JD Slumps After First Decline in Over A Decade — The China Show — 8/14/2026

[00:00:00] Speaker 1: And it's 9 a.m. here in Hong Kong and also Shanghai and Shenzhen. You're watching The China Show. I'm Stephen Engel and my partner here, David Inglis. Inglis Show this Friday. Happy [00:00:11] Speaker 2: Friday to all of you. Ahead of the weekend coming down to the open markets in greater China. The approach is this. Asian stocks extending gains as moderating U.S. inflation and a pullback in energy prices, reinforcing bets that the Fed will hold rates next month. The KOSPI is heading for a fifth day of gains, potentially testing the 7,000 level. Now, gg.com's Hong Kong listed shares in focus. It's after a massive tumble in ADRs on its first quarterly revenue decline since it listed in 2014. Meanwhile, chipmaker CXMT topping Tencent as China's most valuable company. Now, Lenovo stock also hits a record on a forecast of $100 billion in revenue this fiscal year that's driven by AI and will get the outlook with the CFO, Winston Cheng. Plus, MTR CEO, Jenny Young, will be joining us as well on shows after first half net income doubling on strength in the Hong Kong property business. [00:01:24] Speaker 1: Dave, so much for having a slow Friday. It's a busy one. It's earning season in full swing. Of course, midweek Wednesday, we got Tencent. The market punished that, even though they're talking about massive more spending in the AI space. Other companies, though, are really being rewarded for their AI spend. Lenovo, I think, is the one that we're really circling right now. No longer just a legacy PC maker. They're going headlong into AI infrastructure. And they are being rewarded. [00:01:51] Speaker 2: Look at their stock price so far this year. Massively rewarded. And I think the afternoon session when they reported during the launch break was really clear that the market had already made up its mind what type of company Lenovo was. Right. It's still trying to figure out what Tencent is. Is it more on the consumer side of the weakness. Has it done and told us enough about the AI story. I think to the point we just talked about at the start of the show is JD.com is another one which is still clearly a consumption story that's showing up in numbers. So we'll see what happens with the stock as we go into the open today. A lot of earnings to get into. Let's have a look at where we are in equity market. So you have the likes of Guizhou Maotai Zijin is coming out. Samsonite also came out. CICC China's biggest brokerage by some measures also coming out with earnings today. So the old AI winners and giants remain the winners so far. NASDAQ futures are pulling back a little bit. Of course there's a memory story which we'll get to in a moment here when you look at some of these big names across the Asia Pacific. The macro picture dollar yen inching ever closer to 160. We're halfway back. We've talked about that around midweek. Terrible 30 year auction. Well they got it through but at a cost of the highest yield back to 2001. The approach to the open today again we talked about JD.com going the opposite way. We're trying to practice overnight. This is what we had going into this morning. Alibaba was also down two and a half. JD.com punished over seven percent. A50 futures coming up on your screens. The 10 year 10 year yield and dollar China has relatively been in a very tight range the last 10 days or so. But as you can see the 10 year yield has now peaked again. Testing that's 1.7 percent. I mean there are just so many companies that are [00:03:30] Speaker 1: proxies to the Chinese economy whether it's the consumption side of the story. The AI build out that we're going to be talking about from yesterday and today going into the weekend. Result season looks like it's driving further dispersion within Chinese tech. Semiconductors are booming while the consumer Internet space struggles. Let's bring in markets reporter Anthony Stevens to discuss this dynamic and what lies ahead. So what are we watching. Let's start specifically with Chinese tech. Yeah. We had that big data [00:03:58] Anthony Stevens: point yesterday right CXMT passing Tencent as China's biggest listed company. And you see the leads into today and it's more of the same. Right. We saw memory do really well in the U.S. and this cup double figures dragging the entire ecosystem with it. Korea is looking a bit more tentative than I would have expected this morning. And that's because local retail is selling. But the leads into memory into CXMT and into the other Chinese memory players are super strong. This compares with the 1.6 percent discount Tencent ADRs traded overnight in line with the general weakness around the China Internet space. Right. So Tencent if anything is at least a little bit better position than the J.D.s and Maitwan's of the world given that they have already put the foot into the AI door. But investors as you say are not giving them credibility of a complete pure play AI name. Right. So that dispersion continues to grow. There's a lot more earnings momentum around the semiconductor space despite valuations being pretty extreme even by global standards. Right. So the fact that these Chinese companies are coming through on the earnings front in the case of SMIC and have very strong global leads. And that's where SanDisk the guidance was so impressive. There's like the cycle is over. There's no cycle. This is structural and it's huge. And we have new contracts that are going to actually solidify pricing and demand here. Right. So a little bit very interesting to see how CXMT trades and then going going into that we talk about you know the J.D.s and and the Babas and the Maitlons of the world. What did SanDisk say. Let's get into that. And what's the read through we're seeing currently now. So they see double digit growth into 2030. Like that is a level of visibility that you know it's very rare. They've also they're also S&P is like top performing name right. 500 percent plus. And so for them to come out and be that confident. The second thing was their estimated demand on flash. Right. That it was on another level. There's literally a slide where they gray out all the years before 2025 as irrelevant. Right. And the next thing is that they've pioneered what they call not very creatively the new business model NBM where they look to lock down prices for multiple years. This is a very different vibe change. Lastly they are moving on to high bandwidth flash and they have met us partnership with that. So the space is not only earning a lot of money now. The technology progress is very rapid. And that's got people really excited. Let's shift it then to like the chip makers [00:06:26] Speaker 1: that you mentioned Smith as well as Hua Hong. There's some dispersion there between the two and their earnings. What can you see. And that speaks to where valuations [00:06:34] Anthony Stevens: versus expectation. Right. So as bullish as the story is you can't afford to miss. Right. And we saw that in the U.S. as well. We have cerebrous miss massive drop. Cisco came in a little bit light on the top end. It also dropped. And we're probably going to see a little bit of that versus in Hua Hong Grace. You know Hua Hong Grace is probably not going to get much grace from the market today in missing the top end of estimates. But the picture is great. You just need to execute. [00:07:02] Speaker 2: There we go. Maybe a fall from grace. We'll see. We'll see. As far as the market reaction is concerned there. The dispersion. The new ones between the two. Anthony Stephens. Fantastic there. As we go into the session today. Twenty three minutes away. One stock. We're of course tracking as well as JD.com over 7 percent drop in ADRs overnight. Get this. Since becoming a public company in 2014. The company reported the first quarterly year in year decline on the top line in revenues. That's coming up on your screens very shortly in terms of the visual iteration of how that actually looks. It's a growing divide between improving profits and really subdued underlying demand in China. Catherine Lim our senior consumer and tech analyst Bloomberg Intelligence joining us right now for her take. When you saw the numbers first reaction. What was it. And where do we go from here with the company. [00:07:51] Speaker 4: Look I think to be fair. The company revenues declined was actually in line with expectations. And in fact that decline actually came in narrower than what the street was actually expecting. Now all that headline historical numbers aside. The reality is that the company did give a very bullish outlook into the second half of the year. They're talking about revenues profit accelerating. But I guess you know that's all out of the window because it's all into the it seems like you know consensus has already well anticipated or that acceleration. And really I think it's starting to actually sink in that. So what's going to happen. You know after this after all these base defects et cetera goes away. [00:08:35] Speaker 1: So so Catherine I mean you've written that JD's own guidance for accelerating growth won't hold through 2027. So that's why you said it's sort of out the window right now. So why is that. I mean is this going to be a company that's going to be in uncertain outlooks of until 2028. [00:08:55] Speaker 4: Yeah I think you know both of you have actually highlighted this you know the overhang on China consumption. And we're going to actually see that next Monday when you know China reports the July retail sales numbers itself which you know may not be the most exciting things you know based on what I'm actually projecting. The reality is that you know to try and throw out that trajectory into 2027 that you know things is going to be better there is going to be more people buying electronics you know home appliances as well as general merchandise which are for taste of you know JD.com. I think that's where the big question mark is. Again I'll reiterate that in the second half that a lot of the acceleration is actually coming from a low base effect. And we all know about you know the food the ugly food delivery war that took place last year. That is no longer the case now. And that's why the numbers are prettier for JD.com. As well as possibly Alibaba and Maytuan. [00:09:51] Speaker 2: Catherine the why is the market not buying it. I think that's one part of the question. The second part is they talked about this AI partnership their new LLM's you have AI shopping agency of this 200 brand AI partnership. Well why is that changing the market outlook and did that change your outlook specifically as well. [00:10:10] Speaker 4: Maybe I'll take the latter question first that you know honestly speaking embedding AI into you know your operations etc. I think you know that is the key the basic that any companies can actually do right now. And JD.com highlighting you know what they've actually done. What one key thing to really to take note is that they've somewhat admitted that it is still a cost line that they need to actually incur. They've talked about higher R&D expenses that kicked in in second quarter and will likely continue to be the case you know over the next couple of quarters itself. And I do think a lot of it is actually AI driven. Clearly you know they're not actually breaking it down explicitly but you know again the realities the benefits of that the whole monetization you know that we all talk about and are looking for for companies just is still absent in JD.com. [00:11:08] Speaker 1: All right Bloomberg intelligence senior consumer and technology analyst Catherine Lim. Thanks for joining us. Okay some other earnings to mention China mobile reported first half net income of eleven point seven billion dollars down six point three percent from a year ago. It's capex jumping five percent on the AI driven demand for computing power also CK Hutchison saw its profit rise in the first half to three point four billion U.S. dollars. Thanks to hefty gains from asset disposals. The company is currently looking to sell its long held assets to build a war chest of at least forty one billion dollars. [00:11:44] Speaker 2: And DD Global's ADR is soaring as it