September 30, 2025 • 19 mins
The US government hurtled toward a Wednesday shutdown as Democrats blocked a Republican stopgap funding package that didn't address their demands, the latest sign that neither party was likely to fold in the final hours before a federal funding deadline. With no more votes planned in the Senate before a midnight deadline, the White House's Office of Management and Budget instructed government agencies to "execute their plans for an orderly shutdown." Despite the risk of a shutdown, US equities notched a second straight quarter of gains. We spoke to is Viraj Patel, Executive VP & Head of Asset Allocation at Fiduciary Trust International.
Plus - China's Golden Week starts, with all eyes on consumption over the holiday. Millions are set to travel, shop, and dine during that time period. Their spending data will offer clues on whether deflationary pressures are easing and if policy support is translating into real economic activity. To encourage consumption, city governments are issuing coupons largely targeting autos, dining and tourism, while the central government released service-industry stimulus measures, including extended museum hours and more sports events. For more, we spoke to Catherine Lim, Senior Analyst: Consumer and Technology for Bloomberg Intelligence.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia podcast. I'm dek Chrisner. The White House is
now taking steps to shut down the government after two
plans for short term funding failed in the Senate. Here
(00:22):
is Senate Democratic Leader Chuck Schumer.
Speaker 2 (00:24):
Trump and the Republicans want to shut down and Democrats
do not. We need to deal with this healthcare crisis now,
not later, but the Republican bill fails to do that.
I urge my Republican colleagues instead to join with us
work in good faith to keep the government open, keep cauts.
Speaker 1 (00:44):
Down despite the risk of a shutdown. The US equity
market closed higher on the final day of the third quarter.
The Dow actually finished at a record high. Joining me
now for a look at markets is Viaje Patel. He
is senior VP, also head of Asset Allocation, a fiduciary
trust international varage. Joining us from here in New York City.
(01:04):
Thank you so much for making time to chat with me.
So we had a record high today for the Dow
final day of the third quarter. Performance has been pretty respectable,
although there has been a lot in the way of
conversation around the vulnerability of certain pockets of the market
and I'm thinking certain areas of the artificial intelligence trade.
(01:25):
Is that a fair statement?
Speaker 3 (01:28):
It certainly is. First of all, thank you for having me,
and I think that there has been a lot of
talk of bubbles echoes of the late nineties tech boom.
I think the big difference here is this is the
real technology that's being used, granted is not being used widely.
Speaker 4 (01:44):
And more importantly, I think the.
Speaker 3 (01:46):
Bubble speculation here might be a little overdone, as a
lot of this cap ax spend on artificial intelligence is
being funded by free cash flow from company ballot sheets
that are quite healthy. The first signs of kind of
going outside of balance sheet funding with some oracle as
they issued about eighteen billion dollars in dat to build
(02:08):
some of their own AI capabilities. But I think the
interesting point that you also bring up is the brunning
of the market. We're seeing it here domestically in cyclical
sectors like home builders, small caps, and even abroad looks
like there's a little bit of an icicleic goal rally.
Speaker 4 (02:25):
That's continuing in Europe.
Speaker 3 (02:27):
Japan has been doing well for multiple years, more of
a secular story there, and even China for the first
time in a very long time, feels like it's got
a little bit of a heart beat there, related to
a variety of factors AI included.
Speaker 1 (02:39):
So I'm curious varage to get your take on the
extent to which the FED policy right now is factoring
into a lot of the upside that we're seeing. And
today's Fed speak seem to underscore the complexity of the outlook.
We had Susan Collins, who is the head of the
Boston FED, saying that further rate cuts may be appropriate
given the weakness that we have seen lately in the
labor market, but the FED needs to remain wary about
(03:02):
the possibility of persistent inflation, and those comments seem to
be echoed today by FED Vice Chairphil Jefferson. He was
saying the FED, yes, it faces a cooling labor market
alongside rising inflationary pressures, and Jefferson went on to say
that the mandate itself, that balance between employment and keeping
(03:23):
prices in check that is under pressure as well. So,
I mean, how do you navigate this right now in
terms of trying to figure out what the FED may
do next?
