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Oil Surges As Trump Steps Up Pressure on Russia | The Asia Trade, 10/23/25

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Окт 23, 2025

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  • 00:00SHERY AHN: THIS IS «THE ASIA TRADE.» AVRIL: I’M AVRIL HONG. ASIAN STOCKS OPEN A LOWER. OIL JUMPING AS U.S. SANCTIONS OF RUSSIA’S BIGGEST PRODUCERS OVER THE WAR IN UKRAINE. PROFIT TUMBLED MORE THAN EXPECTED. ELON MUSK IS TRYING TO SHIFT INVESTOR FOCUS TO ROBOTAXIS AND HUMANOIDS. PLUS, WE HEAR FROM THE FINANCE MINISTER OF SOUTH KOREA ABOUT TALKS WITH THE U.S. ON THEIR $350 BILLION INVESTMENT. STEPHEN: IT IS THE ANNUAL BUND SUMMIT IN SHANGHAI. WE WILL GET THE OUTLOOK FOR CHINA’S ECONOMY AND U.S. TRADE TENSIONS, AMONG OTHER GUESTS LIKE STEPHEN ROACH AND GINGER CHENG. SHERY AHN: THE EXPECTATION FOR THE BANK OF KOREA TO HOLD RATES STEADY, GIVEN FINANCIAL CONCERNS. WE HAVE SEEN INCREDIBLE PRESSURE ON THE SOUTH KOREAN WON, ESPECIALLY GIVEN WITH THE U.S. INVESTMENT FUND WORTH 350 BILLION DOLLARS DURING THE TRADE NEGOTIATIONS WOULD MEAN FOR THAT PRESSURE, AND WEAKNESS, AND WE ARE ALREADY SEEING THAT IN THE CURRENCY. WE SAW A JUMP IN THE SOUTH KOREAN WON AFTER OUR CONVERSATION WITH THE FINEST MINISTER — FINANCE MINISTER OF SOUTH KOREA, TALKING ABOUT WITH THE U.S. UNDERSTANDS ABOUT THE FX LANDSCAPE IN THE COUNTRY. TAKE A LISTEN. > > SECRETARY SCOTT BESSENT FULLY UNDERSTANDS THE DIFFICULTY IN KOREA’S FX MARKET AND IS HAVING INTERNAL DISCUSSIONS ON HOW TO RESPOND TO THE SITUATION. AVRIL: ON TOP OF THAT, WE ARE WATCHING THOSE MOVES IN THE U.S. DOLLAR, AND OVERNIGHT ON THE SESSION, WE DID SEE MOMENTUM CONTINUING TO UNWIND. THINK ABOUT IT, STEEP SELLING IN GOLD THAT PASSED TO A SECOND DAY, AND AGAINST THE BACKDROP. IF YOU LOOK AT FACTORS, THEY ARE MOVING THE MARKETS MOMENTUM, AND IT HAS GOTTEN BAD ENOUGH THAT IT SPREAD TO OTHER SECTORS OF THE MARKET, AS WELL, EVEN THE SMALLER CAP STOCKS SHOWING UP IN THE RUSSELL’S INDICES. AND I GUESS THIS ALSO DOES NOT HELP THAT WE ARE SEEING SOME OF THE EARNINGS. THEY HAVE BEEN RESILIENT AS OF LATE. IF THAT DISAPPOINTS IN A WAY THAT TESLA SEEMS TO HAVE, THAT COULD BE QUITE UNHELPFUL FOR THE MARKETS, AS WELL. SHERY AHN: EV MAKERS ARE FALLING. IN THE FINAL RECORD OF EV SALES ARE A NEW DEVELOPMENT BECAUSE WE HAVE SEEN CUSTOMERS RUSHING TO GET THOSE TAX CREDITS FOR EV PURCHASES UNTIL SEPTEMBER WHEN THEY EXPIRE, BUT IN THE AFTER OUR SESSION, WE ARE SEEING A DOWNSIDE ON THE TESLA SHARES. WE ALSO SAW SOME DOWNSIDE AND A AMOUNT — AROUND THE PRESSURE WITH THE BROADER MARKET, AND WE HAD CONCERNS ABOUT THE U.S. TRYING TO TRADE NEGOTIATIONS WITH THE U.S., NOW SET TO BE CONSIDERING ON THOSE EXPORTS TO CHINA. PLENTY FOR INVESTORS TO DIGEST. INCLUDING THE LATEST ON U.S. ESSENTIALS AND OIL PRODUCERS, WHICH IS LEADING TO THAT SPIKE IN OIL PRICES. WE WILL BE WATCHING THOSE OIL-RELATED STOCKS AND SECTORS ACROSS THE ASIAN SESSION. SHERY AHN: ABSOLUTELY. AVRIL: YOU ARE REALLY SEEING THOSE STOCKS AT THE OPEN. THAT IS THE SECTOR GAINING THE MOST WHEN THE REST OF THE MARKET IS OPENING PRETTY TEMPTED, WITH A DECLINE IN GOLD RELATED STOCKS WHERE A DAY AGO IT WAS A BIG DRAG ON THE MARKETS. YOU TALKED ABOUT THE U.S.-CHINA TENSIONS. IT IS INTERESTING THAT IF YOU LOOK AT DOLLAR CHINA, THEY SEEMED UNBOTHERED BY THE WHOLE THING. IT HAS ACTUALLY EASED OFF. WE ARE WATCHING THAT WITH TESLA SUPPLIERS IN THE SECTOR. SHERY AHN: LET’S TURN TO OUR TOP STORY WHICH COULD MOVE ANOTHER SECTOR IN THE ASIAN SECTION, THE U.S. ANNOUNCED SANCTIONS ON RUSSIA’S LARGEST OIL PRODUCERS TO PRESSURE PRESIDENT PUTIN INTO NEGOTIATING AN END TO THE WAR IN UKRAINE. PRESIDENT TRUMP: WE CANCELED THE MEETING WITH PRESIDENT PUTIN. IT DID NOT FEEL RIGHT TO ME, IT DID NOT FEEL WE WOULD GET TO THE PLACE WE NEEDED TO GET, SO I CANCELED IT BUT WE WILL DO IT IN THE FUTURE. > > CAN YOU TELL US WHY YOU ARE ELEVATING SANCTIONS AGAINST RUSSIA RIGHT NOW? PRESIDENT TRUMP: I FELT IT WAS TIME. WE WAITED A LONG TIME. I THOUGHT WE WOULD GO LONG BEFORE THE MIDDLE EAST. WE DID SEVEN DIFFERENT. SHERY AHN: FOR MORE, WE ARE JOINED BY MICHAEL HEATH WITH THE LATEST. THIS SOUNDS LIKE A DIFFERENT TONE FROM PRESIDENT TRUMP, BUT WILL IT MAKE A DIFFERENCE WHEN WE’VE SEEN OTHER ROUNDS OF SANCTIONS AND OTHER PUNISHMENTS FOR OFFICIALS IN RUSSIA? MICHAEL: IT WILL NOT MAKE AN IMMEDIATE DIFFERENCE BUT IT IS A STEP IN THE RIGHT DIRECTION. THESE ARE THE FIRST SANCTIONS PRESIDENT TRUMP INTRODUCED AGAINST RUSSIA IN HIS SECOND TERM, SO I THINK THERE IS A SIGNIFICANT MOVE. ONE OF THE THINGS NOT MENTIONED IN THE CLIP YOU SHOWED WAS PRESIDENT TRUMP SAYING THAT WHENEVER HE TALKS WITH VLADIMIR PUTIN, THEY HAVE THESE GREAT CONVERSATIONS AND THEN THEY NEVER GO ANYWHERE. IT SEEMS LIKE HE SORT OF STARTED TO GET WITH THE PROGRAM THAT RUSSIA IS GOING TO TRY TO STALL THE U.S. AND ANY SANCTIONS, AND IT HAS NO INTENTION OF STOPPING ITS CAMPAIGN. SO IMPOSING THESE SANCTIONS, IT IS RUN BY A CLOSE ALLY AND HE USED TO BE ON OF HIS TIGHTEST ADVISORS AND THEY ARE BIG OIL SURPRISE, AND THEY COME FOR A LOT OF THE BUDGET AND INCOME. SO THEY’RE GOING IN THE RIGHT PLACE. ANOTHER THING THEY NEED TO DO, IF IT IS TO GET IN THE ATTEMPT — STOP BUYING RUSSIAN OIL, IT IS TO JUST TRY AND CRIMP THE FINANCE RUSSIA HAS AND IT IS NOT GOING TO STOP THE WAR, BUT IT MAKES IT HARDER AND IT DEMONSTRATES TO RUSSIA TO STAND UP TO THIS BECAUSE PUTIN HAS ALWAYS BEEN AT THE WEST WOULD GET BORED AND FRACTURE AND HE WOULD END UP WINNING. SO IT IS REALLY ABOUT HOW THE WEST IS HERE FOR THE LONG TERM. AVRIL: I’M USING THESE ULTRA LONG-RANGE MISSILES INTO RUSSIA, IS THAT COUNTERPRODUCTIVE, SENDING A MIXED SIGNAL? MICHAEL: THE WALL STREET JOURNAL REPORTED THAT THE U.S. HAD LIFTED RESTRICTIONS AND ONES PRESIDENT TRUMP CAME INTO OFFICE, HE TRANSFERRED, THE USS TO SIGN OFF, HE TRANSFERRED THAT FROM U.S. COMMAND TO DEFENSE SECRETARY PETE HEGSETH. THAT HAS NOW BEEN TRANSFERRED BACK TO EUROPE AND AMERICAN COMMAND, SO THERE IS A BIT MORE FREEDOM AS I UNDERSTAND IT VERY UKRAINE TO DEPLOY THESE. THAT GOT A RANGE OF 119 MILES. WHAT UKRAINE HAS BEEN AFTER ARE THE TOMAHAWK’S THAT COULD STRIKE DEEP INTO RUSSIA. PRESIDENT TRUMP SAID THIS TALK WAS FAKE NEWS, BUT IT IS ALMOST LIKE HE WAS REFERRING TO SOMETHING DIFFERENT. LOOK, IT DOES NOT CHANGE THE GAME BUT IT ALLOWS UKRAINE TO STRIKE BACK. YOU SAW RUSSIA TARGETING ITS ENERGY SECTOR AND IN THAT PART OF THE WORLD, IT IS VERY COLD AND IT MAKES IT MISERABLE FOR PEOPLE, SO UKRAINE DOES HAVE A CHANCE TO RESPOND WITH LONGER-RANGE MISSILES. SHERY AHN: MICHAEL HEATH. PRESIDENT TRUMP PLANS TO SPEAK TO CHINA XI JINPING ABOUT BEIJING’S PURCHASES OF RUSSIAN OIL WHEN THE TWO NEED NEXT WEEK IN SOUTH KOREA. LET’S BRING IN OUR CHINESE CORRESPONDENT. A LOT OF THE TABLE WHEN IT COMES TO THAT SITE LINING APEC SUMMIT BETWEEN THE TWO LEADERS. WHAT DO WE EXPECT ON THE RUSSIAN OIL FRONT? MINMIN: PRESIDENT TRUMP IS ADDING MORE ITEMS ON THE AGENDA. AND NOW HE IS TALKING ABOUT ENDING THE RUSSIA-UKRAINE WAR, AND HE WOULD LIKE TO SEEK PRESIDENT XI JINPING’S ADVICE I WOULD LIKE TO TALK TO CHINA ABOUT THE PURCHASES ON RUSSIAN OIL AND ENERGY. HE SEEMS TO THINK THAT THE PRESIDENT WOULD BE RECEPTIVE TO THAT, BUT I’M NOT SO SURE BECAUSE THE THREAT OF THE SECONDARY SANCTIONS HAVE BEEN HANGING OVER CHINA, AND CHINA THIS YEAR ACTUALLY SIGNED A GAS PIPELINE DEAL WITH RUSSIA. IT HAS RAMPED UP ENERGY. LAST YEAR WE SAW A RECORD AMOUNT OF BUYING 100 MILLION TIMES OF CRUDE OIL, WHICH IS CLOSE TO 1/5, 20 PERCENT OR SO OF CHINA’ AS ENERGY IMPORTS. IT WOULD BE COSTLY FOR CHINA TO SHIFT ITS IMPORTS TO OTHER COUNTRIES BECAUSE IT IS BUYING THESE SANCTIONED ENERGY AT A CHEAPER PRICE. THIS IS SOMETHING PRESIDENT TRUMP WOULD LIKE TO SPEAK TO PRESIDENT XI JINPING ABOUT. HE SAID IT WOULD BE A WIDE-RANGING TONE AND THEY ARE PREPARED TO SPEAK FOR A LONG TIME, AND THEY WILL TALK ABOUT SOYBEANS, TARIFFS, AND POTENTIAL CUTS ON SOFTWARE. THAT IS ALSO SOMETHING WE JUST REPORTED TODAY. A WHITE HOUSE OFFICIAL CONFIRMED THEY ARE CONSIDERING POTENTIAL BROAD CUTS ON CHINA, AS WELL — CURBS ON CHINA, AS WELL. AVRIL: TALK ABOUT THAT MOVE. WHAT IS INTERESTING IS THAT THE U.S. HAD IMPLEMENTED SIMILAR MOVES WITH RUSSIA. WHAT ARE WE SEEING IN TERMS OF THIS REPORTED MOVE ON CHINA? MINMIN: REPORTEDLY, AND REUTERS’S WAS THE FIRST TO REPORT THAT THE U.S. IS CONSIDERING SIMILAR MOVES THAT THEY