September 22, 2025 • 18 mins
Wall Street traders defied calls for a breather after a $15 trillion stock rally from April lows, with Nvidia Corp. boosting optimism on artificial intelligence after pledging to invest as much as $100 billion in OpenAI. Tech led gains in the S&P 500, with the US equity benchmark hitting its 28th record this year. The world's largest chipmaker rallied about 4%. Its investment is intended to help OpenAI build data centers with a capacity of 10 gigawatts of power using Nvidia's advanced AI chips to train and deploy OpenAI's models. For a closer look at the market landscape, we hear from Michael Green, Chief Strategist at Simplify Asset Management.
Meanwhile, Asian stocks posted a modest gain at the open. Gauges in Australia and South Korea rose while equity-index futures for Hong Kong — facing its most damaging typhoon since 2018 — were flat. For more on markets, we get the views of Daniel Lam, Head of Equity Strategy at Standard Chartered Wealth Solutions. He speaks with Bloomberg's Shery Ahn and Avril Hong on The Asia Trade.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner.
The US equity market has posted a fifteen trillion dollar
rally from those April lows, and today Wall Street defied
calls for a breather. The S and P five hundred
hit it's twenty eighth record of the year, and tech
led the way. Nvidia rallied four percent after announcing an
(00:31):
investment of up to one hundred billion dollars in open Ai. Now.
The aim here is to build next generation open AI
data centers powered by Nvidia's advanced AI chips. Man Deep
Singh is Global head of Tech Research at Bloomberg Intelligence.
Speaker 3 (00:46):
When I look at Nvidia, clearly, you know they're at
a two hundred billion dollar round rate, growing exceptionally well,
and they have to keep up the growth rate. So
now that they can't really sell to China market or
at least there's uncertain they have to find those avenues,
and the biggest avenue is open ai.
Speaker 2 (01:04):
That is Bloomberg's Man Deep sing there. Now, this deal
will boost open AI's ability to train models like chat, GPT,
and it will also strengthen Invidia's dominance in AI. In
a moment or two, we'll get some perspective from the
Asia Pacific. We'll hear from Daniel Lamb, head of equity
strategy at Standard Chartered Wealth Solutions, but we begin here
in the States. Joining me now is Michael Green. He
(01:27):
is chief strategist at Simplify Asset Management. Michael, thank you
so much for making time to chat with me. I
mentioned a moment ago the twenty eighth record high of
the year for the S and P five hundred. That's
a pretty astounding statistic right now, given the fact that
we're looking at lofty valuations I think around twenty five
times earnings for the overall S and P. Are you
(01:48):
a little concerned about where we are in terms of
the overall market?
Speaker 4 (01:53):
Well, I am concerned and would emphasize that the earnings
that we're reporting and that valuation is against extraordinarily elevated
earnings in the technology sector. If we look more broadly
at the market, the Russell two thousand, for example, the
generally accepted accounting principles gap earnings have now actually turned negative.
(02:13):
That typically only happens during periods that are recessionary or
near recessionary conditions. The question now becomes is this narrowness
in terms of the earnings performance is it going to continue?
And unfortunately, I'd point to things like the vendor financing
that you just highlighted, where in video is taking an
equity stake in open Ai. Open Ai is using that
(02:34):
equity infusion to buy in video products. That's a game
that only goes on for a certain period of time.
Speaker 2 (02:41):
I remember Cisco Systems doing something similar back in the
nineteen nineties. How are you hedged right now against your
concerns that maybe we enter an environment of a little
bit of equity market weakness.
Speaker 4 (02:53):
Well, one of the things that we do, the product
that I manage for Simplify is a high yield product.
There we're able to take advantage of a couple of
feet features in the high yield space, but one of
which is to apply and overlay to that that we're
creating a hedge that's targeted at credit spread widening without
the negative cost associated with CDs. Now, to be totally fair,
(03:13):
we're actually concerned enough that credit spreads have been driven tighter,
particularly in the paper markets, which suggests that there's a
shortage of new issuance paper to refinance existing expiring paper.
