AI Rout Hits Asia as Investors Rush to Safety

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Original language: English

Original video: AI Rout Hits Asia as Investors Rush to Safety · Channel: Bloomberg Television · 47:22 · Watch on YouTube

Topics: Enterprise AI applications, Cybersecurity and software security, Markets and economy

Summary

Asian markets came under pressure as investors questioned whether the spending and valuations tied to the AI boom can be sustained, while seeking safety in government bonds and the yen. Bloomberg’s guests discussed the risks of an AI bubble, the uneven pace of business adoption, and potential effects on jobs and industries. The program also examined Indian IT stocks’ rebound and strong demand for Jio Platforms’ IPO, including its prospects and risks.

Key points

Investors moved toward bonds and the yen as the technology selloff deepened, with bond yields falling sharply.
Analysts discussed whether the market’s AI spending and valuations are sustainable, while noting continued demand for computing capacity.
Martin Sorrell said AI adoption is emerging in areas such as advertising, marketing, financial services, autos, and supply chains, but is not yet broad across companies.
AI tools are changing advertising through faster content creation, scaled personalization, and automated media planning and buying.
OpenAI President Greg Brockman discussed the challenge of keeping the internet secure as AI helps identify vulnerabilities and supports both cyber defenders and attackers.
The yen’s gains were described partly as an unwinding of earlier trades; one strategist cautioned that they do not guarantee a lasting return to safe-haven strength.
Indian IT stocks rallied as investors reconsidered their valuations and whether AI could create opportunities as well as pose a threat.
Jio Platforms’ IPO attracted strong demand, with investors citing its telecom business, 5G rollout, and potential digital and AI businesses.
Risks raised for Jio included changes in connectivity technology, a possible shift toward satellite, and the resulting need for new capital spending.

Chapters

Start	Chapter	Summary
00:01	Asian markets seek safety amid the AI selloff	The program sets out concerns over AI valuations and spending as investors turn toward bonds and the yen.
01:23	Market fallout across bonds, currencies, and equities	Bloomberg correspondents describe a bond rally, yen strength, and losses in Asian technology stocks and related sectors.
05:38	The debate over an AI bubble	Comments from Blackstone’s John Gray and investor Ken Griffin frame a discussion about AI demand and the risks of overbuilding.
12:38	Martin Sorrell on AI’s impact on business and jobs	Sorrell explains how AI is changing marketing work and organizations, while considering adoption, employment, and future opportunities.
20:17	Cybersecurity and AI adoption	OpenAI’s Greg Brockman discusses vulnerability management and describes how AI agents can help people at work and at home.
23:33	Bond and currency market outlook	Market strategists assess defensive portfolio shifts, the yen’s rally, and uncertainty over the US dollar and economic growth.
31:27	Indian IT stocks rebound	Reporters explain why Indian software shares have risen as investors reassess the sector’s valuations and role in AI adoption.
35:20	Jio Platforms’ IPO draws strong demand	Bloomberg reports on the IPO’s subscription, expected use of proceeds, and possible drivers of the company’s post-listing performance.
39:04	Jio IPO outlook and risks	PL Capital’s chairperson discusses the IPO’s valuation, potential medium-term gains, index inclusion, and risks including future technology changes.
44:04	Indian software stocks and consumer pressures	The discussion turns to the appeal of Indian IT valuations and closes with concerns about inflation and consumer-facing stocks.

Quotes

This is not just a flock to safety. This is worries about cracks to growth. — 02:59

There is significant demand for compute — 12:02

How do you how does this whole system need to change? — 20:47

it doesn’t mean that the yen was strengthened forever — 27:48

the whole idea should be, uh, medium term investments. — 42:19

Concepts and entities

AI, Martin Sorrell, S4 Capital, OpenAI, Greg Brockman, Jio Platforms, Bank of Japan, PHP

Full transcript (original language)

00:01 Technology under pressure. Across Asia, investors are questioning the price of the AI boom, the returns on the massive spending and how much longer investors can withstand the stretched valuations. Live from Sydney I’m Paul Allen. This is insight where we dive deeper into the stories that matter with crucial context and shop analysis. Well, investors question the price of the AI boom. Is the technology truly transformative enough to justify the huge spending? Martin Sorrell, chairman of S4 capital, joins us on how the technology is

00:31 reshaping businesses on the ground. The rush for safety sends investors into bonds, treasuries holding most of their biggest rally in more than two years after the ten year yield tumbles and the yen rallies to its strongest in more than a month. The Japanese currency is shining again after struggling to benefit from its traditional haven status in recent years. Meanwhile, India’s software stocks are turning from eye casualties to beneficiaries. The nifty IT index has surged in October as investors bet on I implementation rather than just the infrastructure place.

