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This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. You can join Brian Curtis and myself for the stories, making news and moving markets in the APAC region. You can subscribe to the show anywhere you get your podcast and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

China has announced that it will be holding a briefing on Saturday morning on fiscal policy. The State Council says that the Finance Minister will be introducing moves to strengthen fiscal policy, so industrials will be expecting some tangible news. Joining us now in our studios as Dan ten Kate Bloomberg Asia Eco goov Executive editor. So we know there's the potential for some disappointment, Dan, but this is actually the Finance Ministry and along with the State Council, this is where you would get this kind of information. Are we expecting money which from the minister and if so, what will some of the details likely be.

China has announced that it will be holding a briefing on Saturday morning on fiscal policy. The State Council says that the Finance Minister will be introducing moves to strengthen fiscal policy, so industrials will be expecting some tangible news. Joining us now in our studios as Dan ten Kate Bloomberg Asia Eco goov Executive editor. So we know there's the potential for some disappointment, Dan, but this is actually the Finance Ministry and along with the State Council, this is where you would get this kind of information. Are we expecting money which from the minister and if so, what will some of the details likely be.

Yeah, well, certainly the markets are anticipating real stimulus, some concrete measures, some actual money. We didn't get that earlier this week with the NDARC, And as you mentioned, the NDRC wouldn't be the body the Chinese agency that would necessarily give you those hard details. So the Finance Minister is the one in the Chinese system who can deliver on that. And you know, the market swings that we've seen indicate that there's a real urge to see something concrete to keep this rally going.

Yeah, well, certainly the markets are anticipating real stimulus, some concrete measures, some actual money. We didn't get that earlier this week with the NDARC, And as you mentioned, the NDRC wouldn't be the body the Chinese agency that would necessarily give you those hard details. So the Finance Minister is the one in the Chinese system who can deliver on that. And you know, the market swings that we've seen indicate that there's a real urge to see something concrete to keep this rally going.

Right now, the way we understand things is that the growth targets remain intact. Could that change? Do you think in any meaningful way?

Right now, the way we understand things is that the growth targets remain intact. Could that change? Do you think in any meaningful way?

Well, pretty much they are. You know, the NDRC, which is China's economic planner, they did indicate that they were on target to hit that GDP target of about four point eight percent. The real problem with Chin China's economy right now is these deflationary pressures. So even if you hit five percent real growth, if you have deflation of one percent, your nominal growth is not growing and so overall your economy isn't really moving. In fact, prices are just declining and people are getting poorer essentially, So that number needs to be put into context in that sense, and what economists are looking for is something to get the private sector moving again and to get a bit of inflation to get investment going and to kind of reverse this decline that we've seen, to prevent this sort of Japan style deflation that could really eat gains in wealth over time.

Well, pretty much they are. You know, the NDRC, which is China's economic planner, they did indicate that they were on target to hit that GDP target of about four point eight percent. The real problem with Chin China's economy right now is these deflationary pressures. So even if you hit five percent real growth, if you have deflation of one percent, your nominal growth is not growing and so overall your economy isn't really moving. In fact, prices are just declining and people are getting poorer essentially, So that number needs to be put into context in that sense, and what economists are looking for is something to get the private sector moving again and to get a bit of inflation to get investment going and to kind of reverse this decline that we've seen, to prevent this sort of Japan style deflation that could really eat gains in wealth over time.

It seems urgent from a market point of view, and it may seem urgent from consumers who are disappointed, and of course the authorities don't want people out in the streets. But we just had a guest on that said, you know, maybe expect a little little bit more patience here. The authorities don't want these kind of rapid gains that we've seen in markets, So I wonder if investors are getting themselves a little bit too far out over their skis.

It seems urgent from a market point of view, and it may seem urgent from consumers who are disappointed, and of course the authorities don't want people out in the streets. But we just had a guest on that said, you know, maybe expect a little little bit more patience here. The authorities don't want these kind of rapid gains that we've seen in markets, So I wonder if investors are getting themselves a little bit too far out over their skis.

Yeah, there's definitely a mismatch between official thinking in Beijing and investors at the moment. And you know, volatility is something that Chinese authorities never really like that. What they would prefer is just kind of a slow and steady climb up to the top. But you know, with the big headlines flying on the Bloomberg terminal, et cetera, the big market swings that we're used to in the world today, that's just not the case. And we've seen you know, a thirty percent jump over the past couple of Weeks's that's getting way ahead of your skis in some sense for what the authorities can deliver.