swung back into profit here after two consecutive quarterly losses net income coming in a hundred and twenty eight million dollars helped by strong ride hailing demand in China. So that's just really a preview of this extremely busy earnings day. That's just the tip of the iceberg. A lot more ahead here here on shows Lenovo CFO will be joining us in a couple of minutes. To talk us through of course the stellar numbers this massive re-rating it's the best performing stock year to date MSCI China Hang Seng Index by far MTR CEO will be joining us as well Jenny Young at those times on your screens to unpack their earnings what their outlook is for the railway business and also the property business lots more ahead counting down to the open of trade in Shanghai in Shenzhen and now an extremely heavy downpour amber rainstorm warning up in Hong Kong. On the opening bell just over 17 minutes away. Happy Friday. This is The China Show. [00:12:57] Speaker 1: And welcome back. You're watching The China Show here on Bloomberg. [00:13:01] Speaker 2: Yeah. I'm looking at the markets there. I can't see those. Well somebody to remind me memory. Do you remember that? Yes. We're talking about that right now. So like the I think we discussed this and this story is playing out. And as Anthony put it as clear visibility as you can get into 2030 in terms of the revenue outlook. And you know for a company to be able to give you that level of transparency and confidence on the top line four years down the road is indicative of this being more structural than cyclical. But yes it is playing out across some of these names as well. And you know I think the market iteration of this in China is CXMT in case you missed that statistic. CXMT has surpassed Tencent as China's most valuable company as of the close yesterday. [00:13:46] Speaker 1: All right Dave. Let's bring in Ben Luck senior multi asset strategist at State Street Markets. Ben welcome. Thank you again on this amber rainstorm day. There was some thunder just going on. But the you know the ominous storm clouds have been brewing over U.S. tech for quite some time but it still keeps on outperforming. What's your still consistent take on U.S. tech. [00:14:08] Speaker 5: Yeah I think as a custody bank we're able to basically look at how investors hold these positions and they have continued to add into those overweights. There hasn't been any changes to it. There were briefs of selling I would say at the start of the year. But then basically since the Middle East conflict it has been a persistent buying as well. And what we have seen at least this year as a bit of a change comparing to previous years was they were rotating out of fixed income into equities which is what we saw before. This year is more interesting where they're actually doing more intra asset rotation whereas they're selling Europe, selling the U.K., selling Pacific X Japan and then also moving those proceeds into buying U.S. equities. So it is overcrowded. Definitely some of the measurements that we have is it's really closer towards pre GFC levels in terms of how overweight those metrics are. But to your earlier discussions right earnings are well justified. They continue to see those beats to come through. And really those revisions continues to be positive as well. So it sounds scary but we still like this asset class as a whole. [00:15:22] Speaker 2: Yeah. So I'm going to ask you what do we do with that information because that's the backdrop and then you had that 30-year auction last night which was they got it up and extremely cheap. Right. Is there any indication or clue? Do we need to lean into past winners is my question. Right. Do I need to change my strategy from the start of the year? [00:15:41] Speaker 5: Yeah. I don't think so. I think I think the 30-year week auction reflects this I would say somewhat of an hour structural change where most investors are moving more towards shorter duration. They're now a lot more worried or uncertain over what the new Fed regime looks like right under Walsh and how that obviously unfolds. But in general bonds are no longer acting as that safe havens in a more of a medium term basis. And what you what we're seeing is that investors have accepted those shocks but then they continue to buy in those dips actually. [00:16:21] Speaker 1: Yeah. Before we start talking about Asia let's talk about the Fed a little bit because of course we've seen them sort of fading the inflation concerns in the United States. investors right now and sort of pricing out the potential for a hike. You disagree. [00:16:35] Speaker 5: I we do. We do disagree. And there's a reason for this. So we we have our own way of calculating inflation and it's called the state street price stats. It's an online inflation metric that we use which now the Fed also uses as an alternative of data. And what we see from our data your metric you mean. Yes. The state street price stats. The state street price stats data that the Fed also takes into consideration as well. What we're now starting to see is a second order effect in the inflation. So we pass that oil concern where obviously oil has come down a bit. You're starting to see that in the transport prices. We we agree with that. But what we're now starting to see is places that are starting to move up a bit in prices is places like in apparels. Recreations, electronics, household equipment. Those are things that right now may not look as big. But when you actually see the second order effect given the fact that the street continues to remain closed. You are starting to see these online retailers actually increasing prices with their existing inventories. So that could actually be something that we think the Fed could monitor and actually be more hawkish than what the market is thinking right now. [00:17:46] Speaker 2: Would that become a problem to markets? Because I get back to the early point. AI has so far offset any any of the issues on that side of the room. [00:17:53] Speaker 5: Right. I think if it's just a 25 basis point rate hike, the market will well absorb this. It's not that big of an issue. But whether or not we're going to see, let's say, not just a 25 basis point rate hike, but more of a firmer rate path, then again, the question then becomes it's going to be even a bigger risk for the long end of the curve because of how much those hawkish are going to be priced in next year. So I think right now that the A.I. tech will well cover that 25 basis point hike if the if it comes. Let's quickly pivot to Asia. Your second highest conviction is Asia. Yes. How and where Korea is interesting for us. Definitely. We have seen, I would say, more of a wipeout since the start of the summer. Right. With the the the deleveraging cycle that we've seen there. And and I think a lot of what was sold off was really not driven by corporate fundamentals. It was a lot more driven by how much of that was leverage base and how much was that was obviously driven by that hype overall that we're seeing in the ex U.S. tech story. Right. But as people go back into the Asia story, I think Asia remains to be this undervalued and under owned area that investors may not think about it too much right now because of the fact that U.S. has done so well. But outside of that, we think where the earnings are, where the potential is, Asia tech remains to be that core strategy for us. Yeah. [00:19:19] Speaker 2: Are institutions going back into Korea because you guys have a unique window into flows? [00:19:23] Speaker 5: Yes. So the flows that we're seeing is that Korea is now a modest overweight in terms of what we see since the start of the year. So we are starting to see institutional investors rebuilding those positions already. Taiwan remains to be an underweight story that we see. So a lot of that selling really at the start of the year hasn't really been closed out yet from what we see. So I think the it's it's less I would say it's less attractive compared to start of the year given how both positions have moved. But when you compare the large outside U.S. tech story that we're talking about, it's there's still ways to go in terms of how investors can rebuild that Asia. And just quickly China. Yeah. China is a story that we were positive at the beginning. And I think it's past tense. It's past tense now. Unfortunately, the earnings story hasn't lived up to the expectation that we were hoping for. It's and really, I think a lot of the story for us in China is more focused on the renminbi story being stronger. The bond story still being quite well intact. And I think some of those flows have moved away from the equity side more into the fixed income story. So we're more on the neutral side for now for China until there's more growth story to come through. [00:20:32] Speaker 2: Have a restful weekend. Ben, thank you so much for coming here. Thank you. Ben Luck there out of State Street Markets there. J.D.com on your screens, tracking the ADR drop overnight. Talk about 7 percent. Hansen Index coming up very shortly. A preview of the trading day just ahead. [00:20:45] Speaker 1: All right. Welcome back. You're watching the China show. Here's what we're watching in greater China. Of course, Dave is going to talk about this in just a second. We did see on the Shenzhen Shanghai 300, the CSI 300 index drop off the cliff towards the end of the trading day yesterday. Some profit taking perhaps, but we'll have to dig deeper into that as we approach the open. Guotai Hightong Securities studying options, according to sources, to combine its international units after announcing plans to take one of its Hong Kong listed units private last week. That would align China's efforts to consolidate the securities industry to better compete with Wall Street brokerages and international firms. Deep Seek. Is this the bottom of the race to the bottom? Deep Seek price hikes. Again, large language models trying to monetize their investments in AI. Earnings, earnings, earnings. You know, we have tons of it. We're going to be having the CFO of Lenovo coming up later in the show in just a matter of a few minutes. A number of different proxies for the Chinese economy, from the consumers to AI spending, out yesterday and today. I've run out of time, but Guotai Maotai, I should say, that's a good proxy for the consumer as well. [00:22:11] Speaker 2: There's always time for Maotai. And it's Friday. In fact, I'm going to buy 15 more seconds there to talk about Maotai, because that used to be the biggest heaviest weighted stock on the CSI 300. It's no longer that. It's the AI place, the hardware names like Chongji Inolite, of course, that have taken over that throne. Two-day look, yet an afternoon sell-off that we talked about, alluded to just now. So we'll track whether or not the momentum to the downside continues into the session today. Pre-markets are looking like this. And, of course, this whole swath of stocks we're tracking, given the earnings story, Flemmenovo, day two. It was out earning with earnings lunchtime yesterday. He said the stock did already react. JD.com is one we're tracking, because that is going to be first dibs for Hong Kong listing. There we go, on your screens. We're down 7% on JD.com. We have plenty more ahead, including the opening bell. See, we made it just on time. With time to spare, this is The China Show. [00:23:06] Speaker 1: All right. Welcome back. You are watching The China Show. We're counting down to the open of markets here in Hong Kong, of course, and the mainland markets. It should be a very interesting open, Dave. Obviously, as you just talked about, we saw a drop-off in some, maybe some profit-taking in the CSI 300 late yesterday. It is smack in the middle of a very key earnings season, and I can't believe it here in 2026. I'm talking about Lenovo, the old legacy PC maker, is one of the best-performing, if not the best-performing companies right now in Hong Kong. Adjusted profit up 176% year-over-year, revenue jumping 43%. This stock has been an absolute tear, and we're going to be talking to the CFO coming up in a matter of minutes as we wait for the opening of the markets. In one second, two seconds. Bingo. [00:24:09] Speaker 2: Yeah, there we