# Japan's Takaichi Set to Call Early Election

An episode of [Bloomberg Daybreak: Asia Edition](https://invisiblenetwork.ai/podcast/1663863437), 15 Jan 2026, 21 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/58e85be7-dbb5-4043-afed-af80014dc0b3/7c9f86a5-65db-4d54-b3e5-b3d3001d5b67/audio.mp3?utm_source=Podcast&in_playlist=27143354-63aa-4ac5-965d-af80014dc0d3

Japanese Prime Minister Sanae Takaichi will call a snap election early in the parliamentary session starting later this month, in a bid to shore up her leadership and secure a mandate for the new ruling coalition. Takaichi told officials from the ruling bloc that she will give more details of the dissolution on Jan. 19, according to Liberal Democratic Party Secretary General Shunichi Suzuki and Hirofumi Yoshimura, co-leader of the Japan Innovation Party, the LDP's coalition partner. We spoke to Isabel Reynolds, Bloomberg's Tokyo Bureau Chief Plus - Stocks started Thursday on a softer note after Wall Street gauges retreated as investors rotated out of richly valued technology stocks. We heard from Jason Liu, Head of APAC Equity & Derivative Strategy at BNP Paribas. 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
[0:12] Speaker 1: Asia podcast. I'm Doug Prisner. We begin today in Japan,
[0:15] Speaker 1: where the country's finance minister, together with a top currency official,
[0:19] Speaker 1: issued a warning to speculators after the end weakened to
[0:23] Speaker 1: its lowest level against the dollar in eighteen months. The
[0:26] Speaker 1: officials said they will respond appropriately to any moves they
[0:30] Speaker 1: deem excessive, including those that are speculative. Now, betts against
[0:34] Speaker 1: the End seem to pick up speed after sana E
[0:37] Speaker 1: Takiichi emerged as the leading candidate to become Prime Minister
[0:41] Speaker 1: last October. Takiichi is known for her pro fiscal and
[0:45] Speaker 1: monetary stimulus views. Well now Takiichi is obviously Prime Minister,
[0:50] Speaker 1: and she will be calling a snap election later this
[0:53] Speaker 1: month at the start of the parliamentary session. This is
[0:56] Speaker 1: an attempt by Takiichi to shore up her leadership and
[0:59] Speaker 1: secure mandate for a new ruling coalition. For a closer look,
[1:03] Speaker 1: I'm joined by Bloomberg's Isabel Reynolds. Isabel is Bloomberg's Tokyo
[1:07] Speaker 1: bureau chief, and she joins from our studios in the
[1:10] Speaker 1: Japanese capital. Thank you for being here. Happy New Year,
[1:13] Speaker 1: to you, Isabel, Can I get you to begin by
[1:15] Speaker 1: kind of laying out the dynamics that are at play
[1:18] Speaker 1: because Takei ICHI's Liberal Democratic Party is so reliant on
[1:23] Speaker 1: a coalition partner.
[1:25] Speaker 2: Yes, I mean for more than a quarter of a
[1:27] Speaker 2: century it was in this coalition partnership with a party
[1:30] Speaker 2: called Cormeto. They had very little in common in terms
[1:33] Speaker 2: of policy really, but what they did get out of
[1:36] Speaker 2: Cormeto was this ability to really turn out the vote
[1:38] Speaker 2: when it came to an election. So there were many
[1:41] Speaker 2: LDP members of parliament who in fact owed their seats
[1:44] Speaker 2: really to Cormeto. Then, when Takeichi came into power as
[1:48] Speaker 2: Prime Minister last year, she had certain views that Cormeto
[1:51] Speaker 2: really took issue with. But the one that finally sort
[1:54] Speaker 2: of put an end to the coalition was her refusal
[1:57] Speaker 2: to clamp down any further on these allegations about corruption
[2:01] Speaker 2: within the party, about slush funds and so on. So
[2:04] Speaker 2: Cormator left the coalition. She was left scrabbling around desperately
[2:09] Speaker 2: for another coalition partner. She did find one in the
[2:11] Speaker 2: form of the Japan Innovation Party, but that party is
[2:15] Speaker 2: very sort of regionally based, has less capacity to turn
[2:19] Speaker 2: out the vote, and in any case has said that
[2:21] Speaker 2: it will sort of not coordinate on seats and will
[2:24] Speaker 2: be end up fighting against the LVP in the next election.