Yeah, there's definitely a mismatch between official thinking in Beijing and investors at the moment. And you know, volatility is something that Chinese authorities never really like that. What they would prefer is just kind of a slow and steady climb up to the top. But you know, with the big headlines flying on the Bloomberg terminal, et cetera, the big market swings that we're used to in the world today, that's just not the case. And we've seen you know, a thirty percent jump over the past couple of Weeks's that's getting way ahead of your skis in some sense for what the authorities can deliver.

So we're just coming back from the Golden Week holiday. Have we been able to look at any high frequency data to see how consumers were behaving in that period.

So we're just coming back from the Golden Week holiday. Have we been able to look at any high frequency data to see how consumers were behaving in that period.

Yeah, there, you know the consumers, it's not as much as you would want. And I think that that's kind of the problem here, is that the Chinese consumer is not delivering in a way that is really going to make people of confidence in China's growth at the moment. And that's you know, we're seeing people just tighten their belts across the board. We've seen, you know, bankers having to give up bonuses, we've seen salary cuts, We've seen prices following, restaurants giving details or deals on food and basics. So, you know, Chinese people right now, they are very cautious on spending. You know, the hope from the government was in part that the stock market gains would make people feel a bit richer and help this elusive concept of confidence in the consumer. But you know that is fleeting. As we've seen, markets can rise and they can fall very quickly as well.

Yeah, there, you know the consumers, it's not as much as you would want. And I think that that's kind of the problem here, is that the Chinese consumer is not delivering in a way that is really going to make people of confidence in China's growth at the moment. And that's you know, we're seeing people just tighten their belts across the board. We've seen, you know, bankers having to give up bonuses, we've seen salary cuts, We've seen prices following, restaurants giving details or deals on food and basics. So, you know, Chinese people right now, they are very cautious on spending. You know, the hope from the government was in part that the stock market gains would make people feel a bit richer and help this elusive concept of confidence in the consumer. But you know that is fleeting. As we've seen, markets can rise and they can fall very quickly as well.

Dan, it's a little tricky because it seemed like, you know, this has been such a long period of declient since twenty twenty one, that you needed sort of a shock in all moment, and then when you get it, then you know when the response is so dramatic that you feel that authorities want to go a little bit slower. You can kind of feel their pain a little bit. You would think that just incremental announcements of positive moves on the market would be what the doctor ordered. And we did get a little bit more this morning, in addition to the announcement about the fiscal stimulus coming via the Finance Minister, about the PBOC and its swamp facility to start app accepting applications today from funds and insurance companies and securities where these institutions can borrow against their holdings and can buy backstock and that sort of thing. Is this something that you're getting positive vibes from from investors?

Dan, it's a little tricky because it seemed like, you know, this has been such a long period of declient since twenty twenty one, that you needed sort of a shock in all moment, and then when you get it, then you know when the response is so dramatic that you feel that authorities want to go a little bit slower. You can kind of feel their pain a little bit. You would think that just incremental announcements of positive moves on the market would be what the doctor ordered. And we did get a little bit more this morning, in addition to the announcement about the fiscal stimulus coming via the Finance Minister, about the PBOC and its swamp facility to start app accepting applications today from funds and insurance companies and securities where these institutions can borrow against their holdings and can buy backstock and that sort of thing. Is this something that you're getting positive vibes from from investors?

Well, definitely, the moves on from the Chinese authorities, particularly the PBOC to cut rates and that monetary stimulus and to signal like support for stocks in general have have been seen as positive signals. But I think what people are waiting for is this fiscal firepower from the government, and that has yet to come, and that's why there was some disappointment earlier this week, and that's why there's high hopes for this weekend that the Finance minister will deliver.

Well, definitely, the moves on from the Chinese authorities, particularly the PBOC to cut rates and that monetary stimulus and to signal like support for stocks in general have have been seen as positive signals. But I think what people are waiting for is this fiscal firepower from the government, and that has yet to come, and that's why there was some disappointment earlier this week, and that's why there's high hopes for this weekend that the Finance minister will deliver.

You mentioned earlier the possibility of China kind of mirroring what happened in Japan over three decades beginning in the late nineteen eighties early nineteen nineties. Do you think that's underneath I mean, the fear of that kind of outcome really underneath the motivation for a lot of the stimulus that we have seen.