go. Fantastic. Lenovo is such an OG in the tech space. I remember in the mid-2000s, that was the big news, right? In fact, at that point, I had just moved to mainland China, and they had just bought, I think, the business of IBM. Well, they bought the Think brand from IBM. From IBM, right? And here we are celebrating, market is celebrating the company as an AI company, yet looking at the likes of Tencent still as an old-school platform company. [00:24:33] Speaker 1: Punishing Tencent for putting CapEx on AI up 176% while they're celebrating Lenovo. [00:24:41] Speaker 2: Yeah, they re-rated the company substantially. In fact, Tencent's coming up on your screens, and the statistic we were talking about earlier on was, you see it now, CXMT's up 3%. Tencent's coming up very shortly. The former has now overtaken the latter in terms of the biggest, most valuable Chinese company. That is by market cap, just in case you're curious. Hong Kong is coming up on your screens. We'll have a look at Lenovo in a moment, following, I think it was 20% in the afternoon session, into the close, following the earnings at lunch. Tencent is still seeing some downside. MSCI China's down 7%, 10% to 1%. So just a wrap of earnings. C.K. Hutch was also out. The chip makers, you have Hua Hong and SMIC also come out with earnings. Lenovo is flat. You do see that divergence between Hua Hong and SMIC, given, of course, what they reported, which is quite expected anyway in terms of market reaction there. Some of the other stories coming up. J.D.com, well, the J.D.'s are coming up on your screen. J.D.com was off 7%, 6.5% in the pre-market, should be down 7.5%. Now, there we go. First revenue drop since 2014. Yeah, quarter and quarter drop, which I think was a good point from Catherine Lim earlier on. The market, in fact, was expecting an even steeper drop. So the company actually over, they did deliver, and it was a high bar as well, I believe, the year before. But again, the market is reacting the way it's reacting. We're down session lows now at 8.5%. Drone stocks on your screens. This is the tariff story coming through overnight. I'm out of the U.S. Are we seeing any reaction there? [00:26:12] Speaker 1: Not really. Okay, let's take it back to earnings. Well, I just wanted to mention about J.D. Health. They're an aberration because the health stocks, if you look at the sub-indices, MSCI, China Health sub-index, it's one of the better performers and proving to be a winner. If there's any rotation out of big tech in China, it's been into health care. [00:26:31] Speaker 2: It really is. And I think HSBIO was flagged by Anthony yesterday, a market reporter, has really made a comeback, this rotation that Steve was pointing out, into perhaps healthier parts of the equity market where you are getting more visibility on earnings here. Definitely undervalued. [00:26:43] Speaker 1: Yes, so that's why they're seeing some love. Are we going to bring up that full screen again as we head towards Min Min? About the earnings that are coming up today, it is a busy day, even though the storm clouds are brewing outside. China correspondent Min Min Lo is here. There we go. There we go. That's what we're going to be waiting for today. What do you want to circle right now and start with, Mao Tse? Do you have a shot of Mao Tse right now? [00:27:04] Speaker 6: Yeah, we can talk about Mao Tse. I mean, it's that... [00:27:07] Speaker 2: Fetian Friday, as they say. Rockets show. [00:27:11] Speaker 6: No, there's an alcohol ban now, mind you. Yeah, it's a bellwether, right, for consumption. And if you look at the retail sales number, we all know in May there was a contraction. June was just 1%. So that is a drag on Kuei Chou Mao Tse's sales. But on top of that, there is an anti-extravagant campaign, the ban on alcohol. So that also a drag on corporate sales as well. But the thing about Mao Tse is it is positioned at the very premium end of the market. So while sales is expected to slow, it doesn't necessarily mean that profits will slow as well because this is a company that has hiked prices twice this year. And in fact, our Bloomberg Intelligence Analyst is expecting Mao Tse to consolidate market share because of this prolonged downturn, and some of their competitors maybe are not able to survive. So that's a positive thing for Mao Tse in the longer run, although, of course, revenue for the year expected to still remain flat, not expected to recover sustainably until maybe late 2027. Another factor to watch for that could affect the stock price is the dividend payout because they have a target of 75% payout ratio. And our BI analyst is expecting them to increase the payout, perhaps even above that target. Because, again, after all, it is a state-owned company, and the government might want to use it as a model to really increase shareholder returns as a way to push to strengthen the confidence in the equity markets. [00:28:35] Speaker 2: Okay, we have a few more. I don't know how you're doing it, actually. There's a ton of companies. Should we stick to the sin companies? [00:28:42] Speaker 6: Yes, from alcohol to gambling? [00:28:44] Speaker 2: To the casinos, yes. [00:28:45] Speaker 6: Yes, alcohol, yes, gambling. Since China. Yes, June and July, gambling was pretty bad. In fact, we're looking at double-digit declines in revenue, according to Citigroup's survey. And this is probably the worst we have seen since COVID reopening. A couple of factors. One is because of the government crackdown on cross-border capital flows. So this could have an impact on the high net worth of the VIP customers going to Macau to gamble. Second thing is what's happening in June and July is the World Cup. So that has diverted clients that may be thinking of travelling to Macau. They may stay at home to watch the World Cup. So it will be interesting to see how they report in the second quarter. And in the third quarter, whether this blip, this decline we're seeing, is because of the World Cup, whether the customers will return after that, or is it like a permanent hit to the business there? [00:29:37] Speaker 1: Let's last one. You have so many more to talk about. We could talk about Zijing Gold. Gold price is up, obviously. We could talk about Ping An with their diversified investment portfolio. But I like CICC, China International Capital Corp. They took, by Bloomberg estimates, in the second quarter, they took 18% of the underwriting for the big IPO boom that we've seen compared to 10% in the first quarter. That's a large jump. [00:30:00] Speaker 6: Yes, it's a large jump. And it's not just CICC. The whole brokerage industry in general is expected to do very, very well in the second quarter. A couple of reasons. One is the huge IPO boom, right? The pipeline in Hong Kong, in mainland China as well. And to your point, Steve, many of these Chinese companies that are listing, they're starting to choose Chinese firms like CICC instead of the Western brokerages like Morgan Stanley and the like. So that's why we are seeing the whole deals and wealth deals business is really doing very well. The investment banking side of things. Wealth management also doing very well because of a big bump in stock turnover. We're talking about 130% increase in mainland daily turnover, 20% increase in Hong Kong as well. So wealth management is also very positive for CICC as well. It's a different story for Ping An, the insurers, which are reporting because insurance, their exposure to equity may be a drag on earnings. And of course, we have the crackdown as well. Not not crackdown, but the personal income tax on offshore policy returns. That's a drag on on Ping An's. Yes. Min Min, thank you so [00:31:03] Speaker 2: much. Min Min Lo, our China correspondent there with a wrap of earnings. So far, in fact, we'll have more on the Lenovo story in a moment. I believe they have arrived, of course, after a visit to our friends across town. There we go. Winston Cheng joins us in a couple of minutes at those times on your screen. So for our Bloomberg clients, if you have any questions, of course, to probably the most re-rated stock in Hong Kong, get them in. You know how to reach us here as [00:31:25] Speaker 1: well. Well, another story we are tracking. Guotai Hightong Securities is said to be studying options to combine its international units. That follows last week's offer to take one of its Hong Kong listed businesses private. For more, David, shall we bring in Bloomberg Asia Pacific Deals Team leader, Miguel Aghori. Thanks so much. What's the deal here? Because we saw some consolidation. It's probably in line as well with national policies to kind of get the brokerages together, consolidate to better compete on the [00:31:57] Speaker 7: international stage. Exactly, Stephen. I mean, you explained it very well. I mean, there is a top-down policy to consolidate the banks, the financial services industry in China to create national champions and more more streamlined, stronger industry. And as you recall, the first big step was with, you know, Hightong coming together as well, Guotai. And then what they're doing now is just basically streamline all the listed subsidiaries. So they last week launched a tender offer for one of the subsidiaries which was listed here in Hong Kong, Guotai Junai International. Now they're looking into what the next steps would be, including a leasing company as well that they've got here in Hong Kong and other bits and pieces. But this is all within the whole process of consolidating the two banks as well. Yeah, I think Unitrust is actually not up 5%. They're fantastic reporting that. So do we have an idea of timing here? It's very early stage, David. Timing is key on every single transaction. Let's see how it pans out, right? Even the first one that was announced last week needs to be seen. Obviously, bear in mind, they already have more than 70% of stake in there. So, I mean, they just need to basically buy out the minority investors. And then one step at a time. This is more about a strategy and the process of combining everything they've got, which is quite a few bits and pieces. But it will take time. And we're in a very [00:33:39] Speaker 2: early stage here. Yep. As you guys are pointing out, the current state of affairs now is said to be mulling. There we go. Manual by Gori there. Our favorite three-word phrase there here at Bloomberg. Said to be mulling. Said to be mulling. Right. It's said to be mulled that coming up on shows is, of course, an unpacking of a lot of the big earnings coming out. No, it's actually not said to be mulled. It's confirmed. Lenovo joins us in a couple of minutes. This is The China Show. All right. We're 12 minutes into the cash market session. Lunch break yesterday. It's quite visible when Lenovo came out with earnings. The afternoon session was a completely different story. Let's call it 22 percent since this time yesterday. So not that they needed it. But here is the pecking order as far as the Hang Seng Index top four. MSCI in a top four. There's a single name at the top of both those tables. It is Lenovo in terms of the share price. We haven't even considered a total return. But there we go. That's as of this morning. Two hundred eighty percent year to date. Hang Seng Index on your left. MSCI China on your right. And as far as the re-rating and the multiple is concerned. That's also coming up on your screens. Chart takes you back forward. You going back 10 years. You have the two standard deviations up and down. And as you can see this has really seen a massive re-rating since about two quarters ago I would say. You know the last earnings report prior to this one actually kicked things off. And here we are today. Market is looking at a [00:35:19] Speaker 1: completely different company. Absolutely. I mean it's a new record for the stock you know as of the first quarter and second quarter. Looking great for Lenovo right now. Joining us now is the Lenovo CFO Winston Chung. Congratulations on beating the street handily across revenue. Revenue is up 43 percent adjusted profit up 176 percent. And your AI infrastructure business seems to be doing well. Are you really sort of more than sort of transitioning to be less of a legacy PC laptop tablet