China Tightens Travel Rules for Families of AI Talent

9AM in Shanghai. Shenzhen, and here in Hong Kong. You're watching the China show. I'm Yvonne Man with David Ingles. Good morning. We're counting down to the open of markets in Greater China. Let's get to your top stories today. Asian bonds are tracking really bad and extended losses in U.S. treasuries, with a standoff between U.S. and Iran keeping oil prices. As you can see, elevated tech stocks under pressure as air giants announced further steps to slow development. Sources say China is tightening travel rules to include the families of key people working in AI and chips, as it seeks to keep top mines from leaving for competitors. Meanwhile, Beijing signals fresh policy measures to stabilize the property market, create jobs and boost domestic consumption and fast fashion retailer XI, and warns of further uncertainty after profits plunged in the first half on higher costs and weak demand. Yeah, it is almost like a triple whammy of macro risk out there, right? Higher yields, higher oil, higher dollars. So certainly we are see risk assets take a bit of a backseat. China though certainly had a pretty bad day yesterday two days. Yeah it doesn't help because China has the additional dynamic at work where you're stuck between two holidays. And of course you have this liquidity squeeze. And of course we're going into a very long one as pertains to the mainland markets in a couple of days. So you are getting that on top of everything else that you mentioned of higher rates. Right? Which obviously hits is politics agnostic when you look at how that works across these markets. So we're down 4/10 of 1%. Obviously there's the gold story because it's a non yielding asset in higher rates. But yes it's it's a terrible time to be long duration at this point. Yeah. Unless you're Jim Bianco who is pulling out some first time in six years is going bullish when it comes to treasuries. Right. He says, look, this is not a sign of economic distress that we're seeing in the U.S. economy. This is more about coming back to normal levels of fact that we are targeting the 5% for the two year yield, or the entire yield curve above that level, does show that there is value that is emerging now in the Treasury market. And I think when you look at some of these milestones that we are likely to hit on a five year and very close also on the 10 to 30 year yield, what you don't see, not too obvious, is really a curve that is flattening quite substantially and very quickly. And at some point you will get an inverted curve, which we all know of course beckons, perhaps a year slower than that. Well, that also goes into the air story in as far as the slowdown that maybe they are talking about there, with Nvidia and them using perhaps more of their money to buy back shares and then expand otherwise on your screens is interesting because yields are pulling lower. The call from cities interesting on the Chinese 30 year yield. So they're saying that's the opposite. Trade to everything that's macro out there. Weaker growth by Chinese 30 year bonds is what they're saying there. Yeah. And certainly you add you know the whole eye element with Nvidia. Yes. The massive monster buyback. You pair that with the sort of AI software security tools that they put out to build as well, does show that maybe the security side of things is really kind of perking up. Once again, you've OpenAI, according to some reports, saying that they are also slowing down the launch of some of their new models here. So what does that mean about pacing the frontier? That should in some ways be detrimental to the chip sector. But no, it's not. At least today you're seeing a bit of recovery in Korea, of course. I mean, there's a separate story which confused the markets, uh, for more than a moment, because dropping the anthropic story out of Reuters and really the importance of having an s. So, uh, anthropic. Well, well, it's a big figure nonetheless of half a trillion. Now, whether they spend it over a year's time, obviously, or over several years just underscores they are still in growth. But that might be going, uh, a lot in as far as offsetting some of the headwinds. It's also worth pointing out Korea was hammered silly yesterday. I think Taiwan is reopening today. So there's also that when you look at some of these markets. Yeah. So that's one thing to watch here as well. We talk about commodities getting hit. It's not just the gold story I think copper certainly took a hit here as well. But Deutsche Bank has a pretty interesting call right 50% upside over the next two for the next six months, six months or so, 22,000. Just given the all the supply constraints in the like there. So certainly that is one thing to watch. So yeah, let's let's stick to really the anthropic story, what we heard from them very overnight. And the safety issues when it comes to AI. And bring in Avril Hong. She joins us now with the latest uh April just talk us through what we learned about the anthropic sort of story based on reports around this whole IPO prospectus. Yeah, we're getting a snapshot of anthropic finances, learning more about this company in terms of its rapid growth in the past year, and how its revenue jumped 12 fold to about $4.6 billion. Net loss was about $42 billion, but also its massive spending plans in the coming years. Of about $520 billion on cloud and computing infrastructure. So essentially you get this glimpse of a company and AI leader that's grown very rapidly, but this is coming at a huge cost. It's hard to bet big and will likely continue betting big on AI and its transformative impact on the global economy. Of course, all this coming ahead of its planned IPO, which Reuters has previously reported as potentially coming after the U.S. midterms. That could value it at about $2 trillion. It will talk to us about the other obviously related story here. You know, they we've been talking about this for weeks. The companies have been warning of, you know, the threat that technology poses to existential risks to humanity. And they just come out with a very simple solution. We have a software fix for that one. What's the solution here? Yeah, absolutely. So this is a double layer security system that Nvidia has debuted and it's open source and runs on its hardware. And essentially here the idea is not just monitors, but also can kind of stop these agents in real time. And this is if they break the rules. And it's worth noting, Nvidia has said that this could have prevented the hugging face incident back in July. It's not clear whether OpenAI out anthropic what sort of plans they have to use this system. But as you know, Jensen Huang has been downplaying the risk from I kind of running out of human control, and he's couched this as more of an engineering issue rather than something that requires more regulation. So here is that solution, I suppose, from Nvidia, in the sense that it is allowing this development of artificial intelligence while also being able to prevent breaches. Yeah, it's almost perfect timing, April, that we're talking about this whole topic, because OpenAI has come out with some latest lines here, uh, when it comes to, in particular, what they've been doing with the Australia. Government agencies. This was after of course that cyber security breach there. Um, they're saying that they're going to establish an Australian task force on ie cyber risk, working closely with government agencies. Right now. They've launched probes into these activities in Australia. Uh, they also will work with Australia on cyber behaviour disclosures to establish that task force with independent expertise. So certainly that's one thing to watch very closely here. Wasn't just this the cyber security breach that we talked about when it came to Australia? Uh, and some of the government agencies there, but also when it came to hugging face. Right. And I think that's why on video said, look, they're tools could, could have probably prevented such an incident. Although OpenAI itself has come through in responding to these safety concerns, saying that they're going to at least scrap the model release. Tell us more. Yeah, I mean, OpenAI, as you say, has had a slew of these incidents, not just hugging face the issues with the Australian Government website, but also more recently we're learning that it's had to scrap and model release. That was planned for October and this was the GPT t 6.1 Astra. Basically, its researchers found that there were security risks during the testing phase, and here it's had to kind of pull the plug on things, given how this model is said to have shown more deception than predecessor models, in that it was not accurately disclosing some of the times it had or had not undertaken. And this is, of course, as I see it, aside from the hugging face incident in July. So OpenAI is said to have paused as well. The training on a model last week where we actually saw it, disclosing how one of its models actually escaped a sandbox and it access the web. So this most recent cancellation by OpenAI is seen as the clearest sign of how a genetic misbehavior, if we can call it that, is pacing the frontier. Okay. Yeah. Uh, April, thank you so much. Uh, with all the latest on. This won't be the last time we're talking about this, for sure. Uh, let's talk about the Chinese angle here. So, Bloomberg and this is the latest here on this, uh, latest rule that's really become a talking point recently. Uh, so Bloomberg's been told that China has expanded the overseas travel restrictions for top AI professionals to include, uh, families of key personnel. Let's bring in our China correspondent to tell us about the latest rules to background. Of course, context is important. And of course the intention behind this. Yeah, I mean, there has been a lot of debate around AI safety, but for China, the concern really is still on national security, right? That's why, according to sources, the government is looking at imposing these travel bans on key executives as well as their family members, including their spouses, their children. So these people will have to apply for permission from the government if they want to go overseas, even if it's for a short trip. And according to sources, the government is gradually looking to compile this list of names that will be under that restricted list. And this comes after what has been reported back in mid-September, when the government started implementing this new entry exit bans on individuals who are violating import or export control rules that are considered to be threats to the national industrial and technological security. So really, the race is heating up here between US and China. Okay. Does it mean that we're just going through separate races eventually then? I mean, what are the implications for the tech industry? I mean, it's a huge implication, right? Because first of all, it sends a signal to the entire industry about the extent of government reach, because in the past, these travel bans, they apply often to just public servants like, uh, prominent college professors, for example, people in a state sector. The fact that it now applies to even employees of private companies, it really sends a signal to the broad business environment here. Right. And the other