Tech Stocks Lift Asian Markets; China Unveils More Stimulus | Bloomberg: The China Show 9/26/24
Good morning. We're half an hour away from the open in Hong Kong, Shanghai and Shenzhen. You're watching the China show. I'm David Ingles live from the bloomberg by side forum here in hong kong and i'll be Yvonne Man. Our top stories this morning. Traders watching signs a stimulus fueled china rally may be running out of steam. Beijing, meanwhile, announcing cash handouts for the poor ahead of that holiday week. Also ahead, new world development suspends trading in Hong Kong as Bloomberg learns it may axe Adrian Chang as CEO following the first annual loss in two decades.
Plus, back in the headlines, Micron soaring on a strong forecast, while Openai says it's ready to chase profits amid an exodus of senior managers. Haven. Good morning to all our viewers joining us from around the world. We're live here, of course, at a Bloomberg bite sized forum here. And lots of conversations taking place about I mean, you and I have been covering this all week, this almost historic week that we've seen in Chinese equity markets.
I just had a look at my some of my my screens right now. So, you know, anywhere from 24 billion shares traded yesterday, a trillion renminbi and turned over. We are currently on track and we'll see if we get day three. That's another conversation. We are currently on track for the best week on the CSI 300 going back to 2020. So we'll see if we get a day. Three. We know the sell side has been sold on the idea.
Has the buy side bought into this idea as well? It's market reset, among other things, of course, is this this big news story. One specific stock option will be very much in focus this hour. Yeah, new world development, as you mentioned. You know, we had rumblings of this yesterday. Our team had broke that story that know Adrian Cheng might have to be or will be stepping down as CEO after what we've been talking about the last few years of months about debt issues and really the profit losses surrounding this developer. So we'll see if that comes out.
But yes, earnings also come out later on today as well. But as you mentioned, you know, in a bigger backdrop of things at the Spice forum, a lot of questions on whether they are buying in on this China reflation story after, you know, after two historic days, as you say, across markets, we're seeing some signs of fatigue already there. But absolutely, I think we have a really great story out somewhat that is a it's a great tangent to the buy side conversation where you do have, I think, data from Goldman Sachs and a prime brokerage that on Tuesday, this massive inflow from hedge funds. Now do we get a sustained flow? It's another question as well. We have a great lineup of guests coming
through here from the Buy Side forum and probably hear the program beginning right behind me as well. Christopher Wei, the financial services secretary, will be joining us in about 20 minutes or so. He's actually set to speak in about 5 minutes or so if we are on time, effectively, all things all things fixed income, we're talking talking all things private private markets as well. And also as it pertains to what the Chinese finds and where the flow is now pointing to E funds will actually be joining us at the top of the next hour or so. Yeah, suffice to say, stay tuned. What's in store here from on the ground here? Yeah, just take a little market check here. Right now. I'm taking a look at Asian stocks.
I mean, we're still hovering around those two year highs. And it really has been that sort of China led sort of rally here. But then again, we'll see how this all plays out. We're still punching some decent gains here. Obviously, when you take a look at the dollar surge that we saw overnight that's weakening the yen, we saw 1% weakness in the Aussie, the Kiwi, some of the G10 players as well, which is helping the likes of the Nikkei 2 to 5. We're seeing gains about 2%, but not so much about the China story because it's more about the story that is kind of catching that baton now from what we've been seeing in China, because overnight for oh, there was a Nasdaq gold Dragon.
Some of these ETFs that are listed in U.S. that tracked China all start to falter even towards a late session yesterday here in Hong Kong as well as in Shanghai, You started to see signs of this momentum being lost here, especially in commodities as well. Take iron ore. We're well below that 100 level, of course, according to a futures in Singapore.
So there you go. You take on some of these chip stocks. You got to thank Micron for that. Strong forecasts coming through from the chip maker that's really helping on the likes of S.K. High takes Tokyo electrons up some six and a half percent here right now Taiwan's semi just coming online There you go seeing gains of 1% ask behind SBY while also announced that they began that advanced air chip production as well that's helping to lead to gains of more than 8% right now the approach the open is looking like this. So as as we mentioned, right, it's it wasn't just Chinese assets, but commodities that are starting to at least get to the fact that maybe we need more than just monetary policy to fuel this rally. Does this announcement we got from CCTV
yesterday about cash handouts for the poor enough, there wasn't a whole lot details. So we'll get to minimal on that just a bit. But we're flat when it comes to futures here this morning. Two or three if your Chinese ten year
yield and 702 64 for dollar China here right now for more day, we're going to talk more about what goes on next. Yeah. I mean, we we were surprised by day one. We were excited about day to day three. We have a question mark. And that certainly given the the price action overnight. But I think the point that you also bring up as well and then we've heard from a lot of analysts this week is that many of the things, including the cash handouts to the poor, are all new measures. Right.
So have we finally turned a page here? Let's get a sense of where funds are going and fund flows. In fact, fantastic story. And that's Abhishek Bishnoi, our senior equities reporter, joining us right now to Singapore. Abhishek, fantastic story here. Get us up to speed. Talk to us about the data and where is the money going and is there a sense that this is simply beyond a tactical trade at this point? So if you look at, you know what we have reported, hedge funds are coming in, hot money is coming in. There's an element of short covering as well here. But the long only aspect of it is still missing the aspect of locals coming into droves again. A, That is also missing.
