China's Industrial Output Jumps But Consumption Lags | Bloomberg: The China Show 3/18/2024

All right. Happy Monday. We're half an hour away from the opening bell, Hong Kong, Shenzhen and Shanghai. You're watching the China show. I'm David Inglés with Yvonne Man. Our top stories this morning, Investors bracing for this week's big central bank decisions, including a Fed call set to reveal whether policymakers remain on track for three rate cuts this year. Or could the doc shift higher to two? We got speculation still building on the BOJ set to end negative rates. Right now, China is exp

ected to report muted economic activity numbers to start the year, raising doubts about its ability to meet its growth target. Plus, an exclusive interview with ANZ CEO Shayne Elliott on the outlook for business interest rates and the global economy. All right. Monday morning. And yes, it is a busy day talking about this map shows it all. I think I counted close to a dozen or so essential big decisions this week alone. I mean, we're talking about nearly half the world is going to be coming up wi

th some sort of policy this week here. I think, first and foremost, if you have to laser focus into two. I got to choose Biogen Fed, Right. What about you? Yeah, well, I think you're forcing me into it now. So it's the Vogue, the Fed, and then it takes us in the RBA. There's pretty much one every week where every day of the week plus twice on Sunday, as they say, really what the guidance will be from central banks and certainly bond markets last week. And certainly when you look at pricing right

now, at least in the blog writes a blog, it ends tomorrow. And certainly you're looking at 28 basis points of hikes priced in. When you look at swaps, for example, Goldman's coming out with their note. They're actually not expecting the BOJ to raise rates tomorrow. They're also updating some of their calls into future rate hikes as well. So that's just the BOJ. Of course, we got to talk about China as well. Big day today. Yeah, I mean, we have the data down that's coming up in the next hour as

well. Credit data, certainly we're still looking weak as well. So this is keep in mind the tally of the year to date numbers. Right. So it's still looking like the headline numbers might still show a bit of a slowdown, but economics a little bit different take on it under the hood, maybe maybe more signs of stabilization than deterioration. But in terms of what your agenda looks like here today, we talked about the data dump, Hong Kong volumes when it comes as equity market have been picking up.

Right. And you certainly have seen what we're seeing in onshore markets as well. The southbound connect flows, I mean, are continuing to be, what, 22 straight sessions where we've seen that buying CSI 300 is up five straight weeks already. EV stocks and focus more push. Of course these new productive forces in the why we've a big EV segment coming up later on copper iron ore show in two different things right Mr. Copper Mr. growth continues edged higher here today. Iron ore continues to be a do

wn arrow story and we got some jobless rate numbers coming out on Hong Kong a little bit later on. Yep, there we go. Lots of stuff to sink your teeth into. As you can see, copper and iron ore coming online. Italian, Italian, 1.7%. On the downside in the opening minutes, a glance at market action as we approach the opening about 26 minutes away. So every single day last week, pressure on iron ore prices, equity markets, the story is half of 1% to the upside, although that being said, we're still

fairly muted as far as the market breath is concerned. HFT futures coming online in Singapore flat open there, as if one is pointing out five straight weeks of gains on the CSI 300 nearly every single day. Going back to the start of SAB in terms of net buying across the stock Connect coming into Hong Kong and the dollar China, of course, that exchange rate has practically been frozen at about these levels for the better part the last few weeks or so. Yeah, so it's busy. I haven't even mentioned

earnings, by the way. It's a big week as well. China earnings. You have Tencent coming out I think is tomorrow as well. So keep your eye on that. But there's a lot to talk about. Ahead of that is a big video event, too. I think we're taking a look at a little bit later on this week as well. So it's busy. Yeah, everywhere you look. All right. Let's talk a little more about what's on tap here, which is the eco data that data dump are said to come through at the top of the hour, likely mix at the s

tart of the year with properties still a major drag and data due later on is said to show retail sales rising. But growth in industrial output slowing as well as go to Jill disaster China economy editor joining us with a preview. What are we watching out for the most? Jones Well, I think ultimately, Yvonne, you really want to look at any of those retail sales figures, right, that those consumption numbers. Remember, we did see CPI tick back toward positive in February. A lot of economists thinki

ng maybe that's going to be a short lived uptick before we're back in deflationary territory this month. But I really would like to see what those holistic January five retail sales figures look like. Obviously, you have to account for the Lunar New Year holiday. That did boost spending quite a bit as well as travel. But if you recall from just a couple of weeks ago, we talked about how per capita spending was still fairly weak. So I do want to see whether there's health there. I think, you know

, the fixed asset investment figures, probably you're going to see an uptick for January, February, but that might be just some frontloaded, you know, government backed sort of, you know, state spending on infrastructure projects, some of that economic stimulus kind of trickling through. And then I think the industrial output numbers might actually be fairly interesting because if you remember, the export data for January, February was a lot better than expected. Now, obviously, you know, Chines

e officials still saying there's a lot of difficulty on the horizon. We have talked a lot about U.S. sanctions on Chinese goods and such. But yes, so lots to look out for here, although again, because you're combining two different months, it might be a bit noisy. Well, combined aggregate financing. Jan in Fed was 8 trillion. That sounds like a big number as well. That was out late on Friday. Just what's the new ones here? Yeah, I think that the issue that we're seeing with some of that recent c

redit data is that loan growth was still quite weak. And so I think you're still seeing some of that. The implication of, you know, if there's there's a lack of borrowing demand within the Chinese economy right now. And it doesn't really seem like the government has been able to do a ton to actually get those numbers going again, We saw a similar pattern in in January as well. Again, but weak loan growth this week, loan growth figures. And so I think what all of this is pointing to is that conti

nued issues, continued issues with confidence in the Chinese economy that we're not really seeing, you know, any kind of like a major turnaround there. So ultimately, I think, you know, we'll see what these numbers tell us today. But we've had sort of a mixed bag just already within the first couple of months of the year. You guys have interesting piece out talking a bit more about this new buzzword, new productive forces. How should we interpret what this all means? I mean, certainly it's turne

d the market a little bit last week in terms of a little bit more towards the growth sector. Yes, I know. I guess so. Ultimately, new productive forces, a phrase that Xi Jinping started trotting out, I think last September. Now we've seen it play up front and center at the National People's Congress recently. Ultimately, what it seems to be is this idea of funneling investment into new growth drivers for the economy. So the markets are interpreting that as saying, oh, is there going to be more i

nto EVs? Is that going to be, you know, some of these new technology sectors, advanced manufacturing? Obviously, you know, this isn't a completely new concept in the world of China. We know for quite a while now we've seen a lot of, you know, five year plans and such really devoted to this idea of building up alternative types of growth drivers, especially as the property sector has struggled. I think the difference here is that this is actually the only the second time in the last decade or so

that we've seen an industrial policy type of slogan really kind of take this level of prominence. Usually those slogans are much more macro economic in nature, but as with a lot of things in China, it's all about sort of decoding the clues. You know, is this just really vague? Could things change? As you might recall, just from couple of years ago, we saw a lot of emphasis on technology led investment and then suddenly the common prosperity comes out as this major slogan and things kind of turn

around. So we'll have to see how that develops. Jill Great stuff Jill thesis there are China economy editor now more too on the top story of course other top story which is in Japan of course back in Japan meeting starts day wraps up tomorrow. Media reports saying policymakers will end negative interest rate policy on Tuesday. Nikkei is up 2% session highs, yen is weaker for a sixth straight day. Stephen Engle is with us out of tokyo, chief north asia correspondent steve, will they or won't they

? Yeah. It's not much of a secret anymore. Essentially over the weekend. All the major networks are the major news organizations, including kind of the gold standard for financial reporting domestically. And that's, of course, the neon case I but the Nikkei reporting that it's pretty much a done deal. And, you know, you know how this works, David. Essentially the DOJ ahead of its decision, which is coming out tomorrow, will have to inform the government. But then there might be elements within t

he government that for political expediency or political reasons might leak it. So it's essentially been leaked. So I think if you're a betting man, you would say tomorrow it's going to happen. They're going to exit the 17 year old negative interest rate policy. You saw the numbers there. You know, probably by more than 0.1% hike to a range of zero two, 0.1%. And, you know, it's not a big bang hike, obviously. And we're very unlikely tomorrow at the press conference that starts at 330 local time

with Governor White. He will probably take a fairly dovish tone and also essentially indicate that he's going to have more accommodative stance and very unlikely, of course, to basically telegraph any future hikes. I don't want to necessarily put a whole, you know, slam on the brakes to what they've seen already with this. I would suppose a more virtuous cycle of inflation above already the 2% government target. But it has been in disinflation it's starting to slow is at 2.2%. And that's the bi

g concern is that perhaps without these wage concessions and wage numbers that we got, which blew in a way past expectations, you know, inflation is starting to come off the boil a little bit. And that would be the concern. You know, I've been up to Niseko a couple of times this year and they have a lot of pricing Power prices are going way up in the ski resort because the foreigners are coming in and they say, wow, the yen at 149 to the dollar. You know, it's everything is cheap, but the averag

e household, it's a lot more of a burden. So again, that's the big concern is, you know, you don't want to tighten too fast. And Steve, I'm looking at the market. I mean, the yen's weakening again. We're at 149 levels. You talk about the, you know, some dip by a guess on Japanese stocks post like what we saw last week. Is there a sense that the DOJ has been successful already in relaying that message of maybe, you know, not aggressive tightening, but tightening is coming soon? Yeah. I mean, agai

n. What, the yen. No one is expecting a big sharp increase because again it's a king dollar story still. And the Fed has a lot to do with that. So you know, it's been trading right around 148 to 150 over the last couple of weeks as we got a better indication that the the BOJ will exit negative interest rates and it might start slowly creeping higher. But again, no one is really expecting a sharp appreciation in the yen. Again, it's really helped the profitability of corporate Japan. What was it