sort of issue is also the problem of talent retention, Italian recruitment, because you think about all the tech founders we have interviewed on Bloomberg from China, especially in the post ChatGPT era. Many of them are young founders who presumably will want to travel overseas. So it presents a dilemma for many of these young tech engineers who have global ambitions. They have to think about whether they want to stay at home or go abroad early on in their career, especially if they have global ambitions. So it really, um, sets up a dilemma here from them. It for, for them. And it could have a chilling effect on the entire industry. All right, women, thank you. Our tonic correspondent Ben Lowe there with the latest. And coming up that little bit more on Franklin Templeton stake and their view on how the latest development and I could shape trading with markets open in mainland China. Here in Hong Kong Nicholas Choy joins us in just a few moments. And we're counting down the open to trade in Shanghai, Shenzhen and Hong Kong. This is the China show. All right. We are coming off a really bad Monday. I think there's no better way to really discuss what happened yesterday in the markets. I see as I was on over to China, it was down over 4%. And as you can see over so we were called higher today. But over the course of 12 months we've taken out the low back in March. And this is now at a 12 month low. So we've almost come full circle back given the rally and then this sort of retracement lower into current levels. Let's bring us Nicholas Choi, portfolio manager at Franklin Templeton. He runs, of course, a more than one strategy, of course, looking in China. How are you? Very nice to see you. Very good to see both of you. It's been a roller coaster year. Largely. Good year. Um, how have you guys managed exposure recently? So, like you said, I think roller coaster is the right term. uh, if we look at the China Asian market and how that's performed, if you look at MSCI China versus the offshore indices MSCI China, the difference over one year is 20%. That's a staggering number. I've not seen that number. I think it's the first time a career that I've seen that it's almost two different markets. Uh, it is like two different markets, but yet they represent the same economy. But clearly then it means that it represents different sectors. Different. Right. Should it be sets clearly on iShares? You've got a higher representation of hardware tech as well as financials. That's almost 50% of the index already. Um, it's a very different story when it comes to the offshore China index. So as a stock picker, we have to pick our battles, um, in kind of weathering that roller coaster. Right. Right. Do you expect that gap to narrow in any way versus H. And what what sparked that? You think so? Yes. Uh, we think that on a relative basis, the offshore indices represents a strong opportunity set, at least in the near-term, partly because of how much undersold oversold it's been, but also how much, I guess negative, you know, kind of headwind. News has been priced in for many of the large constituent stocks. But naturally you do need a catalyst for this to be unlocked. But I guess whilst waiting for that, the good thing is we've got yield. Um, the offshore market, you know, the way I see the offshore market is we can split into maybe three very key, distinct thesis of why one should be looking at that market. The first is the structural growth stories. I know I, uh, a lot of people understand that, but you've got a lot of yield, which is a very interesting, a very increasingly permanent, uh, part of the equation which people didn't really buy into before. Nobody bought China asset class for yield. Yeah, that's changed a lot right now. So I think on the MSCI China the average yield is about 2.5%. Not too shabby. Um and on the financials it's 5% and more, right? Right. Now, if you look at some of the banks, actually, if you look at the performance of those banks on one, three and five years versus even the US indices S&P 500, they've beat them by maybe a magnitude of 60 to 80%. Very few people know that. Okay. Um, so actually just staying in that trade has been profitable. It's also yielded strong returns. Right? It's still about 5%. Right. Um, so to answer that question, we don't know when that's going to happen. But as we wait, we're getting paid, right? And we're not overpaying. I think in terms of multiples today, and I think the latest reports results coming out of the banks, you know, profit is even accelerating further. So this dividend play certainly underscores even further the visibility. How much of how much of your return do you think has come from just the income from the bank? In other words, is that something you think should remain a core pillar of of China exposure these days? So I think yield and return in general is certainly a cappella, but the yield in the form of two things. One is dividends and one is buybacks. Okay. And you know, for us, I guess we're not so fast about how we're getting the money back as long as it's coming in. Absolutely. Okay. Uh, and we see that happen across state owned enterprises. Privately owned enterprises. It's a you have a trend that we're seeing spread across sectors as well. Because cash flows in certain parts of the economy are doing okay. But also the government the government is really pushing for this, that pushing for this since maybe late 2023, early 2024. Uh, we've not seen any of those policies change. Yeah. And so if you if you see the pool of liquidity, for instance, in South Bound and what they buy, a lot of it's coming into dividend yielding stocks, not just the banks. So as that grows in size in terms of that that addressable pool, um, you know, we continue to think that that's still very relevant. Plus, ultimately the share prices of these stocks have risen, but they're still yielding something like five 6%. Mhm. Um, that means to your point. The dividend per share is also increasing. Interesting. Okay. Uh let's talk about the eye strategy because yeah, it's interesting that we've seen the eye hardware names haven't really exactly recovered from the selloff we saw in July. Right. There's lofty evaluations. There's a lot of competition, uh, within the space as well. How do I look at eye hardware now? So we have to be quite selective, because I think a lot of that easy money has been made. A lot of bullish thesis is known by the market. So we need to tread quite carefully. And as a stock picker I think that's exactly what our job is. Um, we have to be selective on picking, for instance, the areas where we think there's still a bottleneck because I yes, there's the demand equation, but the supply shortages are still quite acute. And so I think picking those spots where you can still see that volume and that price increase, I think is still quite important. Um, and therefore I think that's, that's kind of how we are anchoring ourselves, uh, on that, uh, at this moment. But to your point, because of how, I guess, concentrated that trade was, we're starting to see some of that liquidity flow out of the I trade into other areas, which is, I think why. Right. You know, you've noticed that why haven't share prices gone back up. What's really changed. Yeah. Right. We ask ourselves that question what's changed from July till now? Um, very few things change over a short period of time, but sometimes I think the world's view of a certain kind of opportunity set can change when there's overcrowded ness. And now that that's come down off a lot more. Um, I think be in a much healthier place to relook at this, uh, and assess where those shortages are. I mean, that's why you guys do what you guys do. I mean, the the temptation to act is. So it's so there, the temptation to scratch that itch. What do you do with gold right now? The the exposure do you have. Because you have a couple of names in gold space and the bold doesn't do well when you have higher rate real rates specifically. So how are you looking at this? Well, to your point, our role is to, you know, that the temptation is to scratch. But maybe in some cases, like gold, the temptation is not to scratch. And for us, I think we're holding on to gold. Um, we see that as a very different play, uh, on where we are in the global cycle. Um, we still think that gold is very relevant and specifically for our holdings there. We are playing that through a cost leader, a cash cost leader, which we think, you know, is already very profitable even at today's gold prices. So if the gold price increases, that's kind of like the cherry on the cake is that's the gold that is correct. Okay. That's the one. Um, and so, you know, we see that as a very unique play in, you know, be acquiring other players and hunting the cost structures and continuing to grow that asset. So we've got a volume play, uh, at a very strong cash cost. And if the gold price, uh, does, well, then that's that's really, I think, the bonus. Um, so for us, we're not playing it because we think gold price is going to rise. It can flatline for a while. Who knows? Uh, but ultimately, as a bottom up stock picker, we want to get paid on the cash flows. And that's exactly what this company is doing. All right, Nicholas, uh, hold that thought. Hopefully we can get you to stay for some final thoughts and show you their portfolio manager at Franklin Templeton. Uh, free market is looking like this here right now. We're flat when it comes to the Hang Seng, but some big debuts to tell you about here, but doesn't look to be the good day when it comes to the first day of school. Robo technic, Red Avenue showing a lot of red and Shenzhen King Wong as well as direct drive tech are all, uh, having their debuts today. Yep. Hang Seng index as we go into the session today, the Tuesday session. And it's, uh, nearly 2 billion, of course, this IPO rush here, uh, in Hong Kong today. So that's, uh, flat as a pancake as we go into the session 37 minutes away, the opening bell. This is the China show. All right. Your agenda here today. We'll see if we see any sort of lead up here in terms of this, uh, A-share market route that we saw yesterday, everything from the optical stocks to really the chip makers there. So certainly, um, we'll see if those lingering concerns remain. Uh, we talked about those Hong Kong IPO's coming up as well, one month. However, we've also seen, uh, hitting the highest summer market driven, um, landlords out there. Uh, we talked about sectors like gold, just given what we saw with the crashing of gold prices of Hong Kong property, given the rising rate environment, certainly as well. Uh, also when it comes to and we talked about the earnings side of things were not pretty operating profit falling a really lackluster results. Uh the first earnings, one that we've seen since it went public as well. Also look at minimax as well as JB was on the IE pure plays here today. Yeah, minimax was down I think about 910% yesterday. So we'll see how that goes into the session today as we were just pointing out nothing to see here. So flip the page please very quickly. JB okay, so this is one thing we've been tracking the slow grind lower as far as yields go. So your ten year sitting on thinks the ten year can go to 1.6. Uh the 30 year yield is the one