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This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This is the Bloomberg Daybreak Asia podcast. I'm Brian Curtis along with Doug Krisner. Join us each day for the stories making news and moving markets in the Asia Pacific. You can subscribe to the show anywhere you get your podcasts and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

Well.

Well.

China has asked South Korea to maintain stable supply chains and to be a trustworthy partner. We get more on the story from Bloomberg's minmn Loo in Hong Kong.

China has asked South Korea to maintain stable supply chains and to be a trustworthy partner. We get more on the story from Bloomberg's minmn Loo in Hong Kong.

Chinese Premier League Tang told South Kurrent President Yunsogil China wants them two nations to be trustworthy neighbors. He said each country should help the other to thrive. These comments came as the countries began their first three way summit with Japan since twenty nineteen. Lee said both sides should avoid turning economic issues into political issues. The Chinese premier also said Beijing welcome South Korean firms, including some Song to expand in China. Beijing, Tokyo and Seoul are said to be looking at several areas of cooperation including the economy and trade in Hong Kong. I'm Min Min Loo Bloomberg Radio.

Chinese Premier League Tang told South Kurrent President Yunsogil China wants them two nations to be trustworthy neighbors. He said each country should help the other to thrive. These comments came as the countries began their first three way summit with Japan since twenty nineteen. Lee said both sides should avoid turning economic issues into political issues. The Chinese premier also said Beijing welcome South Korean firms, including some Song to expand in China. Beijing, Tokyo and Seoul are said to be looking at several areas of cooperation including the economy and trade in Hong Kong. I'm Min Min Loo Bloomberg Radio.

Joining us now on the program is Richard McGregor, a senior fellow for East Asia at the Loewi Institute, to take a closer look at this story and perhaps talk a little bit about that US delegation in Taiwan, and also Jensen Huang. Richard, thank you so much for joining us here on the program. So the news is tightening a little bit on China. We had the G seven finance chiefs criticizing Chinese trading practices, and also at the end of last week the US moving to reimpose tariffs on hundreds of Chinese goods, and now this trilateral summit. What are the deliverables here for each of the countries? Just if we could sum up briefly.

Joining us now on the program is Richard McGregor, a senior fellow for East Asia at the Loewi Institute, to take a closer look at this story and perhaps talk a little bit about that US delegation in Taiwan, and also Jensen Huang. Richard, thank you so much for joining us here on the program. So the news is tightening a little bit on China. We had the G seven finance chiefs criticizing Chinese trading practices, and also at the end of last week the US moving to reimpose tariffs on hundreds of Chinese goods, and now this trilateral summit. What are the deliverables here for each of the countries? Just if we could sum up briefly.

Well, I think the first of all, the medium is the message in a way, member, as your reporter said, this is the first time in four or five years, and one of the fascinating things about it, of course, is that the problem hasn't been China Japan, which is usually the problem, but it's China, South Korea. They've had a particular rocky patch and so the fact that they're all able to meet now, I think tells you that China wants to re engage with those countries. It's close neighbors, both politically, but most importantly economically and technologically.

Well, I think the first of all, the medium is the message in a way, member, as your reporter said, this is the first time in four or five years, and one of the fascinating things about it, of course, is that the problem hasn't been China Japan, which is usually the problem, but it's China, South Korea. They've had a particular rocky patch and so the fact that they're all able to meet now, I think tells you that China wants to re engage with those countries. It's close neighbors, both politically, but most importantly economically and technologically.

Is this a kinder and gentler Chinese regime at the moment, I.

Is this a kinder and gentler Chinese regime at the moment, I.

Don't think there are very many, you know, I don't think either the US nor China is kinder and gentler at the moment. I think both countries are looking for leverage. They're not looking for an off ramp for their competition. And Japan and South Korea are vital, they're both US security, longtime US security allies, and they both become very wary of China politically and economically. Remember South Korea, we're underwent pretty severe economic sanctions from China from twenty sixteen over the installation of that anti missile shield in South Korea, and so that really hurt relations. And then of course the President Yuan made some comments about Taiwan which truly angered China, and so China has I think it has found its influence and its economic role in both South Korea and Japan two degree diminished. And also, of course the US wants South Korea and Japan to cooperate in its own sanctions against China on semiconductors.

