Speaker 3 (03:35):
They might be more like twelve or thirteen percent, But
you know, it's just it's important that we don't lose
sight because I know the administration is very positive about
look at all the tariff revenues that are coming in,
and it's importantly not lose sight that those teriff revenues
are coming out of either consumer or business pockets in
the United States, and sooner or later that's going to
(03:58):
wear away at the margins. And if it's in slightly
slower growth or moderately slower growth, I think the issue
would be the market is not prepared for broader sectoral tariffs,
and we have a shot at getting some of those.
Speaker 4 (04:14):
I think maybe there's partial.
Speaker 3 (04:18):
Expectation too, that the longer we push out these full
country tariffs, the likelier we are to see some sort
of legal overturning. Because the testimony in those in that
case starts in I think it's July thirty.
Speaker 2 (04:32):
First, so I'm wondering whether the uncertainty around tariffs and
the impact in terms of the inflationary impact or the
inflationary pressure that these tariffs may create, really keeps the
FED on the sidelines for perhaps longer than the period
that would take us through September.
Speaker 3 (04:50):
Our expectation is still in September, and you may see
enough continued wear and tear on the economy by then
that the FED feels compelled to go ahead, and because
they're not necessarily going to wait for hard data to
come through, and by the time we get to September,
you will have you'll have a couple more CPI prints,
a couple more PPI prints, You'll have some data for
(05:12):
the FED to start looking at. And we do think
you'll see a continued deceleration if you will. We're not
looking We don't think it's recessionary, but we do think
that you're impacting the strong growth We came into January
with I.
Speaker 2 (05:27):
Want to focus a little bit if we can, on
one industry, in particular, artificial intelligence. Today, Mark Zuckerberg said
that Meta is going to be building massive data centers
to power AI. Elon Musk saying that Tesla shareholders will
be voting soon on whether to invest in Musk's startup Xai,
and tomorrow in Pennsylvania, President Trump will be announcing a
(05:49):
seventy billion dollar investment package that will focus not only
on AI but energy generation as well. Are you still
playing this and if so, how is that unfolding in
your portfolio?
Speaker 3 (06:03):
I think it's hard not to play it if you will,
in terms of I mean just owning a plan ol
INDICX fund in any of the technology names, and you're
at least market weighted, if not overweighted, in that play.
And we do think the combination of that and some
of the more pro growth, pro business friendly aspects of
(06:25):
the one big beautiful bill that was passed last week
or the week before, those things do put some nice
support underneath. So that's one of the reasons why we're
not out there with a massive recessionary call. And that
could help surprise relative to employment too, because you've got
tighter labor markets in there.
Speaker 4 (06:43):
And if you get some support.
Speaker 3 (06:45):
Where companies are hiring again because they need to hire
for construction workers, they're going to need to pay those
workers a little more than they historically have.
Speaker 4 (06:54):
If you will, we're going to put up.
Speaker 3 (06:55):
Those data centers leverage AI across a variety of industries,
and we don't think it's close to the final innings.
It's definitely in the early and still in terms of
the build out there in much the same way as
you're probably in the mid nineties, not the late nineties,
when we were building out the infrastructure for the Internet
to begin with.
Speaker 2 (07:16):
The other thing that's happened under the Trump administration is
this embracing of cryptocurrencies. House Republicans have declared this week
as Crypto Week. We've got three bills on the agenda
on the House side. Maybe a regulatory framework begins to emerge,
and maybe some institutional investor appetite begins to occur around crypto.
(07:38):
And as I'm speaking to you, Carol, bitcoin is above
one hundred and twenty thousand, which is hard to believe
because when President Trump was elected to his second term,
I think bitcoin was under seventy thousand. So this has
been a pretty phenomenal run. And I'm curious as to
how you're feeling about it.
Speaker 4 (07:56):
It's interesting, it's something we've watched.
