Key Insights on Asian Markets and Economics

It is almost noon here in Tokyo. Welcome to Bloomberg Markets Asia. I'm Heidi Stroud. What's and these are your top stories. Asian stocks are catching a tailwind from Wall Street's tech driven rally ahead of the US inflation report. China, meanwhile, cracks down on short sellers. Also ahead, President Biden's advisers to meet with Senate Democrats as more party voices question his decision to stay in the White House race. The Indian earnings season is set to kick off with software major TCS, but investors are hoping for strong numbers to justify these high valuations on Indian equities. And we speak to the founder of Gem Music on the stake sale to Tencent, which valued the unit of Thailand's biggest media conglomerate at $700 million. But first, let's check in on how Asian markets are faring with this report from that Wall Street session. April Hong is in Singapore. April. Yeah, Heidi, we're seeing that US rally echoing loud and clear in this part of the world. We saw the S&P 500 on that. You know, another record COD stop won't stop. Right. And this part of the wall, I think we're seeing the Apple supplies along with the chip stocks that's lifting the gauges across the region. A couple of themes in there, including Apple saying no ship, more iPhones. We had Samsung unveiling its new phones. And then, of course, just a day ago, TSMC sales is this is what you see in stocks. But also keep in mind how Powell saying that inflation doesn't have to hit 2% before we see rate cuts. Also providing support for Asian currencies against a backdrop of a softer dollar. Keeping a close eye on the one today, the bok kept things unchanged and the governor did say that a couple of members are open to rate cuts in the next few months. But they also talked about how the market expectations for easing seems excessive. So the sense you get is that they'll keep things restrictive for a while. Korean one actually extending gains. That's for the board. And take a closer look at stocks in Taiwan. As you see here, the TAIEX is really outperforming. What's behind that. We see TSMC going from strength to strength. Yesterday we saw second quarter numbers or rather for the month of June, and it showed that the sales growth fastest pace in two years. Keep in mind that this company is the sole supplier for NVIDIA and Apple's advanced chips. What we're looking out for next is is earnings call next week, whether it shows that it can negotiate higher prices that will be useful for its earnings growth. These are the chip stocks in Taiwan that are lifting the benchmark. We also have Largan, the Apple supplier, doing quite well today. Heidi. Haverhill Hong there in Singapore. Let's get some more when it comes to this tech driven rally. Our reporter Adam Vogel is joins us out of Hong Kong. So belt is there's a lot of crosscurrents going on and some of them are sort of idiosyncratic stories. But broadly, it is just this rotation between the eye and the Fed narrative that is driving this markets. Yeah, that's right. And it's really just helping to boost those stocks today. I mean, April already kind of went over a lot of the headlines there around these expectations for a cut. You can add to that the TSMC figures that we got out yesterday, the monthly sales numbers telling us that we're likely to see or we will see analysts expectations for the entire second quarter being exceeded next week. And as well, that focus on CapEx and what signal there, what else is really driving it is just analysts continuing to be more bullish. So, for instance, we've seen that China securities upgrading its price target for SK Hynix. We've got that name trading at its highest level going back all the way to 2000. So there's clearly a lot of headlines that you also add on more of the that the macro focus as well because for instance, we had those export numbers coming out this morning for Korea the first ten days of the month. And again, it is that stronger number of shipments, outbound shipments that we're seeing tells us the worst of that semiconductor slump is over perhaps. Some of the enthusiasm over at Apple was obviously with the Apple intelligence features in the iPhone 16 that are being hinted at. But we're seeing other devices integrating A.I. right, as well, including from Samsung. Yeah. So we had the Samsung Unpacked event overnight. And really, if you would just take one word that came across, it really was AI. We had it being integrated into into new devices that came out. We saw the new foldable phones, the latest iterations, the the the new watches coming out, a new ring as well. All of this just infused with this artificial intelligence and a lot of really cool different features. Samsung is really trying to to face off Apple, particularly in that wearables segment. The ring that is something that we haven't really seen a lot of true competitors in that space. So so something that will be really trying to push quite strongly. So that's that Samsung, that's the story from them. And then Apple as well, as you mentioned, that was the other one to watch because we had a Bloomberg scoop out saying that essentially they're going to be increasing the number of shipments this year. And it comes at a time where it has really not been the best year for Apple. Right. Could this be the turn around? Yeah, it certainly seems to be the case, actually, because as you said, yet, we've had a couple of years of really sluggish sales numbers, quite anemic really for Apple, particularly in the Chinese market, where, of course, Apple faces very stiff competition from the homegrown players and has been losing ground there. Samsung as well. Actually, Dimension has only got a very small slice of the sales pie in China. They're also trying to boost their demand there or sales, particularly with those foldable phones. But to Apple, Yes. So they had their their own worldwide developer conference last month. And in that they introduced this new thing called Apple intelligence. And they're trying to again integrate offerings that work in WeChat GB for instance to to. So this into really all of their different devices. And so now we're getting a sense of what sort of sales we can expect later this year. Apple what we're hearing from sources is a Bloomberg scoop, but Apple is expecting 90 million iPhone shipments in the latter part of 2024, and that's about a 10% increase on devices. Again, that sluggish sentiment does sort of give a bit of a favorable comparison effect, but still good for Apple all the same. We have seen those supplies mostly moving a bit higher, looking a little bit mixed at this point in time, though. How concerning in the longer term is the reliance on China for. Well, it certainly has been, of course, a bit of a pain point for Apple and and questions over whether it could be able to sustain its its edge or its market share in that country. We did have some reporting out a couple of months back saying that Apple was looking to lose a lot of ground in the country. That was sort of debunked in the latest sales numbers that came through. And Apple was saying that that they actually were seeing some pretty strong numbers there. It is that sort of geopolitical overhang as well that that comes across, particularly for Apple. And you are seeing, for instance, government agencies that are being told that they can no longer use Apple devices as a yes. It's always that constant tussle, Apple versus the homegrown players. Adam was there in Hong Kong. And as Bill mentioned, that geopolitical overhang likely to persist regardless of who is in the White House following November's election. But certainly this is really one of the top issues for investors in terms of the very candidacy for the Democratic Party. President Biden's re-election campaign is facing mounting opposition now within his own party, a Senate Democrat calling for him to step aside. That's after the former House speaker, Nancy Pelosi, told MSNBC that Biden needs to decide quickly if he will stay in the race. Bloomberg's news desk editor Jill de CES joins us now from Singapore. And Joe, it was interesting, the op ed in The Washington Post from the Vermont senator was really kind of the first explicit call out from within the Democratic camp for the for the president to step down. Are we still seeing that level of defiance from Biden? And is the pressure just getting to a point where perhaps it's not as easily surmountable? Yes, Heidi, I think at this point it's a pretty difficult path right now for Biden. He obviously remains incredibly defiant about how he's staying in the race. So that really hasn't changed from his perspective. But, yes, you are seeing this continued pressure from the Democrats, as you just mentioned there. Peter Welch, the Democratic senator from Vermont, being really the first sitting senator to come out and say that Biden should step aside. What that actually means in terms of, you know, whether whether there's any others who come out. We'll have to see. But it does seem at least like there is some of that pressure. You mentioned Nancy Pelosi. I mean, Nancy Pelosi saying essentially that it's up to the president to decide what he wants to do. I mean, you know, she's saying that, but at the same time, Biden has kind of already made his intentions clear. So the fact that you still have these kinds of, you know, nebulous comments from Nancy Pelosi, not exactly, you know, this kind of full throated support for the president staying on the ticket there. I think all of that kind of combines to show that in the wake of that really disastrous debate performance from Biden, this pressure just doesn't really seem to be going away right now. Yeah. And Senator Walsh's remarks in his op ed saying we can't unsee that debate performance. Right. We're also seeing reports that Majority Leader Chuck Schumer may be open to replacing Biden on the ticket. What are we hearing about that? And I guess a broad question of if he does step down from the race, who could meaningfully replace him, who could actually perform quite well against the former President Trump? Yes. Well, the the Chuck Schumer reports those are coming out of the news outlet Axios. I mean, he hasn't obviously made that those concerns public knowledge. But we'll have to see whether or not that changes over the course of the coming days in terms of who could actually replace Biden on the ticket. I mean, obviously, the primary choice there is Vice President Kamala Harris. She's already on the ticket. But, of course, you know, there are questions about whether or not she's the most viable candidate to actually, you know, potentially beat Donald Trump in the November election. I mean, there were a lot of concerns about, you know, her viability earlier. There's been some recent polls showing maybe she pulls a little bit better than Biden. But, you know, in the absence of Kamala Harris actually stepping up and being that nominee, then you kind of open the door for maybe a, you know, an open convention in August once the Democrats actually meet. And that could pose some additional challenges for the Democrats if they're fielding a brand new candidate, maybe one of the maybe one of the state governors just in a few months before the election. President Biden's speech to open night, who was largely regarded as a very strong and quite