Speaker 3 (03:32):
Yeah, I think it's a really tricky situation, and you
nail it on the head. The FED has a dual
mandate that's in conflict with each other. Right, we have
clearly weakening and softening labor market, so their full employment
mandate is under pressure. And then clearly we've done a
lot of work or the FED has done a lot
of work on the inflation that was induced during the
(03:52):
peak pandemic period, and then we're going to get an
inflationary impulse related at haaroffs, but that hasn't manifested itself yet.
I think our read from the lifestat MC meeting and
share Powell's comments are while they will be data dependent
and they're still sticking with their dual mandate on employment
and inflation, it seems to be tilted a little bit
(04:14):
in favor of labor because that could be more problematic
and create more downside risks for the economy in our opinion.
Speaker 1 (04:21):
So do you necessarily look to the bond market maybe
for opportunities right now if you're convinced that rates are
going lower no matter what.
Speaker 3 (04:29):
I'm not sure the bond market is giving us much
of a signal here. I think the move off of
the highs was a clear signal that Okay, maybe weaket
growth is slowing a little bit, it's a little weaker employment,
and labor markets are a little softer, but we think
that yields have settled here underneath four point two percent,
(04:50):
which was a very strong level of support for the
better part of.
Speaker 4 (04:53):
A year or a year and a half. So maybe
the move down to four percent was a little overdone.
Speaker 3 (04:58):
And if you look at the backage of economic data
that's come out over the last couple of days and
a little over a week, probably signals that the move
off of four to closer to four zero point one
point five where we are today makes a lot of sense,
as the economic data has been firmer and economic activity
in particular related to consumption, I mean personal expenditures has
(05:20):
been pretty firm. So we're pretty constructive on the US
economy despite labor market softness here. It's tough to tell
whether that's related to trade and serreony and some seasonal
softness in the summer where hiring kind of slowed down,
or more indicative of problems in the second sorry, the
last quarter and into twenty twenty six. But it's a
(05:43):
data dependent fed from where we sit and dens here
the second part of your question, We think that the
cyclical and raid area or raid sensitive sectors the economy
should benefit. Right, I mentioned that homebuilders are showing life again,
small caps are acting well. Any areas that are floating
rate deat in their cap structure, any areas of the
(06:05):
economy that are red sensitive that have been in the
doldrums and been masked, in our opinion, by a really
strong AI. Part of the economy is starting to show
lives and the market is starting to broaden out, and
economic activity is starting to broaden out nicely as well.
Speaker 1 (06:21):
So I want to feel that when it comes to
the inflation story, obviously you have to mention tariffs. So
that's one of the policies that's coming out of the
White House. The other today was on the pharmaceutical story,
where Pfizer is cutting cost of some drug prices of
up to eighty five percent in a deal with the administration.
So broadly speaking, right now, how do you think the
(06:42):
administration is influencing economic activity? Is it net positive?
Speaker 4 (06:50):
That's an excellent question.
Speaker 3 (06:52):
We think, you know, the administration, the White House and
President Trump is trying to influence economic activity.
Speaker 4 (07:01):
It's tough to separate the signal from the noise.
Speaker 3 (07:03):
There's no question that President Trump's one of his policy
priorities is protectionism, and he wants fair trade, and he
wants to do it in a way that's supportive for
the US economy and US businesses. And I'm not necessarily
sure that he wants to kill or hurt meaningfully foreign
(07:25):
countries and foreign businesses. He just wants it to be
a little bit more fair, or maybe in some bastance
is a lot more fair. Now, the short term impacts
of that, whether it's disruption of supply chains, a massive
inflation impulse that comes to the pipeline, and just sales
falling off of a cliff, are yet to be determined.
But for now, our early read is a couple of things. One,
(07:49):
we think that a lot of the rhetoric coming out
of the Trump administration White House seems to be more
negotiations and posturing in terms of getting a deal, so
to speak, and that's the business a President Trump coming out.
