Oil Prices Jump After US Strikes Iran — The China Show — 7/8/2026

[00:00:00] Hadi Stroud-Waltz: It's 9am in Shanghai, Shenzhen and in Hong Kong. You're watching The China Show. I'm Hadi Stroud-Waltz in Sydney. [00:00:10] April Hong: And I'm April Hong in Singapore. We're counting down to the open of markets in Great China. Our top stories, oil prices extending gains, but Asian stocks reversing some losses after fresh U.S. strikes against Iran. Washington earlier revoking its permission for the sale of Iranian oil. China's DeepSeek and Zhipu reportedly planning to develop in-house AI chips in a potential boost to local firms trying to erode NVIDIA's dominance. [00:00:41] Stephen Engel: And I'm Stephen Engel at the Hong Kong Stock Exchange where Hong Kong Financial Secretary Paul Chan is speaking right now behind me. And the fundraising frenzy shows no signs of slowing here in Hong Kong. We'll be speaking with the head of autonomous driving firm Momentum Global, one of five companies making their trading debuts. Here today, we'll discuss how they plan to use the 750 million U.S. dollars raised in this Hong Kong issuance. [00:01:05] Hadi Stroud-Waltz: Well, Avril, this peace agreement or really this tentative peace agreement remains in peril, right? We have the U.S. resuming airstrikes. We also have that revocation of the waiver that allowed Iran to sell oil globally. All of this mostly playing out when it comes to the energy market. It's ironic that even just hours ago, we were talking about the potential of the supply glut situation with the price cuts that we've seen from Saudi Arabia, with the lack of demand that we're seeing in strength from China as well. But now we've got really that renewed uncertainty over the energy price and inflation outlook. We are seeing some of the reaction when it comes to markets, a lot of caution when it comes to Asian markets, mostly retreating. We've seen some volatility when it comes to Japan as well. But of course, all of this also feeding through to what it potentially means, Avril, for this broader chip rally, right? Mostly we've seen investors more or less happy to kind of shrug off the geopolitical risks in order to keep pushing that story higher. [00:02:21] April Hong: Yeah, and when it comes to chips, think about how Zhipu and the likes of DeepSeq might be looking to develop their own AI chips at a time where, according to reports, China might also be looking to restrict overseas access for its AI models. But to your point about what we're seeing in the geopolitical backdrop, let's take a look at how oil prices are faring with these fresh strikes. The geopolitical risk premium that was pretty much erased is coming back. We're seeing Brent creep towards the 76 handle that's dragging up U.S. yields along with that. Take a look as well as how things are playing out in stocks because don't forget it was a really bad day of selling the Samsung sell-off, as they're calling it. And this is something that spread, of course, to the U.S. But you look at how futures are faring and that uptick even in the cost speed. You're seeing green of 1%. It's very interesting. Today we're seeing SK Hynix among the stocks that are leading the gains. And this is against the backdrop of reporting that, yep, maybe that U.S. listing is oversubscribed. So investors and the market may be being able to absorb this massive ADR. Take a look as well at what we're seeing in the dollar. Given what we've seen in oil prices and the inflationary risk, the dollar has been rallying. The yen has been moving further away from the 162 handle. Keeping watch on Kiwi dollar as well. Today we have an RBNZ decision that's coming up in the next hour. And the majority of economists see a hike to 2.5%, although there are a handful who think maybe a hole. Either way, there are these hawkish expectations out of the RBNZ. So this could mean the Kiwi dollar is vulnerable. Take a look as well at what we're seeing in the setup for China today at the time where the dollar is rebounding. You're looking at dollar China sitting above the 6.8 handle. To what extent can the yuan continue rallying this year? Of course, we've been talking through some of these developments out of China on the AI front. And keep in mind as well, this week, we had yesterday, right, for Zhipu, the lockup period expiring. Today, it's Minimax's turn. I think we also heard from some of these cornerstone investors of Zhipu saying, you know, they're holding things for the long term. So that is among the things that we're watching for the session today. But to our top story, with the U.S. Central Command saying that the new strikes on Iran are a response to attacks on commercial vessels transiting the Strait of Hormuz. Lumba Economics says it's a reminder that lower intensity conflict is a feature rather than a bug of the current agreement. Their economic statecraft lead, Chris Kennedy, joins us now from Washington. So, Chris, walk us through how we got to where we are now. Is this flare-up any different? And how at risk is this interim deal from these latest strikes? [00:05:20] Speaker 4: Thanks so much for having me. So, we believe that this does represent a pretty significant escalation over other recent tit-for-tat strikes between Iran and the U.S. It follows a weekend in which we saw strikes potentially from the Houthis on vessels in the Red Sea. And then over the last 36 hours or so, three different strikes on vessels attempting to transit the Hormuz Strait through this Omani route that the U.S. has been shepherding. And Iran is clearly trying to show the world that it still controls the Strait of Hormuz in the tail end of this funeral process that they just held for their former leader, Hominate. [00:06:05] Hadi Stroud-Waltz: Chris, the question is really what sort of impact from the latest revocation of the sanctions waiver on oil sales. You say, of course, we have been seeing escalating tensions across the trade of Hormuz. We know the Iran knows now that it's able to leverage the Strait on the global economy. Is that going to be up for play again? [00:06:27] Speaker 4: We definitely think so. And certainly that particular development, as you mentioned, so the revocation of General License X, which was really an extraordinary waiver that allowed Iran to sell its oil around the world without any fear of sanctions. So that represents a pullback from probably the most consequential term that the U.S. agreed to as part of this memorandum of understanding. And doing that, while the U.S. could, in theory, reverse this and go back to issue another waiver that would allow Iran to resume oil sales sanctions free, this, of course, is really going to send traders through a loop. Can they count on engaging with Iranian oil without having a future waiver revoked? So it just creates a lot of uncertainty. And we see this as a real escalatory step, perhaps even more so than some of the tit-for-tat strikes we've seen recently. [00:07:23] April Hong: The worry also is that Iran's control of the Strait could mean, you know, fees, eventually something we might have to accept. Where do you see the conflict progressing from here on out? [00:07:36] Speaker 4: Right. So, obviously, we're in a very uncertain moment, and it's a fluid situation. We're seeing reports that Iran is planning to conduct some additional strikes in the very near future if they haven't already. Iran certainly has made it very clear that it plans to exercise control over the Strait in the future. They've been adamant about that, you know, for months at this point. We still believe that we probably aren't heading back into a full-fledged high-intensity conflict, but it's really challenging to see how we're going to get back to talks on a timeline that fits the 60-day MOU period that the U.S. and Iran set out to last month. And, as you mentioned, I mean, oil markets are responding. It's tentative so far. But, of course, the world has been relying heavily on emergency reserves over the past several months. Those are going to be running dry pretty soon. And so, if we don't get back to a normal status of traffic through the Strait, I think we're going to see oil markets respond in a more robust way. [00:08:45] Hadi Stroud-Waltz: As we continue to head closer to those midterms in the U.S. too, right? Our lead for economic stake craft at Bloomberg Economics, Chris Kennedy, there joining us with the latest. In the meantime, Chinese authorities have reportedly held meetings with top tech companies over the past month about potentially restricting overseas access to their most advanced AI models. Let's bring our China correspondent, Min Min Lo. So, tell us what we know in terms of what potential curbs are currently being considered. [00:09:12] Speaker 5: Yes, Heidi, this is according to Reuters reporting. And the report said that the Commerce Ministry, as well as the NDRC, which is the economic planner, has been meeting with some of these top companies, including Alibaba, Zhipu, ByteDance. And they're discussing potentially restricting foreign access to these top AI models. And if that sounds familiar, that's exactly what the Commerce Department did to Anthropic when it comes to that Mythos and Fable 5 model. Now, those restrictions, some of those have been lifted, but China is taking a leaf out of that playbook. They're considering restricting access to even models that are not yet released, including both open source and closed source models. They're also reportedly considering limiting who can fund these domestic AI startups and also making it a crime, an offense to steal some of these advanced AI, proprietary AI technology and making that a national security offense. So, both U.S. and China are really stepping up security controls of these AI models. And of course, for the Chinese firms, because many of them have made global inroads because of how cheap their models are, if this comes through, it would be quite a hit to companies like Zhipu to their overseas business. And it could potentially raise business costs across the AI sector as well. [00:10:37] April Hong: So, this is potentially going to add to the bifurcation of the U.S. and China AI systems. And then we're getting reports as well that Zhipu, DeepSeq, they're looking to make their own chips. [00:10:49] Speaker 5: That's right. And this is a trend that is continuing in China. Zhipu and DeepSeq are following what ByteDance, Baidu and Alibaba are doing to create their own tailor-made inference chips because many of these models are seeing a huge surge in interest when it comes to token usage. And that means they no longer need a lot of those general-purpose GPU. They're shifting to these inference chips that are a lot faster, a lot more energy efficient. And that's why they want to create their own tailor-made ones that sync well with their own AI models. And this