That means the paper that's left in the market, the
high yeld that's left in the market, is being bid
extraordinarily tight. That's true not only in absolute terms, but
also now relative to say high yield CDs, which remains
(03:36):
above three hundred, while the high yield cash market is
actually in the two sixty range. That's an unusual divergence,
and we would suggest that that basis suggests there's more
concern than the market currently has.
Speaker 2 (03:48):
Very interesting today we had three different FED presidents warning
against further rate cuts, basically all pointing to the idea
that inflation still is an issue. I understand that there's
weakness in the labor market, and that certainly was the
justification for last week's quarter point rate cut. How are
you feeling about the FED right now vis a VI
(04:10):
both the job market and inflation.
Speaker 4 (04:14):
Well, I think on the inflation front that's where my
concern sits as well. There's a seasonal pattern to inflation
that is supposed to be canceled out with the BLS adjustments. Unfortunately,
that uses a trailing five year period and because of
the disruptions of the pandemic and the Russian invasion of Ukraine.
We've gotten a very asymptomatic or atypical I'm sorry, inflation
(04:39):
pattern that is creating lower than expected inflation during the summers,
when we traditionally would have seen high gasoline prices to
offset travel. Now we're actually seeing the inflation relatively low
in the summers, rising in the fourth quarter as more
and more companies have become accustomed to price hikes to
offset inflation. My expectation is that that is going to
(05:02):
play through. We'll start to see that data in October.
That very well may derail some of the thoughts that
the Fed is going to be more aggressive, in line
with what Stephen Moran spoke about today.
Speaker 2 (05:14):
Yeah, he thinks the neutral rate is around two and
a half percent. He thinks we're well well above that
and very restrictive right now. Does he have a point
or is he basically carrying water for what the administration
would like to see.
Speaker 4 (05:28):
Well, I think, unfortunately the answer is both, and candidly,
his analysis that he released today said, I did the
calculations today to support the indication of rate cut expectations
and the terminal rate that I produced last week, and
so unfortunately that suggests that it was political, and now
he's scrambling for an explanation behind it. Unfortunately, I actually
(05:50):
agree with his explanation. I think with the labor force
growth having basically turned to zero, you're hearing your own
power and others refer to the incredibly low level of
job creation. That's saying effectively the same thing. The only
thing that we really have for us at this point
is productivity. What puts us right back into the camp
of is the AI boom going to deliver or instead,
(06:13):
is the construction associated with the AI inflating GDP and
when that begins to retreat. If I'm correct about my
concerns on financing or other components, then we can see
the weakness in economic activity manifests itself in an accelerated fashion.
So I actually lean towards Moran's point. I think he's
ultimately correct that the interest rates are too high, but
(06:36):
I think unfortunately he presented it in a way that
suggests it was largely political in nature.
Speaker 2 (06:43):
I'm wondering whether or not you think it's a little risky.
We were talking about elevated valuations for the US equity
market to seek shelter. If you're going to remain exposed
to equities in markets outside the US, and whether or
not there is a risk that if we get some
sort of downdraft in this states, that that could then
in turn spread to other markets. So that kind of
(07:04):
trying to remain diversified maybe in the current setting is
not a real strong strategy.
Speaker 4 (07:11):
Well, I think there's two separate issues associated with it. One,
we actually saw evidence of something that I continually emphasize
in discussions, which is the increasing inelasticity of the market,
basically large price changes to relatively small fault flows in volume.