And then two, you know, six to seven months after
President Trump announced those punitive tariffs in early April, it
(08:10):
seems that corporations in the economy for now are managing
the tariffs and concerns quite quite well, right, So companies
are managing terariffs for a position of strength, And what
I mean by that is revenues are all time highs,
profits are all time highs, and more importantly, profit margins
are all time highs. So there is a little flexibility
(08:31):
there for them to potentially eat some of that tariff
impulse or tariff costs of the pipeline and not necessarily
have to pass on a meaningful amount of costs to consumers. Again,
we're not in steady state yet, so we have no
idea what the picture actually looks like where tariff's rates
will be or final rates with our biggest trading partners.
But our reader is there are a lot of moving parts.
(08:54):
But markets are seemingly looking past a lot of the
worst case left Heil scenarios related to terrorists and climbing
the wall of worry every day.
Speaker 1 (09:04):
Well, historically, October can be a pretty ugly month for
the equity market. It's going to be very interesting in
terms of what we hear from corporate America when the
earnings begin to trickle in guidance, I think we can
agree will be critical. How are you hedged right now
against maybe a little bit of a pullback or some
downside at the very least.
Speaker 3 (09:24):
So we're overweight cash waiting for that proverbial pullback. We've
been a little bit cautious given we have no clear
idea and how the trade levels play out over the
summer months and negotiations that coupled with valuations which are
quite stretched.
Speaker 4 (09:43):
We're far from cheap.
Speaker 3 (09:45):
I wouldn't call it, you know, bubble territory like we
were in the late nineties, but we are an elevated
evaluation level here. The s andps back at the highs effectively.
So our view is, as you pointed out, that a
little bit of a tricky period from a seasonality perspective
in October, we have some technicals that are maybe a
(10:07):
little stretched and a little overbought, coupled with some even
driven situations that could possibly cause the market to consolidate
a little bit.
Speaker 1 (10:14):
All right, Varaje, we'll leave it there, Thank you so much.
Vaje Patel is Senior VP, also Head of Asset Allocation
at Fiduciary Trust International, based here in New York City.
Joining us on the Daybreak Asia podcast. Welcome back to
(10:34):
the Daybreak Asia Podcast. I'm deg Krisner. We go to
China next, where the Golden Week holiday is now underway.
It started today with National Day and it will run
for eight days through next week's Mid Autumn Festival. I
think it's fair to say that Golden Week is the
most important travel period in China, and more broadly, the
holiday represents an opportunity for a lot more when it
(10:58):
comes to domestic consumption. To help me take a look
on what's happening is Bloomberg's Katherine Limb. She's retail analyst
for Bloomberg Intelligence. And Catherine joins us from the Lion
City of Singapore. Thank you so much for making time
to chat with me. Can you give me a sense
on the extent to which there is optimism over the
outlook for consumer spending this year?
Speaker 5 (11:20):
Right? You know, happy to be here and things are evolving,
Doug as we speak. Do you know, as you've highlighted,
we are into the dual holiday period over eight days,
you're gonna see celebrations not just for National Day, but
also the Mid Autumn Festival, which is a traditional, you
know event that family and friends together. So it was
(11:45):
very timely seeing how some of the cities are issuing
consumption vouchers out to to you know, their consumers, so
that you could stimulate a little bit more of that
spend day, which admittedly had put on a dreg in
August because there was a calendar shift in that very
(12:07):
important mid autumn festival that I've just talked about where
by family and friends gather. So all of that's going
to kick in in September and through the next ten days.
Speaker 1 (12:18):
I'm wondering about sentiment right now, and maybe we can
tie to the equity markets in China which have been
performing very well. Is that expected to provide some positivity
to sentiment? Do you think?
Speaker 5 (12:32):
Well, definitely, I guess. You know, when you look at
asset and asset value creation, it's either property if not.
Do you know the equity market, and I think in
the last two to three years both of these market
hasn't been you know, in the best of shape. In
the year to date, equity market, the rally definitely brings
(12:55):
relieved and you know, does help stimulate that centiment if
you ask me so.