So the the the long term money is still missing from the picture. So it is it is slightly better than a tactical trade right now, but are still falling short of calling it a U-turn or, you know, a structural bull market. But having said that, you know, there is there has been a lot of comparison between what's happening in China and what has happened in Japan. You know, market is making the narrative day by day. You know, we are up 4% and we are very bullish. We are, you know, up less than 2%.
You know, we are less bullish on Nasdaq. Golden Dragon is down. We are sort of bearish. But the thing is, I mean, you know, markets are made of meat by human beings. We learn from our mistakes, from experience, from others mistakes. So the Japan ification aspect of China, it will be like the lost decade.
I mean, there would be a cycle, but it'll be a shorter cycle. And we have lived with this world of lower growth, lower growth in China, China's changing role into supply chains and elsewhere. So this has been known for a while. So the hope is that the market is going in a direction where it expects policymakers to do us, you know, something more meaningful on the fiscal side as well. And that's where the cycle changes. That's where you start thinking about
who would be the new champions, who will be, you know, championing this new growth regime in China. So all in. All right, now, the the money, the flows. What they're saying is that it's lower for longer kind of regime on valuations and also on rates now lower for longer rates have been actually good for valuation. So I would say given all this and given
how things have panned out historically in markets, we are closer to being more optimistic than pessimistic on China at this point in time. And have you one key element from the stimulus plus that we got was the PBOC is funding this are the part of the market that could benefit the most. And is it material enough, you think? I think it's my doing enough. I think we have seen a lot of dividends buybacks being fueled by debt and cheap money in the US in the last few years and in Japan as well. So similar thing is happening here. Central bank has come in.
It's infusing liquidity. It's saying you can take money from me at about 2.2% and fund buybacks. So, you know, our reporters did an analyst, they ran the numbers. Looks like CSI 300 index, which means the large cap index, large cap stocks are better poised to, you know, gain from this aspect of central banks funding. And looks like in most of the stocks there, which are part of the consumer story, which are part of the financial industry, they are, you know, in a better position, a bit more primed to gain from this.
Almost all of them are giving dividend yields or buyback yields in excess of 2.5%. So it's it's like an arbitrage situation. Take the money at 2.25, you know, give a buyback or dividend to 2.5%. And there is this arbitrage which is going to, you know, better, the shareholder returns too. So, I mean, despite this trading in consumption, I mean, the silver lining to me is that despite this downgrading consumption, actually consumer stocks are better primed to gain from all these efforts.
Hmm. I wish. I think you're a senior equities reporter. Abhishek Bishnoi there joining us out of Singapore. On to another top story here this morning. China is giving out one off cash handouts to people in extreme poverty.
In a rare announcement of direct aid. For more, let's bring in our China correspondent, Ben Mellow. We've heard from economists for months now that this is what's needed to shore up consumption.
We're finally getting some details of it. What more do we know? Yeah, actually, it's a very surprising move because we know a presidency has traditionally been quite resistant to the sort of welfarism that Chinese officials say could encourage laziness. But as you said, we've been hearing so many calls from economists for this direct handout. And finally, they are heeding that call. Maybe the state of the economy is causing to weaken, causing them to reconsider this. We don't have a lot of details as to how big of a handout it is, but we do know that about 4.7 million people are in
extreme poverty. They could benefit from this. The handout is supposed to be given out before that Golden week holiday, traditionally a time where there is peak travel and spending. But of course, you might ask the extreme poor, are they going to actually go out and spend on holiday? Maybe not, but perhaps they might give a boost to the consumer staple stocks, which has been one of the laggards in the Chinese economy so far this year that the Chinese cabinet has also called for strengthening the country's job market by resolving structural issues, promoting wage growth. How about are they suggesting they do so
now? Yes. So the State Council has issued a 24 point guideline that includes measures to guide companies to provide a training base for vocational skills training, as well as to gradually increase wage growth and some benefits for graduates who haven't been able to find a job for two years after graduation. And this perhaps a sign that the government is acknowledging that they need to make full employment a priority, that they will coordinate that industrial, monetary and fiscal policy towards this, because we saw that record high youth unemployment back in August of over 18%.
A big part is driven by that structural mismatch because many of these highly educated youths are looking for white collar jobs, but it's the factories that are looking for workers. So that's why they are beefing up vocational training. And also that income stagnation was a key barrier to consumers going out to spend as well. And also, if you have a big group of people who are unemployed, that also poses a source of social instability. So we're seeing the government really painful attention to this now to hopefully boost spending, especially ahead of the golden week. All right, Thank you. Our China correspondent Ben Lowe there. We just have some breaking news.
According to The New York Times, they are reporting that the New York City mayor, Eric Adams, has been indicted after a federal corruption probe. This is after we've been hearing from a lot of reports and calls from lawmakers for the mayor to resign and to stop governing New York City. Certainly, we'll continue to watch this here. But yes, we are learning that the New York City mayor indicted on a federal corruption probe. And this is according to people with knowledge of the matter. The indictment is sealed. It's not yet clear what charge or
charges Adam will face, according to The Times. And that is the latest that we'll hear. We'll bring you more updates once they come through Dave. Yeah, we're jumping back and forth between a lot of top stories today, Yvonne, and just looking at live pictures right now from the Bloomberg by site forum and things have just begun a couple of minutes into the conference today on your screens right now for our viewers as Christopher where he is giving the keynote speech. And in a couple of minutes, if things go on schedule, he'll be joining us here, of course, on our set here at the forum. So stay tuned for that. Futures are pointing higher, 3/10 of 1%, cutting down to the open of trade.
A Thursday session just 16 good minutes away in Shanghai and Shenzhen. And here in Hong Kong, you're watching the China show. Good morning. All right. Your run reference, right? Just coming through here. 703 54 against the dollar.