Toyota last week essentially saying that for every ¥1 increase by the dollar, it's about ¥45 billion increase in operating profit. So they've definitely benefited. But going forward, you're absolutely right, Yvonne. You know, Governor Awada is going to maintain his accommodative stance, and that's probably why. And again, David, earlier you alluded to that Goldman Sachs report that came out early, early this morning. They've changed their call, essentially say that they will hike tomorrow and al

so, of course, keep a steady purchase of the JGBs and the bond purchases, because, again, that any cutback on bond purchases would perhaps indicate to the market a less accommodative policy. And Governor Awada is still going to be cautious. Steve, it's been a busy 72 hours. I think it's got to be another busy 48 or 72 as well. Stephen Engle There you go. Jack Or is what? He's at the right place at the right time? Still ahead, Dubai's ruling family is opening a branch of its family office here in

Hong Kong. Speaking to the chairman, Sheikh Ali Rashid Al Maktoum, about why they chose the city for their first office outside the UAE. But ahead of that conversation, we're talking with soft and frank. Van Zimmerman joins us in a couple of minutes here. We're talking to all things fat Bank of Japan and what you do with all that information coming as we come down to the open of trade. 17 minutes away, Shanghai, Shenzhen. And as you can see, a foggy Hong Kong this Monday morning. This is the Ch

ina show. Good morning. Right. Seven 2065 Right now on dollar offshore, your reference rate is just out of the PBOC right now. Your midpoint is at 709 43 against the U.S. dollar. A bit of backdrop here. We are weaker for a fifth day on dollar gen ahead of the open today. All right. Let's bring in Frank Ben Zimmer, head of Asia equity strategy at Societe Generale. He joins us now. I mean, Frank, how should we wrap our head around all the event risk this week? What's going to be most important to

you? Well, most important are the central banks. And well, what has been interesting is on the Fed has been this the equity market is not too much concern now on what the Fed is going to do. And we see this decreasing correlation between bond and equity. So I think that's one of the interesting things, but not much to expect in terms of of of the rate change. We think it's going to to be unchanged under and then the Bank of Japan and but again not much surprise on to to expect or so we think tha

t the negative interest rates are going to and that that's not going to and the bull market on the Japanese equity in our view. Yeah I think one of your key concerns is keep your exposure to to East Asia. Markets like Japan, for example. Just underscore that view for us. Yes. Yes. So so both within emerging Korea, Taiwan and ex emerging Japan, while the export is going to be one of the key sector. And that's interesting to see this divergence between the economy which is not in such great shape

and the equity market. And this has all to do with the exporter which are going to make still better profit with this with this level of yen and with the economic outlook in the US, which which remains good. So so I think that this divergence could continue. In the case of of Japan, there seems to be more interest in China now, a bit of a bit of a rotation. Maybe the India is a little bit out of Japan. Are you are you are you seeing that rotation in a meaningful way now? The well, we've seen a l

ittle bit of rotation, but I don't think it's going to be meaningful enough because what is really missing in the case of China is earnings, some that are not recovering. And do we have this downward revision, which has been there since 2021? And there is no sign, actually, when you look either at the micro level on the earnings level or at the more macro level in terms of policy easing, that is going to change in the in the short term. So probably there is a lower downside. But to get this big

upside, which would be the reason to go back on the Chinese equity market, we need to be a little bit more patient in our view. So you mentioned earnings. What what do valuations tell you right now? I'm just going to paraphrase something from your your notes here. My valuation model shows some convexity. What does that mean in simple English? Well, it means that you have the downside in our view is around 15, 20% and then you could get some upside of 50, 60%. So this is what we mean by convexity

when we are using our valuation model. And what we use is actually kind of a long term model. So we look at the long term growth of 5.5%. So if we go from 5.5 to 6.5 in nominal, so that means that two and the deflation, then you have this big potential. But the question mark is when and how the deflation is going to end. And this is really where we are not ready yet to to pull the trigger and to take a big overweight position. And we've seen a bit of a shift towards maybe post NPC growth sector

s. Right. Or, you know, this whole new productive forces is letting you know, a lot of these sort of names to gain a bit more traction. Is that something that you're looking at now? Yes. So now if I translate this into the equity market, is these are some sector which are doing well. They have leading market share in the world, but you also have some overcapacity. Yeah. And this is something which is creating some stress on the earnings. So so we have so from from a macroeconomic point of view,

yeah, it's good. It's making sense. Also we would have I like more on the consumption but we we have to be more patient than that. But from from the equity point of view, the risk is to add some overcapacity and this is where we are a little bit concerned. One last question on China. Where do I maintain exposure, given that you're not ready to pull the trigger on an overweight, though we are maintaining the exposure because as I said, the valuation is not very high. You we have this convexity in

terms of what our models are saying and then we need to get some diversification in a in a global portfolio because what we what we have, even if I stay on Asia, Korea, Taiwan, it's very much about the US, about the S&P, about the financial condition in, in what we see in the US. So if we see some reversal, then you you need to get the diversification. And this is still one of the places where you can get it. So. So you have the valuation and the diversification element which said let's keep so

me exposure. Also, we don't want to be very brave on this. You are being a bit more brave when it comes to Korea, though. You have a bit of a view out of consensus that this is going to be the start of a bull market. Is it beyond just the tech plays and the AI plays? The whole value up corporate governance side? Is that some that you're factoring into to the first thing that we that we are having in Korea is it's been through two years of outright construction in the profit. And this is the year

where we see this recovery. And on top of that, you have some announcement terms of value, a program with all the political pushback that we can see around around it. But there is an international and the given and it's not that many market in the world where you have some level of valuation which are not very elevated. So I might be a little bit biased with Japan, which is is a market that I spend a lot of time to look over, over time. But I really see where Japan was in 2013, 2014, where is n

ow Korea, when it comes to the discussion about governance also is are two very different to market structure and the corporate structure is very different. But in terms of the intention, we are maybe at a similar place. And what criteria are you using to pick your sectors in Korea? Would it be the same sort of model you used for Japan in 2013 2014, since you mentioned that we we look at is a company with a low payout ratio, the company with a lot of cash and with the ability to increase return

on equity. And then you need also to sees a is a split between some part of the market which are part of the Shabelle and the one which are not part of the banking sector in Korea is one of the very interesting one on that matter. Frank, Heidi, our team for us, have a great week ahead from consumer there, head of Asia equity strategy at SOC Gen. Just going into the opening bell 7 minutes away, we're looking like this Hang Seng is down about a 51% steady in dollar. China, your ten year yield to 3

4 as we speak. 6 minutes well, 7 minutes away. The opening bell. You're watching the China show. Happy Monday morning and welcome back to the show. Hope you're all well and a restful weekend. Are you ready for the week? We're not. There we go. We're off right now. Equity markets. All that being said, though, I mean, there's a lot of event risk. We've talked about central banks at length and really how extremely packed this week looks to be. Apart from that in the next, what, 35 minutes or so, tr

ying to release as, of course, activity numbers coming through ahead of that. Just keep in mind, we have been looking at a lot of flows. Do we get day 23 today as far as net buying for mainland investors? Certainly one to watch and perhaps also goes into why and a function of why volumes and turnover here in Hong Kong has been has been had been picking up of late to analyze actions as we talk about the earnings story in China and Seattle certainly is one that has benefited from it. We're getting

an upgrade from J.P. Morgan on that stock here in particular, raising that price target among some of their peers to to 20 renminbi for Seattle says upside to earnings rerating to the stock there's the beat in dividend payout and strong cash flow. A group also read a new buy at Northeast Securities. Beijing King Soft also rated a new accumulate at CLSA. So it's a watch as they see it. I'll watch very closely live later on here, but certainly that's one to watch at the open stocks, we talk about

x pump plane, cheaper brands, according to Reuters as well. And watching some of these miners giving copper is going one way, continue to surge higher iron ore heading south. The obvious access is Bloomberg. Welcome back. Happy Monday morning. 40 seconds to the opening bell. If you're just coming to the office here in Hong Kong, it's probably like a scene out of the opening minutes of Lord of the Rings. Twin Towers, clouds of Mordor over the city. That being said, it looks like it's fog anyway,

not smog. Sure, it was more beautiful in Paris last week. It really was. Except it was raining cats and dogs. Oh, yeah. Okay. All that being said, yes. I mean, you're going to help you through. We had sunny skies all weekend here. Not jealous at all about your Paris trip, but all day. But yes, I would say, okay, when it comes to those open. Yeah. There seems to be more momentum comes as some of the Chinese equities we talked about that fifth week of gains when it comes to onshore. We're certain