they're advocating to buy. Uh they see that falling to 1.8%. So call that 30 basis points from current levels. Uh, on the back of weak economic growth. Um, speaking of just some earnings to tell you about, I mean, it's few and far between. She was out yesterday of course, with some earnings coming through. Yeah 53% drop in operating income. At least the stock is flat uh, right now at the get go here. But yes it seems like profitability continues to deteriorate there. It seemed like it also worsened in the second quarter from the first three months of the year. I certainly will continue to watch what this means for the e-commerce space as well. Countdown to that open. Coming up next. This is Bloomberg. With Billings. All right. Uh. Good morning. Uh, welcome back to watching the China show. So here we go. Um, big listing, as you can see at the exchange for counting. Oh, five gongs. Five gongs. And how many people? Ten. Eight. Well, I think there's nine. No, there's an odd one out there. Yeah, there's a long ring to see. Oh, yeah. But anyway, I'll, we'll talk more about these things. But of course I have ETFs as well. They just fit the stage I mean, it's a I feel is in one day, right? This is one of the busiest ones we've seen after what already has been such a blockbuster year. This is not a Whitney Houston challenge, by the way. Know this is not a fancy version of the show. Dave and I do that off shows, but not not on the stage of a Hong Kong exchange. Yeah. Uh, four companies, all someone I linked as well. Likes a robot Technic. Intelligent technology. That's why the largest deal out of the four here today. Uh, $660 million IPO here. After what we saw, the Shenzhen list of shares more than doubled this year. So it's another dual listing. We'll see how much momentum is behind that, but not much, it seems today, Dave. No, no, I think we're also headed into, uh, National Day holiday. It's a very strange dream. Yeah, because we were shot in the festival. And best of all, we stopped ourselves with mooncake. We're coming out of this, uh, and then things are shut in Thursday. But we reopened in Hong Kong on Friday. But then things remain shut in down. And I was in Korea. And man, festival is no joke there. It is Thanksgiving for in Korea. It is. Everything is. It's, uh, bit of a banger there. Yeah, but anyways, markets are not seeing that much momentum. Not that lit here right now. Uh, especially for the first day of trade for some of these companies here to take a look at when it comes to that second one. Right. Avenue. Yeah. That's the one that's seen the most read. We're down more than 30 one half lower there. Uh, bucking the trend is the bottom one there. So certainly that's one thing to watch here today the liquidity side of things. And obviously as we get closer to that holiday, maybe there is not much really risk taking here. You add that to the macro risk that we're seeing here. Higher yields, higher oil, higher dollar. And that's not necessarily the best thing when it comes to risk assets here today. Although the chip sector in Korea is actually doing okay. Right. I think uh, the anthropic lines that we got uh, in terms of they're raising fund raising the like certainly is maybe half a trillion bit of a bright spot here if you pair that with what Nvidia and OpenAI talking about safety and issues and whatnot and the pacing of the frontier. So certainly, uh, that certainly is lifting at least some parts of the I hardware trade here today. But you take a look at when it comes to Shenzhen and Star 50. They still are leading the charge. So still seeing decent gains here. The star 50 is up close to 1%. Where that six 7671 level for China onshore Hong Kong is looking like this here today. Of course, apart from the whole IPO story that we're seeing, uh, we are seeing a bit of a retreat here about down about 31% for the Hang Seng MSCI China as well. So Asia's tech seems to also be leading that charge lower here today we're watching some of these sort of AI plays, whether it's Lenovo SMI, C, mini Max, triple yesterday it was really a lot of I guess you say, you know what? What really took the hit was the optical side of things. Uh, chipmakers here. That was of course at report from the information that China may have given that green light on baba buy tends to buy Nvidia chips or a certain type of chip. Uh, we're seeing a little bit of recovery, at least in the optical sort of trade here today. So Gyeongju in a light is up more than 1% here. But yes, the technology restrictions and the like. Is that going to be a separate path in the diplomacy that we got in D.C.? You know, I think there's still a bit of disappointment that's sinking in about just that two year trade truce extension that maybe people thought may have fallen short a bit too as well. So still dealing with a bit of disappointment on that front. But these cabochons and some of these chip plays are actually recovering today. I mean, yeah, the optics seem to be diverging from what was what seemed to be the takeaways from that. Well, the optics and what's actually happening on the ground, on the tech side, on the tech side, which is, uh, interesting juxtaposition of really contradictory opposites, if that makes sense. Okay. Speaking of that, the IP, the way we just talked about that now. So not the best time meeting these markets of course. But it's been a good year. We are in track still. So yeah a further 1.8. So we are on track for the best year for fundraising I believe still here in Hong Kong. Uh, let's bring in our Asia equity capital market reporting to talk us through. so many companies, what they do, and they're listing all today. What, uh. What a time to be alive. That's right. For today, indeed. Seems like one of the busiest days in Hong Kong when it comes to listings. We're looking at four companies raising combined 14.4 billion HKD. That's about 1.8 billion that we're talking about here in one day. We really couldn't find the right space for to fit all these gongs, just like you said. Robert. Technicals won that race. Uh, 660 million. Uh, they are, um, they do automation for chip factories, you know, when they do the solar panels and silicon wafer. So they automate the whole production. Um, again, I related, uh, we've got a Ken Wong, which is a, um, PCB maker. They have 2.5, uh, market share and globally, um, and, um, that raise about 650 million. And we have read Avenue that we just saw that's a chemical product maker and direct drive is the robotics uh, component maker. So this is like a really good Hong Kong quarter in a nutshell, actually, because we have seen so many array of companies that come together in Hong Kong. We're looking at about 40, $46 billion in terms of IPOs, the placements and blocks altogether this quarter. And this is just shy of 47 billion that we logged in 2021. And one of the quarters there. So this is quite significant. Um, and the it seems like the pipeline is coming 20. So how do you think these debuts are being received? Do you think investor appetite is holding up or are you seeing maybe some fatigue now? Yeah. So we've been talking to some bankers and that's exactly the word that they use, right? I mean, they have had uh, so much of these deals like mega deals. We're talking about Alibaba, the 10.2 billion that we have seen in August don't seen a light raise about 8 billion. And don't forget AI which you know had that combo. The stock in the converse combo as well. So there has been a little bit of that fatigue, but especially because of recent IPOs, just haven't done as well as we had expected. Right. So, uh, don't get me wrong, the pipeline is monstrous, they say. And so it is still waiting to come to Hong Kong. It's just that investors are growing a little bit more selective in terms of where they put their money, um, in place. Uh, so we will have to see how they trend. Uh, today especially, we're seeing road technique and the two other companies also trending a little lower other than the robotics maker. So this trend, we will have to see whether it continues throughout the winter. All right. So there are Asian equity capital markets. Reporter joining us still with us is Nicholas Che portfolio manager uh Franklin Templeton. Uh, you guys have been pretty active in this IPO market. Can you tell us how how how active have you been. So this probably takes us back, you know, since 2024. Mhm. Um, end of 2024 when the market started to kind of become relevant again. Uh, the key reason why we've been active is actually it's been a very strong source of idea generation, because you have a whole lot of new sectors, companies. Right. Those that you just went through that are coming to market, that just wasn't available for us as secondary investors, secondary equity investors to invest in. Um, so that's been the primary motivation. But at the same time, um, what's been obvious, I guess, as you've pointed out, is the strong momentum behind, uh, some of these IPOs. And the key reason is because they haven't been priced to perfection. There's been money left on the table, particularly for those deals in 24. And I guess most of 2025. Um, and so when you've got a strong combination of good fundamentals. Right. So these are very interesting companies. Some of them leading edge. And if they come to market at a reasonable valuation, that actually provides a compelling case for us to actually do some work at going into some of these names. And do you come in in the secondary market or do you try and get an allocation? And just I know this is generalizing things. What's the holding period looking like. Yeah. So we've tried to go into these deals and IPO okay. And hold on to them. Okay. So that's been our base the best type of IPO investors right. Yeah. All right guys. And that's still the the large majority of that. Okay. Um, where we've been able to get decent allocations that we're able to hang on, uh, at a good price. And I guess where there are certain circumstances where we've actually added on post-market as well. Oh, okay. Um, because allocations are very difficult to come by. So it isn't like I get the full allocation that, that I really want at the IPO itself. So there are actually numerous cases where we've had to add on. Um, but the interesting thing here is the conviction levels that we have on these names. Where we add on would be quite high, right? Because we do the work. Um, we're spending the time, but ultimately it represents a new opportunity set that's actually presented to us in China. Um, that, you know, kind of in the past, we wouldn't have been able to invest in. Um, I was looking to take on the health care side of things to what you said is a very non eye sort of sector. But then there's you're starting to see I really being quite beneficial to this, to this whole biopharma industry as well when it comes to drug discovery and the like. How do I play the whole healthcare space now? So healthcare is no longer just about drugs. It's no longer just about medical equipment is no longer just about hospitals, to your point. You know, I kind of, I guess, flattens out that platform. And as I pretty much every single vertical, uh, where we see most excitement at present is still on the drug space, and it's most evident by the kind of deals that we see from global MNCs looking into