Bloomberg Markets: Asia 03/11/2024

It is almost 11 a.m. in Singapore, in Shanghai. Welcome to Bloomberg Markets Asia. I'm Haslinda Amin. And here are the top stories. Is the fed any closer to a rate cut? Well, investors look ahead to the US inflation data on Tuesday for more clues on where rates may be headed. Chinese lawmakers are set to wrap up their annual meeting with discuss whether investors heard anything that could change their mind on equities. Also ahead, it's not just AIG mania, the short volatility. Trade is roaring b

ack on Wall Street, with investors sinking billions into ETFs betting on a calm market. Plus, we have a great lineup of guests to discuss. Markets. AVM Capital founder and CEO Ashwin Murthy is up first. And later on in the focus we have on Rafi to weigh in on the rally there on the markets. It is a big week ahead. Of course, we have front and center the CPI data out of the US that is front and center in terms of investors. Are Asian markets under pressure led by tech slumping about 4% in chipmak

ers in particular, We saw that pullback in the US and Nvidia leading the pack lower among max seven, losing about 6% on the back of that. Investors looking ahead to US CPI data as we said looking for guidance from the Fed. Perhaps this is a Powell who has said that we're not too far from the first cut. He just needs a little more evidence. CPI are getting to 2% taking the where we are and into the benchmarks right now. Nikkei to 25 down two and a half percent. It is really about the yen story in

ching higher and that is dismantling the rally that we've seen so far. Some of us as do USD extended that 2% rally which we saw last week. JGB yields also trending up after a report saying BOJ considering scrapping that white. See see, in terms of the other markets, we have dumped losses for the Philippines as well as new zealand, china in focus and B.C front and center as well. Concluding this week onshore offshore stocks have moved pretty much in opposite direction. Take a look where we are in

terms of the Chinese yuan, pretty flat right now. It's been stabilized by that fixing by the PBOC. MSCI is a big index now extending its loss to more than 1%. As we said, a big week ahead. We'll get the latest inflation print out of the US on Tuesday. That likely abated gradually last month while retail sales rebounded, illustrating why the Fed is in no rush to lower interest rates. While Bloomberg Economics expect China's BBC could lower its one year medium term lending facility by ten basis p

oints, marking the first cut since August. And India's CPI may continue to ease in February, which could force the RBI to rethink perhaps its hawkish bias. And here's a breakdown of consensus expectations for the February US inflation reading headline CPI forecast to stay unchanged at 3.1% year on year, but core inflation expected to ease to 3.7% year on year. Let's assess how significant the data is. Ashwin Moorthy is founder and CEO of AVM Capital, a macro hedge fund manager. Well, likely to s

tand pat in March, but it is also about the trajectory that the Fed may provide, perhaps. Yeah, I think the Fed is, you know, communicated to us that they would like to cut interest rates very soon because they think current policy rates are quite restrictive. I personally don't understand why they think it's restrictive, because if you look at the stock market, you look at growth, you know, things are doing quite well, but, you know, they're using a textbook definition of what is restrictive an

d they feel their interest rates are quite high. So I think if inflation does mean revert lower tomorrow and we see that continue in April, May, they're going to cut in June. It is about the dot plot and it doesn't take much to move expectations because all it takes are two Fed officials to perhaps make some changes for the median to move. What are you looking at? Yeah, So I think if inflation comes as 0.3, there is a chance that two dots might move. So all you need is two governors to change th

eir diet. And we could get two points for this year. But if it comes in, you know, slightly lower than that, I think Powell is going to do what he needs to do to keep those darts at three, because he does want you know, he's communicating to us that he wants to start a rate cut cycle. I'm not sure what's behind that. But, you know, when we look at the data, it doesn't look as weak as what is what he's seeing. You know, this textbook definition of real rates is is probably wrong right now. You kn

ow, with markets soaring and financial conditions so easy, it's clear that the market's on very tight. And we have El-Erian weighing in, saying that, you know what, jobs in particular is pretty ambiguous. Let's take a listen to what he had to say. I'm honestly paralyzed. I wouldn't know what to point to. This is. This is an ambiguous report, and once in a while we get ambiguous reports. We continue to produce jobs. We continue to contain monthly hourly earnings. The US is just exceptional. But m

arkets have priced in expectations and that's why I see this ambiguous as opposed to simply positive. So it's not clear cut? No, I don't think so. But I think the jobs market, you know, people take away what they need to take away from that payrolls report, but it still looks robust. You know, it's not overheating and not getting three or 50 k jobs, but it's still a very solid labour market. Wage growth is healthy. Household balance sheets are healthy. You know, it's a strong economy at the mome

