9 a.m. to Shanghai, Shenzhen and right here in Hong Kong. You're watching The China Show. I'm Yvonne Man, with David Ingles. We're coming to you live from the annual ICMA Global Financial Leaders Investment Summit, where we speak exclusively to the heads of top Wall Street banks and asset managers.
Yep, we have lots of good conversations coming through as well, so stay tuned for all those exclusives over the next, let's call it two, two and a half, three hours as we also count down to the open of markets across Greater China. Let's go to your top stories today.
Beijing announces additional support measures to halt this record slide in the equity market. We'll hear from senior officials from the PBoC and financial market regulators here at the ICMA. But also in the last few minutes, the PBoC raising the reserve ratio requirement. We'll also have a strong lineup of guests right here.
Joining us exclusively this hour are the heads of DBS, Schroders and State Street, and the next hour we'll be hearing and speaking with the chair of Bain Capital, as well as the CEO of Goldman Sachs. Those conversations are coming up at the times on your screen.
We're also tracking a sell-off in Asian stocks, high losses on Wall Street and further China weakness on Apple's latest results. Oil prices holding a big drop, though, on hopes of renewed talks to end the war in Iran. What a marathon it's really going to be.
Yeah, today we're hearing from He Lifeng, of course, the vice premier, in his video speech, to really highlight what Hong Kong's role is going to be when it comes to boosting sentiment, when it talks about the renminbi market and really becoming this offshore renminbi hub for China. And certainly there's this panel coming up as well.
But separately, what we heard was breaking news when it came to, of course, some ways to really maybe soften the like we've seen in the currency. I mean, the currency is listening to that move from the PBoC to raise the, by a couple of steps here, the reserve ratio requirement and the FX side of things.
And I think what's interesting, given that backdrop, is really the conversations around making Hong Kong, bolstering the role of Hong Kong as a yuan hub. Now, just a couple of lines that are coming through. And you're looking at live pictures right behind where Yvonne and myself are.
This is, this is the gallery, by the way, from overnight, I believe, or okay, now this is actually what's taking place inside the boardroom right behind us. He Lifeng just finished speaking.
Just to recap some of the headlines that have come through so far. We're looking at China will continue support listings and boost the RMB market in Hong Kong. The motherland is Hong Kong's firmest foundation, and they will continue to expand the opening up here in Hong Kong to continue to build a free and economic environment in Hong Kong.
I think it's important to note there, the timing of this is coming against the backdrop of a very weak equity market, whether that's onshore, offshore, a challenged backdrop. And the audience as well is quite key here too as well.
Yeah, and certainly it's interesting, right. He says, you know, he will continue to expand this opening up, according to He Lifeng. And it really comes at a time when, of course, Hong Kong is facing some of what China has really cracked down on, which is, of course, taxes on cross-border when it comes to insurance gains and income. So certainly there's a lot at hand there, what role Hong Kong still plays.
But really they are going to be saying this message at this event, that Hong Kong remains that financial center for global markets as well. We certainly have heard that from some of the CEOs throughout this morning as well, in terms of some conversations that we've had already.
I mean, it's really the state of play across these markets today, right? When you're talking about FOMO, as they're calling it, the fear of being obliterated here in these markets, just given the collapse you see in this whole AI trade in some ways, but, you know, most of the asset managers we've been talking to this morning have been still a little bit more optimistic on that.
Yeah, I mean, the notion that we are going to get a correction or are in a correction is something to be expected. And I think the question is whether you buy or you stay put. We spoke with Jenny Johnson, Larry Fink, and they've had different takes, of course. But the long story is remain invested in AI.
Yeah, but be aware and recognize that the market has become more discerning on the parts of this. You see credit spreads widening out. In fact, why don't we play it out for our viewers, some of the takes so far from our interviews here on the ground on the AI trade.
For one, I think the biggest story with AI has yet to come. We are living, in my mind, the greatest technological advances I've seen in my lifetime. Everybody's got their AI story. Everybody can talk. I can tell you, you know, we've done this, we've rolled out this thing in our sales group and we've seen an uplift in sales, and they're more effective, but it's not yet material to our earnings. It will happen, but it takes a lot of time.