company and more of an AI play. Yeah. This is [00:35:55] Speaker 8: actually a 10 year long strategy. And I think the market is finally giving us some credit. But of course our business has been struggling to be profitable for many many years. And now we're really turning around that business. And I think partly also because of our differentiated offerings as well in terms of our ability to source at scale in terms of both on the device side infrastructure size gives us a competitive advantage. We have 32 plants around the world being able to produce in each of the geographies is now strategic to our customers. And so both having the supplies having the great product that we bought from IBM in terms of think systems which was a leading product in the market. Now putting that all together with a great go to market team. I think it's really the results that you're seeing. Is it accurate to say you've entered a new phase of growth. I think the AI infrastructure span is probably been characterized as one of the greatest span in private market history. Right. Certainly in terms of real walls maybe it was built by both entrepreneurs but also by the governments. Right. But in terms of the private sector is mostly funding the AI bill today. And we're still not really seeing significant sovereign participation yet. Right. I think there are some but I think not yet in a large scale. So it's really driven by global hyperscalers telecom companies in certain markets as well as new clouds today that are additionally serving that market. And we're starting to see more and more trying to come in and provide that because the need for compute is a multi year trend. I think it's a it's one that it's hard for people to actually quantify. So I think from that perspective we are business will enjoy that growth and spend for many years. And then of course the full cycle that will turn around and come around which is the individuals will need devices that are upgraded that are AI enabled to be able to interact with the better performing going forward. And I think we're well positioned for that. So after the infrastructure spend in terms of cloud services today that people are building for. Yeah. Then the corporates will actually need it for inferencing because certain corporates especially global 1000 have the internal IT capabilities and they need to have data that's on prem. And so they need to have device up servers that are also on prem. And a lot of that demand is also not coming up yet. I think that cycle hasn't come. And then the device cycle. And so I think just from the multi year device plan in terms of product portfolio set should allow us to grow for many years to come. And I think the focus on profitable growth more profits growing faster than revenue growth is absolutely something that we're keen to to make sure that this is a multi year year trend for us. One of the keys to these results has been your [00:38:26] Speaker 1: ability. It's uncanny ability as well to sort of anticipate the component shortages across your legacy businesses and also AI business as well. Memory is a big one part of that young and Ching the chief executive officer said they anticipated those cost increases and the supply shortages and address them appropriately and successfully. Can you give me your secret sauce is how you did that and where are you seeing those shortages [00:38:51] Speaker 8: continuing. Yeah. Well I think it's really being part of the industry understanding how the ecosystem works. And I think we have people in Lenovo the Lenovo ins in here for many many years who have been at the company who know the space who are partners not just in terms of business but on a personal level with the suppliers. And I think we treat them with respect. We treat them in the same ecosystem and that allows us to be able to continue to be important in our product portfolio set which is one of the most complete in the market today. And also our geographic presence into 180 markets. And in this past quarter with all the highlights. It's such a balanced growth because every geography that we reported is actually got the historical revenues. How much into the future have you locked in your supply of memory. I think we've had this conversation [00:39:38] Speaker 2: before. I just want to get a sense of where from your perspective where we are in that global shortage. I think in terms of [00:39:44] Speaker 8: capital demand is very significant today. So I think given the revenue growth there is a lot of demand for that capital. And I think inventory also going up not just in terms of volume but because of that cost is going up. So the inventory dollar is actually going up. So I think from that perspective we need to make sure that we're very fast in terms of that turnover of that inventory. So accuracy of that forecast is important. And I think from that perspective is how we manage our business. How are you [00:40:12] Speaker 1: looking at CapEx going forward for the AI infrastructure side. In terms of CapEx we already spent and we actually [00:40:20] Speaker 8: launched our North Carolina campus in terms of that manufacturing facility for servers just about a month ago. So I think that is actually built purposely for customer demand. And so I think from that perspective we have already spent we continue to have to have to have to build out in terms of the plant in KSA. And I think of course given the geopolitical situation since March that slowed down a little bit. But I think the long term thesis for the region continues where they have a lot of abundant energy and they could serve as a very major hub to produce and generate tokens efficiently going forward. So I think in terms of being an AI factory in the region and having a server factory that's nearby and we have the only one that's most complete in the region I think puts us in a very competitive position to grow [00:41:09] Speaker 2: there. The I had a very quick glance I should hedge at your margins. And I think the last conversation we had was whether or not you would be able to pass on that increased cost. And it looks like you've more than done so. Do you get a sense that you can continue like there is pricing power on your side and there is demand that could absorb any further sort of inflation [00:41:29] Speaker 8: through that supply chain. Yeah. It's a supply and demand equation obviously in terms of that question. The these demand for the AI infrastructure continues to be very strong and you're seeing the end takers. I mean if you look at the end takers you're seeing the end takers or the end takers. The end takers themselves in terms of hyperscale they're increasing their capex where you're hearing capex only directionally going one way which is up. And you're seeing it either in triple digit or even sometimes triple multiples in terms of growth of that capex. Right. So I think from that perspective we're only seeing demand coming stronger. And I think you're not even seeing the AI natives are starting to raise capital. They a lot of them have not gone public and once they go public they will need to spend more as well. So I think from that perspective the market I think is still got many years to go in terms of that ramp up. And I think therefore the supply will be will be somewhat limited. One part of your business which is going substantially the infrastructure solutions group. I think you're up 100 percent. It's pretty much [00:42:32] Speaker 2: doubled. It's gone from a fifth of the business to I now think close to a third. Does that does that become the do you see as an area where that becomes your biggest revenue driver. It's a it's a sharper observation. I think given one observation I think our chairman CEO made last year was that for the first time infrastructure [00:42:53] Speaker 8: 10 is larger than the device 10 is larger than the device 10. And so in his 40 years of operating he didn't he never really seen this. So I think from that perspective he does believe that device 10 should come back in the future in terms of being larger. But in the next many many years I think that infrastructure 10 will be very large. We have one that we have an OEM and ODM business model ODM plus model we call it. So we're able to serve the broadest customer set. So growing from well positioned from the training phase to the inferencing phase. And so we're building up that we're building up that business and our product is probably one of the most complete. And we have the global presence. So I think we replace as well to grow. And I you can see that potentially ISG business would be bigger than our IDG business in a few years time. I want to briefly come back to memory because it has been a drag for a lot of [00:43:48] Speaker 1: you know legacy PC makers and of course the AI you know hyperscalers. And how do you see a company like CXMT coming on challenging the triopoly of the three established memory chip makers. How do you see that as is as well on a day that CXMT overtakes Tencent as the most highest market cap here in the most valuable Chinese company globally actually. So again how do you see them scaling to be able to give the capacity in the scale in the memory [00:44:18] Speaker 8: chip that can alleviate those pressures down the road for you. Yeah I cannot say for the long term trends multi year but I know that both the Chinese players but also the Korean Korean players I think are all building additional capacity. So I think that's coming online. Obviously it takes time to build that capacity. But I think there's so much market demand. And I think some of the constraints to this great AI infrastructure build out will be supply. And I think both land power resources to deploy in terms of people but also in terms of some of these key components are absolutely critical. So I think that's any additional supply will be welcome by the market. Of course. [00:44:58] Speaker 2: Yeah. How do you control yourself in terms of because it just seems that the constraint to growth is simply your capacity to grow your the way you fund growth. Clearly it's visible to you that demand is there for several years. Is it. I don't know. Like how is that conversation within you and you know your executive committee and how you deal with fundraising and being able to make sure you have the money but also not invest too much. [00:45:24] Speaker 8: Yeah. So absolutely. So I look at it in terms of our current manufacturing facility. We actually have the broadest purple and we're well diversified in the key geographies that we have so we can manufacture devices and infrastructure in any major continent that we operate in. So I think that's very important. So we're already well placed in terms of our global business. Sure. Our geographies actually recorded record revenue. So we have balanced growth. So that gives me confidence that we can invest in where we need to invest in. I as she's now doing very well and is profitable. So we can addition invest additionally there as well. And we have been. We acquired a storage business to continue that product portfolio set. And I think that integration and the results of that is many years to come in terms of where that was. But in the meantime servers is where it is majority contributing a lot of the business growth and that's where the demand is. But storage is also a very big part of that business as well. And I think that having our own IP will also be important. [00:46:18] Speaker 2: Was it ever a consideration to vertically integrate. I mean are you looking to grow inorganically for example. How active are those conversations. I know it's always part of the options but how active are those conversations. We have been a company that have really grown. We talked about that before we start. [00:46:35] Speaker 8: I think we've made the think acquisition in terms of PC. We bought a server business in terms of think systems. We bought them all. We actually also own Motorola in terms of the handset business and got some great products in terms of fold coming up. So I think from that perspective we are a business that have been able to acquire six and integrate successfully and we've enabled some of the major brands also in Japan to be able to continue