Don't think there are very many, you know, I don't think either the US nor China is kinder and gentler at the moment. I think both countries are looking for leverage. They're not looking for an off ramp for their competition. And Japan and South Korea are vital, they're both US security, longtime US security allies, and they both become very wary of China politically and economically. Remember South Korea, we're underwent pretty severe economic sanctions from China from twenty sixteen over the installation of that anti missile shield in South Korea, and so that really hurt relations. And then of course the President Yuan made some comments about Taiwan which truly angered China, and so China has I think it has found its influence and its economic role in both South Korea and Japan two degree diminished. And also, of course the US wants South Korea and Japan to cooperate in its own sanctions against China on semiconductors.

And the like.

And the like.

Yeah, so we see the US definitely exerting pressure on the G seven, and you know that's been tough in the EUS, tough in policy to a certain degree on China. I'm curious how much pressure you think the US is applying to its close partners in Japan in South Korea to do more of the same against China.

Yeah, so we see the US definitely exerting pressure on the G seven, and you know that's been tough in the EUS, tough in policy to a certain degree on China. I'm curious how much pressure you think the US is applying to its close partners in Japan in South Korea to do more of the same against China.

Well, I think an exceptional amount of pressure. But in some cases, a country like Japan is applying its own pressure. You know. So Japan, for example, you know, which you know, pioneer successful industry policy back in the seventies and eight nineteen seventies and eighties. It really wants Europe to come on board with the US in trying to constrain China in some respects. So, yes, US is putting pressure on, but in some respects are Japan and to a lesser extent, but to some extent South Korea they're willing to work with the US. I just think it depends on how far it goes in the ext and the detail.

Well, I think an exceptional amount of pressure. But in some cases, a country like Japan is applying its own pressure. You know. So Japan, for example, you know, which you know, pioneer successful industry policy back in the seventies and eight nineteen seventies and eighties. It really wants Europe to come on board with the US in trying to constrain China in some respects. So, yes, US is putting pressure on, but in some respects are Japan and to a lesser extent, but to some extent South Korea they're willing to work with the US. I just think it depends on how far it goes in the ext and the detail.

Really, let's talk a little bit about the delegation of US lawmakers that are in Taiwan now, and also Jensen Wong of Nvidia. These trips are planned out, you know, fairly far in advance.

Really, let's talk a little bit about the delegation of US lawmakers that are in Taiwan now, and also Jensen Wong of Nvidia. These trips are planned out, you know, fairly far in advance.

I would imagine.

I would imagine.

Is there much significance in Jensen Huang going to Taiwan at this time?

Is there much significance in Jensen Huang going to Taiwan at this time?

Yeah, I mean you'll struggle to get a really detailed answer from me about the detail of mister Wang's trip about exactly what he'll be doing. But I just think it's a reminder that Taiwan is the global center of advanced semiconductor manufacturing. Even with building a couple of plants in Kyushu and Japan, constructing one in Arizona and Germany, the importance of Taiwan is not diminished. And yes, Taiwan has been willing to put TARSMC factories elsewhere, but TSMC has made sure to keep its most advanced chips manufacturing in Taiwan itself. So I mean, in that respect, all leeds road to lead to Taiwan, and it's no surprise mister Wong would be going there.

Yeah, I mean you'll struggle to get a really detailed answer from me about the detail of mister Wang's trip about exactly what he'll be doing. But I just think it's a reminder that Taiwan is the global center of advanced semiconductor manufacturing. Even with building a couple of plants in Kyushu and Japan, constructing one in Arizona and Germany, the importance of Taiwan is not diminished. And yes, Taiwan has been willing to put TARSMC factories elsewhere, but TSMC has made sure to keep its most advanced chips manufacturing in Taiwan itself. So I mean, in that respect, all leeds road to lead to Taiwan, and it's no surprise mister Wong would be going there.

Yeah.

Yeah.

What did you make of the Bloomberg story last week? And it was later confirmed to a certain degree by ministers in Taiwan about the ability for TSMC and ASML to you know, have a kill switch on the advanced semiconductor manufacturing equipment in Taiwan.

What did you make of the Bloomberg story last week? And it was later confirmed to a certain degree by ministers in Taiwan about the ability for TSMC and ASML to you know, have a kill switch on the advanced semiconductor manufacturing equipment in Taiwan.

Gosh a kill switch.

Gosh a kill switch.

