China Rejects Claims the Yuan Is Undervalued

9 a.m. in Shanghai, Shenzhen and here in Hong Kong. You're watching the China Show. I'm Yvonne Man with David Ingles. Good morning. We are counting down to the open of markets in Greater China. Let's get to your top stories today. Asian stocks tracking a tech led selloff in the U.S. is following reports that open eyes revenue is around $20 billion, below recent estimates. That's reviving concerns over the sustainability of this eye spending boom. Yep. And that's sort of what Chinese take under pressure here again anthropic a new AI model as well. Beating minimax and moonshot when it comes to pricing. The tech index now in oversold territory is down 40% over the past year. And we hear from Las Vegas Sands CEO Patrick Dumont about expansion plans in Asia and why the casino operator is shunning prediction markets, at least for now. All right. Um, certainly will be digesting all the what was like, you know, the bad news. And it seems like investors are taking the chips off the table when it comes. This whole AI trade here, right. It's not just the OpenAI story and really the run rates that we're seeing when it comes to revenue and the like, according to our reporting and media reports out there. But yesterday, what we saw in the pure play is in China about the pricing in the competition that we're seeing from the US as well. It's really going to be a big one. Wins again today. Yeah, I mean they're all coming together. Yeah. Many of what people on. And so I want to say that the doomsayers but some of them on the side of the conversation have been warning about for many weeks now, suddenly came together. And then you have this OpenAI story, right, this moving target, but from a lofty level. And then you have real rates and then firmness also delay. They're actually pulling their IPO holding IPO the Invisible Woman, of course, in Australia, and all of it coming together. And, you know, let's, let's that let's fight another day. Right. And this is what we're looking at here. And if you look at price direction and the fact that you don't have Korea and Taiwan today as a good proxy for the eye trade, it's it's just, again, uh, low volumes, low on price. And on top of that, as we went into the session, we go into the session today. Yeah. This massive selloff that we had in Singapore, which is one market we're looking at as well as we go into the open today. So Singapore actually had one of its worst days, uh, over the last two years yesterday because of the back story that goes into the real yield story as well. So it's not a good day to be longest risk assets. Uh, on top of all of that, there's this tech rout within the AI story in China that really accelerated into the close yesterday. Uh, we were down about 3% on the Hang Seng tech index. I think this is something we'll unpack even further later on. But yes, it's not it's not kind for the Bulls today. Yeah. The cloud recent cloud model, um, where they were able to bring down the cost per task to even beat some of these Chinese players out there right now, right. Which basically shows in some ways that the competitive edge that China may have had when it came to pricing is narrowing. Now, Robert Lee from Bloomberg Intelligence had a great piece in saying that. Look, is this turning into more this? I was like, what happened in the solar panel industry where everything's very highly commoditized, and the only way to differentiate is through price signal. Yeah. And you look at where the, you know, the solar story is currently and, you know, you could take you take the Chinese EV story. Look at where that yes, it's playing off right now. So the the margin story is really showing up even in the high tech space. And we know that that's a China story isn't going to become a U.S. story anyway. We'll get into all of that in a moment here. But also just to tell you about the oil story, which is obviously leading to the macro challenges out there. So we are at 104. We are pulling back a little bit from the cut up on Brent that's coming up on your screens, but still 104 at 92, uh, on your crude, uh, gold catching slight bit as we go into the session today. Uh, and we talked about this, the Hang Seng Tech Index, um, has really had a terrible last few weeks. Uh, in fact, right now you draw it from the peak last year, uh, we're down 40% down from that peak. So you call it a double bear market if you want to, down about 3% into the close yesterday. And the visual iteration of this, is this coming up on your screen. So yeah, I mean let's see if technicals come in or we get some buying. Of course, because we are at a level of 2627 and a 14 day RSI that does indicate that you get we'll get biased. But anyway, uh, this is where we are. Uh, and it's not been again, kind for the Bulls here. Yeah. Let's continue on our top story here this morning, sources telling us that OpenAI is on track to generate annualized revenue of roughly $50 billion based on its current performance. And that's about 20 billion less than previous estimates. Let's get more now from our Bloomberg Intelligence global head of technology research, Mandeep Singh, and our managing editor for Asian Equities 19 two. Mandeep, I'll start with you. 20 billion less than what was initially estimated. How significant is that? How concerned should we be? Well, it is significant in the sense that, uh, OpenAI had a dev day on September 29th and they mentioned, you know, the error was, uh, 70 billion. So it is a big deal that, you know, even if it's an accounting change in terms of, you know, showing net revenue versus gross revenue previously, uh, why didn't they talk about it? Uh, you know, a week before and, uh, I mean, to my mind, you know, if CapEx numbers are going up, which everyone thinks they are, you know, next year it's going to be 1.2, 1.3 trillion in hyperscale plus new cloud CapEx. The revenue for these, uh, frontier labs has to scale with the CapEx, because they are the ones who are at the forefront of showing ROI. And if that doesn't scale up with CapEx, which it sounds like, you know, if it's a 20 billion shortfall, uh, then I think there could be, you know, some anxiety around that. But if they were to revise these numbers, you know, the prior number, uh, before 70 billion was 40 billion. So how does that trajectory look like? That to me is the most important thing. If if everything is getting revised to net number, what does the prior numbers look like? And I think that will, uh, you know, uh, help resolve some of the anxiety around, uh, this, uh, 20 billion gap here. David here, just maybe trying to find a silver lining here. How much? I mean, we know, of course, a lot of them measure revenue in different ways. How much of this could be down to accounting? Well, I mean, uh, anthropic, uh, you know, gives us a gross number. And they went from 9 billion and error to close to 80 billion. Now, what these, uh, frontier Labs do is they run their models on cloud providers like Amazon, Google or Microsoft. So in the case of OpenAI, their arrangement is such that Microsoft takes, you know, uh, the cloud cost of running their models as well as a separate fee that, you know, they have to pay Microsoft. So if they're counting it as. Net, it makes sense that, you know, it's not 70,000,000,050 billion. But like I said, the prior trajectory, they gave a $40 billion number back in July. And these companies have been adding, you know, uh, 6 to 7 billion in revenue per month. So that's where the trajectory really matters. And what is the monthly net revenue look like? And, uh, I think we probably need some clarification from the company. Uh, here. Okay. Yeah. I'll bring you in. I mean, there's the competition seems to be heating up between U.S. and China when it comes to these AI models. Now, right. When the latest when it came to cloud. Uh, this is, of course, the haiku 5.5 model basically was showing that the pricing of this per task is lower than the likes of some of these Chinese pure plays. Right. And then we saw mini Max falls some 10% yesterday. What's in store for for some of these Chinese I plays today. Yeah I think things are not looking very good. The competition is obviously major news, but at the other side there is also all the negative, uh, news that was piling up, uh, overnight to open. I, as you guys mentioned, was one there was a full most news. And in addition to that, there was a lot of news about how a bunch of, uh, companies, including Tencent, looking for debt financing and that just now, you know, making investors worry whether the market actually has enough capital or appetite to fund those debt deals at increasingly, uh, higher borrowing costs. And, you know, when the company is venturing into debt that could, you know, potentially lead to some kind of bubble. And now the question is up. Yeah. Is there? Are we really in some kind of bubble? Obviously noises are getting louder as well about that topic. So, you know, eventually if those companies cannot get all the funding that they need, that means they may spend less on CapEx. And overall, that doesn't bode well for even the hardware names that China or the rest of Asia are very proud of when it comes to this AI trade. Yeah. Just for our viewers who might have missed that, you know, Tencent was said to be mulling here a 5 billion bond offering was with the intent which is alluding to just now. So the engine put everything together for us. The setup going into the open today, particularly against the backdrop of that selloff in Hong Kong yesterday across the tech names, is what's that setup looking like today. Yeah I think again this one I think Hong Kong in particular I would say, you know, tech being one thing that is negative about Hong Kong is also very sensitive to U.S. rates, and Hong Kong is probably among the most sensitive markets to that because of the Hong Kong dollar peg. And Hong Kong also has a very big property market, which is again, very sensitive to U.S. rates. And there is another headwind, which is that, uh, cross-border, uh, investment policies from mainland is actually tightening, uh, that is now contributing to a tighter financial conditions for Hong Kong. So all of these things that adding up are the reason why HSBC downgraded Hong Kong to neutral yesterday. Then I was going to get your take on the news that we're saw when it came to, uh, haiku. Right. This is the cloud model that really is now being quite competitive in terms of pricing compared to even the likes of Deep Sik, uh, and some of these other China names right now. Uh, Robert Lee from, from your team has talked about how they think this whole AI race is becoming more like resembling the solar panel industry where it's oversupplied, it's very commoditized, and the only way to differentiate is through pricing. Is this looking more like a race to the bottom now among these AI players? So I would say, you know, it depends on the use case. In the case of coating agents, the frontier models have shown, you know, they can get a premium price for their tokens that they're generating. You know, we had the launch of Metal Muse and Instinct has gone wild since its launch. So these consumer agents don't use premium tokens. And that's where depending on the use case, you will see prices come down really hard for some of, uh, the tokens. And I think what anthropic is doing is they will cater to all kinds of use cases where there is premium tokens required. People will pay up for that. Very high Coke could be used for a use case. You know, they will offer lower token pricing. And that's how the market is going to evolve