So it is slightly weaker than what is expected here today. And also just reflecting that dollar surge that we got overnight. As you can see, dollar China back above that seven handle here right now, while the Bloomberg bias forum is underway in Hong Kong, bringing together senior leaders and experts in global financial markets, Dave, you have your next guest joining you right there. Yeah, yeah.
Dennis fok is here with us on set. Head of etf portfolio management at mirae asset global investments here in Hong Kong. So we're talking all things equity markets, fixed income what strategies work and if we have time we'll see if we can talk about an exposure at this point then. It's nice to see you and good morning. Nice to see you. Good morning.
You know, the market, the main topic in markets, global markets this week has been this resurgence in in China. I am wondering from your perspective, I mean, you see all the flows in the ETFs space, you know, what strategies do you think have worked and where do you see those funds going now? Yeah, that's a very great question and very great time to talk about, you know, Hong Kong, China, you know, equity market. You know, today, of course, you know, for the last, you know, two days, we have been seeing very strong rebound given all the monetary easing policy by the Chinese. You know, people see and that what we
can see, you know, year to date wise, I can see, you know, especially for those Hong Kong trying to equity they're paying high dividend the basket has been outperforming quite significantly against a broad based benchmark. I think this actually shows that, you know, in terms of valuation, we are seeing, you know, start to be fairly attractive and that for the last two days we also see high dividend but can also very quiet lot. And then what we can well are seeing is that you know, given all the, you know, Fed easing cycle or you know, people are looking for more power and you know, within this region we would probably see continuous inflow in terms of our the height of the stock in this region, the you know, the high I'm glad you brought it up because the high dividend strategy has been seen as you know, to your point, it's outperformed it was seen as a defensive play given the broader bear market in China. And I'm wondering, to your point, do you
think it remains it remains to give investors Alpha, given that there could be a pivot to other unloved parts of the equity market? Yeah, of course. You know, what we can see is that there will be some volatility and still, you know, maybe in near future. But what we are seeing is that, you know, given some of the, you know, Hong Kong and China equity, they are paying quite consistent dividend, you know, in terms of the, you know, peer ratio therefore attractive most of these height of their start up in oh seven and given their track record of paying consistent dividend, I believe that when a lot of our group or as allocators or institutional investors they redeploy their capital you know into into you know Hong Kong China equity market. I think you know height of the you know stock definitely you know these may not be seen as defensive play but you know, that's a fair world position when they feel that, you know, volatility is still there. But the things that they still want to deploy their capital in this region, that is a given over here in the Hong Kong studio. What do you make of this move that we've seen? Do you think that there's something that's long lasting this time around that the stimulus places is a bit more of a game changer than previous sort of stimulus that we've heard from policymakers? And is there anything more to this than just some sort of technical rebound? Oh, yeah, sure.
That's a great question. Of course, no one has a crystal ball, but the thing is that what we are seeing is that, you know, starting from yesterday, I can see the height of the new stock in Hong Kong equity market. And China equity market has already attracted some, you know, traction both in Hong Kong ETF market and also in onshore China. If you see the number of launches in China, you'd have market. We have been seeing a lot of high dividend launch.
That's a fairly good indication that, you know, there could be potentially interesting flow there. And of course, you know, in terms of the rebound, you know, it takes time, you know, for these policies to actually, you know, get into play, you know, into the Chinese economy, the economy. But the thing is that, you know, what we're seeing is that in the global wage cycle, definitely in terms of the emerging market inflow, that would be a step in that would be beneficial for the emerging market. Yeah, Well, talk about the role of M Now, do you think global investors should be increasing their or decreasing their exposure, given it's not just the Fed cutting, it's also almost everyone else apart from, you know, a few central banks like the BOJ. Yeah, sure. Yeah, that's a very interesting observation. I think, you know, the thing is that, you know, in terms of monetary policy globally, I think that the reserves still play very dominant role.
The weaker cycle started already and then everyone is aware and then where for the fixed income manager when they deploy the capital, you know, either they play motivation play, they go for a longer duration because the things that they believe that the weak the. Would play into, you know, longer term or, you know, they start to think about spread and also have maybe currency impact. I think the thing is that, you know, when you take a look at the current spread, I think in terms of the IG is still very narrow. I think more and more people may start
to consider that affects impact where whether, you know, the emerging market currency would have potential to APJ. But given the relatively solid, you know you know solid economic structure in terms of the Asian economy, I think potentially the Asian emerging market currency potentially will have some, you know, potential to APJ and you know, who knows, we might even get Korea being included, of course, in that bond inclusion. Well, we can talk about that next time. What do you think what fixed income strategies you think are the most appropriate? You mentioned duration. I mean, can we still add duration at
this point, given how how much Treasurys have rallied? And, you know, is it is it absolute yield? Is it do do I play an income like what makes sense at this point in time. I think in terms of the current Ukef involvement, what you can see is that, you know, after the weaker decision, I think the long term European, you know, figure has been quite stable. What it means is that is kind of like expected. You know, the Federal Reserve are weaker decision only affecting, you know, short term. And often you have I think the lowest point is I want you to fear what we can see is that the investors are still very concerned about the upcoming US presidential election, the outcome. And the thing is that everyone in fixed income, well, actually is are well aware that the long term, you know, you really depend on demand and supply of the you know, long term born.
