Chinese AI Labs Catch Up to OpenAI, Anthropic

YVONNE: 9AM IN SHANGHAI, SHENZHEN, AND HERE IN HONG KONG, YOU ARE WATCHING "THE CHINA SHOW." I AM YVONNE MAN WITH AVRIL HONG. AVRIL: MAINLAND CHINESE MARKETS SHUT FOR GOLDEN WEEK HOLIDAYS BUT WE ARE COUNTING DOWN TO THE OPEN IN HONG KONG. OUR TOP STORIES, ASIAN STOCKS RISE AS INVESTORS SAY RATE HIKE DEBTS OUT OF THE U.S. WILL -- AND WE WILL BE WATCHING THE OPEN AND HANG SENG -- IN HONG KONG. SILICON VALLEY'S PERFORMANCE LEAD OVER CHINESE AI LABS NARROWS TO A RECORD LOW, PAVING THE WAY FOR THE LIKES OF DEEPSEEK TO GAIN MARKET SHARE FROM ANTHROPIC AND OPENAI. TAIWAN'S ENVOY TO THE U.S. TELLS BLOOMBERG THEY ARE SURE PRESIDENT TRUMP WILL APPROVE WEAPON SALES WHEN $14 BILLION, DEFINED VISIONS CALL FOR A TOUGHER LINE. -- DEFYING BEIJING'S CALL FOR A TOUGHER LINE. YVONNE: WHEN IT COMES TO HOW WE ARE KICKING OFF THIS WEEK, ONE THING, THEY BE TAILWINDS FROM THE U.S. JOBS REPORT THAT CAME IN MISSING ALL OF THE ESTIMATES. CERTAINLY THAT DOES DAMPEN THE CHANCE OF A POTENTIAL RATE HIKE NEXT MONTH. THAT IS HOPING RISK ASSETS HERE TODAY. LOOK AT WHAT WE SEE WHEN IT COMES TO THE LIKES OF JAPAN. TAIWAN'S COMING ONLINE. KOREA AND CHINA ARE STILL SHUT. THE QUIDDITY MIGHT BE AN ISSUE. CERTAINLY, THE SET UP LOOKING MORE POSITIVE TODAY. AVRIL: GIVEN THE JOBS NUMBER WE GOT, SOFTER THAN EXPECTED IN TERMS OF THE PAYROLLS BEING ADDED. ON TOP OF THAT, THE JOBLESS RATE TICKING HIGHER. LESS THAN 20% NOW. WE STILL SEE MARKETS PRESSING FORWARD. DECEMBER, IN TERMS OF WHAT THIS MEANS FOR HONG KONG FINANCIALS, PARTICULARLY GIVEN MANY ERA OF ELEVATED YIELDS. LET'S LOOK AT HOW TREASURIES ARE FARING TODAY AFTER WE SAW THEM DECLINE DOWN FOLLOWING THE POST JOB NUMBERS. THIS IS AGAINST THE BACKDROP OF THOSE CONCERNS. LET'S LOOK AT HOW THE MARKETS ARE FARING. THE FISCAL CONCERNS, IF WE CAN PULL UP THE BOARD, STILL WEIGHING ON TREASURIES. ALSO GIVEN THE BACKDROP OF ELEVATED ENERGY PRICES. IT IS RANGE BOUND. YOU ARE SEEING TRADERS WATCHING THE FRESH FIGHTING OUT OF THE MIDDLE EAST. AT A TIME WHEN YOU SEE ASIA STOCKS TRACKING WHAT WE SAW ON WALL STREET, KIND OF ON THE FRONT FOOT. AI IS LEADING THE WAY. THANKS IN PART AS WELL TO MORE OF THIS CAPEX, INCLUDING FROM THE LIKES OF JAPAN, WHICH IS STILL OPEN TODAY. TAKE A LOOK AT DOLLAR-YEN. DESPITE THE SOFTNESS IN THE DOLLAR, STILL LOOKING WEAK ON THE JAPANESE CURRENCY. THE TAIEX OFF TO A FLYING START. TAKE A LOOK AT WHERE -- AT WHAT WE SEE IN TERMS OF FUTURES FOR CHINA'S MARKETS. KOREA AND MAINLAND ARE SHUT TODAY. WILL WE SEE THE STABILITY RETURN IN A WAY TO THE HANG SENG? PARTICULARLY GIVEN THE CHANGING FED RATE HIKE BETS AND HOW THIS HAS PLAYED OUT ON RISK APPETITE. FOR MORE, OUR MANAGING EDITOR JOINS US NOW. WHAT ARE WE SEEING IN ASIA? >> DEFINITELY QUITE POSITIVE. A SIGH OF RELIEF AMONG GLOBAL INVESTORS BECAUSE OF THE SOFTER JOBS DATA. PEOPLE POWERED BACK INTO AI. RISK ON IS PROBABLY THE WORD OF THE DAY. IF YOU LOOK UNDER THE HOOD, THE BREATH FOR EQUITIES MARKET IS STILL PRETTY LOW. IF YOU LOOK AT THE U.S., PRETTY MUCH AI HYPERSCALERS. CHIPMAKERS RUNNING THE SHOW. THE ONLY SECTOR WHERE PEOPLE ARE WILLING TO PILE MONEY INTO. THE SAME STORY IN ASIA. AT -- TAIWAN WILL HIT A RECORD HIGH. KOREA IS SHUT BUT TO -- CHIPMAKERS ARE DOING WELL. THAT IS BASICALLY A SECTOR WHERE THE HIGH AS EARNINGS VISIBILITY AND GROWTH EXPECTATIONS. BUT ALSO SHOWS PEOPLE ARE QUITE JITTERY IN THE ENVIRONMENT WHERE PEOPLE -- WHERE YIELD IS SURGING HIGHER. TODAY, THERE MAY BE A PAUSE BUT WE ARE TALKING ABOUT 10 YEAR YIELD .3%. THE BIG ROUND NUMBER PEOPLE ARE EYEING FOR IS 6%. IF WE CLIMB TOWARDS THEIR, THE CONVERSATION CAN SWITCH QUICKLY. THAT WOULD MAKE ENORMOUS AI INVESTMENTS A LOT MORE EXPENSIVE, AND MAKE FIXED INCOME MORE ATTRACTIVE AS WELL. YVONNE: SEEMS LIKE 5% USED IT TO THRESHOLD. I THINK HE SURPASSED THAT. NO WE ARE TALKING 6%. WHERE WE FELT ON FRIDAY WAS HONG KONG. RISING YIELDS, FINANCIALS TOOK A SMACKING HERE ON NOT JUST THE RISING YIELD ENVIRONMENT. THERE WERE THREATS OF MAYBE U.K. TAX HIKES AND THE LIKE THAT ROILED THE HSBC'S OF THE WORLD. DO WE SEE ANOTHER LEG OF THIS TODAY? WHAT DOES THE SET UP LOOKING LIKE FOR HONG KONG? LIANTING: FRIDAY, AS YOU SAID, WAS A TRIPLE WHAMMY. WITH THE RATES WORRY, YOU CAN FINANCIALS, AND THE FACT THAT THE SOUTHBOUND WAS SHOT DUE TO MAINLAND HOLIDAYS. TODAY, WE PROBABLY WILL SEE A RELATIVELY WEAK SESSION, GIVEN THE OVERNIGHT PERFORMANCE IN THE LIKES OF KAY WEBB AND GOLDEN DRAGON. FOR HONG KONG, THIS SESSION, PEOPLE WILL BE FOCUSED ON MORE ABOUT HOLIDAY RELATED SPENDING STATS. IN THE NEXT FEW SESSIONS AS WELL. BECAUSE MAINLAND IS SHUT, EVERYONE IS JOINING -- IS ENJOYING A LONG BREAK. SO FAR, THE LITTLE WE KNOW SEEMS TO BE RELATIVELY UPBEAT. WE SAW A RAILWAY VISIT, THE NUMBER OF TRIPS HIT A RECORD HIGH ON OCTOBER 1. IF YOU LOOK AT MACAU CASINOS, THE FIRST THREE DAYS SPENDING IS QUITE GOOD WITH A NUMBER OF TOURIST ARRIVALS UP 12% VERSUS THE SAME PERIOD IN 20 55. WE ALSO SAW LOCAL MEDIA REPORTS THAT EVEN SALES IN BEIJING IS SEEING A PICKUP. UPBEAT, SO FAR, SO GOOD. IT IS HARD TO CHANGE THE MEDIUM-TERM INVESTOR CONFIDENCE TOWARD CHINA, ESPECIALLY WITH VERY LIMITED STIMULUS THAT WE SAW JUST NOW. YVONNE: ALL RIGHT, THANK YOU. SETTING UP OUR MANAGING EDITOR FOR ASIAN EQUITIES, JOINING US OUT OF SINGAPORE. YOUR WEEK AHEAD IS LOOKING BOND CENTRIC. WHEN IT COMES TO THE MIDDLE OF THE WEEK, WE HAVE THAT ARE B.I. DECISION, THE FED MINUTES, IT WILL BE INTERESTING TO SEE HOW HAWKISH THIS FOMC WAS IN SEPTEMBER. WE ALSO HAVE BIG OPTIONS FOR THE U.S. TREASURY MARKET. THE 10 YEAR BOND MARKET IS ON WEDNESDAY. THE 30 YEAR. WE WILL SEE WHAT SORT OF INVESTOR DEMAND IS LOOKING LIKE WHEN IT COMES TO THE LONG END. NOW THAT WE HAVE SEEN STABILITY, I GUESS YOU COULD SEE A BALANCE IN THE TREASURY MARKET, BUT HOW SUSTAINABLE THAT IS IS ONE QUESTION HERE. THAT JOBS REPORT IS AT LEAST HELPING A LITTLE BIT OF THAT HERE TODAY. LET'S BRING IN GLOBAL HEAD OF INVESTMENT SOLUTIONS AT LEO WEALTH. GREAT TO HAVE YOU. >> THANKS FOR HAVING. YVONNE: DO WE HAVE TO LOOK AT BONDS IN A NEW LIGHT? >> WE DO, BUT NOT THE NEGATIVE ONE PEOPLE ARE WORRIED ABOUT. YOU'RE GETTING 5.3% ON THE 10 YEAR, YOU CAN HEDGE GLOBAL ECONOMIC GROWTH RISK WITH THE 30 YEAR AT 5.6%. THESE ARE LEVELS THAT ARE ATTRACTIVE FOR A LOT OF INVESTORS. PENSION FUNDS ARE VERY HAPPY TO LOCK IN THEIR LIABILITY AND MATURATION. EVEN IF YOU LOOK AT THE HIGH-YIELD BOND MARKET, YOU CAN GET 7%, 7.5%. IF YOU GO BACK TWO OR THREE YEARS AGO, YOU COULD BARELY GET 5%. AS WE ALL KNOW, MOST PEOPLE ARE LONG EQUITIES. TAKING A LITTLE BIT OF RISK OFF THE TABLE, BUYING SOME BONDS, MIGHT BE QUITE ATTRACTIVE. YVONNE: HOW HAVE YOU BEEN REASSESSING YOUR BOND PORTFOLIOS? >> WE WERE PROBABLY EARLY BUT A WEEK AND A HALF AGO, WE ADDED A BIT OF DURATION. WHEN WE SAW THE FIRST -- OVER SEPTEMBER, THE 10 YEAR IT UP .5%. ONCE WE GOT 30 BASIS POINTS, WE THOUGHT, LET'S TAKE ANOTHER HALF A YEAR OF DURATION. WE ARE MAYBE HALF A YEAR OVER THE BLOOMBERG GLOBAL AGGREGATE DURATION LEVEL NOW. WE THINK IT IS AN INTERESTING HEDGE TO EQUITY RISK, GLOBAL GROWTH RISK, ESPECIALLY SINCE THE INFLATION IS NOT SO WORRIED SOME TO US -- WORRISOME TO US. A LOT OF IT IS SUPPLY-SIDE. IRAN WAR MIGHT GET WORSE OR BETTER, WE DON'T KNOW. BUT IT SEEMS LIKE OIL IS FLOWING. PASS-THROUGH IS GOING TO BE LIMITED. IT'S EASY FOR US TO SEE HOW INFLATION MIGHT COME DOWN TO A LOW TWO HANDLE OVER THE NEXT SIX MONTHS. AT THAT POINT, THE FED AT 4, 4 .25, IS PRETTY REASONABLE. AS OPPOSED TO WHAT IT IS PRICED IN RIGHT NOW. YVONNE: IT IS HARD TO OUT HOCK THAT. -- OUT HAWK THAT. >> I WOULDN'T BE SURPRISED IF IT COMES BACK DOWN TO TWO OR MAYBE EVEN 1.5 TYPE OF PROBABILITY-WEIGHTED NUMBER. THAT PROBABLY MEANS WE ARE AT FAIR VALUE, IF NOT, MAYBE JUST A LITTLE BIT CHEAP ON THE LONG END. AVRIL: CAN YOU UNPACK FOR US WHAT YOU ARE SEEING IN TERMS OF THE BOND MARKET WEAKNESS? WHY USERS ARE BEING DRIVEN HIGHER? IS IT GROWTH, PHYSICAL RISK PREMIUM? HOW MUCH AND TO WHAT EXTENT? >> I HAVE STRUGGLED WITH A FISCAL RISK PREMIUM STORY. TOTAL U.S. DEBT IS ACTUALLY DOWN. IF YOU THINK ABOUT GOVERNMENT DEBT BEING UP FOR SURE, BUT THE REST OF THE ECONOMY, HOUSEHOLDS. RATES HAVE RISEN NOT JUST IN THE U.S. U.K., GERMANY, JAPAN, RATES ARE RISING EVERYWHERE. BECAUSE GLOBAL GROWTH IS BETTER THAN EXPECTED. IT DOESN'T FEEL LIKE A FISCAL CONCERN STORY. IT FEELS LIKE A GOOD GROWTH REQUIRES SLIGHTLY HIGHER RATES STORY. I WOULDN'T BE SURPRISED IF THE 10 YEAR, 30 YEAR OPTIONS GO QUITE OK. IT REALLY IS A GROWTH AND MAY BE A LITTLE BIT OF INFLATION STORY AS THE MARKET IS HESITANT TO BELIEVE THAT THIS INFLATION IS TERRITORY. WE ALWAYS FIGHT THE LAST WAR AND WE HAD THE 2022 INFLATION BEING TRANSITORY MESSAGE THAT DIDN'T QUITE WORK OUT. THERE IS A FEAR THAT WILL HAPPEN AGAIN. IF YOU LOOK AT TRIMMED INFLATION, IF YOU EXCLUDE THE OUTLIERS ON BOTH SIDES, AND HE SAW THE REVISIONS LAST WEEK IN THE U.S., IT POINTS TO A RELATIVELY MILD INFLATION PICTURE. WE WILL SEE HOW THINGS