You mentioned earlier the possibility of China kind of mirroring what happened in Japan over three decades beginning in the late nineteen eighties early nineteen nineties. Do you think that's underneath I mean, the fear of that kind of outcome really underneath the motivation for a lot of the stimulus that we have seen.

Yeah, the Chinese authorities have definitely studied the case in Japan, and there's a lot of different views about whether China is actually heading there or not. There's some key differences among them. The fact that China is not as wealthy as Japan was back in the day. Some acconas will tell you that makes China's situation even potentially worse. But what we're seeing more broadly from China is that they're trying to deflate the property bubble while also maintaining some growth in these bigger sectors like evs and solar panels and kind of new energy type of stuff. And that's why you see these dueling narratives about how China's domestic economy is falling off a cliff. But at the same time, China is taking over the world on all these major manufacturing things and increasing trade tensions all around the globe. And so that's really the conundrum is here, is how do they successfully land the plane there and get back to stable growth.

Yeah, the Chinese authorities have definitely studied the case in Japan, and there's a lot of different views about whether China is actually heading there or not. There's some key differences among them. The fact that China is not as wealthy as Japan was back in the day. Some acconas will tell you that makes China's situation even potentially worse. But what we're seeing more broadly from China is that they're trying to deflate the property bubble while also maintaining some growth in these bigger sectors like evs and solar panels and kind of new energy type of stuff. And that's why you see these dueling narratives about how China's domestic economy is falling off a cliff. But at the same time, China is taking over the world on all these major manufacturing things and increasing trade tensions all around the globe. And so that's really the conundrum is here, is how do they successfully land the plane there and get back to stable growth.

The Polar Bureau has pledged to stop housing market declines. How would you assess the progress on that front?

The Polar Bureau has pledged to stop housing market declines. How would you assess the progress on that front?

They still have more to do. I mean, the measures that they've released to buy unsold housing in particular have not really caught fire yet, so there's a lot of room to expand that we might hear more about that on Saturday. What we're very clear on is that the authorities view the drag on property sector as really too much. It's kind of they do want to deflate the property sector, but they don't want it dragging on GDP so much. So all the gains that you're seeing in these other sectors are being way offset. So the view is, okay, if you could put a if you could stop the bleeding on the property sector, not necessarily even boosted that much, but just stop the downward spiral, then you could stabilize the economy and the GDP number will look.

They still have more to do. I mean, the measures that they've released to buy unsold housing in particular have not really caught fire yet, so there's a lot of room to expand that we might hear more about that on Saturday. What we're very clear on is that the authorities view the drag on property sector as really too much. It's kind of they do want to deflate the property sector, but they don't want it dragging on GDP so much. So all the gains that you're seeing in these other sectors are being way offset. So the view is, okay, if you could put a if you could stop the bleeding on the property sector, not necessarily even boosted that much, but just stop the downward spiral, then you could stabilize the economy and the GDP number will look.

Better very quickly. Dan, do you think there's the possibility that China could scale back a little bit on its defense spending to have more ammunition u pun intended to apply on the overall economy.

Better very quickly. Dan, do you think there's the possibility that China could scale back a little bit on its defense spending to have more ammunition u pun intended to apply on the overall economy.

It's unlikely they would. I mean, they haven't really significantly boosted defense spending as a proportion of GDP over the years, and China's expenditures on defense are very opeque anyway, so it would be very difficult to tell whether if they're in fact doing that speakin.

It's unlikely they would. I mean, they haven't really significantly boosted defense spending as a proportion of GDP over the years, and China's expenditures on defense are very opeque anyway, so it would be very difficult to tell whether if they're in fact doing that speakin.

With yeah, Dan, Thanks very much, Dan ten K, Bloomberg Asia Eco Gov Executive Editor. Let's get to our guest, you Ting Shao, macro strategists at State Street Global Markets. You think there are a lot of headwinds or rather tailwinds for US equities At the moment. It seems to be telling a pretty positive story, but the valuations are high. That seems to be one of the biggest blocks. If history is your guide, you might not feel very comfortable at these levels. So how do we justify these these levels of valuation? Right?