IMPLEMENTED ON RUSSIA. THEY ARE PLANNING TO PERHAPS DO THAT TO CHINA, AS WELL, IN RETALIATION TO CHINA’S EXPORT CONTROLS. WE KNOW THAT PRESIDENT TRUMP HINTED THAT POTENTIALLY PLACING CONTROLS ON ALL OR ANY CRITICAL SOFTWARE TO CHINA RIGHT NOW IS NOT HOW CLEAR IT WOULD BE — HOW SWEEPING IT WOULD BE. WHETHER THERE WOULD BE AN EXTRATERRITORIAL ELEMENT TO IT THAT WOULD AFFECT FOREIGN PRODUCTS THAT RELY ON U.S. SOFTWARE, BUT EITHER WAY, IT WILL HAVE A HUGE IMPACT ON THE CHINESE AND U.S. ECONOMIES. SCOTT BESSENT WAS ASKED ABOUT THIS AND SAID EVERYTHING IS ON THE TABLE WHEN IT COMES TO EXPORT CONTROLS. WHETHER IT IS ENGINES. AND HE SAID IT WOULD BE COORDINATED WITH OTHER G-7 NATIONS. ANOTHER THING TO POINT OUT IS THAT THE NATO CHIEF IS IN THE WHITE HOUSE THIS MORNING, AND HE SPOKE TO PRESIDENT TRUMP AND SAID CHINA IS A KEY ENABLER OF RUSSIA’S WORK AND UKRAINE, AND — WAR IN UKRAINE, AND THIS ALLIANCE BETWEEN PRESIDENT TRUMP AND NATO COUNTRIES COULD BE SOMETHING THAT IS OF CONCERN TO CHINA, AS WELL. AVRIL: THANK YOU FOR PROVIDING THE CONTEXT FOR ALL THESE LATEST DEVELOPMENTS. ALSO COMING UP ON THE ASIAN TRADE, WE TALKED MARKET STRATEGIES. PLUS, YALE LAW SCHOOL’S STEPHEN ROACH AND GINGER CHENG. MUCH MORE AHEAD. STHIS IS BLOOMBERG. ♪ HAS’S THIRD-QUARTER PROFIT PLUNGED MORE THAN EXPECTED. IT IS A RECORD QUARTER A VEHICLE SABLES. ADJUSTING EARNINGS FOR 50 CENTS A SHARE. AUTOMAKERS ARE FACING PRESSURE FROM SHIFTING TRADE POLICIES. LET’S BRING IN OUR COLLEAGUE. CUSTOMERS TOOK ADVANTAGE OF THE TAX CREDITS BEFORE THE EXPIRED BUT THERE WAS NOT ENOUGH? KEITH: YEAH, BECAUSE WHAT INVESTORS ARE CONCERNED ABOUT IS THE SALES ARE GOING TO FALL OFF A CLIFF. TAKE AWAY THE $7,500 TAX INCENTIVE SO WHAT YOU ARE SEEING WITH TESLA’S COSTS HAVE GONE UP, INCLUDING TARIFF COSTS OF 400 MILLION DOLLARS. OVERALL, COSTS WENT UP BY 50%, AND THAT CUT INTO EARNINGS. AVRIL: TESLA IS NOT IMMUNE TO THESE COST PRESSURES THAT OTHERS IN THE AUTO INDUSTRY ARE FACING, BUT WHAT WAS INTERESTING ON THE CALL WAS ELON MUSK’S TALK ABOUT ROBOTAXIS, HUMANOIDS, IS THAT ENOUGH TO CONVINCE INVESTORS OF ITS LONGER-TERM PLANS IN ANY WAY? KEITH: THAT IS WHAT INVESTORS HAVE BEEN TREATING, TESLA’S WERE IN AI COMPANY, BUT IT STILL MAKES ITS MONEY BY SELLING ELECTRIC VEHICLES, AND THEY HAVE FOUR STRAIGHT QUARTERS OF PROFITS IN THAT REGARD. THAT IS HOW THEY ARE FINANCING THIS FUTURE OF ROBOTAXIS AND ROBOTS, SO IT IS IMPORTANT FOR THE CAR BUSINESS, SO THAT IS A GOOD SIGN, BUT YOU NEED A ROBUST CAR BUSINESS TO FINANCE THIS FUTURE. SHERY AHN: WHERE ARE TESLA’S SHARES OF THE MOMENT, DO THESE NUMBERS TELL US ABOUT THE FUTURE TRAJECTORY OF HOW INVESTORS ARE PRICING THIS COMPANY AS AN AI RELATED PLAYER? KEITH: SHARES HAVE MORE THAN DOUBLED OVER THE PAST YEARS, BUT WHAT HAS HAPPENED IS — THERE IS A REACTION FROM INVESTORS THAT THERE IS CONCERN ABOUT THE CAR BUSINESS. THEY HAVE MOVED AWAY FROM ENCOURAGING SALES OF ELECTRIC VEHICLES AND BACK TO ENCOURAGING SALES OF TRADITIONAL VEHICLES. AVRIL: THANK YOU TO OUR BLOOMBERG AUTO REPORTER, WITH THE LATEST ON TESLA EARNINGS. AS KEITH WAS OUTLINING, SHARES OF TESLA HAVE DOUBLED, GIVEN HOW IT HAS VARIED AFTER HOURS WITH THE BACKDROP OF OVERALL U.S. EARNINGS THAT HAVE BEEN RESILIENT. WHAT DOES THIS MEAN FOR THE MOMENTUM TRADE? LET’S BRING IN OUR GLOBAL HEAD OF RESEARCH. GREAT TO SEE YOU. WE ARE LOOKING AT U.S. EARNINGS TRYING TO UNPACK WHAT HAS BEEN RESILIENT OF LATE. THE TARIFF IMPACT, AS WELL. DOES WHAT YOU ARE SEEING IN THE MARKET CONCERN YOU OR IS THIS MORE OF A SHORT-TERM CONSIDERATION? JEAN-FRANCOIS: THE MARKET WAS VERY RESILIENT, MAYBE A LITTLE OPTIMISTIC BECAUSE WITH THE PAUSE ON TARIFFS, WE FORGET THAT TARIFF IS STILL THE FAVORITE WORD OF TRUMP. THIS TRADE WAR IS STILL VERY MUCH GOING ON. I THINK WHAT WE ARE SEEING IS A CHANGE IN ECONOMIES, WITH SOFTWARE, AND ON THE OTHER SIDE, WE SEE THAT THE WORLD NEWS ACCELERATING AND THEY ARE SHOWING A WAY OF DOING THINGS, SO IT IS MASSIVELY CHANGING THESE DAYS, SO THE MARKET WAS A LITTLE OPTIMISTIC AND COMPANIES ARE WITH EARNINGS, BUT NOW, THE FUTURE IS UNCERTAIN. AND THERE WAS A LOT OF FRONTLOADING, SO WE SEE MAYBE IT IS JUST A TASTE OF WHAT IS IN THE PAST, NOT THE FUTURE. AVRIL: I GUESS TRADE WAR 2.0 HAS GONE ON LONG ENOUGH TO GUESS WHO THE WINNERS AND LOSERS ARE SHAPING OUT TO BE, BUT I WOULD LIKE TO GET YOUR THOUGHTS ON WHAT YOU ARE SEEING IN THE MARKETS, PARTICULARLY AS GOLD — ON GOLD AS A HAVEN OR RISK ASSET, DO YOU SEE MORE OF THAT COMING? JEAN-FRANCOIS: THIS IS INTERESTING BECAUSE WE SEE GOLD SKYROCKETING, SO SOMETHING HAS TO GIVE. IT IS VERY INTERESTING TO SEE WHAT IS GOING ON BECAUSE IT IS A SYMBOL OF THAT, AND BITCOIN, AS WELL, BECAUSE PEOPLE ARE BUYING U.S. STOCKS. THEY ARE AGING, SO IT SAYS A LOT ABOUT, YES, WE ARE OPTIMISTIC ABOUT THE PROSPECT, BUT ON THE OTHER SIDE, WE DON’T KNOW HOW MUCH WEALTH THE DOLLAR IS GOING TO BE, SO BOLD IS THE NEW DOLLAR IN THIS CONTEXT. THIS IS A GOOD EDGE AGAINST THE JOB ABILITY, BECAUSE THERE IS UNCERTAINTY, AND AT THE SAME TIME, YOU SEE THE LEAPS, THE MOVES IN THE MARKET IS VERY LOW. SOMETHING HAS TO GIVE AND GOLD IS A GOOD EDGE ON THIS KIND OF TRADE-OFF BETWEEN VOLATILITY IN THE MARKET, WHICH IS LOW, AND UNCERTAINTY, WHICH REMAINS EVERYDAY WITH NEW TARIFFS AND NEW TRADE WARS. SHERY AHN: WITH THE DOLLAR UNDER PRESSURE, WE ARE SEEING LARGER MARKET CURRENCIES GAINING GROUND. NOT TO MENTION SOME EM COUNTRIES ARE EXPOSED TO GLOBAL TRADE. HOW BENEFICIAL WILL IT BE FOR SOME OF THE NON-DEVELOPING OR THE UNDERDEVELOPED REGIONS AND THE ASSETS ON THOSE EM CLASSES? JEAN-FRANCOIS: VERY GOOD QUESTION. IT DEPENDS ON YOUR SHARE OF THE GOLD TRADE THAT WILL BE AFFECTED. IT DEPENDS ON WHERE YOU ARE, YOUR CITY AND IN TERMS OF SUPPLY CHAIN. IT IS VERY INTERESTING FOR EMERGING COUNTRIES. BUT PROBABLY THE DOLLAR WILL BE LESS DOMINANT IN THE FUTURE, AND AT THE EXPENSE OF THE DOLLAR, YOU PROBABLY WOULD SEE RISING ALTERNATIVE CURRENCIES. YOU CAN THINK OF INDIA, INDONESIA, AUSTRALIA. PROBABLY YOU WILL SEE A BUNCH OF REALLOCATION BETWEEN THE USUAL DOLLAR DOMINATED TRADE. AND THANKS HER FRONTLOADING, IT IS HOLDING UP WELL, BUT WITH FRONTLOADING, YOU PROBABLY WILL SEE SOME REBALANCING. AND THEN WE THINK THAT COMPARED TO OTHER CURRENCIES, WHICH IS WITH CHINA, FOR INSTANCE, CHINA TRADE IS DOWN DOUBLE-DIGIT FIGURES OF THE U.S., BUT IT IS AT DOUBLE DIGIT WITH SOUTHEAST ASIA, AFRICA, AND THE REST OF THE WORLD. SO MEASURE AGAINST THE DYNAMITE OF CURRENCIES, AS WELL. SHERY AHN: WHEN IT COMES TO ONGOING TRADE TENSIONS, WE CONTINUE TO SEE MORE THREATS ON RESTRICTIONS ON SOFTWARE EXPORTS TO CHINA, CHINA RESTRICTING RARE EARTH MATERIALS, AS WELL. GIVEN THE EXPOSURE OF TECH AND HOW MUCH EXUBERANCE IS IN THAT SECTOR, WHAT IS THIS TELLING YOU ABOUT THE RALLY WE HAVE SEEN IN AI RELATED SECTORS AND STOCKS? JEAN-FRANCOIS: THIS IS ANOTHER QUESTION MARK ON THE EVALUATION BECAUSE YOU ALWAYS HAVE A CONCENTRATION OF VALUATION, WHICH I’M HOPING THESE DAYS, YOU HAVE THESE BIGGER — LAST TIME WE SAW THESE RATIOS, IT WAS — WHAT WORRIES ME A LITTLE BIT WHEN I SEE THIS VALUATION, FOR NOW, IT IS A PROBLEM FOR THE AUTO INDUSTRY, MORE FOR NVIDIA, FOR INSTANCE. WE SEE A STRONG REORGANIZATION OF THE SUPPLY CHAIN HERE AGAIN BECAUSE WE SEE A VISA AGREEMENT WITH AUSTRALIA. WE ARE FINDING A LOT OF RARE EARTH AND WE — WE JUST NEED TO FIND A WAY TO APPOINT THEM AGAIN, BUT IT WILL TAKE TIME. AND IT IS — WE HAVE A PROBLEM OF REFINING THEM, SO IT WILL TAKE TIME. YES, IN THE MEANTIME, IT CAN BE ANOTHER RISK ON THE VALUATION OF TECH. SHERY AHN: GOOD TO HAVE YOU WITH US, GLOBAL HEAD OF RESEARCH. WE HAVE MORE AHEAD ON «THE ASIAN TRADE.» THIS IS BLOOMBERG. ♪ AVRIL: AMID THE CONTINUED MOMENTUM ON WHY PRICES ARE SLIPPING, AGAINST THE BACKDROP TRACKING AUSTRALIAN MINERS, AND GOLD RELATED STOCKS, WHICH WERE THE BIG DRAG A DAY GO, AND BUCKING THE TREND TODAY IS THE FIRST SHIPMENTS OF IRON ORE SHOWING STRONG CHINESE DEMAND FROM FORTESCUE, DESPITE A POSSIBLE SUPPLY GLUT. WE’RE ALSO WATCHING THE SESSIONS. SHERY AHN: SUPPLY GLUT COULD BE AN ISSUE FOR OIL, AS WELL. WE ARE SEEING JUMPS IN THE PRICE OF OIL GIVEN SANCTIONS ON RUSSIAN’S BIGGEST OIL PRODUCER. WE WILL BE WATCHING THOSE ACROSS TRADING IN THE ASIAN SESSION TODAY. WE HAVE MORE AHEAD. THIS IS BLOOMBERG. ♪ SHERY AHN: TAKING A LOOK AT HOW MARKETS ARE TRADING. DOWNSIDE OF .40%. ALTHOUGH, ENERGY STOCKS ARE LEADING GAINS, GIVEN THE JUMP IN OIL PRICES ON