DEVELOP. AGAIN, IT FEELS INTERESTING AT THESE LEVELS TO US. AVRIL: WHAT ABOUT WHAT IS HAPPENING IN FRANCE? ARE YOU WORRIED ABOUT POSSIBLE CONTAGION? >> YES, NEVER THOUGHT I WOULD SAY IT THAT GREECE IS SAFER THAN FRANCE, FROM A MARKET POINT OF VIEW. THAT SEEMS TO BE THE CASE RIGHT NOW. THE ECB CAN EASILY STEP IN. WE SAW EUROPE SOLVE ITS PROBLEMS 10 PLUS YEARS AGO WITH THE SOUTHERN SOUTH EUROPEAN ISSUES. FRANCE WILL BE NOT A SIMILAR. IT IS A FIGURE SYSTEMIC RISK. THE ENTIRETY OF THE EU WILL JOIN IN. THE CHALLENGES, PROBABLY NOT YET. WHEN WE EXTENDED DURATION WEEK AND A HALF AGO, WE DID IT ACROSS U.S. AND NON-US. AS I SAID, RATES ROSE EVERYWHERE. WHAT I WANT TO BE MAKING AN AGGRESSIVE SPREAD TIGHTENING BETWEEN OATS AND BONES AT THIS POINT? PROBABLY AT MY GET WORSE BEFORE IT GETS BETTER. YVONNE: HOW ARE YOU LOOKING AT -- HE MENTIONED HIGH-YIELD. THE TRIPLE C COLLAPSE WE SAW LAST WEEK, WHEN YOU ARE SEEING THE JUNKY US JUNK-BONDS IN DISTRESS FOR THE FIRST TIME IN A FEW YEARS, AT A TIME WHEN SPREADS ARE QUITE TIGHT, IS THERE A FEAR OF CONTAGION? WHERE IS THE NEXT SHOE TO DROP IN THE CREDIT SPACE? >> THAT IS AN INTERESTING QUESTION. I DON'T SEE CONTAGION FROM TRIPLE C'S. IT IS NOW THE HIGHEST QUALITY IT HAS BEEN IN 5, 6 YEARS AT LEAST. SOMETHING LIKE 65% OF THE INDEX IS DOUBLE B. IF YOU CREDIT RISK ADJUST THE SPREAD, IT IS ACTUALLY NOT THAT TIGHT. IT IS CALLED FAIR VALUE AGAIN. IN ABSOLUTE LEVELS, IT IS LOW. BUT IN ABSOLUTE LEVELS, YIELDS ARE NOW 7.5%. IF THE ECONOMY GETS WORSE, LONG DEAD YIELDS WILL DROP. THE SPREAD WORLDWIDE IN. MY TOTAL YIELD FROM HIGH YIELD WILL PROBABLY STAY THE SAME. WE ARE NOT OVERWEIGHT TRIPLE C'S , BUT WE ARE HAPPY TAKING DOUBLE B AND MAYBE B+ RISK. YVONNE: HOW ARE YOU TWEAKING THE STOCK SIDE OF THINGS? >> NOT NECESSARILY TRIMMING. FOR CLIENTS WHO ARE WORRIED ABOUT RISK, IT IS A VERY EASY THING TO DO TO SAY, LET'S TAKE A LITTLE OFF. WE THINK THERE MIGHT BE A CENTER RALLY COMING. MAYBE EARLY TO TALK ABOUT THAT, BEGINNING OF OCTOBER. BUT THERE IS STILL A LOT TO GET THROUGH. MAYBE NOT AN OCTOBER. WE STILL HAVE THE MIDTERMS. WE HAVE A LOT OF UNCERTAINTY. THERE WILL BE 47 POLLS BETWEEN TODAY AND THE MIDTERMS THAT WILL CHANGE ALL OF OUR MINDS. BUT GLOBAL GROWTH IS STRONG. EARNINGS ARE PRETTY STRONG. . I HEARD SOMEONE SAY EARLIER THAT BREATH IS REALLY LIMITED. IF YOU LOOK AT Q2 EARNINGS, NON-MAG SEVEN NAMES GREW EARNINGS ALMOST AS FAST AS THE MAG 7 IF YOU EXCLUDE SPACEX AND ANTHROPIC, MARKET TO MARKET NUMBERS. WE DON'T SEE THAT CHANGING THIS QUARTER. IF EARNINGS ARE GOING TO BE GOOD, WE MIGHT SEE EXACTLY WHAT WE SAW AT THE BEGINNING OF THIS QUARTER. WHERE YOU HAD A DIP IN THE BEGINNING, EARLY JULY. AND AS NUMBERS STARTED COMING IN, AND THEN YOU HAVE THE MIDTERMS REMOVE UNCERTAINTY. ONE WAY OR THE OTHER WE WILL HAVE LESS UNCERTAINTY COME THE SECOND WEEK OF NOVEMBER. WE MIGHT SEE THE MARKET REACT TO STRONGER GROWTH, GOOD EARNINGS, AND I HOPE, LOWER YIELDS. YVONNE: ALL RIGHT, GOOD TO HAVE YOU HERE TO KICK OFF THE WEEK. COMING UP, CHINESE BUILT TESLA'S ARE NOW GAINING TRACTION IN CANADA. WE EXAMINE HOW THESE RELAXED IMPORT RESTRICTIONS AND AGGRESSIVE PRICING ARE FUELING SALES. A REMINDER, MAINLAND CHINA MARKETS ARE STILL SHOT FROM THE GOLDEN WEEK HOLIDAYS. HONG KONG IS SET TO REOPEN. AFTER THAT BRUTAL SELLOFF ON FRIDAY, WE WILL SEE IF THINGS EASE OFF. COUNTING DOWN TO THE OPEN OF TRADE IN HONG KONG. THIS IS "THE CHINA SHOW." ♪ YVONNE:YVONNE: YOUR AGENDA HERE TODAY, WE ARE TRACKING WHETHER HONG KONG GETS ANOTHER BRUTAL DAY WHEN IT COMES TO STOCKS. THE 2% DROP WE SAW WHEN IT CAME TO EIGHT SHARES. WE WERE AT THE LOWEST WE HAVE SEEN SINCE JULY WHEN IT COMES TO THE HANG SENG ON FRIDAY, ON THE BACK OF THESE WORRIES ON GLOBAL BOND YIELDS. CERTAINLY THAT IS ONE THING TO WATCH CLOSELY, AS MAINLAND MARKETS ARE SHUT. WE DON'T HAVE THE SUPPORT OF SOUTHBOUND FLOWS, WHICH IS AMPLIFYING THE PRICINGS WE HAVE SEEN. NEW WORLDS, ONE THING TO WATCH CLOSELY TODAY. AFTER EARNINGS THAT CAME OUT LAST WEEK, AFTER THE TALK ABOUT TERMINATING THAT PROJECT. WE ARE NOW HEARING THAT BAIN COULD BE EXPLORING THE INVESTMENT INTO THE PROPERTY DEVELOPER. WE ARE WATCHING THE AI TRADE. WE HAVE A GREAT PIECE OUT THAT WILL FLESH OUT HOW THE NARROWING GAP BETWEEN U.S. AND CHINA TECH WHEN IT COMES TO AI DEVELOPMENT. Z A I RAISED TO BUY GOLDMAN WITH A PRICE TARGET AT 1560 HONG KONG DOLLARS. WE ARE WATCHING ALL THINGS AI. THE EV SECTOR IS SOMETHING TO WATCH AS WELL. TESLA ENJOYING STRONG SALES OF ITS MODEL 3 IN CANADA DURING THE THIRD QUARTER AS SHIPMENTS BEGAN TO ARRIVE FROM CHINA. LET'S BRING IN OUR CHINA CORRESPONDENT MINMIN LOW, WHO JOINS US WITH HOW THESE SALES ARE LOOKING LIKE FOR CHINESE BRANDS IN CANADA. THEY HAVE RELAXED TARIFF RESTRICTIONS AND WE HAVE SEEN MOMENTUM. MINMIN: YES. WE ARE SEEING 16,000 CARS ARRIVING IN CANADA SO FAR, A THIRD OF THE ANNUAL QUARTER THEY PROVIDED SINCE CHINA AND CANADA'S STRONG THAT DEAL. THE VAST MAJORITY OF THESE EXPORTS, CHINESE MADE TESLA'S PEER THEY ARE ENJOYING STRONG SALES IN CANADA, MAINLY BECAUSE THEY ARE PRICED CHEAPLY. 20% DISCOUNT COMPARED TO'S THE -- TO THE TESLA'S IN THE U.S. ONE REASON WHY CHINESE DOMESTIC BRANDS ARE NOT MAKING HUGE INROADS IS BECAUSE TESLA WAS ONE OF THE FEW ABLE TO RAMP UP EXPORTS IMMEDIATELY. IT'S CARS ARE ALREADY CERTIFIED TO RUN ON NORTH AMERICAN ROADS, IT ALREADY HAS A PRESENCE IN CANADA. MANY OF THESE CHINESE CARMAKERS ARE STILL IN THE PROCESS OF RAMPING UP THEIR SALES AND DISTRIBUTION IN CANADA. THIS IS SOMETHING WE WANT TO KEEP TRACKING TO SEE HOW QUICKLY THE CHINESE DOMESTIC BRANDS CAN ALSO HAVE THEIR PRESENCE FELT IN CANADA. AVRIL: WHAT ABOUT FOR CHINESE EV'S? THE U.K. IS SET TO FOLLOW THE EU TO IMPOSE TARIFFS. MINMIN: THAT'S RIGHT THIS IS ANOTHER CONCERN FOR THESE CHINESE CARMAKERS STRUGGLING WITH THEIR DOMESTIC SLUMP. THE U.K. HAS BEEN ONE OF THE FEW WESTERN MARKETS THAT HAS SO FAR REFRAINED FROM PLACING THESE LEVIES ON CHINESE EV'S. BUT IT IS NOW BECOMING A STICKING POINT WITH THE EU. THE EU HAS THESE 45% TARIFFS. IN THE EU IS CONCERNED THAT THEY U.K. COULD BECOME A BACKDOOR FOR THESE CHINESE CARS TO ENTER THE EU. THEY ARE THREATENING THE U.K. TO CUT THEM OFF FROM THIS MAIDEN IN EUROPE INITIATIVE THAT COULD BE VERY DISADVANTAGEOUS FOR BRITISH CARMAKERS THAT WOULD LOSE THEIR TAX BREAKS AND SUBSIDIES. THE BALANCE POWER IS SHIFTING A LITTLE BIT. INITIALLY, THE U.K. HAS BEEN CONCERNED ABOUT RETALIATORY MOVES ON CHINA ON BRANDS LIKE LAND ROVER, A VERY WELL KNOWN IN CHINA. BUT THERE MARKET SHARE HAS BEEN DROPPING BECAUSE OF COMPETITION FROM CHINESE BRANDS. BRITISH CARMAKERS, THEIR LARGEST EXPORTS, MORE THAN 50%, GOES TO THE EU. WHEREAS 4% GOES TO CHINA. LOOKS LIKE THE U.K. IS SET TO FOLLOW THE EU. YVONNE: THERE IS THIS EMBRACE OF CHINESE CARS IN THE U.K. AREA TALK TO US ABOUT THIS TEMA RANGE ROVER. REALLY GAINING A LOT OF POPULARITY. MINMIN: ONE OF THE BEST SELLING CARS IN THE U.K. NOW IN SEPTEMBER, THEY SOLD MORE THAN 10,000. IT IS NICKNAMED THE TEAM ROOM LAND ROVER BECAUSE IT LOOKS LIKE A LAND ROVER BUT IT IS HEAVILY DISCOUNTED AND STARTS AT 30,000. LAND ROVER, THE MOST AFFORDABLE MODEL STARTS AROUND 45,000 POUNDS. IT IS GETTING A LOT OF TRACTION. THIS BRAND IS GETTING 4.3% OF THE MARKET SHARE, JUST BELOW TESLA'S 4.5%. YOU CONSIDER THESE CHINESE BRANDS, EDGING OUT THE TESLA MODEL 3. IF YOU TAKE INTO ACCOUNT ALL OF THE CHINESE BRANDS INCLUDING BYD AND THE LIKE, THEY ARE TAKING 23% OF THE MARKET SHARE. WHEN THE U.K. IMPOSES THESE LEVIES, IT IS GOING TO POSSIBLY PUT A BRAKE ON THESE CHINESE BAND -- BRANDS. AVRIL:AVRIL: THE PICTURE COULD CHANGE. THANK YOU SO MUCH. CHINA CORRESPONDENT MINMIN LOW FOR US. LET'S LOOK AT THE OTHER STOCKS THAT WILL BE IN FOCUS GIVEN THIS BACKDROP OF CONCERN SURROUNDING CHINESE EV'S, AND HOW WE SHOULD SEE THAT BIT OF MIXED PERFORMANCE FOR THE MOMENT, BYD LOOKING A LITTLE SOFTER. ASIDE FROM THAT, LOOK AT HOW THE HONG KONG FUTURES ARE SHAPING UP. MINMIN MARKETS ARE STILL SHOT FOR GOLDEN WEEK. ON FRIDAY, THAT BATTERING FOR THE HONG KONG FINANCIAL STOCKS. HSBC, IT WAS HARDHEAD. THAT LEFT THE HANG SENG WITH ITS WORST PERFORMANCE THE MONTH OF MARCH. TODAY, HANG SENG TECH. MAYBE SOME STABILITY RETURNING TO HANG SENG FINANCIAL RELATED STOCKS. PLENTY MORE AHEAD. THIS IS BLOOMBERG . ♪ AVRIL: TAKE ANOTHER LOOK AT HONG KONG, HOW IT IS FARING IN THE EARLY GOINGS PRE-MARKETS. MAINLAND MARKETS SHUT STILL. A LOT OF THE WORRIES STILL BEING EXPRESSED VIA HONG KONG. YOU SEE THE HANG SENG TECH ON THE BACK FOOT. GIVEN THE SELLOFF WE SAW ON FRIDAY WITH HSBC, GIVEN THE YIELD CONCERNS. MIGHT THE FED RATE HIKE BE PULLED BACK BRING SOME STABILITY TO THE HANG SENG FINANCE INDEX TODAY. YVONNE: WE TALKED ABOUT LESS THAN EIGHT WHEN HE 5% CHANCE THAT THE FED MAY MOVE IN OCTOBER AFTER THAT WEAKER THAN EXPECTED JOBS REPORT. THAT CERTAINLY IS IN SOME WAYS AIDING AND SUPPORTING THE FINANCIALS TODAY. SOME STABILITY COMING THROUGH FOR THE STOCKS. HSBC WAS THE MAJOR DRAG WHEN IT CAME TO THE HANG SENG FINANCIAL INDEX