This is DAYBREAK, Asia.
We're counting down to Asia's major market opens.
And Heidi, at the start of the session today, that focus is coming down to what
we're seeing in the bond space, because what, a whipsaw trading start to the
year. You've got those bonds that started to
rebound in the prior session here after we had that sell off to end the week and
also to start this one here in the focus as well on Chinese stocks.
What happens there? Yeah, and whether we could potentially
see these kind of bets on China or whether a stabilization could bolster
broader risk appetite across the rest of the session and rest of the region.
Right. But it is really
the bounce back from that sell off. And we see a little bit of a pullback in
the US dollar as well that we're seeing in the session.
Yes, let me do two closely tracking courses.
Japan comes online here, just taking a look at what's happening with the
Japanese yen, for instance, where back down just fractionally and closer to two
147 there. Stocks wise, we're coming online with a
bit of weakness here. So not quite tracking the U.S.
because it was that rebound we had into the close.
But certainly traders really thinking and paying close attention to what we're
hearing from Fed officials. And overwhelmingly this chorus is saying
that they're not looking to cut rates any time soon.
Of course, for investors that are taking longer term bets.
Yes, the direction here is that rates will eventually move downward.
Whether that's March or not, perhaps not too much of a concern.
But let's change on. Take a look at the start of trade for
Korea today. Likewise, in the session, you are seeing
stocks just moving fractionally actually to the upside a little bit.
The Korean one here to note it's fairly steady so far, but we did have that
current account data coming out in the last hour and we actually saw them
logging a surplus for the eighth straight month.
And that's on the back of an increased trade surplus, increased dividends that
we're seeing as well from overseas. So something that could help boost the
Korean one somewhat and we're also continuing to track that company is
currency, rather. Yesterday was that story of further
internationalization, given they had the experimental trial of expanding the
trading hours. So local currency to 2 a.m.
local time, Heidi. And we are continuing, as you say, to
kind of watch for the the central bank of back to.
Right. This is a picture as we see an hour of
trading now under the belt when it comes to Sydney.
We're seeing about 7/10 of 1% there. And it was kind of a mixed message from
the RBA's Governor Bullard yesterday with the first of the revamped
communications regime with the press conference as well.
Some of the comments could adequately be interpreted as being a little bit more
hawkish, but certainly keeping the door open to the need for further cuts.
But Bloomberg economics, seeing them as being pretty well done at this point.
The Aussie dollar at 6528, we saw really the US dollar after the big surge,
actually the highest since November, pulling back from that 12 week highs.
We saw yields slipping there as well. So coming back from that strongest level
in two months with that retreat in Treasury yields some of that earlier
weakness across US banking shares weighing there as well.
Also watching crude at the moment, we are seeing crude up marginally higher.
We had U.S. crude stockpiles reported by the API
seeing an increase last week. There are some of those long bets being
cut by oil traders on these concerns over the right retrenchment by the Fed,
as well as ongoing concerns over what we see out of the demand side for Asia as
well. Take a look at treasuries of the moment
as, of course, we continue to react to Fed speak.
We're hearing from Philadelphia Fed President Patrick Harker in the text of
a speech at the moment saying that data pointing to continued disinflation
and labour market rebalancing of the United States.
He sees a soft landing inside and he's optimistic that the Fed can achieve
that. Also commenting that the recent PC
inflation data highlights ongoing progress is being made, not commenting
on the outlook for rates, but certainly it adds to what we heard from Cleveland
Fed President Loretta mester overnight, saying that policymakers will probably
become more confident in cutting interest rates later this year if the
economy continues to evolve as expected. On the demand side, we had a pretty good
reception for the first of this week. Three Treasury note on bond auctions
that sort of settled the outlook for what we're gearing up for that biggest
ever tenure on Wednesday. And let's get to our next guest who
actually sees Asian markets being reasonably attractive, led by China.
Let's bring Lorraine Tan, who is a director of Asia Equity research at
Morningstar. Lorraine, great to have you with us.
And this is a bit of a fresh, refreshing view.
In what ways are you constructive and feeling a bit bolder on China than.
Well, just about everyone else that we've spoken to.
Yeah. So if you look at things from a
fundamental sort of free cash flow generating perspective, yes.
Based on to our fair value estimates, China is.
Pretty much discounted. And I actually do think the market does
understand that. But the concerns obviously are on the
geopolitical front, on the regulatory front.
So the way that we would play China would obviously try to limit those risks
as much as possible. In particular, you talk about some of
the kind of moat names for China is being
selectively interesting, is is on the back of perhaps more confidence in the
consumer. Yeah.
