# Asia Stocks Post Modest Gain, Weak Yen Fuels Japan Rally

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 14 Jan 2026, 23 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/d94f10dc-34ee-4737-a40f-b3d200240bc4/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Asian shares posted a modest gain at the open, while Japanese equities extended their record-breaking run fueled by a weaker yen. For more on what is moving the markets in the region, we speak to Abhishek Vishnoi, Senior Reporter for Asia Equities. Plus - Japanese Prime Minister Sanae Takaichi's reported plan for a snap election fueled a rally in stocks while pushing down bonds and driving the yen deeper into the intervention-risk zone. For more on the outlook on Japanese markets, we heard from Zuhair Khan, Senior Portfolio Manager at UBP. He spoke to Bloomberg's Paul Allen and Avril Hong. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak
[0:11] Speaker 1: Asia podcast. I'm Beg Krisner. Equity markets in the Asia
[0:15] Speaker 1: Pacific are trading mixed today after a down day in
[0:18] Speaker 1: the States. We had JP Morgan leading a slide among
[0:21] Speaker 1: bank stocks. That was after reporting disappointing revenue from both
[0:25] Speaker 1: underwriting and advising on mergers. And the latest reading on
[0:29] Speaker 1: US retail inflation was a bit cooler than forecast, although
[0:33] Speaker 1: money markets are continuing to project the next rate cut
[0:37] Speaker 1: from the Fed mid twenty twenty six. And we are
[0:40] Speaker 1: waiting for a possible ruling on Wednesday from the US
[0:43] Speaker 1: Supreme Court when it comes to President Trump's global tariffs,
[0:47] Speaker 1: those that were announced back in April of last year.
[0:50] Speaker 1: Joining me now for a look at some of these issues.
[0:52] Speaker 1: Bloomberg's Abishek Vishnoi. Abishek joins from our studios in Singapore.
[0:57] Speaker 1: Thank you so much for being here. Happy New Year
[0:59] Speaker 1: to you. Can we talk about Japan first, because that's
[1:02] Speaker 1: where the big move is happening today. What's driving the
[1:04] Speaker 1: price section?
[1:06] Speaker 2: Hi, Doug, Yeah, happy to be here. Happy here. Japan
[1:09] Speaker 2: is actually leading the gainers today, and that's largely because
[1:13] Speaker 2: yen has become weaker, probably looking at a handle of
[1:17] Speaker 2: one sixty versus the US dollar, and you know why not.
[1:22] Speaker 2: Prime Minister Takachi is expected to announce a snap election
[1:27] Speaker 2: as per one of the most prominent news wires in Japan,
[1:32] Speaker 2: and it's said to be announced today. That has been
[1:35] Speaker 2: the initial driver. Then we also have a hawkish fed
[1:37] Speaker 2: stance and in around fuel increase in oil prices that
[1:42] Speaker 2: is threatening the Japanese currency. So there is a bit
[1:44] Speaker 2: of a triple wammy going on there. The outlook looks
[1:47] Speaker 2: pretty good and solid for stocks, but your currency is
[1:50] Speaker 2: expected to weaken, and it's not like an outlier. If
[1:55] Speaker 2: you look at what's happening with other Asian currencies recently,
[1:58] Speaker 2: they've also been weakening while equity markets, so local equity
[2:02] Speaker 2: markets tied to them, have been doing well. So yes,
[2:06] Speaker 2: yen's overnight retreat is helping Japanese stocks. And given the
[2:10] Speaker 2: focus on fiscal spending, given the focus on corporate reforms,
[2:14] Speaker 2: it looks like a good story for this year two.
[2:17] Speaker 1: So we're just beginning twenty twenty six. When you're having
[2:20] Speaker 1: conversations with market participants, what are they saying about the
[2:24] Speaker 1: year ahead for Asian equities, well.
[2:27] Speaker 2: If you look and talk about Asian equities, it does
[2:30] Speaker 2: look like a lot has happened so far. How it
[2:34] Speaker 2: happened in twenty twenty five. There is optimism around China,
[2:39] Speaker 2: there is optimism abound Japan, a lot of optimism around Korea, Taiwan,
[2:44] Speaker 2: and that's getting reflected in the stock price as well.
