June 11, 2025 • 16 mins
US equity-index futures dipped along with the dollar after President Donald Trump said he will set unilateral tariff rates within two weeks, dialing up trade tensions once again. The comments come a day after Chinese and US officials struck a positive tone following their talks to dial down trade tensions. Amid US talking with countries including India and Japan to lower the levies, some investors see Trump's comments as an effort to ramp up urgency in talks. We talk markets with Zachary Hill, Head of Portfolio Management at Horizon Investments.
Plus - China's biotech industry is gaining momentum, with Pfizer and Bristol-Myers Squibb making billion-dollar deals with Chinese companies to license experimental cancer drugs. The industry is expected to continue growing, driven by factors such as US President Donald Trump's economic policies, cheaper and easier human testing in China, and an abundance of young and affordable engineering talent. We check in with Shuli Ren, Bloomberg Opinion Columnist, for a closer look at the sector.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisener.
So US China trade talks remain our number one topic,
and today Treasury Secretary Bessett was saying that Beijing has
not threatened to cut off pharmaceutical exports to the US.
In a moment or two, we'll check in with Bloomberg
Opinion for a look at how biotech is advancing in China.
(00:31):
I'll be joined in a moment by Bloomberg Opinion columnist
Truly Ren in Hong Kong. Meantime, President Trump declared a
trade framework with China has been completed, and he said
Beijing will supply rare earth materials and magnets upfront. The
President also said the US will allow Chinese students into
American colleges and universities. Tariffs meantime for these two countries
(00:55):
will be maintained at their current lower levels, but remember
that number is still much higher than when the President
took office in January. Bloomberg's Jennifer Welsh says that Beijing
has learned some things.
Speaker 3 (01:08):
China now realizes they have this major hammer in the
form of these critical mineral export controls that they can leverage,
and I think that really dilutes the US ability to
push China towards the deal that Washington says it.
Speaker 2 (01:20):
Once Jennifer Welsch of Bloomberg Economics. By the way, presidents
Trump and She must still formally sign off on this agreement.
So let's take a look at the market action right now,
maybe a little bit about tariff action as well. I'm
joined by Zachary Hill, head of portfolio management at Horizon Investments. Zach,
thank you for making time to chat with us. Could
you weigh in on your reaction to what you've been
(01:41):
hearing about this agreement that was reached in London a
couple of days ago.
Speaker 4 (01:46):
Yeah, dok. Great to be with you today.
Speaker 1 (01:48):
You know, I think this agreement broadly kind of hits
on all the points, and the market was already expecting,
so it really seems like a status quo matt expectations,
but to not exceed them, and you know the context
of how much risk premium has come out of the
market over the last month and a half or two months,
you know, it wasn't enough to push equity and disease
(02:09):
higher today, which kind of speaks a little bit to
the fact that we're pretty fully valued here above six
thousand of the S and P.
Speaker 2 (02:16):
So Zach, I'm curious about how you're navigating the current
terrain when it comes to tariffs, given what we know
so far. It's interesting today on truth Social President Trump
posted the US is getting a total of fifty five
percent tariffs, China is getting ten percent. Now, so let's
say that those levels do remain in place for a period.
How is this going to impact your decision making when
(02:39):
it comes to putting money to work.
Speaker 1 (02:41):
Yeah, I mean those levels are pretty pretty large and
are likely going to have to be you know, force
companies to adjust in terms of their cost structure and
in the way that they're sourcing you know, inputs, and so,
you know, we do think that that's going to, you know,
weigh on economic activity. It's it's not likely large to
put us into a recession, but it is likely something
(03:03):
that we're going to feel a growth slow down. And
so from a positioning perspective, we're trying to keep things,
you know, pretty pretty tight and pretty close to home
and keep a little bit of dry powder because we
do think, you know, especially in the summer months after
you know, a pretty exhausting period of trading UH to
start the year.
Speaker 4 (03:22):
That this low liquidity environment.
Speaker 1 (03:24):
Is likely to uncover some opportunities for us to put
some capital to work.
Speaker 2 (03:29):
Let's change gears. Talk a little bit about what's happening
in Washington with respect to the tax bill. I know
that the Senate is now trying to negotiate a few things,
and there is still concern about the level of deficit spending.
I guess that we could say double line capitalist. Jeff
Gunlock was saying today that America's debt burden and interest
expense have become untenable. The bond market at this point
(03:51):
really doesn't seem to be as upset as it was
a month ago or so it would appear when the
House was negotiating its version. How do you make sense
of that?