01:23 Investors rushing for safety as the tech selloff deepens, sending stocks of lower bonds higher and the Japanese yen surging. Let’s assess the damage with Averil Hong joins us from Singapore. Anthony Stevens is in Hong Kong. So let’s start with you on the safe side of things. Where are investors heading for cover? Yeah, Paul, I have to say this is quite in line with Anthony and myself, our personalities. But there’s a lot for investors to worry about, right? The I rule the situation and then the

01:55 French market turmoil. So investors are flocking to the havens. You saw how treasuries rallied overnight. Unpack that a bit. But look at how we’re seeing GBS along with Aussie debt rallying as well across the curve on GBS. On the ten year, we’re seeing a move of about 11 basis points lower on the yield. And the yen has been rallying as well. Petering off a bit for the moment, but its extension from yesterday’s move more or less, and it is one of the top performers earlier in the session. Among the G10, there are some wobbles also among the carry trades for the yen,

02:29 which I’ll unpack also in just a bit. Interesting to see the way gold is performing today amid the precious metals selloff. But treasuries were really the big mover overnight. We saw almost 20 basis point move on the yield on the short end of the board. When it comes to the ten year, we saw the yield moving below five and it was the biggest move in a single day. So the board if we can that we’ve seen it in more than two years. Now some of this is positioning. You got that short covering. And we saw in terms of that wave of

02:59 buying and Treasury futures, but we also saw traders pulling back the bit of fed rate hike. So it speaks to maybe this is not just a flock to safety. This is worries about cracks to growth. How sustainable is I investment which of course has been a major driver of U.S. growth and is remarkable that the rally in treasuries has been coming along with the spike in oil prices, is almost like a reminder that in times of trouble, investors ultimately flock to U.S. government debt. Now, said the board again. And take a look at what we’re seeing in

03:31 the yen carry trades. Given the rally, we’ve been seeing it hitting the Mexican peso, for example, very hard. And given how we’re seeing really low volatility on the Japanese cars still. And as our Bloomberg Economics colleagues have been highlighting that hawkish shift from the BOJ since September, we could see even further pressure on these yen carry trades Paul All right. Thanks very much, April. Uh, Anthony Avril, uh, was, uh, over in the safety zone there, but, uh, you’re looking at the danger zone.

04:02 What’s going on with equities today? You know, we’ve seen, uh, confidence really shaken across the board. Well, and let’s get granular about it. We’ve seen the hyperscalers under pressure. SoftBank down six. We’ve seen the kind of passive component makers that were supposedly in a structural bull market getting challenged down six and a half to seven for Murata and TDK. And lastly, this score which actually came out at pretty decent numbers, very strong guidance. But they did highlight some of these growing, uh, capacity constraints. And that stock is getting hit down 6.5%

04:35 almost. Now flip the board. And we can kind of see the start of contagion potentially in the broader economy. Just because banks are so leveraged now to the eye trade, whether it’s deal flow, whether it’s lending, whether it’s overseas expansion, banks in Asia are very exposed to the eye trade and especially so in Japan and Korea. And you’re seeing that play out here as the trade gets repriced and you have SMG up down around 5%. That’s a big move. Normally in Japan when tech drops banks rates today everything is going down together.

05:08 And we’re seeing a very similar dynamic in Korea with Hana and Woori also seeing sharp losses. Actually, their losses are sharper than that of the big tech companies. Hynix and Samsung. Now flip the board and we can see what is winning. And what is winning is kind of depressing, frankly, right. We’re seeing tobacco do really well. Uh, Uniqlo in Fast Retailing we are seeing beer stocks do okay. Uh, and also fast food across the across the region is doing well. You know, that makes for a cheap budget holiday in Tokyo. But it’s not really what people want to

05:38 be playing this late in the I cycle. All right. Thanks, Anthony. Cigarettes and alcohol rallying. Uh, that’s a trade for the times, isn’t it? Uh, Wall Street’s eye bubble debate Against that backdrop is a raging on black stone. President John Gray is downplaying the risks. He’s calling it demand for the technology almost parabolic. He also believes this time is different from the likes of the 1990s telecom bubble. When you think about a bubble, you think about building capacity and then hoping

06:10 the demand comes with IE, you’re building capacity and you’re hoping you can keep up with the demand. Today, there’s really an indisputable shortage of compute, and it’s hard to deliver that compute. And that’s what’s preventing some of the excesses we’ve seen in past what they call bubbles. Billionaire Ken Griffin earlier this week, though, warned that eye bubbles almost certainly exist right now as corporations grapple with AI spending

06:41 and its economic impact. These bubbles, if we’re going to use that word, often coincide with these giant technological transformations, or the railroads, for example. But what’s left in the wake of these problems, if we want to use that word, is often game changing for the world. And the companies that are on the other side of that bubble are the market leaders for decades to come. Well, joining us now with insights is Martin Sorrell, chairman of S4 capital.