[2:26] Speaker 2: So in terms of actual election cooperation, they're not as
[2:30] Speaker 2: nearly as strong a partner.
[2:32] Speaker 1: So if she is successful in shoring up per leadership,
[2:35] Speaker 1: is it a foregone conclusion that we're going to see
[2:37] Speaker 1: much more in the way of government stimulus going forward.
[2:41] Speaker 2: We don't know that for sure at all. At the moment,
[2:44] Speaker 2: this election looks much more uncertain than it does on
[2:48] Speaker 2: the surface. So if you look at Takehi's popularity, I mean,
[2:51] Speaker 2: she's had extremely high popularity ratings kind of personally and
[2:55] Speaker 2: for her cabinet, but that sort of same feeling doesn't
[2:59] Speaker 2: necessarily extend to her party. So what we don't know
[3:02] Speaker 2: is how far you know that positive feeling towards her
[3:05] Speaker 2: will actually translated into people getting off the couch on
[3:09] Speaker 2: that day and going into the polling station to vote.
[3:12] Speaker 1: So help me understand why her polling is showing such
[3:15] Speaker 1: strong kind of sentiment here in regards to her leadership.
[3:18] Speaker 1: Is there something that the population in Japan is expecting
[3:22] Speaker 1: from her?
[3:23] Speaker 2: I think she came in talking about all the things
[3:26] Speaker 2: that the Japanese are worried about at the moment. So
[3:29] Speaker 2: last summer during the Upper House elections, one of the
[3:33] Speaker 2: issues that kind of cropped up more than it ever
[3:36] Speaker 2: had done before was immigration, and well, I mean, she
[3:39] Speaker 2: didn't take a very strong stance on it, but she
[3:42] Speaker 2: was more outspoken about the need for limits on immigration
[3:46] Speaker 2: and the need to clamp down on sort of non
[3:50] Speaker 2: nationals who commit crimes or who break the rules. So
[3:54] Speaker 2: that was popular with the people who had kind of
[3:56] Speaker 2: drifted to a more sort of right wing new party
[3:59] Speaker 2: that had cropped up over the past couple of years.
[4:03] Speaker 2: So she was able to co opt I think those
[4:05] Speaker 2: people into supporting her. But I think there are other
[4:09] Speaker 2: issues that go beyond policy. To be honest, I mean,
[4:11] Speaker 2: I think she's she's conveyed this very enthusiastic and energetic
[4:15] Speaker 2: sort of atmosphere. She's always out there smiling. She's very
[4:21] Speaker 2: kind of dynamic in her relationship. If you see her
[4:23] Speaker 2: on the international stage, she'll be at summit, she'll be
[4:26] Speaker 2: rushing up to meet people and hug people, Whereas you know,
[4:29] Speaker 2: previous Japanese leaders would kind of sit in a corner
[4:32] Speaker 2: and play with their iPhone rather than going out proactively
[4:35] Speaker 2: to talk to the other leaders, and she's just comes
[4:38] Speaker 2: across as very dynamic, and I think people appreciate that
[4:40] Speaker 2: that although Japan has these huge problems and who knows
[4:44] Speaker 2: if she'll be able to resolve them, the aging population,
[4:46] Speaker 2: the massive debt, at least she looks like she's really trying.
[4:50] Speaker 1: And talking about breaking the glass ceiling, right. I mean,
[4:53] Speaker 1: she's the first female prime minister that Japan has had.
[4:56] Speaker 1: Talk to me a little bit about the way in
[4:58] Speaker 1: which she's being evaluated when comes to foreign policy, whether
[5:01] Speaker 1: we're talking about the relationship with US and trade issues,
[5:05] Speaker 1: whether we're talking about mainland China or even to somewhat
[5:09] Speaker 1: lesser extent, South Korea.
[5:11] Speaker 2: If you talk about the US. I mean, I think
[5:13] Speaker 2: Japan has resigned itself to the only thing that can
[5:16] Speaker 2: do with Donald Trump is to basically flatter him, offer
[5:19] Speaker 2: him gifts, just look as enthusiastic as possible, and never
[5:22] Speaker 2: contradict him, never criticize him. And that's exactly what she's done.