compelling. But we're also hearing that some of that lack of confidence is playing out at the NATO summit still. Yes, we'll have to see how Biden does in another press briefing that's happening Thursday. So he's expected to take perhaps some Q&A from reporters at that press briefing. I mean, at this point, pretty much any public appearance that Biden has is something that has an opportunity to show whether or not he remains fit for office, at least in the eyes of the public and among a lot of, you know, major Democrats there. So we'll have to see whether that, you know, that upcoming press conference on Thursday actually fulfills that purpose. There's also some reports that you've got, you know, White House aides going to Capitol Hill to try to assuage any fears from the Senate as this, you know, from some of the Senate Democrats, from some of those Democratic lawmakers as this process continues. But, yes, certainly massive week for Biden right now with this ongoing NATO's summit, with that opportunity to once again speak in front of the public there to meet with a lot of these European and other North American leaders. And then obviously at the same time, a lot of his staff trying to assuage those concerns among Democrats. And it's a really, really big week for the for the Bidens, to say the least. We'll be watching that very closely. Joe DeSantis, a Bloomberg News desk editor there with the latest out of Singapore, Still ahead on the markets, Asia. We'll be speaking with the founder of the Thai entertainment platform, Jammin Music, about their collaboration with Tencent and how the deal could grow the business in China and beyond. That's coming up later this hour. This is Bloomberg. Let's get a look at how Asian stocks are performing on what is broadly a pretty good day as we follow the lead from Wall Street. Overnight, tech lifting indices across the region. We see Hong Kong looking pretty robust there, 1.3% higher. Watching for the reaction when it comes to expectations going into the third party plenum kicking off on Monday and the U.S. tightening short selling rules as well. The cost be as well as trading here in Tokyo really being lifted by that big tech rally. TSMC at record levels with the sole supply of NVIDIA in Apple's most advanced chips. Looking at those second quarter sales, they grew at the fastest since 2022. Also seeing some gains when it comes to Samsung, despite, of course, that ongoing labor strike situation that is yet to be resolved. And Australia, we are just within a whisker, about ten points away, I believe, from a fresh record high harking back to that closing record high previously in late March. We'll be watching that if if we get there on that closing basis today, our next guest says we may be seeing that sweet spot for Asia equities. Let's discuss all of that with Eddie Lowes, the CEO of Maybank Group Wealth Management. Eddie, if you take a look at the trading action today, pretty hard to argue with that outlook. Well, it has been a pretty impressive first house for US assets. And as we enter the second half, we believe the macro landscape remains constructive and favorable for both equities and bonds. Equities will be supported by rising corporate earnings, whereas peaking rates are low. I think that would be supportive of bonds carry as well. But having said that, there are actually stories out there shifting expectations around inflation and rate cuts as well as the upcoming US election. So I think that will trigger market volatility from time to time, as your suggestion to investors is really to maintain well-diversified portfolio with a multi-asset approach to optimize and the investment returns an outcome. Where do you see the most compelling opportunities within Asia then? Well, I think within equities, as we think Asia is in the sweet spot, given the fact that valuation is still undemanding and it is actually supported by not just China, but also other growth markets within the region such as India, South Korea, Taiwan, because of the even ASEAN, I think countries like markets like Singapore, Malaysia, I think that's been doing pretty well actually recently. And so I think as a whole we are suggesting investors to adopt a broad Asia exposure in order to get that smooth investment journey, reaping the benefits of diversification with an increased focus on dividend play, just to have that at the resilience. The Bank of Korea was really interesting today, like they didn't move. That was fully expected, but the signaling seemed a whole lot more compelling for the doves than perhaps we even thought going into it. Do you think the start of perhaps that easing cycle as expectations build towards August is going to change the outlook when it comes to Korean equities, which have gained some of that excitement on the back of the rally in Japan as well? Well, Lee, we believe that while we think of Korea, Singapore was within expectations, but there are some believe that Bank of Korea will start thinking about cutting in the fourth quarter. And in general, I would believe we are seeing similar trend across Asia, where central banks in Asia are watching this very closely before taking rate cut actions. I think partly because of concerns over currency stability. But once once the Fed start cutting rates, I think Asian central banks will be in a better position to start easing as well, and that will bode well for the economy and growth and that will be including the likes of South Korea. And perhaps more significantly than for most other central banks, The bear. AJ Right. How much of a quick pivot or action could we see once we have a bit more certainty from the Fed, from the Vijay? Well, I think the DOJ caught some investors by surprise by not intervening when Dollar again breached that 160 month level again. Our suspicion is that the central bank is really trying to reserve their annual firepower ahead of the Fed rate cut that is expected to come through sometime this year. So in the meantime, we do expect the Bank of Japan to perhaps hike in July, start tapering their bond purchases. But I think what really matters more for the yen trajectory is the fact, because should the Fed really embark on the rate cutting trajectory, that should probably lead to a more sustainable strengthening of the yen against the dollar. Knockers are proven to be pretty good at ignoring geopolitical risk. Do you think that's going to be a major catalyst or driver going into the second half? I think geopolitics in particular, U.S. elections, we are getting quite a bit of questions surrounding it, and I believe it will trigger some market volatility, including Asia assets. Because if we think about it, should Trump win a second time, He's talking about imposing 60% tariffs on China and 10% tariffs on the rest of the world. That will create some uncertainty on the rest of the markets. But having said that, this time could be different from what maybe, you know, considering or maybe more willing to cut deals or deal Yoshi with other countries to strike a win win. So we shall see. We shall see when it comes to China as well. I know you know, in your notes you say all eyes are on the third plan, which gets underway at the start of next week. But it feels like expectations that are so incredibly low at the moment, investors don't really hold much confidence in policy measures that might be really meaningfully impactful. Well, indeed. And then probably because if you take a look at the recent macro data, especially with the recently released June CPI data, it came in slightly below expect a 2.2% year on year. So it reflects a soft domestic demand banking, which is linked to a lack of confidence across consumers as well as businesses. So we need more policy support as required for China in order to meet its official GDP target of 5% for 2024. Now, having said that, we have seen somewhat of a reluctance from Chinese policymakers to really launch big bazooka stimulus. So given that fact, they look at valuations today and they say China is actually trading below ten times forward. P We we believe that market expectations for any kind of big stimulus during the plenum I think is quite limited, which, you know, in some ways suggests that perhaps there is potential scope for upside surprises still affected. Very little has been priced in. Yeah. In fact, one of the options being back economics is set out is is is fed style QE. But that's a pretty, pretty big call if there are any expectations for China to do that. Eddie, really great to have you with us. Eddie Love Maybank Group, Wealth Management. Much more ahead. This is Bloomberg. Okay. Go's founder, Bill Fong, has been found guilty of criminal charges stemming from his firm's multibillion dollar collapse. Bloomberg's Vonnie Quinn has more from the federal court in Manhattan. Tiger Culbert. But Bill Hwang, the founder of Archegos Capital Management, found guilty of a raft of criminal charges in Manhattan today. These pertain to racketeering, conspiracy, two counts of securities fraud, wire fraud, and several counts of market manipulation, in particular stocks such as Viacomcbs Discovery and Tencent's. U.S. Attorney Damian Williams of the Southern District of New York said that Hwang intentionally lied to Wall Street banks to try and help the trading capacity of the firm in order to intentionally move the prices of stocks in the portfolio higher and that this new move just continued and continued. The defense, for its part, said it couldn't have been a pump and dump scheme because Hwang never sold a single share. There was no dump. Defense also saying that the wipe out was due to a black swan event or indeed a week where there was a perfect storm. Now that week came March 22nd of 2021. It was a week where Viacom issued more shares and the SEC said it was cracking down on some China companies listed in the United States. Two events very detrimental to archegos his portfolio. Within hours, margin calls started coming in from various banks and by Friday, Archegos was no more. And collectively, banks across the street were down 0 billion. Sentencing, which in theory could be up to 200 years, at least for Hwang, but is obviously likely to be a fraction of that is set for October 28th. Both Wong and Halligan are likely to appeal. Vonnie Quinn Bloomberg News. Take a look at you when it comes to the House's crackdown on short selling on quant trading in China. These are some of the higher short interest stocks that we're watching at the moment. We are seeing some of these pharma companies in particular seeing a rise as we see the securities watchdog tightening the short selling rules to bolster the equity markets. We saw some of the most extreme steps yet to restrict short selling and quant trading strategies. They are really looking at to support the nation's sliding stock market ahead of that third plenum. So this is an increase in margin requirements for short selling to take place from July 22nd, essentially making those trades more expensive for hedge funds and other investors. More ahead. This is Bloomberg. I'm. All right, let's check in on China. Marcus, As I head out to lunch, I'll get over to Abraham, who's in Singapore, where we are seeing this kind of, I guess, maybe a knee jerk boost to sentiment from the U.S. policies on short selling. Yeah, absolutely. And we're seeing stocks on the mainland in