China's Stock Market Rally is Faltering, Here's Why | Bloomberg Markets: Asia 10/08/2024

China's Stock Market Rally is Faltering, Here's Why | Bloomberg Markets: Asia 10/08/2024

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It is almost 11 a.m. in Singapore, in Shanghai. Welcome to Bloomberg Markets Asia. I'm Haslinda Amin. Here are the top stories. Hong kong stocks plunge despite the post-holiday euphoria on the mainland. The CSI 300 also powering early gains as the indices news conference fails to add fresh stimulus.

Lot of Asian stocks under pressure. Falling losses on Wall Street driven by a tech sell off Middle East tensions and bets on a smaller Fed rate cut. And I'm out of old rule as live in Taipei. But on his annual Tech Day, the company best known for building iPhones now looking to EVs to be the next drivers of growth.

This hour here from Pininfarina, it's a legendary Italian design firm helping Hon. Hai make it stand out in a crowded market. Still a ride in the markets gyrations when it comes to those Chinese stocks. We have some reversal in sentiment after gaining as much as 11% at the open. The CSI has given up about half its gains already. The DRC session, as we said, a big disappointment for investors. No big stimulus, nothing meaningful.

What we did hear, however, is that China will keep using ultra long sovereign bonds. That's according to the DRC. China will hasten progress on fiscal spending. It will focus on consumption, and other housing policies are also being planned, but all short on details. CSI 300 Index currently up by about 4%. Let's get to our China correspondent, Ben Lo. She's joining us now. Also in Hong Kong is the China show

co-anchor dividend less. David, of course, huge disappointment, but bear in mind, the expectations were sky high leading up to the reopening today. Take us through the market reaction and absolutely. In fact, I we need to take you back about three or four weeks to, I guess, understand the context why market expectations have been elevated to this to this point.

Right. You know, when we when we heard that initial briefing about three weeks ago from the PBOC in a9am rare joint briefing, and then the market rally that ensued following that, you do understand why going into this specific briefing almost chapter two, and I think maybe we'll talk more about what was lacking and, you know, just putting contextualizing, of course, and who was there and what they could say. You do understand why markets were somewhat, I guess, disappointed.

It's I need to caveat this as well. Right. So there are two almost mechanical dynamics at play here, two sets of mechanical dynamics at play. One is a Hong Kong market which has rallied, depending on which index, you look at, 30 to 40% in some cases going into today. So you understand why the itch was there to take some profit and maybe define the rally we're seeing onshore.

That's number one. Number two is really onshore where things have been shut for about a week. The initial minutes right after the opening bell saw the benchmark gain 11, 12%.

That the CSI 300, where every single stock was up. Since that point in time, we've seen things pare back a little bit has. So I guess in some ways it was expected to see well, it's not surprising to see Hong Kong pulling back given how far the rally has come. And it's unsurprising as well to see still some gains onshore as we go into the I guess, the latter part of the morning session highs.

And we're seeing the CSI paring back further currently up by 4.8%. Medmen put that disappointment in perspective for us when it comes to that press briefing. Yeah, the tone at this briefing is really quite different from what we got from the PBOC before that holiday where we had those big bazooka monetary stimulus just announced right at the start of the briefing. This one was more like a traditional Chinese style ministry briefing where the official will spend quite a bit of time at the start just recapping the state of the economy. And then we got a drip feed of measures that includes more more focus on promoting consumption, and that includes, for instance, more subsidies for students, measures to boost the income for low and middle income groups for the private sector. The government will extend loan support

for mid-size firms and also release a new negative list for foreign access. But I think what's most notable is that officials mention about quickening fiscal spending. The PRC is urging local governments to finish issuing all the local government bonds by end October. 90% have already been issued by and September, by the way. But there's this urgency to issue all those bonds by October that perhaps open up some room at the end of the year to issue more bonds if the authorities are so wishes to. There was also a announcement that 100 billion worth under ¥100 billion worth of investment planned for early next year an outright. Long, special sovereign, ultra long

sovereign bonds as well. A little bit of mention of the property markets, but it was mainly recapping what has been said so far. They said there will be more measures in the pipeline, but not a lot of details when it comes to that. So, yes, markets a little bit

disappointed. You look at the major gauges, they're paring back about half the half of the gains that we have seen since the early morning. And you know, David, we've also talk about the skepticism from the likes of Nomura, from HSBC.