07:14 And Martin, we just heard a couple of opinions there from two gentlemen with tremendous reputations, both taking opposite views. Do you have a sense that we’re entering a bit of a crossroads here? What’s your opinion on whether or not parts of the market are in an eye bubble? Well, I probably steer between Gray and Griffin, if I can put it that way between the two guys. Um, I would be what we’re seeing. And I’m talking about marketing transformation. So I as it affects the advertising and

07:46 marketing services, which is not a huge industry. You know, a Blackstone uh, would, would be or Blackrock will be managing $14 trillion in our industry this year, excluding mainland China would be about 1.35 trillion. So it’s a relatively small industry relative to the investment industry through in mainland China, you’d be up about 1.55 trillion. But if you look at that, industry is being transformed, uh, mainly by consumers.

08:16 Actually, what we’re seeing and why I would steer of course, down the middle is where we’ve seen I adoption in marketing is by consumers. So for example, muse which was launched the the agent uh, launched by meta in the United States and shortly to be launched around the world, has had very rapid takeoff with consumers to some extent with enterprise. But where we’re seeing transformation in enterprise is where there is existential threat. So, for example, in the auto industry, I

08:48 work with General Motors, I work with BMW, I work with Honda. Are examples of traditional manufacturers starting to react to the existential threat from Chinese EVs, particularly BYD. I mean, here in Singapore, uh, it’s a 50,000 unit market, and BYD in two years has moved to a 40% share, 20,000 units in two years, overtaking Toyota. So we are seeing significant transformation pressure in industries

09:20 under threat. So financial services will be another one. We work for new bank in Mexico uh, and Brazil and new Bank now have a banking license in America like revolute. Uh, they have an East African shareholder as well. So they may be expanding beyond the Americas into, uh, the Middle East in Europe and Africa. We’ll see. But that’s a threat to the branch banking business like an HSBC, a Santander, a JPMorgan Chase and the third area, the third vertical, where we are seeing some transformation at scale, although its more general, is in the

09:55 packaged goods industry. I work for General Mills, for SC Johnson. A good examples were companies like Unilever and Procter and Nestlé are starting to move a little bit more aggressively for two reasons. One, they’re seeing price pressure. Consumers are not prepared to take price increases as they were during Covid or shortly after. And secondly, the geopolitical issues U.S., China, Russia, you, Iran are putting pressure on supply chains and fragmenting them. So they’re putting a lot of emphasis on

10:27 supply chain improvement. So we are seeing adoption, but we’re not seeing adoption of a scale across the board. And one of the fundamental reasons, going back to what Graham and Griffin was saying is companies are doing super well. So in Q2 of this year. The S&P 500, which is a proxy for major companies EPs, was actually up 50% on average. Now that reflected the space X and other exceptional gains. You stripped that out. You about 33% EPs gain in Q2.

11:00 And you strip out the hyperscalers, the four big ones and the others. You’re down to about 14%. But it’s still it was double digit. And the S&P 500 EPs, I think is up double digit for seven quarters in a row. And in Q3, it looks like, I think going in Goldmember forecasting like 9% EPs. Great gain in in Q3. The reality is we’re seeing very significant gains beyond that. And my guess will be we’ll see strong double digit gains again in EPs in Q3.

11:31 Why is that important? Well, companies are doing well and companies take the view. If it ain’t broke, why fix it? But so I was there a midcourse uh, we were at a Google conference in California a few a few days ago. Also, the Business Council, uh, in California, also a week or so ago, it was quite apparent that demand for compute and the demand for capacity continues to increase. And a lot of the manufacturers of that capacity, the suppliers, see order books

12:02 out to 30 and 31. So there is a considerable demand as the both those speakers said, particularly John Gray from from Blackstone. There is significant demand for compute, but where we’re seeing is more consumer led. Uh, we’re seeing companies that are under pressure responding. But I don’t think you’ll see wholesale adoption until we start to see a bit of economic pressure, maybe after the midterms in a week or so and into 27, we’ll see pressure on companies and more

12:38 pressure on adoption. Martin, can you talk to us a little bit about how you’re seeing the AI revolution disrupt your own industry? Because, you know, these tools, uh, useful in many respects, uh, particularly in advertising and marketing. And what I’m really driving at here is what happens down the track. Do you see a situation where there’s going to be mass layoffs and some other problems coming up for society? And I want to expand on that, Simon, to, you know, Sam. Sam Altman talked about 95% of people in

13:11 advertising lose their jobs. Now, he does tend to, uh, overtake the pudding to make the point. But the point was well made. I do think we will see pressure, but let me just go through where we see the, the the change in our industry. Firstly, in visualization and copywriting. Simply put the time taken to make an ad and the cost therefore that now traditionally we charge around the time and material spaces we have to move to an output base is either on assets delivered. Use of assets or even licenses for

13:43 software. So that’s the first area. The second layer is personalization at scale, what I call Netflix on steroids. I still think Netflix is the best example of using signals from the platforms, plus first party data that’s client owned data on their consumers to personalize content at scale. So that’s the second area huge expansion there. The third area is media planning and buying algorithmically. I mean, the industry that that Gray and Griffin represent, that is all done algorithmically.