So I think what we need to do is that there's obviously a couple of a few key
elements of drivers this year that we see.
One is falling global interest rates that should be positive for most certain
sectors. And then we've got, you know, the hope
for the the belief that the consumer in China is going to become more confident.
And that could come from, you know, finally a slew of measures that
intensify and help to to support, you know, a clear sort of floor to to
the property sales and prices. And in China said that comes through.
We do think that consumer sentiment should get a boost and that would lift
the, you know, some of the sectors like particularly consumer cyclicals, for
example, for upward. They I think a lot of these concerns are
reflected in current valuations. So that's one of the the place that we
would look at. But we do note that, you know, the
investors appetite have to be willing so to sit through at least the next six
months. And of course, the last thing is
geopolitics. And this is unknown.
We are in an election year in the States.
So, you know, the rhetoric against China's is sure to be it's probably a
given. And so we will need to to sort of avoid
some of the more the companies that are more sensitive or have more activity
exposure to the US. Lorraine, I just want to bring viewers
up to speed with a breaking news headline that's crossing the terminal
here. That's New York Community Bank being cut
to junk by Moody's. We actually had seen that lender on a
review for a downgrade from Moody's. But essentially the bank is bracing for
stiffer regulation. It's had deals that's lifted its assets
above $100 billion, and particularly its purchase last year of signature bank's
deposits in some of its loans. The concerns around that, as well as
potential weakness in office and multifamily property markets.
So quite a concern there for for the regional lenders.
Lorraine, I'm curious. Last year we had that regional banking
crisis in the US and it and it really did send shockwaves or potential
shockwaves globally. Do you think we've seen the worst of
that? Is that something you continue to track
and see any sort of bearing on on this part of the world as well?
Yeah, I think because I think there's a little bit of a known factor now.
And I think we do anticipate I mean, it has been anticipated that that weakness
is more or less concentrated to smaller, more sort of regional banks.
So in that regard, I think its results should be more you should see a little
bit less overreaction this time around because of that.
I think we but we do need to be mindful of regional, even Asian banks that could
have access or basically exposure to, you know, global property risks.
And, you know, these are commercial property exposures in the U.S., for
example. So that's a particularly weak area to
watch out for. I don't think it's going to sink any of
the Asian banks, but certainly me. So to come in as a risk factor in terms
of their credit costs. Yes.
Or in Japan, one that we've watched really closely in that regard, given its
exposure to to commercial real estate in the US.
But in terms of the areas that you're more positive on, what are your
conviction ideas and any names that are standing out to you in particular?
Yeah. So one of the things that we began to
see in the fourth quarter last year is the turnaround in the you know, in the
in the basically the optimism for the check, the chip cycle to turn upward.
We've basically been seeing the inventory cycle sort of be stabilized.
So we do see like tomorrow TSMC and and tell you you didn't as those place both
about you companies and so leaders in there you know some of the couple of
leaders in their areas. We also do like because of a similar
sort of trend to increase CapEx to be coming through to the semi conductor
names as well. So we do like the factory automation
space and the leader here would be fine. The other area, as I've mentioned, is
the domestic consumer names in China, and we do have a preference for more
heavily sold down quality, what we call floating names as well as Asia.
So the the Buy Your Air segment is an area that we like fully onion lounger
and also onto sports for that reason. All right.
Lorraine Tan, the director of Asia equity research at Morningstar.
We are just about 10 minutes into the session so far.
Draw your attention to some of the movers that we're tracking.
And one in particular is standing out to us here.
That's Mitsubishi. You can see it actually is traded at
this point if we can remove that strap. But essentially we're seeing it jumping
here. We had 80 hours as well, up around 11%.
But the Japanese trading company has announced a share buyback of ¥500
billion. It's also reported net income for the
third quarter that beat the average analyst estimates, a saying that we're
tracking very closely here. Nintendo, another name in focus here,
it's lifted its profit and its outlook for this switch console.
So again, we are seeing some moves here to the upside for that name.
One of course, that we track just in terms of general exposure to tech
companies in this part of the region. And we did see ads likewise gaining
around 4%. So we'll see perhaps some further
upside. Let's switch on because auto makers in
focus yesterday we had Toyota reporting, but that was during or in the lunch
break of Japan. We did see shares rising and after into
the afternoon session, rather, and we actually saw Toyota, its market value
topping ¥50 trillion for the first time. We've also seen the automaker boosting
spending on TV production in the US by $1.3 billion.
So Toyota that you can see here, just continuing to advance.