And on the other hand, as well, investors are waiting to see how those stimulus, which have been announced so far will play through, including in the markets. Absolutely. I mean it. Looking at just the the magnitude and how quickly markets have I'll use the word reset and I'll talk more about it in a moment. You know, at some point the market was going was would be running into either a bad set of economic numbers, still soft earnings, for example. And at some point, you know, the everything that was announced so far will take time to simmer into the economy. Right.

But, you know, we we don't have the the luxury of time. You know, in about ten days or so, we get the activity numbers for for September coming through. And then we have we move into earnings season, which, you know, arguably it's it's we don't have enough runway for this to really filter into into corporate guidance.

Now, all that being said, right, the reason I word I used the word reset was at least people are now looking and asking about China. Right. Whether that's or global investor putting their queries in. We just had UBS joining us about an hour back. And these athletes are getting questions

right now on China onshore. The question is to what extent should they be deploying the retail investor money back into this market? And our previous guest in the last hour of the show anecdotally said, you know, they're looking at three, 4 billion new brokerage accounts that are open going into the open today. I'll end on this. The reset has taken valuations back from an extremely cheap level of, you know, trading one or two sigma below your ten year average. And we're actually now back on MSCI China.

I can go back to your ten year average. Right. So at this point, the question becomes now that we're back to the average, what's next has a turn. And even then, against a backdrop of little conviction, Bloomberg China show co-anchor David Inglis and China correspondent Ben Lowe, we thank you so much for your insights today. Let's get more perspective. Joining us now, Karen Harris, managing director at Bain and Companies Macro Trends Group. Good to have you, Karen. I mean, how are you assessing China right now? Well, I think we need to separate the longer term goals from what's happening in the short term in the equity market. In the long term, she's not really worried about growth as much as stabilization.

There's a strong set of more national security oriented goals around CHIP that the US dollar dependent, the supply chain resilience. But in the near term, there was not that we were reaching a crisis of confidence and the the large measures that were taken right before the holiday were trying to create a stop, a do loop of falling sentiment. And that I think that's the explanation for why they were so large.

They succeeded in creating and stopping that momentum. And now unless we see that sentiment fall again, I would guess that there perhaps there there's a sentiment that there's no real need to intervene at that same level, which is why we're seeing less excitement today. The thing is, Karen, can you actually draw a distinction between near-term and longer term perspective on China when Xi Jinping himself talks about a 100 year storm? If you do want to take a longer term perspective, where do you see the opportunities then? So equities are not a very important part of that.

In the grand scheme of things, not a really important part of the Chinese economy, where the challenges have been of course is the property market, which reached about 25% of GDP starting in 2021 with the three red lines. We've seen the effort to cool that down. But the way we think about it is it's like a very, very hot glass. If you want to cool it down and you drop it into a bath of cold water, it shatters. And so there's been an effort to shift the economic focus away from property to cool that down without creating a sort of catastrophic unwinding. And that is in in efforts to again

restart, to move credit, to move economic focus out of property, out of the financial economy into more real fundamental sectors. And that I think is part of that 100 year vision. They're creating goods, having advances in technology. And she is that techno utopian in many ways, really investing in the technologies of the future. And that is not going to happen through apartment buildings. But I guess the concern really is

housing is a huge part of the economy and it remains in the doldrums even as they talk about other housing policy being planned or being implemented. I mean, it's really an issue that's yet to be addressed. Yes, it's a challenge because, of course, it's housing.

It's for living in. Where do people put their savings? And that's been that's depression. That that lack of savings opportunity. It's resulted in low consumption domestically that can serve being dependent on consumption abroad through exports.