China to license deals. So China still represents the lion's share of deals that are being licensed globally. And for good reason. Yeah, they've got good molecules. And when we meet these companies, you know, they were founded many, many years ago, right in the early 2020s. Um, and for a bio farm that's already quite a long time ago, even though it's only been maybe three, four, five, six years. Um, and you've got these global entities that are looking here and say, hey, look, they've got these pipelines that have moved on to phase two, phase three. And yet there's a patent cliff going on in the other part of the world. They need an immediate solution. And the solution is here now. And that's why these mega deals are happening. It continues to happen in spite of all the geopolitics. Um, because that's innovation. It speaks completely to innovation. So that's, I think, where it's very exciting now. I think it's going to speed up the drug discovery process. Um, and and that, I think, will supercharge this thematic even further, obviously are still relevant in the other parts, like medical devices as you plug it in to the entire system, hospitals, etc.. Um, but I think the most immediate beneficiaries on drug discovery. Yeah, for of course will have something special for you guys on this topic tomorrow. Nicholas. Fantastic. Thank you so much. Nicholas Choi, their portfolio manager at Franklin Templeton. Uh, right. Uh, she and first half operating profits. Uh, what are we doing to understand what indexes down stocks should be? Oh, okay. Uh, not good. Uh, stitches, as they say. Um, so weak performance. Uh, after, of course, the debut as a public company, it's also warning that the uncertainty around the current half with tariff headwinds, logistic costs will, uh, could persist. Let's bring in Catherine Lim or a senior analyst at Bloomberg Intelligence to talk us through this. Catherine, first glance at the report card. Your initial thoughts? Right? Um, well, if you're stripped out first quarter, second quarter profit on a recurring basis was down 65% year on year. Margins continue to weaken from first quarter's level. And I'm not surprised that the company actually warned, um, subtly in its interim research report released last night that with the uncertainty, they are looking to absorb, some of the costs debt will continue to remain elevated. Whether it just, you know, fulfillment, logistics, um, as well as, um, you know, some of the pricing that they do actually have to continue to keep at a competitive level, um, to uphold their market share. So, um, everything and I think the trajectory for shift into 2027 so that Profit Rebel still remains very uncertain. Yeah, uncertainty certainly is the thing. I mean, they talked about things for the rest of the year, right. There's 1111. There's Black Friday and Cyber Monday. Maybe those are the next windows for them to really see a boost in orders. How does the fourth quarter and the rest of the, you know, early next year look like? And can they really address these growth concerns now? Yeah I mean fourth quarter. It's a peak selling season for all platforms. It's not just Shein. So that's when it gets really cut throat and it's all about volume. My share in fourth quarter versus you know, profits. Whether that actually translate to stickier users. Um, going into 2027, I think that remains the big question mark. So I would say that, you know, again, for Sheen to bear in mind that, you know, for the EU, um, the European, um, region, right now, they are facing new, um, €3 of duties that has come in. So that will inevitably, you know, hits their bottom line. Um, for the second half of the year and into the first half of next year. Yeah, as you say, third quarter sales will be the key test there as well. All right, Catherine, thank you. Our Bloomberg Technology and senior consumer and technology analyst joining us there with the latest on Sheehan. Coming up, Beijing signals fresh urgency to revive China's economy, raising hopes for a new wave of stimulus, which is why some investors are drawing parallels to that 2024 pivot. There was much more coming up. This is Bloomberg. All right. It's really been all about, uh, bonds recently. So we're looking at the U.S. Treasury market. And we woke up yet again. So another leg higher in yields were steady in the Asia Pacific in these hours. But make no doubt certainly the moves overnight were quite something to ten year five and a quarter right now, and we're still waiting. And it seems like a matter of time between that before the two year after you then gives you that five handle and that basically now completes the catch. Your entire curve would be at that point about 5%. Now on average. The average U.S. yield right now in fact, is already at about five, in fact 5.13% thereabouts here, which I guess goes to show some of the concerns around this specific group of buyers. Yeah, we did hit at 1.5 27 for the US ten year yield overnight. So we come off that just a little bit. But certainly that is a fresh 19 year high uh for that one. So certainly that's one thing to watch here. This this selloff in bonds has not really let up. But when you look at the flip side maybe the opposite trade for that is. But look I know it comes the KGB. Yeah. Uh so what we're seeing the curve across there in China City coming out saying that, look, it could be a reason to kind of go long on the long end of the of the China yield curve here. 30 year bonds. Is it is that buy in just given the fact that you continue to have weak domestic demand, subdued credit creation should continue to weigh on growth outlook and keep duration demand well supported. And let's let's talk about this right. Is there something in the policy that the cocktail of policy support and stimulus that could up and that call from city, which obviously would mean better on macro policy makers in Beijing are displaying a rare public urgency about reviving parts of the economy at the State Council. China's cabinet has pledged to study and roll out new policies to stabilize the property market, promote employment and also boost domestic demand. Yeah, economists are also taking note of maybe the stronger language that was laid out here. Pantheons Kelvin Lam says it's the first time since September 2024 that he remembers when the last round of concerted stimulus was deployed. Let's bring in our senior Asian government and economy correspondent, Rebecca Wilkins. She joins us from Warsaw. Um, it seems like there's echoes of what we heard from 2024. I mean, what? What was your take on the State Council sort of statement that they got in the language there? Yeah. Look, this is really interesting. This is something that sort of lit up the various groups of of economist nerds, uh, overnight, really a discussion around how we precisely interpret the language. And in fact, if you pull up the bullets that you initially showed, it is particularly a conversation around the translation of Donald Young, essentially. Is this an additional set of support? Is this incremental support? So you have the likes of Goldman Sachs interpreting and translating this more as incremental. You have others, Calvin Lang among them, saying that, no, the language is Marxist, sort of quite a different shift from last month's State Council. Certainly it does look like the language is more dovish. Certainly there is this acknowledgement of emerging or new issues that are coming up and again, but but much of it is also this repeat, this desire to tackle some of the issues with more sort of so-called countercyclical, uh, supportive measures. I think generally the consensus is we're not going to see, uh, anything hugely different from what we've seen in the past, but it is worth considering the backdrop here. September typically is one of these key months when it comes to sort of policy makers trying to make a decision about whether or not more stimulus is needed or what happens next through the end of the year. Consider two that we had, of course, that missed that coming down under estimates when it came to that second quarter GDP target that came even below the bracket 4.3%, we government had set its target between 4.5 and 5%. Um, and now may also be the time that perhaps the State Council, perhaps policymakers have an indication of what the next quarter, the third quarter that we're waiting still to see what that level comes in. So there are many, many factors, in addition, I suppose, to just that State Council statement that underscored the need that policymakers may be feeling to provide some more support. And, Rebecca, we as we know, of course, the that the choice of language in terms is critical here. And I think I want to get your thoughts on this that, you know, according to that statement, officials will roll out. This is, of course, the, uh, the translation here, pragmatic and effective measures, which to me seems to be more targeted than all. Uh, what is your interpretation of this? So we've heard this phrase pragmatic and effective, uh, measures today, but it's whether or not we are seeing it use in a context that actually suggests that we will see something beyond that sort of supply side support. To be frank, I think economists are still a little bit cautious about that, particularly as we wait to see precisely where this next, uh, GDP number comes in. Um, but and of course, when you look at the sort of that investor reaction to. Yes, certainly not seeing a similar response that we saw back in 2024. Rebecca. Thank you. Rebecca Chung Wilkins ah, senior Asia government and economy correspondent. Yeah. And to Rebecca's point, when you look at the markets right now in these benchmark September 2024, literally almost a vertical line when you look at some of the equity benchmarks, uh, within that one week span from the 24th of September. Right. Lots more ahead. This is the China show. So the stories that we're tracking for you today, Madis has launched its latest AI model and a platform called Q that helps create personal eye agents. The updated model is designed to work faster and more autonomously. Manus remains independent after Beijing canceled Meta's proposed $2 billion acquisition in April. The Chinese startup, based in Singapore, is now expanding its presence on the mainland, and meta has hired the CEO of data based software company MongoDB to lead a new enterprise AI platform. CJ DSI will run a unit that Mark Zuckerberg calls the next major growth pillar for meta, a position as a social media giant against Microsoft, Google, Amazon Web Services, OpenAI and anthropic. MongoDB shares plunged 18%, while meta stock fell around 4% after the announcement. SpaceX's massive Starship rocket has reach orbit for the first time, deploying 26 upgraded V3 Starlink satellites, but the mission was cut short after an engine failure and a spacecraft splashed down near Hawaii about three hours after launch. The 14 test flight marked Starship's first successful satellite delivery and a major step towards routine launches to expand the Starlink network. Okay. Back from orbit. Uh, gold prices recently. We're seeing some stability right now at 4130. Um, the equity market iteration of this has really been from yesterday declines there somewhat declines still, uh, today, some of the Hang Seng, uh, some