European markets rallied sharply in the February time period in
(07:32):
response to the idea that the European Union is going
to dramatically increase defense spending, et cetera. That's a good
indication of that. We saw similar behavior in the Russell
two thousand around the June time period when it was
believed that we were going to see additional stimulus and
that tariffs were going to be removed. Those are really
just reflections of relatively small sums of money moving to
(07:54):
try to take advantage of those insights that in turn
causes prices to rise dramatically, and so while I will
not say that it's impossible for European stocks to perform
while US stocks are not performing, the suggestion that I
would emphasize is that ultimately the slowing economy in the
United States, as the consumer to the world, represents a
key risk to almost all economies. The traditional expression is
(08:17):
when the US sneezes, the rest of the world gets
a cold. I think that's even more true in an
environment in which the trade deficits are running as large
as they have been running.
Speaker 2 (08:26):
I'd like to get your take on what's been happening
with the gold market and the degree to which central
banks have been large buyers here, and whether or not
that in itself represents a little bit of risk, which
is to say, if there is a downdraft and central
banks need to fund some type of action, whether it's
to defend a currency or maybe even prop up problems
(08:48):
in their respective bond markets, that gold could be vulnerable.
Speaker 4 (08:52):
So I think there's definitely some vulnerability that exists. Again, gold,
very much like the inflation pattern that I was emphasizing,
was influence by the events of June twenty two, when
the US government decided to take Russia's reserves in the
form of treasuries that sent an alarm bell to China
and other countries that potentially oppose the United States. Under
(09:13):
various circumstances, they began to diversify their reserves quite aggressively.
No longer flowing them in the trade deficit receipts that
they have because they're running a trade surplus with the
United States, they redirected those flows into gold, powering a
gold move that has now been picked up by the
US retail public and is advancing rapidly, even as interest
(09:36):
rates aren't confirming this type of move. We're seeing no
real indication of genuine inflation fears. Instead, this appears to
be very aggressive speculation continuing a move.
Speaker 2 (09:46):
Michael will leave it there. Thank you so very much
for making time to chat with us. Michael Green is
the chief strategist at Simplify Asset Management, joining us here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia podcast Time Derek Krisner. The US equity market has
(10:07):
been up now for three straight weeks, and expectations for
those fed rate cuts have been a big part of
this story. We had one analyst today over at Goldman Sachs,
saying that investors should be responsibly bullish on stocks. For more,
we heard from Daniel Lamb. He is head of equity
strategy at Standard Chartered Wealth Solutions. He spoke with Bloomberg
TV host Sherry On and April Hong on the Asia trade.
Speaker 5 (10:31):
US stock's doing well, Daniel, we are seeing a lack
of volatility, though, what do we do with that information?
How should we be positioning well?
Speaker 6 (10:41):
From volatility front? This really macro versus micro Okay, So
with the macro front, we already know that the job
numbers are not looking so good, so that prompt you know,
the comment from you know, from the Fed overnight about
being more aggressive on the rate cut. Okay, but on
that front is actually a double edged sword where basically
(11:02):
the fat wants to cut, but they're also wary of
the return of inflation. And let's not forget right back
until to one. They've lost a lot of credibility by
saying that inflation is transitory, Okay, so they don't want
to make the similar mistakes again right now. On the
other hand, micro fund, of course you're saying it's great,
we know that Nvidia is powering up again. Investing in
(11:25):
open AI and that brings the whole sector up. Okay,
So it's macro versus micro. So what's going to win out? Well, basically,
the way we see it is that on the pullbacks,
on any pullbacks of US equities, especially on the tech side,
one should we be adding because we do see that
this investment in AI is a structural story. So bio
(11:50):
dips on tech.
Speaker 5 (11:52):
Okay, bio dips. You said, bring the whole sector up?
Speaker 3 (11:56):
Right?
Speaker 5 (11:57):
What interesting is some of these sleepier trades in tech
they've researched. You look at Oracle, you look at some
of these chip equipment names. What is your assessment. Do
you think this is because there is enough AI demand
to lift all boats? Or is this because some of
the market leaders are getting too expensive and then people
(12:17):
are searching for secondary trades.