That was in Europe and the US. Now looking at the global South, so that balancing that is difficult. And I think we can see that the recent measures have been an effort to put a floor under property prices in a managed growth slowdown and and turn without creating, again, a catastrophic loss of confidence in an unwinding. And given what we have heard from the DRC, given the stimulus measures that we have seen in the past few weeks, are you more encouraged? I don't.

It depends on where encouraged what seat you're sitting in and what you're looking for. And as the equity investors, I think these have all been short term trades. So I don't know that will be if we look at the beginning of next year, if we see those same gains. And of course that you've just pointed out, many of the gains have already been eroded over time. So if you're if you're skating in the equities market in momentum, that's a very different situation than where would I invest fundamentally in China. And I think from a real basis there,

clear winners. China is dominating the global EV market, for example, the best the best vehicles on the planet for the price. Lots of innovation happening there. So from Bain and companies perspective,

we really think about what are the sectors in business that will be those long term winners are the clients we work with are looking in three, five, ten year time horizons, which is very different than the kind of buoyancy and and lack of buoyancy we see in the equity markets that's much more attuned to the stimulus packages that have been issued recently. Karen. Hang tight. Karen Harris, MD Macro Trends Group at Bain and Company. Still to come, we're live in Taipei, where the world's biggest iPhone assembler is set to unveil a new TV as it seeks to diversify its growth engines. More from John High's Tech Day later

this hour. Keep it here with us. This is Bloomberg. And.

With oil dipping below that 80 bucks a barrel. And China disappointment questions about its demand outlook. Of course, China is the number one importer of oil still in focus, though. Escalating tensions in the Middle East raising speculation Israel may attack Iran's oil infrastructure. Brent crude down about one and a half

percent. New York crude also down as much. Take a look at Brent, just under that 80 bucks a barrel level. Well, still with us is Katherine Harris, managing director at Bain and Companies Macro Trends Group. And Karen, of course, the trend here is, of course. The uncertainty in the geopolitical

environment. Oh, well, we've just lost Cam. We'll try and take a look at where we are in terms of that link with Karen Harris for now. Of course, we've been talking about Brent crude dipping below that 80 bucks a barrel and that disappointment with China, questions about the demand outlook, of course, that China has failed to give any meaningful indication in terms of what it intends to do to further prop up its economy and reverse that negative sentiment will go for a very short break. Keep it here with us. This is global. Welcome back. Taiwanese industry giant Foxconn is

holding its annual tech day in Taipei. The company, known formally as Hon. Hai, is the largest contract electronics maker in the world. Now it's pushing to diversify and build more futureproof income streams. Will I? Tech reporter Annabelle Jewellers joins us from the event in Taipei about what's the mood on the ground for this type of superstar and VIP? Well, it has. It's a really exciting day for the business here to if it's ever on high tech day, but it's also the 50th anniversary of the company this year. And one of the highlights we've heard so far from Chairman Yu is talking about building the world's biggest supercomputer facility right here in Taiwan. And as I'm saying, it really speaks

about sort of the the goals of where Hon. Hai wants to go from here. It's known as the world's biggest assembler of iPhones and a range of other consumer electronic appliances. We know sales of those are slowing. So Hon Hai needs to think about what is next. So essentially the focus is, is building

out this EV ambition, also smart manufacturing smart cities as well, trying to develop these additional business streams for the company. But EVs has been really one and particularly interesting, of course, given that the company has very big ambitions in this space, around 5% of manufacturing share for global EVs, they want by 2025 whether that's possible or not. Definitely the man leading that effort, Jun SEK, is saying that they will make every effort to get there. So think they. Well, what are you looking out for? What's been the most exciting? They do so very well. I think really it's about those Arabs in particular here today.