ly watching that data very closely for any signs of clues, whether there is maybe some recovery or at least stabilization in the data as well. But here's what your Monday morning is shaping up to be here. Hang Seng is on the back foot here. We're flat when it comes that index here and CSI 300. There you go. We're pushing forward here, extending those gains up about a fifth of 1%. So going, of course, just given the data dump. And what's Sue here this week? Check the on offer. We're watching shar

es as well. Just slightly to the downside. We're still waiting to see if we get to the bull market territory for that one. Didn't quite make it last week and continue to see more of this roiling when it comes to commodity markets. Right. So iron ore is doing a little bit better in China, but Shanghai crude is down some 2%. We're watching copper futures very closely here, just given some of the shortages around that, the continuous spikes that we're seeing when it comes to that metal. And there y

ou go, sector by sector, it's a mixed bag here. Overall, developers are catching a slight bit and we're taking a look at when it comes to financials, industrials, industrials seem to be still continuing to do well here this morning. That was one of the key sort of sectors that Franklin Zimmer mentioned about from soft general, where you can still gain exposure in the mainland. They're watching when it comes to movers here today. So Seattle, that was catching a bit of bit here this morning. We're

up some 5% for the stock post earnings. So full year net income beat estimates, you're hearing more analysts raising their price targets given just the strong be strong cash flow according to JPMorgan they have an overweight on that stock here right now expanding as well a watching earnings this week 3% pop there there was talk about possible cheaper brands coming through from export. That's according to Reuters as well. We're watching buy that stock close to 2% gains right now. That's a perfec

t segue way to get us into an earnings preview of the week. The tech giants also coming out with their financial results here. Let's bring in Rachel Jo, our breaking news earnings specialist, to really talk us through all the big names. Why don't we start with which company you want to start with? Yes, sure. We can always tell me first. Okay. So so the EV company now. So yeah, so the expansion into EVs will actually be, you know, scrutinized, you know, when they report earnings later this week.

So alongside we've also established competitors Xpeng, which is also reporting this week as well. So for Sell Me, they will launch the very long awaited as you said, series later this month. So this will be quite well. This was well received by the market when they made the announcement earlier as well. So the annual adjusted profit is set to double this this time and also they are foray into EV vehicles, could also bring long term growth to the company and also to boost sales as well. But on th

e other hand, for Xpeng, we might see deeper losses for this time because of the intense as they try to keep up with intensifying competition in that sector. And they've also been slashing prices for their vehicles to to to catch up as well. Yeah. What about when it comes to the China Tech space? I mean, the big ones like tennis have made one are also early results coming out. Two. Yes. So four times. So we're expecting to see strong growth this quarter as well, thanks to the sales rebound in ad

vertising, international games and fintech for this time. And also Tencent's profit will also be driven up further, as with more AI and Hunt's s and also a stronger demand for short videos as well. So we will see how that will play out in the upcoming earnings. And for me, one, we are also expecting Matalon to perform better also because they have seen success in expanding beyond mainland China for their new delivery services such as in Hong Kong as well. And the company has also invested in new

businesses such as grocery, retail and also live streaming to keep up with competition as well. But in terms shareholders may also expect more cash return this year as well because it now has surpassed cash and they do not see much M&A opportunities coming up. So that money will likely return to shareholders. All right. We'll see if we get any news of that. Rachel, Yo there. Thank you. Our breaking news earnings specialist joining us here in Hong Kong. There is more a little bit on China's boom

ing EV market. In the next hour, we're joined by HSBC, its Shanghai securities. Head of autos research. Talk about more about the sector you Chen day joining us too. Yep there we go in the next hour of the show before that. Stay tuned for a great conversation. Coming up, Tobias Royal. A ruling panel is opening a branch of the family office here in Hong Kong. We'll speak to the chairman about why they chose the city and what their plans are here as they open up in the city. Coming down, of course

, to the release of the data. Activity numbers coming out of China about 25 minutes away. A glance at benchmarks as we kick off a fresh trading week. You're watching the China show. Good morning. Well, Hollywood has been looking to promote the growth of family offices here in the city and really try to catch up or at least battle against Singapore in a bid to attract the super rich. The city has introduced a new capital investment entrance scheme for foreigners just a few years ago, including th

e mainland Chinese over the age of 18. Right. This is what was laid out. Applicants must make a minimum investment of 30 million HKD, with the vast majority of it in financial assets. We did hear, of course, back then from John Lee, the chief executive of Hong Kong, saying that Target write 200 or more family offices to establish or expand their operations in the city by the end of 2025. Dave. Yeah, well, on that very note, certainly quite a timely conversation coming up here. Joining us here on

our Hong Kong assets is His Highness Sheikh Ali, Rasheed Ali Saeed Al Maktoum, a member of the ruling family of Dubai, is also the chairman of the family office of Sheikh Ali bin Rashid Al Maktoum. And also joining us here on set is Eleanor Mack, vice chairman and CEO of the Family Office. Welcome to Hong Kong, first and foremost. Thank you for making the time. Nice to see you as well. Why? Why Hong Kong? Why not Hong Kong? I mean, you know, for for for me, I would say that doing my my first bu

siness, which was early and actually December last year, I got to see a lot of similarities with Dubai. I think I'm Kong is very advanced. So many aspects. It has so much to offer in terms of investment opportunities and business expansion. And I can see like there is a there's a potential for a long term growth that can happen. And so I we kind of went along with the idea and through a few friends through talks, and now we're in the process of establishing that family office here. And you menti

oned talks. How how if I could ask, how long were you was the prior engagement with the Hong Kong government leading up to this decision that we're in right now? Well, I think it took around one or two into one or two months. Just pretty quick. Yes, pretty quick, because, you know, I feel like, you know, once you find the right people to help guide you and establish things, you have the right connections also extremely fast. And I feel like, you know, time is of the essence. So might as well act

ually do the best and are to making a positive change around the world. And that's what my family office wants to be all about. Okay, Eleanor, let me bring you in. What are your initial plans? What's the what's the initial priority here? Yes, in Hong Kong, because we are looking for two projects that interest in our sectors like air construction on EV, on also tourism and fintech. Yes. Debt of interest and investment. And then also we have them to scale up in Dubai and UAE. Okay. And how big is

the fund? It's up to $500 million. Okay. And ticket sizes of the investment, how much are you looking to do per per transaction? I know that's a that's a moving target. But is there a range that we can we are open to them? Yes, it depends on the scale. Is a start ups or apologetics or construction? Yeah. Do you guys have any targets in mind in terms of specific investment targets at the moment yet? I think nothing at the moment, but I think it's just it's in the work, in the process. We are open

to exploring so many options. And, you know, so I think there's, you know, through collaboration stuff, I think things will start shaping up and be more clear in time. Right. When are you looking to make your first investment? If not already, investment would be the construction fund because this a very good policy. And you. Yes, we do. Yeah. You have a timeline for that when when the first it would be in the within this year. Yeah. The next quarter. Yes. Maybe towards the end of the year. Okay

. You guys are in talks already with potential target companies, I would imagine. Yes, Yes, Yes. Okay. Talk to us about parallels between, you know, Hong Kong as the first family office outside of Dubai, of course. Yeah. What are the parallels that you're looking to take advantage of Hong Kong and Dubai for you? First of all, Hong Kong, you know, it has the, you know, services in terms of the legal and investment management. I think it's a very which is very appealing, actually, and also the con

nection to the Greater Bay Area. And to me later, it's mainland to China, which is what we even back in Dubai, we we usually look up to and we very much aspire also by the technologies and also the investment movement that has been achieved over the past maybe 50 or 100 years. And it's known that China and Hong Kong are one of the leading players in terms of investments and opportunities. So they want to take advantage of that. And that's why, you know, I thought this would be a good step for me

to us to bridge and to strengthening the bonds, you know, through the family office. And also me, first and foremost, I think my initiative through creating this family offices to be able to have a positive impact, you know, through each and every project. I want it to be a meaningful approach towards creating a. Better tomorrow. And that's what my office will be all about. Yes. I should have asked you this at the start. Why? Initially, the thought of branching out of Dubai in the first place?