Speaker 6 (12:20):
Well, I would say that the market leaders in what
they do are the ones that one should be seeking after.
It's because the fact that you know AI investment is
benefiting you know, the biggest players, and not necessarily all
the players can make it. I mean, that's going to
be the evangelity, right, So if your bound dips, you
(12:45):
should be going for the biggest player on each of
the field right for the medium to the longer term.
Speaker 1 (12:51):
Given the tech exuberans in the US, we're also seeing
those tech names across Asia rally. But at the same time,
wrongly speaking, MSCI Asia now perhaps headed for its best
annual our performance over the S and P five hundred
and twenty seventeen or so. What's leading to that divergence
or perhaps that our performance here in the Asian benchmarks
(13:15):
and could we see that continue three year end?
Speaker 6 (13:18):
Well, it has to do with the weakness in the
US dollar because typically if the dollar is on the
down trend or if it's not going stronger, then other
equity markets in the rest of the world can benefit, right,
So in this case is Asia this year and the
way we see it is that the dollar is probably
going to be staying on the week side of things, right,
(13:41):
So this is why we do see that in twelvence
time is going to be around say around in ninety
five to ninety six level. They're for the foreseeable future, right,
So basically that means that Asia would still have you
more upside to go, especially you know, the variation gap
is still big, right versus history?
Speaker 1 (14:05):
Does that include Korean stocks because they've seen an incredible rally,
and of course we talk about Samsung, we talk about
sk Heinis. But at the same time, it seems that
geopolitics may not be on its side. We're talking about
that trade deal and concerns about the investment packag into
the US pretty much stalled at the moment.
Speaker 6 (14:22):
Well, for Korea, if you look at where it was,
say twelve months ago versus now compared to its own history,
it is not looking so inexpensive anymore. So right now,
I remember that the MSCI career is trained at a
round ten and a half times PE for it looking
pe and that's actually pretty much, you know, on the
(14:46):
average side of things right versus history. So from that perspective,
the low hanging fruit in Korea is over, and what
we are advocating is that one should be trimming down
some of the excessive profit the main careing equities and
rotating into other markets. China is still looking good, still
looking cheap at this moment in time.
Speaker 5 (15:07):
What in China specifically, Daniel, Well.
Speaker 6 (15:11):
We're looking at areas like technology, primarily so the Internet
technology space, and we feel that that versus the US,
tech has still got some upside goal, there's still some ketchup.
Of course, China is developing its own semiconductive side of
(15:31):
things and encouraging companies we're using those, So from that
perspective we do like the prospects there. Also, you know,
the consumption pattern in China is changing, okay, So previously
they are looking at spending on the big ticket items.
Now they're looking at spending on the smaller ticket items,
(15:51):
and those smaller ticket items consumption are the ones that
we like also.
Speaker 1 (15:56):
And that is a very interesting take because when we
talk about especially the mastic economy in China, we're still
very much concerned about the property sector. So could we
see that being supported by just these consumption patterns changing
and Chinese demand domestically.
Speaker 6 (16:12):
Well, the fact that the properly side of things is
probably going to be stalling right at these levels means
that in terms of what people spend the money on,
it's going to move to other items. So the property
sector is probably going to be stalling at these levels
in terms of near term upside unlikely at this moment
(16:36):
in time, right, if we're stalling at a steady.
Speaker 5 (16:40):
Level, Daniel, just one quick final question for you, I mean,
do you think this is a value that needs a
cut from Chinese authorities, a cut from Chinese authorities, because
the worry also is that that could further stall what
some think is a bubble in the stock market.
Speaker 6 (17:01):
In terms of bubble wise, if you look at the
margin financing side of things in China domestics, it is
high on an absolute basis, but that should be compared
against the market capitalization. Okay, so right now the margin
financing is as high as what we saw in two
(17:21):
one five when the government came in and cool down
the markets, and that led to a big correction at
that time. But if you compare that to the market
capitalization now, it is actually not at a high level.