14:15 In our case, of that 1.35 trillion I mentioned, about a trillion this year will be digital and therefore algorithmic. And the programs that Google are doing with nano banana on the content side, with performance Max on the media planning, buying side with Advantage Plus at Meta, what you’re seeing is the creation of end to end models on content creation and media planning and being increasingly being implemented, and therefore media planning and buying will become increasingly automated and

14:48 increasingly transparent. Those are the three main areas. You also see general improvements in capacity. And you see flattening of organization because information is made available to organizations across the board. And you’re seeing structural changes in organization like Jensen Wang has 50 or so direct reports, doesn’t do one on one meetings, runs the company through email and measuring against KPIs. So you’re seeing a lot of flattening and more efficiency in organizations.

15:21 But the first three are driving significant change. You see the holding companies, the big holding companies under severe pressure with their revenues flat, uh, about by and large publicists, gaining the others like WPP and Omnicom and Dentsu. Uh, maybe say less so have the two French companies gaining the other three, uh, US based and UK based suffering. But overall agency remuneration has

15:52 really been quite flat as clients have started to squeeze the supply chain. And that reflects my pressure of May I on unemployment. I think overall you’ll see a reduction, but there will be areas like content scale where you’ll see increases. Yeah. Martin Employments, the key one that I really wanted to get to because if you’re a young person today, particularly in a creative industry, watching this happening, it would be easy to lose hope in the future. I mean, we’re seeing movements like this around the world. There was the cockroach movement in India, for example, the current riots in

16:26 France. There’s a cost of living crisis, rising youth discontent. We’ve got yields on French debt surging. We could probably make some sort of oblique connection to that as well. And I was just reminded of the words ten years ago by from Jean-Claude Juncker, when he coined the term Polish crisis. That was during the European debt crisis. Do you feel like 2026 is making that era seem like the good old days? No, I think that’s a little bit extreme, given what’s happening. I mean, markets obviously a volatile and will continue to be volatile. We have three major geopolitical issues

16:59 around US-China relationships around Russia and Iran, which I think are probably in the short to medium term, maybe even the long term irreconcilable, and are things that we’re going to have to live with. I’m not saying globalization is dead, but I think increasing fragmentation is the rule. And as a result, growth is going to be more tepid. Inflation is going to be tougher to bring down. As we’ve seen with central banks, interest rates are going to be higher than we’ve anticipated. And therefore I and quantum, which is coming down the track, are going to

17:33 become increasingly important for clients, our clients, to improve their efficiency. So this is the way the work is working. But if you look at stock markets, would you follow Bloomberg? You know, assiduously, you see where they are. They may have come off in the last couple of days, but they are very near all time high, driven by the I how you price hyperscalers in particular in expanding their capacity. So I take the sort of Eric Schmidt view that you should be a little bit more optimistic about what I and quantum and

18:06 other technologies like blockchain are bringing to the party, whether it’s in the drugs and health care industry or whether it’s in our own industry. You know, creative now can be produced with tools that are extremely effective, and the human brain actually has become even more important in deciding what is the big idea. The real challenge is going to be a little bit further down the pike with creative is where machines become even more powerful. Will they become even more effective in producing even those big ideas? That, I think, is where the challenge.

18:39 But it’s not yet. On the media planning and buying side. I think there is a real opportunity to improve efficiency. A because digital is already 80% or approaching 80% of the industry, and this where the growth is, mezzo reported last night. Growth in advertising at about 2,627%. Google in Q1 and Q2 is reporting 15 to 20% gains as same with Amazon. Those companies at Google will do 350 billion of revenue this year. Meta will do 250 billion.

19:13 Amazon will do about 80 going to 100 billion in the next couple of years. Um, and ByteDance or TikTok outside China doing about 60. So those four platforms all showing growth of 15 to 20% or thereabouts are really on fire driving. Not just enterprise, but small and medium sized business. So I think for the young people that you’re referring to, it is a different opportunity. You do have to learn Chinese. You do have to learn Spanish, and you do

19:44 have to learn code, although I can help you learn all three things or do all three things for you. But the point is well made. It’s about culture and it’s about different cultures and countries, and it is about technology. So the two buckets, geography and technology are the key buckets to think about. All right. As for capital Chairman Martin Sorrell there. Thanks as always for your insights. Coming up, we hear exclusively from open AI President Greg Brockman on the pressure AI is putting on companies to address cyber vulnerabilities.

20:17 This is Bloomberg. Welcome back. You’re watching inside. Governments and companies around the world are rushing to patch critical flaws in widely used technology, and that’s after OpenAI helped identify a potentially catastrophic cyber security vulnerability in PHP. That’s a programming language that runs millions of websites and applications.