With yeah, Dan, Thanks very much, Dan ten K, Bloomberg Asia Eco Gov Executive Editor. Let's get to our guest, you Ting Shao, macro strategists at State Street Global Markets. You think there are a lot of headwinds or rather tailwinds for US equities At the moment. It seems to be telling a pretty positive story, but the valuations are high. That seems to be one of the biggest blocks. If history is your guide, you might not feel very comfortable at these levels. So how do we justify these these levels of valuation? Right?

So, I think given where we are in the US equity space, there's still a lot of i think positivity from the investor sentiment perspective, given that we are still in this world where you know, earnings might quite a bit and or the US said, you know, earning still look to be quite resilient, and now that you are entering this support of recounting cycle that overall is a very friendly environment for equity. So even though you know, valuation looks a bit a bit stressed, you don't really see signs of things start to crack. So there's really not, in our views, a lot of reasons to pull back from this point.

So, I think given where we are in the US equity space, there's still a lot of i think positivity from the investor sentiment perspective, given that we are still in this world where you know, earnings might quite a bit and or the US said, you know, earning still look to be quite resilient, and now that you are entering this support of recounting cycle that overall is a very friendly environment for equity. So even though you know, valuation looks a bit a bit stressed, you don't really see signs of things start to crack. So there's really not, in our views, a lot of reasons to pull back from this point.

Let's talk a little bit about China. It's hard to ignore the amountain of stimulus measures that the government has unveiled recently and the enthusiasm short lived as it may have been in the equity space long term. Now are you positive on China? Do you believe that this stimulus is represents a pivot point.

Let's talk a little bit about China. It's hard to ignore the amountain of stimulus measures that the government has unveiled recently and the enthusiasm short lived as it may have been in the equity space long term. Now are you positive on China? Do you believe that this stimulus is represents a pivot point.

Yeah. I think what we've seen so far is definitely showing there is a sense of urgency from authorities, and it is a bit of a pivot point when it comes to you know, the last year and a half of these meal measures we've seen versus what we've seen this time around of more coordinated, more comprehensive combination policies to really at least, you know, stabilize the sentiment, arrest the weakening momentum. So I think to really achieve the growth target at this point for the year, it's really we are well in line to achieve that, but you know, looking beyond that, we still need to see more, uh, you know, data to really confirm on the macro side, things that are recovering, especially from consumers and on real estate side as well. So I think fiscal policy is going to help, uh, you know, to really make this rally more sustainable and really translate more into recovery on the macro side. Of course, we will have the Ministry of Finance briefing. It's upcoming this Saturday, so you know, more details to be revealed by then.

Yeah. I think what we've seen so far is definitely showing there is a sense of urgency from authorities, and it is a bit of a pivot point when it comes to you know, the last year and a half of these meal measures we've seen versus what we've seen this time around of more coordinated, more comprehensive combination policies to really at least, you know, stabilize the sentiment, arrest the weakening momentum. So I think to really achieve the growth target at this point for the year, it's really we are well in line to achieve that, but you know, looking beyond that, we still need to see more, uh, you know, data to really confirm on the macro side, things that are recovering, especially from consumers and on real estate side as well. So I think fiscal policy is going to help, uh, you know, to really make this rally more sustainable and really translate more into recovery on the macro side. Of course, we will have the Ministry of Finance briefing. It's upcoming this Saturday, so you know, more details to be revealed by then.

Do you think that that's kind of a make or break moment in that there was some disappointment after the NDRs. See, you know, we know that that that's not the the uh uh the source perhaps of new stimulus and the Ministry of Finance actually is, but it seems like investors, you know, they may be if if this, if they don't, if he doesn't deliver on Saturday, you wonder what might.

Do you think that that's kind of a make or break moment in that there was some disappointment after the NDRs. See, you know, we know that that that's not the the uh uh the source perhaps of new stimulus and the Ministry of Finance actually is, but it seems like investors, you know, they may be if if this, if they don't, if he doesn't deliver on Saturday, you wonder what might.

Happen right right, There is definitely quite a bit of disappointment out of the d r C briefing, where you know, market was very excited going into it, hoping there's more you know, to come after the Golden wik Holiday. Of course, so I think to understand, you know, you do need more as the people have it arguing on the physical side, there needs, you know, to be done on the measures. But I think whether it will be to make it or break in a moment, we probably wouldn't be that extreme because I think one thing that when need to keep in mind is from the authority's perspective, they don't necessarily want to think to see things moving too quickly in one direction or the other. The very massive rally we've seen, you know, does show that, you know, there is this very entrenched parish underweight in the Chinese space, which is why you see a lot of the shortcovering you know, the rally into it. But they don't necessarily want to see things going up twenty thirty percent in the you know, in a span of one week and that's not really sustainable, not very healthy either.