because some use cases require a lot more reasoning, and you don't have open rate models that are comparable in terms of quality. And, you know, in those type of cases they can still come out the premium. But bottom line is they have to show revenue growth that scales with CapEx. And and it will require a combination of both premium tokens as well as, you know, catering to some of the use cases that use commoditized tokens, which arguably was the opposite with the OpenAI story team. Thank you so much. Now. Fantastic conjecture from both of you. Mandeep Singh, there are global head of tech research at Bloomberg Intelligence and our managing editor for Asian equities looking at markets 92 in Singapore. For us now, one of the stories we just alluded to just now, and one of the reasons, other reasons that we are seeing this cloud, uh, uh, just above us right now as we go into the open today and perhaps why we could see some more headwinds, uh, you had for us, in case you haven't heard of that company, that's the Nvidia back data center firm. Uh, it's not postponing its, uh, planned IPO in Sydney, saying that it's now looking maybe at options in the private markets. Uh, instead manual by Gauri who leads our API deals team joins us right now to help us understand what the company is now looking at and why it's looking at this. Yes. Uh, very dramatic turn of event. Uh, David and Yvonne, uh, kept us really busy the last few days, especially last night as we were scrambling to break news on it. Uh, so, yeah, definitely, uh, firmness, uh, you know, which obviously everybody out there which, uh, has some sort of knowledge in digital infra was questioning, uh, the track record uh, came down 11th hour. Um, we throw in uh, the plans for, uh, an IPO, which would have been, uh, just very many would have been one of the biggest ever in Australia, period. And obviously, uh, they didn't, uh, get enough traction with investors. Uh, and they had to pull it. So now the next steps. Um, as you highlighted, they are looking into, uh, private markets. Uh, to raise funds. I mean, just these companies, er, related companies had data centers. Uh, among them, they, uh, require a huge amount of funding to keep going and to deploy and to build and operate these facilities. So just it's a lifeline. They either, uh, raise funds or will be very, very hard for them to build out, uh, on their promises. Uh, so next steps will be how they managed to, um, uh, raise some funds in the private market. Uh, but also interestingly, uh, what we are looking at is ripple effects. Uh, these dramatic turn of events may have in the industry. There are other IPOs in the pipeline. Uh, obviously, uh, different, uh, track records and different, uh, quality of assets out there. Uh, but not only in capital markets, also in M&A. We've seen a lot of platforms coming to market and up for grabs. Yeah. What does it mean for sentiment? Right. I mean, at this time, it's not just for Miss Fry. I mean, we talked about it, but I at least delaying indefinitely. You've had aura also postpone. I mean, like, there's been a few kind of big names have decided, you know, I'm just going to take a breather here before things settle down a bit. What does it tell you about this whole sentiment around the whole AI trade now? Definitely, when you highlighted some examples, I would also perhaps have energy in the US. Yeah. It's another one that we've been tracking down quite closely. Uh, yeah. It's quite dramatic, right. Because everything was like party. Everybody was, uh, coming in and, uh, you know, trying to monetize and make money out of, uh, these before the music stops, as they say. And now there is a turning point here. Everybody's watching closely. I think the bottom line is investors are becoming more discerning of the quality of assets and where to deploy capital into. And when you've got, uh, markets like Australia where, you know, regulatory scrutiny around data centers is increasing. And where you've got firms, uh, like firmus, for instance, that, uh, don't have a track record in, uh, deploying, building out and operating. Investors are just questioning whether they want to, um, invest into future or they just want something more tangible in the present. Uh, so I think that's become a reality check for many in the industry. All right. Well, thank you. Maybe I'll go all glory there. Who leads are Apex Deals team? Uh, coming up, we're speaking to the Nasdaq CEO. Uh, it's gonna be a really good one with Adina Freeman, who's joining, uh, has there, uh, Milken and really talking about what this means when it comes to the pipeline, what they're seeing over in the U.S.. Meanwhile, we're tracking, of course, EU and China talks. China is defending its currency policy as talks with the EU get underway, with investors watching for any signs of progress in averting a full blown trade war. We'll bring you the details coming up next. Welcome back. You're watching the China show. Uh, some strings coming through. And the currency? The reference rate is out. Bottom of the screen. The plot is a bit more complex and, um, uh, thicker today, as one could say, because we did get. And we'll get to this in a moment. This rare, uh, defense of the policy around the currency out of the central bank yesterday, uh, really against the backdrop of not just fundamentals, but obviously politics, uh, perhaps muddying the waters a little bit here today. Yeah. Of course, the head of those EU China talks where the PBoC has now rejected claims that the renminbi is undervalued as trade talks with the EU begin. EU officials have increasingly blamed those trade imbalances on the exchange rate. Yet let's bring in middle and lower China correspondent here to talk us through this. Let's start with the statement which came out yesterday. Well it's not really a statement. It's a nine page document really about its thesis on the market rate policy. Uh, but yeah, I mean, the timing is interesting, right? Because it is the day when it came out, on the day when you and China heading into trade talks. And of course, the tweet imbalance between EU and China has been in focus. And yes, if you look at the euro, it's actually fallen by 10% against the UN since the January peak. And a part of it is because of also weak economic growth in the eurozone as well as France's fiscal problems. Right. But to your point, you saw earlier the fix the PBoC has been fixing a higher fix sometimes to slow down the growth of the yuan. Right. So even if nominal rate goes up. There is the argument that given China's inflation is so low compared to the rest of the world, the real effective exchange rate is not appreciating as fast as it can be. Uh, and the EU is arguing that this is really boosting the competitiveness of Chinese exports. So, I mean, what's the key argument that that China is making right now? I mean, as you mentioned, right, this is a sort of a rare defense that they've really kind of laid out here when it comes to the currency. Yeah, a few things. One, there is saying that if you look at the FX market, the size of it has ballooned so much that it is impossible for any single central bank to dictate the underlying trend of a currency. I mean, just look at the attempt to intervene with a yen, right? Uh, and number two, they're also saying that, um, one reason for China's export strength is its industrial policy and all the investments it's put in before. So all countries on both sides of the trade have to do their homework to fix the structural imbalances. And if you're facing a trade deficit, you've got to think about if you're under investing. If you have very rigid regulatory policy, you're under investing in innovation and digitization, or your savings rate is too low and you need to close that savings investment gap. So it's saying that Europe, you need to fix all your problem and not blame it on China. Um, yeah. Oh, you caught me right there. Were okay, so let's talk about the other things. So we have the currency obviously, which is perhaps part of the broader discussions. What else is on the table here? Well, uh, well, of course, we read all of this on the table. Whether China will extend the exemptions to the rest of export controls. And the EU is trying to fast track or create a mechanism to fast track applications of Chinese rail to enter the EU. But at the heart of it, going back to the trade imbalance, right, China. The EU wants China to lower trade barriers on all things. And this is where China has been arguing that there's a bit of a double standard here because they're saying, okay, if you want us to buy more goods, why are you being so restrictive on Chinese investments? Chinese companies have been blocked from investing in sudden wind turbine projects and renewable energy projects, and Chinese medical devices have trouble getting government procurement, for example. So they are saying it's it goes two ways. And both sides have to take a step back. And it's the same thing. Why the EU wants China to roll back some restrictions on specific products like pork, dairy, brandy and these products restrictions. The tariffs came in in retaliation to those heavy tariffs. So again, it's sort of a tit-for-tat cycle that is uh looks set to be escalating right now. I think you are trying to correspond to them. And lo there of course as we get to those EU China talks, your free market is opening up here and we are seeing some green eyed when it comes to the Hang Seng here today. But certainly we are still nursing some of the losses that we saw yesterday. I'm tracking many maps here right now after what we saw. Right, 13% losses. We are still extending that loss here today when it comes to that stock. After what we heard from cloud here in terms of the pricing and the competition seems to be really heating up in the model space right now. We are seeing though HD futures in the red this morning. Plenty more ahead. This is Bloomberg. Another down day for some of the AI pure plays in China today. This on the back of what we heard and comes to anthropic and its recent model and its pricing. So certainly the competition is heating up and we are seeing minimax once again lower by 1% after 13% losses yesterday, also down 2.5%, the internet platform said this time is also doing slightly better here today, but we are watching for some key levels right now in Hong Kong. Yeah, so 24,000 and easy to remember this one because we are at about those nice round levels 4000 and Hang Seng 8000 on the China index two, we are getting a balance closer to, or in some cases just above those specific levels. We are outlining that for you. Coming up next, so far in the Hang Seng tech there are 24,000. And by the way, this is the low end of the recent range into high 20 threes on the Hang Seng index. And of course 8000 is the one to watch as we go into the session today. Uh, we it's looking like and by the way, it's a quiet day across the equity markets. You don't have Korea. You don't have Taiwan today. So volumes are life priced slightly to the upside. The opening bell is coming up next. Right. Welcome back. You're watching the China show. So we're just wrapping up the it is the first week actually at the of the fourth quarter uh, truncated one of course, mainland because things just reopened yesterday is a two days there. I think that the point is we've seen really better days here to Hang Seng Index. Yes. Up today, but really had a terrible session on Monday. Uh, so we'll see what the open looks like. Of course, the big theme that we woke up to this morning was the drop in tech overnight. Divine right to the open I and the rethinking