So in the near term, we still do not see
a significant cooling measures from the government to bring down
(17:41):
the stock market. So we believe that again for China,
it's going to be a bidomed deep mode for investors.
Speaker 1 (17:48):
Daniel Man, I'm good to have you with us, head
of Equity Strategy, sound a Chartered Wealth Solution.
Speaker 2 (17:55):
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
(18:17):
and Australia. I'm Doug Prisner, and this is Bloomberg
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia Podcast. I'm Doug Krisner.
The US equity market has posted a fifteen trillion dollar
rally from those April lows, and today Wall Street defied
calls for a breather. The S and P five hundred
hit it's twenty eighth record of the year, and tech
led the way. Nvidia rallied four percent after announcing an
(00:31):
investment of up to one hundred billion dollars in open Ai. Now.
The aim here is to build next generation open AI
data centers powered by Nvidia's advanced AI chips. Man Deep
Singh is Global head of Tech Research at Bloomberg Intelligence.
Speaker 3 (00:46):
When I look at Nvidia, clearly, you know they're at
a two hundred billion dollar round rate, growing exceptionally well,
and they have to keep up the growth rate. So
now that they can't really sell to China market or
at least there's uncertain they have to find those avenues,
and the biggest avenue is open ai.
Speaker 2 (01:04):
That is Bloomberg's Man Deep sing there. Now, this deal
will boost open AI's ability to train models like chat, GPT,
and it will also strengthen Invidia's dominance in AI. In
a moment or two, we'll get some perspective from the
Asia Pacific. We'll hear from Daniel Lamb, head of equity
strategy at Standard Chartered Wealth Solutions, but we begin here
in the States. Joining me now is Michael Green. He
(01:27):
is chief strategist at Simplify Asset Management. Michael, thank you
so much for making time to chat with me. I
mentioned a moment ago the twenty eighth record high of
the year for the S and P five hundred. That's
a pretty astounding statistic right now, given the fact that
we're looking at lofty valuations I think around twenty five
times earnings for the overall S and P. Are you
(01:48):
a little concerned about where we are in terms of
the overall market?
Speaker 4 (01:53):
Well, I am concerned and would emphasize that the earnings
that we're reporting and that valuation is against extraordinarily elevated
earnings in the technology sector. If we look more broadly
at the market, the Russell two thousand, for example, the
generally accepted accounting principles gap earnings have now actually turned negative.
(02:13):
That typically only happens during periods that are recessionary or
near recessionary conditions. The question now becomes is this narrowness
in terms of the earnings performance is it going to continue?
And unfortunately, I'd point to things like the vendor financing
that you just highlighted, where in video is taking an
equity stake in open Ai. Open Ai is using that
(02:34):
equity infusion to buy in video products. That's a game
that only goes on for a certain period of time.
Speaker 2 (02:41):
I remember Cisco Systems doing something similar back in the
nineteen nineties. How are you hedged right now against your
concerns that maybe we enter an environment of a little
bit of equity market weakness.
Speaker 4 (02:53):
Well, one of the things that we do, the product
that I manage for Simplify is a high yield product.
There we're able to take advantage of a couple of
feet features in the high yield space, but one of
which is to apply and overlay to that that we're
creating a hedge that's targeted at credit spread widening without
the negative cost associated with CDs. Now, to be totally fair,
(03:13):
we're actually concerned enough that credit spreads have been driven tighter,
particularly in the paper markets, which suggests that there's a
shortage of new issuance paper to refinance existing expiring paper.
That means the paper that's left in the market, the
high yeld that's left in the market, is being bid
extraordinarily tight. That's true not only in absolute terms, but
also now relative to say high yield CDs, which remains
(03:36):
above three hundred, while the high yield cash market is
actually in the two sixty range. That's an unusual divergence,
and we would suggest that that basis suggests there's more
concern than the market currently has.
