August 1, 2025 • 38 mins
Bloomberg Daybreak Weekend with Tom Busby take a look at some of the stories we'll be tracking in the coming week.
- In the US – a look ahead to earnings from Walt Disney and Uber.
- In the UK – a look ahead to earnings from BP.
- In Asia – a look at ahead to how US smartphone production will be impacted by Apple’s shift towards India, along with an outlook for China property.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight ahead on the program, and
look at how streaming can impact earnings at the media
and entertainment giant Walt Disney.
Speaker 3 (00:23):
I'm Tom Busby in New York.
Speaker 4 (00:25):
I'm collying Hetkit in London, where we're asking what's on
the cards for BP's earnings.
Speaker 5 (00:30):
I'm Dog Krisner looking at how a production shift by
Apple has made India the number one exporter of smartphones
to the US.
Speaker 1 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two to nine, Boston, DAB Digital Radio, London,
Sirius XM one twenty one, and around the world on
Bloomberg Radio, dot Com and the Bloomberg Business App.
Speaker 3 (01:02):
Good day to you. I'm Tom Buzzby.
Speaker 2 (01:04):
We begin today's program with a look at a fresh
round of corporate earning, starting with the world's biggest entertainment giant, Disney.
For more, We're joined by Githa raganathin Bloomberg Intelligence analyst
on US media. Well, Geetha, thank you so much for
being with us once again, booming theme parks, Blockbuster Movies,
ESP and other networks, cruises, merchandising and with all that
(01:25):
besides Netflix, no one has proven how important streaming is
like Disney. So what do you expect this week from
Disney's results?
Speaker 1 (01:34):
Yeah?
Speaker 6 (01:35):
Thanks Tom, So. The sentiment actually has been really positive
for Disney, and it's really important that you bring up
the streaming segment because I think investors are now laser
focused on the rising profitability of the streaming business, and
we've seen Disney kind of completely turn that business around.
I mean, just a few years ago, they were losing
(01:55):
something like about four billion dollars a year. This year
they're going to a probably post almost one point two
to one point three billion dollars in profits, So definitely
a lot of good stuff going on there. They've increased prices,
so we're seeing great pricing power. They're really kind of
doubling down on their advertising business. And the one big
(02:16):
thing that happened during the quarter, and I think we're
going to want to hear a lot more about this
during the call is you know, everybody kind of knows
about this big Hulu custody battle that Disney was fighting
with Comcast that has finally concluded. So with full ownership
of Hulu now under their belt, we think it will
pave the way for much greater and deeper integration with
(02:39):
Disney Plus and that should really drive I think, overall
profitability as well as their advertising business.
Speaker 2 (02:45):
And they've got now three properties that are streaming right
Disney Plus, Hulu and ESPN Plus.
Speaker 3 (02:50):
Are they all?
Speaker 2 (02:51):
I know, the crown jewel in that is Disney Plus,
But how are the other two doing?
Speaker 6 (02:56):
They're doing very well And again very glad that you
bring that up, because yes, they do have ESPN Plus
right now. But the really big debut that we're all
waiting for is the what we call the flagship ESPN products.
So what you see right now on ESPN Plus is
more like the second tier sports. What we're going to
see with the flagship ESPN product, which launches in a
(03:18):
few weeks, is that everything that you get on their
ESPN linear TV network is now going to be available
on their streaming on the streaming platform for thirty dollars
a month. And again What is going to be really
interesting here, and you know investors are going to focus
a lot of their attention on, is the bundling strategy
that Disney is going to adopt. So we think when
they have these three great marquee products, you know, the
(03:42):
flagship ESPN streaming they have obviously Disney Plus as you mentioned,
and Hulu and kind of the bundle there, it is
really going to drive streaming profitability pretty significantly going forward.
Speaker 2 (03:55):
Well, let's talk about subscribers, because Disney Plus now profitable
has what one hundred twenty five million or.
Speaker 6 (04:01):
More, Yeah, somewhere in that region. Yeah, about one hundred
and thirty million subscribers and.
Speaker 2 (04:05):
A lot of buzzworthy shows, not just and Or, but
a whole bunch of Star Wars shows, lucasfilms as well
as Marvel comic spinoffs. I mean, their content has really,
you know, really grown and matured.
Speaker 6 (04:18):
You're absolutely right. So, you know, this was something that
they were struggling with just a few years ago. You know,
there was a lot of content, but people were kind
of complaining that maybe you know, it was more of
a focus of quantity rather than quality. They have definitely
kind of completely rejiggered their content engine, and we've seen
that kind of play out very very well, Tom on
(04:38):
the on the studio side of the business. So we've
seen you know, a lot more of their films kind
of perform pretty well. Just recently, you know, we had Thunderbolts,
we had of course, Fantastic Four, you know, so a
whole reboot of the of the Marvel franchise entering a
new phase. And you speak about content and how it's
going to be such a great differentiator. I mean, just
(05:00):
look at the next year. So just look at fiscal
twenty twenty six for Disney. This is going to be
an absolute bumper year for this company at the box office.
We're looking at the release of Zootopia two. You're going
to have Avatar, Avengers, Mandalorian, Toy Story, so all their
biggest franchises. And then remember all of that is going
(05:21):
to come to the Disney Plus platform as well, So
we're going to you know, definitely see content keep driving
that flywheel for Disney at least when it comes to
subscriber momentum.
Speaker 2 (05:31):
Well, and it's not only the movies that you talked
about next year, Avatar, Star Wars, Avengers, all coming back.
I mean, that could be a blowout year at the
box office.
Speaker 6 (05:41):
It absolutely is going to be because you know, all
these movies, each of these properties, Tom, I mean, they
generate easily. We're talking like, you know, one and a
half to two billion dollars in you know, in global
box office ticket sales, so you have multiples of those
kind of coming out. You think of just even Zouotopia two,
that's a huge, huge franchise when it comes to the
(06:02):
Chinese market. So you know, they have all of these different, uh,
you know, titles that are coming out on on the
on the on the movie side, and then of course
you have a whole bunch of a different series that
they have for Disney Plus. So it looks really really strong.
I mean, the setup looks extremely strong for both this
year as well as fiscal twenty twenty six.
Speaker 3 (06:22):
Well, a lot to look forward to.
Speaker 2 (06:23):
Disney Q three earnings out on Wednesday, that's ahead of
Wall Street's opening bell Our thanks to GEETHA. Raganaffin, Bloomberg
Intelligence analyst on US Media. We move next to earnings
from the nation's biggest ride hailing giant, Uber, which, like
rival Lift, is now offering a lot more than just
rides and for more. We're joined by Mandeep Singh, Bloomberg
(06:43):
Intelligence Senior tech industry analyst Mandeep There is ride hailing,
Uber won subscriptions, Uber eats, partnerships with Instacart, Home Depot,
Delta Airlines, and a burgeoning robotaxi business, including a deal
with Lucid to make the next generation high end cars.
That's a lot going on. So what do you expect
to see from Uber's latest earnings.
Speaker 7 (07:04):
I mean, look, when it comes to this quarter, you know,
the futuristic stuff like the robotaxis don't really matter as much.
At the same time, you know, everyone cares about the
ramp up of Wemo, so you want to see you know,
them expanding that partnership that they have in two cities,
Austin and Atlanta. Wemo has talked about using you know,
(07:29):
different partners like they've recently announced a partnership with Avis.
So it sort of puts Uber in a tough spot
that they don't want to rely just on Wemo. At
the same time, they've been doing their own stuff. You know,
you mentioned neuro I think that probably will help them
(07:49):
and lose it, you know, So to my mind, robotaxis
is an important aspect of how investors look at Uber,
you know, for the next five to ten years. BET,
but there's no doubt that Uber still has the scale
with one hundred and seventy five million monthly active users.
They've aggregated their demand when it comes to both delivery
(08:14):
as well as ride sharing, and that is what has
worked to their advantage. So being the scale player, being
able to grow ebit faster than the top line growth,
that is what has driven that shift in sentiment for
the stock over the last three four quarters. And I
expect them to execute on that. Where top line will
(08:34):
grow around sixteen seventeen percent, the ebitdel line would probably
grow over thirty percent, and they continue to show a
steady operating leverage.
Speaker 2 (08:43):
The one hundred and seventy five million active monthly users. Yeah,
with all the economic uncertainty, it's really an astounding figure
that they're still adding customers.