recovery mode, perhaps unsurprising, as you alluded to there, those tighter restrictions on short selling. So we're seeing among the stocks that are gaining ground, those with outstanding shorts and also perhaps unsurprising given how many of the stocks on the CSI 300 were in oversold conditions coming into today. And we are seeing also the CSI 300, as you know, has been trending lower since May, I think is down about 7%. As for the board, because even as we see this rebound today, keep in mind a couple of market indicators, including how there's this lack of market breadth. Right. If you take a look at the number of stocks that are in oversold conditions, it's about the same as way back in February this year, despite the CSI 300, based on levels not as low as the rout in that month at around 3200 level. So it doesn't look as bad on the face of things. But keep in mind the market breadth or lack thereof, the the board, again, because I wanted to bring you some of the data in terms of trading activity for Shanghai and Shenzhen. And if you go back to September 20, 22, it looks almost as bad as back then. That was when China was in the midst of harsh lockdowns. Investor skepticism was really, really high. And another thing to note was that that came just ahead of the 20th party Congress. So some parallels ahead of next week going into the third plenum, Heidi. Thanks. Over there in Singapore and sticking with China, economists are saying that Beijing does have the firepower to end its housing crisis at the upcoming third Plenum, but it's unlikely to pull that trigger. China correspondent in Manila joins us now from Hong Kong with more. So women, Bloomberg Economics are going through some of these scenarios and some of them are they are big bank options, right, of how the PBOC could step in. Now, Bloomberg economics colleagues look at three different scenarios of how much money the U.S. could point to inject into the market because the current lending facility injecting ¥300 billion to help as or ease buy back unsold houses is expected to only mop up less than 1% of the unsold housing. So if the PBOC really pull out the big guns and follow in the footsteps footsteps of what the Fed did back in 2008 after the global financial crisis, that would mean injecting about ¥24 trillion into the market and that would help mop up 70% of unsold houses. If they do it on a smaller scale, just following on the OECD's footsteps after the European debt crisis, injecting about ¥13 trillion into the market, that would help mop up nearly 40% of unsold houses. But of course, this quantitative easing of such a large scale would come at tremendous cost. It would mean further devaluation of the yuan, perhaps causing inflation as well, and heavier debt burden for both state owned enterprises and local governments as well. So what's most likely to happen? Our Bloomberg Economics colleagues think in that third scenario, which is a repeat of what the government did for the shantytown redevelopment program in 2015, where the PBOC could inject maybe 3.5 ¥3.6 trillion into the housing market to mop up about 10% of unsold houses. Now that's projected to create low cost housing for about 1.6% of the population and projected to increase GDP growth this year by 0.2% and by one percentage point in 2025 and 2026, respectively. So those are some of the measures that could possibly come out. But we don't think the government is going to really pull out the kind of stimulus that markets are expecting. And we've seen, of course, ahead of that, the securities watchdog tightening those rules on short selling, on current trading, high frequency trades to try and crack down what it calls improper arbitrage. We're seeing that boost on the markets at the moment, which obviously plays well going into a big event like the Third Plenum. But what are the implications of these changes? Yes, So China has now approved stock exchanges to increase the margin requirement for short selling. So investors now need to put in a 100% deposit equivalent to the value of the securities that they are trying to borrow. And private funds participating in stock lending as well have to increase their margin requirement to 120%, up from 100%. And in the meantime, China's largest stock lending provider is going to suspend its lending to brokerages starting from July 11. That's likely to give a short term boost to the stock market. We already see the effects of that this morning after the CSI 300 cap, about seven weeks of losses last Friday. Another area that the psychology is looking into is quant trading. So they are looking to guide stock markets to impose new monitoring standards and delineate red lines for abnormal trade. And they're also considering charges for additional traffic on high frequency train as well. And they will work with their Hong Kong counterpart to find a mechanism for investors to report their tweets through that stock, not down stock link as well. So what this will do is reduce the long shot strategies and the scale of those strategies that investors take and possibly reduce excess returns as well. A China correspondent. Women though there. And as we head towards the start of trading in the Indian equity markets, Tata Consultancy Services will be one to watch today. Take a look at how they've perform year to date. We've got the earnings due out later on today and we are expecting another quarter of lacklustre numbers. This is of course a major tech bellwether, continuing to see clients avoiding discretionary spend, inflationary and cost pressures still being major issues there and hurting companies like Tata also think global peers like Accenture have really struggled with weakening revenues as clients curtail a lot of that tech software service related contract spending. So one to watch in the session, but of course, kicking off a big earnings season in India. And investors are hoping for it to be a robust one to justify these high valuations on the country's equities. But strategists say they could be disappointed by lacklustre growth. Let's bring in our Asia equities reporter S.J. Chakraborty, who joins us now from Mumbai. And it would have to be quite a significant outperformance here to be able to justify not just a rally this year, but the 11% recovery that we've seen since that election related sell off. Yeah, absolutely. I mean, the the return of Prime Minister Modi, did you know, stocks after that sell off on June 4th, when the outcome was quite surprising compared to what the markets were expecting. But now the picture, you know, turns to the earnings season. And clearly at this point of time, strategists are not that confident that the valuations that we have currently can be justified with the sort of earnings growth that they are expecting for the first quarter of the financial year. At this point of time, Citigroup is forecasting about a 2% year on year growth from the for first quarter Nifty50 companies. Motilal Oswal is expecting about 4% growth. So that is very low compared to the 11% year on year growth that we saw in the last quarter of the previous financial year, which was for the March quarter for Indian companies. So at this point of time, it seems like earnings will probably not be able to support the run up that we have seen in the market. And, you know, that could raise questions about the pricing valuations that Indian equities have. Could tech offset some of that pressure? Well, the one sector that, you know, analysts are actually expecting to help is the technology sector. I know that, you know, TCS is going to report earnings today and expectations are pretty low for the company. But Nomura recently came out with a bullish call on the sector, saying that they expect the first quarter earnings, earnings growth or revenue growth to, you know, the slowdown that we have as we have been seeing good bottom out in first quarter and then we can start seeing recovery in the coming quarters. Motilal Oswal also upgraded a sector from underweight to slight overweight, indicating that they are quite optimistic on that sector. But of course if you look at the macro picture, the upcoming federal budget now becomes very crucial for the stock bulls because there is expectation that the government will continue to step up, even though, you know, spending on infrastructure as well as supporting the consumer economy, which came into sharp focus during the election period in April and May. What are some of the factors that might be able to keep propelling this rally if earnings are slowing, given that we're seeing, you know, both stocks and profit expectations pretty close to record highs? Yeah. I mean, that is the that is the conundrum right now for investors, right? If you look at, you know, 12 month forward profit estimates, they are currently at record highs. Indexes and the Nifty50 and the Sensex just came off the record highs yesterday, but overall are still perched in uncharted territory at this point of time. If earnings do not support, then what will? Well, a blockbuster budget could go a long way in, you know, helping, you know, today's expectations, especially on the mining side when it comes to 2025 and 2026 projections. But the other factor that has been really, you know, been an underlying theme for this market is the liquidity that is available, especially from the domestic investors. We just saw in the month of June. Equity schemes or equity plans for mutual funds got inflows in excess of 40,000 crores, which is, you know, a humongous number of humongous number when it comes to Indian equities as hyperbolic or systematic. Investment plans are trending north of $2 billion a month. So clearly, there is a lot of liquidity available and a lot of investors, you know, are parked on the sidelines at this point of time to buy in to any sort of dips that this market could see. Oh, Asia equities reporter S.J. Chakraborty there in Mumbai with potentially a bit of a warning going into this earnings season. Take a look at out India markets just ahead of the trading open. And we've had quite a lot of oscillating price action this week. That record high just earlier in the week before a pullback in the previous session, really a little bit of profit taking perhaps before a significant earnings season. We are seeing quite a bit of upside, though, going into the start of cash trading. And, you know, even with the potential weakness that could come through with earnings, this is a market that remains on course to outperform the Asian peers for a fourth straight year. Let's bring your co-anchor Haslinda Amin now, who joins us now out of Singapore, who's about to speak to a special guest. Haidi, we're talking to the man who runs Thailand's gaming Music is behind big Thai artists like Big Slam, Big Ass. I'm not sure I'm supposed to say that on TV. Big Bird, Tung Chai. We'll find out why it's sold a 10% stake to Tencent. And what about its IPO plan? Is it on the back burner given the, like, last a Thai stock market? We'll get answers from the company in just a moment. Keep it here with us. This is Lambi. You're watching Bloomberg Markets. Asia and Chinese tech giant Tencent recently agreed to acquire a 10% stake in Thailand's gem music, valuing the company at $700 million. And it comes after nearly a year after its parent company, GM, Grammy, approved a plan to spin off the firm and listed