Of course, you can see that range of line up with Miami. We just had two new vehicles announced in the last hour or so. What else is really interesting is just off to my left, which you can't see, but that's the supercomputer facility. And of course, we just had those results from on high for the third quarter over the weekend. And they really just told us how much this company is continuing to gain a market share in service in particular. So it's working with the likes of NVIDIA very closely. Of course, it's trying to impart its

design knowledge in the build out and this design is sort of specifications, the eight servers, it's making those and it's sending them off to the hyperscalers, the likes of us, Microsoft and Apple as well, all of these different ones that are involved in the process. Very big business for the company. They're saying it's got a lot further to go from here, as I said. Seat belts. Thank you so much for that. Now to another top tech story we're

tracking right now. Samsung shares slipping after its preliminary third quarter earnings. Miss expectations. The company issued a rare apology for the weak result, an unusual admission that it's grappling with a potential crisis. The world's largest memory maker is now playing catch up to its rival, SK Hynix, which took the lead in producing chips used in air applications. It's also begun laying off staff as part of a plan to reduce its global headcount by thousand. Take a look.

We are in terms of how those are wider Asian chip makers are doing right now on the back of news out of Samsung. This is how it's looking. We know Samsung Electronics down on the news. We have hon. Hai also trading lower right now. We have down by almost 3% smi c continuing its trend downwards, down about 9%. Remember the smi c has been smacked in recent sessions in the broader market. This is how it's looking up china front and center. We've been talking about the gyrations

in the market. China's stocks giving up some of those gains in the early session. We saw how it was up by about 11%. Asia on a whole under pressure. There you have it.

We have China CSI 300 index, only up by about 6% as we speak. Well, let's get to our guests, Will Amar, CEO Gro Investment Group. He joins us right now. Willem, give us a sense of how you're

reading in terms of the movements in the Chinese market right now. Oh, it's a very volatile, exciting time. I believe that domestic Chinese in particular retail investor, is having a very high expectations. If look at last week that ETF in the Hong Kong China A-share market was close is trading at 10 to 20% premium meaning that people are expecting ten plus percent rally in the a-share to catch up on the HSA. So what happened this morning I think reflected a part of it is over expected and the potential disappointment is coming from lacking of a high level factor, no matter if it's 1.5 or two or 3 trillion. Also fiscal stimulus. But my expectation is later on today,

this afternoon, on the next two or three days, the sentiment will, you know, come back where more details and effect are being announced. So, William, given those expectations, would anything be a buy? Well, actually, it's already buying. I think that that voice is in the details. If you look at some of the brokerage company historically, when China a-share market rebounds, those from security company, they are having kind of like option return profiles. If you look at some of the Hong Kong and U.S. ADR listed brokers, they were already up 100% over the last two week or so and their China market was down sorry, it was closed down.

So basically it's kind of Asia broker or the 55 year old China broker. They only meet up, you know, today playing catch up. So I think sector specific, there is always a buy. But I think on the index level, it would be kind of like volatile, you know, one more policy with more volatility, it has to come out. In the end, William It will have to be about fundamentals of fundamentals in China, supportive of the view that you hold that perhaps we'll see gains later on. Yes, I would say in terms of consumption, that is the key. You know, those of the kind of late

October, you know, National Day spending. When I talk to my friends, I think people are spending more, you know, in the expectation of the equity market and, you know, wealth effect coming up. And then it's said to me in terms of companies fundamental, if you look at the global and local brokers, actually I see earnings upgrade. You know, some some of them particularly in the security sectors. But at the end of the day, the macro fundamental economic figure like September has been very weak, you know, the PMI and CPI.

So I believe, you know, we need a month or two for confirmation of the fundamental coming back. But I see more volatility on the upside rather than the downside, given the iconic kind of late policy direction change what the rotation into Chinese stocks at the expense of China bonds. Yes. I think if you do a survey, which we also asked about the institutional investor in China, one of the worry that they've had is the Chinese investor or the institutional investor without government bonds. And then not too long the equity which, you know, caused a collapse of a potential, you know, Western rotation. I think people will see it did a good job in doing that, trying to let the point being leveraged are perhaps, you know, for equity. So we are not seeing a sharp selling in this morning, but potentially that this rotation could be a risk.

You know the world to which I would say equity has more upside. You know, if the policy direction continue rather than the bonds in China markets when then when it comes to its tank what a run and you know what what the downside as well we're seeing it on onset to be to posted itself was day since its inception. I mean is this a surprise? Well, yeah, it's a yo yo. You know, if you talk about a Hong Kong tech company, but realistically, I do. I see that differentiation. Guys like, you know, Tencent and Alibaba, I think they are a more long term buy.