[2:47] Speaker 2: I think if you look at the YDA performance, these
[2:49] Speaker 2: markets are doing pretty well, leading with Korea and then
[2:53] Speaker 2: Tabanese benchmarks in Japan. Even China is positive. India meanwhile,
[2:58] Speaker 2: it is lagging. And it's largely something that we've seen
[3:02] Speaker 2: that AI backed stocks are something you know, pick and
[3:04] Speaker 2: shovel stocks tied to chips and other parts of semiconductor
[3:08] Speaker 2: chain are doing pretty well. And that's the same thing
[3:13] Speaker 2: you know, even on the earning estimate side, So keep
[3:16] Speaker 2: this in mind, Like prices are set largely by investors,
[3:19] Speaker 2: so investors are pretty much exhibiting similar trends or continuation
[3:23] Speaker 2: or twenty twenty five with AI markets leading China, inter
[3:28] Speaker 2: continuous are around probably you know, going with the earnings
[3:33] Speaker 2: expansion more this time than valuations. And along the similar lines,
[3:37] Speaker 2: we are also seeing analysts raising their earning estimates. You know,
[3:42] Speaker 2: Korea and again Taiwan are doing pretty well. They're leading
[3:45] Speaker 2: the pack with i think six to ten on person
[3:49] Speaker 2: increase in their twelve month forward earning estimates, followed by
[3:52] Speaker 2: a couple of other markets and even China you know,
[3:56] Speaker 2: going ahead of you know, India and Japan. So that's
[4:02] Speaker 2: that's largely the outlook pretty much how it happened. It's
[4:05] Speaker 2: it's gonna you know, give give similar returns. There were
[4:08] Speaker 2: expectations that India might outperform or you know, might see
[4:12] Speaker 2: a rebound, but that they those are getting dashed, you know,
[4:15] Speaker 2: given the macro problems and earning slowdown that we're seeing
[4:17] Speaker 2: in the large cap space there.
[4:19] Speaker 1: So when we're talking about technology that's focused on AI,
[4:22] Speaker 1: is it does it come down to the chip makers primarily?
[4:25] Speaker 1: Is that the essential focus?
[4:28] Speaker 2: Absolutely? I mean for Asia chip makers, you know our
[4:31] Speaker 2: key and uh you know for Marcus like Korea and Taiwan,
[4:33] Speaker 2: that's uh, that's primary primarily the best. However, in case
[4:38] Speaker 2: of China, you know you're seeing a lot of market
[4:40] Speaker 2: CAAB actually getting created because of uh, you know, AI
[4:45] Speaker 2: related enablemental businesses. A lot of businesses trying to get
[4:52] Speaker 2: AI to boost their earnings operationally. So it's it's not
[4:55] Speaker 2: just about chips or you know, the pick and shovel
[4:58] Speaker 2: of the sector. It is moving in the direction you
[5:02] Speaker 2: know in case of China, as it has moved in
[5:05] Speaker 2: the US, so there is a lot more confidence. You
[5:08] Speaker 2: may have seen, you know, how many EA related listings
[5:12] Speaker 2: have happened in Hong Kong and Mainland this time and
[5:15] Speaker 2: almost everyone, each one of them have have have seen
[5:19] Speaker 2: a pretty good reception, and that's a trend that is
[5:21] Speaker 2: expected to continue. If you look, you know, Taiwan and Korea,
[5:28] Speaker 2: and there are some calls out there, some strategies are
[5:30] Speaker 2: wondering that if it's getting too crowded and maybe there
[5:33] Speaker 2: should be some rotation to less on sectors, but they
[5:37] Speaker 2: still very much want to stay in the theme. So
[5:40] Speaker 2: even if you know there's a there's a cooler on chips,
[5:44] Speaker 2: you know the money would rotate to you know names
[5:47] Speaker 2: in China and elsewhere where. AI is actually starting to
[5:50] Speaker 2: aid bottom lines.
