About this transcript: This is a full AI-generated transcript of US Accuses Alibaba, Baidu, BYD of Aiding Chinese Military — The China Show 6/9/2026 from Bloomberg Television, published June 9, 2026. The transcript contains 17,384 words with timestamps and was generated using Whisper AI.
"9 a.m. in Shanghai, Shenzhen, and here in Hong Kong, you're watching The China Show. I'm Yvonne Mann with Stephen Ingle. We're counting down to the open markets in greater China. Our top stories this morning, Asian stocks rebound, tracking gains on Wall Street, on easing tensions in the Middle..."
[00:00:00] Speaker 1: 9 a.m. in Shanghai, Shenzhen, and here in Hong Kong, you're watching The China Show. I'm Yvonne Mann with Stephen Ingle. We're counting down to the open markets in greater China. Our top stories this morning, Asian stocks rebound, tracking gains on Wall Street, on easing tensions in the Middle East, and the revival of the AI trade. OpenAI fouls confidentially for an IPO as it looks to join rivals tapping public markets to fund ambitious growth plans. Meanwhile, SpaceX's listing is said to be well oversubscribed. And the Pentagon accuses Alibaba, Baidu, and BYD of supporting the Chinese military, calling them threats to U.S. national security. All right. If you've been hiding under a rock, you missed yesterday. Maybe it's almost like nothing quite happened. We couldn't hide yesterday. We couldn't hide. And today, all it took was maybe just another 24 hours for things to bounce back here again. I think there's been news of obviously OpenAI and about that IPO. And then you have reports about Intel and Google chips and the like. That's
[00:01:15] Speaker 2: really kind of helping the whole AI trade once again. Yeah. And again, the tensions between Israel and Iran kind of coming down a little bit, obviously, after they fired a back and forth retaliatory strikes the day before. So again, cooler heads in the Middle East, cooler heads perhaps on the
[00:01:29] Speaker 1: markets as well. Yeah. Cooler heads in the markets for now. Whether this is just a technical, you know, healthy reset, as some have called it, or is there signs of, you know, more red flags to come is certainly one thing we're going to be debating about with all of our guests here this morning. And then you take a look at the data, right? It's not just the fundamentals of some of these stocks, but also when it comes to China. Those trade numbers that are coming through later on today. I mean, we're still going to see, right, this export engine quite strong because of AI.
[00:01:54] Speaker 2: You're also going to see, though, import booms because of the first four months of the year, we had double digit gains. Again, there's commodity price increases. So that has added to that. But also the AI component imports as China is really doubling down, tripling down on its AI ambitions and its domestic innovation, if you will. So there's going to be aberrations in these numbers. And we're going to talk them through in a little bit. The aberrations is because a year ago is the base effect. That's when the trade war was launched. And U.S. exports or exports to the U.S. from China dropped 35 percent. So there's going to be some aberrations there. Yeah. I mean, you're seeing
[00:02:31] Speaker 1: aberrations in the market as well, right? The fact that we saw one of the biggest drops since March when it came to Asian stocks. And now we're coming off that quite substantially here, particularly how the KOSPI and Taiwan coming online. So, I mean, obviously, you know, we're not recovering fully just yet, especially when it came to the KOSPI here. We saw losses as much as 8 percent for that benchmark. We're coming back with 3 percent gains right now in Seoul. Taipei is up about 1 percent as well. So it is, you know, better than yesterday, but certainly you're not quite, you know, there's a lot of lingering questions out there, but at least the chip space, right? You are seeing the likes of SK Hynix is rebounding some 6 percent. Samsung also close to 3 percent gains there. TSMC is joining in on that phrase. So more chip news, as we talked about here. And obviously, Tencent also is going around a fundraising as well. Yeah, that's right. So, I mean, again,
[00:03:17] Speaker 2: Asia falling off the springboard of the Nasdaq 100 was up 1.6 percent overnight. So that gave a good indication that Asia might bounce back. But we started to see some of those Asia markets pair those
[00:03:27] Speaker 1: losses in late in the session. Yeah. And where does that leave EMFX and what we're seeing here when it comes to the dollar, right? Because that really has been the dominant story here when it comes to this part of the world. And really, you know, the oil and winners and losers are really quite apparent here right now. You still continue to see that strength when it comes to the wands. So the dollar is softening just a bit here. Dollar yuen b has been pretty stable at 678 levels. We're still holding at 160 for dollar yen here right now. So not much movement really this morning during the Asia session. But overnight, there was that story about the Pentagon adding some Chinese companies to a list. This has been, there has been, there has been a list. Some have, some companies have been put back on this list. You know, it's a, we'll, we'll parse through kind of what we heard here. But the likes of Baba Baidu have been accused of, of aiding the Chinese military. And we did see some of those ADRs fall
[00:04:19] Speaker 2: overnight. Yeah. I mean, the who's who of the AI movement in China, also a pharmaceutical company, Wuxi Apptech, the chip makers, CXMT, Youngs of Memory. Tencent was added a year ago or so. So it's with BYD and Alibaba and Baidu added. And there's a lot of intrigue too, is the timing of this list, because it briefly appeared in February. Yeah. It was taken down really fast. Yeah. Of course, Trump was trying to get a high profile summit with Xi Jinping. Whether that is a coincidence or not, we don't know. But again, now a month after that Xi Trump summit in Beijing, it's back up. Yeah. All
[00:04:56] Speaker 1: right. Well, watch how the China tech plays fair there in the face of that, of course. New list. You take a look at what really has been underpinning this rebound. It really has been news about Open AI. They filed confidentially for an IPO and joining its rivals in a race to tap public markets to fund its growth plans. Now, a potential listing could come by the end of this year. Yes. So what does
[00:05:17] Speaker 2: this mean? What are we going to bring in? Bloomberg's U.S. deals team editor, Michael Haitha, joining us now. So there's the big question, Michael. What does this say? What does Open AI say about its plans? Because they filed a confidential IPO, but we are hearing sources and also a statement
[00:05:34] Speaker 3: from Open AI. Right. The race is on with Anthropic. They're both headed to an IPO. The confidential filing, the process of it, is just that you file with the SEC a draft which does not get released to the public. The SEC reviews it. There might be changes made in the draft. And then it flips publicly when all that information is disclosed and the IPO drive begins its sort of final push. The thing I think what's being said by Open AI about it was pretty short. It was a tweet, really. It just said that they've submitted their registration confidentially to the SEC. And they did it because it was going to leak anyway, they said. Right. One interesting thing in timing in there, while Bloomberg has reported later this year, Open AI is being very unspecific about the timing. It says very specifically, we have not decided on the timing yet. It may be a while because there are things we want to do that are likely easier as a private company. That sounds a little bit cryptic and inexact, and maybe that's intentional.
[00:06:38] Speaker 1: Okay. So it's good to kind of see through some of the cryptic messages there. What does it mean when it comes to the race with Anthropic there? Do you think there's enough investor interest for both of these IPOs?
[00:06:50] Speaker 3: That's a great question. They're both going to be, you know, multiple billions raised in their IPOs. But both have valuations in their last funding rounds approaching $1 trillion. That's a lot of money in anybody's book. The exact amount to be raised will be decided later, of course, and that'll be much later in the process, you know, perhaps two weeks or so before the actual listing itself. The appetite for AI seems to be pretty bottomless, as you reported, you know, after a market dip that it's already a bounce back now. That follows Anthropic filing last week or saying, excuse me, saying it filed confidentially last week. And, you know, opening eye today, keep in mind, SpaceX is in this mix too. SpaceX is very much an AI company now. And there seems to be a lot of interest. Don't forget that Google just raised $85 billion as well for its AI drive. So there's a lot going on. There's a lot of money flowing into it. I, you know, there seems to be a lot of gas pedal and not a whole lot of brake on it.
[00:08:02] Speaker 2: Well, Michael, let me ask you about that, because, of course, there were a lot of predictions. Maybe the bubble had burst on Friday with the bloodbath on the markets, but it's pretty short lived with the market kind of, the market kind of bouncing back. How much will those, I guess, storm clouds on the horizon give investors and these, you know, potential issuances room for pause?
[00:08:24] Speaker 3: I think there's always, you know, going to be room for pause and some doubt. But the overall direction seems to be very positive and very much in the direction that the companies want to go. So I think with Anthropic versus OpenAI in particular, there's going to be the question of who goes first and what advantages who goes first and who goes second gives each one of those companies. The first one out of the box is going to have to, one, disclose all its financials to the competitor ahead of time. They will also perhaps get first dibs on the enthusiasm level of investors. So there's a pool of investors looking to invest in either company. The first one out of the box is going to be the one that you're going to focus on most, and the second one will inevitably get a little bit less attention. So whether who, you know, whether who filed a week apart confidentially makes a difference or not, the actual process ahead doesn't really matter. Anyone could go a week before the other, two weeks before the other, or months or whatever. It's the process we'll have to decide as we go.
[00:09:32] Speaker 1: Michael, great to have you. Michael Haitha there, our U.S. Deals Team Editor. Let's bring in George Estatopoulos now, Portfolio Manager at Fidelity International, to talk us through, I mean, these big IPOs that are happening in the U.S. How do you think this is going to really impact this part of the world?