Speaker 1 (13:02):
When I think of destinations in China, one of the
things that comes to mind is Macau and the casinos.
Are people feeling reasonably optimistic about casino business this year
and traffic at the big places, well.
Speaker 5 (13:16):
We've also seen traffic and I would say it the
you know, these the table rolls, et cetera, picking up
in terms of the crowd, so that is a good sign.
On the other hand, what I'll say is that you
know a lot of these spenders, whether you're gamblers or
your shoppers per se, there is more discerning spending that
(13:40):
we have observed, so I'm not sure whether we should
be putting that much bet on Macau. Similarly, you know,
even Hong Kong per se, I would say that, you know,
after the recent typhoon hits and we are anticipating another
typhoon hitting you know, the South over the next ten days,
(14:01):
et cetera, it may not actually be you know, the
biggest thing for these two autonomous regions within country, within
the country itself. I'm a little more optimistic about domestic
tourism within the country, as you know, more of the
shoppers or consumers take a break out into you know,
(14:24):
the suburban regions and there are more camping sites as
well as you know, areas that consumers can take a
break from the city.
Speaker 1 (14:33):
What about moving offshore to visit a place like Singapore
or Japan. Let's say, is that going to be a
driver do you think?
Speaker 5 (14:42):
Yeah, that's a great question because effective you know, yesterday,
South Korea is giving a new visa exemption to mainland
Chinese visiting the country. So you know, we could actually
be seeing uptakes in some of these places. South Korea, Japan,
(15:03):
as you've highlighted, has always been a popular place. And
I have to touch on Singapore because this year the
f Wonder Formula one race is will take place over
the next two to three days and that actually coincides
with the Golden Week holiday. Whether you know it was
(15:23):
deliberately engineered in such a way, but it's all good
because that is definitely drawing traffic.
Speaker 1 (15:29):
So you mentioned a moment ago that domestic governments in
China are handing out vouchers and coupons and things to
kind of stimulate domestic consumption. Give me a sense of
how they are applied and whether we should be looking
for kind of high frequency data among retailers, whether it's
more a story about restaurants, whether it's a story about
(15:52):
air travel, right.
Speaker 5 (15:55):
You know, for restaurants, definitely, because you know, we are
still seeing lots of promotions ongoing for platforms like Ali Baba,
may twe and JD dot Com when it comes to
food delivery and quick commerce. You know, you would have
heard of the competition that was ongoing among these three
(16:18):
companies since the beginning, since the middle of this year itself,
and it continues to actually intensify as we go into
the holiday season. Again, you know, all the gatherings that's
going on now that will likely come through and on
a more intensified level into October and November. Doug, Let's
(16:40):
not forget that we are now very close to the
start of the Singles Day shopping festival, which is essentially
a near two month long shopping festival, and it will
kick start sometimes on the seventh of October, which is
essentially next week itself. Once the consumers returns from the holidays,
(17:03):
they may actually be shopping more online. So I would
say that, going back to your earlier point about consumption vouchers,
it's definitely good to actually have an extra you know,
vouchure on hand to spend. But we'll let's look at
the discretionary side of things itself. Those spending may actually
come through in October and November, particularly during the Singles
(17:28):
Day promotions.
Speaker 1 (17:30):
Catherine, before I let you go, can we take a
step back. I'd like to get your sense of what
more the government can do on the mainland to stimulate
consumption beyond everything that's being undertaken as part of the
Golden Way.
Speaker 5 (17:42):
Holiday, right. You know, it's interesting that we've also seen
the announcements coming through that they're trying to stimulate consumption
through new scenarios, essentially different ways of you know, consuming,
And I'll just put across for instance, May twe is
(18:02):
starting the drone deliveries at night in Shunjin, So just
to give you a sense, it's you know, it is new,
I would say, and I'm not sure how scillable this
business is because there are obviously constraints when it comes
to drone deliveries and at night. I'm not very sure,
(18:23):
but you know, it is different scenarios that the country
is trying to actually put across, including increased use of
the robots and humanoids within the country.
