It is 9 a.m. in Shanghai, Shenzhen, and here in Hong Kong you're watching The China Show. I'm David Inglis with Yvonne Man, who is in the Indian capital for the third and final day of the Bloomberg New Economy Forum. We are counting down to the open of markets in Greater China. Let's get to your top stories today.
The rout in chip stocks extending to the Asia-Pacific after $1.6 trillion wiped out in the U.S. due to worries over AI spending. Now, traders are also ramping up bets for a Fed rate hike, or rate hikes, plural, following hotter-than-expected U.S. inflation. Now, researchers uncover rogue AI agents, and Tencent's cloud service is targeting rival Alibaba. It's adding to safety concerns around the rapid pace of development in the technology. And India's education minister defends the nation's elections chief, saying he's doing a wonderful job amid calls for him to resign. We'll have more on that conversation out of the Bloomberg New Economy Forum.
And I'm April Hong at the IMF and World Bank annual meetings in Bangkok, where policymakers are looking ahead to tomorrow's remarks from Fed Chair Kevin Walsh. Ahead of that, we'll be speaking with RBNZ chief economist Paul Conway and HSBC Corporate Banking CEO Michael Roberts.
Well, Dave, it is the final day of the New Economy Forum here in New Delhi. And certainly things are going to be quite interesting here today, just given what we're seeing across these markets. Right, that hot inflation print, the U.S. is really kind of roiling this whole rate hike trade here at the moment, but certainly a lot of kind of repricing here when it comes to the front end of the curves overnight on whether the Fed needs to continue to hike further either this month or maybe the next few months or so.
Yeah, we did see, I mean, markets had to adjust, I think is the point. You are getting a higher probability now of a hike, possibly before the midterms, although the base case for most remains, of course, one more, at least one hike over the next four months or so. But certainly the chances of getting to a slightly higher rate now. I think I just want to point to the note coming from our folks at Bloomberg Economics that say, while the headline is obviously grabbing all the attention, look at the breadth of where inflation is coming from. It doesn't really underscore as much urgency to hike interest rates, I think is the key point. And I think the other thing we want to point out is amidst this sort of rout across risk assets, you also had, of course, the core CPI issue plus the $0.10 issue as well. So all those are actually contributing to these losses we're seeing across, whether that's long-duration assets or momentum names or AI and all of these conversations.
Right. I think just one other thing I'd point out.
Right. So we're obviously covering a lot of things from many, many places today. I'm here in Hong Kong where we are likely also going to see some pressure coming through, maybe not to this extent across markets in Hong Kong. We are in bear market watch, of course, for the CSI 300 at this point. Number one, of course, we're on is not a good conversation there where April is in Bangkok and, of course, will be joined later on by a colleague who is normally based in the U.S. Lisa Abramowicz, of course, will be here in the Asia-Pacific. Kevin Walsh, he's actually speaking out of the Asia-Pacific. And it's really his speech, Yvonne, that's going to be telling in whether or not he gives in to his own policy of not giving too much forward guidance and how much really the market needs clarity from him given the data that we have. Yvonne.
And he's going to be speaking in the middle of the Asia session. So we'll see how this all plays out in Bangkok tomorrow. But as you say, right, you're starting to see that repricing underway. I think the odds of an October hike are now up, I think, 50%. And we're about maybe here. They basically fully priced in for a hike for in December. So certainly that's going to be really interesting.
Hi. I was just looking at that stock. It's down some 10% right now. You're seeing quite a bit of pain when it comes to the Kospi here this morning. TSMC, we'll see if that does anything to improve sentiment when they report some numbers and results are coming up later on as well.
Right. But you are seeing a little bit of repricing here, but like 2% losses for the Asia-Pacific here today. It's going to be a good jumping-off point from what we hear as we wrap up the New Economy Forum.
Here in New Delhi, I want to have a great conversation about AI coming up with Gary Marcus. He is probably one of the more, I guess you could say, the scientists that are talking about the AI dangers out there when it comes to safety. And he's always been talking about when it comes to some of these AI models, they need to be at least paused or recalled, almost like a car recall, until we have proper safeguards in place. When I ask him a lot of questions about what this means for the U.S. and China, I raised it, particularly now that China seems to be catching up in some ways to OpenAI. We had some guests in Europe talking about, you know, because open-weight models might be a bit more risky than maybe the ones in the U.S. So certainly there's a lot of debate on that as well. But yeah, it's interesting to talk about the India side of things.