20:47 President Greg Brockman spoke exclusively to Bloomberg about managing risks as I empowers both cyber defenders and attackers. The core question we have, I don’t think that we have the answers yet, but I think that we’re really asking the question is as the scale of vulnerabilities found increases, and it’s harder and harder for anyone to make sure that they’re taking all of the patches. How do you how does this whole system need to change? And so if you look at PHP, we had two months worth of very manual process.

21:20 We were on the phone with many of our partners, the government, to really try to land as well. We see other vulnerabilities coming. We’ve been working on several of them as well. And I think that the system of making sure that that we stay ahead, that defenders are advantaged and that there is some sort of process, some sort of societal process for keeping the internet secure. That’s that’s the question that we think that the people should be asking. Greg, before I let you go, I’ve been using dots a lot, um, alongside music rock for you know, I kind of put this question to Sam the other day trying to

21:54 work out how to make an agent useful to me. Is there any updated data you can give me on how doctors has gone from an adoption perspective, in a user perspective? It’s it’s it’s really hockey sticking. I mean, it’s it’s really exciting to see all the, all the usages. Uh, and actually, I think that there’s so many surprising things across work and also your personal life and even, for example, for protecting people. One of my friends told me that the, uh, That her dot noticed a phishing email in her inbox said, hey, do not open this

22:28 email. It’s a phishing attempt, and her admin also has access to to her email. And it sends, you know, also painter admin saying do not open this email. And so I think that we’re finding this proactive form factor of an eye that’s looking out for you in your personal life and your work life to be something that just increases people’s. Helps people save money, is able to increase people’s productivity, and it’s something you could not get a person to do right if you’re looking out for you constantly. So I think that there’s just so much potential that’s being unlocked. And I think that that we can make people

22:59 I, you know, more more productive, make work more joyful and also help people just live a more fulfilling lives. All right. Let’s take a look at how Asia benchmarks are tracking at the moment. I mean, the key takeaway is not particularly well in terms of equities, particularly tech are getting hit reasonably hard. But the Hang Seng index a rare bright spot where higher by 4/10 of 1% of the Hang Seng Tech index also beat up by about two thirds of 1%. But the cost is taking a hammering and in fact it’s now cheaper than any major

23:33 market has ever been. It’s a 12 month for PE not dropping to just a 4.2, and that’s just above half the level of the Jakarta Composite Index, which should you remember, is under threat of a double downgrade. We have plenty more ahead. This is Bloomberg. Welcome back. You’re watching inside. Let’s take a quick look at where the markets stand.

24:05 Mainland Chinese markets are heading off to lunch Japan set to come back on line. You can see that most of the equity space is suffering again today. The cost be one of the hardest hit. Again, off by about 1.75%. Um, we have got the CSI off for a little bit more. 4/10 of 1%. The Hang Seng index, though, and positive territory and, uh, the yen catching a bit. And I got a 156 handle as, um, well, uh, investors seek a haven. The yield yield on our bonds also pulling back, uh, the ten year now 4.96

24:38 crude prices. We, um, talked about that that rising again. Saudi Aramco is asking staff to work from home. Its evacuated its headquarters in Tehran. And the cost to lease a tanker now to cross the Pacific from the US to China is at a record $18 million. That’s half the price of actually just going ahead and building one. Anyway, let’s get more market analysis on all of this. Bloomberg M live strategist market Mark Cranfield joins us from Singapore. And in Hong Kong we’ve got Bloomberg Intelligence chief emerging markets FX strategist Steven Chu. All right guys thanks so much for

25:08 joining us. And Mike, I want to start with you particularly talking about the bond rally, which is somewhat fascinating. I mean, all the factors that drove yields higher in the first place over the past couple of weeks are still there. Is this a case of the cleanest dirty shirt? Um, it’s also, uh, partly a reflection of of people changing their portfolio structures. So in the first half of the year, uh, people got so used to the idea that equities were the only game in town. We actually had people talking about these 80, 20 portfolios where equities

25:43 were so heavily skewed. In the past, we used to have a standard of a 6040 mix between equities and bonds, but that’s been skewed more and more recently towards equities, even to the extent where bond holdings have become a very small partner. Now, of course, in the first half of the year bond performance was pretty bad. It was kept rising, G10 bonds were declining and that was working out very well since July especially. People have to rethink that whole setup and it’s really accelerated in the past

26:13 few weeks. So people are having to not only cover up on shorts, but really evaluate where they want to have fixed income in their portfolios against equities and that increase that’s helping to drive the Treasury market, but not just treasuries. I read across the G10 space, with the exception of France at the moment, no one seems to want French bonds. So that process is underway. It probably isn’t complete, but in the background, what you’re doing is even though oil prices, as you say, are staying extremely high.