[00:09:48] Speaker 4: How is it going to impact this part of the world? First of all, we are in a once-in-a-lifetime CAPEX cycle, AI CAPEX cycle, and that's always very, very important to sort of keep in mind. And as a result, you know, this has led to global growth accelerating. The U.S. growth is strong, nominal growth is strong, and it is above trend. What we have seen in the past few days, this volatility that we have seen, to some extent, it's a hell, you know, you mentioned, is this a healthy reset? This is the, you know, we're on that camp. This has been a healthy reset, and when it comes to the size of these IPOs, I'm probably going to mention some things that are, it's not original sort of views, but it's important to remind these views. You know, issuance is large, but when it comes to looking at these issuance from the lens of, look at the market cap of the U.S. equity market, it is not that big. If you look at it as a percentage of GDP, it's not that big. And we have, if anything, the anomaly perhaps has been what we have seen in the past few years, where IP emissions and generally speaking supply has not been that high. If anything, now we're going back to what the average has been of the past 15, 20 years. And to me, the interesting thing here is that if you take a step back, what is happening is that rates are high. Rates are no longer zero interest rates and negative interest rates, and this is having the ramification we're seeing now. The past 5, 10 years, at Fidelity, every year, we've been looking at the free float in public equity markets. It's been coming lower and lower and lower and lower, and we've always been wondering, where is this going to lead to? But now we're seeing a reversal of that. And why is that happening? Again, rates are up. The big debt financing days might not be what it used to be, and that's perhaps also why we're seeing what's going on in the private equity market, the private credit market. But the IPO issuance is this is back to the normal days. And the other sort of element here is also that this is also going to unlock some sort of locked up money, which can also sort of create some upside demand. And, again, if you look at, you know, from a demand supply dynamics, yes, buybacks in the U.S. have come down quite a bit. The past 10, you know, 5, 10 years, U.S. has been the big buyback market in the world. Buyback yield has come down. But still, if you combine buybacks and M&A, it still outstrips supply. What does this all mean for Asian markets? Because, you know, big circle back there. But I think it's important to set the sense of the background, Asia, North Asia, Taiwan, Korea and parts of China as well. They sit at the heart of the global AI capex cycle. Buybacks, what used to happen in the U.S., all that cash flow now is going to capex. And all that capex is coming to this part of the world. So strong tailwinds is all I see. And, if anything, healthy reset and probably a nice opportunity for one school who didn't have exposure in that part of the market to actually be buying some of that.
[00:12:39] Speaker 2: Is there a further reset? One day of sell-off in the U.S. doesn't, by my characterization, count as a reset. It's maybe some profit-taking and just kind of a reset of outlook. But, again, it's not a major correction.
[00:12:54] Speaker 4: Not a major correction. Again, you look at Korean equities, there's still a massive amount year-to-date. And that correction is just a little blip. If you take a long-term chart, it barely becomes obvious. Could we see more further correction? Yes. The question is, what do you do when there is a correction? Do you panic and sell, or do you see that as an opportunity to buy? And, from our perspective, this is, again, it's a healthy reset. Could we see a further reset? Sure. Again, that becomes an even healthier reset as a result. And then, you know, this is, again, this is a once-in-a-lifetime capex cycle. And, as a result, we still think that this has legs.
[00:13:27] Speaker 1: Have you been at any exposure?
[00:13:30] Speaker 4: I can't comment about specific traits, but let's put it this way. Yesterday, potentially, it might have been a good day to add to some of the names, some of the exposures in the AI capex cycle.
[00:13:39] Speaker 1: You mentioned about, you know, we're launching out of this whole ZERP, NERP sort of era here right now. And you mentioned, you know, what this could mean was this new era for financials.
[00:13:49] Speaker 4: Yes. Yeah.
[00:13:50] Speaker 1: Talk me through everything that's non-AI at the moment, because I think we talk about it too much.
[00:13:54] Speaker 4: Yeah.
[00:13:54] Speaker 1: But why do you think financials is now the truth?
[00:13:56] Speaker 4: Yeah. It's important to just not focus on AI, because there's other interesting things happening in the world. And, again, financials is one of them. So, era of financials, what does that mean? What I would typically refer to as, again, all stars are aligned when it comes to financials. Some structural, some cyclical. What are the structural? Again, long are the days of ZERP and NERP. Cash rates are higher than what they were. And looking at what's going on in the U.S. Jobs market, for instance, you know, a big, nice surprise. The market's sort of repricing higher when it comes to rate. You know, no more rate cuts, not potentially rate hikes. I would argue that's a bit of a healthy situation. But also, it's great for banks. Yeah. The other thing, deregulation. The U.S. has had its phase of deregulation for some time. Now, with one big, beautiful bill, a bit sort of further deregulation. And also, you could argue that the wars is also more in the deregulation camp. So, benefits the U.S. And if you look at Europe, Europe, for the past 10, 15 years, has been in a massive regulation sort of phase. That's now reversed. And if anything, if you look at Europe, for instance, we've seen a big increase in buybacks and dividends paid out. Even in my home country, Greece, until a year ago, the banks were not allowed to pay dividends and buybacks. Now they can. So, these are the two structural reasons. The cyclical reasons are curves are starting at different speeds. And different countries are not exactly sort of working kind of in tandem. But generally speaking, sort of steeper curves. Look at Japan, for instance. You know, steeper curves. And the lending cycle, again, at different speeds, is improving. You know, we've said the past 10 years, since GFC, corporates have delivered, households have delivered. It's all the leverage has gone into governments, which means that now, potentially, we could see households starting to lever up again. We could see corporates starting to lever up again. This would be a boost for financials. And the corporates are already levering. Not so much the households, but the corporates are levering. And one last thing. Friday, Monday, what was the best performing sector? I think financials. Banks. So, also, giving you some nice diversification benefits.
[00:15:53] Speaker 1: Yeah. All right, George, hold off that. We'll have more and some closing remarks from George there. George Estatopoulos, portfolio manager at Fidelity. He's sticking around. And we're coming down the open of trade in Shanghai, Shenzhen, and Hong Kong. Futures looking like this here right now at a time when we are seeing quite a bit of bounce back across risk assets here today. Futures are slightly higher here this morning. This is The China Show. Futures are pretty flat here this morning, though we're expecting some sort of maybe some headwinds here when it came to this, of course, blacklist from the Pentagon here on some of the big tech firms in China. So, that might limit what sort of upside we could see in China today, Steve.
[00:16:43] Speaker 2: Yeah, that's right. I mean, the China story has been sort of taking a back seat. Not really because of a lack of relevance, but because of what's happening with the U.S. markets, what's happening in the Middle East. But so much of the global economy goes through China right now. And let's bring back George Estatopoulos, Portfolio Manager at Fidelity International. In the break, we were talking about how China plays in all this. We're getting trade numbers. They've been sort of volatile because of the trade war a year ago. So, on the base effects level, it's going to be a bit distorted as well. But China's also importing a lot more to fuel their own AI ambitions. So, what's your big take on China right now?
[00:17:23] Speaker 4: I mean, China, if we go back to before March, I think, but until then, we were seeing some sort of a reflation story in China. You were looking at the CPI numbers, and they were getting stronger and stronger and stronger. Even core CPI was getting stronger. And then you were also looking at PPI. And this is, again, before March. PPI was also starting to improve, and industrial profitability was starting to improve. So, we were seeing some sort of positive signs. Of course, then we had March. China, of course, is not an oil export. It's an oil importer. And that has had somewhat of a ramification because China has reduced to some extent their import, and that has had an impact in the domestic economy because prices have gone up. But at the same time, China, if you look at China for the past 10 years, strategically, China has really managed to essentially diversify its energy resources. I was actually here in March, the first week of March, when all the screens were red. Korea was down 10%. And we're discussing about China. And will China suffer? Because China gets 90% of its oil, or gets 90% of Iran's exports, right? China has actually been quite resilient because, again, China has been the strategic investor, diversifying their energy resources. So, when it comes to exports and imports, potentially, what we might be seeing is a lot of other countries, a lot of other governments who don't produce oil, and as a result, they have energy dependence, they might be looking at China, and they're saying, we need to do what China has done. How do we do that? We need to build green energy. We need to build green energy. Who can offer that know-how, that IP? China. So, interestingly, on the back of this, because one thing's going to start getting a bit more smooth, maybe China finds a new, a new additional export growth channel, that of exporting know-how, energy resilience know-how in the green energy sector, so in that sort of supply chain. So, Chinese exports have been very, very strong, and they might find an additional sort of channel there.
[00:19:15] Speaker 1: And as we were talking about, given a time when inflation is picking up, you know, you need that sort of diversification. You might not get that hedge in the bond market anymore, even gold prices. Are real assets trying to look more attractive?
[00:19:28] Speaker 4: Yeah, I mean, will we have a scenario where inflation continues to be sort of sticky and rates sort of, we don't see sort of those cuts in the U.S. and other places? If anything, in other places, we started seeing hikes. Yeah. We started seeing hikes in places like Australia. We started seeing hikes in some of the not-haves in emerging market space, Indonesia, et cetera. And even the ECBs now is sort of, we're seeing some pricing for hikes. Bonds have had relatively poor returns the past four or five years as inflation has gone up and as cash rates have sort of normalized. We could see some additional years of poor bond returns as a result, which means from a portfolio construction perspective, you know, I'm in the multi-asset. I'm a multi-asset investor. We always need to look at sort of across the pond. Yeah. Fixed income. We have had a very low exposure to fixed income in the past five years. Are we increasing that exposure? Most likely not. What are we doing instead? Alternatives, commodities, real assets. That's where the portfolio has shifted more towards sort of in recent years. Whether that is the commodities, copper, uranium, or also energy equities that are more linked to, you know, green energy, for instance, which again, as I mentioned before, China might have actually a know-how. That's another interesting area sort of to be looking at.
[00:20:39] Speaker 2: How do you look at the China markets right now? Because there's been calls that it needs to be a broadening because it's narrowed right now. I think 5% of the stocks right now driving 40% of volume in China. So how do you look at China right now? Talking about China, the U.S. I think that story is everywhere. Yeah, yeah, yeah.
[00:20:55] Speaker 4: That story is everywhere pretty much. If anything, emerging markets have become a lot more concentrated, even more concentrated than the U.S. these days. I think that's kind of the interesting story. But, you know, specifically on China, we've had more of a preference for the Asia's market and especially a bit of a focus in the mid-cap space, you know, CSI 500 or Chinext, which are meant to be, at least, you know, the government policymakers are pushing towards, you know, for more flow towards that part of the market when it comes to pension funds, wealth management, et cetera. And, you know, if, this is an if, it's not happening right now, but this is an if, but if we end up seeing Chinese consumption rebounding, what do we need to see? You know, we need to see, obviously, you know, the oil prices sort of come down to some extent and we also need to see the property market, some more green shoots from the property market. We're starting to see some early signs of that. There's been some false sort of signals in the past. Let's wait and see how this plays out. But essentially, if we start to see these, the mid-cap space is a little more, you know, the revenue, it's domestic revenue generation. They could benefit.