Right. We did speak with the Indian education minister. We shot a bit of clips up there about just what's going on on the ground here in New Delhi. And he had some pretty interesting things to say about, you know, what is going to be happening in the plan next when it comes to the education sector after what happened during the summer. Right. These protests that were led by students over this exam leak, which ultimately led to his predecessor to resign. He is now stepping in with multiple sort of jobs in his portfolio to kind of come through with some reforms. Here's what he had to say.
Why he should resign? He's doing a wonderful job. Why he should resign? Because he's it. What do you mean by that? It is the cleansing of the electoral rolls. When he is cleaning it, no question, because it is approved by the not less than the Supreme Court of India. That is the highest court of India. There's no question on that.
So he's talking about here about what's happening, the latest protests that have happened in the last few days. Right. These are the protesters that were talking about the revision of these voter rolls. Right. And they are demanding for the chief election commissioner to resign. He says he doesn't need to at this point here and says, look, he's doing a wonderful job. So that is sort of what the stance is from the government here in India. So certainly that was quite a telling interview. We'll bring you more of that coming up. But we still got to bring it back to the Fed this morning, Dave.
Yeah. What are they going to do? Right. What do they need to do? What should they do? I mean, maybe two separate questions. I mean, investors, when you look at FX markets, and it's interesting because everyone's obviously focused in on the U.S. dollar. And at the start of this week, by the way, we flagged that the yellow line you see on your screens was a level to watch being breached, that level past 110. And as we can see, we pulled back a little bit from that point in time. We did touch 2025 highs in this. But what's interesting about this dollar breakout is it's not coming at the expense of some Asian currencies. You know, the yuan has done well. The Korean won has done very well this year. The dollar is actually there. MAS, of course, held policy this week. Right. So it's really context that matters here when you look at this dollar breakout. And, you know, what do you buy the dollar against is a key question. And do you assume that the Fed does need to hike interest rates even by one more than is currently priced in these markets? Let's put those questions to Charlie Lo, FX and rates specialist at LGT. Good morning and very nice to see you.
How hot was the inflation print in your view?
Well, certainly it was above expectation and a level that the Fed is comfortable with. So it brings back, you know, the October meeting. Now, I still think that the base case for us is a December hike rather than the October hike. Now, of course, we still have the PPI data tonight. And then also retail sales, the Fed will take that into account. And then as you start going into Chair Powell's meeting tomorrow, what is he going to signal? And it's going to be difficult because we always know that he's against forward guidance. And so how to balance between, you know, the fact that he'll still be very much focused on inflation on one hand and, you know, not giving you a clear signal whether October is the meeting or the next hike will happen. Now, what I always say is that the fact that market pricing, you know, for the October hike went up to about 50% overnight, but they pulled back and I think it's around like 30, 35% now. It means that the market is not forcing the Fed. Right. If the market pricing is 80%, it's going to be difficult to disappoint that. But at the moment, I think it's still a close call at the moment. So we don't, the jury's still out, let's put it that way, as far as October is concerned.
You guys have a tactically bullish call on the U.S. ten-year. Tell us why you have enough certainty to make that call at this point.
Yeah. So last week we entered a tactical bullish duration on the ten-year when yields were 5.3%. I mean, obviously the CPI does complicate the near-term picture a bit because it brings back the October Fed meeting into consideration. I guess it's always difficult to catch the absolute bottom in the market. But if you look through the near-term volatility, we do think that, you know, when you look three months or six months down the road, yields are more likely than not to have a retracement. And we're not looking for a big move here. I'll take it. It's between like 30 to 50 basis points. So for the ten-year to go back to the 4.8 to 5% range. And why do we have that conviction? I think two factors. Number one is that I think rising yields are already tightening financial conditions. And so that weakens the interest-rate-sensitive sector of the economy, robust housing and consumer durables. And what we had overnight with the equity market is interesting because to the extent that rising yields start to weaken equity sentiment on a more sustained basis and you have that negative wealth effect for consumption as well. And the second part of it is that while inflation is hot, the labor market is sending very different signals. We look at wage growth year-to-date has decelerated at a faster pace than 2024, 2025. And so the labor market is not telling you that it's a very worrying medium-term inflation picture. And maybe that we are not in a state of the world where AI, you know, displaces jobs, but maybe it is constraining wage growth. And that at the end of the day limits how far they can hike. And one last thing I would mention is that I would watch closely the Treasury questionnaires to primary dealers that will be released this week on Friday ahead of the November 1st quarterly refunding, because that questionnaire will give you some sense of, you know, what is the Treasury plan? Is it going to be reducing some long coupons, issuance increased by bills? We have seen quite a bit of noise in the market recently about a potential more drastic action to cancel the 20-year papers. I want to get your take on that.