Speaker 7 (08:53):
When it comes to ride sharing and delivery. I mean,
these are integral part of our day to day lives.
You know, everyone has to eat three meals a day. Now,
you're not going to order it on Uber or door
dash every meal, but there are always times when you
like to use these type of services, and that's what's
drive the frequency for both door Dash and Uber. The
(09:16):
field has consolidated now to these two players. I think
Uber's partnership with instacart has also helped them sort of
connect with more users. That's why that MAU number has
grown faster over the last few quarters because of that
cross sell. But with that being said, look they've ramped
(09:36):
up ads now. The reason why operating leverage has been
better over the past few quarters is because ads is
a one point five billion dollar business for Uber. That
wasn't the case. And the reason why ads are working
is because they have the scale, they aggregate demand, they
have the supply on the platform, and once you have that,
(09:59):
ads become obvious choice for monetization, and that's what they've
been successfully able to do. Door Dashes doing the same.
Lift's problem is because of the smaller size, their ads
are just not as useful to the advertisers as they
are on just.
Speaker 3 (10:15):
Out ranging that volume of people.
Speaker 2 (10:17):
That's right, Yeah, Well, I want to go back to
the robotaxi wars because that's what it really is. And
you're right, a lot of this is futuristic, a lot
of it is five ten years, but there are more
players than ever.
Speaker 6 (10:28):
Now.
Speaker 2 (10:28):
We know that Tesla just in June finally came out
with its cybercab in Austin. Very small, very limited, but
lift we talked about their self driving shuttles. Uber, you know,
the partnerships and expanding more. However, way Mo looks like
it has another partner in Dallas next year with Avas.
I mean, is it are they just hedging their bets
(10:51):
or is there enough out there, enough business, enough partners,
enough autos that we're going to see this everywhere or
try to see it everywhere? And is it really going
to be a game changer?
Speaker 7 (11:03):
I mean, just to give you a sense of Uber scale,
they do almost nine billion ride sharing trips every year
globally and out of that US is close to four billion.
So when you compare that to Wemo's current volume, Vemo
is at a run rate of maybe thirteen to fifteen
million rides annually. Uber does that in one day exactly.
(11:28):
And Uber has that scale that no one else has.
And that's where Wemo, even though they're hedging their bets,
I think partnering with Uber does give them that, you know,
demand in terms of the user base and the volume
of trips that they can do with Uber that they
can't do elsewhere on their own. At the same time,
(11:50):
You're right, I think Wevemo's approach right now is to
hedge their bets and partner with as many people because
they don't want to be overly ligned on Uber because
it hurts the take rates. You know, in the end,
it's all about how much is Uber gonna keep, how
much is WIMO gonna keep, how much is fleet operator
(12:11):
gonna get because there is some cleaning and maintenance involved
with these autonomous rights, and you know, there are different
parts of the ecosystem. So I think luring your reliance
on one player does serve Waymo well in the long term.
Speaker 3 (12:26):
Well.
Speaker 2 (12:27):
Uber Q two earnings out this Wednesday, just ahead of
the opening. Bell Lift is out that same day after
the close. Our thanks to man Deep Sing, Bloomberg Intelligence
senior tech industry analyst, and coming up on Bloomberg Day
Break weekend, we'll look ahead to earnings from the British
Oil on the Gas Giant BP. I'm Tom Busby and
this is Bloomberg. This is Bloomberg Day Break weekend, our
(12:58):
global look ahead at the top stories for investors in
the coming week.
Speaker 3 (13:02):
I'm Tom Busby in New York.
Speaker 2 (13:04):
Up later in our program we'll look at how a
production shift by Apple is impacting smartphone production elsewhere in Asia.
But first, following a deluge of European results, oil giant
BP reports its earnings this week. The London based energy
firm recently replaced its chairman amid pressure for a new direction,
but has that change paid off for more Let's get
(13:25):
to London and bring in Bloomberg Daybreak Europe anchor Caroline
hepgar Tom.
Speaker 4 (13:30):
BP is one of the big names of the oil industry,
but it's lagged behind fellow oil and gas majors in
recent years, with lackluster returns, a mountain of debt, and
an aborted attempt to transition to renewables. Activist shareholder Elliott
Investment Management has criticized the company for lacking urgency and ambition,
(13:50):
appealing to new chairman Albert Manifold to focus on improving
the firm's cost base and capital allocation. This is in
contrast rival Shell, which has focused its business on oil
and gas and denied reports in June that it was
in talks to acquire BP. Also to contend with are
the sector headwinds a trading environment beset by geopolitical uncertainty,
(14:15):
conflict in the Middle East and between Russia and Ukraine.
The plight of oil markets and energy providers is such
a precarious environment. It's something that Bloomberg's Asia Energy editor
Stephen Sapcinski expanded on recently, discussing the risks posed by
current White House policy.
Speaker 8 (14:36):
While oil prices did rise and there is a fear
that Trump will do something that could restrict Russian oil
on the market, there is also the view that this
could be a taco sort of situation. Trump always chickens out.
So how exactly will this play out? It's unclear, But
because there are so few details, it's hard for people
in the market to take a really bullish position on
(14:56):
this at the moment.
Speaker 4 (14:57):
That was Bloomberg Energy reporter stephen's Chinsky. So can BP
put its best foot forward against a difficult backdrop. I'm
joined Boblinberg's team leader for oil trading in Europe, Alic Nightingale,
and our markets report to sam Un said, welcome to
both of you. How can I start with you? Just
give us the context ahead of BP's earnings. What is
your impression of the first half of the year for BP.
(15:20):
Do they have a turnaround plan.
Speaker 9 (15:22):
Yeah, they've got a turnaround plan. They haven't got into
the real meat of the turnaround yet. They need to
kind of start looking at att disposals and you know,
a lot of the big work is still to come.
They have got a new chairman, which was an important
part part of, you know, their strategy and just getting
(15:46):
things on the right footing. They've made changes to the board,
so things are starting to come into place, and now
they're under pressure to deliver on the big kind of
strategic reset that they've they promised investors.
Speaker 4 (16:00):
Has uncertainty from tariffs and geopolitical instability affected the market
around BP, the oil markets, that's a great question.
Speaker 9 (16:12):
And what we're seeing time and time again so far
this quarter is that the oil majors and oil companies
are saying that they've had the wrong kind of volatility.
These guys are really good at trading, you know, supply
and demand. They've got better visibility than anybody else on
where things are tight, when there's not enough supply, or
then when there's too much supply. But when you move
(16:36):
into kind of tweets and geopolitical things and things that
you know, we have as good an idea as anybody
else of whether the US is going to bomb Iran
or something like that. You know, it becomes a bit
more of a guessing game. So what they do. They
retreat from risk. It doesn't mean that they become worse traders.
It just means that they retreat from risk and risk
(16:58):
and trading is a big part of kind of profit
boosting for the European all majors like BP and Shell.
So I think he's probably been a tougher environment on
the trading side for the whole space were yet to see.
BP didn't warn about that in their updates, so maybe
they did, Okay, but I think there is you know,
Total said they have to be careful about trading. Shell
(17:24):
said that there's a risk of environment equanor similar stuff.
So yeah, there are issues around just trying to be
more risk averse when you've got these geopolitical headlines and
headlines that are not about supply demand fundamentals.
Speaker 4 (17:38):
Sam, how are BP's results likely to compare with other
energy companies in the market in the middle of results season.
Speaker 10 (17:46):
Yeah, And I think actually what I was just talking
about there is really the interesting part of it, because
BP didn't have such a weak trading update, you know,
in terms of how their all training is doing and
that kind of thing. But that has been what we've
heard from everyone else across the sector, and what you're
also hearing as well is that investors are trying to
sort of look through this a little bit. You know
(18:07):
that hopefully with tariff deals getting done, with a little
bit of that those trade tensions coming down, the old
traders can get back to focusing on the supply demand
fundamentals and get away from the kind of as I
was saying, the kind of wrong kind of volatility. However,
you know, I think, as we've seen with the copper market,
for example, the potential that these unpredictable events can keep
(18:30):
happening is very much still in play. So I think
that will be a key part for BP, and then
across the rest of their results it will be the
same things as a lot of the other companies with
the trading, with the trading almost put aside, if you like,
because they release a little bit earlier on that, how
are the actual operations doing, how are they performing within
the company, And then for BP, specifically buybacks. You know,
(18:51):
are they going to keep up the pace of bibacs
cut it and the restructuring? You know, how have they
made any kind of extra progress on this very big,
very significantly structuring.