From here, we don't feel we need to increase allocations or concentrate even more. We really believe in this prepare, don't predict model, which is our model, which is diversification. And so in many ways we're looking more and more to get equal weight exposure and also looking at other sectors that have been a little bit unloved.
I think the momentum of the economy in terms of growth is very strong. Yes, US rates is rising, one is rising. Gradually it will get passed to Hong Kong. But I think the impact on the economy, given this very strong momentum, will only be limited.
Yep. So we have a whole list of guests to come through here in the next couple of hours or so. And certainly we'll be talking a little more about really where we are in this whole AI trade, the state of play when it comes to China markets in particular here, and really this IPO market that continues to be quite hot as well.
I mean, when you have the likes of Ted Pick from Morgan Stanley, you have the likes of David Solomon from Goldman Sachs all going to be on a panel here coming up and talking about the state of play in markets. You may remember last year they did talk about that 10% correction across markets here that did actually move the markets.
So we're looking to see if they still have that confidence around this AI trade after being, you know, they're still one of the co-leads, in fact, in terms of these big IPOs. Right. Anthropic all coming up too.
Yeah, and I think what's key here to Evan's point, right, we are speaking with the people who are getting these deals out in the market. They're helping investors and these issuers value at what price. And it's going to be interesting because if this, let's just say we had this conversation about two or three months ago, it would have been an easier exit to price it at a higher range.
But given the current wobbles right now, how do you adjust, if you adjust at all? But I think the other key point is the window is still open to get these funds out, because people are still willing to throw money at this AI trade and continue to fund this as well.
Okay, now all that is to say that these are key questions to ask. And we'll be having these conversations, of course, over the next couple of hours. So on top of all that, right, it cuts both ways. Right, as we further fund this AI story, you're also furthering the risk as it pertains to cybersecurity, right?
So how do you then bolster as your bank, you know, protect your clients? We had the hack, of course, with Binance on the weekend. How do they then alter, bolster that side of the conversation?
We are having this conversation against the backdrop of markets continuing to sell off. Taiwan just came online. I believe we're down about 1%. Greece also selling off. Let's get a sense of the state of markets. Anthony's with us. Anthony, what are you seeing?
Hi, guys. As you guys were talking about, there is this flood to fund the AI trade. But on the other hand, that is costing listed markets right now. So you see that pressure on the Kospi down 2.5%. That's actually a significant improvement from the early open. We are starting to steady up a little bit here. Taiwan's open really helping with that, down only 1%, you know, versus some of the big moves we saw in US tech.
The down 8%, 9% that we saw in the Nasdaq. So, you know, this is not bad compared to the carnage we saw in the US. Australia is a very interesting case in point, as the drop in oil kind of bolsters this consumer play, and that sets up China quite well.
Now flip the board and we can see whether the US has kind of come down in terms of the futures indications. You know, there isn't that much follow-through. Nasdaq is steadying up a little bit here after yesterday's wobble. Of course, a lot of that kind of wobble was centered in the tech trade, not wide across the region.
And we see the S&P continuing to hold some of that resilience as oil continues to be quite muted. Now flip the board and we can see the setup for the Chinese futures. You know, China was a huge outperformance overnight. Most markets trading flat to up.
When you're talking about the KOSPI, all the futures indications, futures are kind of drifting a little bit here in line with the region's weakness, but there is plenty of moving parts on the macro front, as you guys talked about, China's increase, the FX reserve ratio, and we've seen the CNH move in a big way here.
That's a pretty punchy move for the CNH, especially against the trend. It's been strengthening in a straight line, and this looks like a warning shot from the PBoC to not play it like that, not to get one-way traded. Now flip the board. We can see some of the granularity from all these macro moves.
And that is weakness in big cap tech. Samsung and TSMC in the crosshairs not only of the tech drawdown, but the Apple results which were a little bit disappointing, especially on the China front. But on the other side of things, you see that sharp drop in oil hitting all oil names across the region.