Yeah. You mentioned about being a bit more, I guess, bullish or extending duration in the ten-year in the U.S. Are there other sovereign curves that you're looking at to extend that duration? And how concerned should we be looking at what's happening in Europe right now here?
So I think Europe is another market that's interesting from a duration perspective, but I would want to be very clear that this is a very tactical call on a ten-year. We're still cautious on longer durations beyond ten years. Now, going back to Europe, I think on one hand, we do think that the fiscal and political situation in France will weigh on the euro performance and Europe sentiment in general. But on the other hand, I think we need to put it in perspective. And I think the environment today is very different from 2012. And that's different in three key elements. Number one, growth is a lot more resilient now. And we have German fiscal expansion to offset some of the tightening elsewhere. And this is very different from 2012, where we basically brought back a fiscal consolidation that pushed growth into recessions in Europe. The second part is that the European banking system is well capitalized. So we cannot draw the link between a sovereign crisis directly to a banking crisis. And the most important part to me is that the ECB has a backstop. It's not going to activate the TPI at this level, in our view. But the backstop is available, and it wasn't there until very late into 2012.
Interesting, interesting. We're getting back to those levels of 2011, right? The difference between a banking and other types of crises. I want to ask you two about Asian FX. So whether that's your call on the Chinese currency, and feel free to get into the details of that. So my question is, despite amidst the dollar's strength, why has Asia been okay?
Yeah. So for PBoC, for the RMB in particular, it is purely a policy decision. So we had that very detailed paper from the PBoC last week on the exchange rate. And I think the clear takeaway from that paper is that China doesn't want RMB to be used as a bargaining chip in trade negotiations, and it's not open to rapid revaluation. But at the same time, I think the behavior from the fixing says that the PBoC is still open for greater appreciation. And I said that because, you know, the fixing on the dollar-CNY fix has resumed a downtrend since September. And when you look at the betas of dollar-CNY fix to DXY, the beta is year-to-date negative, which is a very rare occurrence. It's quite simple. So basically it means that DXY has been going up while dollar-CNY has been going down. And this divergence we have not seen since 2000 and early 2022. All, you know, back in 2012. And so the message here is that they can tolerate greater appreciation. And my view is we get to about 6.60 on a six-month basis on dollar-CNY. There's some downside risk to that. But I think we're probably looking at 6.50 to 6.60 range rather than something sharply lower. And the reason is, I don't think either the wide environment or China domestic demand is ready for very fast RMB appreciation.
So my other question is, yesterday we had the trade numbers coming through. And you look across the Asia-Pacific, these exporting economies are exporting. I can't remember the last time you've seen this export engine chugging along. There's this. Well, what does it mean for Asian FX on the one on the Taiwan dollar and across the board?
Yeah. So we've seen Asia FX being more resilient. RMB, the Korean won, and the Taiwan dollar. I mean, the Korean won seems to be trading on a very different dynamic with the equity market as of right now. And the fact that you have a very strong trade surplus and seasonally positive in September-October period certainly add to that. And I think more broadly, when we come back to the dollar view, the fact that growth is not just limited to the U.S., the fact that we've seen growth quite broadly across the market, you know, across the tech export economies, that's also part of the reason why we're reluctant to be very bullish dollar on a broad outright basis.
Probably I got to ask you about the rupee because I'm in India. We bounced off of those record lows after that intervention from the RBI. Was that just a tactical move? Does it change anything? It's bigger picture.