So that's the most important thing for people to watch. If inflation is no longer the biggest risk for both fixed income and equity markets, what what is the biggest risk right now? Yeah, it's kind of like, of course I say you in football manager, we're always playing a bull and we wish that, you know, we miss out. I believe that, you know, one of the biggest ways that you know we have maybe the market had not be players is that you know what if the inflation hit up again, the thing is that US economy still fairly solid place people to keep variable you know soft landing or hot lending scenario. But the thing is that what if the economy really heats up again? What would be next? I think that's something that, you know, the market, you know, still continue to final. And then that's why, you know, if you see a lot of our fixed income, you know, movement, of course you know, it price in the wake up, you know, maybe 75 basis point 1% very quickly. But the thing is that beyond that, you
know, people would not expect that to naturally go back to typically, you know, maybe pre-COVID crisis level or even go back to 2008. Dennis, thank you so much for joining us. Dennis FOK, their head of ETF portfolio management at Moray Asset Global Investments in Hong Kong. Take a look. When it comes to your pre market here this morning and of course we're seeing futures are slightly in the negative territory. So we are seeing signs that perhaps this rally is fading in some way. The Hang Seng though, take a look that we are seeing the pre-market, they're up about 1%. So certainly one to watch of whether we
can extend these gains on the Hang Seng after things did kind of lose a bit of momentum towards late part of the day yesterday. This is Bloomberg. Looks like we are seeing day three of gains here when it comes to the Hang Seng were up about 1%. It's really been led by this whole A.I. driven story. Tech is up one and a half percent. And BYD, who seems to be the leader so far on the board with 3% gains here so far and watching very closely that dollar China trade now well above that seven handle here once again. And is it really due to the fundamentals
and a prospect of more stimulus under way? If you take a look at this chart, it shows maybe not, because look at the you have to be against the basket. It's actually been weakening here. So really is this really dollar weakness that is sending that renminbi higher of late. We've got the open coming up next. This is Bloomberg. Good morning from Hong Kong. Welcome back. You're watching the China show. To all our viewers just joining us right
now. So a couple of big stories right now. It looks like we'll be getting day three as far as Hong Kong is concerned. That's number one. Number two is we're looking out for any
developments out of New World. That's the big property developer reports in Hong Kong amid reports our reporting that the CEO might be replaced, Adrian Cheng. And we do understand one part of the plan to usher in a new hope, a whole new world. And Yvonne, we just finished the speech. Christopher Play will be joining us in a couple of minutes. I understand he just stepped off stage.
Will he be coming here and set to have a conversation around Hong Kong? Apart from that many other stories? Of course. What else are you watching? Yeah, it's a good day for Hong Kong, too. You know, we were thinking about maybe this stock rally was petering out in some ways or just given the overnight action. And you're actually seeing, when it
comes to Hong Kong, doing a little bit better than what we're seeing onshore. There you go. We're flat when it comes. The Shanghai Composite, as well as just the slight declines, the CSI 300.
But this is after yesterday, we basically saw it just take you raised a gain of nearly 4% HCI only in the day, slightly higher. So things are still looking pretty mixed here right now. You're still seeing that downside when it comes to commodities. So things are also slowing down there when it comes to steel, copper here this morning. But CGT yields continue on this rally.
Right. So it seems like that push and pull, we're seeing a little bit more money heading back into this bond market here today. We're watching some of these large caps like Kweichow, Seattle. Not a whole lot of movement here this morning, but we're watching very closely how Hong Kong does because seems like things are still trudging along and we're actually doing quite well on day three of this rally. There you go, Hang Seng up 6/10 of 1%. Asia's tech is really fueling that here this morning. MSCI China also seen some pretty punchy gains here.
Right now. What we're going to see is the likes of buy you. There you go. That's really what's leading tech here this morning. Perhaps the micron sort of strong forecast that we start from there that's really helping some of these chip makers is helping that whole air trade across the region here today. Tencent is also up 7/10 of 1%. But yesterday, that stock basically went from a surge to basically back to levels that we saw at the beginning of the session as well. Alibaba's up one and a half percent. And of course, as you mentioned, about
New World suspended trading in Hong Kong. You know, it's interesting, right? There's rumors that they might be replacing Adrian Chang as the CEO. Analysts that we've been talking to say, that could be a way to boost investors confidence in the developer here. It could be a reset for the company's priorities.
It could step up the plan to raise liquidity through these asset disposals in the light. So we're watching very closely what developments come through for New World here today in terms of what movers it is about that cash handout story, whether this has any sort of impact on the consumer sector here. But as I said, interesting notes. Hey, look, this is really a the pain trade. But are we likely going to see more of this sort of rally spread to the more cyclical parts of this market? You are seeing a little bit of that here today, but Trip.com slightly up just about 1/10 of 1%. Not a whole lot of movement there. But we're also watching news, a process set of exited at stake in trip.com chip suppliers, chip stocks, the like.