Speaker 1 (04:01):
Yeah, I think you know, the way that we make
sense of that is just this narrative volatility we've had
on the macro front.
Speaker 4 (04:07):
You know, tariffs come and go.
Speaker 1 (04:10):
You know, doge was a thing that the market was
talking about for quite a long period of time, and
now it's it's no longer relevant. And the concern about
you know, budgets and the deficit bill and long term
interest rates has been something that's waxed and waned. You know,
I would agree with you with that importance in the market.
Narrative has has faded, and you know likely is not
going to come back unless we see a material upside
(04:33):
surprise to the deficit. So, you know, nobody really thinks
that we're going to be cutting the deficit from current levels.
If we expanded in a really material way, that might
cause them indigestion in the long end of the bond market.
But it seems like a lot of that, at least
in the near term, is already in the price and
we've seen the curves deepen pretty.
Speaker 2 (04:50):
Dramatically right to we're down today across the curve. Remember
that we did have that benign reading on make consumer
prices first thing in the morning and kind of goes
to the notion that maybe we can get more than
one FED rate cut in this year. I think the
swaps market is fully pricing in twenty five basis point
cut in October and now maybe a seventy five percent
probability we get a cut in September as well. How
(05:14):
are you feeling about the FED as a part of
this story.
Speaker 1 (05:17):
Yeah, you know, the Fed has been kind of on
the sidelines for a while because of all the uncertainty
around you know, what the economy, how the economy is
going to involve, and how inflation is going to involve.
And it's actually interesting, the you know, end of year
interest rate implied in the futures market is about the
same as it was to start the year, so about
fifty basis points worth of cuts.
Speaker 4 (05:39):
And so, you know, one of the.
Speaker 1 (05:40):
Things that we're watching is the potential now that we've
had a few good inflation prints in a row after
a series of bad inflation prints to end the year
and to start this year.
Speaker 4 (05:51):
To see if that emboldens some of the doves.
Speaker 1 (05:53):
You know, in this in this vacuum that we have
right now to start pushing for the idea that interest
rates are too high. That's not our base case scenario,
and the economy seems to be doing.
Speaker 4 (06:03):
Just fine with interest rates above four percent.
Speaker 1 (06:06):
But from the way the Fed looks at things, they
do still think that they need to be cutting at
some point, and so that's something that we're going to
be paying quite a bit of attention to over the
next few weeks to see if that narrative of the
FED needs to start acting, and they're not going to
act this summer because it's too soon, but they could
potentially act pretty forcefully in the fall.
Speaker 4 (06:24):
And so that's something that we're going to be watching,
you know, as the news flow evolves.
Speaker 2 (06:28):
So President Trump was saying that he is very very
close to releasing the name of a nominee to replace
FED shared J. Powell, and a number of market participants
we're saying the probability of Trump appointing someone that is
uber dubvish is very very high, given mister Trump's stance
on being pro growth. What would that do in your
(06:48):
mind if we get an uber dubbish FED chairman.
Speaker 1 (06:52):
Yeah, I don't think that would be good for market
sentiment generally speaking, because it's going to cause you some
pretty material steepening in the yield curve and that's going
to be felt in equity valuations, and similar to some
of the price action that we've seen, you know at
parts of this year, you know, higher long term interest
rates that we met with a lower dollar and not
not a higher one.
Speaker 4 (07:11):
As the typical relationship would hold.
Speaker 1 (07:12):
And so you know, we don't think that would be
good for markets, and there's a potential, you know, like
you said that if we get an announcement you know,
more in the in the near future, we could have
that shadow fed chair idea, which is something that investors
have not ever had to deal with in the US,
and so, you know, I don't think that's something generally
speaking that would be well received by by the market.
Speaker 2 (07:34):
Let's talk a little bit about the equity space right now.
Are you still constructive on US stocks?
Speaker 4 (07:40):
Uh?
Speaker 1 (07:40):
We are constructive on US stocks, but not nearly as much,
you know as we were to start the year. You know, actually,
our favorite in our highest conviction call that we have
is that we're likely to continued dollar weakness, especially against
you know, large uh, you know, international economies like Europe
and Japan and so, you know, markets is a part
(08:01):
of the global equity universe that we favor. And within
the US, you know, kind of keeping things pretty neutral
and not going on the defensive side of things, maintaining
some tech exposure and playing offense in the in the
domestic financials and the banks, as we think that's the
area of the market that has the clearest de regulatory tailwinds.
