shanghai. welcome to bloomberg markets: asia. u.s. futures gaining along with asian chipmakers as nvidia outlook reinforces optimism for the global ai boom. korea unveiling a $19 billion of funding for their own semiconductor industry. and anglo american agreed to talks with bhp, and what could become the biggest mining deal in over a decade. and the outlook for china's summer vacation season and the outlook. let's get you to markets. avril home, it is about ships. -- chips. >> there is a push and pull in terms of monetary policy and

earnings from nvidia delivering on the monetary policy front. we saw how the fomc minutes came in more hawkish perhaps more than powell led on during his speech and that is bringing a resurgence in the dollar and putting pressure on asian currencies, particularly on the chinese yen. pboc seems to be leaning in. they said that six at the weakest level since january, allowing declines. we see the korean won under pressure no thanks to the strengthen the dollar but it mostly held steady after the bok kept rates unchanged as expected . yen has been moving up towards 156.9 earlier the session, i want to highlight what we see in chinese equities, it declines on a day where other counterparts are gaining.

there also concerns about geopolitical tensions. hang seng leading declines dragging the index down. csi three hundred, material stocks but as you say it is about nvidia and about how even though there was a high bar, it really delivered on what we hear from the ceo, it sounds like more is to come. >> companies and countries are partnering with nvidia to shift the installed base of traditional data savers -- data centers to consolidated computing and build a new type of data center, aia factories, to produce a new commodity, artificial intelligence. >> all good news for asia chip making stocks.

it is green on the screen, in particular for tsm bc -- tsmc who exclusively makes into videos ship and it could help -- who exclusively makes chips for nvidia. something we also see is south korea unveiling a 19 billion dollars support package for the chip sector. more than double what was proposed a couple weeks ago and it goes to show how important it is that sector is for this industrial revolution and it comes at a time where governments from the u.s. to china are bringing in more monetary support, financial support to attract or support the industry. samsung was flat when news came out and is getting a fair bit of gains now.

>> that story is not going away. let's get market reaction to the news out of korea and nvidia with the director of asia active research who joins us this morning. lorraine, when you look at the forecast from nvidia does justify the rally we have seen in chips so far? >> yes but not just nvidia or the ai space. inventory levels have normalized and we expect a smart phone replacement cycle to add a further boost in 2025 so we expect margins to start expanding again for these companies and that is good news for them. >> so there is still value to be had in the ai space. nvidia up 90% year to date.

surely others will play catch up. >> in terms of valuations we are a little less enthused by some of the other names but we continue to like in video for the most part, as an industry leader it has a platform that will benefit it and in that respect if you are looking at who benefits most from the ai push it is still nvidia. as far as we are concerned in terms of value and where value goes we still like chips first and we do not think nvidia is overvalued so there is still room. >> give us a sense of where we are in the chip cycle, ai cycle. a lot of questions being asked. how much more upside and surely a correction is coming. >> i think if the numbers, on

the chip side there is still upside because we are looking at industries that are supportive to the sector coming back off excess inventory levels that have since been absorbed. so that will be a prolonged benefit for the chip names and we like a few of them going forward but i think for the ai side, this is a multiyear new industry growth we are looking at and i think that if you will be exposed to the space, we tend to like industry leaders. where it is headed is obviously we have secondary names like baidu and china looking at this space as well. whether or not it will lead, we

are probably not seeing that much yet either but ultimately they will be new growth drivers. >> it is a competitive space. korea not to be outdone announcing a package for the chip sector. does it move the needle and make the likes of samsung an attractive play? >> we already like samsung electronics. we think it is relatively undervalued at the current level . we expect an uptick in the cycle to benefit from that so regardless of the additional support from the government, which is always positive, we do not wanted to be the other way obviously, but we do -- we didn't have reasons to like samsung prior. >> let's look at that china and

hong kong where we see some recovery with hong kong doing better than china. chinese stocks trading in both markets. how are you assessing how appealing they are? >> we think there is still a lot of value in the china names and hong kong stocks as well. i think where we should be cautious are the places with excessive exposure to geopolitics and stick to names that are pretty safe within the domestic area so we are looking at names that have been sold off because of consumer concerns. we expect that to recover so the sectors would like to pick up now is [indiscernible] relative to some of the best known names.