Equity investors seem convinced that this time we might actually get a peace process. On the other side of things, obviously, you see names like the airlines, consumer names really benefiting from this drop in oil, and that's a factor to watch when the Chinese market reopen.
All right, Anthony, thank you so much. Anthony Stephens there with an update on the equity markets, also touching on the currency there with the big headline, of course. And we're going to show you the reaction in the Chinese currency, as Anthony was pointing out, on the weaker side substantially today on the back of that move from the PBoC to cool the currency rally, quite substantial.
And we should be getting your midpoint of the day actually in the next couple of minutes or so. Speaking of the PBoC, yeah, yeah, I think there is some representation too. Right. And this on the back of reserve those support measures to stabilize markets, right? Encouraging financial institutions to make fuller use of their tools.
On the back of this, what we're seeing here in Asia, this next panel, right. And it's the senior top regulators from China that are going to be speaking on stage here right now from the PBoC, the NFRA, SAFE as well as the CSRC are going to be speaking. Let's listen in.
Represented by what we call the six networks. And in the coming years, the six network investment would reach about 25 to 30 trillion yuan of effective investment. It will provide a very, very strong support for our further reform and opening up, and such kind of opening up will also help us to stabilize the exchange rate and reduce the uncertainty for the cross-border economic and trade activities.
And for the export, for the first three quarters, the import for the first three quarters will grow by 22.3%, 5.92 percentage points faster than the exports. Certainly we are seeing changes in China's financial system structure.
With the economic structure transformation and upgrading in China, we are seeing enterprises' asset forms shift from land and factories to technology, data and brands. We are seeing also long-term and trend-changing adjustment for the financing structure in China. The direct financing proportion steadily climbs up.
And in 2025 we're seeing incremental amount of social financing for bonds and stocks. And for the first nine months, it further rose to 49.5%. And we are seeing more and more loans directed to technology and green development and other high-quality development areas instead of the traditional infrastructure and real estate industry.
The PBoC implemented a 14th Five-Year Plan for building a stronger financial nation and responded to the changing trend of the financial structure. We have created a favorable financial environment for high-quality economic development. Firstly, we have been based on a supportive monetary policy stance and continue to advance the transformation of the monetary policy framework.
It gives more play to the role of interest rate regulation and improves the market-based interest rate formation, regulation and transmission mechanism. We have further optimized your short-term interest rate regulation mechanism, enhanced the accuracy of the interest rate regulation, and promoted a reform of the loan prime rate from a relatively single reference to the loan prime rate to a more diverse pricing benchmark.
Secondly, we have responded to the enhancement based on the different financing types and we.
All right, so we're just going to dip out for a couple of minutes there. That is, of course, what's going on right behind us. We are coming to you live, of course, out of the ICMA summit here. I'm just looking at shares. Well, the backdrop of markets, of course, this morning is one where you are getting a derating continuing across the tech space.
I'm looking at some markets that are coming online. Singapore included, we're down about 1%. DBS, the reason that is relevant is because we are joined here on set by the boss of DBS Group, CEO Tan Su Shan, exclusively here. Good morning and very nice to see you.
Thank you so much for having me. Delighted to be here in Hong Kong.
The AI conversation cuts many ways, as we were talking about before we went on air. You guys are very visible in what you're doing to upskill your staff and really make it more relevant as far as AI is concerned. If you could give us an update as far as that endeavor is concerned.
Well, we're all off the same starting line. And it's really, you know, when I launched my leadership conference this year, I gave everybody a T-shirt. That's it. Talk. It's cheap. Show me your agent. And why did I do that? I think that the human brain is so malleable. And really, the only way we learn best is by doing.
And when all my colleagues realized, oh, my God, it's actually quite easy to build an agent, anyone can do it from an 18-year-old to an 80-year-old, that's when we decided, well, this can change and I can do it. So it's really bringing that attitude that actually let us see the nimbleness into the workforce.
Right, that was the key cultural mindset shift. And the other was to create a framework in which everyone can understand how AI will change the way we work. We've been using what we call classic AI for ages. That's your classic, you know, artificial intelligence, machine learning for years.