ON FRIDAY. SEEING UPSIDE. STANCHART AIA SEEING SOME PRESSURE HERE THIS MORNING. ALSO TRACKING ZAI. GIVING THE STOCK AN UPGRADE FROM ABIDE TO A NEUTRAL. IT BE -- A REMAINS ONE OF CHINA'S BEST AI MODELS. AND IT HAS BECOME ATTRACTIVE AFTER A SHARP SHARE PRICE MARK. WE ARE SEEING A POP IN THOSE SHARES. NEW WORLD AS WELL. A LOT OF NEWS COMING THROUGH LAST WEEK WHEN IT CAME TO THE EARNINGS, WHEN IT CAME TO THEM SHEDDING THEIR ASSETS. NOT MUCH MOVEMENT, ACCORDING TO OUR SOURCES. THEY MIGHT BE EMERGING TO EXPLORE A POTENTIAL INVESTMENT INTO DEVELOPERS. WE WILL SEE HOW THAT PANS OUT WHEN IT COMES TO THE PROPERTY SIDE OF THINGS. DEVELOPERS, REAL ESTATE, THEY MIGHT STILL BE EXPOSED TO WHAT HAS BEEN GOING ON WITH THE RISING RATE ENVIRONMENT. CERTAINLY WE WILL CONTINUE TO TRACK FINANCIALS AND PROPERTY. WE TALKED ABOUT THE CONSUMPTION NAMES, MIGHT BE MOVING CARE THEY ARE FLAT RIGHT NOW, FROM WHAT WE LAST CHECKED. SOME DATA WE SAW, EARLY DATA FROM THE GOLDEN WEEK HOLIDAY SEEMS TO SHOW LOWER SPENDING, LOWER TRAFFIC. WE WILL FLUSH THAT ALL OUT COMING UP WITH THE OPEN AND HONG KONG COMING UP NEXT. THIS IS BLOOMBERG. ♪ AVRIL: WELCOME BACK. YOU ARE WATCHING "THE CHINA SHOW." WE ARE COUNTING DOWN TO THE OPEN OF MARKETS. WE WILL BE WATCHING THE FINANCIAL STOCKS, TECH AS WELL. THE EXTENT TO WHICH THE SLIGHT PULLBACK IN FED RATE HIKES THE MONTH OF OCTOBER IS GOING TO HELP RISK APPETITE IN THE REGION. WITH MAINLAND STILL SHOT OF COURSE. ADD THAT WITH WHAT WE ARE SEEING, EARLY SIGNS FROM THE DATA, GIVEN THIS LONG WEEKEND OUT OF CHINA. MAYBE CONSUMPTION, TRAVEL SPENDING IS STILL LAGGING A BIT. YVONNE: WE ARE NOT SEEING THAT IN THE EARLY SIGNS OF THE DATA WE ARE GETTING HERE. NOT THE OFFICIAL NUMBERS. SUGGESTING EVERYTHING FROM BOX OFFICE HAS BEEN SOFTER THAN EXPECTED. CERTAINLY NOT A GOOD START TO THE GOLDEN WEEK WHEN IT COMES TO HONG KONG. THE HEADWINDS CONTINUE WHEN IT COMES TO RISING RATES. CONCERNS ABOUT TIGHTER FINANCIAL CONDITIONS. AT LEAST WE ARE SEEING SOME STABILITY. WE DID SEE STOCKS ON FRIDAY, THE LOWEST SINCE JULY WHERE WE ARE. WE ARE BELOW THOUGH 24,000 THRESHOLD FOR THE HANG SENG. WE ARE GOING TO BE WATCHING FINANCIALS CLOSELY. SEEMS LIKE IT IS REALLY JUST THE HSBC SEEING A SLIGHT RECOVERY. YOU ARE STILL SEEING THESE FINANCIALS GETTING HIT. AIA IS DOWN ANOTHER 1.5%. THE HANG SENG FINANCE INDEX IS STILL SLIGHTLY LOWER. AS AVERILL MENTIONED, WE ARE STILL IN THE GOLDEN WEEK HOLIDAYS. YOU DON'T GET THE MAINLAND CHINESE SUPPORT WHEN IT COMES TO THIS SOUTHBOUND FLOWS INTO HONG KONG. THAT MAGNIFIES THE MOVES WE SEE AMIDST FOR AN LIQUIDITY AND THE LIKE DURING THIS HOLIDAY PERIOD. SEEMS LIKE HOT -- LIKE HONG KONG IS CONTINUING TO GET HIT FROM THE MATH GROW RISKS. ONE OTHER THING WE NEED TO WATCH OUT FOR IS WHAT THE JOBS REPORT SAYS. THAT DID LEAD TO THE DROP IN THE DOLLAR. TEXT SEEMS TO BE THE ONE THAT IS BENEFITING FROM THE MACRO RISK AND WHAT WE SAW OVERNIGHT THE STOCKS INDEX WAS SURGING ON FRIDAY. KOREA IS SHUT. WE ARE NOT SEEING QUITE YET HSTECH PARTICIPATING HERE TODAY. MAYBE THE EV SECTOR IS ONE THING DRIVING THAT TODAY. EASY BYD, ALL FOLLOWING, EXCEPT FOR TERRY OTTO. MAYBE THE VERSION OF THE RANGE ROVER IS WHAT IS HELPING IT IN THE U.K. MARKET. REALLY, THIS CONCERN NOW OF MORE RESTRICTIONS WHEN IT COMES TO THESE EV EXPORTS FROM CHINA COULD BE SOMETHING THAT IS AN OVERHANG AMONG THESE EV MAKERS. Z.AI COULD BE THE BRIGHT SPOT AGAINST THIS WHOLE TECH STORY. GOLDMAN, OPERATING THE STOCK -- UPGRADING THE STOCK FROM NEUTRAL TO BUY. THE VALUATIONS ARE LOOKING A BIT MORE ATTRACTIVE AFTER THE SHARP SELLOFF WE SAW IN THE STOCK EARLIER. THEY CAME OFF -- IN THE PREMARKET, WE WERE UP 3% OR 4%. WE COME OFF WITH THE INITIAL?, GAINS OF 1%. THAT IS ONE THING TO WATCH. ROBERT LEA FROM B.I. COMING OUT WITH HIS REPORT LATER ON, ABOUT THE GAP BETWEEN U.S. FRONTIER TECH AND CHINA. IT IS ACTUALLY NARROWING NOW. AND WHAT THIS MEANS HERE IN THIS AI RACE. COULD BE A GOOD ONE TO WATCH. WE ARE WATCHING NEW WORLD, AS WE TALKED ABOUT HERE. BLOOMBERG HAS REVEALED BAIN CAPITAL IS EXPLORING A POTENTIAL INVESTMENT IN ITS DEBT LADEN DEVELOPER. IT COMES MONTHS AFTER BLACKSTONE ABANDONED A PROPOSED DEAL. LET'S BRING IN LULU CHEN, OUR MANAGING EDITOR FOR ASIAN CHINA INVESTMENT. TELL US ABOUT THE DETAILS. >> BAIN CAPITAL HAS EMERGED AS THE LATEST POTENTIAL WHITE KNIGHT TO SAVE NEW WORLD. THEY ARE ENGAGED IN TALKS. THIS COMES AFTER A SERIES OF FUNDS WALKED AWAY FROM POTENTIAL TALKS WITH NEW WORLD. THIS COMES AT A TIME WHEN THE FAMILY HAS THE POTENTIAL, OR THERE IS REVIVED HOPES THAT THE CHANG FAMILY WILL INJECT FRESH CAPITAL THEMSELVES INTO THE FIRM. COMING ON THE HEELS OF NOT SO GOOD EARNINGS RESULTS IN INVESTORS WERE SPOOKED BY THE 3.6 BILLION LOSS THAT THEY SAW. AVRIL: I WAS JUST ABOUT TO ASK. WHAT IS THE LATEST SITUATION WITH THE COMPANY RIGHT NOW? HOW MUCH ARE THEY IN NEED OF THIS FRESH CAPITAL INJECTION? LULU: NEW WORLD, THEY HAVE BEEN TRYING TO SPIN OFF ASSETS. THEY ARE FILLING HOTELS HERE AND HONG KONG. THAT SAID, IT IS NOT ENOUGH FOR THEIR TOTAL DEBT SOLUTION. THE COMPANY STILL NEEDS TO FIND A HOLISTIC SOLUTION FOR THE LONGER-TERM DEBT ISSUES. ONE OF THE THINGS THAT EMERGED DURING THE EARNINGS RESULT IS THEY EXITED THEIR RENTAL CONTRACT FOR 11 SKIES, THE FANCY MODEL NEAR HONG KONG AIRPORT AUTHORITY THREE POINT BILLION HONG KONG DOLLARS. AND EXITING THEIR LONG-TERM RENTAL CONTRACT. THAT GAVE INVESTORS NEW HOPE THAT THIS CLEARS THE PATHWAY FOR NEW WORLD TO SEEK NEW INVESTORS AND POTENTIALLY LOOK FOR NEW CAPITAL INJECTION FROM THE FAMILY. YVONNE: LULU CHEN THERE, MANAGING EDITOR FOR ASIAN FINANCE WEALTH, BRINGING US THE SCOOP ON NEW WORLD AS WE SEE PRESSURE FOR THE STOCK. DOWN SOME 3%. HAVE BEEN TALKING ABOUT HOW THE HONG KONG MARKET HAS BEEN STRUGGLING AS OF LATE. IT IS SUCH A DICHOTOMY TO WHAT YOU SEE WHEN IT COMES TO THE IPO MARKET. HONG KONG SHARE SALES RAISED A RECORD $47.5 BILLION IN THE THIRD QUARTER AS AN AI DRIVEN FUNDRAISING BOOM POWERED THE STRONGEST SUMMER ON RECORD. ALIBABA'S $10.2 BILLION OFFERING LEAD THAT SURGE, AND HELP PUT HONG KONG ON TRACK FOR ITS STRONGEST YEAR OF FUNDRAISING SINCE 2021. LET'S BRING IN OUR ASIA EQUITY CAPITAL MARKETS REPORTER, TO WALK US THROUGH THESE NUMBERS. QUITE IMPRESSIVE. >> YEAH. THE VELOCITY OF THESE FUNDRAISERS IS NOTHING LIKE WHAT WE HAVE SEEN BEFORE. 47 POINT 5 BILLION RAISED IN HONG KONG AND LOCKS ALTOGETHER. WE ARE PUSHING TOWARD AND 90 BILLION AND ABOUT FOR THIS ENTIRE YEAR. THAT WOULD BE SHY OF 112 THAT THEY REACHED IN 2021. THERE IS A CHANCE WE MIGHT GET THERE. BUT WHAT IS STRIKING IS THE SHEER GAP OF HOW FAST THESE COMPANIES ARE COMING BACK TO TAP INTO THESE CAPITAL AGAIN. LIKE HIS EAI IS A PERFECT EXAMPLE OF THIS. -- LIKE THE AI IS THE PERFECT EXAMPLE OF THIS. THEY CAME IN AND RAISED ANOTHER BLOCK. AGAIN, THEY WENT BACK AND THEY HAD THAT COMBO OF STOCKS AND CONVERTIBLES. THEY RAISED 9.6 BILLION. THIS IS COMING AT A TIME WHEN HONG KONG IS STRUGGLING, HANG SENG TECH HAS BEEN SLUGGISH THE WHOLE YEAR. FUNDRAISING SPREE IS JUST NOT STOPPING. BANKERS ARE SAYING THIS TREND WILL CONTINUE, BECAUSE AI CAPEX, BUT NEEDS IS NOT SLOWING DOWN. AVRIL: THIS FUNDRAISING BOOM IS NOT JUST THE HONG KONG STORY WHAT DOES IT LOOK LIKE A CROSSED A PACK -- LIKE ACROSS A PACK? SANGMI: IT IS REALLY NOT. WE ARE SEEING THE SPILLOVER EFFECT ACROSS THE REGION. WE ARE LOOKING AT $120 BILLION, RAISED IN A PACK REGION ALONE. THAT IS A SIX YEAR HIGH WE ARE LOOKING AT. HONG KONG HAS BEEN A STANDOUT. LOOK AT INDIA. IT IS INTERESTING THERE BECAUSE THEY LOGGED $26 BILLION FROM THIS QUARTER ALONE. WE HAVE SEEN THE $2.4 BILLION THAT WRAPPED UP THEIR IPO, AND THE PIPELINE IS LOADED. WE HAVE GEO PLATFORMS LED BY A BILLIONAIRE, NOW LEADING INVESTORS BEFORE ITS NOVEMBER DEBUT. WE HAVE OTHER NEWER MARKETS STEPPING UP LIKE AUSTRALIA'S $5 BILLION IPO. IT IS A DATA CENTER OPERATOR. AND WE ALSO HAVE G CASH, LED BY MINT. THE COMPANY BEHIND A PAYMENT APP IN THE PHILIPPINES. WE DO SEE THIS RECORD AND ENORMOUS PIPELINE WAITING FOR US. BUT THE BANKERS THAT JULIE AND I HAVE BEEN TALKING TO SAY THAT TOWARD THE END OF THE YEAR, INVESTORS WILL BE MORE SELECTIVE IN TERMS OF WHERE THEY PUT THEIR MONEY. TO BECAUSE WE HAVE SEEN SOME OF THE WEAKER PERFORMANCES IN SOME OF THESE IPOS IN THE REGION. YVONNE: THANK YOU. THE BANKERS DID NOT GET MUCH OF A SUMMER HOLIDAY. DOESN'T SEEM LIKE THEY WILL GET ANY BREAKS ANYTIME SOON. SANGMI CHA, ASIA EQUITY CAPITAL MARKETS REPORTER. MEANWHILE, TALKING ABOUT BLOOMBERG INTELLIGENCE, THIS REPORT TALKING ABOUT THE PERFORMANCE GAP YOU SEE BETWEEN U.S. AI COMPANIES IN CHINA. IT SEEMS TO BE NARROWING. IT HAS NARROWED TO A RECORD LOW, ACCORDING TO THE DATA THAT THEY HAVE BEEN TRACKING. THEY ARE TALKING ABOUT 3% IN SEPTEMBER. WHICH IS QUITE REMARKABLE HERE, GIVEN ALL OF THE NEWS WE HAVE BEEN SAYING -- SEEING, PARTICULAR WHEN IT COMES TO DEEPSEEK'S LATEST MODEL. AVRIL: FROM 15% THAT WE SAW EARLIER IN THE YEAR. THIS HAS GIVEN THE HEADWAY THAT THESE CHINESE AI MODELS HAVE BEEN MAKING. GIVEN HOW THEY ARE DOING THIS AT A MUCH LOWER PRICE POINT, IT DOES BEG THE QUESTION, HOW MUCH THIS IS HELPING TO FUEL THE ADOPTION OF CHINESE AI ACROSS THE REGION, VERSUS WHAT YOU GET FROM THE LIKES OF THE U.S.. WHEN IT COMES TO BLOOMBERG INTELLIGENCE, ROBERT LEA'S REPORT, HE DOES STILL TALK ABOUT HOW THE PATH TO PROFITABILITY FOR THE CHINESE AI MODELS, BETTER STILL IN DOUBT TO SOME EXTENT. WE WILL BE SPEAKING TO HIM IN THE NEXT HOUR. VERY INTERESTING REPORT COMING FROM BLOOMBERG INTELLIGENCE. COMING UP AS WELL, BOLSONARO HAS MOVED AHEAD OF THE PRESIDENTIAL ELECTION WE EXAMINE WHAT IS BEHIND HIS MOMENTUM AS THEY HEAD TO A RUNOFF WASTE LATER THIS MONTH. THIS IS BLOOMBERG. ♪ YVONNE: TAIWAN'S ENVOY TO THE U.S. SAYS HE IS CONFIDENT THE ISLAND'S FUTURE WILL NOT BE ON THE MENU IN UPCOMING MEETINGS BETWEEN PRESIDENT TRUMP AND CHINA'S XI JINPING. ALEXANDER YUEH ALSO TOLD US TIES WITH THE U.S. ARE BEING IMPROVED TO INVESTMENTS IN CHIPS AND OTHER INDUSTRIES. >> ACTUALLY, THERE IS VERY -- THE STATE OF INCREASING U.S.