U.S. SANCTIONS ON RUSSIA’S BIGGEST OIL PRODUCERS. NIKKEI FUTURES POINTING TO THE DOWNSIDE AFTER JAPANESE STOCKS FELL LAST SESSION. U.S. FUTURES NOT DOING MUCH AFTER WE SAW MOMENTUM TRADES UNWINDING IN THE OVERNIGHT SESSION. LET’S GO TO THE ANNUAL BOND SUMMIT BEGINNING IN SHANGHAI, BRINGING TOGETHER POLICYMAKERS AND EXECUTIVES. STEPHEN ENGLE IS THERE FOR US. WHAT SHOULD WE EXPECT FROM THE SUMMIT? STEPHEN: A LOT OF DIALOGUE. THAT IS WHAT WE ARE GOING TO EXPECT. NO BETTER PERSON TO KICK OFF COVERAGE AT THE BOND SUMMIT IN SHANGHAI — BUND SUMMIT IN SHANGHAI, STEPHEN ROACH, A SENIOR FELLOW, AND THE FORMER CHAIRMAN OF MORGAN STANLEY ASIA. THANK YOU FOR HAVING US. STEPHEN R.: GOOD TO TALK TO YOU. STEPHEN: I’M SURE YOU HAVE LOTS AT THE FOREFRONT OF YOUR MIND BUT LET’S TALK ABOUT THE UPCOMING XI-TRUMP MEETING. HOW HIGH ARE YOUR HOPES FOR THAT TO KIND OF STABILIZED THE RELATIONSHIP? AGAIN, DONALD TRUMP IS THREATENING TARIFFS UPWARD OF 155% BECAUSE THEY CANNOT SEEM TO FIND GROUND — WHILE THEY TRY TO FIND LEVERAGE, THEY CANNOT SEEM TO FIND GROUND ON EXPORT CONTROLS. STEPHEN R.: LEADER TO LEADER SUMMITS ARE ALWAYS IMPORTANT IN TERMS OF COSMETICS, PRESS, AND MEDIA COVERAGE, BUT THEY RARELY ACCOMPLISH. I’VE STUDIED THEM FROM NOW TO NIXON. WE’VE HAD 22 MAJOR LEADER SUMMITS BETWEEN THE U.S. AND CHINA SINCE THEN, I WOULD SAY TWO OR THREE OF THEM HAVE BEEN MAJOR WORLD MOVING EVENTS. THE REST HAVE BEEN BLAH, INCLUDING THE LAST ONE BETWEEN BIDEN AND XI JINPING IN SAN FRANCISCO. I DON’T EXPECT MUCH, BUT I THINK IT IS GOOD THAT THE TWO WILL MEET. STEPHEN: WHAT DO YOU THINK COULD MOVE THE NEEDLE? BOTH SIDES ARE BUILDING LEVERAGE FOR WHICH THEY COULD POSSIBLY MAKE CONCESSIONS, WHETHER IT BE SOYBEANS — IT COULD BE TOO LATE, THE HARVEST IS DEEP INTO THE SEASON — BUT, ALSO, RARE EARTH AND THEN SEMICONDUCTORS ON THE OTHER SIDE? STEPHEN R.: WELL, I THINK WHAT WE WILL MOST LIKELY SEE IS ANOTHER TACO MOVE ON THE TRADE SPREAD FROM PRESIDENT TRUMP. HE HAS DONE IT ONCE BEFORE. THERE IS NO REASON TO THINK HE WILL NOT DO IT AGAIN. HE IT HAS ALREADY ALLUDED TO THE FACT THAT HE PROBABLY WILL FALL BACK FROM HIS THREAT OF AN ADDITIONAL 100% ON TOP OF THE PRE-EXISTING 30 TO 50 — HE CANNOT REALLY MAKE UP HIS MIND ON WHAT THAT IS. CHINA HAS GOT SOME POWERFUL, STRATEGIC OPTIONS THAT ARE DEPLOYED RECENTLY. MOST IMPORTANTLY, THEY ARE IN THE RARE EARTH’S EXPORT CONTROLS THEY IMPOSE, WHICH IS REALLY CAUSING POTENTIAL PRESSURES ON GLOBAL SUPPLY CHAINS AND ON U.S. MANUFACTURING. STEPHEN: DID THE U.S. UNDERESTIMATE THE BARGAINING CHIPS CHINA HAS COMING INTO THE SECOND MAJOR TRADE WAR BETWEEN TRUMP AND XI? STEPHEN R.: I THINK THE U.S. HAS ALWAYS UNDERESTIMATED CHINA’S BARGAINING CHIPS. WE VIEW IN THE U.S. AS A RELATIONSHIP THAT IS A ONE-WAY DEPENDENCY AND THAT CHINA DEPENDS ON US, AND WE DON’T DEPEND ON CHINA. I’VE WRITTEN TWO BOOKS AND STARTING A THIRD ON CODEPENDENCY, WHERE WE BOTH DEPEND EQUALLY ON EACH OTHER. AND I THINK CHINA IS DEMONSTRATING THEIR TWO WAY NATURE OF THIS IMPORTANT ECONOMIC AND SECURITY RELATIONSHIP. STEPHEN: SIX MONTHS INTO LIBERATION DAY AND THE LAUNCH OF ALL THESE TARIFFS, WHAT DOES YOUR RESEARCH TELL YOU THE NET IMPACT HAS BEEN ON THE U.S. ECONOMY? WE ARE BAKING AND ALREADY A COUPLE OF FED CUTS. WHERE IS THE INFLATION SPECTER GOING TO BE AS WE KEEP GOING DOWN THIS ROAD? STEPHEN R.: I LOOK BACK, AND WHAT I WROTE ON LIBERATION DAY, AND THE ACTUAL IMPACTS HAVE BEEN SLOWER AND MORE GRADUAL TO OCCUR THAN I AND MOST OTHERS THOUGHT. BUT, THERE ARE CLEAR SIGNS OF GOODS INFLATION, ESPECIALLY IN CERTAIN CATEGORIES LIKE A FURNITURE, AND SOME CONSUMER APPLIANCES, WHERE PRICE INCREASES ARE PICKING UP DUE TO TARIFFS. I THINK WHAT I WOULD TAKE AWAY FROM THIS EXPERIENCE POST LIBERATION DAY IS THE IMPACT IS SLOWER. ALBEIT, IT IS STILL IN THE DIRECTION MOST EXPECTED. STEPHEN: DO YOU CARE TO WEIGH IN AT ALL WHAT YOUR OP-ED HIGHLIGHTED, AND THAT IS THE DAMAGE THAT POTENTIALLY IS HAPPENING TO THE U.S. BECAUSE OF THE EXECUTIVE ORDER PROCESS, AS THE TARIFFS HAVE BEEN EXECUTIVE ORDERS AND NOT THROUGH THE TWO CHAMBERS OF CONGRESS, AND WITH THAT IS DOING TO UNDERMINE AMERICA’S LEGITIMACY? STEPHEN R.: YOU ARE REFERRING TO AN ARTICLE I WROTE SEVERAL MONTHS AGO CALLED «AMERICA’S CULTURAL REVOLUTION,» THAT WAS CONTROVERSIAL AND GOT PUSHED BACK FROM MY FORMER FRIENDS IN THE UNITED STATES. THEY SAID, HOW DARE YOU COMPARE US TO THE MOST GUT WRENCHING UPHEAVAL THE WORLD HAS EVER SEEN. COMPARED TO THE NORMS THAT WE HAVE HAD IN THE U.S., PRIOR TO OR TRUMP 2.0, THIS IS A DRAMATIC SHIFT FROM THE STANDPOINT OF EXECUTIVE OVERREACH, FROM THE STANDPOINT OF TRADE POLICY, FROM THE STANDPOINT OF OUR ALLIANCES WITH THE REST OF THE WORLD, AND THAT IS AN IMPORTANT POINT THAT I WOULD LIKE TO STRESS. UNLIKE CHINA’S CULTURAL REVOLUTION, WHICH HAD NO IMPACT ON THE BROADER WORLD BECAUSE CHINA WAS AN ISOLATED, TINY ECONOMY, AMERICA’S UPHEAVAL WILL HAVE A MAJOR GLOBAL IMPACT BECAUSE OF OUR ROLE IN THE WORLD. STEPHEN: DO YOU FIND CHINA HAS WEATHERED THIS TURMOIL FAIRLY WELL OR BETTER THAN IN THE PAST BECAUSE THEY HAVE FOUND BARGAINING CHIPS, WHETHER IT IS RARE EARTHS AND MAGNETS, AND THEY HAVE BUILT UP THEIR OWN DOMESTIC AI INDUSTRY, DEVELOPING THEIR OWN AI CHIPS, BUYING SOYBEANS FROM ARGENTINA AND BRAZIL, NOT THE UNITED STATES? THEY BUILT IN BUFFERS, BUT THEY HAVE TROUBLES. THEY HAVE THREE CONSECUTIVE NEWS OF DEFLATION. THERE IS A RACE TO THE BOTTOM RIGHT SOME CALL IT A RAT RACE TO THE BOTTOM, SO THEY HAVE SOME STRUCTURAL ISSUES. HOW DO YOU SEE THE NEED FOR THE PRIORITY’S SHIFT WHICH THE TOP ASIAN LEADERS ARE CONCOCTING NOW TO BOOST CONSUMPTION AND BRING THE IMBALANCES BACK? STEPHEN R.: THAT IS WHAT I FOCUSED ON FOR LONGER THAN I CARE TO REMEMBER, AND IT IS MORE URGENT NOW BECAUSE OF PROBLEMS YOU ALLUDED TO. IN THE PROPERTY SECTOR, FOR EXAMPLE, IT IS DEAD MONEY FOR THE FORESEEABLE FUTURE. EXPORTS ARE BOOMING, BUT THE WORLD IS PUSHING BACK. EVEN OUTSIDE OF THE U.S., I THINK THERE IS PROTECTIONIST BACKLASH, AND YOU WONDER HOW MUCH CHINA CAN CONTINUE TO DIVERSIFY A WAY. THE INVESTMENT SECTOR IS NOW 40% OF GDP, HOW MUCH HIGHER CAN IT GO? SO THEY NEED A NEW SOURCE OF GROWTH AND THE CHINESE CONSUMER IS THAT SOURCE. THEY HAVE BEEN TALKING ABOUT THAT SINCE 2007. I HAVE WRITTEN ABOUT IT MYSELF. AND THE DEBATE IS ENDLESS AND TEDIOUS. THEY HAVE TO BE MUCH MORE AGGRESSIVE IN ESTABLISHING A TARGET FOR WHAT THEY ARE TRYING TO ACHIEVE IN THE UPCOMING PLAN. STEPHEN: THEY WOULD LIKE A TARGET THEY CAN REACH. YOU SAY ABOUT 50% IS HOUSEHOLD CONTRIBUTION TO GDP. STEPHEN R.: THEY NEED AN EXPLICIT TARGET OF BOOSTING HOUSEHOLD CONSUMPTION OF GDP FROM CURRENTLY 40 TO 50 BY 2045, AND THE CHINESE ARE GOOD AT HITTING TARGETS AND CAN DO IT. THEY HAVE TO FIGURE OUT A WAY TO DO IT. STEPHEN: WE ARE IN SHANGHAI. THERE HAS BEEN A LOT OF TALK, OBVIOUSLY, GLOBALLY, ABOUT MAYBE THERE IS A TREND TOWARDS DE-DOLLARIZATION, BUT DIFFICULT TO DO. ARE THERE PARTICULAR STEPS WE SHOULD BE WATCHING OUT FOR FROM CHINA OR THAT THEY HAVE ALREADY DONE WITH THE CROSS-BORDER AGREEMENT SENT SWAPS AND THE LIKE TO GET THE RENMINBI TO BE MORE NATIONAL? HOW DO YOU SEE HONG KONG AND CHINA PLAYING INTO THOSE ROLES? STEPHEN R.: THIS IS A DEBATE WE’VE HAD FOR YEARS. THE DOLLAR IS NOW UNDER SIGNIFICANT DOWNWARD PRESSURE FROM ANY OF THE REASONS WE WERE JUST ALLUDING TO IN THE U.S. THE EXECUTIVE OVERREACH, THE OPEN-ENDED DEFICIT SPENDING AND THE HIGH LEVELS OF U.S. DEBT, AND THE SHORTFALL DOMESTIC SAVING, WHICH LEADS TO CURRENT ACCOUNT BALANCES, SO THE QUESTION HAS ALWAYS BEEN, IF YOU DON’T LIKE THE DOLLAR, WHERE DO YOU GO? THE RENMINBI IS STILL SMALL IN TERMS OF ITS GLOBAL PRESENCE, BUT THE CHINESE ARE PUTTING A LOT OF PIECES TOGETHER THAT PROBABLY WILL MAKE THE RENMINBI MORE ATTRACTIVE OVER A LONGER TIME AS A GLOBAL RESERVE CURRENCY. STEPHEN: CAN THEY DO IT WITH A CLOSED CAPITAL ACCOUNT? STEPHEN R.: OPEN THE CAPITAL ACCOUNT, AND THEY HAVE TO CONTINUE TO BUILD AND THEY HAVE TO BUILD CAPITAL REFORM INFRASTRUCTURE IN CHINA. WE HAVE MADE A LOT OF STEPS IN THE EQUITY MARKET, BUT THEY HAVE A LOT OF WORK TO DO IN TERMS OF INTERNATIONAL CURRENCY MARKETS. STEPHEN: ALWAYS GREAT. THANK YOU FOR KICKING OFF OUR COVERAGE HERE IN SHANGHAI. DON’T BE A STRANGER. BACK TO YOU. WE HAVE A FULL SLATE OF GREAT GUESTS. ONE OF THE POST PREMIER EVENTS IN CHINA. SHERY AHN: GREAT CONVERSATION WITH STEPHEN ROACH. OF COURSE, MUCH MORE TO COME FROM THE