Speaker 1 (18:35):
Believe it there, Catherine, It's always a pleasure. Thank you
so much. Katherine Limb, Bloomberg Intelligence retail analyst joining from
Singapore 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,
(18:55):
and geopolitics in the Asia Pacific. You can find us
on apple Spot, off if by, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
and Australia. I'm Doug Prisoner and this is Bloomberg
Bloomberg Audio Studios, podcasts, radio News. Welcome to the Bloomberg
Daybreak Asia podcast. I'm dek Chrisner. The White House is
now taking steps to shut down the government after two
plans for short term funding failed in the Senate. Here
(00:22):
is Senate Democratic Leader Chuck Schumer.
Speaker 2 (00:24):
Trump and the Republicans want to shut down and Democrats
do not. We need to deal with this healthcare crisis now,
not later, but the Republican bill fails to do that.
I urge my Republican colleagues instead to join with us
work in good faith to keep the government open, keep cauts.
Speaker 1 (00:44):
Down despite the risk of a shutdown. The US equity
market closed higher on the final day of the third quarter.
The Dow actually finished at a record high. Joining me
now for a look at markets is Viaje Patel. He
is senior VP, also head of Asset Allocation, a fiduciary
trust international varage. Joining us from here in New York City.
(01:04):
Thank you so much for making time to chat with me.
So we had a record high today for the Dow
final day of the third quarter. Performance has been pretty respectable,
although there has been a lot in the way of
conversation around the vulnerability of certain pockets of the market
and I'm thinking certain areas of the artificial intelligence trade.
(01:25):
Is that a fair statement?
Speaker 3 (01:28):
It certainly is. First of all, thank you for having me,
and I think that there has been a lot of
talk of bubbles echoes of the late nineties tech boom.
I think the big difference here is this is the
real technology that's being used, granted is not being used widely.
Speaker 4 (01:44):
And more importantly, I think the.
Speaker 3 (01:46):
Bubble speculation here might be a little overdone, as a
lot of this cap ax spend on artificial intelligence is
being funded by free cash flow from company ballot sheets
that are quite healthy. The first signs of kind of
going outside of balance sheet funding with some oracle as
they issued about eighteen billion dollars in dat to build
(02:08):
some of their own AI capabilities. But I think the
interesting point that you also bring up is the brunning
of the market. We're seeing it here domestically in cyclical
sectors like home builders, small caps, and even abroad looks
like there's a little bit of an icicleic goal rally.
Speaker 4 (02:25):
That's continuing in Europe.
Speaker 3 (02:27):
Japan has been doing well for multiple years, more of
a secular story there, and even China for the first
time in a very long time, feels like it's got
a little bit of a heart beat there, related to
a variety of factors AI included.
Speaker 1 (02:39):
So I'm curious varage to get your take on the
extent to which the FED policy right now is factoring
into a lot of the upside that we're seeing. And
today's Fed speak seem to underscore the complexity of the outlook.
We had Susan Collins, who is the head of the
Boston FED, saying that further rate cuts may be appropriate
given the weakness that we have seen lately in the
labor market, but the FED needs to remain wary about
(03:02):
the possibility of persistent inflation, and those comments seem to
be echoed today by FED Vice Chairphil Jefferson. He was
saying the FED, yes, it faces a cooling labor market
alongside rising inflationary pressures, and Jefferson went on to say
that the mandate itself, that balance between employment and keeping
(03:23):
prices in check that is under pressure as well. So,
I mean, how do you navigate this right now in
terms of trying to figure out what the FED may
do next?
Speaker 3 (03:32):
Yeah, I think it's a really tricky situation, and you
nail it on the head. The FED has a dual
mandate that's in conflict with each other. Right, we have
clearly weakening and softening labor market, so their full employment
mandate is under pressure. And then clearly we've done a
lot of work or the FED has done a lot
of work on the inflation that was induced during the
(03:52):
peak pandemic period, and then we're going to get an
inflationary impulse related at haaroffs, but that hasn't manifested itself yet.