[5:52] Speaker 1: So I mentioned the fact that the CPI report in
[5:54] Speaker 1: the States was a little cooler than forecast, and money
[5:58] Speaker 1: markets are continuing to project the next FED rate cut
[6:01] Speaker 1: in mid twenty twenty six and I think right now
[6:04] Speaker 1: swaps market is still holding with the idea that we're
[6:07] Speaker 1: going to get a total of two twenty five basis
[6:10] Speaker 1: point rate cuts. It seems like the market has already
[6:13] Speaker 1: had the ability or the opportunity to discount those moves
[6:18] Speaker 1: from the Fed, and that's being reflected in the dollar
[6:21] Speaker 1: at the moment. Or am I wrong? And could we
[6:23] Speaker 1: begin to anticipate a little bit more dollar weakness this year?
[6:27] Speaker 3: Yeah?
[6:27] Speaker 2: I mean markets are definitely pricing with swaps and you
[6:30] Speaker 2: know other processes are reflecting. But you know one thing
[6:33] Speaker 2: that's not been discounted to a great extent right now
[6:36] Speaker 2: is you know, President Donald Trump's pension for rate cuts.
[6:40] Speaker 2: Market sure pricing consensus, what the expectations are right now.
[6:46] Speaker 2: You know, from what we have reported and what we've
[6:48] Speaker 2: talked about after cpiit it looks like given his campaign
[6:53] Speaker 2: against Jerome Babbo and his pension for lower interest rates,
[6:58] Speaker 2: there can be a lot more weight cuts then what.
[7:01] Speaker 2: You know, swaps and you know, futures are reflecting right now.
[7:05] Speaker 2: So that's something that will continue to weigh on dollar.
[7:07] Speaker 2: And that because it weighs in dollar, you know, it
[7:10] Speaker 2: feeds into other risk assets because barring a few assets,
[7:14] Speaker 2: almost every other asset as a negative correlation to US
[7:17] Speaker 2: dollar and and therefore, you know, both on the US
[7:21] Speaker 2: equities EM equities, we're gonna we're going to see a
[7:24] Speaker 2: move higher. So and look, even if they look at
[7:28] Speaker 2: the backdrop, you know this this these rate cuts and
[7:32] Speaker 2: uh this uh you know, scenario of liquidity improving across
[7:36] Speaker 2: markets because of rate cuts and fiscal spending. That pretty
[7:40] Speaker 2: much remains the case for this year too. And markets
[7:43] Speaker 2: have sort of started looking ahead and you know, ignoring
[7:47] Speaker 2: geopolitical risk. That remains the setup for this time around
[7:50] Speaker 2: as well. Just that there may be more rate cuts
[7:53] Speaker 2: given what Trump wants uh fed to do and he
[7:56] Speaker 2: is in in in that position where he can influence
[7:59] Speaker 2: the pol a lot more. So let's see how it
[8:01] Speaker 2: plays out.
[8:02] Speaker 1: So I'm curious as to how what we're seeing coming
[8:05] Speaker 1: from the Trump administration, the dynamics that are play right now,
[8:08] Speaker 1: how that's impacting the thinking on asset allocation in parts
[8:13] Speaker 1: of the the Asia Pacific market.
[8:17] Speaker 2: Yeah, we've started reporting a lot more on that, and
[8:20] Speaker 2: you know, it goes back to the point that you know,
[8:24] Speaker 2: some of our reporters made last year where you know,
[8:28] Speaker 2: they were talks about peak US exposure. I think that's
[8:31] Speaker 2: sort of coming back given you know, Trump has started
[8:34] Speaker 2: focusing a lot more intervention in a variety of subjects,
[8:38] Speaker 2: and I mean it it's it's a different sort of globalization,
[8:42] Speaker 2: but it hurts you know, US. You know, the US
[8:46] Speaker 2: being a US position as a bellwether for global economy
[8:49] Speaker 2: is a I mean, given what the EFC swop that
[8:53] Speaker 2: Trump administration carried out in Argentina, given what they've done
[8:57] Speaker 2: in Venezuela, they're focusing a lot more on their hemisphere,
[9:01] Speaker 2: which means the rest of the world. You know, like
[9:03] Speaker 2: Europe may have influential players like Russia. You know, Asia
[9:08] Speaker 2: has China and India, so it's again becoming a multipolar world.