[5:26] Speaker 2: In space. I mean, we saw her going down to
[5:28] Speaker 2: the US military base at Your COSTCA, appearing by Trump's side,
[5:31] Speaker 2: talking to the all the military people there and looking really,
[5:35] Speaker 2: really happy to be there, and that's been the modus
[5:39] Speaker 2: operandi for Japan for some time. So I think the
[5:42] Speaker 2: Japanese and people appreciate that. I mean, I don't think
[5:45] Speaker 2: everybody in Japan supports Trump. I think he's relatively unpopular here,
[5:48] Speaker 2: but they recognize that that's the way that you have
[5:51] Speaker 2: to deal with him because Japan is sort of reliant
[5:54] Speaker 2: on the US for defensive purposes. When it comes to China,
[5:59] Speaker 2: she did make these remarks in parliament a while back
[6:02] Speaker 2: which angered China about the possibility of Japan sending in
[6:06] Speaker 2: its military if there were to be a sort of
[6:09] Speaker 2: a military clash over for Taiwan. Essentially, she hinted that
[6:13] Speaker 2: if it were to involve the US, and if it
[6:15] Speaker 2: were to be sort of an actual, full non military clash,
[6:19] Speaker 2: then Japan might have to send in its own military.
[6:22] Speaker 2: That has really angered China. But I think from the
[6:25] Speaker 2: Japanese perspective, although she's saying out lies something that sort
[6:30] Speaker 2: of politicians never said in the past, or at least
[6:32] Speaker 2: people in high office did not say in the past,
[6:35] Speaker 2: I mean, it's not a change in policy. And I
[6:38] Speaker 2: think this kind of backlash from China against her over
[6:41] Speaker 2: this has actually aided her own popularity domestically that they're
[6:45] Speaker 2: glad to see that she's sort of standing up for
[6:48] Speaker 2: what she says.
[6:49] Speaker 1: So when it comes back to the issue of economic stimulus,
[6:52] Speaker 1: I'm wondering whether or not there are obstacles in the way,
[6:55] Speaker 1: perhaps fiscal hawks that would push back against the idea
[6:59] Speaker 1: of that to government debt in Japan, that may tie
[7:02] Speaker 1: her hands to some extent. Is that a possibility, Well.
[7:06] Speaker 2: Yes, I mean it's it's a kind of a topsy
[7:08] Speaker 2: turvy situation in Japan, it is kind of in some
[7:11] Speaker 2: other parts of the world now. In that I mean,
[7:14] Speaker 2: she's seen as a right wing figure, but she favors
[7:16] Speaker 2: more spending, which is kind of not the traditional right
[7:20] Speaker 2: wing position, and there are the main opposition party, the CDP,
[7:25] Speaker 2: is a little less enthusiastic about spending, and that CDP
[7:30] Speaker 2: is now kind of in talks with the LDP's former partner, Cormeto,
[7:35] Speaker 2: and they are linking up potentially for the next election,
[7:39] Speaker 2: so they could take some votes away on that side.
[7:43] Speaker 2: So obviously, I mean, if Takai she wins a big
[7:46] Speaker 2: election victory for her LDP on on her own and
[7:49] Speaker 2: manages to get a majority on her own for the party.
[7:56] Speaker 2: I mean, she can pretty well do what she likes,
[7:58] Speaker 2: but that the budget has more less been put together already,
[8:02] Speaker 2: so it'd just be a question of passing what's already there.
[8:07] Speaker 2: The only other issue is, you know, whether that victory
[8:10] Speaker 2: will turn out to be as big as it might
[8:12] Speaker 2: potentially look on the surface.
[8:14] Speaker 1: As you and I both know, the Japanese equity market
[8:17] Speaker 1: is very near record highs, and I'm wondering about, away
[8:20] Speaker 1: from the politics, how people in Japan are feeling about
[8:23] Speaker 1: the economy.