there of that run rate on annualized revenue 20 billion shorts compared to the previous thinking. Yeah. That 20 billion sort of gap certainly is worrying investors about, you know, where are we when it comes to this AI cycle is certainly oh there's half your face. Oh there you go. Well yeah. Not quite that much of a drawdown. Yeah. But it's about 30% 30. You know it does. Question. Right. Where the durability of this AI trade. Right. When you have a name I open I um talk about, you know, 20 billion less in terms of revenue. Um, now 50 billion, still a sizable number. But, you know, certainly one thing to contend with here and is it just didn't come down to accounting, as David mentioned. Right. You pair that with some of the news we got yesterday on the latest model when it came to cloud, and how they've been able to bring down the pricing of some of these models here to even compete and be cheaper than the likes of Deep Seek. That's really dead royal. Of course, these pure plays like mini Max here today is so sentiment as we've been talking about has not been good. And we are kicking off and wrapping up the trading week. I should say on that negative note, Csi300 is down about a third of 1%. And yes, no surprise China and Star 50 is leading lower here. Tech seems to be on offer once again. So one thing we're watching very closely though is the China Bank story. Uh, Morgan Stanley coming out with a pretty interesting sort of note about raising the price targets of some of these bags and basically saying some of the macro concerns about the economy and the like are a bit overdone. They're expecting a quicker than expected sort of recovery when it comes to net interest, margins and the like. You are seeing the likes of Bank of China up close to 2% here right now. Hong Kong is looking like this, right. So David talked about those key levels to watch when it comes to Asia's tech and HCI. Looks like we bounce off that key threshold of 8000 for the Asian market, 4000 as well for tech. So at least Hong Kong doing a little bit better. Even financials seem to be doing better after what we mentioned about yesterday. Right. Even the Singapore banks were feeling the effects of this euro crisis is happening also when it comes to that rising yields environment for the boards. And check how the Asia Pure plays are doing right. The minimax, the group who's in the like that continues to be a negative story. So a 1% losses. Their mini max was down 13% yesterday. So we're just extending that sell off here. But at least you're seeing a bit of a bright spot with Baba as well as sense time here right now. Hong Kong listed chip stocks is also one thing we're watching out for here. This morning there was a call when it came to SME. I see they're all over here this morning. Obviously, what we're seeing when it comes to this anthropic release and this low cost model was a mean, of course, for the supply chain might mean, uh, something that, you know, that we have to pace the frontier, but also pace, uh, the revenue and profit delivery and the returns. Right. That certainly is the narrative here today. Shannon Gold, another one there, a JP Morgan downgrade on the stock. So they're downgrading it from neutral to underweight. They say when it comes to production reduction that's really what they're expecting here right now for the miner. We're down or up about 1.5% right now David. Production. Production reduction sounds like a 90s hip hop song isn't it? Right. Uh, anyway. Okay, I'm speaking up. Okay. So that's what's happening right now. And I think let's take a step back because I think we've this is something we've talked about already, this drop that we're seeing across the tech space, right on the Hang Seng tech index. And I think one of the big stories we were talking about this time yesterday was this major overhaul in this index. It's a tech index, but it's mostly in the name when you look at the constituents here. So things like EVs are in here, they haven't done very well. Platform companies are no longer considered cutting edge tech. Right. And you know, a lot of these factors really leading to what you're seeing right now. So this is basically a chart that shows you how much the draw down has been from a recent peak, in this case the peak last year we're down 40%. So more than a third. Uh, and you just juxtapose that with what we're seeing in the likes of other tech benchmarks, right. What Nasdaq cost me. And it's, it's night. It's night and day. It's almost like as we flip the page, right. Investors are trying to relitigate what it means to be a Chinese tech lei and how long you need to be on that. So since inception, about just over six years ago. So July of 2020 was when the Hang Seng tech gauge was introduced. And this major overhaul, by the way, to actually weeks would then make it from 30 to 50 stocks. It really hasn't done well. Right? So we're down 40% on price. We're doing slightly better, relatively speaking. We're down about 37% on total return. When you factor in things like buybacks and dividends. So that translates to about an annualized return of -7%. It's not something you think of during the air when you have tech giving you a negative annualized return in terms of up and down quarters, as you can see, obviously, because it's been challenged, we've had certainly more down at quarters than we have up. So let's let's see what the future holds. But certainly the bar is low for US dollar performance. So we'll see what happens with this one coming through. Okay. Um, just ahead a lot of bets. Perhaps we'll have to do with how the economy picks up too. And you had the golden week. Of course. We're coming out of that, uh, mixed picture for retailers. Goldman Sachs actually has a really fantastic, uh, pulse check on the Chinese consumer. We'll unpack that report with Michelle Cheng coming up next. All right. We got a little bit more data out of China after that weeklong holiday. So according to state media on how the golden week really stacked up, uh, you know, there was some official numbers that did show some growth. You take a look when it comes to average sales and service sectors, for example, that was close to 20%. Tourism. Sightseeing was also up 27% from a year ago. Catering services. Sports services as well. Uh, was actually a bit better, right? So certainly there are signs of growth. There are that again, you look at some of the really smaller, earlier indications from box office, from spending that seem to be still a little bit unexciting. But Shinhwa also says for the first six days of the holiday, foot traffic and revenue at 78 major shopping streets in districts monitored by China's commerce ministry also rose well 2.5% and close to 5%, respectively, when it comes to revenue. So there you go. Single digits? Yeah. Unexciting. Yes. The folks at Goldman have put out their unexciting demand. Uh, although I think when you look at some certainly bright spots there across that market, there are some surprises. Um, and some of the numbers, of course, may have been influenced because you do have, of course, this specific year you had mid-autumn. Of course it's close. And I think you have that sort of positive aberration that, you know, if you were if you are strategic enough with your leaves, you would have had a very long holiday. Clearly, we were not. Uh, anyway, uh, let's bring in Michelle Chang, uh, co-head of Asia consumer research at Goldman Sachs. They just have this report out on the pulse check at the Chinese consumer. Very nice to see you. Good morning. Yeah. Hi. Thank you for having me back again. Okay. Well, how unexciting was it? Yeah. Honestly, uh, I think it's a bit hard to explain the data these time because, as you know, a Mid-Autumn Festival this year is earlier in September. So on the West side, probably some of the consumption already took place in September. So like when we talk to some sportswear companies, they actually see, uh, uh, July was very bad. But August, September. So there are some improvement. But on the other side, uh, if you, uh, took three more days off, you will have a very long holidays. Yeah. So, um, for this data is a little bit hard to interpret, but. Or aggregate wise, I think it's still not too exciting if we combine. Really the reason few months trend, uh, single digit growth, um, uh, from different sources, uh, is slightly better than only like a 0 to 1% retail sales growth in July August. And consumers still spend a little bit more during the holidays. Uh, but you can see they are still very rational spending. For example, like Hainan, uh, traffic is up 14%. But uh, the, the sales is also only up like three, 4%. So the per has Bendis actually. And, uh, clearly. Oh, price is very high. Uh, airfare is high. So consumers uh, domestically, the traffic is only like a 0 to 1%. So consumers, uh, choose to, uh, travel by railway, uh, other uh, travel methodology rather than uh, uh, took the air flight or even drove by themselves. So you can still see that they, they want to go out, but, uh, very cautious in spending. What about units in terms of volumes? Because we know inflation isn't as quick in the last few years compared to the previous decade. Right. So that might be is that why we're getting not as robust growth rates are pick up year in year because the prices are just steady. Mhm. True. Um, on the one side uh if we compare early of the year uh honestly pricing trend has um be excited. It's uh especially you do have this inflation risk uh kicking in. So uh, if you recall uh first have around Chinese New Year. We we mentioned that, uh, uh, holiday sales. Was much better, uh, even a high base. But, uh, after our Chinese New Year, things are slowing down. Uh, so far, found the pricing prospective like 80. Uh, promotion activity is still very intense, and we are about to enter another very important holiday season and singles day. I think people are still very worried about the promotion activity. So, um, on the one side, it's slow. The company, uh, to something they still want to be shares uh, or the drive, the sales skills. So pricing is not active. So even looking ahead of what we learn from the earlier Rizal season is that people start to worry, but companies start to worry about inflation rates more rather than just oil. But El Nino is a very, uh, getting more, uh, more and more like a topical, uh, so, uh, inflation risk is there. But I think pricing, um, uh, strategy wise, uh, most of the company is still very disciplined out raise the price, but they still work on a lot of things on how to optimize the cost structures to maintain the profitability. So what stood out to you as something of a surprise and anything turn out better than you thought? Yeah. So some positive, some negative, uh, so positive surprise. One is all about travel. So domestic, uh, traffic is only 0 to 1% for outbound traffic, 6 to 7%. And, uh, in Hong Kong, you feel a lot of people here. Uh, Hong Kong, my call 9%, uh, to 11%. So, uh, all bound, especially the short haul, uh, is, uh, has been very popular and, uh, some experience, uh, um, uh, experience us, uh, spending. So but it's also very diverged, uh, within the entertainment part, uh, you can see box office, uh, revenue was very bad, but that's no big, uh, blockbuster movies. Uh, that could explain the reason. But if we look at, uh, sports events are cultural events. The data seems to be still very good. So that's the bright side. But on the negative side, uh, like, spirits are low based last year about our channel still suggest probably 1,015% decline from Mid-Autumn Festival to Golden week. Um, and also premium consumptions