Speaker 2 (08:20):
Are those the same things that you would employ if
you went offshore financials in tech, Well.
Speaker 1 (08:25):
The composition of the offshore market's a good bit different,
and so you know, a lot of our you know,
favoring international markets more than we have over the last
few years is due to the dollar dynamics that we
think are can continue to be in play. You know,
the sector composition of those markets is a good bit
is a good bit different than what you get in
the US, and so we do think, especially in this
(08:46):
kind of environment where risk is higher than it has
been in some time, that international stocks are going to
offer a lot more diversification.
Speaker 4 (08:53):
Than they have in the past.
Speaker 1 (08:54):
You know, US investors have been pretty disappointed with the
benefits of global diversification really for the last ten plus years.
But we do think this is an environment where that's
going to continue to pay dividends in terms of reducing
overall portfolio risk and potentially improving returns.
Speaker 2 (09:11):
I'm curious as to how you're thinking about Chinese equities
right now. Obviously, the deep seek moment was a big
one for the equity space. In a moment we're going
to be taking a look at what's going on with
biotech in China. How do you view Chinese equities.
Speaker 1 (09:25):
Yeah, I mean, China is one place in terms of
equity market composition where you can actually get a lot
of high growth tech names. The problems there, you know,
are are potentially existential.
Speaker 4 (09:36):
However, in terms of.
Speaker 1 (09:38):
You know, the few between the US and China, which
while it seems to be on a better page today,
you know, two and a half months ago was in
it was in a very very dark place. And so
you know, we're a little bit cautious on EM as
as a whole, and we don't necessarily think that that
kind of dollar weakness trend that we expect is going
to going to extend across the EM universe more broadly,
(10:00):
and so, you know, not really embracing the EM trade.
Speaker 4 (10:06):
We prefer develop markets.
Speaker 2 (10:08):
Zach will leave it there, thank you so much. Zachary
Hill is head of portfolio management at Horizon Investments. Joining
us here on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Chrisner. China has offered
(10:29):
a few deep seek moments so farthes here, and it
really shows the country is more than just the world's
largest factory. China has clearly demonstrated it can compete with
the US on the technology front in areas from artificial
intelligence to military defense, and now Chinese biotech is having
its day in the sun. For a closer look, I'm
(10:51):
joined by Bloomberg opinion columnist Julie Wren. She's on the
line from Hong Kong. Shuley's been writing about how China's
biotech industry is gaining momentum. Surely it's always a pleasure.
Can we begin by having you give me a sense
of scale here, perhaps a few examples of how biotech
in China is advancing.
Speaker 5 (11:12):
Well. The revelation came really just a month ago when
Pisa agreed to pay a record one point two seven sorry,
when Pisa agreed to pay a record one point two
five billion upfront to license an experimental cancer drug from
a Chinese company costs three is bio. Two weeks later,
(11:32):
Bristol biosquib said it will pay Biointech another one point
five billion to license a similar cancer drug, and that
cancer drug was an acquisition from Biointech. That cancer drug
was bought by Buyotech from a Chinese company just lay
last year for eight hundred million. So what we're seeing
(11:53):
is that the Big Farmer are paying billions of dollars
licensing Chinese drugs.
Speaker 2 (11:58):
It's interesting because when we think about our official intelligence,
obviously military defense, I think these are areas where the
government is kind of working with the private sector to
accelerate a lot of development. Is the same true in biotechnology?
Is the government involved in some way?
Speaker 5 (12:15):
Not really? I mean, biotech is having a winter globally,
right like. What we are seeing is that the biotech
companies in the US are not getting that much to
venture capital funding. And the situation is even dar in China.
I mean, venture capital has lost its shine since the
government crackdown on big tech starting twenty twenty one. And
(12:37):
what we are seeing is that the biotech startups are
basically coming up with innovative drugs on their own.
Speaker 2 (12:45):
So are we to understand then that this pace of
deal making and a lot of the appetite for biotech
in China is going to last? Is it durable? Do
you think?