with the legacies of those businesses and actually thrive. So important partners like NEC and Fujitsu who have actually made money after they sold business to us because we continue to grow together in those markets. So I think acquisitions continue to be a very important component of that. And you know I think we need to continue to be flexible on that. [00:47:20] Speaker 2: Watch. Watch this space. Yep. We have been. Yeah. Winston Chang. Fantastic. Thank you so much sir. CFO at Lenovo there. A look at markets. We'll take a short break. The second hour of the China show is just ahead. [00:47:50] Speaker 1: And welcome back. You're watching the China show. And you're also seeing quite a gloomy day out there in Victoria Harbour. Amber rain storm signal up. And we've been here in the thunder. That's for sure. Let's see how the market is doing. It's not too stormy. It's down about half one percent right now. [00:48:09] Speaker 2: With the hang saying in the opening half hour. Dave. Yeah. Clouds of Mordor have gathered as we go into the weekend to be careful what you ask for. Right. It was. In many ways a literal sauna stepping out into Hong Kong this week and it's now turned into the steam room if you think about it because it's still so hot but it's very condensed. [00:48:31] Speaker 1: Quite a relief going to work this morning. It wasn't that oppressive heat like we've had for several weeks. [00:48:35] Speaker 2: That's a good way to put it. Oppressive. In fact it was bordering and offensive at some point. Just being just being out there this week. I've actually you know we were talking about this. I've had trouble sleeping this week just because of the heat. You know how they say it has to be cool dark. Yeah. And obviously you have to call. Two old men complaining about the weather on our back porch here. Yeah. Yeah. Okay. Let's have a look at what do we pick. Okay. Let's why don't we start with the Nikkei. There we go. The weather should be better in Tokyo and you get a better sense of that half an hour when we show you the live shot out of Tokyo into the Imperial Palace. The weather market sentiment wise is also doing quite well. So we really seem to come back in the in the big AI winners of the past. The Korea's come back in a very big way. Memory is still something we're talking about today. SanDisk was really the specific tailwind. And as far as some of these equity markets are concerned or parts of the equity market some of the factors here. Just to mention too is Indonesia coming online right now. Stay tuned of course for this is a really important political exercise happening political and economic exercise today would of course promote delivering the budget. That should I believe be taking place in about 90 minutes in the next hours about 90 minutes or so. Treasury markets. We talked about this. The. They got the option through but it came at a price of the highest yield going back to I think 2001. So let's call it the better part of the last quarter century. Although that is coming at a backdrop of subdued inflation. So there is something else that is almost like dark matter. When you think about physics and energy. There is something else that is accounting for the movement of the celestial bodies. It's not inflation. It could be the debt burden. But that gets us very nicely into Sam. Unstead here of course our Bloomberg markets today editor. Talk to us about this 30 year auction. [00:50:25] Speaker 9: What's the framework we should be looking at. Yeah it's interesting. You mentioned a couple of points there. But so the inflation story is probably not quite the one. But mostly it's just enormous amounts of uncertainty. So you mentioned the debt. The deficit in the U.S. that's weighing on the 30. More and more as well. We had some nice stuff on the markets live blog over this week about the correlation between oil and 30 years as well because there's more and more uncertainty about what the effect of a higher oil price is going to have over the longer term. From this debt sale yesterday as well which is quite interesting. So you know I'm over here visiting you guys from the U.K. And we've spent a lot of time over the last couple of years talking about 30 year yields getting higher and higher and higher and higher. And what has ended up happening in the U.K. and which now looks like it's going to happen in the U.S. as well is tilting away from longer term bond sales sort of focusing things more at the shorter end of the curve. So it's going to be an interesting picture [00:51:13] Speaker 1: over the course of the next year as that starts to starts to shift. Sam let's talk about the yen. Obviously it's creeping back more weakness after the intervention. What are the carry traders doing as far as the end shorts right now. Having a great time. Basically I mean to say that you know the the intervention comes in. [00:51:31] Speaker 9: It delivers a very short term boost but all the fundamentals are still you know it's towards the end yen weakening. And that's just been continually it's continually happening since that intervention happened. We had some stuff this week that there's you know a greater potential or seeing a greater potential for Bank of Japan rate hikes coming in September and October. If you don't do the intervention without the rate hikes likelihood is things go back to fundamentals like they have. Carry trade still looks good and the yen keeps going down. Korea. I want to get your take on this because [00:51:59] Speaker 2: you're visiting. This is something obviously that's become a global global story. So what stood out to you from the story since you've been here. [00:52:06] Speaker 9: And how are you guys looking at this. Well I mean I've had two very different weeks covering the Kospi here because because you know this last week it had it notched up its seventh week down in a row this week. It's kind of come back. It's getting back towards 7000 points. You know as it has been for the entire time that it's become this sort of more globally focused upon index. It's really out to stocks. But the memory story as you as you alluded to earlier with SanDisk that added a bit more. But there's actually been a lot of good news flow for for the memory stocks and for the AI trade over the course of the last week. Some of the companies in the U.S. who've reported may have hit high expectations but the results are still really good. And so that underlying sort of positivity has been flowing through across the whole week. Been very nice to see you. Fantastic. Thank you so much. And let's of course stop by any time. Of course. [00:52:52] Speaker 2: Next time you're hospitable weather. Yes. I think I know where you're headed next week. OK. All right. Enjoy that too. All right. So I'm there out of the markets today. OK. By the way some breaking news right now. So we've been it's been testing this level. It's now taken the level out. So we're now clearly below 1.7 percent on the Chinese 10 year yield. So we just discussed long end yields everywhere else moving higher. China's going the opposite way. We're now at 1.679 percent. This is the lowest yield here in the 10 year going back to July of last. Let's call it 11 month low. All right. Well we're coming up after the break. We're [00:53:27] Speaker 1: talking earnings with the CEO of Hong Kong rail and property developer MTR Corp and their outlook for the northern metropolis development. Of course up on the border with the mainland that is in the works. We're going to be talking to Jenny Young coming up [00:53:42] Speaker 2: after the break. This is Bloomberg. All right. Welcome back. We are in the thick of earnings season and we're looking at. There we go. Very nice pop in shares of MTR. We're up. Let's call it 5 percent revenue beating estimates there. You also have it coming at 3.3 billion. Relatively speaking though compared to last year that was marginally down. Let's call it 4 percent net income coming in about 2 billion. That's U.S. dollars here. But yes. I mean market is quite clearly reacting very positively here to the results. That's right. [00:54:33] Speaker 1: Joining us now is MTR CEO Jenny Young. Thanks so much for coming in taking the subway here. I'm sure because of the storm outside. Bad weather. Bad weather. Yes. So tell me how you see the outlook going forward because you have multiple different plays. Obviously you're you know the train operator here. You have a lot of capital outlays coming with the northern metropolis. But you're also a major property developer with IFC just nearby here. How are you seeing Hong Kong's property market recovery. Let's start there. And also the tenant mix right now. It seems like people are coming back to the office towers coming from mainland across the border. [00:55:11] Speaker 10: Right. As you said and tell has quite a wide range of portfolio. So let me try to talk about maybe the call first. The call is a Hong Kong business here. We see that in the first half while the international situation is still quite you can say volatile. But Hong Kong market we saw has stabilized a bit as reflected for example in our rental reversion in our shopping malls and shops in the station. The negative reversion has narrowed. So I'm still negative but indicating that things are stabilizing with more tourists with you know a lot of financial activities in Hong Kong. And in terms of our another very core of our business our patronage. We saw that patronage has been quite stable the domestic one despite a lot of challenge of course including the weather. Right. But cross boundary traffic has seen some growth. So overall I think in terms of the Hong Kong core business I would say it is very solid. And instead of like you know edging down in 25 versus 24. In fact in the 26 first half we saw a slight increase in our recurring income. So I would say the fundamental start to be more stabilized and more more in a way predictable in this first half. Right. Yeah. The macro backdrop has been certainly improving. And I think one of the numbers that stood out to me was total [00:56:38] Speaker 2: patronage here. Transport services nearly a billion. So 970 million in the first half. Talk to us about the trends we're seeing in foot traffic and spending in [00:56:48] Speaker 10: in and around. In and around the state just to give us an indication of just volume and demand for retail. Yeah. For the transport we actually although we cannot increase our fare because we are under the adjustment mechanism. But we see an average fare increase indicating that people are taking longer trips. So at least from the transport side we are not seeing a decrease in perhaps spending. But I think the retail could be a different story. So I would say the retail environment like the malls and the shops in the station is still under challenge. But I think we strongly believe people still have to buy you know physically physically right on top of e e-commerce or even not buying consumption. And then they will go to places with the best locations. So we believe our malls are all situated in good locations because right next to our station. And as well as they are connecting directly to a lot of residents around the station. So I think our malls are better suited to benefit from the recovery you can say. But of course we also have to do a lot. Right. Trade mix. We talk about trade mix. We are bringing in more interesting trades from overseas not just from Hong Kong. And we are also continuously improving our asset condition. We need a good ambience to continue to attract [00:58:11] Speaker 1: our visitors to malls and to stations. Let's talk about the big mega project that is underway. The northern metropolis that's going to help bridge you know Guangdong with Hong Kong and all part of the greater bay. You have a lot of new lines that are going to have to be built. I think seven new lines overall throughout. Where are we now. Can you give us a project update as far as how much you need to set aside funding midterm funding and midterm costs. Right. Right. For the seven projects. [00:58:40] Speaker 10: They are some of them are in the two moon area extension of two moon line. So they are you can say more serving local needs. If we zoom