It also had an upgrade from Macquarie, but lifting other automakers in turn
Heidi. And though still ahead, Taiwan's digital
affairs minister joins us live to discuss the island's cyber security
priorities amid a delicate rebalancing of relations between the US and China.
But first, the latest on negotiations for pause in fighting in Gaza with hopes
that a deal can be sealed soon. This is Bloomberg. Hamas responded tonight.
We're reviewing that response now and I'll be discussing it with the
government of Israel tomorrow. There's still a lot of work to be done,
but we continue to believe that an agreement is possible and indeed
essential, and we will continue to work relentlessly to achieve it.
U.S. Secretary of State Antony Blinken there
speaking in Doha following a proposal to halt fighting in the Gaza Strip in
exchange for the release of some Israeli hostages.
Okazaki mediated to end the conflict, as Hamas has sent quite a positive response
for the plan. The BBC's Michael Heath is with us for
the latest. So it's a positive signal.
Yeah, definitely, Heidi. And you know, Secretary Blinken's in
Israel today, so obviously there'll be discussions held there.
We're in baby steps. So, I mean, it's obviously much better
than them rejecting it. But President Biden was asked to react
and no, there's no details. He said some of the suggestions for a
bit over the top from from Hamas. So, yes, look, this is early stages, but
positive. And obviously those hostages have been
held for four months now and the conditions must be fairly awful outside
of the suffering of the people in Gaza under the bombing as well.
So, yeah, I mean, look, whatever happens there, you know, any chance of getting
towards a cease fire is really positive news and the repercussions of it could
be quite, quite significant. I mean, you might see an end to the
Houthi attacks on shipping as well, which obviously would be good for the
economy and some of the other militant groups that are supported that are
backed by Iran. A lot could to stand out in the meantime
as well, because they say all their activities are connected to Hamas.
So there's a lot at stake there. But, you know, again, we're still at
very early stages and both sides still have, you know,
slightly conflicting views of what they want out of that sort of that sort of
cease. So we'll just have to see how it plays
out. Something that could really perhaps
complicate matters, at least from the US side, is is what's just happened in the
last few minutes. The US House failing to pass this nearly
$18 billion funding package for Israel. Does that sort of playing to the mix at
all? Yeah, it's hard to say.
I mean, the support for Israel is very strong among the political classes in
the US. So unlike Ukraine, it's hard to say that
there will be an issue at the end of the day in Israel receiving its funding and
receiving the arms that it supplies. But one of the issues that's been raised
is whether the US has to use a bit more, a bit more stick and a little less
carrot when it comes to dealing with Israel.
Obviously, you've had these ministers that have have criticized the US and one
of them said that they'd prefer President Trump to President Biden and
that, you know, the US supplies obviously give it some leverage.
But just that general support within the political class means that I don't think
that's going to be something that that's at stake here.
But again, you know, for president for Prime Minister Netanyahu, just bring it
back to the Israeli side. It's kind of complicated.
He's got to sort of keep the US on side. He's got some pretty right wing
ministers there who've made some pretty inflammatory comments as well.
So I'm trying to get to this deal. It's going to be you know, it's going to
take all of his his skills if he is indeed keen for a deal.
There's obviously a lot of differences with the US on how they see things
unfolding as well. So, yeah, look, we're in you know, these
are important times and it could be that we're on the verge of something really
quite hopeful. But yeah, there's a lot of, a lot of
bits that need to come together. Yeah, a very delicate balancing act.
That was Bloomberg's Michael Hayes there and other political stories we're
watching as well this morning. President Biden is blaming Donald Trump
for sinking a bipartisan bill linking border controls with military aid for
Ukraine. The president admitted the Senate
package is unlikely to move forward and says he will use the issue against the
Republican frontrunner on the campaign trail.
All indications are this bill won't even move forward to a Senate floor.
Why? A simple reason Donald Trump.
He'd rather weaponize this issue than actually solve it.
So for the last 24 hours, he's done nothing, I'm told.
But reach out to Republicans in the House and the Senate and threaten them
and try to intimidate them to vote against this proposal.
And looks like they're caving. A US federal appeals court has rejected
Donald Trump's argument for presidential immunity, moving him closer to
prosecution for allegedly trying to overturn the 2020 election.
The case, brought by special counsel Jack Smith's office, is one of four
criminal cases Trump is facing, including a similar election case under
state law in Georgia. His campaign says he'll appeal against
the D.C. Circuit Court ruling.
And you can get a roundup of the stories you need to know to get your day going
in today's edition of DAYBREAK. Bloomberg subscribers go to be going
there terminals. It's also available on mobile in the
Bloomberg Anywhere app. You can customize your settings so you
only get the news on industries and assets that you care about.