Happen right right, There is definitely quite a bit of disappointment out of the d r C briefing, where you know, market was very excited going into it, hoping there's more you know, to come after the Golden wik Holiday. Of course, so I think to understand, you know, you do need more as the people have it arguing on the physical side, there needs, you know, to be done on the measures. But I think whether it will be to make it or break in a moment, we probably wouldn't be that extreme because I think one thing that when need to keep in mind is from the authority's perspective, they don't necessarily want to think to see things moving too quickly in one direction or the other. The very massive rally we've seen, you know, does show that, you know, there is this very entrenched parish underweight in the Chinese space, which is why you see a lot of the shortcovering you know, the rally into it. But they don't necessarily want to see things going up twenty thirty percent in the you know, in a span of one week and that's not really sustainable, not very healthy either.

What is the house view, it's stayed straight on Chinese equities right now.

What is the house view, it's stayed straight on Chinese equities right now.

We are neutral at this point. We were underweight going into the simials measure, and I think for a lot of people that's similar views as well. I think that they've definitely surprised to the upside when it comes to the overall combination of measures. But in our views, you know, we think at the moment, you know, to chase the rally, you need to see more. But you know, they have done quite a bit and that is warranted adopt great from underway to neutral.

We are neutral at this point. We were underweight going into the simials measure, and I think for a lot of people that's similar views as well. I think that they've definitely surprised to the upside when it comes to the overall combination of measures. But in our views, you know, we think at the moment, you know, to chase the rally, you need to see more. But you know, they have done quite a bit and that is warranted adopt great from underway to neutral.

The other one that's a little tricky to figure out is the Japan market. The nick A is pushing forty thousand again. Now it seems like there's been a little bit of pressure on the BOJ and so the BOJ has pulled back on normalizing just yet. But do you have a positive view on Japan or not so much?

The other one that's a little tricky to figure out is the Japan market. The nick A is pushing forty thousand again. Now it seems like there's been a little bit of pressure on the BOJ and so the BOJ has pulled back on normalizing just yet. But do you have a positive view on Japan or not so much?

I think on the BOJ MITRO policy side, you know, we think even though they're taking a bit of a pause on the monetary policy normalization, the crucial matter is we are still in this world where Japan is the outlier with energy tenk space which is still on the hiking paths when everyone else has started to cut, so that you know, looking ahead, we are likely to get more you know normalization, whether it's the end of this year or heading into next year, because inflation is coming back, you know, even though growth is not that strong at the moment, there's definitely signs of inflation start to come back to Japan and becoming more sustainable in the system. So that does warrant the further normalization of policy and a higher rate than that where we are at the moment as the terminal. So for the currency side, as a result of that, we are you know, in a case and that we think potentially there could be more strengths that coming into the end. So as a result of that, you know that is going to you know, both a little bit less well for the equity space, and also you know, keep in mind you also have quite a lot of this money that potentially can be repatriated back into the Japan market once you start to see JGB picking up and restart to go up, so that there can be some rotation in that aspect as well.

I think on the BOJ MITRO policy side, you know, we think even though they're taking a bit of a pause on the monetary policy normalization, the crucial matter is we are still in this world where Japan is the outlier with energy tenk space which is still on the hiking paths when everyone else has started to cut, so that you know, looking ahead, we are likely to get more you know normalization, whether it's the end of this year or heading into next year, because inflation is coming back, you know, even though growth is not that strong at the moment, there's definitely signs of inflation start to come back to Japan and becoming more sustainable in the system. So that does warrant the further normalization of policy and a higher rate than that where we are at the moment as the terminal. So for the currency side, as a result of that, we are you know, in a case and that we think potentially there could be more strengths that coming into the end. So as a result of that, you know that is going to you know, both a little bit less well for the equity space, and also you know, keep in mind you also have quite a lot of this money that potentially can be repatriated back into the Japan market once you start to see JGB picking up and restart to go up, so that there can be some rotation in that aspect as well.