into the cross boundary. Right. Or the integration with the greater bay. It's more the northern link which the northern link part one has been started. We have already signed agreement with government and we are actually starting to tender tender our packages for construction to commence. And then we still have the annual part two when we call talk about part two. It could sounds very technical but part two is actually the spur line linking to one call right. Part one is more the horizontal connection between the existing two my line and the Israel line. So part one has started and then the part two is under final discussion with the government. So it you can imagine that both the part one and part two together. It's like a very important artery for the whole north of the metropolis. The horizontal one is going to link up the logo. And then we still have the right. And then we still have to move east west and within the district. And then the spur line is going to bring all those people. Right. And then the spur line is going to bring all those people right. And then the spur line is going to bring all those people right. And then the spur line is going to bring all those people right. And then the spur line is going to bring all those people right. And then the spur line is going to bring all those people right. And then the spur line is going to bring all those people right. And then the the spur line is going to bring all those people right. And then the spur line is going to bring all those people right across the boundary or to bring you know our visitors from the cross boundaries into the network. And then the spur line is what we call part two. And although the part two is still under discussion but both lines are aimed to be open by 2034. [01:00:04] Speaker 2: So we are very excited about this development in helping to build up the northern metropolis which is of course one of the focus and development in Hong Kong at the moment. Yeah. What then would be the capital requirements that you need that you foresee going into the next year. So talk to us about your outlook for gearing and when you know which calendar years if you could see that far might you need to to tap capital and the impact on cash flow in the interim. Right. Yeah. Yeah. I think currently if you [01:00:34] Speaker 10: look at our current ratios they're still very healthy the interest cover as well as and in fact the interest cover is very high expectedly because of the property income and then also the gearing is very healthy. But I think like what David mentioned we have to look ahead and we know you know how many projects we have and we know their time timing spent spending timing. So not not not this year or not next year but in years ahead of course there's still a lot of variables affecting exact usage. But in years ahead we will see there will be a huge funding requirement in terms of cash flow and of course the ability to repay interest and some of the principles. principles. So we are having a very prudent and forward looking. Excuse me. Very forward looking approach in managing. So we already thinking of in those years that we need more cash. How are we going to fund that. And if you look at what we did in the first half we have raised altogether 58 billions in green bonds preparing ourselves. They won't be all consumed within this or next year. So we can't we can't construct in that speed. So they will be gradually you know being used for the subsequent demand in the coming years. But definitely it's a challenge for the company. Right. How to ensure that you know we have enough cash flow. We have the ability you know to service those interests and then the repayment etc. So this is one of the core duty that the management [01:02:11] Speaker 1: need to take a very forward looking very prudent approach. Then how are how closely are you looking obviously at the dot plots and what the Fed might do as obviously interest rates here are tied with the bank currency looking at the outlook for the Fed. And as a side question to that as well does those big capital outlays in the borrowing that must be done to fund your projects through the northern territories. Does that northern metropolis does that sort of put further international expansion. [01:02:40] Speaker 10: on hold for a while while you have these big capital outlays coming in the next 10 years. Right. And I think for the offer for the Fed rate we we it's hard to forecast right. But I think looking at what has happened in the first half we have been able to get a very good portfolio of green bonds at a decent rate we will say. But of course we are seeing the edging up of the raise. So we will depend on the timing and on continuously raising funds or bonds or of course depending on how the market continue to change. But as we have successfully raised a 58 billion already in the first half so we can weigh a bit. So I guess this is the way that we have been you know riding on good market opportunity. Right. And then because we know our need. We have the need. So we just need to ride on the right time to get the best for the company. And then going to international. We still need to expand. Right. So Sydney you're building out for Sydney projects and even for those in the mainland. I think the capex requirement is very different. The capital deployment is much less. Usually in those business we are just involved is an operations and maintenance contractor. Right. That means the government will just play pay us for example cost plus. We are earning the margin using our expertise to earn the margin rather than deploying a lot of capitals in the overseas market. Which you quite rightly point out they have to be focused to be used in Hong Kong which is you know a really huge development phase for the MTL in the coming maybe decade. [01:04:15] Speaker 2: Yeah. We haven't talked about the housing market. Certainly the pick up in home prices I would imagine is helping your current and future cash flow expectations. Do you expect housing prices. Are you seeing more demand coming through for housing prices. And where is the demand coming from specifically is what I want to know. [01:04:31] Speaker 10: Yeah. So far we see in the of course first half the market has been quite good. Many of the properties not just ours once being rolled out have been taken up. And the demand both come from Hong Kong and of course mainland users. And we are seeing a bit of you can say stabilization in the past month. Not as robust as the previous months but they are still coming. There's still demand. And I think we stand in a good position to take those demand because our locations are usually more convenient than the you can say other property development. They happen to be by a railway station. Yeah. So we believe that the price have at least not falling like before. Sure. Right. They have risen for a certain margin and it seems to be a you know still stabilizing or even slightly edging up as well. That's a sense we got too because of the first few [01:05:27] Speaker 2: months have really seen an acceleration in prices and it's stabilized. Do you get a sense that there is still room for upside over the next in this [01:05:34] Speaker 10: current half. Right. It's really very hard to forecast. Right. But we are seeing that you know it hasn't fallen down. Right. And it has been like you know wavering in the level that has risen up in the past six months or so. Jenny. Thank you so much for spending. Thank you. Thank you. Have a great [01:05:51] Speaker 2: weekend. Thank you. Thank you. Thank you. Jenny Young the CEO at MTR. You can rewatch by the way that interview we just did there on our video hub there. Subscribers can explore very busy person of course. Jenny Jenny Young. There we go on our video hub. Bloomberg dot com forward slash videos. We have plenty more ahead. This is Bloomberg. All right. Jay. Oh OK. Ten percent. We open that about six and a half to seven percent down. So we have clearly tacked on the losses there. First revenue decline for the company since it's listed although it it's also fair to say that revenue actually coming in better than expectations. We were expecting a drop anyway as far as the analysts go. But clearly the [01:06:51] Speaker 1: market is focusing on on other things. Market doesn't like it when you have your first revenue drop since the listing in 2014. So 12 years down 9 percent. China's luxury sector meanwhile has finally turned the corner after years of long downturn. But what's emerged now looks very different from its pre pandemic highs. Bloomberg opinion columnist Julianna Liu argues that Chinese consumers are becoming more selective and luxury brands have to adapt. How different are these luxury shoppers and what are they buying not handbags but what. Very different. So I think just to kind of [01:07:30] Speaker 11: set the stage of the Chinese luxury consumption tripled in the five years before 2021. So enormous growth. It seemed like you can you know sell almost anything and it would be a hit. So that's very very different now. We had some pretty volatile couple of years before this year. But the good news is that 2026 looks like consumption is going to be growing. Luxury consumption is by Chinese shoppers will be up six percent. And McKinsey thinks this will hold for a couple of years at least. So this is the pretty much the highest growth of any region especially now with what we're seeing in the Middle East that was previously the highest growing region. But that said the shoppers are very different in terms of their behavior. So instead of dropping five thousand to ten thousand on handbags or jewelry. They're downgrading quite a lot. So they're spending their budget on high end prestige cosmetics. Skincare. I think watches are still in the mix. Or rather apparel and footwear. So fancy sneakers nice clothes. People still have budgets but [01:08:39] Speaker 2: they have less individually. Although collectively we can see that they're back. Yeah. There's always that need anyway to show off. How should luxury houses respond then. So being realistic. [01:08:52] Speaker 11: Being realistic. Being really realistic about what they can expect from these shoppers. So LV said that their sales from China in the last quarter was essentially flat. Sephora they said was doing it was doing better. So for example they might have to put a lot more effort into Sephora which isn't actually doing that well in China. Hasn't been doing that great the last few years. But L'Oreal. Beersdorf. Estee Lauder. They're seeing really strong growth of up to ten percent in their Luxe lines. And actually I would argue that the Chinese Luxe shopper has changed. They're not showing off as much as much as they used to. That's true. Maybe they're showing off their glowing complexions. But yeah. [01:09:32] Speaker 2: The natural humble black look. It's less loud. Yes for sure. Right. It's more sophisticated for sure. And you know what. Some of these products are expensive for a reason. They're actually very good quality I have to say. Here I am. You know I just I just did a rant on luxury goods. But I don't own anything actually. You don't. No. Zero. Zero. So you're by the playbook. Do not show your ostentatious wealth. Because it draws attention. The team knows this. I wear the same exact thing every day. And you eat the same thing too. I eat the same thing. It's. But anyway. That's just me. Clearly I'm not the market for this. Juliana. Thank you so much. Juliana. Thanks. Opinion. Why don't we talk about software. There's your software stocks coming up on your on your screens here. Potential P buyout of Workday playing out here. And as far as that story is concerned. Memory stocks. We talked about this in the SanDisk tailwinds. We're getting of course from a fairly visible outlook on revenues into 2030 coming out of the company. GDS holdings. That's an earning story that's also coming up on your screens very shortly. And as you can see substantially higher. 