Speaker 1 (19:01):
They have to do well in.
Speaker 4 (19:03):
Terms of the buyback, paying out dividends. That is always
a very important component in the London market, isn't it.
What are we expecting around that?
Speaker 9 (19:12):
We saw declining profits for the other oil companies and
BP's training update wasn't too bad, So I would have
thought that they'll keep it, keep the buybacks and there
won't be too much alarm on that front. So yeah,
I wouldn't be you know, I think that the expectation
is that that won't be.
Speaker 4 (19:33):
Changing in terms of also the sustainability issues for BP.
So they're in the middle of reversing what was a
pivot to sustainability. How does that compare to what other
oil companies are doing and fossil fuel production now, I
(19:53):
think I.
Speaker 9 (19:53):
Think there's a general is not singular, there's not one theme,
but I think there is a move to kind of
be less engaged with renewables and things like that, and
an emphasis on hydrocarbons. If you look at how the
US oil companies that have never been quite so kind
(20:13):
of wedded to kind of environmental sustainability type of stuff.
You know, they've done better and they've been more focused
on what they always were and I think you've seen
a pivot back towards that. But it's not universal. You know,
there are oil companies that have kind of stuck stuck
(20:34):
to it more. But you know, we've seen moves out
of green hydrogen. BP is a big Australia project, so
you know there's a lot going on in terms of
moving away from it and moving back to a focus
on oil and gas.
Speaker 4 (20:48):
In terms of activist management, Sam BP shareholder's Elliott Investment Management,
they are so called activists investors, aren't they And they
certainly have made a number umber of statements around BP
and what they'd like the business to look like. How
do you think that relationship is and how does it
fit into kind of US activist investment in the UK
(21:11):
and Europe.
Speaker 10 (21:12):
Well, I think with the BP in particular. So you know,
as I was just talking about, you know a lot
of companies are still staying in that renewable space and
one of the big things that was pushed for for
at BP and by Elliott in particular, is moving back
over to these the hydrocarbs, the fossil fuels, because in
part of the valuation on the stock, you know, BP's
evaluation and their shares have done extremely poorly, you know,
(21:34):
against a lot of the other majors over the last
couple of years. I think that's a major part of it.
But what they need to be able to do over
the course of you know, the whole restructuring process that
they're going through, is balance that with decent operations and
then with you know, pulling away from the new renewable
side of things, but balancing those two things out. Other
companies have just done that a little bit better than
(21:55):
BP have, I think for the results, I think what
you're likely to see is if there's an in honesty,
there's not probably going to be an enormous amount of
extra progress made, you know what we'll see. But what
Elliott and what certainly investors seem to think when the
restructuring was first announced is that it needed to go
a little bit further. So maybe they will be looking
for that kind of thing. I don't think that's the
(22:16):
kind of thing you'll get with the results, But that's
going to be the focus going forward for Eliot in particular.
Speaker 4 (22:21):
Al can you just give us a view on the
second half of this year and into next year what
BP will be thinking about. As you say, it's a
much more unstable, uncertain world, maybe risk is coming off
the table. I mean, OPEK and its allies continue to
add barrels to the market. There's a very uncertain white
house when it comes to energy policy. What are you
(22:42):
thinking about? What are all the market's thinking about when
it comes to BP and the market for the rest
of this year.
Speaker 9 (22:49):
I think BP everybody else is easy to forget that
the oil price is really important and the gas price
is really important. You know, a few bucks of move
in the oil price can affect their revenues very significantly,
(23:10):
and so that's important. Now what's going on with the
oil price. The widespread expectation is that as we move
into the second half of this year into early twenty
twenty six, we're going to see a surplus building up.
OPIC keeps on adding barrels, you know, I think I
think that the Trump terrris haven't really crushed demand like
(23:33):
people kind of maybe predicted it they would, But there's
still are kind of an uncertainty economically that probably hasn't
been helpful. So you've lost a bit of demand, you're
certainly adding some supply. There's non opic supply coming in.
So the expectation among the big forecasting agencies like the
International Energy Agency and the EIA is that they're going
(23:54):
to see a surplus moving into next year. Surplus isn't
usually very good for oil prices, and therefore, you know,
it's not great for BP or anybody else if that
starts to be the case. If you start to see
a glove building up, then oil price is bad and
that's that isn't good for the stock prices of these
(24:15):
oil companies.
Speaker 4 (24:17):
And Europe of course has recently committed SAM to buying
much more energy and energy products from the US, for example.
So we have geopolitics, we have conflicts, we have uncertainty.
How are you thinking about the rest of the year
for BP and in context for the earning picture?
Speaker 10 (24:37):
Yeah, I actually what Ilse said there is is a
really important point which you know, we should always keep
in mind what the oil price is doing and what
the outlook is for the ol press over the course
of the rest of the year. But when you have
a market that is under pressure like that, you know,
either it coming from the oil price or from the
kind of broader uncertainties in the market. Demand. Uncertainty is
going into the rest of the year. I don't think
we can sit here and say that uncertainty is over
(24:57):
in any way. So over the course of rest of
the year for BP, because they are coming at it
from a slightly weaker position, I think that they will
they will have to deliver, you know, well, they have
to show their investors that they are delivering on the
plan that they have managed to put together, and so
there will be a bar for them to get over
I think for the earning and then for the rest
(25:18):
of the year to show that progress.
Speaker 4 (25:20):
Okay, many thanks to both of you. To Bloomberg, Sam
Onsteed and Alec Nightingale, thank you so much for your time.
Really good to speak to you ahead of BP's earnings
in the next few days. I'm Caroline Hepge here in London.
You can catch us every weekday morning for Bloomberg Daybreak
you at beginning at six am in London. That's one
I am on Wall Street.
Speaker 7 (25:38):
Tom.
Speaker 2 (25:38):
Thanks Caroline and coming up on Bloomberg Daybreak Weekend how
a shift by Apple has turned India into the world's
top maker of smartphones ship to the US. I'm Tom Busby,
and this is Bloomberg. This is Bloomberg day Break Weekend,
(26:03):
our global look ahead at the top stories for investors
in the coming week.
Speaker 3 (26:06):
I'm Tom Busby in New York.
Speaker 2 (26:08):
Global supply chains began to shift during the pandemic, and
that shifting became more dramatic with the rollout of President
Trump's tariffs as high as one hundred and fifty percent
for Chinese exports to the US, and that caused Apple
to reimagine its production network. For more on those results,
let's get to the host of the Daybreak Asia podcast,
Doug Krisner.
Speaker 5 (26:28):
Tom As Apple began to diversify its supply chain further,
the company doubled down on India, and that got a
reaction from President Trump. Back in May, he threatened CEO
Tim Cook with a twenty five percent tariff on Apple
products unless the company shifted production to the US.
Speaker 11 (26:46):
I had an understanding with him that he wouldn't be
doing this.
Speaker 12 (26:48):
He said, he's going to India to bill plants.
Speaker 11 (26:50):
I said, that's okay, to go to India, but you're
not going to sell them to here without tariffs.
Speaker 5 (26:54):
But Apple followed through and deepened its ties in India,
and in the quarter through June, India became the largest
manufacturer of smartphone shipped to the US for the very
first time. According to data from Canalis, Indian produced handhelds
accounted for forty four percent of the American market. Vietnam,
home to much of Samsung's production, came in second. China
(27:16):
dropped to just twenty five percent. That's down from more
than sixty percent a year ago. Let's take a closer
look now. Joining me is Sun Culp Fartial. He is
India technology reporter for Bloomberg News, joining us from our
bureau in New Delhi. Sun Culp, thank you so much
for making time to chat with me. Can I begin
by asking for some perspective on Apple's relationship with India.
(27:40):
When did it actually begin?
Speaker 12 (27:42):
I mean, Apple sol iPhones it India forever, but the
relationship has especially become better and more meaningful and more
important in the last four years. Twenty seventeen was the
first time Tim Cook visited India as Apple CEO. At
that time, he met with the Prime Minister and Ardiamodi.
(28:02):
Both of them had a chat and there was requests
from India that Apple should manufacture in India. And then
we saw that in twenty seventeen, Apple actually started assembling
a few test units of what was back then called
the iPhone SE but that was sort of a test run.