SUMMIT IN SHANGHAI. THE NEXT HOUR, GINGER CHENG WEIGHS IN ON REAL ESTATE EXPOSURE. LATER, WE DISCUSSED MARKET STRATEGY, AND THE FORMER ECB GOVERNOR WILL SHARE HIS GLOBAL OUTLOOK. MORE AHEAD ON «THE ASIAN TRADE.» THIS IS BLOOMBERG. SHERY AHN: TRADE TALKS WITH WASHINGTON ARE NOW FOCUSING ON THE STRUCTURE OF THE 350 BILLION DOLLAR INVESTMENT PLAN, RATHER THAN THE CURRENCY SWAP. THE ONE JUMP NEAR THE SESSION HIGH ON WEDNESDAY WAS NEWS. WE SPOKE ABOUT THE PROGRESS OF THE NEGOTIATIONS. > > [SPEAKING] ANOTHER LANGUAGE] > > BESSENT UNDERSTANDS WE CANNOT PAY UPFRONT. REGARDING ON HOW TO PROCEED ON THIS WAS NEGOTIATIONS CURRENTLY UNDERWAY WITH THE U.S. I ASK FOR YOUR UNDERSTANDING THAT I CANNOT YET PROVIDE SPECIFIC DETAILS ON THE PLAN. > > THE BANK OF KOREA GOVERNOR SAID THE MAXIMUM AMOUNT THAT CAN BE RAISED IN DOLLARS ANNUALLY WITHOUT MARKET DISRUPTIONS IS $20 BILLION. ARE WE LOOKING AT AROUND THOSE FIGURES RIGHT NOW? > > YES. THE BANK OF KOREA CURRENTLY ESTIMATES THE MAXIMUM AMOUNT WE CAN RAISE WITHOUT SIGNIFICANTLY IMPACTING FOREIGN EXCHANGE MARKET IS $20 BILLION. > > DOES NOT MEAN FOR UPFRONT PAYMENTS? DOES THAT MEAN FRONT PAYING SOME AND THEN ANNUALLY? > > REGARDING THAT ASPECT, WE ARE KEEPING VARIOUS OPTIONS OPEN AND ARE CURRENTLY IN NEGOTIATIONS WITH THE U.S. > > THAT IS ONE OF THE OPTIONS YOU HAVE TALKED TO WASHINGTON ABOUT? > > I CANNOT CONFIRM THAT AT THIS TIME. HOWEVER, SECRETARY BESSENT FULLY UNDERSTANDS THE DIFFICULTIES IN KOREA’S MARKET AND IS HAVING INTERNAL DISCUSSIONS ON HOW TO RESPOND TO THE SITUATION. > > BECAUSE OF THE POTENTIAL FINANCIAL SHOCKS TO SOUTH KOREA, THERE WAS A LOT OF TALK ABOUT THE POTENTIAL CURRENCY SWAP AGREEMENT, IS THAT STILL ON THE TABLE? > > WHETHER A CURRENCY SWAP IS NEEDED AND TO WHAT EXTENT WILL DEPEND ENTIRELY ON HOW THE DEAL IS STRUCTURED. IT MAY NOT BE NECESSARY AT ALL, OR IT COULD BE ARRANGED ON A SMALLER SCALE. THEREFORE, THE CURRENCY SWAP ITSELF IS A NECESSARY CONDITION, NOT A SUFFICIENT ONE. DEPENDING ON HOW THIS DEAL TURNS OUT, WE PLAN TO CONSULT WITH THE U.S. REGARDING THE CURRENCY SWAP ASPECT, AS WELL. EVEN IF WE HAVE A CURRENCY SWAP, IT WILL BE DIFFICULT TO JUST BLINDLY PROVIDE MONEY TO THE U.S. WITHOUT CONSIDERING THE COMMERCIAL RATIONALITY OR VIABILITY OF THE PROJECT BEING SELECTED. > > I’M UNDERSTANDING THAT THIS OPTION IS STILL ALIVE. IF THAT IS THE CASE, WHEN IT COMES TO THE STRUCTURE, COULD IT BE SIMILAR TO THE ARGENTINA STYLE GOING TO THE TREASURY INSTEAD OF DIRECTLY FROM THE FED? > > REGARDING THE CURRENCY SWAP, WE ARE NOT DOING IT BECAUSE WE LACK SHORT-TERM FOREIGN RESERVES LIKE ARGENTINA. IT IS A SITUATION WHERE KOREA NEEDS MORE AND CURRENCY TO MAKE LONG-TERM INVESTMENTS, AS REQUESTED BY THE U.S. SO THE U.S. MUST PROVIDE THE LATTER AND CURRENCY. THEREFORE, IT DOES NOT ALIGN WITH THE CONVENTIONAL SHORT-TERM SWAP STRUCTURE. SO, REGARDING THAT ASPECT, IF WE WERE TO ENGAGE IN A CURRENCY SWAP ARRANGEMENT WITH THE U.S., THERE ARE FURTHER POINTS THAT REQUIRE DISCUSSIONS. > > THE SOUTH KOREAN AT 1400 PER DOLLAR, IS THAT THE NEW NORMAL? DOES THAT REFLECT FUNDAMENTALS? > > WE BELIEVE MUCH OF THE REASON DEPRECIATION REFLECTS MARKET CONCERNED THAT THE TARIFF NEGOTIATIONS HAVE BEEN FINALIZING, SO, WE ARE CURRENTLY PURSUING NEGOTIATIONS WITH THE U.S. WITHIN A RANGE THAT DOES NOT SIGNIFICANTLY IMPACT KOREA’S FOREIGN EXCHANGE MARKET. FORTUNATELY, U.S. TREASURY SECRETARY BESSENT IS FULLY AWARE OF THE SITUATION IN KOREA’S FOREIGN-EXCHANGE MARKET. THEREFORE, ONCE THE ISSUE IS RESOLVED, THAT UNCERTAINTY WILL LIKELY FADE. > > WE’VE CLEARLY SEEN THE IMPACT ON SOUTH KOREAN AUTOMAKERS BECAUSE THE TARIFFS CONTINUE TO BE MUCH HIGHER THAN FOR JAPAN, EUROPE, WHO ALREADY THE U.S. HAS LIFTED THOSE LEVIES. WHAT CAN THE GOVERNMENT DO AT THIS POINT TO SUPPORT THE SECTOR? > > IN THE SHORT TERM, THE GOVERNMENT IS PROVIDING ALL POSSIBLE POLICY SUPPORT TO AUTOMAKERS AND AUTO PARTS COMPANIES, FACING DIFFICULTIES DUE TO HIGHER TARIFFS, COMPARED TO THE EU AND JAPAN. IF THEY YIELD BREAKTHROUGH, THOSE ISSUES COULD BE RESOLVED. > > THESE ONGOING TRADE NEGOTIATIONS, IS THE FACT THAT SOUTH KOREA WILL LOSE ITS ADVANTAGE OVER JAPAN BEFORE THE TRADE DEAL BECAUSE KOREA HAVE A FREE-TRADE AGREEMENT WITH THE U.S., IT HAD AN ADVANTAGE OF AROUND TWO POINT 5%, IS THAT BEING DISCUSSED AT THIS POINT — 2.5%, IS THAT BEING DISCUSSED AT THIS POINT? > > I CONVEYED THAT POINT TO PRESIDENT TRUMP AND EXPLAINED THAT SINCE KOREA IS AN FTA PARTNER. TARIFFS ON KOREA ALREADY SUFFICIENTLY LOW, BUT TARIFFS ON OTHER COUNTRIES OR NOT. MAKING IT UNFAIR. IT SEEMS THE U.S. IS NOT WILLING TO UNDERSTAND THAT ASPECT. IN ANY CASE, WE PLAN TO CONTINUE EXPLAINING AND PERSUADING THEM. PERSUADING THEM. > > WE ARE SEEING STOCK — SOUTH KOREA’S STOCK MARKET ON A TEAR. ARE YOU CONCERNED THIS COULD BE A MARKET BUBBLE? > > THE CURRENT STOCK MARKET REFLECTS EXPECTATIONS FOR THE KOREAN ECONOMY. SUCH AS ENHANCING SHAREHOLDER VALUE IN THE KOREAN CAPITAL MARKET, EXPANDING DIVIDENDS, RESOLVING UNFAIR PRACTICES. EXPECTATIONS FOR THE MODERNIZATION OF THE KOREAN STOCK MARKET, AND ON TOP OF THESE EXPECTATIONS, WE ARE ACTIVELY SUPPORTING TECHNOLOGY ECONOMY TO ENSURE A ROBUST ECONOMY THAT CAN BE A GLOBAL INVESTMENT DESTINATION. SHERY AHN: THAT WAS THE SOUTH KOREAN FINANCE MINISTER THERE, AND THAT CONVERSATION LED TO A SPIKE IN THE KOREAN WON LATE IN THE TRADING SESSION YESTERDAY. THERE WERE IMPLICATIONS ABOUT THE U.S. UNDERSTANDING THAT FX SOUNDS FROM SOUTH KOREA. WE ARE SEEING COSTS LIKE THIS WAS AN INCREDIBLE RALLY ALREADY FOR SOUTH KOREAN STOCKS. WE ARE SEEING RECORD HIGHS, THE LONGEST WINNING STREAK SINCE SEPTEMBER OF LAST YEAR. FUTURES POINTING TO SOME DOWNSIDE. WE ARE EXPECTING THE BANK OF KOREA TO HOLD RATES UNCHANGED FOR A THIRD STRAIGHT MEETING TODAY. THERE ARE CONCERNS ON THE PROPERTY MARKET AND FINANCIAL STABILITY. MORE AHEAD ON «THE ASIAN TRADE.» THIS IS BLOOMBERG. ♪ AVRIL: YOU ARE WATCHINGAVRIL: SOME ANALYSTS WARN OF A NEAR-TERM CORRECTION. A SENIOR STOCKS REPORTER JOINS US WITH THE DETAILS ON THIS. WE GOT A TASTE OF THIS WITH A SOFT BANKS DECLINED JUST A DAY AGO. EVEN AMIDST A LACK OF CLEAR DRIVERS. TALK TO US ABOUT HOW THIS RALLY SEEMS TO BE NARROWING AND THE RISKS SURROUNDING THAT. HIDEYUKI: EXACTLY. IF YOU LOOK AT THE BENCHMARKS LIKE THE NIKKEI, IT ALMOST LOOKS LIKE THE JAPANESE STOCK MARKET HAS HAD A SMOOTH RISE, BUT IF YOU LOOK CLOSER TO WHAT IS GOING ON, YOU CAN SEE THE RALLY IS NARROWING. SO FAR THIS MONTH, EVEN THOUGH THE TOPIX HAVE RISEN MORE THAN 4%, ALMOST 40% OF SHARES HAVE DECLINED WHEN THIS RALLY BEGAN IN JULY, NUMBERS ARE AT 20%. BUYING HAS BEEN CONCENTRATED ON A SMALL NUMBER OF SHARES, AND ALSO IF YOU LOOK UP TRADING, YOU CAN SEE A SIMILAR PARTNER. THE RATIO OF THE STOCKS IS AT A HISTORICAL LEVEL. AT THE MOMENT, THEY HAVE GONE FROM 42% OF THE TRADE, THAT IS A VERY HIGH LEVEL. AND THE AVERAGES ABOUT 31% OF THE PAST TWO DECADES. CLEARLY, THERE ARE SIGNS THAT THE RALLY IS DRIVEN BY A SMALL NUMBER OF STOCKS AT THE MOMENT. SHERY AHN: I THINK PART OF THAT RALLY WITH EXPECTATIONS OF MORE FISCAL SPENDING, EASING MONETARY POLICY, GIVEN NOW THAT THEY HAVE A NEW PRIME MINISTER. COULD THAT REKINDLE JAPANESE SHARES? HIDEYUKI: THEY HOPE THAT THE NEW POLICY WOULD CREATE A ROTATION OF THE VERY HOT STOCKS TO THE BROADER MARKET, AND YOU COULD ARGUE THAT WE MAY HAVE SEEN SUCH A ROTATION BECAUSE STEELMAKERS AND AUTOMAKERS HAVE RISEN QUITE A LOT WHILE OTHER SHARES DROPPED YESTERDAY AND HAVING SAID THAT, WHEN YOU LOOK UP THE PERFORMANCE OF THE NIKKEI OVER THE LAST SIX MONTHS, IT IS HARD TO DENY THE MARKET SO MUCH, AND THE NIKKEI IS NOW TRADING AT 20% OF ITS 200 DAY MOVING AVERAGE, AND IF YOU LOOK BACK, IN THE PAST FEW YEARS, WHEN THAT HAPPENS, THE MARKET GOES INTO CORRECTION EVERY TIME. THERE MAY BE HOPES, BUT AT THE MOMENT, THE RISK-REWARD SEEMS TO BE TO THE DOWNSIDE. AVRIL: DO YOU WIDE. AS WE SPEAK, FUTURES ARE POINTING TO THE DOWNSIDE AND CHECKING SOME OF THE STOCKS TO WATCH WHEN TRADE OPENS, IT IS THE TESLA SUPPLIERS, THE MAIN MOVE AFTER THEIR PROFIT PLUNGE MORE THAN EXPECTED. WE ARE LOOKING AT ADJUSTED EARNINGS, AS WELL, AND HOW THE COSTS UNDERCUT THE RECORD QUARTER A VEHICLE SALES FOR THE EV MAKER. SHERY AHN: TAKE A LOOK AT HOW FUTURES ARE SETTING UP. WE ALREADY REACHED A RECORD HIGH FOR KOSPI FUTURES. NIKKEI LOSING MORE THAN 1%, EXTENDING THE KLEINS WAS OUT IN THE PREVIOUS SESSION. WATCH OUT FOR ENERGY PRODUCERS, GIVEN U.S. SANCTIONS ON RUSSIAN OIL MAJORS. THIS IS BLOOMBERG. ♪ > > THIS IS «THE ASIA TRADE.» WE ARE COUNTING DOWN TO ASIA’S MEASURE MARKET OPENINGS. WE SAW THE KOREAN WON JUMPING IN THE PREVIOUS SESSION AS THE FINANCE MINISTER TOLD US THE SOUTH KOREAN GOVERNMENT IS FOCUSING ON THE STRUCTURE OF THE U.S. INVESTMENT PLEDGE WHEN IT COMES TO THESE TRADE NEGOTIATIONS. AVRIL: IN TERMS OF TRADE NEGOTIATIONS THINK ABOUT NEXT WEEK AS WELL. WHEN THESE MEETINGS GET UNDERWAY. THAT IS SOMETHING WE WILL KEEP AN EYE ON. IN TERMS OF THE GEOPOLITICAL BACKDROP, IS ABOUT THE SANCTIONS THE U.S. IS PUTTING IN PLACE ON THE RUSSIAN ENERGY MEASURES. SHERY: WE SAW AGAIN BEING GROUND IN THE EARLY ASIAN SESSIONS. TAKE A LOOK AT THE NIKKEI. NOT A LOT OF MOVEMENT. THE NIKKEI HAS SURGED MORE THAN 20% THIS YEAR ALREADY. WE HAVE A NEW PRIME MINISTER ORDERING A FRESH PACKAGE OF ECONOMIC MEASURES. DOWN .7%. THE JAPANESE YEN HOLDING STEADY. VERY CLOSE TO 152 PER DOLLAR. THE LONGEST WINNING STREAK SINCE SEPTEMBER OF LAST YEAR. SIX SESSIONS OF GAINS. 