uh also start to show slow down. Uh, few quarters ago actually premium consumption was a pricey but we start to see our premium consumption also, uh, getting slower. Uh, so and a goal to our consumption. But it's basically the high base. Last year, the fourth quarter, we had a very high, uh, a very big rally on the gold price. Oh, gold jewelry was good, but this is so what? Okay. Can you define with what premium consumption? Uh, so basically, uh, like some leading, uh, shopping malls, uh, they come that to the luxury shopping malls performance, uh, doing holiday was lower than the average shopping mall traffic and performance. Okay. Uh, in terms of message for investors, what's what's the best way to express, you know, the trends that we're seeing among consumers in travel now? Yeah. So on the one side, we all know that consumption has been slower. But uh, and also I think every time people try to, um, hope for easy base will play out. Actually last year they can have or we did had the easy base. But so far, like retail sales are everywhere. Most of the companies seem to us like hovering at around flat small positives, no negative. Uh, so I think it's sector wise, it's a bit, uh, slow. But on the company level we still see, uh, some iRobot trend. And also something we learned in the past few months is it's even more diverged. So still, some companies, uh, they are gaining shares, uh, in the tough base and they still deliver. But for some companies, especially a smaller players, uh, they probably had, uh, fewer bullets. They can play out. Yeah. So if you look at, uh, the fund, the companies level, uh, even the tough sector, actually market leaders still perform much better. But of course, I think the, uh, from the sector, uh, perspective, we like some sectors are either they have a secret opportunity, for example, like why Google's domestic business is smaller, it's more stabilized, but they have going global story. Um, and also you have restaurants, uh, the sector. It's, uh, slow, but you have market leaders. They are gaining shares. Yeah. And also, uh, out of theory, they have cyclical. Right. Um, so we do still have some sectors are delivering relatively decent growth with a good return. Where does it leave FMV names? Uh, because you mentioned, you know, for you to stand out, you need to have a going global theme. So, you know, just like as an example, Haidi Lun for example, some of the bubble tea names, where do these stack within your year? So that's a great point. Uh, if we compare this cushion, that reverse is uh, stable with MB. These questions are easier to have some going global story. Uh, so why goes uh, even apparels uh, or the toy companies, uh, uh, bubble teas in between. Uh, yeah. We are actually seeing more companies are opening stores in the US, in Korea, in, uh, Asean countries. Uh, but uh, overall PHP companies, probably still more domestic driven and even more pricing driven. So the domestic economy and inflation I think is still the critical, uh, uh, catalyst is, uh, for the FMB companies. Uh, I want to get your call in. That was a big one this week. Um, I mean, your initiating has a buy right now. You are seeing that earnings are going to rebound. And what what are you seeing in terms of the turnaround of this company? I mean, the earnings were pretty bad when they reported here. Yeah. So I guess on the one side, uh, uh, one is uh, it's actually fitting to a thing we like a lot going global. Uh, this is actually the, uh, one of the early names. They prove they are going global, uh, stories. Uh, but of course, I think on the other side, uh, there are a lot of the trade tensions, uh, pressures. And they are not alone. Actually, if we look at the the aggregate overseas revenues, uh, momentum across all the consumer company we cover. Past one year was very tough. You have tariff tariff impact not only on apparel. She's actually on a lot of companies. And there's a wall, uh, inflation pressures. Uh, but uh, if a companies are they really have a strong, uh, advantage strength, uh, supply chain management, quicker response to market. And uh, all we know, we think, oh, well, the Chinese companies are stress is really light on the supply chain management. So for those companies not only only she made she's also a very good example. If you Nancy, they actually can still benefit from the longer term price back to you if you if they are really strong in the supply chain management. Michelle it's great to have you, Michelle Cheng, their co-head of the Asia Consumer research at Goldman Sachs. Uh, we're tracking some more news when it comes to OpenAI. So our team has been talking to their sources. Uh, this is interesting. Right. So open is now expecting to reach or exceed 70 billion in annualized revenue by the end of the year, and their talking is driven largely by growth in its enterprise business. Now, earlier, there was the concern of the 50 billion. So what we're hearing from our sources is that it was roughly 50 billion at the end of September. The figure represents a projection of yearly sales based on a shorter period. So we might just be like a timing thing here, but I think we're trying to get a bit more clarity on whether, you know, where is there actually a gap from initial estimates or not, but they're still expecting and it's targeting that 70 billion and more when it comes to annualized revenue. But it does seem that the more optimistic figure at fine, you have a few more months to get to that number. Uh, there's a condition that's also attached to that in terms of the growth in the enterprise business. So I think the point being was certainly in a much better position now than we were an hour back. But are we simply just back to two days ago? And as far as how good things can actually be. But as you can see, markets of course are you know, repricing is moving target. We're up now 3/10 of 1% on the Nasdaq contract. Lots more ahead. This is the Chinese year. There has been no company in the United States unfortunately that has views this system more than Microsoft. Thanks to an ongoing investigation, we have decided to suspend the Perm program for Microsoft, which means they will no longer be able to apply. Uh, they're the deal. They would no longer be able to take those 81 BES and apply for permanent resident status within the United States of America. That was U.S. Vice President JD Vance singling out Microsoft as the Trump administration suspends major companies on a U.S. worker visa program. That's been a crucial talent pipeline for Silicon Valley and Wall Street. Now, several of the firms targeted were either based in India or have large operations there. For more on this story, let's bring in Swati Pandya, who leads our South Asia economics and government coverage. Uh, big one, this one. Swati. What is likely the impact going to be with, uh, on India specifically? Um, yeah, there has been, uh, big overhang for India's outsourcing industry. And this further adds to the disruption. Uh, over the past few years, Indian tech companies have tried to reduce their reliance on H-1b visas. Uh, this, uh, announcement from JD Vance affects one form of one particular pathway. Uh, and, um, Indian companies have been trying to reduce reliance by hiring more people locally, um, in the US and, uh, automating more work, uh, as well as, uh, just believing that, uh, immigration policies are going to become, uh, stricter and not easier. So, uh, companies have been prepared, have been prepared. And there was a statement from uh, Nasscom, which represents Indian tech firms, uh, overnight. And uh, they did specify that, uh, this affects one form of one particular pathway. And uh, and uh, that, uh, you know, companies while this is not, uh, good outcome companies have been prepared. Yeah. I mean, we're just going to watch what happens with Infosys, Tata, Wipro, the like, uh, at the open today. What does this mean for broader US India relations, Swati. Because, I mean it's been months now that the two nations have been tried to negotiate some sort of deal. Yes, it's been since February. They have been in talks and, uh, just, uh, I think a couple of months ago, India's commerce minister had said and, um, and, and, uh, the US ambassador to India also had said, uh, that 99% of the deal is done and only 1% was remaining. Uh, but now it looks like, uh, the talks have plateaued and a deal is not in the offing. Uh, this is another area of concern for India. Uh, for us, there are concerns about, uh, market access for U.S. companies into India. Uh, for India, immigration is a concern. Uh, so, uh, it just looks like this is another wrinkle in the relationship between India and us and puts another question mark on whether a trade deal would go ahead. So how do you think you, Swati Pandya there, who leads our South Asia economics and government coverage? Okay, let's have a look at markets and where we are about 24 minutes into the cash market session. And of course, the big news just in the last few minutes, uh, was the was it a clarification or maybe more context? I think it's a better way to state that, uh, coming through out of OpenAI based on our reporting. So the 70 billion annualized revenue went effectively. I'm just simplifying this. Uh, can you go back to OpenAI NASDAQ, please? Um, went from 70 b down to 50 B. Uh, and that was what caused this rupture, uh, across tech stocks as we go into the session today. And then now the figure is effectively back to 70 billion with conditions. And of course, there's also a timing adjustment there. But in any case, we are in slightly, slightly better footing right now than we were about an hour back. But the question is, are we any better situation than two days back, which was really where we were with that 70 billion figure South Bank coming through on your screens. We just showed you that. Show it again, please, very quickly. And you have shown me minimax and all of the rest of the open, uh, the, the pure play I knew is across the Chinese markets, which, by the way, have seen substantial losses. We're now seeing a bounce there across those names. Lots more had. This is the China show. Welcome back to the China show. We are seeing sentiment improve this a bit here okay so some news when it came to OpenAI according to our team uh, and their sources about where where the revenue and where they're going to be ending up at the end of the year. Seems like, according to our reporting, they've clarified that they are aiming are still expecting that annualized revenue could hit 70 billion by the end of the year. Right. And that that 50 billion number that people are concerned about a few hours ago may have been something that by September. So there's a few more, I guess months of clarity, but not much has changed. Just a little bit of a clarity, I guess you could say. But that's actually helped with this rebound that we're seeing across Asia tech today and Nasdaq futures. Yeah. Because you know, this time in the last hour we were just going through the reasons and many reasons and consistent reasons why markets were selling off. Right. And I think any anything that is incrementally better is certainly going to help. Plus the fact that we are coming into today oversold territory on many of these Hong Kong benchmarks were up there 2%, as you can see on your screens. Let's flip the page please, on the Nikkei and the topics. And I think also yes the equity markets overnight did not give us any sort of runway to the upside. But perhaps on the macro side of things, things were relatively stable overnight, which was perhaps why, of course, we were doing slightly