we have tencent as one of our topics now. the more conducive regulatory environment towards the gaming space definitely should help tencent along as well. >> a lot would depend on the guidance and earnings. what do you anticipate the numbers to be in the coming quarters? >> if you look at macro concerns, obviously the market will be driven by what is going on with interest rates in the states. we expect the pc numbers which is what the fed will probably look at and that should start coming off in the third quarter and i think that should give more flexibility for the fed to cut perhaps it can, maybe 25 basis points in the third

quarter were -- third quarter. probably base case right now. in terms of where china is headed, there is still a lot of excess inventory in the real estate space that needs to be absorbed so what the policies being introduced will help, we think china will grow so it is still decent on a relative basis compared to other large countries but overall there are still concerns with access capacity in certain industries. >> lorraine, thank you so much for your insight today. still ahead, we speak with the founder of an indian private equity firm and hear about their investment strategies after raising the country's biggest

ever pe fund. but first, the group ceo of tree.com -- trip.com coming right out. this is bloomberg. ♪

>> welcome back. china's economy might be facing massive challenges but an exception is emerging in domestic tourism. the labor day public holiday's on 18% jump in trips in the country compared to pre-covid. it joining us is jane sun, ceo of trip.com group whose first quarter earnings beat market

expectations. always good to have you with us. do you think the numbers and recovery has been much faster than you first anticipated at the beginning of the year? >> yes. we anticipate that travel industry will capitalize on the growth of economy and also chinese people are very interested in travel around the world so we are very excited for the future growth in the travel industry. >> in terms of what to expect in the coming quarters, how will recovery be and what kind of pickup can we expect, especially for the domestic travel market? >> is growing very well since covid is behind us. we have seen enthusiastic travelers go around the world and also the visa restrictions for a lot of countries are being lifted, particularly for asia and gcc countries, australia,

new zealand, these countries are doing very well. there were a lot of air capacity being added to these area so we saw a strong pickup for travel. hopefully going into the summer we will be able to further relax the visa restrictions and add to flight capacity which would enable us to bring chinese travelers to the rest of the world. >> so a lot of optimism about outbound travel. the question is when outbound travel will get to pre-covid levels because expectations are not this year. >> based on our data the industry recovered to about 70% and by the end of the year the conservative estimate is that capacity will be recovered at

80%. for our team we will be able to recover fully to pre-covid levels because our customers focus on quality and are normally willing to travel around the world ahead of the mass market. >> we know the chinese consumers are pretty concerned about the recovery in the economy, a lot of them are saving more than they are spending. when it comes to the travel industry do you see a segmentation in the travel sector where some people are looking for value for money well the sector is doing as well. >> yes. 1.4 billion people in china. it is very big. so you can see every kind of consumer. the most expensive tour we saw pre-covid cost about 200,000

dollars, 80 days around the world and we sold out rapidly. we have also created older generations, this is the first generation after the open door policy by china right now they have money and also have time and they did not have to travel during the peak season so that generation now are willing to travel with a much more flexible schedule so our hotel partners, airline partners, valuable volume during the slow season. the young generation are very robust. 18% -- 80% of our customers were born in the 1980's or after. they are very energetic and focus on concerts, entertainment

so there is a lot of segments going into the experiential travel. >> what kind of growth do you anticipate the different segments? >> and aggregate growth rate of double digits for the next quarters and going forward we believe we can look at the gdp growth rate at about 5% and normally travel industry we are to percent to 3% on top of gdp growth and we will be able to outpace that number. >> we have heightened tensions between the u.s. and china. will that impact travel at all? >> i think people to people exchange is very important during challenging times. china already were last --