Yeah. So, I mean, I guess a policy signal is clear. On my views, it basically saying that 97 is a line in the sand near term. But from my perspective, I think the measures probably provide a near-term relief, but not a trend reversal when it comes to the INR. And our forecast is still for 96 in dollar-INR in 12 months' time. Near term, I guess we can be in the range of, you know, 94.5 to 96.5. I guess the fundamental has not changed. We still face, you know, a rise at a high energy price environment that is negative for India trade balance. We also have, you know, rising inflation recently. And even with the RBI hike, real rates, it's not negative. And on top of that, you have the structural concerns where India just doesn't quite have as much exposure to it as elsewhere in Asia. So I don't think that RBI measures change that. What it does say, though, is that the RBI is moving somewhat away from a heavy-handed direct FX intervention scheme to really like more on macroprudential policy. And it has good and bad in my view. The good thing is that, you know, FX reserve is never unlimited. So relying only on FX reserves, the market is going to question your credibility at some point. Macroprudential policy has better staying power, and the expertise of that foreign exchange risk reserve is something that the RBI borrowed very directly from the PBoC playbook. It has shown to have effect on FX over the short term. But then the question is, if it affects broader hedging cost and market liquidity, then it may actually dampen foreign investor sentiment rather than, you know, encouraging the return of foreign flows.
Okay. If I had space in my arm, I would tattoo macropru, but I don't have space on that. Charlie, thank you so much. FX and rates specialist there at LGT. As we were just talking about here, the reference rate is 60, 72, 53 for it. Today we're looking at the sell-off, continuing to monitor the absolute collapse we're seeing in the equity markets. Case in point, down 11% in Korea. Apart from that, we are in bear market watch as we go into the Chinese open today. We're about 4% away, call it two or three bad days away on the CSI 300 from crossing a threshold of 20% down from a recent peak. On top of all that, Yvonne, lots of guests and conversations, of course, taking place from where you are today. Tell us more, Yvonne.
It is the last day of the Bloomberg New Economy Forum, but that does continue. Doesn't mean that we're not stopping when it comes to the amount of guests coming through. What I speak to Gary Marcus, he's a prominent AI critic here, the co-founder also of Indian renewable energy giant Suzlon and the head of the U.S.-India Strategic Partnership Forum, plus former ECB president and former Italian Prime Minister Mario Draghi joins us in conversation later out of the day. We have much more ahead as we count down to the open of trade in Shanghai, Shenzhen, and Hong Kong. This is The China Show.
Good morning. As we look at the damage across equity markets today, I'm looking at two C's. In fact, two C's, core CPI and CoreWeave. We've lost the other C's on your screens. There's moving up there on the back of what's really now caught up to space, underscoring this angst that's been going on in that part of the market. It's spreading as well, of course, across sentiment as we go into the session here today. SK Hynix, we showed you that 11%. Kospi's down about 8% today. Let's get the market setup right now with Anthony Stevens. Put this CoreWeave story in context for us. What has finally catalyzed in the AI trade? Right. For the longest time, we've just been navigating higher rates with growth from the AI supply chain. Now that growth is getting challenged because you're seeing existing hyperscalers come out with AI models that are gaining market share. That was the early worry. Then we had bodies from the likes of Broadcom talking about an AI investment bubble. So the market was really ready for this event to be catalyzed. Then we had this, you know, very decent, at least strong, U.S. CPI number. Right now we have a true rate concern. CoreWeave is at the center of this because they serve Anthropic and OpenAI in such a big way. Anthropic and OpenAI have started to kind of disappoint market expectations on the top line of growth and revenue, right? So today you see Anthropic error come through. Nasdaq futures don't stop falling. So the bar now is really on TSMC to kind of stabilize some things. I mean, that's a pretty high bar right here. I mean, look at what's going on in Korea right now. I mean, you see double-digit losses when it comes to Samsung, SK Hynix, and the like. What's going to kind of put a floor to that right now?
Right now we're in like a flow unwind, technical level kind of breakdown. Right. The locals in Korea and Taiwan were buying all the way down. And now they're getting a very significant risk check. We're also getting closer to the end of the year. Right. These two markets are both sitting on, you know, 50 and 70% gains respectively. So people are going to be running to take some of this money off the table before these concerns kind of spiral. In terms of the positive side of things, we do need to continue to see growth from Anthropic and OpenAI. It does look like they're in a pocket here where they've started talking about AI safety and less about revenue.
Anthony, thank you so much. Anthony Stevens, our market reporter, trying to help us understand what's going on with gravity today and risk assets. We're doing not as badly, though. Let's be going to the Hong Kong open today. We're down just 8/10 of 1%. Although it's that second ticker that I'm worried about on your screens. A50 futures don't normally show that extent of a move. And that's what we're getting. Six minutes to the opening bell. This is The China Show.