[00:21:52] Speaker 1: George, it's great to have you. George Estatopoulos there, portfolio manager at Fidelity International. We were talking about markets and really this pre-market is looking pretty lackluster here today against this backdrop of, you know, things looking a little bit better and risk assets in North Asia in particular. Hang Seng pre-market, there you go. We're down about four tenths of one percent. We'll watch how some of these China tech plays fare. You know, it seems like geopolitics are really kind of reemerging for that trade as well. We've got futures still, though, a tenth of a percent higher. This is Bloomberg. All right. It looks like Greater China not really participating in this rebound here this morning across Asia. You are seeing when it comes to the Hang Seng pre-market, we're down about four tenths of one percent. HS tech is on offer. You take a look at some of these companies that were added or re-added back to this Pentagon blacklist. You are seeing some downside when it comes to Baba. Baidu doing a little bit better, but Wuxi App Tech also close to two percent losses. We've got The Open coming up next. This is Bloomberg.
[00:23:18] Speaker 2: And welcome back. You are, of course, watching The China Show. We're counting down to the open of markets. As you see, in about 42 seconds, the markets in China and in Hong Kong are pointing slightly lower here in Hong Kong. But it's a much less turbulent day to start the day here in Asia today as opposed to yesterday, of course, on the back of the big sell-off in Wall Street. On Friday, Wall Street sort of stabilized with the Nasdaq 100 up 1.6 percent. The S&P 500 also eked out a slight gain of about three tenths of one percent.
[00:23:50] Speaker 1: Yeah, you know, the chaos yesterday, right? They were talking about in Taiwan where some of the broker sites were down and then someone in Korea kind of did something wrong with some of the fat fingers in the ETS. The circuit breaker was fired. Yeah, so there was a lot of that yesterday. Today, as Steve mentioned, right, it's almost like the rain has cleared in Hong Kong as well. Things are stabilizing on the weather front. The temperature across markets has also cooled down a bit here. So at least you are seeing some upside gains when it comes to CSI 300 here today, really kind of following some of the tailwinds that we're seeing across Asia. So Korea, Taiwan has rebounded. The China next to Shenzhen gauge obviously is doing a bit better given some of the AI trades there. So we are seeing the China is up more than one percent. And no surprise, it's the once again, the darlings of the AI trade. Capricorn Tech is up two percent. CATL is also up close to one percent as well. So so new energy, you take a lot, you know, AI, pure plays, all that. Semis are doing OK domestically. Hong Kong could be a different picture here. You take a look at Hang Seng is doing. We're down about six tenths of one percent. HS Tech seems to be dragging a little bit about that. Baidu is the exception, which is interesting because we've seen some pretty pronounced moves, the downside of late. But there was this Pentagon list that has accused Alibaba, Baidu of aiding the Chinese military. We've seen this list before a few months ago. Some of them were taken out. Now it seems like they've been back on. So there's a bit of kind of, you know, it's interesting take from our Bloomberg economics team saying that, you know, it's it's bad, but that it's not as bad as sanctions. So that's the way to kind of look at it.
[00:25:22] Speaker 2: Yeah, there's no immediate legal ramifications of being added to this, what, 1260 H list, a blacklist of the Pentagon. But it could be a warning as well to investors that further retaliatory action or any kind of punitive action on national security grounds could be in the pipeline. But again, it's a broadening of this list, including pharmaceutical company like Wuxi Aptek, which has strong connections with Eli Lilly as supplier to them, but also the big chip company, CXMT. And adding Alibaba, Baidu and BYD to the addition of Tencent.
[00:25:56] Speaker 1: Those chip makers, both of which are big IPOs coming up here in China as well. So it'll be interesting to see how this all plays out. Other movers that we're checking across these markets are the Apple suppliers. So we're checking the Worldwide Developers Conference in the U.S. And Apple, of course, debuting that AI agent, right, Siri AI and how it really stacks up in the AI era. Apple, after hours, was down. The stock was also down. So there was a bit of disappointment there. But at least some of these suppliers are doing, relatively speaking, a little bit better. Autos is certainly one thing to watch as well, because we saw some data that came through yesterday here when it came to car sales slumping. So it did drive the PCA, this is the Passenger Car Association, to deepen their forecast when it comes to those cuts. So it's a mixed picture, but BYD and NIO are actually doing OK in the face of it. Li Auto, though, is down some 1%. Let's talk a little bit more about market breadth, right, because we talk about concentration risk in Taiwan. We talk about concentration risk in Korea. I hope my producers have this chart, right, just to show you're seeing some signs of that sort of concentration risk in China, right? When you take a look at what some of these Shanghai, some of the Shenzhen benchmarks are showing you, shares of companies in those benchmarks that are trading above or at 52-week highs are actually now slipping. So from 10% at the start of the year, you see that in the top frame there, to now about 8.5% in mid-May, at a time when you're actually seeing consistent gains. So it shows that maybe there are signs of strain, that maybe participation is weakening there, so breadth seems to be narrowing in this market. Let's bring in our Asia Equities reporter, Charlotte Yang, with more on this as well. So we still have to deal with some concentration risk in China as well.
[00:27:37] Speaker 5: Yeah, so my colleague April had this really cool piece looking at the technical indicators that show you how actually there are signs of strain emerging for the Chinese onshore market. You know, like you said, a lot of people like to talk about Korea and Taiwan when we think about concentrations, but if you're actually looking at China onshore, so I think top 10% of stocks have actually contributed to nearly 60% of total turnover in May. And also if you look at other indicators such as what they call like the advanced decline lines, which is a measure of how many stocks, more stocks are rising or falling, that is actually also being declined. And we're also seeing less stocks now that are trading above their 200-day moving average. That also shows you how, you know, despite the index level, we're doing fine, doing better than regional peers. It's actually less support for the market.
[00:28:25] Speaker 2: You know, when I mentioned this story to our last guest, George, he said, are you talking about the U.S.? Are you talking about China?
[00:28:31] Speaker 1: Yeah, it's about the same, really.
[00:28:33] Speaker 2: Right. The 5% of the companies are basically contributing about, what, 40% of the trading volume. What should we be looking at as far as an indication that the broadening is starting to happen?
[00:28:45] Speaker 5: Yeah, that's a very good point. And also actually, just at one of the main group briefing last week, and they talk about, the person was talking about, you know, how he sees this extreme concentration in Asia now running out. And the reason for that is because they're seeing earnings running out. So it's no longer, I think, part of the reason why we're seeing such concentration of moves in these AR hardwares is because they have the strongest earnings upgrades. But now we're seeing some of those earnings upgrades spreading to, you know, the industrial sector and also new energy. So I think if we continue to see more of those earnings upgrades start spreading out to more sectors, I think the concentration will also ease.
[00:29:22] Speaker 2: All right. That was our Asia equities reporter, Charlotte Yang. Thanks so much. Let's pivot as I pivot in my chair here over to the other story. We've been talking about China's car sales fell 22.1% in May, prompting the China Passenger Car Association, or PCA, to downgrade its annual sales outlook. They now expect full-year passenger vehicle sales to drop 11% compared with its earlier projection of a 1% decline. Bloomberg's Asia Aviation and Transport reporter, Danny Lee, joins us now. So the further deterioration, is this a, you know, emblem or a symptom of the low household confidence and low spending power or just waiting for the knife to continue to fall because of the price war?
[00:30:03] Speaker 6: Well, I think this is also a continuation of the government withdrawing support for the industry through the previous subsidies and tax breaks that they have rolled out and they cut at the end of last year. So we're continuing to see this deepening malaise in the car industry. That 22% fall was the single biggest fall since roughly April 2022. That also hurts EV sales down 7.5% year on year. So it's a tough time for the car industry. And when you looked at the stocks, it's a mixed picture out there. You still see the likes of BYD, who is struggling domestically, doing really well overseas, but they are in a stronger position than some of the other players, like Lee Auto, which had a difficult sales period. They announced their May sales. They, you know, slip back furthermore and you see some of these car makers looking to the future to bolster their earnings and sales, and that might not happen. And so with this cut in the annual target, it does show the vulnerability for some of those smaller or weaker car players out there. So, yeah, definitely a mixed picture.
[00:31:08] Speaker 1: How much do overseas exports help now?
[00:31:12] Speaker 6: For BYD, significant numbers. We're talking potentially 40, 50% of their monthly sales now being drawn from overseas markets. And they're doing a phenomenal job because higher margins. They've got such momentum because of the higher fuel price overseas. And so for BYD, they've laid the groundwork and they're going to reap the gains from that. And so that momentum for them will continue for many months. We see that already in parts of Europe and elsewhere and in Latin America. So if you are some of the smaller players who do not have that overseas exposure, then you're going to be in a lot of trouble domestically because the guidance from the PCA is saying that that summer low we have seen continuously, that's going to deepen. And therefore, the kind of growth or return to growth will only happen in the last quarter. So it's going to be a difficult number of months to come.
[00:32:01] Speaker 1: All right, Danny. Thank you, Danny Lee there, Asia Aviation and Transport Reporter. Coming up, we're going to talk a little bit more about Apple's Worldwide Developer Conference in California as the company sets the stage for its AI reboot. We're going to get the take from IDC. Coming up, this is Bloomberg.
[00:32:23] Speaker 7: At Apple, creating the best products in the world to deliver experiences that enrich people's lives has always been our North Star. It's been the honor of a lifetime to help advance that mission with teams whose creativity, care and conviction continue to make a lasting difference in people's lives.
[00:32:56] Speaker 1: Apple CEO Tim Cook there delivering the closing remarks of the company's Worldwide Developers Conference there in Cupertino. We're watching some of these Apple suppliers as well, which actually are doing okay in the face, of course, with Apple shares that were actually lower. There was a bit of a disappointment, I guess, from some of the investors out there about Siri AI and really their AI agent in this whole kind of race. I mean, Apple has largely been seen as really lagging in this whole race so far.