is, again, according to Reuters and the Informations reporting. It's a process that could take multiple years because you need to contact the chip designers. You have to design the chips, then run tests, and then see if you need to make adjustments to your AI stack to make sure the chips complement your AI models. And Zhipu is just at the start of the process. DeepSeq is about one year in. And what this means is that for a company like NVIDIA, it could mean that the more they lose this market share, it might become structurally difficult to regain them back, even if these export controls were to be eventually loosened. And in terms of market implications, some of these Chinese chip providers like Huawei could lose out as well, what the Chinese chip designers like Tiren, like Cambricon, they could gain as a result. [00:12:09] April Hong: Mimin, thanks for keeping tabs on all these AI stories for us. Bloomberg's China correspondent, Mimin Lo. Still ahead, most economists expect New Zealand's central bank to hike its key interest rate by 25 basis points in the next hour to ward off inflation threats. We'll have a preview coming up. We're counting down to the open as well. In trade in Shanghai, Shenzhen, Hong Kong, this is The China Show. [00:12:47] Hadi Stroud-Waltz: Take a look at how we're setting up for trading in the next 15 minutes or so across greater China. And this is a picture as we get this backdrop of general cautious sentiment across the rest of markets already trading, right? The revival of geopolitical conflict between the US and Iran, oil prices bid, dollar getting bid as well. All of this is creating a new amount of volatility for this session. But this is the picture as we look ahead. And there is a view that given we've had this slew of companies set to debut in the coming days in Hong Kong's IPO boom, there is a concern that we're going to see this surge of new share supply impacting that broader market even further. We're also watching in terms of some of the AI and ship related names today, given the developments that we're hearing when it comes to how Beijing is approaching some of these possible curbs from their companies. As well as that broader theme of AI investors just turning more discerning. We've seen that sort of cashing out of some very crowded trades, widening the search for more undervalued opportunities. They're getting harder to find. Let's bring you now from Singapore. Christy Tan has a global investment strategist at Franklin Templeton Institute. Christy, really great to have you with us. So we are seeing a day where geopolitical tensions, the revival of these concerns and oil now back in the spotlight, as well as broader inflation concerns, are now top of mind. Is this something that investors have been pretty happy to shrug off to date, but is it something that now creates that risk for a rally that is already looking very, very heated? [00:14:16] Speaker 6: So that's an interesting question. I think we started the year saying that, you know, the markets were probably broadened out and the equity markets concentration has been one of the key themes observed. And this AI and CAPEX and earnings momentum has kept, you know, markets and investors buffered against all the shocks that's coming from the geopolitics and the oil situation, as well as inflation risks. But I think you're probably right that, you know, geopolitics continue to be one of the key themes and one of the key concerns that a lot of investors, especially medium-term ones, are still very, very focused on. And this will drive, you know, the kind of inflation profile, which recently we've seen the fall in oil prices. And we thought that, you know, because of the U.S.-Iran situation and ceasefire. But obviously, that is not something that is very concrete. In fact, it is a shaky ceasefire and an MOU is not a deal. So the peace deal, I think, is still in question. And that brings about the continued overall concerns, especially in the geopolitics front. And on the other hand, if you're looking at the AI trade and the concentration risk, and now there are increasing concerns of whether or not this volatility induced will also lead to, you know, these structural questions on whether or not the capex expenditures, where the funding is from and how this can continue to support earnings going forward. So I think it's a combination of some of the existing concerns with regards to geopolitics that is really still not something that is absolutely priced in. And then at the same time, we're looking at the continued, I think, talks about the concentration risks, where the fundings, capex fundings are coming from, and also where the earnings momentums will continue. So, but overall, I think the macro data has shown that the economy is resilient. [00:16:31] April Hong: Christy, to your point about the resilient economy, how much does the inflation profile, as you highlighted, actually matter for tech stocks in the second half? We saw in the first half how things were really driven by momentum. I mean, this week, yeah, we are seeing that selling. What are you assessing overall when it comes to the growth, the rating that we've been seeing for much of this year in South Korea, Taiwan markets in particular? [00:16:54] Speaker 6: So, in Asia, the inflation themes probably came about quite meaningfully because essentially Asia largely are a large importer of oil. So that inflation profile, I think inflation risks, does manifest quite visibly, especially in Asia. And then on the other hand, the AI story in Asia is quite different from the one in the U.S., right? So, we're looking at especially Korea. I mean, Korea is a very clean expression of the AI memory and semiconductor cycle. And so, when position becomes crowded, volatility also rises. And the added issue in Korea is leverage, right? So, we're seeing that leverage single stock products can force same direction flows. So, we're buying into rallies and selling into declines, which can amplify market moves, especially when liquidity is not ample. So, I think at this point in time, it's not just whether the fundamental story is attractive, which we think it is. The question is whether liquidity and positioning can absorb the flows. And so, how do we relate that to that inflation profile in Asia? Is that we are seeing a lot more tightness in, I think, policy direction. So, we're seeing, you know, Bank Indonesia hiking rates and the other central banks, including RBNZ, are probably going to, you know, tighten policy to deal with the inflation risk. And this comes at a time when there's a lot of volatility in the equities markets as well. [00:18:31] Hadi Stroud-Waltz: Christy, I wanted to dig a bit deeper into your views on South Korea because you say, you know, there's obviously the danger of just buying the index on the AI story, which a lot of investors have done. And it's a very compelling sell, right? Also, a danger, you say, in looking at companies like Samsung and Hynix with its ADR listing as well as a proxy for the South Korean markets. So, how do you trade this market? Where are the opportunities and, I guess, the value that you can still find? [00:19:00] Speaker 6: So, a potential U.S. listing would speak to global investor demand for AI supply chain exposure and deeper capital market access beyond the Max 7. But, you know, it does not remove that underlying cyclicality of semiconductors, memory pricing or even concentration risks. So, for investors, the right lens is really, you know, exposure sizing. So, you've got to really look at where there's value and liquidity and whether the earnings and we are entering the second quarter earnings season, whether these earnings can keep validating the price. So, this is not just an earnings story, especially with Korea and, you know, listing, overseas listing, but it's also a positioning and liquidity story. So, I think investors going ahead is not just, you know, buying the index as a simple investment portfolio, but then again, you know, really looking at where the liquidity is. And I think in this case, potentially, we're looking at some of the other, well, non-AI related stocks that are still, you know, trading below book value. And they provide, you know, the kind of earnings buffer and earnings profile that will be able to withstand the shocks should all this AI volatility and concentration risk do look, you know, more increasingly more and more risky and volatile. [00:20:31] April Hong: Yeah, I guess there's a need there to be even more selective. Christy, thank you so much for sharing your time with us today. Christy Tan is Global Investment Strategist at Franklin Templeton Institute. And we're, of course, watching out for how China trades today. Given all these AI developments, you're looking at the pre-markets pointing to slight firmness after yesterday, sort of joining the selling that we saw across the region. [00:20:56] Hadi Stroud-Waltz: Take a look at what we're watching when it comes to events in greater China. We do have a mix of really geopolitics as well as some of these big market moving impacts as well. We're talking a little bit earlier in terms of how we potentially see the broader market being impacted by this flurry of debuts in Hong Kong. It has kind of been trailing when it comes to the IPO boom, but the action is well and truly taking place now, including, of course, luck share, precision technology industry. I should say the biggest listing of the year. All of that could potentially weigh on the broader market even further. We also do look ahead to Wang Yi in Europe as well, coming at really such an interesting time for global geopolitics, Avril, with, of course, resumption of US airstrikes on Iran, the tenuousness of the broader energy market globally as well. And China, of course, in the past has really sought to play something of an intermediary role. It will be very interesting to see what those remarks might be. [00:22:14] April Hong: Yeah, coming at the time where, of course, European nations that are more vulnerable to rises in these energy prices at the time of fresh strikes from the US, that's interesting as well. Now, let's take a look at some of the stocks to watch. Of course, you're looking at those live pictures at the Hong Kong Exchange. And among the big ones we're watching, Momenta as well. Very exciting interview that's coming up. But against the backdrop of these AI developments, we are seeing, I guess, that continued concern when it comes to the chips ecosystem and the lockup period for some of these firms that has been expiring this week. So that could play out in the session as well on a day where, when it comes to energy stocks, that's the green you're seeing, along with the climb in oil prices. This is Bloomberg. Bloomberg. Welcome back. You're watching The China Show. We're counting down