[9:12] Speaker 2: And therefore, you know, it just makes sense for long
[9:17] Speaker 2: term money to start looking at other revenues where there
[9:20] Speaker 2: is better growth prospect. Of course Max seven or you
[9:23] Speaker 2: know companies which are general like Microsoft, which are generating
[9:27] Speaker 2: so much more money and where you know, people's lives
[9:30] Speaker 2: are evolving around those companies. They they remain unscathed, but
[9:33] Speaker 2: a lot more money, you know, would start looking at
[9:36] Speaker 2: exposure outside the US, and in terms of major economies,
[9:40] Speaker 2: major fast growing economies. Uh, and with you know, similar
[9:44] Speaker 2: kind of capability as the US. China comes to come
[9:47] Speaker 2: to mind. So the the appeal of owning Chinese assets
[9:50] Speaker 2: you know, or stocks you on, and that increases a
[9:54] Speaker 2: lot more. So this, uh, this intervention is sort of
[9:59] Speaker 2: you know, moves by the US. This will marginally hurt
[10:03] Speaker 2: at least the non max seven part of you know,
[10:06] Speaker 2: US economy.
[10:07] Speaker 1: We're seeing a lot of interest in precious metals lately,
[10:09] Speaker 1: and I'm looking at a rally right now in both
[10:12] Speaker 1: silver and platinum today. Would you say that this is
[10:15] Speaker 1: a trade that is based on momentum or is it
[10:18] Speaker 1: more related to this idea that you know, we're looking
[10:21] Speaker 1: for opportunities to find haven's. Is that really what this
[10:25] Speaker 1: precious metals trade is about.
[10:27] Speaker 2: Oh no, absolutely, it's It's not momentum at all. I mean,
[10:30] Speaker 2: if you have been following the last year, you know,
[10:33] Speaker 2: the advances that these precious medals made last year, it's
[10:36] Speaker 2: largely happened, you know, not involved, but it has happened
[10:39] Speaker 2: in context of Russia's move in Ukraine and what US
[10:44] Speaker 2: did in terms of their exposure to US treasury. So suddenly,
[10:48] Speaker 2: you know, in central banks reserves US Treasury is not
[10:51] Speaker 2: a guarantee, as you know, said by one of the
[10:56] Speaker 2: researchers gave call recently in a note, And that meets banks.
[11:00] Speaker 2: A lot of central banks actually, you know, move towards
[11:04] Speaker 2: cold to diversify their reserves. Uh uh. And then you know,
[11:09] Speaker 2: this move started getting reflected in silver as well, because
[11:13] Speaker 2: in terms of precious metals, you know, one one thing
[11:15] Speaker 2: is there that you can hold a lot of that
[11:17] Speaker 2: the storage cost is not as much, uh and a
[11:20] Speaker 2: very little exposure means big amounts in dollar terms. So
[11:25] Speaker 2: that started getting reflected in silver, and now that's getting
[11:27] Speaker 2: reflected in platinum as well. The the way things are moving,
[11:32] Speaker 2: it's it's it's it's a bit of a hetch it's
[11:35] Speaker 2: a bit of a necessity and a natural consequence of
[11:39] Speaker 2: what we are seeing in the world. You need some
[11:41] Speaker 2: levers where you know there's geopolitical pressure. What Trump is
[11:45] Speaker 2: doing gets reflected rightly and and gold, silver, you know,
[11:49] Speaker 2: these kind of commodities go in that direction after central banks.
[11:53] Speaker 2: You know there there there is a lot more exposure,
[11:56] Speaker 2: and you know by portfolio investors as well, in terms
[11:59] Speaker 2: of folio construction, gold was supposed to be a single
[12:02] Speaker 2: digit exposure. I don't think a lot of investors are
[12:04] Speaker 2: feeling that way that there are. There are many out
[12:07] Speaker 2: there who have it in double digit terms, especially on
[12:09] Speaker 2: the multi asset side. And last year, Doug, you know,
[12:13] Speaker 2: gold was up as much as cost P which was
[12:16] Speaker 2: the best performing equity market. So you know, it has
[12:19] Speaker 2: become an asset, a macro acid class, not a h
[12:22] Speaker 2: but you know, macro asset class, but absolute returns you know,
[12:26] Speaker 2: in offering. So this this is expected to continue. And
[12:30] Speaker 2: now given it has run up so much more and
[12:34] Speaker 2: you know, the relative valuations versus other commodities and other
[12:39] Speaker 2: markets have gone for a toss, there is a case
[12:42] Speaker 2: building increasingly that the next thing that you know, investors
[12:46] Speaker 2: would look to diversify or own, you know, in context
[12:49] Speaker 2: of whatever is happening in the world, might be oil
[12:51] Speaker 2: and other commodities. We are looking to do more reporting there.