Well, one wonders if they're you know, heaven forbid, it won't happen that there were a conflict, military conflict involving Taiwan and in Taiwan, what would happen to TSMC facilities. You know, you hear some wild stories is that they would be bombed by anti China forces to prevent China set of benefiting from them. Then there's the issue whether you need to do that at all, because of all the value of TSMC is basically inside the engineer's heads, and that's the value, not just the sort of hard ware that they've built, is the updating of it. But yeah, I think I don't think China. China's interest in Taiwan is about its semiconductors. But if they were to take over the EYE, and then that is obviously a tremendous price they would seek to leverage.

Well, one wonders if they're you know, heaven forbid, it won't happen that there were a conflict, military conflict involving Taiwan and in Taiwan, what would happen to TSMC facilities. You know, you hear some wild stories is that they would be bombed by anti China forces to prevent China set of benefiting from them. Then there's the issue whether you need to do that at all, because of all the value of TSMC is basically inside the engineer's heads, and that's the value, not just the sort of hard ware that they've built, is the updating of it. But yeah, I think I don't think China. China's interest in Taiwan is about its semiconductors. But if they were to take over the EYE, and then that is obviously a tremendous price they would seek to leverage.

Sometimes when we mention to people who only look at this issue from AFAR, they're surprised to hear that for China, Taiwan is issue number one. It's a bigger issue, even in some ways than global trade, because it it goes to the reuniting of China. And you spent a lot of time, Richard, in Beijing, and you've covered China for gosh, since we met back in the eighties, so it's been a long time. Is Taiwan any less important now or is it more important now than it used to be?

Sometimes when we mention to people who only look at this issue from AFAR, they're surprised to hear that for China, Taiwan is issue number one. It's a bigger issue, even in some ways than global trade, because it it goes to the reuniting of China. And you spent a lot of time, Richard, in Beijing, and you've covered China for gosh, since we met back in the eighties, so it's been a long time. Is Taiwan any less important now or is it more important now than it used to be?

No, it's more important than Brian. You're aging us both, but we actually met and worked together in Taiwan in the late nineteen eighties, and I think it's more important. And it's more important in this respect is because once China covered at Taiwan, but they did not have the military or political capability to move on the issue. That's all change now and you look at the you know, the blockade that China imposed on the island after mister Laichinder's inauguration, and they did that rapidly. China resort would always wanted to have done that, but they didn't have the capability to do it. Now they do. They have the military capability. They're military dominant, militarily dominant in that era area. And I think yes, so it's more important because now they can act on what they've always wanted to act on.

No, it's more important than Brian. You're aging us both, but we actually met and worked together in Taiwan in the late nineteen eighties, and I think it's more important. And it's more important in this respect is because once China covered at Taiwan, but they did not have the military or political capability to move on the issue. That's all change now and you look at the you know, the blockade that China imposed on the island after mister Laichinder's inauguration, and they did that rapidly. China resort would always wanted to have done that, but they didn't have the capability to do it. Now they do. They have the military capability. They're military dominant, militarily dominant in that era area. And I think yes, so it's more important because now they can act on what they've always wanted to act on.

We had Einer Tonguan from the Taihu Institute on the program late last week, and he tends to lean pro China in some ways, but he was saying that a blockade for China wouldn't make any sense because it would also disrupt its own trade to such a degree that it would be too punitive.

We had Einer Tonguan from the Taihu Institute on the program late last week, and he tends to lean pro China in some ways, but he was saying that a blockade for China wouldn't make any sense because it would also disrupt its own trade to such a degree that it would be too punitive.

Well, that's right, that's why many of the options that China has, none of them are easy. And of course you can do a blockade. You know, we might wake up one morning and China is to clear Taiwan part of its custom zone. But you know, the US could do a counter block day against China against its energy assets, for example, and other raw materials going through the Malacca Straits and elsewhere, so that would hurt everybody as well. But you know, it's not only China has options. Others have options. I think China's problem is that it's been so bad at winning any support on the ground amongst the Taiwanese people that they've only left themselves bad options. I mean, all she needs to do is to get Taiwan to agreed to negotiate, but public opinion and political parties in China won't do that until China gives them some incentive too, rather than simply threatening them.

Well, that's right, that's why many of the options that China has, none of them are easy. And of course you can do a blockade. You know, we might wake up one morning and China is to clear Taiwan part of its custom zone. But you know, the US could do a counter block day against China against its energy assets, for example, and other raw materials going through the Malacca Straits and elsewhere, so that would hurt everybody as well. But you know, it's not only China has options. Others have options. I think China's problem is that it's been so bad at winning any support on the ground amongst the Taiwanese people that they've only left themselves bad options. I mean, all she needs to do is to get Taiwan to agreed to negotiate, but public opinion and political parties in China won't do that until China gives them some incentive too, rather than simply threatening them.

