中国大型银行上半年利润增长，息差压力缓解

Bloomberg Audio Studios podcasts radio news. Welcome to the Daybreak Asia podcast. I'm Doug Krishnner. Crude oil prices are higher after US forces struck Iranian rocket launchers nearby the Strait of Hormuz. Now, a US official said Iran's Revolutionary Guard was observed preparing to launch rockets with sea mines into the straight. At the same time, we have President Trump saying the US is planning to use its control over Venezuelan crude oil to refill US emergency reserves.

Now, the level of the US strategic petroleum reserve is roughly 40% of capacity. Here is Bloomberg senior editor Wendy Benjaminson. President Trump believes that um the uh agreement to control the oil of a sovereign nation of Venezuela um will certainly help the US control gas prices. That's what he's telling the public. However, the oil from Venezuela is not ready to be refined and produced or even drawn out of the earth.

So, it could be years before the US sees any of this Venezuelan oil. That is Bloomberg's Wendy Benjaminson. We go to Japan next where the latest reading on industrial production shows manufacturers were able to weather uncertainty from the conflict in the Middle East better than expected. Output rose last month at a month-on-month rate of onetenth of 1%. Expectations called for a drop of 7/10en of 1%. A weaker yen, no doubt, was able to help out.

In the US, the employment report for July is due on Friday. With employment growth continuing, Fed officials now are zeroing in on price stability. Last Friday, Fed Chair Kevin Worsh said broad financial conditions were not restrictive. And Worsh's remarks raised the probability of a rate hike in September. The two-year Treasury in the Friday session was up by more than 10 basis points. And that's where we begin our conversation with Karen Calder.

He is head of Asia equity research at UBS. Karen spoke with Bloomberg's Heidi Strad Watts. Heidi started the conversation by asking whether the Worsh speech strengthened the Fed's credibility.

So, I mean, I think definitely from uh the speech on on Friday, he made pretty clearly uh made made the case and got in in line with what the rest of the market is thinking is that inflation is way too high and the Fed needs to do something. Um, you know, of course, he prefaced that with a lot of detail around the individ individual 90 so components of the the PC. Um, but you know, the the main thing is that inflation's too high and the Fed needs to act.

Um, uh, if you know, if we do not get a move uh later this month um, for whatever reason, I think uh, that's you know, we're going to start to have a little bit of dislocation in in the market. Um, clearly inflation is is too high and it needs to get under control. Has this kind of just been heightened in terms of the risk given that we're now seeing yet more military escalation or at least response from the US in the Middle East?

Yeah. Well, so I mean if you look at uh you know the timing of course is uh maybe coincidental but uh this is an administration which likes to uh uh you know do something over here to distract from something over there it seems. Um but the the net you know the major impact for markets anyways of increased action in in uh in Iran is through the energy markets. So um and and then therefore that plays through into into uh inflation.

Um I I I think you know it all comes down to you know again uh this is inflationary uh more action in the Middle East especially through the uh energy channel uh and we need to uh see the Fed you know act to uh to get that under control rather than just say we've got work ahead and we're going to act um because the market's no longer buying that.

You're still pretty constructive when it comes to US particularly on an earnings basis. So I guess the question is how much do you factor in the volatility in treasuries? Like at what level do we see equity sentiment still remaining positive despite a move in yields or or does it depend more on I guess the magnitude of how fast yields move?

Well, I mean of course it depends on uh you know uh the quantum and the speed uh of course. So the reason that we like the US uh equity market is basically earnings. So earnings uh you know in the second quarter it was a blowout. Um we're starting to see uh you know the beginnings of monetization of the AI uh capex buildout. So this is initially obviously through um increased cloud revenue for the the three main cloud providers.

Um you know the two big frontier LLMs are now uh have a run rate of over 100 billion in terms of revenue. Um so these are all positive. Um interestingly we've seen we think a disconnection um between the valuation of the uh bank sector uh and interest rates. Um and and that's been going on for a couple of years now. Um so the bank sector continues to move higher even though interest rates have been um you know flat to down although as you said we think they're as we expect they're going up a little bit uh before the end of this year.

Um and that's really been because uh also ARI related the the major banks in in the US fees revenue uh is uh recovering um to pre2022 levels. A lot of that uh fee and M&A activity is related to to AI um both on the equity and the bond side. Uh and and we think that's part of the trade that continues as well. Do you worry about the crossf funding risk that we're seeing across AI or across the AI thematic and and the ecosystem?

What are you concerned about as the risks right now?

Yeah, I mean absolutely we are um you know we've we've kind of seen this sort of a thing before um with telecom uh 20 years ago. Um so but we think probably the biggest risk right now uh in within the AI ecosystem is around open AI. Um so open AAI obviously is a little bit further behind Anthropic in terms of their IPO plans. Um and we think that's possible that that can put some pressure on the balance sheet. Um and if you look at their balance sheet there's a few um you know things to look out for.

So one you know they've talked about uh giving 5% or selling 5% to the government. Um that's interesting in itself and uh something to to uh there's questions around that. Um they're also widening you know the circle of risk. So as one of their largest shareholders Soft Bank is doing a the largest ever retail bond issue to fund their investment into into OpenAI. Um and and of course they're also part of the uh sort of vendor circular financing um uh ecosystem.

You know these are all things things to watch. Um it it's okay at the moment. Um and if you see the messages uh last week from uh from Nvidia um you know the only regret that the CEO of Nvidia has is it hasn't invested more in these these uh companies. Um so we should expect more in terms of the vendor financing we expect. Um but definitely this is an area uh to watch and it's tied to the to monetization. So the faster we get monetization of this giant infrastructure build out the better and it'll solve a lot of those questions.

That's Karen Calder, head of Asia Equity Research at UBS, speaking with Bloomberg's Heidi Strad Watts, bringing you their conversation here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia podcast. I'm Doug Krer. So, the big banks in China have reported earnings. Stateowned lenders produced higher first half profits. Now, these results in and of themselves offer fresh evidence of improvements in China's banking industry after a prolonged squeeze on margins.

For a closer look, we caught up with Bloomberg senior banking analyst Francis Chan. He spoke with Bloomberg TV host Ivon Man and David Inglace. David began the conversation by asking Francis for anything that stood out.

Um, well, that that's also reflected in the regulatory data. uh we do see the easing margin pressure and uh uh both uh many of the banks they have sequential improvement in the second quarter margins. I see that as a more important matrix than the uh yearon-year comparison. Uh and uh le