[12:55] Speaker 1: Abishek believe it there. Thanks so very much, Bloomberg's Abisk
[12:58] Speaker 1: Visnoy Joining from Singer here on the Daybreak Asia podcast.
[13:11] Speaker 1: Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner.
[13:14] Speaker 1: We go next to Japan where Prime Minister Sona A.
[13:17] Speaker 1: Taka Ichi is reportedly planning to call for a snap election.
[13:21] Speaker 1: We're seeing a rally in Japanese equities, yields on jgbs
[13:25] Speaker 1: are higher, and the end is weakening deeper into the
[13:28] Speaker 1: zone where intervention becomes a risk. That's where we begin
[13:32] Speaker 1: our conversation with Zurrhir Khan. He is senior portfolio manager
[13:36] Speaker 1: at UBP. Con spoke with Bloomberg TV host Paul Allen
[13:40] Speaker 1: and April Holm.
[13:41] Speaker 4: So zu here, great to see you and looking at
[13:44] Speaker 4: what the Japanese stock market outlook is, it looks quite bright,
[13:48] Speaker 4: I mean the pro growth expectations from Takaiji. What is
[13:53] Speaker 4: your sense of whether we have more upside on Japanese stocks.
[13:58] Speaker 3: So I think the japan market overall is fairly valued
[14:04] Speaker 3: if you exclude one thing, which is continued significant corporate
[14:08] Speaker 3: governance reform.
[14:09] Speaker 5: Excluding that, it's fully valued.
[14:11] Speaker 3: But there are a lot of Japanese companies which have
[14:14] Speaker 3: not yet benefited from corporate governance reform. I mean, sixty
[14:18] Speaker 3: percent of Japanese companies still have close to twenty percent
[14:21] Speaker 3: of their balance sheet in cash. A large majority of
[14:25] Speaker 3: Japanese companies still have loss making unprofitable business segments. And
[14:29] Speaker 3: then you have a significant need for consolidation in the
[14:33] Speaker 3: Japanese market. There are too many companies in the same industry,
[14:37] Speaker 3: each of which are subscale and not very profitable. So
[14:40] Speaker 3: consolidation would tremendously benefit the market. So if those things
[14:43] Speaker 3: continue to happen, there is upside without you know, sort
[14:48] Speaker 3: of let's say, an acceleration of those things. Because part
[14:52] Speaker 3: of it is priced in. I think the market is
[14:54] Speaker 3: fairly valued.
[14:57] Speaker 4: Okay, what about one things I would like to highlight?
[15:00] Speaker 5: Is that soorry?
[15:02] Speaker 3: I just want to say one last comment, which is
[15:04] Speaker 3: that relative to global markets, the Japanese market, even though
[15:08] Speaker 3: I think on an absolute level it's fairly valued, on
[15:11] Speaker 3: a relative level, it remains very attractive among other major
[15:14] Speaker 3: global markets.
[15:16] Speaker 5: Sorry, you had a question on gen how much?
[15:19] Speaker 4: Yeah, how much are you expecting foreign investors to then,
[15:24] Speaker 4: you know, turn their attention to Japan? And given the
[15:29] Speaker 4: yen volatility, does that figure into the attractiveness of the market.
[15:35] Speaker 3: So I think, given how weak again is currently, I
[15:38] Speaker 3: think for foreign investors that's an added attractiveness of the
[15:42] Speaker 3: Japanese market because I think again is undervalued and over
[15:46] Speaker 3: time it should recover.
[15:47] Speaker 5: The pace and timing of that is difficult.