better, uh, but not slightly worse. Uh, on the Nikkei Csi300 down about one. So we're now down two straight days from that reopened China is down a further 2%. We are, of course shut on Korea and Taiwan. Just in terms of market reaction that we've seen so far on this clarification or context coming through, coming out of our reporting up. There we go. So we're now in the green near session highs last we checked. And some of the big names in Japan SoftBank just a proxy of this story coming up on your screens should also be doing slightly better. There we go a little bit off lows for the day. Still down to about let's call it 4% from the cash markets reopened today. Yeah it could be a happy Friday for those on Wall Street waking up. Um, that maybe there's a little bit better news than than before. For more on how early Asia is doing and what they're watching out for us. Our Asia Equities reporter Wendy Shu, on what the team is focused on today. Yeah, well, as you mentioned, I think what we're seeing right now, a bit of a reversal, right? Yes, there is a bit of a clarity, but what it really just tells us is that people are now paying a very close attention on these numbers, on if these companies can really be profitable or not, or on the sustainability of this whole AI investment. So, um, while overall today we're actually seeing MSCI Asia pretty flat, fluctuating a bit on these news, on the dark side of things I guess is these AI related news. But bright side of things, you're actually seeing topics doing quite well, perhaps also supported by the lower yields. We have low oil also coming back down a little bit. But Hong Kong um, today is rebounding after having um being sold off down about 3% yesterday. Right. But when you look at the broader mainland Chinese market actually still under quite some pressure, we're watching some of the milestones. You have Csi300 about 5% away from bear market. Then you have star 50, also about 8% away from erasing all the gains that we see so far this year. So when it comes to China, still that lack of catalysts, the disappointment around stimulus and of course, more restrictions when it comes to some of these optical names are still quite concerning for investors. I don't mean to put you on the spot here. So you mentioned Asia Pacific. We're up to 20% year to date. Yes. What does market rest look like though? Well, it's actually looking pretty bad because you're talking about the broader MSCI Asia up about 20%. But when you look at the equal weight actually just up about 5%. So it goes to show how, um, these AI winners, especially the ones in Taiwan, Korea, have actually been doing the heavy lifting. And you can see that the breadth is actually getting worse as global yields continue to rise. We're looking at guess, 77% of companies on the MSCI Asia in bear market right now versus about 60% for the SNP. And you look at the number of percentage of companies trading below 200. Uh average, uh 200 day average. That is also at its lowest level in more than a year. So this is mostly about an earnings story that the higher yields really hurting everything. That is not really showing much of an earnings momentum. And that is also showing up as we saw the yields. Uh U.S. Treasury ten year yields hitting 5% first time I think in September mid September. And ever since then infotech in Asia is pretty much the only sector in the region, while the rest are pretty much still struggling. And the problem with that is that going forward, this might mean that in the high yield environment, any up, it just makes things a bit more vulnerable when it comes to Asia, because any uncertainty when it comes to the AI story that is going to hurt Asia more than S&P 500, for example, we are expecting for third quarter earnings then for the region. Yeah. So obviously we are still seeing pretty strong growth when it comes to Korea and Taiwan, given their exposure to some of these tech names. And China continue to lag, perhaps because of the weakness in consumer and also some of these tech names still not able to show the profitability there. And some of the key sectors that we're really watching out for is, as we mentioned, tech consumers. But actually banks are actually in focus as well. The other day we had the note from JP Morgan saying that the third quarter earnings for some of the Southeast Asian banks, especially the likes of Singaporean banks, might actually come under pressure because how the higher yields are likely going to hurt their capital activity of their clients. So that is another sector we're watching out for. But overall, investors right now really demand more for the further upside of stocks. And we're already seeing that in the early ones in um s seven and I in Fast Retailing Stocks fell after the earnings as well as Samsung Electronics. Yesterday we really saw that investors not impressed by the profit the quarter record profit. And they still want to see the sustainability of AI going forward. Winnie, thank you so much. You can check out Winnie's piece. Uh, no one likes bad breath, right? No no, no. Always it ruins, ruins your day and your thesis. My biggest pet peeve on the shelf investment strategy works. Yeah, you can try that. Would Winnie on Winnie space? Of course. You know, she talks about. She smells great. Yeah, well, sorry. With a t h and a d these. Friday. It's Friday. It is Friday. Brian, can we talk about Euro yuan? Why not? We're not trading at 750. Um, this rare. I mean, amendment's about to give us how many pages? It was several page, nine page statement coming through the PBoC. This rare defense of the currency policy, rejecting claims that the currency is undervalued as trade talks with the EU began and are underway, of course. Let's bring in Matt Miller, who is here with us, of course, to talk us through the statement. And when it came out, well, it came out yesterday as the two sides, EU and China were heading into those trade talks. And it's a nine page document, as you said, that really outlines his thesis on its currency policy. And the EU has been accusing China of undervaluing the UN to boost its export competitiveness. And China says, well, it doesn't have the need nor the intention to do so. Right. It's saying that its exports strength is coming from its industrial policy and the intense competition in China that really shop in some of these companies. And it's saying that the EU well, it has to address some of its own domestic structural problems. Right. If its savings rates are not high enough, its fiscal deficit are too high. They really need to rein that in. Then they need to think about if they're under investing in infrastructure and digitization and innovation. But those domestic problems. Shouldn't be blamed on China. And on the flip side. Countries with trade surpluses like China need to also do their part to address their own macro imbalances, which is the domestic consumption problem, the domestic investment problem. And China is already very focused on trying to boost domestic, uh, consumption there. Okay. So what's what's the argument that they're really laying out here when it comes to defending the currency policy now? So, well, they're saying that their currency policy is really not about having an implicit target of where the yuan should be. It's really about managing stability and managing extreme volatility. And that's why the fix is there to provide that guidance for market expectations, right, to prevent, uh, excessive market stress or that self-reinforcing cycle of depreciation, especially in extreme events like during the tariff war in April or during the Covid 19 pandemic, for example. So this is China's argument. And it's also saying because the FX market has grown so much, it is impossible for any single central bank to really dictate the underlying trend of a currency. Just look at what the BOJ has done with the yen. So they are saying that, look, everything is really dictated by market forces and the PBoC is just there to guide expectations. All right. Remain low. Thank you. Our correspondent there. Um yeah it almost feels I would say like like almost like April Fool's Day. Don't pay attention to the first hour of of show everything we recorded there. There's a lot of clarifications that are going on back to our source base reporting. Right. So we're hearing once again about firmus. So according to people familiar with the matter earlier reported that they were going to be pulling this IPO in Australia. That might still be the case. But in terms of what they go private and seek private funding or where they look other venues, right. Apparently they're also looking at weighing out a U.S. listing Now in the longer term after the collapse of that IPO in Australia, and they really were not able to muster that much investor support. So that is what we're hearing here right now, that they're not going to proceed with the Australian listing, but they have their sights set in the US. And I think this simply just lays out the options that they have on the table. One of which, of course, was looking at private markets. Short term public markets also longer term and perhaps public markets would be the U.S. there. So I mean, not as if we're correcting ourselves that just broadening out the options here at the company. What is clear, though, is no going on. That's where I had this is the Chinese. All right. Our big take here today is really talking about China's push when it comes to the green energy space, when it comes to renewable energy. That accounted for more than 60% of China's power capacity last year. But official figures suggest about 9% of wind and solar power was wasted in the first half of this year because the grid couldn't absorb it at all. And now the plan is that China plans to spend trillions of dollars, then upgrading the power network and the speed there to turn the surplus energy into an eye advantage. And that is the focus of today's big take. And let's bring in Denver to our China Energy reporter to talk us through the big plan. Dan. Um, what where are they going to spend all this money? Yeah. So right now in China, we have two things that are happening, right? The the economy is getting more and more electrified. You look at like EVs, advanced manufacturing data centers. Now about 30% of all energy use in China's electricity. And at the same time, we're building out all this power generating capacity solar, wind, nuclear, hydro and still also still quite a bit of coal. Um, and then right in the middle of all of that, you have the grid, the system for delivering that electricity from the generators to the users. And that's right now where the bottleneck is. Uh, we saw in the first half of this year at least 9% of all the the renewable power, wind and solar, uh, not be able to, to be generated because, you know, whether because of, uh, long term coal contracts or because of, uh, congestion on the grids, there just wasn't enough room for it to, to safely put it out there, though there would be risks of, uh, overheating the grid and potentially leading to blackouts and, uh, equipment failures. And so right now, China's big, uh, problem, their big dilemma is solving that issue. Because once they do, then they have this pathway to really push this economy toward, you know, growth, uh, in a clean way that they haven't been able to do before. And as the headline suggests, in order to win in this, I race, they really have to get the equation right. What more needs to be done then down for a smoother transition into this whole green energy push, and of course, to be dominant in the eye space. Yeah. You know, right