to the open of markets, counting down to the banging of the gong on the Hong Kong Exchange as well. But, Heidi, also the considerations when it comes to these fresh strikes by the US and Iran, the impact we've already been seeing in oil prices, a bit of a tepid gain. And I guess investors are still considering how much geopolitical risk premium is appropriate. We're watching out for those trading debuts in Hong Kong today. But aside from that, also, when it comes to these AI developments, Chinese companies wanting their own versions of AI chips at the time where China also seems to be looking to restrict overseas access for its AI models. [00:24:06] Hadi Stroud-Waltz: Yeah, Avery, the sort of parallel narrative when it comes to ecosystems for AI and chips is really taking place. But you are seeing there that pomp and ceremony, if you will, as we see really just the latest. And it comes to an expected flurry of listings in the IPO boom that we've seen Hong Kong finally kind of taking advantage of there. On the downside, we could see further pressure on the broader stock market. It also comes at a time where we're seeing massive bond issuance globally as well, right? But today it is all about the GM-backed momentum, the autonomous driving companies there making its Hong Kong debut after a $752 million IPO. Let's get you a look at how broadly China markets are opening here. We did have the yuan fixing a few minutes ago. That was broadly in line with expectations. Of course, all of that is happening against the backdrop of a dollar seeing another bid higher there, along with oil prices, the geopolitical implications of renewed airstrikes from the U.S. on Iran very much playing out there. Involving sort of traders having to now readjust that broader inflation outlook, feeding through to expectations from central banks. That inflation outlook, I should point out, from other economies, including the U.S., really also hinges on the demand that we're seeing out of China there as well. We're not seeing too much of a reaction when it comes to the start of trading. The Shanghai Comp, they're pretty flat. China X, they're also a little modestly high there by just about half of 1 percent. As we'll see, hopefully, some of that reaction when it comes to the stories that Avril mentioned, DeepSeq, for example, seeking to develop its own AI chip, according to one report. Drupal weighing, designing its own chip as well, according to other reports. So really that cohesive narrative of a narrative of tech independence there by some of these Chinese companies very much coming into play. DeepSeq, for example, wanting to develop its own chip for inference that lets the model generate responses for users rather than for training new models. Early stage efforts for a lot of these ambitions, but certainly worth watching for the broader markets. We're also watching energy stairs as well, of course, as we see that oil price rise back into a sense of momentum there. It's interesting, just yesterday we were talking about a potential fear of a supply glut returning to this market with vessels through the Strait of Hormuz with that pretty limp demand levels out of China as well. But now we are seeing that rise in oil prices again. A lot of the energy names, including those in China, will be benefiting throughout the course of this session as the U.S. launch fresh airstrikes in Iran. The revocation of that waiver allowing Iran to sell oil globally will be key here as well. The attacks on the Strait of Hormuz we've seen over the past few days, and the question is whether all of this is going to then become escalated to a point where we see Iran leverage passage through the Strait of Hormuz again. This is a picture as we are watching some of the AI names that we were talking about before. Jipro is down by just about two and a half percent. But really, April, we're looking like a pretty volatile session just given how much these names and these markets are jumping at the moment. [00:27:15] April Hong: Yeah, and I guess the broader backdrop, I think, that's going on in the background is how you're seeing in the region the likes of SK Hynix that seems to be managing to clock these gains or the reversal among the memory makers in terms of, you know, that heavy, heavy selling that we saw just a day ago. But to your point about the local names looking to develop their own AI chips, Deep Seek, Zhipu, right, that seems to be benefiting some of these chip stocks as well, chip related stocks in Hong Kong. Let's take a look as well at these trading debuts, a number of them that we have in Hong Kong today. And this includes Memento Global that you're seeing top of your screen there, Basic Semiconductor. So to some extent, you are seeing the AI read through when it comes to these listings or these trading debuts. Reconova, another along with Econ. Let's get to more on these Chinese autonomous driving company, Memento Global, because that, of course, as you see, has begun trading in Hong Kong after that $750 million plus IPO. Our Chief North Asia Correspondent Steve Engel joins us now from the Hong Kong Exchange. So, Steve, we saw, I think it was 400 plus times subscribed. Talk to us about how investor demand has been and what Memento intends to use these funds for. [00:28:45] Stephen Engel: Well, sure, there's obviously been a capital raising frenzy here in Hong Kong on AI and AI adjacent companies. And you can kind of put Memento Global in that AI adjacent camp because, again, they are one of the largest, if not the largest, external provider of the autonomous driving software for global legacy car makers like Toyota, like Mercedes. GM is a backer as well and, of course, BYD. But, of course, you just mentioned Basic Semiconductor. It's up about 14 percent in the opening going on their IPO. I'm just looking at the data on the Bloomberg Terminal. We're seeing Memento stock code 6880 here in Hong Kong up about 3.4 percent, as you can see on the screen right there, at 305. It listed at 295 after selling nearly 20 million shares at 295.60. It's the second so-called red-chip company that got permission from Beijing to list here in Hong Kong after sort of a regulatory tightening on these offshore structured companies, which Memento is. But it was the second one to go, and some would say, is the AI trade losing a little bit of momentum? Well, right now, of course, it is still fairly strong. We have five companies going public today here in Hong Kong. And Memento is an interesting one because they have provided about, you know, the external provider of this advanced driver assistance technology. They provide in China about 65 percent of the market to many of the car makers there. How can they broaden that offering as well? Revenue was up 82 percent, but this company is still not profitable. [00:30:34] Hadi Stroud-Waltz: Steve, this is, of course, just one part of the broader IPO boom that we're seeing in the Hong Kong market. Is there an element of downside for the rest of the market in terms of how much pressure it might add? [00:30:45] Stephen Engel: Yeah, well, of course, there's always external shocks with tensions flaring again in the Middle East, in the Strait of Hormuz, with Iran, with another strike from the United States. There are obviously concerns in the United States about the potential AI spending bubble. That is something we're going to talk to about with the founder, chairman and CEO of Memento coming up as they pivot as well, not only becoming a licensee software provider for these car makers, but also they're in partnership with the likes of SAIC, also Uber, also Mercedes around the world. In Germany, they're doing robotaxi trials. In UAE, they're with Mercedes. There's talk about maybe also partnering up with the likes of Grab in Singapore. So again, when you're operating a robotaxi fleet, it's much more capital intensive. It's much more asset heavy. So at a time, of course, when chip and data storage costs are rising exponentially as well. So there are a lot of challenges, no doubt, to these kind of players. Right now, they're not profitable. But I'm going to try and get an idea of what a concrete timeline looks like for break-even and profitability for Memento Global. [00:32:04] Hadi Stroud-Waltz: Our chief North Asia correspondent, Stephen Engel, there for us. We're coming up. Most economists expecting New Zealand's central bank to hike its key interest rate to buy 25 basis points in the next hour to ward off inflation threats. A preview coming up. This is Bloomberg. Most economists surveyed by Bloomberg expect New Zealand's central bank will raise its key interest rate today as it aims to head off emerging inflationary pressures. Traders are also pricing in a 70% chance of a hike. And this is particularly interesting given that we do have this now resurgence of the oil price risk, right, with this return of airstrikes between the U.S. and to Iran, I should say. And that's really causing both the dollar to be bid up and also that resumption of the rise in oil prices. Previous to this, we actually saw more or less the gains that we've seen during that war period being wiped out for oil would actually return to conversations about the threat of a supply glut given that we had Saudi Arabia reducing prices for one key type of oil product that it sells as well as that concern over de-escalating demand out of the China market as well. But when it comes to New Zealand, we are expecting that move today to ward off broader inflationary pressures. We've got 16 out of 22 economists surveyed by Bloomberg expecting the RBNZ to lift the cash rate by 25 basis points. The prospect of demand reviving in the second half of the year and stoking inflation seems to be that sort of anticipatory expectation for the rate hike. But let's bring Garfield Reynolds, who leads our MLive Asia coverage. It's obviously an interesting day to be making this decision given the broader oil and energy uncertainty that we're seeing. But what's the reasoning here for the RBNZ? [00:34:09] Speaker 7: Well, I mean, the RBNZ, like most central banks, faces the concern that inflation has come back into the mix. And I think there's a big risk for the New Zealand dollar and for the long end of New Zealand bond market. If the RBNZ doesn't hike, there could be a lot of concern that they're willing to risk falling behind the curve. The movements up in crude futures today have, or overnight, helped to emphasize those concerns. But those concerns were growing anyway, we had US traders reviving bets on Fed hikes even before oil came along because you had a New York Fed measure showing that inflation expectations had actually been ticking up again. If you look across various issues, one that stands out, too, is that fuel prices are much stickier than crude prices. So that's all part of the mix that tells you