Speaker 5 (12:54):
I think so? And I think President Donald Trump's unpredictable
economic policy plays a huge catalyst. I mean, look at
Big Farmer. Trump has talked about cutting a prescription drug
prices by fifty nine percent at the minimum right, and
his big beautiful tax and spending bill has Medicare and
(13:14):
Medicaid cuts. What that means is that big farmer are
just not going to be as profitable as before, and
that gives them incentive to outsource research and development to
cheaper destinations such as China.
Speaker 2 (13:28):
So within China, give me a sense of how the
labor market is supporting the biotech industry. Are young college
grads moving into the field, are their.
Speaker 5 (13:38):
Opportunities absolutely In China, there is this popular phrase called
the engineer difend, and basically it talks about in the
last decade or so, China has been producing a ton
millions of the stem science students, for instance, like engineering
medicine are two of the most popular degrees for graduate
(14:02):
school studies. And all these young and fresh engineers, bioengineers,
medical students, they're coming to market right and they are
going to come to work for biotech startups for pretty
cheap prices compared to the US.
Speaker 2 (14:15):
When you look at the way in which some of
these stocks have been performing, perhaps on the mainland or
in Hong Kong, have they been doing remarkably.
Speaker 5 (14:23):
Well, remarkably well The hands in bioteching deck is up
sixty percent this year. By comparison, SMP biotech in Decks
is in the red right. And what investors are banking
on is that the Big farmer are not only going
to license billion dollar deals, they're also going to buy
(14:43):
equity stakes in those biotech smaller biotech companies. For instance,
the Pisor deal one point two five billion, like a
licensing deal with the three Spile, they're also putting a
one hundred million dollar dollar investment equity investment in the
Chinese company.
Speaker 2 (15:00):
When I think about R and D drug development in
this country, I think about the Food and Drug Administration.
What is the regulatory regime like in China? And if
you had to compare let's say Chinese standards versus US standards,
what conclusion would you arrive at.
Speaker 5 (15:18):
I think the Chinese are also quite strict with approving
drug use, and the Chinese regulatory body is actually pretty
open minded about introducing Western drugs because they do see
that Western drugs are often seen as better quality. So
in a way, for the Chinese biotech companies to go
(15:41):
to market, it could be just a little bit better
for them to partner up with the US Big farmer surely.
Speaker 2 (15:48):
We'll leave it there. It's always a pleasure. Thank you
so much, Bloomberg opinion columnist July Wren. She's writing about
how China's biotech industry is gaining momentum. And you can
read Chuly's writing if you have a Bloomberg terminal. The
function is OPI N go shu Ley Wrenn joining us
here on the Daybreak Asia Podcast. Thanks for listening to
(16:09):
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 and Australia. I'm Doug Chrisner,
(16:33):
and this is Bloomberg
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Chrisener.
So US China trade talks remain our number one topic,
and today Treasury Secretary Bessett was saying that Beijing has
not threatened to cut off pharmaceutical exports to the US.
In a moment or two, we'll check in with Bloomberg
Opinion for a look at how biotech is advancing in China.
(00:31):
I'll be joined in a moment by Bloomberg Opinion columnist
Truly Ren in Hong Kong. Meantime, President Trump declared a
trade framework with China has been completed, and he said
Beijing will supply rare earth materials and magnets upfront. The
President also said the US will allow Chinese students into
American colleges and universities. Tariffs meantime for these two countries
(00:55):
will be maintained at their current lower levels, but remember
that number is still much higher than when the President
took office in January. Bloomberg's Jennifer Welsh says that Beijing
has learned some things.
Speaker 3 (01:08):
China now realizes they have this major hammer in the
form of these critical mineral export controls that they can leverage,
and I think that really dilutes the US ability to
push China towards the deal that Washington says it.
Speaker 2 (01:20):
Once Jennifer Welsch of Bloomberg Economics. By the way, presidents
Trump and She must still formally sign off on this agreement.
So let's take a look at the market action right now,
maybe a little bit about tariff action as well. I'm
joined by Zachary Hill, head of portfolio management at Horizon Investments. Zach,
thank you for making time to chat with us. Could
you weigh in on your reaction to what you've been
(01:41):
hearing about this agreement that was reached in London a
couple of days ago.
Speaker 4 (01:46):
Yeah, dok. Great to be with you today.
Speaker 1 (01:48):
You know, I think this agreement broadly kind of hits
on all the points, and the market was already expecting,
so it really seems like a status quo matt expectations,
but to not exceed them, and you know the context
of how much risk premium has come out of the
market over the last month and a half or two months,
you know, it wasn't enough to push equity and disease
(02:09):
higher today, which kind of speaks a little bit to
the fact that we're pretty fully valued here above six
thousand of the S and P.