Fairly picture equities and the CGB curve. Yes, we are at 1.63, down about three basis points on the Chinese 10-year yield. So we are pushing even further into these lows, and we are set to join the sell-off across these markets. A50 futures are down, a CSI 300 is called lower, a further 70 points, let's now call it. We're about just over two, 2.5% away from current levels from entering a technical bear market on a CSI 300. We are looking at a sell-off across the region. The opening bell is coming up next. You're watching The China Show. Good morning.
All right, close your eyes, but we want you to keep watching The China Show, counting down the open of markets here today. But the sell-off is getting quite ugly across North Asia here today, and it seems to be spilling into the Hong Kong session. You take a look at when it comes to how things are set up in the pre-market and how futures are pointing to looks like China is going to join in on the sell-off here today after that hot CPI print out of the U.S. Dave.
Yeah, hang on to your wicks. It's going to be a wild one today looking at this open. We are nearing this bear market. I will get to that level in a moment. Here in the CSI 300, we are poised to open in about 10 seconds from now. Hong Kong is actually doing relatively better than the rest of the region, and I think the pain that we've had in these markets over the last, let's call it two years, because we are back to two-year lows effectively on many of these benchmarks, that's probably now going to be the blessing in disguise, because we are not seeing the same extent of losses that we are seeing in the likes of Korea. Although just to juxtapose that, and so to split the difference, the CSI 300 and onshore stocks have actually done relatively better compared to Hong Kong, and hence perhaps why we are seeing the catch-down story there. Not to mention, the data has actually also been on the negative side of things. So much so that you have BofA calling for likely some catalyst once we get the quarterly numbers early up next week. So suffice to say, sentiment might be nearing this inflection point where we might, if not already, be seeing some response here anyway. Hong Kong, as you can see, 8/10 of 1%. MSCI China, China's down about 1.2%. Hang Seng Tech, given, of course, the tech worries and all the conversations there. It's something to track very, very quickly. Now, can I also just ask, can we bring up the CSI 300 chart if we can, please? I want to show our viewers here how close we are to a bear market as we go into the tech stocks and the chip stocks coming up very shortly as well on your screens. And by the way, there's a separate story as well on the AI agents going rogue. We'll get to that later on and once we have more details on that. But as you can see, we're down just about across the board here. Chinese chip stocks coming up very shortly on your screens. We lost nearly over 1.5 trillion, of course, overnight. There we go. Okay. CSI 300. Okay, I'm squinting my eyes, but that looks to be we are down 18% from the highs, which might mean we're about 2.3% away here from entering a technical bear market. About 4% away before the open today. Chip stocks are coming up very shortly on your screens. Just to mention, too, that perhaps this also is not something that is perhaps moving agnostic to what's going on elsewhere.
Yeah. A lot of these, of course, are listed here in Hong Kong and up in mainland China.
You know what? When it gets this bad, the thing I do is I think about my ex, and things don't seem to be as bad anymore. But anyway, that's my escape. What's yours? Anyway, let's get it. Let's talk about inflation remaining above, in this case, the RBNZ's target range, keeping the central bank's policy path firmly in focus. That's my very strange segue right now to our other coverage taking place in Thailand today for the IMF and World Bank annual meetings, and April Hong is there with her next guest. April.
Thank you, Dave. Joining me now is Paul Conway, chief economist at the RBNZ. Paul, great to have you this morning. So my colleagues have just been talking about U.S. CPI. It's hitting assets, risk particularly. What do you see in terms of perhaps when you watch the inflation data out of the U.S. and how different or similar the New Zealand experience?
Right. Yeah. There's a lot of inflation pressures around globally, as we've been talking about this week at the annual meetings. Obviously, there's an oil price shock coming at us out of the Middle East. I think globally, there's also a huge investment surge into AI technology. And both of those macro dynamics are pushing up inflation globally and sort of having offsetting effects in terms of growth. With respect to New Zealand, obviously, we're feeling the effects of that oil price shock, but we're not, you know, directly sort of linked into global supply chains. So we don't sort of have the demand push from AI, which is, from an inflation control perspective, is quite useful. Obviously, not so good for growth. But we do have what we call excess capacity in the New Zealand economy right now, which is, you know, we especially in the labor market. Actually, the labor market is quite soft. Unemployment was 5.6%, which is obviously too high. But what it does mean is that the Monetary Policy Committee is, you know, reasonably confident that the increase in near-term inflation pressures from higher oil prices will dissipate, and we will get, and it will not sort of morph into more generalized inflation pressures because of that excess productive capacity. So, you know, we're confident that we're going to get inflation back into the band and back down to 2% by the end of next year.