[00:33:20] Speaker 2: You know, Apple still has to overcome investor skepticism about its AI strategy. So, Apple did introduce a new generation of products at its annual Worldwide Developer Conference in Cupertino, including an overhauled assistant called Siri AI to compete with its rivals. Bloomberg's Ed Ludlow was at the event and gave us the highlights.
[00:33:40] Speaker 8: Apple WWDC represented the biggest overhaul of Siri the company has ever done. It is Siri AI. It comes in the form of a standalone app. It comes with a chatbot interface. It is also interoperable. Siri AI will work across iOS with iPhone, macOS with Mac, iPadOS with iPad. You get the idea. The whole point is that you can start a project, something meaningfully useful on one device and carry it over into another. It takes Siri from a place where it's a feature. It's a single prompt that elicits a single result to a multi-step task, something much more of use. There's also visual intelligence where now, through any given device, Siri can help you see through the camera on that device, much better functionality around assessing and analyzing image-based files. The bigger picture is that Apple didn't announce anything that's some kind of breakthrough feature. A lot of this, they've been talking about for a number of years, but not yet released. Speaking of release, Siri AI goes into beta for developers today, but it won't be in a wider beta release in the U.S. until later this year, English language only at first. If you're in the European Union, that doesn't come until March. In China, there's no timeline because of the regulatory hurdles that Apple is facing. But one more thing, this was Tim Cook's 15th and final WWDC as chief executive. On September 1st, he hands the reins over to John Ternus, who takes on the CEO role, but right at the beginning of the presentation, before the pre-prepared, pre-recorded keynote even started, Tim Cook came onto stage to a standing applause and appreciation, basically, of the work that he's done. The main takeaway that Bloomberg has from this event is that Siri is actually real and it's now doing things that are useful, even if those things were previously advertised. This is Ed Ludlow for Bloomberg News in Cupertino.
[00:35:34] Speaker 1: Well, our next guest was also at Apple's WWDC. Joining us now from Cupertino is Nabila Popal, senior research director at IDC. Nabila, it's great to have you. Yeah, so, I mean, they finally debuted the Siri AI. What's your initial take so far and how has it, you know, in any way challenge the initials, the big ones there, which is OpenAI as well as Anthropic?
[00:36:00] Speaker 9: Hi, thank you for having me. Absolutely. So, there was, you know, excitement going into the event. There were rumors. And I think my key takeaway is that Apple delivered on what we have been waiting for, which was the, you know, Siri 2.0. I know they're calling it Siri AI, but it is finally the real personal assistant that consumers and, you know, we've been looking for Siri to get to that level, right? And what really stood out to me and how I think Apple is going to differentiate this is, one, the fact that it's going to have access to all personal contacts, right? So, that's what is really going to give it the upper edge. Not only are you going to be able to use the model like we are used to, right, in other AI models, getting certain information, carrying forward conversations, using visual intelligence. So, all of that is there in some of the other AI models, but what has, what is not is your personal history, your messages with your family or your group chats, being able to pull across all those different apps, be it email, be it messages, and carry forward a, you know, single conversation and then have it do action, right? So, the example, let's say, you know, where is the, where is the location of the next meter shower and then what was the, where was the, you know, like when is it coming, what are the dates, and then you ask it to take it further where, you know, what did my sister recommend, what was the location she set to go to, right? And then, okay, can you now send a message to the group chat, inviting everybody to a pre-shower party? So, there's so many different things that were, that I think it takes it to the next level. And then, just one more thing, I think what gives it the upper edge is Apple's core message around privacy and security, which they really did emphasize, right? This is not Gemini's models, this is, yes, leveraging Gemini technology and partnership, but this is all going to be secure on device or on private cloud compute using Apple's foundational models. So, those were the two take-home messages for me around Siri.
[00:38:07] Speaker 2: Well, Nabila, this is Stephen Engel here. How much of a key pivotal moment is this for Apple? We're having, of course, that transition period with Tim Cook stepping aside in the boardroom, but also, as we heard from Ed Ludlow there, who was also at the conference, is saying there was no real breakthrough feature that was announced. Yes, this is an advancement of Siri AI. Did they do enough?
[00:38:32] Speaker 9: You know, I'm really glad you brought this up. I agree, right? And, you know, while I agree that there was no revolutionary breakthrough feature that we haven't seen before across, you know, other models, but what is breakthrough is the fact that it's, let's remember the Apple installed base, there are massive, you know, there's millions of users using iPhone and iPhone only, right? Not everyone has been in the tech space or has used other devices. Those are the consumers that are going to be revolutionized. They're going to get these features that they didn't have access to before and they're going to find them very useful and it will enhance their life. Yes, again, technologically, it might not have been groundbreaking, but it will have a significant impact to the user experience, which is, again, central to Apple's story, right? How can we, it's not about shiny names or different features and, you know, agentic this and agentic that, but really how can we make the user experience better and how can we enhance the user's life and make it easier? And I think that's what some of the features that we will find resonate really well with iOS users, so it will impact the installed base, especially users who are sitting on four-year-old iPhones given the economic climate inflationary pressures that we're seeing, they might have considered, right, not upgrading this year. Those are the devices that won't have, you know, are not hardware ready to have Apple intelligence or the upgraded Siri, and in order to get that, this might just push them over the edge. So absolutely, this was a, this is a pivotal year for Apple to catch up to its AI strategy, and I think that they have and they will deliver.
[00:40:20] Speaker 1: Yeah, it's similar, I guess, to what you see with the likes of Tencent and Baba, right, where they have these massive user bases and this whole ecosystem, which they can incorporate AI into Nabila. What does this mean for the upgrade cycle? Do you think this, what we're seeing with Siri, is enough to drive a pretty big upgrade cycle for Apple?
[00:40:41] Speaker 9: So, you know, thank you for bringing that up. And that's exactly what I meant, right, when I said that the older, so the Apple intelligence and essentially all the features that were announced today will be available to... You know, from 16, sorry, 15 Pro onwards, right, but it won't be available for users prior to that device, so iPhone 14 users will not have access to that, so it's really all of those users that will be inclined to upgrade, so it's essentially, you know, going to help carry forward the momentum, the strong momentum that Apple has built last year, right? So instead of dropping that to slowing down, it will help enhance and take that forward, which is very important, especially even that the overall smartphone market is going to see a large decline and face challenges. So if Apple is able to continue this momentum, they will see share gain, you know, no doubt, like significant share gain this year because of that.
[00:41:43] Speaker 2: Nabila, thanks so much for your insights after that conference participation. Senior Research Director at IDC and Cupertino. You can rewatch that on the Bloomberg Video Hub. Subscribers can explore live streaming news and interviews, all our Bloomberg TV shows, documentaries, reporter analysis, and more. Check out Bloomberg.com forward slash videos. This is Bloomberg. And welcome back. You are, of course, watching The China Show, and here are some of the top corporate stories we are following. Tencent is said to be looking to raise around $3 billion in a dual currency bond offering that could be priced as early as Tuesday. Sources say the company has secured regulatory approval to issue as much as $4.5 billion in offshore debt. If successfully priced, the deal would be Tencent's first dollar bond issuance since 2021 and its second ever DimSom bond sale. Now, a new report from Bain suggests global buyout deal value fell to $20 billion in the first quarter as fewer large deals were completed. Valuations of software companies fell about 8% in the first quarter. Bain says private equity firms need to adjust to the AI threat by figuring out how to protect existing investments. And Intel shares closed higher after reports that Google will rely on it for more than 3 million specialized AI chips in 2028. According to the information, Google will tap Intel to manufacture some of the TPUs after months of testing the chipmaker's technology. This, as TSMC struggles to keep up with demand for its manufacturing capacity.
[00:43:36] Speaker 1: All right, we're checking markets here right now and where we are in this whole tech sort of AI play here. When you take a look at some of these big ones here in Korea, so this rebound, not exactly lifting everything here. When you talk about LG Electronics, some of the robotic names, Naver, Doosan Robotics, these are some of the ones that were also dining and whining with Jensen Huang in Korea as well, are actually still seeing double-digit losses here. And we are seeing the Cossack, though, actually recovering quite a bit there. But there again, you take a look at what else is moving when it comes to some of the Shenzhen movers as well. Optical stocks certainly is still doing OK. So there are still parts of the whole China AI plays that are still seeing quite a bit of upside here today. So the likes of EptoLink, for example, is up close to 7. And we're watching, of course, the AI data stocks in China as well. So we've talked about not just, you know, the optical side of things, but data after the government did come up with some sort of development plan. So you are seeing most of these are higher here this morning. We're still tracking, of course, some of those names that were put and re-put on this Pentagon list. Wuxi Aptech, we're still watching, of course, that stock in particular here after was included into that list here. We're down some 5% right now. We actually saw when it comes to BABA when it came to some of these other companies. We're also falling in the face of that news here. So certainly continue to see some, I guess, worries about what it means when it comes to being on this Pentagon list. The dashboard is looking like this here. You are actually seeing when it comes to onshore markets doing a little bit better than Hang Seng here right now. Hong Kong is down some half of 1%. But you are seeing when it comes to the eight shares also seeing some marginal declines here. Chinax is where things stand out. So Shenzhen is still doing very well. We're up about 1% or so, Steve. What else are you watching out for?
[00:45:27] Speaker 2: Well, coming up in the next hour, we'll be talking FX with Bank of America's Global Research's Ardash Sinha and why they're revising their yen view to neutral from bearish. Plus, we'll be live from Invest Malaysia in Kuala Lumpur with Bursa. Malaysia's CEO on the country's growing IPO pipeline. Diversified coverage across the region, Yvonne, today. Obviously, a much different day than yesterday when we were talking at this hour about the losses across the board. But a little bit of a stabilization right now. As we look at Lu Zhao Zui in Shanghai, we'll be right back with the next hour of The China Show.