-TAIWAN BUSINESS PARTNERSHIP THAT IS GROWING DAY BY DAY. IT IS NOT ONLY JUST AFTER PRESIDENT TRUMP'S ANNOUNCEMENT IN APRIL OF LAST YEAR. TAIWANESE COMPANIES HAD BEEN LANDING ON THE UNITED STATES SINCE, WELL, YEARS AGO. I SAY THIS VERY FREQUENTLY. 15 YEARS AGO, 85% OF OUR INVESTMENT WAS GOING TO CHINA. THAT IS WHERE OUR FACTORS WERE TWO YEARS AGO, IT CAME DOWN TO 7%. NOW IT IS ONLY 1% GOING TO CHINA. WHERE IS THAT MONEY COMING TO? IT IS COMING TO THE UNITED STATES. THERE IS A GROWING INTEREST IN TAIWANESE COMPANIES TO INVEST IN THE UNITED STATES. WHAT YOU JUST SAID IS ACTUALLY A DELEGATION OF TAIWANESE COMPANIES TRYING TO LOOK FOR OPPORTUNITIES TO INVEST. THAT IS THE DIFFERENCE BETWEEN TAIWAN AND OTHER COUNTRIES. WE NOT ONLY TALK THE TALK, WE WALK THE WALK. WE ARE YOUR FOURTH LARGEST TRADING PARTNER, WE ARE INVESTING HEAVILY IN THE UNITED STATES. NOT ONLY IS TSMC'S PHOENIX PROJECT 256 BILLION, IT IS A REMARKABLE ACHIEVEMENT. BUT ALSO JUST THIS YEAR, TAIWANESE COMPANIES HAVE PLEDGED TO INVEST IN THE UNITED STATES SOMEWHERE AROUND $50 BILLION. THAT COMES WITH THE AGREEMENT OF RECIPROCAL TRADE WE SAW WITH THE UNITED STATES EARLY IN FEBRUARY THAT WE HAVE PLEDGED TO INVEST $250 BILLION, FIVE TAIWANESE COMPANIES IN THE UNITED STATES. ALSO, MAKING AVAILABLE 250 BILLION DOLLARS OF CREDIT GUARANTEES. THAT IS ALREADY TAKING PLACE. >> QUICKLY BEFORE WE LET YOU GO, I WANT TO ASK, TRUMP AND XI HAVE ANNOUNCED THAT THEY WILL MEET TWO MORE TIMES THIS YEAR. IS THERE SOMETHING YOU ARE LOOKING FOR, SOMETHING HE WOULD LIKE TO SEE COME OUT OF THOSE MEETINGS FROM THE U.S. OR CHINA? >> AGAIN, THE FACT THAT THE U.S. AND THE PEOPLE IN CHINA, THEY ARE TRYING TO ACHIEVE THIS CONSTRUCTIVE STRATEGIC STABILITY. I GUESS IT'S A GOOD THING FOR THE TWO SIDES TO BETTER KNOW EACH OTHER AND REDUCE ANY MISUNDERSTANDINGS, REDUCE COSTS OF FRICTION. IT’'S IMPORTANT. AGAIN, WANT TO MAKE SURE TAIWAN IS NOT ON THE MENU. I THINK UNITED STATES MADE IT CLEAR THIS TIME, AS YOU MENTIONED AT THE BEGINNING, CHINA WANTED TO MAKE THE ISSUE OF TAIWAN AGAIN BUT THERE WAS NO RESPONSE FROM THE U.S. SIDE. THEREFORE, TAIWAN WAS NOT ON EITHER SIDE OF THE FACT SHEETS FROM BOTH SIDES. AVRIL: AMBASSADOR ALEXANDER YOU, TAIWAN'S REPRESENTATIVE TO THE U.S. WE ALSO HAVE TO TALK ABOUT POLITICS IN BRAZIL AFTER THE FIRST ROUND OF VOTING IN THE PRESIDENTIAL ELECTION. WE ARE SEEING BRAZIL REAL FUTURES ON THE UPSIDE. THIS IS FOLLOWING PERHAPS INVESTORS BREATHING A SIGH OF RELIEF. BRAZIL'S LULA IS STILL IN THE RACE. BOLSONARO'S PERFORMANCE SO FAR MAY BE RAISING OTHER CONCERNS, GIVEN HOW TIGHT THE RACE IS, AND ALSO REPRESENTING A BIT OF THAT RIGHT WING SHIFT WE ARE SEEING IN LATIN AMERICA OVERALL. . THE PRESIDENTIAL ELECTION WILL BE DECIDED OCTOBER 25 AND A RUNOFF ELECTION AFTER A NARROW FINISHED AHEAD OF PRESIDENT LULA DA SILVA IN THE FIRST ROUND. OUR CORRESPONDENT JOINS US NOW FROM SAO PAULO. TALK TO US ABOUT THE RESULT. HOW SURPRISING WAS THIS? >> VERY GOOD TO TALK TO YOU GUYS IN ASIA. I THINK THE MAIN POINT HERE IS THE SURPRISE EFFECT. PEOPLE WERE NOT EXPECTING TO SEE THE RESULT THE WAY WE HAVE BEEN RIGHT NOW. WE HAD OVER SEVERAL WEEKS IN A ROW UNTIL WE HAD SEVERAL POLLS INDICATING PRESIDENT LULA WOULD BE AHEAD OF BOLSONARO. AND WE KNEW IT WOULD BE TIGHT. BUT MOST POLLSTERS WERE SHOWING LULA AS THE FRONT RUNNER. NOW WE KNOW THIS ADVANTAGE TO BOLSONARO DOES NOT INDICATE JUST THAT HE GOT MORE VOTES ACROSS THE COUNTRY THAN INITIALLY EXPECTED. WE ALSO SAW A SWING TO THE RIGHT FOR THE SENATE, IN DIFFERENT STATES ACROSS BRAZIL. WE HAVE TO REMEMBER THAT BRAZILIANS WERE NOT JUST CHOOSING A CANDIDATE FOR PRESIDENT TODAY, BUT ALSO FOR THE LOWER HOUSE IN THE STATES, IN THE SENATE, AND IN DIFFERENT GOVERNMENTS ACROSS THE COUNTRY. AT THE END OF THE DAY, IT HAS BEEN A VERY LONG SUNDAY HERE IN BRAZIL AS YOU CAN IMAGINE. WE CAN TELL THIS WAS A VERY GOOD DAY FOR BOLSONARO AND FOR ALL OF THE RIGHT WING PARTIES IN BRAZIL. YVONNE: YEAH, IT IS ALMOST 11:00 AT NIGHT FOR YOU GUYS THERE. BRAZIL WAS SORT OF THAT LAST HOLDOUT OF PRESIDENT TRUMP'S SO-CALLED DONROE DOCTRINE -- DOCTRINE. WHAT DOES THIS TELL US ABOUT THE STRENGTH OF BRAZIL'S RIGHT-WING MOVEMENT BEYOND BOLSONARO? FILIPE: I THINK THIS IS A CONVERSATION THAT WE ARE GOING TO HAVE STARTING RIGHT NOW IN A WAY THAT PROBABLY DIDN'T PLAY AS MUCH OVER THE BACK -- THE PAST FEW WEEKS. THIS IS GREAT NEWS FOR DONALD TRUMP, FOR THE RIGHT-WING MOVEMENT IN THE U.S. WE HAVE SEEN ELECTIONS HAPPENING ACROSS LATIN AMERICA EARLIER THIS YEAR THAT SHOWED A SIMILAR TREND OF WHAT WE SEE IN BRAZIL RIGHT NOW. WE HAD ELECTIONS IN COLUMBIA, PERU, AND IN BOTH CASES, THE ALLIANCE TO PRESIDENT DONALD TRUMP WHERE THE ONES THAT TURNED OUT TO BE THE ELECTED ONES. IF WE SEE THE SAME WITH BRAZIL, THIS IS THE BIGGEST COUNTRY IN LATIN AMERICA, IT'S THE BIGGEST ECONOMY IN THE REGION. IT'S A MAJOR WIN FOR TRUMP, MARCO RUBIO, AND EVERYTHING RELATED TO THE INFLUENCE THAT THEY AIM TO GET AND PERPETUATE IN LATIN AMERICA. OF COURSE, THIS IS NOT OVER YET. WE STILL HAVE THREE WEEKS UNTIL THE RUNOFF. BRAZILIANS WILL COME BACK TO POLLS ACROSS THE COUNTRY TO VOTE FOR A PRESIDENT AGAIN. THE GAP BETWEEN THE TWO CANDIDATES IS VERY NARROW, AND WE SHOULD SEE AN INTERESTING CAMPAIGN IN THE NEXT FEW DAYS. AVRIL: IT WON'T JUST BE THE U.S., BUT CHINA ALSO WATCHING THE RESULTS OF THE ELECTION. WHAT COULD THE ELECTION MEAN FOR BRAZIL'S RELATIONSHIP WITH CHINA, ITS LARGEST TRADING PARTNER? FILIPE: THAT IS ALSO A VERY GOOD QUESTION. BECAUSE WE KNOW THAT LULA IS WIDELY KNOWN AS A VERY STRONG LEFTIST LEADER, NOT JUST IN BRAZIL WHERE HE HAS HAD OVER THREE DECADES OF VERY STRONG POLITICAL PRESENCE. HIS RUN FOR PRESIDENCY, THIS IS A SET OF TIME THAT HE IS RUNNING FOR THE SEAT. HE IS SOMEONE THAT HAS BEEN VERY CLOSE TO CHINA, PRESIDENT XI, TO THE WHOLE CONCEPT OF THE SOUTH. WHILE BOLSONARO WAS THE PRESIDENT DURING THE PANDEMIC YEARS HERE IN BRAZIL UNTIL 2023. BOLSONARO IS NOW IN JAIL, HE WAS NOT ALLOWED TO RUN FOR PRESIDENCY. HE WAS CONVICTED LAST YEAR FOR ATTEMPTING A COUP AFTER NOT GETTING HIS OWN REELECTION. BOLSONARO, NOT JUST A SON, BUT ALSO THE FATHER, THEY HAVE ALWAYS BEEN VERY MUCH ALIGNED WITH PRESIDENT TRUMP AND THE U.S. IT'S HARD TO SAY RIGHT NOW WHAT WOULD BE FLUFFY YOU'S STANCE TOWARD -- FLAVIO'S STANCE TOWARD CHINA. HE HAS SAID HE WOULD NOT PICK UP A FIGHT WITH CHINA, IN A SIMILAR WAY THAT HIS FATHER HAS DONE. ESPECIALLY DURING THE YEARS AFTER THE PANDEMIC. AS WE APPROACH THIS INTERVAL BETWEEN THE FIRST AND SECOND ROUND, I THINK THIS IS ONE OF THE MAIN QUESTIONS THAT WE ARE GOING TO ASK HIM AS WE PREPARE FOR THE RUNOFF. AVRIL: IT IS GREAT TO HAVE YOU. THANK YOU SO MUCH FOR JOINING US AFTER WHAT HAS BEEN A LONG DAY. BLOOMBERG'S BIRD ZERO COUNTRY CHIEF FILIPE PACHECO. SUBSCRIBERS CAN TURN TO THE TERMINAL FOR MORE ON THIS. TLIV <GO> IS YOUR LATEST -- IS THE TAKER FOR THE LATEST. THIS IS BLOOMBERG. ♪ YVONNE: WE'RE CHECKING OUT THESE CONSUMER AND TRAVEL RELATED STOCKS IN CHINA. ALL SEEM TO BE FALLING, MOSTLY LOWER AFTER WE GOT EARLY DATA FOR THE GOLDEN WEEK HOLIDAY, WHICH POINTED US ON MUTE -- MUTED TRAVEL. SOFTER SPENDING PER PERSON THIS IS EVERYTHING FROM FOOT TRAFFIC, WHERE WE SAW DECLINES. THE BOX OFFICE NUMBERS WERE NOT LOOKING GOOD EITHER, WHICH WAS WORSE THAN THE COVID PERIOD. TALKING ABOUT LOWER BY 38% YEAR ON YEAR. SEEMS TO BE SOFT, MUTED NUMBERS HERE SO FAR APPEAR THEN AGAIN, ANALYSTS LIKE CITI, THEY ARE SAYING BECAUSE OF THE PROXIMITY TO THE GOLDEN WEEK -- GOLDEN WEEK, THAT MAKE OBLIGATE THESE YEAR ON YEAR NUMBERS. MAYBE TAKE THIS DATA WITH A HINT OF GRAIN OF SALT. AVRIL: YEAH. ESPECIALLY WHEN YOU LOOK AT THE LEASES SO FAR, OR LACK THEREOF. MAYBE THAT IS WHAT IS PART OF AFFECTING THE BOX OFFICE NUMBERS, AND HOW THAT FELL SHARPLY. ALSO, NOT JUST THE EARLY SIGNALS THAT WE ARE GLEANING, BUT WHAT MORGAN STANLEY HAS PUT OUT IN TERMS OF TALKING ABOUT HOW, CHINA SPORTSWEAR THEY EXPECT SALES OF LEADING BRANDS TO REMAIN