All right, Richard, unfortunately out of time, but always a pleasure.

All right, Richard, unfortunately out of time, but always a pleasure.

Good to talk with you again.

Good to talk with you again.

Richard McGregor is Senior Fellow for East Asia at the Lowi Institute. Well, it was about ten years ago that President Shijen Fin gave a very important speech, a pivotal speech. It would set China on course to dominate the electric vehicle industry around the world. And joining us now is Linda Liu Bloomberg China Cars Reporter to talk about the extent to which Linda China has achieved that dream.

Richard McGregor is Senior Fellow for East Asia at the Lowi Institute. Well, it was about ten years ago that President Shijen Fin gave a very important speech, a pivotal speech. It would set China on course to dominate the electric vehicle industry around the world. And joining us now is Linda Liu Bloomberg China Cars Reporter to talk about the extent to which Linda China has achieved that dream.

Are they there on the precipice.

Are they there on the precipice.

Yeah, you'll be on the money, because ten years ago on the auto industry and China looked very different to what it is today. At the time, China sold fewer than eighty thousand eeds and hybrids, exported about five hundred thousand cars, and that the mestic market was dominated by international manufacturers like Volkswagen and the messic brands are perceived as being inferior. And so fast forward to ten years we've seen come to be the world's largest market for autos and EV's they've overtook Japan as the world's largest exporter, so they've come a really long way.

Yeah, you'll be on the money, because ten years ago on the auto industry and China looked very different to what it is today. At the time, China sold fewer than eighty thousand eeds and hybrids, exported about five hundred thousand cars, and that the mestic market was dominated by international manufacturers like Volkswagen and the messic brands are perceived as being inferior. And so fast forward to ten years we've seen come to be the world's largest market for autos and EV's they've overtook Japan as the world's largest exporter, so they've come a really long way.

Well, it's interesting that the challenges at home are not so great for continued EV dominance in China, but challenges abroad are getting a lot tougher. Now, how much tougher is it going to be for China to build on some of those gains outside the country or will it mainly only be difficult in the US and Europe.

Well, it's interesting that the challenges at home are not so great for continued EV dominance in China, but challenges abroad are getting a lot tougher. Now, how much tougher is it going to be for China to build on some of those gains outside the country or will it mainly only be difficult in the US and Europe.

Yeah, it's really interesting because now that China has built up its domestic autos and EV supply chain, it's looking to expand over broad abroad. But in the process of that, it's actually going to kind of step on the toes of some entrenched auto industries in other countries because essentially, with the rise of evs, it's going to disrupt traditional auto supply chains that employ millions of people. So you've seen the US, you know, already called droping the import tariffs on ebs, and the EU is about to announce results from an anti subsidy investigation also into Chinese ebs. We've also seen action from Brazil where they remove a tax break for EV imports. So these countries are really putting up trade barriers, and that's going to be a challenge for Chinese carmakers who are looking to expand internationally.

Yeah, it's really interesting because now that China has built up its domestic autos and EV supply chain, it's looking to expand over broad abroad. But in the process of that, it's actually going to kind of step on the toes of some entrenched auto industries in other countries because essentially, with the rise of evs, it's going to disrupt traditional auto supply chains that employ millions of people. So you've seen the US, you know, already called droping the import tariffs on ebs, and the EU is about to announce results from an anti subsidy investigation also into Chinese ebs. We've also seen action from Brazil where they remove a tax break for EV imports. So these countries are really putting up trade barriers, and that's going to be a challenge for Chinese carmakers who are looking to expand internationally.

So China looks to be hitting back, with the China Chamber of Commerce talking about raising import tariffs on cars with large engines. How much would that hurt some of the European automakers and to a lesser degree perhaps American car makers selling there.

So China looks to be hitting back, with the China Chamber of Commerce talking about raising import tariffs on cars with large engines. How much would that hurt some of the European automakers and to a lesser degree perhaps American car makers selling there.

Yeah, for the potential hike of this import tariff on large engine kaza, China has hinted that and they do well mostly hit European brands like Mercedes and BMW because they're the top importers into China right now. And interestingly, the largest importer of autoism too China last year was actually Toyota. So we're gonna have to see how this tariff, if it is raceed, will play out. Because Japan they have become collateral damage. American car makers actually don't import that many cars into China any more, so this action, if it goes ahead, will probably mostly impact European automakers.