Speaker 3 (07:58):
It still feels like it's in the speculative zone pieces
of it, but build again, building out the infrastructure of it,
watching it, by having a regulatory.
Speaker 4 (08:07):
Framework of it will help.
Speaker 3 (08:09):
And I think we need to pick a handful of
industries that we want to make sure we stay at
the forefront of and you know, trying to bring some
battery technology back, whether it's restarting some of the nuclear energy,
because it's one thing. All of this stuff is going
to take energy on the grid and we're not going
to get there just by.
Speaker 4 (08:31):
Pumping oil and drilling coal.
Speaker 2 (08:33):
Okay, Carol, We'll leave it there. Thank you so very much.
Carol Schleife. She is the chief market strategist at BEMO
Private Wealth. Joining us here on the Daybreak Asia podcast.
Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner,
the CEO of Japan's third largest bank, says the US
(08:55):
will continue to be an important trading partner for Japan
even with tariff uncertain still. Misuvo CEO Masahiro Kihara says
Japan will need to diversify away from its second biggest
trading partner. Kihara spoke with Bloomberg's friends in Laquaw in London. Here.
Speaker 1 (09:12):
As part of their conversation, mister Kihara Thank you so
much for speaking to us here at Bloomberg. Now, how
confident are you about reaching the one trillion en profit
within a few years given all the global uncertainty and
given what we heard on tariffs and trade.
Speaker 5 (09:26):
Thank you very much for having me. In fact, I
think from a current earning profile, I think we have
almost reached one trillion. Again, actually we had eight hundred
last year. We had eight hundred eighty billion. We took
one time losses around somewhere around one hundred and twenty
(09:48):
billion actually, so I think in reality we reached one trillion.
Thanks for all the you know, circumstances.
Speaker 1 (09:56):
But what does the uncertainty do? The uncertainty surrounding some
of the Trump policy and trading.
Speaker 5 (10:00):
Yes, yes, so before April second, we were aiming on
somewhere around one point one trillion for this year. Actually, however,
because of all the uncertaintyes, we sort of shrink it
down from as a conservative base to nine hundred and
fifty trillion. I'm sorry, nine hundred and fifty billion yen.
(10:22):
But I think you know, when things get certain, the
corporate action will come back, which means that we can
wratchet up a little bit. Yeah, our guide.
Speaker 1 (10:34):
So where are you seeing that uncertainty play into right now?
Is it loans? Is it cheap executives not spending, not
deploying cash?
Speaker 5 (10:41):
Yes, right now, the CEOs are very very on the sidelines. Actually,
But for example, if it is a domestic deal, even
in each region, if it is a domestic deal, things
are happening, which means that we don't see a lot
of crossworder happening right now. All of them are. We
(11:01):
have a big chunk of pipeline, but they're not executed.
But from a domestically perspective, people are moving a little bit,
so I think, you know, there is a good chance
that people will get confident at some point.
Speaker 1 (11:13):
You've also built up a US investment bank basically franchise.
How's that going?
Speaker 5 (11:19):
So we're started from building the capital markets by ourself.
We went to equity capital markets, M and A was
missing for us, but we purchased Greenhill, and I think
at this moment we have the necessary pieces on the
ground actually, so I'm very very looking forward to see
(11:40):
the synergies between our former missile platform and the Green
Hill platform to materialize.
Speaker 1 (11:46):
Actually, do you plan to take the model of the
successful investment bank that you build and actually apply it elsewhere,
including an Asia.
Speaker 5 (11:54):
Yes, so we would like to uh sort of use
our US capabilities transplanted to Europe Asia and so that
the also even in Japan, so that there will be
(12:15):
cross regional collaboration between our regions and so that and
I think that will bring our next growth.
Speaker 1 (12:22):
Actually, how much of your growth will be organic and
how much will be through mergers and acquisitions.