We're watching very closely. Given that Micron story, that certainly is one thing we're watching here. And there you go. S&P is up close to 3% here today. Speaking of which, we're getting more details on possible changes at chat. GPT creator Openai Bloomberg has learned
the company may give CEO Sam Altman a 7% stake. Let's bring in our tech reporter, Annabel jewellers. This could be a major shift. Well, it certainly would be a bit of an about turn. I mean, Sam Altman is someone who in the
past has really said that he didn't want to have any sort of equity stake in the company. He was telling people that he already had enough money and that this was a company that was supposed to be benefiting society broadly and not necessarily himself. So this reporting that we have now that Open is mulling giving him a 7% stake is particularly significant in light of that. It does also speak to this bigger story that we've also been talking around as well, which is that open AI is looking at changing the structure of the business. So you think about the origins of Open A.I.. It was established back in 2015 as a not
for profit, and the goal of it was developing AI in a way that was responsible, but also that helps society. Obviously, it started to get a lot of interest. It started to get a lot of funding from the likes of Microsoft around 2019. It changed the structure of the company to create a subsidiary where it had a for profit business that sat underneath the broader known for profit structure. That sort of structure and the tension around that really reached a head in November last year. We had that ousting of Sam open at that
time. He, of course, came back to the business. But again, we're hearing that now the actual structure of the company could finally be changed, a for profit one put in place that still has that sort of goal as well of helping society. This is at a time we're seeing a bit of an exodus when it comes to senior management of the company. Absolutely. Yeah, we've seen a lot of key. Leaders at the company leaving the
business in recent months. And the latest one just overnight is Mia Moratti. So she's the CTO of the business. She played a really key role in the in the rollout of the Voice assistant feature that we saw this week as well. Image Generation Software. She's been she's been really pivotal. She even actually was CEO for a period when Sam was ousted in November of last year. So she's saying that essentially she's going to take on more personal projects. Her departure date itself is not set
just yet, but Sam Altman has been reflecting on this on ICS, saying that leadership changes are sort of a natural part of any business. And so, yes, he said, and of course by the news, but the company will move on. He says they've been developing a number of talent at the company to take on these more senior leadership positions. They have been expected to be holding a meeting that kicked off in the last hour or so with those senior people at the business will wait for any sort of updates from that, but certainly caught a lot of people by surprise. All right. Well, thank you, Annabel Jewellers there, our Asia Tech reporter. I'm just getting some wins here when it comes to the RBA.
So they're releasing this financial stability review and there have been some highlights here in particular when it comes to China. So offshore risks include China, financial sector imbalances. The super funds have potential to amplify these financial shocks and Australian banks have kept prudent lending standards. Most households and firms, though, have been coping with higher inflation and rates. But overall they're saying loans an area
likely to rise slightly in the period ahead, that that's really on the cross. You know, we're taking a look at when it comes to what's been going on with the RBA and how they're looking at interest rates here. They still stand to be one of the lone central banks that is holding off on cutting rates any time soon. Perhaps maybe some of the financial risk is one factor here as well, David. Yeah.
I mean, they're in a pickle, aren't they? In in many ways. But I mean, we'll see. I mean they probably will be one of the last in terms of the being able to put the inflation story behind them. I mean, let's see. Let's see. But in any case, of course, markets have been running with lower rates and we'll see what happens then.
Certainly, I think a big topic of conversation here at the Bloomberg by Side forum in terms of the tailwinds for risk assets. Right. So you have you have a Fed that's cutting rates, plus you have all these stimulus measures out of China, perhaps two big tailwinds for risk assets globally.
We'll leave you with live pictures coming up out of the Bloomberg site for forum taking place in this massive room right behind our set here at the forum. And coming up is our interview with Christopher Quake. This is Bloomberg. Right. Welcome back to watching the China Show. We're live here at the Bloomberg Bayside Forum in the city. Speaking of Hong Kong, there's a global financial centers index report out earlier this week. In fact, says Hong Kong has reclaimed
its top spots in Asia's top financial as Asia's top financial center, knocking Singapore back to second place in the region. That comes ahead, of course, of the chief executive's annual policy address next month. So the winds are blowing in the right direction, as they say. Joining us here exclusively is Christopher Wade, the Hong Kong secretary for financial services and the Treasury, to talk us through all these key themes. Thank you for joining us and taking the time.
I didn't catch your speech. I will talk about what you mentioned early on, but let's start there. I mean, we're back to third globally. What do you think has gone well and where do I send the thank you card? In fact, if you look at the ranking more deeply, there are, broadly speaking, three set of criteria. One set is more about general temperament in terms of our friendliness to businesses, our talent, and also in terms of reputation. So we fare obviously very well on these fronts. And the other set of criteria is more financial sector specific about areas where we are doing well.
And in fact, we talk in terms of investment management and also the same time in terms of insurance banking. These are areas that we have to do rather well. So the third bit in terms of the subsector ranking is about general impression of people of Hong Kong. And that also has improved a lot. So I would say that generally speaking,
we are pleased with the result and we'll keep on doing what we have been doing. Areas for improvement. You feel we need to do more to engage the market more, and that's why here I'm today at the as I say, from off the bat. At the same time, I think we need to be able to articulate more in terms of what are the long term plans for financial services sector. And that's exactly what we've been trying to do in terms of having various type of policy statements on family offices, on virtual assets. And very soon, about end of this year,
we'll have a roadmap in terms of how we get our industry prepared for the international standards on disclosure. Okay. Can you give us a little bit more detail on how are those preparations going? What can we expect specifically from the government along those lines? Yes, we see sustainability as a key topic globally. Okay. At the same time, Hong Kong has always
been at the forefront of embracing that. Against this backdrop, back in March last year, we already have a mission statement issued basically articulating our goal to comply with the green disclosure standards of the International Sustainability Standards Board. And we I would say the very first amount, the global financial centers took that date. And after that, it's about a part of the mission. We need to go to the details. And that's why the end of this year, with a roadmap highlighting what our listed companies and also huge financial intermediaries are going to do in terms of prepare the industry for the readiness to do the Spirit disclosure by the year 2049, which is the prescribed deadline for the green standards. Yeah, it seems like we have a lot of time, but that's actually quite a short bit of time in terms. You mentioned the policy address.