This is Bloomberg. You're watching DAYBREAK.
Asia taking a look at some of these big moves today in Wall Street after hours
because it's all about the earnings story and the numbers that came out
after the bell today. So some of the big ones we're tracking
here, snap. You can see here plunging more than 30%,
it's it's really struggling with what's been a slump in the digital advertising
market that social media giants. So that's what's behind that.
Disappointing revenue in the holiday quarter.
Ford you can see moving to the upside here, more than 6%.
It posted fourth quarter results. That was a very sound beat on
expectations and it's also forecasting higher profits in 2024.
That's even though it's actually seeing losses in the AV division and rising
labor costs. So good numbers out of Ford and Yum
China really the standout there as well, up more than 20% in after hours trade,
given it posted numbers that were better than expected for same stores, same
store sales rather. But let's get more on those numbers and
bring in someone who knows a lot about it.
Bloomberg Intelligence, senior consumer and technology analyst Catherine Lehman.
Catherine, I'm curious, what stood out to you the most in these numbers?
Right. You know, as you've rightfully
highlighted, there were many beats to the same store sales numbers actually
came in stronger than what we were looking at.
Margins were actually holding up better than what we were looking at,
particularly in a quarter, whereby we have observed that there were multiple
discounts that the company seems to be putting into the market.
So overall, I think it's a great delivery from Yum China in the fourth
quarter. What are some of the likely sort of
highlights as you're watching out of Alibaba, particularly as we've seen the
share price do quite well in the last couple of sessions?
Right. You know, a couple of things.
Obviously, you know, I do think that, you know, the consensus numbers which
have been cut about 10% in the last four months, may have been too pessimistic.
And there is some upside to the deliveries tonight.
Another thing to actually watch out for would be, you know, the share buyback
program that the company had in the market.
There seems to be room for them to actually upsized it over the next couple
of quarters. So these would be some of the highlights
that I will be looking at into tonight's results.
Bloomberg Intelligence, senior consumer and technology analyst Catherine LAMB
there. And of course, we'll be watching.
Alibaba will also be speaking exclusively a little bit later on with
Yum! China CEO Joe Walsh about their latest
earnings and their outlook. That conversation taking place at 10
a.m. in Hong Kong.
1 p.m. if you're watching in Sydney.
Up corporate stories that we're following today in Shanghai based chip
maker Smic posted better than expected quarterly profits on robust demand for
Huawei's marquee smartphones. Powered by its components, net income
was just under $175 million in the three months ended in December.
China's top contract chipmaker is capable of making advanced seven
nanometer chips used in smartphones and laptops.
National Australia Bank says Andrew Irvine will replace Ross McEwan as chief
executive officer. Irvine has been NAB's group executive
for business and private banking since 2020.
He will start in the new role on April 2nd, when McEwan will retire from
executive roles after more than four years in charge.
New York traded. Shares of UBS fell the most in 11
months, even after it announced $1,000,000,000 buyback.
That's after fourth quarter earnings missed estimates.
CEO Sergio Morais told us the bank is willing to sacrifice growth in order to
improve returns, as the merger with Credit Suisse concludes
is a pivotal year. Because if you think about the journey,
the first six months are very intense. I think we're going to go through the
merger of the two operating entities. UBS and Credit Suisse AG will merge in
the first half of the year. The subsidiaries in the US and
Switzerland will merge also in during 2024.
So this is the prerequisite to be able to realize our synergies.
We already achieved four billions of cost savings, accelerate 2023.
We now plan to have another gross savings of nine billions and between 24
and 2026, partially, partially at this will be reinvested in the business to
make our platform more resilient and up to speed with the requirements, but also
to invest in our future. So, Sara, how important was this
investor update just to give a blueprint of the kind of growth that you want to,
you know, to attain and how? I think it's very important for
investors to understand how we are connecting the dots between
what we say in summer last year and in respect of our long
term plans and 2026 plans and going beyond that.
So today we are providing a few dots between 2024 and 2026, how we achieve
cost savings, how we manage our balance sheet, how we want to manage growth that
has to come in a sustainable way. And also we give also some indications
about what to look for work after the completion of the of of the
restructuring, which is then going to enable us to harvest, you know, the the
work that we did with a quite attractive returns.
ABC, Sergio Ramos speaking to Bloomberg's Francine Lacqua there in
Zurich. Let's take a look at how futures and
Europe are opening up in this session. This is a picture, of course, across
european futures as we see the euro stoxx 50 looking modestly higher.
There we are seeing german dax futures a little bit on the softer side.
European stocks did gain in the in the previous session.