And that's led to a growth in income and growth in feeds today with the generative and the AI now coming to play. And you've seen the news in the last few hours. Sign, sign of recursive self-improvement. The agents are improving themselves. These are all game-changing things.
And the fact is the human brain may not move as quickly as AI. But if we remain fundamentally agile, we have the right attitude and we create the right framework in which people, humans, can learn and relearn, then you're on to something.
You've warned, though, that some of these agents need tight controls because they can pursue a goal in unexpected ways. And I know you guys have high levels of AI use cases as well. Where do you draw the line on autonomy? Are there actually agents now that are executing tasks with us?
So we don't allow autonomous agency, and we think that we're not ready for that. And so we don't allow autonomous agents at all. What we do is we're building a harness and we're building a control plane. What is a control plane? To a control plane.
It allows the enterprise to look at who's agents doing what. What can they access? And that goes back to basic cyber hygiene. As a human builds an agent, the agent can only access what the humans are allowed to access. And having things that gate to allow or not allow your agents access to particular information is crucial. We call that a jump host.
So allowing or not allowing agents specific access to data and therefore allowing them to do tasks. You have to have a control so that you're monitoring. And so you have full accountability, full observability. And you see end to end what happens.
The other thing is get the data foundation right. You know, we've all got data. We've all done M&A where you've got third-party data, you've got integration, you've got different ways of different countries doing different things. Get that data lifecycle sorted out. So from the day your data is born to the day it is purged. Who owns the data?
How do you keep it safe? What are your models? How do you measure the efficacy and the safety of your models, etc.? So building the framework, building the control plane and building the observability is just as crucial. But using AI to monitor AI, that's a game changer.
Okay. And I think you've been on record by saying, I'm saying the bank is agnostic, whether that's us or a Chinese model that you use. If you could be more maybe specific on specifically what Chinese models are you looking to bake into? What are you guys working with?
Well, you know, we're open-minded. You know, there could be Chinese, it could be Singaporean, or it could be Asian models. It could be, you know, European models. It could be Western frontier models. We're open-minded. The key thing is obviously baseline of cybersecurity. And we use, you know, AI code to scan to make sure that there's no vulnerabilities.
The second is we have built something called a router. It's like an open router. But we look at how we can optimize our use of LLMs. And how do we do that? The first is you have something called a cache. A cache means if you and I ask the same question, we don't have to boil the ocean for the same answer. We reuse the same answer.
I see you being more optimized on your token consumption then.
And the second is, you know, not all tasks need some LLM. Some simple tasks you can just use SLM. And that's why the open router can help. So to optimize the use of your models. And so whilst we, you know, increase our token consumption by some five times, we've actually decreased our total token costs.
So there are ways that you can optimize. And we're learning as we're doing.
And you're one of the first things, I think, to actually come up with returns from. I mean, you had a number here, about $1 billion in economic value for last year. Do you have targets set for this year or even where we want to beat last year's target?
And so we have our own internal targets. If on what you mentioned was what we call the AI in the mouth, the traditional classic AI, if you will. What we're now attempting to measure is how to generate AI that will increase our efficacy, increase our customer journey, and really rethinking our workflows.
Now that's a bit harder because when you have to rethink your workflows, because really, for work to make sense, you can't be using your old workflows of line 1, line 2, line 3 to work anymore. In fact, why can't line 3 be line 0.5? All right.
And that's one. I've challenged the team to rethink their entire workflows and that you can't boil the ocean. You've got to focus on what's going to matter. And so we've chosen 12 big workflows to change. We call them operating model transformations, OMT for short. And that's where we want to measure, for example, completely different outcomes.
You know, capacity realization because, you know, guess what? We're growing. And if you want to grow without increasing your headcount, then realizing capacity through the use of agents, through the use of AI is the answer.
I guess before we move to the macro, final question on AI and cybersecurity, given the Binance hack over the weekend, what's your assessment of the nature of the threat, the new threat vector?
I think if you're always connected to the internet and you have hot wallets and you don't have mitigations, then, you know, that's good old basic cyber hygiene. My learning is cyber hygiene trumps everything and treat inside outside. That means trust nothing. It could be that the vulnerability is sitting right inside your organization.