Of course, this is coming up next month as well. What can we expect from from you guys? Anything that's in the order that you might announce? Yeah, but of course, we need to keep people in suspense after all. Yes. Well, give us and give us a little bit of a give us something to be suspenseful about. Generally, I think as you see, the
economy is recovering at the same time we have been recovering really well vis a vis other Asian economies or global economies. And we are expecting a economic growth rate between 2.5 and 3.5%. And at the same time, I would say we've been firing from all cylinders in terms of how we can spare further development in this territory. And that's what you find inside of a sector. We have been doing a lot in terms of growing the new finance areas, including green as was mentioned, virtual asset, etc..
And the other angle is to see how we can bring more people in. And that's why we are having a host of forums at events including the coming of Content Week, the Investment Summit, Asia Financial Forum and Wealth Focus Summit for Family offices and all these are being lined up. The since you mentioned family offices, let's let me ask you about that. Are you. I think that is a target 200 family
offices by next year. Are you and 2050, 2050, Are you on track to meet that target? Definitely. And I think we are more than confident to do that, because I think the attractiveness and attraction to have offices here is very much there and accelerating, I would say. As I highlighted in my speech just now, there are actually three set of dividends to Hong Kong has to offer for the global wealth and also asset management industry. And the first set is about the diversification dividend with geopolitics, politics, whatever. People are increasingly eager and ready to diversify their asset allocation globally.
And Hong Kong is actually, as they say, is a very safe place for the assets, is a very natural choice for them. And the. Second dividend is about secession, because now you can see that there's a cross-generational transfer of wealth from the first or second to a third. And these type of new asset owners have a different outlook for investment. They're looking for impact, investment, charities, arts, philanthropy, etc..
And Hong Kong, being a very comprehensive cosmopolitan, has everything to offer an asset bid in terms of it is about super, which I'm sure is not about you and me. It's about people relatively more senior. But at the same time, we see there are tremendous opportunities because as people age, they have a strong desire to invest in order to protect or to preserve their retirement life.
And this again, this opportunity for all of us. Yeah. I want to ask you about family offices, but since you mentioned Silver, can we just briefly talk about that? So what exactly are so so what what's the concept and what what are what should we expect from the government? You mentioned something happening next week, I believe. Yeah. In fact, there are a number of initiatives already ongoing. I think more structurally we are trying to revamp our management three provident fund regime, which is the pension fund of the Hong Kong working people population, including me. Okay.
To first of all, reduce the administration fees for the funds that are investable by our working population. Okay. How we do that is to use technology. So we are going to have a government funded digital platform basically centralize all the in and out all these type of pension payments in such a way that the administration fees applicable to the working population will be lowered. And this whole scheme is what we call the NPF that, you know, try and make mandatory provident fund will be fully implemented by next year. So it's something ongoing.
And the other set of measures that we already announced is less about structural but more about products. Okay. And in fact, next Monday we will start application for people about 60 years old, so long as you have in possession of a kind of Hong Kong you can attach great for I was before bonds basically it is the bonds issued by the government in Hong Kong dollar with a guaranteed interest rate of 4%. Okay so to be eligible you have to be above 60 in terms of the absolute amount that the government is looking to issue. Yeah, largest that bond that we are looking for like a $5,050 billion. Okay.
And I would imagine because of the target market, that's not going to be a very long duration bond is it is a three year bond is a three year bond. Okay. And is there a target, you know, on aggregate, how much you're looking to do that? Because that's something new. Yeah, I must say it's not first time we
do that and even look at what the result was like. Past few issues. Yes, it has been very popular, especially during the low interest environment. But now of course, even with the different environment now, we expect this type of issuance will have a very positive reception. Okay. And Hong Kong can afford to give out 4%. Yeah. The interest rate, that's not going to
be a problem because it was low, low interest then it's it's slightly higher now. Let's talk about family offices. So 250. You're confident you'll meet that. How many single and multi-family offices have established a presence in the city this year? In fact, if you look at the stock concept, we have done it with as a independent third party to do a report for us. And based on a survey, we have a 2700 single family offices by early this year and currently operating. Yeah. Operator Okay.
And then if we look at these 27 from other family offices more closely, half of them have a, um, about 50 million USD. Okay. So but of course we want to grow more because we only count single family offices, because you've talked about multiple family offices, it's more like an asset manager.
So it belongs to a different category that we don't include them in population. That said, we have a dedicated team in Hong Kong, basically our investment promotion agency, to cater for the unique needs of family offices. What interested here and also to cater for that. Annually we have a flagship event, what we call the Wealth of Youth Summit here in Hong Kong, and we will launch a set version of the 30 year anniversary of that event next March.
That is something that we are now planning for some of the just to pivot to some of the talent schemes and the visa programs that the government has put in place and has really attracted a lot of talent to the city. And the bulk, I should say, of course, coming from the mainland, should we expect those programs to continue to be in place in in their current form moving forward? In fact, if you look at the results, I think it's very pleasing in terms of how attractive Hong Kong is as a place to attract talent. And that's why I to your first question about the financial center index talent, it's one of the areas that we top in terms of the ranking. And that aside apart from talent, we
also want capital and that's why we have launched a capital investment scheme basically to allow people with $30 million invested in Hong Kong. We welcome them to come and visit here and to King API eventually. So far we have received more than 550 applications since March this year with be logic. Okay.