I think our read from the lifestat MC meeting and
share Powell's comments are while they will be data dependent
and they're still sticking with their dual mandate on employment
and inflation, it seems to be tilted a little bit
(04:14):
in favor of labor because that could be more problematic
and create more downside risks for the economy in our opinion.
Speaker 1 (04:21):
So do you necessarily look to the bond market maybe
for opportunities right now if you're convinced that rates are
going lower no matter what.
Speaker 3 (04:29):
I'm not sure the bond market is giving us much
of a signal here. I think the move off of
the highs was a clear signal that Okay, maybe weaket
growth is slowing a little bit, it's a little weaker employment,
and labor markets are a little softer, but we think
that yields have settled here underneath four point two percent,
(04:50):
which was a very strong level of support for the
better part of.
Speaker 4 (04:53):
A year or a year and a half. So maybe
the move down to four percent was a little overdone.
Speaker 3 (04:58):
And if you look at the backage of economic data
that's come out over the last couple of days and
a little over a week, probably signals that the move
off of four to closer to four zero point one
point five where we are today makes a lot of sense,
as the economic data has been firmer and economic activity
in particular related to consumption, I mean personal expenditures has
(05:20):
been pretty firm. So we're pretty constructive on the US
economy despite labor market softness here. It's tough to tell
whether that's related to trade and serreony and some seasonal
softness in the summer where hiring kind of slowed down,
or more indicative of problems in the second sorry, the
last quarter and into twenty twenty six. But it's a
(05:43):
data dependent fed from where we sit and dens here
the second part of your question, We think that the
cyclical and raid area or raid sensitive sectors the economy
should benefit. Right, I mentioned that homebuilders are showing life again,
small caps are acting well. Any areas that are floating
rate deat in their cap structure, any areas of the
(06:05):
economy that are red sensitive that have been in the
doldrums and been masked, in our opinion, by a really
strong AI. Part of the economy is starting to show
lives and the market is starting to broaden out, and
economic activity is starting to broaden out nicely as well.
Speaker 1 (06:21):
So I want to feel that when it comes to
the inflation story, obviously you have to mention tariffs. So
that's one of the policies that's coming out of the
White House. The other today was on the pharmaceutical story,
where Pfizer is cutting cost of some drug prices of
up to eighty five percent in a deal with the administration.
So broadly speaking, right now, how do you think the
(06:42):
administration is influencing economic activity? Is it net positive?
Speaker 4 (06:50):
That's an excellent question.
Speaker 3 (06:52):
We think, you know, the administration, the White House and
President Trump is trying to influence economic activity.
Speaker 4 (07:01):
It's tough to separate the signal from the noise.
Speaker 3 (07:03):
There's no question that President Trump's one of his policy
priorities is protectionism, and he wants fair trade, and he
wants to do it in a way that's supportive for
the US economy and US businesses. And I'm not necessarily
sure that he wants to kill or hurt meaningfully foreign
(07:25):
countries and foreign businesses. He just wants it to be
a little bit more fair, or maybe in some bastance
is a lot more fair. Now, the short term impacts
of that, whether it's disruption of supply chains, a massive
inflation impulse that comes to the pipeline, and just sales
falling off of a cliff, are yet to be determined.
But for now, our early read is a couple of things. One,
(07:49):
we think that a lot of the rhetoric coming out
of the Trump administration White House seems to be more
negotiations and posturing in terms of getting a deal, so
to speak, and that's the business a President Trump coming out.
And then two, you know, six to seven months after
President Trump announced those punitive tariffs in early April, it
(08:10):
seems that corporations in the economy for now are managing
the tariffs and concerns quite quite well, right, So companies
are managing terariffs for a position of strength, And what
I mean by that is revenues are all time highs,
profits are all time highs, and more importantly, profit margins
are all time highs. So there is a little flexibility
(08:31):
there for them to potentially eat some of that tariff
impulse or tariff costs of the pipeline and not necessarily
have to pass on a meaningful amount of costs to consumers. Again,
we're not in steady state yet, so we have no
idea what the picture actually looks like where tariff's rates
will be or final rates with our biggest trading partners.