[15:50] Speaker 3: It will depend more on uh PED loosening policy rather
[15:55] Speaker 3: than the BOJ titan, because the BOJ is going to
[15:57] Speaker 3: tighten at a very slow pace, and then it's also
[16:00] Speaker 3: going to depend a bit on sentiment. So a lot
[16:03] Speaker 3: of Japanese continue to invest overseas, very significant amounts to
[16:07] Speaker 3: the New Investment Savings ACCOUNTANISA, A.
[16:11] Speaker 5: Lot of that money is going overseas.
[16:13] Speaker 3: Japanese companies, because the yen has continued to remain weak,
[16:17] Speaker 3: have not been repatriating their profits back into Japan. So
[16:21] Speaker 3: if you start to see a strengthening, I think those
[16:24] Speaker 3: factors may start to reverse and then add to the
[16:26] Speaker 3: trend of end strengthening, but I think it will depend
[16:29] Speaker 3: more on FED moves rather than you know, BOJ moves
[16:32] Speaker 3: in the near term.
[16:35] Speaker 6: So we've got this environment of very weaky end closing
[16:38] Speaker 6: in on one sixty weekest since July twenty twenty four,
[16:41] Speaker 6: and at the same time we've got yields climbing as well.
[16:44] Speaker 6: Now we've got some commentary from Calisle saying, look, this
[16:47] Speaker 6: is a good sign the economy is exiting deflation, but
[16:50] Speaker 6: is that really a sign of economic health when you
[16:53] Speaker 6: look at that sort of trend, any reason to be concerned,
[16:58] Speaker 6: and no.
[16:58] Speaker 5: I completely agree with them.
[17:00] Speaker 3: If you look at the ten year Japanese inflation index bonds,
[17:05] Speaker 3: the real return on those is only zo point two
[17:09] Speaker 3: percent currently, it's less than point three percent. If you
[17:12] Speaker 3: compare that, for example, to the German interest rates, the
[17:17] Speaker 3: real inflation protected interest rates, it's about one percent, just
[17:20] Speaker 3: under one percent. If you look at the US, UK, France,
[17:23] Speaker 3: it's between one and a half to two percent. So
[17:25] Speaker 3: Japanese real interest rates inflation protected remain very low. So
[17:30] Speaker 3: I don't think that's an issue, and impact Japanese inflation
[17:34] Speaker 3: is actually helping the government currently on the debt to
[17:38] Speaker 3: GDP rate issue, right, so nominal GDP is growing faster
[17:42] Speaker 3: than the debt is growing, and so the nominal debt
[17:45] Speaker 3: to GDP is actually declining, and I think that remains
[17:48] Speaker 3: well under control.
[17:50] Speaker 5: I think what happened until.
[17:52] Speaker 3: This past year and the later half of last year
[17:56] Speaker 3: was that as global inflation was declining, people expect that
[18:00] Speaker 3: Japan's inflation, which was running at around three percent, would
[18:03] Speaker 3: decline in Japan would go back towards zero inflation, and
[18:07] Speaker 3: hence the Japanese longer term bond yields were not going up.
[18:11] Speaker 3: But what they've seen is that ja Japanese inflation has
[18:13] Speaker 3: remained quite sticky and strong despite global inflation declining, and
[18:18] Speaker 3: so that's given people confidence that Japan is truly out
[18:22] Speaker 3: of the inflation and that's why.
[18:24] Speaker 5: The longer term bond yields in Japan have been going up.
[18:28] Speaker 6: Do you see the upside risk to inflation from the
[18:32] Speaker 6: end pushing up prices of impulse?
[18:35] Speaker 5: Yes?
[18:35] Speaker 3: Yes, And this is a big political problem for Takaichi.
[18:39] Speaker 3: I mean, this is why her predecessor, Ishiba basically had
[18:43] Speaker 3: to step down, was because people were unhappy with inflation
[18:47] Speaker 3: and the cost of living in Japan. So it's something
[18:49] Speaker 3: that she needs to tackle. She has other political issues
[18:54] Speaker 3: as well, but it also there's an opportunity. There's recently,
[18:57] Speaker 3: you know, rumors about she may call for an early election.
[19:01] Speaker 3: That may be a positive for her, but there are
[19:03] Speaker 3: of course risks whenever you go into an election.