[8:26] Speaker 2: Yes, I think the stock market is one thing, and
[8:28] Speaker 2: the way people are feeling on the ground is definitely
[8:32] Speaker 2: a different thing. While wages have been going up, they
[8:36] Speaker 2: have not kept pace with the cost of living at all,
[8:41] Speaker 2: especially for people kind of in the lower income groups.
[8:45] Speaker 2: And also, as you know, Japan's a very elderly country,
[8:48] Speaker 2: so people on these fixed incomes people and pensions and
[8:50] Speaker 2: so on are facing a rather painful financial situation on
[8:54] Speaker 2: personal level. So any poll you look at, if you
[8:57] Speaker 2: if you ask what is the biggest issue that the
[8:59] Speaker 2: govern should be focusing on, they all say the cost
[9:02] Speaker 2: of living, And whether she can really deliver on that
[9:06] Speaker 2: it is difficult to say because she's sort of overseen
[9:08] Speaker 2: this fall in the en, which contributes to inflation, because
[9:12] Speaker 2: Japan imports so much of the stuff that people need
[9:15] Speaker 2: to know for food and fuel and so on, that
[9:19] Speaker 2: this is part of their daily living expenses.
[9:21] Speaker 1: Normally, you and I don't speak about the Bank of Japan,
[9:23] Speaker 1: but if I can ask for a little bit of
[9:26] Speaker 1: perspective here, does this necessarily tie the hands of central
[9:30] Speaker 1: bankers in Japan right now until the dust settles on
[9:33] Speaker 1: what take Ichi intends to do on the fiscal side.
[9:37] Speaker 2: Yes, I mean I think with an election in the offing.
[9:40] Speaker 2: The next meeting is on January the twenty thirds, and
[9:43] Speaker 2: I'd be very surprised if they made any dramatic move
[9:45] Speaker 2: at that point, because they tend from past experience not
[9:49] Speaker 2: to do anything when there's political uncertainty. But in the
[9:52] Speaker 2: longer term, I don't necessarily think so. I mean, obviously
[9:56] Speaker 2: there's a lot of concern over the week a yen
[9:58] Speaker 2: at this point, I mean, it is getting to the
[10:00] Speaker 2: point where even the Bank of Japan would start to
[10:03] Speaker 2: think about it. So in the longer term I wouldn't
[10:06] Speaker 2: I wouldn't rule out further action by the bank.
[10:09] Speaker 1: Isabelle will leave it there. Thank you so very much.
[10:11] Speaker 1: Bloomberg's Isabelle Reynolds. She's a Bloomberg's Tokyo bureau chief. Joining
[10:16] Speaker 1: from our studios in Tokyo here on the Daybreak Asia podcast.
[10:26] Speaker 1: Welcome back to the Daybreak Asia Podcast. I'm Doug Prisoner.
[10:29] Speaker 1: Since the beginning of the year in the US stock market,
[10:32] Speaker 1: we have seen a steady rotation out of megacap tech shares. Well,
[10:36] Speaker 1: today that trend seemed to gather steam. We had the
[10:39] Speaker 1: Nasdaq Composite suffering its worst decline in about a month,
[10:42] Speaker 1: with a drop of one percent, and at the same time,
[10:45] Speaker 1: stocks with more exposure to the economy continue to benefit.
[10:49] Speaker 1: The Russell two thousand index of small cap shares added
[10:52] Speaker 1: seven tenths of one percent today. And that's where we
[10:55] Speaker 1: began our discussion with Jason lu Jason is head of
[10:59] Speaker 1: a pac equity and derivative strategy at BNP PERIBA. He
[11:02] Speaker 1: spoke with Bloomberg TV host Averril Honk and Paul Allen.
[11:06] Speaker 3: I do want to start with what we saw during
[11:09] Speaker 3: the US session, this move out of tech, the Nasdaq
[11:12] Speaker 3: having its worst day in a month, small caps doing
[11:15] Speaker 3: pretty well. Do you see this as being a US
[11:18] Speaker 3: specific story or could we expect to see a bit
[11:21] Speaker 3: of a weakness and Asia tech stocks going ahead as well.