nt, you know, but we'll have to wait for that data to turn. But I think the Fed just wants to go ahead. And the feeling in the market is that if that disinflationary trend were to continue, we could see and everything rally. I mean, yes, so the markets is sort of front runner that everything rally right now. So we are seeing that a lot has been priced in. A lot has been priced in. You know, the market is still pricing more cuts than the dots between three and a half in four right now. You know,

we could see that disinflationary process speed up over the next few months. One thing we haven't seen is shelter inflation coming off. If that starts to come off like many leading indicators are pointing to, we might get that false impression that inflation is coming off very quickly. But that's only going to last for a short bit. And then the disinflationary process for goods is about to end. But once that starts going up and services inflation stays sticky, we might have come into a surprise

towards the end of the year. What might catch the markets by surprise? Maybe in the shorter term? I mean, it's priced pretty much for perfection right now. I think services inflation remaining sticky or inflecting higher will cause a lot of pain in the market because that would not allow the Fed to cut rates. Right. Because that's the part that is linked to wage growth is a weak link to the labour market and they're going to then keep rates restrictive so that the labour market softens and servi

ces inflation comes down. The markets are not prepared for that. How prepared is the market in Japan for a higher and stronger yen today? We're already seeing a massive tilt to the bottom. Currently Nikkei to 25 down about two and a half percent. It does look like that weaker while stronger currency is weighing on sentiment. Yes, I think in Japan, the weekend has helped a lot, both the economy and the stock market. And I don't think the economy is ready for a very strong in a very appreciates. S

lowly, I think it's okay. But if we drop to like 130 until the end, I think that would cause some problems and the Nikkei would tumble. But how much upside is there for the yen? I think it depends on the pace at which the BOJ tightens policy. So for us, you know, whether they do in March or April is irrelevant. It's what's matters more is the path beyond that. I think they're going to have a dovish exit from, you know, basically negative interest rates. And I think they'll take their time. You k

now, we need to see how the wage inflation, these wage hikes start to filter into the economy. I don't think they're going to jump the gun. The question really is how much more foreign money is expected to pour into Japan? Because if you take a look at where yields are right now, the returns from investments in Japan, there's also a limit to how far they can go. Yes. So if the yen continues to weaken, then you might see the Nikkei continue to power ahead. Fundamentals enough to support the rally

that we're seeing in Japan. I mean, dividend yields are looking pretty good for Japanese companies, for instance, and buybacks. So, you know, these two forces are helping the market along. So I think, you know, you you've got zero rates. And then between the dividend yields and the buybacks, that's about 5% yield on a zero rate economy. So that's pretty strong. So what would you be buying in Japan? I think for us right now we're going to wait for this BOJ to end and I think we'd be actually loo

king to go a long dollar. And again, because we think a lot of this move in the currency is linked to the interest rate differential. And looking at how BOJ likes to drag its feet, we expect real rates as David largely a negative in Japan for a long time. Still not convinced yet, considering that you're still waiting before pumping in more money. Yes. So I think you know this people markets are going to react to this this exit, which is only a ten minute hike, you know, maybe a good dollar and i

nto the low one forties and I think it'd be a great buy the OC as friend Stanford I've been moorthy about capital is sticking around still to come on and Ravi private wealth management tells us why they're staying cautiously optimistic on the Indian markets. More on their outlook later this hour. I keep it here with us. This is Bloomberg. Our view is that one should not invest in China. I don't think it's un investable per se. High dividend and Klein's asking for income definitely will still con

tinue to play very, very, very careful. If you're investing in China right now, we think the economy is going to steadily continue to slow down for the next ten years. I think the biggest risk here is policy maker complacency. It is not clear what the overall general direction of policy will be. Long term stimulus is important, but I think China has passed the stage where they want to throw a lot of money, build a lot of leverage. We're in a new paradigm. The leaderships economic parties are com

pletely different. It's very difficult to restore the market confidence. The sentiment is really bad. I talk to my friends in China and they are talking about that. There is no hope. I think it's going to be a hard challenge to bring the foreign investors back to China. And those were some of our guests speaking about their investment outlook for China. And Mark, is it been a mixed bag over the past week with the NPC underway, the CSI 300 posted a slight gain while the Hang Seng fell across sect