on the Thai stock exchange. Let's get back to Singapore now, where co-anchor Haslinda Amin is with our next special guest has so on. And Jim and Grammy, of course, is a dominant player in the entertainment space in Thailand. Let's discuss GM music's future plans with founder family. Dan Chai, Tom Foreman. Good to have you with us. First off, you sold a 10% stake to Tencent. What's the logic? What's the business sense? Well, just to give you a context first, and for an underlying global market in terms of music industry, we are growing into what we call a second wave boom. So just to put that into a context, the second wave boom is the market is booming very fast right now globally. And so it's the right time to get into a partnership with Tencent. So in terms of the market globally, we have gone double size in terms of revenue from 2015 right now to number two, it doubled to. Well, it's been it's been growing in billions right now. And as a projection in forward in six years, it's going to double again in 2030 according to Goldman Sachs landmark study of music in air. So the market has growing very fast, especially Thailand, Thailand. Everybody is saying that the country and the music streaming is taking off in Thailand. So we have been growing around 30% year on year in terms of music subscription. So we have been growing very fast. Altogether in Asia, Asia has been growing faster than global market at around 15% growth year on year and compared to about 10% growth globally. But presumably the stake sale to Tencent is to tap the China market. How much potential do you see there? What's the ambition? Well, we are trying to get a global alliance across different key markets, especially in Asia and beyond the global market as well. Pensarn is obviously one of the biggest market, one of the biggest players in China. China is obviously our target market as well. So we are trying to grow into a bigger market. Aside from China, we have been doing partnerships with other key markets in the in Asia market as well. We have a partnership with YG Entertainment, a label company that manages Blackpink. Okay. So K-Pop is obviously a very important movement in the music industry. So that's in Korea, Japan, the China market. Are you looking at would you like to go to 10% of it? What's a realistic target for China? Well, the thing that in the music industry has been growing is the music IP asset, right? So the music IP asset is is is music content, is artists, is concerts. And Tme, a subsidiary of Tencent in China has been very successful in their streaming business. So that's their success in China and they have been growing into the music business as well. They are doing a lot of live business in concerts, They are doing a lot of artist management as well. So those are the music apps that we are trying to collaborate with Tencent and TVB in China and we are trying to grow into China as well. And in exchange, Tencent will have their music regionally grow into Thailand through us as well. Are your IPO plans still intact? Yes, of course. So this investment strategy, investment with Tencent is actually a very important milestone for us to to to to go into IPO as as a roadmap when we're aiming for as soon as possible, which is depending on the market sentiment, depending on the market environment. So we are very optimistic about very soon this year to next year. So depending on the market, we are we are on plan right now. And what's the amount you're trying to raise? Well, let's just say we are going to be the only music pure play in the Thai stock market exchange. So we have a unique proposition in the in the market. And so because of our vision, our plan to grow outside of Thailand into the global market as well, and now that we have Tencent, now that we have other strategic partnerships in the region and outside of Asia as well, we are benchmarking ourselves to the Asian players and the global players in the music industry. So that's going to be our comparable in terms of valuation going into the IPO. Right now, the company is looking at a possible valuation of $700 million. Is that a fair amount that that was the investment valuation from Tencent, right? Right. So the investment was the Tencent and TMT came in at $70 million. Four 10% in German music, valuing the company at $700 million. So that was the investment from Tencent and tme. So that is, we hope to be a benchmark for us to grow on to and together with the investment itself. That's right. A partnership that we are trying to build with them. The collaboration that we are trying to build with them is going to make us bigger, hopefully, and it's going to make us grow into a bigger market with them across Asia. How are you assessing the IPO wing in Thailand? The asset has been pretty lackluster. It's down, I think, about six and a half percent year to date when the rest of the world is testing record highs. Well, the country has been in transformation, but we are still very optimistic about the stock market going forward. For us, the music industry has been growing, as I mentioned before. And for us, we have a unique proposition in the market. So that's why we believe that our position as a music pure play in the market alongside with our global partners, will make us unique in the market proposition regardless of the market environment. Just very briefly, when do you see TI Pop getting to the level of K-Pop? How long do you think that will take? We will hopefully very soon. That's that's why we are trying to do that's why we are trying to make alliances off in terms of the Asia music market and Asian music players together. And so we are going to a different markets in Asia and also beyond Asia. So we are trying to uplift our quality of production. We want to we want to upscale our opportunity outside of Thailand. And of course, we want to unlock the value of our company and unlock the value of the music industry. And hopefully that will happen within the next 2 to 3 years. Thank you so much for that. For my Chai Tum of GMA Music. Heidi, heading it back to you. She'll be listening to more tape up. I think as Malik, there is much more ahead. This is Glenn Beck and. Indian Prime Minister Narendra modi's embrace of Vladimir Putin on the eve of President Biden's Naito summit in Washington has frustrated U.S. officials. The Biden administration has made closer ties with India a cornerstone of his foreign policy. For more on this, we're joined by Bloomberg News reporter City Ranjan Sen, who joins us in city. We were talking, in fact, just yesterday about just the awkward timing going into the NATO summit and not to mention, you know, the U.S. and its allies attempts to try and isolate Russia and efforts to prioritize the relationship with India. Well, yes. I mean, I mean, this is what we are also getting to hear from on the ground that, you know, there has been a little bit of a disquiet or a discomfort within the US administration with Prime Minister Modi's visit and also the timing of the visit. As we all know, there was, you know, a major strike on a children's hospital in Kiev. The optics of the prime minister's visit was really, really not well and people, you know, were left wondering why at this point of time did the prime minister want to go to Moscow? Because he's not been to Moscow for some time. India, of course, saying that, you know, bilateral agenda had kind of piled up. And Moscow is an old ally of India. Indian military also depends largely on hardware from Russia. But that said, India is trying to go I mean, be closer to the US looking out for critical technology and also emerge as an alternative to China and build a manufacturing base. And that is where the discomfort comes because questions are being asked are likely to be asked within the US administration about why when the US is trying to help India, India is not doing enough to isolate President Putin and punish him. And from what our reporting shows, my colleagues in the US and me here in New Delhi, what it shows is there have been calls from the US administration and from senior level enough to kind of express concern and also find out why we know the reason behind the visit. So definitely there is some kind of a discomfort within the US administration right now over Prime Minister's visit to Moscow. You talk about the reasons behind the visit, and that's quite interesting, isn't it? Because obviously the US sees its relationship with India as a counter to China. Does India see building this relationship with Russia as its own counter to China? Yes. I mean, Russia and China has been has been getting close. And that's that's, you know, really worrisome for India, because India and China, the relationship between the two neighbors in in South Asia are, you know, are not good at all. In fact, thousands of soldiers are still mobilized and deployed along the disputed Himalayan border. And, you know, India is seeking steps to kind of discourage Chinese investments. So the India-China relationship is really, really poor at that point of time when, you know, when China and Russia getting closer is a cause of concern for Indian. India's all to try to shore up the Russian relationship and not let Russia completely drift to to a you know, into the Chinese embrace. So that is the India, you know, that is Indian maneuvering that is there, but it's really not going down well in the in Washington. Nexus City Region Center with the latest When it comes to that geopolitical element, as of course, the NAITO anniversary summit gets underway. Take a look at how broadly Asian markets are tracking at the moment. And of course, this is still the rally that is being ultimately being supported by the tech space as well as these are Fed cut expectations. Right. And take a look at the form, a narrative. Taiwan Semiconductor, one of the biggest that we're watching at the moment, 2.4% higher. We had that three month figure of June cells expecting something of a blowout earnings report next week. We are seeing broadly that Apex Semiconductor index up about 40% year to date when it comes to broader indices futures, that is, we're seeing a little bit of weakness when it comes to US stocks after it has been record high after record high and just that longest winning streak that we've seen since November. Also watching Treasuries going into that CPI report. This is Bloomberg.

It is almost noon here in Tokyo.
Welcome to Bloomberg Markets Asia. I'm Heidi Stroud.
What's and these are your top stories. Asian stocks are catching a tailwind
from Wall Street's tech driven rally ahead of the US inflation report.
China, meanwhile, cracks down on short sellers.
Also ahead, President Biden's advisers to meet with Senate Democrats as more
party voices question his decision to stay in the White House race.
The Indian earnings season is set to kick off with software major TCS, but
investors are hoping for strong numbers to justify these high valuations on
Indian equities. And we speak to the founder of Gem Music
on the stake sale to Tencent, which valued the unit of Thailand's biggest
media conglomerate at $700 million. But first, let's check in on how Asian
markets are faring with this report from that Wall Street session.
April Hong is in Singapore. April.
Yeah, Heidi, we're seeing that US rally echoing loud and clear in this part of
the world. We saw the S&P 500 on that.