But the other tech is kind of like a risk on and risk off. I would say at this point for global investor, it would be better to look at, you know, manufacturing or wait good manufacturer for example you look at the you know has been go up a lot and then when the Hong Kong market is down and the tech right now is only down 2 to 3%. So I think that is a better sector. William. William Hang tight, William on CIO Grow Investment. Stay with us. Plenty more ahead. This is Bloomberg.

China market just heading to London. What a day for China stocks gyrations, not for the faint hearted. The CSI 300 index currently up by 6% as we speak. Remember that it opened up by as much as 11% disappointment. When it comes to the DRC, of course. Expectations were sky high. Disappointment was kind of expected. But that volatility. Oh, wow.

Well, we're back with William Mallet, CEO Gro Investment Group. William, we talk about gyrations in the market. Talk to us about the spreads between eight and eight shares. How are you reading that? Yes, I believe the spread will narrow down and as we speak, I think the Shanghai index is coming back again.

And we have to remember there is no limit up limit down on the Hong Kong shares. But for the China shares being bought 10%, that small cap, $0.22. So as best as you can go, so up 10% for China. So we expect that there will be a

narrowing down a little bit when retail investors start digesting that details meeting, you know, not. Right. William, how best do you gain exposure to to China? I'm sorry, Ken, can you come again on the question? When then how best? How best to play China. Hello, Tony. Sorry. Can you come again on the question? Sure. William, how best do you play China? How do you invest in China? Best. Oh.

Yeah, I think the best place to play China is two things. One is our focus on the rotation of security factors, which I think turnover is going crazy and, you know, accounts opening and I expect that will continue. Number two is global companies, you know, happen to be Chinese company labor manufacturing sector, labor media, which I think if you look at the details, their first listing in Hong Kong, 35% of their process is for global hour and declining percentage for global expansion. So they are the largest, you know, manufacturing of white goods manufacturer. So I think it's a triple, you know, play, you know, for Chinese company playing local and global. Those are the two sectors that we think reasonable and is reflected in the share price with the market, correct? I think they are holding up very well.

I think there's now concern because we had earlier at the DRC briefing that the moves by the PBOC, for instance, is not meant to prop up the stock market. I mean, might the stock market be expecting too much and derail your own expectations as to where Chinese stocks are headed? Yes, I'm glad they mentioned that because, you know, to be honest, the nature of the China retail investor is very aggressive. And also when the Asia market become a bull market, it will go up quickly.

If you look at 2015, the market last for only two months. So I'm glad they bring this up and there are so many new accounts being opened by 3 million, you know, retail. So I believe that is a very good message to be sent now. And hopefully if there are more

policy details coming out and let the institutional investor drive that market rather than the retail. How about the swap facility that was mentioned? I'm sorry. Can you come again? William, How about the swap facility that was mentioned to me now to allow shareholders to perhaps buy back shares? Yes, I believe the swap facility is positive, but, you know, it does not create a very kind of powerful feedback mechanism, if you like. At the end of the day, people are watching the meat to large gatherings, I think a large cap. So I think that's what facility would help. But at the end of the day, the buying power of that is not very large. It has to be from the mutual fund

community, an insurance company to drive the market is not least that company could do more back. It would help sentiment. But this is not the key focus issue. William, great insights and thank you for joining us. William CEO Gro Investment group. Let's do it again. Indian markets as we head towards the start of the trading day, India starts trading in 10 minutes or so. Nifty futures pointing to a higher open, up 3/10 of 1%.

Of course, india has had a bruising week. Last week the rbi rate decision later this week might also influence sentiment. It will guide the trend in bonds, in particular in terms of the Indian rupee trading at 8396 flat versus the USD. Well, Indian payments company MOBIKWIK reportedly received approval from the market regulator last month for an IPO. That's after filing for a listing for a second time back in January, aiming to raise around ₹7 billion or more than $83 million is an update on those plans. Oops, I'm not. Taku is co-founder of Mobikwik and joins us now in the studio for an exclusive.