(28:22):
This assembly was done in Bangalore in south of India,
so the relationship started there. But in twenty twenty one,
Apple actually won financial incentives or what I should actually
call state subsidies to manufacture in India, and that's when
they really scaled up production. And you know, today more
(28:45):
than a fifth of iPhones are assembled in India. More
than a fifth of the global iPhone output is being
done out of India. So that's a quick recap of
the history.
Speaker 5 (28:54):
So we know that Apple has been diversifying its supply
chain away from China. I'm curious about the technology that
Apple is using in India to produce these devices. Hanhaigh
Precision is the world's largest maker of iPhones. How does
a company like Hanhai fit into the picture of Apple
in India.
Speaker 12 (29:12):
Yes, they have been key in Apple's manufacturing success or
assembly in India. I just want our listeners to know
that there's very little difference between manufacturing and assembly now,
and India does quite a bit of assembly now, but
a lot of components is yet are sourced from China.
Fox Corn, as Hanahai is more widely known. They made
(29:35):
the first iPhone in India sometime in late twenty twenty
or twenty one, and they made iPhone ten in India
for the first time, and from then on, you know,
they've been ramping up production. Last year they produced iPhone
sixteen at the same time as the global launch from India.
So a lot of components still come from China, but
(29:56):
Apple is very actively scouting for partners here. Fox Corn
has one factory in the south of India and they're
building another one, which is their second largest plant in
the world.
Speaker 5 (30:06):
To what extent has the workforce in India been an
attraction for a company like Apple, a workforce that may
be technologically sophisticated.
Speaker 12 (30:15):
So the workforce is quite a big advantage for Apple
in India. First of all, when fox Conn began assembling
iPhones in India, another unit of fox Corn was already
active in India making Shaomi phones and you know, some
other phones. They had devised the model where they brought
(30:36):
in a lot of women workers in India, especially women
workers as seen as more hard working, more reliable. They
stick to the job. Sometimes they're the only breadwinners in
the family, so Apple stuck to that model. About seventy
percent of their workforce in the factories is comprised of women.
It's an advantage because these workers otherwise have not gotten jobs.
(31:02):
Probably some of them would have been married really early,
so it's a good thing for their families. And this
workforce has proven very reliable for Apple and from scratched
to making one fifth of the iPhones. That says something.
Speaker 5 (31:14):
I'm wondering whether other technology firms beyond Apple are looking
at India on the production side and seeing all of
the points of attraction that you've just kind of laid
out and thinking about maybe investing resources putting more production
lines in place in India.
Speaker 12 (31:31):
Is that happening, Yes, to some extent, it is happening,
to be sure, China still is a huge manufacturing superpower,
and we're very small compared to China, but it's also
early days for India. Some other firms that are now
making their products in India include Google, Bloomberg broke the
(31:51):
story last year about Google making its Pixel phones in India. Now,
the volumes of Pixel phones or the sales are much
smaller compared to Apple. Samsung has a huge factory on
the outskirts of Delhi. It's a little bit smaller than
their plant in Vietnam, but they make phones in India
and they export them as well. In fact, when that
(32:13):
factory was inaugurated a few years ago, I remember Samsung
said that we're now going to make in India for
the world. There are companies here that assemble laptops for
ACER and HP and Dell. So yes, I mean India's
stature as a manufacturing hub is definitely growing. Is it
(32:33):
right to compare it to China? No, We're still very early.
Speaker 5 (32:36):
But I'm curious whether or not it's beginning to move
beyond some of these devices like handheld or smartphones and
into things like semiconductors, whether we're talking about microprocessors or
sophisticated computer memory. Is that happening at all.
Speaker 12 (32:53):
Yes, that's beginning to happen. I think it's a very
big push by Prime Minister and Arrange Room, these government
to make India reliant electronically in electronic products and the
chip shortage kind of showed nations that they needed to
be reliant, self reliant. So what we've seen is that Micron,
(33:15):
the US company, has entered India. They're building a plant
in the western state of Gujarat, which also happens to
be the home state of the Prime Minister of India.
Then we see Tata Conglomerate, which is one of the
biggest Indian conglomerates. They are building a factory again in Gujarat.
They're going to be making legacy semiconductors. So India is
(33:37):
not making the kind of cutting edge semiconductors that are
TSMC makes. TSMC has not even come to India and
may not for some time, but India started its journey
towards manufacturing chips.
Speaker 5 (33:50):
So it seems like there's a fair amount of foreign
direct investment that's been moving into the Indian market.
Speaker 12 (33:56):
Yes, definitely. So you know, India announced billions of dollars
worth of state subsidies to encourage the assembly and the
manufacturing of smartphones. Then it has announced another scheme with
some early billions to push the manufacturing of servers and
laptops and tablets. It has a ten billion dollar fund
(34:17):
to encourage chip making in the country. So it has
spent some amount of government money, some substantial amount of
government money to attract assembly and manufacturing to India.
Speaker 5 (34:28):
That was send culled Farti al There, India Tech reporter
for Bloomberg News. Let's move next to the property sector.
For both Hong Kong and mainland China, new property sales
across forty seven Chinese cities fell nineteen percent between July
first and the twenty third, and Bloomberg Intelligence says this
could portend a deepening sales downturn in the second half
(34:49):
of the year. Buyer sentiment has weakened since April's US
tariff announcements, and it's threatening to undermine previous stimulus efforts.
For some insight, let's bring in Adrill Chan. He is
chair of Hong Long Properties. Adrill joins us from our
studios in Hong Kong. Good of you to make time
to chat with me. I want to bring up a
sore subject right out of the gate. I'm sorry because
(35:10):
I noted that net income for your company was down
fourteen percent year over year in the latest period. Can
you give me a sense of what's happening, what you're
struggling with right.
Speaker 11 (35:21):
Now, Thanks Doug. The decrease in net income really is
as a result of a lower number of sales of departments,
and that is something that fluctuates for us. The primary
sector of our business is retail leasing and office leasing,
so commercial leasing is actually down low single digits, which
(35:41):
is a lot less bad than being down fourteen percent,
but that's the explanation for that. If you look into
retail and offices, retail has been actually surprisingly resilient in
the Mainland. I think our share price has reacted relatively
well since the announcement of our results, and that's a
little bit of a surprise to me, honestly, but I
(36:01):
think that the market was perhaps expecting worse. So we're
down retail sales low single digits, but I think people
were probably expecting worse than that.
Speaker 5 (36:11):
So give me a sense of what your portfolio looks like.
When you talk about retail spaces, I think shopping malls.
Are you catering to retailers that perhaps service the higher
end of the market. Are these luxury type retailers primarily?
Speaker 11 (36:25):
Absolutely so. Our biggest exposure is to the luxury brands,
and as we've been seeing over the past couple of days,
the luxury brands have been posting let's say, mixed results.
Asia extrapan is sort of broadly flat ish, while Japan
is down significantly, and that kind of I think is
what explains our reasonable performance. A lot less Chinese outbound
(36:49):
tourism to Japan for shopping and staying on shore to
do that shopping. So that's one of the macro trends
that we've seen. I don't know if that's because of
all this rumors about earthquakes and this and that, but
for various reasons, the Chinese consumers seem to be staying
put on shore.
Speaker 5 (37:08):
So when you cater to that segment of the real
estate market, those higher end retailers, do they have expectations
about certain upgrades or modifications that the landlord in your
case has to provide them, And does that kind of
draw down or maybe force you to do a little
bit of cap.
Speaker 11 (37:28):
X Oh, it certainly does. So, you know, in terms
of luxury moles, this sector in the mainland of China
has only been around for maybe twenty years or so,
twenty twenty five years, and so if you think about
the lifetime of a mall, that's kind of the time
that you need to definitely start looking into CAPEX upgrades.
(37:48):
We've done quite a few. We've done three upgrades in
three of our separate males across the mainland.
Speaker 5 (37:54):
They've been well received.
Speaker 11 (37:55):
I think now in terms of the market cycles, it's
a relative down it's probably a good time to be
investing in oneself. That being said, because we're in a
down market, the tenants have pricing power. It's a buyer's
market for our tenants, and so we have to make
sure that we're on the ball in terms of how
those capecks upgrades go and our ability to deliver on
(38:18):
an operations and service that is.
Speaker 5 (38:20):
A drill chan share of Hong Long Properties. And I'm
Doug Krisner. You can catch us weekdays for the Daybreak
Asia podcast. It's available wherever you get your podcast.
Speaker 2 (38:29):
Tom, Thanks Doug, and that does it for this edition
of Bloomberg day Break Weekend. Join us again Monday morning
at five am Wall Street Time for the latest on
markets overseas and the news you need to start your day.