Speaker 2 (03:48):
Very interesting today we had three different FED presidents warning
against further rate cuts, basically all pointing to the idea
that inflation still is an issue. I understand that there's
weakness in the labor market, and that certainly was the
justification for last week's quarter point rate cut. How are
you feeling about the FED right now vis a VI
(04:10):
both the job market and inflation.
Speaker 4 (04:14):
Well, I think on the inflation front that's where my
concern sits as well. There's a seasonal pattern to inflation
that is supposed to be canceled out with the BLS adjustments. Unfortunately,
that uses a trailing five year period and because of
the disruptions of the pandemic and the Russian invasion of Ukraine.
We've gotten a very asymptomatic or atypical I'm sorry, inflation
(04:39):
pattern that is creating lower than expected inflation during the summers,
when we traditionally would have seen high gasoline prices to
offset travel. Now we're actually seeing the inflation relatively low
in the summers, rising in the fourth quarter as more
and more companies have become accustomed to price hikes to
offset inflation. My expectation is that that is going to
(05:02):
play through. We'll start to see that data in October.
That very well may derail some of the thoughts that
the Fed is going to be more aggressive, in line
with what Stephen Moran spoke about today.
Speaker 2 (05:14):
Yeah, he thinks the neutral rate is around two and
a half percent. He thinks we're well well above that
and very restrictive right now. Does he have a point
or is he basically carrying water for what the administration
would like to see.
Speaker 4 (05:28):
Well, I think, unfortunately the answer is both, and candidly,
his analysis that he released today said, I did the
calculations today to support the indication of rate cut expectations
and the terminal rate that I produced last week, and
so unfortunately that suggests that it was political, and now
he's scrambling for an explanation behind it. Unfortunately, I actually
(05:50):
agree with his explanation. I think with the labor force
growth having basically turned to zero, you're hearing your own
power and others refer to the incredibly low level of
job creation. That's saying effectively the same thing. The only
thing that we really have for us at this point
is productivity. What puts us right back into the camp
of is the AI boom going to deliver or instead,
(06:13):
is the construction associated with the AI inflating GDP and
when that begins to retreat. If I'm correct about my
concerns on financing or other components, then we can see
the weakness in economic activity manifests itself in an accelerated fashion.
So I actually lean towards Moran's point. I think he's
ultimately correct that the interest rates are too high, but
(06:36):
I think unfortunately he presented it in a way that
suggests it was largely political in nature.
Speaker 2 (06:43):
I'm wondering whether or not you think it's a little risky.
We were talking about elevated valuations for the US equity
market to seek shelter. If you're going to remain exposed
to equities in markets outside the US, and whether or
not there is a risk that if we get some
sort of downdraft in this states, that that could then
in turn spread to other markets. So that kind of
(07:04):
trying to remain diversified maybe in the current setting is
not a real strong strategy.
Speaker 4 (07:11):
Well, I think there's two separate issues associated with it. One,
we actually saw evidence of something that I continually emphasize
in discussions, which is the increasing inelasticity of the market,
basically large price changes to relatively small fault flows in volume.
European markets rallied sharply in the February time period in
(07:32):
response to the idea that the European Union is going
to dramatically increase defense spending, et cetera. That's a good
indication of that. We saw similar behavior in the Russell
two thousand around the June time period when it was
believed that we were going to see additional stimulus and
that tariffs were going to be removed. Those are really
just reflections of relatively small sums of money moving to
(07:54):
try to take advantage of those insights that in turn
causes prices to rise dramatically, and so while I will
not say that it's impossible for European stocks to perform
while US stocks are not performing, the suggestion that I
would emphasize is that ultimately the slowing economy in the
United States, as the consumer to the world, represents a
key risk to almost all economies. The traditional expression is
(08:17):
when the US sneezes, the rest of the world gets
a cold. I think that's even more true in an
environment in which the trade deficits are running as large
as they have been running.