of the Hang Seng tech movers here on your screens coming up next in the big Tech plays day. And of course, within that, the benchmark is down, uh, yet again today have ten cent Baba BYD and show on your screens were down 1 to 2.5% hang Seng Tech over two years. We're now at the lowest level going back to January of 2025. And as you can see, we've taken out the low recently and we're now back to those levels, uh, in early 2025. Lots more ahead. This is the China show. Welcome back to the channel show or look at HSN. I have found that it's a beautiful day in Hong Kong. Um, but yeah, we're not seeing that much sky and blue skies out there when it comes to these markets here. Right now. We're off some of the lows at least, but we're still seeing that much momentum behind these markets here. You mentioned about tech. That seems to be what's driving this. Yeah I think we're looking at Tencent to bid to Alibaba. We're down in the order of about 1 to 2.5% on that one. Hang Seng tech. Uh Hang Seng China, bottom of your screens. Um, we obviously had that big sell off on the China, uh, index yesterday. Hang Seng tech do we have that? Can we show that, please? That's me asking our dear producers to, uh, give us. Making them do things on the fly again. There you go. There we go. 40 68.21% coming off lows a little bit, but this still should be enough to take you back to levels that seen it early of last year. Uh, Taiwan is coming back online today. Um, I think, uh, should be seeing okay levels. There we go. Yeah, I think we're doing okay as far as that's concerned. All to Korea. Uh, but by the way, Korea had a terrible session yesterday. Uh, Japan, 1.7% to the downside, by the way. There's separate conversation now. We'll talk more about this later. In terms of the yen, increasingly again we're hearing an increasingly louder chorus calling for a stronger, uh, currency. Could that be, uh, somewhat muddling with with the math today? Now, apart from that, uh, we are also going into, of course, uh, this holiday on Thursday with mainland China traders certainly digesting this flurry of headlines, an eye spending and safety while obviously looking at your calendars with micron earnings. I think that's Wednesday going into the holiday in China on Thursday. Uh, Anthony is here with us to talk us through all the all the new ones here. Anthony. Yeah. We've not been able to shake off this concern around. I saved and you continue to see it play out across the region as Taiwan comes back. Very whippy session. You know Taiwan open flat now it's trading lower. And that's really being shown in the stocks underneath TSMC TSMC rock solid but everything else underneath is kind of catching up to that next move that we saw yesterday. Printed circuit board makers in particular and SoftBank as well participating on the downside. SoftBank is obviously in play here as OpenAI continues to delay its front about it's not flip the board and we can see what growth investors are focusing on instead. And that is very much the pharma sector specifically oncology. Oncology is strong across Hong Kong, Korea uh, and in Taiwan, we see the entire sector being a target of M&A deals, partnerships. Uh, I kind of related growth in terms of discovering new therapies. So this is where the focus has shifted from the hardware semiconductor trade. Now flip the board again, and we can kind of see where a little bit of an interesting divergence is happening as oil prices go higher. People are losing interest in oil stocks now. Does that signal a future topping out of oil price? Or is it simply people locking in their money as this conflict can't seem to get any worse? But whatever the case may be, we are seeing broad based weakness across the oil sector in Asia. Whether you're talking about explorers in Japan or the refiners in Korea or explorers in Australia, it's across the board. And it's a really interesting thing to watch into the geopolitical developments of the back end of this week. All right, Anthony, thank you. Anthony Stephens, there are Bloomberg Markets reporter on the latest in terms of movers. There seems like in some ways you are seeing pockets. Still a bright spots in this whole eye trade. But yes it's against the macro risk out there. Right. When we talk about higher yields bring in our Bloomberg NY strategist Mark Cranfield joining us with more. You have basically you know it's only the two year left. And the treasury curve that is yet to hit above 5%. Looks like we are set to go there. But where to next? Now, when it comes to the sell off mark. Yeah. I mean, as Anthony is saying, there's a lot of moving parts in this macro story, but it would certainly help everybody if we get a decent 40 year JGB auction today, that would help to calm down. A lot of the movement we've seen in the global bond market that's been a major driver in the past week, especially Treasury yields, but not just there across the whole G10 spectrum, we've seen yields going higher, particularly in the long end of the market. If you look at 30 year Treasury yields at the highest, they've been for for many, many years there. And that's that's unsettling people in the equity space, as Anthony was saying as well. So if we do get a good 40 year auction and the prospects are reasonable here, the yields are about 4%. We're in a zone where there's been domestic buying, so we may get through that auction reasonably well. Then we've got the RBA decision. They are expected to raise interest rates, but the outlook may be fairly neutral. And again, that may give some support to Australian bonds as well. So we could get a positive feedback loop by the time the RBA has finished. And before the European market gets going, we may start to see some stability in the global bond markets, which could feed into the European session. Of course, it will help if oil prices stabilise as well, and the early indications are that oil is is forming a new trading range here. And as you say, as I was mentioning, the oil stocks are being sold off here, which could be a sign that people are looking forward to October as being a better period in terms of energy. So we may be getting to a turning point here. If we get a decent set of circumstances for fixed income oil stabilising, the mood may start to improve, but it may take a few hours before that's really clear. Yeah. Mark, you know, the first story I woke up to this morning on my Bloomberg was the one on Jim Bianco turning bullish for the first time, I believe, in about 6 or 6 years. The next story I saw was one a rap on fixed income. And at the very bottom I think it was buried. Paragraph 7 or 8 was the US 30 year bond that was issued in May of 2020 is now trading at $0.43 on the dollar, I think. I mean, to your point, a few weeks back, we were talking about how good the conditions were for risk assets, and I wonder if this is just a blip currently. Can we look at the value now in the table, whether that's in fixed income or the value in equity markets, and hope that October remains October, which is typically seasonally good for for risk assets. Well, it certainly is interesting you bring up the point there about the some of these bonds trading below $0.50 on the dollar. It's exactly the same thing that we saw in the Japanese bond market earlier in the year, where a lot of people are getting concerned off the run. JGB is the 40 year sector were trading at 30 or $0.40 compared to to where they are on the runs or trading, and that actually helped to bring in some long term investors. It wasn't an immediate thing. It gradually happened, but we did see money start to shift into the long end of the Japanese curve, which has been much more stable than the shorter end of the curve. That may be starting to happen in treasuries as well, early stages. But that's why people like Jim Bianco are starting to take a serious look at the long term of the Treasury market, because these are yields we haven't seen for a very long time. And relative to where the stock market is. Maybe it's time for people to start moving in. It doesn't mean to say the bond market is going to turn around immediately, but these are the kind of signals that long term investors are looking for. They're looking for complete distress in the market before they start to come in. And maybe a couple of decent bond auctions and things could start to look a lot better. Mark, thank you so much. Great set up to Mark Greenfield there as we go into a crucial next couple of hours or so. I just, I guess on that note, yes. Backward looking, but I think and also underscores the value that perhaps has emerged this 2% drop that we're getting in treasuries right now, uh, would be enough currently for the worst month for treasuries going back up two years. Uh, let's bring in Marcella Chow here on set with a global market strategist at JP Morgan Asset Management. You guys have been advocating. Very nice to see you, by the way. Good morning. Good morning. I'm advocating to have a closer look at fixed income. Yes, indeed. Um, with Treasury yields surpassing like ten year and also 30 as a positive 5.2 and 5.5%, we think it's becoming more attractive again. Um, and indeed there have been various reasons triggering all these. The uh, was the fiscal sustainability concerns, inflation issues and also Fed credibility, etc.. These are all long term issues. So, uh, we're advocating a closer look into probably a shorter and um, uh, uh, treasury yields and also investment grade corporate bonds And because, uh, we see how the economy momentum remains quite robust, actually supportive for the default rate for high yield to also become stay relatively low and credit spreads to be quite tight. Is this just a sense that we're just heading back to normal? I mean, gone are the days that we used to see 0% rates, you know, post-Covid the like. But I think is it just that than actually what you have been saying? This is not really economic distress that we're seeing right now that's causing the small. With regards to fiscal sustainability. And it's actually a global phenomenon too. It's not just us we see in UK and Europe, etc. and Japan as well. People worried with the law and yields surpassing, uh, historical highs. But then I think inflation is also a key issues too, with the Middle East situation and also pushing on to energy costs because, uh, lower inventory and also concerns about refined products like diesel, as well as also the seasonal demands coming out with winter coming. In the Northern hemisphere. All this will continue to push inflation. Headline probably 23.5 4%. Uh, and for the rest of this year. So and with the rally focused into inflation, is that the new normal? Um, I think surpassing 5%. And we'll see how that impact or the interrelationship, how that affects in to, uh, equity performances so far, especially last week, we see uh, S&P 500 only down like -0.8% when bond yields rise. Rose by 40 basis points. This suggests that if the backdrop is still robust economic fundamentals I still support it from earnings growth. That should still be okay. But then if it's not biting and I guess it's more on the magnitude on the earnings proficiency. If that's actually bigger than the yield pressure, then equity markets will still be performing. And so we're still constructive on that. But there