I'm Tom Busby. Stay with us. Top stories and global
business headlines are coming up right now.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight ahead on the program, and
look at how streaming can impact earnings at the media
and entertainment giant Walt Disney.
Speaker 3 (00:23):
I'm Tom Busby in New York.
Speaker 4 (00:25):
I'm collying Hetkit in London, where we're asking what's on
the cards for BP's earnings.
Speaker 5 (00:30):
I'm Dog Krisner looking at how a production shift by
Apple has made India the number one exporter of smartphones
to the US.
Speaker 1 (00:38):
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC,
Bloomberg ninety two to nine, Boston, DAB Digital Radio, London,
Sirius XM one twenty one, and around the world on
Bloomberg Radio, dot Com and the Bloomberg Business App.
Speaker 3 (01:02):
Good day to you. I'm Tom Buzzby.
Speaker 2 (01:04):
We begin today's program with a look at a fresh
round of corporate earning, starting with the world's biggest entertainment giant, Disney.
For more, We're joined by Githa raganathin Bloomberg Intelligence analyst
on US media. Well, Geetha, thank you so much for
being with us once again, booming theme parks, Blockbuster Movies,
ESP and other networks, cruises, merchandising and with all that
(01:25):
besides Netflix, no one has proven how important streaming is
like Disney. So what do you expect this week from
Disney's results?
Speaker 1 (01:34):
Yeah?
Speaker 6 (01:35):
Thanks Tom, So. The sentiment actually has been really positive
for Disney, and it's really important that you bring up
the streaming segment because I think investors are now laser
focused on the rising profitability of the streaming business, and
we've seen Disney kind of completely turn that business around.
I mean, just a few years ago, they were losing
(01:55):
something like about four billion dollars a year. This year
they're going to a probably post almost one point two
to one point three billion dollars in profits, So definitely
a lot of good stuff going on there. They've increased prices,
so we're seeing great pricing power. They're really kind of
doubling down on their advertising business. And the one big
(02:16):
thing that happened during the quarter, and I think we're
going to want to hear a lot more about this
during the call is you know, everybody kind of knows
about this big Hulu custody battle that Disney was fighting
with Comcast that has finally concluded. So with full ownership
of Hulu now under their belt, we think it will
pave the way for much greater and deeper integration with
(02:39):
Disney Plus and that should really drive I think, overall
profitability as well as their advertising business.
Speaker 2 (02:45):
And they've got now three properties that are streaming right
Disney Plus, Hulu and ESPN Plus.
Speaker 3 (02:50):
Are they all?
Speaker 2 (02:51):
I know, the crown jewel in that is Disney Plus,
But how are the other two doing?
Speaker 6 (02:56):
They're doing very well And again very glad that you
bring that up, because yes, they do have ESPN Plus
right now. But the really big debut that we're all
waiting for is the what we call the flagship ESPN products.
So what you see right now on ESPN Plus is
more like the second tier sports. What we're going to
see with the flagship ESPN product, which launches in a
(03:18):
few weeks, is that everything that you get on their
ESPN linear TV network is now going to be available
on their streaming on the streaming platform for thirty dollars
a month. And again What is going to be really
interesting here, and you know investors are going to focus
a lot of their attention on, is the bundling strategy
that Disney is going to adopt. So we think when
they have these three great marquee products, you know, the
(03:42):
flagship ESPN streaming they have obviously Disney Plus as you mentioned,
and Hulu and kind of the bundle there, it is
really going to drive streaming profitability pretty significantly going forward.
Speaker 2 (03:55):
Well, let's talk about subscribers, because Disney Plus now profitable
has what one hundred twenty five million or.
Speaker 6 (04:01):
More, Yeah, somewhere in that region. Yeah, about one hundred
and thirty million subscribers and.
Speaker 2 (04:05):
A lot of buzzworthy shows, not just and Or, but
a whole bunch of Star Wars shows, lucasfilms as well
as Marvel comic spinoffs. I mean, their content has really,
you know, really grown and matured.
Speaker 6 (04:18):
You're absolutely right. So, you know, this was something that
they were struggling with just a few years ago. You know,
there was a lot of content, but people were kind
of complaining that maybe you know, it was more of
a focus of quantity rather than quality. They have definitely
kind of completely rejiggered their content engine, and we've seen
that kind of play out very very well, Tom on
(04:38):
the on the studio side of the business. So we've
seen you know, a lot more of their films kind
of perform pretty well. Just recently, you know, we had Thunderbolts,
we had of course, Fantastic Four, you know, so a
whole reboot of the of the Marvel franchise entering a
new phase. And you speak about content and how it's
going to be such a great differentiator. I mean, just
(05:00):
look at the next year. So just look at fiscal
twenty twenty six for Disney. This is going to be
an absolute bumper year for this company at the box office.
We're looking at the release of Zootopia two. You're going
to have Avatar, Avengers, Mandalorian, Toy Story, so all their
biggest franchises. And then remember all of that is going
(05:21):
to come to the Disney Plus platform as well, So
we're going to you know, definitely see content keep driving
that flywheel for Disney at least when it comes to
subscriber momentum.
Speaker 2 (05:31):
Well, and it's not only the movies that you talked
about next year, Avatar, Star Wars, Avengers, all coming back.
I mean, that could be a blowout year at the
box office.
Speaker 6 (05:41):
It absolutely is going to be because you know, all
these movies, each of these properties, Tom, I mean, they
generate easily. We're talking like, you know, one and a
half to two billion dollars in you know, in global
box office ticket sales, so you have multiples of those
kind of coming out. You think of just even Zouotopia two,
that's a huge, huge franchise when it comes to the
(06:02):
Chinese market. So you know, they have all of these different, uh,
you know, titles that are coming out on on the
on the on the movie side, and then of course
you have a whole bunch of a different series that
they have for Disney Plus. So it looks really really strong.
I mean, the setup looks extremely strong for both this
year as well as fiscal twenty twenty six.
Speaker 3 (06:22):
Well, a lot to look forward to.
Speaker 2 (06:23):
Disney Q three earnings out on Wednesday, that's ahead of
Wall Street's opening bell Our thanks to GEETHA. Raganaffin, Bloomberg
Intelligence analyst on US Media. We move next to earnings
from the nation's biggest ride hailing giant, Uber, which, like
rival Lift, is now offering a lot more than just
rides and for more. We're joined by Mandeep Singh, Bloomberg
(06:43):
Intelligence Senior tech industry analyst Mandeep There is ride hailing,
Uber won subscriptions, Uber eats, partnerships with Instacart, Home Depot,
Delta Airlines, and a burgeoning robotaxi business, including a deal
with Lucid to make the next generation high end cars.
That's a lot going on. So what do you expect
to see from Uber's latest earnings.
Speaker 7 (07:04):
I mean, look, when it comes to this quarter, you know,
the futuristic stuff like the robotaxis don't really matter as much.
At the same time, you know, everyone cares about the
ramp up of Wemo, so you want to see you know,
them expanding that partnership that they have in two cities,
Austin and Atlanta. Wemo has talked about using you know,
(07:29):
different partners like they've recently announced a partnership with Avis.
So it sort of puts Uber in a tough spot
that they don't want to rely just on Wemo. At
the same time, they've been doing their own stuff. You know,
you mentioned neuro I think that probably will help them
(07:49):
and lose it, you know, So to my mind, robotaxis
is an important aspect of how investors look at Uber,
you know, for the next five to ten years. BET,
but there's no doubt that Uber still has the scale
with one hundred and seventy five million monthly active users.
They've aggregated their demand when it comes to both delivery
(08:14):
as well as ride sharing, and that is what has
worked to their advantage. So being the scale player, being
able to grow ebit faster than the top line growth,
that is what has driven that shift in sentiment for
the stock over the last three four quarters. And I
expect them to execute on that. Where top line will
(08:34):
grow around sixteen seventeen percent, the ebitdel line would probably
grow over thirty percent, and they continue to show a
steady operating leverage.
Speaker 2 (08:43):
The one hundred and seventy five million active monthly users. Yeah,
with all the economic uncertainty, it's really an astounding figure
that they're still adding customers.
Speaker 7 (08:53):
When it comes to ride sharing and delivery. I mean,
these are integral part of our day to day lives.