Investors kind of picking up really the thematics coming through from earnings
winners and losers and also, of course assessing that path forward for rates.
We saw in particular the likes of BP rallying on the earnings beat UBS.
We were just speaking to Sergio Ramos slipping a little bit with the
outperformance really in that energy sector.
Plenty more to come here on DAYBREAK. Asia.
This is Bloomberg. Taking a look across Asian markets as we
get into half an hour of trading in some of these major markets, including Japan
and Tokyo and an hour or a half into the start of trading here in Sydney.
Now, the Nikkei 2 to 5 is down by just about half a percent, really a
fluctuating session. We're seeing that retreat from tech,
some earnings support coming through for select
earnings affected, the sort of stories that we can see.
But the broader topics is virtually unchanged.
The Nikkei, though, seeing a bit of a decline.
We're also seeing a bit of a rebound when it comes to the yen as well after
hit its weakest level since late November, earlier in the week.
When it comes to the topics of tech is really the biggest sector.
Seeing that drag a different picture across Korean stocks.
We're seeing the cost being broadly higher by over 1%.
This after we had a bit of a pullback. Of course, the best weekly gains since
2020, seeing a little bit of profit taking.
But we're back to gains today when it comes to trading in Korea.
Here in Australia, it is broadly a pretty optimistic session, about 6/10 of
a percent higher, a couple of laggards, communications services and consumer
discretionary seeing some weakness, but we're seeing some very strong gains from
the likes of real estate as well as some of the big miners and utilities and
energy names here as well. Kiwi stocks just modestly higher as we
see a pretty positive session so far across the Asia Pacific.
Taking a look at really some of the big movers so far in this session, and
particularly we've been talking about the impact, of course, of earnings
across Japan in particular, Daikin is one to watch as we've in the session.
A bit of a move to the downside, third quarter operating income missing
estimates in the inventory really seen as a drag on profit progress.
We're watching Toyota there and that is really just a big, big story for Japan
today. We're seeing Toyota up by over 5% with
the market value topping ¥50 trillion for the first time.
And of course, we're watching Mitsubishi there as well, up by close to 10% in the
session. BELL
Yes, certainly a lot of movies in the session today.
But let's shift gears now to Taiwan, because three weeks since the island
held its presidential elections, it's been left with just 12 diplomatic allies
accounting for around 0.17% of the global economy.
Reuters is now reporting that Taiwan's most economically powerful diplomatic
partner, Guatemala, is considering formal trade ties with China.
Beijing, as we know, has been peeling off Taipei's allies for years as it
ramps up economic and diplomatic pressure on the island.
So here to discuss some of the challenges and how Taiwan is grappling
with threats in cyber security is Audrey Tang, Taiwan's minister of digital
affairs. And yeah, as we said, just
really not too long after launching to victory, it's it's probably not a result
that Beijing wanted to see. But as we count down to his
inauguration, I'm curious, when you look at your portfolio, what are the
priorities that are really standing out to you?
Thank you. I think for this here.
We need to make sure that everyday people have the ability to understand
and direct this role in their lives. In particular because our election
proved down to his debunking and with collaboration with civil society, we can
overcome deepfakes and information manipulation challenges.
So we look forward to continue this strong partnership also with our
Democratic allies that are going to have elections this year.
Talk us through more. Some of what you're seeing in terms of
deepfakes, Was that an issue that cropped up significantly across the
course of the election campaign? Yes, according to our domestic A.I.
Labs, Taiwan. And that was in collapse.
What deepfake technology and generative A.I.
in general was able to do is to put a single narrative.
But instead of like obviously astroturfing, repeating the same talking
points and so on, to paraphrase it, so that it looks like organic, it looks
like, you know, 10,000 different accounts telling 10,000 different life
stories, all echoing the same points. So I would say that it massively lower
the cost to do information manipulation on a scale.
Minister following the election ahead of the inauguration and beyond.
Are you seeing tactics and strategies and threats?
Changing or evolving at all? What in particular are you seeing from
overseas threats from day one, Inc.. Yeah.
So in terms of pre preventing against information manipulation and threats, it
is essential to distill the messages that the adversaries are spreading.
Mostly what we've been hearing around the election time is to cast a doubt
toward the election results or it has dealt around democratic institutions in
general. The main idea of the adversaries talking
points is essentially that democracy only lead to chaos and polarization and
mutual hate in whatever ends are proven can work worked because we have seen
that after the election, people in general trusted our democratic
institution more and also trusted each other more.
So we've seen the messages evolving toward just highlighting the divisions
between the parties, between the different ideologies and so on.
But so far they are having little effect.