Well, for me, I've always consulted with people from around the world. And I think for me, I've always wanted to make an impact in people's lives. And so I think maybe businesses or, you know, charity work, which is also something that I really stand strong for. I want to be able to, like, have every foundation, every in every country so that I can give back. It's a way for me to like. You know, see people also succeed because that's also one of my visions, is to be able to uplift people in ever

y sense of the word, whether it's my team or the people that I meet. So I think we put projects together that help to shape up the next generation and in the future. Also, how do we take this philosophy into sort of tangible investment strategies, for example, in terms of the sectors you're looking at or the target you're looking at? Are we looking at something like that, like a more like a football? We are also aligned with the designer's official mission. Yes, we will target on the worst days

and walkouts. We know it is because we would like to start with a more conservative base. Okay. Okay. And also other than the start up. Yes. In the projects is right. So when you mentioned startups to maybe companies that are further down or further developed, for example, are we talking everything from visa to private equity, for example? Yes, something like that. Okay. Yeah. And in terms of are you looking to deep how much are you looking to deploy in mainland China? Specifically mentioned GBA

, for example, and wondering whether you distinguish between Hong Kong startups, mainland startups or the startups. We are looking forward to technologies we are open to all actually, no matter which region, which countries that as long as it's a good technology that we can have to scale up in UAE and then we would think about. Yes. Outside of plans outside of China, for example, are you looking at elsewhere in the Asia Pacific, too? I mean, you know, I don't want to limit myself to or be put in

side a box. I think there's the world has so much to offer. So we will definitely, you know, take the step also to learn as though we know we can cater and adapt to different parts of the world. So definitely there's a long way to go. But I think Hong Kong being the first also family office outside the UAE is something that I'm very much excited and very proud of. And I'm sure, you know, with everybody's guidance and help, we we all can make it happen and do great things together. Yeah. And just

for reference, of course, we just glanced at the team, which is right behind the cameras here. And of course, there's a whole contingent as well. Final question, What are the risks that you're looking to manage? Generally speaking, as you embark on this new journey, Eleanor, But I mean, what kind of what are the key risks that you're looking to manage? The key risk. We all could be something. We could be. Oh, we are looking forward to risk as well. What? We are both very concerned. I think ther

e's a slowdown in the economy. I think something that will affect the worldwide. You know, if there is like I mean, we hope we don't run into an economic crisis again like the EIA. I know, but I think there's so much more happening that things that happen in the world that hopefully we will be able to control, understand how the market works so that, you know, we don't end up like investing too much at a period where things might be slow and vice versa. So I think that's that that would be the o

ne of the main challenges. But hopefully, you know, through the dedicated team that we have, we are able to anticipate such movements in the markets and cater to things. Okay. Final question. Are you hiring Like what are the what are the plans are on building your team here, for example? Yes, we are at the moment we are actually growing. Finding the right team members that can help to add value not just to it, to us, but also to themselves. Because I also want to see people grow. You know, it's

it's it's a vision of mine to see people have a steady growth because it's for me, too. So it's been a a movement of a togetherness rather than empty. It's all it's about me. It's not about people working for me. It's about working together for a better tomorrow. Yeah. Thank you for making the time to come and have a great rest of your trip. It's great to see you, Of course, here in Hong Kong. And this. Let's. Let's. Let's chat again next time. There we go. That was Sheikh Ali, Rashid Ali, State

Al Maktoum, chairman of the Family Office of Sheikh Ali, Ben Rashid, Al Maktoum, and of course, Eleanor Michaels. And joining us here, vice chair and CEO of the Family Office. And by the way, you can get an insider's guide since we talked about Hong Kong there to the money and people are shaking up the financial hub here. It's our new Hong Kong edition newsletter that's out every Thursday. So do sign up on the link on your screens. Check that out. More ahead. You're watching the China show. Thi

s is Bloomberg. We've been saying that the Bank of Japan is very likely to be tightening policies. My view is that it will be a very dovish exit. Markets split between a march and April exit from negative rates. Japan raises interest rate, the US goes lower, the yen strengthens a little bit. I don't think that they want to risk any financial instability. The stock market has performed very well on the week again, come on this. So that could take a bit of the zest out of that. Yes, there will be

hiccups and it seems that these couple of months would be a little bit rough for Japanese equities. But at the same time, they can give you opportunities for money. This then leaves Japan. Where does it go? That's an interesting one there that could bring us back maybe maybe to China. All right. Some of our Bloomberg TV guests on our latest My Pulse survey about what is the BOJ going to do? What does this mean for the equity market and the like? Here are some more of the results that came out wa

s quite interesting. Right now, what is going to perform best this year to choose between the Nikkei, the S&P or the CSI 300? And this is what we're seeing in terms of the responses here so far. I mean, still, the U.S. remains the best place to be here in Asia. But you're not going to like this. Yeah, And even with Japan is 28%. I mean, 23% goes to China. So it's pretty split in some ways in terms of where the yen is going to end up as well. What do people say do? Yeah. So dollar yen. Well, I th

ink keep in mind first for week or for six days. Yeah, right. And, you know, arguably this has been well priced into into markets right now. You look at swaps, for example. And where will the US dollar end this year? As you can see, 70% basically see a stronger yen and not just a slightly stronger yen right now and 122 140 it's quite a big step from current levels. Let's call it 150 as we speak Now, is that deflationary? In some ways We'll see in terms of price hikes getting priced into this mar

ket. If you look at swaps currently and this is a moving target, we're looking at about 28 to 30 basis points of rate hikes priced for the rest of this year. Yeah, you ask the CEOs out there in Japan what they feel about all this, Right? How are they preparing their businesses for that? Potentially the first rate hike since 2007 with the BOJ, while they expect it to end its negative rate cycle as soon as tomorrow? Bloomberg's Haslinda Amin spoke with Recruit CEO has a UK takeover to find out wha

t a big normalisation could mean for business. I think you know, the one big risk factor the Japanese economy have is the really weak tap in the end. So I think same as other central banks. It's just a matter of time how Japanese central buying is coming back to the No more situation. Has business sentiment in post do you think this financing the kind of growth is? Yeah I'm going to see yeah I think you know what I'm hearing is binary. Japanese companies can increase the prices of items and that

's the first step to increase the compensation and hourly wage. And that cycle we we have to definitely make it better. And so to do that, you know, first of all, we need to increase the price of the items as Christine, the importing goods items because of the weaker, weaker yen, everything is becoming more expensive. But I think that's probably the first step to normalize Japanese. The impression and economy. There you go. That was well, that was, of course, Linda and recruit holding CEO. He's

a U.K., it echoed. But you can watch, by the way, the full interview coming up. As you can see, that premieres March 28. That's the next episode of Latitude with host Linda. Now we go. Yeah, And it's interesting, we keep asking that question about, you know, now, now that we see this, these Ringo talks come out stronger and much stronger than last year. What does this mean for terms of raising your prices of your products, for example? And we did speak with Santori CEO Takashi NAMI last week. He

said, look, that's a tough one. I mean, they were able to raise their prices of whisky, I think, early last year. But, you know, consumers are willing to spend. First and foremost, I think that still takes a bit of time, according to Takashi there and certainly consumers he says not confident yet but it is a matter of time as as a recruit CEO says yeah I think you get into a and arguably we're having this conversation because they are entering at the onset of this, this virtuous cycle of being

able to increase prices, needing to account for wage price pressures, of course, coming up as well and needing to protect their margins. Right. So the next step is really is this a consumer base that's actually ready to start spending on higher prices? We'll see. Anyway, markets 23 minutes into the session here, or about a fourth 1% higher on the CSI 300, which, by the way, is on a five week run up slightly. This coming through in Hong Kong, 3/10 of 1%. If you missed our earlier conversation wit

h Ben Zimmer of soft agents, they're not convinced yet to change to a massive overweight in China. Still have exposure, but they're not really seen as bad as far as earnings go. Yeah, you need that last hurdle, which is earnings growth, to really maybe see more momentum in this rally. Certainly there's what he's been saying in terms of the last piece of the puzzle, really, and that rotation out of India, out of Japan, maybe a little bit is not meaningful enough right now. So focus on the industr

ials. They say right now over consumer cyclicals, the like. But yeah, U.S. futures are still slightly higher. It's just doing quite well. The dollar is also pretty flat here, but most sectors are in the green. You take a look at how the region is playing out here today. One stock we're watching very closely, Seattle, There you go. The battery maker that earnings were a bit massive upgrades when it comes to the raising of the price targets of some of these analysts out there as well. Basically ta

lking about strong cash flow rerating, even Jp morgan when it comes to the stock overall. Yep. Which reminds us it is earnings season to get us into this week here. So coming up here on the show oh we're not done that regard exclusive conversation with the ANZ boss Shayne Elliott. He joins us in a few minutes. And also we're talking all things EVs with HSBC. This is Bloomberg. Welcome back to the China show. And there we go. So you have a live shot of the well, national of your statistics. This

should be coming out with a press briefing shortly after the release of the key economic numbers coming out as well. Retail sales, industrial production, fixed asset investment, property investment. Year to date, the jobless rate, maybe even separately, FDI today. So the stage is set. Yeah. What do we get? And this the data that we've got recently of late. Right. If you take a look at CPI prices, you look at export data, there's signs up pointed to some at least hope, Right. I mean, how long las

ting is one key thing. But certainly you are seeing in the data more or less bearish I guess are more positive numbers coming through here. So likely we'll see whether this is some sort of stabilization or what. Here you go. So take a look at what is obviously industrial production. That is certainly is a sizable bit of 7% growth for, of course, year to date, really compared to a beat from what economists were expecting, a 5.2% print fixed asset investment, also quite a bit of 4.2%. Dave, retail

sales, that's where we're seeing a little bit of disappointment there relative to the median estimate of five and a half percent. Also getting some numbers coming through on property investment year to date. And arguably this perhaps is the most important thing and you're getting some strength coming through in the Chinese currency on the back of largely stronger than expected data, not across the board. Property investment deal is down negative nine. We were looking for a number of -8%. The jo