1% OF THE MOMENT. AS WE HEARD FROM THE FINANCE MINISTER ON THE STRUCTURE OF THE U.S. INVESTMENT PLEDGE. ALSO ABOUT HOW THE U.S. UNDERSTANDS SOUTH KOREA’S STANCE WHEN IT COMES TO ITS FX MARKET. YOU CAN SEE THE KOREAN WON AT THE 1430 LEVEL AT THE BACK OF THE POLICY DECISION. AVRIL: WE ARE WATCHING CONTINUOUS MOVES IN FX. AS YOU HIGHLIGHTED THERE IS CONTINUOUS MOMENTUM ON WHAT WE ARE SEEING IN TERMS OF THE REACTION TO THE SANCTIONS. THEY FOR MENTAL NEWS OIL PRICES. ENERGY RELATED. IT IS WORTH NOTING DESPITE GOLD HOLDING LOSSES THAT SOME OF THE GOLD RELATED NAMES ARE RECOVERING FROM STEEP DECLINES OFF OF A DAY AGO. WE ARE SEEING TREASURIES MORE OR LESS MOVING SIDEWAYS. FUTURES POINTING TO THE DOWNSIDE. PRICE IS MOVING HIGHER, ALMOST 3% FOR THE MOMENT. SHERY: LET’S DISCUSS ALL OF THIS WITH THE FOUNDER AND CEO. GOOD TO SEE YOU AGAIN IN PERSON IN SEOUL. AVRIL MENTION SOME OF THE DOWNSIDE IN THE U.S. WE ALSO HAD POTENTIAL SOFTWARE RESTRICTIONS WHEN IT COMES TO EXPERTS TO CHINA. WE HAVE THREATS ABOUT RESTRICTIONS WHEN IT COMES TO RARE EARTHS COMING FROM BEIJING. WHAT DOES THIS MEAN FOR THE TECH AND AI TRADE? > > WHEN IT COMES TO A U.S. MOVE, A LOT OF MOVES FROM TRUMP SEEM TO BE MORE TACTICAL THAN STRATEGIC. WE ARE IN THE MIDST OF CLOSING AN IMPORTANT TRADE DEAL. IT SEEMS THE U.S. TENDS TO INCREASE THE PRESSURE OR SIZE BEFORE — WHILE THERE IS A SHORT-TERM SQUEEZE IN THE MARKET, WE THINK IT IS ONLY TEMPORARY. THERE IS MORE ROOM FOR UPSIDE BECAUSE EVERY TIME WE SAW THE DIP RESULTING FROM POLITICAL TENSION IT EVENTUALLY RESOLVED AND THE PRICE WENT UP. SHERY: SOUTH KOREA IS VERY HEAVILY EXPOSED TO THE TAX RATE. WE HAVE SEEN AND — ON THE TECH TRADE. TAKE A LISTEN TO WHAT THE FINANCE MINISTER HAD TO TELL US WHEN IT COMES TO THE POTENTIAL WHERE THIS COULD BE A MARKET BUBBLE. > > THE CURRENT STOCK MARKET REFLECTS EXPECTATIONS FOR THE KOREAN ECONOMY. SUCH AS ENHANCING SHAREHOLDER VALUE, EXPANDING DIVIDENDS OR RESOLVING UNFAIR PRACTICES. EXPECTATIONS FOR THE MODERNIZATION OF THE KOREAN STOCK MARKET. ON TOP OF THESE EXPECTATIONS WE ARE SUPPORTING THE CORE TECHNOLOGY TO ENSURE A ROBUST KOREAN ECONOMY THAT CAN BE A GLOBAL INVESTMENT DESTINATION. SHERY: WHAT DO YOU THINK? IS THE RALLY SUSTAINABLE? JUNG: I THINK SO. THE GOVERNMENT IS PUSHING TO OPEN UP THE MARKET. WE HAVE NOT HAD THIS KIND OF A ROBUST AND STRONG ACTION FROM THE GOVERNMENT IN DECADES. THERE IS A LOT OF ROOM TO CATCH UP. THIS HAS BEEN GOING ON FOR MORE THAN A DECADE. WE COULD SEE SOME HIGH UPSIDE WHEN THEY REALIZE THERE IS A STRUCTURE CHANGE HERE IN KOREA. AVRIL: WE ARE WATCHING OUT FOR DEVELOPMENTS NEXT WEEK AT THE MEETINGS. MAYBE WE SEE THE CHINESE PRESIDENT AND HIS U.S. COUNTERPART. WHAT DO WE NEED TO SEE AT SOME OF THESE RELATED SUMMITS FOR FURTHER UPSIDE? JUNG IN: A U.S.-KOREA TRADE IS NOT CERTAIN BECAUSE THEY SEEM TO BE TALKING ABOUT TERMS THAT ARE NOT NEGOTIABLE. I THINK KOREA CANNOT POSSIBLY DELIVER $350 BILLION U.S. DOLLARS UPFRONT. THERE HAS TO BE SOME CONCESSION. IT WOULD BE A DRAMATIC CONCESSION BECAUSE BOTH PARTIES MUST YIELD A LOT. BUT IF WE DO REACH A DEAL, I THINK A LOT OF UNCERTAINTIES REGARDING KOREAN EXPORTERS WILL BE LIFTED UP. THAT I CAN GIVE A SURPRISING UPSIDE TO THE MARKET. RALLYING NEARLY 10% THIS MONTH. WE COULD SEE ANOTHER SPIKE IN THE PRICE. HOWEVER, IF THERE IS NO DEAL, IT IS A PROBLEM. IT IS A BIG PROBLEM. UNCERTAINTIES WILL PERSIST AND WE WILL PROBABLY SEE A GAIN IN THE KOSPI IN THE SHORT-TERM. AVRIL: IT IS INTERESTING BECAUSE FOR THE MOMENT THERE IS SOME OPTIMISM BASED ON WHAT THE SOUTH KOREAN FINANCE MINISTER HAS BEEN TELLING BLOOMBERG. AT LEAST SCOTT BESSENT SEEMS TO BE AWARE OF WHAT THIS COULD MEAN FOR THE FX MARKET. ARE YOU SEEING ENOUGH MOMENTUM AND DID FOLLOW-THROUGH IN THAT REGARD? JUNG IN: IN TERMS OF THE PROGRAM, WE ARE STILL TAKING BABY STEPS. THE VALUE IS AT THE INFANT STAGE. WE HAVE NOT SEEN THE INFLUX OF FOREIGN CAPITAL WITH THE BASIS OF VALUE. A LOT OF TIMES IT IS FX RELATED OR EARNINGS RELATED OR GEOPOLITICAL TENSION RELATED BUT NOT THE GOVERNMENT INITIATIVE. WHEN WE SEE A STRUCTURE CHANGE AND WE SEE A LOT OF LEGISLATION PASSED THIS YEAR, THEN INVESTORS WILL START TO TAKE A LOOK MORE SERIOUSLY, WHICH WILL ADD TO THE KOSPI. SHERY: IN JAPAN WE SAW A NEW MEASURE OF ECONOMIC MEASURES FROM THE PRIME MINISTER. HOW MUCH UPSIDE THIS CAN PROVIDE IN A MARKET WHERE THE RALLY HAS NARROWED? JUNG IN: IF YOU LOOK AT THE JAPANESE YEN, IT HAS SHOWN SOME WEAKNESS. THAT IS NATURAL. IT IS MIMICKING WHAT HAPPENED YEARS AGO. PHYSICAL OUTFLOW AND EASING OF MONETARY POLICY. TRY TO REFRAIN FROM HIKING TOO MUCH. WE WILL PROBABLY NOT HAVE ANOTHER HIKE UNTIL THE FIRST HALF OF NEXT YEAR. FOR THAT REASON IT HAS CAUSED WEAKNESS IN THE JAPANESE YEN. ALSO THEIR REFLATIONARY PLAY IS TAKING SOME STRENGTHS. THAT IS WHY WE SAW THE LEVEL UP IN JAPANESE EQUITIES. HOWEVER, THE INFLATION IS A CONCERN. IF WE SEE A MUCH STRONGER THAN INSPECTED INFLATION IN JAPAN, THAT MOMENTUM CAN DIMINISH. SHERY: AN OPENING FOR KOREANS. JUNG IN: IN EXPORTS. SHERY: HOW MUCH OF A RISK AT THE MEETING FOR BROADER — ACROSS ASIA? JUNG IN: IF THEY MEET THAT MEETING WOULD BE A POSITIVE SIGN. THERE IS UNCERTAINTIES WHETHER THE MEETING WOULD ACTUALLY TAKE PLACE. MOST PARTIES TEND TO PLAY NOT MEETING AS A CARD, OR OPTION TO PRESSURE EACH OTHER, RIGHT? I THINK A MEETING WOULD BE FANTASTIC. IF THERE IS ANY TALK, IT WOULD BE A PLUS. EVEN IF THEY SCHEDULE IT FOR NEXT MEETING IT WOULD CREATE A POSITIVE VIBE IN THE MARKET. SHERY: TALKING ABOUT A POSITIVE VIBE. ALWAYS GOOD TO SEE YOU. JUNG IN YUN JOINING ME. WE HAVE MORE. THIS IS BLOOMBERG. ♪ PRES. TRUMP: I THINK WE WILL MAKE A DEAL. THE RARE AS THE LEAST OF IT. THE TARIFFS ARE MUCH MORE POWERFUL THAN THE RAREST. THE RARE EARTH IS A DISTURBANCE. I HAVE HAD MORE CALLS ON THE RARE EARTH. I THINK WE WILL MAKE A DEAL ON SOYBEANS. I THINK WE WILL MAKE A DEAL ON MAYBE EVEN NUCLEAR. PRESIDENT PUTIN MENTIONED TO ME ABOUT NUCLEAR WHERE WE DO A DE- ESCALATION AND I AM FINE WITH THAT. THAT IS APPROPRIATE. AVRIL: PRESIDENT TRUMP AHEAD OF HIS MEETING WITH XI JINPING NEXT WEEK. HE SAID HE PLANS TO SPEAK TO XI ABOUT THE PURCHASES OF RUSSIAN OIL WHEN THE TWO LEADERS MEET NEXT WEEK. MINMIN LOW IS HERE. HOW MUCH INFLUENCE DO YOU THINK ALL OF THIS MIGHT HAVE ON BEIJING? MINMIN: YOU HEARD PRESIDENT TRUMP JUST NOW FLAUNTING THAT EVERYONE HAS RARE EARTH, BUT IT WILL TAKE THE U.S. MANY YEARS TO CATCH UP WITH THE EXPERTISE AND SUPPLY CHAIN THAT CHINA HAS BUILT UP OVER THE YEARS. HE SAID HE WANTS TO TALK WITH PRESIDENT XI ON RUSSIA, AS WELL, SAYING PRESIDENT XI HAS HUGE INFLUENCE ON PRESIDENT PUTIN. HE WANTS TO DISCUSS CHINA’S PURCHASES OF RUSSIAN OIL. THIS IS A SENSITIVE ISSUE FOR CHINA. IT IS ENERGY AT A CHEAPER PRICE. IT WOULD COME AT A GREAT COST TO CHINA TO DIVERSIFY ITS APPLY TO OTHER COUNTRIES. LAST YEAR IT RAMPED UP PURCHASES TO 100 MILLION TONS OF CRUDE OIL FROM RUSSIA. THAT IS ABOUT 1/5 OF ITS IMPORT SO FAR. IS SIGNED ANOTHER GAS PIPELINE DEAL. PRESIDENT TRUMP APPEARS TO THINK PRESIDENT XI WOULD BE RECEPTIVE TO THIS DISCUSSION AND HE HAS BEEN SETTING A POSITIVE TONE, SAYING THEY WILL HAVE A VERY GOOD DEAL AND A WIDE-RANGING ONE WHERE THEY WOULD DISCUSS EVERYTHING FROM SOYBEANS TO TARIFFS TO FENTANYL, AND THE RUSSIA-UKRAINE WAR. SHERY: THERE ARE SO MANY HURDLES, ESPECIALLY WITH THE WHITE HOUSE CONSIDERING SOFTWARE CURBS