SUBDUED DURING GOLDEN WEEK. AND THEY SEE PREMIUM BRANDS ARE THE ONES THAT MIGHT FARE A BIT MORE ROBUSTLY. WE WILL ONLY GET THE OFFICIAL NUMBERS, I THINK IT IS OCTOBER 8, THAT IS WHEN THE FULL HOLIDAY NATIONAL LEVEL STATISTICS WILL BE RELEASED. FOR THE MOMENT, WE ARE SEEING IN TERMS OF THE BROADER MARKETS, THE WORRIES SURROUNDING SOME OF THE CONSUMPTION RELATED TRENDS THAT ARE PERHAPS WHAT ARE INFLUENCING MARKETS IN HONG KONG WITH THE HANG SENG TECH, THE BIT OF UNDERPERFORMANCE FOR THE MOMENT. LET'S TAKE A LOOK AT THE OTHER MARKETS AS WELL THAT ARE IN FOCUS WITH THE HANG SENG TECH -- IT IS PULLING AHEAD FROM THE NEGATIVE START TO THE SESSION EARLIER. HANGS A FINANCE INDEX, THAT IS THE ONE WE ARE STILL SEEING A BIT OF PRESSURE, GIVEN THOSE ELEVATED YIELDS AND CONCERNS AMONG BANKING PEERS. YOU ARE WATCHING "THE CHINA SHOW." ♪ YVONNE: WELCOME BACK TO THE CHINA SHOW. A LOOK AT THE HSI A HALF-HOUR INTO THE SESSION. WE ARE SEEING QUITE A BIT OF PRESSURE. MODERATE LOSSES BUT IT SEEMS LIKE THE SELLOFF IN FINANCES IS GAINING MORE MOMENTUM. WE ARE LOWER BY ABOUT 0.6%. OBVIOUSLY WHAT WE SAW FRIDAY IS CONTINUING WITH THE CONCERNS ABOUT RISING GLOBAL BOND YIELDS, TIGHTER FINANCIAL CONDITIONS. YOU ADD THAT TO A WEEK WHERE WE ARE NOT GETTING THE MAINLAND SOUTHBOUND FLOWS INTO THE CITY. THAT IS AMPLIFYING THE MOVES HERE TODAY. EVEN WITH A WEAKER JOBS REPORT ON FRIDAY, THAT SEEMED TO BE LIFTING THE RISK ASSETS IN TECH IN THE REST OF THE WORLD. WE ARE NOT SEEING HONG KONG PARTICIPATE TOO MUCH IN THAT STORY. AVRIL: WE ARE SEEING THE HANG SENG TECH ON THE BACK FOOT. THE TECH SECTOR BEING LIFTED THANKS TO WHAT WE ARE SEEING OUT OF THE JOBS NUMBERS IN THE U.S.. THERE'S ALL THAT TALK ABOUT HOW THIS WAS NOT TOO HOT, NOT TOO COLD. SO, HELPING INVESTORS TO PARE BACK THEIR BIDS OF A FAIR RATE HIKE -- OF A FED RATE HIKE. WE ARE NOT SEEING THE JOBS MARKET FALL OFF A CLIFF, SO THAT IS PERHAPS A HELPFUL BACKDROP IN TERMS OF RISK APPETITE. YOU ARE SEEING THE TAIEX, A REALLY STRONG SHOWING, ALONG WITH JAPAN WHICH WAS GETTING SUPPORTED BY SOME OF THESE NUMBERS, SHOWING CONFIDENCE AMONG FIRMS. SINGAPORE ALSO UP A TOUCH. LET'S TAKE A LOOK AT WHAT COMMODITIES ARE DOING. WE ARE ALSO ON WATCH FOR HOW BRENT FARES. BETWEEN 100 TO 110. WHAT YOU ARE SEEING IS THE IMPACT POTENTIALLY ON INFLATION-RELATED CONCERNS, AND HOW GIVEN THE STABILITY THAT HAS RETURNED TO TREASURIES IN THE EARLY GOINGS IN THE ASIA-PACIFIC, DOES THAT MAKE A CASE FOR NON-YIELDING ASSETS. WE HAVE GOLD ON THE FRONT FOOT FOR THE MOMENT, BUT STILL REALLY FAR FROM THE AUGUST HIGHS WE HAVE SEEN. A BIT OF RISK APPETITE RETURNING TO THE LIKES OF BITCOIN, JUST UNDER THE 87,000 HANDLE. AVRIL: EVEN -- YVONNE: EVEN GOLD, WE CAPPED THE WEEKLY LOSSES THAT WE HAVE SEEN SINCE JUNE. IT IS ALL ABOUT TECH TODAY AFTER THAT WEEK U.S. JOBS REPORT CLEARED THE MACRO CLASS FOR THE TRADE. TAIWAN AND JAPAN LEADING THE CHARGE WITH KOREA CLOSED. FOR MORE, BRING IN ANTHONY STEPHENS. ANTHONY: DESPITE ALL THE WORRIES AROUND AI SAFETY AND WHAT HAVE YOU, THE AI INFRASTRUCTURE CONTINUES. YOU ARE REALLY SEEING IT IN THE STOCK MOVERS. TDK LEADING THE WAY IN JAPAN. YOU ARE SEEING IT ACROSS THE SUPPLY CHAIN. THEY ARE TALKING ABOUT PASSIVE PERFORMANCE, TESTING EQUIPMENT. THIS IS VERY SIMILAR TO THE U.S. MOVE ON FRIDAY. THE MOVE IS INTO HARD TO MANUFACTURE COMPONENTS AND JAPAN HAS A TON OF THESE. THAT WILL LIGHT THE WAY FOR THE NIKKEI TO GO TO 70,000 IF IT GETS THERE. IT IS A VERY STRAIGHTFORWARD AI STORY AND TAIWAN. THE MARKET IS AT NEW LEVELS, LED BY THE MOST OBVIOUS NAMES. YOU ARE NOT GOING TO GET A DOWN DAY. BELOW THAT, THERE ARE EVEN BIGGER MOVES. PLENTY OF LIMITS IN THE MID-CAPS SPACE. -- MID-CAPS SPACE. YOU CAN SEE WHICH MARKET IS CONTINUING TO STRUGGLE, AND THAT IS HONG KONG. IT IS NOT MISSING OUT ON THE AI HARDWARE STORY. IT IS THE HEADACHES IN THE MARKET CONTINUE TO GROW. SO YOU HAVE THIS NEW FINANCIAL PROBLEM WITH THE FACT THAT GLOBAL YIELDS ARE GOING HIGHER AND THE U.K. HAS ALL THIS PRESSURE COMING IN ON FINANCIALS. NOW YOU HAVE CONCERTED PRESSURE IN THE U.S. ON CHINESE CVS. SOMETHING TO WATCH WITH THESE SECTORS BECAUSE THAT IS WHAT IS HOLDING THE MARKET AS A WHOLE DOWN. AVRIL: ANTHONY, THANK YOU. ANTHONY STEPHENS. LET'S TAKE A LOOK AT HOW THOSE ASIAN BONDS ARE FARING FOLLOWING THE U.S. JOB NUMBERS AND HOW THAT AFFECTED SOME OF THESE RATE HIKES. -- RATE HIKE BIDS. THE COMMENTS FROM BESSENT, HE IS NOT TOO WORRIED ABOUT THE WEAKNESS IN THE BOND MARKETS. NOT AN IDIOSYNCRATIC THING, HE BELIEVES. OTHERWISE, WHAT WE ARE SEEING IN GERMAN DEBT. WE ARE SEEING THE 10 YEAR YIELD HOVERING AT THE 5.25 LEVEL. YVONNE: THE ONE THING I THINK YOU HAVE TO ACKNOWLEDGE IS I CANNOT CONTROL THE BOND MARKETS. MAYBE THE HOUSE IS NOT QUITE THE HOUSE. LET'S GET MORE FROM NOEL DIXON FROM STATE STREET MARKETS. HE IS IN TOWN. IT IS GOOD TO SEE YOU AGAIN. THIS IS COMING AT A TIME WHEN YOU'RE LOOKING AT THE LONG END OF THE CURVE, STILL SEEING PRESSURE. DO YOU THINK IT STILL LOOKS CHEAP, BONDS VERSUS FUNDAMENTALS? OR DO YOU THINK THERE IS MORE RUNWAY FOR THIS? >> I THINK THERE IS A TECHNICAL AND FUNDAMENTAL ASPECT. FROM A FUNDAMENTAL ASPECT, I THINK WE HAVE COME VERY FAR VERY QUICKLY. WE WOULD START TO PUSH BACK ON THIS A LITTLE BIT, MORE SO IN THE BELLY OF THE CURVE. I THINK THERE'S MORE OPPORTUNITY WITH THE FIVE-YEAR TO MAY BE THE TWO-YEAR. BUT WHEN WE THUNK -- THINK ABOUT THE LONG AND COME THERE'S OTHER THINGS THAT HAVE BEEN DRIVEN BY REAL YIELDS. AND THIS WHOLE NOTION OF THE NEUTRAL RATE. WE HAVE TO WORK THROUGH THAT. YVONNE: WHY FADE THE SHORT END? IS IT BECAUSE THERE IS NO WAY THE FED WILL BE ABLE TO HIKE AS MUCH OF THE MARKET IS PRICING IN RIGHT NOW? NOEL: EXACTLY. I DON'T THINK THE FED WILL BE ABLE TO GET BEYOND WHAT THE MARKETS ARE PRICING IN. IF YOU LOOK AT CORE INFLATION, IT HAS BEEN RELATIVELY CONTAINED. YOU LOOK AT THE LABOR MARKET, BY ANY STANDARD, FOUR POINT 2% IS PRETTY SOLID. HOWEVER, THERE ARE SIGNS OF CRACKS. WE THINK THE FED WILL BE MORE CONSISTENT WITH THEIR LATEST DOTS AND IT WILL NOT BE AS MUCH IS WHAT HAS BEEN PRICED INTO RATE MARKETS. AVRIL: TALK TO US ABOUT WHAT YOU ARE SEEING IN TERMS OF RISK APPETITE. GIVEN HOW THE JOBS NUMBERS RAISE SOME CONCERNS THAT EMPLOYMENT IS NOT GROWING AS MUCH AS WE MIGHT LIKE, DOES THAT SHAPED THE PICTURE? NOEL: YEAH, IT DOES SHAPE THE PICTURE BECAUSE IT IS ABOUT HOW DO YOU INTERPRET THE LABOR MARKET DATA? YOU COULD ARGUE THAT IT IS NOT BROAD-BASED. A LOT OF THE JOB GAINS HAVE BEEN IN HEALTH CARE. IT HAS BEEN IN STATE AND LOCAL GOVERNMENTS BUT IT IS NOT REALLY SPREAD OUT. IT IS ONCE AGAIN HOW THE FED IS ULTIMATELY GOING TO INTERPRET THIS. WHILE WE DO THINK KEVIN WARSH WILL WEIGH MORE HAWKISH, IT IS A GROUP DECISION. I THINK THE VOTING MEMBERS AS A GROUP ARE GOING TO STAY CONSISTENT WITH WHERE THE DOTS ARE. AVRIL: CAN I ASK YOU AS WELL, IT IS INTERESTING TO YOUR POINT ABOUT WARSH, HE HAS STOOD ON THE SIDELINES SAYING NO FORWARD GUIDANCE. BUT HIS DEPUTIES LAST WEEK, WILLIAMS JEFFERSON, THEY SEEM TO BE PROVIDING THEIR GUIDANCE. HOW MIGHT THAT SHAPE WHAT WE SEE IN DECEMBER? NOEL: THEY MAY NOT WANT TO CALL IT FORWARD GUIDANCE, BUT THEY'VE DEFINITELY GIVEN BREAD COMES TO THE MARKET -- GIVEN BREADCRUMBS TO THE MARKET. THEY WANT TO AVOID ANY UNNECESSARY VOLATILITY. I THINK THAT WILL CONTINUE. IN THE END, IT WILL BE ABOUT THE DATA. BUT GIVEN SOME INSIGHT ABOUT HOW THEY ARE THINKING, I THINK THEY ARE GOING TO WANT TO BE MORE GRADUAL THAN RATE MARKETS ARE LETTING ON. YVONNE: WE HAD A GUEST THAT SAID WE MIGHT SEE SOME SANTA CLAUS RALLY. IT WON'T HAPPEN NOW. BUT WHAT SORT OF QUESTIONS ARE YOU FIELDING FROM CLIENTS WHEN IT COMES TO WHAT HAPPENS IN NOVEMBER AND BEYOND? NOEL: THE KEY QUESTION IS, ARE WE GOING TO HAVE A BLUE WAVE OR WILL IT BE MORE COMPETITIVE? IF YOU LOOK AT THE CONGRESSIONAL BALLOT POLL, THAT IS A PLUS NINE. THAT SEEMS TO BE CONSISTENT WITH WHAT WE SAW IN 2019 WHERE THE DEMS WON 40 SEATS IN THE HOUSE. BUT KEEP IN MIND, THE SENATE IN THAT SAME REGARD GAINED TWO SEATS. IN EITHER SCENARIO, WE WILL HAVE A SPLIT CONGRESS. THE GOOD NEWS IS THAT IS GOOD FOR RISK ASSETS IF WE LOOK SIX TO 12 MONTHS MOVING FORWARD. I THINK THERE IS ABSOLUTELY A POSSIBILITY WE COULD GET A RALLY TO THE END OF THE YEAR AND EQUITIES AND SOME STABILIZATION AT A MINIMUM AMONG THE LONG AND FOR THE DURATION. YVONNE: DO WE GET STABILITY IN THE AI TRADE AS WELL? NOEL: I DO THINK SO. HARDWARE IS WHERE WE THINK IT IS MOST APPEALING. I THINK EVEN WITH THE SOFTWARE AND THE HYPERSCALERS, THERE WAS A LOT OF CONCERN ABOUT DO THEY HAVE ENOUGH TO COVER THE DEBT LOAD AND LEASING LIABILITIES. BUT WHEN YOU LOOK AT HOW MUCH THEY ARE EARNING ON A YEAR-OVER-YEAR BASIS, THERE'S PLENTY TO COVER THAT RATIO. AVRIL: TALK TO US AS WELL ABOUT SOME OTHER QUESTIONS YOU ARE FIELDING RELATED TO FX IN TERMS OF WE ARE SEEING THE DOLLAR PULLBACK GIVEN THE JOBS NUMBERS BUT IT IS NOT REALLY HELPING THE LIKES OF THE END. WHAT ARE YOU SEEING IN TERMS OF THE RISK FOR THE CONSENSUS THAT IS IN