ors. Raw materials showed the most strength, while real estate and consumer discretionary pretty much lagged behind. Now China's annual session of parliament is wrapping up in a few hours, with perhaps more emphasis on what leaders did not do than what they did from all. Let's bring in AI, China economy and government reporter Lucy Liu in Beijing. Lucille, the key takeaways here. Yeah. I mean, it's it's been one of not a lot of surprises, I must say. A lot of the, you know, targets for the year

in line with economists expectations. Of course, we did have, you know, the premier presser being cancelled. So that was a big event to conclude the two sessions that we always look forward to and a rare meeting for foreign journalists. And you know that the the premier of China. So that's no longer in the books today. We're basically looking for the passing of the state council's organic law that essentially is the codifying of something that's already in place, which is that, you know, the gov

ernment is really serving the party and in this case also sees vision for the economy. Lucille, of course, front and center, that GDP target about 5%. Are we any clearer to how China would get there? Yeah. I mean, we did see some good, you know, CPI numbers recently. Of course, economists are saying that, you know, that's not going to last. That came off as basically the Lunar New Year holidays increase spending there. But actually interesting there we also had it was increased trips, but per ca

pita spending decreased about 10% from pre-pandemic. So people are being more frugal even though, you know, more people are going on trips. So it's you know, there is a mixed bag, but we aren't seeing anything, you know, anything concrete for for how we're going to achieve this very aggressive 5% with not a lot of change in policy. And of course, that work report again emphasizing these sort of new productive forces. It's focus on manufacturing. So China very much staying the course there, even

though a lot of foreign countries are concerned about overcapacity. And you know, what happens if China continues on this track? That's right. A lot of people say that to get to 5%, you need a lot more stimulus. Of course, we had data of out of China over the weekend as well. That CPI print. It is in the positive for the first time in quite a while. But some say, you know what, it is not sustainable. It is mainly because of the lunar New Year holiday. Yeah, absolutely. I mean, deflation, of cour

se, as something we're watching very carefully this year. And we did get that bump last month. But, you know, in addition to new Lunar New Year, there was also sort of extreme weather in mid-February. There was, you know, sort of freezing rain here in the north. So that also pushed up consumer prices. So economists pretty much, you know, across the board not expecting that to continue. And, you know, those deflation worries still very much here. And, you know, that's going to be a major drag on

the economy. Michelle, thank you so much for the coverage. They are china economy and government reporter Lucy Liu in Beijing. Let's get insight on markets, the impact possibly. Arvind murthy, founder and CEO of AVM Capital. He is still with us. It is a big nothing burger for investors. Yeah, I think, you know, people were expecting something big going into the meeting. It didn't it didn't pan out. One of the things that struck me was, you know, if you look at some of the targets they've set, we

had nominal growth at about three and a half percent last year. Now they expecting real GDP growth at 5%, inflation at three. That's a nominal growth of 8%. What is going to get us from three and a half to 8%? I don't think they're very clear about that. And that's why markets are just not enthusiastic about this. This is a different China. China has set the three new I guess growth drivers would be EVs, would be solar power batteries and so on, so forth. That takes time. Why wouldn't you buy i

nto these sectors, for instance, in view of the longer term perhaps goals? Yeah. So I think as a stock picker, they're going to be certain industries that are getting support from the government. You know, those things can thrive. But a broad market, I think the only way it's going to go up now is to really get investor sentiment back. You know, the wealth effect right now has been discussed quite it's quite tough in China, both property market and the stock market down. So you having consumptio

n which is we people not willing to invest and they're not many options. That's probably one of the reasons why they've kept interest rates at 2% is not at zero despite deflation. We talked about how it's a nothing burger, but we did hear from the PBOC saying that it is willing to cut rates further. I mean, realistically, how deep could the PBOC go? I think they've realized that cutting rates is not going to help too much. There's already a lot of liquidity in the market. They just want to incre

ase this leverage problem. The other issue is that given there's no place to invest, nothing much to invest in in China right now, if they reduce rates from 2% to one or half a percent, you know, that makes people even more unhappy because there's less less to invest in. And the other problem is the currency. You know, if the interest rate differential in the US starts to widen again, that's going to put pressure on the currency and they're trying to keep it stable. So how much of a cut could we

see in triple-A? It could continue at triple or maybe one or two cuts this year, maybe another ten bips on there on the on the policy rate. But all of those are going to have very minimal impact, I feel, on the economy. What really needs to happen is they need to get investor sentiment up. And, you know, this program of buying these ETFs is helping. That has put a bottom in the market. If they continue buying these Chinese ETFs every day for the next year, throughout the course of the year, you

should see markets start to rebound. And we really have our Britain News, a headline from Reuters saying that Chinese regulators are asking banks to step up support for Volcker. I mean, we've seen this before. How the national team comes in to provide the support. Is that enough to revive, revive sentiment? I think this is important. They can't let a state owned enterprise as a linked developer go down is different from China of a grand or a country garden. So I think they will step up, support