All right, number one. Number two is access, right? Whether it's your laptop, your servers, whatever, make sure you really protect access to production. We've learned that over the years. Do not let your production systems be open to everyone and anyone, anyone touching production. Make sure you have a strong system of security.
Make sure every code, every change management that you're doing has strong gates so that you're protecting your production.
Chinese AI, this boom has already seen quite a sharp correction. I know you guys have done a lot of origination and AI financing deals, I think was around 20 billion USD nearly this year. Has that changed at all how you look at China and AI deals in the region now?
You know, we think that AI is a game changer. There will be winners and there will be losers, so the long-term ROI will be determined as companies start to adopt and learn like we are. Short-term though, there are supply chain blockages. And where are the blockages? There are blockages like in power, certainly in the West.
There are blockages in memory chips. And soon, or we're seeing it right now, even to your point, we're seeing some blockages in capital. So the cost of capital is now being repriced, especially in the US, for AI, for data centers, for chips, etc. So I think that there will be an adjustment, there will be winners and losers.
And the way we look at financing is we have to project. We have to see, you know, what is the circularity around the pricing. We have to make sure that we are highly structured and that there are mitigations along the way, whether it's, you know, insurance, sanctions, risk, etc. Just making sure that you're buttoned up around the risk management.
Do you get a sense that the system is over-dependent, over-leveraged, over-exposed to a singular theme?
Not really. I think the system, you know, the markets are quite good. I mean, you can see now there is a rotation out of that hot AI chip stocks now into, you know, Walmart and, you know, consumer durables, healthcare, etc. So the market's pretty dynamic and pretty nimble. So do I see concentration risk?
There was maybe up to this correction, now no longer. And let's see how Anthropic, that's, you talked about the Anthropic IPO. Yeah, that will in itself, whatever the valuation is, create a lot of wealth in the markets as well.
I was going to talk to you about wealth, especially just what you're seeing in your wealth business right now. Obviously Hong Kong, Singapore is big for you guys here. How, what, how are you seeing flows right now?
The flows remain pretty good, Yvonne. And I think we're seeing good flows from all over. We bank 120 different nationalities, and both Singapore and Hong Kong are great financial hubs for Asia. So we're seeing good flows and outflows want to diversify.
By the way, we are also seeing flows domestically. So we've been opening wealth centers in China, in Hong Kong, in Singapore, in India, in Indonesia, because we believe that wealth will be both offshore and onshore.
You have a very big franchise in Hong Kong. Yeah. What are the growth plans, expansion plans, headcount plans?
Strong, strong. I mean, Hong Kong has been one of our best performing markets, double-digit growth. We see strong growth in wealth management. We see, you know, you heard the news from the conference. There's a lot of emphasis on building a fantastic financial hub for your wealth management.
It's also prime brokerage that's assisted the institutional investments, private credit, growth capital, the whole assets of capital stock, if you will, will be born here, plus gold, commodities, precious metals, etc. So you see the whole multitude of different financial instruments and different stages of capital being built here.
Su Shan, it's great to have you here in Hong Kong. Thank you. Tan Su Shan, CEO of DBS Group. Let's bring you back live into, of course, the ballroom and these live pictures, this panel with some of the top Chinese policymakers here at the summit speaking out, Xiao Yan Chia, the Vice Minister of the National Financial Regulatory Administration.
Global annual economic growth surged to 2.1%. So the first 1,700 years, the global economic growth on average is less than 0.5%. And which means that in the past 200 years, there has been explosive expansion of global economic output since the rise of artificial intelligence.
Data shows that AI contributions of 1.5 to 1% to economic growth in the United States and 1.2 to 3% to Europe. Its contribution to growth will rise substantially upon large-scale industrial application.
Beyond boosting productivity, we also need to analyze AI's structural impact on GDP growth to capture marginal changes in macroeconomic operations. AI's overall impact on inflation is neutral. On one hand, it generates massive investment demand and pushes up prices of production factors.