You've talked in the past in conversations with us about the need
internally for you to turn conflicts into creation.
In terms of the creation of new strategies to be able to futureproof
Taiwan, communications is one of them. The threat of cutting off Taiwan from
communications. Can you tell us more about efforts that
might be being made and progress being made on that front?
Yeah, I believe you're referring to our idea of local communication resilience.
A year or so ago, the two subsea cables between our Matsu Island and Taiwan
proper was cut, both of them accidentally, quote unquote, by cargo
and fishing vessels flying to PRC flag. It's what's known as free zone
operations. So we've been deploying not just
satellite connectivity and microwave, but also with the three public cloud
providers so that hopefully by the end of this year, videoconferencing and so
on, all the essential infrastructures can be routed entirely domestically so
that even when our subscribers connect in Taiwan to the world are hindered or
jammed, our domestic communications can flow naturally, and then we can reserved
the satellite bandwidth to the international correspondents.
Everyone, Addabbo mentioned deepfakes, and you've
talked about the threat to information integrity that comes from technology
like deepfakes. What about what do you think is the
right approach? And equally, do you see it as as a
threat or an opportunity? I assume both.
What's your sort of strategy to that? Yeah.
So our main idea is a collective alignment of meaning.
For example, for the past year. For 12 months now, I've been training my
local models, using my email correspondences and so on.
So it drafts, but it doesn't send my email correspondences and so on.
The advantage of such locomotives and loco tuning is that it opens up to
everyday people as not a black box that's tuned by somebody else, but
rather anyone can use their own data to ensure the accuracy and fairness and so
on. So through like the collective
intelligence project, we've work with top labs like anthropic, improved doubts
with a democratic conversation to co-create a Constitution document for
A.I.. Such collectively aligned A.I.
is equally capable but far less biased, far less discriminatory, and so on, more
fitting to the local norms. So we're looking to systemize this kind
of processes so that any community, any enterprise, any groups and so on can
freely tuned eyes to their liking and therefore have their hands on the
steering wheel, so to speak. You are quite big on open source.
Do you see any sort of risks associated with that?
But I would say, well, open source in cybersecurity only works if the entire
supply chain adhere to the vulnerability, discovery and threat
intelligence and indicator sharing frameworks and so on.
So there are standard cybersecurity practices that safeguards the entire
supply chain of open source ecosystem. So what's important is that we need to
democratize access to this kind of testing, verification assurance systems.
And Taiwan has just set up the evaluation center to not centralize this
testing capability, but rather democratized this testing and
verification of receiving capability so that everyday citizen can also help to
look at emerging threats and also possible mitigations collectively.
You've talked about 2024 as being, I guess, a deadline for Taiwan needing to
bolster its defenses. Are you comfortable in being able to
meet that deadline? And where do you see the vulnerabilities
within either the government sectors or corporate Taiwan as being the most
susceptible to outside attack? Yeah, I'm happy to report that in
addition to our satellite alliances with our partners, for example, Oneweb from
UK and as well as from Europe. And three public cloud operators that we
just alluded to. We have also received a lot of
friendship and collaboration from the international open source community, the
open source community that wants to use their technology not just to safeguard
software, but also safeguards, as you mentioned, information, integrity,
contextual integrity to work on a contextualisation engine such as the
community nodes on ex-con. That's one open source software that
we're bringing to more platforms and so on.
I think that is very heartening. So that safeguarding towards democracy
also pays dividends to safeguard other democracies as well because the software
components are reusable. Minister, really great to have you with
us. We appreciate your time.
Audrey Tang, Taiwanese minister for Digital Affairs.
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This is Bloomberg. TBS has reported fourth quarter profit
but missed expectations amid signs of pressure on margins the lenders see.
Gupta is also facing a big pay cut after a spate of digital banking outages last
year. Let's take a look at these earnings.
Bloomberg Intelligence senior analyst Sarah Jane Mahmood joins us now.
So what was the biggest drag either?
So, yeah, GBS supported a very good set of results actually for the full year of
2023, with profit growing 25% to record levels last year, chiefly off the back
of the Fed rate hikes, although as you mentioned, it did post lower than
expected profit growth in the fourth quarter, chiefly due to slight margin
compression, weaker than expected loan growth and seasonally slower fee income
as well. Now last year we saw net interest margin
expand by around 65 basis points, but lending activity was relatively
relatively slow at around 1%. And without the acquisition of U.