that even the crude futures are kind of overstating the reduction in the pressures created by the Gulf War and that therefore central bankers are going to need to go on trying to maintain their credibility about their willingness to fight inflation. And that's why I think it might be that not only the RBNZ needs to hike, but also needs to sound sufficiently hawkish, i.e., this is not just a one and done. [00:35:42] Hadi Stroud-Waltz: Where to for the path ahead when it comes to dollar kiwi then? [00:35:46] Speaker 7: Well, the kiwi is exposed much like the Aussie dollar as times of risk proxy, you know, it's very tied into global growth via the commodities channel, via the China channel. So with the US dollar mostly on the front foot, the kiwi, the best it can do is to eke out some gains. It does benefit relative to the Aussie dollar because the RBA is seen as much closer to the end of its hiking cycle than New Zealand. But the kiwi dollar is going to remain under plenty of pressure as long as we have this higher inflation, global disruption, geopolitical risk set up affecting markets. [00:36:33] Hadi Stroud-Waltz: Gaffer Reynolds, our MLive Asia coverage will be watching for that RBNZ decision. Still, it's not always a slam dunk, as Sharon Zollner from ANZ says, right, it is plausible that we could see that choice to wait by the committee. But that's coming up in the next hour and coming up next, our exclusive interview with the Momenta global CEO, the autonomous driving firm backed by GM, making its trading debut in Hong Kong, will be asking Cao Xudong about the AI outlook after the $752 million IPO. This is Bloomberg. [00:37:17] April Hong: Now, breaking news crossing the terminal with the US Central Command saying that the military has completed new round of strikes against Iran. It hit more than 80 targets with munitions, and this included air defense systems as well as control networks. Now, aside from what we're seeing in the reaction in Brent oil prices overall, let's also talk about this big day for one Chinese company. The first day of school when it comes to Momenta. This is a momentous occasion, I suppose. Chinese autonomous driving firm Momenta Global says it plans to devote 40% of the proceeds from its Hong Kong IPO to AI computing power. Bloomberg's chief North Asia correspondent, Stephen Engel, is at the Hong Kong exchange for us, Steve. [00:38:09] Stephen Engel: Yeah, Momenta Global in the opening minutes of trade here and its debut in Hong Kong. Virtually flat, but in the open it was up as much as about 4%. And we are very honored to have the founder and the chairman and CEO, Cao Xudong. Good to see you again. Good to see you again. Ten-year-old company. You've come to fruition here with the capital raising $752 million U.S. Give us an idea to the investors in the audience where you tend to take to this company because you've licensed your autonomous driving solutions and technology to a lot of the big legacy car makers. Toyota, Mercedes, BYD, of course, is not a legacy car maker, but a big EV player. But you're also going to spend a large chunk of your proceeds on AI compute. Are you an AI company or a robo taxi company or both? [00:38:59] Speaker 8: Actually, it's both. We think we believe autonomous driving is the first and also currently the biggest application of the physical AI because a huge amount of data and also a good close loop of the business. So we have enough funding for the R&D investment, not only from the capital market, but also from the gross margin of our revenue. So by a large amount of data and a large amount of R&D investment, we can scale our model. The model is the world model and the foundation model for autonomous driving, not only for one scenario, but also for all kinds of autonomous driving scenarios, including passenger vehicle, robo one, robo truck, and robo taxi. [00:39:45] Stephen Engel: And also for all global applications, how do you make sure to offset the rising cost of chips and also data storage? Yes, your revenue was up 82% in 2025. You're still not profitable, though. A loss of a little bit more than 500 million US dollars. How do you offset, with those licensing of software and your autonomous driving software solutions, how does that offset the rising cost of chips and data center if you're going to become more of an AI company? [00:40:12] Speaker 8: Yeah, it's a good question. Our revenue in the past, every year the CAGR is more than 80%, and we have the confidence in the future the CAGR also more than 80%, and the gross margin will be more than 70%. So by more and more revenue and gross margin, we can continuously to increase our R&D investment. However, we can keep narrowing our loss compared to last year, this year our loss will keep narrowing, and next year we'll be profitable. [00:40:48] Stephen Engel: Okay, so there you go. There's news. Breakeven next year in 2028, you're going to see profitability, right? [00:40:55] Speaker 8: Yeah, profitability. [00:40:56] Stephen Engel: Okay, so where do you go from here as far as expansion overseas? You have a number of different legacy car makers, your partners, and one of your clients is Toyota, also Mercedes, GM is one of your backers. But right now about, I think, two-thirds or so of your revenue comes from five main clients. How do you broaden that out? [00:41:16] Speaker 8: Oh, it's a good question. Two approaches. First approach is, of course, domestic OEM. Now their overseas progress is also very good. They want to enhance the product competitivity by autonomous driving. So together with domestic OEM go to overseas markets, that's one approach. Another approach, you know, we already collaborated with Mercedes, BMW, Audi, Toyota, Honda. We have a very good collaboration and a very good technology and product in China market. They also want to reuse the success in China to overseas markets. So two approaches to further expand our global market. [00:41:55] Stephen Engel: So trials in Germany, I believe, with Uber, you're also doing trials in the UAE with Mercedes. We're hearing as well that maybe tying up with Grab in Singapore. What can you confirm and how far away from commercial ability is it? [00:42:10] Speaker 8: Yeah, the progress is good. I believe the global business, one of the largest markets of all costs is China. Another pioneer market is Middle East. So the progress is really good. The policy there is very supportive for robot business, all kinds of robots, including RoboOne, RoboTaxi and also RoboTruck. [00:42:36] Stephen Engel: What does the domestic market tell you right now and regulators? We know that there were some accidents and there was some outages that kind of slowed the regulatory approval process, whether it was Baidu's service in Wuhan and others. Where are we right now at a time when Tesla also trying to roll out FSD, full self-driving in China? And Huawei, we all know they have a suite of Harmony OS solutions that would be competing directly with you. [00:43:00] Speaker 8: I think China progress is safety and good progress. So it's like our two-legged strategy. You need a two-legged strategy to have very good synergy to work steady and running faster and faster. That's very important. [00:43:19] Stephen Engel: Any plans to do your own AI chip? DeepSeq is doing that and others to kind of hedge against the export restrictions of NVIDIA chips. Yeah, it's a very good question. [00:43:29] Speaker 8: Our collaboration with NVIDIA, with Qualcomm, is very good. And also we have a sister company who do large model SOC. The progress is also very good. So our software solution is hardware agnostic and we can support all of them. And we give the freedom and give the free choice to our customers. [00:43:51] Stephen Engel: Xiao Shudong, thanks so much and congratulations on your listing here in Hong Kong. Okay, we're going to send it back to you from the Hong Kong Stock Exchange. Thank you. Thank you. [00:44:01] Hadi Stroud-Waltz: Our very own David Engel there. Xiao Shudong there. Founder, Chairperson, CEO at Momentum Global. Big day for the company. Let's get you another look at the markets given just how much volatility we're seeing as a result of this revival of geopolitical risk. We did have U.S. confirmation that they've completed this most recent round of airstrikes against Iran. Of course, this is really leading to that jump back higher when it comes to oil. At a time when we're starting to talk about oversupply hitting these markets with price cuts, with that diminished demand out of China story as well. We do have those China inflation numbers coming out later this week. So that'll be an interesting gauge in terms of how that's going to play through to that global demand and inflation picture as well. But at the moment, we're seeing Brit crude higher by about 2%. This is a gauge, though, I should point out, that's essentially wiped out all of its wartime gains since about February. So it has made that progress, but we are just seeing greater uncertainty. The U.S. military saying that has completed a new round of strikes against Iran. We have seen this following really greater conflicts within the Strait of Hormuz there as well. In the meantime, Iran's military launching drones at Bahrain. That's according to the latest reporting from Axios as well. So the U.S. is also saying that they're ready to hold Iran accountable when an agreement is not obeyed. Remember, we're still seeing this continuation of that 60-day countdown for talks towards a more permanent peace accord. But a lot of snags being hit, and we're seeing that taking place in today's developments and the impact on the markets as well. We are seeing kind of a bifurcation here. It's interesting. U.S. futures are actually looking kind of flat at the moment. NASDAQ futures are budgeted by about a quarter of 1%. We are, of course, looking ahead to that SK Hynix ADR as well. And the huge amount of enthusiasm that we continue to see with that AI play at a time where there are concerns about how overheated this rally is and how broad-based it is, investors looking to look for more undervalued opportunities in markets like South Korea. A lot more on the way in the next hour of The China Show. This is Bloomberg. [00:46:05] April Hong: Welcome back to The China Show. We're set to get the rate decision from the RBNZ any minute now. And the majority of economists expect there to be a quarter-point hike to 2.5%. But this could be a live one. It is coming on an interesting day following on from the fresh strikes from the U.S. on Iran. As quickly, almost, as those strikes came, we are since hearing from Central Command that the U.S. military has completed those strikes against Iran. But, Heidi, it's also about the extent in which financial conditions have been tightening in New Zealand at a time where you're looking at the backdrop of elevated yields, how that has maybe fed into some of these mortgage rates as well. And this is what you're seeing in terms of the trade today, the hawkish expectations of the RBNZ. And potentially, are they going to be able to meet the mark? The messaging here is also important, Heidi. [00:47:26] Hadi Stroud-Waltz: Yeah, and they have. They have moved. New Zealand raising the benchmark interest rate by 25 basis points to 2.5%. And, you know, I was going to say there is a view out there, and I think our in-house view was one of them, that they could have gone either way. They could have done the sort of wait and see. But arguably, as ANZ said, 2.5% is kind of a more comfortable perch in terms of guarding against that risk of future inflation. And as you say, they'd be feeling comfortable, particularly as it comes at a daylight today where we're seeing renewed strength in energy prices. We're seeing renewed strength when it comes to that inflation argument as well. The pass-through that potentially we continue to see from volatility in the global energy market, given that traders had kind of been treating this U.S.