Yeah, for the potential hike of this import tariff on large engine kaza, China has hinted that and they do well mostly hit European brands like Mercedes and BMW because they're the top importers into China right now. And interestingly, the largest importer of autoism too China last year was actually Toyota. So we're gonna have to see how this tariff, if it is raceed, will play out. Because Japan they have become collateral damage. American car makers actually don't import that many cars into China any more, so this action, if it goes ahead, will probably mostly impact European automakers.

I think a lot of listeners would be curious where China's strongest markets are outside of Europe. Let's say, for instance, in South America or on the African continent. Where is China having the most success in moving its cars abroad.

I think a lot of listeners would be curious where China's strongest markets are outside of Europe. Let's say, for instance, in South America or on the African continent. Where is China having the most success in moving its cars abroad.

China is actually growing its exports in different parts of the world. Like you said, South America is seeing a really big increase looking at countries like Brazil, Mexico, China is doing a lot of exporting their emerging markets is where China performs the best because they tend to be countries that have more friendly relations with China. So we're also seeing healthy growth of Chinese supply chains expanding as well as exporting into Southeast Asia, Africa, like you said, essentially places where there aren't as many antagonism and trade barriers against China.

China is actually growing its exports in different parts of the world. Like you said, South America is seeing a really big increase looking at countries like Brazil, Mexico, China is doing a lot of exporting their emerging markets is where China performs the best because they tend to be countries that have more friendly relations with China. So we're also seeing healthy growth of Chinese supply chains expanding as well as exporting into Southeast Asia, Africa, like you said, essentially places where there aren't as many antagonism and trade barriers against China.

One of the other interesting areas for a Chinese ev makers is at the luxury end. We know that BYD is now producing more luxury models, Zeker is another one, Neo is another one. Is that an area for growth for the Chinese car makers, let's say over the next decade.

One of the other interesting areas for a Chinese ev makers is at the luxury end. We know that BYD is now producing more luxury models, Zeker is another one, Neo is another one. Is that an area for growth for the Chinese car makers, let's say over the next decade.

Yeah, the Chinese carmakers definitely want to raise the average spelling price of their vehicles, and going upmarket luxury is a sure fire way to do that. One of the challenges is really around brand building, which is something that not just automakers, but Chinese companies is really having I guess, to learn how to do and trying to cultivate their own brand. Looking at markets like Europe, customers there actually have very strong brand loyalty. You know, some families may be driving Volks Fagins for generations. So for Chinese automakers are going up markets trying to build their brand, they really have to take the time and investment into doing that.

Yeah, the Chinese carmakers definitely want to raise the average spelling price of their vehicles, and going upmarket luxury is a sure fire way to do that. One of the challenges is really around brand building, which is something that not just automakers, but Chinese companies is really having I guess, to learn how to do and trying to cultivate their own brand. Looking at markets like Europe, customers there actually have very strong brand loyalty. You know, some families may be driving Volks Fagins for generations. So for Chinese automakers are going up markets trying to build their brand, they really have to take the time and investment into doing that.

All right, Linda, thanks so much for joining us. Always interesting to catch up on the latest developments with Chinese automakers. Linda lu has been with this Bloomberg China Cars reporter.

All right, Linda, thanks so much for joining us. Always interesting to catch up on the latest developments with Chinese automakers. Linda lu has been with this Bloomberg China Cars reporter.

Well.

Well.

Joining us now in our studios right here in Hong Kong for discussion markets is David job, who is Global Market Strategies for the Asia Pacific at Invesco. David, thanks very much. So we've run through some of the top stories there. It's an interesting environment, kind of bullish, I guess, coming off of some of the trading last week, particularly tied to AI and Nvidia. What is chief of mind for you as we start this week.

Joining us now in our studios right here in Hong Kong for discussion markets is David job, who is Global Market Strategies for the Asia Pacific at Invesco. David, thanks very much. So we've run through some of the top stories there. It's an interesting environment, kind of bullish, I guess, coming off of some of the trading last week, particularly tied to AI and Nvidia. What is chief of mind for you as we start this week.

Well, I think that there are a few things going on.

Well, I think that there are a few things going on.