U. Without the acquisition of Citigroup's
retail assets in Taiwan, DBS would actually have seen its loan book
contract last year. As you mentioned, its management team
have actually taken a bonus pay cut on average of 21%, with the CEO taking cuts
of at a larger figure, 30% in wake of the couple of years or so of digital
outages that the bank has been suffering and the ongoing regulatory probe into
that at the moment. DBS is the first of of major Singapore
banks to report results will have other peers, UAB or ICBC later in the month.
Does that pressure on margins is as well likely to translate to the other
lenders, do you think? Yeah, I think margin has definitely had
its peak for the Singapore banks, but it's quite interesting with DBS, we
expect and management expects as well, that net interest income growth could
hover around seven similar levels in 2024 or decline just modestly because of
the Fed rate cuts, which could come as early as March.
But in DBS case, the negative impact of this could potentially be offset because
of his acquisition of Citigroup's retail assets in Taiwan and the boost in
lending and wealth fees that it's likely to gain over there.
I think loans housing in Singapore as well is it has.
Sorry continue.
Well I'm sorry. So loan growth has been relatively weak
though. I think the Singapore lenders are likely
to see it pick up a little bit more this year as sentiments improve slightly.
And I think it's quite important to note as well that DBS is likely to see
further growth in its Wells business this year On tailwinds from a 23% rise
in assets under management last year and also leveraging new regulations around
family offices in the city state. Well, we'll be, of course, tracking DBS
when it comes online with Singapore saying trade at the top of the hour.
That was Bloomberg Intelligence, senior analyst of South and Southeast Asian
banks and regulation. Sarah Jane Mahmoud.
Then let's take a look at where we're at in the session today with the I'm at
function. You can see here we're posting gains for
the broader index up around 8/10 of a percent at this point in time.
A pretty broad based as well because you've got every single sector in the
green so far with the exception of consumer staples.
What's interesting is to the flipside, consumer discretionary is leading the
gains so far, up 1.5%, but if you were to dive into that, you'd see there's
really one name that standing out in particular today, and that's Toyota,
because we are extending gains for that stock.
Toyota has already crossed the ¥50 trillion market cap mark.
But as well, we also had those earnings out after the bell and we saw the stock
jumping the most since November of last year.
But they've boosted their year operating outlook.
So it's a really very rosy outlook for Toyota there, Heidi.
Yeah, we do have a little bit more comfort news breaking here in Australia,
though. You know, we've been focused on these
ongoing merger talks between Santos and Woodside Energy in Australia over that
potential combination. Woodside now confirming that they've
ceased talks on potential on that potential merger, with Santos, saying
that these talks have concluded in a regulatory filing and have ceased
discussions regarding a potential merger with Santos.
They will be continuously assessing organic and inorganic growth
opportunities. The CEO, McCrindle saying that they've
done their thorough due diligence, they will only pursue a transaction that is
value accretive for shareholders. And these talks have stopped.
It was sort of towards the end of January that we heard from Santos that
these talks were still continuing. It was sort of these alternative options
to try to increase value. But these negotiations have now come to
an end, though it will actually still on the M&A front,
we know that the Japanese company or parent of the world's biggest
convenience store chain, 7-Eleven, is making a case for worldwide growth.
And some of that could actually be through acquisitions.
But we heard from the CEO, Reggie Osaka, who spoke to us exclusively about plans
to expand in the US where the brand began a century ago.
He covered that in this graph. Not as a small store.
You must constantly change your product mix to meet changing customer needs.
If a large store has a certain range of products, it can respond to changes in
customer needs with its overall product mix.
However, a small store will only carry about 3000 stock keeping units.
Therefore, we need to be sensitive to changes in seasons, times and
demographics. In this sense, we are the industry that
must continue to adapt to change in order to grow from within us.
Clearly, this model, the Japanese model, the convenience store works in other
Asian countries and regions. I've been to them in Hong Kong, in
Thailand, in Taiwan. They work.
What about further afield? The United States is very familiar,
obviously, with 7-Eleven brand, but it's different.
It feels differently when you walk into a 7-Eleven in the United States.
What is your main priority when thinking about expanding in a place like the
United States? American market to do more for the
students good or to do nothing. We are now focusing on fresh food
products in the U.S. market.
We are in the process of building a system to supply fresh, high quality
products to stores while working together with our Japanese supplier.
What are they need to to build a factory over there and develop products
together? We believe that we need to change our
business model from one that relies on gasoline and cigarettes to one in which
customers choose us based on our products.
The key to this change is fresh food. Do you have a store number goal for the
United States? I heard it was going to be maybe 20,000
stores, of course, after the speedway purchase 9000 stores plus 4000 for
Speedway. And your goal was 20,000.