-Iran situation, the interim peace deal, as a done deal. What we're seeing at the moment is showing that that volatility will continue to be a factor here. But this is the expectations now being met for these markets. The Kiwi dollar now extending those gains after we saw the rate rise as expected. Of course, it comes against a backdrop of that broader renewal of dollar strength as well. So there was some concern that any softness in the tone of the RBNZ is going to see some Kiwi vulnerability get introduced. That's the view of Rabobank. Just a reminder, this is a monetary policy review, so we're not going to be getting any kind of new economic projections, cash rate projections. But we will be hearing from Governor Bremen at the news conference in an hour after this decision has now come out. So it'll be very interesting to get some of that context and the color around how this decision was made. The RBNZ saying that the decisions ahead will obviously depend on price dynamics versus those growth dynamics, April. [00:49:05] April Hong: Yep. On those price dynamics, let's take a look at the market action today after an onslaught in the stock markets that was really triggered by Samsung, right? That sell-off that triggered even some of these circuit breakers on the Kospi. You're down about 2% after the benchmark actually managed to clock some green earlier in the session. So it speaks to the volatility that the South Korean markets are really being notorious for. And I think the, I guess, volatility around the Iran situation is adding to some of those woes, adding to that as well when it comes to the climb in oil prices and the extent in which that will affect EM Asia, take a look at how Indonesia is faring in the early goings. And this is, of course, following on from the S&P Dow Jones now joining MSCI and reviewing the country's market framework. So the extent in which this adds fresh index risk for Indonesian stocks at the time where there could be pressure on bonds already as well as the currency. And as we watch what Brent is doing for the moment, hovering near the 76th handle, it was interesting in terms of that Joe political risk premium very quickly being sapped out. And then now we are back towards 76 again. Shanghai crude also in the green. When it comes to the war risk, the extent in which we can also see gold maybe dip below the 4K handle. Those are some of the levels that we're watching as well, Heidi. [00:50:40] Hadi Stroud-Waltz: Yeah, and Ava, we'll continue to watch for kind of this renewed effort by investors to try and find opportunities within the tech and AI and chip trade, right? Hong Kong listed technology is a clear outperformer in the region. Semi-conducted trade continues to struggle in Japan and Korea. Let's get the latest when it comes to another high volatility day with our markets reporter, Anthony Stephen. So it is another day of rotation in this space. What are we seeing as the major catalysts now? [00:51:05] Speaker 9: Yeah, we're seeing this combination of volatility and positioning really start to hit the semiconductor trade. You know, at the margin, most of the kind of ongoing news flow and research from the street is around position management rather than, you know, it's a full-on sell or downgrade. But it's causing these outsized moves. Korea has already had two swings of around 4% today. And the Japanese semiconductor space has been pretty consistently under pressure. On the other side, Hong Kong tech got off in the green and just kept going. And that speaks to this rotation into the people who are buying semiconductors versus those selling. There is the perception that the margins on the selling of semiconductors seems to have hit a cyclical peak. That's a big debate. How long can you maintain 80% to 90% margins in memory, for example, versus the people buying semiconductors who are looking to optimize their spending now? So we are hearing a lot about custom chips. We are seeing a lot about memory optimization on the software side. And that kind of optimism is feeding in to the Chinese hyperscalers who obviously have been leading the software innovation charge because they can't get top-of-the-line U.S. chips in the first place. So that narrative has changed. Bear in mind that the Hong Kong Internet space has been a consistent underperformer in the first half. So this is also some rebalancing into the second half to pick the bottom in some of these laggards. Tencent and Meituan are notable examples in that regard. [00:52:37] April Hong: Talk to us about the volatility in the tech trade. I mean, we look at VCOSP upwards of 80. It's pairing a bit. But is volatility a risk in and of itself? [00:52:47] Speaker 9: If you look at historically where volatility is today versus where it has been, we are in completely uncharted territory. It is extraordinary for the world's best stock market to be trading at 80 ball for months on end. And that's with single stocks in that index like Samsung or Hynix trading at 90 to 100 ball at times. This constrains structurally the size of a position you can hold. At the same time, these positions are the biggest weightings in the MSCI AP after TSMC. So we are in a really extraordinary situation where investors, even passive investors, hold a large chunk of stock that is moving around at historically high volatility. Emerging market volatility as a group has started to explode away from VIX volatility in the U.S. So as a risk factor, this makes people more likely to incrementally put the incremental dollar into the U.S. equity market, which is less risky than in emerging markets. So this is constraining position size, even though the fundamental picture is quite strong. Now, whether the volatility can retrace back to historical levels remains to be seen. Flow picture is much more complicated than it ever used to be because of the range of leveraged ETFs in play now and alongside a huge uptick in options trading amongst local retail. [00:54:09] Hadi Stroud-Waltz: Anthony, I'm watching the Kiwi extending those gains after the move from the RBNZ. There is that risk that they've got to be quite strong in the language to keep it up there, right? Because the dollar is back. How are we seeing that playing out across Asian FX? [00:54:24] Speaker 9: It's a lot more dispersed this time around than when the war first kicked off. So when the war kicked off initially, correlation between oil and the dollar was near 60.6, you know, near the highs of the kind of tensions. It's since retraced to around 0.2 and now we're seeing this very dispersed reaction to dollar strength. So the yen seems to be consistently under pressure. The Korean won seems to be more a function of its equity market. And all these other currencies are more a function of the actual reaction function on rates. So we're seeing a very dispersed kind of response to the oil pressure as well, depending on which central bank you're sitting in. The Aussies and the Kiwis seem to be more ready to go early just to get ahead of the problem, whereas in Europe now they're getting a little bit more tentative. And you're seeing that play out in the carry trade with the Aussie and Kiwi rallying quite strongly against the yen and euro. So this oil trade this time around is a lot more dispersed and a lot more complex. And that keeps FX volatility as a whole against the dollar quite muted. And that is something to watch if these tensions with Iran pick up. [00:55:32] April Hong: Well, as Anthony was just saying, maybe things pick up, especially when it comes to oil. And this is, of course, against the backdrop of the U.S. saying it has completed a new round of military strikes against Iran. Central Command says it was in retaliation for several attacks on shipping in the Strait of Hormuz. Stephen Stepchinsky, who leads our Asia Energy Coverage, joins us now. So, Stephen, what do you make of the latest developments? [00:56:00] Speaker 10: I mean, I think this is now the new normal, right? This ceasefire deal, you're going to see some tit-for-tat strikes, both in Hormuz. You might see traffic stop, start. At the same time, you might see the U.S. kind of attack the targets within Iran. But, you know, I think what's very interesting is, you know, how Iran responds to this. If they do some more, you know, a few attacks as just retaliation for what the United States did, or if this spirals into something bigger. Now, the likelihood is, according to the analysts and the people that we talked to, is that this is likely going to blow over. You know, this won't necessarily spiral into the conflict we saw in March, for example, when Iran was actively targeting refineries, oil fields, and different assets across the region. But at the same time, it isn't going to push forward the trade deal, or rather the peace deal between the U.S. and Iran that's needed to really open up Hormuz and bring things back to normal. So we're in this weird in-between stage where, at the moment, you're going to see some of the ships go through, some ship captains maybe turn around. That's going to throttle flows of the fuel. But we're not going to see a disaster scenario where oil prices are surging to above $100 because assets are being attacked, and we're seeing a destruction in production. [00:57:17] April Hong: What does this mean for the resurfacing concerns about a glut, then? [00:57:22] Speaker 10: I mean, I think the glut talk still makes sense. When you look at where the market stands, a lot of the buyers in the Asian region had already replaced Hormuz flows. That's why the glut discussion was even coming out, because you're seeing this big surge in ships coming out. You're seeing, you know, super tankers from Saudi Arabia and other producers leaving