And then. We are expecting more than 5 billion injecting into our market with those applications. Have you approved all of those? Like what? Yes, I think we are in different stages of their application. Okay. So far when I talk about the 550, they
are rather in advanced age. Right. I need to ask you about geopolitics. Some comments you've had recently, and I'm sure you've seen the comments coming out of U.S.
officials that doing business in Hong Kong, to paraphrase it, make it simply has become more risky. I know you've disagreed with that very, very firmly. What do you think they're missing? I think the fact that Bloomberg is having this buy side from me in Hong Kong says a lot, and I'm sure that none of us feel risky.
When you do your businesses or you live here. At the same time, I would say Hong Kong is open society. We open for businesses and that's why we can all out. At the same time, you want people to come basically to see what the general situation here is like. But what are the I mean, just to push you on that, too, what are some of the concerns that you think have some basis, for example? I mean, there's there's no doubt that the economy in Hong Kong has become closer with the mainland and there are changes there, not necessarily negative changes, of course.
And I'm wondering, to your point, how do we make things better here in Hong Kong? What do you think the concerns are that need to be addressed? I think if you look at how we position ourselves, that's very clear. We are gateway between the mainland and the rest of the world. And Hong Kong has been and continue to be in such a role. Right. And like, for example, if you look at how we have been introducing enhancements to various connect programs at the moment, including our stop in that program, our volcanic whatever.
At the same time, what we've tried to do, as you said, launching more products on the renminbi funds. What we tried to do is to build this link and to even stronger in this rather dramatically concerns world, because after all, I would say the issues or challenges that we encounter is no different from other jurisdictions. It is new world order. That's fair. Interest rates are coming down. We import our interest rates from the Fed, for example.
Do you see the economy improving materially next year? And just to ask you as well, on the job market in Hong Kong, it's been soft as far as deals and front office jobs, for example. Do you have an outlook of the improvements ahead here for the job market? I think if you look at different sectors of the economy, of course, they are being affected in different ways by the interest rate reduction. Like, for example, with interest rate reduction or with the improved economy that we are seeing in financial sector, in our property banking, for example, wealth management is increasing more people from our interactions with industry, especially those from abroad. I think they really see a growing demand for wealth management services and that's why many foreign banks and international companies are having shops here, you know, to capitalize on those opportunities.
Chris, thank you so much for saying Thank you so much for the time there. Hong Kong Secretary for Financial Services to the Treasury. Yeah. Before I toss to break, I have, in fact,
some research here coming out of our folks at Olympic Intelligence to talk about what that I'm about to pass to Christopher and his team. Coming up here on show is Jeff Lee, global equity CIO e Fund Hong Kong joins us to discuss investor sentiment and fund flows. And given, of course, all the news this week.
Plenty more ahead. This is the China issue. All right. We're looking at some of these consumer stocks here on the back of that news out of China, ready to give some cash handouts to the poor just ahead of that golden week holiday.
That certainly is helping from the likes of Media Group. That's up some 4%. Some of the consumption plays like Qingdao Brewery is up some 3% tobacco as well here today.
But it really is a tech driven story here today that's really fueling the gains that we're seeing here at Hong Kong and around the region here. So Tencent bilibili by two, it said this time with the top movers on this take you take a look at what it comes to, what Tencent is saying. So Morgan Stanley lifting that price target. They still have it overweight on the stock but we're talking targeting games ads recovery they say could actually be a better play than that is for some ways. Bilibili Goldman also talking about how
it has a highly sticky and under monetized young user base video platform. Now turning to more robust sort of business model for the company is stock is flying some eight and a half percent right now. I think on the dashboards here it really is what we're seeing across Hong Kong that is driving equity sentiment and it seems like we're seeing day three well gained some traction here in this equity rally. We're up 1.2%, 19,385 for the Hang Seng. You're watching the China show. Welcome back to the Chinese. Shall we start with some breaking news
at the second hour and possibly more stimulus on its way when it comes to helping some of these Chinese banks. So our sources are telling us that policymakers are considering injecting up to 1 trillion renminbi. That's about 42 billion of capital into its biggest state banks to increase their capacity to support the struggling economy. This was always been the worry after we saw this week the stimulus blitz, a cut to mortgage rates, a cut to low rates and all the like that.
This was going to really weigh on the banking sector. And now it seems like help or at least some funding will come along the way. These lenders here especially will come in the form of issuance of new special sovereign bonds. That's according to people familiar with
the matter. We'll get to that story in just a bit. In terms of the details in the weeds of all this, here's HSBC right now. We're off some of the session highs here right now, but there you go.
We see Hang Seng up for another third day of gains here after we thought that things were going to be faltering a bit here. I think the tech story really helped lift things here today. Not so much maybe the stimulus news, but really we all have now, not just this injection of capital into banks, but also cash handouts to the poor that might be keeping this rally at least afloat for another day Dave. Yeah, this really shows, I think, Yvonne, if you remember the day after that big rare briefing, which was on Tuesday, you know, the morning after we were looking at Chinese markets, what also moved and not a lot of people noticed were some of the China proxies globally. Right. And that's exactly, again, what we're seeing as far as market reaction. So you mentioned the Hang Seng, you
mentioned the Chinese currency. The Aussie dollar is rising as well. I'm also seeing iron ore also start to pick up. We were trading below $97. We're now above $97 as far as iron ore
prices are concerned. So you really see markets are literally tuning in to this market story in China right now for any further clues of any incremental help. And it looks like with this story, we are getting it divine. Yeah.