, you know, the various ways of doing that. They could swap the debt for loans by these policy banks, and I think that we'll see more of that if any of these developers get into trouble. But have you seen the US, do you think? I think we're nowhere close to the immediate. I think we're go there, try to plug the gaps on the downside. But what's happening now is they need all these property and all these projects to be completed, right. Because a lot of people have bought these properties. We need

that to be completed. But after that, where are we going to get the activity from? You know, it's not going to be like the pre-COVID times when, you know, there's a lot of demand for private properties. So I think that's part of you're going to see activity go down a fair bit. We have heard from China over the course of the NPC that they are willing to intervene, they're willing to step in to ensure that there is unnecessary extreme panic in the market. Is that good enough for you to allay conc

erns about how bad it could look in China? I think for now it does allay some concerns because, you know, you have the backstop of the government, but it depends, you know, they need to make sure that they prevent it from getting a lot worse. They need to step in quickly. And it seems like that's what they're trying to do right now. So while they're doing that, they need to get investors willing to buy debt to it, to offer laws, to buy equities. And that's why they've stepped in into the equity

markets. And now, you know, they put a bottom in that and that is slowly going up. It takes a while. I don't think it's something they're going to fix overnight. It might take two or three years. But, you know, it's it's just going to take some time. You talked about the yuan earlier. It has been supported very well by the fixing that we've seen so far. What is fair value of the currency? Wow, that's a tough question. I mean, if they remove the bans, you know, I think most people think the dolla

r, it would be trading at nine or ten because there's so much money that wants to leave China at the moment because of a lack of investment opportunities, you know, something that can be fixed immediately. But I think they're going to manage it's in their interest to have a weaker currency because that helps with exports to help boost growth. But given where investor sentiment is currently domestic. They can't afford the yuan from weakening to quickly. What they would what would make them happy

is that we get a sell off in the US dollar bear market to the US dollar. Then they can let it depreciate against this trading basket. But realistically, can you expect the sell off in the US dollar when the Fed is now expected to cut rates by, you know, three times instead of seven? That was initially expected at the end of last year even? Yeah, we're not expecting that is not a base case unless you get a hard landing. We don't expecting a very, you know, a long term sell off in the US dollar. Y

ou know, right now most of the central banks, we look at the ECB and the Fed, they seem to be coordinating quite well. It looks like June might be the first rate cut that just reduces things more. So I don't expect a sell off in the US dollar. I don't expect it to rally very hard. But, you know, going forward, if you get U.S. exceptionalism going into the end of this year, next year, the U.S. dollar should start to rally again. So you want by the end of 2024 would be. It really depends on how mu

ch what if you had to put a figure to it Right here. Right here. Yeah. So it's going nowhere. It's going they're going to keep intervening as long as they have the export, the current account balance to support the currency and quickly. Has it been surprising that the Asian markets have been pretty much decoupled from China, or how have we been seeing that trend for a while now? We have been because I think the correlation between the Chinese markets and the rest of the global markets have been

quite low. It's been very specific, let me tell it. It looks at what's happening domestically in terms of policy. Unfortunately, has been on a downtrend for three years while the rest of the markets have been going up. I expect that decoupling to continue. Just one final question before we let you go. Of course, it's tech. It is easy. We've seen how easy and tech stocks have rallied in the US, but not the same story for Chinese and tech stocks. At what point would they be a buy? I think it depen

ds on the policy in China. You know, they went after the big tech companies, the monopolies. That's not very pro stock market for equities. If they change their tack, they start supporting these companies. I think we could be it could start to become a buy. All right. Not anytime soon. HODGMAN Thank you. Arjun Murthy, founder and CEO of AVM Capital. Plenty more ahead. Keep it here with us. This is Glenn back. The one place where we could see a correction and it's just a correction. We're not cal

ling it the end of this at all is in the chip space. There was probably a lot of double and triple ordering as the word shortage was making the rounds and those inventories will have to be digested. ARK Investments CEO Cathie Wood on a possible correction for CHIP stocks. And we're seeing some correction here in Asia on the back of what we saw in terms of tech stocks in the US at a slump of 4% for tech stocks and Vidya led the charge lower, slumping as much as 6% and at one point erased about $1