ON CHINA, AS WELL. MINMIN: THE TIMING IS SURELY NOT A COINCIDENCE. THE WHITE HOUSE SAYING IT IS CONSIDERING THESE CURBS. A THREAT OF PUNISHMENT TO INCREASE THEIR LEVERAGE. THIS COMES AFTER PRESIDENT TRUMP ALSO HINTED THAT THE U.S. COULD CONSIDER EXPORT CONTROLS ON ANY OR ALL CRITICAL SOFTWARE IN RESPONSE TO CHINA’S RARE EARTH CONTROLS AND SHIPPING LEVIES, WHICH BY THE WAY WERE STARTED BY THE U.S. NOW SCOTT BESSENT IS SAYING EVERYTHING IS ON THE TABLE WHEN IT COMES TO EXPORT CONTROLS, WHETHER IT IS RARE EARTHS, SOFTWARE OR ENGINE PARTS. THE U.S. WILL COORDINATE WITH OTHER G7 NATIONS. WHEN IT COMES TO U.S. SOFTWARE, IT IS NOT CLEAR HOW SWEEPING IT WILL BE, WHETHER IT WILL TARGET ONLY U.S. SOFTWARE OR IF THERE IS AN EXTRATERRITORIAL COMPONENT WITH A TARGET FOREIGN-MADE PRODUCTS AND RESTRICTING THE USAGE OF THOSE BY CHINA. THAT WOULD BE PRETTY FAR-REACHING. WE WILL HAVE TO SEE HOW CHINA WOULD RESPOND TO SUCH A THREAT AND HOW IT SHAPES THE TREETOPS NEXT WEEK. SHERY: MINMIN LOW. LET’S DELVE INTO THOSE SANCTIONS WHEN IT COMES TO RUSSIA. THE U.S. ANNOUNCING THESE LEVEES ON THE LARGEST OIL PRODUCERS IN THE COUNTRY. PRESSURING VLADIMIR PUTIN TO NEGOTIATE AN END TO THE WAR IN UKRAINE. PRES. TRUMP: WE CANCELED A MEETING WITH PRESIDENT PUTIN. IT DID NOT FEEL RIGHT. I DID NOT FEEL LIKE WE WOULD GET TO THE PLACE WE NEEDED TO GET SO I CANCELED IT BUT WE WILL DO IT IN THE FUTURE. > > CAN YOU TELL US WHAT YOU ARE ELEVATING SANCTIONS AGAINST RUSSIA RIGHT NOW? PRES. TRUMP: I THOUGHT IT WAS TIME. I WAITED A LONG TIME. WE DID THE MIDDLE EAST PLUS SEVEN. WE DID SEVEN DIFFERENT WARS. SHERY: FOR MORE, BLOOMBERG’S MICHAEL HEATH JOINS US WITH THE LATEST. A SHIFT IN TONE FOR PRESIDENT TRUMP. MICHAEL: VERY MUCH SO. AS WE DISCUSSED, HIS ATTITUDE TOWARD RUSSIA AND UKRAINE AND WHAT HE INTENDS TO DO WITH A PATH FORWARD TO TRY TO GET A BREAKTHROUGH IN THE CONFLICT. EVEN THOUGH IT WILL TAKE TIME FOR THESE SANCTIONS TO HAVE ANY EFFECT, THE TWO BIGGEST OIL PRODUCERS IN RUSSIA. IT IS A BEHEMOTH. IT IS RUN BY VLADIMIR PUTIN’S CLOSE CONFIDANT. IT IS AN IMPORTANT SIGNAL. THE FIRST SANCTIONS UNDER THE SECOND TRUMP AGAINST RUSSIA. PRESIDENT TRUMP SEEMS TO HAVE TRIED EVERY AVENUE TO SPEAK WITH VLADIMIR PUTIN. HE HAS ALWAYS BELIEVED HE HAD SOME SORT OF CONNECTION WITH HIM. IT HAS BECOME CLEAR TO HIM THAT IS PROBABLY NOT A REALITY. WHAT MINMIN WAS REFERRING TO EARLIER WILL BE SIGNIFICANT AS WELL. AS THE WEST SANCTIONED RUSSIA, CHINA HAS STEPPED IN TO BE THE MAIN PARTNER WITH MOSCOW. A LOT OF CHINESE CARS BEING DRIVEN. BUSINESS DEALINGS GOING ON BETWEEN THE TWO, WHETHER IT IS OIL SALES. THAT IS A MAJOR FACTOR IN FINANCING RUSSIA’S WAR. AVRIL: IT SEEMS LIKE EVERY AVENUE BEING USED WHEN IT COMES TO THE FINANCING ASPECTS, BUT WHAT ABOUT ON THE BATTLEGROUND? TAKING OPTIONS, INCLUDING USING LONG-RANGE MISSILES, HE IS TALKING ABOUT HOW IT IS COMPLEX TO USE. WHAT ARE HIS CONSIDERATIONS AT THIS STAGE? MICHAEL: PRESIDENT TRUMP, THE UKRAINIANS HAVE BEEN ASKING FOR U.S. TOMAHAWK MISSILES WHICH HAVE A RANGE OF 1000 MILES SO IT COULD STRIKE VERY DEEP INTO RUSSIA. IT IS A MASSIVE COUNTRY. GETTING AT ITS INFRASTRUCTURE FOR WAR, SOME OF THIS STUFF IS IN SIBERIA, A LONG WAY EAST. PRESIDENT TRUMP SUGGESTED TOMAHAWKS ARE ONLY VALUABLE WHEN THE U.S. USES THEM. THAT MIGHT BE THE CASE, DEPENDING ON THE TECHNOLOGY AND EXPERTISE. WHAT UKRAINE HAS DONE IS IT DEPLOYED U.K. MISSILES, WHICH HAVE ABOUT 1/5 OF THE RANGE, 180-200 MILES. THEY HIT A PLANT IN RUSSIA THAT IS RELATED TO THE WAR, ABOUT 100 MILES INSIDE. THE WALL STREET JOURNAL REPORTED THE U.S. HAD LIFTED BARS ON USING THE TOMAHAWK’S BECAUSE THAT TOMAHAWKS HAVE A U.S. GUIDE TO SYSTEMS OF U.S. HAS THE FINAL SAY. . PRESIDENT TRUMP SAID THAT WAS FAKE NEWS BUT THE FACT THEY HAVE STARTED USING THEM AND THERE HAS BEEN A TRANSFER OF WHO MAKES THE FINAL DECISION ON WHETHER THE MISSILES CAN BE USED HAS BEEN MOVED BACK FROM THE SECRETARY IN WASHINGTON TO THE U.S. COMMAND IN EUROPE. IT SEEMS LIKE THEY HAVE EASED UP. RUSSIA HAS BEEN HITTING UKRAINE VERY HARD, TARGETING ENERGY INFRASTRUCTURE AHEAD OF WINTER. THERE HAS BEEN CIVILIAN CASUALTIES WHEN HAVE IT KYIV, THE CAPITAL. THERE IS NOT A LOT GOING ON ON THE FRONT LINE BUT RUSSIA IS HAMMERING UKRAINE HEART. THESE LONG-RANGE MISSILES ALONG WITH DRONES GIVING UKRAINE AN OPTION OF FIGHTING BACK. SHERY: BLOOMBERG’S MICHAEL HEATH WITH THE LATEST ON U.S. SANCTIONS ON RUSSIA. THAT SENT OIL PRICES HIGHER. WE ARE SEEING ENERGY STOCKS GAINING GROUND. TAKE A LOOK AT HOW SOUTH KOREA IS TRADING. THE ENERGY SECTOR IS LOSING GROUND, DOWN MORE THAN 1% FOR THE KOSPI. THIS AFTER SIX SESSIONS OF GAINS, THE KOSPI STILL NEAR RECORD HIGHS, THE LONGEST WINNING STREAK SINCE SEPTEMBER OF LAST YEAR. IT HAS BEEN A MAJOR YEAR FOR SOUTH KOREAN EQUITIES. MORE THAN 60% GAINS ALREADY. YOU SEE THE KOREAN WON WEAKENING A LITTLE BIT BUT ONLY AFTER JUMPING TO SESSION HIGHS IN THE PREVIOUS SESSION. ALL OF THIS AFTER SOUTH KOREA’S TOLD US TRADE TALKS WITH WASHINGTON ARE FOCUSING ON THE STRUCTURE OF SEOUL’S $350 BILLION PLEDGE’S RATHER THAN A CURRENCY SWAP. WE SPOKE ABOUT THE PROGRESS OF NEGOTIATIONS. > > UNDERSTOOD THAT DUE TO THE CURRENT STATE OF KOREA’S FOREIGN-EXCHANGE MARKET, WE CANNOT PAY UPFRONT. HE UNDERSTANDS THAT. HOWEVER, REGARDING HOW TO PROCEED ON THIS WITH NEGOTIATIONS CURRENTLY UNDERWAY WITH THE U.S., I ASKED FOR YOUR UNDERSTANDING THAT I CANNOT YET PROVIDE SPECIFIC DETAILS ON THE PLAN. SHERY: THE BANK OF KOREA GOVERNOR SET THE MAXIMUM AMOUNT THAT CAN BE RAISED IN DOLLARS ANNUALLY WITHOUT MARKET DISRUPTIONS IS $20 BILLION. ARE WE LOOKING AT AROUND THOSE FIGURES RIGHT NOW? > > YES. THE BANK OF KOREA CURRENTLY ESTIMATES THE MAXIMUM AMOUNT WE CAN RAISE WITHOUT SIGNIFICANTLY IMPACTING THE FOREIGN-EXCHANGE MARKET IS $20 BILLION. SHERY: WHAT DOES THAT MEAN FOR UPFRONT PAYMENTS? DOES THAT MEAN FRONTLOADING SOME AND THEN PAYING ANNUALLY? > > REGARDING THAT ASPECT, WE ARE KEEPING VARIOUS POSSIBILITIES OPEN FOR THE FOREIGN-EXCHANGE MARKET AND ARE CURRENTLY IN NEGOTIATIONS WITH THE UNITED STATES. SHERY: ONE OF THE OPTIONS YOU HAVE TALKED TO SECRETARY BESSENT AND WASHINGTON ABOUT? > > I CANNOT CONFIRM THAT AT THIS TIME. , HOWEVER SECRETARY BESSENT FULLY UNDERSTANDS THE DIFFICULTIES IN KOREA’S EXPORT MARKET AND IS HAVING INTERNAL DISCUSSIONS ON HOW TO RESPOND TO THE SITUATION. SHERY: BECAUSE OF THE FINANCIAL FINANCIAL SHOCKS TO SOUTH KOREA, THERE WAS TALK ABOUT EIGHT SWAP AGREEMENT. IS THAT STILL CURRENTLY ON THE TABLE? > > WHETHER A CURRENCY SWAP IS NEEDED, AND TO WHAT EXTENT, WILL DEPEND ENTIRELY ON HOW THE DEAL IS STRUCTURED. IT MAY NOT BE NECESSARY AT ALL, OR IT COULD BE ARRANGED ON A SMALLER SCALE. THEREFORE, THE CURRENCY SWAP ITSELF IS NECESSARY, NOT SUFFICIENT. DEPENDING ON HOW THE DEAL TURNS OUT, WE PLAN TO CONSULT WITH THE U.S. REGARDING THE CURRENCY SWAP ASPECT, AS WELL. EVEN IF WE HAVE A CURRENCY SWAP, IT WILL BE DIFFICULT TO JUST BLINDLY PROVIDE MONEY TO THE U.S. WITHOUT CONSIDERING THE COMMERCIAL RATIONALITY OR VIABILITY OF THE PROJECT BEING SELECTED. SHERY: I’M UNDERSTANDING THIS OPTION IS STILL ALIVE. IF THAT IS THE CASE, WHEN IT COMES TO THE STRUCTURE, COULD IT BE SOMETHING SIMILAR TO THE ARGENTINA STYLE GOING TO THE TREASURY RATHER THAN THROUGH THE FED? > > REGARDING THE CURRENCY SWAP, WE ARE NOT DOING IT BECAUSE WE LACK SHORT-TERM RESERVES LIKE ARGENTINA. KOREA NEEDS FOREIGN CURRENCY TO MAKE LONG-TERM INVESTMENTS AS REQUESTED BY THE U.S. SO THE U.S. MUST PROVIDE THE LACKING FOREIGN CURRENCY. IT DOES NOT ALIGN WITH THE CURRENCY SWAP STRUCTURE. REGARDING THAT ASPECTS, IF WE WERE TO ENGAGE IN A CURRENCY SWAP ARRANGEMENT WITH THE U.S., THERE ARE FURTHER POINTS THAT REQUIRE DISCUSSIONS. SHERY: SOUTH KOREAN FINANCE MINISTER SPEAKING TO US EXCLUSIVELY. WE ARE WATCHING OUT FOR THE BANK OF KOREA RATE DECISION THIS HOUR. STAY WITH US. THIS IS BLOOMBERG. ♪ AVRIL: SOME OF THE TOP CORPORATE STORIES WE ARE TRACKING. IBM SHARES FELL OUT OF THE COMPANY REPORTED DISAPPOINTING REVENUE. CONCERN AMONG INVESTORS. THIRD QUARTER SALES IN THE HYBRID CLOUD UNIT INCREASED 14%, MISSING ESTIMATES. THE CFO SAID THE COMPANY STILL FEELS GOOD ABOUT GROWTH OPPORTUNITIES. THE COMPANY SAID IT RAN AN ALGORITHM ON THE CHIP THAT CAN REPEATED ON SUPER PLATFORMS. GOOGLE SAID IT POINTS TO A BROAD RANGE OF POTENTIAL USERS. BLOOMBERG HAS LEARNED THAT A CHINESE CHIPMAKER IS CONSIDERING AN IPO AND MAINLAND CHINA AND