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[music] Bloomberg Audio Studios podcasts radio news. Welcome to the Daybreak Asia podcast. I'm Doug Krner. Equity markets in the Asia-Pacific are rallying on this Tuesday after a surge in US stocks in the Monday session. We had a bounce back in semiconductor shares. However, Nvidia was left behind. Its shares were down by more than 4%. That's as investors weighed the news on Nvidia CEO Jensen Wong's affair with a woman suspected of working for Chinese intelligence.

And this is raising questions about what it could mean for Nvidia's business in China. Here is Bloomberg's Michael Dung. But the bigger issue is that this lands at a really critical moment with in particular Congress returning as of today and a Senate defense bill in negotiations in which there's multiple export control packages uh that are part of this. And so when you have Jensen Huang, who's been one of the industry's most visible, prominent, effective advocates for allowing chip exports, face this kind of controversy, it really means that Nvidia's efforts on this front will face some serious damage um in terms of credibility uh in terms of pushing back on any further uh chip export controls.

That is Bloomberg's Michael Dung. So what could this controversy surrounding Nvidia and Jensen Hang mean for the broader markets? Bloomberg's Heidi Strad Watts put that question to Floodlines research founder Anna Woo. I think it's a headline risk and as a key man risk like this and he's one of the most outspoken person in this space. Um I think that will be reputational. Um and it will also be a headline risk to the company and then the broader chip industry as well.

But what it doesn't change is the fundamentals of the company. So for example the Reuben chips it will still get selling um their Blackwell was still over subscribed and with the earnings report coming up just in a few days I think that is more of a solid guidance on how the company will trade. Um at the moment I'm I am not surprised that it's down a little because of the headline risk but to your point the fundamentals still there is pretty solid and um I think the the earnings report will probably have a higher weight in terms of the direction of the guidance.

It's interesting, isn't it? Because as you allude to, he's been kind of number one cheerleader for the entire industry. Um, there's now reports of potential intervention by Nvidia in terms of these US probes into Mega Speed uh and the woman who's at the center uh of all this with Jensen Huang. Does some of these complications make you worry about the governance aspect? Notwithstanding, of course, he continues to have the support for now of President Trump.

Yeah. Um well, let's come back to the midterm. Um comments from President Trump, he's got the veheto and he's not scared to use it. So I think in terms of policy swayed yes headline risk-wise and then a lot of market talks and sentiment will get um I guess swayed in in in the volatility but in terms of what's at the backbone of AI in terms of the chips output in terms of the policy support um I am struggling to see a clear step back from um from the the optimism since the start of the Trump's trade and also from the um you know the potential China probe there as well.

Uh well, Nvidia does already exclude China China numbers for quarters in their guidance. So I think from from an actual financial um perspective um the impact might be slightly lower than what the market's fearing right now.

The I think we mentioned briefly the impact of the midterms and clearly the backlash for data center buildout in particular both here in Australia and other jurisdictions as well. in the US, you know, that the vote in Texas heavily weighed on that as well. If you look at that, does that take away from the AI optimism or it's just one part of the the trade? I think it's a good wakeup call. Um the market has been in the frenzy about data uh in data centers and the buildout um almost one direction and then we need to some extent it's healthy um that evaluation will be relooked at and also the data centers take a a closer look at what is actually going on to your point um now with um the blue suite in the white house and the the broader congress I think that is a chilling call there um Trump still has his veto so I I don't think it would change his policy stance but at least from a valuation and from a market sentiment perspective it has already I guess re uh regulated the the overall temperature a lot but on top of that I think uh we need to put more attention to say um the actual distribution list uh the actual distribution risk as well as the tenant risk um on the credit side as well on top of what what's going on in the midterm

is the anthropic IPO the next catalyst that this market needs because there's a seems to be a debate of you know is it risky to buy in or riskier to to miss out when it comes to this company that is so disruptive across so many industries. Yeah, anthropics is a high stake event and it is almost I guess to some extent decisive to the um AI sentiment in the near term. So the IPO is going to be high risk and high return.

But if you look at um the company's latest Q3 number um it it's already removed its profit. So it's no longer profit making um the revenue has come down as well because of the compute um cost according to the company itself. So that is I guess an evidence that's showing that um the elevated oil price through energy bill and also the chip supply squeeze is already eating into um giants like this. So I guess um it is going to be well on the IPO day and in the very near term we we're probably still going to see um a lot of optimism and a lot of participation in this but in terms of the valuations point let's come back to that um it will be a lot more rational and less frenzy than before.

How compelling is the Chinese AI trade opportunity right now?

Yeah. Well, coming back to the valuations point, um if it was 6 months earlier, I wouldn't have this view. But right now, I think they're they're looking a lot more attractive than um before because they have experienced the sell off a lot earlier than the US and they have been down um for most of the year already. Look at Hangen's um indust to to normal yet. Um so I think when the market is finding a way out of the US AI while the sentiment is beaten down and looking for a better entry opportunity well China's um rival AI um at the right valuation could be um not a bad choice to consider.

I I also like your call on India as well being unloved as it has been for a lot of this year. You think there's an opportunity there?

Yes to me I think India is one of the most um oversold trade um through this year. It still is one of the worst performer in Asia. Um but what's very interesting um you you could see last week and a bit before was that India has come back. It's actually one of the most um best performing markets in in Asia in the last 2 weeks and because it's got the lowest AI exposure and also it's right now at a relative appealing point of valuations then the capital hided um in India for that trade when chips is selling off in the US.

That was Floodline Research founder Anna Woo speaking with Bloomberg TV host Heidi Straoud Watts bringing you their conversation here on the Daybreak [music] Asia podcast. Welcome [music] back to the Daybreak Asia podcast. I'm Doug Krishnner. Cityroup is planning to hire about a 100 bankers over the next several years after winning approval for its securities venture in China. Now, this expansion comes despite a sluggish Chinese economy as well as continued uncertainty for global companies operating on the mainland.

City's corporate banking co-head Khaleim Risby says the opportunity still outweighs those concerns.

China second largest global economy in the world. It's it's too big for anybody to ignore, right? The question is how do you go through a cycle and and come out as a winner on the