bless rate actually ticking up. Yeah, 5.3%. The estimate was for 5.1%. That's against the backdrop of this NPC target, of course, of cracking the 11 or 12 million, 12, 12 million jobs bearing up. So I think Yvonne put it perfectly earlier on, you know, we're you know, our guys at Bloomberg Economics now think this is really the period of stabilization, maybe a sharp recovery, perhaps not yet in the offing. But things are at least we pulled back from the cliff. They've looked at the month on mont

h numbers. And really what you're seeing in terms of momentum there and they're say, look, things headline may still look weak even though it today is looking a pretty sizable beat on multiple fronts here. So but we're seeing stabilization we're not quite to pre-pandemic levels, but not deterioration. That's sort of the headline that they're looking at. Hopefully that continues. Yeah, of course, you could turn more to your Bloomberg for more on this of course we get a little more from the econom

ics will be later on the show so to live go that's getting fired up here right now you can get commentary analysis from some of our expert editors. You got to wonder what this means for Policy Day moving forward here. If the data is looking slightly less bad. Yeah, well, we have the loan prime rates coming out this week as well. I think no change expected there. And that really leads us into and by the way, since I'm talking, I'm looking for my list here because it's an extremely busy week for c

entral banks half the world will reports are will update as a monetary policy. So I'm giving up Oh here we go. Okay so obviously you have the Fed, you have the Bank of Japan, you have the RBA coming out of Mexico, plus a few other key countries there as well. And that doesn't even get a start as far as economic data is concerned. As far as bond market pricing goes, it looks like bond markets have well, to a large extent. Oh, by the way, the dots are also out this week. Right. So that's really mo

re important. And whether or not it's three, three or the three become two or two become one, looks like three, maybe 3 to 2 is what people are leaning toward. And by the way, the margin to switch from 3 to 2, they're saying is pretty thin, Right? You only need two Fed officials to indicate that four, those dots are shift higher. So it could happen. Right. Bond markets certainly have surrendered to this or higher for a longer scenario. Equity market, not so much. But you have seen I think we're

back to those close to 20, 24 highs for yields. Now, when it comes to the Treasury. Yeah, I mean yields are yields are there, right? Yeah, yields want yield look at your WB by the way on your Bloomberg terminals in case you're wondering when you look at that okay let's talk about all things monetary policy all things banking let's talk about the business. Joining us exclusively today, Shayne Elliott, co executive director at ANZ. It's nice to see you. Good morning. Good morning. How's how's busi

ness? Actually, business is pretty good. You know, we've spent a lot of time at ANZ getting ready, getting ourselves into shape for tougher times. And I have to say, things look pretty good from where we sit. That's not to say there isn't stress out there and people are doing it tough and various parts of the economy and remembering we operate around the region and 29 different markets. But overall actually we think things are going pretty well. Obviously with the higher rates environment, peopl

e have been worried about mortgages over where you are in Australia and even the Reserve Bank. Sara Hunter is saying households are clearly struggling with rate rises. They're still not quite seeing that change between, you know, that rollover from fixed to floating rates as well. How are you seeing this? Is this sort of just a red herring or is it, you know, just around the corner? So I think things have changed a lot in my time. And really, you know, we sort of flip between homeowners or house

holds and people with home loans and they're not necessarily the same people all the time. So only about a third of Australians have a home loan. And in fact, over time, the people who have a home loan are increasingly quite wealthy in order to get a home loan. It's never been harder to get a home loan in Australia than in the last 30 years. So the people who have home loans are generally well off. And so that part of the economy in general is actually doing quite well. They very well employed.

Their incomes are rising faster than they have for a long time. They're sitting on quite significant high savings balances. A lot of that to do with Covid. So that part of the market in general, pretty, pretty good. All of the banks have sort of reported there's emerging stress in our home loan books, but it's still much, much lower than it was pre-COVID. So things are getting worse, but from an almost zero base, whether households are doing it tough isn't actually the home borrower market, it's

the renter. And those are the people who are renting. That another third of the economy, they're the ones who are really doing it tough and really finding it difficult in terms of, you know, cost of living. Yeah. Where are you seeing that? You mentioned early early signs and granted, we're coming off a low of zero here, but just more specifically on repayment stress, for example. So there's no geographic indicators, zero. There's no particular states or parts of the country doing particularly b

adly. It says, as we know, 90% of when people get themselves a behind on a home loan in Australia, there are three causes for that and they're generally shocks to their income. I lost my job, I got ill and I was unable to work or I got a family separation. They continue to be the three big drivers of people getting themselves, mostly people starting to lose their jobs. There's a new little category emerging, which is this cost of living issue for some. They just can't make the books balance. But

it's still very, very small, as I mentioned. So to give you a number, we've got about a million home loans on our books. The number of people who are in hardship, who are struggling, a couple of thousand. So it's a relatively small number on a percentage sense. So you think I think where you to swap consensus is thinking that the RBA may be able to start cutting rates maybe in the back half of this year. Does that look right to you to follow the Fed and South Sydney, said the House? Stuart. Wha

t ANZ is that will probably see rate cuts towards the end of the calendar year. My personal view is that still optimistic. I still think that inflation is more hard set in Australia and around the world than people think. Why is it starting to become and it's being built into people's expectations? And what we're saying is, you know, wage wages are growing pretty well and so people are out spending that little bit more money so the economy's a bit more robust then I think we give it credit for.

So I personally think it's going to be a lot harder to see inflation come down into the target ranges set in Australia. But I think that's true in other parts of the world as well. What is the next move, a cut? I think the other question that I mean, you didn't look good, but I'm wondering what you think. Look, I think the next move is a cut, but you can't rule out a surprise here. You know, the reality is that what have we learned over the last couple of years is that we should expect to be sur

prised every now and again. And inflation has been more stubborn than people thought. And so I don't think it would take a lot for us to see a rate hike. So again, it's not my base case or certainly our house view, but you can build a case pretty well, I think to say that. And I think, you know, the RBA have, you know, in the language of sort of said there's still it's still on the table, they haven't ruled it out. So we'll wait and see. What do you look at in terms of resources demand now too?

I mean that seems to be slowing whether you look at China or other parts of the world. What does that mean for the Australian economy? Look, the Australian economy is still a remarkably in good shape. Right. And let's not forget again, it depending on your time perspective, I sort of stand back and think about it in a longer perspective, you know, sort of 5 to 10 years. We've got an economy in Australia that actually wants to spend a lot more money in terms of its own infrastructure. There's sti

ll an infrastructure deficit in Australia. There's big spending plans, quite rightly around things like defence. We've got a massive housing shortage like many parts of the world and we've got to get people out there building homes, apartments, etc. and all the infrastructure that goes with that. So this and then of course the big one out there, energy transition, you know, the energy transition, the demand on that side is huge. He's sitting there and think, well, there's still a lot of money th

at needs to be spent in our part of the world and not just in Australia. Just look around here in all of Asia, and that's going to keep demand going pretty well. Guess what drives a lot of that stuff away? A lot of that stuff drives demand for things that Australia produces. So whether it's iron ore or whatever it might be. So I think the demand over time for resource is still intact, still a very strong story. Okay. They're going to be blips along the way. Iron ore dipped below $100, you know,

still $100. It's a pretty good price when you look at the cost of production in Australia for for those sorts of commodities. That takes us into the broader trade activity conversation. And then, you know, a lot of your business is tied to the global economic cycle. Let's shorten that time horizon. So over the longer term, things look okay, what does the next 12 months look like to you? What assumptions is the bank making? Yeah, so for us to just for people watching, I mean our business internat

ionally is intermediated trade and capital flows so our customers move things in money around most of the Asia-Pacific trade back. And we facilitate that, you know, whether that's doing currency trades for them or the actual trade itself. So we get a lot of data in there. Look, it's still very stable. I mean, what we've seen, particularly with the dominance of China and a lot of those trade flows, that has diminished just a little bit. And particularly if you're talking about Australia, New Zeal

and, part of the world. So we've got more and more diversified places that we're trading, whether it's a Thailand or a Vietnam or increasingly an India. So our business is shifting, if that makes sense, sort of geographically quite fast as a. But overall, total volumes that we're seeing are more or less the same, pretty flat, but there's quite a big shift under the covers there between various countries. So, you know, we need to respond to that, as you know. So we need. So we're building out our

capability in places like India or like Vietnam to help with that capacity. As we see those those trade flows and capital flows shift. Which brings me to my next what your commitment in the mainland in some ways, obviously, and that has retreated from Mike Smith sold kind of super regional strategy which meant heavy capital investment into China. What is the business strategy on the mainland for you guys now? So I think on some measures we're still Australia's largest investor in mainland China