All right, you think, thanks very much for joining us, You team Shao, macro strategist at State Street Global Markets, a closely look at markets. The next three days could be very very interesting in Hong Kong and China. Joining us now is Paul Dobson, Bloomberg Executive Editor for Asia Markets in our studios in Singapore. So we had this announcement yesterday that the Finance Ministry will address the public on Saturday morning and we'll talk about strengthening fiscal policy. So that's one very big thing. Also today, as of today, the PBOC has set up this swap facility to allow insurance companies and securities firms and funds to borrow to get liquidity against their holdings to buy back shares. And if you're looking for something that is tangible in the market, I mean a lot of stimulus will help the economy, but is it tangible in markets? This swap facility could be tangible in markets. Paul, So, I guess the question is are we at a turning point here in interpreting how serious they are about stimulus?

All right, you think, thanks very much for joining us, You team Shao, macro strategist at State Street Global Markets, a closely look at markets. The next three days could be very very interesting in Hong Kong and China. Joining us now is Paul Dobson, Bloomberg Executive Editor for Asia Markets in our studios in Singapore. So we had this announcement yesterday that the Finance Ministry will address the public on Saturday morning and we'll talk about strengthening fiscal policy. So that's one very big thing. Also today, as of today, the PBOC has set up this swap facility to allow insurance companies and securities firms and funds to borrow to get liquidity against their holdings to buy back shares. And if you're looking for something that is tangible in the market, I mean a lot of stimulus will help the economy, but is it tangible in markets? This swap facility could be tangible in markets. Paul, So, I guess the question is are we at a turning point here in interpreting how serious they are about stimulus?

Hi?

Hi?

Hi that, Brian, I think it's the right question. I don't know if I have a good answer for you, because we still don't have enough details. And that's what the streets is really crying out for now. We heard from policymakers over the past few days saying they're willing to listen to the markets in the marketplace. What companies want, what people and traders and investors need, What they need is more finds. They're stimulus not just to support the market, but to support the underlying economy, to bring back that consumer confidence to revive the property market. And we have seen some signs and hints and clues as to it, but really what we want to know is how big is this package going to be, How extensive is it going to be in order for people to really be to convince and to carry on buying into this massive upswing that we've seen over the past few weeks of trading around the holiday. So that's where the market is so nervous right now. It's very interesting to see that this briefing is going to take place on a Saturday while markets are closed. Maybe that keeps things a little bit calmer for them to give those announcements and make sure that they're properly explained. But the market is still wondering whether we will actually get any figures from that, whether it's the Finance Ministry, that is the right place to to announce those numbers which are so crucial on which people are waiting to hear.

Hi that, Brian, I think it's the right question. I don't know if I have a good answer for you, because we still don't have enough details. And that's what the streets is really crying out for now. We heard from policymakers over the past few days saying they're willing to listen to the markets in the marketplace. What companies want, what people and traders and investors need, What they need is more finds. They're stimulus not just to support the market, but to support the underlying economy, to bring back that consumer confidence to revive the property market. And we have seen some signs and hints and clues as to it, but really what we want to know is how big is this package going to be, How extensive is it going to be in order for people to really be to convince and to carry on buying into this massive upswing that we've seen over the past few weeks of trading around the holiday. So that's where the market is so nervous right now. It's very interesting to see that this briefing is going to take place on a Saturday while markets are closed. Maybe that keeps things a little bit calmer for them to give those announcements and make sure that they're properly explained. But the market is still wondering whether we will actually get any figures from that, whether it's the Finance Ministry, that is the right place to to announce those numbers which are so crucial on which people are waiting to hear.

Poll as you know, I mean, has been stuck in this deflationary trap for some time. But I'm wondering whether or not historically you can look at a period of time and maybe make an analogy. Is there a time when regulators' authorities in Beijing essentially through everything and the kitchen sink at the problem to try to pivot and turn a very bad sentiment into something that is a lot more positive.

Poll as you know, I mean, has been stuck in this deflationary trap for some time. But I'm wondering whether or not historically you can look at a period of time and maybe make an analogy. Is there a time when regulators' authorities in Beijing essentially through everything and the kitchen sink at the problem to try to pivot and turn a very bad sentiment into something that is a lot more positive.