All right. Day two of HK May and here we go. This panel is still underway here between some of the top Chinese regulators that really talk a little bit more about Hong Kong's role, of course, and how China is supporting when it comes to the IPO market, renminbi, Hong Kong being the offshore renminbi hub as well. Speaking now is still Xiao Yan Chia, the Vice-Minister for the NFRA, also on the stage.
With him is, of course, officials on the PBoC, SAFE, and as well as the CSRC as well. So we bring you more live pictures from there. Let's go outside the boardroom and bring now our next guest here, Richard Oldfield, Schroders chief executive, joining us here. Richard, it's great to have you.
Right. When you talk about, well, I think we're going to go to markets first, actually. Yeah. Well, okay. Well, no, no, no, let's go to Richard's here. Virtual free tier. You know what's going on in markets today. You can give us an hour. Yeah. You can do that. Live, live TV for you. Okay.
You guys just finished this deal, right? You're part of the Nuveen family now? Schroders, tell us a bit more. You're bigger. And what can you do now?
Yeah. So we're now quite a $2.6 trillion asset manager, importantly, with capabilities right across the public to have a private markets capabilities. That was a big reason why we entered into this transaction to grow our private markets capabilities for clients.
But importantly, now we have a business that has local relevance across foreign markets as well as global capability, which we think is a differentiator. And the business has got the capability to create solutions for clients as we look forward. So I'm pretty proud that we're here now, we're in a top ten position across public equities, public credit and private markets. So we were in a great place, that opportunity to bring most of our clients.
Where are the gaps you're looking to fill? Given the enlarged footprint, it's still not as comprehensive, I would imagine, as you would want.
Well, we have a pretty comprehensive platform. The question is, is it comprehensive everywhere around the world where we want it to be? So the focus going forward is how we, for example, service our wealth place in the US more holistically, big growth markets, as you know, how we service the insurance industry better, how we grow here in Asia. So we think these are all really big opportunities for us.
We have, as you know, a very dedicated wealth business that's focused on high net worth individuals. So how do we grow that part of the business? So we think we've got a pretty full range of capabilities today, but it's actually making sure we deploy them all the right segments and markets as we go forward.
State of play across markets right now. I mean, there's fear of getting obliterated, according to Paul Singer from Elliott Management. With this AI trade, I mean, do you agree with that sort of assessment? There's still opportunities, still tactical trades in this. That is totally opportunities, right?
Look, I think the question on AI overall is whether or not we can generate the returns, importantly, in the timeframe that investors are really expecting. This is an unprecedented CapEx cycle. Warren, we've never seen it before. Undoubtedly some of our CapEx will be misdirected, but there will be winners.
When we look across markets more broadly, we're still fairly positive on equities. You look at the US earnings season, we saw a good breadth of growth across the market, not just in technology. We still think there's opportunities selectively in fixed income. So I know there's lots of different gloom around. I think there are questions and issues as we look at the AI sector going forward.
But I think there's lots of tactical trades around. I mean, there's been a repricing, derating somewhat, some standards have been coming back in, which I think is a good thing.
What would be red flags, do you think, that we should be attuned to?
Well, look, I think there's two things I, we focus on. One, that will cracks emerging where expectations are so high that actually there's no buffer for a miss from a profit perspective. I think we can also expect to see continued pressure in relation to credit. We're raising an awful lot of money. Can the returns, can we see solid returns coming through from those AI plays?
As I remember, this is a broad ecosystem, right? So, and that's why it has a global ripple impact, even though we can see many of the issues are focused in the US part of the market, right? Because the chips are coming from this part of the world, often we have the ripple impact here.
So what we're really worried about is actually seeing stress in the credit markets. We're really worried about whether or not there's a miss as we go forward on earnings from some of those large.
And that's how do you look at the China market right now? I mean, sentiment is so weak. There's a lot of AI plays, but the monetization path is still not quite clear.
Well, I want to square because I'm a big, I'm a big China fan, right? Just from an investment perspective. But I think the long-term fundamentals, I mean, it's the market that we got to be in and where there's opportunities for investors. So when I stand back, I think many global investors are seeing this as a very specific investment opportunity.