Speaker 2 (02:16):
So Zach, I'm curious about how you're navigating the current
terrain when it comes to tariffs, given what we know
so far. It's interesting today on truth Social President Trump
posted the US is getting a total of fifty five
percent tariffs, China is getting ten percent. Now, so let's
say that those levels do remain in place for a period.
How is this going to impact your decision making when
(02:39):
it comes to putting money to work.
Speaker 1 (02:41):
Yeah, I mean those levels are pretty pretty large and
are likely going to have to be you know, force
companies to adjust in terms of their cost structure and
in the way that they're sourcing you know, inputs, and so,
you know, we do think that that's going to, you know,
weigh on economic activity. It's it's not likely large to
put us into a recession, but it is likely something
(03:03):
that we're going to feel a growth slow down. And
so from a positioning perspective, we're trying to keep things,
you know, pretty pretty tight and pretty close to home
and keep a little bit of dry powder because we
do think, you know, especially in the summer months after
you know, a pretty exhausting period of trading UH to
start the year.
Speaker 4 (03:22):
That this low liquidity environment.
Speaker 1 (03:24):
Is likely to uncover some opportunities for us to put
some capital to work.
Speaker 2 (03:29):
Let's change gears. Talk a little bit about what's happening
in Washington with respect to the tax bill. I know
that the Senate is now trying to negotiate a few things,
and there is still concern about the level of deficit spending.
I guess that we could say double line capitalist. Jeff
Gunlock was saying today that America's debt burden and interest
expense have become untenable. The bond market at this point
(03:51):
really doesn't seem to be as upset as it was
a month ago or so it would appear when the
House was negotiating its version. How do you make sense
of that?
Speaker 1 (04:01):
Yeah, I think you know, the way that we make
sense of that is just this narrative volatility we've had
on the macro front.
Speaker 4 (04:07):
You know, tariffs come and go.
Speaker 1 (04:10):
You know, doge was a thing that the market was
talking about for quite a long period of time, and
now it's it's no longer relevant. And the concern about
you know, budgets and the deficit bill and long term
interest rates has been something that's waxed and waned. You know,
I would agree with you with that importance in the market.
Narrative has has faded, and you know likely is not
going to come back unless we see a material upside
(04:33):
surprise to the deficit. So, you know, nobody really thinks
that we're going to be cutting the deficit from current levels.
If we expanded in a really material way, that might
cause them indigestion in the long end of the bond market.
But it seems like a lot of that, at least
in the near term, is already in the price and
we've seen the curves deepen pretty.
Speaker 2 (04:50):
Dramatically right to we're down today across the curve. Remember
that we did have that benign reading on make consumer
prices first thing in the morning and kind of goes
to the notion that maybe we can get more than
one FED rate cut in this year. I think the
swaps market is fully pricing in twenty five basis point
cut in October and now maybe a seventy five percent
probability we get a cut in September as well. How
(05:14):
are you feeling about the FED as a part of
this story.
Speaker 1 (05:17):
Yeah, you know, the Fed has been kind of on
the sidelines for a while because of all the uncertainty
around you know, what the economy, how the economy is
going to involve, and how inflation is going to involve.
And it's actually interesting, the you know, end of year
interest rate implied in the futures market is about the
same as it was to start the year, so about
fifty basis points worth of cuts.
Speaker 4 (05:39):
And so, you know, one of the.
Speaker 1 (05:40):
Things that we're watching is the potential now that we've
had a few good inflation prints in a row after
a series of bad inflation prints to end the year
and to start this year.
Speaker 4 (05:51):
To see if that emboldens some of the doves.
Speaker 1 (05:53):
You know, in this in this vacuum that we have
right now to start pushing for the idea that interest
rates are too high. That's not our base case scenario,
and the economy seems to be doing.
Speaker 4 (06:03):
Just fine with interest rates above four percent.
Speaker 1 (06:06):
But from the way the Fed looks at things, they
do still think that they need to be cutting at
some point, and so that's something that we're going to
be paying quite a bit of attention to over the
next few weeks to see if that narrative of the
FED needs to start acting, and they're not going to
act this summer because it's too soon, but they could
potentially act pretty forcefully in the fall.