THE MARKET FOR THE MOMENT? NOEL: WHAT THE DOLLAR -- INFLATION IS A FACTOR. THE LABOR MARKET, WHICH I THINK IS AT LEAST MODERATING, AND POSITIONING DOMESTIC U.S. INVESTORS, THEIR FOREIGN EXPOSURE, THEY WERE HEDGING THAT A LOT. THAT WAS DRIVING THE DOLLAR. THAT HAS RECENTLY PLATEAUED. OUR MEDIUM-TERM VIEW IS TO BE DULL AND NEGATIVE. AS IT RELATES TO THE YEN, IT IS A FUNCTION OF WILL THE BOJ BE ABLE TO DELIVER AND WILL THEIR DIRECT COMMUNICATION COME ACROSS IN THE ACTUAL MEDIA AND HOW INVESTORS INTERPRET? I THINK RIGHT NOW THERE IS A RELUCTANCE, BECAUSE OBVIOUSLY TAKAICHI HAD TO MEMBERS ON THE BOJ NOW. THEY DISSENTED. I THINK NEXT YEAR SHE GETS ANOTHER TWO. THERE IS A TREPIDATION ABOUT WILL THEY BE AGGRESSIVE AND DO WHAT IS NECESSARY FROM AN INFLATION STANDPOINT? WE SEE THAT DISCONNECT BETWEEN DIRECT COMMUNICATION AND THE MEDIA START TO CONVERGE WHEN WE LOOK AT OUR DATA. WE ARE CONSTRUCTIVE ON THE YEN AND IN PARTICULAR WE LIKE IT AGAINST THE AUSSIE HERE. YVONNE: TELL US MORE BEYOND YOUR CONVICTION AROUND SHORT DOLLAR. YOU'RE ALSO SHORT AUSSIE. NOEL: EXACTLY. BECAUSE ONCE AGAIN IT IS A POSITIONING THING. AMONG THE G10 WHEN WE LOOK AT OUR DATA, THE AUSSIE IS THE MOST OVERWEIGHT CURRENCY. A LOT OF THAT WAS LED BY THE AUSSIE SUPER FUNDS THAT WERE HEDGING THEIR FOREIGN EXPOSURE, WHICH THEY TYPICALLY DO DURING GEOPOLITICAL UNCERTAINTY. WHEN WE THINK ABOUT A PERCENTAGE OF TOTAL ASSETS, IT IS THE HIGHEST LEVEL IT HAS BEEN SINCE THE PANDEMIC. IT IS BASICALLY OVERSATURATED. WHEN YOU LOOK AT THE DOMESTIC ECONOMIC SITUATION, IT IS STARTING TO EASE. WE THINK THE RBA HAS DONE ENOUGH. NOW YOU HAVE A SITUATION WHERE THE UNEMPLOYMENT RATE IS STARTING TO INCREASE. I THINK FROM A PRUDENT STANDPOINT, MICHELLE BULLOCK WILL WANT TO PROBABLY WAIT AND SEE WITH EVERYTHING PRICED IN. I THINK THAT PROVIDES OPPORTUNITY TO GO SHORT. YVONNE: THAT PARE, AUSSIE-YEN, THAT IS USUALLY A BAROMETER FOR RISK SENTIMENT. DOES THAT HAVE BROADER IMPLICATIONS ON RISK ASSETS? NOEL: I DON'T THINK SO. I THINK THE YEN HAS BECOME MORE OF AN IDIOSYNCRATIC STORY. AGAIN, THE AUSSIE, YOU COULD STILL HAVE A CARRY TRADE WITH THE SWISS. BUT I THINK THE YEN IS A UNIQUE ANIMAL. YVONNE: IT IS GREAT TO HAVE YOU. SAFE TRAVELS. STILL AHEAD, ASIA'S NEW FINANCE MINISTER THE COUNTRY EXPECTS TO MEET GROWTH TARGETS. OUR EXCLUSIVE INTERVIEW IS UP NEXT. THIS IS BLOOMBERG. ♪ YVONNE: INDONESIA'S NEW FINANCE MINISTERS HAS THE COUNTRY IS COUNTING ON SOVEREIGN WEALTH FUND DANANTARA FOR ITS AMBITIONS. SUAHASIL NAZARA EXPLAIN HOW THE FUND IS IMPROVING STATE OWNED ENTERPRISES. >> RIGHT NOW, WE ARE COMMITTED TO THE 3% AND A MAXIMUM 60% OF THE GDP RATIO. THAT IS SIGNALING THE CONFIDENCE OF THE MARKET THAT WE CAN CONTINUE TO DO THIS. >> YOU TALK ABOUT HOW 3% IS A GUARD RAIL AND YOU ARE COMMITTED TO 3%, YET MORE AND MORE OF YOUR PROJECTS ARE BEING FUNDED OFF BUDGET BY THE LIKES OF DANANTARA , STATE OWNED ENTERPRISES. HOW DO YOU FEEL THE RISK TO YOUR FISCAL STANDING? >> DANANTARA IS A SOVEREIGN ENTITY. IT IS SOVEREIGN. DANANTARA HAS BEEN TASKED BY OUR PRESIDENT, AND THE PRESIDENT IS VERY KEEN TO SEE THAT DANANTARA HANDLES ALL OF OUR STATE OWNED ENTERPRISE. THERE IS SO MUCH EFFICIENCY WE CAN GET FROM DANANTARA. WE BELIEVE ALL OF THOSE EFFORTS THAT DANANTARA HAS BEEN DOING, ALMOST TWO YEARS TO THE DAY, AND IN THE LAST YEAR THEY START TO CLEAN UP THE STATE OWNED ENTERPRISES. THEY CLEAN UP, MAKING SURE THEY CAN OPERATE IN A MORE EFFICIENT WAY. THEY HAVE ROOM FOR IMPROVEMENT, ROOM FOR INVESTMENT. THIS IS SOMETHING THEY HAVE TO CONTINUE TO WORK. RIGHT NOW, WE ARE IN VERY CLOSE COMMUNICATION WITH DANANTARA. ME MYSELF AS THE MINISTER OF FINANCE WITH THE CEO, THE COO, WE START TALKING FROM DAY ONE TO UNDERSTAND EACH OTHER'S POSITION, UNDERSTAND EACH OTHER'S SITUATION. THEN WE WORK TOGETHER FOR THE BETTERMENT OF THIS COUNTRY. LET ME GIVE ANOTHER PERSPECTIVE HERE. IMAGINE THAT THE STATE OF INDONESIA HAS TWO ARMS. ONE ARM IS THE STATE BUDGET, THE OTHER ARM IS DANANTARA. DANANTARA IS THE CONSOLIDATION OF THE STATE ASSET. BIG VISION, BIG PERSPECTIVE, BIG IDEAS CAN BE CHANNELED THROUGH THE WORK OF THE STATE BUDGET. IT CAN ALSO BE CHANNELED THROUGH THE WORK OF DANANTARA. OF COURSE, EACH ONE OF US MUST UNDERSTAND THAT. >> I AM SURE YOU HAVE MADE TARGETS FOR YOURSELF. WHAT CAN BE EXPECTED BY THE INTERNATIONAL COMMUNITY AT THE END OF YOUR FIRST YEAR AND YOUR SECOND YEAR? >>>> I INTEND TO MANAGE THE STATE BUDGET. MY TAGLINE IS ALWAYS -- [SPEAKING ANOTHER LANGUAGE] LET ME TRANSLATE THAT. THE BUDGET THAT GROWS THE ECONOMY, THE BUDGET THAT PROTECTS THE PEOPLE, AND THE BUDGET THAT IS CREDIBLE FOR OUR SUSTAINABILITY. IN ORDER TO DO THAT, BECAUSE THAT IS THE INTENTION, I WILL WORK VERY CLOSE WITH EVERY INSTITUTION IN INDONESIA. THE TWO ARMS OBVIOUSLY BY NATURE, WE ARE WORKING TOGETHER WITH OUR FINANCIAL SECTOR STABILITY FORUM. IT IS ALSO VERY IMPORTANT. THEN WE ARE MANAGING INDONESIA NOT ONLY FROM THE CENTRAL GOVERNMENT, BUT ALSO TALKING TO A LOT OF LOCAL GOVERNMENTS. >> AND INVESTORS CAN EXPECT CONTINUED POLICY FROM YOUR PREDECESSOR? >> FROM TIME TO TIME, WE ALWAYS RECONSIDER OUR POSITION. THAT CONSIDERATION MIGHT END UP IN THE NEW POLICY. BUT INDONESIA HAS ALREADY SHOWN HOW FISCAL CREDIBILITY AND FISCAL SUSTAINABILITY HAS BEEN MAINTAINED. OUR BUSINESS SECTOR, THEY CAN EXPECT WE WILL CONTINUE WITH THAT KIND OF CREDIBILITY. YVONNE: THAT WAS THE INDONESIAN FINANCE MINISTER SUAHASIL NAZARA SPEAKING EXCLUSIVELY WITH HAS. OTHER GLOBAL STORIES, TAIWAN'S ENVOY TO THE U.S. SAYS THERE HAS BEEN NO CHANGE IN POLICY TOWARD THE ISLAND. PRESIDENT TRUMP'S RECENT SUMMIT WITH XI JINPING HAD SPARKED UNCERTAINTY ABOUT THE U.S. COMMITMENT TO TAIWAN, RAISING THE STAKES FOR A PLANNED $14 BILLION ARM SALE. >> WE ARE GETTING WHAT WE HAVE. OBVIOUSLY THE SPEED COULD BE A LITTLE FASTER. BUT WE HOPE THAT THEY UNDERSTAND THE THREAT WE ARE UNDER, AND I'M VERY SURE THEY WILL BE PROVIDING US WITH THE NECESSARY EQUIPMENT. YVONNE: PAKISTAN'S FOREIGN MINISTRY IS CALLING FOR AN INVESTIGATION AFTER ACCUSING INDIA'S BORDER SECURITY FORCE OF KILLING TWO UNARMED CIVILIANS. ISLAMABAD SAYS TWO PAKISTANI CIVILIANS WERE KILLED FRIDAY ON THE BORDER BETWEEN THE TWO COUNTRIES. INDIA HAS REJECTED THE ALLEGATIONS, LINKING THE INCIDENT TO DRUG TRAFFICKERS OPERATING FROM PAKISTAN. THE PENTAGON HAS REMOVED U.S. BONDS FROM THE U.S. -- U.S. BOMBERS FROM THE U.K. BASE AFTER A SUSPECTED TERRORIST ATTACK. A DEPARTMENT OFFICIAL SAYS ALL AMERICAN BOMBERS DEPLOYED HAVE RETURNED TO THE U.S.. THE WITHDRAWAL WAS URGENT AFTER NEW THREATS EMERGED OF A PLOT LINKED TO IRAN. COMING UP, THE RACE FOR AI LEADERSHIP IS REACHING A FEVER PITCH. BLOOMBERG INTELLIGENCE ESTIMATES THE GAP BETWEEN U.S. AND CHINESE AI MODELS HAS NARROWED TO A RECORD LOW OF 3%. WE WILL BRING YOU THE DETAILS AHEAD. THIS IS BLOOMBERG. ♪ YVONNE: SOME STORIES WE ARE TRACKING FOR YOU. SOUTH KOREA HAS ORDERED BANKS AND OTHER FINANCIAL FIRMS TO CARRY OUT URGENT SECURITY CHECKS AFTER A STRING OF CYBERATTACKS EXPOSED CUSTOMER DATA. THE BREACH IS AFFECTING MULTIPLE LENDERS AND PROMPTED REGULATORS TO DEMAND INSPECTION RESULTS AND TIGHTER SAFEGUARDS ACROSS THE SECTOR. OFFICIALS SAY AI MAY HAVE PLAYED A ROLE IN THE ATTACKS, HIGHLIGHTING THE GROWING CYBER THREAT FACING FINANCIAL INSTITUTIONS. AN OPENAI SAFETY RESEARCHER HAS QUIT THE COMPANY, WARNING THAT LEADING AI DEVELOPERS ARE NOT DOING ENOUGH TO MANAGE GROWING RISKS. THE WORKER SAID THE COMPANY IS MOVING TOO QUICKLY BETWEEN LAUNCHES. IN AN ESSAY HE WROTE, ROBINSON ARGUED AI FIRMS SHOULD OPULENT -- OPERATE MORE LIKE NUCLEAR PLANTS WITH EXTENSIVE SAFEGUARDS AND REDUNDANCY. PRESIDENT TRUMP SAYS HE HAS APPOINTED JAY CLAYTON TO LEAD A WHITE HOUSE TASK FORCE ON AI. HE HAS SERVED AS DIRECTOR OF NATIONAL INTELLIGENCE SINCE JULY, OVERSEEING THE U.S. SPY. IT COMES AS THE FAST-MOVING TECHNOLOGY RAISES CONCERNS ABOUT ITS SAFETY RISKS. SOME OTHER ITEMS ON THE AGENDA HERE TODAY WHEN IT COMES TO YOUR WEEK AHEAD. IT IS VERY MACRO CENTRIC. WE HAVE AN RBI DECISION ON WEDNESDAY. INFLATION NUMBERS COMING THROUGH IN SOUTHWEST -- SOUTHEAST ASIA. THE FED MINUTES COULD BE QUITE INTERESTING JUST TO SEE HOW HAWKISH MEMBERS COULD HAVE BEEN. OUR VERY OWN ECONOMICS TEAM IS SAYING IT COULD SHOW ALMOST ALL. MORE TIGHTENING WAS NEEDED. YOU PAIR THAT WITH WEAKER JOBS. THE KEY TO WATCH IS THE BOND AUCTIONS HAPPENING IN THE U.S.. THE 10 AND 30 YEAR GO ON SALE THE LATER PART OF THIS WEEK, SO IT WILL BE INTERESTING TO SEE WHAT THAT INVESTOR DEMAND IS, PARTICULARLY WHEN IT COMES TO THE LONG END OF THE CURVE. A LOT ARE PRICING WHAT THEY THINK THE FED COULD DO. IT IS LESS THAN A 25% CHANCE NOW THAT THEY THINK THE FED COULD HIKE IN OCTOBER. THE MARKET CHECK IS LOOKING LIKE THIS. NORTH ASIA LOOKS STRONG WITH THE EXCEPTION OF KOREA. CHINA IS STILL SHUT SO YOU ARE SEEING THE BRIGHT SPOTS IN JAPAN, THE BRIGHT SPOTS IN TAIWAN CONTINUING TO TRADE HIGHER AFTER THAT U.S. JOBS REPORT. YOU ARE SEEING TSMC IS UP TO THREE PERCENT IN TAIPEI. BUT MASSIVE MOVES