Speaker 5 (12:28):
From now on on. I think we did the Green
Hill deal. It's very important that we make sure that
the synergies will be built out and for us, the
next growth will basically be organic.
Speaker 1 (12:44):
Okay, because you said in the past that you weren't
used to or you didn't want to, for example, interested
in buying some traditional commercial banks with a physical branch network.
So that's still that's still the case. That's that's still
the case. But how do you seem it's so changing
actually in the next four to five years.
Speaker 5 (12:59):
Yeah, So, I mean there are a couple of areas
that should be interesting for us, just as I said, UH,
investment banking, regional collaboration that will bring a lot of
synergies inside our institution. Also, as you may know, as
a management. Wealth management is growing in Japan and this
(13:20):
will be another area and also one of one more
area that will be very interesting will be Japanese midcaps actually,
so the medcaps are keen to grow or if they
can outgrow, they might deal list. And there are a
couple many corporate actions happening in that space. So I
think this will be another interesting area for US.
Speaker 1 (13:40):
Is competition very fierce in wealth management?
Speaker 5 (13:44):
Yes, it is very high competitive, but I think the
thing is that the overall market is growing and that
is beneficial for all of the banks.
Speaker 4 (13:57):
I think yeah.
Speaker 1 (13:58):
And on the medcap is there something so if it,
will it be basically lending that they need or all services?
Speaker 5 (14:03):
As they grow there will be advisory and also lending,
so both how.
Speaker 1 (14:09):
Do you see them? You know, Japanese landscape for businesses changing,
how much will they look? I mean Japan has been
a great experiment right in terms of financials for a
lot of time. Yes, is it companies that will then
grow also abroad as economy stabilizes.
Speaker 5 (14:25):
I would say that if right now there's many uncertainties,
but things get clearer, the corporate action will come back.
These couple of years, we have seen many corporate actions
happening investing outside Japan, you know, changing their business s, portfolio,
(14:49):
misk selling parts of the business that they are not
doing well, so concentrating the areas that has strengths. So
I would say that once things get clearer, corporate action
will come back and many you know, Japanese corporates will
try to invest in outside of Japan too.
Speaker 1 (15:07):
Are you confident in the Japanese economy overall? Over?
Speaker 5 (15:11):
I think we still have strengths in the economy sectors
that we have, so I think over we are very
I am very confident in that. The thing is that
we have to concentrate our resources in the area that
(15:31):
we have strengths. We have high quality manufacturing, high quality
you know products, So I think we need to figure
out where the strengths are and try to sell it
to the world.
Speaker 1 (15:46):
Do you worry or are there dangers actually to Japan
given the spike and long term interest rates.
Speaker 5 (15:52):
Yes, so twenty years so for the long end es
for the twenty years thirty years, there has been spike
and there has been volatility, but I think the government
said that they will try to shift the issuance to
a ten years below. I think that BOJ is a
(16:12):
little bit shrinking, is qt. I think that will help.
Speaker 1 (16:16):
Is there a point where it actually starts shirting your
business and starts shirting the real economy?
Speaker 5 (16:22):
Well, I think BOJ is saying that the neutral rate
is somewhere around one point one percent to one point
five percent, and on top of that, ten years will
be somewhere around two to two point two five percent.
Then I think that that's the level that is okay.
But if it goes beyond to three percent or so,
(16:43):
they will then hurt the budget.
Speaker 1 (16:44):
I think, are you expecting more turmoil in you know,
in the end, but also not in the bond.
Speaker 5 (16:50):
Market, not at this moment. Actually, I think the current
level of one point four one point five for ten
years is very It's okay, I think, you know, and
we have I haven't seen any turmol in the ten
years old. So as long as the ten year is fine,
I think it's fine.
Speaker 2 (17:08):
That is masahiro Kihara, the CEO of Misoho, speaking with
Bloomberg's friend Sine Laqua 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
(17:29):
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
and Australia. I'm Doug Chrisner, and this is Bloomberg
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