[19:08] Speaker 4: So we he talk to us about the sectors that
[19:10] Speaker 4: you are perhaps a bit more cautious on, given the
[19:13] Speaker 4: valuations tech financials for example.
[19:18] Speaker 3: Yeah, so I think the rising interest rates are more
[19:22] Speaker 3: than priced in into financials, especially insurance companies and banks
[19:27] Speaker 3: and regional banks, not.
[19:29] Speaker 5: As much as the megabank.
[19:31] Speaker 3: Megabanks are maybe a bit better, but regional banks, insurance companies,
[19:34] Speaker 3: I think rising interest rates are more than priced in
[19:37] Speaker 3: a lot of let's say, inbound thematic names like restaurants,
[19:42] Speaker 3: department stores I think are overvalued. The tech names I
[19:46] Speaker 3: think are overvalued. Defense related names has been a big
[19:51] Speaker 3: thematic this past.
[19:53] Speaker 5: Year in Japan. That's overvalued.
[19:55] Speaker 3: There's been a bit of an AI mania in Japan.
[19:58] Speaker 3: And I'll give you one sort of an example of
[20:00] Speaker 3: an AI mania. So until earlier, that's in the middle of
[20:05] Speaker 3: last year. Late last year, Japanese factory automation names were
[20:10] Speaker 3: considered sort of a bit negatively because there wasn't strong
[20:14] Speaker 3: rebound in demand in it from China because of the
[20:17] Speaker 3: evolution policies of the Chinese government to reduce capacity. But
[20:25] Speaker 3: then suddenly it became, you know, robotics is the next AI.
[20:28] Speaker 3: Factory automation is the next AI name, and those just
[20:31] Speaker 3: bounced up like crazy. And then what you see is
[20:33] Speaker 3: as the reporting earnings and outlook, there's no improvement. It
[20:37] Speaker 3: was just that you know, robotics is the next AI,
[20:39] Speaker 3: and the evaluation ran up. So there are those sort
[20:41] Speaker 3: of thematic sectors that we need to be quite cautious.
[20:45] Speaker 4: About do you see that caution also part of the
[20:51] Speaker 4: function of the way in which South Korean markets I mean,
[20:54] Speaker 4: we've been seeing that robotics team also playing out there.
[20:57] Speaker 4: Does it set some of the investor appetite the time
[21:00] Speaker 4: when memory prices are trending at these levels that seems
[21:05] Speaker 4: to be supportive more of South Korea big chip makers
[21:08] Speaker 4: rather than the other electronics makers across the region.
[21:13] Speaker 3: Yeah, so I think, you know, this theme has become
[21:17] Speaker 3: rather I mean, when we look at, let's say, even
[21:20] Speaker 3: the more bullish forecast, for example, from any of the
[21:24] Speaker 3: Japanese component makers or companies in the semiconductor supply chain,
[21:30] Speaker 3: and we look at the more bullish forecasts, and then
[21:32] Speaker 3: then we price those in, you know, using a discount
[21:35] Speaker 3: cash flow model, we still can't explain current valuation, right, So,
[21:39] Speaker 3: even using the most bullish forecasts. So I think there's
[21:41] Speaker 3: a bit too much priced into the market currently.
[21:45] Speaker 1: That was Zoomhair Khan, senior portfolio manager at UBP, speaking
[21:49] Speaker 1: with Bloomberg TV host Paul Allen and April hon And
[21:52] Speaker 1: we're bringing it to you here on the Daybreak Asia podcast.
[21:57] Speaker 1: Thanks for listening to today's episode of the bloomber Our
[22:00] Speaker 1: Daybreak Asia Edition podcast. Each weekday, we look at the
[22:03] Speaker 1: story shaping markets, finance, and geopolitics in the Asia Pacific.
[22:08] Speaker 1: You can find us on Apple, Spotify, the Bloomberg Podcast
[22:11] Speaker 1: YouTube channel, or anywhere else you listen. Join us again
[22:15] Speaker 1: tomorrow for insight on the market moves from Hong Kong
[22:18] Speaker 1: to Singapore and Australia. I'm Doug Prisoner and this is
[22:23] Speaker 1: Bloomberg

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