Good to have you with us. So confident that IPO will come through. Yes, absolutely. What kind of reception are you anticipating? Much stronger.

And we've also changed as a company a lot in these last three years, 2021. You know, it was a very volatile market in India. And it was also the first time tech companies or consumer Internet companies were coming for a listing. And so valuations were quite bubbly.

Investors were chasing growth at all costs. Since then, last few years have seen investor mounted change to profitability and long term sustainable growth. As a company, Mobikwik has diversified its revenue streams from consumer payments to merchant payments to distribution of financial products. And we've also scaled the revenue three times and we have grown profitable. So for our last financial year, which ended March of 2024, we have done a revenue of $111 million US.

And on that we have delivered in a bit dull four and a half million dollars. So we have done profitable. We are the only profitable fintech in India today, so I believe that is helping us garner into ten profitable, but it is a small profit. How do you ensure that you build on that profit? What is the strategy? So good question. I think India is a very large time for financial services. You know, we are a country of more than a billion people and while we have bank accounts for 50 million Indians in terms of financial products have only reached about 100 million Indians.

So there's a lot of opportunity for us. We have grown this past year about 59%, and we intend to grow about 50 to 60% for the next two years also. So how do we do that? We scale our platform.

So we are currently at 161 million users, but last many years we've been adding anywhere from 15 to 20 million users every year. So we scale up in terms of number of users, we scale up in terms of number of merchants. So therefore we scale up the existing products in the payments portfolio, consumer credit, merchant credit portfolio, and we are also bringing new products to the market. So just this year we have launched a very exciting new product called Pocket UPI. This is the first product in India where you can use wallet to pay on the entire UPI network. So all for all your daily life payments, you don't need to clutter your bank statement. You can pay from a wallet, keep your

bank account safe. And, you know, this is giving us a lot of growth. Just to give you perspective, as per the RBI published data, our market share went from 11% to 23.9% between March to August of 2024 in terms of the total spend happening on the wallet platform.

Well, the thing is your persona, you can't charge for your UPI transactions. How then do you make money? You write, you can't charge for the UPI transactions, but as part of the payment spend, there are also wallet transactions. And interestingly, you can charge on wallet. We charge in MDR anywhere from 1% to 1.4% to the merchant, and that forms our main revenue stream. There are some use cases where the user is also paying a convenience fee to use credit on the network. On UPI, we have very interestingly, we are going to launch a Diwali Rupay card in participation with Npci and the State Bank of Mauritius, and this Rupay card also has an MDA and these two products pocket UPI and our RUPAY card, it's called the first card, the first card for every Indian. These will help us scale in the UPI

market share and also on MDR while doing so. The thing is, as you plan to list, there's greater scrutiny of the company as well. Are there changes that need to be implemented at Mobikwik? So currently Mobikwik has five licenses. India is a well-regulated market, three from the Reserve Bank of India, one from the Securities and Exchange Board and one from the insurance regulator. All these licenses. While monthly reporting and annual

audits and inspections. Currently, we are up to date on all of our licenses. But yeah, as of seeing the company, we have to be adaptable and we have to keep improving on our compliance structures. As for the new notifications that keep coming from our regulators, it is a highly competitive space. Paytm, Google are all playing the same

space. What's the strategy to, I guess, fight with that with this place? No, absolutely. So I think our play has always been to a focused company from a strategy perspective, instead of trying to do this that in every business in the payments space. You rightfully said that as Google, there's people that are at those and many of them have focused on vanilla UPI growth, which is paid from your bank account to any merchant where there is a QR code. Our point of view is that this whole vanilla game has been done to date. So the only way for us to make a dent in

the market is with differentiated product offerings, which is why I mentioned our pocket UPI offering where users paying from a wallet, not from their bank account on the European network. Nobody else is doing this, and the card that we are launching again is a very differentiated offering and none of our peers have yet done that. So our view has always been to innovate and bring a stronger value proposition to the user instead of building the business on the back of incentives and cashbacks. And we look forward to your IPO and you

have to come back on the show when that happens. Oupa Taku, Co-Founder at Mobikwik. Quick Well, we're still counting down to the India Open now in just under 5 minutes. Here's how it's looking ahead of that open Sensex index, pointing to a lower open down 2/10 of 1% at this point in time.