40 billion in market value because this is one stock and Nvidia we're talking about that's rallied hard 70% and at 2024 alone. So not surprising that investors are perhaps taking some money off the table. In the meantime, Asian tech stocks falling us a lower Samsung Electronics down by 7/10 of 1%. Hynix lower by more than three. TSMC not spread either, as am I see them bucking the trend higher by about 1% right now. Of course, investors now looking ahead to that CPI print to see what will happen

next. TSMC re-entering the global top ten club after touching that record level. Currently don't down about 2%. Let's do a check on cryptocurrencies in particular as well. The largest cryptocurrency jumping to another all time high of more than $70,000. That happened on Friday. Giving up some of those gains somewhat today, down about 1.2%. And Bitcoin has capped a seven week run of more than 70%. Wow. What a run for that cryptocurrency ether. Binance. Ah com Solana in negative territory right n

ow. Now here are some of the top corporate stories we are following. Bloomberg has learned that Reddit and its investors are looking to raise as much as $748 million in an initial public offering. Sources say the social media platform plans to sell shares in a range of 31 to $34 each, seeking a valuation of as much as six and a half billion dollars. Reddit has been working towards a listing since its initial filing in 2021. Saudi Aramco raising its dividend despite lower profits to help the gove

rnment plug its budget deficit. More when we come back. This is Bloomberg. We're all come back. Jenna market just heading to lunch. And what a lift. CSI 300 index up by 8/10 of 1%. Not much to do with NPC, perhaps more to do with China vodka rising after depositing about $650 million to fully repay its notes. How can developers also rising after the weekend home transactions hitting a three year high? And of course we had that report from writers earlier on talking about how China is looking for

support for vodka as well. CSI 300 index up 8/10 of 1%. We are looking at the yuan trading at seven 1908, pretty much flat versus the U.S., a currency that's been well supported by China's fixes. As China goes to lunch, Japan comes back from lunch break. And it is a different story for the Nikkei 225 as well as the topics it is in negative territory, extending the loss to about two and a half percent right now. It has to do with the yen pharma versus the USD expanding that 2% rally which we saw

last week. JGB yields also trending higher after a report saying that the BOJ is considering scrapping. Why see see yen and one 4697 versus the US expanding the strength that we've seen in the past week. Now to today's big take in one of the biggest bets on Wall Street right now that's not tied to the AIG boom. We're talking about the short volatility trade once a key factor in market sell us in 2018. The bets on come. Markets are back in a new form and on a much grander scale. To break this do

wn, let's bring in analyst strategist Mark Cronin. For Mark, it's just a different name right now, Is it not quite right to say it's not related to AIG because in a way that is in the background, actually the typically big selling of volatility tends to coincide with or in markets of relatively clear direction. So what happens is that investors get confident that the trend, whatever it is, whether it is up or down, but particularly during bullish markets, they get confident that the trend is goi

ng to extend. And that means that they what they're willing to do is to enhance their returns. They're willing to sell options to other people, whether it's through ETFs or whether they're just over the counter. And because they think that the that's a pretty predictable path here. So that means that we'll have plenty of time to get it if the options go wrong. Plenty of time for us to cover those exposures and especially they will sell the downside. Put options, though they'll be thinking, oh, t

he market has got so this trend is so good, it's going to be such a long time before it reverses. We're not at much risk on the downside. Now in the very short term, one of the things that could derail this very badly is in video and video has become the largest retail stock in the market. That means that more people is over taken from Tesla. More retail punters in the US are using video than any other, and we all know what happens when they suddenly lose faith in a particular stock like that. I

t could be very unpleasant. But the thing is, how real is this risk, especially when you consider that it is a different backdrop. Now you take a look at the S&P. It's doubled over the last six years. So is it really warranting that, you know, caution, The the big problem that happens with these kind of things is that an event comes along from from left field that people just weren't prepared for. That's typically what derails these major these plays. So, for example, we've got the Bank of Japan

coming up. The calls for the Bank of Japan to tighten policy are becoming louder and louder. There's there's a wide assumption in the marketplace. The Bank of Japan is not really going to hurt global financial markets because the move is going to be fairly small. People are seen it coming for a long time until they didn't. So we've seen it before that even though a change in policy And don't forget, the Bank of Japan is the only major central bank considering tightening policy. Other people hav