now China's big advantage in Asia is electricity availability. You know the US has better chips, but China has more power and they can build power out rapidly. And so, you know, they can build data centers and not have to worry about, you know, power rates and power prices going up for residents. That's a big problem in the US right now. But for China to be able to take full advantage, that they need to make sure all those wind and solar plants are putting in can get that power onto the grid. And so they're they're looking at spending trillions of dollars building long distance power lines, building battery plants, building pumped hydro facilities on mountains to be able to move power across distances and to be able to store power across hours and even days. Um, and they're also looking at reforms of their power market because their, their grid has basically been run on a system built for coal power plants that can just kind of burn whenever they want to. Now the power comes whenever the sun or the wind wants it to. And so they're trying to make a system that's more flexible. Uh, emulating systems you see in places like California or Europe where, you know, more nimble market moves, uh, dictate what kind of power it goes out when and where. Help us understand and what the power mix, if at all, that changes what that could evolve into looking like. Uh, if once we're on the other side of this project. Yeah. You know, the we've seen every year more and more uptake of wind and solar power, but we're hitting a point now where right now we're at about 25% wind and solar for the first half of this year. That's one out of every four electrons hitting the grid or coming at the wind of clouds or breezes. Uh, and that's causing a problem. If they can solve this bottleneck, if they can, you know, allow for, you know, more of that energy to be stored and then deployed later in the evening, they can keep growing that. And that will reduce coal further and further. Right now, coal is, uh, under 50% of power generation in the first half of this year, the first time that's ever happened in China. The more they can make the grid flexible and get these cleaner electrons on to it, the more they can reduce that coal. And and, you know, that would allow them to, you know, keep, uh, basically limit their emissions, start reducing their emissions, and also provide a more of a secure form of energy because you don't have to rely on, you know, extracting minerals from the ground. And you don't have to rely on expensive oil and gas imports. So that's what they're aiming for. Uh, how long it'll take them to get there is the big question right now. Dan, thank you so much, Dan Murtaugh. Are China Oil, gas and renewables reporter. You can check out, of course, that piece and the full story on the Bloomberg terminal. And also on rt.com. All right. Um, just ahead, we will be back live at the Milken Asia Summit with the NASDAQ CEO, Dina Friedman. So lots and lots to ask today. What's going on? Right. Upcoming IPO is what's happening, what's not happening. I trade sentiment and everything in between. If we had this conversation this time in the last hour, perhaps more negative tone use features coming up on your screens, given all the breaking news in the last 30 minutes. Now on slightly stronger footing. Plenty more ahead. This is the China show. Well, because casinos have been facing a deepening slowdown, with gaming revenue falling for the fourth straight month in September as China tightened scrutiny of capital outflows. But the Las Vegas Sands CEO, Patrick Dumont, told us that he remains bullish on the region amid this trade truce between the U.S. and China. The key thing is the two largest economies in the world will only benefit by by finding better ways to work together and invest with each other to create mutually beneficial outcomes. The economies of both countries can benefit from better relations, more investment, better exchange. And so in the long run, hopefully that will continue and we'll be the beneficiaries of that, because tourism is a great industry and it brings people together. And so for us, investing in Macao is something that we look forward to do. We're very excited about our non-gaming investments here. We feel in the long run, they'll create a lot of value for shareholders. Create unique experiences that create repeat visitation and bring more visitors from farther away into Macao. But then also in Singapore. We think that's an extraordinary market. You know, we're sitting here today in a beautiful hotel room in Macau. We're very excited about the renovations we're doing here in the Venetian. Uh, but in Singapore, we just broke ground last July on a brand new resort. And that's going to be really special because that has a 15,000 seat live performance venue that we think will be the most technologically advanced in Asia. We're very excited about it. Uh, we think the hotel will our goal is to be the best hotel in the world and have very unique experiences there for for guests and for the for the public in Singapore. And that's another thing that for us will differentiate us in the long run. I want to talk about a couple of other trends around the world that would potentially impact, uh, the gaming industry. One is the prediction markets. What are your thoughts on that? I know, uh, in the past, Las Vegas, Sands has stayed away from the digital side and really concentrated on the physical side of gaming and the intricate, integrated resorts. But we're seeing the likes of Poly Market open up or assign a representative official in places like Japan. So it is spreading definitely in the United States, but it's starting to make its way into Asia, which is your core place of business. What do you think about prediction markets? What do they do to your product, and is it something you'd want to get into? So from the standpoint of sports, I think it's something that increases engagement. I think people enjoy the idea of wagering on sports. It seems to be something that's very popular with young people today. Uh, in, in the U.S., uh, and you can see the success of both Kelsey and Polly markets, uh, based on this thesis. Uh, I think in the long run, that's something that will that will ultimately be settled. I don't have a view on that, but I will tell you that we don't really offer the same experience that they do. We're very much, uh, something that's related to people. People to people. Interaction. Right. It's about the experience that you get life. Right. You show up in our building, you have a great dinner. You stay in a wonderful hotel room, you have live entertainment that you see. You're here with your friends. It's a completely different experience than what you would get looking at your phone, uh, you know, placing prediction market bets, it's just a different experience. It's a different product. The house does pretty well in the prediction markets. We're looking at long shot bets. Bloomberg had a great article today in fact about I think 98% of these really long shot, um, bets placed on public marketing. Kelsey, uh, go to the house. I mean, whether Jesus Christ is going to be resurrected this year, these kinds of things, people are betting on all kinds of things. I mean, it really favors the house, doesn't it? It sounds like an interesting even Goldman Sachs. Uh, uh, talk to me, David Solomon about he's intrigued by the markets of the world. Yeah. I think that's not really a business that we're in. Uh, I think for us, I really think about experiences that people have life. Yeah. And so that's really what I'm focused on. But uh, in terms of, uh, you know, how those businesses do, I guess we'll have to see. How about I what do you how are you using it and what can it be used for? I think it's transforming the way we do business. Uh, it helps us in a lot of different ways. So I think first and foremost, uh, we're using it now, the way we think about our customer interactions. There are a lot of things you can do with business intelligence that you couldn't do so easily and do it efficiently today, that make you smarter about the way you choose to, to interact with your customer. Particularly with us. Uh, you know, in our business, we do a lot of things with reinvestment. The way we sell it offers the way we we we look at different things and the way we think about the total, uh, customer experience. So it's very useful there. And it's early days for us, but we're starting to see some very interesting things from it, and we're very happy we're pursuing it. I think there's the the more traditional, which is like, let's call it the, uh, Microsoft co-pilot route. And I think that's something that makes people more efficient. It's an efficiency tool. Like you remember when PowerPoint came out? Right. That was something that made everyone more efficient. I think this is another a leap of efficiency through that. And then I think the third leg is really development. Uh, in our industry, proprietary development is is fairly typical for certain things, marketing applications, stuff that you do internally. And it just makes it much faster, much cleaner. And uh, really, to be fair. Um, easier to change and adapt. And so I think for speed of business, it's been very useful so far. I mean, it's early days, right? You know, when you think about when these tools first became available. People got trained on the tools and learned how to use them. And what we're able to do with them now, it feels like there's a bright future ahead, so we're really excited about it. For integrated resort, you need people. You need groupies. You need. We are capital business. Right. So what does it mean for human capital elimination potentially or reduction going forward? That's not really how we look at it. I think we look at it from the standpoint of making us better at what we do. Right. We still have to train people to interact and to provide great service. You know, we always say that in these buildings they don't run themselves. You need people who really care about the customer, who are focused on service and who show up every day and, and are consistent and really care. And that's not going to be replaced by that's going to be enhanced by. So we can do it better. There we go. That was Patrick Dumont. They're the Las Vegas Sands CEO with Steve, our chief North Asia correspondent. And in the cab. Okay. That's a brief look at markets right now as we go into the we are headed into the Japanese lunch break. By the way, if you don't have Korea and Taiwan, uh, both markets are shut today. Uh, fortunately, most of the market focus has really been, uh, the Nasdaq. Were it not for the closure, we perhaps would be seeing some reaction there to the news earlier on or clarification or context based on our reporting that and as you can see near session highs now that open I expect 70 billion up from 50 be with some conditions and some maybe some changes to the, uh, the timeline there. 