You know, another record COD stop won't stop.
Right. And this part of the wall, I think we're
seeing the Apple supplies along with the chip stocks that's lifting the gauges
across the region. A couple of themes in there, including
Apple saying no ship, more iPhones. We had Samsung unveiling its new phones.
And then, of course, just a day ago, TSMC sales is this is what you see in
stocks. But also keep in mind how Powell saying
that inflation doesn't have to hit 2% before we see rate cuts.
Also providing support for Asian currencies against a backdrop of a
softer dollar. Keeping a close eye on the one today,
the bok kept things unchanged and the governor did say that a couple of
members are open to rate cuts in the next few months.
But they also talked about how the market expectations for easing seems
excessive. So the sense you get is that they'll
keep things restrictive for a while. Korean one actually extending gains.
That's for the board. And take a closer look at stocks in
Taiwan. As you see here, the TAIEX is really
outperforming. What's behind that.
We see TSMC going from strength to strength.
Yesterday we saw second quarter numbers or rather for the month of June, and it
showed that the sales growth fastest pace in two years.
Keep in mind that this company is the sole supplier for NVIDIA and Apple's
advanced chips. What we're looking out for next is is
earnings call next week, whether it shows that it can negotiate higher
prices that will be useful for its earnings growth.
These are the chip stocks in Taiwan that are lifting the benchmark.
We also have Largan, the Apple supplier, doing quite well today.
Heidi. Haverhill Hong there in Singapore.
Let's get some more when it comes to this tech driven rally.
Our reporter Adam Vogel is joins us out of Hong Kong.
So belt is there's a lot of crosscurrents going on and some of them
are sort of idiosyncratic stories. But broadly, it is just this rotation
between the eye and the Fed narrative that is driving this markets.
Yeah, that's right. And it's really just helping to boost
those stocks today. I mean, April already kind of went over
a lot of the headlines there around these expectations for a cut.
You can add to that the TSMC figures that we got out yesterday, the monthly
sales numbers telling us that we're likely to see or we will see analysts
expectations for the entire second quarter being exceeded next week.
And as well, that focus on CapEx and what signal there, what else is really
driving it is just analysts continuing to be more bullish.
So, for instance, we've seen that China securities upgrading its price target
for SK Hynix. We've got that name trading at its
highest level going back all the way to 2000.
So there's clearly a lot of headlines that you also add on more of the that
the macro focus as well because for instance, we had those export numbers
coming out this morning for Korea the first ten days of the month.
And again, it is that stronger number of shipments, outbound shipments that we're
seeing tells us the worst of that semiconductor slump is over perhaps.
Some of the enthusiasm over at Apple was obviously with the Apple intelligence
features in the iPhone 16 that are being hinted at.
But we're seeing other devices integrating A.I.
right, as well, including from Samsung. Yeah.
So we had the Samsung Unpacked event overnight.
And really, if you would just take one word that came across, it really was AI.
We had it being integrated into into new devices that came out.
We saw the new foldable phones, the latest iterations, the the the new
watches coming out, a new ring as well. All of this just infused with this
artificial intelligence and a lot of really cool different features.
Samsung is really trying to to face off Apple, particularly in that wearables
segment. The ring that is something that we
haven't really seen a lot of true competitors in that space.
So so something that will be really trying to push quite strongly.
So that's that Samsung, that's the story from them.
And then Apple as well, as you mentioned, that was the other one to
watch because we had a Bloomberg scoop out saying that essentially they're
going to be increasing the number of shipments this year.
And it comes at a time where it has really not been the best year for Apple.
Right. Could this be the turn around?
Yeah, it certainly seems to be the case, actually, because as you said, yet,
we've had a couple of years of really sluggish sales numbers, quite anemic
really for Apple, particularly in the Chinese market, where, of course, Apple
faces very stiff competition from the homegrown players and has been losing
ground there. Samsung as well.
Actually, Dimension has only got a very small slice of the sales pie in China.
They're also trying to boost their demand there or sales, particularly with
those foldable phones. But to Apple, Yes.
So they had their their own worldwide developer conference last month.
And in that they introduced this new thing called Apple intelligence.
And they're trying to again integrate offerings that work in WeChat GB for
instance to to. So this into really all of their
different devices. And so now we're getting a sense of what
sort of sales we can expect later this year.
Apple what we're hearing from sources is a Bloomberg scoop, but Apple is
expecting 90 million iPhone shipments in the latter part of 2024, and that's
about a 10% increase on devices. Again, that sluggish sentiment does sort
of give a bit of a favorable comparison effect, but still good for Apple all the
same. We have seen those supplies mostly
moving a bit higher, looking a little bit mixed at this point in time, though.
How concerning in the longer term is the reliance on China for.
Well, it certainly has been, of course, a bit of a pain point for Apple and and
questions over whether it could be able to sustain its its edge or its market
share in that country. We did have some reporting out a couple
of months back saying that Apple was looking to lose a lot of ground in the
country. That was sort of debunked in the latest
sales numbers that came through. And Apple was saying that that they
actually were seeing some pretty strong numbers there.
It is that sort of geopolitical overhang as well that that comes across,
particularly for Apple. And you are seeing, for instance,
government agencies that are being told that they can no longer use Apple
devices as a yes. It's always that constant tussle, Apple
versus the homegrown players. Adam was there in Hong Kong.
And as Bill mentioned, that geopolitical overhang likely to persist regardless of
who is in the White House following November's election.
But certainly this is really one of the top issues for investors in terms of the
very candidacy for the Democratic Party. President Biden's re-election campaign
is facing mounting opposition now within his own party, a Senate Democrat calling
for him to step aside. That's after the former House speaker,
Nancy Pelosi, told MSNBC that Biden needs to decide quickly if he will stay
in the race. Bloomberg's news desk editor Jill de CES
joins us now from Singapore. And Joe, it was interesting, the op ed
in The Washington Post from the Vermont senator was really kind of the first
explicit call out from within the Democratic camp for the for the
president to step down. Are we still seeing that level of
defiance from Biden? And is the pressure just getting to a
point where perhaps it's not as easily surmountable?
Yes, Heidi, I think at this point it's a pretty difficult path right now for
Biden. He obviously remains incredibly defiant
about how he's staying in the race. So that really hasn't changed from his
perspective. But, yes, you are seeing this continued
pressure from the Democrats, as you just mentioned there.
Peter Welch, the Democratic senator from Vermont, being really the first sitting
senator to come out and say that Biden should step aside.
What that actually means in terms of, you know, whether whether there's any
others who come out. We'll have to see.
But it does seem at least like there is some of that pressure.
You mentioned Nancy Pelosi. I mean, Nancy Pelosi saying essentially
that it's up to the president to decide what he wants to do.
I mean, you know, she's saying that, but at the same time, Biden has kind of
already made his intentions clear. So the fact that you still have these
kinds of, you know, nebulous comments from Nancy Pelosi, not exactly, you
know, this kind of full throated support for the president staying on the ticket
there. I think all of that kind of combines to
show that in the wake of that really disastrous debate performance from
Biden, this pressure just doesn't really seem to be going away right now.
Yeah. And Senator Walsh's remarks in his op ed
saying we can't unsee that debate performance.
Right. We're also seeing reports that Majority
Leader Chuck Schumer may be open to replacing Biden on the ticket.
What are we hearing about that? And I guess a broad question of if he
does step down from the race, who could meaningfully replace him, who could
actually perform quite well against the former
President Trump? Yes.
Well, the the Chuck Schumer reports those are coming out of the news outlet
Axios. I mean, he hasn't obviously made that
those concerns public knowledge. But we'll have to see whether or not
that changes over the course of the coming days in terms of who could
actually replace Biden on the ticket. I mean, obviously, the primary choice
there is Vice President Kamala Harris. She's already on the ticket.
But, of course, you know, there are questions about whether or not she's the
most viable candidate to actually, you know, potentially beat Donald Trump in
the November election. I mean, there were a lot of concerns
about, you know, her viability earlier. There's been some recent polls showing
maybe she pulls a little bit better than Biden.
But, you know, in the absence of Kamala Harris actually stepping up and being
that nominee, then you kind of open the door for maybe a, you know, an open
convention in August once the Democrats actually meet.
And that could pose some additional challenges for the Democrats if they're
fielding a brand new candidate, maybe one of the maybe one of the state
governors just in a few months before the election.
President Biden's speech to open night, who was largely regarded as a very
strong and quite compelling. But we're also hearing that some of that
lack of confidence is playing out at the NATO summit still.
Yes, we'll have to see how Biden does in another press briefing that's happening
Thursday. So he's expected to take perhaps some
Q&A from reporters at that press briefing.
I mean, at this point, pretty much any public appearance that Biden has is
something that has an opportunity to show whether or not he remains fit for
office, at least in the eyes of the public and among a lot of, you know,
major Democrats there. So we'll have to see whether that, you
know, that upcoming press conference on Thursday actually fulfills that purpose.