26:44 People are becoming much more defensive. And if you’re going to be defensive, you need to own a lot more bonds. Um, Stephen, another Haven trade that we’re seeing today, aside from the bond space, is the yen that I mentioned a moment ago as well. It’s below 157 again while we go. One 5689 right now. Can you talk to us about some of the factors that’s driving that trade and how enduring is it going to be? It’s very interesting. It looks like the old days, a stronger again and then high up won prizes over again.

27:17 But to be fair, um, in line with what Mark has just set now, our market is having a rethink, especially with the US midterms coming up. There’s the French election and a lot of uncertainties about Beto es and heading to US year. And so it makes sense to unwind the trade from earlier this year. So namely a stronger US dollar also sell off in rates. Now we saw a reversal. It’s probably not because of the yen regaining the haven status. It’s just because of um they’re trying to unwind the trade.

27:48 So from here, even if the risk of sentiment may continue, it doesn’t mean that the yen was strengthened forever, because after the US and Japanese rates, caps remain pretty high, and it’s very unlikely to see Bank of Japan tightening aggressively from here. Yeah, we do have that BOJ meeting of course next week Stephen. And inflation came in today uh 2.1% CPI numbers which was in line with expectations as well. But the balance of probabilities is we’re probably going to see more tightening from the BMJ. Could potentially be more support for

28:21 the end on the track. I mean, if you ask me, ultimately the terminal policy rate should be around 2%. So that gives you about zero real rates. But even going to 2% will be challenging because if they reach 2%, say in one meeting, two meetings, well, that’s going to help the yen. But however we know it’s the Bank of Japan, and for them to go that aggressive, it’s highly unlikely. So for this month it’s more like a status quo. And the next move will come later this year or even next year.

28:52 So that would be hot from a yield perspective to support the yen against the dollar in particular. So any further yen rally will have to rely on other drivers. Um, Mark, I want to get your view on the role of currencies and what we’re seeing today. I mean, the yen strengthening, as Stephen mentioned, their other one has been strengthening as well. We’ve got these Asian tech names under pressure also. How does this dynamic evolve over the next few days? A big part of it will be how people feel

29:24 about the US dollar, especially as people are saying we’re going into the midterm elections and the role of the dollar. Whether that justifies being a haven or not is something that people will be viewing very carefully over the next couple of weeks, and it looks as though the cracks are starting to appear in the whole US dollar story. If you look at the what the yield curve is telling you as well, it’s saying that although inflation is higher for now, the risk is that the Federal Reserve tightens too far and that we have a slowdown in the US economy going into

29:56 2027. So there could be an abrupt change in the situation where the fed hikes through late, where we’re expecting them to move in December. At the moment, even though that’s not fully priced in. But the outlook for 27 is changing dramatically for the tech sector. If people’s expectations of where the growth is going to come from, where the revenues are going to come. To justify all this, I build out if they’re not there and the US economy is going to slow down more quickly than is currently priced into the market.

30:27 That will undermine the US dollar. And if you’ve got other central banks around the world European Central Bank, Bank of England, Bank of Japan, reserve Bank of Australia all look as though they’re going to tighten policy again, that will incrementally improve the outlook for their currencies against the US dollar. So really the big trade for investors here between now and the next three months is how much do they like or not like the US dollar. And how are they going to change the build up of their portfolios in relation to that?

30:57 It looks as though we’ve probably had a peak in the strength of the US dollar. Question is, how far is it going to decline? All right. I’m life strategist Matt Cranfield and Bloomberg Intelligence chief emerging markets FX strategist Stephen Chu. Still to come. Investors clamor for a piece of Geo Platform’s $3.2 billion IPO, even as India’s broader stock market struggles. PL Capital’s Mahavira tells us what’s behind the extraordinary demand.

31:27 This is Bloomberg. Welcome back. You’re watching inside. Let’s take a look at Indian markets just ahead of the opening just over five minutes away. Now it’s not been a great week for India. It’s not been a great week anywhere though. There’s been three days of declines on the market as oil prices rise. But the pre-market suggesting perhaps a rebound today, particularly in the IT sector. The nifty IT index pointing higher by more than 2% in the pre-market.

32:00 And yes, Indian tech stocks have somewhat bucked the trend that we’ve seen Recently, um, uh, performing rather well. Uh, despite some of the concerns over I, there was a sense that perhaps the Indian software stocks might actually benefit from this in the longer run. Some earnings coming out today to watch also from Infosys, Doctor Reddy’s, Tata motors and Adani Power as well. Now the global eye trade might be wobbling but India’s software stocks are bucking the trend. As I mentioned, investors rethinking who could benefit from the next phase of the

32:32 AI trade. The nifty IT index has surged about 16% in October. TCS, Wipro and Tech Mahindra among Asia’s top performers this month. Asia equities reporter Ashutosh Joshi joins us now with more from Mumbai. So Ashutosh the Indian IT stocks, they were among the biggest casualties of the AI boom. That was the past tense suddenly making a comeback. Why? Yeah investors are starting to recognize that yeah yeah is perhaps not as big threat as initially expected.