So how much tightening would you have to do to get it back into the band then? Because you don't sound terribly worried at this stage.
Yeah. I mean, you know, my job is to worry about inflation. So I'm always going to be worried about that. We've done 225 basis point hikes so far this year. We've indicated that we might need to do another couple. And, you know, over the next year or so, we've been quite, in our last statement, we were unsure of the timing. So, yeah, we think the direction of the OCR is most likely up. But as to when, well, we've got a round coming up, so we'll be having a good look at that during that round.
Markets are pricing 60%. Does that sound reasonable?
So, yeah, in September, we intentionally left that open and we said to markets, you know what? What do you guys think? Essentially. And, yeah, I think it's worked quite well, actually. I think we're getting some good insights out of market pricing. I think markets understand our reaction function quite nicely. So, yeah, I think for our next decision, it's wide open. We wanted optionality. We wanted to have the option of doing a zero or a 25. And I think we've got that on the table.
What are you seeing in terms of the effects from elevated yields? And is that helping to do some of the work of your view on that?
You know, it's interesting. It's an inflationary environment, along with robust growth in some parts of the economy. Add in some fiscal risk in terms of deficits and government debt. And, you know, we've got high yields also in New Zealand. I think the 10-year was around, you know, a little south of 5% currently. So that's elevated. In terms of whether it's helping bring down inflation, you sort of really have to look at the reasons why it's gone up. I think the one point I'll make about New Zealand and high long-term yields is that fiscal books are actually in good shape. So the current projections from the Treasury, we see the fiscal balance going to surplus in 27/28. Total government debt in New Zealand, net government debt is 42, 43%, and expected to decline from that peak. So very different fiscal situation to some other countries globally at the moment.
What about what you're seeing in Kiwi dollar? Because people seem to have been turning quite pessimistic on it. Do you think that's reasonable?
Well, the Kiwi dollar has depreciated this year and since our last decision. Part of that, that's possibly interest rate. So I also think there's, you know, global imbalances and money sort of looking for interesting investment opportunities related to the AI boom has resulted in some sort of depreciation in the Kiwi dollar. Obviously, that's not good for me to inflation. And I actually think, compared to our projections, we were projecting inflation to be 3.9% in the third quarter and the fourth quarter. I think there's some upside risk to that fourth quarter CPI projection, partly because oil prices have gone back up recently and also from the depreciation in the dollar. The other thing I'll say about the Kiwi dollar is it is helpful from a growth perspective. It is supporting exporter incomes. But commodity prices have actually been quite strong, so they're already doing quite well. But the other thing it's doing is supporting the tourism industry. So the number of tourists visiting New Zealand has finally got back to pre-COVID levels. And that's about demand and accommodation, the food industries in the New Zealand economy, which are labor-intensive. So I'm hoping that that's going to give New Zealanders a bit more certainty about future job prospects, though growth still looks pretty tepid.
And what are you seeing in terms of the nowcast? Is it giving you any indication of what we should expect? Like the economy has been recovering, we have had growth in the New Zealand economy.
It sort of gets a little derailed, you know, by tariffs last year and by higher oil prices this year. But, you know, we see underlying growth in the economy. In fact, GDP growth, annual GDP growth to the June quarter was 2.5%, which isn't stellar. But, you know, it's not too bad either. And we think that growth is going to strengthen. A lot of, you know, some parts of the New Zealand economy are actually doing very well at the moment, particularly in the south of the country, in the South Island, the agricultural sector. Farmers are happy, which is great, but we're not seeing that spillover into household spending, household consumption. So farmers have been paying down debt, which is prudent. Households have been saving, as opposed to spending, in a sort of precautionary way. You know, we do expect household consumption to pick up from here, but it's not sort of going to run away on us. It'll be a slow, sort of gradual pick up.
Some interesting. There seems to be a bit of demand destruction. I mean, you look at the recent schedule, for example. Right. Great to have you with us, Paul. We have to leave it there for today. Thank you so much for your time this morning. Paul Conway, chief economist at RBNZ. Guys.
April, great stuff. Thanks so much. We'll come back to you soon. And obviously we're continuing to track the sell-off across Asia here today. And really China joining in now as we wrap up the third day of the Bloomberg New Economy Forum. Here you are seeing what it comes to. It is down to about 2% here. We're still on bear market watch when it comes to CSI 300. You look at where the bond market is going. 1.63 for your Chinese 10-year yield. The lowest we've seen since May of 2025. The 30-year yield are the lowest in 13 months. Plenty more to come. This is Bloomberg.