11 percent to the upside. And LG Electric is one that I am going to figure out now why we're looking at that. Oh thank you so much. Yes. Actually this one actually came out about 30 minutes ago if I'm not mistaken. Right. Unveiling this partnership with NVIDIA. Humanity robot into Q1 of 2027 and the rest of the region is doing well Steve too. [01:11:00] Speaker 1: Yeah. LG is doing up 2.3. So again a little bit of an interesting picture on this Friday as we still digest all these earnings coming out of China. Another full day later this morning. [01:11:12] Speaker 2: Maltai is coming out. Zujin is coming out as well. CICC is also on deck today. Plus of course there's this weather that we have to deal with. And on the other side of this break. So there's been some extreme rainfall we've seen here in Hong Kong in Tokyo this week. Massive light disruptions there in parts of Southeast Asia. That's just me buying time until we head to the break. But there is this weather report that's coming. Fairly consequential too. [01:11:33] Speaker 12: This is Bloomberg. Is the Bank of Japan going to be hawkish to support the currency. And heretofore they've been a bit deliberate in terms of moving it. This moving in September to sort of stabilize the currency is a big deal. Intervention. You know I've watched intervention happen over time. You need to really keep going with a lot of firepower. I would argue it's not the most durable way to get there. [01:12:07] Speaker 1: That's BlackRock speaking to Bloomberg about Japan's options for stabilizing the yen. Well it's 1129 a.m. in Tokyo. Japanese markets soon to be had. Oh it's so much nicer weather in Tokyo today as we're seeing the Imperial Palace nearby our Bloomberg office there. As you're seeing the Nikkei 225 up by about eight tenths of one percent. The broader topics seven tenths of one percent. But there's the yen. Well actually it is strengthening a bit against the U.S. dollar at 159.40. Of course there's a lot of talk right now that the carry traders are you know playing the intervention game well by helping their shorts. Yeah. So to speak on the yen possibly creeping back weakening past one sixty and back to those pre intervention levels of around one sixty three one sixty four. So as we approach the lunchtime break in Tokyo have a good meal. [01:13:04] Speaker 2: Yeah. Now makes me want to think now I'm going to have for lunch today. Clearly there's no option to walk outside. Not that we have lunch outside. I think we've had this conversation. No we don't. There's nothing outside. But if we did have just theoretically if we were to have lunch outside there is no where to go because it's just a Bloomberg pantry. Yeah. Someone grab me some bananas please before the crowd descends upon the basket there. OK. Speaking of the Japanese currency the weekend and this gets us really into the next segment of the earnings season really been a key driver for earning strength right in Japan especially for a lot of these exporters and multinationals. But here's the here's the catch. Investors are increasingly looking past these currency driven bumps these one FFX gains raising the bar really for many companies. Our Asia equities reported winning shoes here with us to talk us through this. We pretty much wrapped up earnings season in Japan. What's been the overall takeaway so far in as far as the currency is concerned. [01:13:58] Speaker 13: Yeah. So overall the earnings have actually been pretty strong. In fact two thirds of the companies reported earnings beating expectation. But this time around what's so different from other quarters is that the reaction when it comes to the price share prices have been quite muted. And that is because of that concern around the yen. And actually last year around this time you saw that for companies that beat expectation they saw their share prices outperform the MSCI Japan by about a percent. But this time around underperform that by about 0.5 percent on average. So you can see that the traditional way of trading Japanese stocks when you see a weak yen benefiting the profits and then showing up in the share prices where investors cheer about that is no longer true just because of how much risk there is in the yen right now. Yeah I'm not holding my breath for a stronger [01:14:49] Speaker 1: yen anytime soon. But if they do get the right concoction with the intervention and interest rate hikes going forward. Could we see and what [01:14:59] Speaker 13: would we see a stronger yen impact then on corporate earnings. Yeah. Most likely will be quite negative. So the thing is usually a stronger yen is bad for earnings. But the good thing I guess in this case is that Japanese companies are usually quite conservative. So they already have their FX assumption at relatively strong level. Let's take Toyota for example. Their assumption is about 160 against the dollar. Right. So when you saw that joint intervention that took the yen to 157 at one point if that level sustained actually it will weigh on the price outlook. But at this point because investors really see the yen potentially go either way for a good reason they can strengthen because of another joint intervention or weakening just because how the rate differentials between the U.S. and Japan remain so wide. So it's definitely making it way more difficult for investors to really set up an assumption of the FX impact on earnings at this point. What if the BOJ hikes rates faster than we expect. What would that mean for the equity markets then. Yeah. So actually the pace of it is quite important. Right. Because when we saw that big crash the meltdown back in 2024 it was because it came as a surprise. But at this point a lot of it is becoming baked in in the market. We're looking at what 75 percent of a September hike at this point. So I would say the downside reaction will probably be a bit more muted compared to what we saw back in 2024. But it's still relatively going to be weighing on the exporters. And with that expectation that's why we are seeing the topics auto sector down about 5 percent so far this year versus topics of 20 percent versus the bright side of things is the banks. Right. We're really seeing banks rallying doubling what we saw in the [01:16:49] Speaker 1: topics here today. So what are you hearing. How are investors adjusting their strategies given this uncertainty over the end. Yeah [01:16:56] Speaker 13: exactly. So one the clear bet really is to move away from exporters because of that risk. And they are moving into just as we discussed banks is a clear beneficiary with the Bank of Japan raising rates and the domestic driven sector is actually going to benefit from a stronger currency and also a stronger domestic demand especially with the food tax cut coming through soon as well. So we're seeing retail sector as quite an attractive one as well. But last thing I really wanted to highlight is that it shows kind of a big structural difference from what we're seeing in the Chinese capital markets for example because of this bet on the Bank of Japan to raise rates. MUFG which is Japan's biggest bank is in fact overtaking Toyota exporter to become Japan's biggest company on its topics index. So you're seeing the dominance of financial stocks in Japan versus in China. We just saw that shift where we saw CSI 300 being dominated by the tech sector as financials move [01:18:00] Speaker 2: downwards. So it's it's quite an interesting contrast there. Yeah it's quite a dynamic right. The changing nature of the economy and what markets are rewarding investors for winning fantastic. Thank you so much. We need you. There are Asia equity support. In fact just in a note that when you was pointing out right how things have changed. This chart actually tracks earnings revisions for Japanese companies. The yellow line on the screens are the 50 most domestically exposed companies in the Nikkei 225. And as you can see the last five years have seen very consistent and predictable upward revisions in earnings. The bottom 50 or the 50 most globally exposed Nikkei 225 companies have seen decent earnings but not as predictable. So looking inward this domestic story in Japan is really hence this need in the conversations around the BOJ needing to raise interest rates. And hence this next segment the Japanese economy isn't showing signs of life. Rising wages. You have inflation just below the central bank's target of two percent. You have these young workers reaping the benefits. You have pensioners and feeling though that the other side of that the strain of higher cost of living and also the weak Japanese yen. Have a look at this K-shaped recovery. [01:19:09] Speaker 14: On a Saturday afternoon thousands of people packed this convention center in Tokyo for an investment expo looking for new ways to build wealth from real estate to cryptocurrencies to gold coins. Among the speakers one influencer tells the audience she accumulated $431,000 in wealth while still in her early 30s. She used to earn only $1,200 in her 20s. She's part of a shift in how Japanese people are choosing to invest instead of save. For three decades Japan unleashed economic stimulus while prices and the economy stayed flat. Now inflation is back around the central bank's two percent target and it's looking like it's here to stay. With rising prices profits are growing. Workers are getting the strongest wage gain in decades. The stock market is near historic highs thanks in part to the [01:20:09] Speaker 15: A.I. boom. And with it animal spirits appear to be coming back. With everything happening around the world I worry about my financial future whether I'll be able to support myself while I'm working and after retirement. I wanted to reduce that uncertainty so I became interested in investing. [01:20:30] Speaker 14: The benchmark Nikkei 225 index has surged over 20% so far this year and first time investors who piled into stocks with the help of a government tax free savings program have ridden the wave. It's helping fuel a growing narrative of Japanese dynamism. Japan is back. But there are fears that inflation is also worsening inequality. Analysis by Nomura shows consumption in 2025 for the top 20% of the population. Far outpaced that for other groups. Cheekosugai lives in Murakami a five hour drive from Tokyo. The 72 year old widow finds surviving on a pension of around six hundred and seventy dollars a month increasingly difficult. [01:21:17] Speaker 16: Cheekosugai. The price of kerosene rose to 180 yen and I was really shocked. That was what worried me the most. I used to be able to keep my heating costs under 30,000 yen somehow. But suddenly I had to pay 36,000 yen. That took a big chunk out of the money I have to live on from a pension. It is quite hard. [01:21:39] Speaker 14: Cheekosugai isn't alone. This food truck driver sees a wider trend. [01:21:46] Speaker 17: People used to shop without paying much attention to prices. But now they're asking, how much is this? And checking their wallets before deciding what to buy. Because many of our customers are senior citizens living on pensions, they're the ones hit the hardest. That's why we can't increase prices too drastically. [01:22:06] Speaker 14: Cheekosugai. For households with lower incomes, the weekend is expected to continue eroding savings. [01:22:13] Speaker 18: Cheekosugai. The weekend is great for the stock market because it improves earnings. But at the same time, it's bad for the Japanese people because Mr. and Mrs. Watanabe is losing purchasing power. [01:22:25] Speaker 14: A Yomiuri poll in July saw Prime Minister Takaichi's popularity plunge to 57 percent from a high of 69 percent. Among respondents, 71 percent said their major concern was the cost of living. Takaichi has sought to cushion the blow of higher prices with subsidies and has decided to suspend the sales tax on food. The question is how much those measures will resonate with Japanese voters. [01:22:54] Speaker 1: Shereean Bloomberg, Tokyo. All right. We're going to take a quick break. But coming up, China's AI models may be catching up with Silicon Valley, but the path to profitability is far less clear. We look at whether the industry's race to the top in capability is becoming a race to the bottom price. You're watching the China show. This is Bloomberg. You're watching the China show and we're watching Chinese AI stocks after Deep Seek unveiled sharply higher prices for some of its flagship AI