But our reader is there are a lot of moving parts.
(08:54):
But markets are seemingly looking past a lot of the
worst case left Heil scenarios related to terrorists and climbing
the wall of worry every day.
Speaker 1 (09:04):
Well, historically, October can be a pretty ugly month for
the equity market. It's going to be very interesting in
terms of what we hear from corporate America when the
earnings begin to trickle in guidance, I think we can
agree will be critical. How are you hedged right now
against maybe a little bit of a pullback or some
downside at the very least.
Speaker 3 (09:24):
So we're overweight cash waiting for that proverbial pullback. We've
been a little bit cautious given we have no clear
idea and how the trade levels play out over the
summer months and negotiations that coupled with valuations which are
quite stretched.
Speaker 4 (09:43):
We're far from cheap.
Speaker 3 (09:45):
I wouldn't call it, you know, bubble territory like we
were in the late nineties, but we are an elevated
evaluation level here. The s andps back at the highs effectively.
So our view is, as you pointed out, that a
little bit of a tricky period from a seasonality perspective
in October, we have some technicals that are maybe a
(10:07):
little stretched and a little overbought, coupled with some even
driven situations that could possibly cause the market to consolidate
a little bit.
Speaker 1 (10:14):
All right, Varaje, we'll leave it there, Thank you so much.
Vaje Patel is Senior VP, also Head of Asset Allocation
at Fiduciary Trust International, based here in New York City.
Joining us on the Daybreak Asia podcast. Welcome back to
(10:34):
the Daybreak Asia Podcast. I'm deg Krisner. We go to
China next, where the Golden Week holiday is now underway.
It started today with National Day and it will run
for eight days through next week's Mid Autumn Festival. I
think it's fair to say that Golden Week is the
most important travel period in China, and more broadly, the
holiday represents an opportunity for a lot more when it
(10:58):
comes to domestic consumption. To help me take a look
on what's happening is Bloomberg's Katherine Limb. She's retail analyst
for Bloomberg Intelligence. And Catherine joins us from the Lion
City of Singapore. Thank you so much for making time
to chat with me. Can you give me a sense
on the extent to which there is optimism over the
outlook for consumer spending this year?
Speaker 5 (11:20):
Right? You know, happy to be here and things are evolving,
Doug as we speak. Do you know, as you've highlighted,
we are into the dual holiday period over eight days,
you're gonna see celebrations not just for National Day, but
also the Mid Autumn Festival, which is a traditional, you
know event that family and friends together. So it was
(11:45):
very timely seeing how some of the cities are issuing
consumption vouchers out to to you know, their consumers, so
that you could stimulate a little bit more of that
spend day, which admittedly had put on a dreg in
August because there was a calendar shift in that very
(12:07):
important mid autumn festival that I've just talked about where
by family and friends gather. So all of that's going
to kick in in September and through the next ten days.
Speaker 1 (12:18):
I'm wondering about sentiment right now, and maybe we can
tie to the equity markets in China which have been
performing very well. Is that expected to provide some positivity
to sentiment? Do you think?
Speaker 5 (12:32):
Well, definitely, I guess. You know, when you look at
asset and asset value creation, it's either property if not.
Do you know the equity market, and I think in
the last two to three years both of these market
hasn't been you know, in the best of shape. In
the year to date, equity market, the rally definitely brings
(12:55):
relieved and you know, does help stimulate that centiment if
you ask me so.
Speaker 1 (13:02):
When I think of destinations in China, one of the
things that comes to mind is Macau and the casinos.
Are people feeling reasonably optimistic about casino business this year
and traffic at the big places, well.
Speaker 5 (13:16):
We've also seen traffic and I would say it the
you know, these the table rolls, et cetera, picking up
in terms of the crowd, so that is a good sign.