Speaker 2 (08:26):
I'd like to get your take on what's been happening
with the gold market and the degree to which central
banks have been large buyers here, and whether or not
that in itself represents a little bit of risk, which
is to say, if there is a downdraft and central
banks need to fund some type of action, whether it's
to defend a currency or maybe even prop up problems
(08:48):
in their respective bond markets, that gold could be vulnerable.
Speaker 4 (08:52):
So I think there's definitely some vulnerability that exists. Again, gold,
very much like the inflation pattern that I was emphasizing,
was influence by the events of June twenty two, when
the US government decided to take Russia's reserves in the
form of treasuries that sent an alarm bell to China
and other countries that potentially oppose the United States. Under
(09:13):
various circumstances, they began to diversify their reserves quite aggressively.
No longer flowing them in the trade deficit receipts that
they have because they're running a trade surplus with the
United States, they redirected those flows into gold, powering a
gold move that has now been picked up by the
US retail public and is advancing rapidly, even as interest
(09:36):
rates aren't confirming this type of move. We're seeing no
real indication of genuine inflation fears. Instead, this appears to
be very aggressive speculation continuing a move.
Speaker 2 (09:46):
Michael will leave it there. Thank you so very much
for making time to chat with us. Michael Green is
the chief strategist at Simplify Asset Management, joining us here
on the Daybreak Asia podcast. Welcome back to the Daybreak
Asia podcast Time Derek Krisner. The US equity market has
(10:07):
been up now for three straight weeks, and expectations for
those fed rate cuts have been a big part of
this story. We had one analyst today over at Goldman Sachs,
saying that investors should be responsibly bullish on stocks. For more,
we heard from Daniel Lamb. He is head of equity
strategy at Standard Chartered Wealth Solutions. He spoke with Bloomberg
TV host Sherry On and April Hong on the Asia trade.
Speaker 5 (10:31):
US stock's doing well, Daniel, we are seeing a lack
of volatility, though, what do we do with that information?
How should we be positioning well?
Speaker 6 (10:41):
From volatility front? This really macro versus micro Okay, So
with the macro front, we already know that the job
numbers are not looking so good, so that prompt you know,
the comment from you know, from the Fed overnight about
being more aggressive on the rate cut. Okay, but on
that front is actually a double edged sword where basically
(11:02):
the fat wants to cut, but they're also wary of
the return of inflation. And let's not forget right back
until to one. They've lost a lot of credibility by
saying that inflation is transitory, Okay, so they don't want
to make the similar mistakes again right now. On the
other hand, micro fund, of course you're saying it's great,
we know that Nvidia is powering up again. Investing in
(11:25):
open AI and that brings the whole sector up. Okay,
So it's macro versus micro. So what's going to win out? Well, basically,
the way we see it is that on the pullbacks,
on any pullbacks of US equities, especially on the tech side,
one should we be adding because we do see that
this investment in AI is a structural story. So bio
(11:50):
dips on tech.
Speaker 5 (11:52):
Okay, bio dips. You said, bring the whole sector up?
Speaker 3 (11:56):
Right?
Speaker 5 (11:57):
What interesting is some of these sleepier trades in tech
they've researched. You look at Oracle, you look at some
of these chip equipment names. What is your assessment. Do
you think this is because there is enough AI demand
to lift all boats? Or is this because some of
the market leaders are getting too expensive and then people
(12:17):
are searching for secondary trades.
Speaker 6 (12:20):
Well, I would say that the market leaders in what
they do are the ones that one should be seeking after.
It's because the fact that you know AI investment is
benefiting you know, the biggest players, and not necessarily all
the players can make it. I mean, that's going to
be the evangelity, right, So if your bound dips, you
(12:45):
should be going for the biggest player on each of
the field right for the medium to the longer term.