Yeah, I mean, yeah, there's a track record of it. And I think people are almost as worried about how that has led to a kind of overheating of the markets that then turned into a bubble that then burst as they are about the possibility of under delivery, which is what has been the theme over the last few years. So you know, think about some of those previous stimulus bursts that we've seen going way back into the early part of this millennium, and some of the booms and bus cycles that we've seen so throw in the kitchen sink at it will nearly are all going for you know, growth based on exports and that kind of thing, old old Willstonmias building white elephant projects. That's not really what people want to see. Yes, it will provide that temporary sugar rush, but it's not going to be sustainable. And okay, so speculators will rush in and jump onto the bandwagon and push those asset prices higher. But what the rest of the world. What you know, international investors, you've taken their money out of China over the past few years, want to see is more of a conviction to long term economic reform and growth, not just in terms of manufacturing, which has been extremely successful, but also in terms of consumer and pushing that narrative.

Yeah, I mean, yeah, there's a track record of it. And I think people are almost as worried about how that has led to a kind of overheating of the markets that then turned into a bubble that then burst as they are about the possibility of under delivery, which is what has been the theme over the last few years. So you know, think about some of those previous stimulus bursts that we've seen going way back into the early part of this millennium, and some of the booms and bus cycles that we've seen so throw in the kitchen sink at it will nearly are all going for you know, growth based on exports and that kind of thing, old old Willstonmias building white elephant projects. That's not really what people want to see. Yes, it will provide that temporary sugar rush, but it's not going to be sustainable. And okay, so speculators will rush in and jump onto the bandwagon and push those asset prices higher. But what the rest of the world. What you know, international investors, you've taken their money out of China over the past few years, want to see is more of a conviction to long term economic reform and growth, not just in terms of manufacturing, which has been extremely successful, but also in terms of consumer and pushing that narrative.

Well, Paul, the market seems a little out of step with what the economy has produced over the past three or four years because we've seen such a huge dark cloud over over markets in China that you know, you have a situation where for Hong Kong, for instance, Hangsing Index down from more than thirty one thousand, creating down around the fifteen sixteen thousand level, the CSI three hundred, you know, down in the three thousands when it was well up over fifty five hundred at one point. So it does seem that, you know, a lot of this is self inflicted. I mean, they came out with some very very powerful anti private sector policies over the past three years, and maybe this is just a little bit kind of writing the ship a bit.

Well, Paul, the market seems a little out of step with what the economy has produced over the past three or four years because we've seen such a huge dark cloud over over markets in China that you know, you have a situation where for Hong Kong, for instance, Hangsing Index down from more than thirty one thousand, creating down around the fifteen sixteen thousand level, the CSI three hundred, you know, down in the three thousands when it was well up over fifty five hundred at one point. So it does seem that, you know, a lot of this is self inflicted. I mean, they came out with some very very powerful anti private sector policies over the past three years, and maybe this is just a little bit kind of writing the ship a bit.

Yes, yeah, writing the ship a little bit. The valuations are still relatively low, even after the rally that we've seen in the past few weeks. I think that that's really the key to their longer term trajectory. So much of our reporting over the last year year and a half has been about international investors, you know, US pension funds, index trackers, emerging market investors looking at ways of reducing their holdings of China, lowering the benchmark waiting that they're using to follow China in emerging market indexes, or just you know, kind of deciding that it's too risky and you know, taking holdings all the way to zero. If China wants to bring that international money back, it's got to create a much more stable regulatory framework, much more reliable, and much more long term for that sustainable investment flow to come back here.

Yes, yeah, writing the ship a little bit. The valuations are still relatively low, even after the rally that we've seen in the past few weeks. I think that that's really the key to their longer term trajectory. So much of our reporting over the last year year and a half has been about international investors, you know, US pension funds, index trackers, emerging market investors looking at ways of reducing their holdings of China, lowering the benchmark waiting that they're using to follow China in emerging market indexes, or just you know, kind of deciding that it's too risky and you know, taking holdings all the way to zero. If China wants to bring that international money back, it's got to create a much more stable regulatory framework, much more reliable, and much more long term for that sustainable investment flow to come back here.

Yeah, and to get consumers feeling at least a little bit comfortable for spending their hard earned dollars. Paul, thanks so much for joining us. Paul Dobson, Bloomberg Executive Editor for Asia Markets.

Yeah, and to get consumers feeling at least a little bit comfortable for spending their hard earned dollars. Paul, thanks so much for joining us. Paul Dobson, Bloomberg Executive Editor for Asia Markets.

This has been 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 has been 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.