are also eye concerns etc.. Yeah, I mean on that. Right. I think it's just to build on Evans question. I think it's the first time since the AI story that there is an alternative in terms of income for for investors, right. So investors looking at do I need income? Do I need growth in momentum. How do we need to be thinking about the balance, the trade off between those two strategies in terms of equity? We think we're still constructive on equity at all as well. But then stay selective because we see an investment spending is still expanding. Uh, and economic momentum is still strong. But then cash is becoming less attractive. So equity performance is still decent. And then in terms of, um, the I story, we think right now, uh, they are less um, they are raising more doubts about it. And so, uh, they may not be as, uh, fully, um, fully pricing and all fully be, uh, nice about all the I development side of the question about the feasibility, for example, with all these security breaches and then the related legislation and also legal risks that may be associated, as well as also a commercial viability of all these models going forward. And how does that develop? And to us, it seems like is a development stage that has happened in the past with technological development. So it's more like a reality check of what has happened with all the technological devices and all the models, and that's actually being tested in real world. So going forward, I was still saying with all the exposure to ie, what is risk? Opportunity is not just related to stock market, but also related to fixed income to funds and also interlinked with private assets to and through assets, infrastructure and maybe back back into public equities as well. But that suggests that exposure to I will still be and to a whole uh, portfolio allocation is still affecting, uh, investors portfolio construction going forward in the years ahead. So where does that leave Asia? I mean, they obviously the region has benefited from this whole I build out, um, how do you separate between I on I or winners and losers. It's just hard. A lot of investors will continue asking, oh, should I just try and build a non I just to be, uh, trying to avoid all this volatility. That is very tough right now, but to us is not about avoiding I completely because it's impossible to do that and nowadays but to identify uh the stages, different stages before it was like from the hyperscalers I always say it's uh uh I spenders. And now as I owners like the hot where to build out the um companies in Taiwan, Korea and Japan that are benefiting it. And, but we need to think a few steps ahead. So right now and maybe the I users into various sectors like healthcare and also into robotics, where China have a competitive, uh, competitive advantage. And one key thing, one interesting thing is a lot of us acknowledge how U.S. is good at the premium models like the machine, three stars, etc. but China is good, as is value for money. And to us we do not need to go to mission three star every day and sometimes be a normal user. I'm just happy with a good model. These are models that can satisfy my data usage, so those with value for money will actually be an interesting proposition and interesting. Higher increase in demand going forward as well. And the key for next stop, other than from eye earners to spender to AI users like robotics, I think is also about the energy security and also the energy scarcity, given China will have a competitive advantage in that as well. Fourth quarter is coming. Any specific risk to be attuned to? Uh, I think right now we're focusing first of all, closer to date will be Friday nonfarm payroll. Oh, yeah. We'll see how the labor market, uh, performs. If it's higher than expected, then they will out right away. Brian. Again, concern about high for uh, high for longer narrative because originally we're also pricing in on the unlikelihood that they will hike a few days before midterm, right? I still think so. But then my expectations right now pricing around 70% for the October meeting. Yeah, the October meeting. And then, um, if it's lower than expected for the fighting on some payroll, there's concerns about growth rates. So. Well, you can't please everybody. Yeah. So it's both sides. And um, for China I think what we're also paying attention. We see that there are incremental measures that are being delivered. Uh, and to, to interest subsidies and to, uh, relent and cold turn real estate policies. They are trying to maintain the lower limit of the 4.5% GDP target. But implementation details a bit still before the October long holiday. But we'll wait and see how that will roll out. Okay, Marcella. Thank you. Marcella Chow, their global market strategist at J.P. Morgan Asset Management. Still Ahead and Video's latest AI product isn't a chip software side of things. We're talking a security system built to shut down rogue agents. We have details coming out. This is Bloomberg. All right, Chip story okay here this morning, especially when the lens in Korea Samsung is up about 1.5%. Tokyo Electron also doing okay in Japan here right now this may be on the back of what we heard that report from Reuters this morning right there, saying that anthropic plans to spend more than half a trillion, half trillion when it comes to cloud and computing in the coming years. What's even more astounding is that's coming from the same company that reported a $42 billion net loss in 2025. That is, of course, part of the prospectus care out of the company's much awaited listing, of course, if not the most awaited listing coming through. Let's bring in Mandeep Singh, our Bloomberg Intelligence global head of tech research. He has blessed us with his presence here in the region. Very nice to see you. Nice to see us. So help me square that circle. Half a trillion and spending $40 billion loss. But it's a bullish story. Well because these kind of growth rates at the IRR that anthropic is at you know uh 65 billion in are growing triple digits at that rate. You know, it's such an impressive story. And yes, you can talk about profitability and how it's, uh, burning a lot of cash. But, uh, we know software businesses over time generate a lot of free cash flow. And in this case, they're spending, you know, almost half of their compute on training the next version of their model. So if safety is a priority going forward, a lot of that training span can be curtailed. And then suddenly the margin profile will be a lot better, which is, I think, the story they want to get across during the IPO roadshow. Yeah, I mean, that's why you have Nvidia come out with this monster buyback. And the fact that they've launched these two. Yeah. Security tools. Um, it seems like they are kind of taking the charge on the whole safety side of things. How how credible do you think we should or how much how much weight should we add to it, I guess. I mean, clearly these models can go wrong. And the OpenAI hugging face incident. And then after that, there have been, uh, quite a few incidents where it feels like these model providers are not in total control of how these models behave, and the story actually helps them, uh, improve their profitability. I mentioned about the training spend. Yeah, like these companies are spending, you know, 20, $30 billion in just training R&D. So with the whole safety narrative, it allows them to pull back, and it do that in a coordinated way where your competitors are not training or will leapfrog. Yeah. And then from an inference perspective, all this can be monetized. So I think it helps them with the IPO and the story they want to tell. Uh, you know, investors during the roadshow, not that a few days is as helpful as being here for a year, but what stand out in you so far and as far as the AI story in Asia Pacific that you're here in town? I mean, look, uh, from a consumer agent experience, I think this part of the region has always been ahead in terms of embracing mobile, you know, payments. And now with agent tech stuff, I booked all my Uber rides from the airport to the hotel using instinct, which is the that was my. So instinct is an agent that was launched a few months back where, you know, you can send a message and say, here's my itinerary. Go book all the Ubers from the airport to the hotel. And it did that so seamlessly. Honestly, it saved me at least an hour. You know, just kind of doing that myself so that those are the type of experiences that you are going to see on the consumer side. And I think this region is always ahead when it comes to doing a lot of that consumer agent type of stuff. What about in terms of the the frontier side of things? I mean, do you still see that there are quite a bit of constraints when it comes to some of these Chinese AI models? Can they actually narrow the gap with the U.S.? I think with open rate models, they have the volume on their side in terms of token volumes. It's the monetization that has been a challenge, partly because, you know, every company wants to make sure governance, data privacy is front and center. If you are deploying, you know, something, agent take or one of these frontier models. And that's where the monetization gap has to be narrowed, because we know these companies are burning a lot of cash. And if you're not monetizing your model training, then it becomes a problem over time. So I'll be interested in seeing, you know, the likes of Deep Sea and Zebu and, uh, moonshot. Like, how will they monetize all the inferencing and can they do it, uh, comparable to, you know, the frontier Labs in the US and comparable but proportionally, proportionately, do you think that's an issue because they're not spending nearly as much as their counterparts in the West? I think that's a very good point, that their training costs are not as high. Right. But, you know, in the world of Ela lens, we're not close to getting commoditized. So all these models have their niche in terms of what they're really good at. Like anthropic was very good in terms of coating agent functionality. Yes, OpenAI has narrowed that gap, but still people are willing to pay up for frontier tokens. So that's where you got to find your sweet spot. Like meta launched this muse app, which has taken off, you know, in the last 2 or 3 weeks. It's more e-commerce focused. So you've got to find that use case where your your model is really good at that. And that's when monetization becomes easier. Fantastic. Thank you so much. Mandeep Singh here in set with us, our Bloomberg Intelligence global head of tech research. Speaking of tech, uh, really the sore spot when you look at some of these markets on an index basis looking like this. Within this, of course, the Hang Seng Tech Index is one we have been tracking. We are, uh, at about the lowest there since January of last year. This is the Chinese show. Some big moves that you're seeing across the auto sector, particularly when it comes to Guangdong auto to climbing some 10% here right now after plans to buy a 50% stake in Toyota. So yes, that certainly is helping, uh, to go to the daily limit today when it comes to Banjo Auto. Yes. Uh, property stocks coming up on your screens. Uh, we're looking at some gains here on the back of this report out of Shanghai to China, which first will