IN TAIWAN. SOFTBANK AS WELL. UP CLOSE TO 5%. WE WILL TALK MORE ABOUT THIS WHOLE DEBATE ON AI SAFETY AND THE NEED TO PACE THE FRONT TIER. ON THE FLIPSIDE OF THIS IS WHAT WE ARE SEEING, WHICH IS FINANCIALS, WHEN IT COMES TO INSURERS. IT IS DOWN AFTER WHAT WAS AN UGLY DAY ON FRIDAY WHEN IT COMES TO THE HANG SENG FINANCE INDEX. WE ARE LOWER. HSBC GIVING UP ALL THOSE GAINS IN THE HONG KONG SESSION. STILL A LOT OF PRESSURE WHEN IT COMES TO RISING BOND YIELDS. TIGHTER FINANCIAL CONDITIONS. YOU ARE NOT GETTING SUPPORT HERE, SO WE CONTINUE TO SEE FINANCIALS GETTING REALLY HIT AS WE ARE INCHING AROUND 5% TO 6% ON THE TREASURY CURVE. THE DANGER ZONE. WE WILL GET YOU MORE COMING UP ON "THE CHINA SHOW." ♪ YVONNE: 11:29 A.M. IN TOKYO. JAPANESE MARKETS GOING ON A LUNCH BREAK IN A MOMENT BUT WE ARE SEEING MARKETS SPOTLIGHT ACROSS MARKETS IN ASIA TODAY. WE ARE SEEING AN UPSIDE OF 2.5% ON THE NIKKEI. DOLLAR-YEN, HOVERING AROUND THAT 157.81 LEVEL. THE JOBS REPORT DID IN SOME WAYS EASE THE STRENGTHEN THE DOLLAR. MAYBE A LITTLE BIT OF STABILIZATION WHEN IT COMES TO THIS BOND MARKET. WE ARE SEEING THE JGB 10 YEAR UP ONE BASIS POINT. WHAT WE ARE SEEING IN THE AI TRADE WITHIN THE TOKYO STORY, AND SOFTBANK LEADING THE CHARGE. IT WAS INTERESTING WITH COMMENTS THAT CAME THROUGH WITH THE GROUP CHIEF. HE SAID HE WAS WORRIED ABOUT AI SAFETY AS MACHINES QUICKLY GAIN MORE ABILITIES. HE WAS SPEAKING ON THE SIDELINES OF A TECH FORM IN KYOTO. TAKE A LISTEN. >> I THINK WE DON'T HAVE ANY MORE LUXURY OF HAVING HUMANS FIGHT AGAINST HUMAN. THERE WILL BE A BIGGER ISSUE OF HUMANS AND SUPER INTELLIGENCE. IF THE SUPER INTELLIGENCE BECOMES SO SMART, AND IF BAD USAGE BUT THAT HUMANS USE THE WRONG USAGE, THIS CAN BECOME SUPER DANGEROUS. YVONNE: LET'S BRING IN BLOOMBERG TECH EDITOR. IT IS INTERESTING, HE IS PROBABLY ONE OF THE BIGGEST EVANGELISTS WHEN IT COMES TO AI. IS THIS A SIGN HE IS LOSING FAITH IN AI? MAYUMI: I THINK IT IS THE EXACT OPPOSITE. HE REMAINS AN OPTIMIST. HE BELIEVES AI WILL DELIVER 50 X RETURNS OVER THE NEXT 15 YEARS. AND ALSO HELP HUMANITY IN THE END. WHAT IS SPURRING HIM TO MAKE THESE COMMENTS IS HOW QUICKLY HE THINKS TECHNOLOGY IS RAMPING UP AND ADVANCING. HE SAYS OVER THE NEXT THREE CHIP CYCLES, AI CAPABILITIES COULD EXPAND A BILLION TIMES OVER THAN WHAT THEY ARE TODAY. HE HAS NOT LOST FAITH IN AI, BUT THIS MAY BE THE FIRST TIME HE ACTUALLY SAID THAT SOMETHING NEEDS TO BE DONE TO ADDRESS HOW QUICKLY AI CAPABILITIES ARE ADVANCING BEFORE WE ARE READY. HE IS SAYING COUNTRIES NEED TO BAND TOGETHER AND HELP ADDRESS ALL THESE SAFETY CONCERNS. IT WAS A STRIKING COMMENT BECAUSE HE HAS BEEN SO OPTIMISTIC, BASICALLY SAYING THAT NO MATTER WHAT, IN THE END, THIS TECH WILL HELP US. IT WAS SURPRISING TO HEAR HIM SAY THAT SUPER INTELLIGENCE MIGHT BECOME SUPER DANGEROUS IN THE WRONG HANDS. YVONNE: OK. HE SEEMS TO BE CHIMING IN ON THIS WHOLE CONVERSATION ABOUT PACING THE FRONTIER. DOES ANY OF THIS MEAN THAT THIS AI BOOM IS SLOWING DOWN? MAYUMI: IF ANYTHING, COMPANIES ARE STILL SPENDING ENORMOUS AMOUNTS OF MONEY TO STAY IN THAT GRACE. WE ARE STARTING TO SEE THE FIRST SIGNS OF WHAT THIS BOOM MIGHT COST. LIKE SOFTBANK IS AN EXAMPLE. IT IS SPENDING 65 BILLION POLICIES -- DOLLARS IN AI ALONE. IT HAS BORROWED HEAVILY TO FINANCE ITS STRATEGY. INVESTORS ARE DEPENDING WORK -- DEMANDING MORE COMPENSATION. FINANCING COSTS ARE GOING UP. I WOULD NOT SAY THE AI BOOM IS SLOWING DOWN, BUT THE ECONOMICS ARE CHANGING. CHIPS AND DATA CENTERS, FINANCING COSTS, THEY ARE ALL RISING. I THINK SON'S COMMENTS ARE AN ACKNOWLEDGMENT THAT THE BAR HAS RISEN TO PROVE ALL THIS SPENDING, HE IS GOING TO NEED TO SHOW MORE TO JUSTIFY ALL THIS SPENDING. YVONNE: AND DELIVER SOME PROFITS. THANK YOU. WHEN IT COMES TO THE U.S. AI PERFORMANCE, THAT PERFORMANCE GAP OF LATE, AS YOU CAN SEE WITH SOME OF THESE ELEMENTS, IT HAS REACHED A RECORD LOW AFTER DEEPSEEK GAINED GROUNDS. YOU ARE SEEING IN THE BOTTOM PART OF THIS COLUMN, IT IS RISING IN THE RANKS WHEN IT COMES TO PERFORMANCE. THESE ARE ACCORDING TO LIVE BENCH. IT IS SHOWING THE DIFFERENCE BETWEEN LEADING CHINESE AND U.S. MODELS NARROWING TO JUST 3%. BLOOMBERG INTELLIGENCE SAYS THAT SPELLS -- IT LOOKS LIKE DEEPSEEK HAS DONE IT AGAIN. HOW DO THEY GET THERE? >> WITH A FOCUS ON ARCHITECTURAL EFFICIENCY. ESSENTIALLY DOING MORE WITH LESS. AS WE ARE AWARE, CHINESE FOR -- FIRMS ARE PRECLUDED FROM ACCESSING NVIDIA CHIPS, SO IT HAS FORCED THEM TO INNOVATE, FORCE THEM TO FOCUS ON SOFTWARE UTILIZATION TO SQUEEZE MORE OUT OF THESE MODELS. BY FOCUSING ON MEMORY EFFICIENCIES AND COMPUTATIONAL EFFICIENCIES, THE RESULTS SPEAK FOR THEMSELVES. THE GAP IN TERMS OF OVERALL PERFORMANCE HAS NARROWED TO A RECORD LOW OF 3%. IT IS A NECK AND NECK RACE BETWEEN CHINA AND AMERICA AT THE MOMENT. YVONNE: WHERE ARE WE NOW? DO YOU EVER SEE CHINA OVERTAKING THE U.S. WHEN IT COMES TO AI? >> I THINK THE AMERICAN'S BECAUSE THEY STILL HAVE ACCESS TO HIGH-END CHIPS WILL PROBABLY MAINTAIN A NARROW LEAD OVERALL. IN THE ABSENCE OF LEGALLY OBTAINING THOSE CHIPS, IT IS A HAIR'S BREATH BETWEEN THE TWO COUNTRIES AT THE MOMENT. IT REALLY IS A NECK IN NECK RACE BETWEEN THESE TWO ECONOMIC AND TECHNOLOGY SUPERPOWERS. YVONNE: DOES IT AT LEAST HELP THE MONETIZATION QUESTION FOR SOME OF THESE FIRMS? WHAT DOES IT MEAN IN TERMS OF TURNING A PROFIT? >> WHAT I WOULD SAY FOR THE VIEWERS LISTENING, GO BACK TO BASIC TEXTBOOK WHAT YOU LEARNED IN BUSINESS SCHOOL OR BASIC ECONOMICS. BECAUSE THE CHINA MARKET IS FLOODED WITH SUPPLY AT THE MOMENT. THERE ARE MORE THAN 1001 MODELS OUT THERE COMPETING -- 1100 MODELS COMPETING WITH EACH OTHER. IT IS COMMODITIZED. WHILE CHINA HAS DONE FANTASTICALLY WELL TO NARROW THAT PERFORMANCE GAP IN A MARKET THAT IS AN OVERSUPPLY WITH A RELATIVELY LOW LEVEL OF DIFFERENTIATION, THE LEADING MODELS, MOST OF WHICH ARE FOR FREE, THAT IS INCREDIBLY DIFFICULT. WHAT WE HAVE SEEN LOOKING AT ZHIPU, MINIMAX, LOOKING AT ZHIPU AS AN EXAMPLE, CONSENSUS SELL SIDE HAS MORE THAN DOUBLED THEIR OPERATING LOSS ESTIMATES. THE NUMBERS ARE ACTUALLY GOING THE ONE WAY AT THE MOMENT. THEY ARE MONETIZING, OBVIOUSLY THESE COMPANIES HAVE TO COVER A VERY HEAVY BURDEN OF R&D COSTS AND COSTS. BASED ON OUR NUMBERS, THIS INDUSTRY FROM A CHINA CONTEXT WILL REMAIN HEAVY LOSSMAKING FOR THE NEXT THREE YEARS AND PROBABLY LONGER. YVONNE: THEY CAME OUT WITH AN INTERESTING CALL SAYING THEY HAVE UPGRADED. THEY STILL THINK IT IS THE BEST AI MODEL OUT THERE. THE VALUATION HAS BECOME ATTRACTIVE AFTER THE STEEP PRICE DROPS WE HAVE SEEN. DO YOU AGREE WITH THAT VIEW? >> WE HAVE A FOCUSED IDEA ON THAT COMPANY FROM THE 25TH OF JANUARY AND IT IS DOWN MORE THAN 70%. I GUESS THEY ARE TAKING THE VIEW THERE IS VALUE. I IMAGINE WITHIN THE STOCK, BUT THE MARKET IS WEIGHTED WITH THIS. IT HAS BEEN A SUBSTANTIAL UNDERPERFORMER. DOES IT CHANGE FUNDAMENTALLY, DOES IT HAVE THE SCALE OF RESOURCES TO COMPETE WITH THE LARGE TECH PLATFORMS? THEN ABSOLUTELY NO. I DON'T THINK ANYTHING HAS CHANGED FUNDAMENTALLY. IF GOLDMAN WANTS TO MAKE AN EVALUATION CALL, THAT IS UP TO THEM. BUT FUNDAMENTALLY, ZHIPU WILL MEET -- REMAIN HEAVILY LOSSMAKING FOR THE FUTURE. YVONNE: DOES IT RAISE QUESTIONS ABOUT THE U.S. EXPORT CURVES ON TECHNOLOGY AND THE USEFULNESS OF THEM? >> THE WORD I HAVE LEARNED IS BIFURCATION. GLOBALIZATION IS DEAD, THEREFORE THE CHINA AND U.S. AI SYSTEMS ARE SEPARATE TO SOME LARGER DEGREE. HAVING SAID THAT, CHINESE MODELS ARE GAINING IN USE WITH DEVELOPERS AND SMALL SOFTWARE COMPANIES IN THE U.S.. SOME OF THE SMALLER ONES, INCLUDING -- INCLUDING ZHIPU ARE AT RISK IF THESE ONGOING ALLOCATIONS. BASED ON WHAT THE U.S. ADMINISTRATION, JENSEN HUANG, AND OTHERS HAVE SAID, AMERICA IS OPEN TO OPEN-SOURCE MODELS. BUT I THINK IF THERE IS HARD EVIDENCE FOUND THAT COMPANIES HAVE BEEN SAILING A BIT CLOSE TO THE WIND OR CROSSING THAT LINE, THEY RISK AN OUTRIGHT BAN. I THINK SOME OF THE SMALLER CHINESE COMPANIES ARE AT RISK OF THAT, UNFORTUNATELY. YVONNE: GREAT TO HAVE YOU HERE TO DELIVER YOUR REPORT TO US. MAKE SURE TO CHECK IT OUT HERE THIS MORNING. COMING UP, VIOLENCE ESCALATES IN THE MIDDLE EAST AS HUMANS SAUDI BACKED GOVERNMENT LAUNCHES A MAJOR OFFENSIVE TO RECAPTURE AREAS UNDER THE CONTROL OF THE HOUTHIS. MORE ON WHAT IT MEANS FOR THE REGION AND ENERGY MARKETS NEXT. THIS IS BLOOMBERG. ♪ YVONNE: CHECKING ENERGY MARKETS THIS MORNING. WE ARE SEEING WHEN IT COMES TO OIL, IT HAS BEEN DROPPING IN THE ASIA SESSION. WE ARE SEEING MORE ESCALATION WHEN IT CAME TO THE VIOLENCE PARTICULARLY IN YEMEN. BUT ALSO OIL SEEMS TO BE DROPPING BECAUSE SAUDI ARABIA ALSO CUT PRICES TO ASIA AS WE SEE FLOWS EXPAND THERE. MAYBE THAT IS WHAT IS PUTTING A DAMPENER ON CRUDE. WE ARE BACK TO 101 LEVELS. BRENT CRUDE HOVERING AROUND THE $90 LEVEL. WHEN IT COMES TO OTHER MARKETS, STILL LOOKING PRETTY ELEVATED THIS MORNING. THIS IS ON THE BACK OF WHAT WE HEARD OVER THE WEEKEND. YEMEN'S SAUDI BACKED MILITARY LAUNCHED A FULL-SCALE OPERATION TO RECAPTURE AREAS UNDER THE CONTROL OF IRAN BACKED WHO THE FORCES. FIGHTING