[11:25] Speaker 4: Sure, I think that's a great question. When it comes
[11:28] Speaker 4: to rotation. We actually seen this started maybe towards later
[11:32] Speaker 4: of last year within the USI between tech and the
[11:36] Speaker 4: non tech, but even within tech we have also seen
[11:39] Speaker 4: some meaningful divergence as well. You may record it if
[11:42] Speaker 4: you look back at the tech rally last year. Very
[11:44] Speaker 4: often it tends to be a coordinated rally and a
[11:47] Speaker 4: coordinated decline. But since perhaps November and December last year,
[11:51] Speaker 4: where we see the success of Gemini, there's now a
[11:54] Speaker 4: lot more debate about even within the tech complex, which
[11:58] Speaker 4: AI model will be winning and subsequently which technology hardware
[12:02] Speaker 4: that are driving those AI models will be winning. And
[12:05] Speaker 4: so it resulted in the rather divergence among the MAC seven.
[12:08] Speaker 4: And also if you start this year, you're also seeing
[12:11] Speaker 4: a divergence between the hardware semiconductor side of things versus
[12:15] Speaker 4: the broader NASTAC And this also translates into Asia as well,
[12:19] Speaker 4: because if you look at you to date, some of
[12:21] Speaker 4: the best performing markets are Korea, Taiwan and Japan, who
[12:26] Speaker 4: tends to have a little bit more hardware exposure. When
[12:28] Speaker 4: it comes to the AI complex.
[12:31] Speaker 3: I noticed Jason missing from that list. You did not
[12:34] Speaker 3: say China. But if we take a look at a
[12:36] Speaker 3: chat that we have on the Bloomberg here, China AI
[12:39] Speaker 3: has been finding a lot of new niches, you know,
[12:41] Speaker 3: in terms of medical self diagnosis tools, short videos as well.
[12:46] Speaker 3: We've seen a bit of strength in this space. Do
[12:49] Speaker 3: you think there's better priced opportunities in the China AI
[12:52] Speaker 3: story away from the USAI story.
[12:56] Speaker 4: I think that's a great question. The reason I did
[12:58] Speaker 4: not mention China earlier is because when it comes to divergence,
[13:02] Speaker 4: there's also the divergence between the China AI complex versus
[13:06] Speaker 4: the rest of the world, which mostly driven by the
[13:09] Speaker 4: US market, and the behavior tends to be quite different.
[13:11] Speaker 4: So specifically on the China AI side, we are positive
[13:15] Speaker 4: on this, especially with the anticipation of the fifteen five
[13:19] Speaker 4: year plan that I believe investors are expecting more policy support,
[13:23] Speaker 4: and from the recent IPOs over the past month and
[13:27] Speaker 4: some of the outperformance of these AI related names, it
[13:30] Speaker 4: seems to suggests that there has been a structural change
[13:33] Speaker 4: when it comes to how investor think about the competitiveness
[13:36] Speaker 4: of China AI, but the way that they trade may
[13:39] Speaker 4: have slightly deviated from the rest of the world because
[13:42] Speaker 4: of the China ecosystem is not necessarily, at least at
[13:45] Speaker 4: this point, connected with the USAI ecosystem.
[13:50] Speaker 5: What could potentially derail this? I think this, I guess
[13:55] Speaker 5: is a bit of a background concern. But we see
[13:57] Speaker 5: how authorities on shore maybe looking to cub some of
[14:02] Speaker 5: the risks. You see the tightening of these margin financing ratios,
[14:05] Speaker 5: perhaps in the short term, longer term, what are you
[14:07] Speaker 5: seeing as how this might impact the trajectory?