Nifty futures that you have it currently down about up about 4/10 of 1%. And coming up, we're heading to a high tech day in Taipei to speak with the Italian auto designer that collaborated on the firm's foray into a crowded EV market. This is Bloomberg. Taiwanese industry giant Hon Hai is holding its annual tech day in Taipei. The company best known for assembling Apple iPhones is ambitious growth plans in the growing every as well as air spaces. Reporter Annabel Julius looks at the challenges ahead.

iPhones that Kindle, Nintendo, switch, even ring doorbells. Foxconn is making these and more assembling the devices mostly in China has allowed the company to build an enormous business, generating nearly $200 billion in revenue last year. But the market for many types of electronics, and particularly smartphones, is maturing.

Foxconn wants to move up the value chain to products that generate better profits. Air servers is one area where it's making progress. Sales have risen as Foxconn works with the likes of NVIDIA, Microsoft and Amazon on artificial intelligence infrastructure. Semiconductors is another field with a focus right now mostly on older, less sophisticated chips. At present, these mostly go toward in-house needs, including EVs.

This is an additional space where the Taiwanese company wants to compete with a value proposition similar to what it once told Apple. Foxconn can build part or all of your car in less time and at lower cost. We believe this contracted and design manufacturing service goes smoothly as smartphones, laptops. So we will have 40 to 45% much slimmer features. Goldman Sachs says outsourcing could be worth more than $140 billion by the end of the decade. But with Foxconn still to sign on a major customer, its grandest auto ambitions are yet to be realized. All right.

Let's show you pictures of that on our annual Tech day that Annabelle has been talking about. Lots of excitement there. We're looking at live pictures there where Foxconn's CEO is presenting on stage. It is showing its new models, which it hopes will do well, unveiling those new EV models, a collaboration perhaps with Pininfarina on that EV model. Let's get back to Bill. She's standing by in Taipei with a man who runs a car designer, Pininfarina, which partnered with Hon Hai for its new event. Bill, thank you.

This year has you really could not have done this better, actually, because it got the model data's being unveiled on stage. I've got the man here who is behind the design of it, the CEO of Pininfarina, Silvio and Glory joining us. So I want to talk about that process of working with Hon Hai on this. How many months in the making and what sort of design features are you thinking about here for this vehicle in particular? Well, what you see when you design a car such as this one, it takes a not that long because the idea was very clear since the beginning mission, obviously for intent of the vehicle, the technology that has to be used, the service that we wanted to offer and the experience, most important, that we wanted to offer to to the engine. So it has been a very honest journey,

very short journeys with use, but is something that we're used to we don't win hearts over yet. So when I get more on that, that sort of timeline, because we spoke with a man who's leading the efforts and on my side, that's true. And SECO and he said that he's gonna want things in a very short timeframe, like we're talking about months here. Yes, Yes, we talking about months because as I said, once the idea is clear, it doesn't take very long. It may take three months that you have the first model, the clay model. So something that would enable you to evaluate proportions and volumes and so forth.

And then normally after six or seven or eight months, you have the first prototype running. This is a very, very big project that Hon Hai is taking on in the EV space. It's an extremely crowded market and there's a lot of expectations on this particular business unit to be able to drive on high into the future, figuratively and literally speaking. But, but the various how, how, how different are these vehicles for the consumer? Is there any point of difference that we're seeing here this. Well, you see what the what I think is going on here in this market is going to be an ability of the user, you know, in this case, products that will be in the millions per day. And that is the major difference, I think, because of his speed and that on high I've gained in the consumer electronics blog is massive and he's making is going to be making a difference in this there's no doubt this man manufacture this great ability of thinking through the use of capital intelligence in his manufacturing.

These are all elements that are making a major difference in the market. It's really leading into this space. So China. How much do the carmakers at outside China need to need to catch up? Really, when it comes to the technology and the business of these cars? Because the innovation in a way is also being led by the mainland market. That is very true. I think you see China is leading the path. No way, no, no doubts about it.