70 billion by the end of 2026, in terms of annualized revenue. Plenty more ahead, including a conversation with the Nasdaq. Boss, this is Bloomberg. Yeah. Things turning around to the positive side of things here. I look at Nasdaq futures and what they're doing right now. We're actually punching higher and coming back after there was a bit of more clarity from, you know, our sources, whether this annualized revenue of 70 billion could be reached by the end of 2026, according to our sources. Yes. So that maybe helps a little bit in terms of sentiment. And then there was, of course, the news on firmus in the last couple of minutes, too. I mean, bad for Australia, but maybe good for the U.S., maybe good for the U.S., maybe good for private markets. And I think the understanding there is that, well, the big news was, of course, they are scrapping that plan, and then they're perhaps weighing other options, but it now seems that they have other options on the table beyond simply just scrapping the plan and looking at private markets. In fact, just on that story and why we are looking at Nasdaq futures up 4/10 of 1%. The sources are telling us that firms now will be exploring plans to list in the US in the longer term. That's after, of course, this one we alluded to alluded to just now, this IPO in Oz failed to muster adequate investor support. Now, the shelving of that debut in Oz is the latest delay in the tech related IPOs. Due to all these others roller coaster ride across markets, you have rising yields on the macro side and this debate of course over AI safety. Yeah. So OpenAI said they were pushing it back to maybe next year or also has postponed. There is a safety that all happened in the last couple of weeks or so. Uh, there so certainly a lot to talk to with our next guest who is at Milken. And she joins now with our very own Haslinda Amin. He has. Hey there. We've been talking about Nasdaq. Of course, Adena Friedman is with me right now. She is chair and CEO at Nasdaq. A good to have you with us. My colleagues were just talking about how, you know, some companies like OpenAI are delaying their IPOs. How is it looking in terms of IPO pipeline for you? Well, the IPO pipeline is very strong. And we've had constructive conversations with companies all year in terms of tapping the public markets. But of course, they also want to make sure that they're coming into a market where investors are ready to receive them and are ready to take that risk with them. And so that timing is always something that is fluid with the market environment. And also, I think it's great that a lot of companies now do these test the water meetings with investors to understand are they ready? Are the companies, are the investors ready to to take that risk with them. And sometimes that means that they might wait a little longer. And I think that's great. You know, you want to make sure that when you go public, you feel you you feel confident and the investors feel confident in what you're going to deliver. How do you encourage them to come to market? Because they are concerned about the IPO environment. So they say, well, it's important to recognize that when you decide to change your ownership and enable 8 billion people to be your owners, it is a big decision and there is also new responsibilities that come with that. But we have worked very closely with the SEC to try to make sure what are this, what are those obligations that are really necessary to make sure investors have the ability to assess the companies risks and opportunities fully, and what might not be as necessary in terms of, you know, some obligations that are probably ancillary or not important in a modern environment. So we've been working very closely with the SEC to make IPOs great again, make it less owners to be public. But there is a big it's a big decision. So let's make sure that the companies feel great and confident when they come into the market. You talk about the pipeline. There are potentially huge IPOs coming on board like anthropic. Are you optimistic we will see such mega I oppose five this year. I can't I can't comment on specific, I suppose, but I do. It is very exciting. I mean, the I build out and the I, the potential of I continues to be a huge driver of investor interest and investor demand. We also think that is obviously the most consequential technology to face the global economy in a generation. So being in the public markets and having that capital available to these great innovators, we're very excited to have them when it's time for them to come out. So not not to concern that the likes of aura have delayed the IPO, right? Yeah. So every company has its own story in its own situation. And I would say that, you know, aura and the the decision they made is their own decision. But we look at more, you know, global trends as to we've seen more companies coming into the markets this year. We're seeing more health care companies coming in. Anything related to the I build out, certain consumer companies are having a great experience too. So it really just every company is its own story. You know, that's been a lot of conversation about how there's been a reallocation of capital from the west to the east, so capital basically gravitating towards this part of the region. You're saying that your data doesn't suggest that? I mean, I would say that our data suggests that the rest of it. What are the trends and the ownership of U.S. equities over the past decade? And what we've seen is the rest of world ownership of U.S. equities has gone from 15% to 19% in the last decade. There are a lot of other trends in terms of a real growth in the in the individual direct ownership of retail, ownership of equities. Also the move towards passive and and making it so that that's a bigger, bigger part of the ecosystem as well. So there are a lot of shifts. But one thing we're really excited about is seeing the rest of the world so interested in coming into the U.S. markets. And that's defining part of our strategy in terms of moving towards always on markets and making our markets more accessible to to the global economy. Let's pick up on that. Making more accessible. You're talking about 24 over seven basically. How will that change? Trading? I mean, some people are suggesting that, you know, we can trading the volume will be thin and retail investors might be at risk because you're going to see extreme movements. Right. So first of all we're going to 23 five trading in U.S. equities. We're not taking all the way to 24 seven. Might your first step. Well I would say let's take the first step first and understand how how it's received. Make sure that we do in fact to grow grow the the the accessibility of markets. So let's start with making sure that what we do in our first step, which is launching on December 6th, is to have our markets open 23 hours a day, five days a week. That means that we'll have full market infrastructure available, consolidated tape. So you'll have total transparency of the orders and trades are happening. We have the guardrails put in with limit up limit down. And we also have market watch market ops, everything open and available. But what it also means is we will still have a market open at 930 and a market closed at 4:00 for the U.S. session, and then after that, the global session will begin. Um, so it's an interesting, um, and novel, uh, contract they're trading does already occur 24 five today in U.S. equities, but all but completely in the dark. So let's bring it into the light. Let's put it into core market infrastructure and make the markets more accessible to more investors around the world. So we're very excited about that. Moving to 24 seven is a completely I mean, that's a very, very different proposition in terms of kind of creating two open markets. And we do think that there's a there's a there's a, you know, a trend in that direction. But let's take each step first and make sure that we're successful. Doesn't make sense to go 24 seven. Does Wall Street want to go sleepless I mean is there any demand there? Actually, there are a lot of instruments around the world that already trade 24 seven. So you see that. But you're right, the weekends, there's not the same liquidity characteristics on the weekends and there are during the week. So we want to make sure that we do create the liquidity environment. We have the intelligence that allows people to make informed decisions and risk management. So we have a whole suite of fintech solutions that help manage risk in the capital markets ecosystem. As you're managing these types of changes in the ecosystem, and you also want to make sure that there's integrity across the system as you're moving towards always on. So this is a huge shift. That's a huge shift in market infrastructure. 2435 is a very doable thing. There are a lot of other futures and other asset classes already. Free trade 24 five. So we feel like we're making the right first step. And let's see how we do tokenization. That's a big theme right now. And recently AMC took issue with Robinhood for tokenizing its shares. And it is up in arms. The SEC has responded by saying you have a 30 day period to to actually uptown. What do you make? Yeah. So there's different ways to think about tokenization. And so let's make sure we break them all down. So the first one is basically, um, a retail brokerage firm will buy up a bunch of stock or borrow the stock, and then they'll create a derivative instrument on that stock and claim that it's a tokenized share, but it's actually a derivative of the share. It may not even be one for one. Although they can they can they can make sure it is you. Also, they don't own any governance rights over the equity. So they're really buying a derivative, a financial interest, but not a true ownership interest in the company. And that's what Robinhood is talking about. And where I think, you know, the issuers should have a say in how their stock is manifested in the market consensus key. And we would say consent. So the second one is this innovation exemption that the SEC has put forth where they are trying to say you actually have to make sure it's a true equity interest that's being conveyed. Let's do it in a sandbox environment, in a pilot with limits, hard limits on how much volume can be executed in these can use, but they are giving the issuers negative content rights. Very important. The issuers can opt out of putting their stock into these experimental venues. We think that's very important. Saying then into how do we actually tokenize the underlying equity in the mainstream markets? How do we change market infrastructure to allow for the free flow of capital, a free flow of stocks, similar to how we're allowing the free flow of money for a tokenized form? That's what we're working on. We're working very closely with the industry, DTCC and other infrastructure providers for partnering with Kraken to crude this out into a retail distribution network. And that's, I think, where the issuers will have a right. They also will have benefits that come from a tokenized share. And we're really excited to share those benefits with the issuer community. Might tokenization lead to fragmentation? Is that concern? So that's where if you if you have a derivative instrument or you put them into these, into these smaller venues where you have kind of a trapped ecosystem, there's no transparency of the trading to the rest of the world, because you can only see the transparency of trading in that ecosystem. In some cases, you might actually be hiding off the stock and creating a derivative structure on that. Then yes that's fragmentation. If you want to say, well, let's actually change the core infrastructure of global equity markets. Let's do that together. Let's make sure that we keep the liquidity centered in the center. Let's make sure we do give assurance benefits to having better communications. But there is there investors. That's what we're focused on because we agree that there's a real risk of fragmentation if we don't do it right. Adina, one final theme is I. Of course you are embracing it in a big way. You're big on innovation, and we know that you are trying to save about 00 million in terms of efficiencies. How is it coming along? So