. We've got about 300 people. I mean, we're an on the ground business. We actually have people, we do things on the ground. We're not just selling things remotely. We will go where our customers need us. As I say, we intermediate trade and capital flight. We deal with the world's largest companies, whether they're from the United States, European, Australian or Chinese. And, you know, we they need us. We got. So right now, there is still an enormous demand for our services on mainland China. You

know, our business there is growing, not shrinking. Same here in Hong Kong. And we'll continue to invest in our platforms and capabilities in Hong Kong and of course, in mainland China. I mean, the retreat from Asia sort of got overblown a little bit. You know, the retreat from the super regional strategy that was, by and large retreating from a retail banking strategy, which, you know, we just didn't have the scale to compete in that. So institutional banking, which is what we do particularly

well, that is continuing to grow. And in fact, from our perspective and from our shareholders perspective and more importantly, the profitability of that business has significantly improved. I mean, eight years ago when I started, our international franchise had a narrow way of sort of 3%. Today, it's mid-teens and really, really sustainable. And what more can you do outside of Australia and the institutional business to expand? Well, we've got a strategy that follows our customers. We have six

and a half thousand institutional customers globally. Big chunk of those are other financial institutions. Most of them are the world's best multinationals and we go where they go. And so as they move, as I said, if they you know, we know the China Plus one strategy has been intact for quite a while, and they are out there wanting to invest more in Vietnam and and India, but also places like Japan. We follow. So we go there as well, and we build our capacity to follow to follow them. You mention

ed six and a half thousand institutional investors. I mean, that number has shrunk substantially. Yeah, from, I think, nearly 30,000 trips. Does that number stay or do you see that falling even further? No, I don't think it'll fall further. I think it is pretty stable. It might be a little bit of growth in the we certainly have no ambition to reduce it. I mean, our strength, you know, we're pretty comfortable. We've got the right six and a half thousand will always be people we need to add to th

e list. But none of that is about the right scale for us. I mean, institutional banking is a risky business. Take a look. You know, we've got a lot of balance sheet out to those customers. And, you know, our philosophy is we'd rather sort of know these people really, really well. And six and a half thousand is about a number you can get your head around and and know certainly the big end of that list literally intimately and Nitin really, really well. What about your non-core international dives

tments right. You did recently cut your stake in Ambank. You haven't quite found a buyer for Penang Bank just yet. What what's the outlook there? So we only have those. We have three what we call partnership stake. So they were minority investments. We've actually sold quite a few over the years, but yes, we've just sold six and a half per cent of ambank. We've made it very clear they don't really have a place in our portfolio, our strategy going forward. So, you know, we are we are actively loo

king to find alternative buyers for those. So it's something that we spent a bit of time on. It was a good step forward for us to sell the Ambank stake. We're really pleased with that. We had a great relationship, but we need to move on. They need to move on and the better to have a more stable shareholders pension. Same thing. We work really closely with our partner shareholders, but we look for a solution there and then we have a small stake in China, Bank of Tianjin and on those two pan and b

anking back of change and you have a timeline for that. Is there an ideal time where you. I wish I did in the sense that I don't get to control the timeline on those things. I mean, look. Well, what would you like to see? I did before we would like we are not helpful shareholders if I'm being very honest to either of those parties. You know, we our strategy is change. You know, we don't have the resources to really lean in and contribute to either. So we're probably more of a problem for them th

an the not. So the time it you know, if I'm being totally honest. And so, look, I think the sooner we can just find more appropriate shareholders who can actually help. Has both a good franchises and they need somebody is going to lean in as a supportive partner. Not to say we're not supportive, but I just don't think we're the best shareholder for either party. So the sooner we can clean those things up, I think the better. Yeah, I mean, domestically, you know, the court cleared this takeover o

f Suncorp for you guys, which is obviously good news for ANZ. Are you expecting more consolidation in the banking space? I expected that. I mean, we still have over 100 banks in Australia. A lot of them are very, very small. The reality and it's down over time. I mean the reality is globally and particularly in Australia, banking is a scale game and it's a scale game largely because of regulation, compliance, things like cyber security or all of those, you need real scale keep out of service you

r customers. Well in a world of technology and you know, that makes it more and more difficult for the small and the regional, what we call the regional banks and the mid-sized that people have got, you know, two or three or 4% market share. Yeah. Becomes more difficult. I'm going to give you an interesting step. ANZ, we spend more on cyber security than Suncorp spends on all of its technology, right? So it just gives you a sense of the sort of scale you're talking about. You know, you can't say

to your customers we're slightly less secure, but that's okay because we're small. You know, there's a minimum bar, you have to be at the top of your game. And so I think scale is becoming more and more important. That's not to say there is not a very, very important role for regional banks who find a point of, you know, a niche, a specialisation, something that they can do very, very well. And, you know, some of them are doing quite well. Well, I think there will be further consolidation. You

you're sitting on some, some cash, right. You, you've raised some cash and divestments and you know some of the capital requirements that you have, you know, a representative office, you have that money too. And I'm wondering whether you're looking at using that for any acquisitions. You mentioned we talked about consolidation. Are you actively looking to buy assets in Australia? No, not really. I mean, Suncorp is a big one for us is is $4.9 billion. I mean, we this is this is from our perspecti

ve, a really high quality asset. And you know, we really firmly believe we better drive better outcomes for their customers once they're part of the ANZ stable. We've got our hands full doing that. These things are complicated as you can imagine. We've got to move 1.2 million customers from Suncorp Bank across into our systems that'll keep us busy. Remember, we're also doing our own work. We've essentially launched a whole new bank in Australia called ANZ Plus, which is, you know, digital throug

h and through platform, really exciting and we are migrating all our customers onto there. So we've got our hands full. We've already got 650,000 customers onto that platform, which is really exciting. So we've got we got a lot on now. We're not actively out looking for acquisitions in Australia. We always keep an eye open. You never know. You've got to you've got to stay close to the ground, particularly here in Asia, where things move really quickly. But there's nothing actively being pursued

at this point. I would ask you about overall succession plans. I mean, you are the longest serving CEO, Australian banking CEO, your eight years at the helm. Is there a succession plan in place? There's always been a succession plan. I mean, globally, I'm still a baby. It is. It's nothing. I'm only just getting started. All of my succession planning is something the board and I take very seriously. Obviously, as time goes by, you take them more seriously, as you can imagine. So look, we're very

lucky to it. We've built a really fantastic cadre of leaders. Many of them have sit in the chair here, actually have met some of them. Yes. We've got a good talent pipeline of of business leaders, etc.. So that's my job is to make sure that when the time comes, the board has the best possible choice. And would you like to stay longer? I like you. I love I love the job. I love doing what I'm doing. I feel very privileged to lead such a great organisation and I sit I'm still really energised about

it. I mean, I say to a lot of our young people actually when you sign up for banking, you are signing up for change. I mean the industry is changing really, really fast and you have to be excited about that change and the opportunities that new technology brings. You know, the latest thing we're all talking about, obviously generative AI and that's going to you know, that's going to fundamentally reshape the landscape of banking. I find that stuff interesting. I find it exciting. And, you know,

as I said, it's a privilege to lead the group. Jane, it's great to have you here in the region as well. Shayne Elliott, ANZ CEO, is here here at a Hong Kong studios. Of course, we got to recap that data. We got out of China, which was for the most part better than expected, right? If you take a look at how industrial production and fixed asset investment is concerned, I mean that was a sizeable beat there. There's the weakness a little bit still disappointing retail sales, property investment t

hat remains still the glue in this economy. We're down to 9% there for the year to date figures. And we did see that strength, though, a bit of a reversal when it comes to the dollar, renminbi and the like. Yeah, a bit of a whipsaw when you look at equity markets doing as we'll continue to report and keep you guys up to date, of course, and this press briefing that's taking place there in Beijing away from that story. The other one is really Japan's to the Bank of Japan, of course, day one today

, day two tomorrow. And will they finally raise interest rates for the first time since 2007? Stephen Engle. This one is in Tokyo, Steve, will they or will they and should they? Oh, yeah, that's the question, right? It looks like they will because again. All the major news outlets here in Japan. NIKKEI Jiji Press Kyoto all saying essentially that the Bank of Japan after the two day meeting today and tomorrow will indeed exit 17 years of negative rates, essentially raising by at least 0.1% to tha

t range of 020. 1% range. But big question is how much telegraphing will the fairly dovish governor to give at the press briefing at 330 local time tomorrow? We did talk to the former deputy BOJ governor earlier this morning, Walker base on and he essentially said he's not going to give any forward guidance. He is going to say the situation, as it appears right now for his justification, perhaps if if we're getting ahead of ourselves for the hike in the interest rates because again, they they wa

nt to be, you know, continue to have the accommodative messaging. And again, you know, the BOJ is haunted by the political blowback of dialing back stimulus to earlier too prematurely in the past. And they want to make sure that inflation is sticky. And all along, they've said we want sticky inflation well above the 2% target, of course, which they are. But there's disinflation. Right now, CPI's down to about 2.2%. But they need that backed by wage gains and they got the wage gains. So the wage

gains were good, according to the latest intel. And this at least initial concessions, essentially at 5.28% was the first round of the Rango on Friday. So this is good indication and probably a very big reason why the BOJ will likely hike rates tomorrow. Yeah, and it seems like the economists are all catching up now. You're seeing more and more like the likes of Goldman say, look, maybe it is March versus April. Is this more likely to be the consensus now that you know it's going to be tomorrow