Speaker 4 (06:24):
And so that's something that we're going to be watching,
you know, as the news flow evolves.
Speaker 2 (06:28):
So President Trump was saying that he is very very
close to releasing the name of a nominee to replace
FED shared J. Powell, and a number of market participants
we're saying the probability of Trump appointing someone that is
uber dubvish is very very high, given mister Trump's stance
on being pro growth. What would that do in your
(06:48):
mind if we get an uber dubbish FED chairman.
Speaker 1 (06:52):
Yeah, I don't think that would be good for market
sentiment generally speaking, because it's going to cause you some
pretty material steepening in the yield curve and that's going
to be felt in equity valuations, and similar to some
of the price action that we've seen, you know at
parts of this year, you know, higher long term interest
rates that we met with a lower dollar and not
not a higher one.
Speaker 4 (07:11):
As the typical relationship would hold.
Speaker 1 (07:12):
And so you know, we don't think that would be
good for markets, and there's a potential, you know, like
you said that if we get an announcement you know,
more in the in the near future, we could have
that shadow fed chair idea, which is something that investors
have not ever had to deal with in the US,
and so, you know, I don't think that's something generally
speaking that would be well received by by the market.
Speaker 2 (07:34):
Let's talk a little bit about the equity space right now.
Are you still constructive on US stocks?
Speaker 4 (07:40):
Uh?
Speaker 1 (07:40):
We are constructive on US stocks, but not nearly as much,
you know as we were to start the year. You know, actually,
our favorite in our highest conviction call that we have
is that we're likely to continued dollar weakness, especially against
you know, large uh, you know, international economies like Europe
and Japan and so, you know, markets is a part
(08:01):
of the global equity universe that we favor. And within
the US, you know, kind of keeping things pretty neutral
and not going on the defensive side of things, maintaining
some tech exposure and playing offense in the in the
domestic financials and the banks, as we think that's the
area of the market that has the clearest de regulatory tailwinds.
Speaker 2 (08:20):
Are those the same things that you would employ if
you went offshore financials in tech, Well.
Speaker 1 (08:25):
The composition of the offshore market's a good bit different,
and so you know, a lot of our you know,
favoring international markets more than we have over the last
few years is due to the dollar dynamics that we
think are can continue to be in play. You know,
the sector composition of those markets is a good bit
is a good bit different than what you get in
the US, and so we do think, especially in this
(08:46):
kind of environment where risk is higher than it has
been in some time, that international stocks are going to
offer a lot more diversification.
Speaker 4 (08:53):
Than they have in the past.
Speaker 1 (08:54):
You know, US investors have been pretty disappointed with the
benefits of global diversification really for the last ten plus years.
But we do think this is an environment where that's
going to continue to pay dividends in terms of reducing
overall portfolio risk and potentially improving returns.
Speaker 2 (09:11):
I'm curious as to how you're thinking about Chinese equities
right now. Obviously, the deep seek moment was a big
one for the equity space. In a moment we're going
to be taking a look at what's going on with
biotech in China. How do you view Chinese equities.
Speaker 1 (09:25):
Yeah, I mean, China is one place in terms of
equity market composition where you can actually get a lot
of high growth tech names. The problems there, you know,
are are potentially existential.
Speaker 4 (09:36):
However, in terms of.
Speaker 1 (09:38):
You know, the few between the US and China, which
while it seems to be on a better page today,
you know, two and a half months ago was in
it was in a very very dark place. And so
you know, we're a little bit cautious on EM as
as a whole, and we don't necessarily think that that
kind of dollar weakness trend that we expect is going
to going to extend across the EM universe more broadly,
(10:00):
and so, you know, not really embracing the EM trade.
Speaker 4 (10:06):
We prefer develop markets.
Speaker 2 (10:08):
Zach will leave it there, thank you so much. Zachary
Hill is head of portfolio management at Horizon Investments. Joining
us here on the Daybreak Asia podcast. Welcome back to
the Daybreak Asia Podcast. I'm Doug Chrisner. China has offered
(10:29):
a few deep seek moments so farthes here, and it
really shows the country is more than just the world's
largest factory. China has clearly demonstrated it can compete with
the US on the technology front in areas from artificial
intelligence to military defense, and now Chinese biotech is having
its day in the sun. For a closer look, I'm
(10:51):
joined by Bloomberg opinion columnist Julie Wren. She's on the
line from Hong Kong. Shuley's been writing about how China's
biotech industry is gaining momentum. Surely it's always a pleasure.