Right, about 13 going on 13 minutes into the cash market session here. Hang Seng down two and a half. We're down about two and a quarter. An international group of researchers has uncovered this rare case of rogue agents from China trying to infiltrate Alibaba and their IT systems. That findings may worsen fears about tech firms losing some control over their AI. Let's bring in our China correspondent Min Lo here with the details of what was, what did they find exactly?
Yeah, this is really interesting because a group of international researchers found this, wrote a group of rogue agents, more than a dozen of them, and they suspect that they are coming from a sandbox tied to Tencent's cloud system. But it's not clear whether these agents are working in development of Tencent's own models or are they tied to third-party models. And they essentially were trying to break into Alibaba's e-map, and they made more than 2,800 attempts to do so. And the interesting part was that the researchers had pretended to be agents that had access to computers in order to trick these rogue agents to talk to them, because these agents were the rogue agents were in a sandbox without access to the internet. They were supposed to complete a task, and they somehow managed to escape the evaluation environment and go rogue. And they will ask some very innocuous questions like, what is the most popular entrance to a zoo, for example. So it's not clear what the end goal is for these agents, but it is possible that it is an unintentional sort of mistake here, perhaps. I mean, that's a lot of speculation right now, but it reminds me of the Hugging Face incident where OpenAI's agent went rogue, and the researchers were distinguishing these two incidents, saying that OpenAI's agents were openly colluding with one another, but the Tencent or the suspected Tencent agents were not colluding with one another. So some of them were able to evade Alibaba's anti-bot protections, but there's been no evidence that private systems have been breached.
And can you tell us a little bit more about the latest news when it comes to the Moonshot story here? It seems like BofA, I mean, they're no longer in talks to arrange this IPO. Tell us more.
That's right. So Moonshot, we previously reported that they are expected to list perhaps in the first quarter of next year, raising up to $5 billion. And we are hearing from sources that initially BofA was in talks to be the lead coordinator of this deal, but they seem to have, they seem to have fallen out of that. And the only U.S. bank remaining now that is a sponsor of the deal is Goldman Sachs, along with other players like CICC, as well as Deutsche Bank. So this is just another example of how U.S. banks are perhaps not getting their share of the pie when it comes to the booming IPO deals in Hong Kong and mainland China. Right. And it's not clear whether geopolitical sensitivities played a part in this, because we know the U.S. lawmakers have been putting pressure on these banks to stop putting together deals for Chinese companies that are either blacklisted or under sanction or somehow out of favor. And in this case, Moonshot AI is, of course, accused of illegally distilling from U.S. rivals. So perhaps we don't know if this was part of the discussion, but BofA is now out of the running.
Min, thank you so much. Min Lo, our China correspondent there with a wrap of some other AI-related stories. What is it related to AI these days? Certainly. So a couple of things that we are looking at, further declines across these equity markets, quite a sell-off, particularly in Northeast Asia. Your Korea is up in the world. Japan is also not immune to what's going on. And also to tell you about this topic we just touched on with Min just now. Stay tuned. Of course, Yvonne has a very interesting conversation coming up here in terms of our ability to inject some agency, some benevolence into this technology. Lots more ahead from the New Economy Forum, where we're wrapping up, of course, our coverage there for day three. This is The China Show.
Where two leaders of India's so-called cockroach protest movement have been sent to jail for five days after protests over a contentious voter roll revision. Saraf Das and Ashutosh Rana were detained on Tuesday after they jumped police barricades in central New Delhi, and they face charges including trespassing. Political tensions have been building for weeks, with opposition parties and activist groups alleging voter rolls are being manipulated to benefit the ruling BJP. Meanwhile, India's education minister has told Bloomberg the voter roll overhaul is completely transparent. Speaking to us at the New Economy Forum, Rahul Joshi denied the process has undermined confidence in India's electoral system.