I think that there continues to be questions as to if this AI trend has more legs run I think so. I think that the earnings guidance given by Nvidia and also other related AI manufacturers and AI apps, it shows that companies are spending money on capital expenditures on their AI development. And I think that you know, whether this has the same effect on the economy as said the Internet did you know twenty thirty years ago, is yet to be seen. It's probably not going to be as significant. But I think that the AI development is a very very important technological breaks that that should be a very strong investment growth trend over the coming years.

I think that there continues to be questions as to if this AI trend has more legs run I think so. I think that the earnings guidance given by Nvidia and also other related AI manufacturers and AI apps, it shows that companies are spending money on capital expenditures on their AI development. And I think that you know, whether this has the same effect on the economy as said the Internet did you know twenty thirty years ago, is yet to be seen. It's probably not going to be as significant. But I think that the AI development is a very very important technological breaks that that should be a very strong investment growth trend over the coming years.

So let's talk about how the tentacles of this trend extend out into the marketplace. So if you're a believer in AI, and you need only look at Nvidia's earnings to show that there are a lot of people who are believers, and that's not so much on bidding up the stock side, but in the actual business side. So if you think about those tentacles and how they spread, where do they go?

So let's talk about how the tentacles of this trend extend out into the marketplace. So if you're a believer in AI, and you need only look at Nvidia's earnings to show that there are a lot of people who are believers, and that's not so much on bidding up the stock side, but in the actual business side. So if you think about those tentacles and how they spread, where do they go?

Well, I think that there's both downstream opportunities for investments such as you know, you know, AI requires a lot of energy, so it requires also a lot of precious metals, industrial metals that go into manufacturing a lot of the semiconductor chips. Then you can go upstream in terms of investing in some of the applications that the AI technology runs on. So I think that there's a significant number of opportunities. We look at other places that have perhaps more interesting pockets of opportunity. In places like Korea and Taiwan, the stocks there and the indexes there are more weighted towards AI related technology. So I think that for those that have felt that they may have missed out on the single stock run in in the US or other places, I think that investing in the the COSTP or the Taiwan index could could be an interesting opportunity.

Well, I think that there's both downstream opportunities for investments such as you know, you know, AI requires a lot of energy, so it requires also a lot of precious metals, industrial metals that go into manufacturing a lot of the semiconductor chips. Then you can go upstream in terms of investing in some of the applications that the AI technology runs on. So I think that there's a significant number of opportunities. We look at other places that have perhaps more interesting pockets of opportunity. In places like Korea and Taiwan, the stocks there and the indexes there are more weighted towards AI related technology. So I think that for those that have felt that they may have missed out on the single stock run in in the US or other places, I think that investing in the the COSTP or the Taiwan index could could be an interesting opportunity.

We had an interesting line out of the Stock Exchange Operator in South Korea urging directors of listed companies to play a more active role in enhancing shareholder returns. When you talk to people about Japan and about South Korea, they sometimes talk about corporate governance improving. Uh is that part of your of your approach to those markets as well well?

We had an interesting line out of the Stock Exchange Operator in South Korea urging directors of listed companies to play a more active role in enhancing shareholder returns. When you talk to people about Japan and about South Korea, they sometimes talk about corporate governance improving. Uh is that part of your of your approach to those markets as well well?

I think that corporate governance are improving is somewhat of a subjective and relative term. But what's what's interesting there is that companies are being encouraged very meaningfully to increase shareholder you knows, and to increase shareholder maximize shareholder value there. We haven't seen this development for a very long time, and it's it's it's having a pretty significant impact I think overall on Japanese stocks, both in terms of seeing the valuation starting to really ramp up little known as.

I think that corporate governance are improving is somewhat of a subjective and relative term. But what's what's interesting there is that companies are being encouraged very meaningfully to increase shareholder you knows, and to increase shareholder maximize shareholder value there. We haven't seen this development for a very long time, and it's it's it's having a pretty significant impact I think overall on Japanese stocks, both in terms of seeing the valuation starting to really ramp up little known as.

A Korea UH and and what's going on there.

A Korea UH and and what's going on there.

And I think that similar efforts to maximized shareholder valued is also starting to develop.

And I think that similar efforts to maximized shareholder valued is also starting to develop.

So I think that these.

So I think that these.

Places you know are are are barreling down the right road.

Places you know are are are barreling down the right road.

Yeah, some of these areas would include better treatment of minority shareholders, that's one thing. Also buybacks, which you mentioned, and maybe raising dividends. So among those three things, you know, is anything that stands out? And is there anything else in this general area that companies are doing that you know are appealing to investors?