Can we begin by having you give me a sense
of scale here, perhaps a few examples of how biotech
in China is advancing.
Speaker 5 (11:12):
Well. The revelation came really just a month ago when
Pisa agreed to pay a record one point two seven sorry,
when Pisa agreed to pay a record one point two
five billion upfront to license an experimental cancer drug from
a Chinese company costs three is bio. Two weeks later,
(11:32):
Bristol biosquib said it will pay Biointech another one point
five billion to license a similar cancer drug, and that
cancer drug was an acquisition from Biointech. That cancer drug
was bought by Buyotech from a Chinese company just lay
last year for eight hundred million. So what we're seeing
(11:53):
is that the Big Farmer are paying billions of dollars
licensing Chinese drugs.
Speaker 2 (11:58):
It's interesting because when we think about our official intelligence,
obviously military defense, I think these are areas where the
government is kind of working with the private sector to
accelerate a lot of development. Is the same true in biotechnology?
Is the government involved in some way?
Speaker 5 (12:15):
Not really? I mean, biotech is having a winter globally,
right like. What we are seeing is that the biotech
companies in the US are not getting that much to
venture capital funding. And the situation is even dar in China.
I mean, venture capital has lost its shine since the
government crackdown on big tech starting twenty twenty one. And
(12:37):
what we are seeing is that the biotech startups are
basically coming up with innovative drugs on their own.
Speaker 2 (12:45):
So are we to understand then that this pace of
deal making and a lot of the appetite for biotech
in China is going to last? Is it durable? Do
you think?
Speaker 5 (12:54):
I think so? And I think President Donald Trump's unpredictable
economic policy plays a huge catalyst. I mean, look at
Big Farmer. Trump has talked about cutting a prescription drug
prices by fifty nine percent at the minimum right, and
his big beautiful tax and spending bill has Medicare and
(13:14):
Medicaid cuts. What that means is that big farmer are
just not going to be as profitable as before, and
that gives them incentive to outsource research and development to
cheaper destinations such as China.
Speaker 2 (13:28):
So within China, give me a sense of how the
labor market is supporting the biotech industry. Are young college
grads moving into the field, are their.
Speaker 5 (13:38):
Opportunities absolutely In China, there is this popular phrase called
the engineer difend, and basically it talks about in the
last decade or so, China has been producing a ton
millions of the stem science students, for instance, like engineering
medicine are two of the most popular degrees for graduate
(14:02):
school studies. And all these young and fresh engineers, bioengineers,
medical students, they're coming to market right and they are
going to come to work for biotech startups for pretty
cheap prices compared to the US.
Speaker 2 (14:15):
When you look at the way in which some of
these stocks have been performing, perhaps on the mainland or
in Hong Kong, have they been doing remarkably.
Speaker 5 (14:23):
Well, remarkably well The hands in bioteching deck is up
sixty percent this year. By comparison, SMP biotech in Decks
is in the red right. And what investors are banking
on is that the Big farmer are not only going
to license billion dollar deals, they're also going to buy
(14:43):
equity stakes in those biotech smaller biotech companies. For instance,
the Pisor deal one point two five billion, like a
licensing deal with the three Spile, they're also putting a
one hundred million dollar dollar investment equity investment in the
Chinese company.
Speaker 2 (15:00):
When I think about R and D drug development in
this country, I think about the Food and Drug Administration.
What is the regulatory regime like in China? And if
you had to compare let's say Chinese standards versus US standards,
what conclusion would you arrive at.
Speaker 5 (15:18):
I think the Chinese are also quite strict with approving
drug use, and the Chinese regulatory body is actually pretty
open minded about introducing Western drugs because they do see
that Western drugs are often seen as better quality. So
in a way, for the Chinese biotech companies to go
(15:41):
to market, it could be just a little bit better
for them to partner up with the US Big farmer surely.
Speaker 2 (15:48):
We'll leave it there. It's always a pleasure. Thank you
so much, Bloomberg opinion columnist July Wren. She's writing about
how China's biotech industry is gaining momentum. And you can
read Chuly's writing if you have a Bloomberg terminal. The
function is OPI N go shu Ley Wrenn joining us
here on the Daybreak Asia Podcast. Thanks for listening to
(16:09):
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 and Australia. I'm Doug Chrisner,
(16:33):
and this is Bloomberg
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.