e done it already and we're thinking about rate cuts in other places. So the people are comfortable with the idea, Oh, the Bank of Japan is a small rate change. It won't have a major impact. Maybe it will. Maybe the market is not as prepared for the Bank of Japan as we're assuming. And that can start a spiral of events starts hitting Japanese equities already a bit soft already, and anticipation of this bank aspiring to European into American markets. Certainly before you know it, you've got a b

it of an avalanche starting and it all looks very different. The thing is, truth be told, it is a higher bar for contagion. Right. But if you were to look into the crystal ball, might this happen in the next, what, six months? 12 months? Are we looking at 24 months? No. If it's going to happen, it's going to happen within six months. This is the way it's building up for it to have an impact, for it to really hurt people, it has to happen within a few months. If it happens in 12 months time, by t

hen, a lot of these option positions are expired anyway, so it has to happen while there's a large amount of them outstanding. Which is it now? And they. They will be rolled over in the short term. So if it's going to happen, it's a near-term event. It's not something for for next year. If there is one telltale sign, what would that be? It will it will be something like, well, for no particular reason. You see a major sell off, particularly in the US markets, for example. So we have a week where

this week we've got CPI data in the US. So it probably won't be that. It'll be a week when there's there's not much data, maybe notified speakers. Everything looks calm on the surface and the market ends badly that week. I know. Why did it. There's no particular reason and that's the start of people unwinding positions and it snowballs. Beware AMP Life strategist Mark Cranfield with his stake. And of course Bloomberg Terminals subscribers can see more on this at nine big take go along with more

deep dives into the biggest global stories. Well still to come on on what the private wealth management tells us why they expect India's equity market to grow even further. More on the insights next. Keep it here with us. This is Bloomberg. Well, let's talk India market has been going gangbusters and we know that international investors have been piling into small and mid-cap sized stocks to get value now that the big names have been taken up and, of course, have been outperforming those small

and medium sized companies, list all the things in India with Shweta Rajani, who oversees more than one and a half billion dollars as head of mutual funds, and Anand Rathi Private wealth management. Good to have you with us. How much more upside I mean, people talking about overstretch valuations, Can India continue its rally? Hi, good morning. Definitely. I think the rally can continue from your own. And in fact, in the next financial year, which would start April if you see the earnings growth

coming in. And I'm just referring to Nifty50. You know, if the earnings growth coming in lines of 12 to 13% from your own and looking at the macro stability further upside, very much possible. Of course, there could be those periods of five 7% correction, which is very normal. But through the course of the year, a further upside. Yes, given positive macros as well as corporate earnings coming in, valuations being reasonable. You talk about corporate earnings. We know that in last quarter covere

d earnings rose about 30%. I'm just wondering for the quarters ahead, how much clarity do you have? Yes. So the quarter that just went by, if I break it up, large caps of 20% plus growth and midcaps, we've seen up to 3% growth for a lot of companies coming in. So if I'm looking at the next few quarters, you know, the profit growth for NIFTY50, our estimate is you could see another 13, 14% growth coming in for the mid-cap companies. We could possibly see 15, 16%. And for the small cap companies,

a 20% plus profit growth looks very much a possibility. Where are the big values to be had in China? In India, some say that small and mid-cap said the way to go right now. Absolutely. So if you see in the last few months, large caps have grown up by around 25%, made in small caps, a value of 50% plus some perception is it's very frothy in the mid and small cap segment. But in fact, the way I look at it in pockets, there's still a lot of steam left in mid and small. In fact, our internal numbers

say that valuations are pretty reasonable for a large number of small cap segment. So there is for the steam less. And if I just have to put a number, I would say clients can still look at having around 40% on assignment in small in their portfolio. Which sectors in particular then? You know, if I have to give you a name of your sectors, then I would say within the banking you leave aside the banks, but the non-banking segment in the financial space still is know looking attractive, all kind of

, you know, pharma in auto as well as I think, you know, if somebody is looking at long term then green energy could be a few sectors. Shweta, is that a risk of hot money? We talk about how, you know, the tide is lifting all boats. When the tide subsides, you'll see who's been swimming naked. I mean, is that a risk that we could see too much hot money in India? So, you know, there are two portions to it. You have a fire and then you have DII. If I look at the foreign institutional holding, the l

ong term average has been around 21 and a half percent. And right now if I it is slightly below that. So it's at around 20.5% ownership. So which is where while you'll always have that little segment of hard money, but if I'm looking at the long term trend, there is a possibility that the FII inflows go back to their long term averages and therefore majority of their money would be long term. Even when I'm looking at the domestic inflows, you know, there's this data that comes from RBI and the h