[00:46:04] Speaker 1: Welcome back to The China Show. A look at the CSI 300 a half hour into the session. And, yeah, you're seeing a rebound here today. We're up about half of 1%. MSCI China also doing a little bit better. Mind you, though, the gains that we're seeing maybe in greater China might not be as great as what we're seeing in the likes of Kospi, likes in Taiwan here. So this unwind all the fears about that looks like, yeah, it took only 24 hours for us to rebound and get back to where things are. Maybe business as usual. Maybe, Steve?
[00:46:52] Speaker 2: I'm not willing to put my neck on the line to say, I think, as we heard from one of the guests earlier this morning, yeah, there could be more volatility on the line. But it was a bit of a reset. And now we're seeing, you know, just the expectation change just slightly.
[00:47:07] Speaker 1: Yeah. You know, you had news about open AI that helped in Lyft to come on overall an AI sentiment. Some news about Intel. And then, of course, obviously, there's been some fundraising and Tencent. So there has been some incremental news to help. I think the Iran and Israel situation has also come down a bit in terms of the temperature. So that is also lifting some boats here this morning as well and really putting a cap on oil prices. So that actually helps. There you go. Kospi, we're climbing back about 3.5 percent or more. Mind you, it's not completely making up for all the losses yesterday. So you're still seeing a decent gain, but not really completely fully recovering here. Taipei is also close to 2 percent gains here right now. The EMFX side, I think, certainly has been the pressure point, the pain point. Obviously, Jakarta, one of the worst performing, if not the worst reporting market there. We are also there seeing a little bit more upside when it comes to the JCI there as well. The Rupiah also has been stabilizing just a bit here. We're strengthening just a bit around 18,136. And that really gives the dollar rally a bit of pause here as well. When you take a little bit of what's been going on, the Korean won, that's also recovering a bit here. Dollar-yen, we're still above that 160 level, though. So certainly a lot to talk about here, of course, ahead of that BOJ decision. That's one more. Let's bring in Anthony Stevens, our markets producer. Yeah, everyone's kind of figuring out, right? Was this supposed to be the beginning of that big correction or was it just a blip?
[00:48:29] Speaker 10: We're seeing more signs that this was a risk management week, right? We have the U.S. CPI anyway on Wednesday. You know, we had the risk unwind yesterday. And a lot of the technical indicators around that spoke to a risk unwind event. You saw crash wall spiking, futures volatility and futures volumes increased. Cash volumes didn't do that, right? And so you saw people putting hedges in place and trimming the stuff that they're the most speculative, that they understood the least. And then you had policymakers, you know, from a positive perspective, policymakers jumping into the breach very early. So you had the Korean policymakers saying that the market is still undervalued. The Indonesians came out and clarified their export control. So Asian policymakers were very proactive. But what you're seeing people do in the recovery is buy the stuff that makes sense, not the most speculative stuff. And that is capping the nature of this rally.
[00:49:23] Speaker 2: So let's pivot that then to China. How does it fit into the AI narrative right now? We're just seeing as well, like, for example, PCB, resin stocks gaining on a CCTV report of price surges. But again, how do you read how China is playing into the AI trend?
[00:49:39] Speaker 10: So yesterday, China was a little bit of a safe haven, right? Like you had the HSI, you know, less than a percent down, but Chinex did get hurt. So what's happening today is a reassessment of that Chinex trade. What within that trade has government support and what is pure speculation, right? And the government support is very clearly behind the data center build out. And you're seeing the optical names do really well. But the most speculative stuff around physical AI, even on the pure play AI software names in Hong Kong, Jaipu and Minimax, they're struggling. So the amount of risk people can add into the U.S. CPI and without clear government catalysts is very muted at the moment.
[00:50:19] Speaker 1: Anthony, thank you, Anthony Stevens there, our Bloomberg Markets reporter. We're checking when it comes to, of course, FX. And it seems like the dollar at least has stabilized a little bit during the Asia session here today. We talk about a little bit of more steadiness when it comes to EMFX side of things. Let's bring in Adar Singh, head of global G10 FX strategy at B of A Global Research. Yeah, we missed you here in Hong Kong, Adar Singh. It's good to see you back in the region. If I'm trying to deal with this new regime of higher rates, what's the best way to really express that? Is it still remaining in the dollar right now to go along?
[00:50:50] Speaker 11: Yeah, I mean, look, the trades would be like to be paid front end rates in the U.S. And if front end U.S. rates are going up, the dollar should probably strengthen. I think the big issue for the dollar right now is ultimately the DXY or Eurodollar. We're still within that range we've been in for the past one year, sort of 114 to 120 for Eurodollar.
[00:51:07] Speaker 1: Even with the hikes. Exactly right.
[00:51:09] Speaker 11: And I think the question for clients is whenever you get closer to that 114 level, as we are now, you see a bit of reluctance to kind of pile into the trade. That said, you know, our forecast is 114 for the second quarter. I do think if we get to 114 and break through it, there's probably a bit more downside in terms of Euro going weaker versus the U.S. dollar. And that's the trade we've recommended as well.
[00:51:28] Speaker 2: So here in this part of the world, obviously, a lot of the currencies have been under fire. I mean, the Korean officials over the weekend were saying that they're going to be unveiling a number of different measures to combat speculation. There's been jawboning there. There's been jawboning elsewhere. Hasn't necessarily worked. I can then pivot to Japan as well. We're at 160 to the dollar right now. At what point does jawboning not work and that intervention is going to be the key at 160 for the yen?
[00:51:56] Speaker 11: So if you think about Korea and Japan, what's the similarity between these two countries? Basically, we're seeing very large structural outflows from both Japan and Korea and primarily from the household sector, the retail sector. And that's part of the reason why policy intervention in both countries, although probably a bit more in Korea because they do the jawboning, meaning they have the NPS, has not been very effective. And I think you're now at a point where some policy credibility has been lost. Dollar careers through 1,500. Dollar yen, we saw the biggest intervention in a decade. And we're back at 160. So it's an issue for policymakers. And I think it's an issue basically because these currencies are weakening due to external factors, stuff that is out of their control.
[00:52:37] Speaker 1: So what else can they do? I mean, are they just forced to keep hiking rates then?
[00:52:42] Speaker 11: Well, we've seen that for central banks in this region. I think yield compression does help at some point, but we're not quite there yet. As we've seen for Indonesia, they hike by 50 basis points and the currency is still quite weak. I think in some ways you have to accommodate weaker currencies. You can control the volatility, but you shouldn't try defending specific levels. I think that's always going to be a difficult game in this sort of environment.
[00:53:04] Speaker 2: What's your outlook for the renminbi? It's gone on a different trajectory. It's appreciated against the dollar. But do you see that gaining or losing some momentum?
[00:53:12] Speaker 11: Yes, over the next couple of months. So we've been bullish on the renminbi. It's done quite well versus its peers. We expect it eventually to move to 670. But the next couple of months could be tricky, partly because we're constructive on the dollar, partly because seasonally this is kind of dividend repayment season, where there tends to be FX demand, so sort of onshore buying dollars, selling renminbi. And also in terms of the fixing, I think you could argue China will be a bit more cautious in terms of the dollar-CNY fixings, especially given that the next meeting between President Xi and President Trump is in September, and they probably don't want to strengthen the renminbi too much.
[00:53:46] Speaker 1: Do you think with exports being so strong, though, that they can tolerate, though, a stronger currency?
[00:53:51] Speaker 11: I think medium-term, there's a bit of a change in the mentality around the currency. They're less mercantilist in their thinking, just because exports have held up quite well. And there are benefits to a strong currency, less capital outflow, the internationalization of the RMB. So I think medium to long-term, definitely they'll be okay with a stronger currency. It's just in the next couple of months you want to be a bit more cautious. And keep in mind, being long renminbi is negative carry. So in a low FX wall environment, investors will be a bit more reluctant if it's not moving lower each and every day.
[00:54:19] Speaker 2: Well, it's interesting, we're going to be getting those trade numbers later today. They have been importing a lot more. I mean, granted, not necessarily from Iran and the oil, but again, they're importing a lot more based on the demand for the AI surge, indigenous innovation. We could see double-digit gain in imports for the fifth consecutive month, which is quite a – I mean, there's base effects here, obviously, no doubt. But again, that goes into the argument that a stronger renminbi plays to their advantage if they want to alleviate that trade imbalance.
[00:54:51] Speaker 11: Yeah, absolutely. And the other thing – although on the flip side, I'd say for exports, one thing to keep in mind is exporters are not converting their export proceeds into local currency. So that could be another reason why it might be difficult for the renminbi to strengthen immediately just because you still have a yield advantage when you're holding dollars versus renminbi.
[00:55:09] Speaker 1: What does it mean for the carry trade? If I'm talking about rates are going to be staying higher for longer, inflation is back in some ways, does that change the playbook on how you look at carry trades now?
[00:55:18] Speaker 11: I think it's important because obviously we've seen a bit of a correction. Some of our equity signals at Bank of America are flashing red. I think 70 percent of the indicators are flashing red. Our bull bear indicator is saying sell. So if the equity sell-off continues, then you would expect that to spill over to FX volatility. And in that case, the carry trade would be under pressure. I think probably the most popular carry trade has been Brazil. So we're seeing that kind of unwind a little bit. In G10, it's been the Australian dollar where I kind of sense there's less appetite to buy the Aussie at these levels. So it's not quite wholesale pressure for the carry trade yet, but certainly it is a risk of the equity correction continues.
[00:55:53] Speaker 2: What's your outlook in Europe? Did you just have a trip, FX trip?
[00:55:57] Speaker 11: I was there for two weeks during a heat wave, so it was quite exhausting. I think the general sense I got from European investors and corporates was euros more likely to weaken than strengthen. And it's interesting because the ECB is going to hike this week and they might hike again. And you have the most price in terms of rate hikes, but it's not benefiting the currency, mainly because rate hikes are viewed as a policy mistake that will have to be unwound with rate cuts maybe next year, which is our view. So it's quite interesting. You're seeing rate hikes being priced in, the rate gap narrow, yet the euro is not benefiting. And I think that was something I heard on my European trip as well.
[00:56:33] Speaker 1: Obviously, there's been a lot of concerns in where you are now in London, when the gilt market and the like. What does that mean for the pound moving forward?