really, too? Well, the consensus, that consensus has changed pretty quickly. In fact, you mentioned the Goldman note that came out this morning and they essentially cited things have changed in the last 72 hours because the main news papers here in Japan, especially the Nikkei, the Nyholm case, I Shimbun, which essentially if they're printing it, oftentimes, you know, it's been essentially leaked to them and you kind of almost view it as fact. So they cited in their report today Goldman Sachs di

d essentially because again those wage gains that I mentioned, but also the consensus seems to be in the last 72 hours changing because of those reports that that they do, in fact, now believe that march tomorrow, in fact, there will be a hike. Basically, this is what they're citing as well, that the BOJ has not sent any signal denying the news. Now, they're in a bit of a blackout period right now. But again, there's been no effort to quash these rumors that the hike will happen tomorrow. It bas

ically indicates the BOJ has enough and excuse me, it has enough data right now and no longer needs to wait for the quarterly economic report that is coming out next month. So I'll be here tomorrow. Oh, man. Get ready, Steve. Yeah. Get some sleep. Get some. Yeah, Yeah, I'll call. Is it cold again there in Tokyo? Tokyo versus Beijing last week, Steve? I don't know. You got to bundle up. I still have. I still have the I still have the cold from Beijing for sure. So I'm hoping I have a warm here. I

t's okay. Bundle up. Get ready. We'll be ready with you. AC Our chief political correspondent, David Engle, joining us out of Tokyo ahead of that crucial, crucial BOJ meeting on Tuesday. All right. It just how lucky like this. We talked about a bit of whipsaw when it comes to what traders looking at when it comes to this data dump out of China were flat basically on the Hang Seng. Now CSI 300 still punching slightly higher. The Nikkei, though, that's the one back in vogue or back in style, up so

me 2%. Putting more ahead. This is Bloomberg. All right. Take a look at some markets here this morning. We're watching very closely when it comes to brokerages. Certainly there's been some chatter there about talking about investment and, you know, the nation's value for top investment banks. We've seen the likes of 60 up some 5% here this morning. Seattle remains outperformer when it comes to what we're seeing in the onshore market. Obviously, that earnings beat. You have analysts continuing to

raise their price targets for that stock here. I just given the fact that they were able to defy a lot of the competition that we're seeing in the space here right now to still come out quite on top here. So Eve's very much in focus. Shall Pang X Pong come out with earnings this week as well, yet in fact, we're going to have a round of fantastic roundtable coming up here on all things EVs and really talk about these earnings coming through. And, you know, it's really not just cattle, for exampl

e. You know, I think a few weeks back, Li Auto, of course, came out with a surprise set of numbers outside of what the narrative was at that point in time and really have things changed Anyway, lots of that coming up later on in the show. Be wide, as you can see, 3% higher about an hour into the session. And as we were just pointing out, there's China's EV makers gear up to report their latest earnings. We look at why a vicious price war might not be sustainable. And we're perhaps stating the ob

vious here in the longer run. HSBC joins us to talk about the industry and the prospects next. This is Bloomberg. Central banks in Asia have generally been holding tight this year, early this year. I think they're waiting to see the Fed move first before easing further. And what they're going to do is to raise the policy rate and they are going to end the negative interest rate policy. And I think that they are going to probably going to raise that to veto to 0.21%. Also, they are going to end u

p with a new producer of that ETF and a duet with the Bank of Japan, you know, clearly is on the path to normalizing. And whether it's this meeting on next week, you know, it's almost, almost going to happen. Having said that, you know, if they move, we'd expect them to move, but also at the same time talk expectations down so they don't want to have a runaway policy. Expectations of higher and higher rates, they want to push back against that. Some of our guests today on Bloomberg TV on how the

Bank of Japan could move when it comes to Tuesday and take a look at when it comes to the equity market there in Tokyo. It is back on fire, up some 2% this morning. The topic is up one and a half percent. The yen has been weakening in terms of the yen for, I think, six straight sessions now, Dave. So the market seems to be coming to terms about what really could happen tomorrow and they're not really that worried. And so no first hike in 20 or seven. I think the question now is is it one and do

ne? And you know, we keep referring back to this Goldman Sachs note which came out a few hours back, and it doesn't seem tomorrow is going to be the only rate hike that will deliver. Yeah, in fact, Goldman thinks I'm paraphrasing. So if anyone from Goldman is listening, I apologize for this. I'm trying to hit the spirit of the note here that we will get more increases or tightening as this process of normalization comes to fruition. Our Question of the day, by the way, for our Bloomberg clients

on the BOJ is how long before the ten year JGB currently at 77 right now reaches 2%. There we go on top of this, our data coming out of China and takes us live to the press briefing in Beijing a bit on most not all metrics for activity numbers coming through more lines out of the national bureau statistics here. And this pertains to real estate and the property markets. And so far, the commentary there is it is still in the process of adjustment. That's how it's being phrased at the moment. Ther

e we go. For more, let's bring in David Chiu from live economics. He's with us right now. How should we read this recent data? Data, even if we have only one word, we would say better as well, a better than expected and the better than last year's actual data. So especially in the in the supply side or in the production side, if you look at the industrial production and also the fixed asset investment, both are better than expected. What about the real estate market? They talked about how it's s

till in the process of adjustment. Yeah, based on the high frequency data we saw in the first two months, the housing sector is still weak. You know, I think this is going to translate more weakness into the investment side, I mean the housing investment. But on the other hand, we have seen that it should be the infrastructure investment led by the government and that somehow offset the weakness in the housing sector. So that is why we saw the I fly the fixed asset investment up 4.2%. Yes. Indus

trial output, though, that seems to be the more sizable beat, right. For 7%. What do you think was driving that? Yes, well, I think you mean that in infrastructure, in this industrial output. Oh, yeah. I think it's are for some of the reasons are if you look out of the by sector data you would see that it was mainly the industrial materials sectors that it was supporting the industrial production. And this is in line with the macro data that the consumption side is still weak. But on the other h

and, we see the we saw in infrastructure and also that the car manufacturers were still good. And also somehow I think that is because of the bad weather in middle of February that drove the production of heat and energy. So that was also a support to the overall industrial production. A further line coming through out of the spokesperson of the NBS here, the China has the ability to achieve the growth target for the year. ANZ just put out a note following these numbers. I want to get your react

ion, David, to this, is that the numbers to them looks solid and that might delay any rate cuts that might be on the cards. What do you think this means for monetary policy and do you agree with the view from NZ that the data is solid? Well, I first of all, I agree that the data are a solid, but on the other hand, if the other people see it doesn't do more cause or are using, that would be a risk that they could repeat what happened the last a year in last a year in the in the beginning we saw t

hat data also solid. And also, you know, remember, China just reopened the from the pandemic so that everything looked good. So the PBOC is slow the pace in the third in the second quarter and the third quarter. But we saw what happened in the in the following. Right. So that I think the PBOC still needs to to to cut to avoid repeating what it did last year. David thank you David Chu there for the economics of course you can go to te live go to check out more analysis coming through here and wha

t we're hearing from this national bureau of statistics professor that's happening here right now. Of course, the latest line is saying that they are thin, but conditions and support for Chad to achieve. This year's 5% growth target. Moorhead This is Bloomberg. Welcome back. You're watching the China show. Well, officials are saying that they will take pragmatic measures to support the growth of the new energy vehicle industry. And the call comes as domestic TV makers gear up to reports their la

test quarterly earnings. And that's the agenda, as you can see in the names coming through. Xpeng leads the way out on Tuesday by, of course, reporting, as you can see. But further out next week. Now, the results could actually provide better insight into the impact of the current price war started by Tesla and how this strategy will impact some companies and what they do are transport. Reporter Linda Liu reports. This is the bid at oh three and that's popping up on the streets of Sydney, Berlin

and Sao Paulo and more. Chinese EVs like it, are being exported to the rest of the world. In fact, Chinese carmakers now account for half of all global TV sales. They benefit from access to minerals, and the cost effective supply chain builds over years. And from 2016 to 2019, Chinese carmakers received $28 billion in government subsidies. That rebate program was phased out in 2022. So now China is entering a new stage of EV adoption. The transition from traditional AC to new energy era is stil

l unstoppable. So I think we're still very hopeful. You know, it'll bring a lot of growth opportunities for us. Carmakers want to make inroads in smaller towns and rural areas, but to do that, pricing is key. The competitive auto market is in the midst of a price war started by Tesla two years ago, showing no sign of slowing down. BYD Expand Geely and Late Motor have all slashed prices to follow suit, raising questions over the sustainability of the strategy. When you look at the, you know, the

intense price competition that you're seeing in China right now, that's not sustainable for any company. The price war that's happening, it's a Game of Thrones price war. It's happening in Beijing. The record deliveries don't always translate into bumper profits. Wendy Wide overtook Tesla as the world's top seller last quarter. Preliminary profits for the year were short of estimates by half a billion yen, and shares slumped with the lack of government funding and a slowing domestic market. Even

makers that do survive will have to come up with even better, cheaper products and sell to overseas bias that may not be friendly to cars made in China. Linda Liu. Bloomberg News. All right. Let's bring in Linda now. Just did that piece. And also joining us is our guest from Beijing, Eugen Ding, head of China Autos Research at HSBC Shanghai Securities. Linda, I'll start with you. How might this price war really impact earnings for some of these automakers now? That's a really rough time for eve