You know, everyone has to eat three meals a day. Now,
you're not going to order it on Uber or door
dash every meal, but there are always times when you
like to use these type of services, and that's what's
drive the frequency for both door Dash and Uber. The
(09:16):
field has consolidated now to these two players. I think
Uber's partnership with instacart has also helped them sort of
connect with more users. That's why that MAU number has
grown faster over the last few quarters because of that
cross sell. But with that being said, look they've ramped
(09:36):
up ads now. The reason why operating leverage has been
better over the past few quarters is because ads is
a one point five billion dollar business for Uber. That
wasn't the case. And the reason why ads are working
is because they have the scale, they aggregate demand, they
have the supply on the platform, and once you have that,
(09:59):
ads become obvious choice for monetization, and that's what they've
been successfully able to do. Door Dashes doing the same.
Lift's problem is because of the smaller size, their ads
are just not as useful to the advertisers as they
are on just.
Speaker 3 (10:15):
Out ranging that volume of people.
Speaker 2 (10:17):
That's right, Yeah, Well, I want to go back to
the robotaxi wars because that's what it really is. And
you're right, a lot of this is futuristic, a lot
of it is five ten years, but there are more
players than ever.
Speaker 6 (10:28):
Now.
Speaker 2 (10:28):
We know that Tesla just in June finally came out
with its cybercab in Austin. Very small, very limited, but
lift we talked about their self driving shuttles. Uber, you know,
the partnerships and expanding more. However, way Mo looks like
it has another partner in Dallas next year with Avas.
I mean, is it are they just hedging their bets
(10:51):
or is there enough out there, enough business, enough partners,
enough autos that we're going to see this everywhere or
try to see it everywhere? And is it really going
to be a game changer?
Speaker 7 (11:03):
I mean, just to give you a sense of Uber scale,
they do almost nine billion ride sharing trips every year
globally and out of that US is close to four billion.
So when you compare that to Wemo's current volume, Vemo
is at a run rate of maybe thirteen to fifteen
million rides annually. Uber does that in one day exactly.
(11:28):
And Uber has that scale that no one else has.
And that's where Wemo, even though they're hedging their bets,
I think partnering with Uber does give them that, you know,
demand in terms of the user base and the volume
of trips that they can do with Uber that they
can't do elsewhere on their own. At the same time,
(11:50):
You're right, I think Wevemo's approach right now is to
hedge their bets and partner with as many people because
they don't want to be overly ligned on Uber because
it hurts the take rates. You know, in the end,
it's all about how much is Uber gonna keep, how
much is WIMO gonna keep, how much is fleet operator
(12:11):
gonna get because there is some cleaning and maintenance involved
with these autonomous rights, and you know, there are different
parts of the ecosystem. So I think luring your reliance
on one player does serve Waymo well in the long term.
Speaker 3 (12:26):
Well.
Speaker 2 (12:27):
Uber Q two earnings out this Wednesday, just ahead of
the opening. Bell Lift is out that same day after
the close. Our thanks to man Deep Sing, Bloomberg Intelligence
senior tech industry analyst, and coming up on Bloomberg Day
Break weekend, we'll look ahead to earnings from the British
Oil on the Gas Giant BP. I'm Tom Busby and
this is Bloomberg. This is Bloomberg Day Break weekend, our
(12:58):
global look ahead at the top stories for investors in
the coming week.
Speaker 3 (13:02):
I'm Tom Busby in New York.
Speaker 2 (13:04):
Up later in our program we'll look at how a
production shift by Apple is impacting smartphone production elsewhere in Asia.
But first, following a deluge of European results, oil giant
BP reports its earnings this week. The London based energy
firm recently replaced its chairman amid pressure for a new direction,
but has that change paid off for more Let's get
(13:25):
to London and bring in Bloomberg Daybreak Europe anchor Caroline
hepgar Tom.
Speaker 4 (13:30):
BP is one of the big names of the oil industry,
but it's lagged behind fellow oil and gas majors in
recent years, with lackluster returns, a mountain of debt, and
an aborted attempt to transition to renewables. Activist shareholder Elliott
Investment Management has criticized the company for lacking urgency and ambition,
(13:50):
appealing to new chairman Albert Manifold to focus on improving
the firm's cost base and capital allocation. This is in
contrast rival Shell, which has focused its business on oil
and gas and denied reports in June that it was
in talks to acquire BP. Also to contend with are
the sector headwinds a trading environment beset by geopolitical uncertainty,
(14:15):
conflict in the Middle East and between Russia and Ukraine.
The plight of oil markets and energy providers is such
a precarious environment. It's something that Bloomberg's Asia Energy editor
Stephen Sapcinski expanded on recently, discussing the risks posed by
current White House policy.
Speaker 8 (14:36):
While oil prices did rise and there is a fear
that Trump will do something that could restrict Russian oil
on the market, there is also the view that this
could be a taco sort of situation. Trump always chickens out.
So how exactly will this play out? It's unclear, But
because there are so few details, it's hard for people
in the market to take a really bullish position on
(14:56):
this at the moment.
Speaker 4 (14:57):
That was Bloomberg Energy reporter stephen's Chinsky. So can BP
put its best foot forward against a difficult backdrop. I'm
joined Boblinberg's team leader for oil trading in Europe, Alic Nightingale,
and our markets report to sam Un said, welcome to
both of you. How can I start with you? Just
give us the context ahead of BP's earnings. What is
your impression of the first half of the year for BP.
(15:20):
Do they have a turnaround plan.
Speaker 9 (15:22):
Yeah, they've got a turnaround plan. They haven't got into
the real meat of the turnaround yet. They need to
kind of start looking at att disposals and you know,
a lot of the big work is still to come.
They have got a new chairman, which was an important
part part of, you know, their strategy and just getting
(15:46):
things on the right footing. They've made changes to the board,
so things are starting to come into place, and now
they're under pressure to deliver on the big kind of
strategic reset that they've they promised investors.
Speaker 4 (16:00):
Has uncertainty from tariffs and geopolitical instability affected the market
around BP, the oil markets, that's a great question.
Speaker 9 (16:12):
And what we're seeing time and time again so far
this quarter is that the oil majors and oil companies
are saying that they've had the wrong kind of volatility.
These guys are really good at trading, you know, supply
and demand. They've got better visibility than anybody else on
where things are tight, when there's not enough supply, or
then when there's too much supply. But when you move
(16:36):
into kind of tweets and geopolitical things and things that
you know, we have as good an idea as anybody
else of whether the US is going to bomb Iran
or something like that. You know, it becomes a bit
more of a guessing game. So what they do. They
retreat from risk. It doesn't mean that they become worse traders.
It just means that they retreat from risk and risk
(16:58):
and trading is a big part of kind of profit
boosting for the European all majors like BP and Shell.
So I think he's probably been a tougher environment on
the trading side for the whole space were yet to see.
BP didn't warn about that in their updates, so maybe
they did, Okay, but I think there is you know,
Total said they have to be careful about trading. Shell
(17:24):
said that there's a risk of environment equanor similar stuff.
So yeah, there are issues around just trying to be
more risk averse when you've got these geopolitical headlines and
headlines that are not about supply demand fundamentals.
Speaker 4 (17:38):
Sam, how are BP's results likely to compare with other
energy companies in the market in the middle of results season.
Speaker 10 (17:46):
Yeah, And I think actually what I was just talking
about there is really the interesting part of it, because
BP didn't have such a weak trading update, you know,
in terms of how their all training is doing and
that kind of thing. But that has been what we've
heard from everyone else across the sector, and what you're
also hearing as well is that investors are trying to
sort of look through this a little bit. You know
(18:07):
that hopefully with tariff deals getting done, with a little
bit of that those trade tensions coming down, the old
traders can get back to focusing on the supply demand
fundamentals and get away from the kind of as I
was saying, the kind of wrong kind of volatility. However,
you know, I think, as we've seen with the copper market,
for example, the potential that these unpredictable events can keep
(18:30):
happening is very much still in play. So I think
that will be a key part for BP, and then
across the rest of their results it will be the
same things as a lot of the other companies with
the trading, with the trading almost put aside, if you like,
because they release a little bit earlier on that, how
are the actual operations doing, how are they performing within
the company, And then for BP, specifically buybacks. You know,
(18:51):
are they going to keep up the pace of bibacs
cut it and the restructuring? You know, how have they
made any kind of extra progress on this very big,
very significantly structuring.
Speaker 1 (19:01):
They have to do well in.
Speaker 4 (19:03):
Terms of the buyback, paying out dividends. That is always
a very important component in the London market, isn't it.