[00:56:42] Speaker 11: So it's interesting. I would argue the pound has been pretty resilient, all things considered. We had risk off last week. The pound held up. You have all the political noise. You have a by-election happening and the pound is holding up. We're actually long the pound versus the euro, so we're short euro sterling. And the reason is we see a lot of risk premium or bad news that's already priced in when we speak to investors and when we look at the FX options market. So for choice, I mean, there are a lot of risks out there. They're not going away anytime soon, but we favor being tactically long pounds for the time being.
[00:57:12] Speaker 2: Adarsh, thanks so much for your time and welcome back to the region. Thank you. Glad to be here. All right. Adarsh Sinha, head of Global G10 FX Strategy at Bank of America Global Research. Coming up, we're live from Kuala Lumpur as the Invest Malaysia Summit gets underway. We'll be speaking exclusively with the CEO of Bursa Malaysia on their IPO pipeline and its Value Up program. We'll be live with Haslina Amin soon. This is Bloomberg.
[00:57:42] Speaker 1: All right. We're checking when it comes to oil markets here today. So things looking a little bit tamer here when it comes to the oil price after what we heard is that Iran and Israel have agreed to end attacks amid these peace talks and, of course, pleas from President Trump as well. And, yeah, we did hear from the president recently about that.
[00:58:15] Speaker 2: Yeah. Well, President Trump says the war will end in total victory, quote unquote, in a few weeks. Here he is speaking at a virtual campaign rally a few hours ago.
[00:58:25] Speaker 12: We're negotiating now and they want to make a very good deal. They're willing to give us everything. They're willing to give us no nuclear weapon. We've been a very tough team and I think we are winning that battle. But you're really going to win it over the next two weeks when we declare total victory. It'll be a total victory. It'll happen very soon. And oil prices will come tumbling down.
[00:58:47] Speaker 2: Let's bring in Bloomberg Managing Editor Jill Deesis. Are we at promise fatigue here on this front right now?
[00:58:54] Speaker 13: Well, Steve, I mean, we're starting to hear some repeated hits from Trump here, right? I mean, his favorite unit of measurements, as we know, is about two weeks. You're just here to repeat it here. I think at this point, again, it just remains entirely unclear as to how exactly you get to these long peace talks that Trump, at this point, has been really hammering on for quite a while now. We just concluded, I mean, maybe concluded, probably the most volatile period within this conflict since that initial ceasefire between the U.S. and Iran was announced back in April. I mean, think about it this way. You've got between Israel and Iran right now, this exchange of volley, maybe they've declared sort of a truce, at least temporarily for now. But you had, at one point during this escalation, before they really called things off, Iran saying that if you're starting to, or Israel, striking a petrochem plant in Iran, and then Iran saying, if you're going to start going after energy facilities again, we will too. I mean, we're talking about, you know, some of the escalation that was really at the height of the war back in March when we saw Iran strike an LNG facility, something that led to oil just, you know, sort of going absolutely crazy. So, I mean, that's the kind of rhetoric, that's some of the kind of action that you're really worried about at this point. Does this calm down enough to the point where you ultimately see that peace deal in two weeks? I think that's incredibly uncertain, but does really indicate here how determined Trump is to just finally bring an end to this conflict that he initiated back in February.
[01:00:21] Speaker 1: What do we need to watch out the most? Are we still watching flows in the Strait of Hormuz? Is that still the big thing to watch still?
[01:00:26] Speaker 13: Yes, Yvonne, that's right. I mean, look, at this point, you know, you heard Trump himself talk about the need to bring the price of oil back down. I think when you're talking about energy coming in and out, oil coming in and out of the Strait of Hormuz, those concerns about sustained elevated prices here, that's really kind of at the forefront of Trump's mind. Also, the rest of the Republican Party in the United States, because remember, they've got a really important midterm election coming up in November. Lots of concerns among the American public about the cost of fuel, about inflation, about those elevated prices. I mean, that's something that is going to be at the forefront of their minds as they reach the election, where a lot of those concerns about the domestic economy and how much things are costing are going to be at the forefront of the minds of these voters. So that's certainly something that's really playing into the calculus, at least politically, in the United States right now.
[01:01:12] Speaker 2: All right, Jill, thanks so much. Bloomberg Managing Editor Jill Deesis. Chinese President Xi Jinping has vowed to expand trade, agriculture and technology cooperation with North Korea. Of course, Xi Jinping is in Pyongyang right now. Pyongyang's nuclear program was not publicly mentioned during the meeting with Kim Jong-un. Let's bring our China correspondent, Min Min Lo. So what is the key takeaway right now of this meeting? I mean, Xi Jinping has been doubling down his support for Pyongyang. But what really should we be reading between the lines on this front?
[01:01:44] Speaker 14: Yeah, there are many things to pay attention to, right? If you look at the concrete outcomes, for example, and there are many. President Xi talked about being ready to cooperate on everything from trade to tourism to military exchanges, law enforcement exchanges. But the key message is the fact that President Xi did not even mention the nuclear program when he visited. And this is not the first time. Remember, last year in September, you and I were at the military parade and Putin and Kim were there. And the Chinese readout also did not mention a nuclear program, which is quite a departure from past traditions, right, where this would feature heavily in any of its communications regarding North Korea. So it really shows you that in some ways maybe China is deprioritizing this denuclearization push here.
[01:02:31] Speaker 2: Well, I think there was a white paper that came out of Beijing as well that did not mention denuclearization. So that is quite telling.
[01:02:38] Speaker 1: Yeah, but what does that tell us about the nuclearization efforts or at least what plans are underway and the development of that, right? I mean, it's interesting that they still – they're ignoring it or they're not acknowledging it, but they still need to confront this reality.
[01:02:53] Speaker 14: Yeah, I would say that we are confronting a more ambitious and more confident North Korea, right? And a part of it is that it has drawn closer to Russia during the course of the Ukraine war. By supplying troops to Russia, it really gains some sort of military know-how as well as food, fuel, for example. And that is part of the reason why President Xi visited North Korea to really reassert its influence over this country. But over the course of the last, I would say, seven years since President Xi's last visit, we have seen North Korea really expanded its nuclear program. And just a couple of days ago, you have Kim Jong-un's very powerful sister declaring that this atomic weapons program is irreversible. It's non-negotiable. So she's really outlining the red line here. And I think with President Xi going there, not making mention of a nuclear program, it's almost an implicit sort of endorsement here that maybe would, I think, diminish any chance of a resumption of that nuclear non-proliferation talk with the U.S., right? And we know that Trump has made no secret of his desire to meet with Kim. He did so in his first term in power, but we haven't seen any progress since then.
[01:04:02] Speaker 2: Obviously, North Korea needs Beijing more than the other way around. Do we have a good assessment of how important this is, this visit? Less so for Xi, but probably more so for Kim, who is still isolated globally.
[01:04:18] Speaker 14: Yes, it's definitely extremely important. I mean, just look at the reception that North Korea had given to President Xi, right? You have the children jumping up and down with the balloons. You have the soldier chanting, you know, well wishes for President Xi's help. And you even see the appearance of Kim Jong-un's wife. And that is a very rare appearance. And it shows you the importance of this relationship. You have Kim actually saying that this is a major boost for his country to have these visuals that is shared around the world, the pictures of Xi and Kim together in North Korea. And what is President Xi's first trip to the country? And I think he said unbreakable is the word he said to describe the bilateral relations. And President Xi also mentioned that he pledges his unwavering support for Kim, regardless of changes of the international environment. I mean, this is a really strong support. And I think in the event of any regional instability, in the event of missile attacks and the like, the world will then have to turn to China as one of the only true partners that can really have any leverage on North Korea.
[01:05:18] Speaker 1: Min Min, thank you, Min Min Lo there, our China correspondent, wrapping up, of course, President Xi's trip to Pyongyang. Look at how Asian markets are doing as we head to that break. And really, you take a look at when it comes to risk assets, we are doing quite well. KOSPI is holding on to those gains here, about 3.5%. And we are seeing, though, the Hang Seng is heading the opposite direction here on the back of maybe some of these tech names that are heading lower this morning. This is Bloomberg. We're checking metals and the like here this morning. The commodity complex doing this here right now. A little bit of downside pressure here when it comes to iron ore and dalian, steel, aluminum futures are also in the red. Copper, though, continues to do quite well. It's interesting. Jeffrey said a note when it came to what they think copper prices could be. They're saying maybe $8 a pound. That's around $17,636 a ton here on the back of what? AI and power spending. They think that's going to be really driving a lot of the demand picture there.
[01:06:26] Speaker 2: The centers, EVs, you name it. All right. Well, Brazilian iron ore miner Vale sees no evidence of war-related demand destruction in the global markets, global metals markets, even as the Iran conflict disrupts raw material flows. CEO Gustavo Pimenta says the world's top iron ore producer is seeing massive demand from its global customers.
[01:06:50] Speaker 15: The amount of demand is super constructive. It's historical for us, I think, across all the critical minerals we are seeing and a very strong support from clients all over the world, from countries in terms of looking for security of supply. Iron ore continues to be strong. If you look at copper, nickel. So across the board, we are seeing tremendous amount of demand for all of the mining that we produce.
[01:07:16] Speaker 16: The bulk of your customers typically come from China. Have you seen more interest recently from the United States?
[01:07:21] Speaker 15: We are. China continues to be a strong market for us, very relevant for everything we do. But we are seeing growth outside China. We are seeing growth in Southeast Asia. We are seeing growth in the U.S., Europe. So there is a diversification going on these days with other markets looking to amplify their access to critical minerals.
[01:07:41] Speaker 16: People talk about a commodity super cycle. Iron ore hasn't participated as much in terms of the price gains. And there has been a sort of plateauing in demand from China. Where are the growth opportunities specifically when it comes to iron ore?