models ahead of its potential IPO. You're watching The China Show and we're watching Chinese AI stocks after DeepSeek unveiled sharply higher prices for some of its flagship AI models ahead of its potential IPO. Bloomberg opinion columnist Catherine Thornbeck argues the increase is unlikely to end China's bruising AI price war as model makers continue to struggle for sustainable profits. She joins us now from Tokyo. So Catherine, DeepSeek, they're raising prices sharply. Does that mean that the AI price war is finally coming to an end? [01:24:12] Speaker 19: So I actually think probably not. You know, this is quite a steep increase that we're seeing from DeepSeek. But I think if anything, if you look at sort of the details here, I think if anything, they reintroduced peak and off-peak hour pricing. And I think that maybe just shows that they're struggling to have enough computing capacity. But at the same time, we've really seen this race to the bottom price war when it comes to API prices for AI models in China. Go on for more than a year at this point. And I don't think it's going to get better. You know, Bloomberg Intelligence notes that there's nearly 1,000 large language models on offer in China. And they're all really competing very viciously on price. So I think, you know, customers are finding it easy to sort of switch out when one raises prices. And I don't think anyone has really cracked this code of really a path to profitability. [01:25:00] Speaker 2: So, I mean, it's somewhat counterintuitive, right? Because on a day-to-day basis, there seems to be a new model out, which seems to be much better than the previous day. Yet there doesn't seem to be any or very little pricing power in the industry. What, what, what, what, how, square that circle for us? [01:25:20] Speaker 19: Right. So, you know, as you said, it kind of, I think the thinking goes, you know, if we release a much better, much more intelligent model, then we can start to charge a premium. But I think that customers and business clients might be sort of learning another lesson from all of this, which is that every time a smarter and a better and improved model comes out, the, the round before it, the previous generation is being made cheaper. And I think for a lot of businesses, you know, they maybe don't need the smartest, the top of the line intelligence to sort of automate routine tasks. The way I kind of look at it is, you know, I maybe don't need a Formula One race car to, you know, do my commute every morning if something, you know, cheaper, better, just as good will do. So I think we're sort of seeing these price, these price cuts just sort of go on and on. And I think, you know, the big question is how this will eventually play out and how sustainable this is for the model makers. [01:26:09] Speaker 1: Yeah, that's right. I mean, how is this price war as well, Catherine, affecting Silicon Valley and how they view it as well? Because, sure, there are cheaper token prices, there are allegations as well that Moonshot or others have gotten their capabilities on par or almost on par with Silicon Valley through distillation, which the White House is going to be looking into. So what's the overall impact on Silicon Valley as they look at China's lower cost and lower price models? [01:26:39] Speaker 19: So I almost think that you can say that China has really exported this price war. I think we're starting to see this hit Silicon Valley as well. You know, after Moonshot released Kimmy K3, we saw OpenAI significantly reduce the cost for some of its models. And I think that this price war is really, really coming for Silicon Valley as well. And I think it's really putting pressure on their business models. You know, I think it's really pressuring domestic companies, but it's just as much hitting Silicon Valley. And I think the big question is, will any of these sort of frontier model makers, will any of them figure out how to really make a profit on their models before this really becomes a commodity, before AI models really become a commodity? [01:27:21] Speaker 2: Katherine, thank you so much, Katherine Thwarbeck there, our Bloomberg Opinion columnist. You can check out Katherine's piece on your terminal right now if you're one of her subscribers, or you can also go to Bloomberg.com. You should also find it there. All right, speaking of this discussion around the earnings capacity and earnings pricing power, the earnings story is really showing up across these markets, more or less intuitively, with SMIC and Hua Hong going opposite ways. And certainly some of the takeaways from their specific earnings in and of themselves and relative to each other are pointing to different directions there. China Telco, just keep in mind, of course, China Mobile reported that could be one of the reasons. And JD.com, just about across the board, the biggest decliners in terms of the Hang Seng Index today and the drag we're getting and the percentage of the downside really being felt across the JD.com universe here. So just keep an eye on this. Plus, of course, Lenovo is a big story still. [01:28:13] Speaker 1: It is. Lenovo shares they've eased from the record highs hit yesterday after a blockbuster quarterly earnings report. We spoke earlier on the show with CFO Winston Chung, who says surging demand for AI infrastructure is helping power the company's next phase of growth. [01:28:29] Speaker 8: I think the AI infrastructure span is probably been characterized as one of the greatest span in private market history, right? Certainly in terms of railroads, maybe it was built by both entrepreneurs but also by the governments, right? But in terms of the private sector is mostly funding the AI bill today and we're still not really seeing significant sovereign participation yet, right? I think there are some but I think not yet in a large scale. So it's really driven by global hyperscalers, telecom companies in certain markets, as well as new clouds today that are additionally serving that market. And we're starting to see more and more trying to come in and provide that because the need for compute is a multi-year trend. And I think it's a it's one that is hard for people to actually quantify. So I think from that perspective, we are business will enjoy that growth and spend for many years. And then, of course, the full cycle that will turn around and come around, which is the individuals will need devices that are upgraded, that are AI enabled to be able to interact with the better performing going forward. And I think we're well positioned for that. So after the infrastructure spend in terms of cloud services today that people are building for, then the corporates will actually need it for inferencing because certain corporates, especially global 1000, have the internal IT capabilities and they need to have data that's on-prem. And so they need to have device up servers that's also on-prem. And a lot of that demand is also not coming up yet. I think that cycle hasn't come and then the device cycle. So I think just from the multi-year device plan in terms of product portfolio set should allow us to grow for many years to come. And I think the focus on profitable growth, more profits growing faster than revenue growth, is absolutely something that we're keen to make sure that this is a multi-year trend for us. [01:30:13] Speaker 1: One of the keys to these results has been your ability, its uncanny ability as well, to sort of anticipate the component shortages across your legacy businesses and also AI business as well. Memory is a big part of that. Young and Ching, the chief executive officer, said they anticipated those cost increases and the supply shortages and address them appropriately and successfully. Can you give me your secret sauce is how you did that and where are you seeing those shortages continuing? [01:30:40] Speaker 8: Yeah, well, I think it's really being part of the industry, understanding how the ecosystem works. And I think we have people in Lenovo, the Lenovians in here for many, many years who have been at the company, who know the space, who are partners, not just in terms of business, but on a personal level with the suppliers. And I think we treat them with respect, we treat them in the same ecosystem, and that allows us to be able to continue to be important in our product portfolio set, which is one of the most complete in the market today. And also our geographic presence into 180 markets. And in this past quarter, with all the highlights, it's such a balanced growth because every geography that we reported is actually got historical revenues. How much into the future have you locked in your supply of memory? [01:31:26] Speaker 2: I think we've had this conversation before. I just want to get a sense of where, from your perspective, where we are in that global shortage. [01:31:32] Speaker 8: I think in terms of capital demand, it's very significant today. So I think given the revenue growth, there is a lot of demand for that capital. And I think inventory also going up, not just in terms of volume, but because of that cost is going up. So the inventory dollar is actually going up. So I think from that perspective, we need to make sure that we're very fast in terms of that turnover of that inventory. So accuracy of that forecast is important. And I think from that perspective, it's how we manage our business. [01:32:07] Speaker 1: All right. Welcome back to The China Show. Well, what would you do for your pets to make them live longer? Some owners are now turning to experimental treatments and even longevity drugs for that. I mean, no one has really, David, cracked the longevity code, but people are pouring tons of money towards keeping their pets alive longer. Whether it's peptides, whether it's certain kind of injections, some pills, some medicines that are used to combat organ rejection during transplants in humans. They're even using that to prolong their lives because there's been some evidence that maybe that will. But they're also extending that to their pets. [01:32:50] Speaker 2: Yeah, the peptide pickup in the momentum we're seeing there. And I think what's interesting about what's going on is it's almost the reverse. And obviously, we started this by saying, you know, of course, you would almost give anything to get your pets to live longer. Right. You have a dog. I have a dog. You have a cat. I have two cats. You have two cats. Right. And I think the way that things are going is we've gone from, you know, the pharma industry has gone from testing this on things like, you know, on mice and then it graduates to people. And now that there are signs it's working on people, we're reversing it and now looking at it, bringing it back to the animals. [01:33:25] Speaker 1: Well, we have Bloomberg follow the money. Right. So U.S. pet spending expected to hit a record one hundred and sixty five billion dollars this year. Pet supplement market was two point nine billion dollars in twenty twenty five. The numbers are staggering about the expectations about more people spending. There you go. But 10 percent of pet owners purchasing senior anti-aging supplements. We can probably expect that to go even higher. [01:33:49] Speaker 2: But it's a big portion of my home budget, actually, just getting things like grooming, right, pet food and everything else. But yet the pet industry is a really big thing that has been flagged to us for many years now. Anyway, you can check this out, by the way. This is our big take today for our Bloomberg clients on your terminal. We actually have a very specific function. It's an I animal that takes you and I space animal that takes you to all things news and animals. There we go. Animal spirits at works this Friday. Nope. All you have to lose is look at these server stocks, for example, in Taiwan. And of course, on the back of that, you have earnings coming through today. That's from us here on The China Show. Do have a good weekend. Thank you for joining us this week and we'll see you all on Monday. Time for a distemper shot for me. Time for a distemper shot for me. [01:34:37] Speaker ?: Time for a distemper shot for me. Time for a distemper shot for me. Time for a distemper shot for me.