And keep in mind, there's still popular media going to be happening next few days ahead of that Golden Week holiday. So we are likely to hear a bit more of possible stimulus measures that could be coming through here in the pipeline. For more, let's bring in our China correspondent, Edmond Lo, who has more on this top story now. How should we interpret this move? Yeah, I mean, I think the company I think they want to inject some capital into the banking system. And I guess this time we got a little bit more details that it could be up to a trillion when majority of it coming from special sovereign bonds, which I believe doesn't actually count to that top line budget deficit for the year. So it's a fiscal push here as well to support the banks. I don't think we should see it as the
banks being distressed because if you look at the capital adequacy ratio, it is for the big banks still well above the requirement of 8.5%. The average now is about 11.7%. So this is really to support these banks at a time when their profit margins has been hit. It's at about 1.5% as of END-JUNE, which is significantly below that threshold of 1.8% that is deemed to be reasonable profits for these banks to keep going. And we have seen the best time and again, being asked to carry out national surveys to revive the economy. Right.
With the mortgage rate cuts, that is expected to shave off about ¥150 billion in annual interest payments that will no longer go to the banks. They were asked to give out interim dividends as well at a time when the profits were already already very thin. So hopefully this injection would go some way to also encourage the banks to keep lending, to keep credit growth growing as well. Yeah. Admitted Chinese officials have really opened up their wallets to support this recovery. So on top of this injection to banks that that rare move if not the probably the first time that we've seen Chinese officials come out and said. Cash handouts for those who need it the
most. What can you tell us about that, that fiscal pump, if you will? Yeah, this is a very significant move, as you said, is really a departure from the past where we know presidency has been extremely resistant to what's giving direct cash handouts, which Chinese officials have said could encourage laziness. But at this point, we don't have the details as to how big of a handout this would be and eventually how big of a booth it would turn into when it comes to retail spending and GDP growth. But it will benefit the extreme poor. And there are about 4.7 million of them in China. It's supposed to be given out before the October Golden Week holiday.
So maybe it would give a little bit of a boost to that travel and holiday spending, although for the extreme poor, maybe they won't be going on a holiday. Maybe it will be perhaps some spending towards household appliances, the consumer staples that have been the laggards in the Chinese economy so far this year, by the way, is the 85th and the 75 anniversary of the founding of the PRC. So state media saying this is a sign that the party and the government are showing their love and care for the citizens. Yeah, and today the market reaction is really beer stocks. I think tobacco stocks are rallying the
back of some of these news here when it comes to cash handouts. And we're also watching very closely what goes on with the banks as well as debt amendment mentioned. We're tracking very closely if any sort of reaction to this Bloomberg scoop. It looks like right now it's been a mixed picture across some of the big state banks here as well.
But we'll see if there's any sort of cross through here right now. We'll take a look at ICBC, Bank of China, the like here. There certainly has been the winners in this market, just given that dividend income yielding sort of play that people are talking about. So are the key sort of strategies as you look at Chinese equities here right now. But there you go. You're seeing a rally. Their postal savings bank is up about 2.2% here right now.
Think the Asia extra pair you talked about, it's not just the Chinese assets with a focus on here, but as Dave mentioned, you're also seeing a bit of more of a revival or a rebound in the commodity side of things after this. News also ramps up here, iron ore, we're seeing gains about 6/10 of 1% at $97, according to futures in Singapore here this morning. The Aussie dollar is catching a slight bit and seem to be benefiting from all this China stimulus. Also, of course, the RBA still holding hawkish this week as well. So there you go. You are seeing some market reaction here. U.S. futures are punching slightly higher
here and the Nikkei is up two and a half percent thanks to that weaker yen that we saw overnight. For more, let's bring in our asia equities reporter charlotte yang to walk us through. It looks like day three is still underway for hong kong. But what what else is in store? You think? We were thinking that things were getting a bit tired, but not so thanks to the bank in point a sign of this instance spike posting onshore in Hong Kong because before in them early in the morning with this new market opening on a weaker footing. And I think this is kind of a familiar
episode, you know, for Chinese markets when you have this big stimulus coming out and then you have like the hedge funds coming in to Congress, I'm sure is not so. And also we also this time, we also have a report from Goldman saying that the amount of money buying in, but then they were kind of positive to see what happens next. And like you mentioned, we have this Politburo meeting.
You know, we're expecting it to happen in the next few days and people are expecting that might be some measures coming on. And then you have the seven day long day holiday, which I think the column from the consumption side will be so important to this market because we know the poverty story is a long term thing. So we do want to see movie takers, the retailers, they're going to show some positive signals after all these stimulus signals. Charlotte the.
Expectations running maybe slightly too high at this point. Help us understand where the market mindset is right now given that, as you point out, we've gotten a lot of new things this week and, you know, is the market running ahead of itself or is this, I guess in some ways a proper reset? I think sentiment wise, it has fundamentally improved a lot because the way, you know, the government is sending all the signals, investors really like that. You give this package a holistic package of stimulus, know from the monetary side and also the directors who support the stock market. And they like kind of how over the day we're seeing more efforts from from from the government. And I think also like a lot, we're
hearing some long term investors saying that, you know, this time they're not going to the market to buy specific stocks for what they are doing and they just buy index funds and or like using a call option strategy. So in that way, they can help it can help them capture the upside. Given that overall investors positioning specially, you know, the big money is still relatively light. So I think at this time the expectation
people do have high expectations but is still looking like we may see some more upside in the near term. All right, Charlotte think you're still young. There are Asia equities reporter joining us here. We got plenty more ahead. This is bloomberg. On October 1st. With the election weeks away, the VP candidates are set to face off. When we fight,
you guys are going to get me all fired up. I trust Bloomberg for news and analysis.
2024-09-27 13:27