[01:07:54] Speaker 15: So we continue to be very optimistic about iron ore. If you step back and look at the overall demand, we have population growth, we have industrialization, we have other markets growing. Certainly China probably has plateaued and reached their overall peak in terms of production. They are doing more than a billion tons of crude steel production annually. We think they will continue to be at that level. But we are seeing growth in Southeast Asia. India is growing substantially. We are expecting India to double the crude steel production in the next 10 years. Even the U.S. is growing. So we are seeing more demand outside China. China will continue to be the key market for all of us. But we are seeing greater demand in other markets as well.
[01:08:34] Speaker 1: And that was Vale CEO Gustavo Pimenta there speaking to Lisa Abramowitz. When it comes to markets, we're watching gold miners here this morning. So they have been kind of tracking that gold price lower of late here. So some of these Aussie gold miners are falling substantially here today. We're watching, of course, also the China tech space. I'll give them the facts that Alibaba, Baidu, BYD were among dozens of entities named on this Pentagon blacklist because of what they are accusing of designation as Chinese military companies. So Tencent, on the flip side, is actually in positive territory here. They also announced a massive fundraising round, I believe, about $3 billion. So that certainly is lifting the stock here today. But BABA, Wuxi, Apptech, and Wuxi Biologics are all falling here this morning. Baidu also still in the green. We're also watching some of these, what, circuit board makers, resin stocks, Steve. I mean, there's still a lot of upside here for some of these on the back of the CCTV report.
[01:09:30] Speaker 2: Yeah, I think so. And that's just, again, giving more fuel, if you will, for the AI play and on the parts suppliers in that space.
[01:09:41] Speaker 1: Yep, so certainly that's one thing to watch here as well as we track, of course, this rebound across risk assets, of course, Asian stocks here today. So certainly seeing here maybe this was more of that healthy reset, as Sam has mentioning here, according to our markets producer, Anthony Stevens. Risk management yesterday here. Broadmark is doing this here. Hang Seng is on offer. But the rest of the region looking okay. Kospi now off some of the initial highs are up close to 3%. This is Bloomberg. 11.29 a.m. in Tokyo. Japanese markets are going to that lunch break in just a moment. And, yes, we've been talking a little bit more about this rebound. And Japan certainly is feeling it today to the upside. We're up close to 9.10 to 1% for the Nikkei 225. The rest of Asia is doing much better than yesterday. So it looks like it could have been a blip yesterday. We'll see. We also did have news of Katiana, the finance minister there, saying that Japan is undergoing its biggest budget reform for some time. So certainly we're watching very closely what that means for the bond market here. Yields are taking just slightly higher here this morning, Steve.
[01:10:56] Speaker 2: Well, let's look at the rest of Asia. Change the page to the Asia market dashboard. Again, the IT sector is leading gains. We did have this story late last night about the National Data Administration of China releasing a plan on accelerating development of data sets to support AI development across industries through 2028, according to a WeChat statement. And that might be having it's definitely having an impact on Chinese markets and on the IT sector. But again, as China needs to import also components and the like for its AI ambitions, that's maybe giving some lift as well a day after what was a pretty bloody market across the region. We're seeing, again, MSCI, Asia Pacific Infotech Index up some three and a quarter percent right now.
[01:11:39] Speaker 1: Yeah, and the rest of, you know, even parts that we're seeing show the pain when EMFX is doing slightly better, right? Even when it comes to the likes of Indonesia here today, the dollar is a little bit more steadier here. If you take a look at how EM markets like Malaysia are doing as well, we've basically have strengthening here. The ringgit snapping a four-day losing streak here. And we are continuing to see a bit more when it comes to moves in stocks there are doing a little bit better. We're still lower on the exchange there. The stock exchange was down about a fifth of one percent there. But, yes, the ringgit at least is doing a little bit better.
[01:12:14] Speaker 2: Well, that's a nice segue then. Let's cross over to our anchor, Haslinda Amin, in Kuala Lumpur, where Malaysia's stock exchange operator is hosting its annual flagship conference. She's standing by with the host, Haslinda.
[01:12:28] Speaker 17: That's right, Steve, Yvonne, we've been talking about AI and conversations so far in Asia has pretty much been revolving around the likes of Korea, Japan, Taiwan. But Malaysia comes in the picture as well. In fact, when you take a look at the tech index on Bursa Malaysia, it is up 27 percent. And that's because money's been coming in, wanting to play the data centers as well as the cloud infrastructure. Let's get perspective from Fadil Mohamad, CEO at Bursa Malaysia. Fadil, good to have you with us.
[01:13:00] Speaker 18: Thank you, Haslinda.
[01:13:01] Speaker 17: We saw some ads recently in the AI space. Some say perhaps we have seen peak AI and those capex pretty much unsustainable. What's your take on it?
[01:13:09] Speaker 18: Thank you, Haslinda. I think firstly, our index has actually grown, has actually risen by about 27 percent, as you mentioned earlier. And that's at the back of very strong demand of requirements for semiconductors, for back-end testing, for assembly packaging. And I think that has actually helped and supported a lot of our companies in Malaysia. And at the back of that, we remain confident, though there's been some adjustments in the markets in terms of price valuations. I mean, it has been a tremendous super cycle in terms of valuations, especially in the North Asian markets of Korea and Taiwan. But at the end of the day, the demand for semiconductors, the demand for tech to support the growth in data centers, to support the growth in the need for chips, to support AI, that will continue. And Malaysia, we're very well positioned to support that.
[01:14:12] Speaker 17: Well positioned, but not enough, right? Because when you take a look at the tech contribution, AI play, it's only about 4 percent of the weightage. I mean, how do you capitalize further?
[01:14:22] Speaker 18: Yeah, so that's precisely why there's a lot of opportunity for us to push. The tech index certainly is one space that we want to be able to focus on. We want to have more companies in Malaysia to be able to tap, especially companies in the technology space, to be able to tap the capital markets. And today, we've had companies who have grown the likes of Vitrox, the likes of Franken, the likes of Vinari, etc., which have grown over time to become large billion-dollar companies today. We want to be able to help more companies to come into the capital markets. We want to be able to do that, but we want to be able to have more companies in the capital markets, which we want to be able to invest in the capital markets. We want to invest in the capital markets, which we want to invest in the capital markets, and we want to invest in the capital markets. We want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets. We want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets. We want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets. We want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets. We want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets.
[01:16:53] Speaker 17: And we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets, and we want to invest in the capital markets.
[01:17:00] Speaker 18: So the pipeline continues to be strong. What is strong? So year to date, we have seen 29 IPOs, and out of the 29 IPOs, from a market cap perspective, size perspective, we have actually hit almost where we were for the whole year in 2025. So we feel that there will be continued traction in various areas and sectors.
[01:17:21] Speaker 17: So for the rest of the year, and 2027?
[01:17:23] Speaker 18: 2027, we'll continue to see that because the pipeline today will probably cross into next year.
[01:17:32] Speaker 17: The issue right now is also attracting foreign investors. So far, there's been an outflow when it comes to foreign funds. What will it take to reverse that?
[01:17:43] Speaker 18: So I guess for us, it's about getting the right sectors in place, getting the right scale and size. What's the right sectors? But today, we also have to be mindful that there's a lot of passive funds out there. 17 trillion US dollars of passive funds, for example, track the MSCI. And for us, it's important that we build that scale. And for us to build that scale, we will need to be able to find larger companies to come on board. We need to nurture those larger companies and working with various stakeholders to make sure that we have the size. And tech is one space of it. But the other space that we want to be able to push is to make sure our companies also grow. Hence, together with the Securities Commission, we have launched the My Value Up program. And the My Value Up program is about four things. Number one, to be able to achieve long-term value creation. To get companies to be able to articulate long-term value creation. To be able to have very clear performance targets and metrics that investors can track. And to be able to ensure that companies know how they are allocating capital. And companies are able to articulate that clearly and board accountability.
[01:18:55] Speaker 17: A program is in place. What about the traction? I mean, how many countries have signed up? And what meaningful impact has there been? Okay.
[01:19:04] Speaker 18: So we've just launched the program in April. The target is to see submissions of their plans by the year-end. We have targeted 88 companies. Why 88? Because 88 companies attribute more than 80% of total market capitalization. And we feel that there is the need. And if you want to push and make the needle move, that's where we have to focus on. And we are seeing traction. The Glicks will be coming out to show support. And they have articulated the same to us. And I think for us, the need to see companies buy in. And that's critical. To be able to ensure that companies actually have conviction to support this program.
[01:19:46] Speaker 17: We came into the segment talking about the weakness in the Malaysian Ringgit. And some say that the currency reflects the state of the economy. What is the state of the economy?
[01:19:56] Speaker 18: I think at the end of the day, if you look at the macros, Malaysia's numbers are fantastic. It remains resilient. First quarter GDP growth of 5.4%. We see inflation low. We see rates very stable. And at the end of the day, the macro drivers remain to be strong. In terms of there has been some retracement of the Ringgit, but we're still at multi-year highs. And if you look at it, it will benefit a lot of the Bursa companies who are very strong in the export markets. And that will make us very attractive from an investor perspective.
[01:20:33] Speaker 17: Fadal, thanks so much for your time today. And thanks for having us. Fadal Mohammed, CEO at Bursa Malaysia. Steve, heading it back to you.
[01:20:41] Speaker 2: All right, Haslinda, Inside Anchor. Haslinda, I'm in at the Invest Malaysia conference. We do have breaking news. During that interview, the trade data out of China for May, better than expected or higher numbers than expected. The exports, again, coming off a very different base effect from last year when exports to the United States dropped off 35% because of various reasons, obviously, namely the tariffs. But we're getting 19.4% in US dollar terms gained in exports year over year. We're expecting 15%. It's better than the previous month in April of 14%. Also, imports higher than expected at 27.4% in US dollar terms. We're expecting 26%. That's above last month's 25.3, I should say, Aprils. And a widening trade balance. Yeah. 105.43 surplus billion dollars.