HAS ESCALATED SINCE EARLY LAST MONTH, BUT THEY CAPTURED STRATEGIC AREAS ON YEMEN WEST COAST. LET'S BRING IN JILL DISIS'S ON THE LATEST OF WHAT HAS SPARKED THIS ESCALATION. JILL: GOOD MORNING. WHAT YOU ARE LOOKING AT, AND A FULL-SCALE MILITARY OPERATION. THIS IS A PRETTY SIGNIFICANT ESCALATION IN THIS CONFLICT. THE HOUTHIS DIDN'T REALLY GET INVOLVED IN THE WAR UNTIL JULY OR SO. YOU MENTIONED THE IDEA THAT THEY HAD TAKEN THE STRATEGIC AREAS ALONG YEMEN'S COAST IN SEPTEMBER. IT DIDN'T MEAN IT GAVE THEM SIGNIFICANT CONTROL OF THE STRAIT CONNECTING THE RED SEA TO THE BROADER OCEAN. SOME PRETTY SIGNIFICANT CONCERNS ABOUT THE ABILITY TO TRAFFIC CRUDE THROUGH WHAT HAD BEEN A SIGNIFICANT WAY IN WHICH SAUDI WAS ABLE TO BYPASS WHAT WAS HAPPENING IN THE STRAIT OF HORMUZ. THE FACT THAT YOU HAVE INTERNATIONALLY RECOGNIZED GOVERNMENT, YEMEN, SAYING THIS IS BEING LAUNCHED, DOES INDICATE THERE IS THIS DESIRE TO SEIZE CONTROL OVER STRATEGIC AREAS AND POTENTIALLY PUSH THE HOUTHIS OUT . YVONNE: WALK US THROUGH WHAT THE IMPLICATIONS COULD MEAN FOR SHIPPING ROUTES, FOR ENERGY MARKETS AND THE LIKE. THERE SEEMS TO BE A LOT OF RISK AROUND REDIRECTING FLOWS AT THE MOMENT AROUND SOME OF THESE AREAS. JILL: THAT'S RIGHT. AT THIS POINT, OIL REMAINS INCREDIBLY ELEVATED, TRADING NEAR $100 A BARREL. BUT WHAT WE HAD SEEN MORE BROADLY WERE CONCERNS FOR IRAN OVER WHETHER OR NOT ECONOMICALLY THEY CAN WEATHER A LOT OF THESE DEVELOPMENTS. THERE HAS BEEN A SIGNIFICANT UPTICK IN FLOWS THROUGH THE STRAIT OF HORMUZ. JP MORGAN JUST RELEASED AN ANALYSIS LAST WEEK SUGGESTING PREWAR FLOWS OF CRUDE HAVE RETURNED TO ABOUT 90% OF WHAT WE WERE SEEING PREWAR. THERE'S A LOT OF IDEAS THAT WE ARE SEEING RETURNS TO NORMAL, YOU ARE SEEING IRAN'S MAJOR POINT OF NEGOTIATION THAT CONTROL OVER THE STRAIT OF HORMUZ ARE MAY BE WEAKENING. WHEN YOU ARE TAKING THAT IN COMBINATION WITH THE IDEA OF YEMEN PUSHING BACK THESE IRAN'S BACKED WHO THE FORCES IN YEMEN -- HOUTHI HOUTHI FORCES IN YEMEN, THERE IS THE ATTEMPT TO REMOVE BARGAINING CHIPS THAT HAVE DEVELOPED. WHETHER THAT LEADS TO THE RESUMPTION OF PEACE NEGOTIATIONS WITH THE UNITED STATES, THAT IS AN OPEN QUESTION. IT DOES RAISE A LOT OF QUESTIONS OVER HOW LONG IRAN IN PARTICULAR CAN WHETHER THIS. YVONNE: THANK YOU. JILL DISIS WITH THE LATEST. MARKETS ARE SHRUGGING OFF SOME OF THAT OIL RISK RIGHT NOW. WE TALK ABOUT WHAT IS HAPPENING IN TAIWAN AND JAPAN. THE TAIEX IS UP 2.5 PERCENT STILL. AI SUPPLY CHAIN, AI TRADE, HARDWARE, STILL LEADING THE CHARGE WITH TSMC UP 3%. THE HANG SENG NOT TAKING PART IN THIS AI PARTY. WE ARE FLAT, DRAGGED DOWN BY FINANCIALS THIS MORNING. PLENTY MORE TO COME. THIS IS BLOOMBERG. >> IT IS A DOVISH REPORT, SOFTWARE ACROSS THE BOARD. AND THE MARKET'S REACTING THAT WAY. >> WHEN I TAKE A STEP BACK AND PUT A BIGGER PICTURE TOGETHER IN THE LABOR MARKET, NOTHING'S CHANGED. >> THAT IS A PRETTY SOLID REPORT. THE UNEMPLOYMENT RATE TICKED UP WITH SOME OF THAT IS RISING PARTICIPATION. >> WE ARE ONE BAD INFLATION NUMBER AWAY FROM THEM PULLING A -- PULLING THE TRIGGER ON A HIKE. >> THEIR OPTICS OF HIKING RIGHT IN FRONT OF THE MIDTERMS. I THINK THEY PROBABLY WANT TO TRY TO AVOID THAT. >> WE HAVE AN ELECTION BUT THE FED IS INDEPENDENT. IT IS MAKING DECISIONS BASED ON THE DATA. ELECTIONS HAVE NOTHING TO DO WITH IT. YVONNE: SOME OF OUR GUESTS REACTING TO THE LATEST U.S. JOBS REPORT. JUST 29,000 JOBS ADDED IN SEPTEMBER, BELOW ALL ESTIMATES. THAT IS WHY YOU ARE SEEING THIS RISK RALLY. NASDAQ FUTURES UP BY 0.1%. A DECENT OPEN WALL STREET. WHAT WE ARE SEEING WHEN IT COMES TO MONEY MARKETS AND THE LIKE, THEY ARE NOT PRICING IN -- NOW PRICING IN LESS THAN A QUARTER OF A CHANCE THAT THE FED WILL HIKE IN DECEMBER. THAT RALLY WHEN IT COMES TO THE TREASURY MARKET PARTICULARLY ON THE SHORT END IS CONTINUING TODAY. THE WHOLE YIELD CURVE IS SLIGHTLY LOWER. WE ARE AT 4.81 FOR THE U.S. 10 YEAR. THAT PAYROLL NUMBER, THE SOFTER ONE, GOLDILOCKS, IT MAY EASE THE PRESSURE AHEAD OF THE FED MINUTES THAT LOOKED TO BE PRETTY HAWKISH. BLOOMBERG ECONOMICS SAYING DON'T SWEAT THE HAWKISH MINUTES AFTER THAT SOFTER DATA. THAT IS THE MESSAGE FROM DANA WONG AND HER TEAM. TECHNOLOGICAL DISRUPTION WERE KEY CONCERNS FOR THE GLOBAL ASSET MANAGERS. SPEAKING AT SOME OF THESE KEY CONFERENCES, INCLUDING THIS ONE, SINGAPORE'S MOST SUCCESSFUL COMPANIES AT THIS SUMMIT. WE ASKED HOW THEY ARE POSITIONING FOR THE RISKS POSED BY AI AND OTHER MAJOR CHALLENGES. >> WE HAVEN'T SEEN THE COST EFFICIENCY GAINS YET. IF ANYTHING, OUR INVESTMENTS INTO AI TECHNOLOGY AND THE PEOPLE IN THE LAST TWO YEARS HAS PROBABLY ADDED 20 PERCENT OF OVERALL COSTS. AT THE SAME TIME, I THINK THE ABILITY FOR US TO COME TO CONCLUSIONS, TO STRATEGIZE AND ANALYZE SITUATIONS, FRANKLY ALSO TO LOOK FOR NEW OPPORTUNITIES AND TO ALSO STUDY HOW SOME OF OUR LARGER WILL COMPETITORS ARE NAVIGATING THE WORLD, THE TOOLS THAT ARE AVAILABLE AND THE DEMOCRATIZATION OF KNOWLEDGE THROUGH AI IS SOMETHING WE HAVE THE FIRM HAVE GAINED TREMENDOUSLY FROM. >> IT IS NOT JUST ABOUT AI. IT IS ALSO GEOPOLITICAL TENSIONS. HOW ARE YOU NAVIGATING AT DPS? WHAT ARE YOU POSITIONING DPS FOR? >> IT IS THE TRADE TRUMP TARIFFS AND TECHNOLOGY. WE DO A LOT OF SCENARIO PLANNING. WE PLAN FOR WAR, SHORT WAR, LONG WAR, WHERE THE WAR WILL BE. WHATEVER IT MAY BE. WE PLAN FOR WAR. WE PLAN FOR THE WEAPONIZATION OF EVERYTHING, WEAPONIZATION OF THE U.S. DOLLAR, WEAPONIZATION OF TRADE, WEAPONIZATION OF CHIPS, WEAPONIZATION OF PAYMENTS. WE ALSO SCENARIO PLAN FOR WHEN THINGS DON'T WORK. WHAT IF THE CABLES GET CUT? WHAT IF WE GET BOMBED AND WE CANNOT GET INTERNET ACCESS? WHAT IS OUR BACKUP PLAN? DO YOU HAVE FOR YOUR BUSINESS A STATEMENT TO PULL OUT FOR EVERY DISASTER THAT HAPPENS? BECAUSE WHEN IT HAPPENS AND YOU DON'T HAVE IT, WE WILL BE PANICKING. >> WHAT ARE YOU DOING NOW THAT YOU DIDN'T DO 24 MONTHS AGO, GIVEN THE CHANGING MACROENVIRONMENT? >> WHAT HAS CHANGED IS OUR ABILITY TO TAKE DIFFERENT POSITIONS WHICH GO LONG AND SHORT AND ALLOW US TO PROFIT FROM CERTAIN DISSONANCES IN THE MARKETS. MARKETS MOVING DIFFERENT DIRECTIONS, WHICH MEANS IT DOESN'T MARKETS IF -- DOESN'T MATTER IF MARKETS DO WELL OR NOT. IT IS INCREDIBLY IMPORTANT WITH THE MARKETS TODAY. IT HAS ALWAYS BEEN IMPORTANT TO HAVE THAT FLEXIBILITY. IN ADDITION, I THINK IT IS A LONG JOURNEY. WE ARE ALWAYS IMPROVING AND THAT IS ONE ASPECT. IN TERMS OF TECHNOLOGY AND AI, WE ARE ALSO LIKE EVERYBODY ELSE. WE HAVE HAD A LONG JOURNEY, I A LONG RELATIONSHIP WITH TECHNOLOGY. YOU THINK OF QUANTUM INVESTING WHEN IT HIT THE SHORES OF SINGAPORE, NOT MANY PEOPLE WERE DOING THAT. WE HAVE BEEN FAMILIAR WITH TECHNOLOGY FOR TRADING AND INVESTING. WHEN AI ENTERED THE PICTURE, WE DIDN'T HAVE TO REWRITE THE RULE BOOK. WE DIDN'T HAVE TO RETHINK OUR APPROACH. WE WANTED TO USE TECHNOLOGY. WE WANTED TO EMBRACE TECHNOLOGY TO THE FULLEST EXTENT, IN THE MOST APPROPRIATE WAY. BUT ALWAYS CAUTIOUS, ALWAYS LOOKING FOR WHAT CAN GO WRONG, ALWAYS LOOKING AT THE RISKS AND MAKING SURE THAT AT THE END OF THE DAY, HUMANS ARE IN CHARGE. HUMANS ARE NOT JUST IN THE LOOP BUT OVERSEEING THE ENTIRE PROCESS. ULTIMATELY WE TAKE RESPONSIBILITY. YVONNE: SOME GREAT GUESTS AT THE SUMMIT. WHEN IT COMES TO MARKETS, WE ARE TRACKING THIS WHOLE AI STORY THAT CONTINUES TO REALLY HELP AT LEAST SOME OF THE NAMES WHEN IT COMES TO HSTECH. YOU ARE SEEING AT LEAST SOME OF THE CHIPMAKERS HERE, LENOVO AND THE COMPUTING SPACE. HSTECH IS NOW WELL INTO MORE POSITIVE TERRITORY. THAT CERTAINLY IS HELPING . GOLDMAN'S CALL IS UPGRADING THE STOCK FROM NEUTRAL TO A BUY. IT REMAINS THE BEST AI MODEL IN CHINA. VALUATIONS ARE LOOKING A LITTLE MORE POSITIVE. THE STOCK CONTINUES TO EDGE HIGHER BY FOUR POINT 5%. WE ARE WATCHING SOME AUTO STOCKS IN CHINA. THERE WERE NUMBERS WHEN IT CAME TO SALES IN EUROPE AND THE U.K.. IT WAS SOME OF THESE CHINA MADE TESLA CARS THAT SEEMED TO BE LEADING THE CHARGE WHEN IT COMES TO SALES AND REVENUE. CERTAINLY THAT IS HELPING. BUT THERE IS ALSO THIS REPORT OF THE U.K. PREPARING TARIFFS SIMILAR TO WHAT WE HAVE SEEN IN THE EU. THAT IS WHAT IS WEIGHING ON AUTOMAKERS TODAY. BYD SEEMS TO BE STANDING OUT AS WELL. NEW WORLDS, THAT STOCK EDGING LOWER. THAT'S CONTINUING WHAT WE SAW ON FRIDAY. CERTAINLY THERE HAS BEEN A LOT OF CONCERNS ABOUT WHO THIS WHITE KNIGHT IS GOING TO BE EMERGING AFTER THEY TERMINATED THAT PROJECT AND MAYBE THAT CLEARS AWAY FOR POTENTIAL INVESTORS AND THE LIKE. OUR SOURCES WAS MENTIONING BAIN MIGHT BE THAT WHITE KNIGHT. THAT LIFTING THE STOCK. IT IS WHAT WE ARE SEEING IN FINANCIALS AND REAL ESTATE, STILL DEALING WITH THE MACRO RISKS WHEN IT COMES TO RISING RATES AND THE LIKE. THAT IS NOT CHANGING TODAY AS WELL. WHEN IT COMES TO BRAZIL, WE ARE WATCHING NOT JUST THE REAL CONTRACTS, BUT ALSO THESE ETF'S LISTED AS WELL THAT WE ARE TRACKING WHERE YOU ARE SEEING SUBSTANTIAL GAINS ON SOME OF THESE ETF'S AFTER WE DID LEARN ABOUT BOLSONARO AND LULA HEADING TO THAT RUNOFF. BOLSONARO COMING OUT WITH A SURPRISE LATE. THAT'S IT FOR US HERE AT "THE CHINA SHOW." ♪