EVALUATION THAT COULD EXCEED $40 BILLION. SOURCES SAY THE COMPANY MAY SEEK A VALUATION AROUND $20 BILLION AND IS WORKING WITH BANKS. SEPARATELY, MEMORY TECHNOLOGIES IS ALSO PLANNING TO GO PUBLIC. SHERY: WE ARE WATCHING TESLA SUPPLIERS IN THE ASIAN SESSION. WE HAD TESLA FALLING AFTER HOURS. EARNINGS MISSED ESTIMATES DESPITE RECORD EV SALES. CUSTOMERS RUSHING TO TAKE ADVANTAGE OF THE EV TAX CREDIT EXPIRING IN SEPTEMBER. THAT WAS NOT ENOUGH TO OFFSET OPERATING EXPENSES, WHICH SOARED TO $3.4 BILLION. SHARES WERE DOWN 31% FROM A YEAR AGO. WE HAVE MORE AHEAD. THIS IS BLOOMBERG. ♪ AVRIL: WITH THE U.S. SANCTIONING RUSSIAN OIL, WE ARE SEEING A SPIKE IN CRUDE PRICES. THIS IS COMING AGAINST THE BACKDROP OF HOW MARKETS HAD BEEN POSITIONED PREVIOUSLY. VULNERABLE TO ANY INCREMENTAL CHANGE. WE ARE SEEING THESE SPIKES. THE SHORT SQUEEZE FOR THE MOMENT. SOME OF THESE ASIAN ENERGY COUNTERS ARE IN THE GREEN, INCLUDING WOODSIDE. THAT IS UP 3.5%. SHERY? SHERY: WE ARE SEEING THAT DECLINE FOR THE SECOND DAY. TWO DAYS OF LOSSES BY SOFTBANK OF MORE THAN 7%. SOFTBANK LAUNCHING A $2.9 BILLION BOND SALE. THE REALLY LAUNCHING THIS AGGRESSIVE FUNDRAISING PUSH FOR AI, LED BY THE COMPANY’S BET ON OPENAI. TAKE A LOOK AT HOW FUTURES ARE TRADING. WE HAVE SEEN U.S. PRESSURED BY TESLA’S FALL IN THE AFTER HOURS SESSION, MISSING ESTIMATES, ALTHOUGH THEIR SALES WERE AT RECORD HIGHS. FUTURES DOWN MORE THAN 1%. FUTURES CLOSING TO THE DOWNSIDE UP .3%. WE CONTINUE TO WATCH ALL THE TRADE NEGOTIATIONS. THE U.S. SAID TO BE CONSIDERING BROAD SOFTWARE RESTRICTIONS ON CHINA. LET’S TURN BACK TO THE ANNUAL BUND SUMMIT. STEPHEN ENGLE IS THERE AND STANDING BY WITH OUR NEXT GUEST. WE ARE CHECKING IF WE DO HAVE STEPHEN ENGLE RIGHT NOW AT THE BUND SUMMIT IN SHANGHAI. DO YOU HAVE US? STEPHEN: I DO HAVE YOU NOW. JUST A LITTLE TECHNICAL GLITCH. WE ARE BACK ONLINE AT THE BUND SUMMIT IN SHANGHAI. OUR NEXT GUEST IS GINGER CHENG. THANK YOU FOR JOINING US. GINGER: GOOD MORNING. STEPHEN: A HEART STOPPING MOMENT. NO PROBLEM. WE HAVE IT GOING NOW. YOU OVERSEE THE BUSINESS. WHAT IS YOUR PRIORITY THIS YEAR AMID THE NOISE GEOPOLITICALLY, THE TUMULTUOUS NATURE OF THE CHINESE ECONOMY TRYING TO GAIN SOME FOOTING AND SOME CONFIDENCE AND END DEFLATION? WHAT IS YOUR PRIORITY? GINGER: THANK YOU FOR INVITING ME TO JOIN YOU HERE IN SHANGHAI. MAYBE I WILL TALK ABOUT SOME GOOD THINGS FIRST. OUR STRATEGY PRIORITIES. WEALTH MANAGEMENT BECOMES A VERY IMPORTANT INITIATIVE FOR CHINA AND THE GROUP. I THINK THERE IS A PERMANENT SHIFT OF THE WEALTH MANAGEMENT INDUSTRY IN CHINA. THE HIGH NET WORTH INDIVIDUALS ARE MORE MATURED AND THEY LOOK FOR SAFE ASSETS AND DIVERSIFICATION OF ASSET ALLOCATION. STEPHEN: DIVERSIFICATION MORE TO SAFETY BECAUSE OF THE UNCERTAINTY, OR WHAT? GINGER: AND ALSO BECAUSE THEY LEARNED A LOT OF LESSONS IN THE PAST FEW YEARS. I FEEL THIS IS A PERMANENT SHIFT OF THE MINDSET OF INVESTORS SO THEY LOOK FOR A SAFE ASSET, ESPECIALLY TO LOOK FOR OFFSHORE ASSET ALLOCATION. THIS CREATES A LOT OF OPPORTUNITY FOR SOMEONE LIKE KBS IN SINGAPORE. ALSO A BIG IN HONG KONG. I SEE THIS TREND WILL CONTINUE FOR MANY YEARS TO GO. STEPHEN: WHERE DOES THAT LEAD TO THE INEVITABLE QUESTION OF HIRING PRIVATE BANKERS? WE DID SEE A NUMBER OF 40 NEW BANKERS BY THE END OF THIS YEAR, LARGELY IN SINGAPORE. GINGER: FOUR MAINLAND, I THINK WE HAVE A LOT OF OPPORTUNITIES. A LOT OF PEOPLE’S WHILE STILL IN CHINA THEY CANNOT MOVE EVERYTHING INTO HONG KONG AND SINGAPORE. WE WILL HIRE MORE FRESH GRADUATES AND RELATIONSHIP MANAGERS. WE JUST OPENED A NEW INTERNATIONAL CENTER IN SHANGHAI, WHICH MEANS WE OPERATE OUR BRANCH INTO A CENTER. ALSO TRY TO CONNECT THEM WITH INTERNATIONAL ASSET ALLOCATION. THE KNOWLEDGE, THE KNOW-HOW, EXPERTISE. WE ARE TRYING TO DO THAT FOR OTHER BRANCHES IN CHINA IN THE COMING YEARS. STEPHEN: A LOT OF PEOPLE IN CHINA ARE LOOKING TO DIVERSIFY, LOOKING TO GO OVERSEAS. THEY TEND TO BE YOUNGER THAN THE AVERAGE BILLIONAIRE IN THE WEST. SOMETIMES BY AS MUCH AS 20 OR 30 YEARS. HOW IS THEIR RISK APPETITE DIFFERENT NOW? GIVEN THEIR AGE AND THEIR ABILITY TO HAVE MANY MORE YEARS OF GROWING. ARE THEY GOING INTO MUCH DIFFERENT PRODUCTS? IS THAT WHAT YOU ARE OFFERING?A MUCH DIFFERENT PORTFOLIO ? GINGER: THEY COULD BE THE SECOND OR THIRD GENERATION OF THE ENTREPRENEURS HERE IN CHINA. THOSE PEOPLE ARE PRETTY SOPHISTICATED. TRADITIONALLY THAT ARE EDUCATED OVERSEAS. THEY HAVE A VERY STRONG MINDSET OF HOW TO MANAGE THE RISK AND HOW TO DO THE ALLOCATION. COMPARED WITH FATHERS OR GRANDFATHERS. I FEEL THAT THEY LOOK FOR SOMEONE WHO CAN GIVE THEM ADVICE. HOW TO INVEST THEIR MONEY. THEY ARE ALSO VERY INTERNATIONAL. TYPICALLY EDUCATED OVERSEAS. THEY WILL BRING IN SOMEONE WHO CAN PROVIDE VALUABLE ADVICE TO THEM. THAT IS WHAT I THINK THE INTERNATIONAL BANK IN THIS AREA WILL PLAY A VERY IMPORTANT ROLE. STEPHEN: WHAT KIND OF ASSETS UNDER MANAGEMENT ARE YOU LOOKING AT. THE FAMILY OFFICES AND YOUR OVERALL PORTFOLIO FOR THIS PART OF THE WORLD? I SAW A NUMBER FOR THE FAMILY OFFICES AT ABOUT $1 BILLION. IS THAT IN THE BALLPARK? GINGER: FOR CHINA, OUR STARTING POINT IS NOT VERY HIGH. IN SINGAPORE AND HONG KONG. IT IS AROUND ONE BILLION FOR A STARTING POINT. SOMEONE COULD PUT MORE MONEY IT WITH US. IN CHINA WE OFFER A DIVERSIFIED FORMAT. EVEN U.S. EQUITIES. HONG KONG LISTED EQUITIES. THIS ALSO DIFFERENTIATES OURSELVES WITH CHINESE BANKS AND THEIR FOCUS ON WEALTH MANAGEMENT. IN HONG KONG WE HAVE A VERY BIG PRESENCE IN A FULL RANGE OF WEALTH MANAGEMENT, TREASURIES, TPC. THEY CAN OFFER ALL TYPES OF PRODUCTS IN THE GLOBAL MARKET. STEPHEN: IS THERE ANYTHING IN PARTICULAR THAT WOULD IMPACT YOUR BANK THE MOST THAT YOU ARE WATCHING FOR AS THE LEADERS GATHER IN BEIJING BEHIND CLOSED DOORS? THEY ARE COMING UP WITH THE NEXT FIVE-YEAR PLAN. WHAT WOULD BE THE MOST IMPORTANT DEVELOPMENT COMING FROM THAT THAT WOULD HELP MULTINATIONAL BANKS LIKE YOURS TO GROW THEIR PRESENCE OFF THE MAINLAND. THAT WOULD BE IN LINE WITH MORE OPENINGS. GINGER: FIRST OF ALL I THINK FURTHER OPENING UP THE FINANCIAL MARKET IS IMPORTANT. WE WOULD LIKE TO HAVE MORE CAPITAL FLOWS. WE WOULD LIKE TO HAVE MORE SO WE CAN HELP THE CLIENTS OVERSEAS. OF COURSE BECAUSE OF IT OPENING UP — WE SET UP SECURITY COMPANIES. CAN DO THE IPO’S AND ALL THE EQUITY RELATED BUSINESS IN CHINA. OF COURSE, WE WOULD LIKE TO HAVE MORE OPENING UP. FOR EXAMPLE, GET MORE LICENSES TO CENTRAL BANKS SO THEY CAN DO MORE BUSINESS HERE IN CHINA. STEPHEN: THAT DOVETAILS NICELY TO THE NEXT QUESTION. THERE WERE ABOUT 18 DIFFERENT DEALS ASSIGNED IN THE LAST WEEK BETWEEN SINGAPORE AND CHINA. SOME BIGGER, SOME KIND. ONE WAS SECURITIES, BUT NO DETAILS. GINGER: THAT IS RIGHT. STEPHEN: YOU SAID YOU WOULD LIKE TO SEE MORE OF A BROKERAGE PRESENCE. WHAT WOULD THIS ENTAIL? GINGER: INSIDE OF THE COLLABORATION IS LEVERAGE. I WILL SAY THAT MAINLY FOR THEM TO WORK TOGETHER, TO SUPPORT THE CHINESE CORPORATE GOING GLOBAL. THIS IS A VERY, VERY BIG TREND THAT I THINK WILL SUPPORT THE ECONOMIC RULES OF CHINA. NOWADAYS I SEE NOT ONLY THE INDUSTRY LEADERS BUT THE WHOLE SUPPLY CHAIN IS MOVING UP TO OVERSEAS, TO THE MIDDLE EAST, AFRICA AND EVEN LATIN AMERICA. FOR THE FINANCIAL INSTITUTIONS IN CHINA, TYPICALLY EXPERTISE AND OVERSEAS, THAT WILL CREATE A COLLABORATION. STEPHEN: GINGER, GREAT HAVING YOU HERE. THE FIRST DAY OF THE BUND SUMMIT IN SHANGHAI. LET’S DO IT AGAIN. GINGER:. STEPHEN: THANK YOUSTEPHEN: AVRIL AND SHERY, WE WILL SEND IT BACK TO YOU. WE FIXED THE GREMLINS IN THE SYSTEM. AVRIL: IT IS ALL SYSTEMS GO FOR THE MOMENT. THANK YOU SO MUCH. STEPHEN ENGLE AND SHANGHAI FOR US. AS WE WATCH THOSE CHINESE CONSUMPTION TRENDS, IT IS SAID THEY WILL STICK WITH THEIR ‘S TRAGEDY OF PREMIER PRODUCTS AND HIGHER PRICES, STAY OUT OF PRICE WARS ACROSS CHINA’S CONSUMPTION SPACE. THE COFOUNDER SPOKE EXCLUSIVELY WITH US ABOUT THAT DECISION AND THE COMPANY’S GLOBAL GROWTH. > > IN THE PREVIOUS TWO YEARS, OUR BUSINESS EXPANSION FOCUS WITH THE CHINESE MARKET. THIS YEAR AND NEXT YEAR WE WILL HAVE MORE BUSINESS EXPANSION AND OVERSEAS MARKETS, ESPECIALLY IN THE SECOND HALF OF THIS YEAR IN THE FIRST HALF OF NEXT YEAR. SOUTHEAST ASIA WILL BECOME AN IMPORTANT FOCUS FOR OUR MARKET EXPANSION. > > YOU HAVE OPENED TWO STORES IN THE U.S. HOW HAVE SALES BEEN AND WHAT IS YOUR PLAN IN THE U.S.? > > WE HAVE SEEN STRONG PERFORMANCE FROM THE NEWLY OPENED STORES IN LOS ANGELES. ON THE OPENING DAY SALES EXCEEDED 5000. . THE AMERICAN CONSUMER HAS THE STRONGEST PURCHASING POWER IN THE WORLD IN THE U.S. MARKET IS ONE OF THE MOST VALUABLE FOR US. THE U.S. MARKET HAS BEEN PLAYING A LEADING ROLE IN GLOBAL CONSUMPTION TREND. HAS > > THE U.S.