Yeah, some of these areas would include better treatment of minority shareholders, that's one thing. Also buybacks, which you mentioned, and maybe raising dividends. So among those three things, you know, is anything that stands out? And is there anything else in this general area that companies are doing that you know are appealing to investors?

Well, I think that these places in the past we haven't seen activist shareholders. I think maybe from a cultural standpoint, and in North Asia it's uh, you know, investors have tended to be very passive when it comes to directing UH. Corporate governance initiatives. But I think that's starting to change, and I think the change is good and and I think that we can continue to expect further you know developments.

Well, I think that these places in the past we haven't seen activist shareholders. I think maybe from a cultural standpoint, and in North Asia it's uh, you know, investors have tended to be very passive when it comes to directing UH. Corporate governance initiatives. But I think that's starting to change, and I think the change is good and and I think that we can continue to expect further you know developments.

Uh.

Uh.

Yeah, that's a very good point.

Yeah, that's a very good point.

It's something I left out was, uh, the embracing of activist investors who who really take a look at management and try to get better management, better decisions out of the board and.

It's something I left out was, uh, the embracing of activist investors who who really take a look at management and try to get better management, better decisions out of the board and.

The management on policy.

The management on policy.

So I think that's it's a good point to make now in terms of of the big macro set up, we know that the FED looks positioned now for higher interest rates for longer. Do you expect that to change anytime soon?

So I think that's it's a good point to make now in terms of of the big macro set up, we know that the FED looks positioned now for higher interest rates for longer. Do you expect that to change anytime soon?

Well, I think that that continues to be the million dollar question. I think even among the FED, we continue to see somewhat conflicting signals. I think it's it's very clear that you know, Charity J. Powell, perhaps it's a little more dubbish when it comes to instituting the first rate cut compared to other members of the f MC, which was you know, very exemplified in the recent FMC minute. So I think it's some it continues to be up for debate.

Well, I think that that continues to be the million dollar question. I think even among the FED, we continue to see somewhat conflicting signals. I think it's it's very clear that you know, Charity J. Powell, perhaps it's a little more dubbish when it comes to instituting the first rate cut compared to other members of the f MC, which was you know, very exemplified in the recent FMC minute. So I think it's some it continues to be up for debate.

Yeah.

Yeah.

I spoke with an investor in the last Hour, who was particularly nervous that the FED might want to kind of further brandish it's it's sort of toughness and its ability to fight inflation, to once growth starts to weaken, to continue with this posture of hire for longer. Is that something that you fear as well?

I spoke with an investor in the last Hour, who was particularly nervous that the FED might want to kind of further brandish it's it's sort of toughness and its ability to fight inflation, to once growth starts to weaken, to continue with this posture of hire for longer. Is that something that you fear as well?

Well.

Well.

I think that many strategist economists were were wrong in thinking that the US was going to hit a you know, a hard landing last year. We certainly didn't see it. We're not seeing it this year so far. I think that US growth is certainly starting to modify. It' starting to to slow down a bit, and many signals and I think the US is really hitting kind of this.

I think that many strategist economists were were wrong in thinking that the US was going to hit a you know, a hard landing last year. We certainly didn't see it. We're not seeing it this year so far. I think that US growth is certainly starting to modify. It' starting to to slow down a bit, and many signals and I think the US is really hitting kind of this.

Two two growth spurt, you know, with the lower.

Two two growth spurt, you know, with the lower.

Incomes a k recovery right where the wealthy classes are doing fine, but the lower income strata not so.

Incomes a k recovery right where the wealthy classes are doing fine, but the lower income strata not so.

Fine, That's right.

Fine, That's right.

So I think that if you're the FED, you're looking at this and and so your hands are a bit tied and in terms of im trying to assess what the economic growth landscape really is. And I think that going forward, you know, US growth is going to stabilize a bit. But I think at the at the end of this year that we could start to see a bit of a reacceleration.

So I think that if you're the FED, you're looking at this and and so your hands are a bit tied and in terms of im trying to assess what the economic growth landscape really is. And I think that going forward, you know, US growth is going to stabilize a bit. But I think at the at the end of this year that we could start to see a bit of a reacceleration.

And some investors that I talked to believe that generally speaking, the market is not discounting a number of areas, particularly geopolitics, the two wars, that you could be a third war if you talk about a trade war between the US and China, that there are still a lot of risks out there that perhaps need to be better discounted.