Hormuz and coming to a market where the buyers don't really need those flows. They've already found alternatives. So, and on top of that, you have the weak Chinese demand. China really pulled down their imports. And the future of that, whether they stay at these low levels, really dictates how the market goes going forward. But I think at the moment, you know, yes, oil is up a few percent. We're at $74 or so for Brent. But we're not at $80 or $90. We're not seeing oil prices surge, which indicates that the market isn't taking this as a situation where suddenly we see a tightening. [00:58:15] April Hong: Stephen, great to have you. Thank you so much. Bloomberg, Stephen, Sapczynski, talking us through these nuances in geopolitics as well as the energy markets. Now, let's recap some of the headlines that we've been getting from the New Zealand Central Bank, following on from its hike by a quarter point to 2.5 percent. We also hear them saying that expectation of inflation is seen returning to the target midpoint in the middle of next year. It does, though, note that there is uncertainty over the level of this neutral interest rate. So that sounds like maybe it's hawkish enough when it comes to the messaging from the RBNZ. It also says it sees inflation expecting to have peaked in the June quarter at 3.9 percent. It does, though, see the current cash rate level as accommodative. Heidi. [00:59:08] Hadi Stroud-Waltz: Still ahead, China's DeepSeq and Zipul reportedly planning to develop their own in-house AI chips as Beijing considers restricting access to its top tech. We have the details next. This is Bloomberg. [00:59:36] April Hong: A couple of these AI developments to keep tabs on. And in terms of the reaction function, I think the ones on these Chinese companies developing potentially their own AI chips is what's playing out in markets today. But by the way, for the likes of Zipul, it's gotten its target raised 11 percent by JP Morgan. It sees that competitiveness for its AI model. You're seeing the stock after the lockup expired yesterday, 12 percent higher in trade today. Chips are also a mixed bag, I think. To help us make sense of this, Min Min Liu, our China correspondent, is with us now. So, Min Min, talk to us about what DeepSeq and Zipul are looking to do. [01:00:20] Speaker 5: Yes, this is according to Reuters and the Informations reporting. These two companies are looking to start making their own inference chips. So, they are in discussion with chip designers, with foundries to look into that. It's a multi-year process and Zipul is just at the start of the process. DeepSeq has already done this, started the process about a year earlier. And it looks like markets are taking it very positively, right, especially for Zipul, up about 12 percent here. The fact that it is going to start making its own chips, this is obviously going to bring cost advantage and energy efficiency to the company. Because you look at its latest large language model that launched not too long ago, we saw a 27 percent surge in token usage in the first week alone. And that's one of the growth catalysts that is pushing Zipul to look into making its own tailor-made inference chips. Because it no longer needs a lot of those general-purpose GPUs, which are good for building models, but it's a bit wasteful when you use them for inference. So, the implications for this is obviously for companies like NVIDIA, once they lose that market share in China, some analysts are saying that it could be structurally difficult for them to recover their market share, even if export controls are rolled back. But, of course, those U.S. export controls is also another major catalyst for these Chinese companies to look into making their own domestic homegrown inference chips as well. So, certainly something that we are watching for. And this comes as the Chinese government was in talks with some of these companies to look at potentially restricting foreign access to the most advanced AI models. that China is producing right now. And, again, this is according to Reuters reporting. [01:02:03] Hadi Stroud-Waltz: Bloomberg's China correspondent Min Min Lo there with the latest across the tech and chip front. And let's bring with you Zipul, who's a China portfolio strategist at Goldman Sachs. Really great to have you with us. So, let's start off on this space, right? Because we are now kind of see the hunt for value for less of the lower hanging fruit for investors after we've seen these big run ups in markets in Korea, in Japan, on the AI trade. Within the greater China markets, where do you see the opportunities now? [01:02:34] Speaker 11: If we look at the China market, we see similar return divergence across different sub-segments and by sector. If we look at the Asian market, basically, Korea, Taiwan lead the performance. And within China, we see the small meet-cap issues, especially in the tech hardware sectors, outperformed. If we look at the index star 50 and the China index, outperformed with, like, double-digit, high double-digit returns. Well, if we look at CSI 300 with more large caps, it end up performing these small meet-cap indexes. And besides that, I might say China end up performing even more. So, what we see here is the market is rewarding companies with earnings growth, especially the upper stream, along the AI supply chain that are benefiting from the AI capex growth. So, we still see the market focus is on these AI names, especially in the hardware space. [01:03:40] Hadi Stroud-Waltz: Of course, we're coming out of time where we're seeing, as you call it, a powerful resurgence when it comes to big IPOs in the Hong Kong market. How do you find the best performers in this space? What are you looking for here, given that it is broadly expected to put pressure on the rest of the market? [01:03:59] Speaker 11: Yeah, the Hong Kong IPO remains active, and this is basically since late 2024, and it has been creating a lot of investment opportunities. If we look at the post-IPO performance, on average, these newly listed companies deliver close to 50% post-IPO return in one month and three months horizon. And a lot of the company can maintain the return until like six months or even longer after the lock-up share release. So, that creates a lot of opportunities, but on the other hand, we see the return dispersion is also huge here. So, what kind of company tends to outperform, our analysis suggests that first is the stand-alone IPOs in Hong Kong is performing better than the AH-Duelist ones as many of them are unique new opportunities in the market, especially if in the AI space, biotech space. Second is, if you look at company features, the high-growth company tends to deliver higher returns, even though their valuation could be higher. So, we see the market is focusing more on the growth outlook rather than the valuation. This is the second finding. And in terms of the sector preference, so far we see still the AI-related companies tends to attract more attention, higher subscription ratio, higher post-IPO returns, and also decent cornerstone ownership. These kind of stocks tend to deliver more sustainable returns, as we see. [01:05:37] April Hong: Yeah, I was just about to ask you, what about the risk from the expiration of these lock-up periods for some of these Hong Kong listings? What do you see that looking like in the back half of this year or into next year even? [01:05:52] Speaker 11: Yeah, if we look at the whole picture from a top-down perspective, in the next 12 months, we are expecting about $270 billion U.S. dollar shares, newly listed shares to be released. So, this looks high in absolute number, but relative to the market cap and relative to the market demand, we think it's still manageable. But we need to pay attention to companies, especially with a large portion of shares to release once. So, some companies may have like 60% to 80% of the shares released within one window. So, during that window, we definitely need to pay attention. Historical experience suggests that, in general, the company may decline by like 4% to 7% in the three months to six months horizon after the lock-up share release. So, that's in general, but some companies would decline more. So, that is what we need to pay attention. But for high-quality companies, especially with stronger growth potential, that may also be a window for investor to consider, I think, position because this type of company tends to deliver more sustainable return afterwards. [01:07:08] April Hong: And what are you expecting in the Hong Kong IPO momentum for next year? How much of is it going to continue? [01:07:16] Speaker 11: If we look at the pipeline, it remains very strong. We are seeing around 500 companies publicly disclosed in the pipeline now, but we know the Hong Kong Exchange also allows for confidential filing. So, there could be more companies waiting in the pipeline. That means, in the remaining year, definitely, the pipeline will remain strong. And also, if we look at the market response to that, the demand is still there. So, that's why we're thinking, at least in the coming months, the IPO momentum will still be there. But historically, if we look at the IPO momentum, it's highly correlated with market performance. So, if investors do have a strong sentiment and the positive about the whole market, generally, it push the IPO activities more active. [01:08:08] April Hong: Sifu, great to chat. Thank you so much for your time today. Sifu, China Portfolio Strategist at Goldman Sachs. And still ahead, S&P Dow Jones joins MSCI in flagging a potential downgrade for Indonesia to frontier market status. We'll have details. This is Bloomberg. [01:08:41] Hadi Stroud-Waltz: Pretty volatile session here in Asia. This is a picture, though, when it comes to decided upside, when it comes to energy stocks. We have seen some of the gains being given back for this cohort, given we had really that surge over the past couple of months. In fact, since the start of the Iran-US war in February, we've seen that surge in oil prices. Essentially, that had been erased with that interim peace deal. But now with the resumption of those airstrikes against Iran, we have heard from the U.S. saying that it's completed that round of airstrikes, but also the revocation of Iran's ability to sell on the global markets in terms of its crude supplies. We are seeing now upside in both crude prices, Brent, WTI, as well as some of these big energy names, including those trading in Australia, Woodside Energy, Santos up almost 5% and some Japanese names as well, impacts up by 3.7%. We are also watching some of the travel stocks as well, given that that respite from the dulling of geopolitical concerns has really benefited a lot of the airlines now. But Cathay Pacific, really the only one in that group that's seeing a little bit of upside, that is really on account of these reports of a development plan with China targeting 8.3 billion domestic tourism trips in 2030, according to one Xinhua report. So some of those China-related travel stocks are doing quite well. The rest of the region are under pressure with that oil story. This is Bloomberg. Take a look at Tokyo, where it's 11.29 a.m. in the morning. Japanese markets are going on a break in a minute, probably glad to be taking a breather, given the level of volatility that we've seen in trading in that morning session. Of course, we've got the yen in play there as well. But broadly, we are just seeing that uncertainty when it comes to the resumption of the U.S.