What are we expecting around that?
Speaker 9 (19:12):
We saw declining profits for the other oil companies and
BP's training update wasn't too bad, So I would have
thought that they'll keep it, keep the buybacks and there
won't be too much alarm on that front. So yeah,
I wouldn't be you know, I think that the expectation
is that that won't be.
Speaker 4 (19:33):
Changing in terms of also the sustainability issues for BP.
So they're in the middle of reversing what was a
pivot to sustainability. How does that compare to what other
oil companies are doing and fossil fuel production now, I
(19:53):
think I.
Speaker 9 (19:53):
Think there's a general is not singular, there's not one theme,
but I think there is a move to kind of
be less engaged with renewables and things like that, and
an emphasis on hydrocarbons. If you look at how the
US oil companies that have never been quite so kind
(20:13):
of wedded to kind of environmental sustainability type of stuff.
You know, they've done better and they've been more focused
on what they always were and I think you've seen
a pivot back towards that. But it's not universal. You know,
there are oil companies that have kind of stuck stuck
(20:34):
to it more. But you know, we've seen moves out
of green hydrogen. BP is a big Australia project, so
you know there's a lot going on in terms of
moving away from it and moving back to a focus
on oil and gas.
Speaker 4 (20:48):
In terms of activist management, Sam BP shareholder's Elliott Investment Management,
they are so called activists investors, aren't they And they
certainly have made a number umber of statements around BP
and what they'd like the business to look like. How
do you think that relationship is and how does it
fit into kind of US activist investment in the UK
(21:11):
and Europe.
Speaker 10 (21:12):
Well, I think with the BP in particular. So you know,
as I was just talking about, you know a lot
of companies are still staying in that renewable space and
one of the big things that was pushed for for
at BP and by Elliott in particular, is moving back
over to these the hydrocarbs, the fossil fuels, because in
part of the valuation on the stock, you know, BP's
evaluation and their shares have done extremely poorly, you know,
(21:34):
against a lot of the other majors over the last
couple of years. I think that's a major part of it.
But what they need to be able to do over
the course of you know, the whole restructuring process that
they're going through, is balance that with decent operations and
then with you know, pulling away from the new renewable
side of things, but balancing those two things out. Other
companies have just done that a little bit better than
(21:55):
BP have, I think for the results, I think what
you're likely to see is if there's an in honesty,
there's not probably going to be an enormous amount of
extra progress made, you know what we'll see. But what
Elliott and what certainly investors seem to think when the
restructuring was first announced is that it needed to go
a little bit further. So maybe they will be looking
for that kind of thing. I don't think that's the
(22:16):
kind of thing you'll get with the results, But that's
going to be the focus going forward for Eliot in particular.
Speaker 4 (22:21):
Al can you just give us a view on the
second half of this year and into next year what
BP will be thinking about. As you say, it's a
much more unstable, uncertain world, maybe risk is coming off
the table. I mean, OPEK and its allies continue to
add barrels to the market. There's a very uncertain white
house when it comes to energy policy. What are you
(22:42):
thinking about? What are all the market's thinking about when
it comes to BP and the market for the rest
of this year.
Speaker 9 (22:49):
I think BP everybody else is easy to forget that
the oil price is really important and the gas price
is really important. You know, a few bucks of move
in the oil price can affect their revenues very significantly,
(23:10):
and so that's important. Now what's going on with the
oil price. The widespread expectation is that as we move
into the second half of this year into early twenty
twenty six, we're going to see a surplus building up.
OPIC keeps on adding barrels, you know, I think I
think that the Trump terrris haven't really crushed demand like
(23:33):
people kind of maybe predicted it they would, But there's
still are kind of an uncertainty economically that probably hasn't
been helpful. So you've lost a bit of demand, you're
certainly adding some supply. There's non opic supply coming in.
So the expectation among the big forecasting agencies like the
International Energy Agency and the EIA is that they're going
(23:54):
to see a surplus moving into next year. Surplus isn't
usually very good for oil prices, and therefore, you know,
it's not great for BP or anybody else if that
starts to be the case. If you start to see
a glove building up, then oil price is bad and
that's that isn't good for the stock prices of these
(24:15):
oil companies.
Speaker 4 (24:17):
And Europe of course has recently committed SAM to buying
much more energy and energy products from the US, for example.
So we have geopolitics, we have conflicts, we have uncertainty.
How are you thinking about the rest of the year
for BP and in context for the earning picture?
Speaker 10 (24:37):
Yeah, I actually what Ilse said there is is a
really important point which you know, we should always keep
in mind what the oil price is doing and what
the outlook is for the ol press over the course
of the rest of the year. But when you have
a market that is under pressure like that, you know,
either it coming from the oil price or from the
kind of broader uncertainties in the market. Demand. Uncertainty is
going into the rest of the year. I don't think
we can sit here and say that uncertainty is over
(24:57):
in any way. So over the course of rest of
the year for BP, because they are coming at it
from a slightly weaker position, I think that they will
they will have to deliver, you know, well, they have
to show their investors that they are delivering on the
plan that they have managed to put together, and so
there will be a bar for them to get over
I think for the earning and then for the rest
(25:18):
of the year to show that progress.
Speaker 4 (25:20):
Okay, many thanks to both of you. To Bloomberg, Sam
Onsteed and Alec Nightingale, thank you so much for your time.
Really good to speak to you ahead of BP's earnings
in the next few days. I'm Caroline Hepge here in London.
You can catch us every weekday morning for Bloomberg Daybreak
you at beginning at six am in London. That's one
I am on Wall Street.
Speaker 7 (25:38):
Tom.
Speaker 2 (25:38):
Thanks Caroline and coming up on Bloomberg Daybreak Weekend how
a shift by Apple has turned India into the world's
top maker of smartphones ship to the US. I'm Tom Busby,
and this is Bloomberg. This is Bloomberg day Break Weekend,
(26:03):
our global look ahead at the top stories for investors
in the coming week.
Speaker 3 (26:06):
I'm Tom Busby in New York.
Speaker 2 (26:08):
Global supply chains began to shift during the pandemic, and
that shifting became more dramatic with the rollout of President
Trump's tariffs as high as one hundred and fifty percent
for Chinese exports to the US, and that caused Apple
to reimagine its production network. For more on those results,
let's get to the host of the Daybreak Asia podcast,
Doug Krisner.
Speaker 5 (26:28):
Tom As Apple began to diversify its supply chain further,
the company doubled down on India, and that got a
reaction from President Trump. Back in May, he threatened CEO
Tim Cook with a twenty five percent tariff on Apple
products unless the company shifted production to the US.
Speaker 11 (26:46):
I had an understanding with him that he wouldn't be
doing this.
Speaker 12 (26:48):
He said, he's going to India to bill plants.
Speaker 11 (26:50):
I said, that's okay, to go to India, but you're
not going to sell them to here without tariffs.
Speaker 5 (26:54):
But Apple followed through and deepened its ties in India,
and in the quarter through June, India became the largest
manufacturer of smartphone shipped to the US for the very
first time. According to data from Canalis, Indian produced handhelds
accounted for forty four percent of the American market. Vietnam,
home to much of Samsung's production, came in second. China
(27:16):
dropped to just twenty five percent. That's down from more
than sixty percent a year ago. Let's take a closer
look now. Joining me is Sun Culp Fartial. He is
India technology reporter for Bloomberg News, joining us from our
bureau in New Delhi. Sun Culp, thank you so much
for making time to chat with me. Can I begin
by asking for some perspective on Apple's relationship with India.
(27:40):
When did it actually begin?
Speaker 12 (27:42):
I mean, Apple sol iPhones it India forever, but the
relationship has especially become better and more meaningful and more
important in the last four years. Twenty seventeen was the
first time Tim Cook visited India as Apple CEO. At
that time, he met with the Prime Minister and Ardiamodi.
(28:02):
Both of them had a chat and there was requests
from India that Apple should manufacture in India. And then
we saw that in twenty seventeen, Apple actually started assembling
a few test units of what was back then called
the iPhone SE but that was sort of a test run.
(28:22):
This assembly was done in Bangalore in south of India,
so the relationship started there. But in twenty twenty one,
Apple actually won financial incentives or what I should actually
call state subsidies to manufacture in India, and that's when
they really scaled up production. And you know, today more
(28:45):
than a fifth of iPhones are assembled in India. More
than a fifth of the global iPhone output is being
done out of India. So that's a quick recap of
the history.