Focus, I think, where there is a strategic play. So it's really interesting when I stand back, AI is completely undervalued in China relative to other markets. In a market, by the way, where that is one of the few in the world that has an AI diffusion plan. So I think the exciting opportunities are really where you see the intersection between technology and advanced manufacturing.
A little more broadly in healthcare and pharmaceuticals, and of course in energy. So I think there are real opportunities coming from the strategic plan that was outlined earlier in the year. So I think there's exciting opportunities. People just need to focus.
And how are you tuning your business to take advantage, for your clients to take advantage of the opportunities in China? And if you could clarify, did you pull out of China?
We definitely did not pull out of China, though. So we relocated to what happened. We thought about the portfolio businesses that we had. So today we continue to operate two large joint ventures, a fund management company and a wealth management company with the Bank of Communications.
So the fund management company is the eighth largest asset manager in China. It's performing really well. The wealth management company is growing. In addition to that, we run a significant cross-border business from China, and we run the private markets business in Beijing, particularly focused on private equity and infrastructure.
So we have a range of businesses. We run those businesses actually rather than shrink them in 26. So we continue therefore to try and provide solutions to investors in China, but importantly make opportunities available to investors outside of China in that market.
So for example, one of our infrastructure businesses is to help people who are manufacturing units in China green that manufacturing capability, but they're all businesses that are headquartered outside of China.
Why shut down the wholly owned mutual fund business then? And is that because of a lack of growth is disappointing? I mean, what was the reason for that?
Well, when we thought about how we got to market in China, it was much easier to go with a partner than go directly to consumers. So in most parts of the world, of course, we are not a direct-to-consumer business. And that's what we're trying to be in China. So we felt that the money we were investing in that business would best be spent by investing in our joint venture with both of them.
But maybe parallel, but related to this is there have been reports that you're looking to do some acquisitions to bolster your wealth footprint. Can you comment on those reports and what exactly are your plans now?
So the high net worth wealth market is really prime for growth. You can see, and I know you talked on the show when talking about it, also kind of intergenerational wealth transfer. So we have a successful business in Schroders as well. International is headquartered in London, but we have a business in Zurich and in Singapore, yes, serving this part of the world.
What we're going to do is grow that business because we think there is a real opportunity. We've got a strong market share in the UK and how do we take what is a great white glove service into other markets where there are some people who don't just want to be served by a bank-owned wealth manager?
So we're looking to hire individuals and to increase capabilities and capacity, but also we're open to acquisitions that are in the market with organizations that are culturally aligned. And I think that culture piece is so important when you're thinking of acquisition.
What are you looking at in terms of M&A then, in terms of targets?
Right now, it will be small discretionary managers in this part of the world, or managers who bring capabilities to bring co-investment to some of our ultra-high net worth lines.
Any geographical gap that you're looking?
I'd love to grow more in Asia. Okay. This part of the world has a disproportionate share of wealthy families. And so, you know, Asia is, of course, when we think about our success of Schroders in the vein going forward across all parts of our business, this is an important part of the world.
When we look at price targets in terms of where you can grow in Asia, in terms of asset growth and the like for next year?
Well, we think we've got a good opportunity right here in Hong Kong. Of course, we're still pretty optimistic about the growth in China. We've seen actually got strong despite the markets, good strong asset gathering in China in the last six months. But of course we operate across Singapore. Taiwan has been our fastest growing market globally actually this year. So they're the sorts of locations that we've seen growth already. And we think we can continue growing at a pace.
Right. Yeah, funny where the stock market boom can produce in as far as well so cynical. So it's quite active management, but okay. But what, well, okay, well, what's popular among your clients? I know that's, I might be over generalizing, but are people still looking to do more private market exposure? Is it still public markets? Like what seems to be popular?
Well, if you take a step right back, I think one of the things that came out of the investor survey that we did in 2026, and it was really pronounced in this part of the world, was about 80% of people wanted capital downside protection, and about 83% of people really wanted to see more diversification of their portfolios.
Now, what you see because of that, because private assets are a good diversifier and actually are not as volatile in terms of valuations, we have seen people much more open to a greater weighting in portfolios to private markets. But actually, what they're really looking forward to, and this is unashamed plug.