be studying new policies. We talked about this out of the State Council meeting, I believe, which was released on on Monday, including measures to boost the property market or help the property market in response to some issues, of course, emerging there, uh, in the economy. Right. Just to wrap things up, in terms of our movers, check here she and so if you bought into Sheehan and Guangzhou order, you'd be finding yourself really on the neutral side of bed today. Up ten on the other, down ten on the other, uh, earnings decline their first report card as a public company. So we're now in session lows on this one here. Record lows for the stock since they debuted rise. So we're talking about 53% plunge in the first half operating income. But still there's still not a lot of visibility when it comes to the third quarter here. And what could actually drive orders here. How are they going to turn around this ship when it comes to some of these longer term growth concerns when it comes to the company, right. Rising costs and weaker demand as well. Sheehan down some 10%. Okay. We'll see where this go. 11:29 a.m. In Tokyo, Japanese markets are going on that break in just a moment. Um, yeah. There's a 40 year bond auction, mind you, in the JGB market here today. So that's the next potential event risks to watch amidst this bond selloff, which, you know, mind you, we have studied uh, during the Asia session, but we're still talking about a 310 handle for your tenure JGB. We're talking about the entire Treasury curve. All except the two year is now above 5%. Equity markets are in the back foot here today. Is that really been led by the likes of the topics were lower by a 1.5% here today Dave. Yes. Um, so Mark Cranfield did flag the this auction is something to watch. Global ramifications. Global ramifications, right? If this goes through quite nicely and the RBA doesn't say anything more hawkish than has already been signalled, and that could usher in a period of stability for for these bond markets. Uh, because man how much we've actually seen this leg up in yields. Yeah. Uh, in the U.S. session here. Uh we'll have more on the RBA in a moment up here now, 4/10 of 1%. Call it half of 1% of the downside here. So I see what is pointing out right. Stronger dollar higher oil and higher yields. Bloomberg dollar index. There we go on your screens reversing some of the weakness that we've seen. Um the other thing we want to point out flip the page please. Uh, actually it's not here. But the gold price is something to watch very closely because the on the back of rising nominal yields and on the back of that real yields, you have non yielding assets like gold um which juxtaposes against the property market which is somewhat high yielding as well. But anyway that's just to say watch gold. Uh, these next few days or so I think. Yeah. Story evolved certainly one to watch here. Um, when we talk about higher yields, higher oil, higher dollar, uh, doesn't bode well for, as Dave said, for gold. Um, we just showed that chart, uh, of what we heard from the State Council on Monday. This was interesting what we heard and maybe displaying a rare sort of public urgency when it comes to reviving the Chinese economy. The State Council, China's cabinet, has pledged to study and roll out new policies to stabilize the property market and promote employment and boost domestic demand. So everyone's kind of been leaning into the language, right? Everything from studying, meeting, maybe newer sort of stimulus measures could be put in place, even talking about ways to, uh, the address, some of the emerging issues, uh, in the economy. Does it echo what we saw back in late 2024? Let's bring in our chief Asia economist for Bloomberg Economics, Chung Shou, who joins us now. How did you read that State Council readout? The signal, in effect, is positive for you. It does come at a time when the general confidence is pretty low. Um, it remains to be seen what will actually come out. Uh, if we look at the second aspect, um, if somehow this, uh, announcement in the coming days, coming weeks and suddenly that's positive, it does suggest the government to cash beyond their heads and, and growth and, and does one to ease pains associated with this. If you like. I driven solely AI driven growth. Um, so that's certainly positive but but it remains to be seen why the government, uh, is going to do, uh, our senses that government is largely going to, um, focus, um, faster execution of fiscal policy rather than, uh, unveiling new budgetary supports. Okay, so talk us through the next three months. If we do get, let's say, the team version of that, which is just an acceleration of fiscal plans already been been penciled in. Where does that show up in, in, in the economy. And does that help consumption at all? It will to help consumption help demand to some extent. I mean, uh, if we can look at because earlier we talked about headwind on growth is more or less okay. Um, because we we know that GDP is based on supply side and supply side is largely okay because, um, first half a year we have growth above the growth target, um, bottom of um of 4.5%. And even in the second half of the year, growth is slightly below 4.5. Well, still okay to hit the 4.5 and bottom, but demand side is the weak side. The investment has been very, very slow and contracting very sharply, and consumption is stagnating. But if the government speeds up spending, it's larger it to be on the investment side as far as I can see. But they could be on the margin in some sort of, uh, more policies on consumption. We haven't got your take on Trump yet. Um, beyond just the pomp and circumstance of diplomacy, I mean, there were few concrete sort of deliverables. What was your take on this meeting and what China gained from it? I think for me, the biggest positive coming out of the meeting is the bilateral stability side. Uh, that would say if you allow, uh, the trade and exports to continue to flourish and continue to be of key growth supports. And China does need that. The the I related sectors production exports have have really been booming and that's a key cause to supports for now. So so as far as I can see um the stability is the core, um positive coming out of it. But certainly there are some, some other aspects, you know, and tariff cuts on any amount of goods will be positive. But but on the macro side of the impact is in limited. Chong Siew, thank you so much. Our Bloomberg Economics chief Asia economist there. Coming up, we have a rate decision on deck here in the region today. The RBA will have the highest cash rate. Cash borrowing in the developed world is after what we have here, Iceland, if the RBA. That's a very strange analogy there. But anyway. Okay. Uh, higher than expected. We preview the decision next. Context is always key. They say even unorthodox wants lots more ahead. This is the China show. Right. Welcome back. RBA's on deck. As we were just pointing out a few seconds ago. If they high, that would take their borrowing costs to the highest in the developed world, just below Iceland. So the rates priced across most of the Em on your screens through to 2027. It is hiking season, so brace for not just one, but several, uh, going into next year. And just think about how the many things this could affect, of course, as we brace for higher rates. Yeah, certainly. That's one thing to watch. Uh, let's bring in our Bloomberg Australia economist, James McIntyre, on what to watch out for this meeting in particular. And really, how hawkish do you think this this RBA is going to sound today. Well we think that that's going to be a hike this meeting. But I think the key thing to watch out for and that everyone is going to be focus on, is those hawkish comments, that commentary from the RBA that is suggesting that, you know, where we might see things in terms of follow on. We think a hike in November is a risk. And we also think that the board and Michelle Bullock in particular, at that press conference after, uh, the decision, uh, later in the afternoon is likely to reiterate that they stand ready to deliver further hikes if they needed. And so, you know, it's it's likely that we'll get that hawkish commentary. It'll be indicated that it's data dependent. Now the data on some of the economy, the unemployment rates rising. Uh, we did have some consumers, uh, data earlier today showing that households are being battered a bit by fuel prices. If it's data dependent, it might actually be diesel dependent. With some of the key pass through concerns that the RBA has coming from the way diesel prices, a global challenge are filtering into an economy that has the highest per capita diesel use in the world. Okay, so do we need to start talking about how this economy looks in 12 months time as this these rate hikes start to, you know, seep into the economy housing market. Uh, what comes to mind, James? Well, the things that come to mind first thing is, uh, wealth effect. But then on the other hand, there is a sorry economist with the other hand. But there's also the things in the economy that aren't going to be stopped, uh, by, by rate hikes or by higher bond yields. And that is, uh, the ongoing data center rollout. So the eye investment boom is big in Australia. There is the capacity for the renewable energy production. That investment is going on as well within the economy. So there are these props of demand within the economy that are going to remain strong. That's giving firms within the economy, you know, a little bit of courage, which the RBA doesn't want them to have, but a little bit of courage to think about passing through prices. But on the other side, you do have those consumers and households a negative wealth effect, a pullback in residential dwelling construction and the real estate sector really grinding down under the weight of some pretty high debt servicing costs. James thank you. James McIntyre, there are global economists. There are watching. The RBA is set to make that policy decision in the next hour. Meanwhile it's not just diesel dependent but we're going to take a look what's going on at copper prices. We've seen it around records there. Deutsche Bank coming through with a very bold sort of call here. They say maybe a potentially another 50% surge. Uh, they're saying maybe we could hit to 20, 20, 50 a ton in just the next six months alone. So, you know, it's really that's a very interesting call that we've been seeing here. Uh, really just not just on the tariffs sort of risks around copper and what the US might decide to do, but also China, a lot of, uh, you know, people really trying to build up their inventories too. That really is kind of fueling the copper price of late. Yeah. The 22,000, right. As you were pointing out, that gets us over 50% within six months time. There's just really not a lot of it currently given, you know, you know, within six months is easily as is as visible as demand can get. Uh, massive call. They're coming out of Deutsche Mark. And that really goes into this turns us back to the Oz story, right. You have copper producers there have been leading this mining stock boom. As the I build out that we just talked about as well there uh, with James continues to drive demand agnostic of where your whack is. Right. Weighted