relaxed visa restrictions and trip.com has seen 400% growth for inbound customers from the rest of the world so travel serves as a bridge for people from different backgrounds, different countries. we are very committed to our mission while we are sending people further away we are bringing the world closer. >> so you are saying travel between the two markets is gaining momentum. can you quantify that? >> yes. the base is quite small after covid but we have seen very strong growth among different countries from china to the rest of the world and from the rest of the world into china. >> we are keeping a close eye on the strong dollar an impact on asian currencies. do you find your travelers are assessing where they can get the most value given where the

currencies are trading right now? >> for countries such as japan the currency is quite low so you see people from all over the world going to japan. china right now the currency is attractive as well. china has a duty-free island so this is the right time for people who are interested in exploring the histories and modern infrastructure to come and visit china. >> jane, always a pleasure to have you on the show. plenty more ahead. keep it here with us. this is bloomberg. ♪

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>> anglo american is entering talks with bhp after rejecting a third proposal, opening the door to what could be the biggest global mining deal in over a decade. martin ritchie joins us from shanghai to put it in perspective. it looks positive for bh p. >> that's right. the saga continues. we thought there would either be a deal or no deal yesterday but it turns out there is an extra week for the companies to talk. anglo american has agreed to talk to the first time with bhp who raise their also -- offer for the third time. that agreement to talk we think is important because it shows

that they are willing to explore the possibility of a deal perhaps that valuation that bhp is now offering is enough to get them to discuss some of the terms. it does not mean there is going to be a deal but certainly from the shareholders i have spoken to in australia and analysts they do think this is a step towards a deal even if it is not certain. >> the deal needs to get done. what will that take? >> it revolves around south africa. anglo american has a substantial presence in south africa with more than a century of history. that means what bhp plans to do with the assets is very important from a political perspective and their shareholders so the plan is

complicated. they want anglo to sale to the big south african businesses and then bhp would make that takeover. anglo does not really like that and they are going to have to find a third way. and i think their concerns are shared by some government figures in south africa. >> is there a risk bhp offers too much? >> i think this is something the bhp shareholders are obviously very sensitive to it well, they do not want bhp to overpay for a flagship deal, a deal that would perhaps satisfy the ambitions of ceo mike henry but destroy some

value. i think a lot of shareholders see great strategic value in combining bhp and anglo because of the copper assets. shortages are predicted in the future but they certainly do not want to do that at any price and especially with a transaction that is so complex and subject to a lot of execution risk. >> martin ritchie, thank you so much for those insights. let's check on copper, easing after going past the 11,000 mark and retreating from the record and profit taking demand dropping with bhp down 2.5% and mitsubishi materials lower by more than 3%.

copper down almost 3% as we speak and we are also watching asian military stocks on the back of chinese defense holding its biggest military drills in a year around taiwan, exercises coming days after the island's new president took over. north industries coming up by 2% . still ahead, new zealand central bank waste on chances for another rate hike one day after admitting it considered the move. this is bloomberg. ♪ and they're all coming? those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful...

...day to fly.

>> welcome back.

china markets headed to lunch on the csi 300 index trading close to session lows among the biggest laggards in asia. chinese stocks on the mainland lagging in hong kong by the most since 2011 and even as we speak we are watching the yuan in focus with pboc fixing it at the weakest level since january today, suggesting the willingness to see a gradual weakening of the currency as the dollar strengthens. usd, some say the fix is capable of jolting global effects unc seen as an anchor for the regional peers. 72432 a strong dollars story. nvidia earnings is the big story with bloomberg intelligent saying results confirm strong demand momentum for ai chips.

charles joins us from hong kong. what stands out for you? >> [indiscernible] a pause on consumers spending and we worry actually there could be some drawbacks from the [indiscernible] charade restrictions and [indiscernible] a new demand driver for ai chips

[indiscernible] >> what is the inspected impact on these results, including here in asia? >> [indiscernible]

[indiscernible] [indiscernible] [indiscernible] >> charles, it seems like everyone wants a bigger slice of

the chip pipe. korea announcing a package. what does it mean for competition in that space? >> 44 actually the actually incentive package [indiscernible] more for korean government to retain [indiscernible] >> charles, thank you.