Speaker 5 (28:54):
So we know that Apple has been diversifying its supply
chain away from China. I'm curious about the technology that
Apple is using in India to produce these devices. Hanhaigh
Precision is the world's largest maker of iPhones. How does
a company like Hanhai fit into the picture of Apple
in India.
Speaker 12 (29:12):
Yes, they have been key in Apple's manufacturing success or
assembly in India. I just want our listeners to know
that there's very little difference between manufacturing and assembly now,
and India does quite a bit of assembly now, but
a lot of components is yet are sourced from China.
Fox Corn, as Hanahai is more widely known. They made
(29:35):
the first iPhone in India sometime in late twenty twenty
or twenty one, and they made iPhone ten in India
for the first time, and from then on, you know,
they've been ramping up production. Last year they produced iPhone
sixteen at the same time as the global launch from India.
So a lot of components still come from China, but
(29:56):
Apple is very actively scouting for partners here. Fox Corn
has one factory in the south of India and they're
building another one, which is their second largest plant in
the world.
Speaker 5 (30:06):
To what extent has the workforce in India been an
attraction for a company like Apple, a workforce that may
be technologically sophisticated.
Speaker 12 (30:15):
So the workforce is quite a big advantage for Apple
in India. First of all, when fox Conn began assembling
iPhones in India, another unit of fox Corn was already
active in India making Shaomi phones and you know, some
other phones. They had devised the model where they brought
(30:36):
in a lot of women workers in India, especially women
workers as seen as more hard working, more reliable. They
stick to the job. Sometimes they're the only breadwinners in
the family, so Apple stuck to that model. About seventy
percent of their workforce in the factories is comprised of women.
It's an advantage because these workers otherwise have not gotten jobs.
(31:02):
Probably some of them would have been married really early,
so it's a good thing for their families. And this
workforce has proven very reliable for Apple and from scratched
to making one fifth of the iPhones. That says something.
Speaker 5 (31:14):
I'm wondering whether other technology firms beyond Apple are looking
at India on the production side and seeing all of
the points of attraction that you've just kind of laid
out and thinking about maybe investing resources putting more production
lines in place in India.
Speaker 12 (31:31):
Is that happening, Yes, to some extent, it is happening,
to be sure, China still is a huge manufacturing superpower,
and we're very small compared to China, but it's also
early days for India. Some other firms that are now
making their products in India include Google, Bloomberg broke the
(31:51):
story last year about Google making its Pixel phones in India. Now,
the volumes of Pixel phones or the sales are much
smaller compared to Apple. Samsung has a huge factory on
the outskirts of Delhi. It's a little bit smaller than
their plant in Vietnam, but they make phones in India
and they export them as well. In fact, when that
(32:13):
factory was inaugurated a few years ago, I remember Samsung
said that we're now going to make in India for
the world. There are companies here that assemble laptops for
ACER and HP and Dell. So yes, I mean India's
stature as a manufacturing hub is definitely growing. Is it
(32:33):
right to compare it to China? No, We're still very early.
Speaker 5 (32:36):
But I'm curious whether or not it's beginning to move
beyond some of these devices like handheld or smartphones and
into things like semiconductors, whether we're talking about microprocessors or
sophisticated computer memory. Is that happening at all.
Speaker 12 (32:53):
Yes, that's beginning to happen. I think it's a very
big push by Prime Minister and Arrange Room, these government
to make India reliant electronically in electronic products and the
chip shortage kind of showed nations that they needed to
be reliant, self reliant. So what we've seen is that Micron,
(33:15):
the US company, has entered India. They're building a plant
in the western state of Gujarat, which also happens to
be the home state of the Prime Minister of India.
Then we see Tata Conglomerate, which is one of the
biggest Indian conglomerates. They are building a factory again in Gujarat.
They're going to be making legacy semiconductors. So India is
(33:37):
not making the kind of cutting edge semiconductors that are
TSMC makes. TSMC has not even come to India and
may not for some time, but India started its journey
towards manufacturing chips.
Speaker 5 (33:50):
So it seems like there's a fair amount of foreign
direct investment that's been moving into the Indian market.
Speaker 12 (33:56):
Yes, definitely. So you know, India announced billions of dollars
worth of state subsidies to encourage the assembly and the
manufacturing of smartphones. Then it has announced another scheme with
some early billions to push the manufacturing of servers and
laptops and tablets. It has a ten billion dollar fund
(34:17):
to encourage chip making in the country. So it has
spent some amount of government money, some substantial amount of
government money to attract assembly and manufacturing to India.
Speaker 5 (34:28):
That was send culled Farti al There, India Tech reporter
for Bloomberg News. Let's move next to the property sector.
For both Hong Kong and mainland China, new property sales
across forty seven Chinese cities fell nineteen percent between July
first and the twenty third, and Bloomberg Intelligence says this
could portend a deepening sales downturn in the second half
(34:49):
of the year. Buyer sentiment has weakened since April's US
tariff announcements, and it's threatening to undermine previous stimulus efforts.
For some insight, let's bring in Adrill Chan. He is
chair of Hong Long Properties. Adrill joins us from our
studios in Hong Kong. Good of you to make time
to chat with me. I want to bring up a
sore subject right out of the gate. I'm sorry because
(35:10):
I noted that net income for your company was down
fourteen percent year over year in the latest period. Can
you give me a sense of what's happening, what you're
struggling with right.
Speaker 11 (35:21):
Now, Thanks Doug. The decrease in net income really is
as a result of a lower number of sales of departments,
and that is something that fluctuates for us. The primary
sector of our business is retail leasing and office leasing,
so commercial leasing is actually down low single digits, which
(35:41):
is a lot less bad than being down fourteen percent,
but that's the explanation for that. If you look into
retail and offices, retail has been actually surprisingly resilient in
the Mainland. I think our share price has reacted relatively
well since the announcement of our results, and that's a
little bit of a surprise to me, honestly, but I
(36:01):
think that the market was perhaps expecting worse. So we're
down retail sales low single digits, but I think people
were probably expecting worse than that.
Speaker 5 (36:11):
So give me a sense of what your portfolio looks like.
When you talk about retail spaces, I think shopping malls.
Are you catering to retailers that perhaps service the higher
end of the market. Are these luxury type retailers primarily?
Speaker 11 (36:25):
Absolutely so. Our biggest exposure is to the luxury brands,
and as we've been seeing over the past couple of days,
the luxury brands have been posting let's say, mixed results.
Asia extrapan is sort of broadly flat ish, while Japan
is down significantly, and that kind of I think is
what explains our reasonable performance. A lot less Chinese outbound
(36:49):
tourism to Japan for shopping and staying on shore to
do that shopping. So that's one of the macro trends
that we've seen. I don't know if that's because of
all this rumors about earthquakes and this and that, but
for various reasons, the Chinese consumers seem to be staying
put on shore.
Speaker 5 (37:08):
So when you cater to that segment of the real
estate market, those higher end retailers, do they have expectations
about certain upgrades or modifications that the landlord in your
case has to provide them, And does that kind of
draw down or maybe force you to do a little
bit of cap.
Speaker 11 (37:28):
X Oh, it certainly does. So, you know, in terms
of luxury moles, this sector in the mainland of China
has only been around for maybe twenty years or so,
twenty twenty five years, and so if you think about
the lifetime of a mall, that's kind of the time
that you need to definitely start looking into CAPEX upgrades.
(37:48):
We've done quite a few. We've done three upgrades in
three of our separate males across the mainland.
Speaker 5 (37:54):
They've been well received.
Speaker 11 (37:55):
I think now in terms of the market cycles, it's
a relative down it's probably a good time to be
investing in oneself. That being said, because we're in a
down market, the tenants have pricing power. It's a buyer's
market for our tenants, and so we have to make
sure that we're on the ball in terms of how
those capecks upgrades go and our ability to deliver on
(38:18):
an operations and service that is.
Speaker 5 (38:20):
A drill chan share of Hong Long Properties. And I'm
Doug Krisner. You can catch us weekdays for the Daybreak
Asia podcast. It's available wherever you get your podcast.
Speaker 2 (38:29):
Tom, Thanks Doug, and that does it for this edition
of Bloomberg day Break Weekend. Join us again Monday morning
at five am Wall Street Time for the latest on
markets overseas and the news you need to start your day.
I'm Tom Busby. Stay with us. Top stories and global
business headlines are coming up right now.
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