But the train has left. The station, as we used to say, needs a living. So that means that they can be stopped and therefore everyone has got to get out. And that technology is in no doubt. I think it is The future of the world is relying very much even only led to vacancy notification in general terms.

It might take a bit longer than expected, but we will get there. What area specifically do you think that any makers outside China need to catch up on? Well, certainly on the battery technologies, charging infrastructure, recharging, that is going to be critical because people still have in their mind heart though, of recharging on time to easy autonomy and increase of autonomy as well. That is going to be an issue, in fact. But I think for everyone Street and certainly the new network of infrastructure will again be very relevant. There are certain countries in Europe that are still far behind and they need to catch up if they want to adopt and respond to the market, to new market needs.

Additionally, I think what is going to be making of that is going to be and making a big difference is cost, the cost of the vehicles. China also I wouldn't say less expensive, not cheaper, but less expensive than other brands outside of China, which is I think where the Western world has to catch up on, cause this is this is an area where Hon Hai is saying that it can actually give an advantage to other businesses because they're essentially saying, well, we could do it for PCs, we can also do it for vehicles. Do you see that argument making sense? Yes, it makes a lot of sense because it is the way in which you define the manufacturing process that is going to be different. Think about the mega presses that were announced few years ago that now everyone is adopting. So you have these gigantic prices that are placing stamping cards, diminishing the level of complexity of the tooling and of the manufacturing process itself. This is where you take out house in the process.

And I think that whole notion, my own experience, but what I've been able to see, they are mastering all these technologies. It is incredible the number of patterns that the online processes and demands have. Yes, that is going to be making a difference. You've got to play it at sort of both

ends of the market because you're talking about sort of the lower end. But the Battista brand, which is have been a Barina one where vehicles are selling for billions of euros. What sort of demand do you see at the top end of town? Well, you see what I think that the market is going to be polarised and there will be the cars to be used over weekends and there will be cost of use from Monday to Friday. And the service that E-mobility services are going is going to be different because of the needs of people. So do always be the market for the high

end segment of the market. But this thousand lives and the lives and instead of the market, the cars that will be serving the very, very simple purpose of moving people. And you see people want to use you get through an experience why they use a car. This is a is where the designers will be making a difference. And this is where the world is changing for us. Maybe your own, though, is is an Indian company Mahindra? Are you planning to do any of the construction of those vehicles inside India? Are you looking at expanding your production base there as well? Well, we are Pininfarina, producing only a few dozens of cars per year and then we will make them in Italy where the craftsmanship is at the expense. From an Italian brand.

They want to have that as a possibility for the. Makes sense. Last question around this, and you were talking about sort of the Monday to Friday.

I'm wondering what your view is on the rollout of robo. What? When you think about, I've done almost. I think the replacement option would be rather. And it would be those in commercial April.

I do think that there was. Corey thrive on this kind of roads. At the beginning, I think the we will be safer if we will use the. All right. So thanks so much for your time. That was so bad for you.

Has that behind it going to bring in the CEO of that company and the one that's also been designing some of the cars? And I mean, I'm back here today at High Tech Day, right? I mean, for me, that bell, we know that it is behind those designs of those dream cars like the Ferrari, Maserati, Rolls-Royce, as well as the Cadillac. Of course, we're looking forward to that interview with Hon. Hai. Chairman Young, new, plenty more ahead. Keep it here with us. This is the man. Let's take a look at the benchmarks in Hong Kong. Under pressure, the housing index, by the way, set for its worst day since inception. Each state currently down by more than

8%. Housing also under pressure, down about 6%, along with China, eight shares down by 6%. Of course, traders assessing the recent rally, that messaging from the industry as well. Also, the tech sell off overnight in the US all weighing on those benchmarks in Hong Kong on the back of that.

China back from that golden week holiday. There's been manic movements in the stock market there after gaining as much as 11% at the open. The CSI has given up some of those gains. Of course, if you want to track

movements, do go to t live. Go and keep it here with us. This is Bloomberg.

2024-10-09 04:42

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