we're doing quite well and we're very excited about all the effort. I'm sorry. Well, I would just say that we're we're well underway in our program and we're finding, you know, a lot of opportunities for us to what I would say build better, faster so that we can use the we we've been, um, we're right in the process of rolling out a suite of harnesses that will automate full end to end product development lifecycle. Coding is just one part of building a product. And so what we're doing is of course, we have all the coding components in the hands of our developers, but we're also building these harnesses to automate the full the full product development cycle. And that is going to make it so we can build better, faster and be more efficient in the process. That's a huge program for us, and we're doing other major investments in other elements of our organization to drive that efficiency. Adina, we thank you so much for your time today. It's been such a pleasure. Adina Friedman, chair and CEO and NASDAQ David, heading back to you from a very noisy Milken event. What was that? That's okay. I can hear you clearly. Just playing a game has fantastic. We'll have more, of course, there on the ground, because Linda and the team, they're coming up here on show is there in the meantime or in the interim, as they say, ETF IQ Asia, let's say joins us in a couple of minutes here to talk us through uh why passive ETFs have overtaken active strategies in the onshore market. What's driving that and what could change that if at all? That's coming up next. This is the China show. All. Right. Welcome back. Uh you're watching Bloomberg. It's ETF IQ Asia. And I think the interesting thematic from a news perspective right now is obviously on an index level, there have been better places, uh, to park your money. Case in point, here in Hong Kong, the Hang Seng tech index while up today we're down 40% from the peak. Now, when you look at this from inception specifically, I promise I'm getting somewhere with this. Um, and of course, one of the most popular ETFs here in Hong Kong is the want to copy the tracks? Of course, the index itself. So since inception, we're down 40% in price. We're down slightly less total return annualized. That's about -7%. Uh, the ETF on the right side of your screen just underscores the challenge, of course. Uh, but then again, how does this change the arithmetic for investors onshore. Offshore passive against active. Yeah. Let's get more now with Citic, CLSA A-share strategist Jihye Lee Zhao, it's great to have you. Uh, it's really interesting, the structural shift that you've been laying out right where it when it comes to the Asian market, Chinese investors are really tilting more towards these sort of passive ETFs than actually active strategies. Tell us what's really driving this shift right now. Well, I think it's largely because, you know, actually you five, five years ago during the rally, starting from 2019 to hundred and one, at that time, the active funds were much more popular. So during that two years, the annual new issuance of active uh funds could be totaled as 1.2 trillion RMB per year, but not for this round. The rest only from 2020 and 2024 till now. I think it's larger because, you know, the experience of holding active funds in this round of rally dozen sets is not that satisfying when comparing to, uh, passive ETFs, especially thematic ETFs and sector ETFs, because we have a really k shaped market condition for this round of rally. If you don't own a piece of stocks or ETFs that have exposure to tech, you won't have very much good performance. So that is why I think the leaning more towards the ETFs now. So right now I mean there clearly is a role for active anyway in almost any market. Right. And the conditions might not just be perfect at this point in time. What do you think will be the initial take up and appetite for active ETFs then as we as they become slowly introduced into the market? Well, I would say that first we have to admit that China is not a mature market, is still, in our sense is not efficient, as efficient as the US market or EU market because, you know, clearly the stocks could be easily undervalued, overvalued, and there are so many noises, which of course this is a fertile ground for active management. But on the other side the market is too volatile because we the retail participation could be as high as 60% in terms of trading volumes. So that would say that you need to diversify your portfolio rather than just concentrate your exposure to single 1 or 2 stocks that that you believe have long term. Good view. Okay. So that is why these, uh, basket, uh, ETFs I think uh, we and active managed a condition should work in China market. Yeah. So how soon do you think China could launch these activities? Uh, we don't have the exact idea, but usually when they get preview from the regulators, this should be launched or initiated within. Could be one week or three months. So probably this year. Yeah. And how fierce do you think competition is going to be? Um, so far there's only like 18 products. Uh, I think I heard, uh, they have, uh, for the application in July after the chairman of CSC announced in June. So, uh, so this, uh, so this is just the first round of new products, and there could be more because, you know, all these, um, short ETF providers, they're very competitive, which is why the management fees of ETFs are lowered significantly in the past few years. Uh, I would say, uh, there could be another round of a fierce competition, but I think the the condition would be better than pure passive ETFs, because you still need to look at how good their active management is or not. Now I was about to say. So if it's if it's price or tracking error, you know, in terms of the sophistication of investors. Yeah. What, what what would be the top sort of selection point. In other words, what's what would swing one investor to pick between these 18. What matters most you think? Uh, I think it depends on the professionalism of those ETF providers. For example, I mean, I still even if, you know, we're talking about passive ETFs, like I said, they attract a lot of inflows in the past two years. Uh, our estimation is that in the past two years, those sectors in the thematic ETFs have, uh, received inflows of 800 billion RMB. Okay. That's a very huge amount. But when we talk to, you know, some retail investors, um, they still have concerns. They still have questions to pick the right one. So probably if it's an active managed ETFs and it's so transparent because you need to disclose this uh stocks on a daily basis. And also the fees is relative lower compared to pure active funds. I think that's the kind of the competitiveness when when when to compare it to the pure active funds and also this pure act, uh, passive ETFs. One thing that we've been tracking is maybe some of the southbound flows in ETF connect It doesn't seem like things have really picked up in terms of demand. Mhm. Why do you think that is. It's I think largely because you know actually last year if you look at the southbound flows it's is quite good. Okay. The total southbound flow reached the .3 trillion. And I don't have the exact number of those southbound to connect to ETFs, but I think the number should be around 100 billions. But for these years, largely because, you know, there's a huge divergence between the market itself, the China Asia outperformed, especially in the first half, uh, versus Hong Kong market. So I think it lost that kind of attraction. And um, from from the onshore investors perspective. And also, you know, uh, not a typical holder of those southbound ETFs is actually onshore, some onshore institutions. Uh, I think they have been cutting down their exposure to Hong Kong market as well this year. If you look at the onshore active funds, they have lower their exposure to Hong Kong market from over 19% last year to just the 10% this year as of second quarter. Yeah, and where have they reallocated the Asia because of the Asian markets? They're not elsewhere because, you know, for these active funds you know some insurance. They can only invest A and H. Right. So uh, for Asia, uh, if we were just to look at it first half, you know, there's a huge rally around the AI infra. We we've talk about the, uh, domestic SMEs. So Asia's their priority this year. Well, it's great to have you guys Charlie there as Asia strategist at Citic CLSA. Of course you could tune in to our ETF IQ Asia every Friday right here on the China show. We bring you more analysis and conversations with top market players and newsmakers. This is Bloomberg. Okay. Uh, really? How much an hour can change things? Uh, 2% up to the upside. Uh, Xiaomi is one of the best performers right now. That's coming up on your screens. We're seeing, uh, and I think, interestingly enough, this divergence is, well, between A and market. So Y shall be jumping right now. So this is after they said that it's Sky Nomad model recorded more than 70,000 units in sales in a month following that launch. So yes, that's why you are seeing the EV maker jump here. And the best performer when it comes to agency as well. So certainly that's one thing to watch US futures continue to punch higher here this morning. And what a whipsaw we saw in terms of news flow here this morning. Whether it was the open I annualized revenue projections all the way to Fernet firmus and what they're going to do. Where are they going to list. Uh, but yes. No go for Australia that IPO, but looks like they could be a U.S. listing as well. So it was a one of a big turn of events, I guess you could say um, for markets in some ways, and maybe it looks like we could still have a pretty happy Friday for Wall Street later on today. Oh, yeah. What else is going on? Yeah. Dave. Well, you're leaving me. Well, there's there's I mean, let's go. There's like there's like the F1 Grand Prix in Singapore, I believe. And then there's, there's the NBA games in Macao. Then we got what Bloomberg New Economy for. Um yeah. That begins next week. And it'll be in India for the first time. I would be heading there. Sheriffs heading their houses heading there. Francine Lacqua is going to be there. I mean, it's going to be a stellar lineup of not just us on Bloomberg TV, but guest speakers as well. Tune in to Bloomberg TV and our other platforms to hear from key policy makers, including India's Finance Minister Nirmala Sitharaman, the Eurogroup president and Fed Governor Chris Waller, that are going to be speaking as well. We'll also have some top executives from companies like Blackstone, BWC, Hyundai and Google DeepMind. So certainly lots to talk about. Very, very exciting. Ah, you guys can talk about I think it's really cool. So what do you think you got the Google DeepMind chief AI readiness officer there too, right. So certainly there's going to be a lot of topics about that. I think also, just the whole theme of moving to India is quite significant for us itself to talk really about, put the spotlight on India and all the opportunities is there. And my first time heading up there. So I'm very excited. There we go. So that most of the team is going to be elsewhere. India is of course a very big one. Bangkok, by the way. It's also very big. Next week is IMF and IMF meetings. Next week in April is going to be there for us, of course. So that leaves me. I'm going to be furniture here, but I'll be holding holding down the fourth and hopefully not a lot of news space for these really good conversations to take off. That's it for us here. Happy Friday to all of you. Will see you all next week.