average cost of capital. Um, and that might actually have room to run. All right. Let's bring in primarily on our equities reporter to talk to us through this right now, the copper boom in the mining sector and the equity market iteration of that, those dynamics help us understand that. Yes. So as you were talking about just the it's all about copper this year for Australian mining stocks. Now this is really part of a a bigger structural shift that's been happening in our sector in the last couple of years. Um, if you look at mining returns over the last few decades, it's really been an iron ore story. Iron ore. Of course, being a key, a key steelmaking ingredient that's used in property very closely linked to China's property boom. But as we've seen, China's economy and China's property market struggle to rebound from Covid, we've seen the miners start to pivot away from iron ore and more towards future facing metals such as couple, um, of course, copper being very closely linked to the electrification Story as we get more demand from I. Um, and and data centers. So a lot of that trend has really been to do with that shift towards copper in terms of the Australian mining story. Here it is. Yeah. Those property struggles in China really has been leading a lot to this whole pivot, this you know, this shift, uh, talk to us. Is is this a trend that we can expect to continue then calmly? I think so, I mean, you were just talking about the Deutsche Bank coal. The, um, a lot of Wall Street strategists have sort of similar bullish outlooks for copper. Um, maybe not quite as bullish as Deutsche Banks, but still quite, uh, seeing some room for upside there. Um, when you look at the copper story more broadly, it's important to note it's both a demand story and a supply story. Of course, demand coming from the I and the electrification theme being something that we've sort of discussed already. But when you look at the supply side, that's also been helping support prices higher in the in the near term, um, the tariffs obviously being a big part of it. Uh, we don't know whether or what's the status of those tariffs yet, but if they do eventuate, uh, there's a big risk that we could see supply shortages elsewhere out of the U.S.. Um, we also had some news earlier this month from Chile, the world's largest couple producer, that they're expecting output to be a bit softer in the in the near term. So the copper story, it's sort of a supply and demand story from both sides. Both of these factors helping to support the prices higher. Yeah a couple of risks already there. Anything else you think we should be watching apart from, uh, what we've laid out now? Yeah. Well, inflation is always a big issue front of mind. Uh, not just for the mining sector, but for everyone, but specifically on the mining sector. Uh, of course, we don't know, uh, what's happening with negotiations between the US and Iran. We don't know where oil prices are going to be, um definitively as those negotiations that have stalled. So higher, higher oil prices, higher inflation, that will continue to be an operational headwind for a lot of these miners. It will continue to push up fuel costs for a lot of them. Um, BHP also one of the biggest mines in Australia Hill, they unfortunately had a tragic death last week and had to pause operations. Uh, briefly. So I think that could also be, uh, a challenge here to, to to be keeping an eye on. Camelia going to their, uh, our Australia and New Zealand equities reporter. Uh, just a glance at commodities from copper to Brent and, of course, your two versions of gold on your screen. Lots more ahead. This is the China show. AMD's CEO Lisa Su was announced, is paying $8.2 billion to buy World Labs and I startup founded by industry pioneer Feifei Li. The two CEO spoke exclusively to Bloomberg about the significance of the deal and their shared vision for the next phase of I. Today's a super exciting day, I can tell you that, um, you know, we are super excited to be acquiring World Labs. I have known Feifei for a long time. I've had tremendous respect. You know, for her as a researcher and as a visionary. And if you think about where AI is today, I mean, we are you know, I've said often that we're still in the very early innings of AI, and I truly believe that. And what's becoming more and more clear is that, um, the interaction between, you know, the hardware and the software and the systems and the model layer are such that the more you understand end to end, the better system you're going to build. And so that's why we're acquiring World Labs really is to have access to the world class talent that Feifei has brought together and really bring it together with AMD's complete capabilities around, you know, hardware, software and systems and, um, you know, build the future of AI. I think we should get to the back story, uh, with both of you, but would you talk a little bit, Lisa, how it came about, you know, the catalyst for doing the actual transaction? Well, as I said, I've had a tremendous respect for Feifei. I mean, you know, everyone knows just how much she has contributed to AI over the last couple of decades. And from, you know, our personal relationship, we've always had, uh, that, you know, both mutual respect and trust. But what we've saw is, uh, you know, AMD was an early investor in World labs. So, you know, we saw Feifei build when there were only, you know, just a very few researchers and really building to the team uh, with marble and then with now the release of Atlas And what we see is just a tremendous nucleus of capability. That would be a huge addition to, you know, already our very talented, you know, AMD workforce. So I was thrilled, thrilled that, uh, you know, they and her founders, uh, were excited about joining AMD. And Feifei. Reflect on that. I mean, you and I have spoken very recently. Uh, this, of course, did not come up, but, um, I suppose you know, a good starting point other than how this came together, is what opportunity did you see for your work in the team at World Labs? Work to be a part of AMD? Yes. So just to echo Lisa, this relationship has been going for many, many years. It started with mutual respect and really a genuine friendship at the personal and professional level. We're very grateful. And AMD was an early believer and supporter of World Labs. But really, what's most fundamental and important and exciting. About this merger is the shared vision for the future of AI. World labs has been a frontier, um, model building company. We have been running as fast as we can to build the next generation multi-model, um, omni model for our spatial and physical intelligence. And as our company grows, so is our ambition. So is our need for compute. And at this point, if we can join forces with AMD, we really are, um, giving ourselves and AMD in the ecosystem an opportunity to accelerate this flywheel between software and hardware development, which is critical, critical for today's AI development. Yeah, the the big deal there. At least the CEO of AMD and of course their World Labs speaking exclusively to our colleague, of course. And uh, Ludlow. Okay. Uh, just this some other corporate stories that we're tracking at this point. SpaceX s Space X's massive Starship rocket has reached orbit for the first time. 2.26 upgraded V3 Starlink satellites. But the mission was cut short after an engine failure, and the spacecraft then splashed down near Hawaii about three hours after launch. The 14th test flight marked Starship's first successful satellite delivery and a major step towards routine launches to expand the Starlink network, writes uh. Goldman Sachs has reportedly discussed a plan for CEO John Waldron to succeed David Solomon as the CEO as soon as next year. The Wall Street Journal cites anonymous sources saying Waldron could take over toward the end of 2027 or in 2028 with Solomon to move into an executive chairman role. Now, last year, Goldman's board gave Waldron a restricted stock package, now worth nearly 20 million to stay. Five points. Wow. Uh, yeah. Certainly. Incentive to stay. And then just wait a little bit. Possibly here. Um, as now, the Goldman heir. It'll be much more apparent. Now, according to the journal. Uh, market moves right now, it's still the likes of the internet platforms that are falling here today. Uh, Alibaba, Tencent, uh, Sharma as well. Geely Auto, that's one of the we're seeing 8% losses there. Uh very different. We're seeing when it comes to Android Auto which did announce that upsized stake when it comes to Toyota. Uh, we're also watching uh, when it comes to Hong Kong, I mean, it seems to be like tech is leading the losses there when it comes to the Hang Seng here today. We talked about A over H. And, you know, it was interesting Franklin Templeton. Nicholas Choy did mention right. He has never in his career see the gap this wide in terms of the outperformance versus A versus H. Right. And maybe there's an opportunity now to lean back into the Hong Kong story. Yeah. And what's interesting there was the the the amount of income that they're getting just by waiting. Not just on the banks. Banks. Right. He's getting a lot of the pay that I need. And interesting there to me was the call on holding that one gold stock in their portfolio. Right. Because that call he says pays off or that position pays off, even if the gold price doesn't go up. If it goes up, that's cherry on top. Mhm. Uh, so I think stay tuned of course for that one as this link of this one goes on YouTube. And of course I know of course a lot of you catch us there. So we'll see you there in a moment. I would scroll to the very end, of course, of the interview. He talks about the gold price there and so yes. Can't wait to see you all in the comment section. Uh Hang Seng. Index. Uh, we are doing, uh, as we go into the last hour of the morning session there. And of course, it's going to be a very strange week because we're getting late and turn over and you don't have to stop. Of course. So not to talk about. Of course. Yeah. You know, we talked about the CSI 300 basically dropping to one year lows yesterday. Right? I think the tech sector in the hardware name certainly is feeling the pressure now. I mean, there have been a little bit more concerns about U.S. sanctions on the optical stocks. Also, when it comes to the chip makers here, this report that maybe China is nudging or at least urging more of these companies to buy Nvidia chips as well. So there's still might be some headwinds going through when it comes to the Asia eye plays. In some ways, GM is looking like this year it really is still that rising yield story across markets here. Of course at 40 year JGB auction is underway as well. We'll watch that closely. In terms of what sort of demand picture we could be seeing. If you see a pretty weak result, what does this mean for this whole sell off here? Could it just add more fuel to the route? Yeah. Which as things stand, uh, we have about a few days left. We are set for the worst month for U.S. treasuries, going back about two years. So value, in fact, has emerged. Whether that that is something you take advantage of. I'll leave that to you guys. That's it for us here on the China show. We will see you all tomorrow. Thank you for joining us today.