There's also some reports that you've got, you know, White House aides going
to Capitol Hill to try to assuage any fears from the Senate as this, you know,
from some of the Senate Democrats, from some of those Democratic lawmakers as
this process continues. But, yes, certainly massive week for
Biden right now with this ongoing NATO's summit, with that opportunity to once
again speak in front of the public there to meet with a lot of these European and
other North American leaders. And then obviously at the same time, a
lot of his staff trying to assuage those concerns among Democrats.
And it's a really, really big week for the for the Bidens, to say the least.
We'll be watching that very closely. Joe DeSantis, a Bloomberg News desk
editor there with the latest out of Singapore, Still ahead on the markets,
Asia. We'll be speaking with the founder of
the Thai entertainment platform, Jammin Music, about their collaboration with
Tencent and how the deal could grow the business in China and beyond.
That's coming up later this hour. This is Bloomberg. Let's get a look at how Asian stocks are
performing on what is broadly a pretty good day as we follow the lead from Wall
Street. Overnight, tech lifting indices across
the region. We see Hong Kong looking pretty robust
there, 1.3% higher. Watching for the reaction when it comes
to expectations going into the third party plenum kicking off on Monday and
the U.S. tightening short selling rules as well.
The cost be as well as trading here in Tokyo really being lifted by that big
tech rally. TSMC at record levels with the sole
supply of NVIDIA in Apple's most advanced chips.
Looking at those second quarter sales, they grew at the fastest since 2022.
Also seeing some gains when it comes to Samsung, despite, of course, that
ongoing labor strike situation that is yet to be resolved.
And Australia, we are just within a whisker, about ten points away, I
believe, from a fresh record high harking back to that closing record high
previously in late March. We'll be watching that if if we get
there on that closing basis today, our next guest says we may be seeing that
sweet spot for Asia equities. Let's discuss all of that with Eddie
Lowes, the CEO of Maybank Group Wealth Management.
Eddie, if you take a look at the trading action today, pretty hard to argue with
that outlook. Well, it has been a pretty impressive
first house for US assets. And as we enter the second half, we
believe the macro landscape remains constructive and favorable for both
equities and bonds. Equities will be supported by rising
corporate earnings, whereas peaking rates are low.
I think that would be supportive of bonds carry as well.
But having said that, there are actually stories out there shifting expectations
around inflation and rate cuts as well as the upcoming US election.
So I think that will trigger market volatility from time to time, as your
suggestion to investors is really to maintain well-diversified portfolio with
a multi-asset approach to optimize and the investment returns an outcome.
Where do you see the most compelling opportunities within Asia then?
Well, I think within equities, as we think Asia is in the sweet spot, given
the fact that valuation is still undemanding and it is actually supported
by not just China, but also other growth markets within the region such as India,
South Korea, Taiwan, because of the even ASEAN, I think countries like markets
like Singapore, Malaysia, I think that's been doing pretty well actually
recently. And so I think as a whole we are
suggesting investors to adopt a broad Asia exposure in order to get that
smooth investment journey, reaping the benefits of diversification
with an increased focus on dividend play, just to have that at the
resilience. The Bank of Korea was really interesting
today, like they didn't move. That was fully expected, but the
signaling seemed a whole lot more compelling for the doves than perhaps we
even thought going into it. Do you think the start of perhaps that
easing cycle as expectations build towards August is going to change the
outlook when it comes to Korean equities, which have gained some of that
excitement on the back of the rally in Japan as well?
Well, Lee, we believe that while we think of Korea, Singapore was within
expectations, but there are some believe that Bank of Korea will
start thinking about cutting in the fourth quarter.
And in general, I would believe we are seeing similar trend across Asia, where
central banks in Asia are watching this very closely
before taking rate cut actions. I think partly because of concerns over
currency stability. But once once the Fed start cutting
rates, I think Asian central banks will be in a better position to start easing
as well, and that will bode well for the economy and growth and that will be
including the likes of South Korea. And perhaps more significantly than for
most other central banks, The bear. AJ Right.
How much of a quick pivot or action could we see once we have a bit more
certainty from the Fed, from the Vijay? Well, I think the DOJ caught some
investors by surprise by not intervening when Dollar again breached that 160
month level again. Our suspicion is that the central bank
is really trying to reserve their annual firepower ahead of the Fed rate cut that
is expected to come through sometime this year.
So in the meantime, we do expect the Bank of Japan
to perhaps hike in July, start tapering their bond purchases.
But I think what really matters more for the yen trajectory is the fact, because
should the Fed really embark on the rate cutting trajectory, that should probably
lead to a more sustainable strengthening of the yen against the dollar.
Knockers are proven to be pretty good at ignoring geopolitical risk.
Do you think that's going to be a major catalyst or driver going into the second
half? I think geopolitics in particular, U.S.
elections, we are getting quite a bit of questions surrounding it,
and I believe it will trigger some market volatility, including Asia
assets. Because if we think about it, should
Trump win a second time, He's talking about
imposing 60% tariffs on China and 10% tariffs on the rest of the world.
That will create some uncertainty on the rest of the markets.
But having said that, this time could be different from what maybe, you know,
considering or maybe more willing to cut deals or deal Yoshi with other countries
to strike a win win. So we shall see.
We shall see when it comes to China as well.
I know you know, in your notes you say all eyes are on the third plan, which
gets underway at the start of next week. But it feels like expectations that are
so incredibly low at the moment, investors don't really hold much
confidence in policy measures that might be really meaningfully impactful.
Well, indeed. And then probably because if you take a
look at the recent macro data, especially with the recently released
June CPI data, it came in slightly below expect a 2.2% year on year.
So it reflects a soft domestic demand banking, which is linked to a lack of
confidence across consumers as well as businesses.
So we need more policy support as required for China in order to meet its
official GDP target of 5% for 2024. Now, having said that, we have seen
somewhat of a reluctance from Chinese policymakers to really launch big
bazooka stimulus. So given that fact, they look at
valuations today and they say China is actually trading below ten times
forward. P We we believe that
market expectations for any kind of big stimulus during the plenum I think is
quite limited, which, you know, in some ways suggests that perhaps there is
potential scope for upside surprises still affected.
Very little has been priced in. Yeah.
In fact, one of the options being back economics is set out is is is fed style
QE. But that's a pretty, pretty big call if
there are any expectations for China to do that.
Eddie, really great to have you with us. Eddie Love Maybank Group, Wealth
Management. Much more ahead.
This is Bloomberg. Okay.
Go's founder, Bill Fong, has been found guilty of criminal charges stemming from
his firm's multibillion dollar collapse. Bloomberg's Vonnie Quinn has more from
the federal court in Manhattan. Tiger Culbert.
But Bill Hwang, the founder of Archegos Capital Management, found guilty of a
raft of criminal charges in Manhattan today.
These pertain to racketeering, conspiracy, two counts of securities
fraud, wire fraud, and several counts of market manipulation, in particular
stocks such as Viacomcbs Discovery and Tencent's.
U.S. Attorney Damian Williams of the Southern
District of New York said that Hwang intentionally lied to Wall Street banks
to try and help the trading capacity of the firm in order to intentionally move
the prices of stocks in the portfolio higher and that this new move just
continued and continued. The defense, for its part, said it
couldn't have been a pump and dump scheme because Hwang never sold a single
share. There was no dump.
Defense also saying that the wipe out was due to a black swan event or indeed
a week where there was a perfect storm. Now that week came March 22nd of 2021.
It was a week where Viacom issued more shares and the SEC said it was cracking
down on some China companies listed in the United States.
Two events very detrimental to archegos his portfolio.
Within hours, margin calls started coming in from various banks and by
Friday, Archegos was no more. And collectively, banks across the
street were down 0 billion. Sentencing, which in theory could be up
to 200 years, at least for Hwang, but is obviously likely to be a fraction of
that is set for October 28th. Both Wong and Halligan are likely to
appeal. Vonnie Quinn Bloomberg News.
Take a look at you when it comes to the House's crackdown on short selling on
quant trading in China. These are some of the higher short
interest stocks that we're watching at the moment.
We are seeing some of these pharma companies in particular seeing a rise as
we see the securities watchdog tightening the short selling rules to
bolster the equity markets. We saw some of the most extreme steps
yet to restrict short selling and quant trading strategies.
They are really looking at to support the nation's sliding stock market ahead
of that third plenum. So this is an increase in margin
requirements for short selling to take place from July 22nd, essentially making
those trades more expensive for hedge funds and other investors.
More ahead. This is Bloomberg.
I'm. All right, let's check in on China.
Marcus, As I head out to lunch, I'll get over to Abraham, who's in Singapore,
where we are seeing this kind of, I guess, maybe a knee jerk boost to
sentiment from the U.S. policies on short selling.