Speaker 1 (12:51):
Given the tech exuberans in the US, we're also seeing
those tech names across Asia rally. But at the same time,
wrongly speaking, MSCI Asia now perhaps headed for its best
annual our performance over the S and P five hundred
and twenty seventeen or so. What's leading to that divergence
or perhaps that our performance here in the Asian benchmarks
(13:15):
and could we see that continue three year end?
Speaker 6 (13:18):
Well, it has to do with the weakness in the
US dollar because typically if the dollar is on the
down trend or if it's not going stronger, then other
equity markets in the rest of the world can benefit, right,
So in this case is Asia this year and the
way we see it is that the dollar is probably
going to be staying on the week side of things, right,
(13:41):
So this is why we do see that in twelvence
time is going to be around say around in ninety
five to ninety six level. They're for the foreseeable future, right,
So basically that means that Asia would still have you
more upside to go, especially you know, the variation gap
is still big, right versus history?
Speaker 1 (14:05):
Does that include Korean stocks because they've seen an incredible rally,
and of course we talk about Samsung, we talk about
sk Heinis. But at the same time, it seems that
geopolitics may not be on its side. We're talking about
that trade deal and concerns about the investment packag into
the US pretty much stalled at the moment.
Speaker 6 (14:22):
Well, for Korea, if you look at where it was,
say twelve months ago versus now compared to its own history,
it is not looking so inexpensive anymore. So right now,
I remember that the MSCI career is trained at a
round ten and a half times PE for it looking
pe and that's actually pretty much, you know, on the
(14:46):
average side of things right versus history. So from that perspective,
the low hanging fruit in Korea is over, and what
we are advocating is that one should be trimming down
some of the excessive profit the main careing equities and
rotating into other markets. China is still looking good, still
looking cheap at this moment in time.
Speaker 5 (15:07):
What in China specifically, Daniel, Well.
Speaker 6 (15:11):
We're looking at areas like technology, primarily so the Internet
technology space, and we feel that that versus the US,
tech has still got some upside goal, there's still some ketchup.
Of course, China is developing its own semiconductive side of
(15:31):
things and encouraging companies we're using those, So from that
perspective we do like the prospects there. Also, you know,
the consumption pattern in China is changing, okay, So previously
they are looking at spending on the big ticket items.
Now they're looking at spending on the smaller ticket items,
(15:51):
and those smaller ticket items consumption are the ones that
we like also.
Speaker 1 (15:56):
And that is a very interesting take because when we
talk about especially the mastic economy in China, we're still
very much concerned about the property sector. So could we
see that being supported by just these consumption patterns changing
and Chinese demand domestically.
Speaker 6 (16:12):
Well, the fact that the properly side of things is
probably going to be stalling right at these levels means
that in terms of what people spend the money on,
it's going to move to other items. So the property
sector is probably going to be stalling at these levels
in terms of near term upside unlikely at this moment
(16:36):
in time, right, if we're stalling at a steady.
Speaker 5 (16:40):
Level, Daniel, just one quick final question for you, I mean,
do you think this is a value that needs a
cut from Chinese authorities, a cut from Chinese authorities, because
the worry also is that that could further stall what
some think is a bubble in the stock market.
Speaker 6 (17:01):
In terms of bubble wise, if you look at the
margin financing side of things in China domestics, it is
high on an absolute basis, but that should be compared
against the market capitalization. Okay, so right now the margin
financing is as high as what we saw in two
(17:21):
one five when the government came in and cool down
the markets, and that led to a big correction at
that time. But if you compare that to the market
capitalization now, it is actually not at a high level.
So in the near term, we still do not see
a significant cooling measures from the government to bring down
(17:41):
the stock market. So we believe that again for China,
it's going to be a bidomed deep mode for investors.
Speaker 1 (17:48):
Daniel Man, I'm good to have you with us, head
of Equity Strategy, sound a Chartered Wealth Solution.
Speaker 2 (17:55):
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
(18:17):
and Australia. I'm Doug Prisner, and this is Bloomberg
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