-Iran airstrikes. That's been completed, but of course, we're also dealing with the revocation of that wave of Iran to be able to sell its crude on the global market. And that's having a big impact when it comes to oil prices at the moment and the oil stocks as well. That is a picture as we head into towards that lunchtime session in the Japanese markets. But we are also watching the currency front because we are seeing that bid up when it comes to dollar, that return of dollar as a safe haven status as well, and having quite a divergent picture across Asian effects. One standout that we're watching today has been the Kiwi. It will be very interesting once we get sort of a bit more commentary around that RBNZ decision. The strength of the seen hawkishness from the RBNZ will be key in terms of being able to maintain a little bit more strength for the Kiwi in the wake of the stronger dollar and also against trading in the Aussie dollar as well, Averill. [01:11:38] April Hong: Yeah, speaking of standouts, it's interesting how the Hang Seng is outperforming today. I think Hang Seng tech has pulled away. You're seeing these Chinese Internet names also being supported on a day where Infotech, you look at the sector there on the MSCI Asia Pacific, that's looking flat. To what extent does this speak to the confidence among investors or the optimism that these AI models that are being developed domestically are good enough that they want to restrict overseas access? Heidi, really, to your point earlier, we're watching what the latest on these U.S. strikes are looking like. [01:12:15] Hadi Stroud-Waltz: Yeah, let's get some more on that, which, of course, these strikes coming after the Trump administration revoked permission for Tehran to sell oil globally. Our Middle East correspondent, Abiy Abu Omar, joins us now from Dubai. So even a couple of days ago, we were still hearing that these technical talks were still ongoing. Of course, we know that the clock was 60 days, but we'd also heard from President Trump that he was willing to give more time for these peace talks if it meant getting a better deal on the nuclear issues in particular. How has this unraveled and what would we make of these latest developments? [01:12:49] Speaker 12: Good morning, Heidi. Yeah, look, this has the potential to unravel the whole negotiations or the 60-day negotiation period of the MOU that was reached last month to reach a final agreement in August. But what we saw earlier this morning is attacks by the United States, which is essentially a retaliation for an attack by Iran yesterday. The IRGC had attacked a Qatar-linked ship in the Strait of Hormuz that was laden with LNG. And we believe that the reasons behind that is because this ship did not stick to the route that Iran had laid out for tankers making their way through the Strait of Hormuz, the approved route that Iran has been saying tankers must follow. Now, this is not the first time such an attack happened. A month ago or last month, we saw a Singapore flagship that was also attacked in the Strait of Hormuz for not sticking to those routes. And so the U.S. retaliation this morning, Heidi, came in the shape of more than 60 targets in Iran being hit. Most of those defense targets and also weapon launchers, according to CENTCOM. We don't know what the Iranian response is going to look like. Axios just moments ago reporting that Iran retaliated against Bahrain, one of the GCC nations that harbors some U.S. bases. Now, we also know that GCC nations, including Kuwait, the United Arab Emirates, also harbor U.S. bases. So we don't know if the response is going to be even more dire than this. But Iran deputy foreign minister said that the response will be decisive. So this is a developing story. We don't look like we're back at square one, but definitely unraveling a situation that was already fragile. And then you mentioned the oil sanctions where the Treasury yesterday revoked the lifting of those oil sales by Iran. One of the main concessions that Iran had asked for in the MOU, along with the nuclear component, the blocked assets. And at the heart of all of this, of course, is the Strait of Hormuz. So a developing story. We continue to monitor it. It's quite early in the Middle East. So we'll see what shape this response will take throughout the day, Heidi. [01:15:03] April Hong: Abir, you talked about how we don't quite know yet what the Iran response is going to be. But could you talk to us as well about what we're seeing in terms of, you know, how unified the leadership in Iran is? [01:15:19] Speaker 12: Yeah, that's a good question. Look, and especially at this point, because the mass funeral of the late Supreme Leader is still ongoing in Tehran. He will be buried by the 9th in his hometown. And so the timing of all of this is a little bit surprising because Iran carried through those attacks at a time where the nation is mourning. We know that millions of people, some delegates from friendly nation, as Iran had called them, had visited, along with some surprise visitors. Now, just how unified the leadership is, we still have no sign of the current Supreme Leader, Mushtaba Khamenei. He hasn't shown up at the funeral of his late father and members of his family. But what we know is that the top negotiators in Iran, those are the likes of the foreign minister, the president, the head of the parliament. Those have shown a unified stance so far. Now, it's just unclear how or the degree of just how independent the IRGC is and how it's carrying out those strikes against the ships in the Strait of Hormuz. A lot on clarity is still a role, but again, keeping an eye out on just how exactly the people that we've been hearing from in Iran that have kept the public face, that have been part of those negotiations in Switzerland, but also in Doha with Jared Kushner and Steve Witkoff, just what they come up with and what they will say going forward. [01:16:48] Hadi Stroud-Waltz: Bloomberg's Middle East correspondent, Abir Abou-Omar, there, joining us with the latest and taking a look at some of the other headlines globally that we're following, Bloomberg has learned that NATO allies have agreed to at least $50 billion in defense industry deals to show President Trump that Europe is listening to his spending demands. At the NATO summit in Ankara, Secretary General Mark Rukta revealed that the plan includes $12 billion to buy next-generation drones, surveillance planes and military aircraft. Meanwhile, in a speech at the summit, Ukrainian President Volodymyr Zelensky pressed the alliance to speed up its defense production. [01:17:22] Speaker 13: And I urge all of you and all our partners to give it the attention it deserves. And this cannot wait until 2030 or beyond. Europe needs affordable, mass-produced, anti-ballistic systems as soon as possible. In fact, today. [01:17:51] Hadi Stroud-Waltz: India and Indonesia have taken a major step towards closer defense cooperation, signing agreements in Jakarta on missile systems as Prime Minister Modi met with President Prabowo. The two nations also announced a steel joint venture, Pacton Mining and Maritime Security, and a pledge to push negotiations forward on a trade deal. Modi next heads to Australia and New Zealand, Abir. [01:18:14] April Hong: Heidi, we're also looking at Indonesian stocks after S&P Dow Jones indices listed the country for potential downgrade to frontier market status. The Indonesian Stock Exchange earlier said it remains committed to improving transparency. Our senior Asia Equities reporter, Abhishek Vishnoy, joins us now. So, Abhi, talk us through what S&P Dow Jones is asking for in a way. Is it any different from what MSCI is saying? [01:18:39] Speaker 14: It isn't different. It's the latest one to join the bandwagon of index compilers, complaining against the transparency, lack of, you know, details on ownership. And it is not a downgrade, but it's like putting something on the watch list. Now, what S&P has said is that they may come out with special measures, which means some kind of index maintenance restrictions. And that's what, you know, is going to move the needle for S&P to see if it wants to downgrade from emerging to frontier. But that would happen probably in end 20, 27, 28. Now, this essentially underscores the problems that Indonesia is facing, not just at the level of investments, ownership, index level, or passive investments, but it sort of is overlapping with the policy uncertainty. And therefore, these two things mix together, and it becomes a case of market being policy fragile. [01:19:37] April Hong: How much is this, I mean, what does that ultimately mean for Indonesia's stocks? We're seeing a bit of a bounce, I think, for this month. They've also committed to improving their transparency. And as you say, S&P, Dow Jones, what they're asking for, not materially different from what MSCI is saying. So what is the net net impact you're expecting? [01:19:58] Speaker 14: I mean, the market is deeply sold off, and it has discounted a lot of negatives. But, and, you know, Indonesia is not macro fragile, but economy and markets, they don't move, you know, in the same direction. Over the last decades or so, we have seen that in U.S., India. So a lot needs to be done and proved by policymakers in terms of follow-up actions and assuaging concerns of index providers to get back on track. But like I was saying, you know, Indonesia is not macro fragile, it's policy fragile. And if you look, you go back into the history, there used to be this term, which is to make into the articles, Jokowi premium. So when Jokowi came into power in 2014, look at where market cap was, look at where market cap is today. Look at where JCI was, look at where JCI is today. And you look at where the valuations were and now, they're all down. So market cap and, you know, JCI has leveled. They are pretty much there before Jokowi came to power. So that means Jokowi premium has sort of eroded. The valuations have tanked. JCI is trading at about eight times. It used to be trading at around 13, 14 times till Jokowi was in power. So there is no set term, but there is something