[14:13] Speaker 4: Sure? I think when we look at the China rally
[14:15] Speaker 4: for over the past year or so, it actually started
[14:19] Speaker 4: as a policy driven rally, or driven by the liquidity
[14:22] Speaker 4: transfer from fixing come marketer deposits into equity. It is
[14:26] Speaker 4: true that we have also seen an increase of margin trading,
[14:30] Speaker 4: but that is very much a reflection of investor getting
[14:33] Speaker 4: more positive on the broader market. I think very often
[14:36] Speaker 4: we have heard investor looking at the absolute level of
[14:39] Speaker 4: the margin balance or the margin turnover. It is true
[14:43] Speaker 4: that they are now in absolute terms near a record high,
[14:47] Speaker 4: but we should also remember that the overall size of
[14:50] Speaker 4: the Chinese equity market has also expanded quite significantly. So
[14:53] Speaker 4: if you take the current margin balance outstanding as a
[14:56] Speaker 4: percentage of the overall market cap, we're only a sixty
[15:00] Speaker 4: percent of the previous peak that we saw back in
[15:03] Speaker 4: twenty fifteen. And speaking of twenty fifteen, I believe that
[15:06] Speaker 4: the policymakers have tried to learn from the experience of
[15:11] Speaker 4: those leverage driven market and they're trying to cool down
[15:15] Speaker 4: the market in order to encourage what they call the
[15:17] Speaker 4: slobal market, which is more based on long term capital
[15:21] Speaker 4: allocation rather than speculative flow on specific high growth sectors.
[15:28] Speaker 5: That's a good point talk to us about structurally. I mean,
[15:31] Speaker 5: we've been seeing data in the past they exports growth
[15:35] Speaker 5: in China is still growing really strong. We have Yuen strengths,
[15:39] Speaker 5: maybe taking a bit of breather for parts of this week.
[15:42] Speaker 5: How does that all affect inflows into China you think?
[15:48] Speaker 4: I think the info into China are quite divided, because
[15:51] Speaker 4: historically when investors look at info into China, they often
[15:55] Speaker 4: start from the consumer angle. But for the past year
[15:58] Speaker 4: or two, I think the consumer side remains quite weak.
[16:01] Speaker 4: Or you have the socolled new consumption that are very
[16:04] Speaker 4: specific to a handful of stocks, or specific subsectors instead.
[16:09] Speaker 4: I think we've seen a lot more focus on technology
[16:12] Speaker 4: and on healthcare and high end manufacturing that both of
[16:16] Speaker 4: you mentioned at the earlier point. So, for example, in
[16:18] Speaker 4: the Hong Kong market, we have seen a significant repricing
[16:22] Speaker 4: of a lot of the foreign appetite into the technology
[16:25] Speaker 4: related stocks, but that level of optimism are not equally
[16:29] Speaker 4: distributed across other sectors as well. So when it comes
[16:32] Speaker 4: to forum FLN flow, we maintain the view that this
[16:35] Speaker 4: year will be very targeted by the sectors, and it
[16:37] Speaker 4: will be very targeted by the different segments as well,
[16:40] Speaker 4: because when you look at the listing structure of the
[16:43] Speaker 4: Hong Kong market and the China onore market, they do
[16:46] Speaker 4: offer a very distinct exposure. For example, Hong Kong is
[16:49] Speaker 4: more on the AI application, internet and software, whereas you
[16:53] Speaker 4: can find a lot more hardware oriented companies and higher
[16:56] Speaker 4: manufacturings in the China onial market.
[17:00] Speaker 3: Jason, I know that one of the risks you see
[17:02] Speaker 3: potentially in twenty twenty six will be from a major
[17:05] Speaker 3: change in FED policy. There's certainly no evidence of that
[17:08] Speaker 3: happening at the moment, but could you foresee a set
[17:11] Speaker 3: of circumstances where that might change.
[17:14] Speaker 4: Sure, I think if you look at the fat on
[17:17] Speaker 4: market right now, I think it's pricing and roughly two
[17:19] Speaker 4: to three cut. But it is possible that as we
[17:24] Speaker 4: enter into Q two we'll be faced with a few
[17:27] Speaker 4: unknown number one, as we know now there are quite
[17:30] Speaker 4: a few legal cases around the Fed officials share power
[17:34] Speaker 4: and also Governor Lisa Cook. We also will likely start
[17:37] Speaker 4: to see the implementation of the One Big Beautiful Bill,
[17:40] Speaker 4: which will feed into the physical spending, and that could
[17:43] Speaker 4: also translate into a potential recovery in the employment market,
[17:48] Speaker 4: which feeds into the inflation. And at the same time
[17:51] Speaker 4: we will have a new fat chair. So in Q two,
[17:53] Speaker 4: I think there is a point that the market will
[17:55] Speaker 4: be forced to recalibrate the interest rate trajectory on the
[18:01] Speaker 4: latest economic data, and I think that could drive either to
[18:03] Speaker 4: a more dubbish or hackish tilt, and that will transmit
[18:07] Speaker 4: to the rest of the world as well. So I
[18:08] Speaker 4: think that is indeed a key event that we're watching
[18:11] Speaker 4: in Q two.