And some investors that I talked to believe that generally speaking, the market is not discounting a number of areas, particularly geopolitics, the two wars, that you could be a third war if you talk about a trade war between the US and China, that there are still a lot of risks out there that perhaps need to be better discounted.

Oh indeed, I think that you know, we get questions about the US presidential election and the risks there. I don't worry about that. What I do worry about are other geopolitical risks. I think, what's going on. You know, we haven't seen wars in Europe and the Middle East at the same time for a very long time, and so I think that that's that's perhaps one of the risks that that needs to be better appreciated.

Oh indeed, I think that you know, we get questions about the US presidential election and the risks there. I don't worry about that. What I do worry about are other geopolitical risks. I think, what's going on. You know, we haven't seen wars in Europe and the Middle East at the same time for a very long time, and so I think that that's that's perhaps one of the risks that that needs to be better appreciated.

Do you worry that whoever becomes president at some point they're going to be facing this notion that they need to raise revenue, that the interest expenses are are hurting a lot, particularly given the high level.

Do you worry that whoever becomes president at some point they're going to be facing this notion that they need to raise revenue, that the interest expenses are are hurting a lot, particularly given the high level.

Of interest rates.

Of interest rates.

And you know, I mean if president if form President Trump wins, you're probably not going to see higher taxes, but you might if Joe Biden wins.

And you know, I mean if president if form President Trump wins, you're probably not going to see higher taxes, but you might if Joe Biden wins.

Well, I think that the US debt burden has certainly been on the minds of many, and you know, a significant portion of the US debt was really racked up over the past six years, you know, But ultimately, the US government is one of the biggest holders of debt.

Well, I think that the US debt burden has certainly been on the minds of many, and you know, a significant portion of the US debt was really racked up over the past six years, you know, But ultimately, the US government is one of the biggest holders of debt.

Institutions are holder of US debt.

Institutions are holder of US debt.

I so I don't really see that becoming a significant issue, although the higher interest payments certainly is is mind boggling. I think that, you know, there's more payments and more capital devoted to interest payments than defense spending in the US. But I think ultimately, if the FED is going to cut rates, and we still expect them to do so, perhaps at the end of this year, that should provide some relief.

I so I don't really see that becoming a significant issue, although the higher interest payments certainly is is mind boggling. I think that, you know, there's more payments and more capital devoted to interest payments than defense spending in the US. But I think ultimately, if the FED is going to cut rates, and we still expect them to do so, perhaps at the end of this year, that should provide some relief.

Okay, I give you the sixty second elevator pitch. What is your best investment idea at the moment?

Okay, I give you the sixty second elevator pitch. What is your best investment idea at the moment?

I still really like emerging market equities and European equities. In Europe, European equities are relatively cheap, and both the French and the German economy you're starting to improve. I also really like non investment grade quality debt, things like you know, senior loans, bank loans, perhaps things like private credit. We continue to be an environment where we're being exposed to high interest rates.

I still really like emerging market equities and European equities. In Europe, European equities are relatively cheap, and both the French and the German economy you're starting to improve. I also really like non investment grade quality debt, things like you know, senior loans, bank loans, perhaps things like private credit. We continue to be an environment where we're being exposed to high interest rates.

Makes sense you like private credit rather than just going into the public markets.

Makes sense you like private credit rather than just going into the public markets.

Well, I think I think that given where spreads are right now, between HYYLD spreads, it doesn't make sense to take that risk there. But I think that private credits continue to be you know, we continue to see very juicy spreads and I think that this is this is a diversifier to one's portfolio.

Well, I think I think that given where spreads are right now, between HYYLD spreads, it doesn't make sense to take that risk there. But I think that private credits continue to be you know, we continue to see very juicy spreads and I think that this is this is a diversifier to one's portfolio.

Okay, well, David, thanks very much.

Okay, well, David, thanks very much.

Monday morning. You got to hit the ground running. You come in here and get nine minutes of questions on every front. Thank you for joining us in our studios on a Monday morning.

Monday morning. You got to hit the ground running. You come in here and get nine minutes of questions on every front. Thank you for joining us in our studios on a Monday morning.

I mean, these guys eat it up. Don't worry that this is what they do for a living. David Chow's been with us from Invesco.

I mean, these guys eat it up. Don't worry that this is what they do for a living. David Chow's been with us from Invesco.

This is the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This is the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.