Yeah, absolutely. And we're seeing stocks on the mainland
in recovery mode, perhaps unsurprising, as you alluded to there, those tighter
restrictions on short selling. So we're seeing among the stocks that
are gaining ground, those with outstanding shorts and also perhaps
unsurprising given how many of the stocks on the CSI 300 were in oversold
conditions coming into today. And we are seeing also the CSI 300, as
you know, has been trending lower since May, I think is down about 7%.
As for the board, because even as we see this rebound today, keep in mind a
couple of market indicators, including how there's this lack of market breadth.
Right. If you take a look at the number of
stocks that are in oversold conditions, it's about the same as way back in
February this year, despite the CSI 300, based on levels not as low as the rout
in that month at around 3200 level. So it doesn't look as bad on the face of
things. But keep in mind the market breadth or
lack thereof, the the board, again, because I wanted to bring you some of
the data in terms of trading activity for Shanghai and Shenzhen.
And if you go back to September 20, 22, it looks almost as bad as back then.
That was when China was in the midst of harsh lockdowns.
Investor skepticism was really, really high.
And another thing to note was that that came just ahead of the 20th party
Congress. So some parallels ahead of next week
going into the third plenum, Heidi. Thanks.
Over there in Singapore and sticking with China, economists are saying that
Beijing does have the firepower to end its housing crisis at the upcoming third
Plenum, but it's unlikely to pull that trigger.
China correspondent in Manila joins us now from Hong Kong with more.
So women, Bloomberg Economics are going through some of these scenarios and some
of them are they are big bank options, right, of how the PBOC could step in.
Now, Bloomberg economics colleagues look at three different scenarios of how much
money the U.S. could point to inject into the market
because the current lending facility injecting ¥300 billion to help as or
ease buy back unsold houses is expected to only mop up less than 1% of the
unsold housing. So if the PBOC really pull out the big
guns and follow in the footsteps footsteps of what the Fed did back in
2008 after the global financial crisis, that would mean injecting about ¥24
trillion into the market and that would help mop up 70% of unsold houses.
If they do it on a smaller scale, just following on the OECD's footsteps after
the European debt crisis, injecting about ¥13 trillion into the market, that
would help mop up nearly 40% of unsold houses.
But of course, this quantitative easing of such a large scale would come at
tremendous cost. It would mean further devaluation of the
yuan, perhaps causing inflation as well, and heavier debt burden for both state
owned enterprises and local governments as well.
So what's most likely to happen? Our Bloomberg Economics colleagues think
in that third scenario, which is a repeat of what the government did for
the shantytown redevelopment program in 2015, where the PBOC could inject maybe
3.5 ¥3.6 trillion into the housing market to mop up about 10% of unsold
houses. Now that's projected to create low cost
housing for about 1.6% of the population and projected to increase GDP growth
this year by 0.2% and by one percentage point in 2025 and 2026, respectively.
So those are some of the measures that could possibly come out.
But we don't think the government is going to really pull out the kind of
stimulus that markets are expecting. And we've seen, of course, ahead of
that, the securities watchdog tightening those rules on short selling, on current
trading, high frequency trades to try and crack down what it calls improper
arbitrage. We're seeing that boost on the markets
at the moment, which obviously plays well going into a big event like the
Third Plenum. But what are the implications of these
changes? Yes, So China has now approved stock
exchanges to increase the margin requirement for short selling.
So investors now need to put in a 100% deposit equivalent to the value of the
securities that they are trying to borrow.
And private funds participating in stock lending as well have to increase their
margin requirement to 120%, up from 100%.
And in the meantime, China's largest stock lending provider is going to
suspend its lending to brokerages starting from July 11.
That's likely to give a short term boost to the stock market.
We already see the effects of that this morning after the CSI 300 cap, about
seven weeks of losses last Friday. Another area that the psychology is
looking into is quant trading. So they are looking to guide stock
markets to impose new monitoring standards and delineate red lines for
abnormal trade. And they're also considering charges for
additional traffic on high frequency train as well.
And they will work with their Hong Kong counterpart to find a mechanism for
investors to report their tweets through that stock, not down stock link as well.
So what this will do is reduce the long shot strategies and the scale of those
strategies that investors take and possibly reduce excess returns as well.
A China correspondent. Women though there.
And as we head towards the start of trading in the Indian equity markets,
Tata Consultancy Services will be one to watch today.
Take a look at how they've perform year to date.
We've got the earnings due out later on today and we are expecting another
quarter of lacklustre numbers. This is of course a major tech
bellwether, continuing to see clients avoiding discretionary spend,
inflationary and cost pressures still being major issues there and hurting
companies like Tata also think global peers like Accenture have really
struggled with weakening revenues as clients curtail a lot of that tech
software service related contract spending.
So one to watch in the session, but of course, kicking off a big earnings
season in India. And investors are hoping for it to be a
robust one to justify these high valuations on the country's equities.
But strategists say they could be disappointed by lacklustre growth.
Let's bring in our Asia equities reporter S.J.
Chakraborty, who joins us now from Mumbai.
And it would have to be quite a significant outperformance here to be
able to justify not just a rally this year, but the 11% recovery that we've
seen since that election related sell off.
Yeah, absolutely. I mean, the the return of Prime Minister
Modi, did you know, stocks after that sell off on June 4th, when the outcome
was quite surprising compared to what the markets were expecting.
But now the picture, you know, turns to the earnings season.
And clearly at this point of time, strategists are not that confident that
the valuations that we have currently can be justified with the sort of
earnings growth that they are expecting for the first quarter of the financial
year. At this point of time, Citigroup is
forecasting about a 2% year on year growth from the for first quarter
Nifty50 companies. Motilal Oswal is expecting about 4%
growth. So that is very low compared to the 11%
year on year growth that we saw in the last quarter of the previous financial
year, which was for the March quarter for Indian companies.
So at this point of time, it seems like earnings will probably not be able to
support the run up that we have seen in the market.
And, you know, that could raise questions about the pricing valuations
that Indian equities have. Could tech offset some of that pressure?
Well, the one sector that, you know, analysts are actually expecting to help
is the technology sector. I know that, you know, TCS is going to
report earnings today and expectations are pretty low for the company.
But Nomura recently came out with a bullish call on the sector, saying that
they expect the first quarter earnings, earnings growth or revenue growth to,
you know, the slowdown that we have as we have been seeing good bottom out in
first quarter and then we can start seeing recovery in the coming quarters.
Motilal Oswal also upgraded a sector from underweight to slight overweight,
indicating that they are quite optimistic on that sector.
But of course if you look at the macro picture, the upcoming federal budget now
becomes very crucial for the stock bulls because there is expectation that the
government will continue to step up, even though, you know, spending on
infrastructure as well as supporting the consumer economy, which came into sharp
focus during the election period in April and May.
What are some of the factors that might be able to keep propelling this rally if
earnings are slowing, given that we're seeing, you know, both stocks and profit
expectations pretty close to record highs?
Yeah. I mean, that is the that is the
conundrum right now for investors, right?
If you look at, you know, 12 month forward profit estimates, they are
currently at record highs. Indexes and the Nifty50 and the Sensex
just came off the record highs yesterday, but overall are still perched
in uncharted territory at this point of time.
If earnings do not support, then what will?
Well, a blockbuster budget could go a long way in, you know, helping, you
know, today's expectations, especially on the mining side when it comes to 2025
and 2026 projections. But the other factor that has been
really, you know, been an underlying theme for this market is the liquidity
that is available, especially from the domestic investors.
We just saw in the month of June. Equity schemes or equity plans for
mutual funds got inflows in excess of 40,000 crores, which is, you know, a
humongous number of humongous number when it comes to Indian equities as
hyperbolic or systematic. Investment plans are trending north of
$2 billion a month. So clearly, there is a lot of liquidity
available and a lot of investors, you know, are parked on the sidelines at
this point of time to buy in to any sort of dips that this market could see.
Oh, Asia equities reporter S.J. Chakraborty there in Mumbai with
potentially a bit of a warning going into this earnings season.
Take a look at out India markets just ahead of the trading open.
And we've had quite a lot of oscillating price action this week.
That record high just earlier in the week before a pullback in the previous
session, really a little bit of profit taking perhaps before a significant
earnings season. We are seeing quite a bit of upside,
though, going into the start of cash trading.
And, you know, even with the potential weakness that could come through with
earnings, this is a market that remains on course to outperform the Asian peers
for a fourth straight year. Let's bring your co-anchor Haslinda Amin
now, who joins us now out of Singapore, who's about to speak to a special guest. Haidi, we're talking to the man who runs
Thailand's gaming Music is behind big Thai artists like Big Slam, Big Ass.
I'm not sure I'm supposed to say that on TV.
Big Bird, Tung Chai. We'll find out why it's sold a 10% stake
to Tencent. And what about its IPO plan?