[18:14] Speaker 5: You alluded to some of the potential risks for tech,
[18:17] Speaker 5: in particular in terms of memory prices and demand. Do
[18:23] Speaker 5: you think there is a chance that the likes of
[18:25] Speaker 5: South Korean markets, they sort of become a victim of
[18:28] Speaker 5: their own success. Given how some of these big players
[18:31] Speaker 5: they're also flagging that that could affect growth in other
[18:34] Speaker 5: parts of their business.
[18:37] Speaker 4: I think you're right that when we look at the
[18:39] Speaker 4: memory price, we have seen a remarkable increase a recorded
[18:43] Speaker 4: during the fourth quarter. Some of the memory mardule price
[18:45] Speaker 4: has actually gone up four times, which drove the outperformance
[18:49] Speaker 4: of the Korean taxtocks throughout Q four and also at
[18:52] Speaker 4: the start of this year. And that actually creates some
[18:54] Speaker 4: very unique situation for the Asian tech or global tech
[18:58] Speaker 4: because it's like Korea and Taiwan, they do have a
[19:02] Speaker 4: dominant position in a very specific segment. So Korea will
[19:06] Speaker 4: be memory and storage, Taiwan will be foundries and AI servers.
[19:10] Speaker 4: There are no clear replacement of these companies, and so
[19:14] Speaker 4: they do have very strong price in power. And in fact,
[19:17] Speaker 4: I think we have seen early signs of the transmission
[19:20] Speaker 4: of higher component price into end products, and I think
[19:23] Speaker 4: we have seen a few companies raising their price on
[19:26] Speaker 4: laptops and PC or smartphone to start the year. So
[19:29] Speaker 4: I think if there is indeed a potential concern that
[19:32] Speaker 4: if these price continue to stay high will that hurt demand,
[19:35] Speaker 4: But I think specifically on the Ai side of things,
[19:38] Speaker 4: it seems that demand is still quite strong and it's
[19:40] Speaker 4: more of a supply constraint rather than a kind of
[19:44] Speaker 4: demand constraint. So I think on that part, perhaps it's
[19:47] Speaker 4: less of concern and it is wide because of that
[19:50] Speaker 4: very sharp increase in an expectation, it actually still make
[19:54] Speaker 4: Korean equity relatively cheap on a pe basis, because it
[19:57] Speaker 4: costs me two hundred right now trading around Henhog's pe,
[20:01] Speaker 4: and that is in line with its long term average.
[20:03] Speaker 4: And when they look at Taiwan, the tai x is
[20:05] Speaker 4: also trading at about a thirty percent discount to the
[20:08] Speaker 4: NESTAC of one hundred as well. So in that sense,
[20:10] Speaker 4: I think depending on the specific product, I think for
[20:14] Speaker 4: a certain part of the Asian market, they do have
[20:16] Speaker 4: very strong price and power. That's your feed into the
[20:19] Speaker 4: earning scrowth.
[20:20] Speaker 1: That was Jason leu Had of APAC Equity and Derivative
[20:23] Speaker 1: Strategy at BNP Pariba, speaking with Bloomberg TV host Avril
[20:27] Speaker 1: Hong and Paul Allen, bringing it to you here on
[20:30] Speaker 1: the Daybreak Asia podcast. Thanks for listening to today's episode
[20:35] Speaker 1: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we
[20:39] Speaker 1: look at the story shaping markets, finance, and geopolitics in
[20:43] Speaker 1: the Asia Pacific. You can find us on Apple, Spotify,
[20:47] Speaker 1: the Bloomberg Podcast YouTube channel, or anywhere else you listen.
[20:51] Speaker 1: Join us again tomorrow for insight on the market moves
[20:54] Speaker 1: from Hong Kong to Singapore and Australia. I'm Doug Prisner,
[20:58] Speaker 1: and this is Bloomberg
[21:03] Speaker 4: Four

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