it is about nvidia, korea wanting the slice of pie. let's get to avril home -- hong. >> south korean government coming through with more money for the sectors, providing a further lift for the chipmakers in the country that were already benefiting from nvidia stellar earnings, especially sk hynix. samsung electronics was pretty flat ahead of the announcement on how there will be $90 billion for the sector come up more than double what was proposed a couple weeks ago, really running on the optimism that this will help the south korean chipmakers be more competitive at a time when it is also facing rivalry from other asian chipmakers. the japanese chipmaking related

stocks are talking solid gains, two especially in this is helping the nikkei outperform today. let's take a look at what we see on the currency as well because investors have been digesting the minutes that came in a bit more hawkish than powell had been after his decision during the speech. we saw the dollar yen losing ground against the greenback and it seems to be recouping that. kiwi dollar has been in focus. we saw a spike yesterday after the rbnz said they had been considering rate hikes but from what we hear from their governor today it seems to be allaying some concerns with the kiwi dollars still gaining ground against the greenback. >> speaking of the rbnz the governor downplaying chances of another interest rate hike,

speaking with us earlier he said they would only tighten policy more if it needs to maintain inflation expectations. >> another rate hike would only be meaningful if we thought inflation expectations were getting away on us again, trying -- starting to rise because of the persistence of actual inflation. forward looking inflation is heavily influenced by the current level of inflation. persistence raises the risks that it doesn't do the job needed. >> i get that element will beach crucial but you said you have limited tolerance. it is the patient's running out? do you look at the second quarter is what makes and breaks the decision to go again? >> we are not going off of one statistics on our patients has not run out but we have a lot of

patients in our projection is to keep the official cash rate at 5.5% until early next year. we believe inflation will be back down at that point we can start thinking about normalizing interest rates. that is in our projection. the sticky prices i have talked about in particular the next quarter's have been well signaled and in the inflation projection so that could be something over and above it again to really surprise us. we think the risks are balanced. >> the governor from rbnz talking about patience. turning to india's elections, parties are accusing each other of illegal spending as authorities seize ballistic goods in a crackdown. let's bring in our reporter from

delhi. why is the amount of money spent , legal or illegal, on an indian election so very high? >> is basically the size of the electorate. you have hundreds of millions of people you are trying to where you -- trying to woo to get the votes. more than 950 million people and political parties have to get the voters to come to rallies and spend -- and they have to spend money on ad campaigns and every other kind of publicity campaign and in india a lot of the money that is spent is not accounted for. a very small percentage, less than 5% of the actual money spent, is declared. so it is actually about trying to get out the word and paying

all of it with cash, liquor, gold, drugs, whatever works. >> what does it mean for a party to use unaccounted money to fund a campaign? >> india is still a significant cash-based economy so a lot of transactions tend to happen in cash because it allows people to not declare that income for taxes. at the same time you will have individuals who do not want to disclose the amount of money they give to a political party or how much they gave or who they give to so they tend to give in an illicit way so the public does not know if and individual has donated millions

of dollars. we saw some of that come out when the electorate bond data was released and realized how much money was flowing to corporations. this is just another facet that has no data behind it, only the people giving and receiving the cash actually know what is going on. >> so what has been the response from authorities, what have they done to limit the flow of cash? >> the watchdog we have, electoral commission of india, works pretty hard to catch these unaccounted money transactions going on. they have check posts on major highways, they have people waiting at the ports, at airports, they search helicopters as politicians try

to reach rally points. but the size of this country and the population that exists here, it's almost impossible to actually capture every transaction taking place, especially when it comes to rural india and how the money flows to voters through the polling booths, through the workers working on the ground. what india needs is comprehensive laws that would curtail how elections are financed in this illicit way. >> thank you. still ahead, who dora capital shares their outlook on india's private equity space and after raising the biggest ever pe fund for the country, the founder will join us for an exclusive interview. keep it here with us. this is bloomberg. ♪

>> welcome back. india starts trading in a minute and futures pointing to a flat open. we are watching itc enter globe aviation, companies that will be out with earnings.