On the other hand, what I'll say is that you
know a lot of these spenders, whether you're gamblers or
your shoppers per se, there is more discerning spending that
(13:40):
we have observed, so I'm not sure whether we should
be putting that much bet on Macau. Similarly, you know,
even Hong Kong per se, I would say that, you know,
after the recent typhoon hits and we are anticipating another
typhoon hitting you know, the South over the next ten days,
(14:01):
et cetera, it may not actually be you know, the
biggest thing for these two autonomous regions within country, within
the country itself. I'm a little more optimistic about domestic
tourism within the country, as you know, more of the
shoppers or consumers take a break out into you know,
(14:24):
the suburban regions and there are more camping sites as
well as you know, areas that consumers can take a
break from the city.
Speaker 1 (14:33):
What about moving offshore to visit a place like Singapore
or Japan. Let's say, is that going to be a
driver do you think?
Speaker 5 (14:42):
Yeah, that's a great question because effective you know, yesterday,
South Korea is giving a new visa exemption to mainland
Chinese visiting the country. So you know, we could actually
be seeing uptakes in some of these places. South Korea, Japan,
(15:03):
as you've highlighted, has always been a popular place. And
I have to touch on Singapore because this year the
f Wonder Formula one race is will take place over
the next two to three days and that actually coincides
with the Golden Week holiday. Whether you know it was
(15:23):
deliberately engineered in such a way, but it's all good
because that is definitely drawing traffic.
Speaker 1 (15:29):
So you mentioned a moment ago that domestic governments in
China are handing out vouchers and coupons and things to
kind of stimulate domestic consumption. Give me a sense of
how they are applied and whether we should be looking
for kind of high frequency data among retailers, whether it's
more a story about restaurants, whether it's a story about
(15:52):
air travel, right.
Speaker 5 (15:55):
You know, for restaurants, definitely, because you know, we are
still seeing lots of promotions ongoing for platforms like Ali Baba,
may twe and JD dot Com when it comes to
food delivery and quick commerce. You know, you would have
heard of the competition that was ongoing among these three
(16:18):
companies since the beginning, since the middle of this year itself,
and it continues to actually intensify as we go into
the holiday season. Again, you know, all the gatherings that's
going on now that will likely come through and on
a more intensified level into October and November. Doug, Let's
(16:40):
not forget that we are now very close to the
start of the Singles Day shopping festival, which is essentially
a near two month long shopping festival, and it will
kick start sometimes on the seventh of October, which is
essentially next week itself. Once the consumers returns from the holidays,
(17:03):
they may actually be shopping more online. So I would
say that, going back to your earlier point about consumption vouchers,
it's definitely good to actually have an extra you know,
vouchure on hand to spend. But we'll let's look at
the discretionary side of things itself. Those spending may actually
come through in October and November, particularly during the Singles
(17:28):
Day promotions.
Speaker 1 (17:30):
Catherine, before I let you go, can we take a
step back. I'd like to get your sense of what
more the government can do on the mainland to stimulate
consumption beyond everything that's being undertaken as part of the
Golden Way.
Speaker 5 (17:42):
Holiday, right. You know, it's interesting that we've also seen
the announcements coming through that they're trying to stimulate consumption
through new scenarios, essentially different ways of you know, consuming,
And I'll just put across for instance, May twe is
(18:02):
starting the drone deliveries at night in Shunjin, So just
to give you a sense, it's you know, it is new,
I would say, and I'm not sure how scillable this
business is because there are obviously constraints when it comes
to drone deliveries and at night. I'm not very sure,
(18:23):
but you know, it is different scenarios that the country
is trying to actually put across, including increased use of
the robots and humanoids within the country.
Speaker 1 (18:35):
Believe it there, Catherine, It's always a pleasure. Thank you
so much. Katherine Limb, Bloomberg Intelligence retail analyst joining from
Singapore 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,
(18:55):
and geopolitics in the Asia Pacific. You can find us
on apple Spot, off if by, the Bloomberg Podcast YouTube channel,
or anywhere else you listen. Join us again tomorrow for
insight on the market moves from Hong Kong to Singapore
and Australia. I'm Doug Prisoner and this is Bloomberg
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