ousehold savings data, which shows that compared to ten years later or ten years back, sorry, there's been an increasing change in the asset allocation of all normal Indian households. So if all you had around, you know, 1% of your annual savings going into equity today, it's around six, 7%. So this is, again, sticky money coming in. Plus, what is happening is if you see the investments from not the top 30 cities, but your tier two cities have started to flow into equity, so they've started to e

xperience it. So I think a lot of the money that's coming in is more long term sticky. Hmm. We know that the RBI has been concerned about euphoria in some pockets of the equity market and recently has also claimed. Down on shadow banking. How are you assessing that risk? Yes. So actually, if you see in the last few years, Aria has been very clear that they want to have clean balance sheets, even for banks. So a lot of the measures that they are taking right now, I mean, you're seeing the retail

credit growth picking up. A lot of it is unsecured. So the measures that RBI is announcing, I would look at it more as preventive measures because, you know, you don't want to have a disaster sometime later. So I think this is a good sign and one should look at it positively. And, you know, over the last few years, we've seen how regulators, you know, behaving and trying to sell the banks that, listen, credit growth is good, but you need to be cautious. So I think I look at it positively. Sure.

Just one final question before I let you go. How are you advising your clients? How should their portfolio look like? Yes. So I think a few advice to our clients is be look at it from a long term perspective. Have your strategic allocation in place. You can have that unified 10% effective equals that you take. But if you've decided you want to have that 60 70% equity, then continue with that. Don't be bothered about market timing, market levels as long as you're looking at five, seven years from

your own, that's your investment horizon. I think equities can deliver 12 30%. So that's, you know, primarily our recommendation. Just stick to your strategy gas allocations and don't be bothered about minor corrections that when we see an equity stand pat. Shweta thank you. To Rajani on and Ravi private wealth management. Now let's stay with India. The nation has signed a free trade pact with four European countries that the Modi government says will create 1 million jobs in 15 years. The deal

with non EU countries, including Switzerland and Norway, has been 16 years in the making and against private sector investment commitments in return for the European securing easy access to Indian markets as well as products. Now here's how shares of AB Nestlé Novartis listed in India are doing pre market, all in positive territory. Nestlé India though unchanged at 25, 60, 95. And India expected to announce election date soon. The constitutional body that oversees voting has just lost another m

ember with only its chief now remaining for more. Let's bring in our South Asia government reporter Swati Gupta in New Delhi. Swati, what does it mean for the upcoming election? Because yeah, so the election commission is a three panel body and one member retired last month and another member resigned over the weekend. And the Indian elections is a massive exercise. More than 900 million people are expected to be registered to vote this year. And unlike other countries, the voting takes over, yo

u know, several weeks. It happens over phases. And it is because of the size and stock of the elections. A full panel is pretty much required. So the panel now having just one member, is not an ideal situation for the country when we are expecting the poll dates to be announced within the next few days and for the elections to take place in April and May. As you said, the commission only has one member remaining and there are allegations of a lack of transparency. Could you explain how the situa

tion has arisen so close to the election? Yeah. So the election Commission has not officially commented on what has gone down. They have not given a statement on why the resignation happened. It was just announced that the resignation has taken place. And that has kind of led to allegations from opposition parties that there is a problem and this is not an ideal situation and that there are allegations now of a lack of transparency. Though the leader of the opposition party, who is on the panel

that elect the commissioner commissioners, has confirmed that they are meeting later this week. So there is a possibility that we will have more information on this over the next few days. So what are you looking out for? What kind of information might we get, Swati? So the panel can operate with just one member of the election scan take place. But because of the size and scope of what the elections are like, you would prefer that the entire panel is in place. And so we are expecting to possibly

hear that two more commissioners have been appointed. So we're just waiting for the election commission to maybe make a statement over the next few days. Shanti, thank you so much for that. Our South Asia government reporter 20 Gupta joining us from New Delhi and has been trading for about 2 minutes now. Let's do a check on how Indian markets are trading. Of course, you're seeing foreign funds piling into India, in particular in recent weeks in small and mid-cap stocks as well. Not surprising.