33:08 There are various segments of the business where I can be deployed by. Uh, information technology companies, uh, firstly for reducing their own cost, as well as offering new products to clients. As the global eye, it really, uh, really comes under pressure. Uh, and, uh, software stocks in India are available at a much cheaper, uh, valuation. Uh, investors are starting to recognize, uh, the value uh, this sector has. Uh, we are seeing a sharp rally, uh, in

33:41 names of software companies this month. Uh, even though India has a nifty IT index is down 25%, uh, so far this year, uh, this month itself, it has gained about 16%. Uh, some of Indian companies that have been the best performers in the sector, uh, in October, uh, and with Infosys, the big measure reporting numbers. Today, investors will be focusing more on how Indian companies are adapting to the challenges and watch the way ahead.

34:14 So what could potentially derail this comeback in India and IT stocks. It up. If the focus on AI CapEx continues, that will be one sign that investors will take that. The rally will likely remain and that that will perhaps affect the outlook for Indian companies, something that we have seen playing out earlier this year or over the past one year. That remains the big challenge.

34:46 But but given that Indian stocks are Indian, software stocks are available at about 40% discount to their valuation seen in the past. Um, for investors, it’s a very clear trade. Uh, to take a bit, uh, for a potential recovery in Indian stocks. All right. Bloomberg’s Asia equities reporter Ashutosh Joshi there in Mumbai. Thank you. Now we need to talk about Jio’s blockbuster IPO that closes later on today after seeing massive demand even in a weak market.

35:20 The offering was fully subscribed within the first two hours of subscription opening on Wednesday. For more on what to watch as the books close, let’s get to our senior report of the conglomerates Sanjay in Mumbai as well. Uh, so, uh, Sanjay, what are the core valuation metrics, the subscription trends, uh, use of proceeds? What’s all this? Uh, what’s are they? The highlights driving investor sentiment as this IPO closes. Thank you Paul hard. Jio Platforms Limited is positioning itself not as a pure wireless carrier, but it is positioning.

35:53 It’s a tech company and it is set to launch its satellite services. So they’re expecting, uh, from a PR played the telecom player to a larger digital technology service player. So that’s why they were commanding a large valuation. But they could not get a better valuation compared to that. Number two, wireless carrier Bharti Airtel. Number one is always uh, Jio. Uh last year Infocomm um, which is Jio platform to the end of uh lancing for comma uh limited. And uh here this particular IPO was

36:25 being subscribed in hundred minutes, which is record by all means. And the overall subscription is nearly six times. And we are expecting that will double, which is the last day of the public subscription today. And when it comes to qualified institutional buyers, uh, we are seeing that on 13 types of subscription, it will begin to further gather momentum in coming odds. That’s what the street is expecting. Overall, a lot of the market is upbeat about this IPO. And we will see more record uh, you know forming in coming us by in terms of amount collected applications received,

36:59 etc.. So the mood is upbeat and the proceeds would be used to pay off the debt. And in all parameters this will. This is expected to create a record which is an emotional thing for the Ambani family. Mukesh Ambani always said that the next generation, which is sarcasm, Bunny is shot and Anand will be leading the show and the listing will be done on 28th October. John. Yeah. Okay, so that’s next week. And there’s a lot of enthusiasm, a lot of demand as you are just explaining there. But once this debut happens, what are the catalysts going to be the drive?

37:32 The post debut performance, the company was kept on telling that there will be something always left for retail investors, and they think that there will be gains off the post of the listing. And during a press conference, Akash Company was leading. Jio Platforms Limited clearly said that the currently Jio platforms are charging for 4G when it was already launched and rolled out of robust 5G networks. So the moment they get a better tariff revision, the company will be having better prospects in terms of profitability, revenues, etc..

38:03 So they’re expecting that. And as I flagged earlier when they launched, when they roll out the satellite services, it will add more value. The street is expecting not just the gains listing plus share, but also they are expecting inherent in robustness immediately after the tariff revision, which is always around the corner, and the Bharti Airtel, the rival, kept on telling that the output, the average revenue per user is much bigger beyond expectations. But once the tariff revision happens both it will be beneficial for that.