also watch the indian ruby, -- rupee. private equity heating up in asia. investment giant set to be exploring a possible buyout of group group. others are hunting for deals in india. local player could are capital raised a record $1.7 billion to put it on par with global players. joining us is the founder and managing partner. good to have you with us. $1.7 billion is massive. how will you put it to work? >> thank you for having me. i really appreciate it. india is a big market. as you have seen a lot of people

-- the second-biggest market after the u.s. is india so the depth of the market, what has happened is the market is supported and that is why we have been feeling confident we will be deploying this across nine companies [inaudible] >> how long do you think it will take you to deploy $1.7 billion? >> we assume we will do three or four deals a year and that was what we have done in the past so we feel the same this time around that three years from now we will [inaudible] >> what favors india in

comparison to the other asian markets, what advantages does india have? >> that is a very good question. it is a large growing, the nominal growth of the market [inaudible] [indiscernible] one is large growing market. we are already a domestic consumption economy. geopolitical position india is relative to other markets and up -- and india has strong demand and large strong exits and the depth of the market has surprised everyone [inaudible]

a huge positive for the whole industry. listed alone is 6500 to companies -- >> what is your exit strategy? >> we believe focus on building good companies usually happen but the focus has been plan the exits when you invest so do not focus on the [inaudible] so we start working on exits the moment we start investing and it is typically five years [indiscernible] we have listed a lot of businesses on the exchange and benefited from the markets of exit and static[]

>> the pe story is strong. who do you think are the biggest beneficiaries, the global funds benefit the most? >> i would say if india makes money they have invested in all kinds of funds in this market, everybody is in india and if you take any global private equity funds they are in india and singapore so they are designing [indiscernible] i feel if you can build a company with the enterprise value it is a great exit story [indiscernible]

performance is the underlying important benchmark. >> performance on returns. with valuations so high what do you make of that and what do you make of the performance and returns they can be expected? >> it's the number one question everyone asks. you have to look at consumer and valuation of ai and then start thinking we can create a platform and build on top of it so when consumer was very high a few years back we did a lot of packaging businesses that benefited from the same demand but at the same time if you look at other sectors like financial services and tech services i would say they have been bedrock of making, [indiscernible]

you have to be careful on where you invest with sectors because that to me is going to help build the returns. valuations are high but you have to look at some of those sectors which are not trading as aggressively and basically see if you are comfortable in those sectors so [inaudible] >> where can bets go wrong when investing in india? we kicked off the year, making all sorts of assumptions when it comes to the fed, the economy, and they have all been wrong. >> i used to always say [garbled audio] it looks like it could be an interesing growth story. what could go wrong, geopolitically any big event could be a big setback. valuations are high.

buying at these prices you have to be careful. but i personally think we can make a lot of money and i would say you have to be very careful [indiscernible] it is important to assess the counterparty. very positive on where the country is but just be careful of where you invest i think is the only thing you need to be careful of today. >> thank you so much for your candid comments. india has been trading for seven minutes. let's look at the benchmarks. asia is having a tepid day down three days in a row pretty much

unchanged for the index as we speak. nifty bank index firmly in the positive up half of 1%. plenty more ahead. this is bloomberg. ♪

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>> a lot for markets to digest. asia down a third day in a row. hang seng leading down by one point 5% by gains for the nikkei and sti and kospi and it comes to the bok standing pat but bok said they will keep restrictive starts for a sufficient time and core inflation likely to be 2.2% in 2024 as projected the timing for rate cuts uncertain according to the government but the potential for rate hike is pretty limited and its expected inflation pressures will ease in the second half of the year. let's look how the currency is doing at this point and that ship stocks nvidia is front and season -- chip stocks, nvidia is

front and center. ai computing remains strong. tsmc getting a lift. it is also about korea and the $90 billion package to boost the chip industry. it is getting to be a very competitive space and this is how it is looking, a strong dollars story, the dollar index flat, korean won 136 and the chinese you want 72537, the fix the lowest since january. that is it from bloomberg markets asia. this is bloomberg. ♪

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