Is that a reasonable goal? And by win
motor towns were to win by. I think there are more opportunities,
but we are not targeting concrete numbers at this time.
Unlike Japan, the U.S. market is very segmented.
The U.S. has about 150,000 convenience stores and
the top ten account for only 19% of the market.
Therefore, we would like to expand the number of stores while improving the
efficiency of chain operations as much as possible and proactively developing
M&A. If other companies would like to work
with us, the minority shareholders would like to see perhaps a spinoff of your
local supermarket chain into your. And to unleash the true power and your
true asset of the 7-Eleven brand. Can you give us an update on on whether
you are thinking about what value Act capital, which is a 4.4% minority
shareholder, but very much of the activist investor would like to see you
make structural changes. Is it something that you're considering
within the next five years or so to spin off perhaps your most valuable asset in
7-Eleven to an organic solution or category?
We've certainly received such comments from many of our shareholders, not
limited to Value Act, but what we are explaining is that if we are to transfer
the growth of 7-Eleven, Japan to the rest of the world, we must transfer the
success of 7-Eleven, Japan's food business as well.
If we simply increase the number of stores, we will be building a tower on a
very weak foundation. That was a seven an AI holding ceo
speaking exclusively with bloomberg Stephen Engle there and just taking a
look at the market movers today. So far, seven and nine holdings fairly
steady right now, but some big moves elsewhere.
And lawson is really standing out to us here.
So this is another convenience store chain in Japan here.
But essentially you've got the telco company KDDI and also the trading house,
Mitsubishi, that are taking Lawson private.
So they're really seeking to accelerate efforts to digitize the business.
K d d i it already owns a share in Lawson and it's offering a tender offer
for 50% of the retailer. The proposal is worth $3.3 billion.
That's it. We're watching that.
Mitsubishi as well gaining on very strong third quarter results.
This is Bloomberg. Biggest gain in so far in the session.
Toyota is actually leading the consumer discretionary index higher in the
session today. And that is, again, what's leading the
gains so far for Asian equities that are around half a percent to the upside at
this point. Toyota standing out to us because we had
those numbers due yesterday around noon and they showed very strong outlook for
the company here. So we saw its market cap surpassing ¥50
trillion for the first time ever again. It was that upward revision to its full
year profit guidance that really stood out to us.
But shares really they're up more than 60% over the bat back over the past back
of the year. Strong sales and a weaker yen also
playing into that even though we actually have seen those recent issues
surrounding certification and testing of vehicles by affiliates, that's raised
some concerns. But investors continuing to pile into
this. And there's optimism generally around
Japanese equities in turn. But that's it from DAYBREAK Asia.
Our market coverage continues as we look ahead to the start of trade in Hong
Kong, Shanghai and Shenzhen. Stand by for Bloomberg Markets, China
open. Now, women on average have about a 30%
lower, I guess, amount of money saved up for retirement compared to men.
So what are you doing about that? Yeah.
So we launched a campaign called Retire Inequality.
And we do know that women retire with 30% less.
Women make $0.83 on the dollar. And so there's a couple of things that
we're doing. One, it's having this conversation and
making sure that we all are aware that there is a gap.
By the way, women live longer than men. So longevity risk is a real factor.
Secondly, it's about making sure that we are talking to women about what can you
do differently. And so whether that's negotiating pay
and what are some tools that are out there making sure that you take the time
to negotiate, because we know women do not negotiate as much as men, which puts
you at a disadvantage to start. But then also along the way, making sure
that women are securing their own retirement and that is part of their
retirement plan. We're having much more conversation
around guaranteed income as well. And so ensuring that we understand what
are the nuances for women. If you think about Covid, 2 million
women exited the workforce, they did not continue to contribute to their for one
care 43 B plan. And so how do we make sure as a matter
of policy, as a matter of engagement, that women can have an opportunity to
catch up, that women can understand that if you exited the workforce and now
you're back, that that's two years of compounding that you were not able to
take advantage of. And how do we continue to make sure that
we're educating them and giving the tools that they need to get back on
track? Q And I think this will probably go down
in history as one of, if not the largest financial crisis ever.
I cannot imagine a scenario where $8 billion just disappears.
Bankman-fried has pled not guilty to multiple fraud charges.
Sam was just too important in the crypto community.
When someone says, I'm going to give $1,000,000,000 in the next two years.
Like that catches everybody's attention. As time went on, their ideas got like,
weirder and weirder. I don't think he even had almost a
conception at some point that it was wrong or right.
I think he just had the mentality that he has to win.
This committee will not stop until we uncover the full truth behind the
collapse of FCX. So, Mark, are you in?
I mean. I mean, we're.