rybody in the EV market Right now. BYD is leading the charge. We're slashing prices on a lot of their popular models. This is continuing a price war that was started by Tesla a couple of years ago. So it's really hitting the margins and profitability of these automakers now. By the way, is the top seller. So to have some leeway to wage this war. But you can't say the same for some of these smaller players, like exporting the auto or NIO whose sales are suffering as well as know, taking a hit fro

m this price war. What? So we laid out the companies coming out with earnings this week, apart from the actual numbers. Is there any specific guidance or tone that you're looking to hear on the price war from executives as they talk to investors? Yeah, the executives actually met in Beijing over the weekend for the top level events and they actually laying down some pretty ambitious goals. You've got the car business unit leader from Huawei who's saying they want to be the top player and offerin

g advanced driver systems. So having a lot of high tech features and cars that are working with Huawei. And you've also got others like Neos, Robin, William Lee, saying that, you know, we are trying to improve our battery technologies to make sure that customers are really getting good value from their cars, which is more expensive than some of the rivals. So you've got these top level accessories trying to think of new ways to attract customers in the coming year. CHANG I'll bring you in right

now and what you're seeing when it comes to these price wars, are you thinking price cuts are likely to continue in the space? Yeah, I would say I'm trying to be as mainstreaming. We're basically in the process of consolidation. So during the process of consolidation, I would say the pricing pressure would be part of life now because the laggards and probably struggling at a sub scale might have to cut the price for more volume just to stay relevant. And the same price action has been noticeable

from the leaders such as Biden and Tesla. So this is part of life. But the key debate, all the heat watch here is when you cut the price cap, boost the volume to partly mitigate the pricing pressure. What we discussed earlier, you and David here. So you talked about volume then. What are your assumptions and how much they sell? And just put that also into context of the penetration rate, which I believe based on your report here, is at 43%. Yeah. So our full year forecast for the TV penetration

this year is around 45%. And also over the weekend, the IMF talks about in every event this last weekend, that in a coming three months, the high frequency high frequency data, probably over 50% of penetration in China. So we do notice strong demand picking up starting from March posted the weak us and now with the in January and February and partly we've seen the wait and see consumers who are waiting for a better price probably ready to commit their orders. And what does this mean for I mean,

the market seems to be quite concerned about the overcapacity in the space here right now. And also, when it comes to if you do to cut prices, that's going to lead to more, you know, geopolitical tensions with the U.S., with the Europe, you know, European markets as well. I just want to how should investors look at some of these concerns? Yeah. Two part of the question. First of all, over capacity, I think government to stop issuing you new every production certificate to own 17. The problem is

the existing status quo is this is still simply too much. We have too many brand too many models on the market. So the industry is due for the consolidation. We do notice there are some smaller player reported to hard production and not paying their employees. And also many of the brand talked about cutting the capacity, existing capacity in China. So we've already seen the industry consolidation in the mill on the move and the market is basically the key. The market mechanism is the key driver

s in a process on the other side to navigate increasingly more complicated global trading environment. We do see the potential in market supply could be a rather effective way to mitigate these trade tension as well as the tariff and risks. For example, BYD has been reported to open the new plant in in in Europe, in Asia, and also South America. You think this is Linda here? I'm really curious about what you think of Geely. It's an interesting company who just said that they aspire to be the Vol

kswagen and the new energy vehicle age. How do you think Geely is going to balance all of their brands to really try to come out ahead? Yeah, great question. But we are currently restricted on Geely. But to the topic about incumbency company moving towards electrification. We do notice this couple of incumbency name has been doing quite a good job by establishing a dedicated EV brand and also actively employ direct sell and also advanced driving assistant functions into the new vehicle. So both

party, both the EV pure play as a as well as the incumbency moving towards EV going to remain to be the mainstream player for the EV playground. You should as a follow up I guess to you mentioned incumbent which among among the stocks that you cover among the companies that you cover. Which one has the least visibility in terms of just looking at it? That's a year ahead or five years ahead. Oh, yeah. A great question. I would say the encumbrances as a group in general is facing a more challengin

g environment in terms of the competition. The ICE business has been contracting in terms of the profitability due to lack of scale and also severe pricing. Well, I would say generally don't buy and bike and our coverage probably has a bit of a rough patch to go through while their business is still on the expansion face. And while the incumbency profit pool has been shrinking and this has been reflected in the reported 2023 earnings, and what does it mean for, you know, the number one bid then?

I mean, obviously they maintain that lead amidst this fierce competition. What is the next road for them? Yeah. Great question. So first of all, I would say they have aggressive price action by introducing the budget version. So although this could prop it up, this should partly pressure on the profitability. But on the other hand, lower entry pricing point also attract more demand. So the order book momentum and increasing scale will help help them partly mitigated. The pricing pressure and th

e continuous scaling in China would be a key focus. And another leg of growth probably coming from the oversea market we talked about a bit has been expanding overseas and they have been expanding their production over there and also given a rather more favorable competitive environment in oversea markets. They obviously business has been really much better margin than the domestic market. So domestic market, we're also expecting in the second quarter the platform refresh, which is supposed to d

rive from the second half of the year, another round of the product cycle refreshment. Hey, Linda, question to you. Here you have new entries you've shown me you have while we're entering the TV competition. And you can listen to the question because this also goes to you in a moment here. But I want to get your thoughts, Linda, on what this means for the for the current players, of course, in the industry. So these tech giants entering the space is really going to put the focus on high tech fix

tures and EVs. Huawei said that that want to be the top end of advanced driver system and show me is really pushing this car ecosystem they coming up with if they want to provide a seamless experience for drivers. You know, you can be listening to an audiobook on your phone and when you enter into a car or pick right up playing it on the stereo. So with these focus on technology is putting the pressure on market leaders like Baidu, who actually hasn't had such a big focus on these in-car technol

ogies previously. So now be why they said that they're going to catch up and investing a lot more into the sector. And again, it comes back to profitability because these developing days kinds of functions and features aren't cheap. So in the long term, if you want to stay on top, you've got to spend this money. Yeah, I mean, we saw what happened with Apple, right? And your thoughts on new entries and how the incumbents respond to these new entrants. Yeah, I think the broader industry context wo

uld be EVs are increasingly commoditized as my EV is the next game changer on the technology entrance. Lina just talked about, does that have a different strong differentiation on that front? But I would say the the other IMI names is also playing strong, catching up. The idea has been has been employing more R&D personnel last year and that in earlier updates earlier this year, that Tech Day, they do talk about moving towards in-house software generation. So that's supposed to that's supposed t

o be reflected in a next generation product and they might starting from the high end models first. So I think everyone is moving because they all understand this might be is the next game changer and the OEM. So who have the scale, who have the in-house software capability would be the potential winner. Fantastic. Thank you so much for attending. Head of China Audit Research at HSBC Chennai Securities. And also here on set with us, our Asia transport reporter Linda Liu. Now we'll take you strai

ght back to Beijing now for your statistics press briefing. And we're not talking about the jobless and the labour market situation here. A couple of lines coming out. The situation is stable in the first two months and in two or three days or within two or three days, China will be releasing the youth jobless rate coming out. So stay tuned literally for that. All right. Many more had this intimate. Right. You're back. Time for your China brief. A look at the stories making headlines in the news

papers and also online. The Shanghai Securities News says overseas capital is flowing back into the Chinese market. It's reporting that foreign funds actually are growing more upbeat on A-shares due to attractive valuations and also Fed rate cut expectations. And of course, we're getting an update on those rate cut expectations literally this week on the dots. Well, staying in China here, another article suggests that recent capital market reforms are expected to boost investor confidence. It sa

ys new guidelines are a response to market concerns and perhaps a better balance, both function and profitability, even for those banks and those. Yeah, a lot of focus on what stocks are doing here these days. Meanwhile, when it comes to what we're hearing from Chinese state media calling out BMW at its annual show of was, this is the one that airs out some of these consumer complaints about tech issues and poor service. That's what we're hearing when it comes to BMW this time and why they decid

e to highlight that. As the program criticized the German automaker for technical defects on its five 3330 Li model, which was designed specifically for the Chinese market. According to this report, consumers filed complaints about abnormal sounds. They were saying BMW and local dealers did not provide satisfying solutions, and the carmaker has since taken to website to apologize and said the issues will not affect the safety of the vehicle and that the firm will bear all related maintenance cos

ts. Now, the quick response seems to please some netizens out there. Some users also pointed out that it's normal for moving things to make a little bit of noise, right? Yeah. There we go. It's a car. Yeah. Things are completely silent. That's when you worry. Right. Okay. So that's that's a tiny brief for today. A look at what's happening across these markets right now and broadly speaking. Right. So we're actually on better footing than 90 minutes back in terms of risk assets, although that bei

ng said, you know, pain point continues to be resources mining and with iron ore down about six days right now, well, six or eight days as we speak, rather, US assets futures, in fact, are pointing now slightly higher. In fact, we are near, if not at session highs in US futures. There we go, 2/10 of 1%. That's it from us here at the China show. Plenty more ahead. This is Bloomberg.