-CHINA TRADE WAR > > HAD AN IMPACT ON YOUR BUSINESS IN THE U.S.? > > WE TALK ABOUT POLITICAL GEOGRAPHY. WE DO NOT THINK IT IS RELEVANT FOR CONSUMER COMPANIES. FROM THE POINT OF VIEW OF MAKING A PRODUCT, WE THINK HAVING A GOOD TASTE, GOOD SMELLING GOOD LOOK — AND THE GOOD EXPERIENCE IN OUR STORES. THIS IS WHAT IS MOSTLY CARED ABOUT. THERE IS NO IMPACT ON US. > > WE HAVE SEEN AN INTENSE PRICE WERE. HOW BIG OF AN IMPACT DOES THAT HAVE ON YOUR BUSINESS? > > WE DID NOT FULLY PARTICIPATE IN THE PRICE WAR. IT HAS SOME IMPACT ON US. WE BELIEVE THIS IS ONLY TEMPORARY AND HOPE IT IS A CONTINUAL PROCESS OF VALUE BUILDING. DOMESTIC SALES HAVE BEEN BETTER THAN THE SAME PERIOD OF TIME LAST YEAR BUT OVERSEAS SALES HAS SEEN BIGGER GROWTH. > > THERE HAS BEEN TALK ABOUT HOW THE COMPANY IS LOOKING TO BECOME THE STARBUCKS OF THE EAST. WHAT LESSONS ARE YOU LEARNING FROM STARBUCKS, AND WHAT CHALLENGES DO YOU FACE TO TRY TO BE JUST UNIQUE AND UBIQUITOUS BRAND IN CHINA AND ACROSS THE GLOBE? > > STARBUCKS IS A GREAT COMPANY WHICH HAS ALWAYS BEEN A ROLE MODEL FOR US. I THINK STARBUCKS, THROUGH DECADES OF DEVELOPMENT, HAS BEEN ABLE TO BRING COFFEE TO THE WORLD. WE LIKE HOW COFFEE CULTURE DEVELOPS, WE WOULD LIKE TO TAKE TEA CULTURE TO GO FURTHER. THIS HAS ALWAYS BEEN OUR GOAL AND IDEA. SHERY: THE COFOUNDER SPEAKING EXCLUSIVELY WITH BLOOMBERG’S MINMIN LOW IN SHANGHAI. WE HAVE MORE AHEAD ON «THE ASIA TRADE.» THIS IS BLOOMBERG. ♪ SHERY: WE ARE WATCHING THE ENERGY SECTOR ACROSS TRADING AFTER THE U.S. SANCTIONED MAJOR RUSSIAN OIL PRODUCERS. SECRETARY RUBIO SAYING THE U.S. WOULD LIKE TO MEET WITH THE RUSSIANS AND THEY HAD A GOOD CALL WITH SECRETARY SERGIO LAVROV AND THEY WILL FOLLOW UP. WE ARE SEEING THE ENERGY SECTOR AS ONE OF TODAY’S BIG WINNERS IN JAPAN. THE DOWNSIDE OF THE NIKKEI IS MORE THAN 1.5%. TWO COMPANIES UNDER PRESSURE. THEY HAVE A JOINT VENTURE WHICH IS NOW SET TO ACQUIRE AN INTEREST IN THE SHELL GAS AS SET IN THE LOUISIANA. IT WILL MAKE AN UPFRONT INVESTMENT OF $1.5 BILLION. WE HAVE SEEN MORE ASIAN COUNTRIES TRY TO INCREASE INVESTMENTS INTO THE U.S. AS THOSE TRADE NEGOTIATIONS CONTINUE. IN JAPAN, THE PRIME MINISTER ALSO ORDERING A NEW PACKAGE OF ECONOMIC MEASURES AIMED AT EASING THE BURDEN ON INFLATION ON HOUSEHOLDS AND BUSINESSES. OUR REPORTER JOINS US. WHAT DO WE KNOW ABOUT THIS PACKAGE? > > SHE MADE AN ORDER RIGHT AFTER THE CABINET STARTED. SHE SAID THE NUMBER ONE PRIORITY IS TO HELP PEOPLE TACKLE INFLATION, COPE WITH INFLATION. THAT IS WHAT SHE IS TRYING TO DO WITH THE PACKAGE. HOW BIG IS IT GOING TO BE? WILL ISSUANCE BE NEEDED? WE DID NOT GET CLARITY FROM THE NEW FINANCE MINISTER YESTERDAY. AVRIL: OF COURSE THE FOCUS SHIFTS TO THAT MEETING NEXT WEEK AS THE JAPANESE LEADER HOSTS THE U.S. PRESIDENT. WHAT ARE WE EXPECTING OUT OF THAT MEETING? > > RIGHT. THAT IS ONE OF THE BIG, BIG EVENTS NEXT WEEK. NOT ONLY NEXT WEEK BUT PROBABLY WITH THE PREMIERSHIP GOING FORWARD. SHE IS EXPECTED TO STRIKE CONTINUATION AND TERMS OF A RELATIONSHIP WITH THE U.S. SHE IS PROBABLY GOING TO TRY TO PROJECT AN IMAGE THAT SHE IS WILLING TO DO MORE FOR DEFENSE PURPOSES. IT IS ONE OF THE AREAS PRESIDENT HAS BEEN ASKING FOR. SHERY: THEY ARE EXPECTED TO ALIGN WHEN IT COMES TO THE HAWKISH STANCE WHEN IT COMES TO DEFENSE. HOW ARE WE EXPECTING HER VIEWS TO HAVE A LONG-TERM IMPACT ON THE JAPANESE ECONOMY AND THE MARKET REACTION? > > SHE HAS TAKEN THIS JOB WITH HIGH EXPECTATIONS SHE WILL BE SUPPORTIVE. PROMOTING AND TRYING TO HIT THE BRAKES. THAT IS WHY IT STOCKS HAVE BEEN RISING EVEN THOUGH THEY ARE DOWN TODAY. THE TEST FOR HER IS WHETHER SHE CAN MEET THOSE EXPECTATIONS. THE POLICY WOULD BE RESPONSIBLE IN TERMS OF FISCAL SPENDING. SHE IS NOT JUST SAYING — SHE WILL BE RESPONSIBLE ABOUT IT. SHERY: THANK YOU SO MUCH. AVRIL: BLOOMBERG’S YOSHIAKI NOHARA FOR US. MORE AHEAD ON «THE ASIA TRADE.» THIS IS BLOOMBERG. ♪ SHERY: BREAKING NEWS OUT OF SOUTH KOREA. THE BANK OF KOREA IS LEAVING THE POLICY RATE UNCHANGED AT 2.5%, AS EXPECTED BY MOST ECONOMISTS SURVEYED BY BLOOMBERG. WE HAD SEEN CONCERNS ABOUT A HOT PROPERTY MARKET HERE IN SEOUL AND A WEAK KOREAN WON THAT HAS PASSED THE 1400 LEVEL. 23 OF 25 ECONOMISTS SURVEYED BY BLOOMBERG HAD FORECASTED A RATE HOLD AT 2.5%. IT IS UNCHANGED AT THE 2.5% LEVEL, WHICH WOULD BE THE THIRD STRAIGHT MEETING WHERE THE BANK OF KOREA IS NOT MOVING. LET’S BRING IN OUR GUEST. PRETTY MUCH EXPECTED. WHAT ARE YOU LOOKING OUT FOR FOR ANY INDICATION OF WHERE WE ARE GOING? > > THE QUESTION TODAY IS WHETHER THE BE OK — THE COURSE OF THE EASING CYCLE? FROM MY VIEW, THE — I EXPECT THE BOK TO REMAIN IN THE EASING CYCLE. WAITING FOR FURTHER SIGNS OF THE PROPERTY MARKET STABILIZATION. THE GOVERNMENT IMPOSED A PRETTY STRICT HOUSEHOLD LENDING — THE BOK IS WAITING FOR SIGNS OF PROPERTY MARKET STABILIZATION. THEY MIGHT CUT INTEREST RATES AS EARLY AS NOVEMBER OR IN JANUARY. SHERY: THE THING IS, RIGHT NOW, GIVEN THE SLOW DOWN IN THE KOREAN ECONOMY, THE BANK OF KOREA NEEDS TO DO THIS. > > RIGHT. AS YOU MENTIONED, SO FAR THE ECONOMY HAS REBOUNDED FROM THE FIRST QUARTER. PRIVACY THE ECONOMY — I SEE THE ECONOMY WILL SLOW DOWN FROM THIS FIRST QUARTER BECAUSE IT FACES STRONGER HEADWINDS FROM U.S. TARIFFS. EVEN IF THE ECONOMY GROWS AROUND 1.6% FROM THE FORECAST, THE ECONOMY STILL RUNS BELOW THE POTENTIAL — WHICH MEANS THE ECONOMY NEEDS MORE SUPPORT. THE BOK NEEDS TO SUPPORT THE ECONOMY BY CUTTING INTEREST RATES. AVRIL: IF IT WERE TO CONTINUE AUDITS EASING CYCLE IN NOVEMBER AND JANUARY, HOW WOULD IT BALANCE THIS WITH THE RISK OF THE CURRENCY WEAKNESS IS ALREADY MARKETS ARE WORRIED ABOUT THIS INVESTMENT PLEDGE TO THE U.S. AND WHAT THAT WILL MEAN FOR FX? > > THE KOREAN WON IS UNDER PRESSURE PARTICULARLY BECAUSE OF THE UNCERTAINTY. THE 350 INVESTMENT BETWEEN SOUTH KOREA AND THE U.S. WE EXPECT THE FED WILL CUT INTEREST RATES THIS YEAR AND NEXT YEAR. DEPRECIATION PRESSURE, WEAKENED DOLLAR. IT WILL KEEP PRESSURE ON THE KOREAN WON. AT THE SAME TIME, AS THE GOVERNMENT NOW SAYS THEY WILL MAKE AN ANNOUNCEMENT OR A DEAL, THE UNCERTAINTY WILL ALSO MAKE THE KOREAN WON STRONGER. SHERY: ARE THERE ANY CONCERNS ABOUT THE TECH SECTOR? WE CONTINUE TO SEE TRADE TENSIONS BETWEEN THE U.S. AND CHINA, MORE POTENTIAL RESTRICTIONS ON THE INDUSTRY. COULD THAT FACTOR INTO THE EQUATION FROM THE BOK? > > THAT IS AN IMPORTANT FACTOR BUT AT THIS POINT, IT IS MEANT FOR SEMI CONDUCTORS, IT IS SO STRONG. IN THE LONGER RUN, THAT IS REALLY IMPORTANT. AT THIS POINT, A STRONGER DEMAND FOR SEMI CONDUCTORS IS THE BIGGER FACTOR FOR ECONOMY GROWTH. AVRIL: THANK YOU VERY MUCH FOR RUNNING US THROUGH THE CONSIDERATIONS FOR THE BANK OF KOREA AS IT KEPT RATES UNCHANGED. LET’S TAKE A LOOK AT BENCHMARKS. THE CONTINUED UNWIND IN MOMENTUM AND GROWTH. THOSE ARE THE LAGS OR THE DRAGS ON THE MARKET. FROM THE WALL STREET HANGOVER OVERNIGHT. TECH STOCKS ARE GETTING HARD HIT. CRUDE PRICES ARE A BIT OF AN OUTLIER. FOR THE MOMENT YOU ARE SEEING THE JAPANESE BENCHMARK SINKING ABOUT 1.3%. STEEP DECLINES FOLLOWING FROM EARLIER IN THE WEEK WHEN WE SAW ABOUT JAPAN AND SOUTH KOREA STOCKS HITTING RECORD HIGHS. SHERY: PERHAPS SOME CONSOLIDATION. HE SAID THE NIKKEI HAS RALLIED SO MUCH, MORE THAN 20% THIS YEAR. THE KOSPI HAS RALLIED MORE THAN 50%. WE ARE SEEING SOME DOWNSIDE BUT ALSO BECAUSE OF THE IDIOSYNCRATIC NEWS. WE HAVE SEEN GOLD UNDER PRESSURE. IT HAD RALLY TO RECORD HIGHS. CONSIDERATION ON WHERE THE FED IS GOING, AND WHERE OIL PRICES ARE GOING. A SPIKE BECAUSE OF U.S. SANCTIONS ON RUSSIAN OIL PRICES. A LITTLE BIT OF A DRAG, IRON FOR EXAMPLE, METALS THAT WE ARE FACTORING IN. THAT IS IT FROM «THE ASIA TRADE .» «THE CHINA SHOW» IS NEXT. THIS IS BLOOMBERG. ♪

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Oil Surges As Trump Steps Up Pressure on Russia | The Asia Trade, 10/23/25

October 23rd, 2025, 4:02 AM GMT+0000

«Bloomberg: The Asia Trade» brings you everything you need to know to get ahead as the trading day begins in Asia. Bloomberg TV is live from Tokyo and Singapore with Shery Ahn and Avril Hong, getting insight and analysis from newsmakers and industry leaders on the biggest stories shaping global markets. (Source: Bloomberg)

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