[01:21:37] Speaker 1: That's quite the dynamics, right? We talk about how imports are actually seeing more growth than exports now. It really just goes to show, right? This demand for AI is certainly helping the likes of exports and imports for China. But really, the demand for AI hardware remains a powerful driver of exports here right now. We're not just seeing it in China. We're seeing it in Korea as well. I think when it came to those main numbers, it was surging 61% in South Korea. So that whole AI story continues in the data for China as well. And as Steve mentioned, right, it's also the low base from last year that is really helping these numbers here right now. And, of course, imports from commodities from the Iran war as well. We've got plenty more to come. This is Bloomberg. This is Bloomberg.
[01:22:21] Speaker ?: Yeah.
[01:22:21] Speaker 1: With respect to the stock price, everybody should be very excited.
[01:22:27] Speaker 19: They can now buy stock at a cheaper price. And it's absolutely true that the future of AI is very bright. It is completely -- it is a foregone conclusion that AI will be infrastructure for the world. The next trillion-dollar company, ladies and gentlemen. Whoa! That would be exciting. Let's do it together. Yeah. Let's do it together. I announce his stock price goes up. Nothing happens to mine. Let's also -- let's also stay for the record -- That's -- I'm very happy about that.
[01:23:26] Speaker 4: Let's also stay for the record that you were a shareholder and you sold.
[01:23:29] Speaker 19: Yeah, yeah. Well, I needed the cash. All right. Jen Sanity, right?
[01:23:34] Speaker ?: Yeah.
[01:23:35] Speaker 1: CEO Jensen Hong there speaking on Monday about, of course, what we saw on the route in Korean tech stocks as well. That was led by NVIDIA supplier SK Hynix. You also were there at Computex when he was also talking about these companies like Marvell, too.
[01:23:50] Speaker 2: Yeah, I was right there when he was talking about it. I mean, Marvell stock the next day went up 33%, the biggest gain in 26 years. And also, you saw Rene Haas there, the CEO of Arm Holdings, who used to work at NVIDIA, by the way. That stock surged 16% as well. Yeah. So, he's becoming an oracle and a tech titan.
[01:24:12] Speaker 1: Well, it's interesting how much, you know, these sort of darlings that, you know, were like Naver, for example, that was, you know, having Korean barbecue with him and footed the bill and all that when he was in Seoul. I mean, some of these stocks were actually now falling after, of course, all that hype and really now that I think he has left Seoul, I believe. But certainly, it does lead to a lot of questions about, you know, his charisma and really what does it mean for stock prices. Let's bring in Bloomberg opinion columnist Julie Renz. She's been saying that this investment advice from Jensen Wang has been dangerously rosy. Yeah. You've been talking about, you know, he's known to be bold. He's known to be, you know, kind of playful as well. But when you take a look at what he's doing and what he's saying, I mean, you're saying it can get a little bit, hmm. Yeah.
[01:24:57] Speaker 20: Right. I mean, he's absolutely market moving. Yeah. And right now, we are in between earnings seasons. So, we don't really have company financials as anchor when it comes to the AI rally. So, whenever this AI Oracle speaks up, like he's going to move stock prices. And if you really look at a lot of cheap stocks, they are by no means cheap, right? Yeah. Like the Taiwan market is getting quite expensive. And we have seen with Neva, LG Electronics, just that the fact that he just boasts the so-called partnership without any details can ramp up a stock by 10, 20% a day.
[01:25:34] Speaker 2: You know, I was there and he was definitely on full salesman mode. Yeah. Should he be keeping this advice to himself or does he see something we don't see? He needs to talk up these suppliers because there's maybe some fragility.
[01:25:47] Speaker 20: Well, he does need to buddy up the Asian suppliers, right? TSMC and the memory chip makers because he needs them to supply to his GPU units so that he can sell more Nvidia chips. But on the other hand, I mean, he is a tech person. He's a tech executive. What does he know about stock valuation?
[01:26:08] Speaker 2: He talks it goes up. That's what he knows, right?
[01:26:12] Speaker 1: Talk to me about valuations, right? I think Korea, we've talked about, you know, despite these parabolic rallies, valuations are still quite low. Taiwan might be a bit different as well. But do you think that overall speaking, they're still cheap to you? Do you?
[01:26:26] Speaker 20: Well, I mean, Taiwan traditionally, if you look at the forward P basis, a price to earning basis, Taiwan market is at par with the U.S. market now. And traditionally, Taiwan market is more cyclical and therefore you see less earnings visibility compared to S&P 500. And the way we talk about South Korean, the memory chip makers, right? The verdict is still out on whether the memory chip making is in the super cycle. In the past, it's a very volatile industry. The cycle typically lasts three to four years. And now we are at year two. Are these memory chip makers going to see visible earnings all the way to 2028, 2029? We don't know yet. All right.
[01:27:12] Speaker 2: Bloomberg opinion columnist Shuli Ren. Great column today. And you can check out Shuli's full column. Huang is talking up his suppliers. It's worrying. That's available on the terminal and Bloomberg.com. Yeah.
[01:27:25] Speaker 1: Let's check in some other stories that we're tracking for you today. OpenAI has filed confidentially for an IPO and a bid to tap public markets to fund ambitious growth plans. Sources say it's working with Goldman Sachs and Morgan Stanley on a potential listing as soon as this year. We've also learned that OpenAI is planning a tender sale of its shares to provide liquidity to employees in the coming weeks. Sources say SpaceX's initial public offering is well oversubscribed with multiple institutional investors placing orders for about $10 billion or more of shares. The company is offering some 555 million shares at a fixed price of $135 each, which would raise about $75 billion. That would make this the biggest IPO ever, topping Saudi Aramco in 2019.
[01:28:11] Speaker 2: Well, let's pivot to SpaceX. It plans to use the proceeds to expand its AI and rocket infrastructure. Bloomberg's Ed Ludlow explains. Ignition.
[01:28:21] Speaker 8: Elon Musk wants to build the infrastructure for AI in space, and he's asking investors to help pay for it. The rocket satellite and now AI company wants to raise around $75 billion in what will be the largest IPO in history.
[01:28:39] Speaker 3: SpaceX is probably our greatest commercial space company, hands down.
[01:28:44] Speaker 21: It will enable the next iteration of what we want to see as the space industry continues to grow.
[01:28:51] Speaker 8: This isn't just a space story anymore. After folding in Musk's AI startup XAI earlier this year, investors buying into SpaceX are also buying into the future potential of Grok AI models and Musk's vision for massive computing infrastructure. That ambition comes with a hefty price tag. New filings show SpaceX's AI business, as in XAI, lost nearly $6 billion last year and billions at the start of this year as money poured into computing power and infrastructure to compete with OpenAI and Anthropic. Still, SpaceX has major advantages. Starlink has become a powerful cash generator through its satellite internet business, while the company's launch operations continue to secure billions in government and private contracts.
[01:29:37] Speaker 22: What people need to realise about this company is, it isn't just a little bit ahead of the entire launch industry on planet Earth. It's orders of magnitude ahead.
[01:29:48] Speaker 8: And now, Wall Street wants in. Goldman Sachs, Morgan Stanley and JP Morgan leading more than 20 banks working on the offering. And Musk negotiated record low fees. But the IPO also raises big questions like whether investors are comfortable betting not just on Musk's original vision of making humanity and multi-planetary species and getting to Mars, but on a future combining rockets, AI and social media into one sprawling empire.
[01:30:15] Speaker 22: And so what we're buying is the next, you know, the global economy, 2.0 and 3.0 as we look at buying into SpaceX.
[01:30:26] Speaker 8: If that happens, SpaceX could redefine what the modern public company looks like on Earth and in space.
[01:30:32] Speaker 1: All right, we're checking when it comes to markets in Hong Kong today. In particular, when it comes to some of these companies that have been put or re-put back into this Pentagon blacklist. Really what we heard from the Pentagon was that accusing some of these companies of aiding the Chinese military. Of course, this was something that we brought back months ago. It seems like that's coming back in the fray here today. So you are seeing Alibaba, Costco shipping, Wuxi. They are one of the few that have, one of dozens that have been added to that list here today, all falling here this morning. So certainly that's one thing to watch here. And perhaps that's why we're not quite seeing, you know, Hong Kong markets recovering as much as you're seeing for the rest of Asia here today. Hang Seng is still lower by a bit.
[01:31:22] Speaker 2: And their broader implications. What does this do to the so-called detente that was sort of reached between Donald Trump and Xi Jinping just, what was it, three weeks ago? Yeah. Four weeks ago? It's all a blur to me right now. But again, it's the timing is interesting because that list of Chinese companies on the Pentagon list came out very briefly in February, then was taken down. Obviously, February was right before or right as she and Trump were planning that visit. Now it's up.
[01:31:47] Speaker 1: So you got to wonder, is it just geopolitical posturing at this point? What does it mean in terms of their business operations? I think the sell side has come out and said, look, in terms of what this could mean for their earnings and overall, these companies may not be too much. Could be limited impact here as well. And I think as our Adam Farrar from Luber Economics says, at this point, it still looks like it's it's it's it looks like symbolic in some ways here. But also, you know, they're not as bad as sanctions. No legal repercussions. No legal repercussions. That's a good one to know. Hey, we're going to be there tomorrow. Look at all these people coming to Bloomberg Invest. Right. So we were talking a lot of key themes when it comes to Hong Kong. Obviously, we're starting off and kicking off the year in the first quarter with a pretty great growth here. Absolutely. And whether this momentum can continue. That certainly is going to be the key question. I'm going to be asking Paul Chan, the financial secretary on stage. What about you?
[01:32:32] Speaker 2: Strong IPO pipeline. No doubt the wealth is number one wealth hub in the world. Right. Overtaking Switzerland. But is that threatened by the regulations that are coming from Beijing on cross border flows and crackdowns on where the money is coming from and sources of income? I'm going to be talking to Claire Chan, Hong Kong Investment Corporation, and talk about where Hong Kong is strategically investing. Yeah.
[01:32:54] Speaker 1: I mean, whether these curbs in some ways impact not just, you know, brokerages, but how far does it go in really impacting wealth, as you mentioned, maybe the IPO market, even the property market here in Hong Kong. So lots to delve into here at Bloomberg Invest. We'll be there in the field taking the China show out. This is Bloomberg.