Sensex pretty much unchanged on a day that the MSCI Asia-Pac index is in negative territory. Now. Tilting towards the negative side as well is a nifty bank index currently down by 2/10 of 1%. We're keeping an eye on indigo, by the way. The stock there is Interglobe aviation currently slumping about 1%. This is on the back of Indigo founder Rakesh Gung wal eyeing an almost $800 million in block sale, is said to be India's largest since 2009 and that's according to Bloomberg data. Indigo shares ha

ve been trading near the highest price on record, but today those stocks are down about 9/10 of 1%. Of course, we're also keeping an eye on the Indian rupee, trading close to that six month high versus the US day. Plenty more ahead. Keep it here with us. This is Lambi and. It's about take Singapore's economy seen getting a boost from Taylor Swift's only stop in Southeast Asia. DBS says the hospitality, food and beverage and retail sectors likely benefited from a six day Eros tour concert. The la

test Bloomberg survey of economists shows the city state's economy growing 2.9% in the three months to March. That would be the quickest pace in six quarters for the year. The print expected to reach two and a half percent under the upper end of the. And following that, he joins me here in the Lions, said he can't talk to us about the industries which will likely benefit from today being here in Singapore. Hi, us, Linda. Thank you very much for having me here today. You know, I think a few indus

tries could benefit from this kind of tourism industries. We have the hotel settlement as well as the aviation sector, and we also have more shoppers coming in. That will benefit the retail sector. If your shops and also your and B players. Other than that, we think that those that offers entertainment and attractions, such as the two integrated resorts in Singapore, could also stand to benefit from the flow of tourists coming in for today's concert here in terms of tourism. Delve deeper into th

at. I mean, what are we looking at in terms of par? What are the numbers? You know, because a lot of people have number crunching when it comes to the impact she's had on the various sectors. Yeah, certainly. So in terms of the hotel industry, we think that this could grow by 8 to 15% this year. This is versus a 19% growth last year that we have seen. And this is amid a growth in terms of people numbers coming into Singapore this year. We are thinking that it will grow by around 10 to 18% in ter

ms of the visitor numbers coming in. And this is on the high end of the Singapore tourism box forecast of a 15. Right. Okay. Can we have to leave it there? I can feel that with us. And I think we have a slight our audio issue at this point in time, of course. Economists have been number crunching and Singapore itself is expected to revise up its GDP forecasts because of that. Now, our Investments flagship Innovation ETF had not held any NVIDIA shares for about a year. We are CEO Cathie Wood. Whe

ther she regrets that decision and what might change her mind about the stock. We wrote it most of the way up, but I'll tell you what we did, and this is as a portfolio manager, it's not one action, but the what what it causes in terms of another action. Last year we sold in the flagship NVIDIA and put it into Coinbase. Coinbase, I believe is up as at least as much as in Vedere and it is much less well understood. The whole crypto movement, the crypto asset movement, Bitcoin as a new asset class

and so forth is not well understood or or completely accepted out there. So we prefer to go where others are not travelling as much. And you know, as we were moving out of in video, we're saying, okay, regulators are trying to crush Coinbase here and we were buying it on every dip in video. I have to happen to be one of the sources for, for that purchase. So it's not just what we do on the sell side, it is what we do on the buy side that that you have to look at. And yes, we do hold it in the m

ore specialized funds, but we've been taking profits there as well for reasons I just described. Yeah. And to be fair, you're right, Coinbase is up about 620% since the end of 2022. So that compares with about 530% gain in Nvidia. Is there anything, though, Cathy, in the end video story that would make you rethink the name and want to become more aggressive on it? Yes, the price came down a lot. We would, you know, the rate of return, expectation or split would a split do it Because I know we've

never. No, no, no. That wouldn't change that. Would you change anything? No, no. Split adjusted then. Then the price. So, you know, if you look at our portfolios, what we're trying to capitalize on with a Palantir, for example, are the next stages of this revolution. What we're seeing in the GPU side of things is NVIDIA. All praise to Jensen won. I mean just unbelievable company execution, vision and so forth. And, and it's not over. It's going to last a long time. But there are there are going

to be many other companies benefiting from A.I.. The productivity lift alone is going to be massive the most massive productivity lift in history, we believe. And so this A.I. revolution is going to be broad based and is going to benefit a lot of companies in the on the GPU side, of course, we have AMD as competition, but many people do not understand that there's a lot of other surreptitious competition evolving out there. And that was Ogden investment CEO Cathie Wood, speaking to Bloomberg's

Carol Massar. It is about air and she says lots of companies will benefit from it in the broader market. Of course, the MSCI Asia Pick Index expanding its loss to more than 1%. It is about the yen that is stronger right now. That is it. From Bloomberg Markets, Asia, DAYBREAK, Middle East and Africa is next. Keep it here with us. This Islamic.