You know, in today's markets you need to be very selective about your choose. So what you choose to invest in. And therefore I think active management is really the thing that people are talking just about how we can diversify more broadly out of you, out of some US assets or not really out of US assets, but actually take the overall portfolio when you put new money into it, into Asia, into global equities, into a global fixed income type product. So that the conversations we've been having.
Richard, it's great to have you here in Hong Kong. Richard Oldfield, their CEO at Schroders, joining us here at the May summit for a quick look at what's happening across these markets this spring. And Anthony Stephens, our Bloomberg Markets reporter. Anthony, hey, so we are seeing a little bit of a divergence here between the tech sector in China and everything else.
Tech continues to have this hangover from the US price action. Chinese tech is trading a lot like Taiwanese tech. The same stuff is down a lot. But on the top line you see the Chinese consumer place starting to outperform here. The likes of Kweichow Moutai, etc., holding the line and keeping losses minimized.
Now switch the boat to Hong Kong and you see even more of that. You see the edge of tech doing reasonably well and just hanging in there. And that's because consumer internet is so strong today compared to the weakness in tech across the world. And that's because it's leveraged to the oil price.
So Chinese internet is a consumer-facing sector as opposed to all the other internet that is more mostly cloud and AI spending. So that divergence really coming through here. And I flipped the board. You can see kind of the details of that. You see the big ticket China Internet name spreading really quite well here across the board.
Trip.com has all the region's oil players. So airline plays up 5%, JD.com on the luxury spending side and pretty decent performance from Alibaba and Meituan as well, benefiting from that perceived boost to the Chinese consumer from falling oil prices.
Incredible. All right, Anthony, fantastic. Okay, Anthony Stephens out with the market update. We're about 11 minutes off of the cash market session here. We have lots more on the way here from my coverage of the HK summit. We speak exclusively in a couple of minutes with State Street CEO Ron Hanley.
But now investors are repositioning ahead of the midterms. Of course, midweek managing risk in the airspace given, of course, the wobbles of late. We're also having a separate conversation inside where we are right now, with the vice chair discussing, of course, their initiatives as it pertains to the capital markets. We have plenty more on the way here. You're watching The China Show.
Good morning. All are welcome back to watching The China Show. Just take a short break. Marathon of conversations coming through here out of the camera summit here in Hong Kong. Joining us exclusively here on set, Ronald Hanley, chairman and CEO at State Street. Good morning and very, very nice to see you.
That's good to be here again. Yeah. It seems to be an annual tradition. We speak with you guys. Bubble or not, it's hard to see it as being a bubble yet. There's certainly a lot of investment as there needs to be to develop the infrastructure. But behind all this investment is demand.
It's not like these data centers are being built on spec. I mean, there's real orders behind them, and in most cases, there's real companies behind them. So right now it's hard to see. That's a bubble. I mean, the question will be whether does AI become more efficient such that all the capacity that's being built, we don't need now.
But right now, if you look at demand and you look at supply, it's hard to call it a bubble at this point. And we're very, very early on in the deployment. And that's really the big question here is how rapidly will companies like ours and really industries, all industries and all sectors deploy?
Ah, well, how are you guys doing on that specifically within the firm itself?
Well, AI lends itself to many of the things that we do. I mean, if you think about what we do at our core, we are an operational and technology company. So we're already seeing the benefits of AI in terms of how we develop technology. I mean, the productivity for us, and certainly for many others as early as they are.
But if you think about what we do in terms of securities movement and control, custody, asset management and the end-to-end process there, we're all really early on there. And it's not just about deploying AI end-to-end within our organization, but it's within the whole ecosystem.
So starting with us through our walls to our clients and then upstream to our suppliers. And so the ability to actually enhance these connections and to use agents to do the things that humans know to do now or to accelerate what humans do now, we're early stages on this, so we're very optimistic about the deployment here in terms of what we'll do for accuracy, for speed, for market stability.
What's the advice to clients right now? Do you think that we've seen enough of this speculative froth being taken out of these markets? Where or is it better or is a better backdrop now finding more meaningful, sustainable sort of gains around AI?