that is taking shape under this new regime where they're trying to make the policy more centralized in all aspects. And that is sort of weighing on the market. So if a lot of things get proven in terms of what they do, both at the macro level as well as assuaging concerns of index providers, then maybe valuations can recover. Otherwise, it pretty much remains a market which, you know, remains boxed in terms of valuations, like lower valuations, because this is looking like a China-style kind of economy in the making. And there are a lack of funding upgrades and some structural reasons around, you know, concentration of wealth and concentration of ownership. [01:21:54] April Hong: Which also makes you wonder what the Prabowo premium is supposed to be. Abhi, great to have you. Thank you so much. Bloomberg senior Asia equities reporter Abhishek Vishnoy. Now coming up on shows, Momentos shares make their Hong Kong trading debut. And CEO Tao Shudong tells us the self-driving and AI firm is aiming for profitability in 2028. Our exclusive interview is next. This is Bloomberg. Let's check in on Momentos on its first day of school. The company has raised $752 million in an IPO that's testing market appetite for loss-making tech firms. Our chief North Asia correspondent, Stephen Engel, joins us now from the Hong Kong. Sheh Sif. [01:22:51] Stephen Engel: Yeah, well, Momentos hasn't made money since it was founded 10 years ago in 2016. By the man I interviewed in the last hour, Chao Shudong. He is the founder, the chairman, the CEO. But their revenue has been increasing quite sharply, up 82% last year, even though they posted a loss of more than $500 million U.S. dollars. That revenue is what's driving them forward. But are they going to go forward as a technology provider to the legacy car makers like they are right now, Toyota? They also provide this software for Mercedes. And I mentioned Toyota. And also GM and BYD. But going forward, I asked Chao whether they're an AI company or are they a robo-taxi company. His answer was, well, they're sort of both. [01:23:41] Speaker 8: We believe autonomous driving is the first and also currently the biggest application of the physical AI because a huge amount of data and also a close loop of the business. So we have enough funding for the R&D investment, not only from the capital market, but also from the gross margin of our revenue. So by a large amount of data and a large amount of R&D investment, we can scale our model. The model is the world model and the foundation model for autonomous driving, not only for one scenario, but also for all kinds of autonomous driving scenarios, including passenger vehicle, robo-one, robo-truck, and robo-taxi, all robo applications. How do you make sure to offset the rising cost of chips [01:24:31] Stephen Engel: and also data storage? Yes, your revenue was up 82% in 2025. You're still not profitable, though, a loss of a little bit more than $500 million US dollars. How do you offset, with those licensing of software and your autonomous driving software solutions, how does that offset the rising cost of chips and data center if you're going to become more of an AI company? [01:24:53] Speaker 8: Yeah, it's a good question. Our revenue in the past, every year, the Kager is more than 80%, and we have the confidence in the future, the Kager also more than 80%, and the gross margin will be more than 70%. So by more and more revenue and gross margin, we can continuously to increase our R&D investment. However, we can keep narrowing our loss. Compared to last year, this year, our loss will keep narrowing, and next year, breakeven, and 2028, we will be profitable. [01:25:29] Stephen Engel: Okay, so there you go. There's news. Breakeven next year in 2028, you're going to see profitability, right? [01:25:36] Speaker 8: Yeah, profitability. [01:25:36] Stephen Engel: Okay, so where do you go from here as far as expansion overseas? You have a number of different legacy car makers. Your partners and one of your clients is Toyota, also Mercedes. GM is one of your backers. But right now, about, I think, two-thirds or so of your revenue comes from five main clients. How do you broaden that out? [01:25:57] Speaker 8: It's a good question. Two approaches. First approach is, of course, domestic OEM. Now, their overseas progress is also very good. They want to enhance the product competitivity by autonomous driving. So, together with domestic OEM, go to all overseas markets. That's one approach. Another approach, you know, we already collaborate with Mercedes, BMW, Audi, Toyota, Honda. We have a very good collaboration and a very good technology and product in China markets. They also want to reuse the success in China to overseas markets. So, two approaches to further expand our global market. [01:26:39] Stephen Engel: So, they raised about $750 million in this IPO. And Cao tells me they're going to likely spend about 40% of that on AI compute to build out their offerings. Obviously, AI adding, of course, to their advanced driver assistance technology. And, again, the efforts that they're putting into robo-taxis. They have a robo-taxi fleet that they're launching with SAIC in Shanghai. They are also, of course, having trials in Germany with Uber. They have trials in the United Arab Emirates with Mercedes. There's talk. He didn't confirm it, though, that maybe they would also branch out into Singapore with the likes of Grab. So, again, this money that they've raised, $752 million U.S. dollars, is going to be going to do both build-out AI compute and also those robo-taxi services. [01:27:30] Hadi Stroud-Waltz: One-based chief North Asia correspondent Stephen Angle there as we continue to watch a slew of IPOs hitting the Hong Kong market. In the meantime, we're continuing to watch for trading and momentum when it comes to these Asia memory stocks, right? We're seeing Samsung at the moment off by three-tenths of a percent. It has begun mass production of its most advanced data center storage drives it for use inside NVIDIA's upcoming Veriruban platform there. So, that's the latest news as we continue to watch to see how much further higher these names can push. SK Hynix is clearly another one that's in focus. The $28 billion U.S. listing is said to be multiple times oversubscribed, except ahead of pricing that we're expecting on Thursday. So, such strong early demand. And stocks are the world's biggest chip makers. Hynix among them, Samsung Micron, now struggling with volatility despite record earnings. Our Bloomberg Opinion columnist Shuley Ren thinks that they still have to prove that they've escaped the boom and bust cycles known to the industry. And she joins us now, and we did look to the earlier numbers this week from Samsung to be the most recent catalyst, right? And they were positive, but there's still that uncertainty there. You say that longer-term agreement issue is going to be key. [01:28:38] Speaker 15: Yes, so the idea is that now that we have a memory chip shortage, the chip makers, they can use that bargaining power, that leverage, to force eager customers to sign those long-term contracts, long-term agreements that are favorable to the producers. Micron has given us a taste of what these blueprints will look like. They typically last five years. They have cash deposits from customers so that it's harder for the customers to walk away. And that they have a pretty good pricing floor that will ensure profitability. And Micron said that it hopes that these long-term contracts can cover half of its future revenue all the way to 2030. [01:29:19] April Hong: Shili, signing these long-term contracts can be tricky, though. What are some of the things they'll need to consider? [01:29:27] Speaker 15: So to get this kind of downside protection, the price floor, these contracts also have a price ceiling, which means that the producers, they have to give up some of the upside gain that they have been enjoying, right? Micron and Samsung, the profit margins are so high. They're in the 80 percentile range. And with this kind of contrast, the profit margins are not going to be as high. Also, the one problem is with communication, right? Like now that everybody is talking about this kind of long-term contracts, we want to know, we as investors want to know what kind of customers have signed with Micron or Hinex. Overnight, we saw that Micron has signed with Ford, which is great news. But how about Apple? How about NVIDIA? There will be a lot of communications going on going forward. [01:30:18] April Hong: Shuli, thank you so much. Bloomberg opinion columnist Shuli ran for us. We have more coming up. This is Bloomberg. Some corporate news this hour. Bloomberg's been told that peak demand for Amazon's latest $25 billion bond offering reached $62 billion. That's about half the orders it attracted for an offering back in March, a potential signal of investor fatigue around AI-linked debt sales. This latest deal brings Amazon's total bond issuance over the past year to more than $100 billion. SpaceX AI and Cursor reportedly plan to launch their first jointly developed AI model as soon as Wednesday. Tech news outlet The Information says the model is expected to process information quickly enough to compete with products from Anthropic and OpenAI. It also reports the company's pushback plans to launch the new model earlier this week in order to improve its efficiency. Now, when it comes to AI, of course, what we've been hearing reportedly that the Chinese are looking to restrict overseas access to their AI models. What that seems to be propelling is that bit of optimism for local AI models at a time where you have the likes of JP Morgan. They're upgrading the stock of Drupal, you're pairing some of the earlier double digit gains, I guess, but you are still looking at that bit of optimism, even for some of these PC names. I look at Lenovo and how that is among the stocks that are turning positive today, following on, of course, from yesterday, those steep, steep concerns about the memory names. Today, Samsung Electronics is lagging almost 4% down, so extension for the moment of yesterday's losses. But SK Hynix, those reports of the U.S. ADR being oversubscribed seem to be lifting some of their optimism on a day where it does look a bit choppy overall on Chinese stocks. You have the chip names, of course, that is climbing on the back of these developments out of China. Take a look at the banks at a time where we are looking at potentially this rotation away from some of these high-flying tech stocks, even hardware and the eight shares. We are looking at Bank of China, for example, that are up 3-plus percent on a day where, when it comes to Brent, it's really about what we've seen in Iran. That's it for The China Show. Insight with us, Linda Amin, is next. Stay with us, this is Bloomberg.