First of all, I would like to tell you, Indian election system is very, very, very superior to any other country, I can say, because whatever the EVM, we have brought electronic voting machine that many people in the world was given a challenge to them. If you can hack, please hack this. But it was not done. They are not able to do that. The system is so transparent. And also the recent allegations, it is of Supreme Court, which is many times it has given in other, in other instance I am talking, it has given judgment against the ruling establishment. But in this, after a very lengthy hearing, they said that it is as per the Constitution of India. They're talking about the deletion of the words. I would like to tell you, deletion, whatever deletion has happened, that is around you in that 1.8 crore, 2.8 crore, it is, there are the voters who are dead. They are not there. They are being deleted. And the people who did not give the enumeration for us, who have shifted from one place to other, that have been asked to submit this form, so that enumeration form, so that they can be included. See, the people who are being defeated from quite some time, almost like 15 years, they feel that because of all the, before this, out of what you said before that also they have been defeated. They have been defeating, defeating in many states. So this is that they are trying to create a narrative. Since they are being defeated, they are trying to create a narrative that our party and our leader is not losing because of this trend they are losing, which is not entirely false. It is totally far from the truth. And I can, even the courts have said that there is nothing wrong is happening.
Should the Chief Election Commissioner resign?
He should resign. He's doing a wonderful job. Why he should resign? Because he's it. What do we mean by authorities? The lynching of the read. The cleaning of the electoral rolls. Electrons. When are you cleaning it? No question. Because it is by the not less than the Supreme Court of India. That is the highest court of India. There's no question on that.
There we go. That was the Indian education minister, among the many hats, of course, he does wear, speaking with Yvonne there at the New Economy Forum, really the highest government official to address what was really front and center across our coverage. And, of course, our team and all of our visitors at the New Economy Forum, of course, taking place there on the streets in some parts of Delhi. Back to the here and now as we go into the thick of Thursday. So a couple of things. So we're looking at a really bad day across, a tough day for bulls out there. Not as bad in China, not as bad in Hong Kong. We are coming off lows already. Yes, we are at about 1.2. We were doing much worse earlier on. All that is to say, compared to elsewhere in the region, some of the benchmarks and stocks and names and themes and factors tied more closely to the semiconductor sell-off overnight, we're doing relatively well. On the Japanese yen side of things, so we're coming off course. Point one is a strong dollar and a breakout there and a pullback in the dollar coming into this morning off highs a few hours ago. Even further with the Japanese currency right now on the back of some comments coming out of a board member of the BOJ warning against taking too much of a cautious stance in terms of raising interest rates, a bit of a hawkish, a bit of a hawkish tilt coming through there. The next BOJ meeting is in about two weeks or so, which, by the way, coincides with the next Fed meeting where pricing is at about 30, 40% for a possibility of an interest rate hike. The added complication there, which we'll get to in a moment, is that is the final meeting before the midterms in the U.S., which is good enough reason for many economists to think they might not move at that meeting. They will move in December. But in any case, of course, the hotter-than-expected inflation print overnight is leading to where bonds are currently declines there. Currently, though, across bond markets, with the Aussie 10-year tracking lower, we were joined earlier on by LGT, and they've actually entered last week a tactical bullish call on the 10-year, U.S. 10-year yield. That takes them, it takes the yield in their prediction. So by the 4.8% tactically, and they're saying that hold, that call still holds even despite this hotter-than-expected inflation print. The other thing here on this board is the Chinese 10-year yield. Of course, at 1.64 right now is a level we haven't seen since May of last year. Okay. In terms of stock movers, this is really the heat map across the Asia-Pacific and really juxtaposed against weighting points. Swing on the MSCI Asia-Pacific. So the large tiles you see on your screens, all your culprits today, whether that's 2 or 3, 30. TSMC, of course, by the way, reports earnings today, which we are expecting to be good. But not that, not that that is the exact antidote to the sort of yield to the market today. That's almost like giving a higher dosage of, I don't know, antibiotics to a viral infection. Anyway, that's just my analogy there. We are looking at negative breadth. Certainly a lot of concentration in that negativity around, around the momentum plays. We'll have plenty more ahead here coming through in the second hour of The China Show. This is Bloomberg.
Welcome back. You're joining us live here at New Delhi, end of day three of the Bloomberg New Economy Forum. We are wrapping up things here, but still plenty of big interviews and panels coming up. And really it has been quite a conference here, just given what we've been seeing when it comes to, of course, markets. That U.S. inflation certainly is one thing, is big focus here. The AI sort of story continues on as we talked to Gary Marcus in just a few moments as well. But right now I think we're really focused on what happens next when it comes to the sell-off that we're seeing across Asia. It seems like China is also joining in now. We'll see. Ryan White could actually put a floor to us. We have TSMC results coming through later on, Dave. Maybe just maybe will help center a bit of it.