38:34 Reliance Jio Infocomm, which is the unit of the Jio platforms and Bharti Airtel. So Street is keenly expecting that listing and body for revision in coming days. Paul. All right. Senior cum senior reporter for conglomerate’s PR Sanjay there in Mumbai. Joining us now from Mumbai also Amisha Vora, chairperson and aimed at p l capital Group. Here to talk a little bit more about the geo platforms IPO. Misha, thank you so much for your time today. I mean, this was fully subscribed within

39:04 the first hundred minutes of bidding. It’s selling like concert tickets. Can you talk to us about what’s driving this enthusiasm, this demand, particularly for an offering of this size? With this IPO, which is largely a primary. Geo platforms will become a zero debt company. If you check their, uh, our pool, it is at least 20 to 25% lower than that of

39:35 Bharti. And their 5G rollout is also very impressive. So I think what market thinks, and we also think is that there is still enough headway for our pool to grow. And with that, the profitability free cash to grow at these valuations, which is priced close to about 12 to 30 times, uh, EBITDA. Uh, we feel that there is enough growth in their core business plus at these

40:09 valuations, that entire, uh, cloud and digital and AI business is bundled and it is still not value. So there remains enough scope for uh, not only listing gained. I would say that it will be more a 3 to 5 year story which will continue. To what degree is a lot of this demand and enthusiasm? You know, I mean, a lot of it’s driven by the fundamentals. Obvious. But you know, we’re going to look at the name behind this as well. Mukesh Ambani, the Reliance Brands. How much of a role does that play in

40:43 demand? I think that execution track record that definitely makes a huge difference the way they can build a sizable businesses and continue to build, uh, until they achieve the right market share. Uh, that inspires confidence. But at these valuations, the wage you platforms will be upwards of ten lakh crore will be, uh, it will soon come

41:15 into MSCI, it will soon come into nifty. And that will itself have its own fresh demand round. Uh, so that also, uh, plays a good role in extreme enthusiasm that institutional investors have shown both in anchor book and in Q I people. Let’s assume that the stock delivers a strong listing day gain. Um, what would you advise investors who have managed to secure an allotment year?

41:47 Hold on for more games? Or do you take a bit of profit if there’s a big day? One pop. I think one shouldn’t, uh, bank too much on just the listing gain. Uh, it would be there, but I think it will be more of a 2 to 3 year story, particularly. Also. First eight months to 12 months as it gets included in both the indices, which

42:19 is a process which will draw a lot more investments. And on the top of it, the tariff revision. So there could be listing gains. But the whole idea should be, uh, medium term investments. With, uh, links to that question, I mean, it’s a pretty rich valuation here. $107 billion. Do you think that’s fairly priced or is there still some upside for the stock after listing day? I think that there will be upside

42:57 because, uh, earnings momentum will continue. And, uh, as what? I was just trying to say that there is a huge gap in terms of Oracle between a party and you. And gradually as they continue to roll out 5G more and more, their value market share will also keep growing. Do you see that value continuing to grow in 5G, though, because, you know, is

43:28 slower 5G monetization something that investors should be wary of? Or are they other risks like like higher CapEx or higher, stronger competition? Uh, what are the sorts of risks you might look down that down the track for Jio platforms? I think the key risk would be the whole change in technology because the deal platforms or their connectivity business is all about, uh, the underlying fibre network. And if the whole thing changes to satellite, uh, that would entail a new

44:04 round of CapEx, uh, and in turn, probably a new competition. So that is the key risk, if you ask me. I just want to get your thoughts on some of the other, uh, price action that we’ve been seeing in Indian markets this week, you know, particularly Indian software companies catching a bid. Um, the IT index in the premarket was looking pretty strong, up by 2%. Is the narrative around AI disrupting disruption shifting? Do you feel would you buy Indian software stocks at the moment.

44:40 So Indian software stocks, uh, you know, had come to a level read low growth, high uh, get operating cash flow and combination of valuation made it very attractive. And the markets were uh, also feeling the pinch of likely inflation, likely interest rate, high continuous oil price, uh, remaining

45:11 above manageable level. So it provided a good hedge. Uh, I feel that this is not, uh, growth chasing really that we suddenly feel that the software companies will go back to their, uh, double digit growth or anything. But we see that the valuation I think the investors feel that the valuations at which they were, uh, offered very good investment stock. Uh, medium term.

45:45 Uh, really? Opportunity, a good trade. At the same time. Also, there is a realization that even though I loud will offer enough and more opportunities for Indian tech to be partnering some of the organizations globally and in India in the I adoption. So it’s a twin. But I think the key catch was the deep valuation takes a measure very briefly. We’ve only got about a minute left, but we’re seeing, uh, shares in Swiggy falling about 7.2% at the moment.

46:18 You know, this is an online, uh, food and beverage ordering application. Um, when you see a move like that, what does it tell you about the Indian consumer? Do you have any concerns there? Just one minute. I think the, uh. Overall inflation outlook is going to be very, um, harsh in India. Oil, of course, underlying oil is up almost 6,070%.

46:51 Rupee is depreciated in India, is still an import, uh, dependent company. And on top of that, the monsoon God has been very, very harsh this year with almost 17 to 18% less rains, which is, I think more than two decades. We are facing this situation. So when inflation outlook is also very harsh, uh, some of these when they report very high losses, doses, uh,

47:22 short term time. But thank you very much for joining us today. That is Amit Shah, Vara chairperson and MD at Powell Capital Group. That is it for Inside Horizons Middle East. And Africa is up next. Keep it here with us. This is Bloomberg.