Is it on the back burner given the, like, last a Thai stock market?
We'll get answers from the company in just a moment.
Keep it here with us. This is Lambi. You're watching Bloomberg Markets.
Asia and Chinese tech giant Tencent recently agreed to acquire a 10% stake
in Thailand's gem music, valuing the company at $700 million.
And it comes after nearly a year after its parent company, GM, Grammy, approved
a plan to spin off the firm and listed on the Thai stock exchange.
Let's get back to Singapore now, where co-anchor Haslinda Amin is with our next
special guest has so on. And Jim and Grammy, of course, is a
dominant player in the entertainment space in Thailand.
Let's discuss GM music's future plans with founder family.
Dan Chai, Tom Foreman. Good to have you with us.
First off, you sold a 10% stake to Tencent.
What's the logic? What's the business sense?
Well, just to give you a context first, and for an underlying global market in
terms of music industry, we are growing into what we call a second wave boom.
So just to put that into a context, the second wave boom is the market is
booming very fast right now globally. And so it's the right time to get into a
partnership with Tencent. So in terms of the market globally, we
have gone double size in terms of revenue from 2015 right now to number
two, it doubled to. Well, it's been it's been growing in
billions right now. And as a projection in forward in six
years, it's going to double again in 2030 according to Goldman Sachs landmark
study of music in air. So the market has growing very fast,
especially Thailand, Thailand. Everybody is saying that the country and
the music streaming is taking off in Thailand.
So we have been growing around 30% year on year in terms of music subscription.
So we have been growing very fast. Altogether in Asia, Asia has been
growing faster than global market at around 15% growth year on year and
compared to about 10% growth globally. But presumably the stake sale to Tencent
is to tap the China market. How much potential do you see there?
What's the ambition? Well, we are trying to get a global
alliance across different key markets, especially in Asia and beyond the global
market as well. Pensarn is obviously one of the biggest
market, one of the biggest players in China.
China is obviously our target market as well.
So we are trying to grow into a bigger market.
Aside from China, we have been doing partnerships with other key markets in
the in Asia market as well. We have a partnership with YG
Entertainment, a label company that manages Blackpink.
Okay. So K-Pop is obviously a very important
movement in the music industry. So that's in Korea,
Japan, the China market. Are you looking at would you like to go
to 10% of it? What's a realistic target for China?
Well, the thing that in the music industry has been growing is the music
IP asset, right? So the music IP asset is is is music
content, is artists, is concerts. And Tme, a subsidiary of Tencent in
China has been very successful in their streaming business.
So that's their success in China and they have been growing into the music
business as well. They are doing a lot of live business in
concerts, They are doing a lot of artist management as well.
So those are the music apps that we are trying to collaborate with Tencent and
TVB in China and we are trying to grow into China as well.
And in exchange, Tencent will have their music regionally grow into Thailand
through us as well. Are your IPO plans still intact?
Yes, of course. So this investment strategy, investment
with Tencent is actually a very important milestone for us to to to to
go into IPO as as a roadmap when we're aiming for as soon as possible, which is
depending on the market sentiment, depending on the market environment.
So we are very optimistic about very soon this year to next year.
So depending on the market, we are we are on plan right now.
And what's the amount you're trying to raise?
Well, let's just say we are going to be the only music pure play in the Thai
stock market exchange. So we have a unique proposition in the
in the market. And so because of our vision, our plan
to grow outside of Thailand into the global market as well, and now that we
have Tencent, now that we have other strategic partnerships in the region and
outside of Asia as well, we are benchmarking ourselves to the Asian
players and the global players in the music industry.
So that's going to be our comparable in terms of valuation going into the IPO.
Right now, the company is looking at a possible valuation of $700 million.
Is that a fair amount that that was the investment valuation from Tencent,
right? Right.
So the investment was the Tencent and TMT came in at $70 million.
Four 10% in German music, valuing the company at $700 million.
So that was the investment from Tencent and tme.
So that is, we hope to be a benchmark for us to grow on to and together with
the investment itself. That's right.
A partnership that we are trying to build with them.
The collaboration that we are trying to build with them is going to make us
bigger, hopefully, and it's going to make us grow into a bigger market with
them across Asia. How are you assessing the IPO wing in
Thailand? The asset has been pretty lackluster.
It's down, I think, about six and a half percent year to date when the rest of
the world is testing record highs. Well, the country has been in
transformation, but we are still very optimistic about the stock market going
forward. For us, the music industry has been
growing, as I mentioned before. And for us, we have a unique proposition
in the market. So that's why we believe that our
position as a music pure play in the market alongside with our global
partners, will make us unique in the market proposition regardless of the
market environment. Just very briefly, when do you see TI
Pop getting to the level of K-Pop? How long do you think that will take?
We will hopefully very soon. That's that's why we are trying to do
that's why we are trying to make alliances off in terms of the Asia music
market and Asian music players together. And so we are going to a different
markets in Asia and also beyond Asia. So we are trying to uplift our quality
of production. We want to we want to upscale our
opportunity outside of Thailand. And of course, we want to unlock the
value of our company and unlock the value of the music industry.
And hopefully that will happen within the next 2 to 3 years.
Thank you so much for that. For my Chai Tum of GMA Music.
Heidi, heading it back to you. She'll be listening to more tape up.
I think as Malik, there is
much more ahead. This is Glenn Beck
and. Indian Prime Minister Narendra modi's
embrace of Vladimir Putin on the eve of President Biden's Naito summit in
Washington has frustrated U.S. officials.
The Biden administration has made closer ties with India a cornerstone of his
foreign policy. For more on this, we're joined by
Bloomberg News reporter City Ranjan Sen, who joins us in city.
We were talking, in fact, just yesterday about just the awkward timing going into
the NATO summit and not to mention, you know, the U.S.
and its allies attempts to try and isolate Russia and efforts to prioritize
the relationship with India. Well, yes.
I mean, I mean, this is what we are also getting to hear from on the ground that,
you know, there has been a little bit of a disquiet or a discomfort within the US
administration with Prime Minister Modi's visit and also the timing of the
visit. As we all know, there was, you know, a
major strike on a children's hospital in Kiev.
The optics of the prime minister's visit was really, really not well and people,
you know, were left wondering why at this point of time did the prime
minister want to go to Moscow? Because he's not been to Moscow for some
time. India, of course, saying that, you know,
bilateral agenda had kind of piled up. And Moscow is an old ally of India.
Indian military also depends largely on hardware from Russia.
But that said, India is trying to go I mean, be closer to the US looking out
for critical technology and also emerge as an alternative to China and build a
manufacturing base. And that is where the discomfort comes
because questions are being asked are likely to be asked within the US
administration about why when the US is trying to help India, India is not doing
enough to isolate President Putin and punish him.
And from what our reporting shows, my colleagues in the US and me here in New
Delhi, what it shows is there have been calls from the US administration and
from senior level enough to kind of express concern and also find out why
we know the reason behind the visit. So definitely there is some kind of a
discomfort within the US administration right now over Prime Minister's visit to
Moscow. You talk about the reasons behind the
visit, and that's quite interesting, isn't it?
Because obviously the US sees its relationship with India as a counter to
China. Does India see building this
relationship with Russia as its own counter to China?
Yes. I mean, Russia and China has been has
been getting close. And that's that's, you know, really
worrisome for India, because India and China, the relationship between the two
neighbors in in South Asia are, you know, are not good at all.
In fact, thousands of soldiers are still mobilized and deployed along the
disputed Himalayan border. And, you know, India is seeking steps to
kind of discourage Chinese investments. So the India-China relationship is
really, really poor at that point of time when, you know, when China and
Russia getting closer is a cause of concern for Indian.
India's all to try to shore up the Russian relationship and not let Russia
completely drift to to a you know, into the Chinese embrace.
So that is the India, you know, that is Indian maneuvering that is there, but
it's really not going down well in the in Washington.
Nexus City Region Center with the latest When it comes to that geopolitical
element, as of course, the NAITO anniversary summit gets underway.
Take a look at how broadly Asian markets are tracking at the moment.
And of course, this is still the rally that is being ultimately being supported
by the tech space as well as these are Fed cut expectations.
Right. And take a look at the form, a
narrative. Taiwan Semiconductor, one of the biggest
that we're watching at the moment, 2.4% higher.
We had that three month figure of June cells expecting something of a blowout
earnings report next week. We are seeing broadly that Apex
Semiconductor index up about 40% year to date when it comes to broader indices
futures, that is, we're seeing a little bit of weakness when it comes to US
stocks after it has been record high after record high and just that longest
winning streak that we've seen since November.
Also watching Treasuries going into that CPI report.
This is Bloomberg.

Transcript for:Key Insights on Asian Markets and Economics

Transcript for:
Key Insights on Asian Markets and Economics